Volume 649 Week 84 - Tuesday 2 September 2008(continued on Friday 5 September 2008) 
Text is incorporated into the Bound Volume 
Volume 649 Week 84 - Tuesday 2 September 2008(continued on Friday 5 September 2008) 
[Sitting date: 02 September 2008. Volume:649;Page:18501. Text is incorporated into the Bound Volume.] 
Tuesday 2 September 2008 
( 
continued on Friday 5 September 2008 
) 
Affordable Housing: Enabling Territorial Authorities Bill 
Third Reading 
Debate resumed. 
JOHN HAYES (National—Wairarapa) 
: 
 I say “Good morning New Zealand” and give a particular welcome to those listeners in the Wairarapa my electorate. This legislation demonstrates everything that is wrong with this Government. First of all the wording has child-like simplicity as my colleague Tim Groser said last night. Secondly when we look at what this bill will do we see it will do nothing. This is worthless legislation and the Government is doing exactly the same thing with this legislation as it did with the Climate Change (Emissions Trading and Renewable Preference) Bill. With that bill the Government set up the theatre of doing something important. This housing legislation is all theatre as well. It will do nothing and has no substance whatsoever. It is a political fig leaf. This legislation demonstrates that the Government is again transferring responsibility from central government to ratepayers through territorial authorities—just as it has done over the past 9 long years. This legislation will simply impose more taxes on to communities. 
With this legislation the Government aims to put increased costs on to developers and builders just as it did with the Retirement Villages Act 2003. This Government has put huge compliance costs on to entities that try to provide accommodation for our old folk. What is the net result of those huge compliance costs? In the last 3 or 4 years all those small retirement villages have folded. This housing legislation will do exactly the same thing because it aims to load developers and builders with increased costs. This legislation will increase bureaucracy in territorial authorities because it creates a new employment category—the housing inspector. 
In this House there is no disagreement about the need for affordable housing for people but there is a philosophical difference between the squawkers on the other side of the House and the serious people on this side. This bill highlights the serious philosophical differences on this issue of affordable housing. Our method of dealing with this issue is first to create the conditions where this economy grows and money is left in people’s pockets not sucked out by an over-bloated Government. The first thing is to leave money in people’s pockets and that means capping the growth of Government capping the amount of taxes and then reducing them over a period of time so that people have more money in their pockets. 
Second we have to strip away the increased bureaucracy that this Government has created. I think particularly of the Resource Management Act. In the House last night I gave the example of a fellow from Greytown where I also live who had to pay $900 to get resource consent to build a fowlhouse for four hens. What arrant nonsense this Government is imposing on our communities. 
Third we have to remove the constant stream of burdens that have been imposed on territorial authorities by this Government over the last 9 years. I am thinking of air quality requirements I am thinking of water quality requirements. Those things may apply in Wellington Auckland and Christchurch but I promise you they do not apply in much of provincial New Zealand. By imposing those requirements we put a huge burden on our communities. 
Then I address the lack of intellectual thought that goes into the big projects that this Government proposes to support. If we are thinking about the need for more affordable houses we realise there is quite a simple solution. It applies in my electorate which stretches from Ngawi and Cape Palliser on the south coast to north of Waipukurau and Waipawa— 
Dr Pita Sharples 
: Takapau. 
JOHN HAYES 
: —including Takapau where Pita Sharples was born and I look forward to seeing him there soon. There is a huge amount of land in our electorate. I want to move quickly from that statement to the logic around developing infrastructure in the region. This Government has said it will build Transmission Gully but when we think about it we realise that Transmission Gully will not open up any new land on the west coast of the North Island. But if we were to put a tunnel through the Rimutaka Hill we would provide rapid access to all of that land in the Wairarapa.  
Hon Dr Michael Cullen 
: Ha ha! 
JOHN HAYES 
: Dr Cullen laughs but I assure him that a tunnel through the hill would cost $400 million less than Transmission Gully and it would have a positive internal rate of return or cost-benefit ratio—unlike Transmission Gully. If we did that it would open up huge amounts of land to be used for affordable public housing because the land has a reasonable price. Then we would get access to Government buildings in Masterton—emptied out because of this Government’s policies. We would get access to the hospital in Masterton—emptied out because of this Government’s policies. We would get access to empty buildings in my electorate—empty because this Labour Government has closed schools in my electorate. There is huge capacity there. The infrastructure is in place; it is already built but it is rotting because this Government is sitting on its backside and cannot focus beyond the big cities. 
The National Party stands absolutely opposed to this legislation because it will not provide one additional affordable house for anybody in this country. It is an outrage that this legislation has consumed huge money in bureaucratic time huge money in House time and huge money in select committee time. This legislation is childlike and meaningless. It will not deliver affordable accommodation in this country at all. It will increase the burden on ratepayers through territorial authorities because the Government is trying to create the theatre of some sort of substantive change when none exists.  
JUDY TURNER (Deputy Leader—United Future) 
: 
 I want to take a very brief call on behalf of United Future on the Affordable Housing: Enabling Territorial Authorities Bill. As I mentioned in the second reading United Future supported the first reading. We were excited to see the Government weighing up some options around affordable housing but we have been disappointed in what has come out the other end and are unable to support the bill any further. 
The bill gives powers to territorial authorities that they may or may not use. If they do choose to exercise the powers contained within the bill it is unclear whether they are obliged to apply them in an even-handed way. The truth is a council could impose rigid obligations on one property developer and choose not to require similar obligations of another. How that would play itself out at a local level is completely unclear. 
The bill provides very limited guidelines to the territorial authorities about who they can capture with these new powers if they choose to use them. It is unclear for instance whether they can capture current landowners who purchased land in anticipation of establishing a housing development sometime in the future and who were unaware at the time that they purchased that land that the territorial authorities would subsequently be given powers to slap some serious challenges on to their business plans. 
United Future agrees with I think all parties in this House that central government should be looking very seriously at a range of options to better facilitate the provision of affordable housing in New Zealand. However we do not believe that this bill is a well-considered option and we are sorry to say that we have to pull our support at this stage. The bill has some other interesting provisions that have merit but we cannot agree with the main thrust of it which I think is to place upon the territorial authorities much greater responsibility for the provision of affordable housing. One of the things that United Future is scared of is that it shifts the responsibility to the territorial authorities in a way that is unhelpful. We think that the territorial authorities could choose to incentivise the provision of affordable housing through reduced compliance costs—that is a hugely positive possibility that even now they could choose to do—but they should not actually dictate to a landowner. That is why United Future is a little surprised that the Maori Party has chosen to support this bill. That party has a fine track record in this House of advocating and standing up for the property rights of others. I think that is an area that that party has neglected to consider in terms of the imposition that this bill allows the territorial authorities to place on landowners. 
The motive is good the motive is fine but the bill certainly breaches the principles of our party and we are unable to support its third reading. 
A party vote was called for on the question  
That the Affordable Housing: Enabling Territorial Authorities Bill be now read a third time. 
Ayes 66 
New Zealand Labour 49; New Zealand First 7; Green Party 4; Maori Party 4; Progressive 1; Independent: Field. 
Noes 52 
New Zealand National 47; ACT New Zealand 2; United Future 2; Independent: Copeland. 
Bill read a third time. 
Customs and Excise Amendment Bill (No 3) 
Second Reading 
Hon RICK BARKER (Minister of Internal Affairs) 
 on behalf of the  
Minister of Customs 
: I move  
That the Customs and Excise Amendment Bill (No 3) be now read a second time 
. This bill was introduced into Parliament in December 2007 and it has three purposes: to reform the statutory appeal review rights and the forfeiture and seizure regime in the Customs and Excise Act to provide greater flexibility for the Customs Service to deal with ad hoc arrivals and departures of craft and to give the service better control over illegal tobacco manufacturing operations.  
The matter of appeal rights arose as a result of a Law Commission report on the forfeiture regime in the Customs and Excise Act. The Government has agreed to reform the appeal rights available to allow the owners of goods that have been seized the right to be able to reclaim the goods in a much less complicated way. The Law Commission concluded that it should be possible to challenge the seizure by an initial internal review process which would involve little or no expense to the challenger and should be accomplished without delay. To give effect to this the appeal rights in the Act are being repealed by this bill and are being replaced with a Customs Service internal review process. Applicants who are dissatisfied with decisions resulting from an internal review will be able to appeal those decisions to the Customs Appeal Authority.  
In relation to ad hoc arrivals and departures I tell the House that all arriving craft and those departing New Zealand are required to do so at a nominated customs place. There is currently very limited power to make exceptions and this bill will allow that flexibility to be there. On the matter of tobacco I can say that in a recent case the court determined that the amount of tobacco a person could hold for personal use was quite substantial. The argument at the select committee was whether this new determination should be done through statute or by delegated legislation. The select committee gave this matter careful consideration and the Minister of Customs also discussed the matter with the Law Commission. The happy result was the acceptance of the recommendation of the majority of the committee that the personal use exemption should be moved from delegated legislation into primary legislation and clause 6A gives effect to this decision. On behalf of the Minister of Customs I commend the bill to the House. 
SHANE ARDERN (National—Taranaki-King Country) 
: 
 Madam Assistant Speaker given your opening comments at the beginning of Parliament today that you wanted both humorous and erudite speeches I respect your call! I start off by saying that the National Party supports this Customs and Excise Amendment Bill (No 3) for a range of reasons that I am sure will be covered in the speeches following. First of all as the Minister just said the bill does three things. Forfeiture and seizure regulations will be amended as per the recommendations by the Law Commission and others and there will be an ability to appeal to the High Court and to the appeal authority within the Customs Service if something is seen to be less than acceptable by someone who may be before that authority.  
The second thing which I guess is probably the most important but which I am sure will not get the most debate is the ad hoc arrivals and departures. I think most people accept that something needed to be done in this regard because the Customs Service was left in a bit of a legislative vacuum with regard to the situation prior to the proposal today. Obviously with increasing air travel large airliners and sometimes an inability for customs to cater for three or four planes—747s—arriving all in one go the ability ad hoc as it were to shift them in adverse weather conditions to somewhere like Ohakea or Palmerston North for example if the jet is of a size that can land in those places is clearly sensible. The concern I have about that of course is whether the resourcing for biosecurity as well as for customs will ever be big enough in those destinations in that ad hoc circumstance to be able to cope with the volume that will suddenly be placed on facilities that are not normally required to carry out that efficient service.  
So that is yet to be tested. I know that the Foreign Affairs Defence and Trade Committee put some time into that. I was not a member of the select committee but I know that my National colleagues on the committee certainly scrutinised these things closely. So that is yet to be tested; I am not very anxious about it at this stage but it is an area that needs to be signalled as potentially of concern.  
The third area of amendment that the Minister touched on was the tighter control of exemptions for tobacco growing for personal use. I notice that the select committee members clearly did not entirely agree on this. In fact there was quite an unusual circumstance whereby on one of the Government’s select committees—a committee chaired by a Government member—the Labour members put in a minority report. That is not the norm as I understand it in a committee where the Government has a majority. For Government members to be putting in a minority report is quite an unusual circumstance. The only thing I can draw from that—and I am sure my colleagues who will follow will enlighten us as to how it came about—is that the agreed figure of 15 kilograms of tobacco per person that is allowed to be cultivated is about the consumption of some of the members on the committee in a week. 
So they clearly were not happy with that and the Labour members felt strongly about it and wanted that amount to be much higher— otherwise there would not have been a minority report from the Government on that. It is interesting and I will be interested to hear the debate from the Government members of course who will take a call and explain how they ended up with the Labour Party members having a minority report on that matter.  
I noticed that the Green Party also had a minority review about the exemption of 15 kilograms for personal use. I would probably guess that they were not keen on that quantity. I would give the Green Party the benefit of the doubt and suggest that it was probably trying to get the amount down rather than up. Clearly the Government was not—it was trying to get it higher. I am sure the National members brought some sensible sort of consideration to that.  
My colleague John Hayes points out to me that the committee is chaired by the very capable Martin Gallagher from Hamilton. Dr Wayne Mapp is the deputy chair and Taito Philip Field I am sure was rational at all times. Tim Groser of course would have been completely against tobacco growth and would have opposed it at every opportunity. John Hayes my good colleague from the Wairarapa is another person whom I know is an ardent protester against the use of tobacco. The only person whom I could see who buckled must have been the Hon Murray McCully and that would have brought about the exemption of the quantity of 15 kilograms.  
Going back to the original bill the weakness that was uncovered I guess in the forfeiture and seizure regulations by the Law Commission is one that has been around for some time. I understand based on some of the research I did prior to the debate that there have been some substantial examples of people who have felt that they have not been given a fair deal. But on the whole the Customs Service—and we must remember that the Customs Service in New Zealand is the oldest Government department—has a very proud record. It does not often feature in the media. It does not have a high profile which in itself says it is doing a good job.  
It is the oldest department. It was the first Government department set up more or less as a gatherer of taxes that was handed over to the Inland Revenue Department. The Customs Service is one of our most important departments in terms of maintaining the integrity of our sovereign nation. Some of the new technologies that are being developed for this department are very exciting particularly in the wake of the 9/11 event in the USA around terrorist activity. They are developed not only in the US I hasten to add but also in Europe and other places. They show some exciting opportunity not only for customs but also for biosecurity. I hope that going forward the Government will have the wisdom to adopt that latest technology and I also sincerely hope that there is an opportunity to explore further synergy between the Customs Service and Biosecurity New Zealand at our borders so we can accommodate particularly the ad hoc arrivals but not just the ad hoc arrivals but also the increasing volume of passenger flow with tourism and trade that we as a nation are experiencing.  
I want to give the Customs Service a bit of a bouquet because I have met with a number of its people. In fact I recently attended a ceremony here in Parliament where the Prime Minister presented a number of people with 50-year service medals which is not very common I have to say in most Government departments. Its staff turnover is one of the lower percentages in Government departments but there has been a concern around that—there has been a bit of a flight of institutional knowledge in recent times. Attracting and maintaining the institutional knowledge and also the expertise that is needed to run a department such as the Customs Service is absolutely essential not only for the safety of our revenue but also for our integrity and safety.  
So I close by saying that the Customs Service in general does a very good job. It is more or less apolitical. I doubt that we would ever get much debate in Parliament between parties as to whether the approach being taken is the right one. I wish I could say that with Biosecurity New Zealand; we cannot but maybe we will achieve that one day. At this point in time the Customs Service is one of those departments that does a very good job. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 As chair of the Foreign Affairs Defence and Trade Committee let me thank all members of the committee for their sterling work on the Customs and Excise Amendment Bill (No 3). We acknowledge that in the spirit of a true MMP committee in Parliament there was a variety of views. But in essence I think previous speakers have certainly outlined the context of this bill. 
I just want to make the point that the bill replaces a dual system with an internal review process with a right of appeal and a Customs Appeal Authority and hopefully this creates a cheap and expeditious review process. 
In a sense this bill is something of a technical bill but I have to say to be honest that I was a little surprised in terms of the time that we took on it but it was time well spent. Hopefully this will be a good law. I compliment the Minister the Hon Nanaia Mahuta and her officials and thank them for all their wonderful advice. This was a very very interesting bill. I was delighted to be on the select committee when we considered it. 
TIM GROSER (National) 
: 
 A former member of the House who actually rose to the top of the greasy pole and became Prime Minister albeit very briefly once told me that one of the interesting things about coming into this House is that it is like entering into a giant postgraduate training institution because whether or not a member likes it one is forced to address a whole range of issues that one would never in any other occupation ever have to deal with. Although there is always a concern for any member of Parliament about being once-over-lightly the reality is that one gains over a period of years considerable knowledge. One offshoot of that is that one drills down into any technical bill and I would argue that a bill with a title the Customs and Excise Amendment Bill (No 3)—eye-glazing-over material it cannot get more technical than this—is a beautiful example of the point that was made to me a few years ago. Behind this bill there are some really important things but one has to drill right into it. I will start by making that point in respect of the whole treatment of what is actually called “chop chop” which is home-grown tobacco. To understand what the actual issue is here is I think an interesting illustration of this former member’s point.  
This issue is actually about organised crime. We start off with a health policy objective and so we have extremely high excise taxes on tobacco as you know Madam Assistant Speaker. There was a landmark World Bank study that we came across in the course of our examination of this legislation written in 1999 which from memory stated something like: “All the evidence around the world tells you that the most effective measure you can take against smoking is to raise the price.” If one raises the price by 10 percent the literature suggests there is a 4 percent reduction in usage. This country and many other countries have extraordinarily high excise taxes on cigarettes for I would argue health policy reasons. I personally do not believe that revenue is the leitmotif of this policy; I think it is a genuine effort by Governments around the world including various New Zealand Governments to deal with the shocking health implications of smoking. However as soon as one has done that one increases a massive incentive to arbitrage the difference between the low cost of manufacturing a cigarette—or producing a cigarette—and the retail price. This is one of the chief sources of finance for organised crime around the world. 
So behind this so-called incredibly technical and one might say almost boring bill are issues like organised crime. Tobacco smuggling is a huge issue. According to British authorities it is a larger source of finance for organised crime in the UK than narcotics. In Quebec 60 percent of cigarettes sold are estimated to have been smuggled. In New York there are huge State taxes on top of federal taxes and we were shown an estimate whereby one trailer truckload of contraband cigarettes taken into New York and sold through legal for the most part outlets is worth about a million dollars. It is also related to terrorism. When the federal authorities broke into the apartment of the first bombers of the World Trade Center they found a whole stack of counterfeit cigarette stamps showing that the excise had been paid. By the nature of our job as members of this House we are forced to get into issues that we would frankly never want to get into and what we find behind them are issues like this.  
Our concern was primarily gangs in New Zealand and since the question has been raised as to the personal exemption on home-grown tobacco I will just explain what I took to be the committee’s view. The difference between the overall view of the committee and the minority view is not a large issue in terms of the underlying problem. It simply is that one set of people in the select committee working to exactly the same script wanted to leave it to regulations. We in the National Party as a matter of principle do not like so much discretion being left to officials. We prefer the House to state its view. So the reason why we came up with a firm figure is an issue of principle about how law is made. We just do not like ambiguity in things that affect the lives of our citizens and we do not like changes to be made that people are not happy with and consultation with officials instead of the bill coming back to the House. That is the reason but that point of principle is not really an issue of any substantive policy difference among the members of the select committee.  
I have to say that the limit on home-grown tobacco—“chop chop” is apparently what it is called; I had never heard the term before—provoked a lot of discussion. First of all there was an enormous amount of confusion. I do not think we were terribly convinced by one of the submitters because of the conflict of interest between that submitter’s interests and our view about what matters in the community but I will not go into that. There was a huge amount of confusion over whether the measurement should be of dry or green matter and how many cigarettes one person could smoke in a day. But fundamentally we have come up with quite a high personal exemption use. It is the same as Canada’s so it is not extraordinary in any sense. The logic behind it is this. We felt strongly that we want our customs and police authorities to concentrate on real criminals. If we have a very low level of exemption the law has to be administered to some halfwit out there who has just gone a gram or two over. We did not want the good men and women who carry out such tough services on behalf of us all to be frankly wasting their time with trivial matters of this nature. So we have gone for a relatively high personal exemption precisely to allow the authorities conducting our business on our behalf to concentrate on the real problem which is organised crime.  
There is potentially an enormous amount of money to be made out of organised crime. We find as we go through the bill that there are some very tight definitions around the manufacturing and growing process. I do not have the precise clause in front of me but it is a concept that it must be grown on a property one lives in; people cannot start up some little semi-garden plot and start to farm it. It has to be manufactured in one’s own home and it has to be absolutely for one’s own personal use. There are a few issues around that. We understand that we will never have a watertight situation. In the case of somebody who rolls his or her own tobacco and gives it to a mate we could probably argue about whether that was within the law but the whole philosophy of the members of the committee was that actually this is a huge and serious problem. It is not out of control in New Zealand as it is in many other countries where it is linked literally into terrorism and massive and vicious organised crimes. There has been testimony on homicides murders and witness intimidation that we can find right throughout the literature on this subject but in New Zealand the issue is gangs and we want to be sure that we are not wasting the time of the authorities but are focusing on the real target.  
That is a first introduction to the bill. I think it is good legislation. Like the select committee chairman I think the members worked very very well together and I think we have something that is worth putting into law. 
JOHN HAYES (National—Wairarapa) 
: 
 I rise in support of the Customs and Excise Amendment Bill (No 3) and I invite members of the House to have a good look at it. This bill is a good bill. It is good well-written legislation in contrast to the emissions trading scheme legislation and the affordable homes legislation. If anybody in the House looks at the documents on the Table he or she will see that a huge number of changes and additions have been made to those bills. This legislation is substantial common-sense legislation. It is not theatre without substance which the affordable homes legislation we have just passed is and which the emissions trading legislation is. This bill reflects the substantive work of this House and I am in absolute support of it. 
The legislation comes from a department that is very well run. One of the pieces of education for me over my 3 years in this Parliament has been to see chief executives and their teams come to select committees to contribute to and interact with them. Martyn Dunne the Chief Executive of the Customs Service and the Comptroller of Customs stands out head and shoulders. He has a good team and the department is very well led to the point where during this Parliament our committee has not gone through a questions and answers process with the Customs Service because we have such confidence in the administration of that department. 
This legislation makes effectively three changes to our existing law. The first is to adopt a more pragmatic regime in respect of the forfeiture and seizure regime contained in the Act. This has application in my electorate. For example a woman recently moved from Switzerland to New Zealand there was a mix-up in the rules and she ended up with all her household effects being seized. It was a nightmare to unlock the arrangements because of the complications of the law that she had to operate under at that time. I got involved and we managed to get a good common-sense solution. Those sorts of bureaucratic inanities are removed by this legislation and I support totally that element of it. 
The second part of the bill gives the management of the Customs Service more flexibility to deal with ad hoc arrivals in and departures from New Zealand. The bill talks about “craft”. “Craft” could be aircraft or yachts or small boats. It makes eminent sense for example to allow the Comptroller of Customs to decide whether to send someone to Milford Sound so that a man rowing here from Australia can clear customs there rather than being required to paddle up to Picton or to Westport—if they are authorised Customs Service ports. The provision would work in the same way for yachties up in Northland. Let us say a yachtie wants to head out to Tonga from Houhora; Customs Service officials could be sent up there to clear a yacht or a cruise ship if that would make sense. What we are doing here is putting common sense into the hands of the Comptroller of Customs and that is an extremely good thing to do. 
The third element of this legislation is that—as my colleagues have said—it regulates the amount of tobacco or “chop chop” that can be grown for personal consumption. There is an issue that has not been discussed in the House this morning and that is that the Customs Service collects excise tax from tobacco. Because the rules have been a bit loose some people operating in the top of the South Island—not in my electorate—said that they could grow tobacco for personal consumption and they were growing tobacco in quite significant volumes. The Customs Service took a case against some growers and it lost because of the inadequacy of the law. So I think our select committee has been perfectly sensible in deciding what quantity of tobacco meets the needs of personal consumption. 
The first two changes as I have said are rooted in absolute common sense and pragmatism and I think they represent good simplified law that is not in the nanny-State mould of the Real Estate Agents Bill which we were debating yesterday afternoon or the emissions trading scheme bill or as I have already said the bill we were just dealing with— 
Chris Tremain 
: The appalling affordable housing bill. 
JOHN HAYES 
: —the appalling affordable housing bill as my colleague Chris Tremain reports and I totally agree with him. An issue that caused some concern amongst members of the committee was the personal exemption for production and manufacture of tobacco leaf beyond an area controlled by the Customs Service. As my colleague Tim Groser has pointed out we did a great deal of research on it and looked at what other countries did. There was an element—and I will be more straightforward than Tim was—of self-interest on the part of the people who came here to back the bill. That is because all cigarettes available in New Zealand are actually manufactured in Australia and the manufacturers of those cigarettes were quite keen to shut down competing supplies from locally grown tobacco. 
I go back to the legislation. It seems to me that the issue fell into two parts. The first was in the context of an argument with the Crown Law Office over whether the committee should put penalties within the legislation or whether we should leave them to be determined by Order in Council—essentially by officials. On the question of whether punishment for offences under the legislation should be contained in the primary legislation or whether it should be put into delegated legislation a majority of us strongly supported the principle that individuals who face a possible jail sentence should have the certainty of having the penalties spelt out in the primary legislation—in other words in this bill. The flexibility and the speed with which delegated legislation could be amended could create uncertainty in people’s minds and as a committee we felt that that was undesirable. 
We recognise that in bringing the exemption for tobacco into primary legislation we have left an anomaly in the law in that there is an exemption in the context of producing alcohol. I hope the next Parliament will consider correcting that anomaly by bringing all exemptions relating to offences punishable by imprisonment into our primary legislation. The next Parliament ought to look at the offence of illegal alcohol production and bring the penalties for it into the primary legislation. 
The other part that concerned the committee was the amount of tobacco that could be grown for private consumption. The committee eventually agreed that 15 kilograms was a realistic amount. We did not want to have an amount that was so low that the Customs Service was engaged in trivial pursuit of people growing tiny amounts of tobacco in their garden or backyard for their own use. Although there are some health issues around the volume the majority of the select committee came to a consensus that 15 kilograms was a good figure. I would note that the Government members on our committee did not agree with that figure but common sense prevailed. I personally would have preferred a rather greater exemption but that is the value of democracy—that we reach a common-sense generally agreed perspective. 
With those words I offer the National Party’s full support to this legislation and I particularly commend the officials for the excellent job they did in advising the select committee. Thank you Madam Assistant Speaker. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I sensed the member John Hayes’ relief when his 10 minutes came to an end. He struggled through those 10 minutes and I have to say to the honourable member that we suffered the pain also. It was a relief to us when he finished. 
This bill is a tidy-up bill. To my mind it does three things. It updates the penalties and procedures around offences and seizures and New Zealand First members think that is a good thing and eminently sensible. 
It provides for an individual—[ 
Interruption 
] I think the Berocca is kicking in over there. I sense the Berocca is kicking in. The bill provides for individuals to grow and cultivate tobacco for their own private individual use—provided that they grow it on their own land and provided that they manufacture the tobacco into whatever form they want in their own house. Those are the two provisos—and of course they have to be over 18. 
I was interested in the Greens’ minority report; it intrigued me. It states: “The Green Party member opposed writing into the legislation a limit of 15 kilograms for the personal use exemption as evidence received suggested that such a high limit was not appropriate.” I wonder what those members would have said if it were cannabis—an illegal drug. They do not mind growing and smoking cannabis but they have an objection to some old veteran growing a bit of tobacco putting it in his pipe sitting on his porch and enjoying watching the All Blacks win against whomever they are playing. We think that amount is a good insertion in this bill. 
I am particularly keen on the insertion that provides for craft—sea craft aircraft—that in extraordinary circumstances arrive in a place that is not controlled by the Customs Service. I think it is a good move. It is a sensible move. There are three provisos. The bill allows sea craft or aircraft to arrive as a result of a statutory obligation or navigation requirement and that is a good move. I can remember that when I was a chief officer at sea our ship carried a little amount of explosives—and I am not talking in respect of this country. When we arrived at the place we were taking them to we declared that we had explosives—a dangerous commodity. We were totally upfront—as we New Zealand First people normally are about things. We arrived at this particular port and we declared that we had explosives on board. A little bit of panic resulted and we had to berth away from the mainstream berths. That was a genuine circumstance. 
Shane Ardern referred to aircraft and I thought he made a very good point. I will not go over it. The bill allows for the result of a mishap—something happening on board either an aircraft or sea craft—or bad weather. Ships have to pull into all sorts of places in bad weather; I can tell members that it is sometimes pretty rugged. 
Finally it allows for craft authorised by the Chief Executive of the Customs Service for whatever reason. I listened to Shane Ardern and he made a very good point: can our border control officials and individuals cope with such circumstances? This bill at least provides a midway step. It compels the chief executive to consult before he or she gives an authority for a craft to berth wherever it needs to berth. The chief executive has to consult the Ministry of Agriculture and Forestry the Ministry of Health and the New Zealand Police. If it is an aircraft the chief executive has to consult the Civil Aviation Authority and if it is a sea craft Maritime New Zealand. I think that is a step in the right direction; it recognises that other Government departments may need to be involved and that they need to be consulted. 
I will stop where I began by saying that this bill is a very good bill. It is very sensible. It is tidy-up legislation and New Zealand First supports it. 
A party vote was called for on the question that the amendments recommended by the Foreign Affairs Defence and Trade Committee by majority be agreed to. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I raise a point of order Madam Speaker. It is a point of clarification. Voting on amendments is normally done in the Committee stage. 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: No no. These are the amendments made by the select committee. When a select committee amends a bill and brings it back to the House at the time of the second reading we authorise those amendments made by the select committee. That is what we are doing now. 
A party vote was called for on the question  
That the amendments recommended by the Foreign Affairs Defence and Trade Committee by majority be agreed to. 
Ayes 112 
New Zealand Labour 49; New Zealand National 47; New Zealand First 7; Green Party 5; United Future 2; Progressive 1; Independent: Field. 
Noes 5 
Maori Party 3; ACT New Zealand 2. 
Question agreed to. 
Bill read a second time. 
In Committee 
Part 1Amendments to principal Act  
SHANE ARDERN (National—Taranaki-King Country) 
: 
 It is a privilege to rise and speak to the clauses in Part 1 of the Customs and Excise Amendment Bill (No 3). Can I at the same time touch briefly on Supplementary Order Paper 241 which we will probably be voting on in this part as well. I note that unlike the emissions trading legislation where there were 785 amendments Supplementary Order Paper 241 has just two amendments. One affects clause 2 and omits the word “August” and substitutes the word “October”. Likewise in clause 18A it omits the word “August” and substitutes the word “October”. As there was pretty much universal support for the bill in the House and in the Foreign Affairs Defence and Trade Committee the only conclusion we can draw is that once again we have a very tardy Government that cannot conduct the important business of the State in a timely fashion and so has to come to the Committee of the whole House in order to extend the time by which the bill will receive its Royal assent. I notice that the date—October—is still within the term of this Government. It is amazing that it has not actually kicked it out to December or January of next year but it has not and that is a good thing because this is worthy legislation. 
I will briefly touch on new section 68A “Exemption for tobacco manufactured for personal use” inserted by clause 6A. Subsection (1) states that “Section 68 does not apply to the manufacture of tobacco in a private house or dwelling place” which describes the piece of land or what is known in real estate terms as the “house and curtilage”. For those who might wonder what that term means that is the section or the land attached to or associated with what would normally be described as someone’s house or dwelling place. In other words if I were to decide to plough up 15 acres at the back of my dairy farm and put it into use for growing tobacco for my own personal use then I would not be exempt under this section of the customs and excise legislation. My colleague Tim Groser touched on the reasons why the select committee spent so much time on that and they are very valid because of course it is the area where the Customs Service has I guess a jurisdiction over revenue or the control of the integrity of what should have a customs excise duty and what should not. 
I applaud the committee as I said in the second reading debate for its common-sense approach in arriving at a sensible exemption of 15 kilos of tobacco per annum. Let us see how it goes. It is one of those things we will not know until it is tried. It should not tie up Customs Service staff in needless inspection and trying to track down those who are growing a bit of tobacco for their own personal use. Like the member from New Zealand First I was quite fascinated with the Green Party minority view on this in which it raised concern about the exemption of 15 kilos for personal use and suggested the limit was a bit too high. I like the member would wonder whether if it were another plant that was being grown for domestic consumption in a person’s dwelling place or on land associated with the dwelling place the Green Party would have had such a firm view. One can only conclude that according to the Greens’ philosophy one type of “chop chop” if you like is safer or less health threatening than another. Maybe one of its members will take a call and explain their logic in that. Certainly it is not backed up by medical science to the best of my knowledge. 
I would also like to touch on as I did earlier forfeiture and seizure. I know that this was an area the Customs Service itself spent quite a bit of time agonising over and the ability to use the chief executive’s discretion in the way it is now able to be used is a sensible and pragmatic step in regard to that. I know that there are some cases—and bad cases make bad law as a general approach—where there have been some extreme one-off examples. It is not widespread but there are cases where people feel as though they have not been treated fairly by the system. All of us who are constituent MPs have probably received such cases from time to time and found when we look into them that they are perhaps not as grave as those who bring them to us might have us believe. But sometimes they are and this step potentially will help tidy up that loose end. 
