Volume 631 Week 16 - Thursday 25 May 2006 
Volume 631 Week 16 - Thursday 25 May 2006 
[Volume:631;Page:3415] 
Thursday 25 May 2006 
Madam Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Business Statement 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Next week the House will go into a 2-week adjournment. When the House resumes on Tuesday 13 June priority will be given to the Housing Restructuring and Tenancy Matters (Information Matching) Amendment Bill the New Zealand Superannuation and Veterans’ Pensions (Entitlements of Spouses and Partners of People in Long-term Residential Care and Remedial Matters) Bill the Historic Places Amendment Bill the Protected Objects Amendment Bill and the Coroners Bill. The first Wednesday of course will be a members’ day. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I thank the Leader of the House for that indication of the House’s future business. I wonder whether he might tell us whether the Electoral (Integrity) Amendment Bill which is currently sitting below the line on the Order Paper but is available to the Government when the House resumes will be debated by the full House some time in the next sitting or will it become like the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill which has been on the Order Paper for many years now? 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 That bill bears no relationship to the protection of trout! I am sure that when we do debate that bill it will be debated by the full House. We will determine when that will be at some point in the future. 
Business of Select Committees 
Meetings 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 Following on from the Business Committee meeting this week I seek leave for the Local Government and Environment Committee to have the authority to meet in Australia from 19 to 23 June 2006 and to adopt such procedures and practices as are suitable for the conduct of its business. 
Madam SPEAKER 
: Is there any objection to that course being followed? There is no objection. 
Tabling of Documents 
Ministry for the Environment Book Release 
NANDOR TANCZOS (Green) 
: 
 I understand that the Ministry for the Environment released a book last night  
Gentle Footprints Boots ‘n’ All 
. I realise that the current Minister has no responsibility for that document given that it was initiated before his time or for it being poorly compared with the report  
The State of New Zealand’s Environment 1997 
. I seek leave to table  
Gentle Footprints Boots ‘n’ All 
 so that this House has the opportunity to have a good look at it. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. Would members please be quiet when these questions are put. It is very hard to tell whether members are just chattering amongst themselves or making a serious comment. 
Questions to Ministers 
Venture Capital Market—Investment 
1. Hon MARIAN HOBBS (Labour—Wellington Central) 
 to the  
Minister for Economic Development 
: What steps is the Government taking to promote investment in the venture capital market in New Zealand? 
Hon TREVOR MALLARD (Minister for Economic Development) 
: 
 Budget 2006 delivered an additional $60 million boost to the Venture Investment Fund that with private sector leveraging will deliver $180 million to young firms with high growth potential. Through the fund we hope to speed up the commercialisation of new research and innovation and turn them into successful business opportunities. 
Hon Marian Hobbs 
: Has he seen any evidence that alternative views on foreign investment in Australia have been considered? 
Hon TREVOR MALLARD 
: Yes. I happen to have a copy of a document on foreign investment in Australian industry. It is essentially an exercise in how to sell one’s country. 
R Doug Woolerton 
: Can the Minister confirm that as part of the confidence and supply agreement between the Government and New Zealand First 2007 has been nominated as Export Year and that this venture capital funding is part of the preparation for 2007? 
Hon TREVOR MALLARD 
: “Yes.” to the first part and “I am sure it will help.” as far as the second part is concerned. 
Hon Marian Hobbs 
: Has the report he referred to in his answer to my second supplementary question been used extensively? 
Hon TREVOR MALLARD 
: I think the short answer is no. A copy of the book has been borrowed from the Parliamentary Library three times since 1969 when it first went there. In fact the most recent borrower was the late Rt Hon Sir Robert Muldoon who borrowed it in 1986. I think it is fair to say that this book on selling out one’s country has not been a universal success. The author of course is Donald Brash. 
Communications Minister—Vodafone 
2.  
Hon BILL ENGLISH (National—Clutha-Southland) 
 to the  
Minister of Communications 
: Did he or his office ask Vodafone to send him a letter of apology dated Tuesday 23 May; if so why? 
Hon TREVOR MALLARD (Minister for Economic Development) 
 on behalf of the 
 Minister of Communications 
: The Minister is advised that following the raising of the issue in the House his office sought from officials a copy of the letter he was advised that Vodafone was drafting in November. On discovering a letter had not been sent Crown Law contacted Vodafone’s counsel. Vodafone finalised a letter originally drafted in November and sent it to officials. 
Hon Bill English 
: Can he confirm he is currently in the process of considering recommendations from the Telecommunications Commissioner and a commercial case from Vodafone regarding the regulation of mobile termination rates and that millions of dollars of revenue are at stake for Vodafone? 
Hon TREVOR MALLARD 
: It was made clear to Vodafone by Crown Law in November that that action was completely unrelated to any other matters that may come before the Minister including the mobile termination rate decision. Ministers on this side of the House unlike those who were in the National Government do act in a professional manner. 
Hon Bill English 
: Can the Minister explain to the House why he is trading political favours with a large multinational company given that he is responsible for regulating it and is he surprised that Vodafone came up with a grovelling letter when he is about to make a decision that could cost it millions of dollars? 
Hon TREVOR MALLARD 
: The Minister is not trading favours. 
Hon Bill English 
: How can it be seen in any other light than that when the Minister effectively requested from Vodafone a letter of apology regarding a court case he was involved in the day he had been attacked over it in Parliament and when at the same time he is considering the regulation of mobile termination rates which could cost Vodafone tens of millions of dollars? 
Hon TREVOR MALLARD 
: Relatively easily. The Minister had understood that a letter had come. He asked for it when it was clear that the letter which he was told had been drafted in November had not arrived. Crown counsel asked for a copy of it. 
Hon Bill English 
: Can the Minister confirm that he has just given the House the completely misleading impression that he asked for a letter dated November when in fact the letter was dated 23 May—the day after submissions closed on his decision about mobile termination rates which could cost Vodafone tens of millions of dollars? 
Hon TREVOR MALLARD 
: I am advised that that letter was drafted on or before 16 November 2005. 
Hon Bill English 
: Does the Minister agree that he now has no choice but to reject Vodafone’s commercial case and accept the tougher recommendations of the Telecommunications Commissioner because if he does not it will look as though he is returning a political favour done for him by Vodafone? 
Hon TREVOR MALLARD 
: No. The Minister understands how to make a decision professionally. 
Hon Bill English 
: What sort of banana republic is the Labour Government now running when a Minister responsible for a multimillion-dollar regulatory decision has coerced Vodafone into doing him a political favour Vodafone has done it and he has to make a decision within the next few weeks; what sort of banana republic is that? 
Hon TREVOR MALLARD 
: It is clear that times have changed since National members made statutory decisions. Members opposite know— 
Hon Bill English 
: Trading favours! 
Hon TREVOR MALLARD 
: Members opposite may trade with the Exclusive Brethren with Telecom and with others; this Government does not. 
Transport Strategy—Roading Infrastructure Funding 
3.  
JEANETTE FITZSIMONS (Co-Leader—Green) 
 to the  
Minister of Finance 
: What analysis was undertaken and by whom in terms of the  
New Zealand Transport Strategy 
 before he announced that an extra $1.5 billion would be allocated largely to roading infrastructure? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Relevant agencies contributed to the Government’s analysis which underlined significant funding shortfalls important congestion and safety issues and considerable uncertainty about the forward path without firm and rapid action. 
Jeanette Fitzsimons 
: Has the Government sought any advice from Crown Law on whether announcing a list of projects to be funded with the new money is legal given that they are not part of any land transport programme and given Land Transport New Zealand’s statutory independence in this respect? 
Hon Dr MICHAEL CULLEN 
: The Government consulted with Land Transport New Zealand and Transit about the list of indicative projects. 
Hon Maurice Williamson 
: Did some of the analysis done to justify that expenditure increase in roading include a look at the Allen Consulting Group report from 2004 which showed that if $2.4 billion was spent on just four major roading projects the benefit to the country in economic social and environmental terms would be about $4.50 for every dollar spent? 
Hon Dr MICHAEL CULLEN 
: That report was not looked at in the specific context of the Budget decisions but clearly Ministers were aware of that report. 
Jeanette Fitzsimons 
: I ask the Minister again who provided what analysis that this list of roading projects was better at meeting the requirements of the Land Transport Management Act—namely assisting economic development assisting safety and personal security improving access and mobility protecting and promoting public health and ensuring environmental sustainability—and that this was better than spending a greater proportion of the money on public transport; was it his finance officials was it transport officials or was it Land Transport New Zealand? 
Hon Dr MICHAEL CULLEN 
: Spending on public transport has been significantly increased under this Government. Many hundreds of millions of dollars are in fact being spent on public transport. On the point the member originally asked about I reply that the relevant statutory authorities provided the list of indicative projects. 
Peter Brown 
: Does the Minister share my view that the best advice Jeanette Fitzsimons and the Greens could be given is that they should read the Allen report where they might get some idea at least of the economic importance of roads to this country? 
Hon Dr MICHAEL CULLEN 
: I would not regard the Allen report as the last word on this matter. The Government does believe in an appropriate mix of transport funding via the means of new roads maintenance of roads and public transport. I emphasise again that quite a lot of the roading work is for safety issues—it is about saving people’s lives and saving people from serious injury. 
Keith Locke 
: Why did the Government set up the Auckland Regional Transport Authority to decide which projects best meet Aucklanders’ needs and then refuse to fund the public transport priorities that that body determines and instead override Aucklanders’ wishes and impose lower-priority roading projects? 
Hon Dr MICHAEL CULLEN 
: I see an increasing number of press statements coming out of the Auckland Regional Council from its members specifically the chair disassociating themselves on behalf of Aucklanders in that particular regard. But this Government has never set up any agency to decide a wish list from which we would pay for whatever that agency wanted. If that is the basis on which the Greens would be funding any transport proposals then of course they would have to build a lot more roads than we are proposing to build within this Budget. 
Jeanette Fitzsimons 
: How will spending an extra $1.5 billion on roads mean that the National Land Transport Programme—and I quote from the Act—“ensures environmental sustainability”; and what analysis did he receive about how the biggest roading programme in New Zealand’s history will affect carbon dioxide emissions air quality water runoff and noise pollution? 
Hon Dr MICHAEL CULLEN 
: A number of those factors of course are taken into account in terms of planning consents when roads are being built. It is equally true to say that large amounts of traffic stuck in traffic in Auckland going nowhere and pouring out fumes is probably a particularly bad way of dealing with greenhouse gas emissions. 
Helplines—Social Development and Employment Minister's Statement 
4.  
JUDITH COLLINS (National—Clevedon) 
 to the  
Minister for Social Development and Employment 
: Does he stand by his statement to the House on Tuesday that “The services provided by the 211 helpline are fundamentally quite different from the citizens advice bureau advice.”? 
Hon MAHARA OKEROA (Associate Minister for Social Development and Employment)  
on behalf of the 
 Minister for Social Development and Employment 
: The response to that is a categorical “Yes”. The 211 family helpline line is a centrally based and staffed helpline. The service operates 7 days a week and 13 hours a day from 8 a.m. to 9 p.m. It is supported by a continuously reviewed updated and web-based national directory of over 6000 service providers and a portal to other websites providing knowledge and information on parenting family and social issues. The Association of Citizens Advice Bureaux operates a substantial number of local “shop fronts” accessible by phone from a single 0800 telephone number that automatically directs calls to the nearest branch. Those branches operate independently throughout New Zealand and have different opening hours according to local governance policies although their base hours are between 10 a.m. and 2 p.m. 
Judith Collins 
: When the Minister said the 211 helpline and citizens advice bureaus were fundamentally different was he aware that of the Association of Citizens Advice Bureaux’ 600000 inquiries per year 60 percent of those are phone inquiries and the Association of Citizens Advice Bureaux itself considers the helpline is a duplication of what it already provides? 
Hon MAHARA OKEROA 
: The 211 family helpline services and citizens advice bureaus are very complementary. This is demonstrated by the fact that the 211 family helpline referred 400 calls to the citizens advice bureaus in the pilot period and the citizens advice bureaus referred 60 calls to the 211 helpline in the same period. The Association of Citizens Advice Bureaux features prominently on the 211 family helpline website. 
Georgina Beyer 
: What reports about support for the 211 family helpline has the Minister seen? 
Hon MAHARA OKEROA 
: I have seen an email dated 15 August 2005 from a then Association of Citizens Advice Bureaux chief executive Nick Toonen to the Bay of Plenty Citizens Advice Bureau offices stating that the national board “decided that the Association should formally engage in the 211 community helpline with this engagement developed and tested through our further phase of the helpline pilot. The board noted that this engagement is not likely to include direct involvement in the call centre providing the helpline and that the stats for Rotorua and Tauranga bureaux do not appear to have been adversely affected by the pilot over the March-June period.” This would seem to reinforce the complementary nature of the two services. 
Judith Collins 
: If the Minister is aware of the number of phone calls from the Auckland-based 211 helpline to the Rotorua Citizens Advice Bureau asking for advice why do we not just cut out the middle man and stop this wasteful duplication and give the Association of Citizens Advice Bureaux a bit more money instead? 
Hon MAHARA OKEROA 
: Any member who has even the faintest notion of waste or that this service should be scrapped might think it worthwhile to obstruct access to family support services. This Government supports families. A survey of families in the pilot area showed there was a need for the service. Of those surveyed 93 percent said there was either a very big need or some need for this service. The 211 helpline received 15918 calls over the pilot period. That was equivalent to an average of a call from one in every four Bay of Plenty families. 
Judith Collins 
: I raise a point of order Madam Speaker. Is there any chance of a translation? 
Madam SPEAKER 
: That is not a point of order; that is treating the House trivially. 
