Budget Measures (Miscellaneous Fiscal Matters) Bill — First Reading Second Reading In CommitteeText is incorporated into the Bound VolumeBudget Measures (Miscellaneous Fiscal Matters) Bill — First Reading Second Reading In Committee[Sitting date: 15 May 2014. Volume:698;Page:18017. Text is incorporated into the Bound Volume.]Budget Measures (Miscellaneous Fiscal Matters) BillFirst ReadingHon CRAIG FOSS (Minister of Commerce) on behalf of theMinister of Finance: I moveThat the Budget Measures (Miscellaneous Fiscal Matters) Bill be now read a first time. The bill is an omnibus bill covering fiscal measures. Part 1 of this bill will repeal cheque duty from 1 July 2014. Cheque duty applies at the rate of 5c per cheque. It is an outmoded tax and is New Zealand’s last remaining transaction duty. Since no equivalent duty applies to alternative methods of payment such as cash eftpos internet banking and credit card transactions cheque duty is a distortionary and easily avoided tax. Although the popularity of cheques has declined they are still common enough for cheque duty to be a cost for a significant number of people and businesses. Removing this cost by repealing cheque duty will benefit those who use cheques. Abolishingcheque duty will also reduce compliance costs particularly for banks and printers of cheques. Reducing compliance costs wherever possible is an ongoing focus of this Government.Part 2 of this bill corrects an unintended consequence in the operation of the New Zealand emissions trading scheme. It stops reregistration arbitrage which arises from the price difference between international Kyoto units and New Zealand Units. Urgent intervention is required to prevent the significant reputational and integrity risks and fiscal cost to the Crown that this may create. Post-1989 foresters are voluntary participants in New Zealand’s emissions trading scheme which means they are able to register and deregister the same area of land multiple times. These participants receive New Zealand Units for forest carbon growth while registered and then are able to surrender cheaper international units to meet their emissions liability. This bill limits participants to surrendering only New Zealand Units when they are deregistering an area of forest from the emissions trading scheme.Part 3 of the bill suspends for 3 years the application of anti-dumping duties to residential construction materials. This includes the anti-dumping duties currently in place on standard plasterboard from Thailand reinforcing steel bar and coil from Thailand and wire nails from China. Removing these duties will increase competition for building materials and reduce the cost of constructing new houses. The suspension of anti-dumping duties follows a market study that found they are having a chilling effect on competition in the building materials market. Anti-dumping duties are a legitimate form of protection for a domestic industry and are provided for under World Trade Organization rules.However contrary to some misconceptions dumping does not mean flooding the market with large quantities of low-quality goods at low prices. Dumping simply refers to a situation where goods are imported at a lower price than if they were sold in their country of origin. This is not necessarily unfair trade. It is normal to charge different prices in different markets.Bearing this in mind the Government has decided that in the case of residential construction materials there should be a temporary suspension of these duties to provide an immediate benefit to the Christchurch rebuild and also to the increased residential construction in other areas of the country particularly Auckland. The decision to suspend these anti-dumping duties was not made lightly and comes from the work of the Productivity Commission into housing affordability and from the Ministry of Business Innovation and Employment’sResidential Construction Market Study. It has been made in conjunction with the Government’s decision to suspend tariffs on a broad range of residential building materials. Reducing the cost of building materials is an important although only one part of the Government’s ongoing programme to increase and improve housing affordability.The removal of import barriers is expected to reduce the cost of building a standard New Zealand house by around $3500. The cost savings from the suspension of anti-dumping duties are expected to make up the bulk of this amount at around $2600 per house. The total savings from suspending these anti-dumping duties could be over $55 million per year. Taken together with the savings from introducing the tariff concession scheme direct savings are in the order of $75 million per annum nationwide. I expect that these measures will result in a more competitive market for residential building materials resulting in further reductions in the costs of constructing homes.As part of this package of measures to improve import barriers the Government has also directed officials to develop a bounded public interest test to be applied to all decisions to impose or extend the duration of anti-dumping and countervailing duties. At the moment there is no ability to consider the wider public interest in decisions toimpose or extend the duration of anti-dumping and countervailing duties or to consider significant events that affect an industry or the public such as an earthquake or other natural disasters. The details of a bounded public interest test will be developed through a public consultation process with a view to considering amending the Dumping and Countervailing Duties Act at a later date. It is the Government’s intention that any public interest test is to be put in place before the end of the 3-year suspension period so that building materials will be subject to a public interest assessment when the suspension ends. It will allow the wider public interest test to be considered not only in relation to duties on building materials but also in relation to other types of goods.The Government appreciates that the suspension of current duties on plasterboard reinforcing bar and nails will have some impact on those New Zealand manufacturers that these duties are designed to protect. However I do not consider it likely that the suspension of these duties will threaten the viability of those businesses given the strong domestic residential construction market which is likely to remain strong over the 3 years that the duties will be suspended. I am confident that our building product manufacturers can adapt and innovate to match up to the international competition.The suspension of anti-dumping duties on residential building materials is implemented by this bill as part of the Government’s wider programme to improve housing affordability. This includes work being done on standards and regulations to increase competition to reduce the price of New Zealand building materials and to free up new land for development improving sector productivity and reducing compliance costs. In conclusion the combined effect of these measures will make a lasting difference to housing affordability and will see more New Zealanders realise the dream of owning their own home. I commend the bill to the House and move that it now be read a first time.GRANT ROBERTSON (Labour—Wellington Central): Well here we are under urgency debating the Government’s Budget the critical measures to turbocharge the economy to take the step up to lift wages and to get better jobs and the Government comes to the House to remove cheque duty. That is right. Stop the marches in the street. Call off the hunger strikes. Cheque duty is gone. Around the country New Zealanders celebrate the fact that they will save on average 35c a year—35c a year—from the removal of cheque duty. I have got advice for New Zealanders around the country: do not spend it all in one shop. That is my advice—35c a year. This is the Government’s big idea that holds us here in urgency on a Friday: the removal of cheque duty. We are looking in the Budget for the comparable measures: the rebate on cassette players fondue sets and lava lamps because they are about as relevant as cheque duty is to the economy today.Hon Trevor Mallard: What! What are you saying?GRANT ROBERTSON: Trevor Mallard may also have a rebate placed on him by the end of the day. This is as good as it gets from the Government. This is the thing that the Government has lifted out from the Budget to say “Here’s our economic plan: the removal of cheque duty.” Well that is not enough. It is hard to believe that the Government thought that that was important enough. In the middle of all the many initiatives Bill English could have talked about in his Budget speech he chose to talk about the removal of cheque duty. So on this side of the House we welcome the scourge of cheque duty being taken away from the lives of New Zealanders but we ask ourselves whether or not a timid scattered backward-looking fragmented Budget like this deserves to have cheque duty—that 35c a year—lifted out as the biggie.By the way those figures do come from the Bankers’ Association—that an average of seven cheques a year are written out by bank consumers around New Zealand. Goodness only knows some people must be writing a lot of cheques to get that averageup. But seven cheques a year at 5c a cheque is delivering 35c a year to New Zealanders. This is the social dividend from the National Government—35c a year. Amazing stuff! Do they still have 35c mixtures? They probably did in the 1980s when people were paying by cheque but they do not any more. It is 35c a year from the Government to turbocharge the economy. I was seeking advice from Mr Mallard on the future of 35c mixtures—Hon Trevor Mallard: You eat more lollies than I do.GRANT ROBERTSON: Ah yes—not any more. That is the first part of this bill so there is the turbocharging of the economy.Then we come to the measures to relieve the housing crisis. The Government has decided that it recognises the depth of the housing crisis and the fact that in Auckland particularly housing is becoming unaffordable. Last month $6000 was added to the cost of an average house in Auckland so the Government has come along today with a package of measures to sort out the devil of the cost of plasterboard varnish and nails in the construction of houses. It guessed that it will save $3500. The Minister basically just said that—that it is just a guess of approximately $3500. Well that might touch the conveyancing fee for somebody trying to buy a house. While we are at it first-home buyers and building houses do not always go together. Just a hint for the Government that if it wants to actually do something that will improve the lot for first-home buyers it needs to have a programme like KiwiBuild where we are actually going to build 100000 affordable homes across New Zealand. My colleague Phil Twyford will certainly be speaking at some length in this debate around Part 3 of the Budget Measures (Miscellaneous Fiscal Matters) Bill and its woefully inadequate response to the housing crisis.I do note that within the Budget and within housing a number of interesting facts have come to light. At the moment many people are struggling to buy a house and struggling to service a mortgage. At the moment in New Zealand you need to spend 49 percent of the average gross full-time wage to service a standard mortgage. That is tough work for people—49 percent. Well what the Budget shows us is that by 2018-19 people will need to spend 63 percent of the average gross full-time wage to service a standard mortgage—63 percent. But it gets worse. If you are in Auckland it is 49 percent now but when it is 63 percent across New Zealand if you are in Auckland then 83 percent of the average gross full-time wage will be needed to service a standard mortgage. That is why housing is unaffordable for New Zealanders. That is the Kiwi dream being taken away from the next generation of New Zealanders.We have a housing crisis in New Zealand. We all have a responsibility to do something about it and in this legislation the National Government is taking the tariff off nails and varnish and plasterboard. It is not enough it is insufficient it is hopeless and it will not do anything to greatly improve the chances of people getting into their first homes and that is it for housing in this Budget—that is it.The third part of the bill is around the Climate Change Response Act and my colleague Moana Mackey will have more to say about that. What we can say there though is that although it has been described by the Minister as an “unintended consequence” that is not how it is viewed out in the sector. The question we on this side of the House have is: why does the Government hate the forestry sector so much? Why has the Government got it in for the forestry sector and want to take it on? I can tell the Government this having looked at the regulatory impact statement. The section where it says “There has been no consultation with stakeholders on this.”—that was a mistake. Can I just say that that was a mistake. Right around the country iwi forest owners are not going to be happy with this. They are not going to be happy with this response.Quite clearly this is not the climate change legislation that the Government should be putting before the House.So that is it. That is what the Government has come to us today as its big Budget bill to bring in front of the House under urgency. It is woefully inadequate. We look to this Budget for some ambition for the New Zealand economy and it is not there. It is politics as usual. It is an election-year Budget where National has come in and stolen a few policies from Labour but it leaves ambition for the economy at the door. If we want to have good jobs and higher wages it does not come from tweaks to the cheque duty; it comes from actually adopting an approach where we bring New Zealanders together. It is a partnership between the Government and business and communities that is about creating jobs and making sure that there is industry and regional development and that there is an economic upgrade that will actually add value. We are not going to get higher wages in New Zealand through politics as usual—by investing in the same things we have always have done at the same rate.We need to upgrade the economy in manufacturing in forestry and in information and communications technology. We need to make sure that the skills are being gained by people to take on those jobs. We need to get the settings of the economy right by changing monetary policy so that people are back at the centre of the economy—not the speculators not the bankers but the people who actually drive productivity in our economy. And that is the other thing that is missing from this Budget. Where is the dividend to reduce inequality? If we really want to do something in our economy and our society then we have to harness the talents of all New Zealanders and this Budget leaves behind those who live in poverty. There is very little in this Budget that reaches those people and the last bill that we debated missed them out entirely.This is not a Budget for future generations; this is a Budget for this election year. If this was a Budget for future generations we would not be allowing superannuation spending to outstrip education spending this year and that is what is happening. There is no policy in here for future generations to know that they will have universal superannuation. There is nothing here that looks ahead to that. There is nothing here that looks ahead to safeguarding the Kiwi dream of homeownership or of giving people a fair chance to get on the property ladder. There is nothing in here to address the inequality that means that if you are lucky enough to live in Mission Bay in Auckland your median income will have gone up by $6000 over the last few years but if you are in Māngere or Ōtāhuhu you will have ended up with only a $200 increase. That kind of inequality cannot be sustained in our economy. This is a woefully inadequate piece of legislation that the Government thinks somehow trumpets its Budget. It actually shows that its Budget is a failure.Hon SIMON BRIDGES (Minister of Energy and Resources): Granted that Mr Robertson could not purchase enough wine gums for his calorific out-take of that speech from the cost of a sole cheque in cheque duty nevertheless this bill is a useful discrete measure. As the Associate Minister for Climate Change Issues I would like to build on what my colleague Mr Foss has said. In relation to Part 2 of the Budget Measures (Miscellaneous Fiscal Matters) Bill entitled “Climate change response: unit restriction amendment” I would like to emphasise the following points to the House. This bill will act to maintain the integrity of the emissions trading scheme which is the Government’s primary policy tool to address climate change.An unintended consequence has occurred in the operation of the emissions trading scheme. It allows particular participants the opportunity to arbitrage New Zealand’s units against cheaper international units. This is referred to as re-reregistration arbitrage. Post-1989 foresters are voluntary participants in the emissions trading scheme. They are able to participate in the scheme at their discretion. Reregistration arbitrage occurs whenthese foresters register and then deregister from the emissions trading scheme multiple times. At registration a post-1989 forestry participant receives New Zealand Units and they may surrender any emission unit when they deregister. This allows foresters to use the registration process to profit from the price difference between domestic units and cheaper international units. It was never Parliament’s intention for this to occur. If this unintended consequence is left unchecked it could create significant reputational and integrity risks for the emissions trading scheme. This arbitrage activity also creates fiscal costs for the Crown.The bill ensures that these risks are prevented. The bill improves the integrity of the scheme by removing the opportunity to gain from the interplay of the price difference between domestic and international units and certain design features of forestry participation. To do this the bill will ensure that post-1989 foresters surrender New Zealand Units when deregistering from the emissions trading scheme. This will stop this arbitrage activity as there is no longer an opportunity to use the deregistration process to gain from the unit price difference. It will bring forestry into line with other emissions trading scheme participants.This bill of course will also permanently remove cheque duty which has become an inefficient and distortionary mode of tax and will temporarily remove anti-dumping duties on imported residential building materials in order to increase competition lift sector productivity and reduce the cost of residential construction. I commend the bill to the House.MOANA MACKEY (Labour): Why does the National Government hate the forestry sector? Why does it hate forestry so much? The one sector that got it out of a hole in the first commitment period of the Kyoto Protocol was forestry. This was the sector that put us in the black. Why does the National Government continue this sustained attack on the forestry sector? When I picked up the Budget Measures (Miscellaneous Fiscal Matters) Bill and saw the brief description of it I thought: “OK well that looks fairly reasonable.” until I read the bill and until I read the regulatory impact statement and realised that this is not about what the Associate Minister for Climate Change Issues was talking about at all. This is not an “unintended consequence” of the emissions trading scheme; this is the very deliberate result of a Government that has failed to restrict the cheap international units that have flooded into this country and collapsed the carbon price. This arbitrage issue is a problem only because there is such a differential between the New Zealand Unit price and the cheap Kyoto Protocol unit prices which the National Government has done nothing about and continues to do nothing about. That is the problem. Fix that and this all goes away. I will put forward an amendment in the Committee stage in my name to do just that—fix the actual problem instead of just taking another whack at the forestry industry.I really do not understand why National hates forestry as much as it