Volume 679 Week 8 - Tuesday 3 April 2012 
Text is incorporated into the Bound Volume 
Volume 679 Week 8 - Tuesday 3 April 2012 
[Sitting date: 03 April 2012. Volume:679;Page:1549. Text is incorporated into the Bound Volume.] 
Tuesday 3 April 2012 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Visitors 
Samoa—Speaker Legislative Assembly 
Mr SPEAKER 
: I have much pleasure in informing the House that a parliamentary delegation from Samoa led by the Hon Laauli Leuatea Polataivao Fosi Schmidt Speaker of the Legislative Assembly of Samoa is within the precincts of this Chamber. I am sure members would wish that he be welcomed and accorded a seat on the left of the Chair and that the delegation in the Speaker’s gallery be welcomed. 
The Hon Laauli Leuatea Polataivao Fosi Schmidt accompanied by the Deputy Speaker entered the Chamber and took a seat on the left of the Chair. 
Amended Answers to Oral Questions 
Question No. 2 to Minister 29 March 
Hon BILL ENGLISH (Deputy Prime Minister) 
: 
 I just need to correct part of an answer I gave to oral question No. 2 on Thursday 29 March. 
Mr SPEAKER 
: Leave is sought for that purpose. Is there any objection? There is no objection. 
Hon Trevor Mallard 
: Just before we do agree to that could we get an undertaking— 
Mr SPEAKER 
: Order! I have not called the member. 
Hon Trevor Mallard 
: Well I object. 
Mr SPEAKER 
: The member is perfectly at liberty to object but there is a procedure for raising a point of order. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. This is just to make it clear to the House that if the Minister was correcting an answer to a question for him I would not object; if it was for the Prime Minister it is proper for the Prime Minister to correct it. 
Mr SPEAKER 
: That was not actually a point of order. The member is entitled to object. [ 
Interruption 
] Order! 
Questions to Ministers 
Broadband Cyber-security—Australian Concerns Regarding Huawei Technologies 
1. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Prime Minister 
: Has he had any recent discussions with the Prime Minister of Australia over security and intelligence concerns Australia has expressed over Huawei? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 As has been the longstanding practice in this House by successive Governments I do not intend to comment on matters of security intelligence.  
Rt Hon Winston Peters 
: Why is the Prime Minister giving that answer to the House when he was happy to put out a press statement on 29 January talking about “to strengthen cooperation against the shared and growing challenge of cyber-security through a regular Australia New Zealand Cyber Dialogue”? What was that all about? 
Rt Hon JOHN KEY 
: We do from time to time put out generic statements in relation to security. That was in relation to the cyber-security strategy and the National Cyber Security Centre. I know given the member clearly has an interest in this area he will be pleased to know that the Government is working aggressively in that area. 
Rt Hon Winston Peters 
: If the Prime Minister is concerned about cyber-security then why has he not raised this issue with both Australia and the United States both of whom have denied access to their countries in the way that he has not denied them access to his country? 
Rt Hon JOHN KEY 
: The member’s question is incorrectly phrased. He is making assumptions he should not necessarily make. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. I do not need a grammatical lesson from that Minister either. 
Mr SPEAKER 
: Order! That is not a point of order. The member will resume his seat.  
Rt Hon Winston Peters 
: Mr Speaker— 
Mr SPEAKER 
: Order! The member will resume his seat. Under points of order members do not get to their feet and say they do not need lectures “from that Minister”. In answering the member’s question the Prime Minister asserted the question was not accurate. Ministers are perfectly at liberty to do that. At least it is focused on the question. The member may not agree with that answer; that is why he has further supplementary questions to pursue the matter. But the Prime Minister— 
Rt Hon Winston Peters 
: Point of order Mr Speaker.  
Mr SPEAKER 
: I am still on my feet. I will get off them so the member can raise his point of order. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. The propriety of questions is for the Speaker to decide. The reason why I made that statement is I thought that you would have jumped to your feet to correct the Prime Minister. I am asking a pretty fundamental question about the security of this country. It is not a trivial matter and I think it should be treated seriously by both the House and you and the Prime Minister. I think we are being unfairly treated here. 
Mr SPEAKER 
: Order! The Prime Minister answered the question by asserting there was something incorrect in the way the member asked the question. That is a perfectly legitimate answer to do that. The member has further supplementary questions to pursue the answer given by the Prime Minister. That is what question time is all about. The Speaker cannot judge whether the Prime Minister is right or wrong in making that assertion in his answer. The Speaker cannot judge that but it was very much an answer focused absolutely on the question because it said the question contained errors in part. It is up to the member then to pursue that with further supplementary questions.  
Rt Hon Winston Peters 
: What was the error in the question that was seriously asked of you? 
Rt Hon JOHN KEY 
: In answer to that question the member made assumptions he is not in a position to make. As I said earlier it is not a question of whether those questions may or may not have been asked or statements may or may not have been made—I do not comment on those matters of security. While he is at it it is not “Hu-a-why” it is “Hu-a-way”. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. He got that wrong as well. [ 
Interruption 
] 
Mr SPEAKER 
: Order! I apologise to the member. Order! Unless I misheard the member was calling a point of order and it will be heard in silence.  
Rt Hon Winston Peters 
: Mr Speaker you heard what my question was which simply related to the fact that Australia and the United States found difficulty with this company with regard to them accessing their market. I have asked him why did he find no difficulty with them given those relationships we have with the United States and Australia with— 
Rt Hon JOHN KEY 
: You didn’t ask that buddy. 
Rt Hon Winston Peters 
: There you go Mr Speaker.  
Mr SPEAKER 
: Order! The right honourable Prime Minister should not be interjecting during a point of order. 
Rt Hon Winston Peters 
: Thank you Mr Speaker. That was what the question was if he checks the  
Hansard 
. 
Hon Trevor Mallard 
: Speaking to the point of order. 
Mr SPEAKER 
: I will hear the Hon Trevor Mallard. 
Hon Trevor Mallard 
: It is in support but probably not that helpful to the Rt Hon Winston Peters. I did listen carefully to the Prime Minister’s primary answer. I listened carefully to the supplementary question which was interrupted. I think there was an assumption that the member made that there had not been contact with Australia and the United States which the Prime Minister indicated— 
Mr SPEAKER 
: Order! The member I think is again not raising a valid point of order. He is seeking to comment on the Prime Minister’s answer which he cannot do and he should know better than that. If the Rt Hon Winston Peters feels that his question was totally misunderstood I am prepared to allow it because I agree there is a genuine public interest in this issue. I accept that absolutely. The Prime Minister has made it clear to the House that he does not comment on security issues but given the potential for misunderstanding I am happy for the member to repeat that supplementary question without cost of a further question from the member. 
Rt Hon Winston Peters 
: My question is simply this: what was it that the Prime Minister did not seem to understand in the fact that the United States and Australia found difficulty with this company and debarred them from their market whilst he is allowing them into this market in this country—on the issue of national security what does he not understand here? 
Rt Hon JOHN KEY 
: What I can say is we take overall network security issues very carefully. If we see issues we specifically ensure that we address those issues and the member is quite incorrect when he says Huawei is not involved in the Australian and the US market. Actually it is part of the networks. 
Clare Curran 
: Does he stand by his statement last week that although New Zealand’s ultra-fast broadband contract with Huawei began before Australia’s action against the company he was “comfortable with the current arrangements” in New Zealand; if so does he still have full confidence in the security of New Zealand’s broadband network? 
Rt Hon JOHN KEY 
: Yes and yes. 
Clare Curran 
: Given Australia has taken action to ban Huawei from tendering for its massive broadband network does this mean that New Zealand’s cyber-security measures are superior to the Australians’; and if so how? 
Rt Hon JOHN KEY 
: I do not comment on those matters of security. 
Government Financial Position—Measures to Return to Surplus 
2. 
JOHN HAYES (National—Wairarapa) 
 to the  
Minister of Finance 
: What reports has he received on the Government’s plan to return to Budget surplus in 2014/15? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The IMF this morning released its statement under article IV consultations. IMF has concluded that the Government’s planned reduction path “strikes a balance between the need to limit both public and external debt increases while containing any adverse impact on economic growth during the recovery” which is essentially an endorsement of the Government’s well-considered and well-balanced path to surplus in 2014-15 where we will be able to stop the rise in Government debt but on the way we believe that we can improve public services. 
John Hayes 
: How will Budget 2012 contribute to the Government returning to surplus? 
Hon BILL ENGLISH 
: This year’s Budget will hold net new spending over the next 4 years somewhere close to zero. More money will be allocated to health and education. This will be paid for by savings in lower priority areas and by tightening up various revenue loopholes and reducing tax avoidance. Budget 2012 will help the Government return to surplus in 2014-15. 
John Hayes 
: Why is it important to return to Budget surplus? 
Hon BILL ENGLISH 
: That is a very good question. There are two reasons. One is we need to stop Government debt rising. But secondly it is important that New Zealand gets the Government’s books back into good shape so that if there is another recession at some stage in the next decade we are in good shape to handle that in a similar way to our successful handling of the last recession. 
John Hayes 
: What are the reasons for net core Crown debt increasing in recent years? 
Hon BILL ENGLISH 
: The member is pointing I think in that question to what has been a significant increase in net debt. In 2008 it was as low as $8 billion; it is currently around $50 billion and will peak at around $75 billion. It has been caused by a number of factors: the Government’s strategy of protecting New Zealanders from the sharpest edges of recession a very substantial commitment to the rebuilding of Canterbury after the earthquake and a very large increase in Government spending between 2000 and 2009 which we have worked hard to get under control. 
Prime Minister—Statements and Statements Made on His Behalf 
3. 
DAVID SHEARER (Leader of the Opposition) 
 to the  
Prime Minister 
: Does he stand by all statements made by him and on his behalf? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 I stand by all statements made by me and those people authorised by me to speak on my behalf. 
David Shearer 
: Does he stand by his statement that people gambling in a casino are “in a better environment than say attached to maybe a pub”; if so what evidence does he have to support that statement? 
Rt Hon JOHN KEY 
: I most certainly do stand by that statement. Let me quote a few things for the member’s education. For a start-off an Australian professor from the University of Adelaide said the National Association for Gambling Studies conference in 2008 considered Skycity’s host responsibility programme as probably the most advanced in the world. If one looks at the number of people presenting themselves for harm on average that is around 1.9 percent of people yet those who are presenting themselves for harm in non-casino environments are 3.8 percent. If one looks at those presenting themselves for gambling treatment the majority cite non-casino gaming machines as their primary source of problems. 
David Shearer 
: Why is he proposing the creation of $23 million to $28 million a year of private wealth through an increase in gambling over what would otherwise occur when all the evidence shows that this will cause harm for thousands of New Zealanders? 
Rt Hon JOHN KEY 
: Firstly I would utterly reject the number that the member is quoting. Secondly I think it is worth having a bit of a look at gambling machines. Let us just take a look at pokie machines in the Auckland area. In 2004 that number in the Auckland area was 5111; today that is 4227. The number is as the member can see in the order of around 900 fewer and will continue to go lower even if a deal is done with Skycity over time. 
David Shearer 
: I seek leave to table a document by Goldman Sachs on 23 March that sets out clearly that the amount of funds that Skycity will earn from the gambling bill will be between $23 million and $28 million.  
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 
Document by leave laid on the Table of the House. 
David Shearer 
: Is he aware that Goldman Sachs has estimated—and obviously he is not—that Skycity would make $23 million to $28 million a year of additional profit from the increase in the number of pokie machines; if so does he regard this and his changes to the Gambling Act as legislation for sale? 
Rt Hon JOHN KEY 
: In terms of the latter point no. In terms of the first point the member answered his own question earlier when he said that that is Goldman Sachs’ assessment. If one goes and has a look at the—[ 
Interruption 
] Well the deal actually has not been concluded yet. I might add when we were out announcing that we were doing a deal with Len Brown in Auckland he was quite a little lamb chops before the election because Len Brown knew as well that it will create 1000 jobs in its construction 900 jobs ongoing hundreds of thousands of visitor nights for a convention centre and tourists who will be spending twice as much in New Zealand. And by the way the number of gaming machines is going down not up. 
Mr SPEAKER 
: Order! I want to hear this question. 
David Shearer 
: Does he stand by his statement about the ACC Minister that he “directly asked her the question on two occasions” as to whether the leak of the email sent by Michelle Boag came from the Minister her office or an agency she was responsible for; and what occurred after the Minister’s first denial that required him to ask her a second time? 
Rt Hon JOHN KEY 
: Yes and that was because we had two conversations in which both times actually the Minister offered that. 
Mr SPEAKER 
: Order! It is just impossible to hear. I accept that both sides have been guilty of a lot of noise today but it makes it so hard to hear. 
David Shearer 
: Further to the answer given on his behalf last Thursday did his office contact Cameron Slater on the question of the leak of the Boag letter? 
Rt Hon JOHN KEY 
: No it did not. 
David Shearer 
: Did he chair the Cabinet appointments and honours committee that appointed his Helensville electorate chair Stephen McElrea to the board of New Zealand On Air? 
Rt Hon JOHN KEY 
: Yes and it was the same one that appointed Michael Cullen to New Zealand Post. 
Mr SPEAKER 
: Order! The smaller parties at the back are not guilty in any way in this; it is the main parties at the front here whose noise is unacceptable. 
David Shearer 
: Did he at any time last year indicate to the receivers or the ANZ Bank that the sale of the Crafar farms to Shanghai Pengxin would be considered favourably by his Government after last year’s election? 
Rt Hon JOHN KEY 
: No. 
Mr SPEAKER 
: I had not even called the right honourable Prime Minister. The question asked whether the Prime Minister stood by all his statements or those made on his behalf and then the supplementary questions are ranging over a range of issues that are not necessarily—order! I want to make sure they do not depart too far from the primary question. 
David Shearer 
: Does he think that the interference of senior National Party members in all of these incidents leads to a perception of political interference special treatment or cronyism? 
Mr SPEAKER 
: Order! What troubles me about that supplementary question is the primary question asked about recent statements but that supplementary question does not refer to any particular statement. The question—unless I am reading the wrong question—asked: “Does he stand by all statements made by him and on his behalf?” and several supplementary questions have not referred to any statement made by the right honourable Prime Minister. I listened very carefully to that last question. I heard no reference to a statement made by the Prime Minister. I do not want to deprive the member of his questions so if the member can relate it to a statement by the Prime Minister I would be very grateful. Please relate the question to the primary question. 
David Shearer 
: Do his answers to the supplementary questions relate to a sense of the incidence of—a perception of—political interference special treatment and cronyism? 
Rt Hon JOHN KEY 
: No and that is why the New Zealand public support this National Government so strongly. 
Crime Statistics—2011 Figures 
4. 
JACQUI DEAN (National—Waitaki) 
 to the  
Minister of Police 
: What recent reports has she received about reductions in recorded crime? 
Hon ANNE TOLLEY (Minister of Police) 
: 
 Yesterday the police released the 2011 crime statistics which show a 4.8 percent drop in recorded crime. This follows a 5.6 percent reduction in 2010. This result represents the lowest number of recorded offences for New Zealand for 15 years. Homicide and related offending dropped 14.4 percent. Illicit drug offences reduced by 9.8 percent. Abduction harassment and other related offences dropped by 8.5 percent. I am sure all members will join with me in commending the police for their excellent work in reducing crime and keeping our communities safe. 
Jacqui Dean 
: What factors have contributed to the lower crime rate? 
Hon ANNE TOLLEY 
: The police are focused on the Policing Excellence strategy which is aimed at freeing up police on the front line to go exactly where they are needed. Police now place much greater emphasis on preventing crime with neighbourhood policing teams and the use of mobile technology meaning that officers can spend more time in their communities. Of course as a result of the John Key - led National Government we now have an extra 600 police out on the beat. 
Moana Mackey 
: Is part of her strategy to reduce recorded crime to actually just make it harder for people to report crime given the recent decision to reduce front-line services by closing the Gisborne Police Station to the public overnight a decision that the Gisborne community were not even told about until they turned up and found the doors locked and the phones diverted to Napier? 
Hon ANNE TOLLEY 
: Quite the contrary. In fact the crime reporting line has recently been introduced to the eastern district. That means that people do not have to travel—[ 
Interruption 
]  
Mr SPEAKER 
: Order! I apologise to the Minister. Look I assume the members’ colleague’s question—the question by Moana Mackey—was asked in seriousness and therefore I expect members may want to hear an answer. There is no way an answer can be heard with that rabble.  
Hon ANNE TOLLEY 
: As I said quite the contrary. In fact the police are making it much easier for people to report crime and the crime reporting line has been rolled out in the eastern district. People do not have to visit the police station to report crime; they just get on the telephone and they will be dealt with immediately.  
Privacy Commissioner—Law Commission Recommendations 
5. 
CHARLES CHAUVEL (Labour) 
 to the  
Minister of Justice 
: Why has she declined to accept the Law Commission’s recommendation supported by the Privacy Commissioner to increase the Privacy Commissioner’s investigative powers including by giving her the power to issue compliance notices and to conduct information-handling audits? 
Hon JUDITH COLLINS (Minister of Justice) 
: 
 The member is quite wrong. 
Charles Chauvel 
: I raise a point of order Mr Speaker. I took care in wording the primary question. The Minister has had time to consider it. I wonder whether she would like to— 
Mr SPEAKER 
: Order! The member will resume his seat. The Minister said the member had made errors in his question. She said it was wrong. I cannot know whether the Minister is right or wrong. The solution is to pursue the Minister with incisive supplementary questions. 
Charles Chauvel 
: I raise a point of order Mr Speaker. Primary questions go through an authentication process through the Office of the Clerk so it is not as if a groundless proposition is being put to the Minister here. I wonder whether you might just think about whether or not this is a precedent we want to see followed in future. 
Mr SPEAKER 
: Order! The process of the Office of the Clerk approving questions—just because the question has been validated—does not make the question right. There may be support material provided to validate a question and the Clerk’s Office accepts it but that does not mean that any supposed fact or statement contained in the question is correct. That is up to the Minister. The Minister has asserted pretty emphatically that something in this question is not right. It is worth pursuing that to find out what it is. 
Charles Chauvel 
: Without the powers that the Privacy Commissioner says she needs to do her job how can the House have any confidence that the Privacy Commissioner will be able to fully investigate high-profile or important privacy breaches such as the question of whether the Minister or anyone in her office improperly disclosed the Bronwyn Pullar email and associated information? 
Hon JUDITH COLLINS 
: There are in fact a range of responses that the Law Commission has suggested we make in terms of the Privacy Act. However I note that the member who has just resumed his seat was in a Government that was in office for 9 years and did not address them— 
Mr SPEAKER 
: Order! I invite Charles Chauvel to repeat his question. 
Charles Chauvel 
: Thank you Mr Speaker. Without the powers that the Privacy Commissioner says she needs to do her job how can the House have any confidence that the Privacy Commissioner will be able to properly investigate high-profile privacy breaches such as the question of whether the Minister or anyone in her office improperly disclosed the Bronwyn Pullar email and associated information? 
Hon JUDITH COLLINS 
: The member is yet again wrong. The inquiry by the Privacy Commissioner is—and this is all I can really say on it—relating to privacy matters in ACC and what has happened to particular emails and other documents. It is not specifically about my office. So that is wrong. But the Privacy Commissioner already has powers under section—[ 
Interruption 
] Do they want to hear it or not Mr Speaker? 
Mr SPEAKER 
: Order! 
Hon JUDITH COLLINS 
: The Privacy Commissioner already has a range of powers which she set out for the Hon Trevor Mallard and me. They are obviously broad powers and roles under section 13 of the Privacy Act; also under section 90 to freely obtain information and make inquiries; under section 91 to require information and evidence to be produced and to summon witnesses; and under section 76 to require a person to attend a compulsory conference. There is an obligation to comply with the requirements of the commissioner set out in section 92. There are also other relevant powers. In fact there is the entire Privacy Act and I suggest that member reads it. 
Jonathan Young 
: What is the Government already doing to implement the recommendations from the Law Commission’s review of the Privacy Act? 
Hon JUDITH COLLINS 
: The Government has already acted to address the immediate need for better information-sharing for public service delivery through the Privacy (Information Sharing) Bill which is expected to be passed later this year. The Privacy (Information Sharing) Bill will improve the rules around the collection storage and use of personal information while ensuring there are safeguards in place to protect an individual’s right to privacy. 
Charles Chauvel 
: Why is the Minister exacerbating the Privacy Commissioner’s inability to press fully for answers in this matter by invoking the public interest defence in this House as a ground for refusing to answer legitimate questions from members thereby further preventing relevant information from entering the public domain? 
Hon JUDITH COLLINS 
: The member is quite wrong again. This is actually an issue for the Privacy Commissioner and as an independent body which she is she needs to be free to conduct her investigations without the sorts of lies and manipulations that people have said in this place. 
Charles Chauvel 
: I raise a point of order Mr Speaker. I invite you to reflect on whether that answer was in order particularly the final phrase of it. 
Mr SPEAKER 
: I heard what the Minister said. A member cannot accuse another member of lying. I am not sure the Minister actually did that. She referred to lies and things in this place. I do not like ruling more and more stuff out. It was certainly on the margins—I accept that absolutely. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. With respect if that was not offensive to this side of the House then it was a description of her own behaviour that she was talking about. That is the only way she can survive the challenge from the honourable member over here. He says it was offensive— 
Mr SPEAKER 
: Order! I have heard the member and I think the member’s point is not unreasonable. I think the Minister should get to her feet please and withdraw and apologise. 
Hon JUDITH COLLINS 
: Yes. I withdraw and apologise. 
Mr SPEAKER 
: I thank the Minister. 
Charles Chauvel 
: Why is she further trying to prevent relevant information from entering the public domain by threatening news media and members of this House with meritless defamation proceedings and just what is it that she has to hide? 
Hon JUDITH COLLINS 
: The Minister of Justice has no ministerial authority or responsibility for that and that member should know better. 