TIM GROSER (National) 
: 
 I will focus on just a couple of aspects of Part 1 again to make a broader point. I am looking at the serious penalties provisions and the appeal procedures around those provisions. We are dealing with something that members of the Committee now understand is related to some core policy objectives—that we must have at our borders a very high level of discretion about what is imported into the country and what is not for all manner of good reasons. 
There is a general feeling out there in our community and amongst the political parties that the New Zealand Customs Service does a particularly good job for New Zealand. That is a sentiment we often hear and for very good reason. But it does have Draconian powers. Those powers must be exercised by often very junior officers and they have to be exercised right there on the spot without senior personnel necessarily there to guide the individual judgment of the young customs officer concerned. We want the Customs Service to move swiftly expeditiously and in some ways almost brutally when it has reason to be concerned that something being brought into our country will endanger the interests of our citizenry. The other side of this is that when we give people—particularly at times younger people—Draconian powers of the State we have to be very careful about the appeal process. This bill is extremely sound in terms of getting the balance right. 
We have a situation where a whole-of-Government approach which is exercised by as many as 15 different Government agencies is exercised by one agency the chief executive of the Customs Service and his or her officers and quite deliberately written into Part 1 of the bill are procedures that do not require a consultation process. That is quite deliberate. It is not normal that we get up as politicians and praise the lack of consultation. We are trying to get very swift and expeditious action on something that really matters. 
Equally because of the danger of decisions being made that when we have the fullness of time to look over the facts were perhaps marginal line calls there is a very simple appeal process. It does not cost anybody any money to ask for a review of forfeited goods. That is made very clear. I do not have the exact clause in front of me but I remember extremely precisely the provision dealing with it even if I cannot find the number. The chief executive has wide discretion to make a quick decision and this flows out of the Law Commission’s report suggesting we need streamlined procedure. In respect of new section 231 “Applications to review seizure of goods” inserted by clause 13 a New Zealander can apply to a single agency. There is no cost. It is a very simple process and the chief executive has a wide discretionary power to review the circumstances. For example the applicant must state the grounds on which the review appeal is being made and so on and so forth and there is an appellant process above that if things go wrong. 
I do not want to introduce a discordant note into this debate but I cannot recall many other instances in the life of this Government of people simplifying the bureaucracy and the administration. If the Minister wants to take a call on this part we should give credit where credit is due but ask at the same time why the Minister was unable to persuade colleagues that a whole host of other important matters should not go down the same track of streamlining the bureaucracy lowering compliance costs for citizens who have to deal with the armed and other powers of the State and giving a better result all told. 
I think there is a very good new process involved in something that is quite important and can give rise to a lot of upset on the part of citizens stopped at airports and ports. I imagine many people feel nothing short of outrage when they are asked to justify why they are bringing this or that into the country so it is a delicate matter and always no doubt very difficult for our front-line customs officers to deal with on a personal level. We all know that they need strong backing from members of this House for the work that they do. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 113 
New Zealand Labour 49; New Zealand National 47; New Zealand First 7; Green Party 5; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 6 
Maori Party 4; ACT New Zealand 2. 
Part 1 agreed to. 
Part 2Consequential amendments and transitional provisions  
The CHAIRPERSON (Hon Marian Hobbs) 
: The debate on this part includes the Minister’s amendments set out on Supplementary Order Paper 241. 
JOHN HAYES (National—Wairarapa) 
: 
 I have to say that that last vote was absolutely astonishing. Here we have very good legislation—and Part 2 is very good—and two parties are railing against common-sense and excellent legislation without explanation. The only conclusion one can draw in the case of ACT perhaps is that it does not want there to be any limit on the amount of tobacco that can be grown for personal consumption because that in some way rails against freedom. I say to the Minister in the chair the Hon Rick Barker that there is no other logical explanation and I am sure he is as confused as I am. 
Part 2 amends three or four pieces of legislation. The first is the Protected Objects Act 1975 the second is the Misuse of Drugs (Prohibition of Cannabis Utensils and Methamphetamine Utensils) Notice and the third is the United Nations (Iraq) Reconstruction Regulations. There are also some transitional provisions set out on clause 18A—the reason being that if one thinks about the life cycle of a tobacco plant one cannot arbitrarily draw a line in the sand and say these regulations are being brought in and will apply from today when people may have moved under the old regulations. The regulations will apply to the growing of tobacco from 30 June 2009. 
People may find some astonishment in the fact that the United Nations (Iraq) Reconstruction Regulations of 2003 needed to be amended. I certainly did so I got a copy of the relevant statute just to get a handle on what was being discussed here. These regulations were designed to enable the Government to control the activities of our soldiers and our troops in Iraq and other officials that may be there. This legislation has been put in place particularly to protect Iraq’s cultural property and to make sure that if elements of Iraq’s heritage are pirated and brought back to New Zealand if people were to get involved in the trading of petroleum or gas products or if people were caught looting Iraqi Government assets then these matters could be dealt with under New Zealand law. 
Because of that and because under this legislation we are giving the Customs Service the opportunity to follow a more pragmatic regime in respect of the forfeiture and seizure of items under the Act we are having to modify the United Nations Iraq Reconstruction Regulations in two ways. Regulation 12(1) makes it clear that the Customs Service is authorised by this change to act using its own common sense in regard to all goods that are prohibited in New Zealand. Also the bill amends regulation 12(2) to take into account something that may have been imported into New Zealand and then re-exported and to authorise the Customs Service to become involved in the transaction and to operate. So it is quite important to realise that when we change one piece of law here it can have unintended consequences in other pieces of law. I think that our officials have done a very good job in trawling through quite obscure legislation to make these transitional arrangements work in historic legislation passed in this House. 
The second part of the legislation applies to modifying section 10 of the Protected Objects Act of 1975—legislation that has been modified on many occasions. This part of the bill relates to the return of unlawfully exported protected foreign items. We are changing this legislation so that the Customs Service management can intercede and make some common-sense decisions about how issues should be addressed if for example we were to find that some Buddhist or Islamic treasures had been found in Iraq and brought back to New Zealand. 
With those few words I will just say that we on this side of the Chamber are fully supportive of Part 2 of the bill and will vote accordingly. 
The question was put that the amendment set out on Supplementary Order Paper 241 in the name of the Hon Nanaia Mahuta to be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 113 
New Zealand Labour 49; New Zealand National 47; New Zealand First 7; Green Party 5; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 6 
Maori Party 4; ACT New Zealand 2. 
Amendment agreed to. 
Part 2 as amended agreed to. 
Clauses 1 and 2  
SHANE ARDERN (National—Taranaki-King Country) 
: 
 As I said earlier on the amendment in Supplementary Order Paper 241 is one that really draws a contrast between the legislation that we are discussing here today which has pretty much widespread support in the Committee—we thought unanimous at one stage but we have since discovered that that is not the case—and the excellent work done in the Foreign Affairs Defence and Trade Committee reporting back on time and this Supplementary Order Paper before us which changes the date simply because this Government could not do the important business of the day. In other words it is a Government that was too preoccupied with all sorts of social interference instead of getting on with the core business of government which is customs and excise.  
I tell the Minister that the Customs Service is the oldest Government department there is. He has probably not heard of it—although he probably has because I am sure it will have detained him at the border on one or two occasions so I am sure he has run across customs before today.  
Here we are in the Chamber today still locked into Tuesday which is an interesting concept is it not? This is the third 2nd of September that I have debated in the Chamber this week even though everybody else has caught up to Friday debating a Supplementary Order Paper that would not have been necessary of course if the Government had actually got on with the business of the House at the time it should have instead of wasting so much time on things such as trying to enforce on local bodies social interference like “you must” “you must not” “could” “could not” “will” or “if you wish” provide social housing. So it is I guess somewhat ironic that we are now debating a Supplementary Order Paper that omits the word “August” in clause 2 and substitutes the word “October” and in clause 18A omits the word “August” and substitutes the word “October”. It is quite ironic; it does demonstrate that this Government is tired and I think we should go to the polls and have an election to see what the folk of New Zealand think about that. 
TIM GROSER (National) 
: 
 I tell Mr Ardern that I am into that; let us bring it on! I do not think the date can be very long away. I say to him that comment was probably not appropriate given that we are speaking in sweet harmony on the Customs and Excise Amendment Bill (No 3) but it is nevertheless a sentiment I strongly share.  
When we look at this bill we see it does a number of things that are of central importance to New Zealanders. We all understand that sometimes our geographic isolation is a fundamental problem and at other times it is a huge advantage to us. We do have certain advantages in our isolation. We rely on the front-line officers of our Customs Service to secure our borders and they do a fantastic job. There is widespread recognition of that.  
I talked earlier about one of the many policy objectives related to this bill. Behind this bill is health policy. The need to move comprehensively against smoking is absolutely understood and there is huge positive evidence that the higher the price is the lower the consumption is. But as the evidence indicates as soon as one moves in that direction there is a serious danger of creating an incentive for organised crime. As I indicated in speeches during earlier stages of the bill cigarette smuggling is a massive problem internationally. I recall that in the United Kingdom it was estimated to be a larger source of criminal funding than narcotics believe it or not and there are massive issues of law and order enforcement in many countries around this issue. Of course ultimately the point about terrorism is not some academic point. We recall that the bombers of the World Trade Center had counterfeit cigarette excise stamps in their apartment when the federal authorities broke into them. 
There are big issues here. We have cleaned up our act here. I think we had a pretty reasonable regime but there were certain things that the Customs Service and our authorities wanted to move on and they persuaded the Government and then the Foreign Affairs Defence and Trade Committee to move on them. We have expedited procedures that allow the chief executive of the Customs Service acting on behalf of a wide range of Government agencies to take very swift action. But of course since the powers that customs officers have are Draconian involving the seizure of people and property there have to be civil liberties checks in place. I think there is an excellent new regime for the forfeiture of goods. It is very simple and operates at zero cost—just the cost of a stamp to send the request for a review to the chief executive. I think we have a very nice example—and I just wish that we could see more examples of this type—of the simplification of procedure being introduced into legislation. I think this country would be a better place for it.  
There is wide-ranging support for this bill. It achieves a number of objectives and I think it will facilitate the work of our front-line staff. It has very strong support in this Parliament.  
SUE MORONEY (Junior Whip—Labour) 
: 
 Just reflecting on the vote that was recorded for Part 1 I wonder whether I could seek clarification that the vote cast for United Future was 2 votes in favour. 
The CHAIRPERSON (Hon Marian Hobbs) 
: The vote cast was 1 in favour and therefore the member is seeking leave to amend it? 
SUE MORONEY 
: I seek leave to amend the United Future vote on Part 1 to 2 votes in favour. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Is that agreed? It has been agreed. It has also been confirmed that it was a mishearing. Let me just say that sometimes there is so much noise quite close to the Chair that we do not hear the votes if they are not called out. This vote was misheard and recorded as 1 vote in favour but it has now been corrected and is recorded as 2 votes in favour. The vote on Part 1 is Ayes 113 Noes 6. Thank you very much for the clarification. 
The CHAIRPERSON (Hon Marian Hobbs) 
: The question is that clause 1— 
John Hayes 
: Madam Chairperson— 
Hon MARIAN HOBBS 
: I had started to take the question. John you are a bit slow but I will be very kind and so will New Zealand. 
JOHN HAYES (National—Wairarapa) 
: 
 I was polite and held back because of the seeking of leave caused by the noise of some members on the floor which did not enable the three people at the top table to hear the vote that was cast.  
I rise again in support of this legislation and I would just like to draw the Committee’s attention to a headline in this morning’s  
Dominion Post 
: 
“Kiwis get half the pay of Aussies in same jobs”. Madam Chairperson you might ask: what is the relevance of this to the legislation before us today? It comes back to a point that I made when I spoke previously. This is common-sense legislation and therefore National is supporting it. If we run this country in a common-sense way with a light bureaucratic touch we will create conditions that will enable us to keep Kiwis in New Zealand and will enable us to help increase people’s pay by cutting their taxes.  
As we think about making this country a better-run place we want to have pragmatism. We want pragmatic Government policies in this country because we want our communities to be well governed. The first part of this legislation helps us to adopt a more pragmatic regime in respect of the forfeiture and seizure regime contained in the Act.  
The second area where we need to cut down bureaucratic overhead costs is underlined in this legislation by allowing the Customs Service management to be flexible about where it locates its staff. Clearly it will keep most of its staff in the bigger centres where there are a lot of craft—both air and sea—coming and going but it also enables the Government to operate good friendly policies by sending staff where it makes sense to small locations as I have said like Houhora or Milford.  
The third element of this legislation is that the Government has to be funded—there is no question about that. Taxes have to be charged. But as a Government we must make the smallest possible impact on our communities—often as in my case in the Wairarapa where people earn quite low incomes. When we take money from their pockets we have an absolute obligation to make sure that that money is well spent. I am comfortable with this legislation because it will help us to do that. I hope we can do that across the whole gamut of legislation in this Parliament not as we have seen in this last period under urgency with the emissions trading scheme the affordable homes legislation which will not make homes any more affordable and the real estate agents’ legislation. Those are bills about theatre not substance. In contrast this bill is about substance not theatre. I absolutely think that it is important that all parties in the Chamber embrace this legislation because it is an example of good legislation. It will help us to run this country better. It will have a smaller impact on the pockets of individuals and provide a far more flexible way of imposing bureaucracy on our communities. I absolutely support this legislation and again commend the Customs Service officials who have helped to prepare it. Thank you. 
Clause 1 agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 241 in the name of the Hon Nanaia Mahuta to clause 2 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 113 
New Zealand Labour 49; New Zealand National 47; New Zealand First 7; Green Party 5; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 6 
Maori Party 4; ACT New Zealand 2. 
Amendment agreed to. 
A party vote was called for on the question  
That clause 2 as amended be agreed to. 
Ayes 113 
New Zealand Labour 49; New Zealand National 47; New Zealand First 7; Green Party 5; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 6 
Maori Party 4; ACT New Zealand 2. 
Clause 2 as amended agreed to. 
Bill reported with amendment. 
Report adopted. 
Third Reading 
Hon RICK BARKER (Minister of Internal Affairs) 
on behalf of the Minister of Customs 
: 
 I move  
That the Customs and Excise Amendment Bill (No 3) be now read a third time 
. This bill has been through its second reading and the Committee stage and now has its final reading. It has received widespread support from the House because it seeks to reform the statutory review rights in the case of the forfeiture and seizure of goods under the Customs and Excise Act it gives the Customs Service a greater flexibility to deal with ad hoc arrivals and it gives better control over illegal operations.  
One of the key decisions of the Foreign Affairs Defence and Trade Committee which has now been agreed to by the Committee is to set in statute the amount of tobacco that a person can have for personal use. Rather than the amount for personal use being set by delegated legislation it has been set at 15 kilograms. Just to put it on the record that amount equates to I am told by the Ministry of Health people 58 to 103 cigarettes a day for 365 days. I am not saying that amount will now be compulsory but one would have to say it is on the generous side. So 15 kilograms of tobacco will now be in law once this bill has passed as the maximum amount defined as being for personal use and that clarification will be very helpful to the Customs Service when it is dealing with these issues.  
I commend the bill to the House. 
SHANE ARDERN (National—Taranaki-King Country) 
: 
 Like the Minister I on behalf of National also support the Customs and Excise Amendment Bill (No 3) in the third reading. As the Minister has just said the bill basically tidies up three areas of the Customs and Excise Act: forfeiture and seizure provision of greater flexibility for customs with ad hoc arrivals and a remedy to legislate for inconsistencies relating to illegal manufacture of tobacco. 
I will touch on the forfeiture and seizure part of the legislation for a start because I have a real and practical example of how the legislation as it was before the amendments could get the Customs Service bound up in something it did not really want to be involved with and there were some innocent victims in that.  
In Taranaki the Taranaki Rescue Helicopter Trust which of course is publicly funded and privately funded from fund-raising activity for health services in that region bought some night-vision goggles about 6 or 8 months ago—in fact it is longer ago than that; it is more like 12 months ago. The goggles were about to be delivered to the rescue helicopter service when they were found to have been stolen in the US by a US military person. Of course the Customs Service did what it must do and seized those goods with the intention of holding them until the legal position was established or tidied up and that went on for a long time. The Taranaki Rescue Helicopter Trust had bought the goggles in good faith off a New Zealand person who traded in this stuff and who had no idea they were stolen in the US. Finally through negotiation and after some time the trader of this equipment as I understand it was able to resolve the legal status in the United States. That status was that the military was paid for the goods or they came to some arrangement—I am not sure of the detail—but because of the legislation in New Zealand the Customs Service was still unable as I understand it to make a speedy or timely decision to have these goggles released to the rescue helicopter. Of course the helicopter trust had spent something like $40000 or better on purchasing this equipment and it was out of pocket and did not have the equipment.  
If the Chief Executive of the Customs Service had the powers that he or she will have then a common-sense decision or intervention at that level potentially would have overcome this problem. That is a practical example of one case where there were no guilty parties except for obviously the person who stole the equipment from the US military in the United States in the first instance and who was subsequently proven to have stolen it. 
Ad hoc arrivals have been of concern for a while. I think someone in the Committee stage of the bill touched on the fact that people arrive here by all sorts of craft—by pleasure craft by aircraft in big numbers and suchlike. The discretion to say that the beach at Opunake—or it might be Raglan or Kawhia or somewhere else in the great Taranaki-King Country electorate—can be a customs place for the purpose of the arrival of a pleasure craft is at times a useful and necessary requirement. As I said in the second reading the only concern I have is whether we will be able to meet the stringent requirements that we must meet regarding biosecurity otherwise we are liable to open our borders to further risk. I am confident that concern will be able to be met but we will have to watch and see. I suspect that at some stage in the future there will be further debate in this regard in this Parliament. Maybe some amendments or some further resourcing will be required to meet that concern. 
The final point covered in the bill is the control for the exemption of personal tobacco. I now know as a result of the good work done in the select committee that it is known as “chop chop”. Plenty of people have suggested that I should chop-chop and get moving a bit and sometimes when we listen to debates in the House we could certainly come to the conclusion that members should chop-chop and move on. But tobacco is referred to colloquially as “chop chop” and the reality is that the select committee has done a good job no doubt ably assisted by the officials who clearly have done a good job in helping the Minister draft this legislation to submit to the House and the select committee in the first instance. They have done a good job a practical job and a pragmatic job in coming up with a solution. 
I note that the original proposal was for 8 kilograms of tobacco to be exempt. The select committee has extended that to 15 kilograms. The Labour Party put in a minority report and one can only conclude that it was clearly not happy with 8 kilograms. Ministers obviously wanted a higher volume than that but I know my colleagues on the select committee—the anti-smokers that they are—probably would not have been supporters of that. But in any event the end result is that the figure is now 15 kilograms and that seems like a pretty practical solution. It is one that will not tie up the customs staff and officials in needless trivial pursuit—as someone described it and I thought it was a very good description—out there trying to find out if someone has grown a kilogram or two or four or half a kilogram more than he or she was legally allowed to. Fifteen kilograms should cover the domestic needs of even the heaviest smoker in society. Potentially if a person smokes 15 kilograms of tobacco annually that person will not be around for that long to breach customs laws in the future according to medical science. I think it was probably the right figure to arrive at and it is a pragmatic decision. Thank you Mr Assistant Speaker. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 I would certainly like to take a long call on the Customs and Excise Amendment Bill (No 3) and I know that the Leader of the House would support my doing that but I am not going to; I am going to be quite concise. 
The Foreign Affairs Defence and Trade Committee consideration of the bill was very interesting. There was a bit of to-ing and fro-ing with regard to the tobacco exemption and what we have come up with is a compromise which is obviously accepted. There are some serious health problems around tobacco consumption. I acknowledge the point Mr Ardern made that people who push the limit of the exemption for personal consumption over a few years would not be around for long to enjoy it! Dare I say it that is a point I note. 
The bill tightens up a few things. It amends the Customs and Excise Act in relation to appeal and review rights under the statutory forfeiture and seizure regime ad hoc arrivals and departures and the illegal manufacture of tobacco—which has been talked about. I thank the select committee and the officials for their work. This legislation is a good step in the right direction and tidies up what have been a few anomalies in the past. Thank you Mr Assistant Speaker. 
TIM GROSER (National) 
: 
 I still have not quite got used to the idea of getting up in rapid succession and making essentially the same points. It is an added problem of course when one does it under urgency as there is not even the grace of time to separate the points. Nevertheless it is part of our duty and I will discharge it but in a very brief and expeditious way. The key point is that the Customs and Excise Amendment Bill (No 3) is first-class legislation and a first-class example of cooperation among political parties at the select committee process. Frankly that is a rare jewel and we should celebrate it. We should celebrate it because if we could adopt the same common-sense and practical approach across other areas of policy I am sure we would still find room for the political contest to proceed but I think the country would be better for it.  
We have something that involves Draconian powers of the State. They have to be exercised by customs officers on behalf of I think 15 agencies. They perform vital functions in keeping our society as safe as they can. But equally there have to be very strong controls over the appeal process over the rights of citizens to challenge the forfeiture of goods and so on and so forth. But the point that particularly impressed me about the common-sense approach to lawmaking relates to the personal exemption issue of home-grown tobacco. It is such an important point for lawmakers to bear in mind that our front-line police and our front-line officials in other areas of enforcement will always be very thinly stretched. We know that. We know how much better it is if they focus on the real problem rather than frankly wasting their time with minor or technical infringements.  
There was a huge debate on the 15 kilogram limit. My recollection was that the difference of view between Labour and National was actually not so much over the limit as such but simply over whether it should be enshrined in legislation or left open to the officials to change the regulations. As members know National has a view that that is generally the wrong approach. We like Parliament to set clear laws and stick to them and if they have to be changed they should come back through the parliamentary process. I do not believe that there was a fundamental difference between the two parties on the underlying philosophy of setting the limit relatively high—at 15 kilograms which is the same as Canada—precisely to ensure that the thin blue line is actually focused on the real problem. The real problem here because of the literally millions of dollars that one can make from selling illegal cigarettes on which excise tax has not been paid is the link to organised crime and in other countries—I am unaware of this being an issue in New Zealand—the link to terrorism.  
So there are big issues behind this legislation. It is a nice simple law and there are nice procedures for the chief executive to move expeditiously without needing to consult a dozen different departments and somebody like me who has been in the system knows how much this consultation costs. Everyone says yes to consultation without thinking about the costs of consultation. When one often needs officials to act on their hunches on their instincts and sometimes of course on intelligence that will never be all that accurate—it is never all that clear I am sure to some of our people on the front line just how solid the intelligence is that they are operating on—one has to give them wide powers to move brutally and quickly to deal with the problem. Yes there will be mistakes. We have a procedure in place giving responsibility to the chief executive of the Customs Service and no doubt he or she will use delegated powers to handle that responsibility in a sensible and pragmatic way to look at the overall facts when there are mistakes or the public thinks it has been badly treated. It is good legislation and the House should be very pleased to see it pass into law. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I say to Tim Groser—I know he is relatively new; he has been here for only a couple of years—that there is no law that says members have to say the same thing twice. One does not have to get up in the first reading and then say exactly the same thing in the third reading. I thought he might be interested to know that. I say to the next National Party member to take a call that there is actually no law that members have to take 10 minutes on a bill such as the Customs and Excise Amendment Bill (No 3). It is straightforward it is nice it is tidy and it has gone through this House with a very significant majority.  
The only concern I have with this bill is that the Maori Party has put it on record that it is opposed to it—it has opposed just about every part of the bill—yet the Maori Party members have not taken a call as yet to explain why. I think there is a responsibility on all MPs that if they are opposing something and insist on having that put on the record they should at least stand in this House and say why. There is no problem with New Zealand First. We are totally in support of this bill. I hope the Maori Party takes a call and explains its position. I think it owes it to the House and it owes it to listeners out there who might be listening or watching on TV. New Zealand First supports this bill. 
JOHN HAYES (National—Wairarapa) 
: 
 The Customs and Excise Amendment Bill (No 3) is about border control. A good bit of my electorate covers the borders of this country. It stretches from Turakirae Head across on the other side of Wellington Harbour almost up to Cape Kidnappers. It is very important for the people in my electorate that we have good sound border control and it is very important for the well-being of the people in my electorate that we have good common-sense Government. If we do not New Zealand is left with a choice of becoming either a retirement village or an educational institution for other countries. More than 80000 people a year leave this country because of bad governance because taxes are too high and because wages are not high enough—as reinforced in this morning’s  
Dominion Post 
 by the headline “Kiwis get half the pay of Aussies in same jobs”. 
That is why I support this legislation. It is good legislation. It is not the theatre of the emissions trading legislation it is not the theatre of the Real Estate Agents Bill and it is not the theatre of the legislation that we were discussing this morning the Affordable Housing: Enabling Territorial Authorities Bill which the Government pretends will provide affordable homes to people in my electorate. That will not happen. 
It is really interesting what one can learn when one trawls through the impact of this bill on other legislation. In particular I have some comments that I would like to point in the direction of my colleague from New Zealand First Peter Brown. I draw his attention to sections 10A and 10B of the Protected Objects Act 1975. They are about the importation of protected foreign objects. One is not allowed to bring them into the country. This is the point: if a protected foreign object is in this country a foreign Government has 3 years from the time it knew about it to instigate court proceedings to reclaim that item or 50 years from the date that it was brought into this country. I make that point because I think we need to revisit the issues around our own electoral funding arrangements. Where political parties try to mislead the public of this country a law that gives only 6 months for them to be fined for their actions is patently not strong enough. I think the next Parliament needs to come back and look at the Protected Objects Act and work out how we can have laws in this country that protect the integrity of our electoral process and the funding thereof—something that we have not seen recently in the case of our colleagues in New Zealand First. 
Coming back to the legislation before us this morning I would really like to reinforce the point that we need to put far more effort into improving our legislation across the board. Only by having good legislation and good governance in this community will we keep people in this country. From the perspective of people in the Wairarapa where I live I think the first thing our people want to see is reduced taxes. That also applies to excise tax because our winegrowers around Martinborough Bideford Matahiwi Valley and north into Hawke’s Bay are paying far too much excise tax which is targeted to the inflation rate. In years of low production—and we have had a couple of bad droughts—it puts a huge imposition on our winegrowers. When I see that happening and when I think about it in the context of the excise tax on tobacco that we are collecting through the Customs and Excise Amendment Bill (No 3) I think there is room for tidying up our act on behalf of our winegrowers. 
We need to reduce the quantity of Government intrusion into the lives of people every day. This legislation will do that. At one level we are doing it by allowing the Comptroller of Customs to make sensible decisions about the disposition of the service’s resources in order to quickly protect our border. On the other hand we are also being very straightforward in putting into this legislation the penalties that will apply to people who infringe the law. As I pointed out in the House earlier today that approach does not apply to our alcohol legislation where penalties can be fixed very quickly by bureaucratic fiat. That has to be stopped. Our next Parliament needs to tidy up the legislation in terms of the penalties that apply to people who infringe our law as it applies to alcohol. We must get rid of the nanny State because if we do not we will find that people will continue to vote with their feet as they have been doing. I think this legislation is a very good example of how we can do something sensibly. We need to apply this model to many other sections of our legislation. 
With those comments I thank my colleagues on the Foreign Affairs Defence and Trade Committee for the way that this legislation was considered and put together. I also thank the officials who did a very good job in answering the many questions that our select committee raised in our consideration of this legislation. I commend the bill not only to the House but to the people of New Zealand as an excellent example of good law.  
KEITH LOCKE (Green) 
: 
 The Green Party is supporting the Customs and Excise Amendment Bill (No 3). We were actively engaged in the Foreign Affairs Defence and Trade Committee’s consideration of all the various matters including the personal exemption limit for home-grown tobacco. We heard quite detailed submissions from the Customs Service that an 8-kilogram limit would be the most appropriate. Unfortunately the majority of the committee went with 15 kilograms but we think an 8-kilogram limit would have led perhaps to less abuse and trading and more of a reality of home-grown production being only for personal use. We are disappointed with that 15-kilogram provision but as for the rest of the bill we are satisfied that it does improve the ability of the Customs Service to clamp down on the illegal importation and trading of tobacco which is a harmful drug.  
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Assistant Speaker i tenei ata. There is always a risk that with the rush of urgency some minor technical amendments will slip under the radar as it were—and that has wide-ranging repercussions. We have seen this in the last 24 hours with the reaction from employers about the changes made regarding KiwiSaver and the Employment Relations (Breaks and Infant Feeding) Amendment Bill. Employers are saying that the amendments to the Employment Relations Act introduced yesterday represent a major change to employment law which means they will now have to review their pay arrangements to ensure they are not in breach of the law and potentially exposed to a personal grievance claim from one of their staff members. We need to be far more careful when the bill under examination has received as in this case only one submission at the select committee hearing. So with all these warnings in place we have examined carefully the potential impact that the Customs and Excise Amendment Bill (No 3) could have.  
As far as the Maori Party is concerned the bill makes a number of amendments to the Customs and Excise Act 1996 to enhance the statutory appeal and review rights in relation to the forfeit and seizure regime. A particular issue of interest to us in the Maori Party in the examination of this bill was the personal use exemption on the growth and manufacture of tobacco. The amendments in this bill will give customs better control over the illegal tobacco manufacturing operations and that is all good. However the bigger picture is one of banning the sale manufacture and importation of cigarettes so that there is no industry or Government incentive for smoking.  
The Maori Party has stood strong in its vision to end the sale of cigarettes and smoking tobacco. We say that vision without action is but a dream and in our case it is more like a nightmare. Smoking kills one in three Maori for goodness’ sake. Why the heck would we support a bill that kills Maori? Is this first-class legislation? I do not think so. Perhaps the Minister should have broken up the bill a little in order to separate out the part in respect of the issues we are raising at the moment. The tyranny of tobacco over the lives of tangata whenua has a long history in Aotearoa. 
Hon Tau Henare 
: The tyranny of tobacco! 
TE URUROA FLAVELL 
: Mr Tau Henare knows about this as he used to be a smoker. Any knowledgable historian will point out that tobacco was gifted from Pakeha settlers as a tradable commodity to purchase food and land. We are told that some of our tupuna rangatira who signed Te Tiriti o Waitangi were treated to tobacco. The archives are bursting with picture cards and postcards of our men women and to our horror even our children being shot—with a camera I had better add—with a cigarette in their hand. I was also shocked recently to find that during the passage of defending the nation in war that Maori and Pakeha were routinely allocated cigarettes and tobacco along with their food rations. So does the Crown bear any responsibility to take action to end sales of cigarettes and smoking tobacco? Hell yeah of course it should. A ban on cigarette sales would save 4000 lives and $22 billion annually. [ 
Interruption 
] That is why Tau Henare finished smoking.  
Of course we welcome the graphic health warnings that now appear on all tobacco products. If anyone could be persuaded to give up surely one would think that the prospect of ending up with gangrenous toes diseased lungs smoking damaged hearts rotting teeth big pukus and damaged gums must have some— 
Hon Tau Henare 
: Smoking gives you a big puku? How long have you been smoking? 
TE URUROA FLAVELL 
: The member should ask himself. Although it is early days yet in the course of the campaign to get rid of smoking we are mindful that the number of cigarettes available for sale has not changed in 3 years. In fact even worse the number of cigarettes available for sale has actually risen 2.8 percent over the previous year. And here is the horror statistic—the number of cigarettes available for sale has risen an astronomical 83.3 percent since 1985.  
We say that it is a weak excuse to say that these figures are rising just because there are more outlets for sale. The figures are rising because cigarettes are being sold and cigarettes are being smoked. The other issue to bear in mind is that although the officials tell us that smoking rates have been steadily decreasing the importation and sale of cigarettes is actually increasing. So the tobacco industry remains rich. In effect then the proportion of smokers is not decreasing as the population grows.  