does given the benefits of forestry to this country. The good news is that a Labour Government is coming. It has a plan for the forestry sector that includes restricting these cheap international units and assisting this export industry which has huge job potential. What the Minister would have us believe is that this is purely about reregistration. So in the mandatory emissions reporting period of 5 years a forester can go in collect New Zealand Units and then deregister from the scheme and pay that liability with these cheap Kyoto units. They can then the next day reregister to enter the scheme get New Zealand Units and deregister. We do not want that to happen but that is a symptom of the current failure of this Government to have an adequate price on carbon and to reduce the gap in price differential between New Zealand Units and foreign units. That is the actual problem.What the Government is saying now though is that it is actually not just going to stop the reregistration because you could just do that by saying that a forester can register only once in any reporting period. That fixes the problem and the problem goes away. What the Government has chosen to do is to say that if you are in forestry you do not have any access to these Kyoto units at all. So even if you are deregistering with no intention to reregister and even if you are deregistering because the economics are not working or for whatever genuine reason you do not get access to those units whereas everyone else in the scheme does. So this is not about reregistration at all because if it was we could simply fix that problem by saying that you cannot reregister. This is about whacking forestry once again. When you look at the regulatory impact statement on this bill it makes it quite clear that this is not actually about reregistration at all. One of the points that the regulatory impact statement makes is that it will be seen as unfair to post-1989 forest land participants because it imposes a restriction on their use of Kyoto units whereas other sectors continue to have unrestricted use.Let us talk about those other sectors. There is one other sector that is full of National Party mates who got free allocation of New Zealand Units and that is the heavy industrial emitters—so Rio Tinto. Remember the $80 million the Government gave Rio Tinto? Well Rio Tinto also got a free allocation of New Zealand Units and Labour absolutely supports that. Rio Tinto can engage in arbitrage by taking those New Zealand Units and paying its pollution liability with these cheap international units. Is the Government stopping that? No. And why? Because the Government likes those guys because they are its mates but it does not like forestry. So it is going to allow arbitrage to continue amongst the heavy industrial emitters who got free New Zealand Units allocations. They can continue to engage in arbitrage but forestry cannot—forestry cannot.One of the reasons for that that the Government talks about is fiscal risk. So it says that it needs to do this because the fiscal risk to the Crown is so great. Well if we take the Climate Change Response Act 2002 report from the Environmental Protection Agency and if we use the methodology that it uses for its calculations what we find is that in the year to June 2013 there were 36 million New Zealand Units allocated to industry—to the Government’s mates—which at today’s prices represent $111 million in value. Of that 36 million only 24000 were surrendered by that group to meet its obligations. So it was practically nothing at all. The balance was met through these cheap Kyoto units that we are now telling forestry they cannot have access to. So if we use the same logic as used in the Environmental Protection Agency’s own report what we find is that the fiscal risk to the Crown from the heavy industrial emitters’ arbitrage is $107 million. There is $107 million in fiscal risk.So what is the fiscal risk that we are dealing with here in this bill caused by post-1989 foresters? It is $11 million to $66 million. It is $11 million to $66 million in fiscal risk from forestry. There is $107 million in fiscal risk from heavy industrial emitters. And which is the group that we are targeting in this legislation? Forestry. Why? Because the Government hates forestry. Why are we not targeting heavy industrial emitters? Because they are the Government’s mates—they are the Government’s mates. So if this was about fiscal risk then we would actually be applying this across the board and we would have no issue with that—with it applying this across the board with the same rules applying to everyone and not one rule for National’s mates and another rule for the forestry sector which was the only sector doing the heavy lifting in the first commitment period of Kyoto in terms of emissions reductions.The Government has allowed the carbon price to collapse. There are practically no complementary measures going on at all. An analysis of the Government’s own figures shows that by 2030 if we compare doing absolutely nothing at all in terms of climatechange policy with the Government’s current plan on climate change policy the difference in emissions reductions is 0.4 percent—0.4 percent. We effectively have business as usual when it comes to climate change policy under this Government. So when I hear Minister Simon Bridges talking about needing to uphold the reputation of our emissions trading scheme—are you kidding me? Are you seriously kidding me? That thing lost its reputation the minute that this Government was elected and completely gutted it and allowed the carbon price to collapse overnight. Our emissions trading scheme has not had a good reputation since this Government was elected. It is nothing more than a fig leaf.I am sorry but the biggest risk to our reputation in terms of climate change is this National Government—Simon Bridges Tim Groser John Key—and Gerry Brownlee who is a climate change denier who just wants to build more of his carbon-sequestering motorways. When I hear the Government talk about the reputation and risk of our emissions trading scheme I am sorry—I am sorry—but that is just galling.The other angle on this of course is that there are people who are currently going through the process of deregistering and reregistering and who are going to be caught out by this. An email went out today to Ministers—because of course there was no consultation on this bill; no one knew this was coming—which said: “We have no problem with what we understand the legislation is trying to achieve but currently we have 25 clients who have sold some or all of their New Zealand Units to purchase emission reduction units. They have purchased these emission reduction units to surrender as the legislation allows once we had completed and submitted the deregistration applications to the Ministry for Primary Industries. We can complete these submissions by the end of next week but do not want to progress at the moment if we do as I understand our clients will be required to surrender New Zealand Units that they no longer hold. These are mum and dad - type forest owners and although the amounts involved may seem small to you they are substantial to them.” So do not fool yourselves National Government members that that is not going to have a very real impact on people today.What makes it even worse is that I have here theSustainable Forestry Bulletin from the Ministry for Primary Industries. What this does—and this is from August 2013 January 2014 and February 2014—is tell people how to deregister and reregister their forests. So the Ministry for Primary Industries has been providing guidelines and advice to post-1989 foresters on how to do this. They may be forgiven for thinking that the Government was OK with it. I think they could be forgiven for being extremely surprised that the Government has now pulled the rug out from under them when theSustainable Forestry Bulletin from August 2013 says: “Things to consider when removing and reregistering post-1989 forests in the ETS.”The Government has been promoting this bulletin as a legitimate tool for foresters to use. It has given absolutely no warning that this was going to happen. It has allowed price-gauging to continue under the emissions trading scheme by fuel and energy companies which are buying these cheap international units at 35c then charging through power bills and at the petrol pump around $20 a tonne. The Government has no problem with that; that is OK. It has no problem with the heavy emitters being able to engage in arbitrage. That is OK because they are their mates. But when it comes to forestry the one sector that has been doing the heavy lifting for it in terms of our net emissions—the one sector that has done this—the Government is whacking them once again. It did it the first time by allowing the carbon price to collapse. It has continued to oppose Labour’s attempts to restrict these cheap international units and now that it is doing some restrictions—The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. Her time has expired.Dr KENNEDY GRAHAM (Green): This bill before us the Budget Measures (Miscellaneous Fiscal Matters) Bill is a composite bill so the various policy considerations that attend to it in its entirely separate pieces make for a contaminated democratic process. But that is the nature of this Government.In the first reading I want to address only Part 2 on climate policy. Part 2 is described as removing an unintended consequence in the emissions trading scheme that has the potential to expose the Crown to significant fiscal risk. This bill is a testament to past folly. It is an acknowledgment by this Government that its emissions trading scheme has failed. This bill seeks to prevent after the fact the practice of arbitrage. Arbitrage is a rort. It is defined as the purchase of currencies securities or commodities in one market for immediate resale in order to profit from unequal prices.How did New Zealand get to this state in its climate policy? The primary purpose of the basic Climate Change Response Act is to enable New Zealand to meet its obligations under the United Nations Framework Convention on Climate Change. The Act aims to reduce New Zealand’s emissions. That is a binding obligation. To achieve this the Act sets up the emissions trading scheme. The scheme is described as a scheme that reduces net emissions to below business-as-usual levels. To achieve that the local carbon currency the New Zealand Unit has been introduced as the mainstay of the scheme but foreign units the Kyoto units are allowed into New Zealand as extra currencies. Since the scheme has come into force New Zealand’s gross and net emissions have continued to soar. The purpose of the Act has not been met. In fact New Zealand is in breach of its international obligations.There are two ways by which New Zealand Units are initially acquired: an emissions trading scheme participant can earn them through forestry sequestration or they can be gifted by the Government to cover any liability as a polluter. But the scheme also allows people to purchase foreign units at a cheaper rate than the New Zealand Units and surrender those to the Government instead. They then hold on to their New Zealand Units to sell them later at a higher price. They have therefore made a financial profit off a scheme that is designed to bring down emissions. In the case of forestry they may be harvesting their forests thereby increasing emissions or they may not. They may simply be deregistering from the emissions trading scheme and reregistering the next day. Either way they make a financial profit off a scheme that is designed to change society’s economic behaviour towards the goal the imperative of emissions reduction.There are some 2400 post-1989 foresters in the emissions trading scheme covering 330000 hectares of forest. In the second half of 2013 550—almost a quarter—applied to deregister. About 40 percent have applied to reregister. In making carbon a commodity for trade as opposed to a pollutant to be reduced the designers of this scheme have thwarted the purpose. In allowing windfall profit from a scheme that is intended to protect the planet from dangerous climate change the champions of the free market have excelled themselves in the art of political cynicism. In doing so they condemn their own children to a dangerous future.Eliminating this form of arbitrage will result in the price of the domestic New Zealand Unit rising. How much it will rise by is hard to estimate but it will rise. This will have the effect of reducing emissions or curbing growing emissions. The Green Party therefore intends to support Part 2 of this legislation for that fundamental reason.But the question has to be asked why this Government is confining the halt to arbitrage to the post-1989 forestry sector. The forestry sector has been asking for a unit restriction on international units for years so this is in line with that. But why make thischange yet allow other kinds of emitters—industry pre-1990 forestry energy—to continue to use international units for surrender?The same principle is exploited by industry—aluminium and steel by way of example—under industrial allocation plans. They get given volumes of New Zealand Units each year for nothing. They too bank them and surrender cheap international units instead. Why single out one sector forestry which is reducing emissions which has a break-even carbon price of $15 but is getting $3 under National’s failed emissions trading scheme?Does National believe in the free market or not? This move shows it believes in the free market for some emitters but not others. How many New Zealand Units were allocated to the three other sectors in the last year on record ended June 2013? How many were issued to industry fishing and pre-1990 forestry? The answer is 36.5 million. This involves aluminium smelters being allocated 90 percent of their annual emissions as New Zealand Units yet they too can hand back 100 percent as international units. Is that arbitrage or is it not?What about the steel mills the wood processors the methanol producers the pulp and paper mills? They are all allocated between 60 and 90 percent of emissions as New Zealand Units yet they can hand in any kind of unit. Those 36 million New Zealand Units allocated last year have a current market value of $110 million yet any of these sectors can replace the same level of emissions with emission reduction units worth $7 million.Why did it take 6 years for the modestly self-proclaimed brilliant economic stewards currently on the Treasury benches to trip over the blatant rorting of their emissions trading scheme? Was it by chance a blind ideological devotion to the free market—the free market of global carbon credit distortion? If so the invisible hand was inside the pocket of every New Zealand taxpayer. Where was ACT when we needed it? Where was the compassionate conservatism of Bill English? The Minister of Finance Minister of profit by arbitrage was asleep at the wheel. Where was the insightful judgment of John Key the Prime Minister of everything including degradation of the planet? He was awake but unable to recognise a problem whose characteristics have defined his life experience. It is no wonder they do not act.Or was it by chance a determination to ensure that greenhouse gas polluters of this country are not constrained in their freedom to respond to the mercantilist policies of the John Key - Government—the mercantilism of a 21st century milk and log colony? If so the invisible hand is passing the taxpayers’ money across to selected corporations. Bravo—a better brighter New Zealand.The underlying basis of New Zealand in terms of Treasury climate policy is global least-cost abatement. But global least cost is not the dubious emissions reduction units of track 2 type. There is no global carbon price as yet and there will not be for a decade. The international price ranges from NZ50c to NZ$30. Do we really believe that NZ50c is a true global least cost to save the planet? Allowing the cheapest of these units to come in undermining the integrity of our emissions trading scheme is cynicism of the highest level. Emissions reduction units remain valid in New Zealand until 31 May 2015 so their purchase and trading and surrender can continue until then even though most people who have a commercial interest will have already done the purchasing but any further arbitrage will undermine the emissions trading scheme.My own member’s bill the Budget Measures (Miscellaneous Fiscal Matters) Bill has been in the ballot for 2 years now. It would have prevented the import of all these cheap foreign units so that the New Zealand price could float up. That would have applied across all sectors of our economy which is how the policy should be. We shallbe looking forward to the Minister’s explanation as to why this bill does not allow restrictions on emission reduction units across all sectors.PAUL GOLDSMITH (National): It is my pleasure to speak on this Budget Measures (Miscellaneous Fiscal Matters) Bill. The tenor of Mr Robertson’s speech seemed to be that rather than the steady sensible predictable Budget carrying on in the right direction that this Government has delivered we should somehow be turning things on their head and having big changes in the economy—putting in a capital gains tax nationalising the electricity sector overturning monetary policy with an experiment that no other country in the world has tried. He said it was time for an absolute upheaval in our economic policy which makes no sense whatsoever when we look at the results that have been delivered in this Budget the sixth Budget from Bill English.After 6 years of hard work by this Government and by businesses and New Zealanders generally from one end of the country to the other we have the economy growing at nearly 4 percent wages rising faster than inflation more money in the Budget for families and the most vulnerable and business confidence at the highest level in years. That seems to me and I think to most New Zealanders to indicate that this Government is taking the economy in the right direction.I was appalled to hear a whopper from Mr Cunliffe in his Budget debate speech saying that Labour had previously delivered nine surpluses. Well Mr Cullen said he had a surplus in his last Budget but the reality was that the final Budget in the final year that Labour was responsible delivered a $3.9 billion deficit. The 2008 year saw Government spending increase by an astonishing 12 percent in 1 year leaving a Budget deficit of $3.9 billion and forecasts of never-ending deficits. This Government has had to pick up the cudgels and get this economy back into shape. It was a great day yesterday being able to celebrate a restoration of fiscal responsibility and prudence and I am very pleased to be part of a Government that has done such a thing.I do want to mention in relation to this bill the housing affordability aspects of it in the temporary suspension of dumping duties provisions. Probably the single biggest issue that I hear about in Epsom is a concern about the steadily rising house prices in Auckland. This Government has been very very active in this sector because we realise that the biggest issue we have is the constraint of land and a small supply of new houses and so Nick Smith has been indefatigable in his efforts around the city to increase the supply of land and of new housing.The other area is the cost of building. I do not like to be unkind about any members on the other side of the House but for Mr Robertson to suggest that the cost of building has no impact on the price that first-home buyers pay is economically illiterate because the cost of building a new house does flow through to the overall cost of houses in the city. So this bill will in a small way make a difference to house costs across Auckland by making it cheaper to build new houses. On that basis I commend this bill to the House. Thank you.ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on the omnibus Budget Measures (Miscellaneous Fiscal Matters) Bill covering cheque duty climate change and building supplies. Firstly cheque duty—it is too late to really comment on this. This should have been done years ago. Again it is a little trifling matter that the Government has pulled out in this particular Budget. It is just another way of it padding the Budget out to make it look better than it actually is. Cheque duty should have been done away with years ago not 6 years into this Government given the number of cheques that are issued. I was told this morning that the largest issuer of cheques in this country is the Inland Revenue Department and it is exempt from paying cheque duty. So is it not ironic that the Government the single biggest writer of cheques does not have to pay duty on them? That was a bit of nonsense. The fact thatNew Zealanders have not been paying duty on electronic transactions and other forms of transactions has made it quite an anomaly and it is time that that went.However moving on to climate change New Zealand First wants the New Zealand Government to have a serious response to climate change and this provision is not it. What is now apparent is that a great majority of countries see climate change as a result of increasing greenhouse gases and as a major global challenge. New Zealand First does not argue with that. Climate change is a reality. New Zealand First is opposed to New Zealand’s emissions trading scheme the ETS. We consider it far too complex and far too impractical. It was concocted by financial theorists for the benefit it would seem of the financial sector—a Merrill Lynch solution or really a non-solution from the likes of Merrill Lynch.As a serious response to climate change the emissions trading scheme has been as we foresaw a dismal failure—window dressing. It has failed to deliver significant emissions reductions. In addition there is little evidence that it is actually helping industry to change to a lower-carbon world. The emissions trading scheme has been systematically rorted. We have seen the unit values go from something like $23 or $24 down to a couple of dollars internationally. What an absolute embarrassment in terms of that scheme. A vast industry has grown around the emissions trading scheme but it has delivered few real results and this bill is part of the mess that has ensued from the emissions trading scheme. The bill is a consequence of the mess confusion and financial game-playing that has come from the emissions trading scheme. The emissions trading scheme was a half-baked scheme and the need for this bill demonstrates that.It is time that New Zealand had a serious policy and plan to address climate change. Climate change is possibly the greatest challenge to our future. Yesterday’s Budget pretended it was not happening at all. That exposes the total lack of vision of the National Government. This Budget fails to deliver any meaningful policy on climate change and for that and other reasons it is a manifest failure.On to the building supplies part of this bill—we have great difficulties with this. New Zealand First really does question this as well. New Zealand First anticipates that there will be all sorts of unintended consequences from this building supplies part of the bill. Removing anti-dumping duties could adversely impact the New Zealand economy. There is a reason for anti-dumping duties being in place. It was to protect local manufacturers. We have seen no evidence that the negative impacts on New Zealand jobs and businesses have been fully considered or taken into account in devising this bill. It smacks of being another of National’s knee-jerk responses to the housing crisis a crisis of its own making. But instead of taking meaningful measures—specifically curbing immigration and foreign buying of New Zealand housing stock—it decided to throw to the wolves the local manufacturers of construction products.In this bill there is no actual mechanism for ensuring that the claimed cost reductions will in fact be translated into lower house prices. It is a hope and a dream that by getting cheaper imported goods into this country for construction the price of houses will go down. It will simply mean that the margins will go up for many of those constructing the houses and putting them up.There may be cost reductions but that remains to be seen and quite frankly we are very sceptical. It is also questionable. Today Elephant Plasterboard a New Zealand manufacturer of plasterboard said that we also need to be very mindful of the products coming in—whether they will have full warranties guarantees and longevity. There will be increased supplies from the likes of China Thailand Korea and Indonesia and questionable quality standards.Many of us have witnessed the leaky homes of the 1990s which came about from the National Government changing the building code and allowing building products and kiln-dried timber to be used during the 1990s. Now in the 2000s we have ended up spending at least an additional $11 billion heading towards $20 billion on leaky homes because of inferior products being used in the construction of our residential houses. We have the potential here by knocking local good-quality manufacturing on the head and allowing increased imports from questionable sources to go through another period where—what will the plasterboard standards be? What will the standard of the nails be? I can assure you that I have built a number of properties and I have used nails. Nails are deteriorating in quality year on year. So what will be the quality of the nails?Recently I was told of trailers being sold in New Zealand that are coming in complete from Asia and they are now being given only 2 years’ warranty when New Zealand manufacturers of similar trailers give you virtually a lifetime guarantee. They will go on and on and on. A good decent trailer will last for ever but the ones that are being brought in now out of China and being sold considerably cheaper are given only 2 years’ warranty.The Government has plucked a figure out of thin air as the cost reduction on a standard house—a nice round figure of $3500 which sounds good but is totally unquantifiable. Where did this figure come from? Answer: the back of some envelope in Treasury. We predict there will be business closures in the building supplies sector. There will be job losses. The cost of building supplies is an important issue but ill-considered legislation is not the answer. Reducing GST on building supplies was another and better option. There is no evidence that that option was considered.It is critically important that we protect the manufacturing base—not just expose it at short notice to unfair competition. But once again the fate of the New Zealand manufacturing base appears not to matter to this Government. This Government has spent much of this year pooh-poohing the Opposition which raised concerns about the state of our manufacturing. Sure our agricultural manufacturing is doing very well and some sectors of manufacturing are surviving in terms of IT and smart manufacture but there are areas of what you would call manufacturing for home products consumer products and building products—products used in everyday life in New Zealand that are produced in this country—that are under real pressure. Those manufacturers which in many cases are also exporters under a very high New Zealand dollar heading towards 90c are in dire straits in many cases.This is yet another nail in the coffin for local manufacturers. Taking away the last of those anti-dumping duties will allow greater imports from many many Asian countries in particular where their cost of production is so much less where their cost of labour is so much less and where their quality of materials is perhaps more questionable. Therefore New Zealand First has great reservations about aspects of this total bill.SIMON O’CONNOR (National—Tāmaki): I am pleased to rise to speak to the Budget Measures (Miscellaneous Fiscal Matters) Bill the second of the Government’s Budget legislation. I am going to take a short call because this week is really all about checks. Think about it. National has balanced the Budget. Check. We have returned the country to surplus. Check. We have cleaned up years of Labour’s reckless overspending. Check. We have got a great plan to extend paid parental leave. Check. We are extending free doctors visits to under-13-year-olds. Check. We have invested almost $200 million more into the education system. Check. And we are getting rid of cheque duty. You had better believe that that is a check. I commend this bill to the House.PHIL TWYFORD (Labour—Te Atatū): On Budget morning an opinion poll in one of the daily newspapers said that 76 percent of New Zealanders wanted to see theBudget prioritising tackling the housing crisis and doing something for first-home buyers. Oh how New Zealanders have been let down and disappointed by this Budget. How badly the National Government has got it wrong after talking up the housing crisis for months and leaking suggestions that it was going to do something about the supply of housing in Auckland. Well it has left New Zealanders feeling badly let down.How bad is this housing crisis? Well bear this in mind: the median house price in Auckland has now gone over $700000. We have seen a 40 percent increase in house prices in Auckland since National took office in 2008. Foreign speculators are driving up the price of houses in Auckland outbidding Kiwi first-home buyers from the end of the telephone. We have got people living in garages and sleepouts around the country. And because this Government has utterly failed to get a grip on the housing crisis the Reserve Bank has imposed lending restrictions and loan-to-value ratios requiring 20 percent minimum deposits which have shut first-home buyers and low-income Kiwi families out of the housing market handing the advantage to speculators both foreign and domestic.The best this Government could do was to announce the temporary suspension of anti-dumping duties and tariffs on some building materials. That is the best it could do and that is a very inadequate response to the housing crisis. There is nothing in the Budget—nothing—for first-home buyers. There is nothing to put a stop to foreign speculators bidding up the price of houses in Auckland. There is nothing to guarantee that the 285000 children growing up in this country below the poverty line who live in rental properties will have a warm dry home. The best that National is willing to offer the country is to lift the anti-dumping duties and tariffs on some building materials. It has estimated on the back of a cigarette packet that this might save $3500 off the cost of a new home but we have heard nothing from the Ministers or from members in the House today about why they think that saving would be passed on to first-home buyers. What is to say that in an overheated housing market the builders and the developers will not just pocket that $3500? That is even if we give any credibility to the estimate that it would save $3500.What else alongside this measure did the Government announce in the Budget? It announced $30 million for social housing organisations. That is $30 million over 3 years—$10 million a year—for social housing organisations. The supposed centrepiece of Nick Smith’s housing policy is to resource the community housing sector to provide more affordable housing. Alongside lifting the anti-dumping duties and the tariffs on varnish and nails and wall board the Government has put $10 million a year into social housing organisations. I calculate that on the basis of a house costing $350000 it will take Nick Smith 455 years to meet his target of transferring 13000 houses to the community housing sector—455 years. The NGOs having heard Nick Smith announcing with great fanfare in last year’s Budget the expansion of the community housing sector—just like this year’s great announcement of lifting the anti-dumping duties on Gib board—have been left waiting for the last 12 months to hear what kind of resource the Government would put into this initiative. But all they got was a measly $10 million a year—utterly pathetic.The other initiative alongside the lifting of tariffs and anti-dumping duties is $80 million to the Ministry of Social Development for the purposes of implementing the eligibility assessment for people to get into State housing. So the Government’s single biggest announcement alongside the lifting of anti-dumping duties and tariffs is $80 million to pay the bureaucrats in the Ministry of Social Development to do the job that Housing New Zealand has been doing within its baseline funding. This is unbelievable stuff.But look there is more—there is more. There is $7 million in the Budget to pay the Ministry of Social Development to kick pensioners and disabled people out of State housing. Alongside lifting anti-dumping duties and tariffs which has been talked up as this Government’s huge contribution to solving the crisis in affordable housing this is all it has got. After Nick Smith has been the Minister of Housing for a year and a half this is all the Government has got—to pay the Ministry of Social Development $7 million to kick people out of State housing. Paula Bennett announced it in a press release entitled “Helping more families into rental housing”. Actually it is $7 million to kick people out of their State houses—unbelievable.I want to say that the public have been left open mouthed and astonished that the Government would talk up the housing crisis for the last few months dropping generous hints that it was going to do something for first-home buyers. This temporary suspension of tariffs and anti-dumping duties is estimated by someone in Treasury to save $3500 off the cost of a new house. Even if that is true it is still a tiny pathetic amount. It is less than 1 percent of the median cost of a house—less than 1 percent. Get this—it is 2 to 3 weeks of house price inflation in Auckland. It is 2 to 3 weeks of house price inflation. That is all it is going to save.The Productivity Commission which Nick Smith loves to quote in this House as his bible the font of all wisdom heard a lot of submissions on the question of building costs. Its report indicated that building supply costs in Australia are 76 percent of those for a standard home in New Zealand. So New Zealand is paying a lot more. In fact based on that data and adjusted for inflation and for the exchange rate New Zealand is paying more than $20000 more for the building materials for a standard home than consumers in Australia are paying. And the best this Government can do after an extensive working group exercise to look at building costs—Ministry of Business Innovation and Employment officials did a market study on residential constructions we had extensive public consultation and a whole range of options were foreshadowed—is come up with the temporary suspension of anti-dumping duties and tariffs on varnish nails and Gib board. It is unbelievable.I just want to say in the context of this being the Government’s showpiece announcement on affordable housing that it is worth noting that the Budget’s own figures tell us that under the current policy settings of this National Government the housing crisis is going to get much much worse. The Budget figures themselves the interest rate track and the projections on wage growth tell us that in 5 years’ time by 2018-19 it will take 63 percent of the average full-time wage to service an 80 percent mortgage on a standard home—63 percent of the average full-time wage. It is currently bad enough. It is currently 49 percent and everybody but the National caucus and Nick Smith would agree that that constitutes a housing crisis. In 5 years under this Government’s policies it is going to go from 49 percent to 63 percent. And if you live in Auckland that figure is 86 percent. So under this Government’s policies hard-working Kiwi families paying off a mortgage in Auckland in 2018-19 will have to spend 86 percent of an average full-time wage just to service a mortgage. That is if they can afford to get into their own home.What is the upshot of this? The Government with this Budget has basically run up the white flag. It has admitted defeat. It is telling New Zealanders that the dream of Kiwi homeownership is over. It is finished. The Government has given up and it has surrendered.Hon KATE WILKINSON (National—Waimakariri): It is a privilege and a pleasure to speak at the first reading of the Budget Measures (Miscellaneous Fiscal Measures) Bill this morning. What a great Budget we had and this is a good bill. This is but one component of the Budget and the Budget actually is one component of ourfantastic management of the economy. The speaker who just resumed his seat Phil Twyford I think demonstrated fairly well actually the politics of envy. Labour members are envious of our Budget. They are envious of our economic management. A wee bit of hyperbole he said—Phil Twyford: Nothing could be further from the truth.Hon KATE WILKINSON: —nothing. He said we have done nothing to give families warm dry homes. Well we have. There are now over 280000 homes that are warmer and healthier through our successful insulation schemes. If he thinks that is nothing I would hate to think what he thinks is something. I have great pleasure in supporting this bill to the House.The ASSISTANT SPEAKER (Lindsay Tisch): I understand that the next call is a split call—5 minutes. Dr David Clark.Dr DAVID CLARK (Labour—Dunedin North): I think the short call by the member opposite is indicative of the vision of this Government. Not only was it limited but it was also late. The member Kate Wilkinson stood and said that it was a real pleasure to take a call on this bill the Budget Measures (Miscellaneous Fiscal Matters) Bill this morning. I hate to inform the member that it is indeed nearly 1 o’clock. The member is of course behind the times. She is from that party opposite that is always following always playing catch-up and always trying to catch up with where Labour is at in terms of policies that have vision for New Zealanders—for those New Zealanders who want to get ahead. We are working with New Zealanders. We are determined to work with New Zealanders to deliver policies that have vision that have purpose rather than the scattergun backward-looking approaches that we see this Government pushing.This bill removes cheque duty. That is one of the things that it does. I have to say that all those years of waiting for a surplus just to splash out on removing cheque duty is rather a delicious irony. It really does speak to the backward-looking view of this Government. It is still obsessed with the old cheques. I know that I do not own a cheque book. I look around this House and there will be members who do and members who do not but really it is a small and diminishing part of the Budget.Iain Lees-Galloway: John Banks gets them.Dr DAVID CLARK: John Banks takes a lot of cheques says a member in front of me and he is probably right but I do not know whether he will be doing that much longer though for reasons that we cannot discuss in this House. Cheque duty is being canned but unfortunately New Zealanders are left with a credit card bill of about $58 billion from this Government’s borrowing—$58 billion—and we know that credit cards attract greater interest than cheques. So here we are with a Government opposite that has borrowed more money than Robert Muldoon did presenting its vision to the world: cancelling the fee on cheques. That sums it up aside from the belated catch-up of the member discovering that the afternoon has arrived and the yardarm has moved on.Dr Cam Calder: Don’t mention it.Dr DAVID CLARK: We will not mention the yardarm too much in respect of those members opposite. They were busy last night. This Budget is unfortunately as I have said backward-looking and scattergun but we think that it is a lost opportunity more than anything else because it lacks aspiration and because the Government is facing higher unemployment numbers than when it took office at the height of the global financial crisis—and unemployment is still higher in New Zealand. It is a lost opportunity because real median wages are lower than when it took office because this Government has overseen the highest gap between rich and poor in recorded history in New Zealand and because middle New Zealand struggles and continues to struggle under this Government. It is a Government that has failed to raise those real median wages. It is a Government that has overseen interest rates rising but has no plan—noplan—to help New Zealanders into their first homes. There is nothing in this Budget for them. The $3500 estimated to be saved from the