International Education—Promotion of Christchurch 
COLIN KING (National—Kaikoura) 
: 
 My question is to the Minister for Tertiary Education Skills and Employment and asks: what action is the Government taking to boost— 
Mr SPEAKER 
: Order! I apologise to the member. The previous question has been dealt with. The House will come to order. 
6. 
COLIN KING (National—Kaikoura) 
 to the  
Minister for Tertiary Education Skills and Employment 
: What action is the Government taking to boost international education promotion for Christchurch? 
Hon STEVEN JOYCE (Minister for Tertiary Education Skills and Employment) 
: 
 Last Thursday in Christchurch I announced a dedicated $5 million fund that Education New Zealand will use to promote the city overseas as an education destination over the next 4 years. Christchurch is normally our second largest destination for international students and the city has an excellent international reputation for high-quality education. However it has been a tough time for providers in Christchurch following the earthquakes as it has been for many businesses with a 37 percent drop in numbers in 2011. This campaign is designed to send the message globally that Canterbury providers are back in business and students are welcome and it will augment our expanded national marketing campaign. 
Colin King 
: How important is international education to the New Zealand economy? 
Hon STEVEN JOYCE 
: Currently the international education sector is worth around $2.3 billion to the New Zealand economy with contributions from schools universities polytechs and private training establishments. The Government has an ambitious goal of doubling the economic value of New Zealand’s international education sector to $5 billion over the next 15 years. International enrolments have been steadily increasing since 2008. However the impact of the Canterbury earthquake has meant that although numbers in the rest of the country grew 6 percent last year with Canterbury included the net growth was flat. Therefore having Christchurch back on its feet and growing again in this important industry is a crucial part of reaching our goal. 
Transport Funding—Value for Money 
7. 
JULIE ANNE GENTER (Green) 
 to the  
Minister of Transport 
: Why is the Government prioritising State highway projects with low benefit cost ratios given that traffic volumes are back to 2004 levels and the Crown is borrowing $12 billion a year? 
Hon GERRY BROWNLEE (Minister of Transport) 
: 
 There has been a slight fluctuation in measured traffic volumes over the years but it is not enough to show a trend that would mean that this Government would abandon its proposals for the ongoing road-building programme. Taking no action to improve our roads would assume that our roads were at their optimum point in 2004. The previous Government did not believe that we do not believe that and we are going to go ahead with our programme to build roads because of the economic benefit the social benefit and the safety benefits for New Zealanders. The assertion that the Government is borrowing for the roading programme is wrong. That is paid for by the Land Transport Fund which is funded by road users.  
Julie Anne Genter 
: Why does the Government claim that the roads of so-called national significance have been selected because of their economic importance when the projects were announced in early 2009 well before the business cases had been undertaken? 
Hon GERRY BROWNLEE 
: I think the point is that a Government comes in with a programme and does what it thinks is necessary to create the environment for economic growth. There is not a successful economy in the world that has achieved results by stopping roading progress. 
Julie Anne Genter 
: What evidence supports the claim that the roads of national significance will increase economic productivity given that they have not been updated to reflect the reality of higher oil prices and stagnant traffic volumes? 
Hon GERRY BROWNLEE 
: I think the roads of national significance are going to have a massive effect on economic growth in New Zealand. And I think it is very hard to argue against history where you would find not one country in the world that has abandoned roading projects and achieved economic success. 
Julie Anne Genter 
: I raise a point of order Mr Speaker. My question was quite clear. It said “What evidence supports the claim … ?”. It did not ask for an opinion. The Minister did give his opinion—he thinks these projects will be good for the economy—but I asked— 
Mr SPEAKER 
: Order! Because I could not hear the member’s question very well because of the noise—mainly on my left I must confess on this occasion—I invite the member to repeat her question. 
Julie Anne Genter 
: What evidence supports the claim that the roads of national significance will increase economic productivity given that they have not been updated to reflect the reality of higher oil prices and stagnant traffic volumes? 
Hon GERRY BROWNLEE 
: Those last two criteria are very cyclical so there is no reason to believe that in the long term they would make a difference to the business case. 
Julie Anne Genter 
: Will he review the plans to prioritise the roads of national significance given warnings from the New Zealand Transport Agency and the Ministry of Transport that the programme could lead to a budget blowout of billions of dollars? 
Hon GERRY BROWNLEE 
: No but I will challenge him to make sure that does not happen. 
Julie Anne Genter 
: If the economic situation is so tight that the Government will be announcing another zero Budget why does it still have money for motorways that on the Government’s own numbers will never pay for themselves? 
Hon GERRY BROWNLEE 
: Largely because New Zealanders use them and they pay into the fund and that is where the money comes from. 
Julie Anne Genter 
: Given that New Zealand’s current account deficit of $8.5 billion matches nearly exactly the amount we spend each year on importing oil and that the cost of importing oil has risen 500 percent in the last 15 years is it a good use of the Crown’s resources to lock us into a future where our transport system is even more dependent on oil? 
Hon GERRY BROWNLEE 
: We are not doing that. If the member is going to rely on fluctuating vehicle movements then the member would have to accept that the oil price is a very sensitive point in people’s decisions over which mode of transport they use. We are investing a huge amount of money $1.6 billion in electrification in Auckland. We have got the very very large commitment to the KiwiRail rebuilding programme. We have also got huge amounts of money going each year into public transport across the country and what is more the public transport operating model has been widely accepted and welcomed by regional councils throughout New Zealand. We are by far and away leading ahead of any other Government before us in this matter. 
Julie Anne Genter 
: How is it balanced to spend $14 billion over 75 percent of all new transport infrastructure spending in the next decade on a few motorway projects with increasingly shoddy business cases that will not help motorists will not help freight and will not help New Zealanders avoid rising oil prices? 
Hon GERRY BROWNLEE 
: Working backwards it will help New Zealanders minimise the cost of their transport if they use cars it will help freight and it will help general passenger movements. The member makes these assertions as if she is an authority; she is not. 
International Students—Changes to Health Screening Rules 
8. 
Dr JIAN YANG (National) 
 to the  
Minister of Immigration 
: What changes has the Government made to make it easier for low-risk high-value students to come to New Zealand? 
Hon NATHAN GUY (Minister of Immigration) 
: 
 Yesterday I announced changes to health screening rules that will reduce red tape and costs for international students while protecting the New Zealand public health system. From July this year international students without other health conditions will need to be screened only for tuberculosis. This will greatly reduce the cost and hassle for around 62800 students and it will save them around $17 million a year in medical costs. International education is worth $2.3 billion to the economy a year and indirectly supports 32000 jobs. These changes will help the sector continue to grow. 
Dr Jian Yang 
: How will the public health system be protected with these changes? 
Hon NATHAN GUY 
: Students still must be of an acceptable standard of health. We will now require international students to hold health insurance as a condition of their visa. This will not be an issue for most of these students as they are ineligible for health services in New Zealand and education providers currently require them to hold insurance. These changes show the Government is serious about tackling red tape reducing costs and attracting migrants who can make a contribution to New Zealand. 
Foreign Affairs and Trade Ministry—Cost of Change Management 
9. 
Hon PHIL GOFF (Labour—Mt Roskill) 
 to the  
Minister of Foreign Affairs 
: Does he take responsibility for the $9.2 million being spent on the change process in his Ministry this year and does he consider it money well spent? 
Hon CHRISTOPHER FINLAYSON (Minister for Treaty of Waitangi Negotiations) 
 on behalf of the Minister of Foreign Affairs: The figure quoted by the member is a budgeted figure only. Operational matters are for the chief executive. The chief executive has established a change team to engage in a modernisation project as he is entitled to do. 
Hon Phil Goff 
: Does he agree with the concerns expressed by top exporting groups like the Meat Industry Association and Fonterra that the change proposals put forward could put at risk the effectiveness of the Ministry of Foreign Affairs and Trade in work critical to the New Zealand economy; and having already lost recently two of the top trade negotiators will he risk losing more? 
Hon CHRISTOPHER FINLAYSON 
: It is no secret that the Minister listens very carefully to the comments that have been made by the various people to whom the member has referred. The Minister himself has expressed some reservations about the ministry’s change proposals. He has conveyed his views in a manner that is appropriate under the State Sector Act to the chief executive.  
Hon Phil Goff 
: When a spokeswoman from the Ministry of Foreign Affairs and Trade stated that it had been in discussion with the Minister “throughout the process” and that he has provided “clear direction on their priorities” how credible is it for him to distance himself from responsibility for the botched change proposals as he has just done again? 
Hon CHRISTOPHER FINLAYSON 
: The Minister is acting exactly in accordance with the requirements of the State Sector Act. The Minister knows the rules that matters of detail are for the chief executive and it would be quite improper for him to cross over that line. He is not a micro-manager. His name is McCully not Stalin or Helen Clark.  
Rt Hon Winston Peters 
: Is it not a fact that the Minister has long had the reputation in politics of being a micro-interferer—in more ways than one—and how can he possibly expect people to understand what his role is when he said last Thursday that as a Minister he was no more than “the purchaser of the ministry’s services”? Does he not understand parliamentary democracy? 
Hon CHRISTOPHER FINLAYSON 
: The Minister understands parliamentary democracy very well.  
Hon Phil Goff 
: Is it fair for him to continually blame the chief executive officer for the mess-up in the change proposals when John Allen is unable to defend himself against Ministerial criticism and when constitutionally he as Minister is responsible for what is happening within his ministry? 
Hon Annette King 
: Does he understand that? 
Hon CHRISTOPHER FINLAYSON 
: Indeed I do. It is a question of what is constitutionally proper. Under the State Sector Act the chief executive has the burden of responsibility in carrying out the change plan. Unlike other Ministers in the past the Minister knows what the bounds of propriety are where a Minister can act. 
Rt Hon Winston Peters 
: Given that this is the Minister of Foreign Affairs who has introduced the hub and spokes concept whatever that means has a business model applied to a serious governmental service—namely foreign affairs—and chose the chief executive whom he now blames for everything why does— 
Hon Amy Adams 
: Is there a question coming? 
Rt Hon Winston Peters 
: Do not worry honey. We will get around to it. Even you will be able to understand. [ 
Interruption 
] 
Mr SPEAKER 
: Order! [ 
Interruption 
] No I am on my feet; the member will resume his seat. Members know that if they interject sometimes they will bring disorder. It is better sometimes just not to interject if they do not want disorder. I cannot blame a questioner for responding when someone makes some unhelpful interjection. 
Rt Hon Winston Peters 
: Given that this is the Minister of Foreign of Affairs who introduced the hub and spokes concept whatever that means applied a business model to a parliamentary and governmental service and chose the chief executive whom he is now blaming why does he not just resign? 
Hon CHRISTOPHER FINLAYSON 
: It is not a question of blaming people. It is no secret that the Minister has expressed reservations about aspects of the ministry change proposals. The Minister has conveyed those concerns to the chief executive and in doing so has conveyed his views in a manner that is appropriate under the State Sector Act. What is so difficult to understand about that? 
Hon Phil Goff 
: Mr Speaker—[ 
Interruption 
]  
Mr SPEAKER 
: Order! I want to hear the Hon Phil Goff. 
Hon Phil Goff 
: Was it not his responsibility under the Public Finance Act to vote $9.2 million to be spent on a change process that nobody believes is credible; and if it was not his responsibility to vote that money who was responsible for wasting it? 
Hon CHRISTOPHER FINLAYSON 
: It is important to note that that is the budgeted figure as I said in the answer to the primary question. What exactly it turns out to be at the end of the day remains to be seen. 
Hon Phil Goff 
: Three-quarters of the way through the financial year how much of that $9.2 million has been expended and does it include the latest $200000 spent on the heads of mission meeting or redundancy payments? 
Hon CHRISTOPHER FINLAYSON 
: The member is sloppy with his facts— 
Mr SPEAKER 
: Order! 
Hon CHRISTOPHER FINLAYSON 
: Well he is. He is wrong and I can say this. The amount— 
Mr SPEAKER 
: Order! We will not have this carry-on. The Minister has acknowledged in a previous answer that the budgeted amount was $9.2 million—I think the Minister acknowledged that. The member questioning the Minister asked how much of it had been spent at this stage of the financial year—three-quarters of the way through the financial year how much of it had been spent—and asked whether the amount spent included the $200000 cost of a recent meeting or something. If the Minister was disputing the cost of the recent meeting then I apologise to him because I should not have interrupted if that was the case but I would ask him to answer. The question asked was not an unreasonable question. It was based on figures already acknowledged except for that last one. I think to accuse the member of sloppiness in asking a reasonable question is going to provoke disorder. To answer the question the Hon Chris Finlayson. 
Hon CHRISTOPHER FINLAYSON 
: There are two limbs to the question and I am answering the second limb as you perhaps prospectively observe and he got it wrong. The amount is not $200000. The projected expenditure is $154000 and that is what— 
Hon Phil Goff 
: I raise a point of order Mr Speaker. [ 
Interruption 
]  
Mr SPEAKER 
: Order! A point of order has been called. 
Hon Phil Goff 
: We have got a bit of a dilemma here because the figure I quoted was the figure that the Minister himself had used in the House last week. 
Mr SPEAKER 
: Order! There is nothing I can do. I mean the member’s question was answered—[ 
Interruption 
] Order! The member’s question was answered and the answer cannot be disputed by way of a point of order. 
Hon Phil Goff 
: Did he or his office seek the deletion before it was made public of the reference in the Ministerial briefing to him as incoming Minister that the Government “required” annual savings from the ministry of $40 million; if not who did seek that deletion? 
Hon CHRISTOPHER FINLAYSON 
: I am an acting Minister and so I am unable to comment on that level of minutiae about what lines were excised from a briefing to an incoming Minister. What I can say is that that member has constantly referred to the figure of $40 million and he is wrong. The correct figure as the Minister has told him on many occasions is $24 million. 
Crime Prevention—SAFE Initiative for Knife Retailers 
10. 
MARK MITCHELL (National—Rodney) 
 to the  
Minister of Justice 
: What is the Government doing to reduce knife crime in New Zealand? 
Hon CHESTER BORROWS (Associate Minister of Justice) 
 on behalf of the Minister of Justice: On Friday we launched SAFE a voluntary initiative to educate retailers on some simple steps they can take to prevent theft or inappropriate sale of knives. The SAFE initiative has been developed in conjunction with the New Zealand Retailers Association. It is supported by major knife retailers—about 15 in number—and is a clear example of how the Government and retailers can work together to deliver a safer New Zealand. 
Mark Mitchell 
: Is knife crime a growing problem in New Zealand? [ 
Interruption 
]  
Mr SPEAKER 
: Order! Now I say on this occasion to Labour members it is just unreasonable. The member has a right to ask a supplementary question and to get that barrage of noise is unacceptable. I repeat it is unacceptable. 
Hon CHESTER BORROWS 
: No it is not a problem in New Zealand—or not a growing problem in New Zealand—but it should not be taken lightly by anybody including the Opposition. The National-led Government has seen a 19 percent drop in the carriage of knives—people apprehended for the carrying of knives—since 2008 when it came into Government and a 15 percent drop in knife assaults so the SAFE programme is a preventive measure. It will help ensure that knife crime continues to fall and is yet another example of this Government’s commitment to reducing violent crime. 
Maui’s Dolphin—Preservation 
11. 
Hon RUTH DYSON (Labour—Port Hills) 
 to the  
Minister for Primary Industries 
: Will he extend the area of proposed protection for Maui’s dolphins beyond the proposed levels in the consultation document if submissions are overwhelmingly in favour of larger protection areas? 
Hon DAVID CARTER (Minister for Primary Industries) 
: 
 As the member will be aware the Ministry of Agriculture and Forestry and the Department of Conservation are currently considering additional measures to protect Maui’s dolphins in the Taranaki region. I will await the outcome of this consultation and the advice from the two departments before making any decision whether to extend the set-net ban. 
Hon Ruth Dyson 
: Does he agree that his decision gives the New Zealand fishing industry an excellent marketing opportunity to promote itself as a sustainable fishing industry and that this opportunity would be better than eliminating Maui’s dolphins? 
Hon DAVID CARTER 
: Every decision I make with regard to fishery management gives the fishing industry every opportunity to market offshore that it is managed in a very sustainable manner here in New Zealand. 
Hon Ruth Dyson 
: Is the fishing industry the sole source of research that his ministry is relying on to make its recommendations to him in regard to the protection of Maui’s dolphins; and if the fishing industry is not the sole source of research what other and independent research is being used? 
Hon DAVID CARTER 
: There is a substantial piece of research under way at the moment led by the Department of Conservation and the Ministry of Agriculture and Forestry called the threat management plan which is looking not only at Maui’s dolphins but also at Hector’s dolphins. I expect that work to be completed by around the end of the year. 
Hon Ruth Dyson 
: I raise a point of order Mr Speaker. The Minister’s answer was very interesting but it was to an entirely different question. My question was specifically in relation to the research undertaken by his ministry in relation to the current consultation round not the management of threatened species which is an entirely separate piece of work. I would ask you to ask the Minister to address my question. 
Mr SPEAKER 
: I clearly did not understand the question myself. 
Hon DAVID CARTER 
: Nor did I. 
Mr SPEAKER 
: I invite the member to repeat her question to avoid the confusion. 
Hon Ruth Dyson 
: Is the fishing industry the sole source of research that his ministry is relying on to make its recommendations to him in regard to the protection of Maui’s dolphins; and if the fishing industry is not the sole source of research what other and independent research is being used? 
Hon DAVID CARTER 
: No. 
Hon Ruth Dyson 
: Can he assure the House and the over 11500 people who have to date signed the petition to the Prime Minister to save the Maui’s dolphins that he will do everything he can to save this dolphin subspecies from extinction and that his decision will be made on the basis of independent evidence on Maui’s dolphin habitat? 
Hon DAVID CARTER 
: The final decision will be based on the scientific information and advice presented to me by the Department of Conservation and by the Ministry of Agriculture and Forestry not specifically on the number of submissions received. 
Gareth Hughes 
: As part of the review of protection measures is the Minister also considering increasing the current statutory 48-hour period within which notification of the injury or death of a Maui’s dolphin must occur? 
Hon DAVID CARTER 
: That may well be part of the information finally presented to me by the Department of Conservation and the Ministry of Agriculture and Forestry. I will consider that information when the report has been received. 
Gareth Hughes 
: Is the reason why it took 18 days for the Ministry of Agriculture and Forestry and 28 days for the Department of Conservation to be notified of the recent death of a Maui’s dolphin in fishing gear off the coast of Taranaki because of an agreement between the Ministry of Agriculture and Forestry and the Department of Conservation regarding the waiving of the 48-hour notification period? 
Hon DAVID CARTER 
: I have no knowledge of how long it took for the report to come in that the dolphin that died may well have been a Maui’s dolphin. I do not have that information. 
Gareth Hughes 
: I raise a point of order Mr Speaker. I am in some trouble here. For months we have been debating this as a Maui’s dolphin the Minister’s own press release says it is a Maui’s dolphin and now he brings it into question. 
Mr SPEAKER 
: The Minister is the person being questioned. The Minister has given information in his answer. He answered the question and the Speaker has to accept the Minister’s answer. There is a further supplementary question should the member wish to use it. 
Gareth Hughes 
: Why did it take 18 days for the Minister and the ministry to become aware of the death of a dolphin; and will he be starting a prosecution given that we have seen the law being broken: given the law requires a 48-hour notification period? 
Hon DAVID CARTER 
: As I have just answered to the member I have no idea how long it took for the reported fatality to come to the notice of the Ministry of Agriculture and Forestry and the Department of Conservation. That information has never been presented to me. 
Question No. 12 to Minister 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 For the purposes of clarity I seek leave of the House to add “2011” to the end of the date 24 March in the question. 
Mr SPEAKER 
: Leave is sought for that purpose. Is there any objection? There is no objection. 
Child Poverty Abuse and Neglect—Changes to Family Start 
12. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
 to the  
Minister for Social Development 
: What opportunity is there for providers to demonstrate that they have improved practice in order to achieve the Minister’s new “fresh look for Family Start”; and what support has the Ministry for Social Development put in place for providers to understand the ramifications of these changes announced on 24 March 2011? 
Hon PAULA BENNETT (Minister for Social Development) 
: 
 There have been numerous opportunities for providers to demonstrate that they have improved practice—more than you Mr Speaker would allow me to do in the time that I am given for this. Family Start is the most intensive and expensive programme funded by the Ministry of Social Development to work with our most vulnerable families. An independent report in December 2009 found serious problems with a number of providers and I made that report available to all of them. Since then the Ministry of Social Development has made extensive technical and professional support available particularly over the last 12 months to providers who are struggling to meet the new performance criteria around those most vulnerable children. At the end of the day nine providers have been assessed as performing well and the Ministry of Social Development will be entering a 3-year contract with them. We will support providers where we know they are delivering good quality programmes but we cannot accept that our most vulnerable families should receive substandard services. 
Te Ururoa Flavell 
: Is she aware that Te Whanau o Waipareira Trust Family Start is measuring weekly visits for all new whanau that take place in it and put it in the top 10 of providers and that 80 percent of its whanau are remaining after 12 months; if so why is it being considered as one of the providers to be shut down? 
Hon PAULA BENNETT 
: The advice that I have had is that it is one of five poor performers in that it is failing to adhere to some of the basic requirements of the Family Start programme manual and has not been able to successfully implement best-practice advice. This is the minimum standard of practice that is expected to meet its contract requirements. Further even with additional guidance and support it has been one of five providers that have not demonstrated that they can reach an adequate level of service delivery and sustain that to be business as usual. It has had something like 14 visits from the department on this very programme since July last year. 
Te Ururoa Flavell 
: Can I ask the Minister what consultation has occurred with Maori and Pasifika communities who will be significantly affected by the proposed cut in Family Start services in particular in Mangere and Papakura? 
Hon PAULA BENNETT 
: I think it is really important that we make it clear there is not going to be a cut to services or a cut to the amount of money. We are going to re-tender. So what we have are particular issues with the standards of service for these providers. We are going to re-tender and I imagine other providers will pick up that work. We have got at least 3 months until those contracts are up and we will extend them slightly if we need to so that we have got a transition for those families who need it. But at the end of the day we are re-tendering; we are not cutting the amount that is in Family Start. 