Does this bill do much to address the bigger picture? From our perspective no it does not. We see a new clause that was recommended by the Foreign Affairs Defence and Trade Committee so that the personal use exemption being introduced by the bill is now part of primary and not delegated legislation. This means that rather than illegal tobacco manufacture coming under the stronger regulation-making powers that were originally suggested there is less flexibility to be able to control the black market tobacco trade. Putting the personal use exemption into this bill is as the Labour minority report itself acknowledged inconsistent with the other control arrangements. We believe with Labour that the stronger regulation-making powers are more effective in controlling the illegal tobacco trade. The flexibility and speed with which delegated legislation can be amended is we believe likely to be more effective in addressing the growth of the tobacco industry. 
We should not be we say fiddling around passing laws that allow the Government and industry to collect revenue from tobacco when the bigger picture of tobacco use and abuse is still prevalent. If there is one thing that really put the nail in the coffin of this bill it was the very fact that the only submission received was the support of British American Tobacco New Zealand Ltd. The company supported the bill particularly in respect of amending the Customs and Excise Act 1996 in relation to the illegal manufacture of tobacco.  
Let me make it clear that all this bill will really do is to ensure that Governments get their excise duty payments. Over the 11-month period to May 2008 the Government received an incredible $775 million in customs tax on tobacco and there is a forecast of $144 million in tobacco excise duty over the year to June 2008. Although the Government is happily receiving the princely sum of $919 million there is another group of figures I want to leave with this House. This morning I was presented with a table of figures showing the prevalence of cigarette smoking by New Zealanders 15 years and over from 1996 to 2005. Although there has been a decline in the all-out-high of 58 percent in 1996 the results for Maori have been consistently alarming. Over the last two decades the number of Maori smokers over 15 years of age has hovered steadily on or around the 50 percent mark—50 percent for goodness’ sake! These figures provide a compelling reason to do everything we can to stem the tobacco tidal wave that our people are submerged under and for that reason we will not be supporting this bill. 
JOHN HAYES (National—Wairarapa) 
: 
 I seek leave of the House to table an excerpt from this morning’s  
Dominion Post  
headed “Kiwis get half the pay of Aussies in same jobs”. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member has sought leave to table. Is there any objection to that course of action being taken? There is. 
A party vote was called for on the question  
That the Customs and Excise Amendment Bill (No 3) be now read a third time. 
Ayes 113 
New Zealand Labour 49; New Zealand National 47; New Zealand First 7; Green Party 5; United Future 2; Progressive 1; Independents: Copeland Field.  
Noes 6 
Maori Party 4; ACT New Zealand 2. 
Bill read a third time. 
Companies (Minority Buy-out Rights) Amendment Bill 
Second Reading 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the House take note of the Commerce Committee’s report on the Companies (Minority Buy-out Rights) Amendment Bill and that the bill be now read a second time 
. The objective of the Companies (Minority Buy-out Rights) Amendment Bill is to make technical amendments to the minority buy-out provisions in the Companies Act 1993 to ensure that they function efficiently cost-effectively and appropriately. The minority buy-out provisions provide an exit regime for shareholders of companies who have unsuccessfully opposed certain types of fundamental changes to the structure or operations of the company by virtue of a special resolution. The regime then entitles them to have their shares purchased by the company at an appraised price.  
The rationale behind these provisions is that if the company’s structure or operations change significantly after the shareholder enters the company the shareholder should be entitled to decide to exit the company but also be afforded some specific protection against financial loss by reason of the decision to leave the company. The provisions have been amended largely in accordance with the recommendations made in the Law Commission report on minority buy-outs.  
The Law Commission commenced a review of the minority buy-out provisions after Justice Doogue criticised the provisions in  
Natural Gas Corporation Holdings Ltd v Infratil 1998 Ltd 
 stating that the existing regime was lacking in information for shareholders particularly as to valuation method and date. This bill addresses those concerns. Since the first reading of the bill the Commerce Committee has recommended a number of amendments to strengthen the bill which I am sure will help it achieve its objectives.  
I conclude by thanking the officials and members of the Commerce Committee for their work in considering the bill and acknowledging the contributions of those who provided submissions on the bill. I commend the bill to the House. 
GERRY BROWNLEE (National—Ilam) 
: 
 The Companies (Minority Buy-out Rights) Amendment Bill is one of those interesting bills on which when they come before the Commerce Committee there is genuine interest on the part of all members to ensure that we get good and workable legislation. In this case we are talking about the rights of individuals who purchase interests in various entities only to find that a bigger parcel of shares than theirs is taken up by someone else or that there is a proposal to buy out those individuals by someone else not always at a price that might be in the best interests of those individuals. It is not uncommon for a price to be struck for a buy-out that is ahead of the market but not necessarily ahead of the expectations of some of the smaller shareholders in the particular company. As the Minister said when people make a decision that a new arrangement inside a company they had previously been confident about investing in comes to the fore then people should a right to exit—indeed to test the strength of whoever has bought the company and of the new philosophy that may presumably come with that.  
The committee has made a number of recommendations for amendments to the bill and we will discuss those further in the Committee stage. The bill is fairly technical in nature but as everyone knows it is the fine print that always ends up costing us. So if we were to typify this bill we would typify it as being a bill that puts some rules around the effect of the fine print.  
One of the things that we are a little uncertain about is the involvement of the Arbitration Act or bringing in the Arbitration Act as the vehicle for sorting out disputes between I guess an offered value and the value that someone would like for their shares. Those sorts of provisions can be very costly and it is a little unclear exactly who would meet the costs of that arbitration process. I do not believe that is specified in the bill so the Minister may wish to take us through that when we go through the Committee stage. That may be an oversight. If in fact there is a right to arbitration and a right to a price that reflects the best value of those shares I think the question should be asked and answered in the bill as to how the cost of dealing with the arbitration is to be met because it can be quite expensive.  
The provision of interest on I guess unpaid moneys owing after a price is struck is a very positive contribution in this bill and once again that matter is covered in a new clause in the bill. We will discuss that further during the Committee stage so that the  
Hansard 
 record is clear about what the select committee believed it was doing as this law was being put into place.  
We also recommended amending new section 112C inserted by clause 7 of the bill to provide that legal title to shares passes to a company on notification of the company’s decision to purchase the shares. The relevance of that is that if in fact a board accepts a proposal and the purchaser indicates that it has accepted it the potential exists for it to be quite some time before a settlement is reached—or is concluded which is perhaps a better way to describe it. None the less to all intents and purposes the owner of those shares once this bill is passed will in fact be the purchasing entity.  
It has been a very interesting exercise to consider all the various contortions of minority buy-out rights inside competition law and I think this bill goes a very long way towards trying to make clear some of the things that have been matters of confusion for players in the commercial world. We look forward to the coming debate in the Committee stage. The bill is relatively short but it is very very important. As I said before most people find that the devil is in the detail and that it is the fine print that trips us up. So we expect that the Committee stage today will traverse all aspects of the provisions of the bill in order to ensure it is abundantly clear exactly what it is all about. It is interesting though that the bill is in only two parts and we do notice over a period of time that when important bills are debated just part by part there is not a lot of time to consider all of the clauses in them.  
However I am sure that by the end of the day this bill will probably be law or I should say ready for the Royal assent. Subject to being satisfied with the answers to our questions in the Committee stage I say we will continue to support the bill. 
Dr RICHARD WORTH (National) 
: 
 On one view of it the Companies (Minority Buy-out Rights) Amendment Bill might not be considered interesting but it affects a very substantive change to the law. All tributes go to the honourable Minister Lianne Dalziel who at all times has kept an open mind on the merit of this legislation and who has been prepared to make change where there was a warrant for doing that. 
These changes being made by this legislation are to the Companies Act 1993 which of course is a code that deals with a whole lot of aspects of corporate activity in New Zealand. The Act constitutes a code if you like for those activities that are very much at the heartland of New Zealand business. The provisions relating to minority buy-out rights are contained in sections 110 to 115 so the provisions are not very extensive but they raise essential issues of equity. The argument is really simple: if the goalposts are moved despite the shareholder’s opposition he or she is entitled to decide that he or she no longer wishes to be a player and to also be protected from losing financially by reason of a decision to leave the field. I think it is worthwhile citing a comment made by Alexander Khutorsky who is well known in this area of corporate law for what he said about the intended functioning of buy-out provisions. In a merger context he said this: “In theory the existence of appraisal statutes has a two-pronged effect on merger transactions. First the appraisal remedy is supposed to guarantee that dissenting shareholders get a fair price for their equity stakes. This prong of the appraisal statute is embodied by a procedural scheme whose end result is a judicial valuation of the minority stake in the target with attendant money damages where appropriate. Perhaps more important than the actual exercise of the remedy is the ex ante effect which the mere existence of the remedy is supposed to produce. This second prong works by inhibiting the incentives of majority owners to act strategically by providing for the possibility of a threat of litigation and uncertain damages awards. The corporate planner’s assumed preference for certainty coupled with potential cash-flow constraints in meeting potentially sizeable judicial awards should encourage the planner-majority owner to offer fair consideration in freeze-out transactions.” That is quite turgidly but thoughtfully worded. It is a simple enough concept: a person is a shareholder in a company the other shareholders do something that the person does not like so what are the rights of that person? So we see in this bill the setting up of a code—the amendments to and filling out of provisions in the existing law—that gives rights to the shareholder who wants to get out. In money terms that is the way in which those rights have been exercised. 
There is a history in all of this of course and in fact it is quite a long history. But what prompted the Government to move—actually to move quite slowly—was a case called  
Natural Gas Corporation Holdings Limited v Infratil 
1998 Ltd 
. The judge in that case which is a trigger for all these changes being made today as this bill progresses started off by saying “To the best of the knowledge of the parties this is the first time that the minority buy-out rights sections have come before the court.” and “It is common ground that the minority buy-out rights sections are defective. Although they provide for the company to nominate a fair and reasonable price for the shares to be acquired they do not state at what date that price is to be ascertained. Nor do the sections make any provision for the company in nominating the fair and reasonable price to give any information to the minority shareholder of the basis of the valuation. Nor do the sections provide any mechanism for the completion of transactions falling within them. As already noted s 112(4) is silent as to the basis upon which the shares at issue are to be dealt with and the time when the company is required to pay the provisional price. Nor has the arbitrator power to make orders in respect of the completion of the transaction following the arbitration. Having created minority buy-out rights the Act fails to provide for important features of the transactions that can arise under them. In the context of the Act as a whole and its history that is understandable. However here there is a relatively substantial sum of money involved. In other cases there could be a substantial number of shareholders involved. While the Law Commission and the legislature may have been wise to avoid the complexity of some of the North American legislation it would seem essential that if the minority buy-out rights sections are to be effective they should be urgently reconsidered.” 
Against the background of those comments the Law Commission looked at this issue. It came up with a report; it suggested draft legislation. Parliamentary Counsel had a look at that legislation and made some changes. The Commerce Committee made some further changes. But these are the sorts of issues that arise: should notice be given of the availability of the buy-out rights along with notice of the special resolution sought to be passed? Should the company be required to give particulars of the basis on which its offer is being calculated? Should the statute specify the date at which the shares are to be valued or otherwise dictate the basis of valuation? Should the shareholder be required to convey title to the shares—Mr Brownlee alluded to this issue—at the same time that the shareholder has paid the price calculated by the company on the basis of the value as initially assessed by it? Should the legislation spell out broader powers that authorise the arbitrator to award compensation for costs and delay? And should the arbitrator have the power to make ancillary enforcement orders? This legislation that is before us today actually covers all those points. 
In the time I have remaining it is interesting for me to look briefly around the world to see how other countries and other jurisdictions have dealt with this issue. Delaware in the United States which I guess would be recognised as the state in the United States that has the most company registrations—more companies in the Fortune 500 are registered in Delaware than elsewhere—has I think pioneered standards of excellence in corporate governance and has specific provisions dealing with this. I will not go through those provisions but they talk about that need to establish a fair value for the existing shareholder. When we come to the Committee stage we will see that is not quite the way that New Zealand has approached the issue and it certainly was not the way that the approach was to be taken when the bill was introduced. In New York where they have similar provisions in the New York Business Corporation Law section 623—as the Minister reminded me last night—they use this concept of “fair value” the same as in Delaware. In Canada they talk about “fair value” in the context of the compensation award. 
The American Business Association has a model code where “fair value” is actually defined. We have not done it in that way. I think we have done it in a much more sophisticated way. But in the American Business Association model “fair value” means the value of the corporation shares determined in three circumstances. First immediately before the effectuation of the corporate action to which the shareholder objects; second using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal; and third—and this is quite significant—without discounting for lack of market ability or minority status except in certain cases. 
I commend this legislation as it has come back from the Commerce Committee with a number of changes that we are later to consider. Looking at section 110 of the Companies Act and the sections that follow it I think we have produced an outcome in a New Zealand context that is highly workable. 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 Mr Assistant Speaker yes— 
Gerry Brownlee 
: He was no help at all. 
Hon PAUL SWAIN 
: Well that is a bit uncharitable from that member and he is getting me to engage with him when my speech must not be longer than 1 minute. I have already spent probably about 15 seconds. 
Gerry Brownlee 
: No he was no help at all— 
Hon PAUL SWAIN 
: I think that is a bit uncharitable from that member; in fact I have defended his contribution on many occasions. By and large the Commerce Committee has worked well. I congratulate Dave Hereora. He was the one who spent a lot of time getting his head round the Companies (Minority Buy-out Rights) Amendment Bill. I am obliged to the previous speaker Dr Richard Worth who does know a bit about it. When he gives little sermons in the House like the one he has just given I always find them particularly interesting especially when he goes back into history. 
Gerry Brownlee 
: I bet sometimes you wonder why you slept through it. 
Hon PAUL SWAIN 
: No to be fair to the member I did not sleep through the speech he just gave; I found it very very interesting. But I am now off the point. There is the potential to go on for 10 minutes if— 
Gerry Brownlee 
: Could have fooled me. 
Hon PAUL SWAIN 
: Normally I love interjections because they give me something to draw on but I do want to make a couple of quick contributions. As the member Richard Worth quite rightly said this bill came from some recommendations from the Law Commission around a case involving Natural Gas Corporation Holdings. It was about trying to set a regime so that shareholders had better rights. It is interesting to know that when I was the Minister of Commerce the first thing we did was to introduce the Takeovers Code which the National Party had basically rejected. That code of course gave important rights to small shareholders. It is really important that we are introducing this legislation which is another leg of this particular important part of companies law. 
As has already been said we know what the objective is: to ensure that the markets function properly. It is time to give minority shareholders not so much protections as special abilities to have a fair share value price if they oppose certain transactions of the company—that is if the company is no longer the company that they had shares in. For example if the constitution of the company is amended that amendment might imply restrictions on the company’s activity; the company might approve a major transaction that a shareholder does not agree with; or it might improve an amalgamation that the shareholder does not agree with. The shareholder may disagree with what is being done and want to opt out. This bill makes sure that there is a proper process for particularly assessing the value of the company shares at the time so that minority shareholders’ rights are protected as best as they can be. 
This is good legislation. It is another piece of legislation from the Commerce Committee. I almost said the committee is ably chaired by the chairman; he does chair it quite well but he made some uncharitable comments about me so I will not say it. What I will say is that this is good legislation and needs to be progressed. 
LINDSAY TISCH (National—Piako) 
: 
 From the comments made by previous speakers members will be aware that National is supporting the Companies (Minority Buy-out Rights) Amendment Bill. The genesis of the bill came out of a case back in 2000 and a review of the law following the Hon Justice Doogue criticising the existing law in the case  
Natural Gas Corporation Holdings Ltd v Infratil 1998 Ltd 
. His criticisms related to the lack of information available to shareholders in relation to the valuation of shares and the date at which shares were to be valued. That case was really the genesis of a review that then led to a Law Commission report back in 2001.  
At the time of that case the judge said the matter was urgent—that it needed urgent action. And here we are with this bill 8 years later which shows how urgent it has been to this Government.  
Hon Lianne Dalziel 
: There was a Law Commission report in the meantime. 
LINDSAY TISCH 
: The Law Commission report was in 2001. Well I say to the Minister that in the court case—and she will have a chance in the Committee stage to be able to articulate the points that she wishes to make—the judge said the “fair and reasonable” test for the valuation of shares is well established. It is an objective test. There is no accumulated jurisprudence in relation to the “honest estimate” and it would be a subjective test. One of the questions that came out from submitters to the Commerce Committee was what actually is the “honest estimate” test?  
The key points that were canvassed at the select committee included the issue of valuation. Gerry Brownlee raised the point that where shareholders are aggrieved at the company’s choice of valuation method would they retain the right to reject a price offer and to bring the matter to arbitration and if so who would pay for that? Another point that came up in the submissions was the date of the valuation of shares. Clause 7 states that date is to be the close of business on the day before the special resolution is voted on. That is the date that the Canada Business Corporations Act covers which was the point that Dr Richard Worth mentioned when we were looking at other jurisdictions. Another area was the date at which minority shareholders would lose their legal and beneficial title to the shares. We will be covering that point in some detail during the Committee stage.  
The points that I have made add value to this bill. We are very happy with it. We had a very good discussion on it at the select committee and some other points will come up during the Committee stage. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 This will be a very short call. New Zealand First will support the Companies (Minority Buy-out Rights) Amendment Bill because we recognise that it does improve the current situation. One of the concerns raised by New Zealand First members when we were reading the bill—we were not on the Commerce Committee—was the one of arbitration. It concerns us a little bit this morning which is the very reason that I have taken the call to hear the chairman of the select committee and one of the members of that committee register those concerns. There is no recommendation in the commentary coming back from the Commerce Committee as to how the arbitration problem which was well outlined by Gerry Brownlee and to a lesser degree by Lindsay Tisch will be addressed—in particular the one of cost. I want to put on record that New Zealand First has concerns around that. We will be supporting the bill because we recognise it is a significant improvement on the current situation but we would like to have the arbitration question addressed. We would have preferred to have some comment from the select committee in the commentary. 
Bill read a second time. 
GERRY BROWNLEE (National—Ilam) 
: 
 I raise a point of order Mr Speaker. Earlier this morning a very interesting situation arose. There was a point of order from Mr Tremain in relation to the previous bill we were discussing—that being I believe the Customs and Excise Amendment Bill (No 3) which had provisions on tobacco. At the conclusion of the second reading debate on that bill a vote was taken on amendments. The Assistant Speaker Marian Hobbs gave a ruling that the vote was taken at that point to give effect to the select committee’s amendments to the bill. I notice that the select committee I chaired made a number of amendments to this bill but we appear not to have any such motion now. I want to clarify what the difference is between this bill and the Customs and Excise Amendment Bill (No 3) that means we deal with it in a different fashion. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you for that Mr Brownlee. I am able to advise you that the requirement for a resolution relates only to amendments agreed to by a majority of the select committee. 
GERRY BROWNLEE 
: Thank you. I learn something every day particularly when you are in the Chair. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: You certainly do Mr Brownlee. That is very true. 
In Committee 
Part 1Amendments to Companies Act 1993  
GERRY BROWNLEE (National—Ilam) 
: 
 Let us go straight to new section 112A inserted by clause 7 which deals with the issue of arbitration when a price for a share is objected to by a minority shareholder. 
Just so that people are clear I point out that essentially the board of any company will accept a price for a buy-out or the board will choose to shrink the shareholding by buying out some of the smaller shareholders. A price will be struck for the value of those shares. If the shareholders accept that price everything is fine and it goes through with no problem. If the shareholders do not accept it then they have a right to object. The procedure is that the company strikes the price the shareholders have 10 days in which to think about it and if they reply in writing that no they do not accept it the parties go off to arbitration. The question then becomes who pays for the arbitration. 
The interesting thing is that if the cost of arbitration was loaded on to the board then effectively the board would have a gun to its head because it would either pay for the arbitration process or lift the share price. The board would have to make a determination depending on how big its purchase was about what it should do. However I have to say that in most cases the value of the purchase would be far greater than the cost of the legal proceedings surrounding arbitration. By the same token if the cost of the arbitration was to be borne by the minority shareholders then they effectively would have a gun held to their heads because they would have to make a decision about whether they should spend their money on arbitration. In some cases they themselves will be entities and they will have another subset of shareholders with expectations of the shares in the other entity. So the minority shareholders would have to decide whether to take a case to arbitration and wear all the costs in the hope that any increase in the share price would be more than offset—much more than offset—by the gain they made on the share price itself. 
So it is a bit of a catch-22 situation. It almost means that arbitration is not open to minority shareholders. It is not a process that needs to be used by a board. It is my opinion that the weight of authority in the buy-out lies with the board. In fact this bill does exactly the opposite. 
It would be useful to get the opinion of the Minister of Commerce on this matter. It is a relatively fine point. The politics of this House will not rise or fall on this particular issue nor will the positions that people take in terms of whether to support the bill. As the chairman of the Commerce Committee I feel a bit remiss for not picking up on it a bit sooner. I think our enthusiasm to get what effectively amounts to protection for minority shareholders in buy-out situations was so fervent that we did not quite think through just how a provision like this might work. 
It is not too late to fix it. The Committee could insert a small amendment to make it clear where the costs of the arbitration process would fall. I will quote from the intention of the bill as stated at the start of it in the purpose clause so that we are all clear. Well I cannot find it but the purpose is to protect small shareholders from being steamrolled by a much larger entity. I suppose that an amendment bill does not have a purpose clause because its purpose is to amend the main Act. None the less if Parliament’s intention was and is to protect those interests it seems a little ridiculous to have a provision in the bill that immediately can be seen to impugn those interests. The Minister’s view on that would be interesting. I wonder whether we could put in a small provision that split the matter fifty-fifty: if arbitration came out in favour of an increased share price then the cost of the arbitration would be borne by the offering party; and similarly if arbitration came out in favour of the initial price then the cost of the arbitration would be borne by the applicant. I hope the officials are listening because I think it would be far better that an amendment like that were written by officials and introduced by the Minister instead of a scrappy bit of paper being before the Committee. It seems to me that a fifty-fifty deal is not an unreasonable position to have. If one side wins they get the win and if the other side wins they get the win. 
I will leave my comments there. I know that the Chairperson will not be looking to stifle the debate. My colleagues have mentioned a number of things they want to talk about and hopefully the Minister will accumulate the concerns. In fact I do not think there are very many concerns; this matter might be all we want to talk about. I hope the Minister will give us a bit of heads-up as to whether we ourselves need to introduce an amendment. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I will respond briefly to Gerry Brownlee’s point because I think the member raises it in a genuine spirit of trying to resolve a difficult issue. Obviously when we are talking about mum and dad investors we do not want them to be in a situation where they are taking complicated and expensive court action and arbitration obviously is not the most desired outcome in that regard. However there has to be a mechanism for resolving a dispute when a dispute arises. I think the provision in the bill that actually provides some comfort in this regard is the ability for the arbitrator to award damages. People who are utilising the system unreasonably and putting pressure on a minority shareholder will find the damages that might be awarded against them a much higher discipline than the fear of sharing half the costs if in fact the changes were made. The damages provision could cover all of the cost—and indeed more—to deal with the particular issue. The issue of damages is included under the provisions of what the arbitrator can award. The arbitrator has the power to award damages in those circumstances. 
I want to take this debate away from the mum and dad investors for a minute and to ask members to think about the case where this issue arose— 
Natural Gas Corporation Holdings Ltd v Infratil 1988 Ltd 
. What we are actually talking about—a more likely situation—is a company that was started as a family firm is subject to a takeover the person stays within the company for a period of time further changes occur and that person wants to opt out. So we are not necessarily talking about people who are without means; we are often talking about people with different commercial levels of strength from a legal perspective. I believe that the provisions in the bill that allow for discretion in the awarding of damages and payment of interest will essentially encourage companies and shareholders alike to be realistic about the initial value of the shares. I believe that that will discourage unnecessary delays. 
Dr RICHARD WORTH (National) 
: 
 I will respond to the comments that the Minister of Commerce has made because I think the matter is actually a bit more subtle than the way in which she has put it. The core provisions in Part 1 which National supports are quite clearly the new section 112 and the provisions in new section 112A—both sections are in clause 7—which the Minister and Mr Brownlee have been referring to. 
The scheme of the legislation is very simple. The company gives notice of its offer to a shareholder and the shareholder may accept that offer or may object. In the absence of objection the company must purchase the shares. Then there is the arbitration mechanism which is described in section 112A. 
I think probably two substantive points emerge from what I have said. The first is the point that I made in part in my second reading speech. From the way that section 112(2) was originally drafted the price had to be “an honest estimate of the value”. That has now been changed and appropriately so—and the Commerce Committee comments in its report on why it made that change—to a new test: “a fair and reasonable price”. There were big problems with using the phrase “an honest estimate”. I think there are certainly some problems of a linguistic nature in talking about “fair and reasonable”. What is the actual difference between “fair” on the one hand and “reasonable” on the other hand? There are two subsections that will guide those who have to make a judgment on these issues as to what is “fair and reasonable”. The first is set out in subsection 112(2) and subsection 112(3) allows for a different methodology which can be used if the first methodology is not appropriate. The second methodology is to be used where it would be “clearly unfair” to follow the methodology contained in the previous subsection. 
Comment has been made on this issue of arbitration. There is no doubt about it: these are most generous arbitration provisions which one would not normally strike in a statute. Normally there would simply be something along the line that in the event of a dispute there could be a submission to arbitration and the provisions of the Arbitration Act 1996 would apply. But here we have something quite different and I think much better. 
I think the Minister has correctly identified the most common class of case where there exists the possibility of an injustice being done to a minority shareholder—the founder shareholder who continues in the company then events change and he or she wants to exit the company. The normal rule in an arbitration context is that costs follow the event which means the loser pays. In these particular provisions relating to arbitration we see that that principle is being echoed in a number of ways. For example if we look at section 112A(2) we see that it states: “If the price determined for the shares—(a) exceeds the provisional price paid the arbitral tribunal must order the company to pay the balance owing to the shareholder:”. In that circumstance it would be the shareholder who gained the costs award. In the second circumstance where the price determined for the shares “(b) is less than the provisional price paid the arbitral tribunal must order the shareholder to pay the excess to the company.” it would be the company that received the costs award. But there is the prospect of not only a costs award; the award may include interest. Again we see the reflection of the loser pays in section 112A(3): “Except in exceptional circumstances an arbitral tribunal must award interest on any balance owing or excess to be paid …”. 
The final thing I would say on the question of costs is picked up in subsection 112(7) which imports clause 6 of schedule 2 of the Arbitration Act 1996. If we look at that particular provision we see that it really is nothing more than a code for the “costs and expenses of an arbitration”. But here the term “costs and expenses of an arbitration” is given an extended meaning. Also I have picked up an error in the drafting that has been occasioned by the delay. I am referring to section 112A(7). The term “costs and expenses of an arbitration” in that provision includes “where a balance is owing to the shareholder—(a) the reasonable legal costs of the shareholder on a solicitor-and-client basis;”. Under the Lawyers and Conveyancers Act those concepts have now been changed and that wording should be “on a lawyer-and-client basis” in order to be consistent with the new regime. 
Section 112A(7)(b) states: “the reasonable costs of expert witnesses.” So we see here a bias in the case of the minority shareholder who wins. That shareholder in the context of a costs award can get a little more. It is unusual—very unusual—for costs to be awarded reflecting what used to be called a “solicitor-and-client basis” but is now called a “lawyer-and-client basis”. That is most unusual. It is reasonable that the costs of expert witnesses generally form part of a costs award so that is a change that should be made. 
I have no other comment on Part 1. Part 1 is otherwise I believe well-drafted and strikes an appropriate balance. 
LINDSAY TISCH (National—Piako) 
: 
 The Minister’s explanation as to the costs of arbitration is taken on board and certainly the comments that my colleague Dr Worth mentioned satisfy the question that I had during the second reading of the bill. I thank them for those explanations. 
I have a couple of points to make. The first relates to the date of the valuation of the shares. There certainly was some concern among the submissioners about the trigger date for the valuation of the shares. New section 112(2) set out in clause 7 has been amended from that set out in the original bill to require that the date of the valuing of the shares is at the close of business on the day before the day on which the special resolution is voted on. That is the example in the Canadian Business Corporation Act. We see under new section 112C “Timing of transfer of shares—(1) On the day on which a board gives notice under section 111(2)(e) that the board agrees to the purchase of the shares by the company—(a) the legal title to those shares passes to the company; and (b) the rights of the shareholder in relation to those shares end.” 
When those ownership shares have transferred the question then arises as to when the minority shareholder loses legal and beneficial title to those shares. Once the valuation is done the shares are transferred The ownership of shares gives shareholders three rights currently: to vote to make distribution of the shares and to receive distributions. None of those rights are retained from that time onwards. Sellers no longer have an interest in the company’s future once those decisions have been made and therefore they should not be able to vote. In addition the minority shareholders should not retain the right to obtain distributions. That was clarified within the discussions at the select committee and is identified here. 
Those are the points I wanted to bring forward. I am happy with the Minister’s explanation as to the costs of arbitration and there are no other points that I wish to canvass with her. 
GERRY BROWNLEE (National—Ilam) 
: 
 We have had very rapid discussions on this particular matter. I appreciate the direction that the Minister of Commerce gave us as to how the Arbitration Act itself might work. Also concerning the particular provisions and their interactions with the law as explained by Dr Worth I am now quite satisfied that there is no anomalous position. As it has been explained to me by my colleague Dr Worth the situation is that essentially the loser does pay. It seems to me that that is totally fair in this situation and National members will be able to continue to support the bill. 
I assume that in a minute we will come to the debate on the title. I think there is quite a debate to be had on the title and it would not surprise me if it were overturned and a new name put on the bill. Let us see how it goes. 
The question was put that the amendment set out on Supplementary Order Paper 247 in the name of the Hon Lianne Dalziel to insert new clause 8A be agreed to. 
Amendment agreed to. 
Part 1 as amended agreed to. 
Part 2Transitional provision and consequential amendments to other enactments  
The question was put that the amendment set out on Supplementary Order Paper 247 in the name of the Hon Lianne Dalziel to add new clause 13 be agreed to. 
Amendment agreed to. 
Part 2 as amended agreed to. 
Clause 1  agreed to.  
Clause 2  agreed to.  
Bill reported with amendment. 
Report adopted. 
Third Reading 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Companies (Minority Buy-out Rights) Amendment Bill be now read a third time 
. I have already described the nature of the changes that the bill brings into play. Essentially minority shareholders will be supported in their decision to exit a company if the company structure or operations have changed significantly since the shareholders entered the company but in doing so they will be afforded some protection against financial loss by reason of their decision to leave the company. 
The bill provides more clarity and transparency in determining the price of shares when a company agrees to purchase shares from a dissenting shareholder. This will lead to a reduction of the time and cost involved in resolving disputes arising under the provisions and will reduce the likelihood of cases going to court. There is no need to traverse the detail again but during the Committee stage I tabled a further amendment to the bill by way of a Supplementary Order Paper. This amendment provided that notice of minority buy-out rights must also be sent to shareholders where a special resolution has been passed in lieu of a meeting. 
I would like to take the opportunity to again commend the officials as well as the members of the Commerce Committee for their work on the bill and also to thank all those who made submissions on it. This bill is an example of this Government’s commitment to improve business law in New Zealand. One of the first things we did—and my colleague Paul Swain made this point in his second reading speech—was to introduce a Takeovers Code to provide an internationally accepted standard for protecting minority shareholders in a takeover situation. This latest move shows we are continuing to improve the law to protect minority shareholders and that will give investors greater confidence and will contribute to deepening our capital markets. 
I commend the bill to the House. 
Dr RICHARD WORTH (National) 
: 
 Eight years after a judge highlighted the substantial flaws of the Companies Act in dealing with minority buy-outs and called for an urgent remedy the Government has settled on a solution. Eight years is a long time. Eight years is a long time for an injustice to roll on so it is good that after that passage of time decisive action has been taken that National supports. The National Party has been very actively involved. Its members including the Commerce Committee’s esteemed chairman participated very fully in the committee’s deliberations on this legislation. 