Judith Collins 
: I raise a point of order Madam Speaker. Normally Ministers are supposed to keep their answer succinct and to the point. I think the House has been very indulgent of Mr Okeroa and nobody has given him much of a hard time despite all the ramblings. 
Madam SPEAKER 
: Of course questions and answers should be succinct. I do remind the House of that. The question was addressed however. 
Paula Bennett 
: Does he stand by his statement that one in every four families has used the 211 helpline; and if he does why have no families ever called the helpline twice? 
Hon MAHARA OKEROA 
: The answer to the first part of the question is yes. The answer to the second part of the question is that the services provided in the first place are quite adequate and we do not need to ring twice. 
Judith Collins 
: When I asked the Minister on Tuesday why taxpayers were funding a service where each staff member answers on average only three calls per day and that costs over $50 per call did he say: “That is not the advice I have.” when he was the person who supplied those figures in the first place? 
Hon MAHARA OKEROA 
: What the Minister said I am unsure of so I am not in a position to offer the appropriate response. 
Judith Collins 
: If the citizens advice bureaus already handle 600000 inquiries for Government funding of 805000 a year—that is for $1.34 per inquiry—why does the Minister not just give them the money he has wasted on his 211 line and get the bureaux’ hours extended? 
Hon MAHARA OKEROA 
: We have tried to impress on that member that there is no waste and that both of these services are complementary. 
Biosecurity Inspections—Sea Containers 
5.  
Hon BRIAN DONNELLY (NZ First) 
 to the  
Minister for Biosecurity 
: Are there any written guidelines for biosecurity inspectors upon finding contamination within a sea container; if not why not? 
Hon JIM ANDERTON (Minister for Biosecurity) 
: 
 Written guidelines for biosecurity inspectors are included in the Ministry of Agriculture and Forestry’s quarantine service process procedure. There are guidelines for the clearance of imported sea containers. Although the current version of those procedures is not as detailed as would seem desirable quarantine officers are thoroughly and specifically trained in the actions to be taken if contamination is found. 
Hon Brian Donnelly 
: Can the Minister confirm that the report of the Auditor-General into managing biosecurity risks associated with high-risk sea containers highlights the fact there is no written guidance on what to do when a contamination is found by a biosecurity inspector; and what steps is he taking urgently to improve that situation? 
Hon JIM ANDERTON 
: There are two groups of officials who inspect containers. There are the quarantine officers of Biosecurity New Zealand who examine all high-risk containers at the border. They are specifically and thoroughly trained. There are also accredited inspectors usually from private sector situations who are accredited to open containers when they are delivered to for example warehouses. Those inspectors are also trained. That has been the new system since 2004 and that is where the detailed description of actions to be taken I think is wanting. That is what the Ministry of Agriculture and Forestry will now turn its attention to. 
Dr Ashraf Choudhary 
: Can the Minister tell members of this House what further improvements have been made to the sea container system? 
Hon JIM ANDERTON 
: Prior to 2004—which means for all the period of the 1990s and the period up to 2004—only 25 percent of containers were inspected by the Ministry of Agriculture and Forestry’s quarantine service inspectors. Now 100 percent of containers are inspected by those quarantine service inspectors or by accredited industry persons—a huge change compared with the past situation. 
Hon Brian Donnelly 
: Can the Minister confirm that as part of the confidence and supply agreement between the Government and New Zealand First there will be an investigation undertaken into the feasibility of requiring all used-car imports to be decontaminated offshore and would he agree that if the requirement for offshore decontamination were policy it would greatly enhance New Zealand’s protection against threats to its biosecurity? 
Madam SPEAKER 
: Before the Minister replies would members please lower the tone. There was an interjection during that question. It was not respectful of the member. Members are on their last warning. 
Hon JIM ANDERTON 
: All used vehicles—100 percent—arriving in New Zealand are inspected internally and externally either offshore or on arrival. A risk analysis is under way which is a major piece of work to see whether an import health standard is necessary. These processes and procedures would be developed after that risk analysis. I might say that New Zealand First has been very helpful in supporting that process. 
Immigration Service—Confidence 
6.  
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
 to the  
Minister of Immigration 
: Does he have confidence in the decision making of Immigration New Zealand offices around the world; if so why? 
Hon CLAYTON COSGROVE (Associate Minister of Immigration) 
 on behalf of the 
 Minister of Immigration 
: Yes but as with any large organisation there is always room for improvement. 
Dr the Hon Lockwood Smith 
: Is he satisfied that a father of two foreign fee-paying secondary school students in New Zealand should be issued with a work permit through the Immigration New Zealand office in Korea having been declined such a work permit on two occasions by the Immigration New Zealand office in Auckland; if so why? 
Hon CLAYTON COSGROVE 
: Every application is treated on its merits. For instance people who cannot obtain a permit in New Zealand may then obtain a visa offshore if their circumstances have changed. People can make further applications and if their circumstances have changed then those applications will be treated individually. The member will know of course that I am not permitted to speak about individual cases. If he has evidence that he can provide to me I am quite happy to investigate it. 
Dr the Hon Lockwood Smith 
: Why would a father of two foreign fee-paying secondary school students be granted a work permit through the Immigration New Zealand office in Korea that states he could work for “any employer” in “any position” when the manager of international students at the secondary school involved was told by the Immigration New Zealand office in Auckland that the man “did not qualify in any way and would definitely not be getting a work permit”? 
Hon CLAYTON COSGROVE 
: As I have just told the member he will be aware that I am not permitted to speak about individual cases. Each case is treated on a case by case basis in respect of individual circumstances. I invite the member to bring to my attention any information he has and I will have the matter investigated. 
Steve Chadwick 
: What is the Government doing to ensure high-quality and consistent immigration decision-making? 
Hon CLAYTON COSGROVE 
: In April this year the Government launched the discussion document on the review of the Immigration Act. The review is part of a wider programme that will lead firstly to a new legislative foundation; secondly a new policy framework; and thirdly a new integrated service delivery model. 
Dr the Hon Lockwood Smith 
: Why would he blame the recipient of such a work permit who incidentally cannot speak a word of English for being part of a scam when both the Immigration New Zealand operations manual and its website have made it very clear that since the special guardian visa was introduced variations to those temporary visas—such as the granting of a work permit—had to comply with work visa and permit policy provisions in New Zealand? 
Hon CLAYTON COSGROVE 
: I apologise for being shrill. As I have said to the member every application is determined on a case by case basis according to individual circumstances. If he has information of wrongdoing or potential wrongdoing I am quite happy if he gives it to me to have it investigated. 
Dr the Hon Lockwood Smith 
: Is he concerned that the mother of three foreign fee-paying students should have gained a residence permit through the London office of Immigration New Zealand when the woman was previously in New Zealand on a guardian visa has now returned to Nigeria to join her husband and has no intention of living in New Zealand yet through the granting of the residence visa by the London office now has three children qualifying as domestic students in New Zealand? 
Hon CLAYTON COSGROVE 
: For the benefit of the member again I say that if he has information of wrongdoing and he gives it to me I will have it investigated. Every case is treated on its merits on a case by case basis. If the member delivers to me the information I will have it investigated. 
Peter Brown 
: Does the Minister acknowledge that there are several flaws both in our immigration legislation and in our systems and will he acknowledge also that the agreement for a review which was negotiated between New Zealand First and the Labour Government will address many if not all of these flaws? 
Hon CLAYTON COSGROVE 
: I acknowledge both those points. That is why as I said to the honourable member previously we have announced a review and a discussion document. The review is part of a wider programme that will lead to a new legislative foundation a new policy framework and a new integrated service delivery model. I acknowledge the member’s two points. Of course we can do better and that is why we are having a review of the Act. 
Dr the Hon Lockwood Smith 
: Why did he state on Tuesday this week that he had seen no evidence that applications that had been declined in New Zealand had been granted offshore when his department was advised some time ago that a person whom the Auckland office had said would definitely not get a work permit had attained a permit through the Korean office to work for “any employer” in “any position”—or does his department not trust him with that kind of information? 
Hon CLAYTON COSGROVE 
: I will not repeat the answer about the individual case; the member I think by now is aware of that. It is possible for people who have been declined work permits in New Zealand to gain them when they reapply offshore if their individual circumstances have changed because all cases are treated on their individual merits. If the member has evidence of wrongdoing he can give it to me and I will investigate it. 
Early Childhood Education—Government Programmes 
7.  
MOANA MACKEY (Labour) 
 to the  
Minister of Education 
: What is the Government doing to ensure New Zealand children get the best educational start possible? 
Hon STEVE MAHAREY (Minister of Education) 
: 
 This Government is giving every New Zealand child a good start in life through quality early childhood education and by lowering the costs to parents. The Government recently announced in the Budget a further investment of $162 million over 4 years and that will help us to implement up to 20 hours per week of free early childhood education for 3 to 4-year-olds in teacher-led services benefiting around 92000 children in the first year. We have increased the funding rates for providers by $30 million and boosting playcentres by an additional $4 million will of course ease the pressure on them. Of course I acknowledge the outstanding work of my predecessor in helping to develop those policies. 
Moana Mackey 
: What reports if any has he received about the cost to parents of early childhood education? 
Hon STEVE MAHAREY 
: I have seen information from the New Zealand Childcare Association stating that the average cost of childcare in New Zealand is around $40 per day which of course will go down further with Working for Families and the introduction of free early childhood education. I have also seen a newspaper article from Australia showing the average cost of childcare is higher than that. The  
Sydney Morning Herald 
 found childcare centres charging $90 a day and one in a place called Bondi Beach is planning to charge over $100 a day. That is just one of the many costs that families would face if they took the advice of “Digger” Don Brash and went to Australia. 
Madam SPEAKER 
: No that is not allowed. Would the member please withdraw. 
Hon STEVE MAHAREY 
: I withdraw. 
Hon Brian Donnelly 
: Will the Minister consider removing some of the restrictions around the Government funding of early childhood education—for example by not limiting it to 6 hours on any one day—so that the availability of quality childcare better reflects the actual working times of parents than it currently does? 
Hon STEVE MAHAREY 
: Yes I will. But along with the early childhood sector we prefer at the moment to use the current funding formula which has the 6-hour cap. We all believe that once we have had some experience with 20 hours of free education we will have an opportunity to see whether we ought to move to the suggestion of the member or stay with the current system. 
Moana Mackey 
: What other costs would someone face as the parent of a preschooler in Australia? 
Hon STEVE MAHAREY 
: As the parent of a preschooler in Australia someone may face a personal tax rate of 45 percent a Medicare levy of 1.5 percent and an accident compensation levy of 2.47 percent on top of his or her childcare costs. In New Zealand one would pay less tax overall according to the OECD pay an accident compensation levy of less than 1 percent be eligible for paid parental leave of 14 weeks get tax relief through the Working for Families package be eligible for childcare subsidies get childcare costs reduced and see free early childhood education be introduced in 2007. Those figures once again show how misleading the National Party has been in its drive to ask New Zealanders to go to Australia. 
Biosecurity Inspections—Sea Containers 
8.  
SHANE ARDERN (National—Taranaki-King Country) 
 to the  
Minister for Biosecurity 
: Does he stand by his statement yesterday following the release of the Auditor-General’s report on high-risk sea containers that he “was pleased the report did not identify any critical biosecurity risk issues in the importation of sea containers.”? 
Hon JIM ANDERTON (Minister for Biosecurity) 
: 
 Yes. I am advised that none of the areas identified for improvement in the Auditor-General’s report—which the Ministry of Agriculture and Forestry of course accepts as a constructive contribution to this issue—represents a critical biosecurity risk. New Zealand is internationally recognised as having some of the toughest border controls in the world. 
Shane Ardern 
: How does the Minister reconcile those comments with the ones he made on  
Morning Report 
 today that this report presents “a bit of a wake-up call” and “there are some issues there. We have to do better. We will struggle to meet rigorous standards.” and that the report’s criticism of training was “fair”? 
Hon JIM ANDERTON 
: Because all those points are true and I agree with all of them—more than I agree with the member’s statement earlier this week that biosecurity funding had gone down when it has demonstrably gone up. 
Shane Ardern 
: Why despite import health standards for sea containers being a major criticism in the Auditor-General’s 2002 report and in the 2006 report tabled yesterday are the standards still being heavily criticised? 
Hon JIM ANDERTON 
: The new system of container inspection was introduced in 2004. This came after a long period when only 25 percent of all containers coming into New Zealand were inspected at all. Most of that period was under the responsibility of the previous National Government. Biosecurity has faced an increase of 57 percent in containers during that time. The Government has lifted its baseline funding by 89 percent. Of course biosecurity is challenging at any border in the world. Anyone who has been around the world knows that New Zealand’s biosecurity procedures are tougher than those of most countries. 
Shane Ardern 
: Why then in the face of this report has biosecurity funding—which is far from being boosted by the $32 million as the Minister has suggested—fallen by $5.9 million in last week’s Budget; and in the face of this report is it the case that there is no money for the 15 critical issues that were raised in the Auditor-General’s report that was tabled in the House yesterday? 
Hon JIM ANDERTON 
: It is actually $33.1 million and the member clearly has no understanding of the difference between one-off incursion expenditure which is not included in Budgets and the baseline expenditure which goes up over the next 4 years by $33 million. 
Hon Dr Nick Smith 
: So there were no incursions this year. 
Hon JIM ANDERTON 
: Someone on the front bench who has been in a Cabinet of any description at some time in their lives should take the member aside—and should include Mr Nick Smith with him—and teach him a lesson on Government accounting. 
Shane Ardern 
: How can the Minister expect the land-based industries to trust proposed import health standards for honey when the Ministry of Agriculture and Forestry itself has not been able to fully implement the sea container health import standards after 4 years of trying? 