Questions to Members 
Question No. 1 to Member 
Mr SPEAKER 
: The House now comes to questions to members and although question No. 1 stands in the name of the Hon David Parker and is to the chairperson of the Finance and Expenditure Committee I do not see the chairperson of the Finance and Expenditure Committee in the House. Therefore the question is postponed until tomorrow. 
Hon DAVID PARKER (Labour) 
: 
 I raise a point of order Mr Speaker. I noted that the chairperson was here at the start of question time— 
Hon Member 
: So what? 
Hon DAVID PARKER 
: Well— 
Mr SPEAKER 
: Order! It is a well established—the rules are very clear around questions to members. The chairperson of the Finance and Expenditure Committee I do not believe is in the House. If I am in error I stand to be corrected but I do not believe he is in the House and the question is therefore postponed until tomorrow. [ 
Interruption 
] Order! That kind of language is totally unacceptable but I will not go there because I do not want to give more coverage to it. 
Dairy Industry Restructuring Amendment Bill 
First Reading 
Hon DAVID CARTER (Minister for Primary Industries) 
: 
 I move  
That the Dairy Industry Restructuring Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the Dairy Industry Restructuring Amendment Bill be considered by the Primary Production Committee and that that committee present its final report on or before 1 June 2012. 
The Dairy Industry Restructuring Act or DIRA was enacted in 2001 and was the legislation that allowed for the formation of Fonterra. Ten years on this amendment bill will ensure that the Act remains a durable platform for the continuing growth of an efficient and innovative dairy sector that is maximising its potential for the New Zealand economy.  
Before I get into the detail of what the bill contains it is important to reflect—[ 
Interruption 
]  
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! Can we have some courtesy please. 
Hon DAVID CARTER 
: —on why Fonterra was created and why the Dairy Industry Restructuring Act was put in place. Parliament enabled Fonterra’s creation because it saw advantages in terms of efficiency of scale and scope. It was anticipated that Fonterra would be able to compete more successfully in world markets and that investment and innovation in the dairy industry would be stimulated. However providing an exemption to the Commerce Act to allow Fonterra to form had to come with conditions. Due to Fonterra’s dominance in the New Zealand dairy markets the Dairy Industry Restructuring Act legislation was the trade-off for the creation of Fonterra. It was essential that farmer suppliers could freely enter and exit Fonterra that independent processors could compete for farm-gate milk and that Fonterra continued to have the right incentives to remain efficient and innovative. Freedom of entry to and exit from Fonterra is largely what the Dairy Industry Restructuring Act is all about.  
With almost 90 percent market share Fonterra is still the dominant player in the New Zealand dairy industry. Therefore the conditions that applied on Fonterra’s creation are still applicable today. However there have been a number of developments since Fonterra’s inception and these mean that amendments are required so that the Act remains fit for purpose. Because of Fonterra’s dominance its farm-gate milk price is effectively the default price that all dairy processors in New Zealand must pay in order to attract supply from dairy farmers. The Dairy Industry Restructuring Act does not directly intervene in Fonterra’s milk price - setting processes; instead it promotes contestability through its freedom of farmer entry and exit requirements. The bill legislates for greater transparency of the way Fonterra currently sets its farm-gate milk price through its milk price manual to ensure that the farm-gate milk price is consistent with outcomes in a contestable market. A contestable market should in practice result in a farm-gate milk price consistent with that which would emerge in a workably competitive market. 
The Ministry of Agriculture and Forestry together with the Ministry of Economic Development and Treasury undertook a review of how Fonterra set the price it paid its farmers for milk at the farm gate. The review found that although the approach appears consistent with how the milk price would be set in a workably competitive market Fonterra could have the incentive and the ability to pay a price that could distort the market.  
Two rounds of public consultation were undertaken on potential amendments to strengthen confidence in Fonterra’s farm-gate milk price. The consultations confirmed the need for greater transparency in the milk price - setting process. To achieve this the bill includes the following measures: first embedding Fonterra’s current milk price governance arrangements into legislation; second requiring Fonterra to publicly disclose information in relation to its milk price setting; and third introducing a milk price monitoring regime to be undertaken by the Commerce Commission.  
The bill also includes a number of new provisions to allow for Fonterra’s proposed Trading Among Farmers regime or TAF as it has become known. Under Trading Among Farmers farmers wanting to purchase or sell Fonterra’s shares would trade in a market rather than transacting directly with Fonterra as is currently the case. In addition an external fund would be established and the farmers would be able to sell a portion of their shares to the fund in exchange for cash. Internal investors would be able to purchase the beneficial rights—in other words the dividend—and any changes in value to shares that the farmers sold into the fund.  
Fonterra will remain 100 percent farmer-supplier - owned as voting will stay with Fonterra farmer-suppliers. Trading Among Farmers also provides the opportunity for Fonterra to raise additional capital to pursue growth opportunities in New Zealand and in overseas markets. The bill contains provisions that will enable Fonterra to proceed with Trading Among Farmers should it choose to do so. These provisions are aimed at ensuring that Trading Among Farmers will be an effective substitute for the existing issue and redemption obligations by delivering deep liquid transparent and well-informed markets for Fonterra’s shares.  
It is important to note that the ultimate decision regarding Trading Among Farmers sits with Fonterra and not with the Government. The provisions in the bill supporting the Trading Among Farmers regime will expire if the Trading Among Farmers preconditions have not been met by 31 December 2013. However if Trading Among Farmers is not launched before the end of 2013 or if it is launched and subsequently wound up the bill introduces a new requirement relating to Fonterra’s administratively set share price. This would ensure that the price of a Fonterra share is set at a fair market value. The share issue and redemption requirements would then be retained in the absence of Trading Among Farmers. 
This is critical legislation that allows Fonterra and other dairy companies to make their full contribution to New Zealand’s export economy. I commend the bill to the House. 
Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman) 
: 
 I am not sure that it is a pleasure but it is certainly an honour to speak on the Dairy Industry Restructuring Amendment Bill in the House today in respect of what is the biggest and most successful industry in this country. If it was not succeeding now this economy would be in dire circumstances and I think the Minister for Primary Industries has acknowledged that.  
Labour has a proud history in the dairy industry going back to the 1930s the 1950s through to the 1980s with the removal of subsidies and in 2001 when Labour in Government set up Fonterra. We have and are proud of that history. But we cannot support this bill today. We have supported the legislation on the basis of it being non-partisan and of there being general consensus. Indeed I think in the 1950s Labour developed a bill and it was passed by a National Government. We had consensus when we set up Fonterra. However we cannot support the National Government at this stage because we believe that this legislation is premature.  
There is too much misinformation a lack of information and indeed still great debate within the dairy industry on what might come of this legislation. In fact we heard last week from the Fonterra Shareholders’ Council a position that it could not support this legislation in its current form. That was a brave move for it but it made that statement because there are too many unknowns relating to this bill.  
The Minister has outlined what the bill does. There are basically three components to it. The first is a milk price - setting arrangement. That is currently in legislation and in regulation and what this bill seeks to do is legislate it going forward to ensure better transparency. The issue that dairy farmers have raised in relation to this part of the bill is that when the milk price - setting methodology was reviewed there were concerns from consumers and there had been constant bleating from companies getting milk from Fonterra that they were paying too much. Well in fact the review identified the reality that it would be “a reasonable proxy for how the milk price would be set in a workably competitive market.”—that is there was no major problem with it. What this bill says is that if Fonterra did happen to use its dominant position if it did happen to try to limit the amount of milk going to competitors or if it did happen to try to retain its farmer shareholders then it could possibly manipulate the milk price. Well Labour thinks that this might be perhaps an overregulation of what has proved to be a reasonably efficient way of establishing the raw milk price milk for competitors and a fair indication for farmers as to how much their milk is worth.  
The second component of this legislation is as the Minister said the trading of shares among farmers. This the most significant part of the legislation. There has been huge distraction constructed by the National Government and constructed by the board of Fonterra itself to distract farmer shareholders from getting down to the nitty-gritty of Trading Among Farmers—deep inside the details which have yet to be released in many cases. However there is a fear and a growing fear among farmers that this might be opening up the cooperative to outside investment outside ownership and ultimately outside control.  
The Minister shakes his head. I know that he quoted in his speech that this bill was about maximising returns to the New Zealand economy. I scratched my head and thought: “Where have we heard this before?”. I go back to a previous National Government: “The Government’s goals are twofold: firstly to see the industry performing to its maximum potential using resources as efficiently as possible and secondly to maximise the wealth and welfare of New Zealanders.” That is an honourable statement by a National Minister Mr John Luxton when he was deregulating the pipfruit industry. Ask any apple grower what the results are of that well-intended and noble gesture. Well the Minister makes similar statements now regarding the dairy industry.  
In fact the Ministry of Agriculture and Forestry’s documents imply that a cooperative is an inefficient and ineffective allocator of capital and that it is an inefficient and ineffective manager of one of our main industries. Unfortunately I have to say in this House that I believe that the underlying advice to many Ministers over a number of years from the Ministry of Agriculture and Forestry—the Ministry for Primary Industries as it is soon to be—is that it believes opening up all the sectors to markets will deliver the most efficient allocation of capital. That is basically flawed and it has been proven time and time again. That Minister’s officials have provided the same faulty advice on this piece of legislation. A number of people those who have had the time to go through and read the 251 pages of consultation can clearly identify the faults in that advice.  
We are concerned that Trading Among Farmers may open up opportunities for offshore investment. We are asking whether the farmer shareholders who will be able to trade shares will firstly be New Zealand residents. In fact what is the definition of “farmer”? And we will be seeking through the select committee process if this bill passes—if Mr Banks or Mr Dunne wants to support it—assurances that the farmers who will have the shares and be able to trade the shares will be New Zealanders be New Zealand residents and in fact be the very people who should be controlling and owning our most successful company.  
The third part of the bill is the share valuation process. This is very unfortunate. Wayne McNee the Director-General of the Ministry of Agriculture and Forestry said to the shareholders’ council of Fonterra that if it did not support Trading Among Farmers he would regulate Fonterra’s milk price and regulate its share price. That is the threat that has driven farmers to consider the need for Trading Among Farmers as much as the redemption risk be whatever that may. That threat—that threat—made at the shareholders’ council is very unfortunate for a senior official from a key Government department. Those people feel that if they do not support Trading Among Farmers they will have to face the third provision which I am referring to now and that is share valuation.  
The Minister I have to say almost quite dishonestly in his speech said that it would deliver fair value. No this insists on full valuation of a Fonterra share.  
Hon David Carter 
: No. 
Hon DAMIEN O’CONNOR 
: Yes it does. Yes it does Minister and you should go and read your own officials’ reports. It insists on a full valuation of a Fonterra share. This is some of the concern given that the board of Fonterra devalued its shares by 30 percent less than 2 years ago on the basis of limiting the tradability of the shares. If Trading Among Farmers does not go through and if shares cannot be traded at all why would the National Government insist on a process that delivers full value share? The point is that this is a cooperative. Most cooperatives are started on the basis of a nominal value share. This goes right to the heart of the cooperative and what we believe may be inside pressure to demutualise it.  
Labour is concerned and that is why we cannot support the bill because at this very time the National Government is determined to float shares of our State-owned enterprises. The Prime Minister himself has said that he would prefer to have Fonterra as a listed company. Both of those things are raising alarm bells in the minds of every dairy farmer up and down this country with a few exceptions. Some may see there being an opportunity— 
Hon Trevor Mallard 
: The ones who live offshore. 
Hon DAMIEN O’CONNOR 
: Well there are the ones who live offshore. Most of these dairy farmers have been National Party supporters but I can tell this Government now that those people are concerned that the National Government is pushing ahead with a bill that has too many unanswered questions. That is why Labour cannot support the bill in the House at this time. 
Hon JOHN BANKS (Minister for Regulatory Reform) 
: 
 For the record I declare an interest in these matters considered by the bill on behalf of my family trust which holds shares in New Image Group Ltd which is involved in dairy-based product manufacture and onselling.  
I rise on behalf of the ACT Party to support the first reading of the Dairy Industry Restructuring Amendment Bill. Even if there were numerous provisions in this bill that the ACT Party did not like the ACT Party believes in the best interests of the tradable sector the farming community and dairy farmers. Of course we would support the referral of the bill to the select committee so that we could hear from the farmers as to what the farmers—dairy farmers—up and down the country would think about the provisions in this bill which dictate much of the farmers’ financial viability and future. Labour members stand up in this Parliament and say they support dairy farmers but they are not going to support this bill because they do not like what is in it. Well why not support the bill in its first reading so it can go to a select committee and you can hear from dairy farmers: real people men and women salt of the earth down the country road on the stone roads up past the driveway through the gates past the dogs into the woolshed and beyond to the house? Those people work the farms and milk the cows.  
Hon Trevor Mallard 
: These are dairy farmers not sheep farmers. 
Hon JOHN BANKS 
: They milk the cows. The cows are being milked every day so that the farmers can pay the bills of this country.  
This bill seeks to amend the Dairy Industry Restructuring Act 2001. The Act was supported by the Labour Party. I was in Parliament when the Labour Party supported that bill back in 1999. The Labour Party then believed in supporting farmers—men and women on the other side of the House supported dairy farmers. What has changed in the last—how many years has it been since I have been here? Is it 30 40— 
Shane Ardern 
: A long time. 
Hon JOHN BANKS 
: A long time. What has changed in those times? What has changed is that the Labour Party in Opposition belongs in Opposition as far as dairy farmers are concerned. That is what has changed. I do not know of one dairy farmer who would support a parliamentary Labour Party member of Parliament at the ballot box—not one.  
ACT supported the bill because it was an improvement on the existing arrangements at the time in 1999. ACT wants farmers to control their own destiny. Let us get that up the mast. ACT saw the bill as enabling and empowering farmers to make their own decisions and shape their own destiny. We want farmers to be able to shape their own destiny. We also supported some reform to the Dairy Industry Restructuring Act last time.  
This amendment bill now seeks to further empower farmers to make their own decisions. Fonterra is their business. The first feature of the bill is to permit share trading between the shareholders of Fonterra. We understand that 80 percent of farmers support that. To the 20 percent of farmers who do not support that we do not say—like the Labour Party Opposition—that we are not going to support this bill. We want those 20 percent of farmers to come along to the Primary Production Committee and say why they do not support it. Is that not a better proposition in a constructive parliamentary democracy?  
The bill will also allow others to invest in Fonterra by taking the beneficial interest in the shares while the farmers retain the legal interest—the legal interest. This complex set of arrangements is intended to make Fonterra more like any other company and less like a co-op. If that is the choice of the shareholders—if that is the choice of the shareholders—it is their business.  
The second feature of the bill requires statutory transparency—we love that—over the method used by Fonterra to set the base milk price. Statutory transparency. It does so because of the dominant role that Fonterra plays in setting the price of milk for all processors—the dominant role in this economy that Fonterra has. So we want transparency—statutory transparency. We want to make sure that everything is being done right and the right thing is being done.  
Owners will also need to know how the milk price is determined. Farmers want to know that. The bill creates a statutory panel to supervise how Fonterra calculates the base milk price does it not Minister? 
Hon David Carter 
: Yes it does. 
Hon JOHN BANKS 
: The base milk price formula is published in a manual that is publicly available—a transparent document. Is it not Minister? 
Hon David Carter 
: It is. 
Hon JOHN BANKS 
: The Commerce Commission can then review that manual and issue a report that we can all see—transparency. Is that not right Minister? 
Hon David Carter 
: That’s absolutely right.  
Hon JOHN BANKS 
: The commission cannot issue a determination on the base price of milk under the Dairy Industry Restructuring Act itself or calculate its own price. Fonterra must get the price right with this oversight. Is that the proposition? 
Hon David Carter 
: That’s critical. It’s critical. 
Hon JOHN BANKS 
: However an adverse commission report could be used to provide evidence for an investigation under the Commerce Act if anything was being done tricky by half. I cannot understand the parliamentary Opposition. Why would they not support it at the first reading? Why would they not be much more constructive? 
Hon David Carter 
: They hate farmers. 
Hon JOHN BANKS 
: That is not what they said.  
Hon David Carter 
: David Parker will speak next. He’s the worst. He hates farmers. 
Hon JOHN BANKS 
: He would not know a farmer if he saw one on Remuera Road. They parachuted him into the Epsom electorate and he failed dismally. He came up there and said he was the frontrunner; they said: “Yes to get out of town.” Anyway we will get back to the bill. I know that member quite well. I got to know him quite well.  
The milk manual disclosure regime expires when the level of competition increases and Fonterra is no longer dominant in the market and that will not be a bad day. It will not be a bad day. The ACT Party says we want competition. The ACT Party says we are on the side of the farmers. At that point Fonterra would no longer set the market price of raw milk and that is quite a good day to look forward to. That is the position ACT would like to achieve in the milk market: a range of viable processes for farmers to choose from—a whole range. They will look out over the paddocks past the Jersey cows down the gateway over the road and past the milk tankers to see the viable processes that they can choose from.  
The ACT Party wants—you will not be surprised at this and I want the Opposition to listen carefully—more competition and choice for farmers and we want less regulation. All in all this is an extensive regulatory regime over the production of milk. ACT is the less regulation party. We want business minding its own business. We want the Government out of the business of business. That is why there must be a clear public interest that warrants the processes proposed in clause 13 and we are going to be interested in that. Such a clear interest would be to address the risk that Fonterra prices milk in a manner that might substantially lessen the chances for competition or that there is a real risk of anti-competitive behaviour. In the ACT Party we do not like anti-competitive behaviour. In that case ACT would want to see something done. ACT’s objective has always been to see competition in the dairy sector. Ideally that is best achieved by a range of viable processor options for farmers. That is what we are heading for. If the Dairy Industry Restructuring Act is currently hampering viable competition for Fonterra because of the way it sets the base price of milk then this House will need to act to try to make the Dairy Industry Restructuring Act better. Much as ACT dislikes regulation because we need to get off the backs and out of the pockets of businesses ACT dislikes anti-competitive behaviour even more.  
I want that member to get up on his hind legs and tell us that the Labour Party does not want anti-competitive behaviour in this tradable sector of the New Zealand economy and why it will not support this bill at its first reading so that it can hear from the real men and women of this country who earn the foreign exchange earnings to pay his wages and to keep the parliamentary Opposition in the business that it is not very good at. ACT will be looking for public interest that warrants further regulation of Fonterra. We await the deliberations of the select committee. The only way we can get the deliberations of the select committee Minister is to support this bill at its first reading. What is wrong with that proposition? I ask the front-bench member of the Labour Party soon to get up and tell us what he thinks. 
Hon DAVID PARKER (Labour) 
: 
 And I gladly reply. I think when accusations are made that the Labour Party is not in favour of a prosperous dairy sector we should have regard to history. It was the Labour Government under Michael Joseph Savage that formed the Dairy Board in its original form trying to vertically integrate the industry in order that farmers would get a decent slice of the value chain between farm gate and supermarkets—or the predecessors of supermarkets back then.  
Shane Ardern 
: Tooley Street buyers London. 
Hon DAVID PARKER 
: Tooley Street buyers thank you. It was the Clark Government that created Fonterra. Members do not have to have an especially long memory to recall that at that time the merger of the two main dairy cooperatives New Zealand Dairy Group and Kiwi Cooperative Dairies required the intervention of this Parliament because otherwise it would have been blocked because of domestic competition concerns under the Commerce Act. We in this Parliament led by the then Labour Government said that we thought that it was in New Zealand’s interests that we guard the export interests of New Zealand’s dairy industry which were best met with a strong cooperative that was New Zealand - owned that was vertically integrated and that maintained New Zealand ownership of that value chain in the same way that had been the objective of the original Savage legislation in much earlier years.  
We heard from John Banks—at times an entertaining speech—that we should be going past the woolshed as we went to see the dairy farmers. He was mixing his metaphors there. I would say to Mr Banks that what we need to watch out for here is that if we do not get this right in this Parliament it will not be the cows that are getting milked in the future; it will be the farmers. Unless they maintain long-term control of the vertically integrated structure that we currently have through Fonterra they and the New Zealand economy will be worse off.  
I agree with Mr Banks that in general terms the Government should stay out of business. We are not in the business of business. We should be getting out of the way of business where we are in the way of business. But previously Fonterra came to this Parliament and asked for special privileges that it said were in New Zealand’s wider interests. Mr Banks we do not sit here just for the interests of farmers we do not sit here just for the interests of Fonterra; we sit here for the interests of farmers and Fonterra and the New Zealand public. I did not hear you once mention the interests of the wider New Zealand public. We believe that that public interest is best preserved if the cooperative structure is preserved into the future. You ask why it is— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
Hon DAVID PARKER 
: We were asked what the point of principle is that lies at the heart of our opposition to backing this bill the Dairy Industry Restructuring Amendment Bill at its first reading and it is that there is a fundamental flaw in this legislation that should not have been in it when it was introduced. 
Hon John Banks 
: Change it. 
Hon DAVID PARKER 
: Well fundamental flaws ought to be fixed before legislation is introduced. We do not trust that member or the National Government to fix this at the select committee and that is why we are opposing it. If it is fixed at the Primary Production Committee to our satisfaction we may revise our vote at later readings but we are not confident based on the unwillingness of the Government to address it until now that it will be.  
That point of principle is that if this legislation is passed without any further recourse to Parliament—without any further recourse to Parliament—two things could happen that could lead to the long-term loss of control of the cooperative the undermining of the cooperative structure and the eventual loss of our vertically integrated dairy sector. Those two steps that would need to be taken do not require any parliamentary intervention at all.  