What spurred all this legislation was what happened in a case—as Mr Swain has said—touching Infratil. Infratil was the first minority shareholder to invoke minority buy-out provisions in order to force the Natural Gas Corporation to buy its 6.7 percent stake in the corporation after it opposed the corporation’s $824 million takeover of the energy retailer TransAlta. Infratil was unhappy with the $1.30 provisional price set by the Natural Gas Corporation but after the company sought a declaratory judgment in order to get control of the Infratil shares Infratil was forced to hand over title and the price was later set at $1.68 after protracted arbitration. At that time Justice Doogue who was the trial judge in connection with the litigation criticised the statutory vacuum and said that the relevant section of the Act was “substantially flawed”—that was the phrase he used—and should be considered urgently. 
A number of issues emerged from that case and we have discussed them in the course of these parliamentary processes. There were issues around timing around valuation information and transaction enforcement and also around compensation. Either the Act was short on detail or alternatively the issue was missing from the Act. So it is right to say that the Law Commission reached a proper view in concluding that the bones of the law needed some flesh and that is what we are seeing today. National commends the bill. We look forward to its further passage by way of the Royal assent. 
I note one thing of perhaps passing interest and that is that the commencement clause provides that “This Act comes into force on the day after the date on which it receives the Royal assent.” If I look at the other bills that are on the Table and being dealt with in urgency I note that the Electricity Industry Reform Amendment Bill comes into force on the 28th day after the date on which it receives the Royal assent and the Family Courts Matters Bill comes into force on a date to be appointed by the Governor-General by Order in Council. It seems to be very much a preference of individual parliamentary counsel as to what may or may not be an appropriate commencement date. Surely there is a case for a greater element of consistency on the issue of when legislation is to strike New Zealanders and affect them. 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 Mr Deputy Speaker— 
Gerry Brownlee 
: Oh no! Come on! He doesn’t know anything. 
Hon PAUL SWAIN 
: Gerry Brownlee must be getting tired. He is usually a very calm and mild-mannered man. But here he is on Friday getting a bit agitated and grumpy. There is not long to go now.  
The previous speaker Dr Richard Worth made a good contribution on the Companies (Minority Buy-out Rights) Amendment Bill. He started by introducing a bit of politics into the debate so I must respond to that. The Minister of Commerce has said publicly and rightly so—and I agree with her because I used to be the Minister of Commerce—that in 1999 the Labour-led Government inherited a regulatory wasteland. The member has the effrontery to criticise us for taking 8 years to sort this issue out. We have had a massive agenda a massive programme of doing things in order to get back to protecting some of the rights of people which this bill looks to do. 
Dr Richard Worth 
: There is no excuse for perpetuating an injustice though—no excuse. 
Hon PAUL SWAIN 
: The member says there is no excuse for it. We had to start from scratch. There has not been sufficient time to do it all. That is why we need another 3 years and then another 3 years as undoubtedly will happen.  
But I digress. This is good legislation. It is designed to help those shareholders who want to buy out when an action is taken that they do not agree with. If the share price that is set is not agreed to by the minority share owner then there is the ability to get arbitration and some resolution on the issue of the value of the shares. This is good legislation and it will progress because of that and because of the good work that the Commerce Committee did when studying the bill. 
GERRY BROWNLEE (National—Ilam) 
: 
 The member who has just resumed his seat Paul Swain probably should not have highlighted the fact that he was the Minister of Commerce in the Labour Government for a very long time. It has not escaped the attention of those of us on the Opposition side of the House that it is only in very very recent times that a new Minister of Commerce the Hon Lianne Dalziel has very rapidly picked up off the desk the piles of unattended work of the previous Minister and rattled it into some shape that the House has been able to deal with.  
I know that the previous Minister is now touting his credentials around the business community as he contemplates a career beyond this particular Chamber. I find it a little strange that he makes speeches in the House that totally contradict some of the outrageous claims he makes in his CV. As a recipient of that CV I have been incredibly impressed by the writings in it. He is unable of course to line up the events as described in the CV with the actual events inside the House. But none the less this afternoon I will not destroy the claims of extraordinary leadership in the commerce field made by the previous Minister.  
It probably would have been better for Paul Swain to say that a previous Minister had slaved over the matters included in the Companies (Minority Buy-out Rights) Amendment Bill for some 6 years and then handed the current Minister on a plate the opportunity to take the glory as the tape came up. He could have likened it perhaps to a pursuit cycle race where he was the guy who went out to the front and made all the running but who in the end had to hope that the Olympic Committee would give him a fifth bronze medal. The bill is definitely a bronze medal effort from the current Government as far as attention to commercial law in this country is concerned.  
I think we have gone through the exercise on this bill quite diligently in the Commerce Committee with the full cooperation of all members there. The previous Minister was particularly helpful in that matter particularly during his more wakeful moments. There were not very many of those but when they occurred they were most useful to the committee in its deliberations. 
Dr Richard Worth 
: They were very fleeting though. 
GERRY BROWNLEE 
: His ability to direct us albeit fleetingly as my colleague behind me says in a particular direction was very much appreciated.  
Quite seriously this bill talks about minority buy-out rights. The bill ensures that minority shareholders have a right to sell their shares in circumstances where the shape of the company they originally invested in has changed by virtue of a takeover or a buy-out. This legislation represents one of the many bills that go through the House every year where a lot of good work has been done by members of Parliament on all sides of the House. We continue to support the bill through this reading. 
LINDSAY TISCH (National—Piako) 
: 
 Following on from my colleagues Gerry Brownlee and Richard Worth I say that the debate on the Companies (Minority Buy-out Rights) Amendment Bill has been very interesting. During the Commerce Committee hearings a lot of information came out. As I said in my previous speech the genesis of the bill came from the court case heard back in 2000. A Law Commission report came out following that recommending that these changes be made. We welcome the clarification that the bill brings to these difficult issues. We need to make sure that in company buy-outs the rights of minority shareholders are protected and this bill addresses that. So we welcome the clarification provided by this bill. We support the reasonably simple approach taken in it. This legislation does protect those who disagree with substantial changes being made to a business entity right at the start of a new entity coming together. Having made those points I say National is very happy to support the bill. 
Debate interrupted. 
Business of the House 
PETER BROWN (Whip—NZ First) 
: 
 I have a little problem. I have a member away whom I did not know would be away. I would like in the first instance to seek leave for the two New Zealand First members who are away attending the Hon Brian Donnelly’s investiture to be counted as being in this House. 
Mr DEPUTY SPEAKER 
: Leave has been sought for that course to be followed. Is there any objection? 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 I raise a point of order Mr Speaker. I just missed the last couple of points so I wonder whether the member would like to clarify what he was saying. 
GERRY BROWNLEE (National—Ilam) 
: 
 I can probably help. New Zealand First has members who are attending the investiture of the Hon Brian Donnelly at Government House today. They could not be in the House for a vote. The House by leave can consider that they are in the presence of Parliament for the purpose of that vote. We certainly agree with that. 
Mr DEPUTY SPEAKER 
: Leave has been sought for that course to be followed. Is there any objection? There appears to be none. 
Companies (Minority Buy-out Rights) Amendment Bill 
Third Reading 
Debate resumed. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Deputy Speaker. Kia ora tatou e te Whare i tenei ahiahi. It has always been of interest to me that politicians unfortunately are rated as the lowlifes in a long list of respected professions. To bring the House up to date today I can say that contrary to the speculation raised in the House this morning that carpet sellers real estate agents and car salesmen are scraping the barrel it is actually rather sad that politicians are still trailing way behind—Maori Party members are exempt. I guess there has however been some progress. In this year’s  
Reader’s Digest  
list of respected professions we politicians scored second to last with only telemarketers behind us. That is hardly a vote of confidence in the trustworthiness of politicians and with issues such as “paintergate” “corngate” “speedgate” “doodlegate” and all those sorts of things to contend with it is probably understandable. On the other side of the gate when the Maori Television Service revealed recently that it was on Crosby/Textor’s advice that in 2003 National decided on the strategy of attacking Maori with the infamous Orewa speech or the equally sad “Iwi/Kiwi” billboards it does not do much for our reputation.  
So when we come to the Companies (Minority Buy-out Rights) Amendment Bill which is described as being driven by the express purpose of instituting a fairer and more clear process we of course are inclined to be pretty supportive of such a move. But things have become a little bit cloudy. When we looked into the background to this bill we were referred to the case of  
Natural Gas Corporation Holdings Ltd v Infratil 1988 Ltd 
—the first High Court case I am told to consider the minority buy-out provisions of the Companies Act 1993. In his decision on that case Justice Doogue said: “It is common ground that the minority buy-out rights sections are defective.” He continued: “Although they provide for the company to nominate a fair and reasonable price for the shares to be acquired they do not state at what date that price is to be ascertained. Nor do the sections make any provision for the company in nominating the fair and reasonable price to give any information to the minority shareholder of the basis of the valuation.”  
I have taken a little bit of time to return to the High Court finding because it is yet another instance where the trust and confidence that the public have in the political system runs the risk of being undermined—undermined by flaws in legislation that Judge Doogue referred to as a “statutory vacuum”. Justice Doogue recommended that if the minority buy-out rights are to be beneficial and workable they should be urgently reconsidered. In response to Justice Doogue’s findings the Law Commission report highlighted problems with the existing legislation and concluded it was defective in its failure to set out a workable method of valuation. What they concluded I see was that the current test in sections 110 to 115 of the Act gives insufficient guidance or certainty to companies.  
So here we are today looking to amend the Companies Act to ensure that the buy-out regime functions efficiently cost-effectively and appropriately. We were relieved to see the recommendation from the Commerce Committee that the concept of “fair and reasonable method” is retained. However the committee went further and suggested that a “fair and reasonable method” requires an objective assessment of value. Not only are we valuing fairness and reasonableness but we are even putting the effort into measuring that it matters. That is all great and good. I understand that Chapman Tripp in its submission to the select committee endorsed this move advising that statutory guidance as to the fair and reasonable price to be paid was desirable and would provide more certainty. Fairness and reasonableness is actually a very simple concept and fairness and reasonableness in this bill is in the context of a dissenting vote.  
The bill is essentially to improve the way in which a minority shareholding in a company is valued when minority shareholders have elected to have their shares purchased by the company. It seems such a simple concept but as we know a dissenting vote in the experience of this House is anything but simple. In fact the dissenting vote of my colleague Tariana Turia on the Foreshore and Seabed Bill was rapidly followed by her crossing the floor and the birth of the Maori Party not much later. We in the Maori Party operate from a different premise: that a dissenting vote in itself is not a fatal offence. Indeed we welcome the opportunity to share diverse experiences and to agree to disagree when consensus appears unable to be reached. I suppose the point is that we must have a process in place from which to respond to dissenting points of view. We welcome therefore the initiative in the Companies (Minority Buy-out Rights) Amendment Bill to establish clarity in relation to the process of minority buy-outs and an appropriate methodology for the valuation of shares. The bill as Chapman Tripp barristers and solicitors advised is a step in the right direction but it does not go far enough.  
I just want to wrap up by saying we cannot leave this debate without acknowledging our disappointment that there appears to have been no apparent consultation with Maori companies no apparent consultation with Maori company directors in the Law Commission review and no specific submissions sought from Maori companies. At this point I would like to hold up this article from this morning’s  
Otago Daily Times 
 headed “Call for Maori involvement with Business NZ”. I would recommend this article to any member of the House with an interest in the future of New Zealand. In this article the Maori Party candidate for Ikaroa-Rawhiti Derek Fox lays down a challenge for Business New Zealand to include more Maori in its organisation and in the way its policies and strategies are formulated. His argument was that Maori have a huge interest in the future of New Zealand as collectively tangata whenua are the biggest producers of meat and wool and the biggest shareholder in the dairy giant Fonterra.  
It is a challenge that this House and this Government could also respond to and one which we would have looked forward to seeing in the roll-out of the Companies (Minority Buy-out Rights) Amendment Bill. We make these comments in the honest hope that the Minister and the ministry may take on board the commitment of the Maori Party to do all we can to invest in the growth of business in New Zealand. We look forward to being involved in the future discussions and to that end we will support this bill at this reading. 
Bill read a third time. 
Commerce Amendment Bill 
In Committee 
Part 1Amendments to Commerce Act 1986  
SIMON POWER (National—Rangitikei) 
: 
 I raise a point of order Mr Chairperson. Just for clarification because this is a very complex piece of legislation and so none of us on this side of the Committee get out of order in respect of contributions that we might make during the Committee stage the debate that we are about to enter into relates to Part 1. Does that include those matters contained only in clauses 3 and 4 including the new Part 4 substituted which of course would lead us right through almost the entire bill up to what would be regarded as Part 2 which commences with clause 27? Am I reading that correctly? 
The CHAIRPERSON (H V Ross Robertson) 
: As I understand it Mr Power it includes clauses 3 through to 26 so that would include new clause 4 and it also includes the schedules as well. 
SIMON POWER 
: I understand. Thank you for that clarification. Those members of the public and the Parliament who were tuned into this debate yesterday will be aware that this bill is receiving the support of a substantial majority of the parties in the House although not of all and we are now in the Committee stage of the bill where we can spend some time on it. We are lucky to have in the Chamber the Hon Paul Swain who has some technical expertise in this area and who will be able to assist us during the Committee stage. 
These matters relate to the principal part of the bill and in particular I will commence with the purpose clause. The reason I am going to start there is that I want to allow the Minister time to reflect on Supplementary Order Paper 244 which she has tabled in respect of a couple of amendments made to this bill and ask her to explain to the Committee how that Supplementary Order Paper and the amendments contained therein relate to the work done by the Commerce Committee and whether we are talking about technical changes or major changes. I notice that the initial amendment actually has to do with legal costs surrounding the input methodologies and it might be worth the Minister’s while to just clarify those matters so that we do not get sidetracked into a lengthy and technical discussion on those points. 
Just returning initially to the purpose clause the Minister said in the second reading if I recall correctly that the key to this particular clause was to balance the issues of investment alongside the benefits with consumers. Regulation and the role that it would play in balancing those two variables is essentially what this legislation is all about. I did raise the issue—and I would be interested in any comments that the Minister might have on this—of whether that purpose clause goes wide enough or is intended to capture the consumer of tomorrow and how that is balanced alongside these regulatory decisions in respect of infrastructure and pricing at the consumer end. So there are two things that I would ask the Minister to comment on at this early stage. The first is the matter of balancing the rights and interests of the consumer of tomorrow against the purpose clause and the matters that I have outlined. Secondly would the Minister be kind enough to give a quick overview of the Supplementary Order Paper so we will know as we work our way through that we will not have to have too many technical discussions about that document. I am signalling those two matters at this point. 
Because of the way this bill has been structured we will have a substantial debate on Part 1 of the bill. As I rightly understand from the Chairperson’s colleague who was previously in the Chair Mr Robertson we are dealing now with clauses 3 to 26. This is essentially the guts of the entire bill barring the matters relating to airports and airlines and regulation in that regard. We will be getting into quite a complex and detailed discussion around the input methodology determination and the rights of merit review appeal. I will be interested in the Minister’s comments on valuation techniques the calculations relating to the weighted average cost of capital and other matters. This is a good time to do that because the first and second readings do not allow us to have those discussions in a detailed way and of course the Minister did not appear before the Commerce Committee during its deliberations on the bill. So now is an opportunity for the Minister to give us some of her thoughts publicly on these matters. 
As I say we are certainly supportive of this bill but I think there have been some big changes around those merit review processes. I think it is worth the Minister making some comments on the consumer-owned electricity trusts as well. I would not say that those matters are controversial but they deserve further explanation from the Minister. I think what I will do at this stage is signal that those are the areas along with the Supplementary Order Paper and the purpose clause that we are interested in hearing from the Minister on. Once those matters have been dealt with I am sure we can proceed at a seemly pace through the rest of the Committee of the whole House. 
Just before the Minister takes her call I take this opportunity to thank the officials who were involved in putting this legislation together. As I said yesterday in the second reading as did the Minister and Mr Swain this is complex stuff and we were guided through it by the officials from the Ministry of Economic Development with a degree of competency that frankly allowed those of us who are not specialists in this area to decipher some of the more technical aspects of the legislation in what I thought was a pretty reasonable way. I think probably two or three members of the committee in particular grasped the issues quickly and were able to have some good discussions with the officials during the process. 
I will not say any more other than that I look forward to hearing from the Minister on those points and I am sure she will not mind if we spend just a little time on those three or four issues prior to moving through the Committee stage. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I would like to thank the member for his constructive contribution to the debate on this bill and indeed we have had really good cooperation from the Opposition in respect of the matters contained within it. 
I will deal with the first point that was raised which is about how we judge the interests of future consumers versus current consumers. I think that is set out in the purpose clause. The purpose is “to promote the long-term benefit of consumers in markets … by promoting outcomes that are consistent with outcomes produced in competitive markets such that suppliers of regulated goods or services—(a) have incentives to innovate and to invest including in replacement upgraded and new assets;”. I do not think we should ignore the fact that that is No. 1 of a series of four tests against which those outcomes are being measured. 
Starting with the incentives to innovate and to invest is really sending a signal about how important it is not to forget that future needs are just as important when we are looking at a non-competitive market. New section 52A to be inserted by clause 4 sets out incentives for suppliers of regulated good or services to innovate to improve efficiency and to provide services of a quality that reflects consumer demand—that is current consumers. The purpose of this provision is also to ensure that suppliers share with consumers the benefits of efficiency gains and to limit the ability of suppliers to extract excessive profits. I think we have the order right and that sends a very good signal. 
The amendments to Supplementary Order Paper 244 are technical amendments. Perhaps as we go through the debate there may be particular questions the member would like me to refer to. There are no material changes to policy contained within these amendments. Essentially the first one is to clarify that input methodologies cannot provide for the legal costs of appeals to be passed through to prices. That is probably one of the less technical aspects of the changes being promoted by the Supplementary Order Paper. I will use new section 54T as an example. The Commerce Committee recommended that the power to transfer jurisdiction be limited to Transpower only. Therefore the Supplementary Order Paper makes a consequential change to section 54T to limit the criteria and consultation requirements to Transpower and transmission issues. If the member goes through the different parts of the explanatory note of the Supplementary Order Paper then he will see that the amendment is simply designed to deliver technically what has been approved by way of policy. 
The third area that I want to spend just a little bit of time on is the question of appeals on input methodologies. It has not been a controversial area but it has been an approach we have adopted to try to achieve a purpose. The purpose is certainty in an area where the previous law has not allowed for certainty in investment decisions. The only way to get in front of the Commerce Commission in respect of negotiating administrative settlements was to breach a threshold. We are already on the back foot when we are doing that. We are being punished as it were for failure in the past instead of a forward-looking approach being taken which is what the new provisions of the bill allow. I personally was very passionate about having appeals at the input methodologies stage because it is really important that when businesses are making investment decisions they have certainty in respect of how the regulator will act. Businesses actually could not be certain in this area of the input methodologies which I have to say are pretty much the basis for all of the court cases that have been taken in respect of the Commerce Commission and Part 4 and Part 4A. 
We recognise though that the input methodologies having appeals in the High Court will present some novel challenges for it. I think we will have to use constructively the period between the passing of this legislation and the implementation of the input methodologies and the appeals that may arise from that. As we have 2 years essentially through to 2010 there will be ample time to appoint suitable and available experts—the panel of lay members. We will be ahead of the game as it were. In that time the High Court will be able to consider the best way to optimise the appellate process so that it is fair to all while dealing efficiently with the issues raised in appeals. 
Once this legislation is passed I intend to write to the Rules Committee to ask it to start thinking about the processes around High Court appeals to deal with this rather novel area of law as it will become. I think it is worth doing that because the alternative would have been to set up a specialist tribunal just to deal with this. I believe very firmly that the first time this occurs and the input methodologies are then set appeals will arise out of that. I think that is pretty much a given. I believe that will settle it for quite some considerable time. Even though the system may be reviewed again in 7 years’ time I do not think we will see significant changes beyond that initial period. 
I am very keen for the High Court to give some thought to how it might handle a process where it might be better to get people around the table to talk about issues and really thrash them out rather than leaving the case for the Commerce Commission with the case for the individual parties to be made by counsel and then for rulings to be made. I think that will be a challenge in terms of the new process but I think it will be worthwhile. I am very grateful that we have the support of the Opposition on this bill. I believe it will improve investment in our important infrastructure companies. 
SIMON POWER (National—Rangitikei) 
: 
 I thank the Minister for that explanation. I am particularly interested to follow the procedure around the new role for the High Court and how that pans out in a non-legislative sense. I am not sure of the procedures around how a Minister of the Crown does that but if it is just a matter of informing the body—or signalling to it— 
Hon Lianne Dalziel 
: The Rules Committee. 
SIMON POWER 
: We need to make sure that those processes take into account what will inevitably be a different framework initially. If that is the way it is done then that is the way it is done; I cannot comment on that. But I would certainly be interested in one capacity or another to see the processes that unfold from those particular discussions. 
Hon Lianne Dalziel 
: We’ll keep you engaged. 
SIMON POWER 
: I thank the Minister.  
There are two or three other matters that I would just like to put on record for the Opposition. In fact the Minister has addressed one of them in part already: the issue of the new appeals regime for the input methodologies and when it is that merits reviews are to occur. I know one of the major concerns from parties originally about having a two-step review process or appeal process was that the issue that gaming could occur. The concern was that because the two steps were in place that could easily be used as a way of—I would say—stalling the finality of the determinations. But in the end unless I am wrong—and the Minister or the officials can nod or shake their heads at me at this point—the initial finding is to stay in place while those particular reviews or discussions are going on. So the risk that front-end gaming will take place is eliminated almost completely because that initial stand is to be held in place while those discussions occur. If I have got it right that means that if indeed a merit review is undertaken it will be undertaken at a time when the original determination is held in place which means that there will be no material gain to be made from taking the appeal process through more than one stage. That makes sense and as long as that process within the context of the two appeal stages is understood by all players—which it will be when they read the legislation—I think that is an important step forward.  
It is worth making a comment about the consumer-based trusts for just one second. Of course the model behind the measure applying to them is that because the consumer is—in theory anyway—both the owner and the end user the squeeze if one likes on pricing means that both those parties because they hold two such crucial roles together require a less rigorous regulatory framework. In essence they are able to ultimately control pricing by controlling their representatives on various trusts and other such bodies and controlling any input they might have into the senior management or governance process surrounding decisions on price setting and the like.  
It is also worth making one point about a curious relationship that we discovered during the Commerce Committee hearings which I know the Hon Paul Swain and I were most engaged by. It is the interesting situation of the Northland community trust company where the “democratic” processes that are supposedly responsible for keeping that natural price setting in place are slightly skewed by the fact that the trustees are appointed directly by the member of Parliament for Northland and the Maori member for that area—in other words in current terminology by the honourable members John Carter and Hone Harawira. That presents a slightly skewed version of the democratic model that the consumer-based trust is designed to put in place because of course no direct participatory pressure is able to be exerted in the same way that would occur with the other consumer-based trusts. I think it is worth making that point but I do think this measure is a tidy way of dealing with those trusts.  
I have one final question that the Minister may be able to deal with before I hand over to my colleagues who have far more expertise and detailed knowledge of these matters than I do. It is on the issue of the capacity of the Commerce Commission to deliver on the input methodologies on time. That is an important point and it was one that I and to a lesser extent the Hon Paul Swain raised with a number of submitters during the select committee process. When Ms Rebstock appeared for the commission—it was all in open session so I am not breaching any privilege—she assured the committee that we had sufficient expertise and capacity to get these input methodologies determined in a way that would not hold up the process. That is an important assurance that this Committee needs to hear from the Minister. Although I know the Minister has no direct political ability to interfere with the commission’s work nor should she or any other Minister for that matter it would be helpful to be reassured that she is confident in her ministerial capacity that the commission does have the capacity to meet those time lines in what is—and I know Lindsay Tisch and Richard Worth know more about this than I do—exceptionally complex and very very difficult work.  
I will leave my contributions on this part of the debate there but I ask the Minister just to give the Committee of the whole House some assurances in that regard. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 Again I am very grateful to the member. I was just jotting down and checking my recollection of what had happened. We have resourced the Commerce Commission to develop the input methodologies. It is a specific allocation for it to do that. The commission has already issued a discussion document with both the process and the timetable included in it. It intends to hold a conference on all the input methodologies in February 2010 so that is after it has consulted on all of the individual input methodologies. It plans to have it determined by mid-2010 in accordance with the legislation with 20 days then allowed for appeal. 
LINDSAY TISCH (National—Piako) 
: 
 One of the most controversial parts of the select committee process was dealing with the inclusion of airports. Although we came to some consensus that they should be included in the disclosure regimes there is probably more debate over this than on any other point. I have a particular interest in airports—I mentioned this in the second reading—so I want to concentrate my comments just on the airport part of the bill. Airports were a late inclusion and as I have said National feels that they should be included in the regime.  
One of the issues that came out when we were trying to set a pricing regime was whether companies should be operating as a whole. The argument came forward that in airport company situations they were not: they were not operating as a single till each of their entities was separately in a charging regime so that they became profit centres. One of the arguments was simply that if we want to have some fairness and equity in terms of setting prices we should actually be looking at their operating as a whole.  
The information supplied to the committee indicated that some airport companies over-recovered in regard to their airfield activities under the Commerce Commission scenario based on historic cost of those specialised assets and also under the Commerce Commission scenario of using the optimised depreciated replacement cost which is the optimised deprival value for specialised assets. We were keen to make sure that this part of the debate was fully canvassed and as I said it was the most controversial.  
The bill now has a regulatory regime that allows for the setting of the airport charges and moves it away from the Airports Act into the Commerce Commission. But I say to the Minister I need some clarification in terms of what we are looking at with the methodology. We have just had an inquiry into State-owned enterprise valuation methodology and my understanding is—and the Minister’s advisers here today may be able to help me with this—that the aim of applying the optimised deprival value methodology is to value the assets at the cost to the owner of reinvesting in that business if he or she was deprived of those assets.  
So if they were taken away what actually is the methodology we would use? The optimised deprival value methodology is usually higher than the historic cost. My understanding is that in New Zealand the post-tax nominal weighted average cost of capital is normally used. The next point is that the rate works perfectly well with the historic cost valuation. The next point is that combining the post-tax nominal weighted average cost of capital and the revalued assets can create a double counting of the inflation effect. Those are questions that the Minister with her advisers may be able to help me with.  
On the other side of the equation of course we heard that although the airlines and the Board of Airline Representatives of New Zealand in particular were keen to have the airports included in the Commerce Amendment Bill the airports—which would argue that they have for the last 20 years operated very successfully without this new regime—were not happy that this was included. They gave examples of where there are deregulated regimes. They mentioned Stansted and Manchester in the United Kingdom and they mentioned Sydney. But we felt that at the end we need to have this fair and consistent so that there was some equity and that we were not operating where monopolies could be seen to be operating and that including the airports in this bill was the right way to go. So with those points I would be interested in the Minister’s reply to me as to the clarification of those valuation methodologies which she may be able to help me with. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I continue this debate in the spirit of people genuinely wanting to debate these issues. The provisions relating to the input methodologies are the most important provisions in this bill apart from the introduction of a purpose statement for this particular part. Given that these rules determine how financial statements should be prepared for regulatory purposes they actually allow the Commerce Commission to identify whether a natural monopoly business is taking monopoly rents. So they are the fundamental part of any form of regulatory control under the legislation including the very light-handed information disclosure regime that we have just mentioned.  
I think the member is asking me to set the input methodologies; we are not doing that. That is the Commerce Commission’s role and it will be doing that by 2010. Asset valuations could use the optimised deprival value they could use the optimised depreciative replacement cost method and they could use the depreciated historic cost method. I think the member has gone through some of those options and asked me to define what it should be. The whole point of defining them up front is so that businesses have certainty going forward about how the Commerce Commission will interpret their obligations to report on their financial statements under any of the regimes included under the Act. That is the same with asset revaluations the allocation of common costs taxation and the cost of capital.  
That is the purpose of getting the input methodologies done ahead of time—so that there is certainty. I will not pick and choose which one I might prefer for any particular purpose but we will have an input methodology that deals with asset valuations and there will be certainty. That is the key point of this bill. 
Dr RICHARD WORTH (National) 
: 
 The Commerce Amendment Bill is highly complex legislation in two parts. One can mount sustainable criticism as to why that was done because it clearly carries with it the potential to stifle debate with a significant number of subparts in each part. I really wonder at the utility of prolonging the Committee stage. Instead I flag what might be called some high-level issues that caused various stages of the select committee process to pause.  
The major part of the substantive change of course is in Part 1. Little can really be said of Part 2 because it just effects a number of amendments to other pieces of legislation. So I will focus on Part 1 for a moment and talk about the main changes. Clearly as has been signalled before a significant change was the introduction of a purpose statement specifically for the purpose of the Act to give clearer guidance to the courts and the regulator that the aim of regulation is to promote investment. It is very easy to forget that. We are not seeking in this particular bill to stifle business activity. Rather it is the opposite and that is to promote investment.  
The main changes are that for the first time there is a clear emphasis on the importance of incentives for regulated businesses to invest there is a requirement for the Commerce Commission to clearly set out the regulatory rules which are called “input methodologies” with all their complications applying to these businesses and to complete this work by a nominated date in the legislation. These rules are to be subject to merits review and clearly specifying the rules will greatly improve certainty and predictability for businesses and improve business confidence.  
One of the other changes the bill makes is that it allows what one could call “fit for purpose” regulation such as information disclosure and this negotiate and arbitrate regime as alternatives to full price control. When it comes time to speak about Subpart 11 relating to airports I will perhaps make some comment about that. Another thing it does of course is provide a much simpler and more predictable regime for electricity lines businesses removing the threat of relatively heavy-handed regulation for minor breaches of thresholds and with time limits for commission decisions.  
There is a more appropriate regime of information disclosure for small locally consumer-owned electricity lines business where as Mr Power has said the customers are essentially the owners of the business. That should—should—lower their compliance costs and result in savings to consumers. There is an enhanced regime for gas pipelines that enables them to propose a price path to the commission and there is a more robust information disclosure regime for three airports: Auckland Wellington and Christchurch—those international airports with monitoring by the Commerce Commission. Mr Tisch has said that that was controversial. The current regime contained in the Airport Authorities Act is seen by the airlines to be satisfactory. Not so the airport companies would say. 
Let me just talk about some of the issues that detained us for a short time. The first was the time line for preparation and consultation of input methodologies. This is complex stuff. It centres on new section 52U in clause 4. But generally I would describe the key process requirements in this way. First of all the commission has to publish a notice of its intention to begin work on an input methodology including the process to be followed and the proposed time frames. Second it must subsequently publish a draft input methodology.  
Then it has to give interested parties a reasonable opportunity to give their views on that draft. Then it must have regard to any views received; to that end it may hold conferences. The commission has said it intends to hold one formal conference on all input methodologies by I think February 2010. Next the commission is required to determine all the input methodologies specified in new section 52S in clause 4 for electricity lines gas pipelines and airports by 30 June 2010 with an ability for limited extensions. So it is a complex time line. I do not doubt it will place the commission under some logistic pressure. 
Suggestions were offered by officials that there was a case for additional input methodologies under new section 52S. In fact it is my recollection that the departmental report recommended two additional input methodologies. But there are some problems with that and I think those problems were fairly noted by the Commerce Commission and have resulted in a position where that is not now to be advanced.  
There was also an issue which centres on new section 52Z(2) in clause 4 about whether new evidence should be permitted on appeals because that provision prevents parties from introducing new evidence or information in appeals on input methodologies. That is a reasonable approach to take because it should discourage gaming and it should in particular require parties to put up their best evidence and experts in front of the commission. This gaming that occurs in appellate processes is not uncommon. One need only think about what happens in the world of resource management with the Environment Court to see that it is a legitimate concern and it is a concern that is appropriately addressed in the Commerce Amendment Bill. Of course the downside of not allowing new evidence is probably small because there are no facts or changed circumstances at issue. So presumably the High Court Rules will provide a sufficient basis of protection in respect of the introduction of new evidence.  