Hon JIM ANDERTON 
: Again I advise some of the senior members in the National Party to take aside Mr Ardern and talk to him about biosecurity international trade obligations and the evidence-based system that we have to operate as the most dependent export economy in the world. When they have done that he should come back and see me. 
Madam SPEAKER 
: Perhaps the Minister would like to add to his answer to that question. 
Hon JIM ANDERTON 
: The evidence-based biosecurity system that New Zealand operates by—and every reputable country in the world aims to act by—requires scientific evidence as to whether any imported good would be a health risk to New Zealand. The scientific evidence this Government has is that heat-treated honey from Australia or the Pacific Islands will be perfectly safe. If the member wants to put his scientific evidence up against all the international experts we have consulted I would like to see it. 
Shane Ardern 
: Why did the Minister use the excuse on  
Morning Report 
: “Up to 2004 there were no important health standards on containers” and then repeat that in the House today and say that the Auditor-General “says that as well” when the previous import health standards for managing biosecurity risks associated with sea containers have been in place since 1998? 
Hon JIM ANDERTON 
: In 2004 an extraordinarily high new standard of import health safety regulations were brought in by Biosecurity New Zealand. At the same time New Zealand faced a 57 percent increase in containers and Biosecurity New Zealand set itself the highest standards in the world to meet. The fact that it has not yet met those high standards does not mean to say this Government and the Ministry of Agriculture and Forestry are not determined to meet them. I wish that Mr Ardern like may other people around the world would at some time start praising New Zealand and the systems we have rather than running them down all the time. 
Music—Government Support 
9.  
Hon MARK GOSCHE (Labour—Maungakiekie) 
 to the  
Associate Minister for Arts Culture and Heritage 
: What has the Government done to support New Zealand music? 
Hon JUDITH TIZARD (Associate Minister for Arts Culture and Heritage) 
: 
 At the end of the sixth New Zealand Music Month it gives me great pleasure to tell the House that more than $5 million per annum has been invested by this Government in New Zealand On Air Creative New Zealand Te Mangai Paho and the New Zealand Music Industry Commission. At least $19 million has gone into the support of New Zealand music through the funding of orchestras—especially the New Zealand Symphony Orchestra—opera companies Sounz the ballet and grants to composers and performers. The Government has also supported New Zealand music through the universities and the arts curriculum. 
Hon Mark Gosche 
: What evidence is there of the success of the Government’s music policies? 
Hon JUDITH TIZARD 
: The National Party members appear not to like New Zealand music either. One example is the enormous success of the voluntary code of practice met by New Zealand radio broadcasters. It aimed to have 20 percent of New Zealand music being played across New Zealand radios. That percentage was up from 1.9 percent when National was the Government to 20.77 percent last year and we will exceed even that this year. We are seeing top New Zealand musicians selling New Zealand music. It was 28 percent of sales in New Zealand Music Month 2005. We have also seen magnificent exports with Breaks Co-op up in the top 40 in the UK. 
Hon Mark Gosche 
: What is the Government doing to support the export of New Zealand music? 
Hon JUDITH TIZARD 
: I am very proud to be in charge of an area that demonstrates that New Zealand and New Zealanders are dynamic and willing to take risks to make better exports for all of us so we have better lives. We have put more money into New Zealand on Air with $850000 per annum going into Phase Five a programme that promotes New Zealand music to the international news media and we have provided $444000 extra to the Music Industry Commission for the Outward Sound programme which National obviously does not know about. We have put $178000 into promoting New Zealand music at music fairs and trade fairs around the world. We have also put money into the New Zealand Symphony Orchestra and Sounz to tour New Zealand music internationally—to great acclaim. I am very sorry that the music coming from the other side of the House is such a sad dirge. 
Te Puni Kokiri—Maori Affairs Committee 
10.  
Hon TAU HENARE (National) 
 to the  
Minister of Maori  
Affairs 
: Was he satisfied with the performance of Te Puni Kokiri at the Maori Affairs Committee yesterday? 
Hon PAREKURA HOROMIA (Minister of Maori Affairs) 
: 
 Yes. 
Hon Tau Henare 
: Does he stand by his comment in the House on 11 May 2006 that Leith Comer was carrying out Te Puni Kokiri’s statutory monitoring role well when Leith Comer himself told the Maori Affairs Committee that he had consciously moved resources out of the monitoring area and the committee’s financial review found that Te Puni Kokiri was failing to meet this fundamental legislative requirement? 
Hon PAREKURA HOROMIA 
: The answer to the first part of the question is yes; in respect of the second part of the question the member is twisting what was found in that report. 
Dave Hereora 
: What achievements did the Minister tell the committee about yesterday? 
Hon PAREKURA HOROMIA 
: I told the truth. I told the committee that more Maori are working than ever before. I told the committee that more Maori are participating in education at all levels. I told the committee that the Maori asset base is growing and is being well-used. I told the committee that Maori are making a strong contribution to this economy and that common-sense people are recognising this. I told the committee that Maori are celebrating success across sports arts and culture and there is an abundance of it. 
Hon Georgina te Heuheu 
: Did the Minister advocate for the cutting of funding for local level solutions for Maori in this year’s Budget or was this programme cut because as he himself has described in this House advocating for Maori is “tiresome” and he could not be bothered arguing for it? 
Hon PAREKURA HOROMIA 
: Sometimes we do feel like that when working with our constituency. But they are great people. I also added that we loved them irrespective of how they made us feel. But we did allocate $14.8 million in 2005—and certainly outreached for 4 years. I do care about the Maori people and this Government has done the right thing—unlike the last time National was in Government. What did National do when it was last in Government? It stripped $1.3 billion—tax cuts—out of social services. When it sniffed the recession coming on it sold all the State houses and put Maori on the road. That was under Tau Henare’s watch. He did nothing! 
Gerry Brownlee 
: When he praised his ministry’s performance on the basis of the report of the Controller and Auditor-General which found that Te Puni Kokiri had not significantly breached any law did he mean that breaking the law was OK for Te Puni Kokiri provided the Auditor-General does not catch it? 
Hon PAREKURA HOROMIA 
: I meant no such thing. 
Hon Georgina te Heuheu 
: Is Te Puni Kokiri’s inability to answer basic questions before the Maori Affairs Committee one of the high performance achievements of his ministry that he takes personal pride in or is his view closer to the way he described his ministry in its performance as being “tedious”? 
Hon PAREKURA HOROMIA 
: When I came in as Minister the ministry had $55 million. It now has $156 million. We certainly had our ups and downs when I became the Minister when I was bullied and barraged by that member over there. But 6 years on our position is certainly one of wanting to move Maori from dependency to development. What is wrong with that? And this Government has achieved great things like a 70 percent decline in poverty—30 percent of that being Maori poverty—and attention to early childcare 27 percent of that being Maori. What is wrong with that? What is wrong with Maori getting into a better space? 
Hon Tau Henare 
: How can the Minister justify his claim— 
Hon Dover Samuels 
: Got the right paper Tau? 
Hon Tau Henare 
: I raise a point of order Madam Speaker. I have been booted out of this House for less than that. I do not want to regurgitate that but I honestly believe I have been hard-done-by—[ 
Interruption 
] And there we go again. That is the second time. 
Madam SPEAKER 
: I will ask the Minister to leave the Chamber please for intervening on the member. 
Hon Dover Samuels withdrew from the Chamber. 
Madam SPEAKER 
: I thought it was the Minister who actually made the comment. 
Hon Tau Henare 
: It was both of them. 
Madam SPEAKER 
: It was both of them. I think both Ministers should leave the Chamber. As the member said one has to be fair about this. 
Hon Parekura Horomia withdrew from the Chamber. 
Tariana Turia 
: I seek the leave of the House for the Minister Parekura Horomia to return and answer the next set of supplementary questions. 
Madam SPEAKER 
: Well it is a bit of a dilemma. Normally— 
Tariana Turia 
: Point of order— 
Madam SPEAKER 
: I am addressing the question. The member will please be seated. I am addressing the member’s question. The normal practice is of course that if members are asked to leave and they are to ask a question or to answer it they will be asked to come back. I shall follow that practice. I do not need any help from the members. I think we had better ask for the Minister to be called back. 
Hon Trevor Mallard 
: I ask that a messenger be asked to find the member concerned if there is a requirement for him to come back to the Chamber. Thank you. 
Hon Tau Henare 
: How can the Minister justify the claim he made yesterday that Budget appropriations should not be discussed by parliamentary select committees? 
Hon PAREKURA HOROMIA 
: I did not say that. 
Hon Tau Henare 
: How can he justify the claim he made yesterday that Budget appropriations should not be discussed by parliamentary select committees and if he really believes that where does he believe Budget appropriations should be discussed—in the TAB? 
Hon PAREKURA HOROMIA 
: I do not frequent the TAB—unlike that member opposite—and certainly the appropriate place is in select committees and in consultation with the Treasurer. 
Gerry Brownlee 
: I raise a point of order Madam Speaker. That is an intriguing answer from the Minister. I wonder whether we might now have an indication from the Minister of Finance—I presume as opposed to the Treasurer. 
Madam SPEAKER 
: That is not a point of order as the member well knows but he can ask a supplementary question if he wants further clarification. 
Gerry Brownlee 
: No I do not want to waste a supplementary question on this matter. But I just wonder when the Minister of Finance might be available to come to the Maori Affairs Committee to discuss Vote Maori Affairs with the committee. 
Madam SPEAKER 
: That is not a point of order. 
Peter Brown 
: I raise a point of order Madam Speaker. I wonder whether you could clarify the situation. We had a question from the Hon Tau Henare and an answer from the Minister in which he denied making the statement that Tau Henare alleged he made then we had a second question based on the assumption that he did make the statement. I believe the Minister and I think as honourable members we are obliged to believe the Minister. He denied making the statement that Tau Henare said he made. 
Madam SPEAKER 
: There is nothing to prevent members from asking questions. Consistency is not required under the Standing Orders. 
Hon Tau Henare 
: I seek leave to table a report on the goings-on in the select committee yesterday which has a detailed verbatim description of what the Minister said in the select committee. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Question No. 11 to Minister 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 I raise a point of order Madam Speaker. He korapa kei te tuhituhinga o taku patai. I te rarangi whakamutunga ehara ko te tau tuarau engari ko te tau tuarua. 
[An interpretation in English was given to the House.] 
[ 
There is an error in the way my question was written. In the last line it should be not tau tuarau—100th year—but tau tuarua—second year. 
] 
Madam SPEAKER 
: Leave is sought to change that word. Is there any objection? There is no objection. 
Vote Maori Affairs—Budget 2006 
11.  
Dr PITA SHARPLES (Co-Leader—Maori Party) 
 to the  
Minister of Maori  
Affairs 
: He aha a ia i kore ai e tuku tono pera i ta tetahi nupepa i ki mo tetahi putea kia pakari ai te Ao Maori a ka taea e ia te whakamarama ki tenei Whare te take ko tenei te tau tuarua kaore i kapohia e ia he rawa hou hei putea mo tona tari? 
[ 
Why did he reportedly not submit a Budget bid to strengthen the position of Maori and what explanation can he give the House for this being the second consecutive year that his department has not received any new funding? 
] 
Hon PAREKURA HOROMIA (Minister of Maori Affairs) 
: 
 This year the Government made it very clear that there would be limited funding for new initiatives. I asked Te Puni Kokiri to look at how it could better utilise existing funding and how that funding could be aligned with the Government’s priorities and the aspirations of the Maori people. It is about Te Puni Kokiri being able to continue to work with Maori to support Maori and to make the most of its resources and assets its knowledge its skills and its leadership capability. The member is wrong; Budget 2005 did provide more money for Vote Maori Affairs. 
Dr Pita Sharples 
: He aha ai kare i tono mo tetahi ake putea ma Te Puni Kokiri a i tono ranei ki Te Tahuhu o te Matauranga kia noho tonu te putea Manaaki Tauira mo nga tauira Maori iwa mano? 
[An interpretation in English was given to the House.] 
[ 
Why did he not bid for alternative funding for Te Puni Kokiri or for the Ministry of Education to keep the manaaki tauira student grant scheme going on behalf of those 9000 Maori students? 
] 
Hon PAREKURA HOROMIA 
: It is part of the general premise of where Te Puni Kokiri is moving and manaaki tauira is out of that area. When it started to be delivered there were about 8000 students receiving tertiary education; there are now 90000 students—only 11 percent were using it. The money has not been cancelled and it has not disappeared. It has moved to strengthening teacher capability in secondary schools in order for young people to be encouraged and developed so that when they get tertiary education they do better. 
Gerry Brownlee 
: Does the Minister’s failure to seek more funding in the latest Budget round lead him to agree with the National Party view that there has been considerable wastage in Te Puni Kokiri’s activities and that it is extremely hard to work out exactly what that ministry does? 
Hon PAREKURA HOROMIA 
: The financial report with its recommendation on how Te Puni Kokiri has performed is there for that member to read. If he got out more often amongst Maori like I do as the real Maori spokesperson he would see that a lot of good action is done by Te Puni Kokiri. [ 
Interruption 
] That member never ever went out; he stayed home from Thursday night through to Sunday night. 
Gerry Brownlee 
: I raise a point of order Madam Speaker. The Minister may sling off at me all he likes but he does have some obligation to address the question. The question was whether he agreed that Te Puni Kokiri has had considerable waste attached to it and that it is very very hard to work out exactly what it does. 
Hon PAREKURA HOROMIA 
: I am very clear along with a whole lot of Maori people about exactly what Te Puni Kokiri does. That my friend over there is slow in picking it up and understanding it is not my problem. 