housing tariff is insignificant in the context of the $200000 increase in house prices in Auckland over the last few years. It is a fraction of 1 percent as my colleague Phil Twyford pointed out earlier.This is a visionless Budget. We know that the Government has got to surplus of course through a series of fudging attempts: first through keeping artificially high ACC levies—The ASSISTANT SPEAKER (Lindsay Tisch): Order!Dr DAVID CLARK: Another is through transport spending—The ASSISTANT SPEAKER (Lindsay Tisch): Order!Dr DAVID CLARK: —being couched as a loan and so on but that has been all to produce cheque duty reductions. This is the big vision from the Government that we are being told right now. It is not interested in housing it is not interested in jobs and it is not interested in wages; instead we are here under urgency passing legislation to remove cheque duty. So ladies and gentlemen at home I am informed that this might save you up to a dollar a year.Iain Lees-Galloway: No 35c.Dr DAVID CLARK: Oh 35c a year. My apologies—35c per year this may save you at home.Moana Mackey: Don’t oversell it.Dr DAVID CLARK: I should not oversell this policy. And there will be some people for whom that 35c does make a difference but it is not the same kind of difference that would be made from having the kinds of policies that Labour is proposing to bring in when in Government such as universal KiwiSaver and the ability to use monetary policy to make sure that interest rates are kept low whilst having the money that is used to do that going into savings rather than into offshore banks.STEFFAN BROWNING (Green): I am pleased to have an opportunity to speak to the Budget Measures (Miscellaneous Fiscal Matters) Bill. There are a number of concerns but I will be focusing primarily on the building and wood products part of the bill. I will note what Kennedy Graham said when speaking before on the emissions trading scheme aspects that it is about time there was some catch-up on the rorts that have been done by predominantly overseas interests in the forestry area but that it is absolutely unfair that forestry cops it when other major industry are not being dealt with in the same way. So I support his statements on that.I want to move through to the removal of duties and tariffs on building products. I spent a lot of the morning trying to work out how broad that goes and what things will be affected. I think we all need to reflect on the processes; the tradesmen in our towns and in our cities who are working on everything from kitchen cabinets and bathroom cabinets to trusses doors window frames and things like that the people with skills; and the businesses that are feeding into the local economy. These are going to be knocked heavily by this allowance of dumping of materials into the New Zealand market.Hon Craig Foss: No they’re not.STEFFAN BROWNING: You say that. I look at the tariffs and I see 5 percent on some countries. If that is not going to impact when we have industries that actually need boosting—you are talking of savings here going on to $30 million. Not savings; costs to the Government of $30 million. Why do you not put that into boosting those local industries instead of hitting them with the costs here?Sitting suspended from 1 p.m. to 2 p.m.STEFFAN BROWNING: I was able to use the lunch break to look a little bit further at the bill and I had a good discussion with the Minister. I certainly appreciate and the Green Party appreciates some of the intention of the part of the bill that I was debating which was to deal with some of the monopolistic behaviour of some of the suppliers in terms of plasterboard in particular. However my concern in the earlier part of my speech and also now is with what I would call the collateral damage of that. I think that the bill needs some fine-tuning to look out for the New Zealand businesses that are involved in the construction of joinery for example and some of the timber products.We would like to see a Christchurch rebuild in wood. We would like to see it done with New Zealand producers New Zealand manufacturers and New Zealand tradespeople for New Zealand people. I checked with some suppliers manufacturers and joiners and I talked with a kitchen manufacturer from another town nearby. I was checking as to how much they were using that was imported and it was very little. But I also talked to a Christchurch door manufacturer business down there. They are New Zealanders doing New Zealand stuff and they have tooled up in anticipation of the growth that is expected with the rebuild. I am concerned that this bill will impact very negatively on them on timber products and on New Zealand businesses and that. So it is collateral damage. I realise that my time is nearly up so we will talk more on this later. Thank you.JOHN HAYES (National—Wairarapa): I have been listening to the debate from across this House today and yesterday afternoon—I think we have had something like 9 hours of debate—and you can come to two conclusions. The first is that our country is really lucky to be so well governed by John Key Bill English and their team. Secondly the Opposition members judging by the quality of their debate over the last 9 hours are clearly not up to running this country. We have just seen it with the last speaker Steffan Browning. He was concerned that by removing protection you are going to cause damage for some New Zealand companies. But he loses sight of the goal that we have to secure which is to build the cheapest possible houses to get as many people into homeownership as possible. If he thinks he can do that by maintaining artificial duties and not reducing the cost of a house by $3000 then he is in a space that he should not be.I would also like to draw attention to some of the debate that came up this morning from the Labour deputy finance spokesperson David Clark the wizard from Treasury. He spent all of his debate—Phil Twyford: The Reverend.JOHN HAYES: The Reverend. Yes the “Red Reverend” from Dunedin.Grant Robertson: The Rev. Dr David Clark to you.JOHN HAYES: Dr David Clark the “Red Reverend” from Dunedin. He focused on removing cheque duty. He overlooked telling the people of this country that one it is an outmoded tax and two the cheque duty does not raise substantial money at all—$4 million a year. It is distortionary it is easily avoided and it does not apply to eftpos internet or credit card transactions. That is why we want to get rid of that duty. It costs more to administer than the revenue it collects. The Budget Measures (Miscellaneous Fiscal Matters) Bill is a very good bill and I support it entirely.A party vote was called for on the questionThat the Budget Measures (Miscellaneous Fiscal Matters) Bill be now read a first time.Ayes109New Zealand National 59; New Zealand Labour 34; Green Party 11; Māori Party 2; ACT New Zealand 1; Mana 1; United Future 1.Abstentions7New Zealand First 7.Bill read a first time.Second ReadingHon CRAIG FOSS (Minister of Commerce) on behalf of theMinister of Finance: I moveThat the Budget Measures (Miscellaneous Fiscal Matters) Bill be now read a second time. Part 1 of this bill repeals cheque duty from 1 July 2014. Cheque duty no longer raises substantial revenue largely due to the decline in popularity of cheques as a method of payment. Cheque duty raised about $17 million in 1991-92 and about $10 million in 2001-02 but now raises only about $4 million per annum. Cheque duty is a relic of a previous age and the bill proposes to consign it to history.Part 2 of the bill corrects an unintended consequence in the operation of the New Zealand emissions trading scheme. The bill limits participants to surrendering New Zealand Units only when they are deregistering an area of forest from the emissions trading scheme. Participants can still use Kyoto units for emissions from deforesting or harvesting to repay overallocation and they can still sell Kyoto units on either domestic or international markets. The bill will come into force on 16 May 2014 and the amendments will not affect deregistration applications received by the Ministry for Primary Industries on or before 15 May 2014.Part 3 of this bill suspends for 3 years the application of anti-dumping duties to residential building materials. This means that the anti-dumping duties currently in place on standard plasterboard from Thailand on reinforcing steel bar and coil from Thailand and on wire nails from China will be suspended for 3 years from 1 June 2014. It also means that no new anti-dumping duties can be imposed on a wide range of residential materials over the 3-year suspension period.The purpose of suspending anti-dumping duties is to reduce the cost of constructing houses and is intended particularly to benefit the Christchurch rebuild but also increased house construction in Auckland and other parts of the country. For the purpose of determining the types of residential building materials covered by the suspension the bill broadly defines building material and residential building material. It also includes a range of specific building materials that fall within these definitions.For clarity the bill lists some items that do not fall within the core market for residential construction material and are therefore excluded from the scope of the suspension. The 3-year period over which the anti-dumping duties are suspended is defined as the period from 1 June 2014 to 31 May 2017.The bill also provides that any decision by the responsible Minister to impose an anti-dumping duty on residential building material or to reassess the rate of anti-dumping duties on a residential building material will not take effect until 1 June 2017. This means that New Zealand manufacturers can still apply for a dumping investigation into residential building material. Any decision to impose a new anti-dumping duty on a residential building material would however not take effect until the end of the suspension period on 31 May 2017 and would apply only after that date.New Zealand manufacturers also retain the right to apply for a review of a suspended duty to determine whether it should remain in place for a further 5 years. If a review finds that the duty should remain in place it would continue to be suspended until the end of the suspension period on 31 May 2017 and would be reapplied only after that date.The bill also contains some minor technical provisions relating to the definitions of “ministry” “Minister” and “secretary” to bring these definitions into conformity with current drafting practice. I believe that the combined effect of these measures will in the longer term have a significant impact on housing affordability and allow more New Zealanders to own their own home. Although the combined effect of these measures will have a significant impact on housing affordability in the longer term the suspension of anti-dumping duties as proposed in this bill will provide an immediate benefit by reducing the cost of building materials which will particularly benefit the Christchurch rebuild. I commend the bill to the House and move that it now be read a second time.GRANT ROBERTSON (Labour—Wellington Central): The second reading is the stage of the bill at which we would normally be reflecting upon what people might have said when the bill went to the select committee. That is when members of the public have their opportunity to assess a bill in terms of its value to the country. And what might those members of the public have said had they had the chance to have a look at this legislation the Budget Measures (Miscellaneous Fiscal Matters) Bill? I suspect we would have heard words like “piecemeal” “fragmented” “timid” and “hopeless” because that is actually what this bill is. This is meant to be under urgency the big moment of the National Government’s Budget revealing the transformational changes to our economy that will drive higher wages and better jobs—and it is not here.What is here is cheque duty. The 1980s have been caught up with by the National Government. It has worked out that people are not writing out as many cheques although I am a little confused I have to confess about what the Government is trying to achieve with the repeal of cheque duty. Is it meant to be the return of the cheque? Is it the idea that we take the duty off and we will all be out there writing out our cheques? Perhaps that is what it is. Or is it saving New Zealanders that massive 35c a year? Is that what it is? Is it about the dividend? Finally after all these years of austerity New Zealanders get the dividend the 35c mixture at the dairy. That is it. That is what they are going to get. If people were making submissions on this bill I suspect what they would say is: “Where is the vision? Where’s the plan?”. New Zealand is facing some serious economic and social problems and the Government’s response is removing cheque duty. That is the brighter future ladies and gentlemen that you were promised by the National Government.What we do not see in here is the way that we will lift wages and get better jobs. We have to diversify our economy. We have to add value. It is not just about volume any longer. It has to be about adding value to products in New Zealand to help create those jobs and that is absent from this bill. Perhaps submitters might have gone looking in the bill for how to reduce inequality and how to see that New Zealand becomes a fairer place. Surely that is the goal of any Budget but people come looking to the Budget legislation passed under urgency and they find nothing. The reason for that is that there is nothing in the Budget that will truly do that. The lowest-income New Zealanders the most vulnerable New Zealanders have been left out of the Budget in the measures that are there so those hoping to make submissions on that will not be able to find that either.John Hayes: Stop telling porkies.GRANT ROBERTSON: I say to Mr Hayes a man who spent his life in the Foreign Service before he came here that maybe New Zealanders would go looking for how the export sector was going to be supported and how regional economies were going to be able to drive products that would be exported. They might have wanted to submit on that in the Budget legislation and they would find nothing. They would actually find a cut to the Regional and Industry Development Fund in the Budget so they would find none of that.What they would find when they were submitting on this legislation would be a confused response to a problem created by the Government within climate change legislation designed it would appear to annoy the forestry sector and iwi and not respond in fact to the major challenges that are there in climate change. They would also find a very odd bill on removing some tariffs and changing some anti-dumping legislation. I do note and we will come to this in the Committee stage that the Government’s belief that the housing crisis will be solved by plasterboard varnish and nails being a little bit more affordable is somewhat remarkable from this Government.So in this second reading debate really on this side of the House we are deeply underwhelmed by what the Government has brought before us. We strongly believe that as a country New Zealand needs to address the economic and social difficulties that we have: the housing crisis the inequality crisis the absence of a plan to lift wages and the absence of a plan to create better jobs. None of that is solved by pieces of threadbare piecemeal fragmented legislation that the Government has brought before the House. It is a deeply disappointing piece of legislation.PAUL GOLDSMITH (National): That was a somewhat underwhelming speech from the other side here for the second reading of the Budget Measures (Miscellaneous Fiscal Matters) Bill. Mr Robinson asked—Hon Clayton Cosgrove: It’s Robertson not Robinson.PAUL GOLDSMITH: Sorry. Mr Robertson said: “Where is the plan?”. Again I think the problem is that members opposite do not like steady sensible predictable Government policy that everybody can understand in terms of where the Government is coming from and that is built up in lots of little steps that together bring the economy in the right direction. Theirs is the politics of the grand gesture where somehow you are going to wave your wand in a transformational way.If you overturn monetary policy and start changing the very foundations of what has been part of the successful New Zealand economy if you suddenly upturn the tax system and bring in a capital gains tax or if you overturn the electricity sector and start nationalising it—all those radical things Labour members are opposing but I do not quite understand what basis there is for this when we have a strong successful economy that is so much stronger than so many other parts of the developing world today.We are looking at the books being back in surplus well ahead of many other countries we are seeing growth at 4 percent and we are seeing wages rising faster than inflation and more money being made available in this Budget for families for businesses and for the most vulnerable. That seems to me to be a plan that is working a plan that is working very well and a plan that we are all proud of on this side of the House.Again I do want to remind the House of the whopper by David Cunliffe in his Budget debate speech. He said that Labour produced nine surpluses in a row. Well that is rubbish. The final one ended up being a deficit of $3.9 billion because Labour had increased spending by 12 percent in 1 year and it was 50 percent over the last 5 years of Government. That is how a Labour Government works.Yes it is true. To give Labour its merit it was reasonably disciplined in the first two terms of the Labour Government under Clark but the third term was a runaway train.Spending went out of control and it left us with an economy pregnant with a decade of deficits.This Government has had the fortitude to get us back to where we are today after 6 hard years and the hard work of New Zealanders—New Zealand businesses and New Zealand people all around the country from the top to the bottom bringing us back to surplus today. And that is something we can celebrate. This bill is about some specific details but we should not lose sight of the broader picture and the broader picture is the very successful one.I do want to talk just briefly about what we mentioned on the temporary suspension of dumping duties. Again that was mocked on the other side by Mr Robertson who said that it was just a small thing and that having cheaper nails is a terrible thing. But this is all about a plan that brings together a whole number of issues that help bring about affordability of housing.Who would have thought—I did not think it was imaginable—that we would be able to work so successfully with the Auckland Council in terms of bringing the special housing accords together and seeing upwards of 30000 houses planned to be built in Auckland over the next little while which will produce so much more supply which is what we need. It will have a much better result than any sudden introduction of a capital gains tax. All the small businesses in the country all the farmers and everybody you can name who has risked their money in an entrepreneurial venture is suddenly going to be hit by a capital gains tax. Somehow that is going to make housing in Auckland more affordable just as it has in Australia and elsewhere in the world. It seems it is a hard one to follow.Our policy of focusing on a whole range of issues on housing affordability starting with getting greater access to land and more supply in housing and then working our way through the specific issues is hard and detailed work but the cost of building is an important part of what makes housing expensive in New Zealand. When the Productivity Commission did its thorough review of housing it pointed out that New Zealand materials were more expensive than those in Australia so we are doing what every good Government should do by drilling down into the details. This legislation removing duties and tariffs on building products will increase competition and reduce costs in the industry saving Kiwis around $3500—Hon Clayton Cosgrove: Wow!PAUL GOLDSMITH: —to build a standard New Zealand home. The member opposite mocks. I do not know about you but I would prefer to have $3500 in my pockets than not.Hon Clayton Cosgrove: Do you know how much a house costs to build?PAUL GOLDSMITH: Yes I am very familiar with the general costs of housing but I will not go into that detail. On that basis—Hon Clayton Cosgrove: It wouldn’t even cover the heat pump.PAUL GOLDSMITH: —heat pumps are a lot cheaper than that actually; you just have to shop around—what we will find is that this Government has made a great contribution to housing affordability with this temporary suspension of dumping duties. On that basis I commend this bill to the House.MOANA MACKEY (Labour): Let us just be clear what the Budget Measures (Miscellaneous Fiscal Matters) Bill actually does. We had a very grandiose speech from Mr Goldsmith but very little of it was based in reality. This bill will save people 35c a year on cheque duty.Sue Moroney: How much?MOANA MACKEY: That is the first thing—35c a year savings by abolishing cheque duty.Sue Moroney: That will fix inequality!MOANA MACKEY: That is what this bill does. That will fix inequality; that is quite right! When it comes to affordable housing there will be $3500 that the Government cannot even guarantee that will be passed on to the people who are building houses. There is no guarantee that the ticket will not be clipped on the way through and that homeowners will actually see the benefit of that but my colleague Phil Twyford will talk more about that in his speech.Let us just put the facts on the table about the last Labour Government. There were nine surpluses in 9 years—nine surpluses in 9 years—and zero net debt. We paid the debt off while National was screaming at us to give tax cuts and we did not. We paid the debt down because we knew that when a rainy day like the global financial crisis came we would need to be prepared. We were incredibly exposed and the only reason we have come through the global financial crisis as well as we have has been the last Labour Government’s economic management. There was the lowest unemployment in the OECD. Labour has committed to getting us back to below 4 percent unemployment; National says that it cannot be done. Guess what? Over 5 years Labour averaged below 4 percent. It can be done if you want to do it if you care enough to do it and if you take economic development and unemployment seriously.But I want to talk about Part 2 of this bill because as my colleague Grant Robertson has said this bill should have gone to a select committee. Had it gone to a select committee it would have given the forestry sector the opportunity to appear before the committee to say: “Why do you hate us so much? Why do you continue the sustained attack on our industry?”