Others have spoken on these issues of appeals on final decisions in addition to appeals on input methodologies and I do not want to deal with that. We were concerned however about the prospect of delays occurring in the High Court in the hearing of appeals on merits and appeals relating to input methodologies. I do not think that issue has been well addressed. The reality is as others have said that the courts are open to everyone like the Ritz Hotel—those who have money can make their way determinedly through the processes but for many there are huge costs and the delays associated with cases reaching trial are a compounding effect. So I do not believe we have that issue right and it may well have to be looked at in the period of the next Parliament.  
Members of the Commerce Committee will recall the debate on the issues around whether the commission should be able to appoint itself as an arbitrator under the negotiate and arbitrate regime. The reasons for not allowing the commission to appoint itself an arbitrator are several. They include clearly the fact that the commission is a regulator not an arbitrator so if the commission appoints itself arbitrator it is making regulatory decisions becoming almost a judge and jury in its own cause we might say. The second point is that the commission may well be vulnerable to review as an arbitrator and it may well be seen as conflicted having made the rules for negotiation or arbitration. I guess there may be a reduced likelihood of the parties reaching a negotiated settlement and the commission may be perceived by one party or another as likely to make arbitral awards favourable to that party.  
There is a big issue as Mr Tisch has said about whether airports should be included in the bill. It is right to say that I believe all members of the committee were lobbied determinedly by the different interests in that regard. The view that carried force on the day was that the major airports do have strong natural monopoly characteristics. The select committee was treated to an interesting statistic from Infratil showing that that company aimed to provide its shareholders with a consistent return of 20 percent per annum over the long term. That is a very high rate of return for a low-risk infrastructure business that is not facing competition.  
It is also possible to argue quite credibly that the information disclosure regime under the Airport Authorities Act is ineffectual. There are no input methodologies on how information must be compiled for disclosure and there is no monitoring and analysis by an expert body. As we look back at the history of disputes between airlines and airport companies we would have to say that those disputes have been expensive protracted and in the context of the court processes that have followed not really satisfactory.  
So information disclosure is a very light-handed form of regulation. It is proper to record that other OECD countries apply much more stringent regulation to their major airports even though their airports are subject to more competitive pressures from for example high-speed public transport than New Zealand’s airports. There are other matters that I could talk about but I identify those as the issues that the Commerce Committee looked at with the closest consideration. 
LINDSAY TISCH (National—Piako) 
: 
 I want to carry on with a point made by my colleague Dr Worth. The Commerce Amendment Bill does not actually tie in in terms of pricing methodology and disclosure. Airports will be able to treat information disclosure separately from pricing and will be able to continue to set prices as they see fit. That will be one of the challenges the Commerce Commission has and we will be looking very closely at what the regulations are and how this provision will work. I say to the Minister of Commerce that I do not think it is as clear-cut as we would like it to be. There are some huge challenges and I mention that one in particular— 
Hon Lianne Dalziel 
: Which is why the Commerce Commission will handle that. 
LINDSAY TISCH 
: Sure I appreciate that. The other thing that is of concern is in regard to the transitional provisions and I mentioned it in the second reading. Section 56G(1) in clause 4 states: “As soon as practicable after any new price for a specified airport service is set in or after 2012 by a supplier of the service the Commission must—” and it goes through the requirements. If the commission decides there is monopoly pricing it can recommend to the Minister that an inquiry be held and an inquiry could take anywhere between 2 and 3 years.  
Hon Lianne Dalziel 
: Like it does today. 
LINDSAY TISCH 
: Yes so it could be 2015 or later before anything is done to address a situation of overcharging that could well be occurring. That will be a huge issue in that the bill is trying to satisfy that concern on the part of airlines. 
The other point is that with that delay it is unlikely that any changes would take place before 2016-17. So there is a huge lead time. I understand how that works but I flag that these are things that National members will be looking at and monitoring closely. We like regulation in that it is light-handed; we do not want a heavy-handed approach. But it has to be fair and equitable in this case.  
The question was put that the amendments set out on Supplementary Order Paper 244 in the name of the Hon Lianne Dalziel to Part 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 113 
New Zealand Labour 49; New Zealand National 47; New Zealand First 7; Green Party 5; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 4 
Maori Party 4. 
Amendments agreed to. 
Part 1 as amended agreed to. 
Part 2  agreed to.  
Schedule  
The question was put that the amendment set out on Supplementary Order Paper 244 in the name of the Hon Lianne Dalziel to the schedule be agreed to. 
Amendment agreed to. 
Schedule as amended agreed to.  
Clauses 1 and 2  
SIMON POWER (National—Rangitikei) 
: 
 We know that any discussion in the Committee of the whole House in respect of clauses 1 and 2 are wide-ranging and comprehensive debates and do not— 
Hon Lianne Dalziel 
: Since when? 
SIMON POWER 
: They are as opposed to the particular discussions that the Committee may have had in some detail surrounding Parts 1 and 2. It is not my intention to engage in a wide-ranging debate on clauses 1 and 2 because it would seem that the Committee—apart from I think one party—is largely in agreement with the provisions. We have canvassed in detail many of the matters relating to the appeal provisions in respect of price setting and paths for price setting for electricity lines companies and gas companies. We have had lengthy discussions this afternoon about issues surrounding Part 2 although I believe we had those discussions in the Committee stage on Part 1 when talking about airports and airlines. We have canvassed matters around consumer-owned lines companies. 
We have talked about the capacity of the Commerce Commission to deliver the input methodologies at the time they are required. We have had further discussions about merits review and the potential for gaming and how that issue has been dealt with. We have had further discussions on matters relating to the purpose clause—in particular the Minister addressed the Committee about the confidence she has that the consumer of tomorrow is protected by the purpose clause being wide enough. We will see how that goes. We have had further discussions and heard from the Minister about the Supplementary Order Paper. The Minister has addressed some of those matters and given the Committee an undertaking that the Commerce Commission has the capacity to deliver those input methodologies within the appropriate time frame. 
This has been a slightly shortened debate I think for only two reasons. The first as I said earlier is the near-unanimous support for the legislation by parties in the House but more particularly because the select committee process itself was a detailed and painstaking process which saw us move through many of these issues in a very very detailed way. So for that reason there is probably not a lot I can add to this debate except to say that overall what we will be looking for when this legislation is eventually bedded down is that the intention of the legislation is actually occurring. Peculiar to this legislation that will not necessarily be so in the short term for the large bulk of the matters that are passing through the House this afternoon but we believe on this side of the Chamber that there will be many opportunities during the course of these provisions being enacted and being utilised for us to stop and pause not in a legislative sense but in a policy sense to ensure that what this legislation is intended to do is actually occurring. Of course that is always the test—the theory being applied in practice. Having said all of that I will leave the matter there unless any other member including the Minister has a contribution to make at this time. 
Clause 1 agreed to. 
Clause 2 agreed to. 
Bill reported with amendment. 
Report adopted. 
Third Reading 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Commerce Amendment Bill be now read a third time 
. The bill is a major rewrite of the price control provisions in Parts 4 and 4A and in certain parts of Part 5 of the Commerce Act 1986. Its overall aim is to provide protection for consumers against excessive prices and poor quality when buying what are important infrastructural services where there is no real prospect of competition while at the same time ensuring that suppliers have incentives to invest innovate and improve efficiency. The bill draws upon best practice overseas to achieve these objectives. In particular it seeks to ensure that regulation is not imposed unnecessarily and that where it is required it is applied in the most efficient way to promote the long-term interests of consumers.  
The main changes in the bill can be summarised as follows. First a purpose statement has been set for price control for the first time. That will ensure that any regulation is well focused and delivers on objectives including providing incentives for investment. Second the tests and processes for deciding whether and how to regulate have been improved. An inquiry by the Commerce Commission will need to show there is little or no likelihood of competition that there is scope for the exercise of substantial market power and that the benefits of any regulation will materially exceed the costs. Third the Commerce Commission will be required as a priority to set clear and explicit rules called input methodologies relating to regulatory decisions. This is designed to give businesses certainty about what to expect and to improve their confidence in the regulatory regime. Fourth lighter-handed forms of regulation are made available as fit-for-purpose alternatives to price control. They include information disclosure a negotiate-arbitrate regime and a default customised regime. Lastly the bill puts in place improved approaches for the three sectors that are already subject to economic regulation—namely electricity lines gas pipelines and airports.  
The bill will also improve confidence in the integrity of regulatory decisions by providing for appeals to the High Court assisted by lay experts on input methodologies on final decisions made by the commission. Conducting appeals on input methodologies as I mentioned in the Committee stage will present some novel challenges for the High Court and some concerns have been expressed about this. However the statutory time frames for determining methodologies and lodging appeals mean that the timing of the appeal process is likely to be known well in advance. That will give ample time to appoint suitable and available experts to the panel of lay members. It will also enable the High Court to consider the best way to optimise the appellate process so that it is fair to all while dealing efficiently with the issues raised in appeals. Once this legislation is passed as I said again in the Committee stage I intend to write to the Rules Committee which essentially makes the rules for the processes to be followed by the High Court to encourage it to develop appropriate processes for the best consideration of these input methodology appeals.  
In conclusion can I again thank the officials who worked on this bill. They have worked tirelessly on very complex legislation. Can I also pay tribute to all members of the Commerce Committee. In particular I am going to single out Simon Power for being a very willing and able individual who has worked very closely with us to ensure that the bill has been able to make its way to the House in better shape than when it was first introduced to the select committee. This was a good process and it has been contributed to by the many many submissions that were received on it as well. I commend the bill to the House. 
SIMON POWER (National—Rangitikei) 
: 
 The Commerce Amendment Bill of course has been before the Committee of the whole House in recent moments and now we find ourselves moving swiftly through the third reading. There is no need to be concerned about that pace in this particular instance. Normally speaking the Opposition is opposed to procedural urgency motions and we remain opposed to this one but this legislation by and large does have the support of the very large majority of members in this Chamber. I thank the Minister for involving the National Party in discussions and briefings about the bill from the start. It certainly made understanding some of the complex issues contained in this legislation easier to deal with and I am grateful for that. 
There is of course a very complex make-up to this bill as we have heard on the second reading report back and in the Committee stage. Many of the matters have been canvassed by the Minister in her speech to this third reading. I do not intend to cover off those matters again because they have been covered off a number of times in the last 24 hours. I will just emphasise though a comment that I made in the Committee of the whole House—that is although legislators are put in a position of having to foresee over a 2 3 or 5-year period how legislation they have passed in this House will impact on industry and consumers we never have a crystal ball. That means that many of the things we pass into law can have an effect we do not anticipate. That is why it is important to keep a close watch on the Commerce Commission’s work in the area of determining these input methodologies. 
The inability for legislators to see the future is also why it is important to keep a close watch on the Rules Committee and the way it will be instructed or checked on by the Minister and that is why it is important to keep a watching brief on consumer-based lines companies to make sure that the regulatory framework surrounding them which is different from the one being proposed in this legislation is effective and that consumers are not disadvantaged and long-term investment is not disadvantaged by that as well. That is why it is important under Part 2 to make sure that the delicate balance that has existed for so long in this portfolio between airlines and airports is also looked at pretty carefully and monitored in terms of information disclosure regimes that are being put in place with this legislation. That is an argument that I have no doubt will continue past the passing of this legislation. 
The inability to see the future is also why it is important to spend some time from time to time making sure that the purpose clause of commerce legislation is updated and reviewed and that we can make sure that all the processes involved in that are clearly monitored. 
I also have one last point in respect of something I raised very early in this process; it relates to the merits review process. The Minister rightly in my view recommended to the Committee that we have a two-stage appeal process—firstly at the point where import methodologies are determined and secondly at the point of final implementation. The fact that initial determinations will stay in place if indeed any appeal rights or merit review rights are exercised provides for a minimisation of any potential for gaming in these areas and that is important. The Minister was right when she said in her opening remarks that legislation in the commerce area is designed to provide certainty. That applies not only to businesses under regulations themselves but to the consumers who are in receipt of the goods and services produced by those businesses. 
The Commerce Amendment Bill enjoys the support of the National Party has done through all stages and will continue to do so through the third reading. 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 In the minute that has been allocated to me it will be very difficult to traverse the work—the thorough work—of the Commerce Committee on the Commerce Amendment Bill. But I will say that as the previous member outlined anything to do with commerce and competition requires a very delicate balance. If we get it wrong if the balance is too heavy in one way or too light in the other it creates perverse outcomes. That is no more so than with electricity. We know that electricity lines companies are monopolies so if we regulate them in too tough a way it then means that boards do not have to do much and they blame the Government—if the lights go out it is the fault of the Government for setting the regulations at too tough a level and for not allowing enough retained earnings for putting back into capital expenditure. If companies are regulated too lightly then there is the opportunity for a monopoly to gouge and for consumers who have no other alternative means of access to electricity to have to pay monopoly rents.  
This is a very delicate business and in my view the select committee worked extremely diligently on this legislation to improve the balance in a number of areas. I think the committee worked extremely well and I think that as a result the balance in this area which will have to be looked at continually from time to time has been much improved. I support the passage of this bill. 
LINDSAY TISCH (National—Piako) 
: 
 The Commerce Amendment Bill has been an interesting exercise. It has been a fundamental rewrite of the Commerce Act’s provisions relating to regulation of the sectors with little or no competition or prospect of competition. The new purpose statement in Part 4 in new section 52A(1) substituted in clause 4 states that the bill’s purpose is “to promote the long-term benefit of consumers …” such that suppliers “(a) have incentives to innovate and to invest … (b) have incentives to improve efficiency and provide services at a quality …  (c) share with consumers the benefits of efficiency gains … and (d) are limited in their ability to extract excessive profits.”  
The bill we have debated provides the Government with many more tools for regulating other than the imposition of price controls including information disclosure negotiation or arbitration of a regime a price control path and customised price control. Of course the test will be whether to regulate and that has changed. There will be only one process after deciding whether to regulate and how to regulate rather than two separate processes. This is very complex law it is very technical with wide-ranging implications I have to say that will make it difficult for policy makers to predict the outcome.  
National will be watching very closely as we monitor the progress of this bill under the Commerce Commission to see that the points we have raised will be realised. There was a question mark over resources and how the changes will be able to be implemented in the time frame that has been set. I have been assured by the Minister during the Committee stage that the time frames for the transitional changes are shorter than have certainly been mooted before. That is a good sign. However we will be monitoring those as we go through. Good commercial law depends very much on sound and reliable implementation by both the independent agencies and Ministers. With those points considered National is happy to support the third reading. 
Bill read a third time. 
Electricity Industry Reform Amendment Bill 
Second Reading 
Hon LIANNE DALZIEL (Minister of Commerce) 
 on behalf of the  
Minister of Energy 
: I move  
That the Electricity Industry Reform Amendment Bill be now read a second time 
. The Electricity Industry Reform Act of 1998 required ownership separation between electricity lines companies and electricity supply companies in order to facilitate competition in the electricity industry. I actually recall being in the House when that particular interesting legislation was passed and I recall Max Bradford being the Minister responsible for it. I also recall the promises of lower costs of electricity but that was not to be.  
The reason for this amendment bill is to follow up on amendments passed in 2001 and 2003 which allowed electricity lines businesses to own generation up to specified quantities if they complied with corporate separation and arm’s-length rules. This bill seeks to encourage lines companies to invest in permitted generation particularly renewable generation. It proposes to achieve that by relaxing some of the corporate separation and arm’s-length rules relating to generation and retailing and by allowing electricity lines businesses to sell more electricity to hedge the output of their generation and to invest in generation and retail without limit outside their own lines areas.  
Of course this bill has been to a select committee since the time it was introduced so I feel that that is sufficient for my contribution on the second reading of this important legislation. I recommend the bill to the House.  
LINDSAY TISCH (National—Piako) 
: 
 It is very interesting that the Electricity Industry Reform Amendment Bill which we are having a second reading on now is in line with the National Party’s policy at the last election in 2005. Here we have a bill that will be passed and National is supporting this bill because it is something that we have identified as being important. It is actually consistent with National’s 2005 policy that would have allowed line companies to enter into generation. 
Lines companies have an interest in electricity distribution. They also have very stringent limits on what they are able to invest in at the present time. Some have the ability to invest in generation and this bill implements policy changes firstly to make it easier for owners of lines companies to sell the output of the generation they are permitted to own under the 2001 and 2004 amendments to the Electricity Industry Reform Act 1998 often referred to as EIRA. The objective is to encourage owners of lines businesses to invest in permitted generation especially generation from renewable sources. That is fine; that is something we subscribe to. It will be achieved by allowing retail sales of electricity to go up to 100 percent of the nominal annual output capacity of permitted generation by allowing trading and financial hedges by allowing grid-connected generation to count as local generation in certain circumstances by requiring at least one independent director and not permitting executive directors by allowing the same person to be a manager of both companies up to a threshold of 30 megawatts and by allowing the cost of corporate separation and compliance with arm’s-length rules. 
The second policy change is to narrow the scope of ownership separation requirements in order to focus on the geographic areas where there is potential for the exercise of market power and anti-competitive practices—namely where lines and supply are co-located. And the third main change is to amend the definition of “renewables” to include all renewable energy sources. 
We have just debated another bill that has had its third reading the Commerce Amendment Bill which adds value to the points we are now debating under the Electricity Industry Reform Amendment Bill. Year in and year out we have power shortages. Not a year goes by when there is not some concern about whether there will be enough electricity over the winter periods in particular to be able to have the lights on in our homes in Auckland and to be able to keep industries operating. Even this year with having experienced so much rain in the Waikato we find that the Southern Lakes are still below their normal levels. Yet given that we have had so much torrential rain one would expect that the Southern Lakes would have had the water. But that has not been the case and it has not been the case for over the last 9 years. One of the things in terms of generation and in terms of the whole energy sector is that this Government has made it far too difficult for investment in these areas. 
Hon Member 
: Bollocks! 
LINDSAY TISCH 
: Well it has because in the 9 years of the last National Government we put in 1600 megawatts—1600 megawatts of new electricity came on line. What has it been under Labour? What has it been under Labour’s 9 years? It has been less than 700 megawatts. So why is there no generation? Why are we having these challenges each winter as it comes up when people talk about shortages of power and of maybe having to cut back? I will tell members the statistics; I am not making them up: in the 9 years of a National Government we put on line 1600 megawatts—1600 megawatts went into the grid so that we could have security of supply in our homes in our businesses and wherever we live. This Government which is on its last legs now has put in only 700 megawatts or less over the last 9 years. That is an absolute insult when energy is part of that infrastructural area we need to be so mindful of whether in terms of energy roading or broadband. This Government is found wanting in those three areas. 
Let us put this in the energy distribution concept—electricity distribution is important in underpinning New Zealand’s economy. The Government has $6.3 billion worth of assets and that compares with Transpower’s which is separate at $2.4 billion. There are 1.9 million connected consumers. There are 149000 kilometres of lines and that compares with Transpower’s 11000 kilometres. The forecast investment is $3 billion to $5 billion over the next 5 to 10 years to meet the needs of consumers. At the moment the demand is of $3 billion to $5 billion per year and hopefully with this bill we will be able to achieve those figures because at the moment we are falling far short. Demand for electricity is growing as the economy grows while spare capacity networks have been consumed and assets are ageing. 
The digital age is driving demand for a more reliable energy supply. Our prices have declined by 4 percent in real terms since 2001. The electricity distribution sector can have an important role to play in distributed generation and fibre optics networks if regulation will allow and that is certainly what we are trying to achieve here. 
What are the potential benefits of this bill and of the Commerce Amendment Bill? There will be some certainty that there will be the $3 billion to $5 billion of new distribution investment over the next decade which could be distributed in a timely manner. The investment will improve security of supply through certainty over longer-range planning. It will increase reliability and quality. We will see new technology implemented sooner and more often. There will be a lower cost of the regulatory environment and something we are always very mindful of is that the costs associated and any regulation that goes with those costs are fair and equitable. 
The new regulatory regime will provide the environment for lines businesses to improve efficiency of energy use—for example by reducing line losses upgrading demand sites and management services and installing smart meters. A number of technologies will become available to be implemented under a new regulatory regime which of course is to increase the distribution generation. 
Strong consumer protection still remains with this bill and the bill will be beneficial to smaller lines companies. There are 28 lines companies and 16 of them are owned by trusts. The bill will be beneficial to smaller lines companies like those on the West Coast in Buller where my colleague Chris Auchinvole comes from. Those companies will be the beneficiaries of this legislation. The bill frees up small companies to get engaged in electricity generation thereby improving their income and securities of supply. It limits of course their independence on imposed costs from other generators. 
Without this bill becoming law it will be extremely difficult for us to progress and to provide that security of supply that we believe is so important. As I said this is in line with what National said in its policy of 2005. We said there that our policy was to allow lines companies to enter into generation. The select committee has made only minor changes to the substance of the bill and the changes were made unanimously. National is happy to support the second reading and we look forward to the Committee stage shortly. 
Hon HARRY DUYNHOVEN (Associate Minister of Energy) 
: 
 As the Associate Minister of Energy it is a pleasure to rise to support the Electricity Industry Reform Amendment Bill. I gave the first reading speech on behalf of the Minister the Hon David Parker on this bill. 
Can I just ask the previous speaker from the National Party whose conservation policy was announced this afternoon by the Labour Party whether National might announce another energy policy and whether National will sell the electricity assets that belong to the three State-owned enterprises belonging to the people of New Zealand. Will National sell them? There is absolute silence. The second issue is whether National’s policy is to go nuclear. Those are the two issues that the people of New Zealand are really interested in. 
In talking about this bill I say that it is absolutely needed simply because of the mess that was inherited and the number of things that over the years have proven to be deficiencies which we are now addressing. 
I commend the Hon David Parker and I commend the select committee. I think the bill is excellent and I am sure the House will pass it—perhaps not unanimously but all the thinking people in the House will pass it 
PANSY WONG (National) 
: 
 The previous speaker who has just resumed his seat is Harry Duynhoven who just typifies the concern the public have. Labour is now so bereft of any ideas that it resorts to announcing National’s policy. Labour has nothing to say. The member had nothing to say about the Electricity Industry Reform Amendment Bill. It is amazing that 9 long years ago the Labour Government thumped the table over what Max Bradford did. Does this bill reverse anything of the 1998 electricity industry reforms? What happened to Labour’s vision for energy security for New Zealanders? Where is the vision? I want to ask this question on behalf of the New Zealand public particularly the good people who live in Botany Downs who told me they are sick of hearing every winter a debate about whether there will be power cut or a blackout. Would the passage of this bill save New Zealanders from facing the awful threat of power cuts and blackouts every year?  
National will support this bill although I doubt very much that sneaking this little bill in under urgency—in the midst of the vacuum the total lack of vision concerning security of energy supply for New Zealanders—will save anyone from reliving the nightmare of the last 9 years. This is a very timid approach to electricity industry reform but unfortunately like the rest of the public we have stopped expecting any vision or any bold movements. A little bit of an improvement is almost welcome because unfortunately there is nothing on offer. So I just want to tell Labour members that although they are continuing to run out of ideas they should stop stealing National’s policies.  
It is a pleasure for me to take a short call on this short bill. It shows a lack of vision and I think it deserves only a short sharp rebuttal from members on this side of the House because I do not believe that rushing this bill through under urgency will convince New Zealanders that the 9-year nightmare of threats of power cuts will be resolved. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 Let me make it quite clear that New Zealand First supports this bill. We will support it right through the process unless something major changes during the Committee stage. But we see it as another piecemeal attempt to add to the Electricity Industry Reform Act of 1998; it is a piecemeal attempt to patch it up. National is claiming credit. In 2005 it wanted lines companies to get involved in generation. We suggested that to Max Bradford in 1998. We said he should not close the door completely on the lines companies. And what did he do? He closed the door completely on them. Let us face it the Max Bradford reforms worked at the time simply for one reason only: we had more capacity than there was demand for electricity. It set up four State-owned generators. Contact Energy was independent but owned by the State at that time and three new ones came on board so there were four competing with TrustPower Ltd to sell electricity to the country and they had more to sell than New Zealanders were using. So there was downward pressure on prices. But gradually bit by bit that was eroded. The demand went up and the capacity was not coming on stream. We were told at the time that we needed to bring in 150 megawatts or more per year. Lindsay Tisch told us that in the last 9 years 700 megawatts have come on stream. I do not know whether he is correct but I know it is a good deal less than 150 megawatts per year. 
Lindsay Tisch 
: It is less than 700. The figure’s right. 
PETER BROWN 
: I will take the member’s word but if it is not correct it is close.  
Hon Parekura Horomia 
: I wouldn’t. 
PETER BROWN 
: On this occasion I will because I think he is on the right side of it. I say to this House that concerns around electricity are major issues with the public. There is the issue of security of supply and the issue of price. [ 
Interruption 
] I think we are having a two-way conversation across the Chamber in the middle of the debate. Electricity is so much of an issue that New Zealand First has had more correspondence on this issue in the last few months than ever before. The price keeps going up. We are told we have a competitive market but the public are not seeing that. 
New Zealand First passed a remit at its recent convention. Our members want to investigate the feasibility of amalgamating the three State-owned generators—that is Mighty River Power Meridian Energy and Genesis Power. New Zealand First members want to give consideration to the feasibility of amalgamating those three. To answer Harry Duynhoven I say I have had more correspondence in recent times on this country having nuclear power. It is not a position New Zealand First supports but I have to say we have had more correspondence in recent times about going nuclear. 
Hon Dr Michael Cullen 
: It’s more expensive. 
PETER BROWN 
: It is good to hear the Minister of Finance say it is more expensive. But people are concerned about the environment and the cost. That is where we measure the debate and I would take the Minister of Finance on over that. I am not advocating it. New Zealand First’s position is to stay nuclear free but I am just pointing out the concerns of the public. They want the concerns of the electricity industry addressed. This bill goes some way towards that. It allows lines companies to get involved in generation which is something we said to Max Bradford as I recall in 1996 or 1997. So it is all very well for Pansy Wong to say National had the idea in 2005. We said and I think Labour also said at the time: “Don’t cut it straight down the middle.” This bill allows the lines companies to have more generation. 
Pansy Wong 
: Tinkering. 
PETER BROWN 
: The member should read the bill if she wants to know what it says. This bill will certainly get New Zealand First’s support. 
Let me tell the House what we should be trying to achieve as politicians in terms of energy. We want an abundance of supply. We do not want to keep worrying year after year about whether the lakes are low. We want an abundance of supply. We want a reasonable price. If we have a market then we want a genuine market where companies compete and bring the prices down. That is not happening. We want an electricity supply on a sustainable basis—I think the National members agree with that and I know that my Labour colleagues agree—and of course we want it to be as environmentally friendly as possible. Hence the public concern. 
Some members of the public probably only a small minority are writing in more and more saying that we should look more closely at nuclear power. That is not my position and it is not my party’s position but we are facing realities. There are some people out there who want to take a closer look at doing that. Just to dismiss that idea and to simply say that we will amend things here in a piecemeal attempt in the Max Bradford legislation of 1998 or whenever it was is a way forward but I say that it is not the long-term way forward. We should be looking more closely at the way we supply electricity in this country and it may well be that we will have to amalgamate the three big State-owned players or to show a little bit more vision. I do not know the answer; all I know is that this bill will make an improvement. But whatever we say this is a piecemeal patch-up job. Thank you. 
CHRIS AUCHINVOLE (National) 
: 
 I listened with interest to the previous speaker Peter Brown as I always do. I remember that I followed him in the first reading debate on this bill. I am not quite sure what it is about this Electricity Industry Reform Amendment Bill but here we are debating it in urgency. I noticed from checking back on the first reading speeches that that debate seems to have been held in urgency as well. 
The reality is that there is a great need for urgency in electricity matters—a great need—and a very dilatory approach has been taken to ensuring that we have a secure supply of electricity in New Zealand. I would vary slightly from the view of the previous speaker that we have to have an abundant supply. It is a little bit difficult to convince electricity-generating companies that they should have capital at risk of being used. I think that what we need is a sufficient supply with appropriate back-up where required. 
Hon Dr Michael Cullen 
: Hear hear! Absolutely right. 
CHRIS AUCHINVOLE 
: “Thank you very much.” I say to Dr Cullen. I thought of that all by myself. But it does follow business logic. 
There are of course costs to deferral. If we look at the sad situation of the Dobson dam which was put off for 8 years before it was morphed into the Arnold River scheme we see that there was a huge loss of opportunity cost in that. But the reality is that even though the project now has its approvals and its permits it is not guaranteed because the company involved in building it still has to consider whether it is the most attractive option for it. 
It is a delicate situation but it has not been helped by the figures given to us by my colleague Lindsay Tisch who mentioned just how short the present Government has been in producing electricity generation over the nearly 9 years of its tenure. The Minister of Energy can wax as enthusiastic as he likes about all the activity that is planned for the future current compliant projects but even he has to acknowledge—and he does—that there was a considerable lag during the middle years of this Government’s tenure. Perhaps saying “middle years” is a little unkind because it signifies that there was a beginning and that there might be an end fairly shortly. But there was a pause and that pause has not been without consequence. 
If we look at the Tasman end of West Coast-Tasman we see that there are whole industries up there that drop shifts in the winter to help conserve power which restricts their usage. Consistently now every 4 years we seem to have this stricture on power. Apart from that one of the consequences is that new companies cannot really start up unless they can anticipate having a secure supply. That is where we think this bill will help and National is very happy to support it. 
The purpose of the bill is to better ensure that costs and prices in the electricity industry are subject to downward pressure that the benefits of inefficient electricity pricing flows through to all classes of consumer and that new investments and generation from renewable energy sources occur. 
Quite apart from the other areas this legislation will be of considerable benefit to West Coast-Tasman which has smaller lines companies such as Westpower and Buller Electricity in Buller. The mission statement of Westpower specifies what it does. It distributes electricity generates electricity and provides power systems electrical contracting asset management services and electrical engineering consultancy services. It actually has quite a humming business there. The ElectroNet part of its business has about 120 very skilled employees. Both Westpower and Buller Electricity exist for the community and are owned by the community but the present legislative and regulatory charges on companies the size of Buller Electricity and the larger Westpower company are considerable. 
This bill will allow small lines companies to become engaged in generation particularly hydro schemes as the bill specifies that hydro power is renewable. Without this legislation if Westpower wished to engage in building a hydro scheme it would have to seek a special exemption from the Commerce Commission. This costs a load of hooch and is prohibitive for a small enterprise even to consider. The bill allows companies to look at having hydro schemes for an increased security of supply and a reduction of supply costs. Let us remember when we look at electricity that there is a 20 to 30 percent peak time loss of electricity simply in its transmission. Where it comes up from Lake Coleridge and across Mount Horrible through into the West Coast at peak times we have a 20 to 30 percent heat loss in transmission. In North Canterbury Marlborough Tasman and the West Coast 73 percent of the power used is brought in from outside the area. So we are almost guaranteeing that we will always have high transmission loss. 
We need to grow the telephone book on the West Coast so we need development. Without power there will not be any development. We have 56 rivers we have heaps of creeks but we have limited reservoir capacity. New systems will probably depend on run-of-river operations taking full advantage of the renewable and ever-abundant rain resource that we enjoy so much down on the Coast. There are added advantages. Westpower as I mentioned earlier has a contract subsidiary company called ElectroNet. It employs 120 people with a very high calibre high level of skills. Building generation builds career paths in that sort of company. It is with pleasure that National supports this bill which will none the less still require the National Party’s revision of the Resource Management Act for this to be a truly useful initiative. 
Bill read a second time. 
In Committee 
Part 1Amendments to principal Act  
LINDSAY TISCH (National—Piako) 
: 
 I rise to share with members some of the interesting points that have come out of this debate and out of this bill. I first acknowledge the support of the advisers who are here today because we have had a number of bills including the amendment to Commerce Act and the other power and energy ones and from a layperson’s point of view it is difficult to get involved with and come to grips with some of these complex issues. I must say we have been impressed by them and certainly I have been very mindful of their expertise. So I thank them on behalf of the National Party team.  