Te Ururoa Flavell 
: E whakapono ana ia e pai ana te haere o nga mahi a nga tari matua a mena kei te whakaae ia kei a ia nga whakaaturanga hei ki e pai ana nga mahi o aua tari? 
[An interpretation in English was given to the House.] 
[ 
Does he believe that mainstreaming works; if he does what proof does he have of the success of mainstream departments? 
] 
Hon PAREKURA HOROMIA 
: I believe that if Maori can get to Harvard and that is mainstreaming I am supportive of it. If Maori people can build a house and keep their family comfortable and that is mainstreaming I believe in it. If mainstreaming means that Maori become business owners and business managers I believe in it. But I also believe in recognising our tikanga and culture and keeping it strong. That is what I believe in. 
Hone Harawira 
: Could the Minister please explain in light of comments in this House associating Vote Maori Affairs baseline funding with the fact that Maori unemployment has dropped from a record high of 18.9 percent to 8.6 percent why on the East Coast his own electorate in 2001 50 percent of the population receiving the unemployment benefit were Maori and in March 2006 that percentage had increased to 64 percent; why in Waiariki the percentage increase in Maori unemployment grew from 49 percent in 2001 to 66 percent in 2006; and why in my own electorate of Te Tai Tokerau the percentage increase in Maori unemployment also grew from 53 percent in 2001 to 64 percent in 2006—and what will Te Puni Kokiri be doing to address these disparities? 
Hon PAREKURA HOROMIA 
: A number of issues are relevant to the statistical assumptions of my learned friend from Te Tai Tokerau but first I want to remind him that when we came in the unemployment rate was 22.6 percent and it tracked down to 6.4 percent. It has now risen to 8.1 percent. At the end of the day that is about a lack of industry and a lack of skills and that is what this Government is focusing on. It is about a strong economy as we were reminded by Dr Cullen yesterday but these people do not seem to like it. 
Dr Pita Sharples 
: I raise a point of order Madam Speaker. The question was specifically directed to unemployment on the East Coast in Waiariki and in Te Tai Tokerau and it was not answered. 
Madam SPEAKER 
: No the member cannot require a specific answer. But the Minister certainly addressed the question of unemployment. 
Shane Jones 
: E hia te putea i roto i nga tahua putea e pahore tata ake nei i whiwhia ki Te Tari Maori? 
[ 
What was the funding allocated recently to the Ministry of Maori Affairs in the Budget? 
] 
Hon PAREKURA HOROMIA 
: This Government has been in power for 6 years. When we came to office Vote Maori Affairs was $55 million. The previous Government got rid of $200 million in that area—got rid of it. Budget 2005 provided $14.8 million for Kapohia nga Rawa over 4 years. Budget 2005 provided $4.6 million for Maori radio broadcasting over 4 years $2.5 million for the Hui Taumata action task force and $200000 for Ma Te Reo to help all New Zealanders understand this great language well. 
Hone Harawira 
: In response to the Minister’s comments that the figures I gave were an assumption I say they were not. I seek leave of the House to table the numbers on the unemployment benefit as at March 2001 and March 2006. 
Document by leave laid on the Table of the House. 
Dr Pita Sharples 
: I runga i te whakautu i tera wiki ehara tenei Whare i te wahi hei whakawa i te kawana mo nga mahi kuare a Te Puni Kokiri ka taea e ia te korero ki tenei Whare kia haere ratau ki whea whakawa ai i ia me tona tari? 
[An interpretation in English was given to the House.] 
[ 
Following the response last week that this House is not the forum to hold the Government accountable for the poor performance of Te Puni Kokiri where would he recommend this House go to hear him account for his performance and the performance of his department? 
]  
Hon PAREKURA HOROMIA 
: E tautoko ake ano wetahi o nga whakaaro no toku whakahoki ki a koe e Pita i tera ra e korero anake mo te whakaae o te taea i konei hei korero ake ano. Engari na te whakaaro i roto i aku na to wera Maori mo nga kanohi Maori i roto i a te Tari. Tena ake ano te mea. Kare e hiahia au i roto i a aku e tautokotia ake ano to whakaaro e taea ake ano nga korero i runga i te Whare Paremata nei. My response to my learned elder Dr Sharples is that I also added after he had asked the question that this was the place to bring that issue but I thought it was not the place to make his insinuation and wero—his challenge—about the Maori members and the Maori ministry and that that was for other places. That is what I meant. 
Phil Heatley 
: I raise a point of order Madam Speaker. I am sorry to disturb my colleague but I think it is time for the Minister of Maori Affairs to leave. 
Madam SPEAKER 
: We will ask the Minister to leave the House. 
Transmission Gully—Construction Date 
12.  
NATHAN GUY (National) 
 to the  
Minister of Transport 
: When does she envisage the first bulldozer will appear working on the designated route for Transmission Gully? 
Hon Dr MICHAEL CULLEN (Acting Minister of Transport) 
: 
 The Minister already has envisaged that. That is why Transmission Gully is for the first time on a 5-year programme. 
Nathan Guy 
: With the huge delays currently being experienced by motorists which will only get worse does she think it is acceptable that Transit will take another 5 years before it will state that Transmission Gully is viable or will she tell Transit that 5 years is too long to wait for another report and instruct it to proceed with urgency? 
Hon Dr MICHAEL CULLEN 
: Ministers do not instruct Transit; we have had an interchange on that matter previously this afternoon. There is a great deal of geotechnical work to be done. There is also the small matter of Wellington local authorities coming up with their share of the funding according to all the agreements we previously had in respect of that. 
Nathan Guy 
: With all the reports investigations and studies commissioned over the last 10 years on the viability of Transmission Gully does she think that the $80 million spend and a 5-year delay by Transit will add any significant value or will it be just another $80 million spent on work that has already been done? 
Hon Dr MICHAEL CULLEN 
: I think that question summed up the National Party: one builds a road without doing the geotechnical work first. 
Darren Hughes 
: What funding has the Government already committed to the Wellington region and is the Minister aware of any other alternative funding proposals that include Transmission Gully? 
Hon Dr MICHAEL CULLEN 
: In March 2004 the Government announced an additional $225 million as part of the Investing for Growth package. In June a further contribution of $255 million was made as part of the Wellington western corridor package then the Government contributed up to $405 million conditional on regional agreement. I note that this particular project despite the questioner asking these questions today did not appear in the National Party manifesto or in its proposed fiscal plan. 
Nathan Guy 
: Dos the Minister agree that a further 5-year delay will increase the cost of the project even just accounting for inflation to the stage that it could become unaffordable? 
Hon Dr MICHAEL CULLEN 
: I reply again to the member: we will not repeat the mistakes the previous Government made when it decided to build a road for the Waikato without discovering first what the area was like. We are now trying to stop that road from slumping all over the place as we are building it. We need a geotechnical survey before we build a road through an area that has not been surveyed for that purpose. He of course would not do that. He would just keep spending and spending and if anything went wrong he would probably blame Maori for that. 
Hon Judith Tizard 
: Can the Minister give us any reports on the proposal from Roger Sowry the previous transport spokesperson for the National Party that the National Party’s highest priority was a six-lane highway between Auckland and Wellington; could he tell us what effect that may have on Transmission Gully and other proposals? 
Hon Dr MICHAEL CULLEN 
: I think the member exaggerates slightly. I seem to recollect Mr Sowry proposed a four-lane highway between Auckland and Wellington. What he did not tell Wellingtonians was that it would start in Auckland and arrive in Wellington a long long time from now. 
Peter Brown 
: Is it not true that Transmission Gully has been on the political agenda since the late 1980s - early 1990s when it would have cost a good deal less and that National did absolutely zilch when it had the opportunity? 
Hon Dr MICHAEL CULLEN 
: It is true that there were 9 long years when not a single bit of tarmac was laid for Transmission Gully under the National Government. But I do have to say that all the experience is that the cost of most roads tends to increase as one finds out what one has to do in order to build them. 
Mark Blumsky 
: If Transit takes 5 years as it plans to do another report and that report ends up stating the road is not viable what is Plan B; how will the Minister tell the angry frustrated motorists that one may well need to start from scratch again in 5 years’ time? 
Hon Dr MICHAEL CULLEN 
: Plan B is actually already on the agenda; it was Plan A before Wellington decided it wanted that as Plan A instead. 
Hon Trevor Mallard 
: Has the Minister seen any previous reports from a former Mayor of Wellington opposing Transmission Gully? 
Hon Dr MICHAEL CULLEN 
: I have to say there has been consistent opposition from the mayors of Wellington to the building of Transmission Gully but maybe the member stumbled over the truth sometime during the election campaign. 
Mark Blumsky 
: I’m sure Fran is listening. 
Madam SPEAKER 
: Please ask the question. 
Mark Blumsky 
: How can the Minister have confidence in the board of Transit when Transit stated in the  
Dominion Post 
 just this week it was questioning whether it should rip up the asphalt between Pukerua Bay and Plimmerton—a project it has just recently completed at a cost of tens of millions of dollars—and return the entire route back to just two lanes which is a truly ridiculous suggestion as I am sure the Minister would agree. 
Hon Dr MICHAEL CULLEN 
: I sure there is some sense of frustration in Transit about the length of time Wellington has taken to decide upon its preferred operation in terms of the western corridor. There have always been arguments on both sides in that respect. Members opposite put their fingers in the breeze and decide on the basis of whatever way the wind is blowing which is the best road to build. 
Nathan Guy 
: I seek leave to table a 1995 report on geological factors relating to Transmission Gully. 
Document by leave laid on the Table of the House. 
Nathan Guy 
: I seek leave to table a 1996 assessment of environmental factors. 
Document by leave laid on the Table of the House. 
Nathan Guy 
: I seek leave to table a 2004 Transmission Gully motorway cost estimate. 
Document by leave laid on the Table of the House. 
Nathan Guy 
: I seek leave to table a 2005 cost and programme review update on the Transmission Gully motorway and the coastal route. 
Document by leave laid on the Table of the House. 
Nathan Guy 
: I seek leave to table two items from the  
Dominion Post 
 of Tuesday 23 May. The first is headed “Congestion on a road to nowhere”. 
Madam SPEAKER 
: Leave is sought to table that. There is objection. 
Nathan Guy 
: I seek leave to table another item from the  
Dominion Post 
 this week entitled “Drivers in for decade of delay”. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Budget Debate 
Debate resumed from 24 May on the Appropriation (2006/07 Estimates) Bill. 
Hon RICK BARKER (Minister of Internal Affairs) 
: 
 The seventh Budget delivered by Michael Cullen is an outstanding Budget. It demonstrates that for the first time New Zealand has a net surplus. This country inherited decades of debt from National. Not only have we got a surplus but we are paying money into a fund to guarantee superannuation for the future. The Budget provides for more police more teachers and more social workers. We have the lowest rate of unemployment in living memory and Michael Cullen is only beginning to approach the mid-point of his career as Minister of Finance. 
This country has done fabulously well under the stewardship of the good doctor Michael Cullen. New Zealand is now one of the envies of the world for its economic stewardship. It has record lows in unemployment record savings for superannuation more police more teachers and more of everything we want. Anything that should be up is up and everything that should be down is down. It is a fantastic Budget for this country. Dr Michael Cullen will continue to deliver Budgets for the benefit of New Zealand and the Labour-led Government can look forward to many terms in office as a consequence. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I congratulate that member on that brief scintillating and brilliant speech in which he managed to mention my name as often as John Key did in his speech during the Budget debate—he seems to have a fixation about me. 
National members have had one simple message throughout this debate. 
Darren Hughes 
: What’s it been? 
Hon Dr MICHAEL CULLEN 
: “We lost you won we’ve got indigestion.” That is all they have managed to say during this entire debate so far. The other thing they did during the debate was to keep asking themselves this simple question: “Why are we here?”. We echoed it. We too asked them why they are here because they said they wanted to be in Australia. They said: “Please free us from this bondage so we can go to Australia.” Indeed that dinky-di Australian Don Brash acted as a sort of advertising agency for the Australian immigration office throughout his speech followed by both his acolytes and the rest of the members of the National caucus during the Budget debate we have had so far. 
I will respond on a couple of issues. I do not want to attack my friends in Australia but it is true that I thought a couple of things Peter Costello said raised some issues about the tradition of mateship that Australians are supposed to stand by. But let us look at growth over the last 5 years. Per capita GDP growth in this country rose by 12.4 percent. In Australia it rose by 9.9 percent. It was one-quarter more in New Zealand. But what about the previous 5 years for comparison when Dr Brash’s colleagues were in office? Australia had a growth rate of 17.9 percent; New Zealand’s rate was 11.9 percent—two-thirds the size of Australia’s. 
What about that taxation? We will hear a lot this afternoon about capital gains tax. In Australia every taxpayer has to pay a net capital gains tax on their worldwide assets every year in full—100 percent capital gains tax worldwide every year—and that is in a country where there is a 1.5 percent Medicare surcharge. And if someone is earning over $50000 and does not have private hospital insurance there is another 1.5 percent on top of that. Plus there is stamp duty that might set that person back 20000 bucks when he or she buys a house in Sydney. So before Dr Lockwood Smith strips off his gear again and rushes off to Bondi he had better think about the stamp duties he might have to pay when he gets there and the extra taxes he will have to pay. Members should not believe what Dr Donald T “Dinky-di” Brash is telling them about going to Australia. [ 
Interruption 
] What is Ms Bennett trying to say? 
Paula Bennett 
: I said: “Gosh you’re funny!” 
Hon Dr MICHAEL CULLEN 
: Oh I do not know what I said that was so funny. Perhaps she will tell me later and we will learn about that. 