The first is that the Minister of the day Mr Carter the current Minister for Primary Industries would have to pass a regulation to say that the new capital rules will apply. OK? What happens when those new capital rules come into force is that for the first time in our history of this cooperative the income stream from the cooperative share can be owned by someone else. As to the dividend flow from the co-op share at the moment for every kilogram or every 1000 kilograms of milksolids that a milk farmer delivers to Fonterra they have to own a co-op share and they cannot sell it to anyone else. Under this legislation not only will there be able to be trading amongst farmers of shares so that someone can have more shares in the co-op than they deliver milk and someone else can have fewer—that is a big change for a start—but in addition to that we are creating this new class of shares where the future dividend flow and increases and decreases in the value of the share above the value at the date it starts to trade pass to the person who holds the rights on those shares rather than the farmer. 
 Mr Banks you tell me what the control is on that moving to 100 percent over time. I will tell you the answer to that because I asked Fonterra and it told me that it is a provision in the constitution. So without any recourse to Parliament the limitation on the number of shares that can be separated from their income flow and traded on a separate platform can be changed—without any recourse to this Parliament. It could go from Fonterra’s current intention of it being about 5 percent or 10 percent to 15 percent to 20 percent to 30 percent to 40 percent. At which point does the tail start to wag the dog? There are overseas examples of the separation of profit flow from ownership in a co-op share in the traditional structural sense where over time the different incentives have resulted in the long-term breakup of the co-op. 
Hon Damien O’Connor 
: 20 percent. 
Hon DAVID PARKER 
: I am told by my colleague Damien O’Connor that that has happened with percentages as low as 20 percent of the shares being in this different platform.  
Why does this happen? Well it happens because the holders of different classes of shares have different incentives. The traditional cooperative model is driven by the belief that vertical integration is the long-term driver of profit. You do not have to be a brain surgeon to know that for the majority of the holders of these shares outside of the traditional co-op share structure in this market which is trading in rights to dividends and increases in value of the share their motivation is not necessarily the long-term vertical integration of the dairy industry which has proven successful in New Zealand. Their interest is in short-term to medium-term profit. If they can achieve short-term to medium-term profit by flogging off part of that vertically integrated enterprise overseas they will militate for it. I think it is wrong that legislation is brought to this House where there is no recourse back to Parliament that would allow Parliament to stop that happening. We would have to intervene after the Act was passed and everyone would say: “You’re interfering with private property rights. Compensate us please.”  
Since this Parliament intervened in favour of Fonterra that industry has grown to be New Zealand’s largest exporter—it was already the largest exporter but it has grown incredibly since and now I think about 22 percent of all new exports are in the dairy industry. 
Shane Ardern 
: 26. 
Hon DAVID PARKER 
: Twenty-six percent. Thank you. Twenty-six percent—a full quarter. There is a national interest here that goes beyond the Fonterra interest and the farmer interest and we are not satisfied that it is met.  
I will say one final thing. The shareholder support that there was for this at the time was against the background of the global financial crisis and a run on Fonterra’s balance sheet caused by people being under pressure and wanting to get some money out driven not just by the global financial crisis and the effect on land prices but also by a drought at the time by the liquidity problems that banks were having and by the pressure they were putting upon farmers. We also had the history of Fonterra not making retentions towards its own capital costs in the future because it was distributing every cent of profit and that was a mistake by the then directors of Fonterra. In fairness to them they now acknowledge that that was wrong but Fonterra is not stuck with that problem for the future so the idea that Fonterra is in some dire position if this legislation does not pass is not accepted. It has got to where it is under its existing structure. It has got through the global financial crisis that drought and its problems at the time without recourse to this structure. And although it might want the legislation it will not bring it to its knees if it does not get it.  
This legislation does not include essential protections. It is absolutely shoddy practice on the part of the Minister for Primary Industries not even to mention the facts that I have canvassed about how this could change over time without further recourse for Parliament to stop the growth in trading these shares outside the traditional co-op structure and that is the principal reason why I am objecting at this stage to this legislation. 
STEFFAN BROWNING (Green) 
: 
 The Dairy Industry Restructuring Amendment Bill is a bill that National should have left for a major rethink. This bill is being introduced at a time when farmers are increasingly expressing dissatisfaction with the Fonterra board’s direction and decision making. This bill should not have been introduced when 10 percent—and increasing—of Fonterra’s members have signed a petition asking for another vote on Trading Among Farmers. These farmers are an important part of the 80 percent who voted in good faith who voted in principle for something that Fonterra said would ensure 100 percent New Zealand farmer ownership and control of their cooperative.  
The system now promoted and supported to this House by the Government is something quite different and is much closer to the partial float that farmers rejected outright in 2007. The June 2010 vote was not for a vehicle that would allow for overseas investors to gain dividends at a cost to themselves the New Zealand dairy farmers. This bill will drive lower farm-gate milk prices while supporting profits for non-farmer investors. We want New Zealand family farmers to get a good return on sustainable production not to be encouraged by the need for dividends for overseas or outside speculators or to have to intensify their production management systems to satisfy those dividend needs.  
The co-op model suits New Zealand very very well. It has developed well as a proxy for the past producer boards that developed buffers for their highs and lows of production and price. Fonterra itself is an example; Zespri is another one—both very good examples of successful co-op models. Our issue here is that the Government is supporting a rush of blood to the Fonterra executive’s head as Fonterra becomes increasingly distant from the family farmer member base. The demise of ENZA and the Apple and Pear Marketing Board and the loss of that single-desk approach to pipfruit marketing and industry management has cost family farmers and rural communities dearly. This Dairy Industry Restructuring Amendment Bill appears to be geared more to beginning the demise of the strong cooperative structure of Fonterra and will ultimately benefit only the Government’s friends competing processing companies and possibly those near Fonterra’s executive or the overseas interests which are all waiting in the wings for some unearned dividends.  
We need to keep any profits for developing sustainable family farms. There is no need for Trading Among Farmers. Fonterra has the capacity to create the level of seasonal and entry and exit buffers that Fonterra says it needs. It has its own capacity already. Modest retention can quickly achieve that. That has been proved by the hundreds of millions already retained in last year’s figures even. This concept needs to go back to the very farmers who will be hit negatively by misguided and potentially greedy for some legislation. We want New Zealand family farmers to be producing sustainably. That needs optimum returns to them not to some speculator. Transparency of milk price setting is fine but the real driver from the New Zealand public in discussion on milk price setting was the retail price and a separate bill busting open the supermarket and full supply-chain pricing mechanisms is probably needed.  
ACT clearly loves this bill just as it may have enjoyed Zespri being busted open. But Zespri thankfully is still intact. We need to make sure that Fonterra stays intact in the way that was intended. This Parliament needs to protect New Zealand family farmers. Price transparency—certainly. Price and exit and entry buffers—definitely. Sustainability—always. New Zealand is looking to Fonterra and this Parliament to get farming right. Selling a co-op’s dividend system and milk pricing by this bill does not achieve this. The Greens oppose this bill in this form because of that.  
New Zealand’s sustainability issues that we keep bringing to this House—especially in terms of rivers and fresh water stopping nitrate leaching and concerns about animal welfare nitrous oxide emissions and methane emissions from farming—can all be achieved by keeping family farmers with good incomes for themselves not for somebody else taking that gain. 
 If we want our New Zealand farmers to be producing the best and to be branded the best we have to make sure that they get a good income that it goes to no one else that it stays there and that they will be meeting those needs that more and more they are being asked to meet.  
The Greens oppose this bill in this form if it gets to the Primary Production Committee. It would have been fantastic if the Minister for Primary Industries had pulled this bill today or yesterday before it got to this stage. He heard the voices of the farmers. He has ignored the voices of the farmers. This needs— 
Hon David Carter 
: 80 percent of the farmers want it.  
STEFFAN BROWNING 
: They do not. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! Can I just remind members on the cross benches that they should realise that because of the close proximity it can cause the microphones to muffle and make it difficult for the Speaker and it is out of order. 
STEFFAN BROWNING 
: We want those New Zealand farmers to be doing their very best. We have to support them doing their very best. ACT and National going down this path of supporting a runaway Fonterra executive who seems to want to have outside investment into that organisation is a mistake. The Greens will oppose this. As I say the Minister should have listened to the farmers and should have pulled this out. If this bill goes through to the select committee we will be doing our best to look at it in such a way that we can get improvements that would make it meaningful and fair. As it stands it is not to be supported. Thank you. 
SHANE ARDERN (National—Taranaki - King Country) 
: 
 Before I start my comments in relation to the Dairy Industry Restructuring Amendment Bill I declare an interest. A family trust I am involved in is a shareholder in Fonterra. I thank the Minister for Primary Industries for sending this bill to the Primary Production Committee. I read with some interest just recently in a press statement by a senior press gallery person that it was being sent as a sop to farmers. Well I just want to clarify one thing. Every piece of legislation that has ever been related to the dairy industry every piece of legislation that has ever been related to the dairy industry—that is legislation not regulation because of course regulation goes to the Regulations Review Committee—goes to the Primary Production Committee. So I am not sure where that person got that from. Maybe she was interviewing her computer keyboard but perhaps she could tell us where that came from at some stage in the future. It would be interesting.  
As the Minister has outlined Fonterra was formed nearly 11 years ago to create a structure that allowed individual farmers to band together and compete in the international market place. For those who may be listening to this debate a little bit of history at this time is probably beneficial in putting this debate into context. Originally across New Zealand there were many hundreds of independent dairy companies—in fact I believe there were about 104 in Taranaki alone. These companies were either farmer cooperatives or publicly listed or privately owned companies. They used to sell their products independently to both domestic and international markets.  
It soon became obvious to them that the Tooley Street buyers of London who used to come out en masse in those days and we are going back into the 1930s and 1940s were playing one company off against the other—some things never change and some things change all the time—and lowering the price of dairy products overall in New Zealand. So collectively the dairy companies decided then with the support of their farmers to go to the Government and form the New Zealand Dairy Board which was a legislated single-desk seller. This structure was asked for and paid for by the farming companies. Mechanisation over the years has driven rationalisation and most of the companies merged to form mega companies. We got to the point where we ended up with two large companies in New Zealand dominating the Dairy Board’s affairs. At this time the Government desired to see deregulation of producer boards and for the dairy industry this resulted in the formation of Fonterra.  
Fonterra in its 10 years has achieved 8 percent growth annually. No other New Zealand - owned company has achieved this. Fonterra is now the dominant milk trading company in the world. That means that the original objectives have been met—that is to have critical mass and be able to compete internationally. What is unique about New Zealand’s dairy industry is that we export 95 percent of what we produce as opposed to most dairy nations where the domestic consumption is 95 percent or better—and in fact in some cases of course it is well over 100 percent; that is why we are able to export to them. The industry brings $20 billion of export receipts into New Zealand and represents 26 percent of New Zealand’s export earnings. I want to go on record today to say that I am proud of the achievements within this industry and I believe that New Zealand stands to gain substantially if this industry continues to prosper. Interestingly most other primary industries have said they would like to create a Fonterra-type model for their industry.  
The bill has two parts: raw milk regulation and Trading Among Farmers and shares regulation which is commonly known as TAF as the Minister said. I do not intend to go into a lot of detail here because most of that detail has already been canvassed and I am sure speakers on the opposite side will raise some of that detail. But I know that there are some communities and some farming groups that are concerned about the proposed legislation and I look forward to hearing submissions highlighting the issues within the industry through the select committee process. There has been concern about the domestic price of milk and the transparency around farm-gate milk price setting. I look forward to the findings of recent investigations and how the proposals before us will affect this. The 10300 dairy-farming shareholders who own the Fonterra company and have built it to the stage it is at now—some putting their own farms at risk through their directorships and developing new technologies in large production plants that are the envy of the world—are concerned that there is potential for less than 100 percent farmer ownership. So we look forward to hearing those submissions.  
Whatever the outcome of this process and no matter what anyone else thinks Fonterra is made up of 10300 farming shareholders and their determination and investment must be acknowledged. Fonterra is not a large greedy corporate as some have portrayed it. It is a farmers’ market with enough critical mass and scale to compete in the international market place. So for this Parliament to not recognise that and not focus entirely on ensuring that all of those virtues are protected going forward and that we end up with legislation that enables that to happen will not be in the best interests of the farmers Fonterra the dairy industry at large the country or the economy. It is obvious to me that the process through the select committee will allow for much debate and I look forward to the Opposition’s role in that process of having a look at the detail around this legislation. 
RICHARD PROSSER (NZ First) 
: 
 I find myself again in the position of agreeing with quite a lot of what is being said on the other side of the House and yet disagreeing with what they propose to do about it. New Zealand First is opposed to the passage of the Dairy Industry Restructuring Amendment Bill in its present form. If the bill does make it through to the Primary Production Committee we will certainly relish the opportunity to tear it to pieces there as I am sure other members on this side of the House will do. I think in actual fact some good may come of having the various proposals in the bill put forward for public scrutiny and further opportunity for some of Fonterra’s own farmer shareholders to make submissions despite what the board has been telling us telling the nation and telling politicians about support that existed previously at around the 80 to 90 percent level for the Trading Among Farmers scheme particularly. That support was given on the basis that farmers giving that support were given an assurance that the shareholders would retain 100 percent ownership and control of Fonterra Cooperative. Now it appears that the rules which have not even been finalised as yet may be pointing away from that and that the way in which the share issue particularly the units attached to them may be traded will in actual fact have the opposite effect and that it will not be possible to deliver 100 percent ownership and control.  
New Zealand First believes that it is vital that this industry which is an enormous part of our overall economy stays entirely within the ownership and control of New Zealand and New Zealanders and the farmer shareholders who have built this industry. As a nation as everybody is aware we dominate the world export trade in the dairy industry. We supply something like 95 percent of the milk and milk products that are traded internationally. Because of that I think we have allowed ourselves to believe in New Zealand that we are significant as a player in the world dairy market. In actual fact that is not the case. New Zealand produces something like 3 percent of the world’s milk. So although we produce 95 percent of exports those exports are very insignificant in terms of world production. Fonterra might be the ninth-biggest dairy company in the world but it is less than half the size of the eighth biggest. We are a minnow in terms of overall production. There are dairy companies out there in the world that can swallow the entirety of New Zealand’s economy—never mind the dairy industry—and given the chance to do so they will do just that.  
But it is vital that New Zealand’s dairy exports continue to grow and it is vital for the simple reason that eventually this bubble that we are experiencing at the moment is going to burst. It is going to burst partly because of Fonterra’s own success in growing itself as an export business. There will come a point where the markets that we currently supply with bulk commodities from New Zealand are supplied from the farms that Fonterra itself is developing in those overseas markets. When those markets can be supplied from those markets what the Fonterra Cooperative will have to do is rely on what are currently its highest-value sectors of its business—those being its brands and its high-value ingredients. To do that we are told Fonterra needs to have more money available to grow that side of the business. This we can accept and this is what Trading Among Farmers was sold to the farmers on the basis of.  
If Trading Among Farmers could be constructed in such a way that it did guarantee that 100 percent ownership and control remained with the farmer shareholders it would be a good thing. But it seems that it cannot. The whole point about share trading is that it does not do anything to ensure that more milksolids are produced in New Zealand. When people start trading in the units the securities that are attached to the dry shares what they are going to be making their money out of is not producing milk and selling milk products; they are going to be making money out of buying and selling shares. This gets away from the entire purpose of the dairy industry which has been built up for 150 years in New Zealand by New Zealand farmers to produce milksolids to produce the best-quality dairy products in the world and to sell them to the world. What this scheme will do if it goes through will be to move their focus away from that to make that the secondary business almost; to put farmers in the position of becoming first tenant farmers and then peasant farmers as they rely solely on a milk price that is determined by the other major aspect of this bill. The profits will be made by trading in shares by foreigners.  
We oppose this bill for the same reasons that the shareholders council has chosen to oppose it: that it is not what the farmers were sold and voted on originally—farmers were guaranteed 100 percent ownership and control and that is not now deliverable. We believe that it should be put to another vote and we wonder why the board of Fonterra appears to be set against the idea of there being another vote amongst shareholders. We believe that that may be because the board of Fonterra also suspects that sentiment may be rising against it.  
It is worth noting that although this bill permits Fonterra to instigate the Trading Among Farmers scheme at a point of its choosing up until 2013 it does not actually put any regulations in place around how that trading scheme should function. We are very concerned that while those details are still being worked out this is not something that Fonterra should be allowed to do arbitrarily. It is like giving it a blank cheque particularly when there seems to be some discrepancy in the understanding of the system and the motivations between the shareholders council and the board. There are other ways for Fonterra to raise capital if it needs to. It has an AA+ credit rating and could borrow money on any of the world’s commercial markets at extremely competitive rates. Fonterra could continue to retain dividends from shareholders. In actual fact anything that Fonterra does—other than issue more shares in itself—is going to cost farmers in redemptions in one way or another whether it is direct or whether they are paying back debt.  
There is not currently a redemption risk as the proponents of this part of the bill claim. Redemption has occurred only twice in the history of Fonterra. But if there is one thing that is going to create a redemption risk it will be Trading Among Farmers because it will artificially raise the share price. The first thing that will happen once shares start being traded is they will increase in value. That will increase the motivation for some farmers to quit the business and take the money. Once the value of those shares goes up it will make it much more difficult for new farmers for young farmers to get into the industry.  
 It opens the door for outside influence and control as other members have said. If there are no restrictions—and there appear to be no restrictions—on who may or may not purchase the units attached to dry shares then the people who will buy them will be the ones with the money and that is going to be foreigners. It is as the member from the Greens alluded to a partial float in all but name and it has already been rejected by farmers for good reason. There is no purpose to the unit securities other than to facilitate trading that has no connection to milksolids. We note also that the Fonterra Shareholders’ Council has raised some questions as to the potential conflicts of interest between the due diligence legal committee provider and some of the board members.  
For all these reasons we feel that there is not sufficient good in this bill to let it go through to the select committee. If it does we look forward to as I say examining it closer there. Perhaps in the light of public scrutiny it may not even survive. New Zealand First is opposing the bill. Thank you. 
COLIN KING (National—Kaikoura) 
: 
 It is a pleasure to rise to speak to the first reading of the Dairy Industry Restructuring Amendment Bill. In doing so one does cast one’s mind back to this debate having been quite long and quite tortuous for the many shareholders within Fonterra. I would like to just pay a tribute to the many farmers who are out there and who at this time of the day will be milking the cows. They will be heads down and they will be working to make sure that those animals are cared for in a very husbandry manner and that the staff who are working on those farms will be cared for well—whether they be immigrant labour or whether they be sharemilking people: couples who are building their way up to getting into farming.  
There is no doubt that the dairy industry has been a breath of fresh air when we consider some of the other models that we have around—whether it be the meat industry or the wool industry. So from that point of view when you see where the dairy industry came from—that is what is represented today by Fonterra—it was once the poor cousin of the sheep and beef industries and today it is looked at to be the model going forward. We have had a lot of that conversation through the debate today and on that basis really it is up to the Government—United Future and National and ACT—to ensure that this bill does go through to the Primary Production Committee.  
There is a lot of passion about and a lot of commitment to this piece of legislation from both sides of the House. It is very important that we hear the clear messages coming forward from the submitters because issues have been raised today that have meant that part of the House is against this bill. But really it is very important that we do get it right and that we satisfy the other side of the House that in actual fact we will retain 100 percent ownership by way of control of voting shares in Fonterra. We recognise that Trading Among Farmers is reasonably controversial. However it is something that has been through a fairly robust process and has been presented to this Parliament. We need to give it due consideration. As far as the redemption risk goes effectively it is a problem that confronts cooperatives that having the access being able to enter and to exit freely does present a risk in that capacity. Whether that risk is as material as we have been led to believe I believe will be borne out by the select committee process. That said we have also got the dubious situation to find ourselves in of what is deemed to be a monopoly and what is deemed to be competitive by way of a model.  
There are other issues that will come out during the submission stage if this bill goes to the select committee and they will be around the continued supply of regulated milk. I look forward to the debate. I trust that the debate will not broaden out too much and that it does stick to the principles that are articulated in this bill which are to produce and maintain the most effective dairy industry or milk production in New Zealand. When we do go down this track and we look at the future we have got a company that by world scale may not be large but it does the bulk of the cross-border exporting of milk. What we have seen quite clearly is a challenge quite often to the model of what we define as healthy competition because with competition what we see often is a reversal back to the very fundamentals of exporting rather than the adding of value. It is something that really does worry us because when we see competition coming in and arguing its case for a fair go we want to see that it actually contributes to the innovation and the adding of value.  
This is going to be a very interesting debate no doubt within the select committee because it is about the very fundamentals of our economy and our primary sector. I look forward to the submissions. I encourage everybody to engage in the process but I do say to the other side of the House that it is time to have this debate it is time to challenge some of our fears and it is also time that we looked at the legislation to bring it up to a situation where we can empower Fonterra to progress ahead into the future with confidence. It is a risk and there are challenges but can anybody over on the other side of the House ever tell me where business does not come with its risks? When we are working with a perishable commodity like milk I am confident that we will continue to have a cooperative spirit. My recommendation is that as we go through this piece of legislation and refer it to the select committee the other parts of our primary sector look at the particular model of Fonterra and learn from it. Thank you. It is a pleasure to speak on this bill and to support its referral to the select committee. I look forward to hearing the submissions with great interest. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Mr Deputy Speaker this is for 5 minutes by way of an arrangement with your predecessor. 
Mr DEPUTY SPEAKER 
: Is this a split call with the Greens? 
Hon TREVOR MALLARD 
: Yes. I want to thank the member opposite Colin King for his contribution because I think amongst much of what he was saying there was not much difference between us. I think with his being a sheep farmer being a shearer his thinking was a little bit woolly but I think a lot of the issues that he raised are issues that are important to both sides of the House and I agree with him that the process at the select committee is going to be vital. There is an opportunity there to allay some fears to make some changes and to get something that is broadly agreed to by both sides of the House. I think that is something that will be important if this is to proceed forward because where you have this sort of statutory monopoly effectively in place it is something that needs to have the support of more than just the Government of the day.  
That is why I regret the fact that the Minister in charge of the Dairy Industry Restructuring Amendment Bill has signalled that he is going to foreshorten the period to even shorter than the 4 months that is now regarded as a short period for hearings of the select committee. I think what he is doing there is taking away the opportunity for process to be followed for debates to be had for discussions and for the possibility of getting some of the issues if not all of them off the table.  