I refer to clause 5 “Interpretation” and I will look at the definition “renewable energy source”. It relates to a comment I made in the second reading about power generation which Peter Brown also picked up on—on the amount of generation in megawatts that had been brought online alongside those plants that had been decommissioned. If we look at clause 5 we see that “renewable energy source” means “solar wind hydro geothermal biomass tidal wave ocean current sources or any other energy source that occurs naturally and the use of which will not permanently deplete New Zealand’s energy sources …”. I will not go through the rest of the definition but in essence we are talking about renewable energy sources and the genesis of this bill is about using as much renewable energy as we can.  
So it was of interest when I spoke in the second reading to note that over the 9 years of the previous National Government 1600 megawatts of new generation came online yet over the last 8 years under Labour less than 700 megawatts has come online. I will expand on that point because it is relevant and when we look at renewable energy sources we want to see where the new generation has come from. We have those that have been commissioned and I will start back in 2000 when Contact Energy at Otahuhu B whose fuel type is gas had a capacity of 380 megawatts. I will not go through them all but Contact Energy at Te Rapa in the year 2000 which is gas had 44 megawatts.  
Just so there is a reference point here this information comes from the Ministry of Economic Development’s  
Energy Data File  
of June 2008 at page 132. That is the source of the information just in case some members may think I am making it up which I am not. That is the source. 
Russell Fairbrother 
: That’s unusual. 
LINDSAY TISCH 
: Well I am not making it up and the member will have an opportunity to articulate the Government’s point of view if he wants to take a call.  
Here is another one under gas—Genesis Power at the Huntly project in 2004 had 40 megawatts. I was fortunate to be there for the commissioning when that came online. Also here we have Pan Pac in 2005. But let us look at those of geothermal fuel - type: Todd Energy at Ngawha 2008 had 13 megawatts; Contact Energy at Wairakei had 20 megawatts; Mighty River Power at Kawerau in 2008 had 90 megawatts; Meridian Energy at Manapouri 2007 which is hydro had 130 megawatts. With TrustPower we have a wind one of 93 megawatts; Meridian Energy at White Hill in 2007 whose fuel type is wind had 58 megawatts; Genesis e3p which I mentioned before 2007 whose fuel type is gas had 385 megawatts.  
When we are looking at the whole essence of this bill it is to say that we want to have renewable energy sources. It is really interesting to see where over the last few years—in fact from the year 2000 through to 2008—the actual generation has come from. While there are new plants and what has come on stream there have also been those plants that have been decommissioned. Since 2000—once again the source is the same source—Contact Energy in New Plymouth had plant decommissioned in 2000. 
CHRIS AUCHINVOLE (National) 
: 
 In speaking to Part 1 of the Electricity Industry Reform Amendment Bill I note from the report from the Commerce Committee that the submissions fell into two opposite and probably irreconcilable schools of thought when they were being considered in the committee. I guess with electricity one should expect a degree of polarisation but there is a current of enthusiasm for progress associated with Part 1. It does not generate too many surprises and the recommendations of the select committee incorporate the best of the submission points.  
I would like to follow on from my colleague Lindsay Tisch and select that same area of significance in Part 1—the interpretation clause—which will be of particular interest to electricity lines companies consumers generators and others. The particular definition that is of interest is of a “renewable energy resource”. This is a very significant part of the bill and determines that a renewable energy resource comprises—and I will read out the list so that people are aware—“solar wind hydro geothermal biomass tidal wave ocean current sources or any other energy source that occurs naturally and the use of which will not permanently deplete New Zealand’s energy sources of that kind because those sources are generally expected to be replenished by natural processes within 50 years or less of being used”. The West Coast has 56 rivers and heaps of creeks and this means that with all the necessary compliance conditions being met and all the permits properly gained it will not be necessary now for small lines companies to seek special approval from the Commerce Commission. This means smaller companies can be spared that additional cost and can now consider getting out of the poverty trap that they were previously in.  
We do need the electricity and I would in some measure support the earlier comments of Mr Brown having said that I did not quite agree that we need “abundant” electricity. We have the abundant means of generating it already there but we do need a sufficient amount of electricity to encourage new business and development. The latest projection of power requirement or power demand increases for an area such as the West Coast which currently uses only 46 megawatts with increased dairying with increased mining— 
Hon Parekura Horomia 
: What about the East Coast? 
CHRIS AUCHINVOLE 
: We will come to the East Coast. I would have hoped the member would be the advocate for the East Coast. I am the advocate for the West Coast. But I have no objection to the East Coast. I have been up there a little bit. 
Hon Harry Duynhoven 
: Damien O’Connor does a really good job. 
CHRIS AUCHINVOLE 
: I raise a point of order Mr Chairperson. I was not aware it was normal for Ministers in the chair to interject. 
The CHAIRPERSON (H V Ross Robertson) 
: They can interject but I have my finger here and it goes on the button. Also if they constantly interject then they will be pulled up by the Chair. 
CHRIS AUCHINVOLE 
: Thank you Mr Chair. I am more than happy to advocate for the West Coast particularly in the absence of anybody else doing so. We need that electricity increase for the farms and mines that are developing in that area. It is an interesting list of approved energy sources and I look forward to checking it again in a couple of years and seeing how many of the opportunities have been taken up by small-scale operations hopefully fulfilling the purpose of this bill to drive down the cost and price of power. I note the combination of cost and price. That is a good idea so that the benefit of efficient electricity generation flows to all classes of consumers and to new investment in generation from renewable energy resources. Thank you Mr Chairman. 
PANSY WONG (National) 
: 
 According to the Minister in the chair the Hon Harry Duynhoven the Hon Damien O’Connor is doing a good job on the West Coast. The only question I have if he is doing such a good job is why the Prime Minister and the president of the Labour Party have dumped him so far down the ranking on the party’s list that has just come out. He is unlike our hard-working effective member the next MP for the West Coast Chris Auchinvole who makes so much sense. I think the people on the West Coast deserve a good effective MP. 
Given that the Minister in the chair the Hon Harry Duynhoven is looking forward to taking a call I would quite like him to stand up and explain to us a very important part of Part 1 namely clause 7. He is not very good at making comments about who is an effective MP so maybe he could try to see whether he can do a better job of explaining the meaning of “involved”. I say to colleagues that I have started to think that this bill will generate a lot of business for consultants and lawyers. Apparently there are all sorts of restrictions on who can trade with whom so therefore we get down to the nitty-gritty and have a definition of involvement. New section 7(1) to be inserted by clause 7 states: “For the purposes of this Act a person is involved—(a) in a line if the person conveys electricity by the line or owns or operates directly or indirectly the line or any other assets used in connection with the line either alone or together with its associates and either on its own or another’s behalf:”. I would really like the Minister to take a call and say how legislation that defines involvement in such a way can actually help competition or incentivise anybody to generate more electricity. Actually it gets more interesting. The definition goes on for about five more paragraphs which I do not want to bore the public with. These paragraphs get into the question of how to measure involvement. So lawyers and everybody else need to get around the definition of involvement and how to measure involvement? Is that not intriguing? 
This is very enlightened legislation because there is an example included in the bill of a company called LineCo which has a 20 percent shareholding in a joint-venture company that operates a connected 100 megawatt plant. That means that the company is involved in 20 megawatts of generation. As a very qualified accountant and a fellow member of the Institute of Chartered Accountants I can assure everybody who is listening that a 20 percent shareholding in a joint-venture company does not necessarily translate into 20 percent of the revenue generated etc. The direct relationship is not very obvious but apparently that is the formula that this company has to operate under. Therefore as the example in the bill states “LineCo can sell to connected customers”—and that is interesting; we will have to look for a definition of who is qualified to be a connected customer—“all of the total annual nominal MWh capacity of the 20 MW. The selling cap does not change in proportion to the extent of LineCo’s interest in the business selling the electricity.” I can see that even the Minister has a perplexed look on his face. I am sure that the great listeners to this debate like me really want the Minister to take a call and explain to us in very simple terms what involvement is and how one measures it. Once we get hold of this definition and measurement how can that actually encourage anybody? I can just see people lining up to get into this new legislation so they can get involved and measure how involved they get in generating the much-needed electricity to power those plants. I want the Minister to get up take a call and say how this definition and measurement of involvement can reassure people that there will be no power cuts. 
DAVID BENNETT (National—Hamilton East) 
: 
 If members look at the electricity sector over the last 9 years they will see two features that show what the Labour Government has done to the sector. The first is the tremendous increase in the cost of electricity. The Labour Government has managed to increase the cost of electricity for ordinary New Zealanders. Somehow it has managed to take advantage of the economic conditions of New Zealand and sting the New Zealand public through higher energy costs.  
The other thing that is quite interesting to look at in respect of the legacy of Labour and energy is that its policies have led to a situation where we have fewer renewables as a percentage of what this country actually produces in energy. At a time when any other country in the world is looking at increasing renewables the Labour Government of New Zealand has spent 9 years reducing the percentage of renewables in New Zealand. Is that what members call good governance? In the last week of a dying Government Labour has produced legislation to try to increase the renewable target. What kind of leadership is that? What kind of industry awareness is that? What kind of dedication to the environment is that? What kind of approach to energy issues is that? It is not good enough.  
The New Zealand public deserves better from its Government. It deserves a Government that looks forward and takes action before issues become such a distinct problem as has happened in respect of this Government. This Government has not taken the necessary actions over the last 9 years to encourage renewables. Any members who have been in touch with their constituencies would know that the individual lines companies want to have the ability to produce renewables. Many proposals in the Waikato for example have not got off the ground in recent years and this Government is waiting until the last week to put some legislation forward. The last week is when it decides to do something about it. Well it is far too little far too late.  
The reality is that New Zealand has got into a situation now where we do not have the renewable component that we are used to. It is hurting us economically and it will mean that we have to make a huge investment under a National Government to achieve that renewable target. What is more New Zealanders have had to pay for that electricity over the last 9 years and they have had to pay for dirty electricity not for clean electricity that could have helped our brand as a country and could have helped New Zealand as a leader in the renewable energy stakes. No this Government has charged New Zealanders more for electricity—for dirty electricity. Is that good policy? It is not.  
The Government has had the opportunity over the last 9 years to make structural change to make investment in electricity and to make the progress that New Zealanders demand of a Government. But the New Zealand public did not get that. The Government did not provide that leadership. This bill is just one little attempt in the last week to try to provide that leadership. Well it is not leadership.  
This bill is not leadership. Leadership is about providing some distinct vision about how we can make our renewable target a reality. That will come under the National Government because we will not walk away from the tough issues and we will not put up legislation in the last week of a term to try to find solutions. We will go out there and think about the issues provide solutions and make sure they are workable. 
The CHAIRPERSON (H V Ross Robertson) 
: The member will speak to the bill. 
DAVID BENNETT 
: And I am—to the Electricity Industry Reform Amendment Bill. When we look at this bill we see that it is far too little far too late. It does not cover the issues that the public of New Zealand have had to deal with in the sector. The bill does not deal with the increasing costs that have been put on the public and it does not deal with the lack of renewable electricity generation in this country. They are two immediate failures in the energy policy of this Government and that shows the true intention of this Government not to provide a clean green New Zealand where we can prosper and make the most of the physical attributes of this country.  
LINDSAY TISCH (National—Piako) 
: 
 I wish to conclude the points I was making in the first call I took in respect of the numbers of megawatts that have been commissioned and those that have been decommissioned. I got to the point of identifying some of the plants that have come on stream since 2000. The amount of megawatts commissioned came to 1942 megawatts but for decommissioned plants the capacity amounted to 797 megawatts. So the net figure gain is very very low compared with what it was back in the period of the previous National Government. I just wanted to finish off that point in regard to the capacity we have. 
My colleague David Bennett has talked about the amount of renewables and how they have been reduced considerably yet this bill is focused on renewable energy sources. I want to look at clause 7 “Meaning of involved”. There have been some changes here because originally an issue that one of the submitters came up with was to say that we needed to amend the definition of “involved” and this concerns clause 7. The effect of the broad definition of “involved” in the Act will be to include the generation capacity of the entire wind farm or any generation in a calculation of generator cap even if the lines business owns only a small proportion of the wind turbine. I refer to one of the submissions which was from WEL Networks and it had this to say: “One potential structure of ownership being considered by WEL Networks is the ownership of a proportion of turbines in a wind farm so as to come within limits of generation prescribed by the legislation. If the 30 megawatt restriction continues to apply in section 2(9) schedule 1 of the Act the effect of this broad definition of “involved” will be to include the generation capacity of the entire wind farm in the calculation of WEL Networks’ connected generation even if WEL Networks only owns a small portion of the wind turbine which amounts to below the 30 megawatt capacity.” So that change was made because that very good point came up during the WEL Networks submission. 
Another point I raise came from the Vector submission and relates to the regulatory impact statement consolidation of November 2007. The submission said: “If line companies invest in electricity generation it is likely to be within their own lines networks or other distributor generation. This is because generation in their own region enabled line companies to (a) develop a more diverse portfolio of assets capable of meeting consumer demand such that is possible to defer or avoid investment in new capacity and (b) ensure better local optimisation between investment in lines generation and demand sign management as noted in the November 2006 Cabinet paper.” 
It is interesting to note that when we are looking at bills we need to know exactly what the regulatory impact analysis is. A lot of bills that have come forward before this Parliament have not had a regulatory impact statement and we have seen that with the KiwiSaver legislation as an example and with the Waste Minimisation Bill. It is important that when we are looking at legislation we know what the costs associated with that legislation will be by way of a regulatory impact analysis. Those are the only points I want to bring to the attention of the Committee. There is no need for the Minister to respond to my questions unless he wants to. National is in support of this legislation and with those comments I will finish. 
Part 1 agreed to. 
Part 2Amendments to other Acts and transitional provision  
The question was put that the amendments set out on Supplementary Order Paper 242 in the name of the Hon David Parker to Part 2 be agreed to. 
Amendments agreed to. 
Part 2 as amended agreed to. 
Schedule  agreed to.  
Clause 1  agreed to.  
Clause 2  agreed to.  
House resumed. 
Bill reported with amendment. 
Report adopted. 
Third Reading 
Hon HARRY DUYNHOVEN (Associate Minister of Energy) 
 on behalf of the  
Minister of Energy 
: I move  
That the Electricity Industry Reform Amendment Bill be now read a third time 
. This bill will encourage lines companies to invest in permitted generation particularly renewable generation and it amends the Electricity Industry Reform Act 1998. That was a ridiculous ideologically driven Act passed by Max Bradford and the National Party with considerable opposition from people like myself Peter Brown from New Zealand First and others who have since come along and said that they absolutely agreed with what was done by the Opposition of that time in fighting that legislation. That legislation forced local electricity businesses to be split up into lines companies retailers and generators. It all but stopped local lines companies generating electricity despite their long history of doing so cost effectively. For example in my own area the New Plymouth Municipal Electricity Department had a very good little local hydro station which it was forced of course to separate off from the lines business. 
This bill makes four main policy changes which were outlined earlier each of which will enable lines companies to get back to generating renewable electricity. 
I thank the Commerce Committee for its work on the bill and also those who made submissions. I also thank all those who have spoken in the debate because they have raised issues that were raised during the process of this bill through the Commerce Committee. I commend the Electricity Industry Reform Amendment Bill to the House. 
LINDSAY TISCH (National—Piako) 
: 
 We have supported the Electricity Industry Reform Amendment Bill right through all its stages and it is with pleasure that I take the last call on—[ 
Interruption 
] No I think we will have other colleagues who want to have a say so I will not be taking the last call— 
Hon Members 
: Oh! 
LINDSAY TISCH 
: There is a window of opportunity and I know that my colleagues with their esteemed knowledge and expertise will want to articulate and crystallise the arguments that will be forthcoming. 
We have supported this bill mainly because of the construction of renewable energy generation capacity and that is vital for New Zealand if we are to reduce our carbon emissions. There is a strong view that if we are to be serious about carbon emissions then the whole area of renewable energy generation should factor that in. So that is one of the reasons behind what we have done here. We believe that this bill will move in that direction and help that although we have heard from my colleagues who have spoken that in fact renewable generation has gone down. That is a sad indictment on this Government—renewable generation has actually gone down. In fact the point that I made which I have made twice but I will make for the third time is that generation—the number of megawatts—in the 9 years of a National Government was 1600 yet in the last 8 years of this Government less than 700 megawatts of new energy has gone into the grid. That is an indictment on this Government. 
What this bill does and which we support of course is allow lines companies to enter into generation. That is important; it will facilitate a lot of those companies that would like to move into generation. The Commerce Committee did not make many changes because the original bill had support and with the help of the advisers—and I mentioned their contribution earlier—we were able to move this one along. The bill is beneficial to the smaller lines companies and I mentioned my colleague Chris Auchinvole from the West Coast because it is on the West Coast and in the Buller region that this bill will be beneficial. Those people will be able to capitalise on the changes that this bill envisages. The bill frees up these companies to become engaged in electricity generation thereby improving income and security of supply and limiting their dependence on the increased costs imposed costs from other generators. Without this bill if Westpower were to build a hydro scheme for example it would have to seek a special exemption from the Commerce Commission. Making an application for an exemption is not a cheap exercise and the associated costs are very restrictive. 
My final point is that the Resource Management Act is still a major impediment a major shackle that we have to get over if we are to have speedy construction of renewable energy generation. The Act needs reforming and National has a plan to do that. National will be releasing its policy on the Resource Management Act in a timely fashion but I can say that over the last few years over half of all the net generation that this Government has put in place—and that is not very much from the figures I mentioned before—has come from thermal sources and not from the renewables that we have considered. 
With those few points I will leave the final words to my colleagues who will be finalising the debate in support of this bill. 
PANSY WONG (National) 
: 
 I suppose that after 9 years of the Labour-led Government which has no vision and has taken small steps we should be grateful for tiny steps. I started to take comfort in the passage of the Electricity Industry Reform Amendment Bill because my good colleague Lindsay Tisch has said that the passage of this bill will do a lot of good on the West Coast particularly with an effective MP like Chris Auchinvole who will I am quite sure monitor its implementation. I hope he can explain “involvement” in the new section 7A “How to measure involvement” to encourage the flourishing of renewable resources in New Zealand. As we have all said for the last 9 years the volume of renewable generation of energy has gone down so for that reason National will support this bill even though it is a very tiny step towards reversing that.  
The last thing I want to say is that every time the Hon Harry Duynhoven stood up he raved against the Electricity Industry Reform Act 1998 but I have not seen any attempt in the last 9 years from that member or from any members on that side of the House to repeal the 1998 Act. I imagine that if they think the particular legislation is so bad they obviously do not have any solution. It is a pleasure to take a short call on this legislation in order to take one very small step for New Zealand humankind and to encourage more renewable generation starting from here. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 I will also take a short call mainly to respond to some of the concerns that have been raised in the debate thus far. First of all I listened with keen intent to Chris Auchinvole. He took issue with my saying that we should have an abundance of supply. He seemed to say that we should have just enough with sufficient back-up to cover for emergencies such as low lake levels and extra demand.  
I say to the honourable member and indeed to the House that if we settle for that then we will not have a true market. A true market depends on having a surplus and on having people compete because they need the incentive to sell. If we settle for having just enough with a back-up for emergencies then we might as well go back to the old ECNZ days. Indeed as I said earlier there are people in New Zealand First who want us to look at amalgamating Genesis Mighty River Power and Meridian Energy into the old ECNZ if for no other reason than that there would be only one head office and it need not be on the waterfront in Wellington.  
It is important that a genuine effort is made by generators to sell and they must have a surplus to have that genuine incentive to want to sell their products. We are talking about trading. If I want to sell something ahead of someone else I must know that if I do not sell it somebody else will otherwise it is a monopoly-type situation.  
This bill allows lines companies to produce more generation and New Zealand First supports that principally to keep us up to speed with the amount we have right now. It is not advancing the situation. The price of electricity is a very key issue for many New Zealanders and it is important that we have a structure that keeps as much downward pressure on prices as is possible. This bill will not do that. It will simply bring a little bit more electricity on board to ensure that we do not fall over in an emergency situation.  
I want to respond to Dr Cullen. He said that nuclear power is very expensive. The fact is that the infrastructure is exceedingly expensive but as I understand it the production of electricity is relatively cheap. If we compare other forms of electricity the cost of the infrastructure is reasonable but the cost of production is reasonable also.  
The reason for this country not going nuclear is a political one and it is a reason that I agree with personally. I am not advocating for nuclear power; I am simply saying that there are New Zealanders out there who say that politicians should have a closer look at it. I am not one who supports that but I say to the House that more and more people are putting up their hands to say that we should have a closer look at it. They might well be a minority a very small minority but because of the price of electricity and because of the environmental concerns more and more New Zealanders are saying: “Please have a look at it.”  
New Zealand First supports this bill but we are not kidding ourselves. It really is a patch-up bill to keep us up to speed. It does not advance the electricity industry in this country very much at all. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Kia ora Madam Assistant Speaker. Kia ora tatou katoa e te Whare. The Auckland Energy Consumer Trust recently announced it would be paying dividends from Vector to 300000 beneficiaries in Auckland City Manukau and Papakura of about $320 each. This is a welcome windfall for people who have been suffering high electricity costs for far too long. It is a windfall that makes the Government’s offer of about $112 in compensation to soften the effect of the emissions trading scheme—and wait for it in 2 years’ time—look kind of measly miserly and mean-spirited in comparison. That one-off compensation payment will disappear at great speed when power bills go up about 5 to 19 percent once the electricity sector becomes part of the emissions trading scheme in 2010. 
This bill is supposed to be about developing renewable energy resources. One approach is to define “new renewables” to include hydro and geothermal power so that lines businesses can invest in them as well. This will be good news for Maori resource trusts like Nga Awa Purua which 5 months ago announced a new $450 million geothermal power station in partnership with Tauhara North Mighty River Power and the Sumitomo Corporation and which is planning a second operation at Rotokawa that will generate enough energy to power a city the size of Tauranga. We hope that any future innovation in renewables—hydro wave wind and geothermal—will include fair negotiations with mana whenua as well. 
We know that Aotearoa benefits hugely from electricity generated in Ngai Tahu - Ngati Whaoa territory even though these iwi derive very little benefit from the resource. We also know on the other hand that geothermal stations like Ohaaki can cause great damage to iwi and that in fact of the five marae in the area four of them can no longer fulfil their functions because of subsidence caused by geothermal development. Indeed the latest predictions are that within the next 5 years the area will suffer widespread flooding and that after only 10 years the whole area will be regularly underwater at high-water level on the Waikato River. With all these impacts we naturally support benefits coming back to iwi from the rich resources that drive the nation’s power stations. 
This bill also proposes to allow owners of lines businesses to get involved in generation and retail to encourage a bigger market for generation of renewable energy resources. The New Zealand Wind Energy Association welcomed this move believing that it might help to reduce potential barriers to investment by lines companies. Others however thought that the bill went too far and that relaxing the corporate separation could possibly push prices up for consumers. 
Finally the bill sets in place incentives to provide better conditions for the owners of lines businesses to invest in generation from renewable energy sources. 
The Maori Party has consistently spoken out about the need to prepare for the reality that coal gas and oil production are going to peak and we have challenged members of Parliament to work together to learn how best to adapt to the end of cheap oil and energy to become proactive and energy-literate and to properly evaluate energy options. Ohaaki for example reminds us that the environmental impacts of geothermal energy may in fact be too great to bear. We know too of marine alternatives like marine energy which is close to commercial development but we also know of the massive impact on local iwi in and around Kaipara for example of Crest Energy’s proposed harbour turbine project which will stop fishing diving and even boating across 17000 hectares of traditional fishing grounds. 
We are happy to support any idea that will help create a larger renewable energy pipeline now and we know that time is of the essence not just for the ending of urgency but for real solutions to reduce oil dependence and consumption and to our ultimately becoming energy independent here in Aotearoa. Tena koe Madam Assistant Speaker. 
Bill read a third time. 
Family Courts Matters Bill 
In Committee 
Debate resumed from 20 May. 
Part 7Family Proceedings Act 1980  ( 
continued 
)  
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 I speak on Part 7 of the Family Courts Matters Bill a bill that I think I recall the Hon Rick Barker saying was purely a technical bill but one that clearly extends to much more than matters of pure technicality. In fact I note that the Hon Rick Barker has put forward Supplementary Order Paper 202 which proposes to divide the bill into 12 bills.  
With regard to Part 7 the proposal is to have the title of the Act as the Family Proceedings Amendment Act 2008 and have the commencement come into force on a date to be appointed by the Governor-General by Order in Council. Part 7 deals particularly with counsellors and mediation and the roles they play in this matter of the Family Court which are absolutely vital and fundamental.  
I think it was Principal Family Court Judge Boshier who said in his submission on behalf of the Family Court just how absolutely vital it is to ensure that the help from counsellors psychologists or mediators is of the highest quality because there has been variability in the past and the negative consequences of this help not being of the highest professional standard can be considerable. Nevertheless over the years a high professionalism has developed in this area and I understand that several organisations are particularly representative of mediators and counsellors.  
I see that the Arbitrators and Mediators Institute of New Zealand and LEADR an association of dispute resolvers also submitted. They also stressed just how vital it is to have professionalism within their ranks and to be consistent to be available and of course to be able to provide a rapid response if necessary. Nothing is worse than having long gaps between making the order to have counselling or mediation and it finally coming about because when the parties are ready to embrace it it is important to get on with it while one can. I note that section 12 which is to be substituted in the Family Proceedings Act by clause 54 and is entitled “Duties on counsellors” states in subsection (1) that a counsellor “(a) must explore the possibility of reconciliation between the parties; and (b) if reconciliation does not appear to be possible must attempt to promote conciliation between the parties.”  
In their submission the Arbitrators and Mediators Institute and LEADR spent a lot of time defining the difference between counselling and mediation. They stated: “Counselling is a process in which an individual client is assisted by a counsellor to consider their internal and emotional responses to the external world with a view to improving their own emotional and psychological health and their ability to respond to external stimuli in a more constructive manner.” Undoubtedly this requires enormous professionalism and skill. On the other hand they said that mediation is a process “where an independent mediator works with parties to identify issues between the parties explore options and try to agree to outcomes”. Clearly again the potential of their being successful is incredibly important.  
I note that in those organisations’ submission they also make an appeal to be recognised in terms of their pay. They say that they have not been appropriately rewarded particularly for some of the longer and more complex cases. They feel that their skill level makes it necessary for them to be paid at a similar rate to that of lawyers and I wonder just how my learned legal colleagues around me would feel about such a proposition. I will end by saying that there is no doubt that skilful mediation wide mediation and counselling are very very important. 
CHESTER BORROWS (National—Whanganui) 
: 
 I appreciate the opportunity to make a contribution to the debate on Part 7 of the Family Courts Matters Bill. I guess it is the experience of so many of us working out of electorate offices that people who contact us from time to time about judicial matters are frequently people who find themselves in a state quite broken by the Family Court process. Not having had any personal experience in relation to matters before a Family Court my only experience is through the mouths of those who have. It is a real shame that people find this process so bruising and damaging. In actual fact I think that if there is one thing we could do at some stage in the future it would be to remove as much as we could the adversarial process of the Family Court. Children are frequently at the centre of that process. They become not a toy or a plaything but certainly the most bruised chattels—almost—of those who are scrapping over things that invariably originate away from children and are to do with the relationship of the adults in the situation to start with. I think that that is a real shame.  
Given the clauses in Part 7 National is pleased to be able to support this bill and this particular part of the bill especially because it puts at the heart of matters the opportunity for mediation and it requires that there is a consideration of reconciliation or that these matters are explored. It is a shame that things progress so quickly before the Family Court. I guess no one gets to the Family Court without quite a bit of baggage from previous years or incidents leading up to it but it is a shame that in the middle of what can often be an acrimonious and hostile period people are required to explore reconciliation at a time when it is probably least likely to occur. It is often quite amazing though that after the process is complete—it may be a matter of months it may be a year or so down the track—if one explores the state of the relationship at that time one sees that it is often in a much healthier state than it was at the time of progressing through the Family Court process. Unfortunately that is the time when the orders are made and it is almost as if the relationship is set up for failure at that point. However it is very difficult to see how a judicial process imposed on a personal relationship can do anything else. So not only do we have sympathy for people involved in this process as the parties we also have enormous sympathy for children who are placed into the process by dint of their parents needing to bring matters before the court. The mediators and the counsellors then have to work through that court process.  
It is a real shame too that various parties always seem to find the whole process something that they feel completely dissatisfied with. Frequently many of us as members of Parliament are contacted by men who have been through the process of the Family Court and found—from their point of view in any event—that they have not been treated well. But then on the other side of that we have women who feel that as soon as they entered the process they ran up against family trusts who had paid for big gun legal counsel to fire against them and they found themselves—from their perspective—disenfranchised by the Family Court situation as well. So we end up back where I started from which is that it is a shame that the adversarial nature of the Family Court system or the judicial system is such a big part of the Family Court system no matter how much we would like to try to move it away from that. National is pleased to note that there is a move to maybe deaden that adversarial process to look to counselling and mediation as things that could become keystones of the Family Court process and to lessen the impact on those who are involved in it.  
There is one very disappointing factor though and that is that the Government did not produce a bill capable of dealing with the anomaly that the Family Court cannot order DNA tests to establish paternity. A man accused of being a father is required to pay child support without paternity having been proven and a DNA sample cannot be required by the court. It is very much a matter of consent on behalf of the custodial parent of the child; the court cannot force a DNA test to be made so that paternity can be proven. But at the same time the court can move against the nominated father and require that paternity payments be made. It seems a huge anomaly. It is one of the prime areas of complaint that we see through our electorate offices all the time and it has not been addressed by this bill.  
Anyway National looks forward to the upcoming election—whenever the Prime Minister decides to give us a date—we look forward to the prospect of having the privilege of Government and we look forward to the ability in the future to rectify the law to make it fairer to those coming before the Family Court. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 United Future is supporting Part 7 of the Family Courts Matters Bill which largely covers the issues of counselling and mediation. I agree with the previous speaker Chester Borrows that we need to start to look in family law to some of the rather fine progress that has been made in other jurisdictions around better ways of helping families weed whack their way through what is often a pretty appalling experience when a couple’s relationship has come to an end.  
If we are serious about moving away from a more adversarial approach I suspect we will need to consider at some stage the assumptions in law regarding parenting arrangements for children. Those assumptions allow lawyers to have a field day. If for instance there was an assumed starting position in law of shared care then I think we would find that the approach to working out the parenting and care arrangements for children could be very very different. One of the blocks to that is provisions in other law. Law is such a complicated thing and we quite often find it very difficult to amend one law without making adjustments in other areas of law.  
One of the areas of law I have come across that does deal directly to Part 7 is the fact that in New Zealand our benefit system is inflexible to the point that one cannot share a benefit. It means we are forced to establish a primary caregiver who is entitled to a domestic purposes benefit and a non-custodial parent—or a parent that has access only—who is not entitled to share a part of that benefit.  
United Future would welcome an urgent review of a number of issues to do with child support. Currently we use some very blunt instruments to calculate child support. All these issues add to a series of assumptions that facilitate an adversarial tone in our Family Court. After the election if any Government is serious about moving in a less adversarial way then it will have to realise that there are some very serious considerations—layers and layers of considerations—that will need to be taken into account.  
I also pick up the issue mentioned by Chester Borrows about DNA testing. The Law Society said that this was the great failure of this bill—that it was a wasted opportunity. I have a member’s bill on the Order Paper and I will be seeking to advance that—obviously after the election. The Attorney-General has already indicated there may be some areas of my bill that need strengthening and I am very open to that. My bill is currently focused on allowing a father who is involved in a dispute as to whether he is the father of a child—a named father or an unnamed father as the case may be—to have that clarified simply and quickly through a DNA test. The issue the Attorney-General has raised is whether for instance a child who would like to clarify that position is able to make such an application. I am perfectly open to the suggestion that we could strengthen what I am proposing.  