Of course Dr Brash used to be extremely close to the Business Roundtable. He used to tell us that he believed in cutting health spending cutting education spending and cutting spending in almost every area of Government. These days of course he has only a loose connection with the Business Roundtable and he tells us that he will increase health spending increase education spending increase law and order spending increase roading spending and that he will cut taxes but will not increase borrowing; he will just increase debt. That is the National Party’s fiscal position as explained by Dr Brash almost entirely by himself on  
Morning Report  
the day after the Budget. I could not believe it. He said there would be more spending on roads more on health more on education more on law and order and that there would be less revenue but they would not be borrowing more. There are just too many tooth fairies opposite for that to be believable in terms of where National gets to with its fiscal position. 
So what did the Budget actually do? First of all a lot of money is to be spent on roading. That has got the Greens upset but all I can say is that they should look at the big four-lane cycle tracks we will be building for them in the future throughout New Zealand. The Greens will be able to cycle fully abreast—the entire caucus—down some of those roads. They will be able to take a positive view of life in that respect and they will stop moaning about the fact that some of us poor decrepit older ones who cannot ride our bicycles for about 100 kilometres will be using our cars and getting along more rapidly as a consequence—with less pollution and hopefully killing far fewer people on the way because we would have addressed safety issues on those roads. In the Waikato and Bay of Plenty those safety issues are very serious indeed. There are terrible rates of vehicle accidents in some of those parts of the country. 
Dr the Hon Lockwood Smith 
: We’re not going to see these roads for years. 
Hon Dr MICHAEL CULLEN 
: Yes it will take some time to build the roads because the National Government left a huge infrastructure deficit. 
During this period of time we will be spending 130 percent more per year on roads than we inherited from National. We will be spending on land transport all of the income from excise duty from road-user charges and from motor vehicle registration fees. So when people in Auckland and Wellington say they want even more spent on public transport it has to come out of general taxation. There is nothing left out of the fees on motorists to spend in those areas. So they have to make a strong case and not simply tell me that if we put electric engines rather than diesel engines in trains Aucklanders who are so unused to the notion of electric trains will flood on to them in perpetuity and use them instead of diesel trains. Given that this is a country where one-quarter of us go overseas every year it seems likely that most Aucklanders have already been on electric trains and have already enjoyed the experience. 
Secondly we did—let us announce it again; a sort of ex post facto leak—indeed foreshadow the regulation of telecommunications; unbundling the loop. What has that done? Already Telecom has indicated investment in higher speed broadband. Already TelstraClear has indicated massive investment. Even before the legislation has been drafted we are getting investment committed to improve this country’s telecommunications system. That is a major improvement crucial to economic transformation and crucial to economic growth. 
 Thirdly in this Budget we provided the funding for the introduction of the KiwiSaver scheme which will lift the rate of savings. The only argument now is about whether it should be compulsory but I note that nobody in business wants to pay for it as they do in Australia. They want employees to pay for that if it is going to be a compulsory scheme. Fourthly we provided for the fulfilling of our promises. Now that is the bit the National Party hates about all the seven Budgets I have produced. In every one we fulfilled pre-election promises and other undertakings. That for National members is indecent appalling and a betrayal of the political tradition that they are the proud inheritors of which is: “Say everything to get elected and then turn round and deny it. Once you’re in and don’t actually do it.” That is the approach they believe Governments should take. We do not take it. And of course we do not have to pay for just our own promises; we have to pay for some other people’s as well as part of forming Governments under MMP. 
Then I foreshadowed that Mr Dunne and I are working on a business taxation document that will address issues of taxation within the business area and assist in terms of productivity growth and economic growth within New Zealand. We signalled more investment in skills and more investment in building human capital in the country which is the most important input. 
The Government makes no apology for the fact that in this Budget we provided the money to give an $88 a week increase on average to 350000 families with children reducing the number of children living in poverty by 2007 by some 70 percent compared with the figures that we inherited from a National Government. We do not believe we have to have New Zealanders living in mass poverty in order to make a few people comfortable about living here. If some people believe they must live in a country with high levels of poverty in order to feel good then they should go—leave this country—because this country’s national identity is not one for people who believe that kind of thing. This is a country committed to social justice committed— 
Dr the Hon Lockwood Smith 
: You’re so arrogant. 
Hon Dr MICHAEL CULLEN 
: That is not arrogant. Abolishing poverty is not arrogant I say to Dr Lockwood Smith. If he did not come from such a privileged background he would not say something as stupid as that. The most important thing a Government can do in the modern world is ensure that all its citizens can enjoy a decent life bring up their children in decency enjoy good employment have a decent house and retire with dignity. If Dr Lockwood Smith hates that then he can go to a country where they do not do those things and I will stay here with a Labour Government for years and years to come. 
A party vote was called for on the question  
That all the words after “That” be omitted and the following inserted: “this House has no confidence in this Labour-led Government because for 7 years it has demonstrated a lack of vision and a lack of the policies to transform New Zealand into a high-income high-growth nation and has instead wasted the opportunities provided by buoyant international conditions by overtaxing New Zealanders and wasting billions of taxpayers' dollars on low-quality spending programmes.” 
Ayes 48 
New Zealand National 48. 
Noes 61 
New Zealand Labour 50; New Zealand First 7; United Future 3; Progressive 1. 
Abstentions 10 
Green Party 6; Maori Party 4. 
Amendment not agreed to. 
A party vote was called for on the question  
That the Appropriation (2006/07 Estimates) Bill be now read a second time. 
Ayes 61 
New Zealand Labour 50; New Zealand First 7; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Abstentions 10 
Green Party 6; Maori Party 4. 
Bill read a second time. 
Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I move  
That the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill be now read a first time. 
 I shall be recommending later that the bill be referred to the Finance and Expenditure Committee for consideration. The central feature of the bill is a wide-ranging reform of the taxation of income from share investments whether through New Zealand - based managed funds or direct investment. To understand the reform it is necessary to look at the wider picture of how that investment income is taxed now and what is wrong with the way it is being taxed now. 
To look at only a part of the picture or at a small corner of that picture is to miss the rationale of the shape and the sense of the reform. The current tax rules on share investment operate very unevenly. They overtax some investors—they favour direct investment by individuals over investment through funds and they favour investment in some countries over investment in others. What the bill does is place the tax treatment of different types of share investment on an equal footing to introduce greater fairness into the rules and to reduce the distortions they create. From next year people who invest in New Zealand - based managed funds will see greater fairness in the way their investment income is taxed. The new rules will remove several tax disadvantages for people investing through managed funds many of whom are ordinary middle-income savers. And with the expected introduction of KiwiSaver from next year many more will be joining their ranks. 
 One of the key improvements in the taxation of income from New Zealand - based managed funds is that lower-income investors whose investment income is currently overtaxed at 33 percent will now be taxed at their correct rate. Those whose tax rate is 39 percent will continue to have their savings through funds taxed at 33 percent. The other key improvement is that capital gains on New Zealand and Australian shares held via a New Zealand - based managed fund will no longer be taxed. This will increase the gains for people who invest in this way and put them on an equal tax footing with direct investors into New Zealand and Australian shares. 
The current tax rules on offshore investment and shares are riddled with inconsistencies with the result that some investors pay less tax than others who have similar investments. Under the current rules individuals who invest in shares and companies based in one of eight so-called “grey list” countries such as the United States or the United Kingdom pay little or no tax in New Zealand on their investment income. The simple reason is that companies in those countries usually pay low or no dividends on which those investors can be taxed. On the other hand the same investment made through a New Zealand - managed fund will typically be taxed at 100 percent of realised capital gains. The proposed rules will generally align the tax treatment of “grey list” investment done directly and through managed funds. 
Another huge inconsistency in the way offshore share investments are currently taxed is that direct investors in shares in companies in the remaining countries such as Singapore India Korea and even China have a much higher tax burden. They must pay tax in New Zealand on 100 percent of the increase in the value of their shares each year. That group of direct investors will be better off under the new rules because unless their dividends are higher they together with all the other direct investors in offshore shares will pay tax on 5 percent of the opening value of their shares in most years limited to 85 percent of any gain they make. 
Most individuals who hold overseas shares outside Australia will not be affected by these changes because those whose shares cost less than $50000 will be exempted. That threshold of $50000 for each individual obviously means that a couple could easily hold between them shares costing up to $100000 without being affected. However direct investors with share portfolios above the threshold in countries that are favoured by the current tax rules will be affected. 
The proposed changes to the taxation of investment in offshore shares have a clear policy basis. If people live in New Zealand they are expected to contribute to New Zealand by paying tax here on their income wherever it comes from. That principle should apply to all regardless of the country they invest into. Investments in Australian resident listed companies will continue to be taxed as at present which is mainly on dividends because they pay out a high proportion of their earnings as dividends—that being encouraged by both the Australian and the New Zealand tax systems. There is also the factor of the closer economic relationship between Australia and New Zealand as well as the move towards a single market for the purposes of investment. 
Recent weeks have seen a lot of misinformation about the proposed changes being directed at people who hold overseas shares resulting in a lot of ill-founded concern on the part of people who in many cases will not be adversely affected by the changes in the bill. To allay that concern I announced last week that I would bring an amendment to this bill that would grant a 5-year holiday from the new rules for overseas portfolio investments and shares in certain types of widely held foreign companies that have a substantial New Zealand shareholder base. That holiday is intended to give those companies time to consider shifting their headquarters to New Zealand which would bring considerable benefits to New Zealand and time for the Government to complete its review of the controlled foreign company rules. The amendment will be effected by a Supplementary Order Paper to this bill. 
The reform of the tax rules is very complex because it deals with a very wide and complex area of investment activity that historically has been covered by complex tax rules. For this reason I ask members to consider the proposed reform in its entirety keeping in mind that it is aimed at achieving a coherent and balanced tax treatment of New Zealanders’ investment income. These new rules have been developed after a lengthy consultation process from the release of the discussion document nearly a year ago and the over 800 submissions it attracted through to more consultation earlier this year before decisions were made. The Finance and Expenditure Committee will now have the opportunity to hear evidence on the proposals and to recommend any changes it considers appropriate and I will await its deliberations with interest. 
The bill also makes important amendments to the tax rules in several other areas. It introduces changes to ensure that employer superannuation contributions are taxed at about the right marginal tax rate for individual employees. These changes are designed to minimise the potential for taxpayers to use excessive salary sacrifice as a means of paying less tax. That practice involves reducing salary heavily in exchange for corresponding increases in employer superannuation contributions to take advantage of lower tax rates. Although the Government obviously wants to encourage people to save for retirement excessive salary sacrifice merely to reduce income tax is unfair and against the policy intent of the law which is to ensure fair taxation. 
The bill also introduces changes to the foreign investment fund rules that will resolve tax compliance problems for people in New Zealand who have interests in Australian superannuation schemes. The changes will also remove disincentives for skilled people who have an interest in an Australian superannuation scheme to come to work in New Zealand on a long-term basis. The bill makes changes to the tax treatment of expenditure on geothermal wells to remove uncertainty about the deductibility of capital losses arising from failed wells drilled in New Zealand. It will allow vendors of patent rights to spread income from sales evenly over 3 years thus alleviating potential cash-flow problems that could constitute a barrier to investment in research and technology. A further change will assist the Inland Revenue Department in its investigation of tax evasion and avoidance schemes by allowing the department to remove documents for inspection. Finally the bill sets the income tax rates to apply for the 2006-07 tax year. 
These are some of the many changes introduced in this omnibus bill. They and the other proposed changes are described in detail in the separate commentary that has already been distributed to members of the House. I commend the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill to the House. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 In speaking to the first reading of the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill I have to say that it is typical Michael Cullen – Labour legislation. Sure it eases the tax burden a bit in some areas but then it clobbers in others. This Minister of Finance clearly cannot bear to give up much revenue. We all know of course that Dr Cullen thinks he knows far better than the New Zealand people how to spend their money. That is what gets right up the nose of middle-income New Zealanders about this Minister of Finance—he thinks he knows so much better. 
Clearly the bill does ease the tax burden for some. The tax position of those who invest through collective investment vehicles is improved by this bill. But those it clobbers are often those who have been prudent savers have saved a bit of a nest egg and have invested with a diversified investment portfolio including direct investment in shares not just in New Zealand but in other countries with sound economies. That is the kind of investment that most advisers including those on the Government’s own superannuation fund would say is prudent and wise investment yet this legislation will clobber those people. 
Sure there are winners with this bill. Those investors in what are now called portfolio investment entities—or “PIEs” as this legislation calls them—will not be taxed on capital gains where they have invested in companies in New Zealand and Australia. Capital gains on those companies will not be taxed in this bill. Clearly those investors will be winners as will individual investors in portfolio investment entities who will be taxed at the lower personal rate if they are lower-income earners. Those measures are both pluses and National does not oppose them. 
In fact I guess we recognise that Dr Cullen has to introduce them for his KiwiSaver proposal to work at all. Even if it were not for KiwiSaver sitting on the horizon the measures not to tax New Zealanders’ capital gains on investments in collective investment entities in Australia and New Zealand and to tax individual investors on their individual tax rates make sense. But the problem is that the Government did not have to boot around other investors to make those changes. It could have made those rational changes without actually booting around prudent savers with direct foreign investment in shares in other sound economies around the world. The Government could have introduced these “PIE rules” as they are called yet kept the “grey list” countries. But no Dr Cullen wanted the revenue so he is just going to sock the rich a bit more and try to grab a bit more money off them. So everyone with more than $50000 invested in shares in those “grey list” countries of the UK the United States Canada Germany Japan Norway or Spain will now have to pay tax on capital gains whether or not they are realised from 1 April next year. 