I say to members opposite that this is not actually strictly a partisan matter. I mean I think it is fair to say that you know I could well have more points in common with the Minister in charge of the bill than with my colleague Damien O’Connor on this. I have looked at the issue carefully— 
Hon Damien O’Connor 
: That often happens. 
Hon TREVOR MALLARD 
: —yeah there are a few other issues that way—over many many years and I do know that we have got to somehow better capitalise our dairy industry. There is no doubt about that at all. It is innovative and we have got to make sure that it gets some more capital in. But despite the long period that this has taken this has the appearance of being ad hoc cobbled together and at the end rushed rather than being a coherent and logical piece of reform.  
There are a number of alternatives and I should say one point I am adamant about is that what this Trading Among Farmers proposal lets happen is the sale offshore not only of our farms but also of our most important exporter and innovator that we have in New Zealand. I think that through that arrangement this will let people like the company that is trying to buy the Crafar farms aggregate massive amounts—aggregate large amounts—of Fonterra through the trading exercise. There is a question about the way that the units will work and people’s ability to aggregate that.  
Having said that I think there is room in New Zealand for some ordinary Kiwis to invest in the processing or research part of the dairy industry and this does not give them a chance. This arrangement does not let my constituents in Wainuiomata and the Hutt Valley have an investment in the research that needs to be done for the dairy industry but it lets a Chinese-owned lot who suck up to the National Party do it. It lets a Chinese-owned company that is trying to take over Crafar’s farms get into this area and that is wrong.  
There is another area that I think is wrong and I think it needs to be sorted out here and that is the arrangements whereby companies other than Fonterra have a “take it or leave it” arrangement as far as milk is concerned. Fonterra has to have the capacity for milk but a whole pile of its competitors can choose whether or not to take that milk and I think that arrangement is wrong. I think it was wrong when it was set up. I take some responsibility; I have been involved in that over a period of time. I think it needed to be sorted out and it has not been and I think there are some companies that need to be sorted out there.  
I will make one final point and that goes on to the responsibilities of Fonterra. It has what is effectively a statutory monopoly. Farmers have an obligation to be clean and green but New Zealanders also have the right to get their milk at a reasonable price. Ninety-five percent of it is exported and people all around the world get our milk cheaper than Kiwis get it. That is wrong. That is wrong it cannot continue and if Fonterra expects us to support its arrangements then it has got to take the lead—not just in a few schools—to make sure that the milk that we have that we drink on a day-to-day basis that we use in our baking and that we use in our cooking is something that is available at a reasonable price. 
EUGENIE SAGE (Green) 
: 
 One of the reasons the Green Party opposes this bill the Dairy Industry Restructuring Amendment Bill is what is missing from it and the lost opportunity that the bill represents. It fails to amend the substantive Act the Dairy Industry Restructuring Act 2001 to allow Fonterra to be far more strategic about the expansion of its supplier base. It fails to protect our lakes our rivers our aquifers and areas such as the Mackenzie Basin from poorly controlled dairying expansion. Fonterra is a very successful cooperative and a major contributor to our economy. We want Fonterra to prosper but not at the expense of our waterways and our climate. We want Fonterra to be in business long term and to be able to rely on a genuine “clean green” brand not a marketing myth to promote its dairy products. But it is the rapid and uncontrolled growth in dairying that is trashing that $18 billion “clean green” brand.  
The bill fails because it fails to change the express obligation that the Dairy Industry Restructuring Act puts on Fonterra to collect and process milk throughout most of New Zealand. Section 73 of the substantive Act requires Fonterra to accept all applications to become a shareholding farmer. It also requires the company to accept all applications to increase the volume of milk supplied by a shareholding farmer. The only circumstances where Fonterra can legally reject supply are set out in section 95 of the substantive Act. That allows Fonterra to reject a prospective supplier only if the cost of transporting milk from the new entrant is greater than the highest cost of transporting milk from another shareholder farmer. So the circumstances within which this can be exercised are very narrow. The bill does absolutely nothing to change that obligation. It does nothing to give Fonterra the ability to apply sustainability criteria or to decide whether or not it wishes to grow its milk supply in areas such as the Mackenzie Basin given the biodiversity loss that that involves or whether it wants to slow down the rate of growth of its milk supply in sensitive catchments such as that of Te Waihora—Lake Ellesmere—New Zealand’s most polluted lake.  
As Fonterra’s own legal counsel said during the company’s resource consent applications to treble the size of its Darfield milk processing factory before that factory had even begun operation: “…if individual farmers decide on their own economic or other grounds to convert to dairy then in almost all circumstances Fonterra is required to collect and process that milk.” So when that intensive cow-cubicle farming was proposed for the Mackenzie Basin we had the spectacle of Fonterra spokespeople wringing their hands and saying that although they did not necessarily support dairying in the Mackenzie and although they did not necessarily support cubicle farms there was nothing the company could do about it because the Dairy Industry Restructuring Act obliged them to pick up the milk. The bill fails to deal with that obligation and the implications it has for water quality from the decisions of individual farmers to convert to dairying. It fails to allow Fonterra to regulate the major component of its business the supply of milk.  
The Green Party recognises that there are limits to growth and that to prosper long term Fonterra cannot continue to increase its milk volumes at the 5 to 8 percent growth that has occurred recently. Dairying has grown so rapidly in Canterbury that we have the spectacle of individual dairy tankers—43 of them—driving 800 kilometres each day to take milk from Canterbury down to Fonterra’s plant at Edendale. This of course involves huge greenhouse gas emissions. So by not amending the substantive Act to give Fonterra the power to decline to pick up milk the bill is committing the company to a never-ending growth strategy which is not sustainable. 
IAN McKELVIE (National—Rangitikei) 
: 
 As a sheep farmer it gives me a bit of pleasure I guess to speak to something that concerns what I term the other half of the industry. As a sheep farmer I also know the danger of a fragmented industry and I do not think for a minute that this Government will be endeavouring to fragment the dairy industry. At this point having said I am a sheep farmer I must declare an interest in this Dairy Industry Restructuring Amendment Bill however as I do have an interest in Fonterra through family interests. None the less I need to refute now a couple of the extraordinary things I have heard in the last quarter of an hour.  
I did not hear the last speaker refer once to the bill. I do not know what fresh water has to do with this bill—frankly I think nothing. I think however if you look at the strength of Fonterra and if you look at the strength of the dairy industry the best chance we have of resolving some of the issues that the Green Party has talked about is to ensure that Fonterra remains strong because it will be able to put money into research and development which will certainly overcome a lot of the issues that the Green Party is obsessed with talking about. I also want to refute a claim that the previous Labour speaker made about the 4-month time frame and the reason for this bill being pushed through the select committee process faster. It certainly has nothing to do with precluding opportunities to speak or to hear about the matters concerned in this bill. It is simply a matter of letting the industry get on with its business in the new financial year. If this bill does not get through Parliament in time it will inhibit the industry’s ability to develop and grow.  
The great progress and changes since Fonterra’s inception have brought about the need for change in the Dairy Industry Restructuring Act. I do not think there is any doubt that the significant growth in this industry in that time also means we need to change this Act and make progress for the future. We are talking about amending an Act that has been in place for nearly 10 years and we must remember also in the process of amending this Act that farmers asked for this Act in the first place. They asked this Parliament to assist them in forming Fonterra. As a result of that it is necessary for this Parliament to continue to regulate Fonterra in one form or another. We do not have any choice in my view. We have a responsibility to the New Zealand community to continue to reform and act on this dairy industry Act and consequently the amendment to it the Dairy Industry Restructuring Amendment Bill.  
The dairy industry is challenged by being by far the biggest industry in New Zealand. It is by far the biggest contributor to this country’s well-being and I think inevitably in New Zealand we tend to look at big and successful organisations just like we look at big and successful sportspeople and knock them off their perches from time to time. I think that is a tragedy for Fonterra and for the dairy industry in New Zealand. I think we need to give Fonterra all the assistance we can to ensure that it is able to compete in New Zealand to compete internationally and to look after—as the member for Taranaki - King Country talked about—the large number of shareholders that Fonterra has. As I said a minute ago Fonterra has a great ability because of the strength and the unity of the company to reinvest a large amount of its surpluses in research and development an absolutely critical area for New Zealand agriculture—not only for the dairy industry but for New Zealand agriculture. To encourage the strength of Fonterra in that respect is equally important.  
I think to talk of the risk to Fonterra from outside investment is also flawed and I think we need to remember as the member for the Greens who spoke earlier talked about that from time to time even New Zealand family farms need a place to park some assets for a while as they get through very difficult times and the best solution for this—in the dairy industry particularly—is to be able to park your shares. If you can park your shares it avoids your need to draw down larger debts from banking organisations and the like. 
Hon Damien O’Connor 
: Rubbish! You never buy them back. 
IAN McKELVIE 
: Absolutely they have to buy them back and that is the opportunity that they have got. 
Hon Damien O’Connor 
: You won’t be able to afford to buy them back. You know that too. 
IAN McKELVIE 
: That is not correct. The member for West Coast - Tasman is getting a little bit confused. Clearly any business goes through times of difficulty and I think this is an ideal way of assisting the development of this industry and the development of those farmers by allowing them to park shares in what will be known as the shareholding company. I think it is very good process for the industry to go through.  
Not only that but we must also remember that Fonterra needs an enormous amount of capital to survive and to continue to operate. However strong we think the shareholders and the company are inevitably as we have seen in the last 3 or 4 years companies come under stress and shareholders come under stress and they need to find cash somewhere else. If we do not form and put in place a very strong policy and process for Trading Among Farmers as it is known and as clause 8 of the bill puts in place then I think we will also leave Fonterra at some risk. I think again the scaremongering from particularly New Zealand First and the Greens about the support for this part of the bill is nonsense. There is absolutely no doubt that the majority of Fonterra’s shareholders did and still do support this part of the bill.  
They support it with some nervousness and if the member—I think she comes from Auckland—does not believe me she can come with me to Taumarunui or to Feilding stop and get some petrol and she will be bailed up by a dairy farmer on every corner in my electorate as I am sure she would be in many of our other electorates. She will very quickly learn that they do on the whole support this like the previous speaker for National. They are a little nervous about some aspects of it and that is why I welcome the opportunity to take this bill and look at it through the select committee process—[ 
Interruption 
]; there is a parrot over there—which I am sure will resolve a lot of the fear and the issues that some of our dairy farmers have about it.  
The next issue I want to get on to very briefly is clause 13 relating to the base milk price and the way this is set. I think you will be able to realise that the relationship between the base milk price and the value of the shares is absolutely critical to the future of this industry so it is most important that this is regulated. It is regulated now to some extent. It is most important that this is regulated because it enables us to see a transparent milk price - setting process and at the same time it takes the value of the share and places it to one side in that process. It is most important that this is transparent as well as we go through this process.  
As I said I look forward to this bill going to the Primary Production Committee. I look forward to the submissions. As I said I am stopped in streets all around my electorate to talk about it so I am sure that will ensure that what comes through in the form of submissions is very strong. We must ensure the bill eventually appears in Parliament in a form that satisfies the needs of our dairy farmers the industry and the country. We owe a responsibility to our No. 1 industry and we must continue to foster it. I have no problems supporting this bill going to the next stage and I look forward to the debate in the select committee as well. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 It is a pleasure to take a call on the Dairy Industry Restructuring Amendment Bill and to recognise that it is probably one of the most important economic bills to come before this Parliament in some time. If this Parliament fails to exercise the due diligence and good judgment that is tasked of us on this matter the effects will be felt for generations. 
I am a former diplomat who has represented the New Zealand dairy industry overseas in many markets and on many occasions and I was also a management consultant tasked with advising on the formation of Fonterra from Kiwi Cooperative Dairies and the New Zealand Dairy Group. I have long taken an interest in this most crucial industry for the New Zealand economy and am proud to have been part of the Government that set up Fonterra in the first place. 
Crucial to New Zealand Fonterra is; roughly one dollar in every five of New Zealand’s export earnings comes from this industry and through this cooperative. Many of our trade negotiations have been guided by the interests of this industry arguably the one and only industry where New Zealand has world leadership and global scale. If we lose progressively or dilute over time our sovereign control over the one industry where we are a world beater and a world leader literally we will undermine the future solvency of our very country and the future sovereignty of our very country—that is how important this is. Thirty percent of the global dairy trade comes from or through Fonterra—one bucket of milk in three traded anywhere in the world. No wonder the US dairy industry when I was a diplomat in Washington was terrified of Fonterra—it was the New Zealand Dairy Board then—because it was the big guy on the block and there are not many industries where we can say that. Fifteen thousand people work for Fonterra it is a major employer in this country and we want to see it grow. 
We want to see it strong we want to see it play well in international markets but the issue is whether this bill provides the enduring legislative framework that will lead to that outcome and here are the reasons why. After much consideration Labour has determined that on the current drafting it does not. I can assure you that this has been much debated in our caucus and we have not come lightly to the position of opposing this bill. It has been much consulted on around the country and previously all matters around this industry have been a bipartisan consensus between National and Labour. 
This is a big departure for us. Here is why we have come to that point. The first issue is the lack of detail in the bill and the uncertainty around crucial governance issues that should not be left to chance or the accumulation of financial market pressures. If the Government were in a position where it could guarantee crucial issues of the sovereignty of farmer control we may well have a different opinion and we are open to being satisfied on some of these points through the select committee process. We are concerned that the bill does not enjoy the support of the Fonterra Shareholders’ Council nor the increasing number of farmer shareholders. And the reason for that is simple. They were told early on in the Trading Among Farmers consultation process that farmer ownership and control would be 100 percent guaranteed but it is not. I will go through the reasons in more detail but it is crucially around the sale of units that give ownership of the income stream from the milk production to anybody in the world: New York hedge funds Chinese State-owned enterprises New Zealand share market interests institutional banks—you name it they are powerful pressures and they will only accumulate and this bill opens the door. We need to be extremely careful about the fine print and farmers themselves have not been shown the fine print and in increasing numbers—and the Speaker in the Chair is a Southlander himself and a fine one—they are asking why not. They are asking why not. 
The sale of units as I say is not limited to farmers. It is a different class from wet shares and dry shares. The counterargument has been raised by members opposite that OK the voting rights stay with the share they do not attach to the units. That is true. But hello money talks; big money talks loudly and the money goes with the unit. There is a fundamental conflict of interest it seems to us that is set up by that division. The owners of the units will want the profit to be taken downstream where it can attach to their interests. The farmer shareholders will want the profit repatriated to the farm gate. They are headed in different directions they have different interests and the bill and the commentary are not clear as to how that will be arbitrated. 
The situation is inherently unstable. Take for example Kerry Group in Ireland. It opened the door to a very small proportion of non-farmer shareholdings through A and B class shares not dissimilar to this arrangement—not exactly the same but not dissimilar. And what happened? Effectively corporate control was lost well before the 50 percent threshold. Actually it was lost at around 20 to 25 percent. This bill has a cap of around 20 to 25 percent but crucially that cap is in the constitution of the cooperative; it is not in the law. Parliament is giving a blank cheque to future management under future pressure from unknown foreign institutional investors and we will have no comeback if we pass this bill in this form with a blank cheque to Wall Street. As a bottom line to earn Labour’s support—and I again stress that on a matter of this fundamental national importance bipartisan or multipartisan support around this House is fundamentally the right thing to do—we should argue this out until the majority of us are satisfied. If that cap could be put into law and if the detail were clearer we would be somewhere closer to it. 
And this is not an academic question. I have heard today that next year’s payout forecasts are likely to start with a five—that is not $7 per kilogram milksolid but around $5 something and that will put a lot of pressure on some heavily indebted farm balance sheets. Add to that the fact that the tax structure of farming enterprise may change a few years from now and there may be incentives for farmers to farm more for profit and less for capital gain and that would be a good thing in my view all things being equal. But that will add more pressure on farmers with stretched balance sheets to sell the rights to the downstream production through the units. And this bill provides for the constitution that allows up to 200 percent of the individual farm production to be leveraged out. Well what a hedge fund’s dream that little one is: over-leveraging the farmers’ commitment to 200 percent if I am well advised on that matter. 
We want assurance that this Government will not allow the future flotation of this cooperative on the New Zealand stock market or any other stock market. That would be a fundamental damage to the cooperative nature of this enterprise—New Zealand’s most important single business. Sometimes people might laugh about cooperatives but where would we be if Fonterra was not a cooperative? And the answer is that it would already be foreign-owned for goodness’ sake. It would have been taken over by Kraft or somebody else years ago. The reason it is New Zealand’s No. 1 export earner—not America’s or Denmark’s or China’s or somebody else’s—is because it is a farmer-owned cooperative and anything that dilutes that or puts it at risk cannot be waved through by this Parliament on a wing and a prayer that some future manager will stand by the spirit of this legislation even though they are not bound by the letter. I want my grandchildren to know what it is like to be in a country that is a world-first in at least one industry. And this is it; there is no other. Do not let it go. Do not put it at risk. And if you are not sure and if it is not clear on the details stop think do not pass go do not sell 200 percent. 
MIKE SABIN (National—Northland) 
: 
 I am glad to take a call on this very important bill the Dairy Industry Restructuring Amendment Bill. For the sake of the House’s knowledge not only am I the member of Parliament for Northland but I also have a little bit of skin in the game in the past as a dairy farmer of some 4 years although it did seem like 40 years at the time I must say. Diving around in ditches wondering what my arm was doing in the piece of a cow that it should not really be in trying to rescue calves—I reflect on that with great heart and the due respect I afford our dairy industry for the immense contribution that they make all jokes aside to this nation. I am also a member of our caucus committee and fortunately have the opportunity to sit on the Primary Production Committee as a substitute although I very much hope that I am able to contribute in a full-time role on the select committee as this bill makes its way through the process.  
Back on 24 January the House will recall that the Minister set out a series of proposals about this bill. It has been over 10 years since the Dairy Industry Restructuring Act was first instigated and make no mistake—and I think it is acknowledged across this House—that we have Fonterra because of the Dairy Industry Restructuring Act. It provides for a platform internationally that gives us the most effective economic capability while providing some domestic competition and tension and I think everyone wins in this scenario. But some 10 years on it is fair to say that it is time to look at the policy settings it is time to look at this legislation and therefore we find ourselves discussing this bill.  
Can I also point out that it is important that there is heavy discussion and debate around this not only in this House through the select committee process but on the streets leaning on farm strainer posts and so forth because it is so important to this nation. It is no great surprise to anyone that the dairy industry is almost double the size of the nearest export earner behind it. It is in everyone’s interests that we absolutely achieve the best platform for Fonterra for our dairy industry moving forward. Therefore I welcome this process and I welcome the submissions that will no doubt be heard at the select committee from perspectives across the board.  
The dairy industry is very important to Northland; in fact it underpins our economy an economy that does have its challenges. I was fortunate after the initial proposal and discussion to hit the road to be amongst farmers and to listen to their concerns. Interestingly enough the two concerns that they raised the most were in actual fact around the conditions under which their competitors received milk the level playing field that needed to be achieved in that regard and the issues around virtual processors. So I welcome the opportunity for those within the industry to bring forward their concerns around what was to them something that we very seriously needed to look at and certainly need to apply our thoughts to.  
Can I just say at this stage as the last speaker that I would like to reflect on some of the important messages that this debate has touched on and the things that I think we need to reflect on as this bill moves through this process and that we try to find consensus in something that is very important to this nation and to the foundation blocks of our economy.  
The changes to the Dairy Industry Restructuring Act are about ensuring that we have the most efficient dairy industry in New Zealand and that we are at the forefront of this industry globally. It is a $13 billion company—$13 billion. This bill enables Fonterra to raise capital and reinvest and grow further in the industry. This bill will improve the transparency of and the confidence in Fonterra’s farm-gate milk price setting. It is important to note that there is a disconnect between the public’s understanding of the farm-gate milk price and what they see in the supermarkets.  
This bill will also primarily embed Fonterra’s current milk price governance arrangements in legislation it will require Fonterra to publicly disclose information on its milk price setting and it will introduce an annual milk price - monitoring regime to be undertaken by the Commerce Commission.  
There is nothing to hide from in terms of transparency. The devil is in the detail. I welcome submissions on this. However let us not forget that with this bill the time has arrived. This industry is too important to New Zealand not to get this right and I welcome the opportunity to participate in this process moving forward.  
A party vote was called for on the question  
That the Dairy Industry Restructuring Amendment Bill be now read a first time. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 54 
New Zealand Labour 34; Green Party 11; New Zealand First 8; Mana 1. 
Bill read a first time. 
Hon DAVID PARKER (Labour) 
: 
 I raise a point of order Mr Speaker. I seek guidance from you in the Chair as to what is the point at which we debate the debatable motion. 
Mr DEPUTY SPEAKER 
: It is the next one. The first question directs the bill to a select committee and we vote on that. Then the Minister will move the instruction to the committee. 
Bill referred to the Primary Production Committee. 
Hon NATHAN GUY (Associate Minister for Primary Industries) 
on behalf of the Minister for Primary Industries: I move  
That the Primary Production Committee report finally to the House on or before 1 June 2012. 
 Can I first of all give you a couple of reasons for that shortened select committee process. But before that as Associate Minister for Primary Industries it is important that I let the House know that I can confirm in my own personal interest that Fonterra shares are owned by Kereru Farm (2005) Ltd. The company is owned and controlled by my parents of Levin and I have no current legal interest in Kereru Farm (2005) Ltd. I just wanted that placed in  
Hansard 
 before the House.  
Importantly what I wish to do now is make some comments on why the Government has decided on a slightly shortened select committee process. If Fonterra wants to proceed with Trading Among Farmers—and it is our indication that it does—it would need the legislation to be passed by the end of June this year 2012. 