. What looks like a very innocuous piece of legislation is actually a vicious attack once again on the forestry sector. It is the only sector in this country that has been doing the heavy lifting on greenhouse gas emissions reduction. The whole reason that we came out of the first commitment period of the Kyoto Protocol in the black was not because of Government policy. In fact as we know Government policy will result in only a 0.4 percent reduction of emissions compared with doing absolutely nothing at all. So we are basically doing absolutely nothing at all. We are doing 0.4 percent better than absolutely nothing. The only reason we came out net positive was forestry so why does the Government keep attacking and undermining the forestry sector?The forestry sector earns New Zealand Units when it plants trees but the Government is stopping the sector from using cheap international units in place of New Zealand Units and then basically pocketing the difference when it deregisters or harvests the trees. Of course we do not want that to happen but the reason it is happening is that there is such a big price differential between the Kyoto unit and the New Zealand Unit. That is the actual problem here and this Government has done absolutely nothing about it for 5 years. It voted against amendments that Labour put up to stop that by restricting cheap international units across the board to everyone which would have helped fix the problem. The Government opposed that but when it comes to the forestry sector it is going to say that that sector does not get access to those cheap units.But guess who does get access to them: National’s big heavy-emitting industry mates. Its mates get access to those cheap units to meet their obligations. They are given a free allocation of New Zealand Units to help transition them into the emissions trading scheme—90 percent. They get New Zealand Units and they can then use these cheap units to meet their pollution obligations and pocket the difference. So it OK for the mates of National to engage in what is called arbitrage but God forbid that forestry should do it the one sector that is actually doing something about reducing emissions.The Minister for the Environment is in the House. I would like to know why this does not apply to everyone. She is desperately pretending to be reading something. Why does this not apply to all people in the emissions trading scheme? Why pick on forestry Minister?Sue Moroney: She doesn’t know.MOANA MACKEY: She does not know. She does not care. We know why: it is because the Government hates forestry and it loves big industry. These are its mates. It is Rio Tinto. It has already given them a big taxpayer subsidy. We should not be at all surprised that the Government is also prepared to let big industry continue to speculate on these emissions units when it is clamping down on forestry.The Minister of Commerce said that this is an unintended consequence of the emissions trading scheme. What a load of garbage. This is not unintended; this is deliberate. It has deliberately let the carbon price collapse it has deliberately let these cheap Kyoto units flood into the country and it has deliberately not stopped that from happening so to say that it is an unintended consequence is deeply deeply misleading and I am being polite when I say that.One of the reasons talked about by members opposite is the fiscal risk to the Crown in not clamping down on this arbitrage and that is true. The Government estimates it as being from about $11 million to $66 million. But when you look at the arbitrage that is being carried out by the other sectors that hold New Zealand Units what is the fiscal risk for that? The fiscal risk for that is $107 million. That is $107 million of fiscal risk from the New Zealand Units held by the Government’s mates versus between $11 million to $66 million of fiscal risk from forestry. Which one of those are we clamping down on today? Is it the $107 million or the $11 million? No we are clamping down on the $11 million so that the Government’s cronies can continue to engage in arbitrage and it will not do anything about it although it is quite happy to once again take a whack at the forestry industry which is crucial to our battle in avoiding the worst—Sue Moroney: Are they not in the Cabinet club?MOANA MACKEY: Apparently the forestry industry is not in the Cabinet club—clearly—because if it was we would not be passing this legislation.Another reason we are doing this is the reputation risk to the emissions trading scheme—that is the risk of the reputation of our emissions trading scheme being defiled by the forestry sector engaging in speculation on New Zealand Units. The biggest reputation risk to the emissions trading scheme is that lot sitting over there. Our emissions trading scheme has no reputation now. It has no credibility it has been completely undermined and it is nothing more than a fig leaf. The emissions trading scheme’s reputation went out the door long ago when this National Government was elected. For the Government to say that it is going to clamp down on one small industry—an industry that is doing very very positive things in terms of climate change—and think that that will somehow restore the reputation of the emissions trading scheme is laughable. It is absolutely laughable.Our emissions trading scheme is designed to put a price on carbon. If it is not going to do that then quite frankly why have it? I bet you that it is costing us more to run than it is actually achieving. The thing is that when the emissions trading scheme was first introduced by the last Labour Government it had a price on carbon of around $20 to $25. That was what sparked off the wind industry in New Zealand. The price on carbon gave it the advantage it needed to really take off. That is entirely what the emissions trading scheme was designed to do. It is not doing that now because this Government has allowed the price of carbon to be completely suppressed. The reason the Government says that it is not prepared to act on that is that it wants to reduce costs to struggling businesses and households. It says that if you have a proper price oncarbon that is going to feed through to electricity and fuel bills. What it does not tell you is that consumers are being charged carbon prices well in excess of the actual carbon price by fuel companies and energy companies.And the Government has done nothing about that. It is quite happy to let the fuel companies and energy companies price gouge consumers. What we know is that the price of carbon is currently about 35c but from what we have heard—and this all comes from anecdotal evidence that we have heard from people—consumers are currently being charged between $15 and $25 for a tonne of carbon at the petrol pump and through their power bills despite the fact that the emissions that they surrendering are 35c. So in fact any benefits from a collapsed price on carbon are not being passed on to struggling businesses and households at all. Again what has it done about that? Absolutely nothing. So what looked like an innocuous piece of legislation is actually the exact opposite. What makes it even worse is here is a sustainable forestry bulletin from the Ministry for Primary Industries telling people how to register and deregister their forests. So the very thing that we are clamping down on today is the same thing that the Ministry for Primary Industries has been promoting as early as February this year.I can understand why the foresters are angry. I can understand why they might have had reason to believe that the Government was OK with them doing this given that Government literature tells them how to do it and gives them tips on things to consider when removing and reregistering. I understand why they are probably a little bit shocked that under urgency this is going through with no select committee process and with no consideration about what the impact might be on the very sector that we are still hugely reliant on to reduce our greenhouse gas emissions because this Government is doing absolutely nothing else.Dr KENNEDY GRAHAM (Green): In this second reading I want to pick up on the concern expressed by Grant Robertson about the lack of due democratic process in the passage of this bill the Budget Measures (Miscellaneous Fiscal Matters) Bill particularly as it relates as Moana Mackey has said to something as important as Part 2 of the bill and the proposal to eliminate the arbitrage against post-1989 foresters.Given that the public of New Zealand are not going to have any possible input into the passage of this legislation let us speak on their behalf as faithfully as we can. Rather than presume to input their views let us ask some questions that simply hang in the air because of the import of this draft legislation. The questions have to be asked. I think there would be five questions the people of New Zealand would wish to have answered. Given that neither the Prime Minister nor the Minister of Finance are here but the Minister for the Environment Amy Adams is here let us ask Minister Adams or her colleague who happens to wander into the Chamber and sit down in the chair to address these questions in Committee. Let us see what the answers are to these five questions.The first question to the Minister the Hon Amy Adams is: do you think that climate change is just another economic problem or is it a qualitatively new unprecedented threat to human society? If it is (a) just another problem where can we find it in your four Budget priorities which are: responsibly managing the Government’s finances; building a more productive and competitive economy—it cannot be either delivering better public services or rebuilding Christchurch so it has to be one of the first two. Do we find climate change in the responsible financial management of New Zealand’s economy or do we find it in a better productive and competitive economy? Actually the 195 states that are party to the United Nations Framework Convention on Climate Change competing among themselves and punching above their weight will fail Minister to solve the global problem. If it is the other—if it is an unprecedented threat to human society which 99 percent of humanity thinks it is—why are you and yourGovernment not calling attention to this and calling for a national debate in the forthcoming election? That is question one.Question two is: the United Nations has concluded that to prevent dangerous climate change the developed countries must reduce emissions below 1990 levels within the range of 25 to 40 percent by 2020. If the Minister continues to look down she can pretend the questions are not here possibly. That 25 to 40 percent is designed to meet a threshold of a 2-degree temperature rise or 450 parts per million volume of carbon atmospheric concentration. That 450 parts per million was actually signed off by your Government Minister in—I think it was—August 2009.Given that there is a range of 25 to 40 percent how can you justify any of the developed countries including New Zealand being outside that range and below the 25 percent? Can you explain the Treasury paper to Cabinet that says that it does not follow that every country has to be within this range when the scientists make it clear that they have taken into account all the common but differentiated responsibilities—all the differences in national circumstances—when they give a range of 25 to 40 percent? If in fact you insist on being below 25 percent which you do with your 5 percent unconditional target Minister will you wish to nominate another developed country to make up the shortfall? And will you or your Prime Minister address that issue to that developed country explain the reasons apologise for New Zealand and then nominate the country and help them perhaps to make up the shortfall?Question three—are you confident that New Zealand is doing its fair share when we set a 5 percent reduction? Are you aware Minister that global emissions at the moment are projected to produce an increase of anything between 2.6 degrees and 4 degrees Celsius? Are you equally aware Minister that New Zealand’s projected increases go above that range of 2.6 to 4 degrees Celsius and are more on track if emulated by every other country to go closer to a temperature increase of 5 to 6 degrees Celsius which in the case the World Bank has described is not dangerous but catastrophic climate change for your children and mine?Question four: are you—or perhaps your colleague the Minister of Finance—able to name and identify the global least cost of carbon as of mid-May 2014? And is it sufficient to avert dangerous climate change of a 2-degree threshold?Finally question five which has been asked repeatedly in this House today and no doubt you or your colleagues will have a chance to answer it in the Committee: why is this Government discriminating against post-1989 foresters in eliminating the arbitrage which in itself is a good thing but is iniquitous in relative terms of equity compared with the other sectors that you and your Government are deliberately and somewhat cynically protecting? They are the five questions Minister. We are waiting for those answers.SIMON O’CONNOR (National—Tāmaki): Although I might not be the Minister for the Environment I think the answer to those five supposed questions is that we do not believe in the politics of fear. We do not believe in the politics of fear wrapped in sanctimony and we do not believe in them wrapped in pseudo science.John Hayes: Or pomposity.SIMON O’CONNOR: Or pomposity—that is a very good word. I find it is very interesting with the Greens because of course there is a lot of science around climate change but what I find fascinating with the Greens of course is that when it comes to the science of drug use they are not interested in that. The science around fluoride—they are not really interested in that. The copious amounts of science around genetic engineering—oh the Greens do not want that but they are happy to pick elements around climate change which is quite real but then turn it into the politics of fear. Counterbalance that with National which is moving forward in a balanced and prudent way that embraces of course the environment—and we are seeing that through one partof this Budget Measures (Miscellaneous Fiscal Matters) Bill as it approaches arbitrage in our forests—but also the economy as a whole.We look at something like cheque duties—about $4 million of revenue to the Crown a year. That is being removed because it is an unbalanced tax now. We use eftpos and other mechanisms and they are not taxed per transaction. So the Government looks at this and asks: “How do we make things more efficient? How do we reduce regulation? How do we reduce those things that get in the way of us as human beings being able to live a balanced prudent life without fear?” We want to be able to run our businesses love our families walk in the bush swim in the lakes engage with the world in a multicultural society and be pleased with that. That is what this bill is ultimately about.This is a Budget measures bill. It is the second one of such bills we are putting forward here. I look forward to discussing this more in the Committee stage and of course in the third reading. It is as I said a prudent balanced approach to four important areas for the Government.ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First on this omnibus bill the Budget Measures (Miscellaneous Fiscal Matters) Bill which covers the cheque duty climate change and the building supplies bills. It was very interesting to hear Mr Paul Goldsmith of National giving his checklist of all the positive things in this Budget and what people were getting out of it. He could have equally put up a checklist of what was coming out of the Budget as well on the counter-side which he did not do. He seemed to show only the glossy side.He could have said that $18.5 million is coming out of output expenses for the Department of Corrections. He could have said that $22.5 million is coming out of the courts. He could have said that $2.2 million is coming out of the Customs Service. He could have said that $1 million is coming out of economic development. He could have said that $53 million is coming out of education outputs. Further with his checklist that he was so proud to show us he could have gone on to say that internal affairs is being chopped by $25 million that justice is being chopped by $14 million that labour is being chopped by $31 million and that the Police is being chopped by $42 million. In total when you add up what is being chopped out of the Budget Mr Goldsmith the checklist shows that $284 million is being chopped out of operating output expenses of Government departments this year. That is nothing to be proud of. In a population that is expanding and we have heard that 42000 more people are going to come into this country—the size of Wanganui or Whanganui depending on whether you put an “h” in it—in the coming year $284 million is chopped out of the operating expenses of Government departments to come up with the contrived figure of a $372 million surplus. That is not anything to be proud of.At the same time today we hear about the building supplies bill and how this is going to save $3500 per house built at a time when in Auckland house prices have gone up by 51.9 percent in the last 3 years. That has been the increase in house prices. We are talking many many tens of thousands of dollars if not hundreds of thousands of dollars not just an average over the whole country of $3500. And that $3500 is coming about not because of the cost of building itself but because of the cost of competition to buy houses.Today I received from one of our constituents this real estate paper from Auckland and lo and behold it is all in Chinese. I guess the members from—John Hayes: Are you racist?ANDREW WILLIAMS: No no not at all. I guess the member from Wairarapa or the member fromWaimakariri or the member from Taupō would be quite surprised if in their own town there was a 50-page newspaper all in a foreign language selling properties in your home town. I think Mr Hayes you would be surprised. You would—I am sure you would—because it does not happen anywhere else in New Zealand apart from in Auckland.John Hayes: You’re a xenophobe.ANDREW WILLIAMS: No I am not.Melissa Lee: You’re a xenophobe.ANDREW WILLIAMS: No not at all Ms Lee. I have three children aged 20 25 and 28 who are saying they will struggle to get a home in Auckland because the people their age in their 20s Ms Lee are unable to afford even a deposit on a home in Auckland any more because they have been driven out of the market. I have many real estate people in Auckland say to me that people are walking in the door and offering up to $200000 or $300000 more than what a property is estimated to be worth—offering cash. It has nothing to do with loan-to-value ratios or with going to the bank and lending or anything else. They have got the cash they are walking in and they are paying serious money over the odds. So Ms Lee do not give me a lecture about that. I know what is happening—I know what is happening.We are seeing auctions for houses on the North Shore that are sold to cash buyers who are literally on the other ends of agents’ mobile phones back in foreign parts and they are buying properties left right and centre pushing up the prices. So the problem here is not tinkering around the edges cutting out the costs of a few nails cutting down the cost of a bit of plasterboard and cutting out a few of the costs of materials. The problem we have here which is the big elephant in the room is that the Auckland market—and the Auckland market drives the rest of New Zealand—is currently seeing a huge amount of property being bought from interests abroad and that is pushing up the price of the market.Ms Lee next to my property in Auckland there recently was a 550 square metre piece of land carved off the next-door neighbour’s back lawn. What would a 550 square metre piece of land go for in the Wairarapa Mr Hayes? Probably—I do not know—$50000 $60000 $70000 or $80000. At that particular auction that small pocket of land the size of a handkerchief in Auckland went for $1 million—$1 million—and it did not go to a New Zealand buyer. It did not go to a New Zealand buyer. It did not.Melissa Lee: How do you know they’re not New Zealanders for God’s sake?ANDREW WILLIAMS: It did not go to a New Zealand buyer. Furthermore the second and the third bidders on the property were not New Zealand buyers either. They were not. And all the people in our neighbourhood asked “How on earth will our own children and our own families ever be able to stay in our own suburb?”. We have lived there for 30 years Ms Lee and our friends in the neighbourhood who have lived there for 30 years all asked how our families are going to be able to afford to stay living in our own suburb. How are they going to stay living in our own suburbs? The answer Ms Lee—Melissa Lee: Xenophobic racist.ANDREW WILLIAMS: No I am not. The answer is to stop selling our houses and our land to foreigners. Put a stop on it. New Zealand First is going to do it. New Zealand First is going to bring a halt to selling land if you are not a resident here or you are not a citizen here. We do not want you coming here and buying our houses. We do not want you coming and buying our houses because what that is doing is making New Zealanders tenants in their own country.At the same time it is interesting that this building supplies bill is going to have an effect on local manufacturers. It is going to cause concern for some of our manufacturers of goods. It is also going to have questions about whether inferior products building materials of inferior quality will start to replace New Zealand - manufactured products. Questions are already being asked by some manufacturers aboutwhether those products will come with the same level of warranties guarantees and longevity of product and the source of those materials. Today on the stock exchange Fletcher Building the largest company in this area in New Zealand dropped 11c. Its shares are down 11c today. It has gone down 1.2 percent in capitalisation. That is about $75 million knocked off the Fletcher Building capitalisation. That is the first effect of this—Fletcher Building. If that is one indication then I am sure that many of the other businesses involved in construction and that sort of thing in New Zealand will equally be going down.So the effect of this is a trifling $3500. It is a fictitious contrived figure on a saving on a house that cannot be quantified. It is probably another one of the back-of-the-cigarette-packet formulas that the Government has worked out—$3500. The Government should really get stuck in and say: “We’re going to have a land register in this country. We’re going to work out who owns the property who owns the land. We’re going to work out how we can control it. We’re going to take the heat out of the housing market and we’re going to help good Kiwi New Zealanders get back into houses.” The Government has done nothing absolutely nothing in this Budget for first-home buyers. It has done nothing for young working families—nothing at all—in terms of helping them get into houses and the Government’s answer to it is to try to knock off the price of a few nails and a bit of gib board. Well New Zealand First will not be going along with that.Hon KATE WILKINSON (National—Waimakariri): It gives me great pleasure to rise and support this non - race-based piece of legislation the Budget Measures (Miscellaneous Fiscal Matters) Bill. It is an omnibus bill that amends four other pieces of legislation. I support it at its second reading and look forward to its Committee of the whole House stage.PHIL TWYFORD (Labour—Te Atatū): I am glad to have the opportunity to make a few more comments about the Budget Measures (Miscellaneous Fiscal Matters) Bill which is the most insignificant contribution that could possibly have been designed. If the Government had set out to trivialise the issue of housing affordability in this country—if it had set out to disappoint New Zealanders who were looking for the Budget to actually make some meaningful contribution—it could not have designed a measure better designed to let people down and disappoint them.I want to respond to some of the comments that were made by the member Andrew Williams about the issue of offshore speculators and how they are bidding up the price of houses in Auckland and I want to respond also to a number of the comments and interjections that were made from the National benches. The National Government refuses to acknowledge that offshore speculators are bidding up the price of houses in Auckland and it is denying young Kiwi first-home buyers the opportunity to buy their own home.I do not know why it is in denial. It refuses to recognise that this is going on. Everybody in Auckland knows that this is a reality. It is happening every day in real estate auction rooms all around Auckland. Young Kiwi first-home buyers are being outbid by offshore speculators bidding on the end of a phone. It is a reality it is happening but the National Government for some reason is in denial. We had Nick Smith in the House earlier this week trumpeting Inland Revenue Department figures that he purported to claim said that only 1 percent of properties were owned by foreign buyers. Well he was misrepresenting the data. He was being far too cute as Nick Smith is wont to be. Although the data is limited and not comprehensive I think it is pretty clear to most observers that at least several percent of the houses that are being bought in the real estate market are going to offshore speculators.Every time we raise this issue in the House members on the National Party benches accuse members of this House of being racist and xenophobic. Well I ask members of this House when it has been racist or xenophobic for a Government to stand up for its own citizens. That is all we are asking but National is in such denial that it refuses to even collect the data. Nick Smith on the one hand says: “This is not a problem”—and that offshore speculators are not bidding up the price of houses in Auckland—“but the data is rubbish and I refuse to even collect the data.” That is complete intellectual dishonesty and it shows that this Government is running scared because it knows that New Zealanders care about this problem. In fact all of the polls on this issue indicate that by a ratio of 2:1 New Zealanders want restrictions on offshore speculators.Nick Smith has also been going around saying that it would cost a packet—in fact he said that it would cost mega-millions—to even collect the data on offshore speculators.Hon Clayton Cosgrove: They’ve got a department of statistics.PHIL TWYFORD: Yes the Government does have Statistics New Zealand but even so there are cost-effective and reasonable ways to go about solving this problem. It would be as simple as requiring the conveyancing solicitor to certify on the sale and purchase agreement whether or not the purchaser was a New Zealand citizen or a New Zealand resident. In the case of companies and trusts you simply apply the Overseas Investment Act criterion which means that if there is a beneficial interest or a foreign shareholding of 25 percent or more then you regard the entity as a foreign entity. It is as simple as that. It would cost hardly a thing. The Government could have done this months ago and it could have settled this debate once and for all.JOHN HAYES (National—Wairarapa): I think this is a great Budget. The Budget Measures (Miscellaneous Fiscal Matters) Bill is a superb piece of legislation. I support it. Thank you.Mr DEPUTY SPEAKER: Clayton Cosgrove—a 5-minute call.Hon CLAYTON COSGROVE (Labour): That was an outstanding contribution from the member for Wairarapa. I think the shorter his speeches the more outstanding they get. The Budget Measures (Miscellaneous Fiscal Matters) Bill is an interesting bill in that it is sort of one of the big hits one of the big platforms for the National Government. I will leave it to my learned colleague Moana Mackey to deal with the climate change issues but I am intrigued by the two other propositions contained within this bill.These include namely the cheque duty which in some sort of spin the National Government promoted as a big sort of tax saving and cost saving hit for the populace. I am assuming that Mr Foss the Minister of Commerce being as he is a Minister who covers all the details and knows everything that is happening in his portfolio would have canvassed the Bankers’ Association and it told him that people now write out on average seven cheques per year and that this would give an absolute net saving of 35c a year—35c a year. I know that Mr Hayes would be astounded by this. You know he would be going back to the people of Wairarapa and going around every outlet that he could. He would be standing outside every bank branch handing out his business card and saying: “I have delivered to you the people of Wairarapa 35c per year. You should be grateful.” If he was standing again they should vote for him again—that is what he would be saying. He will be telling the new candidate to go around and do that. I am sure that he will produce a pamphlet and the pamphlet may well cost more than 35c to produce but he will hand it out saying: “Be grateful. The National Government has provided you with a huge benefit.”—that is 35c a year.Then we come to the great sort of housing policy. I did note that when Mr Foss talked in his address about this wonderful $3500 that he would save New Zealanders onthe construction of their new homes he used the words “might” “could’ and “maybe save it”. He did not tell us how he actually calculated the $3500 saving that would be made in construction costs. He did not tell us that because I suspect there is no analysis. He did not tell us that at all. He said: “It might save three and a half grand. It could save three and a half grand. Maybe if we are lucky and people believe us they might get a few shekels back.” I note that the measures are temporary. They are for only 3 years. It begs the question: has any work been done as to the impact positive or negative in respect of the industry? I suspect not and that is why the Government has put it in for 3 years. If it was sure of itself it would be a permanent disposal.But then you look at the list. You look at things like varnish. I am a bit old-fashioned and I call it shellac and there is plenty of political shellac in this legislation. If you look at the conveyancing cost and perhaps the consenting cost of a new home the $3500 would not cover even that expense. So somehow New Zealanders are going to be so grateful to the National Government for the fact that allegedly they are going to save in building cost $3500 when we know that last month alone the cost of construction in Auckland in 1 month went up in excess of $6000. So this will give people a couple of weeks’ break—temporarily—and then it will be superseded by probably 200 percent or more if those figures are consistent increases month to month and people will save absolutely nothing. So it is smoke and mirrors. It is worse than smoke and mirrors—it is political shellac.So on the one hand if you are out there in cheque-writing land brace yourself because you are going to get 35c a year back and according to the National Government you should be damned well grateful for it—Phil Twyford: Happy days.Hon CLAYTON COSGROVE: —happy days are here again—and if you are a homeowner in Auckland or in other places you might have sat back last night read the paper and said: “This is not too bad. Maybe it is a heat pump or half a heat pump.” You know mum and dad might have sat back and said: “This is not a bad start.” until they realised that a 200 percent increase last month would have left them in negative territory. So I say to Mr Foss that it is not good work; not good detail. I will look forward to the Committee stage when you tell us how you get to $3.5k and what the impact will be in that detailed analysis that you and your department have embarked upon so that you can actually tell New Zealanders and they can be confident that you are telling the absolute detailed truth and you are guaranteeing them $3500 a year in savings.Bill read a second time.In CommitteeTIM MACINDOE (Junior Whip—National): I seek leave for the Committee to debate the Budget Measures (Miscellaneous Fiscal Matters) Bill as one question with the votes to be taken separately.The CHAIRPERSON (H V Ross Robertson): Is there any objection to that course of action? There appears to be none. Then that will be the case.Parts 1 to 3 and clauses 1 and 2PHIL TWYFORD (Labour—Te Atatū): I am glad you did not mistake me for Grant Robertson!The CHAIRPERSON (H V Ross Robertson): Certainly not!PHIL TWYFORD: I want to talk briefly about Part 3 of the Budget Measures (Miscellaneous Fiscal Matters) Bill which deals with the suspension of anti-dumping duties. This is the centrepiece of National’s housing policies in the Budget and a sadsad underwhelming policy it is. I want to talk about the whole question of housing costs because I think everyone would accept that we have a housing crisis. The evidence is plain to see. House prices in Auckland have increased by 40 percent since National came to office.Currently it costs someone on the average wage 49 percent of their income just to service an average mortgage. That is unsustainable and very very unaffordable. Under the numbers contained in this Budget the projections are that that will go to 63 percent so 63 percent of the average wage will go to service a mortgage. So things are not looking good first-home buyers are locked out of the market under this Government and Government agencies like Housing New Zealand are routinely referring people to live in camping grounds. We heard the Minister for Social Development Paula Bennett say the other day that people who live in camping grounds are not regarded as high priority for eligibility for a State house. That is how bad things have got.Why are houses so expensive? There are clearly a number of factors. The question of building materials and the high price of those materials is just one of those factors but I want to touch on the other factors in the course of these comments. Land particularly in Auckland is a major factor that is driving up the cost of new homes and residential developments. This Government thinks that the answer to the land supply shortage in Auckland and the high price of land is these special housing areas that it is splattering all over suburban Auckland at the moment. I want to say that Labour’s policy KiwiBuild will drive down the cost of land in new residential developments by the Government taking a much more hands-on role in the development process and foregoing the developer’s margin. A capital gains tax under Labour will also put the frighteners on the land-bankers and the speculators who are making a killing at the moment at the expense of first-home buyers.One of the other major factors is construction costs. About half the costs of a new build are the construction costs excluding materials. This Government has no answers to that. It has been wittering on about the construction industry’s productivity for the last 5 years. It has not done a thing about it. Under Labour the building of 10000 new homes a year for a decade at scale will open the door for off-site manufacturing and modern prefabrication that an industry working group recently estimated would slice $32000 off the cost of a new standard home—$32000. I hope the members opposite are listening to this because compared with the paltry $3500 that they have put on the table in this Budget $32000 amounts to a real and substantial saving. Add to that the possibilities which are unprecedented in New Zealand for bulk purchasing of building supplies. That would enable us to strike deals the likes of which have never been seen in New Zealand. By being able to bulk-purchase the components of 100000 homes we will be able to strike deals that are better than we have seen the likes of in New Zealand.Tony Sewell the head of the Ngāi Tahu Holdings Corporation has been very active in talking about the high cost of building materials in New Zealand and was recently pointing out that we are paying 25 to 30 percent more than Australian consumers for many of the new components of a new build. I think he is quite right. There is clearly something wrong with the industry and I think that most observers would agree that it is fundamentally a lack of competition. We essentially have a duopoly in the building materials industry. It is not the scale of the country; it is fundamentally a lack of competition.I invite the Minister in the chair Craig Foss to take a call and tell us what he and his colleague Nick Smith are going to do about this. What they have done is that they have chosen the low-hanging fruit from the Ministry of Business Innovation and Employment’s residential construction industry market study. By suspending or lifting tariffs and anti-dumping duties they have chosen the low-hanging fruit. They do notappear to have any political will to do anything about the core problem in relation to the high cost of construction materials and that is to address the lack of competition in the industry. So those are some of the factors.But we all know that if you are going to think about the cost of new housing it is not just about the cost of the component parts of a new house. The price of a new house is set by supply and demand. It is inexplicable to me that this National Government refuses to consider the demand side of the equation. It refuses to do anything about speculators who are bidding up prices in Auckland. Auckland is a speculator’s paradise. People are farming Kiwi houses for a capital gain. The collateral damage is to first-home buyers who cannot keep up with median house prices that are now in excess of $700000 in Auckland. But this Government refuses to consider what almost everybody else now thinks is a no-brainer and that is a capital gains tax. As we have said earlier in this debate offshore speculators are contributing to this