The problem is that it is not just the rich that Dr Cullen is socking. If we look at what our Retirement Commissioner is saying on her website—I think it is the Sorted website—about the kinds of savings people need for their retirement we see that someone earning less than $60000 in New Zealand should according to the Retirement Commissioner have saved over $200000 for their retirement. That is way above the $50000 threshold that Dr Cullen is allowing for investors with this legislation before they get clobbered by a capital gains tax. Middle-income earners in New Zealand who are trying to save the kind of nest egg that the Retirement Commissioner says they should have for a secure retirement will be clobbered by this capital gains tax for daring to invest prudently sensibly and wisely in a range of economies around the world. 
We have to ask ourselves why this Labour Government is hitting those sensible middle-income wise New Zealanders who are trying to save for their retirement. Dr Cullen says they are far too rich—he will make them pay a capital gains tax on unrealised capital gain something that will hit a lot of retired folk very hard. Fifty-thousand dollars is not a lot of money to have saved. For anyone trying to have a better retirement $50000 saved and invested prudently around the world is not a lot of money. Yet Labour members and it seems Peter Dunne think such people are wealthy and will clobber them for daring to invest prudently around the world. 
It is interesting that even investment advisers are saying that this is very unwise legislation. The general manager of Equity Investment Advisers and Sharebrokers Ltd John Commins said yesterday that prudent investors who have saved for their retirement and diversified their risk by investing offshore will be penalised. It is a shame that Dr Cullen thinks those kinds of investors should be taxed more. 
National opposes this legislation for that reason despite the fact that we support some of the measures around collective investment vehicles. We are supportive of the portfolio investment entities not being taxed on capital gains. We are supportive of the fact that lower-income investors can be taxed at their personal rates of income tax on investment in collective funds. But why will the Government clobber other wise investors at the same time as it is doing that? 
 Labour knows it is on shaky ground because when this proposal was first put forward it was going to include investment in Australia in the capital gains tax. What happened is that the Government backed down on that one. Peter Dunne acknowledges it backed down on that. Of course what happened then is that 28000 shareholders in the Guinness Peat Group here in New Zealand said it was outrageous that they were going to be clobbered with a capital gains tax through investing in that company. What did Mr Cullen do? He backed down again and gave a 5-year exemption from the policy for those New Zealanders who have shares in the Guinness Peat Group. I do not say he was wrong to change the policy but he should have changed it for everyone. Why did he just change the policy for investors in the Guinness Peat Group? I see Peter Dunne smiling. What or who twisted Dr Cullen’s arm on this? Was it all the emails the Prime Minister was getting? Was it one of the coalition members? Was it Winston Peters who said to Dr Cullen that his support depended on that change being made? I would say there was a fair bit of murkiness in the background because it is not a rational policy change to exempt just a selected group of shareholders. Dr Cullen should have allowed all the shareholders to be exempt from this change because it is bad policy. It is anti-savings and anti - prudent diversified investment. In fact it will probably strengthen the current bias in our investment towards property in New Zealand. 
I note that Dr Cullen is about to speak next and I will finish by saying this to him. This bill confirms the tax rates for this coming year. If he thinks a Government that is taking 92c in every dollar from the income earned by a woman who is looking after three children as she tries to get off the domestic purposes benefit is a Government that shows concern for people on a low income—one could almost say people in a poverty situation—then he disgusts me. He gave away hundreds of millions in his Budget to buy votes from higher - income earning New Zealanders—with up to $140000 of income—and he crapped on those low-income people. He did not give them one cent of tax relief. For him to stand in this House a few minutes ago and claim he was doing a lot for people in poverty was outrageous. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Goodness me! Of course the National Party policy was to lower that 92 percent rate to 90 percent but also to take away the $10 a week of family support payments per child that were due on 1 April next year. So the vast majority of low-income families would have been significantly worse off under that proposal. It is good to hear the National Party oppose the first major tax cut of the new tax year. No doubt we will hear more about that as time goes on. 
The reform to the taxation of share investment income and offshore income as proposed in the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill will introduce a much fairer set of rules for the taxing of income in New Zealand and offshore. As the Hon Peter Dunne said the current rules are inconsistent distortionary out of date and do not meet the purposes for which they were first introduced. They favour investment overseas into companies in eight countries over investment in companies in all other countries in the world including the countries that are most rapidly growing at the present time and are likely to be the most rapidly growing over the next generation or so. They favour investment in companies in those eight countries over investment in companies in New Zealand which does not make a great deal of sense. They favour direct investment by individuals over investment through managed funds when most modest-income people save through managed funds rather than by individual investment. They discriminate even further when investing through funds by favouring high-income investors over lower-income investors. 
The reforms proposed in this bill take the system back towards achieving a reasonable balance between a very wide range of competing interests. The bill seeks a reasonable balance between those people who are at a disadvantage under the current rules and those who are favoured often unintentionally by the current rules. It was never the intention of the current rules that people would avoid paying income tax on their offshore income entirely or almost entirely. It was assumed they would be taxed in the “grey list” countries; that is why the “grey list” was introduced. It was considered there was no need to tax in New Zealand and that paying tax in the “grey list’ countries was easier than trying to offset the tax paid offshore against tax due in New Zealand. In practice people have found offshore non-taxable vehicles which in effect means they have found a way of avoiding tax entirely on their investment income. 
We will therefore line up all those various elements. It will cost the Government something like $120 million a year in annual revenue loss to achieve that line-up. Overall it represents a very significant tax cut for New Zealanders who invest here and overseas and on New Zealanders’ investment income which sadly one sees is not large when one looks at the total level of New Zealanders’ investment income. I understand that in managed funds the total average balance at maturity is something like $30000. Most of the tax cut will come from tax forgone on investments while in managed funds. Overall the offshore investment tax changes for all investors are approximately revenue neutral. Many of the winners will be the thousands of ordinary people who save through managed funds. Hundreds of thousands of people already invest through such funds but that number is expected to increase significantly with the introduction of KiwiSaver especially with regard to low and middle income savers who may not have access to a work-based savings scheme at the present time. 
The reform of the tax laws is therefore crucial to developing a better savings culture—one that encourages people to start saving early in their working life for their retirement years. Many people tend to do nothing apart from paying off the house leaving it far too late and far too close to their retirement before they try to save in addition for that. By then it is too late to accumulate any significant total capital. Now it is too easy not to save. KiwiSaver will change that by introducing effectively an opt-out system rather than an opt-in system. With deductions at work by way of the employer with the Inland Revenue Department managing much of the compliance costs and handling very small balances in order to remove those costs from the managed funds and with the upfront and additional incentive in relation to saving for a house the Government anticipates there will be a reasonably significant take-up of KiwiSaver. Indeed the main objection now is that KiwiSaver should be augmented or turned into a compulsory savings scheme. But I note that New Zealand businesses do not want to contribute to a scheme like the one that operates in Australia where businesses rather than the individual employee pay for the compulsory savings scheme. 
We anticipate a lot more people will invest through managed funds so it is important to remove the tax disadvantages that face people who save through those vehicles. One of the most obvious disadvantages is that there is a flat tax rate of 33 percent on the earnings in the fund which overtaxes all those people who earn under $38000 a year and whose marginal tax rate is 15c or 21c in the dollar. That overtaxation will cease under the proposed rules and lower-income investors through funds that elect to be portfolio investment entities will be taxed at their correct rate. In order to ensure that there is no incentive for funds not to opt in that taxation will be capped at 33 percent so that there is no incentive to try to create separate vehicles for 39 percent taxpayers or indeed not to have such vehicles at all. Those funds will no longer be taxed on their share gains from New Zealand and Australian companies. That is why the bill is timed to come into effect at the same time as KiwiSaver does. 
That is one half of the job. The other half removes the tax advantages—we should be clear about this—enjoyed by some individuals who have offshore portfolio share investments and ensures that direct investment is not tax favoured over investment through funds. In the past the National Party used to subscribe to the notion that taxation reform was not always just a matter of cutting taxes but also a matter of fairness and equity and of achieving an appropriate balance around the taxation area. Now the National Party basically says in this House that it supports the continuation of tax avoidance schemes. It says it believes that it is perfectly right and proper that people should invest in tax avoidance entities offshore and avoid the taxes they would pay if they invested in entities within New Zealand either directly or through managed funds. I do not know how National Party members can keep a straight face when they get up in this House and argue that particularly when— 
R Doug Woolerton 
: They try do they? 
Hon Dr MICHAEL CULLEN 
: They try. Well they put up Dr Lockwood Smith who does not really try to keep a straight face to be fair. But there is even a de minimis level of $50000 so that those with smaller accumulated savings will not be affected by this measure. 
The largest single group thus affected investors in Guinness Peat Group will be exempt for a period of 5 years to allow that group to rearrange its affairs before registering in New Zealand. I have to say very gently that Mr Gibbs was always unable to answer the very simple question of why Guinness Peat Group could not incorporate within New Zealand but had to stay incorporated within the United Kingdom—a very simple mechanism to avoid the consequences of these taxation changes. It has something to do with the tax loss companies held in the UK— 
Hon Bill English 
: What’s the answer? 
Hon Dr MICHAEL CULLEN 
: I have not been told. It has something to do with the tax loss companies held by Guinness Peat Group in the UK which can be offset only against UK taxation not against New Zealand taxation. 
The uneven operation of the current regime—the disadvantaging of some and advantaging of others—has to be addressed in some form or another. It has always been an extremely difficult public policy issue. Many suggestions have been made over the last 2 or 3 years about the best way to do so. This is the best set of compromises I believe that we are capable of coming up with moving forward into the future. In particular it is very important to send the signal given where we are in the world that the New Zealand Government no longer says it prefers New Zealanders to invest offshore in the older lower-growth countries—such as the UK Germany and so on—and not in the new more rapidly developing countries in Asia and elsewhere with which we will have growing economic links in the future. It is hard to say we are part of that developing world of economic growth if we then have a taxation system that discriminates against someone who invests there rather than if you like in the old world. 
These reforms are complex. This is a complex bill in most of its parts. The bill also has other matters in it that will be welcomed by a wide range of business interest groups. Those matters address particular issues like geothermal exploration for example. I am sure the Finance and Expenditure Committee will want to consider the bill very carefully. I have no doubt it will suggest some changes. I have never seen a tax bill that provides for a complex structural change to come back to the House without being altered in some form or another. I look forward to the bill returning to the House and I look forward to New Zealand having a fairer system that in particular does not overtax low to middle income earners on their savings. 
Hon BILL ENGLISH (National—Clutha-Southland) 
: 
 Dr Cullen made at least one mistake in his speech when he said a number of solutions to those problems had been proposed in the last 2 or 3 years. In fact Parliament has been wrestling with some of these issues for at least 10 years. This bill has come forward as part of the Government’s confidence motion around the Budget; therefore it must have the support of New Zealand First. I am pleased that party has become more thoughtful than it was last time in 1998 when it was got at by the savings industry which opposed proposals put forward then to deal with the overtaxation of lower-income earners. 
Hon Peter Dunne 
: TOLIS. 
Hon BILL ENGLISH 
: That was the name of one proposal—Taxation of Life Insurance and Superannuation Fund Savings. In fact the savings industry became really wound up about it and Winston Peters at the last moment pulled the plug on that legislation. Fortunately he is now out of the country and not in a position to pull the plug on this legislation; or it could just be that he is not getting the same support from the savings industry that he used to get so he is not taking any notice of what it says any more. I hope he is not listening to the Guinness Peat Group instead—I will come back to that. 
The savings industry’s problem at that time was compliance costs. In fact the real problem was a whole generation of bad savings products which were too complicated lacking in transparency and ripping off savers with fees that could not be justified if they were ever found out. I am pleased that that industry has become slightly more mature in its approach and more understanding that the needs of customers are more important than its need to hide the ridiculously high fees it has charged for shonky products for a whole generation. That has been one of the problems with savings in New Zealand. Everyone can remember the magic graphs that insurance salesmen used to have whereby one would put in money for 5 years and could get back what had been put in at the end of those 5 years—there was something called a “surrender value”. Those days fortunately have come to an end. 
I hope someone will get up and explain the decision about the Guinness Peat Group because although the savings industry in general has accepted this bill that group did not. It is absolutely remarkable that a Minister of Finance would oversee a decision-making process in which the shareholders in one company get a 5-year holiday. I am sure the Finance and Expenditure Committee will be interested in the logic behind that decision. Occasionally one-off decisions are made about taxation. I can recall providing during a brief but glorious stint as Minister of Revenue—which no one else can remember except me—the taxation underwriting for  
The 
Lord of the Rings 
. A specific exemption was given which meant the taxpayer underwrote it to the extent of $300 million. Of course the gracious Helen Clark has claimed all the credit for that although she had nothing to do with it—nothing whatsoever. 
Darren Hughes 
: She’s good! 
Hon BILL ENGLISH 
: That is right. So a one-off decision is not unusual. That decision was transparent and the reasons why it had happened were explained in the House. I want the Minister or one of his little followers to get up and tell us what is behind the Guinness Peat Group decision. 
I do not want to question the integrity of these particular Ministers because I think they are straight. But this is a context whereby the Minister of Communications is trading political favours with Vodafone a large multinational that he has the responsibility of regulating. He asked the company a political favour when he was right in the middle of making decisions that could cost it millions of dollars and it does him the favour. Now of course he is obliged to look as though he is not returning the favour which effectively makes the decision. The decision is made; the decisions will go against Vodafone on mobile termination rates because it now absolutely has to or the Minister will be guilty of corruption. It is about as simple as that. In that environment the Guinness Peat Group decision needs to be explained. 
I take Dr Cullen’s point that the select committee will look at the balance of compromises in this bill—because it does contain a balance of compromises. National certainly supports the idea that people with a marginal tax rate of 19c on their earned income should not be taxed at 33c on their savings income. That has long been an anomaly and for all the reasons Dr Cullen gave it is a bad thing. The question though is whether the compromises are correctly balanced. 