 Of course the select committee is the appropriate place to have the debate that has occurred in the House today. Shareholders and members of the public can come to engage with the select committee and also engage with officials. Once legislation is passed of course it is up to Fonterra to engage and sell the concept to the investor community in terms of Trading Among Farmers. It is difficult to promote Trading Among Farmers without the legislation being passed and I think it is worth noting in summary that Fonterra shareholders have already voted about 80 percent in favour— 
Mr DEPUTY SPEAKER 
: Order! I must just caution the member. This is probably going to be the first debate we have had about this extension. The only issues that can be debated by either side are the reasons precisely around why the date of the report back is different—the instruction in relation to that. There is nothing else in this motion. 
Hon NATHAN GUY 
: Thank you for your guidance. In summing up I have tried to give the House some indication of why the Government supports this select committee process which is for it to report back in June this year. In essence we are looking forward to receiving those submissions and looking forward to the Primary Production Committee reporting back on or before 1 June 2012. 
Mr DEPUTY SPEAKER 
: Just before I call the honourable member I would invite members to look at Standing Order 286(3). This may well be breaking new ground. 
Hon DAVID PARKER (Labour) 
: 
 New Zealand has very few constitutional protections against bad law. We have only one House of Parliament. Once a law is passed here there is no Upper House of Parliament conferring protections upon New Zealanders against bad law. We do not have a President who can veto bad legislation. One of our most important protections is the select committee process and the select committee process has been deemed so important by this Parliament that at the end of the last Parliament we changed our Standing Orders. We in this Parliament recognised that through truncating the select committee process we undermine good lawmaking.  
One of the reasons why we normally have 6 months for select committees— 
Hon Nathan Guy 
: You didn’t support it going to the select committee. 
Hon DAVID PARKER 
: We did not support the bill the Dairy Industry Restructuring Amendment Bill going to the Primary Production Committee because we opposed the bill—correct. Any bill that goes to a select committee should have the benefit of the full 6 months if it is contentious especially if it is important especially if it is opposed by the Opposition and especially if it is opposed by part of the dairy industry.  
Going back to why Parliament changed the Standing Orders Parliament recognised that the select committee process is one of the most important protections for New Zealand against bad lawmaking. If you have a bill at a select committee for 6 months you have the opportunity for submitters to properly get their heads around the issues. You have the opportunity for them to lobby other people who should be interested to get their committees to go through their monthly meeting and put a submission in and you have the opportunity for them to lobby the media and to explain to the media why it is that there are fundamental flaws in legislation that is being proposed. That is why if this Parliament uses its powers to override that normal protection that is to be found in the 6-month period to report back legislation once it goes to a select committee this Parliament deems it so important that we should have a special debate on a motion to truncate the period—because we are undermining one of the very few protections we have in our country against bad law.  
In terms of why it is important in respect of this specific piece of legislation we are dealing with the exporter essentially of 25 percent of New Zealand’s exports. There are major flaws in the bill which relate to— 
Louise Upston 
: I raise a point of order Mr Speaker. My understanding from the Standing Order you quoted before is that the member cannot talk about the principles of the bill. 
Mr DEPUTY SPEAKER 
: I am not going to uphold the point of order. I think the member is inside what the Standing Order says—at this point. It is not a “get home free” card. 
Hon DAVID PARKER 
: I am not going to repeat my first reading speech but there are at least three large matters dealt with by this bill all of which are contentious. The first relates to how milk should be priced from Fonterra to others. I have not had an opportunity to speak about that— 
Mr DEPUTY SPEAKER 
: Now the member is— 
Hon DAVID PARKER 
: I am not going to. 
Mr DEPUTY SPEAKER 
: Order! The member is now getting outside that framework. I think he was doing very well till that point. 
Hon DAVID PARKER 
: Thank you Mr Deputy Speaker. The point I am trying to make is that this is a very complex piece of legislation that deals with 25 percent of New Zealand’s exports. There are lots of angles to this that need to be explored by both submitters and the select committee itself. I was evidencing the fact that in the first reading debate I got the chance to deal properly with only one of them. There are two other issues in this bill that are as significant if not to me then to other people whose opposition to this bill is on different grounds from my own.  
For Parliament to be asked to truncate the normal select committee process from 6 months to 3 months—to halve it—does no justice to the proper consideration of what is probably one of the most important economic decisions that will be taken by this House of Representatives in the next 3 years. As we have heard in the debate already there are aspects of this bill that people think are of enormous effect to our largest exporter. To truncate the process from 6 months to 3 months is exactly why Parliament changed the Standing Orders to allow members of Parliament to highlight to the public and to the media what it is that Parliament is being asked to do.  
We are being asked by National to truncate this from 6 months to 3 months and the only justification we were given by Mr Guy as he moved the motion was that Fonterra wanted it by that date. Well there is a national interest here that goes beyond Fonterra’s interest. We in Parliament are responsible for the future of the New Zealand economy. Yes the interests of Fonterra are important. Yes the interests of individual farmers are important. But there is a wider New Zealand interest that we in this Parliament are responsible for.  
Mr Guy I am completely unconvinced by your suggestion that because Fonterra wants this bill through by 1 June we should be putting aside normal processes when we know that halving that period of time means that those people who are opposed to this legislation will not have the normal period of time to campaign. They will not have the normal period of time to go and see their local MP to go and see other farmers who might be concerned about it to go and see the newspapers and to get the issue up in the media.  
Given that we have very few other protections in this country against bad law I say that this Parliament should vote against this motion to truncate the period from 6 months to 3 months. We should stand for the proper protection of the New Zealand economy and the proper protection of New Zealanders and we should have a full select committee process so that it can give the normal 6 weeks for advertising. Mr Deputy Speaker you will be aware that normally 6 weeks is the time that is allowed for people who are submitting on legislation to have time to gather their thoughts and to consider the legislation.  
This legislation was tabled in the House only in the last week. They will not understand the detail of it yet. They need 6 weeks of that 6-month period to actually say what they think about the legislation and then they need to have sufficient time for those people whose submissions have been put in to actually come to the select committee to put their case to say what is wrong to say what should be changed and to say what they agree with—to support it if they want to.  
Then the select committee needs to have the time to get considered advice from the departmental officials as to what the right policy position is and the various parties need the time to take that to their caucuses and have a discussion about the issues. In this time there should be background meetings between the different interest groups and different caucuses happening—all these things take time. Then parliamentary counsel need proper time in order to go about their job of drafting amendments to the legislation which will no doubt be necessary.  
All of this takes time. That is why we normally allow 6 months for a select committee to properly do its work. For one of the most significant pieces of legislation on the economic front that will be passed this year probably during the term of this Government to have that process truncated from 6 months to 3 months is very poor practice. 
 What is it that the Government wants to push through without proper scrutiny? Well I suggest that it is indicative of the fact that there are provisions in this bill that are unwise. The longer this debate goes on in the media and in front of the select committee the more apparent it will become that the Government is at risk of making a serious mistake. The less time that we have as an Opposition to identify and to get through to the various people who are interested in these issues the detail of our concern the more apparent it will be.  
We do not have the benefit of ministries working 24 hours a day. We have to do these things ourselves with the benefit of some advice at the select committee and perhaps some advice that we get from the Parliamentary Library and from other interest groups that come in to see us. If we have a truncated process we do not have the time to actually properly draft the amendments that are needed to this legislation in order to protect the public interest that we in this Parliament are guardians of.  
We are not here for the farmers alone. We are not here for Fonterra alone. We are here for the broad range of New Zealand interests including in this case 25 percent of New Zealand’s exports which go out from the dairy sector. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I want to thank the speaker who has just preceded me the Hon David Parker because I think he has pointed out some of the constitutional issues that sit in behind the debate that we are about to have now. Probably of members in the House I think John Banks and I are the only two who were here in 1986 when the expectation changed so that all bills went to a select committee rather than it being an exception. That was I think part of a set of reforms at the time that recognised the fact that we are a unicameral Parliament and that some of the checks and balances did not exist. There was a view that unless something was really urgent it should go to a select committee. At that stage I do not think we had a time limit. Basically the bill went to the committee and the committee did its business. It generally on average took about 6 months but there was not a requirement to send the bill back within that time.  
Subsequent to that in another set of reforms we had an expectation or a requirement that the select committee reported back—I think it probably came in with MMP or a period subsequent to that—that the 6-month rule applied that if the committee had not dealt with the bill it would effectively stand referred back. Recently I have been rereading the review of the Standing Orders which the Speaker and you Mr Speaker Tisch were both actively involved in. We did make a change. We made some things easier for the Government to do—like the extended sittings. We also put some restrictions on the Government and one of the restrictions that we put on was that if a bill was going off to a select committee for a period under 4 months then it would be a debatable motion. What we hoped through doing the extended sittings and that sort of arrangement was to reduce the amount of urgency and to have Parliament debating the things in the select committees and in the House that were important and that were really debatable.  
I think it is fair to say that whatever one’s point of view there is not much doubt that there are parts of this legislation that are debatable and will need a full and proper select committee examination. In a funny way there is not a lot of politics in this. Without referring too much to the debate that has preceded this I indicated that my view was certainly closer to that of the Minister who introduced the bill than to my colleague Damien O’Connor.  
Hon Nathan Guy 
: Must have been a good caucus. 
Hon TREVOR MALLARD 
: Well no we have different points of view. I would say that the chairman of the Primary Production Committee has a view closer to Damien O’Connor’s than mine. So I think it is fair to say that there are a range of views within this Parliament and the select committee is an enormous opportunity to work through those views and to see whether we can get a compromise that has the wide support of the Parliament. I think it is agreed that by the end of this legislation if we do not get something that has—I will say with all due respect to my colleagues from the Greens—the agreement of at least the Labour Party and the National Party together then we will have a period of instability in the dairy industry. That is something that none of us wants. It does not help with investment going forward and it does not help with the things that I think are really important and that is the acquisition of capital for innovation for the dairy industry so some of the things that frankly we are half-cock developing at the moment can be properly funded and we can take advantage of our leadership in the intellectual property area related to the dairy industry.  
But to do it we have to move to a point of if not total consensus then broad agreement across the sides of the Parliament for that. My view is that the best way of doing that is within the select committee. I do not want to say that it is undue influence on the part of Fonterra. I mean Fonterra is an organisation that I know relatively well and have been involved with as a member of Parliament in its formation but to suggest that Fonterra dictates the timetable of this Parliament as the Minister who is currently in charge of the bill did in the beginning of this debate I think is wrong. My view is that it is important for this Parliament to take its time to work out the appropriate legislation and not to have its timetable or the details of the legislation dictated by any outside body.  
Now I am sure Fonterra would not want its request to the Government to be characterised as dictatorial but I think in the way that the member moved this motion he at least gave that impression. I think that does not behove him well and it does not behove other Government members well.  
I do not want to go into the principles of the bill but there are issues within the bill that require different constituencies to have their say within the select committee. There is no doubt that around the farm-gate price-setting arrangements there will be a lot of debate amongst farmers. I hope that the select committee will want to work its way around the country not from every village—and it might not even want to meet in Auckland—but sitting in dairy areas and getting the views of the local dairy farmers like the dairy sections of Federated Farmers and farmers more generally. I think there are some principles involved in this bill that are important as far as the farming industry generally going forward is concerned.  
But what I am saying is that for that to happen you need to have a proper period of notice to the select committee—normally 6 weeks—for things to appear in the paper. I think we are just about at the point now where the Office of the Clerk is prepared to support electronic advertising like getting on farmers’ Facebook pages and various arrangements like that. Then we can encourage them to make submissions and as farmers like to do to turn up and make those submissions in person possibly at carefully arranged times. In fact it would probably fit fairly well in a number of areas for the select committee to fly in. Farmers could come in after morning milking although if we are looking at the period now there might be a few cows that are dry. Are they drying off now? 
Hon Member 
: In some areas. 
Hon TREVOR MALLARD 
: In some areas they are beginning to dry off and they might be on once-a-day milking in some areas. But what I am saying Mr Assistant Speaker and you will be much more cognisant of this than I am being the member for a rural area is that the farmers will want to come in and they will want to have their say.  
One of the anxieties that some of us have about the bill is that many of the people who are going to benefit from this are not New Zealand residents. It is one of the debating points for the bill and one of the questions I have is whether there is any plan for the select committee for example to sit in Shanghai. Clearly there is international interest in the ownership of this area. I see the wry smile from Maurice Williamson at the moment and the importance of whether or not the Primary Production Committee should meet in Shanghai could well be influenced by decisions that are before him at the moment. Certainly by the time the committee advertises and has its hearings then those things will be announced—probably Thursday afternoon at 4.30 would I think be my best estimate. But the point I am making is that people who own New Zealand farms and live in Shanghai people who have an interest in the New York Stock Exchange where the units could well be listed and people in London and New York could well have an interest in making submissions to the select committee. It may be that these will be done by videoconference but then people will not be familiar with our way of doing things in New Zealand at select committees. In fact neither London nor New York has a unicameral system nor do the Europeans. People who might be interested in doing the investment will be interested in going to the select committee. That is why I think 6 months is a minimum. I in fact think that to get this right it would be better to take longer. We will be opposing this motion from Nathan Guy.  
EUGENIE SAGE (Green) 
: 
 The Green Party will be opposing the reduction in time for this bill the Dairy Industry Restructuring Amendment Bill because we all know that haste is the enemy of good law. From my short time in this House I know that select committees are the engine room of Parliament. They are the opportunity for the variety of perspectives from the public to be heard for people to put forward suggestions to amend the legislation and the reasons why it needs to be changed and for members to consider those to seek more information on the bill and to seek a good briefing on the bill from officials. This legislation is very complex. It affects a significant portion of our economy as previous members have noted and truncating the time it is before the Primary Production Committee will truncate the opportunity for the public to have its say and to be involved.  
At the last election we had a decline in the number of people casting their vote. For people to have faith in this Parliament for people to have faith in democracy they must be able to have their say. They must be able to put their views clearly and know that they are well considered by members.  
Truncating the select committee process will reduce the opportunity for the committee to travel around New Zealand. It will reduce the time in which the submitters are able to present their views and we know that farmers do tend to get actively engaged in any regulation and will be very interested in this bill. So it is bad law to significantly reduce the time that the select committee and the House have to consider the bill because Fonterra is asking for that. It reduces the confidence that people have in our democracy if we do not allow people a good opportunity to have their say. There are a number of complexities in the bill that merit further consideration detailed consideration by members at the select committee and by members of the public.  
Haste is always the enemy of good law. The Green Party will be voting against this truncation so that we can end up with a bill that is substantially improved from the one that has been introduced. Thank you. 
RICHARD PROSSER (NZ First) 
: 
 I agree with the sentiments of the last three speakers particularly the two extremely erudite speakers from the Labour benches. I do not intend to keep the House anywhere as long as those fine gentlemen other than to say that New Zealand First does oppose the truncation of this process and for the same reasons. In order for participative democracy to be effective it has to be participative and there has to be sufficient time for that process to be gone through.  
It is all very well saying that this period has been cut back from 6 months to 3 months. In real terms it has been cut back to 1 month. This House has an adjournment for most of the rest of this month. Then we have only May for anybody who wishes to make submissions to the Primary Production Committee and appear at hearings before the committee. Plainly that is not going to allow for a range a cross-section of opinions and ideas or for the practicalities for people to organise such things.  
I think it behoves us as a Parliament to pay more than lip-service to the process of democracy and frankly given the contentious nature of this bill and given the vital importance of it to the economy to the industry—and to that industry as part of the economy—I think that truncating the period for submissions to the select committee would be a dereliction of duty on the part of this House. Thank you. 
Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman) 
: 
 In the trustworthy stakes politicians battle for credibility and acknowledgment by the public who too often do no trust what we do or how we do it.  
Hon Maurice Williamson 
: No that’s outrageous! 
Hon DAMIEN O’CONNOR 
: I am the last person—probably that Minister in particular—and my colleagues would back this up who advocates for process. 
Hon Trevor Mallard 
: That’s true. 
Hon DAMIEN O’CONNOR 
: There you are. But I have to say that that is all we have here in this Parliament to ensure fairness and openness to protect us from corruption and to protect us from undue influence. I have to say that I was very concerned when the Minister started to explain why this is a truncated process for what is as my colleagues say one of the most important pieces of legislation this economy has seen for some time the Dairy Industry Restructuring Amendment Bill. If there was ever a suspicion about what is happening in this legislation then the fact that this process has been truncated—shortened—will add suspicion to the minds of the growing number of farmers out there who are wondering what this bill will do.  
One of the issues we have raised of course is that a lot of the detail is unclear. This is enabling legislation so it lays on the table when passed an ability for a cooperative for Fonterra—the biggest company—to proceed with a process basically beyond the control of Parliament. The entity was set up by virtue of legislation because of issues that were raised by my colleagues in the previous debate. It is very important that when we deal with this entity—when we deal with the legislation around it—we do this in a proper way. It is outrageous that Fonterra should be able to say to the Minister and that he should say to the House that we have to rush this through because we have to meet this deadline as though there were some constitutional dilemma. Well there is not. In fact there is still a question over whether anything will proceed from the legislation if indeed it is enabling as we are told.  
The Primary Production Committee has a huge task to analyse the bill to see whether it is enabling or whether it is in fact a bullying piece of legislation—threatening—and the chair of the select committee acknowledges that. I know we are the most efficient select committee in the House. I know that. In fact we do not have too many political debates. But I have to say that we are going to grapple with this piece of legislation given the unknowns around it. The Government has come into this House after there has been much debate about which select committee the bill goes to—and we know that for a fact—and finally the decision because of some argy-bargy within the National Party is that it had better send it to the Primary Production Committee. Then it insults the committee and says that we are not allowed to have the time to consider this properly. That is the committee and we work here! But what about the submitters? What about the 10500 shareholders of this company which wants to make major constitutional change through the enabling legislation that the select committee will hear?  
We are told that we have to do that in a shorter time frame. Well why? June the 1st just happens to coincide with the start of the new dairy season. In fact if you are down in the good island—the South Island—most will be milking until the end of May. So the farmers are not going to be able to physically get to Parliament to submit. A suggestion of my colleague is that we should hop on a bus or hop on a plane and go around the country. That may in fact be the best thing to do. But I would suggest that those with suspicious minds will say that this is being rushed through in the hope that very few farmers will be able to make submissions. The objective is actually to reduce the opportunity to have input into the bill because the ability to debate it in the lead-up to Parliament has been very limited. The constant criticism has been that there has not been detail on the table for farmers to consider. In fact the Fonterra Shareholders’ Council—arguably the most important body to make a submission on this bill—has said it cannot support the bill in its current form. So I am guessing it will have a substantive submission. We will have to chew that over and we are now told that we will have to do that in a shorter time frame.  
I hope that all the farmers all the dairy industry people observing out there—not the investment community but the dairy farmers—are aware now of what is happening in Parliament through a sweet-heart deal between the National Government and the Fonterra board. That is the only way and the only reason that it is being rushed through. Fonterra has said it needs to have this rushed through and the National Government has said that that is fine by it.  
What do the farmers say? What do the growing number of concerned New Zealanders say—those people who understand support the cooperative support the current structure and are very very wary of what is being proposed in this bill? They look offshore and I am sure that for legislation—be it in Ireland be it in Denmark be it in Holland—where there has been demutualisation of cooperatives in the dairy industry those people probably I hope had a reasonable time to submit. But even there with careful consideration although I am not aware of what they were intending farmers—shareholders in that company—have lost control of their entity.  
We have wonderful words from the Minister for Primary Industries and other people in National that they want to keep things intact. It will be a tricky process to get the right wording in the legislation because it will come down to open trading or closed trading of shares. Untradable or tradable—two letters. All of those details—and we know the devil is in the detail—will be assessed by the committee.  
Here is another question I have. Whom will the select committee decide to have as advisers on this? I am guessing it will take us a wee while to decide that and then to contact the people with appropriate skills to come and provide us with objective unbiased advice. Can I flag here and now that I will be very wary of anyone from the Ministry of Agriculture and Forestry coming in given the advice I have read from it. I say that with sadness— 
Hon Trevor Mallard 
: Can I just add a point? They’re about the worst drafters in the Public Service and they tend to take their time. 
Hon DAMIEN O’CONNOR 
: I take that advice with sadness that they are the worst drafters and now that the ministry has the Ministry of Fisheries in there I would have to say that if you look at the history of the fisheries legislation it has just got a hell of a lot worse. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! 
Hon DAMIEN O’CONNOR 
: Bringing it back we are going to have to double- and triple-check every single word in this legislation because if we leave the door open for demutualisation for inappropriate investment and inappropriate pressure then we will lose control of the dairy industry. This is what the bill is about here.  
I have concerns in a whole lot of areas and the fact that this is being pushed and rushed through by the board of Fonterra and by the National Government is alarming. I hope every dairy farmer up and down this country who voted for National gets that message very clearly. I hope they go and knock on the door—there will be a short time frame but there will be time enough between milkings to get in their cars and go into town and hammer on the door—of the National politicians. That is why— 
Hon John Banks 
: Very narrow. 
Hon DAMIEN O’CONNOR 
: It is yes; it is a very narrow door I know. In fact they go through it sideways with one eye on it. Mr Banks they will find your door as well. The process of the select committee is going to be so short and the opportunity for all of those people to make submissions has been shortened so you will probably have a rush in a few weeks of people banging on the door coming in with their gumboots which is what they should do.  
In summary this shortened truncated process— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I am sorry to interrupt the honourable member. His time has expired. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I would like to acknowledge the Hon Damien O’Connor in his leadership on this issue amongst the Labour caucus and I would like to take a call to express my deep disappointment in the process that the House is right now debating. I note that the Government sees fit to override the normal provisions of the Standing Orders in order to rush this crucial legislation the Dairy Industry Restructuring Amendment Bill through the parliamentary process but that it is not important enough for National MPs to take calls. Is that not extraordinary? I hope the public at home are noting this feature.  
I want to begin with a little homily on a closely related—as you will see—matter although in a different industry. In my first term as a backbencher I sat on the Finance and Expenditure Committee and a private bill came before the committee to demutualise the New Zealand Stock Exchange. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! This is a very narrow debate and it is all to do with the report-back time which has been reduced. The member must relate to that. 