problem. Cashed-up speculators—whether they are in New York London or Shanghai—are bidding on the end of a phone and driving prices beyond the reach of ordinary Kiwi first-home buyers.National refuses to do anything about the demand side of the equation and on the supply side all it has is this lame Auckland Housing Accord which on its own figures will deliver only 5500 new dwellings in the next 3 years in the special housing areas. Auckland needs 13000 houses every year for the next 3 years to catch up on the shortfall and keep up with growing demand. We know from the Budget figures yesterday that surging net migration is going to add 40000-odd new residents to Auckland which will make it almost impossible under the current policy settings for this Government to make a dent in the housing crisis.We know that if you walk into Home Depot in California you can buy treated four-by-two framing timber for a quarter of the price that we pay in New Zealand. It is 25 percent of the price in New Zealand if you walk into Home Depot in California. Why is that? Is it that the Americans are much more efficient at growing pinus radiata than we are? I do not think so. There is a problem in the building supplies industry. It is fundamentally a lack of competition but this Government has no will to address that problem.All that the Government has brought to Parliament in this Budget and offered the people of New Zealand in relation to the housing crisis is this pathetic measure to lift the tariffs and anti-dumping duties on nails varnish and wallboard. It may if we are lucky take $3500 off the cost of a new house but there is no reason to believe on the evidence that we have heard so far that this Government has even thought about how you would ensure that that saving is passed on to first-home buyers. It will undoubtedly be pocketed by builders and developers taking advantage of an overheated seller’s market. The $3500 that the Government has promised will be saved off the cost of a new build is less than 1 percent of the cost of an ordinary house—less than 1 percent. It is 2 to 3 weeks’ house price inflation in Auckland. It is pitiful it is pathetic and the people of New Zealand expected a lot more.MOANA MACKEY (Labour): I want to speak to Part 2 of this Budget Measures (Miscellaneous Fiscal Matters) Bill which amends the Climate Change Response Act. I have a number of questions for the Minister in the chair the Minister of Commerce which I hope he will respond to. This is an incredibly damaging piece of legislation for the post-1989 forestry sector. My first question would be: why does the Minister hate forestry so much? Why does this Government hate forestry? Time and time again we have seen Government policies undermining the very sector that is doing all the heavy lifting in terms of climate change response. I would like to know from the Minister in the chair why this applies only to post-1989 foresters.This is not actually about foresters not being able to reregister once they have deregistered and double-dip because we could have stopped that if that were the case. We could have just said that within any single mandatory emissions reporting period you cannot reregister; you can only register once. That would have fixed it. We could also have limited these international units across the board—treated everyone the same—to try to narrow that differential in price between the New Zealand Unit and the Kyoto units. That would have fixed it. If we had a proper price on carbon and that differential was not there then we would not have this issue at all. I want to know why the Minister is applying this only to post-1989 forestry. And the Minister should really be listening because we are talking serious money jobs and investment for a very important sector.The National Party likes to say that it is all about business—well here we go passing a piece of legislation that is unfair retrospective and inequitable and the Minister is not even doing me the courtesy of listening to or acknowledging any of these concerns. Maybe we should just put the officials in the chair because I do not actually think Minister Foss understands the emissions trading scheme or this bill at all but I would not want to do that because I would not want to have to put them in the horrible position of having to defend what is being done here. All I can say is that help is on the way. Come 20 September you will have a Labour Government that will take climate change seriously and that will support not undermine and attack the forestry sector.Jami-Lee Ross: The arrogance.MOANA MACKEY: Jami-Lee Ross here we go—climate change denier No. 1. Oh no sorry—that is Gerry Brownlee. Jami-Lee Ross is climate change denier No. 2. Simon O’Connor is climate change denier No. 3. He called it pseudo-science in his contribution—pseudo-science. The science of climate change is pseudo-science! Well I can say to New Zealanders and to our long-suffering officials who do wonderful work on behalf of this anti-environment Government that come 20 September you will have a Government that takes climate change and environmental matters seriously so hang on in there—hang on in there.I want to know from the Minister in the chair why this does not apply to the heavy industrial emitters who are engaging in arbitrage. Minister? Hello? No no answer.Hon Phil Goff: The lights are on but no one’s at home.MOANA MACKEY: That is right—the lights are on but no one is home. Why does this not apply to your mates in the heavy industry sector like Rio Tinto? Why are they allowed to engage in arbitrage but the post-1989 foresters are not Minister? Nope no one is there. The wheel is spinning but the hamster is long gone. Why does it not apply to your mates in the heavy-polluting industry sector? There is no answer to that.The other question I have for the Minister is if this is such a dreadful awful thing why was the Ministry for Primary Industries as late as the beginning of this year promoting it in itsSustainable Forestry Bulletin? Why was the ministry providing hints on things to consider when removing and reregistering post-1989 forests in the emissions trading scheme? I think it is fair to say that from this you could probably assume that the ministry thought the Government was OK with it so this has probably come as quite a nasty surprise to it which is why this bill should have gone to a select committee.My next question for the Minister is if this is about reducing the fiscal risk to the Crown—and we all accept that that is a good thing to do—why when the fiscal risk to the Crown of arbitrage being carried out by the post-1989 forestry sector is estimated to be between $11 million and $66 million are we not applying the same restriction to the industrial sector engaging in arbitrage? If we use the same methodology the fiscal riskto the Crown from that sector is $107 million. Why is $11 million of fiscal risk not OK but $107 million of fiscal risk is just fine?This is the most appalling thing. This is a serious piece of legislation. It was presented to us as being something minor and technical. On further investigation it absolutely was not. The Minister in the chair is refusing to even acknowledge these concerns. I would welcome him to stop sitting there like a dried arrangement get up on his pins and answer some of the questions that have not been answered. This bill has not been consulted on. No one in the forestry sector knew this was coming. The Government has not consulted with anyone. There was no select committee process. So these are very very simple questions and I hope that the Minister is going to respond to them.The next question I would put to the Minister is that if this is about reputational risk to the emissions trading scheme then should he not be more concerned about the fact that in his Government’s plan for addressing climate change the difference between the results for that and doing nothing at all is a 0.4 percent reduction in greenhouse gas emissions? So the difference between the Government’s great climate change strategy on the one hand and absolutely nothing at all on the other hand is 0.4 percent. So basically we are doing nothing. If the Minister is concerned about reputational risk then I suspect he need only look in the mirror to see who is responsible for reputational risk to the emissions trading scheme and to New Zealand for our complete lack of action in this area.I have an amendment in my name and we will be voting against this part of the bill unless my amendment is agreed to. That amendment would restrict international units across the board for everyone. That is actually what the post-1989 forestry industry has been calling for for years. So this is not about the industry saying it wants these cheap units and it thinks they should be able to stay in our scheme. For years industry has been saying: “Please restrict them. We want to see them restricted. We want the New Zealand Unit to be the prime unit used in New Zealand but apply that to everyone.” So for the Government to turn round and say it is going to restrict them but only to that industry so it will be the only sector in the emissions trading scheme that cannot get access to these units is highly inequitable. It is also retrospective.This is I think one of the worst things about this particular change to the Climate Change Response Act. There are people out there right now who are holding Kyoto units that when this bill passes they will not be able to use. They purchased those units in good faith. They purchased those units because legally they were entitled to surrender them to meet their obligations. They purchased those units in accordance with the law in accordance with Government policy—the Government had been promoting this activity—and they are now left hanging. If they have not started the deregistration process with the Ministry for Primary Industries by today then they are stuck with those European allowance units. If they have not got New Zealand Units—if they have sold their New Zealand Units because they did not think that they were going to need them—then that makes it even worse.I have another question for the Minister which he will obviously choose to ignore because he does not understand it or appreciate how damaging this actually is. Why did he not allow the European allowance units that have already landed in the country from today to still be allowed to be used? Why is he retrospectively hurting people who have purchased these units in good faith and in accordance with the law but who have not started the deregistration process? Does he care? Do you care Minister that people are actually seriously out of pocket because of something that you refuse to even stand up and take a call on while you sit there and pretend that you are not listening to me and pretend to be reading the papers in front of you? It is just embarrassing. Seriously aquarter of a million dollars for this—that is what we pay this guy for no answers for a complete lack of understanding and for no sympathy at all no remorse for the business people who are out of pocket or the foresters who are going to be hurt by this change. So the amendment in my name will equitably apply that restriction across the board to everyone. That is the way we should be dealing with it.But the primary question that I want to ask this Minister is: why is he giving his mates a free pass and whacking forestry? Minister you should be thanking forestry. It is the only reason we came through the first commitment period of Kyoto in the black—the only reason. This Government has no plan to deal with climate change at all. Forestry saved us. You should be thanking the industry not taking yet another whack at it. So I ask again: why are your mates getting a free pass and forestry is being disadvantaged? Minister? It is cronyism plain and simple. It is what we have seen right through the Budget. It is what we have seen right through the 5 years of this National Government—cronyism. It is unfair it is inequitable it is damaging and it is embarrassing.For the Minister to say that this is about our reputation—give me a break. This damages our reputation. This is a massive breach of faith with people who made investment and business decisions based on what they understood the law to be based on what the ministry was actually promoting.Dr KENNEDY GRAHAM (Green): Thank you Mr Chair. I am grateful that you allowed me to take the next call because it follows immediately on from what the previous speaker Moana Mackey was saying which was about the iniquity of discriminating against a particular subsector of New Zealand’s economy the post-1989 foresters and in the broader context the sheer inadequacy of this Government’s climate policy. I think to pick up on her point we could call this Government the 0.4 percent Government. What does that mean? It means that as I said in the second reading this Government’s policies will result in our emissions projections which if they were emulated by every other country in the world would result in something like a 5 to 6 degrees Celsius increase.During the second reading I asked a number of questions. Because of the truncated democratic process it was necessary to speak on behalf of the New Zealand people who will not have an opportunity to have input into the passage of the Budget Measures (Miscellaneous Fiscal Matters) Bill. We simply wish to ask questions. There were five questions that I asked the Hon Amy Adams who was in the Chamber at the time. I know she took careful consideration of those five questions. She will presumably have passed those on with the suggested answers on behalf of the Government to Minister Foss who will be able to get up having answered Moana Mackey’s questions and answer the five questions that I lodged as well.Just in case his colleague Minister Adams omitted to convey them to him the first one was whether they think climate change is just another economic problem or is it a qualitatively new unprecedented threat to human society? The United Nations says that to stay within the 2-degree temperature rise and 450 parts per million volume of carbon atmospheric concentration—which Cabinet has signed off on—developed countries have to stay below 1990 levels within a 25 to 40 percent range of reductions by 2020. The second question was why does the Government then respond that not every developed country has to stay within that range when that range is very clearly calculated to account for every different national circumstance of those countries? Question No. 3 was did he think that New Zealand was doing a fair share when global projections are on course for a 2.6 to 4 degree temperature increase whereas New Zealand’s projections as I said earlier are on course if emulated elsewhere to 5 to 6 degrees?The fourth question—and Minister Foss can answer this one effortlessly because he knows about these issues—is what is the global least cost of carbon in mid-May 2014 is it sufficient to begin the challenging task of bringing down global emissions and is it the right criterion to bring to bear on New Zealand’s climate policy when we are trying to bring our own national emissions down? The fifth question which both Moana Mackey and I have touched on is why discriminate among subsectors when you profess equity in your climate policy inter-sectorally in New Zealand? Those five questions are now lodged with Minister Adams and Minister Foss and we will look forward to those answers so that the democratic passage of this bill can be honoured as we go through the course of the next 60 minutes.I am also encouraged by my colleague Moana Mackey’s creativity in terms of responding to Part 2 of the bill with an amendment. I have just put forward an amendment in the last few minutes as well. It comes from the bill titled Climate Change Response (National Emissions Reduction) Amendment Bill which is in the ballot and has been in the ballot for 2 years. The reason “National Emissions Reduction” is in the title of the bill is that it is necessary to highlight the fact that the Climate Change Response Act does not specify emissions reductions as the primary goal—certainly not in the title. The title is about trading not about emissions reduction so the important thing was to have an amendment to the Climate Change Response Act that has in its title “National Emissions Reduction” to emphasise the point that we are not in the business of trading carbon; we are in the business of reducing it. That is the critical thing. That is the distinguishing thing between this Government and the Opposition.So within that bill there were a number of purposes stated—there were about six—and they were very briefly: introduce a carbon floor price and terminate the price cap; phase out the one-for-two surrender obligation; terminate the issuance of free allocations to participants; restrict international units that can be traded and surrendered in New Zealand; introduce agriculture into the scheme; and put an obligation on the Minister to prohibit the entry of any international carbon credit. The further measure in the bill was an obligation on the Minister to prohibit the entry of any international carbon credits that may in his or her judgment depress the price in New Zealand below the carbon floor price.Updating that to put it into an amendment in response to the particular nature of this piece of legislation before us Part 2 of this bill my proposed amendment is headed as addressing the Budget Measures (Miscellaneous Fiscal Matters) Bill. The proposed amendment would be a new clause 8A which would alter the Climate Change Response Act to insert new section 222I which would have the Minister regulate trading and international carbon credits. It would simply say: “The Minister must by notice in theGazette prohibit the entry into New Zealand of any international carbon credits that he or she considers may depress the price of carbon credits below the level required to commence a reduction in gross emissions.” That is designed explicitly to ensure that the status of New Zealand Units in the domestic currency and their relationship to any international foreign carbon credits is such that if the latter are going to depress the price of the former down below whatever level—in the judgment of the Minister and the Government—is required to begin the process of curbing our emissions growth and introducing omissions reductions then those units are not allowed in. They are prohibited.That is a response to the necessary but minor component of Part 2 which is to halt arbitrage on the part of post-1989 foresters. This goes considerably further. Halting arbitrage on the post-1989 foresters will halt arbitrage on the subsector. It will not in itself bring down New Zealand’s emissions level. It will not curb the growth in NewZealand’s emissions. This amendment will meet the challenge of bringing down New Zealand’s emissions and I commend the amendment to the Committee.ANDREW WILLIAMS (NZ First): I am going to speak just a little bit on the area of the building supplies part of the Budget Measures (Miscellaneous Fiscal Matters) Bill in relation to the regulatory impact statement that was prepared in relation to residential construction materials. It is very interesting when you analyse this—the impact that it will potentially have on New Zealand manufacturers. It says in the regulatory impact statement: “One of the preferred options—to temporarily suspend the anti-dumping regime in relation to key construction materials—was not explicitly consulted on. It emerged as an option through the latest round of consultation which highlighted the potential for unforeseen effects on other sectors (beyond residential construction). The new option minimises this risk. MBIE”—the department of everything—“is comfortable that the consultation provided sufficient information to assess the risks costs and benefits of the additional option notwithstanding that it was not explicitly consulted on. Consultation on the final suite of proposed options has not occurred due to Budget sensitivity.”So here we have a Government policy that has had minimal consultation and that has a potential effect on other sectors beyond the residential construction industry. It has not been widely consulted on but the Government is hanging its hat on it saying that it is going to save $3500 per house.If you look further into the regulatory impact