This is where we come to the issue of the abolition of the “grey list” and Dr Cullen trying to dress up that revenue grab as some venture into the new world of the Indian stock exchange and that we are all hanging out to invest in these fast-developing countries. Some New Zealanders are and some will because they have a different risk premium from the average. But I think that is a pretty feeble excuse for trying to find the money to balance up what he gives away with moving to a fairer regime for some taxpayers. I hope the select committee will look into whether that balance is right. 
The other issue is the threshold around the $50000. As my colleague pointed out if one goes to the Retirement Commissioner’s website one will find that $50000 worth of savings does not represent a significant income at all. The fact that half of New Zealanders over 65 have nothing like that level of savings is a tragedy and a shame for them and for the country. But that threshold may well be far too low. We may well find that quite large numbers of New Zealanders on middle to average incomes—maybe even on high incomes—have most of their savings tied up in their houses and only a relatively small amount in cash savings that can go into these kinds of investment vehicles and that that threshold may be far too low. National of course is opposed to capital gains taxes. Knowing that the Government will pass this bill because new Zealand First has finally grown up and taken legislation seriously our members on the select committee will almost certainly argue for a much higher threshold if we cannot get rid of the capital gains tax altogether. 
There is another matter covered by this bill that should not go without remark even though the whole Budget debate has focused on it. It is that the bill confirms the tax rates for this next year. I want to draw attention to an issue my colleague John Key brought up in the House yesterday: Dr Cullen’s unwillingness to be honest with New Zealanders about his intentions for personal tax rates. In 2005 he made a decision at the urging of United Future which used its leverage—for once usefully—to index income tax thresholds. Then after the election Dr Cullen gave the impression he would have to give that away because the Government had abolished the carbon tax which I see in the Budget is about $360 million. That is quite a chunk of money. Then I picked up the Fiscal Strategy Report of the Budget and saw on page 44 that the Government’s decision to index income tax thresholds will stop wage earners from rising up through the income tax rates. It states in the Budget that the Government has made a decision to index income tax thresholds. 
But Dr Cullen will not say whether the Fiscal Strategy Report is wrong and that the Government has not made a decision or in fact that it has made a decision. It is in the forecast—one can put anything one likes in the forecast—but the Budget states that the Government has decided. So why can he not just go out and say that yes he is raising thresholds and that that is a tax cut he can afford to give? Well he cannot say that and the reason he cannot say it is that he spends all of his time in the House saying we cannot afford tax cuts. So which is true? How come New Zealand’s Minister of Finance cannot publicly repeat a statement in a Budget document that he signed himself? 
That is why the House particularly the Opposition notes with regret that this bill will confirm the tax rates. Of course Dr Cullen could afford to index the income tax thresholds this year; he could have afforded to do it last year. He could have afforded quite significant tax cuts even if they were not as big as National’s. That is what should be in here because that would lower the marginal tax rates of a whole lot of New Zealanders. The National Party’s package had 80 percent of New Zealand taxpayers on a marginal tax rate of 19.5c. Well that is Asian; that is really getting competitive. That is really giving people the incentive to get ahead. But unfortunately this bill passes up the opportunity to make some real change in tax thresholds and the opportunity to introduce even Dr Cullen’s “chewing gum” tax cuts. 
R DOUG WOOLERTON (NZ First) 
: 
 As expected by the National Party New Zealand First will be supporting this bill going to the Finance and Expenditure Committee and as a member of that committee I look forward with intense interest to delving into some of the questions raised by the members who have spoken before me. I am sure with the collegial atmosphere that exists in that committee we will give it what I colloquially call “a going over” to see what is behind it. 
 New Zealand First favours investment we favour savings and more especially given that we are not a high-wage economy we favour investment made by those on relatively low wages. Again as has been pointed out by previous speakers we have a situation of what I still like to call managed funds which is the easiest investment vehicle that people who do not have a huge knowledge of investment and who would not regard themselves as experts tend to choose to invest their hard-won dollars in. It has been most unfair for people on relatively modest wages and on a relatively low tax scale to have their investments taxed at a flat rate of 33 percent. I think that all parties agree that that situation is iniquitous and it has to be changed. At long last this bill will change it and we in New Zealand First certainly applaud doing that. 
We then get into the business of having some interesting sorts of developments that have arisen historically amongst countries that trade in a like nature to New Zealand. They are countries that have tax regimes and economies similar to ours and are considered to be so-called friendly countries if I can use that term. Those countries are encompassed in the “grey list”. We have heard technical explanations of the “grey list” from people far more qualified than I am to speak about it but suffice it to say that some of those countries and some of the firms investing in those countries were paying very little tax or no tax at all. 
So it is interesting when we hear people talk about private enterprise free competition and so on and so forth to see that we have had a dual standard in existence in New Zealand. We have had investment for the masses if you like in managed funds that are taxed at 33 percent—way above those people’s personal income tax rate—and we have had other investments through companies that invested in those overseas “grey list” countries that have been taxed at a very much lower rate or—as we are now finding out—paying no tax at all. I for one will be interested as a member of the Finance and Expenditure Committee which will examine this bill to see not only what has been going on but also to see how that situation can be put right for the future and we will certainly do that. 
The exemption for Guinness Peat Group is an interesting one. I offer the explanation that was put to me which is that it was not a conspiracy and there was nothing hidden under the bed that I could work out. But we had an iconic company in New Zealand that was invested in by thousands of New Zealand mums and dads who followed a man called Ron Brierley and who have in many cases turned very modest investments into substantial ones. As that company moved offshore so did those people with their investments because they had no choice other than to pull out. That company subsequently morphed into something called “GPG” or Guinness Peat Group—is that the correct terminology? 
Chris Tremain 
: Twenty times the original investment. 
R DOUG WOOLERTON 
: So they have had the advantage of that investment. I agree with the two Ministers who have said that the fuss and bother that accompanied that move and the excellent public relations of that company have upset a lot of people who invested in a company in New Zealand. That company has now moved offshore and those people are being caught out and will be disadvantaged. We will discuss in the select committee whether members agree with that view and what we should do about it but I think that pragmatism has reigned with this bill from what I have seen of it. The Ministers have said that the Government will look at having a 5-year exemption. I have heard it called a holiday but there will be a 5-year time period in which the directors of that company may make a decision as to whether they want to bring the company back onshore and go along with the rest of the investment regime in this country or leave the company registered in foreign climes. 
I noticed in the latest  
Independent 
 that the chief executive officer of that company has said that that move is great but he is not happy with the situation. He wants to push harder further higher and all of the rest of it—and knowing his reputation with all due respect I would not expect him to do otherwise. That is exactly what I would expect him to do. But the company has a period of time in which to tidy up that matter and put the company into New Zealand ownership if the directors so wish. I say quite clearly it is my understanding that that matter will not be determined by virtue of either Mr Brierley or Mr Gibbs; it will be determined more by virtue of the mum and dad shareholders—if we can use that term—in the Guinness Peat Group. 
However that is the situation. We will look at all these issues and we will indeed ask questions around that matter and around many of the other aspects of the bill. I heard some members say that this bill is another tax grab or some other iniquitous imposition on people that the Government is making but the facts as we know them at this point are that this move will cost the State $110 million net—that is the figure the Government mentioned—so it can hardly be called a grab made by the Inland Revenue Department from investors at this point. We will see how that pans out. 
I want to talk for a moment about the investment regime for New Zealanders. As our name suggests New Zealand First believes that a country that does not promote itself either to other countries around the world or to its own citizens is a country that is not proud of itself not confident about its future and it should take a good look at itself. I am pleased to hear that the two Ministers who have spoken so far are talking in that vein. They are talking about sending a message to New Zealanders. We want them to invest in our own country. We want them to be proud of the country. We can make good returns for them in our country and most important we can use the money—the savings that they have—beneficially for the businesses in this country. There is no need for us to be making people in foreign countries wealthier. 
I look forward to debating the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill in the select committee. I am sure that committee will come back in due course with a very sensible decision made across all parties. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 There are some very positive measures in the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill that the Greens support. There is also a huge missed opportunity to make the tax system broader-based fairer and less of a layer upon layer of amendments to remedy anomalies—which has left us frankly with a bit of a dog’s breakfast of a tax system. 
The Greens strongly support the look-through rule for New Zealand - managed funds which will now be taxed at the personal rate of the investor. One could not think of a bigger disincentive for people to save than if those people earn less than $38000 and their savings are taxed at the same rate as those of people who earn a lot more than that. If KiwiSaver is to prosper that amendment is essential and for that reason alone the Greens will support this bill going to the Finance and Expenditure Committee. But we hope the select committee process might bite the bullet and look much more broadly at the opportunity the bill presents to fix the tax system further. 
We also support the removal of the anomaly whereby overseas investments have been taxed inconsistently depending on whether they are funds or investments by individuals. That inconsistency has been remedied. There is no reason why investments by individuals should be taxed differently from investments of those who put their money into a managed fund. 
We also support the move to remove the incentive for people to take a considerable amount of their salary as a superannuation contribution just to avoid tax. Tax law that creates incentives to make moves that one would otherwise not make just to avoid tax is bad law and getting rid of that anomaly is a good thing. We support the removal of discrimination against investing in New Zealand. It was certainly an anomaly that one would be taxed at a higher rate if one invested in New Zealand rather than overseas—so far so good. But in removing some anomalies the bill creates some others because it is yet another add-on to a tax system that actually needs a more thorough overhaul. 
Let us look for a moment at what a tax system should do; I believe there are three things. Firstly it needs to raise enough revenue to meet the Government’s needs for expenditure. That is a question of how much one taxes and there will always be political differences around that question. Secondly it needs to be fair and that is a question of who is taxed and at what rate and there will always be political differences around that question. But thirdly a tax system must not set perverse incentives to do the wrong thing in order to avoid paying tax. I would have thought there might be some measure of agreement around the House that we do not want a tax system that sets perverse incentives. 
The Greens have argued for a long time that we need to broaden the tax base so that we pay less income tax and raise revenue in other ways. We need to start taxing the “bads” in society instead of just the “goods” so we should tax income hard work and enterprise less and we should tax pollution and waste more. We propose a system of ecological tax reform that would take off tax on the first $5000 of everybody’s income which means every taxpayer would get the same rebate; and instead tax things such as carbon toxic materials and waste to landfill—the environmental “bads” that we are trying to have less of. 
As part of that broadening of the tax base we have always questioned why earned income pays tax and unearned income does not. That seems to us to be a serious anomaly that the bill fiddles with but does not really address. We have always proposed that there should be a proper investigation of whether unearned capital gains which are taken as income should be taxed in the same way that wages and salaries should be. Support for this position arrived in the weekend from a rather unexpected source. I want to quote from a column by Mary Holm who is the financial adviser in the money section of the  
Weekend Herald 
. She has written a very sensible article. Her column states: “The heart of the problem it seems to me is that the officials are proposing changes within an already flawed tax system. They will remove some flaws but inevitably create others.” The article goes on to state: “Why shouldn’t capital gains be taxed? Arguably the gains that people are lucky or skilful enough to make merely by holding an appreciating asset should in fact be hit harder than the wages people make by working. What we need is an inflation-adjusted tax on all capital gains much the same as income tax.” 
 The article later states: “Other taxes could be cut and many people would end up paying lower total taxes.” Mary Holm points to some other benefits: “And while accountants and lawyers would get less tax work”—because this would be a very simple system—“we would free up some bright people to help solve other problems.” Surely we need our bright people doing more in life than just finding tax loopholes for people with a lot of money. 
The Green Party position is not at this stage a final policy on capital gains tax because to finalise such a policy would involve a lot of work that the resources of six MPs cannot do. We need a Government department to do a proper investigation of what that would involve. We note we are almost the only OECD country that does not tax capital gains on a broad basis—Australia the United States and most of the OECD do so. Therefore to do so would not at first sight bring about the end of Western civilisation. 
The bill proposes a capital gains tax on gains from overseas shares but not a capital gains tax on New Zealand shares or property. That tends to fuel the rise in house prices from investment housing property which makes it very hard for Kiwis to buy their first homes. So a number of social implications come from this legislation as well. There are some very major issues to crunch here; for example should capital gains tax apply to the family home? We think it should not but it certainly should apply to the rest of the property market—that needs investigation. Should the tax be on the realised value or the unrealised value of capital gains? To what extent should that tax be inflation-adjusted and how exactly would that be done? This is the time that those issues could be crunched. 
I go back to Mary Holm’s column which quotes Brian Fallow’s article in the “Business Herald” the other day: “a capital gains tax ‘is a politically poisonous proposition. At the height of the mid-1990s boom then (Reserve Bank) Governor Don Brash’ ”—and I recommend that Dr Brash’s colleagues look at this article—“ ‘suggested a capital gains tax on investment property but the MPs on the finance and expenditure select committee shrank back from their seats as if he was offering them plutonium lollipops.’ ” We know this is a politically dangerous area that MPs will not go near but in fact we have gone near it. The tax exists now on some capital gains but not on others. That is an unfair anomaly. We are all paying more income tax because the gains we make from unearned capital gains are not taxed. 
This is the time when we could crunch those issues. Dr Cullen has a whole department of capable people to do that for him. We will continue to argue that that work should take place before this bill is finally passed. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Everyone in this House knows the ad on TV where the All Blacks are stranded on the side of the road and looking for a lift. One by one they get picked up starting with the forwards in the latest Ford and working back to Joe Rokocoko Dougie Howlett and Rico Gear who have to ride in a Ford Model T. They all drive off to the song with the lyric: “That’s my black jersey you’re wearing every time when you run out to play”. 