Hon DAVID CUNLIFFE 
: I apologise if I did not make the linkage clear. The stock market demutualisation bill had a short report-back time and rather like this bill it was put to the select committee before there was a clear regulatory structure around the demutualisation. On that occasion I felt so strongly about it that I led a backbench revolt against our own Minister— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! This is a very narrow debate. I refer the member to Standing Order 286(3). We are discussing those points. The instruction that we are debating here is that the bill be reported by the select committee in 4 months or less. You cannot go and get involved in anything else. If the member does not bring it back I will terminate the speech. 
Hon DAVID CUNLIFFE 
: I raise a point of order Mr Speaker. I am by analogy going precisely to the issue of the report-back time. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: The member has been speaking for 3 minutes and has not come back to the point that I have made. The member must come back now to what this debate is about. It is a very narrow debate and it is to do with the instruction that the select committee report in 4 months or less. That is what we are debating. That is what the instruction is.  
Hon DAVID CUNLIFFE 
: The point is this. If it was good enough for us to hold up a bill to prevent an undue truncation of the consideration and to guarantee a proper regulatory framework I appeal to members of the National caucus to exercise their conscience and good judgment and do the same with this bill. I appeal to members opposite to stand up to defy the whip and to stand up for future generations of New Zealanders— 
Hon John Banks 
: I raise a point of order Mr Speaker. I think this speaker should be wound up. Standing Order 286(3) is clear. It has nothing to do with National members sitting in the House listening to this debate. It is very tight it is very narrow—it is probably the narrowest tightest procedural debate that we will ever have in this Parliament—and he has not come back to the point. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I thank the member and this will be the last time that I will ask the member to talk specifically on the instruction and the limited provision that it is. Otherwise I will terminate the debate. 
Hon DAVID CUNLIFFE 
: The following are some of the reasons why this House may wish to refuse to grant the motion that is before it. Those reasons with your conscience—those matters are as follows: firstly the importance of Fonterra as the earner of one dollar in five of New Zealand’s export income. Of its status— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Come back to the debate. 
Hon DAVID CUNLIFFE 
: I raise a point of order Mr Speaker. I seek your guidance.  
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I have given my guidance very clearly. We cannot talk about Fonterra its principles or its objects. This is the last time. If the member deviates from what I have already ruled on that is it. 
Hon DAVID CUNLIFFE 
: I raise a point of order Mr Speaker. I am in no way seeking to trifle with your ruling which I accept and partially understand but I do seek your guidance. I seek your guidance because I am unclear how a member can address themselves to the grounds of this motion which is to truncate the normal select committee timetable for this bill around the structure of Fonterra— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! I have heard the member. If the member had been here earlier or had been listening to previous debate there were some very good speeches specifically on the subject and they were very well received. This is the last warning to the member. The member must come back to the instruction—that is the report-back time is 4 months or less. 
Hon DAVID CUNLIFFE 
: The report-back time is too short. The report-back time is too short. The report-back time is too short. The report-back time is too short. The report-back time is too short. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: Order! The member is trifling with the Chair. The debate is terminated. 
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 When we think about why— 
Louise Upston 
: I raise a point of order Mr Speaker. My recollection was that you would terminate the debate. 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: No I would terminate his speech and I have done that. 
GRANT ROBERTSON 
: There has been a history in this House prior to the last 10 years where there was an unlimited time for consideration by select committees of bills. Clearly that could see bills languish for a significant period of time in a select committee without any particular time line or process for them to come back to Parliament. Then about 10 years ago I am informed by colleagues the practice around a 6-month time line was instituted. This is a pragmatic balance between getting bills through and also giving the public and parliamentarians time to look at them. We all know that the standard period of consultation for public submissions is around 6 weeks. That is a reasonable length of time. There are occasions when holiday periods appear and that causes some difficulty within that period of time. But a 6-week period for public submissions to be gathered is regarded as normal practice. So that sets the bare minimum time that is in fact from my perspective acceptable for most pieces of legislation. To have this instruction for there to be only less than 4 months’ scrutiny for a bill means that having got what I suspect on this particular bill the Dairy Industry Restructuring Amendment Bill will be a large number of submissions in a 6-week period the committee will then be heavily restricted in the way that it can address those submissions. We have seen on other bills where there is restricted periods of time for the committee to consider those bills we have seen people reduced to 5 or 10 minutes when they are making a submission on what can be complex legislation. So a 6-month period of time the normal period of time for a piece of legislation gives the committee the ability to both hear from the public and take the advice that they need from the officials who are around them on complex matters. That means often a to-ing and fro-ing about that advice and restricting as the motion does to 4 months or less actually will limit the ability of the committee to properly consider the public submissions properly consider the advice that they are getting from their officials and in the end it does Parliament no service to have a situation where on a complex and important matter a restricted time frame like this is provided. There may be good reason for from time to time truncated select committee processes. But we should move very warily into that— 
Hon Trevor Mallard 
: None has been provided. 
GRANT ROBERTSON 
: —as my colleague Mr Mallard says none has been provided to us in this debate—where we find a good and constructive reason that across the House we can agree would support such as a motion as this to restrict it to 4 months or less. So from my point of view the standard process the idea that we have a 6-month period is one that should be protected where possible. It is in part to protect the rights of the public to be heard properly and there will be significant submissions on this bill as there are on most bills of this nature. By truncating it to less than 4 months I fear we will be doing a disservice not only to ourselves and Parliament but to the industries that are covered by this bill and to the people who will want to make submissions on this bill.  
If the Government wants to put motions like this as it did last week and as it is doing this week it has to provide good reason because on this side of the House we will stand up for a process that has history that is robust enough and long enough for the public to have their say and is robust enough and long enough for parliamentarians to do their job properly in a select committee of analysing submissions analysing evidence analysing advice and then reporting back to this House a bill that is the kind of legislation New Zealanders would expect us to pass.  
We know from experience that that takes for most bills of this type 6 months. It is not less than 4 months. I find the phrasing “less than 4 months” interesting. It is a minimalistic view of the fact that hopefully it might be 2 months or it might be 1 month. The reality is that if we keep it where possible to 6 months committees will work in short order when they know that there is an important issue in place. But by setting an arbitrary time like less than 4 months I believe the Government is doing a disservice to this piece of legislation and a disservice to Parliament. I think it is very important that we have debates like this to let the Government know that if it is going to step outside of normal practice it must provide good reasons for doing so. I think in this case the Government has failed that test. By simply arbitrarily saying “less than 4 months” it is clearly setting up a process here that will limit public submission and that will limit the ability of parliamentarians to give scrutiny to the legislation which is the heart of the select committee process.  
I have been a member in this Parliament as an Opposition member only and I can say that in those select committee processes where they go the full 6-month period of time or at least have that capacity to go that period of time we make better law. That is what I have observed—that we make better law when we allow the select committee process to take its course. We do not set arbitrary limits particularly around legislation where there is a significant amount of public interest where there is a significant amount of submissions and where there are complex matters that will require advice from officials and indeed perhaps from beyond officialdom in the case of this piece of legislation.  
I will not take much more time but I do think it is important to note that this is not a frivolous debate. This is a serious debate about whether or not Parliament should step outside of its normal processes—processes that have been developed over a number of years to ensure the public have their say and to ensure that parliamentarians perform the role that the public expect of us. If we are being expected in this House to deviate from that we need good reasons. We have not been provided with those good reasons. We will debate these motions out because the Government cannot just ride roughshod over the practices of this Parliament. 
LOUISE UPSTON (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 54 
New Zealand Labour 34; Green Party 11; New Zealand First 8; Mana 1. 
Motion agreed to. 
A party vote was called for on the question  
That the Primary Production Committee report finally to the House on or before 1 June 2012. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 54 
New Zealand Labour 34; Green Party 11; New Zealand First 8; Mana 1. 
Motion agreed to. 
Student Loan Scheme Amendment Bill 
Third Reading 
Hon PHIL HEATLEY (Minister of Energy and Resources) 
 on behalf of the Minister of Revenue: I move  
That the Student Loan Scheme Amendment Bill be now read a third time 
. The measures contained in the bill are designed around two principles: that the student loan scheme should be fair and transparent and that borrowers should be responsible and accountable for the repayment of their loan. In relation to the first principle of ensuring fairness across the scheme the bill removes the ability for New Zealand - based borrowers to offset losses against income in order to reduce their liability for student loan repayment purposes. The bill also proposes to extend pay-period assessments to the earnings of all borrowers and remove annual square-up assessments for borrowers’ salary and wage earnings. To maintain fairness borrowers who have significantly overpaid their repayment obligations on a pay-period basis will still be able to apply for a refund whereas those who have significantly underpaid will have catch-up deductions made.  
In relation to the second principle that of encouraging borrowers to take responsibility for their loan repayments from 1 January 2013 the Inland Revenue Department will be able to receive contact details provided to StudyLink by all new loan applicants as a condition of securing a loan. This will help the Inland Revenue Department to maintain contact with borrowers who leave New Zealand to travel overseas or who change addresses frequently. Finally the bill reduces a current repayment overseas holiday provision from 3 years to 1 year. Again this measure is designed to encourage overseas-based borrowers to resume their repayment obligations within a reasonable time frame.  
These are the main features of the Student Loan Scheme Amendment Bill. The measures were part of a suite of changes announced in Budget 2011 to take effect from 1 April this year. Although the general election and resulting lapse of legislation has had the effect of delaying the passage of this and other bills 1 April is the date that employers and the Inland Revenue Department have worked towards for implementing the proposed changes. In the interests of cost-effectiveness for employers and certainty to borrowers 1 April 2012 should therefore remain the date upon which the measures in the bill become effective. For some time now the Inland Revenue Department has been preparing to implement these changes and this will be completed by this weekend—by this weekend.  
As always I am grateful for the efforts of all those who have contributed towards the passage of this bill so far. My thanks go to the officials across several agencies who have collaborated on the policy development work and the drafters who worked on the detail of the draft legislation—thank you very much for working so closely with me and of course with the Hon Peter Dunne. I also want to thank those who made submissions on the bill to improve its application in practice.  
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I think one of the terrible things—I am not going to draw to your attention something that I am not allowed to but can I just ask that as the Minister does it he makes the changes to indicate he is reading it on behalf of someone else.  
The ASSISTANT SPEAKER (Lindsay Tisch) 
: The Minister is making a speech. I called the Hon Phil Heatley to make the speech; I did not call the Hon Peter Dunne or say “speaking on behalf of the Hon Peter Dunne.” The Hon Phil Heatley can continue his speech in the manner to which he has become accustomed.  
Hon PHIL HEATLEY 
: I again reiterate that I thank the officials for working very very closely with me and also with my colleague the Hon Peter Dunne. I also want to thank those who made submissions and I wish to thank the Finance and Expenditure Committee for its consideration of the proposed reforms and its recommendations to improve their overall effect. As it now stands we have another very practical mechanism for achieving greater integrity and transparency across the student loan scheme and it is with great pleasure that I again commend this bill to the House.  
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 For the benefit of those listening the previous speaker was not the Hon Peter Dunne; that was the Hon Phil Heatley. It is perhaps interesting that Mr Dunne did not give that speech given some matters which I will come to shortly about what has previously happened with the matter of the student loan repayment holiday. I just want to pick up on one matter that the Minister mentioned in this speech about the question of exactly when the Student Loan Scheme Amendment Bill was going to be enacted.  
Those listening may not be aware that most of the ideas and changes in this bill were actually part of Budget 2011. So there has been quite a length of time for the Government to get its act together and decide on the changes that it wanted to make. The bill has wended its way through the process and finally found its way back here from the Finance and Expenditure Committee just last week. There was an attempt made by the Government—we quickly did the second reading and the Committee stage—but it did not quite get the third reading through in time. So we now have two retrospective subclauses in the commencement clause in this bill. I think that as a matter of principle it is worth putting on the record that retrospective commencement clauses are perhaps not ideal. I think Mr Williamson would agree with that. Yes he is nodding. They are not ideal in Government. The Government actually should have its act together— 
Hon Maurice Williamson 
: Suboptimal. 
GRANT ROBERTSON 
: —suboptimal indeed—to make sure that it actually gets a bill ready in time.  
So what we now have in the commencement clause is a retrospective subclause. It caused some consternation on this side of the Chamber during the Committee stage when it appeared that it was a retrospective subclause that was going to remove the ability not to charge interest on loans. It turns out that that is to do with the transfer of arrangements between StudyLink and the Inland Revenue Department. It was just a pity that during the Committee stage there was no Government Minister able to actually explain that at the time which perhaps raises some questions about how much the Government members actually knew about the bill. But now as a result of the disorganisation of the National-led Government we have a second retrospective subclause (4) in the commencement and that is stating that “The rest of the Act”—other than the provisions set out in the earlier subclauses—“is deemed to have come into force on 1 April 2012.” an appropriate date some might say; 1 April has obviously passed. And if you look at the Inland Revenue Department’s website you will see that it was expecting the bill to be in place by 1 April. It was telling graduates about what their obligations would be under the clauses of this bill. But the Government in its hopeless organisation of the House has failed to get this bill passed and so has to put a second retrospective subclause into this bill and that does it no credit.  
When we come to the content of the bill itself issues have been traversed in the debate that the main purpose of this bill the substantive part of this bill is to reduce the student loan repayment holiday from 3 years to 1 year. In 2007 as has been previously quoted in debates a person named the Hon Peter Dunne who was then the Minister of Revenue under the Labour Government talked about the fact that the 3-year repayment holiday represented a pragmatic approach to dealing with what we have commonly come to know as the good old Kiwi OE. The interest-free student loan scheme was put into place but it was acknowledged that people would still want to undertake their OE. Most New Zealanders who undertake their OE come home. They undertake their OE to get that experience and want to come back to New Zealand to contribute. Mr Dunne said in 2007: “We needed to take a pragmatic way through this and being someone who places great virtue on pragmatism”—Mr Dunne told the House—“it struck me that the logical course of action was to derive the solution that we have: to extend the holiday period for 3 years recognising the fact that young New Zealanders take that extended period overseas;”. That was a very pragmatic decision. However Mr Dunne has changed his mind 5 years on and is now proposing to reduce that repyament holiday to 1 year. The Labour Party—and indeed the Green Party—proposed amendments in order to keep it at 3 years but we also proposed an amendment to compromise at 2 years. The reason we proposed that amendment was that most New Zealanders—by far the majority of New Zealanders who go overseas to have their overseas experience—go to the United Kingdom and in the United Kingdom they are for the most part eligible for a 2-year visa. So actually this bill runs counter to the reality of what graduates are doing at the end of their degrees.  
It is unfortunate that that pragmatism has been let go but what is more unfortunate is that the advice that Treasury and the Ministry of Education actually gave the Government about this is that the bill is not even going to do the things that the Government would like it to do. Treasury told it that there is “Little evidence that this proposal will improve repayments. It is likely to increase debt held by overseas borrowers discourage them from returning and therefore increase the annual student loans impairment.” So Treasury actually said: “It is not going to do what you think it is going to do.” The Ministry of Education followed that up. It said that “This can be expected to have a negative impact at the margin on borrowers’ decisions regarding whether to return to New Zealand.” and that will result in an ongoing increase in the student loan debt held by the Government of about $12 million each year. So the whole policy is flawed.  
In the Committee stage debate Mr Dunne went through what he considered to be a logical process for why we should not have the 3-year repayment holiday and in doing so he actually created an argument for not having a repayment holiday at all because he wanted borrowers to be treated exactly the same wherever they live. Well if borrowers are going to be treated exactly the same wherever they live then there should be no repayment holiday and frankly actually everybody should be being charged interest or everybody should not be being charged interest. We should not have either of those situations. It is not realistic it is not pragmatic and I think it is really unfortunate that the Government has chosen to do this when there is no real positive outcome for it in terms of the policies that it is trying to achieve. So ignoring the possibility of leaving the repayment holiday at 3 years or indeed the compromise that the Labour Party proposed of 2 years I think it is extremely sad that this Government has done that and it has led to the Labour Party opposing this bill.  
There are other elements of the bill that are OK. I think that they could be helpful in ensuring that we follow up with borrowers overseas. On this side of the House I want to make absolutely clear that whatever concerns at an individual level some of us might have with the student loan scheme once people enter into those loan contracts I do believe they should be paying their loans back and we do need to follow up those people internationally who do not. Some of the changes that are being made in this bill to facilitate that include a much greater role for the contact person who is listed by a borrower when they go overseas. We asked Mr Dunne during the Committee stage of this debate to ensure that with regard to those borrowers who nominate a contact person those contact people are now aware of their increased responsibility because they do have increased responsibilities as a result of the clauses in this bill. We got some assurance about that from Mr Dunne but we certainly were looking for a greater assurance that when people—mainly parents I have to add—become the registered contact person they are aware of what their responsibilities now are. I do hope that the Inland Revenue Department and the Minister follow through on that lest we have some parents getting somewhat surprising letters and phone calls. One thing for instance is that when a contact person moves they now have to let the Inland Revenue Department know that they have moved. I am not sure many people will be aware of that and that is now an obligation in law. So it is actually something that needs to be looked at very closely.  
I regret the fact that the Labour Party has to oppose this bill but we do feel the Government has failed to listen to reason around the student repayment holiday. I would just finish by saying that this bill really does very little in terms of the student loan scheme. The amount of money that will actually be coming back now is so small that it is—what is it—0.12 percent of the nominal loan value. 
Dr David Clark 
: That’s on the optimistic end. 
GRANT ROBERTSON 
: That is the optimistic end Dr Clark tells me. This bill is not actually going to do a lot to reduce student loan debt and unfortunately I think where we are heading with the student loan scheme under this Government is greater restriction on its use. We know that in the Budget we are going to be seeing more changes around student support. The National Party has a policy that says it wants to ensure that students who borrow from the scheme are working towards qualifications that can attract an income that allows them to pay back the loan. That sounds to me like this Government is planning to restrict access to student loans for certain types of courses. That is part of Steven Joyce’s agenda to “dampen down demand for tertiary education”. On this side of the House we want more people in tertiary education. We want more people getting skills and training. Limiting access to the student loan scheme—limiting access to opportunities—is not the path forward. This bill although it tinkers around with the student loan scheme is I fear merely a forerunner to much more significant changes that will be negative for tertiary education and students in New Zealand. 
Hon JOHN BANKS (Minister for Regulatory Reform) 
: 
 I rise to support the Student Loan Scheme Amendment Bill. The ACT Party supports this bill because it is tackling a very real problem. Well it is tackling a very real problem at the margins only. That problem is that not enough graduates are repaying student loan money lent to them by hard-working taxpayers across the country. Last year taxpayers loaned out $762 million more than they got back in repayments. Much of it they will never get back. The same gap is forecast to be $1.1 billion by 2030 if we do not make changes.  
The Ministry of Education calculates that for every $1000 lent over $450 will never come home. As one of my ACT Party predecessors recently wrote the taxpayers would be better off just giving students a $400 loan that they never have to pay back rather than loaning students $1000 under the current scheme. This scheme leaks money like a sieve. It leaks money like a sieve. The sieve is the system by which it is funnelled out to so-called students and the number of students is falling. So in a country that is borrowing to pay the bills—approximately $250 million a week—substantially from the Chinese to pay for the Crown account how can we afford to continue to fund this when it is not actually working? It is not getting more tertiary students into tertiary education.  
This bill is a step in the right direction—and I support my benchmate Peter Dunne in his endeavours—but the real issue is that interest-free loans are a problematic issue for this country. This bill makes only small changes; it does not solve the problem. Someone must stand up in this Parliament and say that we cannot continue to fund these payments to students when it is not working at getting more students into the tertiary sector and many of them are taking out the loans and walking away from them. For every $1000 handed out only $450 will come home.  
Everybody in this House knows that interest on student loans is the emperor’s missing clothing. The Labour Party knows this because in Government in 2005 it moved to introduce interest-free student loans which was the biggest election bribe in history. That is what it was in 2005. This is the biggest election bribe in history. It got the vote. The Minister of Education knows it. I quote from the regulatory impact statement prepared for this bill: “the current Government … does not want to reverse the interest-free student loan policy. This is a significant constraint on the options available [to the current Government] to contain government expenditure and improve the performance of the Scheme.”  
The uptake of loans has increased dramatically following the interest-free loan structure from 56 percent in 2006 to 71 percent in 2009. So the uptake is increasing the number of students in tertiary education is decreasing the number of loans is increasing and the number of repayments is decreasing. We have a bill in Parliament which I support but it tinkers at the margins. And who is earning this money to lend to students? The same farmers who milk cows night and morning on the farms are earning this money to lend to the students who are not necessarily using it for tertiary education but to do all sorts of other stuff when the number of students is decreasing and they are not paying back the loans. These are hard-working taxpayers.  
The Labour Party members of course are apologists for this because they are the people who put in place interest-free student loans and no one else gets it. Graduates shoot through after a world-class education and some do not come back to the country. So I say to the Government good on you for putting in place some structures that are going to deal with some of this. Interest-free student loans are middle-class welfare for middle-class graduates. That is what they are: middle-class welfare for middle-class graduates. They are a back to front Robin Hood policy that steals from the poor to give to the rich—middle-class kids. And the poor—hard-working people up and down the country—are funding this.  
I sum up the ACT Party and this bill. We know that the student loan scheme sieve needs to be plugged and we commend the Minister of Revenue for this attempt. We say good on him. But we also know that the real problem is too much borrowing and not enough repayment. Students are borrowing too much they are not repaying enough they continue to borrow and the number of students in tertiary education continues to decline. And the loans are interest-free. What about the retailers in Nuffield Street in my electorate in Epsom? They do not get interest-free payments. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 Treasury Budget advice has stated that the student loan restrictions passed by the Government over the last 2 years are likely to see 25000 current borrowers lose access to student loans and will likely mean that they cannot afford to study any more.  
I rise to speak following Mr Banks who made a number of observations many of which I would wish to disagree with. I will select a few just to put on the record some concerns about the general direction he would like to take this loans scheme. Mr Banks suggested that loans have been growing and tertiary student numbers have been declining. As far as I am aware there would not be a long-term data set that would indicate that student tertiary numbers were in decline. I am not sure which particular data set he has been reading or perhaps what country he has been living in but perhaps recently— 
Hon David Parker 
: ACT Party pass rates. 