statement it then says: “Cost of residential construction—As indicated above our preferred options package would reduce the cost of a newly built 202m2 house by around $900.” I am seeing the figure $900 not $3500 Minister. Could the Minister please explain or is $3500 another figure that has popped out of the air? It says here “by around $900”. Then it says: “21300 new dwellings were consented throughout New Zealand in 2013. If a similar number of consents are issued in 2014 and each saved $900 the total savings would be $19170000.” Well that is interesting because today Fletcher Building has already had $75 million knocked off its capitalisation. So the Government is doing a good job here. It is saving $19 million over the industry but it has managed to knock $75 million off Fletcher’s in one day.Further in the regulatory impact statement it says: “Dumping can be remedied by the imposition of anti-dumping duties at the border to ‘level the playing field’. Since 1990 anti-dumping duties have not been applicable to imports from Australia.” which is fair enough. Under CER you would not expect so. “Anti-dumping duties are currently applied to three construction materials: reinforced steel bar from Thailand; plasterboard from Thailand; and nails from China.”It is interesting that the regulatory impact statement refers to those three particular materials. It also refers to Winstone Wallboards bringing a case in 2011 in terms of plasterboard coming out of Thailand: “The investigation found that Thai plasterboard was being dumped that this was likely to continue and this would likely cause a recurrence of material injury to Winstone.” Secondly duties on wire nails from China were put in place. Again it was found that three New Zealand companies particularly were potentially being affected by this particularly the largest one Wireplus which had the largest market share. It says that Wireplus “had suffered material injury caused by dumped imports [of nails] from China.” So there are another three companies in New Zealand that are obviously now going to be feeling the heat of cheap questionable-quality materials from China.The third one was reinforcing steel bars and coils from Thailand. That was New Zealand’s Pacific Steel Group. Again in the case of Pacific Steel there was dumped steel coming out of Thailand which caused “material injury” to Pacific Steel. PacificSteel as many of us know is the biggest recycler of New Zealand metals in New Zealand. It takes a large amount of the recycled steel and cans and all sorts of aluminium—all sorts of stuff—in New Zealand that you put out in your recycling bins. A huge amount of that ends up at Pacific Steel it is melted down and put back into steel. Some of it does end up going into reinforcing and that sort of thing to go back into our construction industry. But this Government is quite happy to basically set Pacific Steel adrift in a leaky boat and say to it and the likes of—[Bell rung] Mr Chair—The CHAIRPERSON (H V Ross Robertson): The honourable member Andrew Williams.ANDREW WILLIAMS: Thank you very much Mr Chair. Mr Goff you can have your call in a minute.It is interesting. These companies are iconic companies like Pacific Steel in New Zealand like Winstone Wallboards and like the other companies making plasterboard. It is interesting that this Government which is so close with the Chinese—well it is because it has got Ministers going up to China every second week having lovely private dinners and having all sorts of things in China. It is so close with China and obviously with some of these other places that it is very happy to sell our New Zealand companies our iconic New Zealand companies down the river leave them out in the cold for the next 3 years and watch cheap nasty nails coming in from China and perhaps wallboard coming in from Thailand which might look good on the wall for the first 6 to 12 months but a year later when it is all cracking and with no warranties and guarantees—Paul Goldsmith: Oh!ANDREW WILLIAMS: —what is it going to be like then Mr Goldsmith? And when the shoddy steel reinforcing goes into the concrete floors and in 5 to 10 years we see it all rusting and bowing and concrete floors cracking in New Zealand—a bit like the leaky homes that the National Government gave us—what are we going to say then? “Oh well we saved $900 per house and we saved $19.7 million but boy we’ve got a bit of a problem in our construction industry because we’ve got a lot of shonky unwarranted products in the market that also possibly put a lot of our good hard workers in some of these industries in New Zealand down the road because the sales of their products went downhill.”Well I am sorry but New Zealand First does not support that. We do not think it stacks up. New Zealand First stands for putting New Zealanders first and we will continue to put New Zealanders first. We will certainly not abandon the manufacturers in New Zealand.Hon PHIL GOFF (Labour—Mt Roskill): We are meeting here as the House of Representatives at 3.36 on a Friday afternoon under urgency. A member of the public might assume we had matters before us of great consequence requiring our urgent attention—legislation that perhaps reflects the vision and the big ideas of a Government determined to tackle the major challenges of our time. But what are we doing? We are looking at a bill that is called the Budget Measures (Miscellaneous Fiscal Matters) Bill. And what are the big issues that require us to be here under urgency on a Friday afternoon? Well the first one is the repeal of cheque duties—the repeal of cheque duties.Grant Robertson: Transformational.Hon PHIL GOFF: You know that is going to be so transformational that it is estimated it will save New Zealanders on average 35c a year. The big challenge in this is how to pay them the 5c because we do not have them any more. And then we have two other areas that are major challenges facing this country—one is climate change and the other is the housing crisis which dominates much of the discussion particularlyin Auckland and in Christchurch. But neither of the other two measures the other two parts of this bill does anything that has any meaningful consequence in tackling those crises.I want to focus on Part 3 of the bill which deals with housing. You know I am a free trader. That is my record as a Cabinet Minister as a Minister of Trade. I do not mind the removal of tariffs. This bill does not actually do the removal of tariffs; that is apparently done in some other measure. It will not have much effect. We do not have tariffs against Australia. We do not have them against China. They are our two biggest trading partners. We do not even have them against the ASEAN members including Thailand. But we do have something called anti-dumping levies.Anti-dumping levies are not against free trade. What they are against is allowing a country to subsidise its exports below the cost it would sell those products at in its own country maybe even below the cost of manufacturing them and send them to another country. The reason we have anti-dumping levies is to stop other countries unfairly dumping their materials in our country in a way that is not about competition and is about not having a level playing field. I wonder where the Government’s principles are in removing anti-dumping levies because surely as a country that believes in free trade we also believe in fair trade that should set a level playing field. This bill undermines the concept of a level playing field and I do not think that is an appropriate measure.The big claim made on this is that it will save $3500 in the cost of building a new home. Where are the figures to substantiate that Minister Foss? There are no figures to substantiate that. You have plucked that figure from the air. How do you even know whether a building company is going to pass on to the consumer any savings that might be made? There is no guarantee of that.What is so bad about this legislation is that it pretends to find a solution to a serious problem when that solution does nothing at all to help the average New Zealander the first-home buyer or the lower-income household to achieve that dream of owning their own home. If it were $3500 being saved that would be half the amount of house price rises in my city and your city of Auckland last month. That is what the saving would be—half the $6000 inflation in house prices Minister that occurred in Auckland last month. Is it any wonder that our first-home buyers have given up hope of being able to save to get into their first home? Does this bill help those people? Not at all. Most first-home buyers as you know actually buy existing homes not new homes so it would not have any impact anyway. If the saving was what the Government claims it would be less than the cost the people would be paying on conveyancing and a fraction of the amount they would be paying to the real estate agent in commission.You see the problem in my electorate is that median house prices since this National Government has been in office have gone up by 40 percent to $700000. Paul Goldsmith came from my electorate. He knows that it is a working-class electorate—a working-class electorate where the median house price is now $700000. My kids could not afford to buy in that area even though they are tradesmen on good incomes. That is a problem. Does this bill solve that problem? Not at all.What does this bill do about the problem of speculation on house prices? Every young first-home buyer who is out there in the market trying to buy a home on the savings they can make by working hard is faced with competition from speculators. Some of them are New Zealand speculators who can claim the costs of the mortgage off their profits. That is tax deductible. It is not for the home buyer; not for the first home - buying couple who desperately want to own a home of their own. Then there are the speculators from overseas. I want those people on the other side of the Chamber who say that it is all about racism to explain to this Committee why it is that first-home buyers in New Zealand should be competing with people who are not New Zealandcitizens are not New Zealand residents and do not intend to ever come and live here but want to make a profit in a country that has no capital gains tax.John Hayes was with me and others when we were in China. China is one of the countries that are interested in buying. It is not the only one and it does not matter whether they are Chinese or Americans or British or whatever. What we discovered in China was this phenomenon where speculators were buying up apartments relying on an income from the capital gain and not even tenanting their apartments. There were hundreds of thousands of empty apartments because the attitude there is to buy the apartment not worry about renting it out wait to farm the capital gain and leave the house empty.How does that solve our housing crisis? Why is it that we do not do things to stop the foreign speculator on the other end of the telephone outbidding the young couple desperate to own their own home? Why is there nothing about that in this Budget? I would not mind being here on a Friday afternoon if we were doing something worthwhile to help those hundreds of thousands of young New Zealanders who will never realise the Kiwi dream of being home owners and are bound to remain tenants in their own country because this Government will not act.Then we have got a Treasury warning in this Budget document that says we are getting so much immigration at the moment—38000 well above what was predicted. They are all coming to Auckland and that also will push up the price of houses. I am not anti-immigration at all. I have an electorate full of people who are migrants. Many of the people who are migrants in my electorate are also desperate to buy their own homes but what they do not want is a level of migration coming through that is well in excess of our ability to supply the houses. Where are the measures in this legislation that will help those New Zealanders—my Indian constituents my Chinese constituents my Pasifika constituents and my European constituents—to get homeownership? There is nothing there.What else does Treasury tell us? It tells us that at the moment a person will spend 49 percent of the average full-time wage on an 80 percent mortgage on the average home. It is 49 percent at the moment. It sounds pretty grim does it not? But what does Treasury say also? In 5 years’ time they will be paying 63 percent of their wage and if they are in Auckland it will be 86 percent of their wage. No wonder more than half of all Aucklanders are caught in a trap of paying high rents and never being able to get their own homes.What does this Government do? It says it will remove anti-dumping on plasterboard and nails. What a Government of vision this is! What a Government that understands the needs of the people! Why do these Government members not understand it? Half of them have their own investment properties. They do not understand what it is like for the people trying to buy. They are not even interested in the people trying to buy. Well I am standing up here speaking out for those young New Zealanders to whom I want to give a chance to do the same thing that I did when I was in my early 20s—buy my own home work on my own home live in my own home and have that chance for the future.STEFFAN BROWNING (Green): I want to principally talk to Part 3 of the Budget Measures (Miscellaneous Fiscal Matters) Bill. Again I am speaking up for the owners of small and medium sized businesses who will be impacted. Some will go out of business because of this bill. These are the ones who are not the big companies like Winstone Aggregates or Fletcher Building or others which the paperwork around the bill suggests will be able to adjust. Yes they will adjust because they have got the sheer bulk and size. In fact instead of being manufacturers they will end up being theimporters that will knock out some of the small businesses that I am particularly concerned about.We have had a discussion around the forestry sector but we need to be doing value adding for our forestry sector too. The logs that I see out my window on the wharf of Wellington heading off could be being processed and value added in New Zealand. This bill in part puts even more pressure on those who would do that value adding. It actually puts more pressure on them to the point that they will go out of existence. New Zealanders will lose jobs because of this bill. They will not be losing jobs just at businesses like Winstone Aggregates; they will be losing jobs out of unique businesses doing very skilled work—cabinet makers door makers window frame makers.There is another aspect too and that is around insulation. Being here with a primary production focus I am interested in fibre as well. More and more we are seeing a move towards wool and natural fibres rather than fibreglass batts. This bill does nothing to support the natural products that our sheep producers can be part of producing. It pushes back against that initiative too. Wool is a healthier better product but it will be priced out of existence for most New Zealanders. For $3500 for a new home I do not think that the bill is worth it. It is not worth it.What the Government could be doing is supporting those New Zealand businesses to innovate and to tool up to be able to compete in the areas that they want to. There are businesses in Christchurch—and I spoke to one as I said earlier—that have actually tooled up to help with this need that the Government has at last recognised in Christchurch. New Zealand businesses can come to the party and they can be helped to come to the party.But what has this Government done? It has just opened up the borders and said: “Come on in it doesn’t matter.” There is no recognition of a border here. There is no recognition of fairness. If something comes in from one of these other countries will we be looking to see the wage structure and the conditions of the workers where it was produced? Will we be looking to see the environmental impacts where it was being manufactured? No we will not. We will just be looking at that bare-bone price and saying “That’s great. We’ve got competition and we’ve got cheap commodity products coming into this country.” We will be worse off for this because of the nature of this bill.I do recognise the need to look at big businesses when they are rorting the system and ripping off New Zealanders big time but there are other ways of doing it than this which actually costs us throughout. The Greens support aspects of the initiatives in here for sure but we do not support anything that is going to go against a fair trade and reasonable conditions for our businesses and our workers. So on this part of the bill or the third bill when it is divided we will be opposing it. Thank you.A party vote was called for on the questionThat Part 1 be agreed to.Ayes107New Zealand National 59; New Zealand Labour 33; Green Party 10; Māori Party 2; ACT New Zealand 1; Mana 1; United Future 1.Abstentions7New Zealand First 7.Part 1 agreed to.The result corrected after originally being announced as Ayes 87 Abstentions 7.The question was put that the following amendments in the name of Moana Mackey to clause 7 be agreed to:add the following subclause:(4) Despite anything in this Act where a participant is liable to surrender units under this Act a minimum of 50% of those units transferred under section 18C must be New Zealand units.add new clause 7A:7A Section 134 amended (Penalty for failing to surrender or repay units)In section 134 replace subsection (1) with:(1) This section applies if—(a)a person fails to surrender units by the due date when required to do so under section 65(4) 118(5) 189 191 or 193; or(b)a person fails to surrender sufficient units to meet their obligation under section 63(3) by the due date when required to do so under section 65(4) 118(5) 189 191 or 193; or(c)an amendment to an emissions return under section 120 or an assessment made under section 121 results in a liability for a person—(i) to surrender units or additional units under section 123(3); or(ii) to repay units in accordance with section 123(6);(d)a person is required under section 125 to repay units transferred in error.A party vote was called for on the questionThat the amendments be agreed to.Ayes51New Zealand Labour 33; Green Party 10; New Zealand First 7; Mana 1.Noes63New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.Amendments not agreed to.The question was put that the following amendment in the name of Dr Kennedy Graham to clause 8 be agreed to:add new clause 8A8ANew section 222I inserted (Minister to regulate trading in international carbon credits)After section 222H insert:222IMinister to regulate trading in international carbon creditsThe Minister must by notice in theGazette prohibit the entry into New Zealand of any international carbon credits that he or she considers may depress the price of carbon credits below the level required to commence a reduction in gross emissions.A party vote was called for on the questionThat the amendment be agreed to.Ayes44New Zealand Labour 33; Green Party 10; Mana 1.Noes63New Zealand National 59; Māori Party 2; ACT New Zealand 1; United Future 1.Abstentions7New Zealand First 7.Amendment not agreed to.A party vote was called for on the questionThat Part 2 be agreed to.Ayes74New Zealand National 59; Green Party 10; Māori Party 2; ACT New Zealand 1; Mana 1; United Future 1.Noes33New Zealand Labour 33.Abstentions7New Zealand First 7.Part 2 agreed to.A party vote was called for on the questionThat Part 3 be agreed to.Ayes96New Zealand National 59; New Zealand Labour 33; Māori Party 2; ACT New Zealand 1; United Future 1.Noes18Green Party 10; New Zealand First 7; Mana 1.Part 3 agreed to.Clause 1 agreed to.Clause 2 agreed to.The Committee divided the bill into the Cheque Duty Repeal Bill the Climate Change Response (Unit Restriction) Amendment Bill and the Dumping and Countervailing Duties Amendment Bill (No 2) pursuant to Supplementary Order Paper 451.The CHAIRPERSON (H V Ross Robertson): Just before I report this bill there is a correction to the voting on the question that Part 1 stand part. It was recorded as 87 for and 7 abstentions. It should have been 107 for and 7 abstentions. So the record is therefore corrected.Bill reported without amendment.Report adopted.