Members of the Maori Party know that every time we come into this House with every bill we analyse every word we speak and every position we take we carry with us the pride of the kaupapa we wear which is the pride of being Maori the passion in being Maori and the priorities of being Maori. Every time we front up we know we must do our utmost to defend Maori rights and advance Maori interests for the benefit of this nation because our people expect it of us in exactly the same way that our whole nation has expectations of our rugby team. It is a kaupapa we wear with enormous respect. Our responsibility to that brand—the Maori brand—also requires that we commit to analysing and taking a position on every bill that comes before the House including strange ones like this Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill. 
Shane Jones 
: Big words. 
HONE HARAWIRA 
: Yes they are big words. This bill states that for a mere $110 million a year the Government can foster a savings culture and resolve investment issues. So how will that affect Maori? There will be a small elite group of the kinds of people Te Puni Kokiri’s recycled funding is catering to who may benefit from increases in asset values. That is cool. Some people will get an opportunity to improve their position through savings investments and those lucky enough to have investments in shares might not have to pay tax. That is great. But the fan base this Parliament is responsible for includes people who come from all walks of life and most of them simply do not fit this bill’s intentions at all. That group of people which includes Maori consists of nearly two million people who get less than $25000 a year. That is right; there are nearly two million such people who between them contribute $3.5 billion in tax—the taxes that allow the Minister of Finance to announce a $9 billion surplus in the Budget. 
That group also includes the other half of the population who are the taxpayers who bring the average income up to $38000 and that includes all the MPs in this House. But the difference is that one half of the population has the means to benefit from these asset value increases and the other half does not. In this game of two halves it is clear to see that the lower half—those in the low-income bracket—are not being looked after properly. 
Beneficiary families are doubly disadvantaged under the Working for Families package in particular for a couple of reasons. First beneficiaries are not allowed to get anything from this package and second 230000 children also dip out. Although the Government thinks it is clever to reward workers and try to force those not in work to go to work it has miscalculated badly by denying the kids who have no say in the matter. 
The Maori Party is also aware of the huge difference in income that exists between Maori and Pakeha as noted in the report of the United Nations special rapporteur. We also note that Maori earn $4 an hour less than non-Maori. The 2001 census also states that the average Maori income was $15000 compared with $20000 for the average Pakeha income. That is the financial background to our current status as tangata whenua in our own land. That is the environment we live in. And then in an environment where Maori statistics are high in all the wrong places and where targeted funding is the best way to achieve changes in those statistics we have a Minister of Maori Affairs who in the Budget round chose not even to bid for any new money. 
It is well-nigh impossible to contemplate that in an environment with appalling health statistics for Maori horrendous arrest conviction and prison statistics for Maori poor education statistics for Maori and the unacceptable mortality rate for Maori the Minister simply did not see the need for new money to address the very real needs of his own people. Yet not only did the Minister of Maori Affairs not bid for new money—and he was roundly congratulated on his frugality by his Government not giving him any new money—but he even allowed one of his flagship programmes manaaki tauira to be dumped. Such is the environment in which Maori are forced to live—an environment where their own Minister refuses to come to their assistance when they are suffering from the classic symptoms of economic violence. 
Economic violence is when people are denied access to resources and power and when their dignity and even their existence are under threat. We see the results of economic violence in poverty debt bad credit having the power and phone cut off because bills are not paid not being able to get a fresh start and anger and frustration at not having enough money for gas doctors’ bills food and clothes. Economic violence makes people feel less than human leads to social conflict and limits people’s potential. Economic violence breeds chronic poverty across generations. It makes sick people worse and it increases the gaps that this Government no longer has any interest in closing. 
That is the environment in which we come to the House today to talk about a savings culture—so let us cut to the chase. The chance to invest in Australia without penalty is OK but it ain’t a big deal. What is a big deal for the Maori Party though is how we measure the real wealth of this nation—how a particular bill will affect us as a people what a bill will mean for our mokopuna and how it will affect everyone else in Aotearoa. What is the plan? We look at every bill to see how it affects our well-being not just our wallets. Will it reduce inequality? Will it help get rid of child poverty? Will it make us a better nation? We ask how an economy can be healthy if its growth is based and measured on constantly using up limited resources. How can building a jail be called capital investment when its sole purpose is to isolate people from reality and punish them and then increase society’s problems when they get out of jail? That is how GDP is measured. In fact GDP can grow even when poverty is getting worse which is probably why the Government shies away from developing a standard by which we can measure poverty. The Maori Party is proposing a new way of keeping our national accounts by measuring the quality of our society. It is called the genuine progress index and if it were adopted Aotearoa could become a world leader in measuring the true value of a nation’s economy. 
The Maori Party will vote for this taxation bill to go through its first reading so as to give us all time to think creatively and intelligently about how we could reduce the gap between the haves and have-nots in this nation. Such is the game we all play and we dare not lose. 
SHANE JONES (Labour) 
: 
 I rise to support this further development to regularise our tax laws in order to ensure that tax anomalies do not drive the investment decisions of New Zealanders and that the tax professionals will not have the capacity—rapacious I might say—to derive even more innovative schemes to evade circumvent or further complicate the taxation system. I look forward to the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill coming to our Finance and Expenditure Committee. 
I follow my whanaunga Hone Harawira the honourable member for Te Tai Tokerau but I want to talk about the content of the bill. I am not interested in redefining economics to suit the views of deep ecologists or other far-flung thinkers who are a hangover from the San Francisco flower power movement in terms of finding the most sophisticated way of measuring the affairs or activities within an economy. We need to bear in mind some key points. Some extraordinarily innovative proposed legislation is being considered by the Finance and Expenditure Committee at the moment. It is designed to grow the number of Kiwis who are saving and also provide them with an option to move into home ownership. The bill we are debating is related to that intention and it will ensure that people are not unreasonably penalised for their investment decisions when they are investing in Australasia—that is Australia and Aotearoa. 
I am sure that legions of lawyers and bankers and a variety of other professionals are matching their wits and skills against those of the learned officials from the Inland Revenue Department—and one or three from Treasury—so I look forward to that contest. However I have no doubt that the sovereign powers of the State as reflected through Parliament will continue to be vigilant to ensure that those people who are moving into creating a greater sense of worth and long-term security through a savings culture are not penalised by unfair taxation rules. 
In relation to what the bill is trying to achieve at a deeper level I remind members that mention was made earlier by the Green Party speaker Jeanette Fitzsimons of Mary Holm’s writings— which were somewhat fanciful and led to all sorts of letters from confused contributors to the  
New Zealand Herald 
—about whether we would be better off lessening the burden on income tax and increasing the burden on capital in general. That is a fine philosophical point but this bill ensures that those who have enjoyed a loophole will have to work on the same playing field and on the same basis as those who live in “Strugglers’ Gully” who do not have access either to the sophisticated advisers or the disposable wealth needed to be able to enjoy the cleverly “conspired” and conceived schemes that in my view give an unfair advantage. 
I look forward to hearing what my friends from the National Party have to say about these issues when the bill gets to the select committee. It disappoints me that the most loquacious of the boys from the National Party Mr Foss—the mokopuna of Granny Smith and a possum in the headlights—is absent but no doubt he will find great fault with this bill which is very unwise of him. However I look forward to the bill coming to the select committee. No doubt there will be a considerable number of submissions—not the least of which will focus on how the Guinness Peat Group has captured its current status—and I look forward to hearing from a variety of other entities. 
CHRIS TREMAIN (National—Napier) 
: 
 It is interesting to hear Mr Shane Jones speak of possums caught in headlights. That was a good way to end his speech. In my speech today I will focus on some possums caught in the headlights. I will address Part 1 “Annual rates of income tax for 2006-07 tax year” and Part 2 “Amendments to Income Tax Act 2004” which focuses on offshore investment and shares in collective investment vehicles. But I do not want to pass up the opportunity to have a look at that annual taxation level in Part 1 which is a fairly brief part I have to say—in fact so brief that the explanatory note states only: “The rates that will apply are those in schedule 1 of the Income Tax Act 2004.” In short it means there is no change. 
I would like to take a moment to reflect on Michael Cullen’s maiden speech when looking at this bill. It is interesting to reflect on the goals mentioned in one’s maiden speech. Earlier today he mentioned the word “arrogance” and in that respect I want to quote from his maiden speech: “I am proud of the fact that my secondary education was not paid for by the taxpayers of New Zealand but by the farmers of Canterbury and Hawke’s Bay. I ripped them off for 5 years then and I shall get stuck into them again in the next few years”. I say: “Congratulations Dr Cullen. You’ve done damn well in that respect.” That reinforces his commitment to the annual rates: there is no change—there is no relief in taxation rates or indexation rates for farmers. In fact farmers were not mentioned throughout the entire Budget. But in terms of lack of taxation relief Dr Cullen has ripped off not only farmers but also police nurses engineers fitters and turners stevedores watersiders seafarers printers customs officers teachers flight attendants— 
R Doug Woolerton 
: All Labour voters. 
CHRIS TREMAIN 
: That is the point I am making. The list includes writers firefighters paramedics and lecturers. They are all hard-working Kiwis but include many of those whom Dr Cullen purports to represent. They will not receive any break in their tax rates over the next year. Those people like farmers are looking for incentives to get ahead. But what has been provided? Nothing! They are taxpayers—the very people who allow us to have a safety net who allow us to have a welfare system. Without them it would be very difficult to provide a growing safety net. 
They are the people with true transferable skills. In case Dr Cullen does not realise it we are now living in a global economy where those skills are transferable. For those people—watersiders seafarers—their standard of living is critical. We do live in a wonderful country; there is nothing surer. I am as patriotic as anybody but I want to be able to provide at least a similar standard of living to that of Australia in order to retain those people whose skills are critical to our nation. The facts are that our living standards are not moving ahead as they should be if we were to be truly patriotic about this country and about keeping those key people here. The fact is that wage rates in Australia in 2000 were 20 percent ahead of ours and are now 33 percent ahead of where we are now. It is those things that are taking people overseas. 
Helen Clark tells us she wants wage rates like Australia’s—well she did in 1999. She made this comment in an address in 1999 at the New Zealand Trade Centre: “I for one prefer New Zealand to have rates of growth and living standards akin to”—wait for it!—“Australia.” Well what the heck is she doing about it? She is doing nothing. Wage rates are continuing to rise yet the bill we are debating does nothing about that. When the Opposition raises questions about growing wage rates members opposite say: “Bugger off then.”. They sit there and wave goodbye. Far from being unpatriotic members on this side of the House set strong aspirations for those key people I have mentioned—for our seafarers printers and many other union members whose skills are necessary for this nation. Helen Clark says she wants the same—at least she did in 1999. I shall quote her again from that time when she said she was not prepared to stand back and see the best and brightest leave taking their ideas and even their businesses with them. 
Brian Connell 
: Who said that? 
CHRIS TREMAIN 
: Helen Clark in a speech to the Contractors Federation conference. Can members believe it? 
Where is the action now? We know that in 2003 10000 left; in 2004 15000 left; in 2005 21000 left. They waved goodbye. But members opposite say: “If you don’t like it here goodbye! See you later.” They wave goodbye to our hard workers like policemen printers and seafarers then they tell Opposition members that we are being unpatriotic. Forget it! How many people will it take to leave for the Government to acknowledge there is a real problem? 
Peter Costello has made it a whole lot harder. That man understands that providing incentives for those key people is important. He knows what it takes to grow an economy and to provide the very best services possible. It takes hard workers who want incentives to get ahead—and there were 21000 of them in 2005. Peter Costello is standing at the gates of Sydney airport with his arms wide open saying: “Come on in.” Meanwhile this Government is saying: “If you don’t like it goodbye.” I would like to remind this Government about the parable of the goose that laid the golden egg: the Government should not forget that those key people we are talking about—policemen seafarers and printers—are important to this country and that they need incentives to get ahead. 
Let us have a quick look at the Australian Government. For the fourth year in a row it has introduced massive across-the-board tax cuts of A$36.7 billion which in New Zealand is equivalent to $45 billion. Those cuts are a massive incentive. But let us not focus too much on tax cuts. What tax cuts do is allow wage growth and people are going to Australia for better wages. 
Michael Cullen and Helen Clark say there is no room for lower taxes even though there is an $8.5 billion surplus. I will give members a couple of quotes from Mr Cullen. In September 1999 he said that New Zealand would move to match Australia on company tax but only when conditions allowed it. I would like to know when conditions will allow it. He has set a few goals: “Well maybe when the operating surplus gets high enough.” That surplus is $8.5 billion. Then he changed the goal to when the operating balance excluding revaluations and accounting changes got high enough. That balance is $7 billion. Then he changed the goal again and said not to worry about the operating balance excluding revaluations and accounting changes but to worry about it only when the cash surplus got big enough. That cash surplus is 1.5 billion. I want to know when we get to the point where we can provide incentives for hard-working Kiwis to get ahead. It is not in this bill. 
So I say congratulations to Mr Cullen. He has succeeded in relation to his maiden speech comments about farmers—that he had ripped them off for 5 years while he was at school and that he would get stuck into them over the years ahead. He has managed to do that to farmers and he has also managed to do it to police nurses engineers fitters and turners stevedores watersiders printers customs officers teachers flight attendants writers firefighters paramedics and lecturers—to all hard-working Kiwis. 
A party vote was called for on the question  
That the Taxation (Annual Rates Savings Investment and Miscellaneous Provisions) Bill be now read a first time. 
Ayes 71 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1. 
Noes 48 
New Zealand National 48. 
Bill read a first time. 
Bill referred to the Finance and Expenditure Committee.referred to Finance and Expenditure Committee 
The House adjourned at 4.57 p.m.