I think we have to understand that there are two situations that the Family Courts Matters Bill has failed to address when it comes to establishing who is the father of a child. There is the case of the father who believes he is the father of a child and would like to have meaningful contact with that child but because he is not named on the birth certificate cannot even apply to have any access. The other side of the coin is a gentleman who is named as the father and suspects that he is not but is now liable for sometimes quite hefty child support payments whilst all the time unconvinced that he is indeed the father. In fact when we talk to such gentlemen we find that many of them would be happy to pay provided they knew for sure they actually were the father.  
I think there is another important thing to note in Part 7. One of the things submitters asked us to be mindful of was that there is a huge difference between mediation and counselling. There was some concern that as we progressed we would morph these into one consideration and misunderstand the very distinct differences between those very important roles. The Social Services Committee was very mindful of that. We talked about issues around the participation by children in mediation and when that was age-appropriate. Who would decide that? Could counsel for the child attend mediation and counselling on behalf of their client the child?  
The committee had to weigh up and consider a number of issues like that and those are not small decisions. Many would have to be made on a case by case basis. The committee was reluctant to see a law that would set up a clear and demanding expectation on children to attend; nor did we want to provide a situation where children were blocked in a way that could be unhelpful for their ongoing well-being. United Future is happy to support Part 7. 
PAULA BENNETT (National) 
: 
 I rise to speak on the Family Courts Matters Bill in the Committee stage. I will pick up on a couple of issues that have been raised by National members.  
When we think about this bill and the necessity for it the first thing that springs to mind is why any party ever launches into such a complex area that raises so many questions. We hear stories from women—and I am sure many of us know such women—who have had difficulties as far as Family Court matters paternity issues and payments for their children are concerned. We also hear the other side of the story which Judy Turner just raised and that is the issues men have as far as paternity access and payments are concerned. The reality is that there are two sides of that story and we hear compelling arguments from both sides.  
At the end of the day in what turns out to be a lose-lose situation the main losers are the children. That is why it is relatively courageous and a great thing that we discussed this issue in the Social Services Committee and we are discussing it here in the Committee stage. It is never easy; nor is it ever going to be. We are dealing with emotions and with people who are quite frankly at a crisis point and as we all know when children are involved it becomes extremely complicated.  
We need to pick up on many other issues. I really do agree with Judy Turner that currently—and this bill touches on this too—we pitch one parent against the other. Immediately we say that one parent will be the custodian and one will be the payer and that is the way it will be. It almost feels like one parent gets the child and the other has to pay for the child and that is where a lot of these issues happen.  
Part 7 talks about counselling. I think it is great to address some of the concerns about what those parents and in particular those children need. I think the best advice we could give to anyone in this situation is to keep the courts out of it wherever possible. If people can sort themselves out without getting the Government and the State involved then that is the best thing a family can do. But if a family is in a difficult situation then they need legislation such as this and parts of this bill will make a difference for such people. I think the Minister himself the Hon Rick Barker acknowledges that when families are dealing with such an emotional and stressful time no legislation will be able to fix every problem and account for every issue and situation that can arise.  
I also want to talk a little bit about where we are with DNA testing. We are in a situation where it is easily done and from what I can see all parties except for the Greens support addressing that issue. I did not have the good fortune of sitting on the Social Services Committee for this bill but I did sit on the committee about 2½ years ago when we went through issues relating to payment and the Inland Revenue Department. From what I could see Labour National ACT and United Future considered child support to be a substantial financial obligation and there needs to be discussion as to how we address the issues of DNA and paternity. It was a shame that we could not do that within the scope of the bill.  
Part 7 talks a lot about the need for counselling and what that means for the children concerned and I think that is important and necessary— 
The CHAIRPERSON (Hon Marian Hobbs) 
: I am sorry; the expressions on my face have nothing to do with the member’s speech. I have cramp—it is nothing to do with the member’s speech. 
PAULA BENNETT 
: I must say that you were throwing me a little Madam Chairperson. I thought I was on the wrong part; it can happen like that.  
Anyway it is great that we are debating this bill. I think there is a lot more debate left on the matter and it is a bit of a shame that we are dealing with it under urgency and at the end of a parliamentary term. Thank you.  
The CHAIRPERSON (Hon Marian Hobbs) 
: Thank you. I offer my abject apologies. We in this Chamber are human beings.  
The question was put that the amendment set out on Supplementary Order Paper 200 in the name of the Hon Rick Barker to Part 7 be agreed to. 
Amendment agreed to. 
Part 7 as amended agreed to. 
Part 8  agreed to.  
Part 9  agreed to.  
Part 10Mental Health (Compulsory Assessment and Treatment) Act 1992  
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Part 10 relates to the Mental Health (Compulsory Assessment and Treatment) Act 1992 and obviously will become an amendment bill itself after the Hon Rick Barker’s Supplementary Order Paper takes effect. National is glad to support this part. In particular it deals with restrictions on the publication of reports of proceedings. Undoubtedly this is absolutely pertinent when it involves individuals who have been committed under the Mental Health (Compulsory Assessment and Treatment Act) 1992.  
I note that in the submissions there was unanimity between the various submitters that this was the appropriate thing to do. Judge Boshier speaking for the Family Court judges did query the competence of a person who is to be the subject of an order to make a rational decision about publication. He says they are concerned about the level of understanding any patient may have about the implications surrounding publication. The judges proposed deleting this provision and dealing with all publication matters under the Family Courts Act. That was very much echoed by the family law section of the New Zealand Law Society and by Professor Bill Atkin.  
It is undoubtedly important that the rights of vulnerable people are protected. I guess that is the nub of this legislation because any change to the openness of the legislation must strike that balance between open justice and the privacy of individuals of children and of the family involved and in that aspect of course of people who have a mental disability.  
It is pertinent that this week the bill that allowed the ratification of the United Nation Convention on the Rights of Persons with Disabilities was unanimously carried in this Parliament—only 2 nights ago. I think there was general celebration both through the sector and through the Parliament that New Zealand had made the benchmark move to have that convention ratified. Again it was made very clear in that legislation that vulnerable people such as those with severe mental disorders do need protection. What was good about that was that it also allowed those who were able to participate in a whole variety of actions to do so and not be excluded because of their mental illness. So again it struck a very good balance between the two.  
But there is one slightly sinister area that I thought it was worthwhile bringing up. From time to time when couples are in huge strife and things become very intense and emotional there have been instances where one partner may attempt to commit the other under the Mental Health (Compulsory Assessment and Treatment) Act 1992. That of course is an awful situation to be in and it just exemplifies how important once again the mediation and counselling processes are if such a condition arises. And of course once again publication of that sort of highly intimate detail would be totally inappropriate. There is no doubt that Part 10 which amends the Mental Health (Compulsory Assessment and Treatment) Act is absolutely appropriate.  
The question was put that the following amendment in the name of the Hon Rick Barker to clause 75 be agreed to: 
to omit from section 25(b) “and” and substitute “or”. 
Amendment agreed to. 
Part 10 as amended agreed to.  
Part 11Property (Relationships) Act 1976  
PAULA BENNETT (National) 
: 
 I would like to ask a question of the Minister in the chair the Hon Rick Barker with regard to new section 2BAA “Civil union includes immediately preceding de facto relationship” in clause 77. I certainly have some questions around that provision and I did not sit on the Social Services Committee. New section 2BAA states: “For the purposes of this Act if a civil union was immediately preceded by a de facto relationship between the 2 civil union partners (‘A’ and ‘B’) the de facto relationship must be treated as if it were part of the civil union.” An example of civil union is then given: “If the de facto relationship of A and B lasts 1 year and their civil union lasts 2 years the civil union must be treated as if it—(a) began 3 years ago; and (b) lasted 3 years.”  
That of course raises many questions. How do we know whether people were in a de facto relationship? Are we insisting a little bit like we do with some other legislation that they show they incurred bills together and were living in the same premises? Under what definition is a relationship a de facto relationship? There are certainly questions around how to prove that.  
A Minister’s speech-writer wrote about “triples”. I wonder whether a triple relationship would come into a civil union relationship if the relationship is a de facto one. I wonder how that would fit in. I am not quite sure what “triple relationship” means but we certainly heard the issue raised in one of the speeches from the other side. If people were in a de facto relationship for some time how do we define the de facto relationship? Is it defined as two people living together and sharing the bills? What happens if it is a triple relationship as has been mentioned by Labour members earlier? How would that work in regard to the Property (Relationships) Act which Part 11 amends?  
DAIL JONES (NZ First) 
: 
 I went to the seminar when the Property (Relationships) Act was being put into effect. The issue of a doubles relationship was raised and one of the ways in which people make sure that everyone knows there is a doubles relationship—in particular the party who perhaps might gain the most—is that after 12 months they have a great party to celebrate the first anniversary of the relationship then they have the second anniversary and then the third anniversary. So if the matter ever went to court they would have all their friends there to say that quite clearly this relationship started on such and such a date. Although that may sound facetious apparently that is done and it is a wonderful way of establishing by way of evidence that the parties have been together for 3 years.  
So far as a triples relationship is concerned well some people might say that chance would be a fine thing but there seems to be some aspersion being cast on a speech prepared by a speech-writer for the Minister and some people seem to be taking advantage of that. I clearly remember a select committee hearing that I was on dealing with a family matters bill and the suggestion was raised that there might have been a polygamous relationship between a homosexual man and two lesbian women. I suggested that could be a triples relationship because both the women had had children from the man. [ 
Interruption 
] This was evidence that was given in the select committee. I raised the question whether it was polygamous and they all denied that it was. It was an interesting point and the Labour Party members were horrified to think that anyone could possibly believe there could be a polygamous relationship. So far this House has on the question of the Property (Relationships) Act— 
The CHAIRPERSON (Hon Marian Hobbs) 
: Good! I am so pleased to hear it. 
DAIL JONES 
: That issue was raised by the previous speaker Madam Chair but it really seems to be a very very long bow and I cannot see that polygamous relationships would ever be accepted. I hope I have illuminated the matter a little for the member who has raised what is a very interesting point but has no bearing on the bill. 
Part 11 agreed to. 
Part 12  agreed to.  
Clauses 1 and 2  
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you for the opportunity to speak on the title and the various other clauses you suggested regarding this Family Court Matters Bill. Once again I note that the Minister in the chair the Hon Rick Barker initially regarded this bill as purely a technical bill but National members have on many occasions pointed out that this is much more than a technical bill. However contrary to the fact that it is appropriate for it to be called the Family Courts Matters Bill in actual fact it will be divided into 12 bills. I will not go through them all but they range through a vast spectrum from the Adoption Amendment Bill and the Care of Children Amendment Bill (No 2) right through to the Mental Health (Compulsory Assessment and Treatment) Amendment Bill and the Protection of Personal and Property Rights Amendment Bill (No 2). All of these are highly relevant to the smooth and effective running of the Family Courts Matters Bill.  
I am only too conscious of just how important it is to have technical expertise within the court to make sure that these matters are run effectively. I was quite interested at one stage to read that although the court is being opened out the judges prefer—well they insist on—having the right to ask people to leave if they feel that it is appropriate. I think that is absolutely correct because I remember very much when I used to be carrying out caesarean sections that husbands would come in to hold the hands of their wives and from time to time I would have to say to them that if there was any possibility of there being a technical reason for them to go then I would ask them to respond appropriately. Occasionally as members can imagine when a spouse fainted and cracked his head there was all hell to pay. That did happen on the odd occasion. I can see a similar analogy in a court of law where a judge might indeed find that he or she will be required to ask one of the many people now allowed into a court in this new open situation to leave.  
But I emphasise that Judge Boshier in his submission to this committee stressed just how important it was to have those expert qualified counsellors psychologists and mediators and how important it was to ensure the professional integrity of those people in the running of the court—much more particularly to the end result of the sort of anguish we see when a small proportion of cases comes to court. As I noted before the delicate balance between the openness of the court and the restrictions that can apply was very carefully and poignantly expressed by the English Law Commission: “What is more serious is that the parties and more especially their innocent children whose identity is frequently revealed as a result of the details which can be published suffer the disturbing experience of having the most intimate details of the family life exposed. While it may be said that the parties have only themselves to blame no such argument can apply to their children whose privacy the law takes pain to protect in other cases.” I understand that in Australia where there is openness this indeed can have quite severe negative repercussions.  
I also take this opportunity to comment on one of the opportunities this bill does not encompass a missed opportunity and that concerns DNA testing on which Judy Turner from United Future has a bill awaiting the ballot. I personally can relate just how important it is to get up to speed and use DNA testing within the court system. I vividly remember some long years ago being asked as a junior registrar to go to the court in Pukekohe of all places to be an expert witness on a paternity case. It happened that there were eight young men and one young woman and of those eight young men only one had any assets. But according to my calculations using the dates I was given the one with assets was indeed the least likely to be the father. However the judge surprised everyone and unfortunately for that young man the judge awarded him the responsibility for that young woman. It seems to me that probably for a decade or so it would have cost him sorely and probably unfairly. I make the point then that yes maybe this is a missed opportunity but hopefully in the next Parliament the matter can indeed be rectified. Thank you. 
CHESTER BORROWS (National—Whanganui) 
: 
 I will pick up on a couple of points that were made by my good friend Paula Bennett. She was talking about triples and I wanted to draw attention— 
Hon Darren Hughes 
: Name-dropper! 
CHESTER BORROWS 
: Well I align myself to as many famous people as I can. But I need to draw attention to those metropolitan members because they may not know that in the provinces some of these multiparty accords are actually celebrated. If any members have the privilege as I will have tomorrow to visit any of the bowling clubs they will find that on the boards around the clubrooms they will see that the clubs list the status of various people. They have triples boards and championships in the triples and all the names are listed. But they also have fours. Then the doubles are listed—well you know there are always quite a few in the doubles—and the poor people who are just in the singles. They are all on their own but there are heaps of them as well. So this is not something new that the honourable Minister’s speech-writer has come up with; this is something that apparently has lain latently within the provinces for a long time.  
However let me get back to Part 1 of the Family Courts Matters Bill. [ 
Interruption 
] I said “lain” not “laid”. Anyway the National Party is pleased to be able to support it in a major way because it does not refer to triples doubles singles or fours. The Family Court system must be a system that is open and fair and this bill increases the openness and the transparency of Family Court proceedings. We believe that that is a good thing. Those who have to go through the court process frequently feel bruised and broken by it more so probably than in other court systems. It is and has been shrouded in secrecy for a long time and we can understand the reasons for that especially at the time that secrecy was introduced. Really whose business is it other than those intimately involved with the break-up of a marriage-type relationship? Parts of the proceedings are not things that should necessarily be open to the public to scrutinise and comment on.  
However those who are at the core of matters proceeding before the Family Court and especially those who feel they have not had openness and due process shown to them are those who most want to have the dealings of this particular court open to some public scrutiny. We believe that that is a fair thing to happen. We mentioned in earlier speeches the incongruity of there not being a provision within this bill—and it would have been most suitable to have had one there—for DNA tests to be compulsory where for instance a parent particularly a father is accused of being the father. A father can deny that but has no means of being able to require a DNA sample to be taken so that paternity can be proven. Yet the Family Court as the law stands at the moment—and will continue to stand even after the passage of this bill—has the ability to require paternity payments child support payments from the accused father whether or not it is proven he is the father and he has no ability to prove he is not. That is a real anomaly within our system. Right across society there is a lot more openness and transparency put on a number of what have previously been private areas yet we have the ability to hold people to account merely on an accusation without any proof. I think that that is a bad thing.  
Another point I make is that we frequently hear in any discussions around the court system that the only people making any money out of this are lawyers: “It is a real heyday for lawyers—rah rah rah!”. You know I speak as a lawyer with a “long” history of practising in the courts for 2½ years and never appearing before the Family Court. But I would like to point out that that really means we have an adversarial— 
Hon Member 
: Did you win any cases? 
CHESTER BORROWS 
: I have never won a case in the Family Court— 
Hon Member 
: Have you lost any? 
CHESTER BORROWS 
: —and I can say that I have never lost one either. So there you go.  
Hon Member 
: Did you meet Denny Crane? 
CHESTER BORROWS 
: I sit on the fence—I should be in one of the minority parties and I have never met Denny Crane. But having said that the fact is that it is our adversarial system that forces lawyers to act in the best interests of their clients. It is the system that forces one side against another and it is frequently in an atmosphere of hostility and animosity that actually means that the lawyer has to thump the other side as hard as he or she can. That is the nature of the system. The fact that going to those depths costs frequently a significant amount of money is the nature of the work. If we are looking for something that is open and something that will be fair then maybe in time this country will have to look at the way it does the Family Court system.  
Finally I would like to make the point that we must never forget that the most critical people at the centre of all these issues that appear before the Family Court are frequently children. An acrimonious series of court hearings with children at the heart of it and scraps over custody and access can only leave them—the most vulnerable people within the system and those most at risk although counsel for the child are appointed—having long-term harm not of their own choosing. It is those people who will need to be most protected by the way this bill is implemented and by the way the Family Courts carry out their business in the future. Thank you.  
PAULA BENNETT (National) 
: 
 Thank you for the opportunity to just finish up quite quickly on the Family Courts Matters Bill. I suppose when we see that people are protesting outside judges’ houses and we see people protesting as to how they feel about the results they have had via the Family Court and when we have certainly had them all through our offices writing to us and certainly expressing their displeasure with the process they feel they have had then it is paramount that we get this stuff right that it is given due process and that it has been through the select committee process. 
As I have said earlier—and I want to reiterate it again—as far as I am concerned it is one of those processes where it is very hard to find winners. It is very hard to find anyone who comes out of this court process and feels like they have actually accomplished what they want to. At the end of the day my personal opinion would be that if one is not getting to spend as much time with one’s children as one possibly can and find something that actually is equitable for both parties then it is always a bit of a shame for everyone involved. 
Overall in terms of the bill I think what has tried to be accomplished is to make the needs of the child paramount. I think at the end of the day that all sides of the House—certainly every party—were concentrating on what was best for the child. I think one sees that when we look at the Minister bringing in things around the Domestic Violence Act and the stuff that goes with those that have been introduced via the courts. There might not be many counselling services for the children but if one believes that every child has every opportunity to succeed then it does not matter how small the number is quite frankly. It is something that should be addressed in this bill and it is something that I am pleased we have seen introduced via it. I think mediation and how we introduce it is important in order to perhaps make people feel like they can talk a bit more easily and that has to be a plus when it comes to the bill. I think it is important that we give people options as to how they can actually go through this process which is a very emotional and often a very distressing process and actually make it as easy as we can. Of course I am one of those people who believe that keeping Government out of it and keeping the courts out of it wherever possible will actually mean a better result. But when that cannot happen for people and they have lost that ability to actually discuss it amongst themselves then I think that we see some of the changes through this bill and we are very pleased to be supporting that. Thank you.  
Clause 1 agreed to. 
Clause 2 agreed to. 
The Committee divided the bill into the Adoption Amendment Bill the Care of Children Amendment Bill (No 2) the Child Support Amendment Bill (No 2) the Children Young Persons and Their Families Amendment Bill (No 7) the Domestic Violence Amendment Bill the Family Courts Amendment Bill (No 2) the Family Proceedings Amendment Bill the Family Protection Amendment Bill the Intellectual Disability (Compulsory Care and Rehabilitation) Amendment Bill the Mental Health (Compulsory Assessment and Treatment) Amendment Bill the Property (Relationships) Amendment Bill and the Protection of Personal and Property Rights Amendment Bill (No 2) pursuant to Supplementary Order Paper202. 
Bill to be reported with amendment presently. 
Walking Access Bill 
In Committee 
Part 1Preliminary Provisions  
Progress to be reported presently. 
House resumed. 
The Chairperson reported the Family Courts Matters Bill with amendment and that the Committee had divided it into 12 bills; and no progress on the Walking Access Bill. 
Report adopted. 
Cultural Property (Protection in Armed Conflict) Bill 
First Reading 
Hon Dr MICHAEL CULLEN (Leader of the House) 
 on behalf of the  
Minister for Arts Culture and Heritage 
: I move  
That the Cultural Property (Protection in Armed Conflict) Bill be now read a first time. 
 At the appropriate time I will move that the bill be referred to the Government Administration Committee for consideration.  
This bill relates to New Zealand ratifying the Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict commonly called the 1954 Hague convention and its two protocols. I am sure that members will be aware that the 1954 Hague convention arose out of the experience in World War II when the Nazis in particular were prone to stealing the cultural properties of other nations that they had invaded and occupied. Vast amounts of cultural treasures were translated into Germany some never to be seen again. New Zealand ratified the convention in Paris on 24 July this year and the bill enables us to accede to the two protocols to the Hague convention. The convention and its protocols work for cultural property in a similar way that the Geneva convention and its protocols do to safeguard civilians in the event of armed conflict.  
The bill has three main relatively simple purposes: to create a number of criminal offences in relation to cultural property to prohibit trade in cultural property removed from occupied territory and to prevent unauthorised use of the convention emblem. Accession to the two protocols will reinforce our participation in the Unesco family as a champion of the protection of cultural property. 
CHRISTOPHER FINLAYSON (National) 
: 
 National will support the first reading of this bill. As the Minister said it meets various obligations that are required before New Zealand can accede to the first and second protocols to the 1954 Hague convention and as the Minister said we ratified the convention on 24 July 2008.  
The convention was adopted in the wake of massive destruction of cultural heritage in World War II. It is the first international treaty that focuses exclusively on protection of cultural heritage in the event of armed conflict. As can be seen by the bill the convention covers not only movable but also immovable property and this includes monuments of architecture art or history archaeological sites works of art manuscripts books and other objects of artistic historical or architectural interest as well as scientific collections of all kinds regardless of their origin or ownership.  
Indeed the issue of how to protect property in a time of war could be said to be as old war itself. Consider the Punic Wars and Cato the Elder’s famous clarion call: “Carthago delenda est.” The attitude of total warfare toward Carthage resulted in its complete destruction at the end of the third Punic War. The fields were sown with salt and the city was ploughed over. Many years ago I visited St Petersburg formerly known as Leningrad then Petrograd. Someone pointed out to me various markers which were actually not far from the Winter Palace. They showed just how close the Wehrmacht came to the centre of that magnificent city. Places like Tsarskoye Selo now known as Puskhin were practically destroyed by the Germans and the damage done in St Petersburg was also enormous. Think too of Stalingrad Coventry London and of course what happened to Dresden in the closing months of the Second World War. The beautiful Saxon heritage of the city was laid waste and indeed some buildings like the Frauenkirche have only recently been finally restored.  
As the Minister mentioned the theft of paintings for example from the Louvre by the Nazis in the Second World War is another illustration of what happens to cultural property in a time of conflict. Goering and others looted museums and art galleries and took their ill-gotten gains back to Germany with them. That is why the issue raised by this bill and the convention is such an important one and why it behoves this Parliament to deal with this issue. It is a very very important issue.  
One issue we will want to look at very carefully in the select committee is the all-important defintion of “cultural property”. It could be said that one of our biggest cultural treasures is our unwritten uncodified Westminster constitution and one may well ask about the damage to our constitution in an intensive period of warfare namely this election year. Of course our constitution is the property of the people not the Government but this administration treats it as its plaything and as something it can meddle with for its own advantage. I need only mention the Electoral Finance Act which is possibly the worst legislation ever passed by this Parliament. With breathtaking arrogance the Government rammed this legislation though the House at the end of 2007 despite opposition from every newspaper the Human Rights Commission the Law Society and thousands of citizens. The Act makes it nearly impossible for those opposed to the Government to campaign against it. It undermines freedom of speech and in fact it is so difficult to interpret that there have even been complaints recently to the Electoral Commission about the Film Archive showing the dancing Cossacks advertisement which was first screened by the National Party during the 1975 general election. Apparently some Labour stooge is alleging that it breaches section 5 of the Electoral Finance Act.  
If the Act is retained—and let me assure the House that one of the first things a National Government will do is ditch it—one out of three New Zealanders will find his or her speech severely curtailed all because the Government believes in conspiracy theories and cannot bear the thought of losing an election. So that is a very important issue of constitutional cultural property that we will need to consider during the course of the Government Administration Committee’s deliberations.  
Finally I might observe on the Electoral Finance Act that it was passed in such a partisan manner that the Government threw out the convention of bipartisan support for electoral reform so I note with irony that the Green Party has finally woken up and realised what a mess it was involved in with the passing of that bill. Indeed their co-leader recently said that all the confusion could have been avoided if the regulated period had started on 1 April not 1 January which is exactly what I attempted to achieve by way of a Supplementary Order Paper but it was voted down by among other people the Greens. Then today we had the most recent assault on our constitution. The Labour Government is intending to appoint another committee of review.  
The exact scope of the legislation we will be looking at in the select committee is unclear. Clearly it will address the issues I mentioned in the first part of my speech about the protection of both movable and immovable property in a time of armed conflict. But it is beyond argument that our constitutional cultural property has also been severely damaged by the Huns and Visigoths on the other side of the House. We have a Government that is disdainful of the constitution and its importance. It has contempt for the rule of law. It has politicised the Public Service. It has breached fundamental human rights like the right to free speech. Destruction of cultural heritage is a terrible thing indeed. Just as terrible if not more so is a decayed Government that passes repressive laws and does not practise what it preaches. Notwithstanding that we support the first reading of this legislation and look forward to careful consideration of it at the Government Administration Committee. 
Darien Fenton 
: Oh! 
CHRISTOPHER FINLAYSON 
: I know that Darien Fenton who is an assiduous member of that committee cannot wait for the bill to get there. 
SANDRA GOUDIE (National—Coromandel) 
: 
 I rise to support my most esteemed colleague Christopher Finlayson. National is supporting the Cultural Property (Protection in Armed Conflict) Bill.  
When I looked at what this bill actually does I wondered about what would happen if we were suddenly in the midst of armed conflict. I sincerely hope that the country we are in conflict with no matter which country it might be has read the Hague Convention on the Protection of Cultural Property in the Event of Armed Conflict. I hope it has that piece of paper close at hand and knows that if we are all gathered here in the House with the rest of the population of Wellington we are safe. If it has not read that United Nations document I wonder where that would leave us—which creek we would be up and whether we would have a paddle. But if we are in this building and the country has read it we may be protected. A heck of a lot of reliance is being placed on a piece of paper.  
The other thing that really intrigued me was what happens when in the midst of armed conflict that country—whether it has read the convention or not—bombs Parliament House. Does that particular country then get hauled through the courts? With the penalties in the bill for criminal offences against cultural property will their commanders be extradited to New Zealand where we will take them through a court of law to bring about some justice for the loss of a building? Of course they would never reinstate the building. However we may lose some of the very poor legislation that has been put through Parliament over the last 9 years and we could start afresh—we could certainly do so on the Electoral Finance Act. So actually when we think about it we see that there are some positives! I was intrigued to see that a soldier is actually being convicted under the War Crimes Act. We have to wonder how far this type of responsibility will actually go how many of those in charge would be liable for prosecution and whether we could bring that into effect. 
When I looked further at the support for this convention I saw that we received only a handful of submissions including submissions from the Historic Places Trust and one or two people who support our heritage—a worthy cause of course; we all value our heritage. Only last night I discovered the ship manifest for the  
Lady Egidia 
 which docked in Port Chalmers with 400 passengers in 1861. That was a huge number of immigrants to come into New Zealand in 1861. I am quite interested in that type of thing. I value our cultural heritage—as I know many many New Zealanders do—and it is important to protect it. However whether doing that is feasible in a realistic sense during a time of conflict remains to be seen.  
We have become a signatory to the Hague convention. What does that mean? We now have to go through the process of deciding which of our buildings or cultural heritage assets are the most important to us. For instance we have to decide whether the building we are now in Parliament House is one of the most important places to us in terms of our cultural heritage—I would suggest that it is. Once we have decided we can at that point put an emblem on the front of the building identifying it as being protected under the Hague convention.  
It is a rather interesting emblem. It looks like an open upside-down envelope. If we put that on the front of the building then everybody will know that it is protected under the Hague convention. In the event of conflict people from another country will see that. In fact they probably could see it from their own country because satellites are so powerful these days that we can google anywhere home in on a street and see who is there. That is what satellites do so it is not too silly to suggest that other countries might be able to see the emblem. It is also not too silly to suggest that it might prevent this building from being bombed—or whatever technology is used at that time to destroy something or someone. Advances in technology are such that people can target pretty precisely where they want to do the most damage.  
Next we will have to decide which aspects of our cultural heritage we want to protect the most. We will also have to provide a limited number of refuges intended to shelter movable cultural property in the event of armed conflict. Cultural property will need to be moved from one place to another to ensure its protection and we hope that the site where it is stored will protect it. Under the legislation certain centres will be defined as “containing monuments”—we must not forget our monuments. A huge number of our monuments pay tribute to all of those who died in wars while protecting our democracy and freedom. Sometimes when we are debating a bill in the House we feel like we are on the beaches of Dunkirk trying to hold back yet another tidal wave of poor legislation that is imposing costs on our citizens—the people of New Zealand—by whatever means. That legislation has been brought about through the misjudgment and misguidedness of the current Government as it puts more and more costs on to the citizens of New Zealand. 
Mr DEPUTY SPEAKER 
: Order! 
SANDRA GOUDIE 
: I will come back to the bill Mr Deputy Speaker. The debating chamber is an important war memorial. It is a part of our cultural heritage. It feels at times as if we are on the beaches of Dunkirk; that evacuation is also a part of our heritage and the monuments to the world wars are very much a part of it. That is why I refer to the fact that when one is standing here debating bills it feels very much like one is trying to protect that cultural heritage from an avalanche of legislation that constantly undermines our freedom democracy and choice. So that is the linkage to those principles. Unfortunately they are not protected by the Hague convention from being undermined by the current Government.  
We go on to the decision about which cultural property deserves enhanced protection. Well enhanced protection is of course for “cultural heritage of the greatest importance for humanity;” as the bill states in article 10(a) of schedule 3. Article 10(b) states that the property must be “protected by adequate domestic legal and administrative measures”. Depending on the degree of intention from a local authority that could be a light-handed or a heavy-handed approach to the protection of our cultural heritage. The other point in article 10(c) is that the cultural property must not be “used for military purposes or to shield military sites”. [ 
Interruption 
] I beg the member’s pardon? 
Hon Steve Chadwick 
: Tell us about the mangrove swamps. 
SANDRA GOUDIE 
: They do not need protection. We have a lot of mangroves around the country. I do not know whether we would really want to claim those to be a cultural heritage plant because—no I do not even want to start going there.  
As I was saying article 10(c) ensures that people do not run a war from a cultural heritage site protected by the Hague convention.  
I just hope that any nations that decide to wage war upon us have read the Hague Convention on the Protection of Cultural Property in the Event of Armed Conflict and understand that we have signed up to it—we ratified that convention on 24 July 2008—and that we will meet those obligations. We hope that other countries have read about our commitment to the Hague convention and will respect our cultural heritage accordingly. 
DAIL JONES (NZ First) 
: 
 New Zealand First supports the Cultural Property (Protection in Armed Conflict) Bill. I believe that some consideration will have to be given in the Government Administration Committee to the definition of movable and immovable property. This has been touched on by an earlier speaker. “Movable property” and “immovable property” are terms that are not usually used in New Zealand land law. We usually refer to real estate or personal property; movable and immovable property are terms from European civil law. I expect that in the select committee a clearer definition will have to be given of what is intended and that we will go back to Roman law principles and suchlike. So that matter will need to be clarified. 
I suppose that if this legislation had been in force during the Greek civil war the damage to the Acropolis might not have been undertaken because the Greeks kept their ammunition in the Acropolis and one day inevitably it blew up to a large extent. One thinks of course of New Zealand’s efforts in the Second World War and of what happened at Monte Cassino. The Germans were ensconced there and of course the inevitable action was taken to try to get them out. Those problems do arise. 
If we read the bill and look at Part 2 which relates to offences we see that this part makes it clear that an offence is committed only if the act is intentional and the person either knew or had reason to believe that the property was cultural property. In addition the act must occur in the situation of hostilities. Again an offence is not committed if the person is acting in accordance with the convention and the second protocol—for example if the person is acting by imperative military necessary. Imperative military necessity is explained in article 6 of the second protocol. 
Further offences relate to cultural property removed from occupied territory. Clause 15 creates new offences of removing cultural property unlawfully from the territory of a party to the first protocol other than New Zealand while the territory is under occupation. Clause 17 creates new offences of dealing in smuggled property or in enhanced protection smuggled property. The offences apply only to things done in New Zealand. 
This is one of those bills where the bill itself is 32 pages long but the schedules are 54 pages long and it will be a very interesting time working them all out in the select committee. New Zealand First supports this bill going to the select committee and on the face of it it supports it generally. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Tena koe. Kia ora tatou katoa e te Whare. On behalf of the Maori Party I rise to make a very short statement on this Cultural Property (Protection in Armed Conflict) Bill which defines cultural property as the cultural heritage of all people. That includes monuments archaeological sites historic buildings works of art manuscripts books scientific collections archives museums libraries and refuges. And that is it. There is nothing Maori in here at all. That is kind of surprising when we are talking about cultural property and even more surprising when we are talking about protection in armed conflict given the efforts of Maori involved in armed conflict on behalf of this country and given also the number of Maori MPs in Labour who allowed this to go through completely de-knackered of any Maori content. 
Maori of course refer to the claim for Wai 262 when they talk of cultural property—a claim lodged with the Waitangi Tribunal to protect and preserve indigenous flora and fauna and associated cultural and intellectual heritage. It was filed in 1991 on behalf of six claimant iwi by Dell Wihongi of Ngapuhi Saana Murray of Ngati Kuri Te Witi McMath of Ngati Wai John Hippolite of Ngati Koata Tama Poata from Te Whanau a Rua in Ngati Porou and Katarina Rimene of Ngati Kahungunu. The tragedy of Wai 262 is that only one of the claimants is still living today. And still we wait and we wait and we wait for a finding. 
Wai 262 is code for the exclusive and comprehensive rights to flora and fauna cultural knowledge and property as taonga that is protected by article 2 of Te Tiriti o Waitangi. Wai 262 is also a claim that says that the Crown has failed to actively protect the exercise of tino rangatiratanga and kaitiakitanga over indigenous flora and fauna and other taonga and also over matauranga Maori; that the Crown has failed to protect the taonga itself; that the Crown has usurped tino rangatiratanga and kaitiakitanga of Maori in respect of flora and fauna and other taonga through the development of policy and the enactment of legislation; and that the Crown has breached the Treaty of Waitangi by agreeing to various international agreements and obligations that affect indigenous flora and fauna intellectual property rights and rights to other taonga. 
I will not speak for much longer but I will say that I was also interested to hear the reference made to constitutional significance earlier in this debate. Yet again unsurprisingly there was no mention of the foundation of our constitution Te Tiriti o Waitangi which gives rise to the thought that perhaps the Maori Party might recommend the inclusion of a Treaty of Waitangi clause in this bill in order to give Labour’s Maori members the opportunity at least once in the last 3 years to vote to support the Treaty of Waitangi. 
The Maori Party will support this bill going to the select committee but only because we know that there are a lot of people out there who will want to challenge the racist basis of this bill and the very exclusive way in which cultural property has been defined and valued. Tena koe. 
CHESTER BORROWS (National—Whanganui) 
: 
 I rise to support the Cultural Property (Protection in Armed Conflict) Bill and I am very pleased to do so because it is certainly time that we acceded to the first and second protocols of the Hague convention that we originally signed way back in 1954 when the world was mourning the loss of cultural heritage that was destroyed in World War II. These days we cannot imagine the effect of the wholesale slaughter of soldiers and civilians that went on during those years from 1939 to 1945 and it was quite common when our parents were young to talk of young women who had lost their sweethearts during the war. Many of them never married and recently $1.5 million was gifted to Wellington College by 92-year-old Violet Dunn in memory of Tom Paul who was killed during World War II. She wanted to ensure that her beloved’s memory would endure by giving the money to benefit the school he attended from 1931 to 1935. 
Similarly we find it hard to imagine how people felt about the wholesale loss of cultural property during those years. The destruction of heritage buildings even whole towns and the artworks manuscripts books and scientific collections contained within was devastating. Whole museums libraries and galleries disappeared and with them the works that were inside. The Hague Convention for the Protection of Cultural Property in the Event of Armed Conflict was signed in 1954 because the high contracting parties believed that peace time was an opportunity to develop a future safeguard for cultural property. Interestingly this was not the first attempt at the convention. There had already been conventions signed at The Hague—one in 1899 which detailed the laws and customs of war on land and naval bombardment in time of war and another in 1907. These were followed by the Washington Pact signed in 1935 which particularly mentioned the protection of artistic and scientific institutions of historic monuments. But obviously none of these had worked. The 1954 convention focused on the protection and safeguarding of cultural property ensuring respect for cultural property particularly by any occupying forces and the protection and transportation of movable cultural property and the personnel who looked after it. The convention also details the use of a distinctive emblem to identify cultural property to be attached in time of peace. 
The first protocol was designed to prevent the exploitation of cultural property from occupied territories. It also requires each high contracting party to take into custody any property that is imported into its territory. The country is then responsible for returning that cultural property to the competent authorities in the territory previously occupied. 
The second protocol concerns measures to take in time of peace for safeguarding cultural property against the foreseeable effects of an armed conflict. It includes the requirement to prepare inventories to have emergency plans to protect structures and to remove movable cultural property. It also requires the designation of competent authorities to look after all of these measures. It also allows for a waiver in case there is an imperative military necessity. The waiver allows on the basis of imperative military necessity the ability to direct an act of hostility against cultural property if the cultural property has by its function been made into a military objective—for example a group of armed soldiers hiding out in a church and shooting their attackers—and there is no feasible alternative available to obtain a similar military advantage to that offered by directing an act of hostility against that objective. 
The rest of the bill details offences and penalties and detailed regulations about search seizure and forfeiture. It also outlines measures of compensation and the return of cultural property. I am pleased that National is supporting this bill. I hope that the use of its provisions will not be necessary in New Zealand or need to be used in reference to New Zealanders in other war-torn countries. 
Bill read a first time.  
Policing Bill 
Third Reading 
Debate resumed from 28 August. 
Dr RICHARD WORTH (National) 
: 
 It is a privilege to speak in support of this bill and I commend it to the House. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 On 25 October last year a crowd of over 700 kaumatua pakeke rangatahi and tamariki marched through Rotorua in a peaceful protest against the police terrorism raids into Tuhoe. They marched for civil liberties they marched for indigenous rights and they marched for justice. 
On that hikoi were senior students from Te Kura Kaupapa Maori o Te Rotoiti. The tumuaki of the kura Hawea Vercoe told the crowd of the views of his students on hearing the news. During our korero on the topic he said one student commented: “It must have been scary to have the police with guns coming to your house especially when you are just waking up.” Another student questioned the tactics used by the police by asking: “If the police thought there was trouble happening in the bush why didn’t they just go and see the kaumatua or call a hui at the marae?”. 
In the years that lie ahead of us those young people those whanau and this nation will return again and again to the events of 15 October 2007 to question the role of the police. They will return just as this year on 25 May we returned to Takaparawhau to reflect on the traumatic actions of 30 years ago when State forces rudely violently and incorrectly arrested 222 people who were occupying Bastion Point. The year 1978 was one of many low points in contemporary Maori-police relations with Tainui Awhiro’s occupation of ancestral land also being rudely and violently interrupted by police arresting and charging those people with trespass on their own tribal burial grounds. 
So how wonderfully ironic it is then that 30 years later Angeline Greensill Maori Party member of the House for Hauraki-Waikato and Rahui Katene Maori Party member of the House for Te Tai Tonga will take their rightful place in this House for they are the children of Eva Rickard and Big John Hippolite who were arrested at Raglan all those many years ago and that they will be joined on the Maori Party list by Grant Hawke the chairman of Ngati Whatua o Orakei Trust Maori Board who along with myself and hundreds of others was arrested at Bastion Point in 1978. Those who think that those events are just bad memories to haunt the national psyche should please note that the Tuhoe court cases are ongoing and that the Independent Police Conduct Authority has still not released its findings on the shooting of Steven Wallace who was killed by police in April 2000—April 2000! The homicide inquiry was over by June 2000 the policeman was cleared of criminal charges in 2002 the coroner’s findings were released in 2007 yet still the questions remain. 
I have taken the time to track back over some of these events of national significance because they form a crucial context to the Policing Bill which aims to improve the effectiveness of the police and which should take as a starting point the climate of anger mistrust and fear that still haunts those communities and many others besides. I have taken the time to track back over some of these events to remind the House that the purpose of this bill which is to confirm and strengthen police operational and governance arrangements will never be achieved until we take a genuinely fresh look at the powers of the police. The 60 recommendations of the Bazley report gave us some real pointers about what standards of conduct the police as an association as a branch of Government and even as an agency of social control should have if there is to be any improvement in the relationship between police and Maori. 
Police wield great authority and considerable power in our society. It was disappointing to hear the arrogant dismissal by the Police Association’s Greg O’Connor of concerns about the Taser as being due to people being “hijacked by political parties with points to score” or corrupted by the influence of minority interest groups making the Taser seem more dangerous than it is. Well well well! I wonder whether the British Defence Scientific Advisory Council’s medical committee would consider itself to be a minority interest group for having the temerity to say that if children and adults were shot by a Taser they were at great risk of suffering “a serious cardiac event”. 
Maybe Mr O’Connor would like to volunteer to be the target of a Taser shot; not the controlled experiment that the police did for television but one out on the street where one’s head would not land on mats and would be likely to bounce off the concrete. I say that because I know that the police had a hell of a time trying to get some poor bugger to volunteer for the TV shot and even though he knew what to expect he still screamed in agony and suffered the uncontrollable muscle spasms the writhing body-wide cramps and the total loss of control that the Taser causes. 
After Greg O’Connor has been dropped screaming to the ground maybe one of the politicians who support the Taser can go next and maybe one of those members’ teenage kids can go next—especially those of the Maori politicians who support the use of the Taser because believe me it is their kids and mine who are the prime targets for these weapons of torture. And let us do it out on the forecourt of Parliament so that we can all see the pain and suffering that 50000 volts will cause our kids so that we can all hear the screaming and so that we can all witness the horror that the Taser will bring to our streets. No takers? Nah I did not think so. I can just see the Tui billboard now: “True Tasers don’t hurt. Yeah right”. I know that members will ask “Why us? It’s not us politicians committing crimes.” But in fact we do. The only difference is that when we get snapped we just pass a law to make our wrongs right. It is a pity our kids out on the street cannot do that. 
We support the new human resource management processes the new code of conduct and any moves to improve police organisation but I return to the key issue we face: the poor way that the police deal with communities particularly Maori communities. That theme ran through many of the submissions that were presented. The Maori Party takes those views very very seriously and 3 weeks ago we argued for the inclusion of a Treaty clause to ensure that Maori would be involved in all decision making from governance to operations. We proposed a simple amendment to the bill stating that “in interpreting and administering this Act effect be given to the Treaty of Waitangi” thereby highlighting the Government’s Treaty obligations and the need for the Government to do all it could to improve its relationship with Maori. That Treaty clause was voted down by every one of Labour’s Maori MPs. Indeed the only people with the courage and the foresight to support the Treaty were the Maori Party and the Greens and my deepest thanks to the Greens for their support. 
We remember the use of armed police to destroy Maori communities all over the country from the Hokianga to Takaparawhau from Hauraki to Whaingaroa from Tuhoe to Taranaki and from 1846 right through to the cowardly police terrorist raids into Tuhoe in 2007. We know only too well that our people will not forget the hurt and the pain inflicted by the forces of the State upon Maori. Given the refusal of the Government to recognise and deal with that history in an open and honest Treaty-based manner the Maori Party will be standing alongside its people in voting against this bill. Tena koe Mr Deputy Speaker. 
A party vote was called for on the question  
That the Policing Bill be now read a third time. 
Ayes 108 
New Zealand Labour 48; New Zealand National 44; New Zealand First 7; Green Party 4; United Future 2; Progressive 1; Independents: Copeland Field. 
Noes 2 
Maori Party 2. 
Bill read a third time. 
Third Readings 
Hon Dr MICHAEL CULLEN (Leader of the House) 
on behalf of the  
Minister for Courts 
: I move  
That the Adoption Amendment Bill the Care of Children Amendment Bill (No 2) the Child Support Amendment Bill (No 2) the Children Young Persons and Their Families Amendment Bill (No 7) the Domestic Violence Amendment Bill the Family Courts Amendment Bill (No 2) the Family Proceedings Amendment Bill the Family Protection Amendment Bill the Intellectual Disability (Compulsory Care and Rehabilitation) Amendment Bill the Mental Health (Compulsory Assessment and Treatment) Amendment Bill the Property (Relationships) Amendment Bill and the Protection of Personal and Property Rights Amendment Bill (No 2) be now read a third time 
. I will just speak very briefly to the motion. The House has accorded strong support to this legislation proceeding through all its stages and careful but reasonably well accelerated consideration was given to this legislation in the Social Services Committee when it formed part of the Family Courts Matters Bill. I particularly thank all those members who participated in the Committee stage of the legislation for their thoughtful comments. I notice that Dr Paul Hutchison and I think Paula Bennett and Chester Borrows took part in the Committee stage of this legislation.  
I think this is an area where traditionally the House has tended to try to adopt a relatively non-partisan approach recognising that Family Court matters involve some of the most difficult and sensitive matters in our judicial system and usually deal with people who are at very difficult points in their lives. I think quite properly that members have stressed the fact that in proceedings before the court the interests of the children particularly need to be paramount. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 It is indeed with pleasure that I rise to support the 12 bills divided from the Family Courts Matters Bill. I must say that it is quite astounding how confused the Labour Government has become—perhaps confused and tired—as it gets to the end of its term in Government. It was only about half an hour ago that it suggested we would have these third readings another day but suddenly they are here. Labour members are shaking their heads; maybe they are even more confused! 
As Dr Cullen says this legislation is very very profoundly important. His comment is slightly at odds with the comments of his colleague the Hon Rick Barker who in the debate on the first reading of the original bill said that it was just a technical bill. Clearly it was the direct opposite. This legislation is profoundly important and indeed it deals with matters that are exquisitely sensitive and it is very important to make sure we get those matters right. I know that as the constituent MP for the most excellent electorate of Port Waikato some of my most distressing moments occur when I am visited by constituents who have had bad experiences in the Family Court. I guess that is because so often the matter is to do with children or with relationships that have come apart. For those reasons it is very important that the court is able to work efficiently effectively and of course sensibly. 
One of the most powerful submissions to the Social Services Committee was from Peter Boshier the Principal Family Court Judge. He made great emphasis of the fact that it was important to have expert qualified counsellors psychologists and mediators that they should all be registered and that there should be continuous quality control. They must be people of high professional quality. He made a great point of emphasising that. I made the point in the select committee that it was quite interesting to hear mediators suggest that they should be paid as much for their services as lawyers are paid for theirs. They felt that the part they played was just as important as if not more important than the part lawyers played. My legal friends around me wondered whether that was being a bit adventurous on their part. 
Judge Boshier pointed out that although judges sort out the legal aspects of disputes in many respects it is not appropriate for them to carry out mediation or counselling. They are not the experts in it. He made a comment that the courts had a backlog of something like 6000 to 7000 cases in this area at the time of his submission and he pointed out how important it was that expert mediators and counsellors be available. He also pointed out that several pilot schemes had been carried out and they showed that while judges might have only a limited time to spend on counselling or mediation the professional mediators had up to 6 hours of mediation available to them through the court and he felt that that was the best use of time in that respect. 
I remember that he cited a very poignant case of a child aged 12 who said that he never wanted to see his father again. Judge Boshier asked the young fellow whether if he met his father in the street he would say hello. The boy said: “No. I’d walk across to the other side and I wouldn’t have anything to do with him.” The point Judge Boshier was making was that it was extremely sad that things had got to that situation and how important it was that that young man be given the chance of mediation and counselling by experts to sort out hopefully the very very difficult emotional state that he was in with regard to his father and hopefully that relationship could be mended in the future. 
One of the other really important parts of the legislation is the opening up of the courts and the really important balance that must be struck between open justice and the privacy of the individuals children and families who are involved. We heard that the Australian courts are open but that the repercussions for the families and in particular the children sometimes can be profoundly negative. I think I quoted earlier on what the English Law Commission had said about it. It said: “What is more serious is that the parties and more especially their innocent children whose identity is frequently revealed as a result of the details which can be published suffer the disturbing experience of having the most intimate details of the family life exposed. While it may be said that the parties have only themselves to blame no such argument can apply to their children whose privacy the law takes pain to protect in other cases.” 
What is very important is striking the balance that is necessary to be able to deal with the tensions that can occur in the Family Court. Judge Boshier pointed out how important it is for the judges to have complete control of the court and to have the absolute authority to ask people to leave when that is necessary and that ability is very clearly pointed out in the legislation. 
One of the other things that came out in the select committee was the missed opportunity to deal with DNA testing. I will not repeat the extraordinary case in the Pukekohe District Court where I was called to be an expert witness but I think it is very important that the court system comes right up to par with modern scientific practice because families and children are missing out if it does not. 
Just to end this is very important legislation. The National Party is very glad to support it and I look forward to the contributions to be made by my expert colleagues Chris Finlayson and Chester Borrows who have spent much of their professional careers in the courts and undoubtedly have a lot to offer. 
CHESTER BORROWS (National—Whanganui) 
: 
 I rise to make a short contribution. It is important to note that this legislation is important. That may seem to be a silly thing to say but in actual fact it will change the nature of Family Court jurisprudence in this country and the way in which it is administered. National believes that it will be a much fairer system for people to enter into at a time that is filled with acrimony and hostility.  
New ways of addressing old issues within the Family Court will make the movement through a procedure in that court much more enduring and lasting we hope. For instance there is the matter of having to balance open justice and the privacy of individuals but with openness and transparency may well come enduring resolutions. One of the main hallmarks of this legislation is the emphasis on counselling and mediation for those who are going through the process mediation before proceedings are formally commenced and the ability to cut a less hostile track through highly strung emotions at a time when matters start going through the Family Court processes.  
The other very sound practice that will be initiated under this legislation is the recommendation that children attend counselling when day-to-day care contact or guardianship is in dispute. Earlier my friend Dr Paul Hutchison raised the incident of the young child who did not want to see his father. The father sought the intervention of the court so that the young boy could see his father who I understand was in a bad way. That is just indicative of the sorts of resolutions we may get through this legislation and that is a good thing.  
It is so often the case that if only one party has access to a young child then it is that party’s view that is transferred on to the child and there is no understanding of the child of why he or she is feeling that way or of why the child is being encouraged or forced to feel that way. I know from speaking to young children who have been treated a bit like a piece of toffee pulled this way and that during Family Court proceedings that years down the track they wish they had seen things in a different way or had been able to stand back and take a more objective view. It is my contention that being exposed to counselling during this process will encourage even quite young people to have a more objective view of what is happening before them. The decisions and the views that are then conveyed to the court by counsel for the child will be those that will encourage a far more enduring resolution in the Family Court.  
We have also discussed in other stages of the debate the fact that we have such an adversarial system and we have questioned whether it is correctly applied to Family Court proceedings. I expressed the view as others did that in years to come we may get to a stage in this country where we look at a more conciliatory and constructive approach towards Family Court proceedings and move away from a strictly adversarial model. That just sets one view against another and things are hammered out and in the end I am sure the courts end up making a resolution that neither party is totally happy with. But they have to make a decision on winners and losers and that is very sad.  
National members hope that this bill will improve the situation of New Zealand families who are involved in the Family Court process and that the improvement to processes and procedures will lead to better outcomes for those families. It is in all of our interests that people who engage in the courts within our country believe that they have been given a fair hearing. Even if at the end of proceedings they are unhappy with the total outcome they can latch on to some parts of the resolutions that come from the court processes and see that they were reached in a fair and understanding way from their point of view. 
CHRISTOPHER FINLAYSON (National) 
: 
 As Dr Hutchison said National supports the third readings of this legislation. I have not taken part in the Committee stage but I have followed this legislation very closely because I think it raises a number of very important issues and I want to make just a brief contribution on a couple of them.  
This type of litigation is hugely sensitive. In fact it is one of the most difficult areas of court work any lawyer or judge can be involved in. A key issue this legislation tries to deal with is the extent to which Family Courts should be open to the public and by that I also include the media. It is a basic principle when one deals with our justice system that there be openness in our court proceedings. By that it is suggested that the courts should be open to the public so that if a member of the public wants to sit at the back of the court and watch a proceeding then he or she should be entitled to. There are very few exceptions to this. Sometimes one can have hearings in chambers and in very rare circumstances one can have in-camera hearings but the general principle is one of publicity or openness.  
I think that the Social Services Committee has dealt very well with this issue in trying to weigh up the kinds of factors involved in determining who should have access to the courts and in what circumstances. I commend the select committee for that and I hope that as this legislation comes into force this difficult issue will be able to be resolved more clearly in the future.  
The second point I want to make is related to clause 9 of the Care of Children Amendment Bill (No 2) which makes some changes to the Care of Children Act 2004. There are some excellent provisions dealing with the duty of lawyers to promote reconciliation and conciliation and they will come under new section 46D of the Care of Children Act and there is also a new section 46E “Duty of Courts as to reconciliation and conciliation”. I really think it is so important a principle of law that it does need to be spelt out in statute. There are some who would say that it is implicit anyway but I think it needs to be clear beyond doubt that a lawyer has a duty to ensure that the spouse civil union partner or de facto partner is aware of the facilities that exist for promoting reconciliation and conciliation and furthermore that the lawyer takes such further steps as he or she thinks fit as may be necessary to assist in promoting reconciliation or if reconciliation is not possible then conciliation. Similar provisions exist in relation to the court and I cannot emphasise enough the importance of that kind of approach to the conduct of family litigation. Indeed I go further than this; I believe that those provisions should form part of the general law.  
I think it was a few weeks ago that Dr Worth speaking in the House on a particular judicial bill referred to a statement by Lord Denning many years ago. Lord Denning was a former Master of the Rolls in England a highly respected judge revered by students for generations who once said: “In litigation as in war if one side makes a mistake the other side can seize upon it.”  
But there has been a sea change in the attitude to litigation particularly civil litigation in recent years and the approach is that it is the obligation of the lawyer to join with the judge in getting to the truth of the matter. So in litigation there has really been a move to “cards face up on the table” rather than thinking one is playing a game of poker in litigation. This legislation takes it a step further and imposes a particular obligation on lawyers to promote reconciliation and I think as this Parliament reviews the civil justice system in the years to come there is a very good argument that those general principles should also apply to those who are engaged in civil litigation because far too much delay and expense is incurred when lawyers play games. There are tedious interlocutory applications and matters seem to go on for an eternity rather than cutting to the chase and helping clients resolve their disputes.  
The next set of rules or sections I want to refer to—and again they are introduced by clause 9 into the Care of Children Act—deal with mediation and the rules relating to mediation are spelt out in some considerable detail. I think it is probably a good thing for this Parliament to address what some may think are questions of procedure. They are hugely significant issues and rather than people fighting it out in court mediation or alternative dispute resolution is certainly in my opinion the way to go in this type of litigation. Mediation developed some 20 or so years ago and it and other forms of alternative dispute resolution are a fundamental part of the justice system but especially in family-type litigation where it is very desirable that the parties should try to mediate their difficulties because it is so much cheaper. One can also deal with issues far more expeditiously and then folk can get on with their lives after what—after all—is a very traumatic part of their lives. So I commend the Social Services Committee for the work it has done in bringing into some of these statutes—and I will not go through all of the statutes—some comprehensive procedures relating to mediation.  
The final matter that really needs to be emphasised—and it is picked up in a number of provisions—is the avoidance of unnecessary formality. Rather strangely there is a reference in new subsection (2) inserted in section 10 of the Family Courts Act by clause 44 of the Family Courts Amendment Bill to the requirement: “A Judge sitting in a Family Court may wear a gown but must not wear a wig.” I do not think judges have ever worn wigs in the Family Court. New subsection (3) in section 10 states: “A lawyer appearing in a Family Court must not wear a gown or a wig.” It may be considered that those provisions are otiose but they certainly bring home the point that the Family Court is not a place for formality but is a place where lawyers and judges are expected to act obviously in a formal way but not with unnecessary formality.  
Although I was not involved with the Committee stage of the legislation I think the select committee and the Committee are to be commended for the work they have done in this very sensitive area of the law. A number of statutes have been amended and I think the end product is very good indeed. But as I said I would be particularly interested to follow the development of the mediation rules.  
The other thing I will be very interested to follow—and this is in relation to those clauses that I dealt with earlier about the duty of lawyers—is the question of lawyers who breach that duty. Will there be professional sanctions against them or could there in fact be civil sanctions? That is one of those interesting issues that I know is going to arise and we will have to wait and see how it is played out. National supports the third reading of this important legislation. 
Bills read a third time. 
Walking Access Bill 
In Committee 
Debate resumed. 
Part 1Preliminary provisions  ( 
continued 
)  
JACQUI DEAN (National—Otago) 
: 
 National supports the Walking Access Bill. It is a good bill and the reason National supports it is that it is National Party policy and it has taken the Government only 5 years to come around to its position on access over private land. The key to why National supports this bill is that it does not impinge on private property rights. That is a position National has long held.  
When Labour first introduced the walking access issue—and it shows just how out of touch Labour is with the primary sector—it called for the creation of compulsory walking strips across private land. Compulsory walking strips bring to mind the proposals the Government made in relation to the new dog control laws. Do members remember that Labour wanted to have private fenced-off walking strips between the front gate and the home? When the Government was exploring that particular daft idea I had visions of people who like me live on State Highway 1. There is a long area from our front gate to our home. I could just imagine a fenced private walking strip to provide safe access to our front door and protect people from our lovely old Labrador who would have licked them to death. But I go back to the Walking Access Bill. The particularly daft idea of the Labour Government some 5 years ago has been dropped and we now have the Walking Access Bill in its current form which National does support.  
The Local Government and Environment Committee received a number of submissions—30 or 40 I think—on the Walking Access Bill. A number of people were very concerned that designating a public walkway across a paper road would then cut off vehicular access to the paper road. That was a huge concern of submitters and rightly so. But that was dropped from the bill—yet again at select committee—by National members advocating for people to have access. We have the most beautiful country in the world. The South Island is arguably the most beautiful part of the most beautiful country in the world and a number of people in the South Island are very keen on access to our beautiful lakes our beautiful rivers our beautiful fishing spots and our beautiful high country tracks. One could go on forever about access opportunities. This bill will negotiate access via the New Zealand Walking Access Commission. But the key for National is that nothing in this bill impinges on private property rights. That is sensible. That is a position that National can endorse and agree with. So from that point of view National supports this bill.  
The provisions of this bill establish the New Zealand Walking Access Commission and I will go into the commission’s role in more detail. Its members will be appointed by the Minister. I would be very disappointed to see any appointments made after this enactment of this bill because there is such a short time to go before the election. I would be interested in comments from the Minister on that. I would be extremely disappointed if long-held conventions of this House were disregarded as they were last weekend when the Minister of Conservation made up to 50 appointments to conservation boards. That is not in the good spirit of this Parliament and I hope it does not happen. I ask the Minister to take a call on that and give us some indication as to whether upon the enactment of this bill the Minister intends to make appointments to the Walking Access Commission. I invite the Minister to answer that query.  
Last week I attended a function for members of the Walking Access Consultation Panel. A number of people from around New Zealand sat on that panel and did an awful lot of good work. I must say that I think the work of John Aspinall of Wanaka was particularly useful because as a high country farmer himself he understands very well what it is like to own a beautiful part of New Zealand where people want to visit. It is a very very strongly held belief of his that access is by negotiation and not by compulsion—and compulsion is just typical of Labour. That is what Labour members want is it not? That is what they wanted when this bill was first introduced.  
I want to finish this thought because I think it is important. The Labour Government wanted to have compulsory walkways over private land. Not only is that impractical and expensive but it impinges on every private property right held very dear by people in New Zealand. High country farmers in the South Island and other private landowners have no problem with providing access to the most beautiful features of their properties. In fact it is a convention in New Zealand that if a fisherman a four-wheel driver a tramper or someone horse-trekking wants to go across private land he or she rings the landowner and asks for permission. That permission is given and away one goes. That permission might be withheld if lambing is going on or if the property is a deer farm and one wants to visit at a certain time of year. But in general there was no problem with access and nothing actually needed fixing.  
The good thing about this bill is that the Labour Government has come right round to the right position. It has taken it 5 years but the Government has come right round to National’s position of providing access by negotiation not compulsion.  
R DOUG WOOLERTON (NZ First) 
: 
 New Zealand First supports the Walking Access Bill and I am pleased to hear that National does. I just want to talk a little bit about property rights because in case Jacqui has not had a look around lately— 
Jacqui Dean 
: I raise a point of order Mr Chairperson. I would prefer to be referred to by my correct name if that is alright with you. 
The CHAIRPERSON (Hon Clem Simich) 
: You are absolutely right. Mr Woolerton— 
R DOUG WOOLERTON 
: I apologise Mr Chairman. I could not remember the lady’s proper name at the time so I had to refer to her as I did. If that gave offence I apologise.  
I wanted to say that the previous speaker probably does not recognise the changing face of the rural environment given that the National Party does not take the interest in that sector that it once did. My brother for instance has a property that encompasses the properties of 10 previous owners. One of them was the property of Bill Waring—Marilyn Waring’s father. Just to rock up to a farmer’s gate and ask for permission to go across the property is not what will be the case in many instances. One is more likely to be talking to the manager of a property who will be far more reluctant to give permission to anybody to wander across the property to access lakes streams or rivers.  
The setting up of a commission is an ideal way to go. I think this will be a start. I think walkways will become a part of the landscape in future and they will be surveyed and recognised. It will not be a grace and favour situation where a property owner says: “Yes I am in a good mood today so I will let you walk across my property.” or in the future the property of his or her employer. In New Zealand we need to respect the fact that there is not just one lot of property rights. There is private ownership and there is the public right to access rivers streams and so on. That is what makes us unique and different from the country that many of us or our forefathers hail from and indeed from the country in whose traditions this Parliament was established.  
In that country—in many parts of Europe and particularly in England—the landowner controlled the lakes streams rivers etc. and if one wanted to fish in the stream or on the lake then one had to pay the landowner. In this country we must protect those other sets of rights: the rights of people to have free and unfettered access to their lakes streams and rivers—not the landholder’s lakes streams and rivers. We in New Zealand First say that if a track needs to be surveyed across that property—not fenced but identified—we are more than happy that compensation be paid to the landowner. We are more than happy if that person has to be compensated in some way for any inconvenience whatsoever. We are happy for that to happen. We hope the commission established by this bill will look at these things into the future and we hope these things will be common practice in this country.  
I think the bill enhances our lifestyle; I do not think anybody who owns farms will have anything to fear from it. In saying this I acknowledge somebody who has been perhaps rather harshly treated in recent history on this issue and that is the Hon Jim Sutton who initially started this bill. The Walking Access Bill has been finessed out of a bill that he proposed. We would have had trouble supporting his original bill but that is the way democracy works and that is progress. We are happy to support this bill and happy to support Part 1. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move that the Committee report progress 
.  
NATHAN GUY (Senior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I would have thought that we have another 5 minutes of debating time before we report progress.  
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 If we have members rising to take a call and the motion cannot be moved by 6 o’clock we will be here from 7 o’clock onwards. 
The CHAIRPERSON (Hon Clem Simich) 
: I will report progress. [ 
Interruption 
] We could well be here until 7 o’clock—or longer—if that is repeated.  
Progress reported. 
Report adopted. 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: Before I make the next announcement I thank the staff. It has been a long time and people have been working really hard over these last few days.  
The House adjourned at 5.52 p.m. (Friday)