Dr DAVID CLARK 
: The member suggests the ACT Party pass rates have been declining but I cannot comment further on that matter. That may or may not be true. I am also advised that Mr Banks had his pilot’s licence at 16 years of age. I am aware that the student loan restrictions that have now come in have restricted access to loans for training in just that area and there is a deep irony in that.  
Labour will be opposing the Student Loan Scheme Amendment Bill and that is unfortunate. It is because the National Party was unwilling to consider a very reasonable amendment that we put forward to ensure that the student loan repayment holiday remained at 3 years. The current Government wishes to cut that to 1 year. It fits I guess with its general approach which is to further restrict access to loans and to allowances. We have recently heard about thresholds not being adjusted with inflation and this is because its view about this is fundamentally different to ours.  
The Labour Party believes that education should be something that is accessible to all people because for the Labour Party it is about fairness and opportunity. It is about making sure that people have an opportunity to make the best of their talents and are then able to make their best contribution to our society. This is something that benefits all New Zealanders. When people make their best contribution it benefits us socially it benefits us individually and in terms of our own well-being and that of our families and it benefits the economy more widely. There is plenty of evidence that suggests that those who are from less fortunate backgrounds ought to be fully supported into tertiary studies as our country can afford it because the returns to GDP are so strong.  
Unfortunately National does not seem to wish to listen to this logic and over the last couple of years it has made a series of further restrictions to student loan eligibility. That has seen tens of thousands of New Zealanders shut out of higher education and that is a great shame. The unfortunate thing too is that it has declared it is not finished yet. Its leader John Key recently suggested that National would rein in student loans in a big way—that it is not finished yet. He should come clean I think sooner rather than later to let students know just how much further access is going to be restricted for study purposes because people are being shut out of the opportunity of tertiary education and shut out of the opportunity to better themselves and to better their lot for them and their families and for our country as a whole.  
We are particularly concerned as a party about clause 17 of the bill which slashes this student loan repayment holiday. To use an example when one takes out a mortgage and repays the terms of that mortgage it is quite legitimate to go and get another mortgage with a bank and receive similar terms and conditions. The National Party here is putting forward a situation where if you have taken one student repayment holiday on your loan you will not get another. The terms and conditions change. That will adversely affect second-chance learners. I think that is a great shame because second-chance learners are often those who have been through hard times and who have through no fault of their own perhaps not appreciated the opportunities the first time round and are determined to make the best of their opportunities next time round. The more people who are shut out of tertiary education the worse it is for our country.  
It is also true that it will shut off people from taking longer overseas experiences as young people and that will restrict the contacts they can build up during their time overseas. It will also restrict their ability to mature in their particular industries and bring that experience back to New Zealand. Some studies suggest that it is 12 to 18 months on average before a person on an overseas trip finds their niche finds relevant experience in their chosen field and finds an ability to repay their loan balance effectively and also the requisite opportunities to better themselves in order to come home to New Zealand and contribute further. So Labour opposes this cutting of the repayment holiday from 3 years to 1 year. It opposes the restrictions on young New Zealanders and the putting in jeopardy of that overseas experience which is so rich in our cultural imagination and so beneficial to those who undertake it.  
The worst point of all—a point I have not yet made—is that these changes risk forcing New Zealanders not to come back. We already know that many New Zealanders once they incur interest overseas and once it starts getting a wee bit out of hand choose not to come home. We lose the benefits of their education and their experience by making this all too difficult. We should be looking for ways to make it easier for New Zealanders to come back and make their contribution not easier to stay away.  
It is interesting that this repayment holiday proposal has been put forward by Mr Peter Dunne who just 5 years ago had a very different view. To put it on the record I will quote if I may Peter Dunne on his Student Loan Scheme Amendment Bill (No 2) in its Committee stage in March 2007. Mr Dunne said: “The reality they all faced was a very massive debt upon their return to New Zealand which in some cases would be enough for them to make the decision not to come home at all and our country would be the loser. We needed to take a pragmatic way through this and being someone who places great virtue on pragmatism it struck me that the logical course of action was to derive the solution that we have: to extend the holiday period for 3 years recognising the fact that young New Zealanders take that extended period overseas;”.  
Well as we know the Labour Party put forward an amendment to the current proposal to ensure that that 3-year provision stayed in place. We are yet to hear a convincing argument— 
Michael Woodhouse 
: I raise a point of order Mr Speaker. I apologise for interrupting but I do want to remind the speaker with the call of the Speakers’ rulings around referring to amendments put forward in the Committee stage and defeated which is that they should not be referred to in the third reading. I wondered whether he was straying into that area. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Well this is a third reading. It is generally a wrapping up of what has gone on in the Committee and times before. 
Michael Woodhouse 
: I raise a point of order Mr Speaker. I am just aware of Speakers’ ruling 123/1: “On the third reading of a bill a member cannot discuss—… (3) the merits of an amendment proposed by the member and ruled out of order in committee;” and I do fear—[ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! When we have a point of order on the floor it is heard in silence. 
Hon David Parker 
: I raise a point of order Mr Speaker. I think the mistake of the senior whip for the National Party is that the amendment was not ruled out of order but it was voted down. It is a different matter. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Yes I had just noticed that. I would ask the member to continue his speech and just be careful. 
Dr DAVID CLARK 
: Thank you very much Mr Assistant Speaker. We are wrapping up here what has happened through the stages and the general point I am trying to make is that the National Party continues to put barriers in the way of access to tertiary education whereas the Labour Party wishes to make tertiary education more accessible to more people to ensure that we have the kind of social mobility in our society that we would like to have. It is true that we do not have the social mobility that we would desire. We know that the greatest determiner of a tertiary level of success for a student—and studies have shown this—is the mother’s level of education. It dictates how likely a student is to achieve tertiary success. The second biggest determinant is the father’s level of education. Socio-economic status is indeed up there as well but not quite as high. So there are various barriers already in place. Socio-economic status is one of those and it is significant and restricting access to loans and allowances moves in exactly the wrong direction when we are trying to achieve access to tertiary education.  
The worst part about this bill is that Treasury and the Ministry of Education have both said that it is unlikely that the gains expected will be realised in terms of restricting this holiday. It is unlikely that money will be recouped and that the coffers will be the richer for this policy that is being enacted so it is a bit of a farce. We are spending $2.6 million worth of parliamentary time which is what one estimate on this particular bill is and the estimates that the Inland Revenue Department has provided is that it will recoup $14 million for the taxpayer. The Labour Party supports efforts to make sure that those who have debts pay them—make no mistake about that—but these estimates from the Inland Revenue Department are not supported by other departments and it appears that they are based on a best-guess scenario. That is what we were told in the Finance and Expenditure Committee. We were told that there was an element of guesswork in just what would be recouped through these changes to the student loan scheme legislation.  
So I put it to you that there would be better ways of ensuring that we achieved the goal of making sure that people pay their debts. This bill is something that the Labour Party will oppose because we believe in fairness in opportunity and in access to tertiary education. Thank you. 
HOLLY WALKER (Green) 
: 
 I am pleased to take a call at the final stages of the Student Loan Scheme Amendment Bill to once again reiterate the reasons for the Green Party’s opposition to this bill. I am proud to note in fact that the Green Party is the only party that has consistently opposed this bill through all its stages. As I have said in the debates on earlier stages there are some parts of this bill that we can live with including losses from the calculation of income for student loan repayment purposes being excluded and including allowing the Inland Revenue Department to ask for details of a contact person in New Zealand for borrowers overseas. We are comfortable with those provisions in the bill.  
What we cannot support is the reduction of the repayment holiday from 3 years to 1 year. We consider this to be a policy that has been made for ideological reasons in a vacuum of evidence and actually may see borrowers staying overseas and not returning to New Zealand and taking longer to repay their loans which is contrary to the intent of this legislation. We have heard from the Finance and Expenditure Committee submissions and in other stages of debate on this bill that if it saves any money at all which is a guess it will be a mere drop in the bucket of $5 million to $6 million in terms of what is collected from those on a repayment holiday in the context of the total student debt of more than $12 billion and even that as we have heard is guesswork. So we simply cannot support this poor decision-making this poor policy.  
To look at the repayment holiday why we have it and why it is important to keep it at 3 years I want to reiterate the current situation. If a student loan borrower stays in New Zealand they are not charged interest on their student loan and therefore they have got an incentive to stay and work in New Zealand and contribute to New Zealand and we totally support that. Their student loans are repaid automatically via their tax code. If they are travelling or living overseas on their OE they are charged interest but they can take a break from their repayment obligations for up to 3 years and that is the repayment holiday that we are debating tonight.  
We believe that it makes sense for that repayment holiday to be set at 3 years for a number of reasons. The first of which we have just heard from the previous speaker David Clark is that we know from research that it takes about 12 to 18 months for New Zealanders living overseas to set up in the new place where they are living and get established in a job or a career. So constricting it to 1 year will very much constrain the time that those borrowers overseas have; before they have actually even started work they may have to start making repayments on their loans.  
We also know from research by the Kiwi Expat Association or KEA that the average New Zealander is away on their overseas experience their OE for 3 to 5 years so it seems entirely consistent with that 3-year average for the repayment holiday on the loan to be 3 years. Furthermore we know and it is a contribution that has been made a number of times in this House by the Hon Nanaia Mahuta that in a number of the countries where it is common for New Zealanders to go on their overseas experiences they have working holiday visas that are set typically at about 2 years. So again it makes sense to be consistent with the provisions that govern people’s behaviour while they are living overseas that this should be at least aligned with the provisions of the working holiday visas.  
It is also important to have a repayment holiday because as we have heard as we have seen at the select committee and as has been discussed in previous stages the defaults and arrears late payment fees and interests that are charged on the loans of borrowers overseas can escalate to the point where their loan balance has become two to three times the original principal that they took out on their student loan. That gives people a very real disincentive if they are living overseas and they are straddled with a student debt that has now ballooned out to two to three times what they originally borrowed to return to New Zealand and repay that loan.  
If they do not return to New Zealand that is bad. It is bad for the country because the debt does not get repaid and it is also bad for the country because we do not get back our graduates whom we so urgently need and so many of whom we know are moving overseas and staying there for a long time.  
All these things I have just outlined are the reasons that were given by the very same Minister who is sponsoring this legislation the Hon Peter Dunne for introducing the 3-year repayment holiday in the first place back in 2007. I have posed the question a number of times and it has still not been answered of what has changed since 2007 that makes those reasons any less valid than they were then. Actually I would say that nothing has changed except the fact that even more graduates are going overseas and never coming back which would make those reasons even more valid than they were.  
There has also barely been enough time since the introduction of the 3-year repayment holiday for any research to be done to assess the impact that it has on borrowers’ behaviour. We can see from the select committee report that this was acknowledged. It was acknowledged in the hearing of evidence at the select committee that there has not been enough empirical evidence and very limited modelling of the impact of the 3-year repayment holiday on borrowers’ behaviour. So before we even know what impact we are having we are legislating to change it and it just seems like bad lawmaking to me to do so in such a vacuum of evidence.  
In fact it is not an entire vacuum of evidence though because the evidence we do have from the Ministry of Education and from Treasury is that actually it might discourage borrowers from returning to New Zealand because of the reasons mentioned. The way that late payments and arrears build up for borrowers overseas can actually create a real disincentive for them to return to New Zealand and the Ministry of Education said it could have a real impact at the margins on borrowers’ behaviour in terms of how quickly they repay their loans and how soon they return to New Zealand. All of this as I mentioned is in the context of more New Zealanders moving overseas than ever before.  
So it seems to the Green Party that this change makes absolutely no sense and is supported by no evidence. That is why I moved an amendment in the Committee stage. It was not ruled out of order; it was voted down unfortunately. But I moved an amendment to keep the repayment holiday at 3 years because of the lack of evidence that has been provided for any reason for the change and the very real concerns that in fact it would make things worse. I was pleased to see that Labour moved similar amendments and indeed I was very pleased to see that Labour has changed its stance on this bill to oppose it after the Committee stage because as Labour members have argued their concerns about the repayment holiday are significant as well.  
I want to briefly address the issue of retrospectivity which I think is quite concerning in relation to this bill. As I am someone who has been following these changes closely you can probably imagine my surprise knowing that I was due to debate the third reading of this bill in the House this week to open the  
Dominion Post  
yesterday and read on page 5 that the changes that this bill makes have already come into effect. Quoting an official from the Inland Revenue Department— 
Todd McClay 
: You can’t believe everything you read. 
HOLLY WALKER 
: Well you would not believe it if you had any faith in parliamentary democracy— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! When the member uses the word “you” you bring the Speaker into the debate. 
HOLLY WALKER 
: Mr Assistant Speaker you would not believe it either if you had any faith in parliamentary democracy that a bill that has not yet passed is being reported in the media as having come into effect. I know that the Minister of Revenue moved an amendment during the Committee stage to make parts of the bill retrospective—those parts that were not already retrospective in fact—and I queried that at the time but what I would like to put on record is that surely even a retrospective clause cannot be deemed to have come into effect until after the legislation has passed.  
I think we deserve an answer from the Minister or his officials about why Inland Revenue Department officials were quoted in the newspaper yesterday as saying that the changes had come into effect when the bill has not finished going through Parliament. I see that as a serious abuse of process and as one commentator called it it is “Legislating by press release”. It is disrespectful of this House and its processes and I think the Minister owes the House an explanation about that.  
So what we have seen in this bill is a shoddy process a rushed process a vacuum of evidence a poor decision unsupported by evidence and even if it has the effect that the Government thinks it might at the very very best guess it might save $5 million to $6 million a year in the context of a $12 billion student debt. It is shoddy lawmaking a shoddy policy and a shoddy process. All that I can think of to explain it is that this is consistent with the Prime Minister’s design to want to rein in student loans in a big way based not on what is best for students but on any way to clamp down on access to student loans without touching interest-free student loans because he is scared to go there politically.  
We have already heard about this freeze on parental income thresholds for the student allowance. That does not bode well and nor does this bill and I shudder to think what changes we are about to see in the student loans and allowance space in the coming months. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I call the next member can I just advise members that every time a member uses the expression “you” the member is referring to the Chair. The member must refer to the Minister or to another member as “the Minister” or “that member” which is in the third person. I suggest that members have a look at Standing Order 104. You cannot bring the Speaker into the debate. 
DAVID BENNETT (National—Hamilton East) 
: 
 It is a pleasure to speak in regard to the Student Loan Scheme Amendment Bill. As for the Labour Party there and its last member of the student loan scheme Chris Hipkins I ask whether he has repaid his student loan. 
Chris Hipkins 
: I have.  
DAVID BENNETT 
: You have. Good on you! 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
DAVID BENNETT 
: When we look at this bill I think that the big part of it is that it brings in the requirement to have a New Zealand - based contact person. That is important because it gives a point of contact for the Inland Revenue Department. The contact person regime in itself does not mean that there will necessarily be a repayment but it is one of those things that once set in motion will lead to a situation where people actually follow the rules. 
Dr David Clark 
: Tinkering! 
DAVID BENNETT 
: Contrary to the view of the new member from Dunedin most citizens in New Zealand do their best to engage and be successful and deal with issues especially their obligations to the Inland Revenue Department. If they have a contact person who gives them a reminder of those obligations they are willing to comply with them and that will lead to greater enhancement of the system.  
I think it is a bit strange that the Labour Party and the Green Party have such a problem with this bill when really what it is doing is trying to make sure that those people who have used the system and have benefited from it actually repay that money so that somebody else can get that benefit and somebody else can use that Government funding for their education purposes. It seems a bit unfair that the Opposition is against people getting an education and is against people having that opportunity. Labour members would rather think it is just for them—that once they have done it that is it. They think it is all about them and not for the best interests of the community.  
This is a bill that will encourage repayment and encouraging repayment is good for education because it increases the opportunity for other people to get education and those opportunities. When we remember the student loan scheme we must recall how Labour put a cap on the number of students in our system. By bringing that interest-free student loan scheme in it effectively capped the number of New Zealanders who could get that education opportunity. That cap is a limitation yet in this House tonight we hear comments against this bill which actually will be a way that we can get more money coming into the system so that we can get more people going through rather than having the capping arrangement which the Labour Party is fond of in regard of students because Labour wants only some people to get an education not everybody. Thank you.  
TRACEY MARTIN (NZ First) 
: 
 Kia ora Mr Speaker. Thank you very much. I rise on behalf of New Zealand First to speak in favour of the Student Loan Scheme Amendment Bill. I do so because there is common sense in this bill. This is about debt reduction. This is about people actually facing their responsibilities no matter where they are on the planet and saying: “We owe this money to the New Zealand public and we will repay it.” However it disappoints us that there are wider mechanisms—and for a short moment there I was very afraid that I was going to actually agree with the Hon John Banks but I am pleased to say that no I do not—that could be used to actually reduce the $12 billion worth of student debt here and they are not all punitive.  
However to start with let us just take the repayment holiday in this bill. I want to address some of the comments that my colleague the member from the Green Party has made. Let us not forget that the New Zealand overseas-based borrowers in the current repayment holiday do not get an interest-free period; they just do not have to make a repayment. But New Zealand graduates who stay in New Zealand do not get the benefit of any break from their repayments. If they are working and they are earning above the threshold no matter what happens in their daily lives they cannot apply for a break from that repayment whether it be 1 year or whether it be 3 years. Considering that 56 percent of the people affected by the student loan scheme are women I have already outlined instances where we believe that it would be beneficial for the repayment holiday to apply to New Zealand - based graduates just as much as it applies to overseas-based graduates.  
I will note the other part of the bill that we find very interesting and I have to say that it is the bit that surprises me so let us just touch on that first. I am new here and I realise that I am new here but I certainly did not come into the House thinking that we would pass legislation after it had already been implemented by a Government department. I find that particularly interesting and somewhat disturbing. I hope it is an anomaly but I am picking up that possibly there is a trend here. It is certainly something that New Zealand First will be keeping its eye on. We seem to be pushing through legislation in this House to meet predetermined time lines that suit other people and we heard about Fonterra earlier this evening.  
I want to quote the Hon Maurice Williamson from the second reading of this bill and at that time he said: “The main purpose of this bill is to improve efficiency and the fairness of the student loan scheme”. I have just touched on the fact that actually overseas-based New Zealand graduates have something that New Zealanders who stay here and work here and keep their skills here do not get. But the next part is around the situation where the repayment holiday is attached to the individual. Again I touched on that at the Committee stage of this bill. New Zealand First believes that the repayment holiday should be attached to the loan. What happens if you gain the loan and you do what we ask of you which is to repay it and if you have had to take a repayment holiday during that period because of your circumstances? I used the example of a woman in her 20s who has gone and got a student loan has graduated has gone and got employment has got married has had her first child has had a year’s break there while the new family sorts out its finances—she does not stop working necessarily; they just need to re-sort their finances—and over time after that year’s repayment holiday she picks up comes back and pays off that loan. It is quite common in this day and age that a woman in her 40s who has raised her family goes back for further or higher education to improve her own circumstances the circumstances of her family or whatever. Let us say that that woman in her 40s has now got a student loan. She is back out working but perhaps her husband gets ill. Perhaps she needs to take a repayment holiday again. She has proved herself to be a good debtor. She has already proved herself to be a responsible New Zealand citizen. Surely by paying off that loan and proving herself to us she should have the benefit of being able to in those circumstances take another repayment holiday. I believe that this legislation will be back in the House. I believe that there will be further amendments and at that time New Zealand First will actually cast its eye and put forward some contributions towards those sorts of thoughts.  
The other part we need to remember is that there is $12 billion worth of student debt. My understanding is that it is not all overdue debt and it is not all debt of people who happen to be overseas. It is just $12 billion worth of debt in total. If this bill and the amendments to this bill had considered how we could reduce that debt in a wider context and if it had looked at the New Zealand First dollar for dollar debt repayment scheme that would have brought in $6 billion—the same amount of money we are selling assets for; the same amount of money between $5 billion and $7 billion we will get by putting up for sale our State-owned assets. If the New Zealand First dollar for dollar debt reduction scheme was applied now to this $12 billion worth of debt we could keep our power stations. Not only that we would have those skills back here in New Zealand. They would be retained in New Zealand because to gain that dollar for dollar student reduction those graduates keep their skills here. They work for this country they pay PAYE they pay GST they pay fringe benefit tax if they are lucky enough to get a car in their job and they pay resident withholding tax if they are lucky enough to save any money.  
New Zealand First is supporting this bill because it is a bill of responsibility that all people with debt must face. But we are saddened that it has not thought wider. It is a shame we were not here to participate in the select committee process because we could have brought these concepts and possibly improved this amendment bill at that time. But for now we support this responsible bill and we will be looking to the bill in the future. Thank you. 
TODD McCLAY (National—Rotorua) 
: 
 It gives me pleasure to rise and speak on the Student Loan Scheme Amendment Bill and a very important piece of legislation it is. I thank the last speaker from the New Zealand First Party Tracey Martin for confirming that her party will be supporting this bill. I believe it is an important decision that it has made. Why is it important? The sum of $1.6 billion was lent by the Government in student loans in 2010-11 and $690 million was repaid in that same period of time. That means the taxpayer has provided an additional subsidy of $940 million during that time.  
We talk about this as Government money but we must remind ourselves in this House that it is not always Government money that is being offered or lent to New Zealand students. It is money that has been provided by hard-working New Zealanders by businesses by taxpayers and we are providing that to people so they can have a brighter future: work hard in universities polytechnics and technical institutes around New Zealand so they can raise the level of skill within the workforce and then go out and improve the New Zealand economy through their hard work. But in so doing they have obligations back to the taxpayer and I believe that this piece of legislation helps them with those obligations.  
The sum of 54.75c per dollar is lent and the Government writes down 45.25c of that. In essence what that means is that hard-working New Zealanders who pay their tax are not seeing the return that they should see on this investment in New Zealanders and their education.  
As of 30 June last year borrowers overseas represented 15 percent of all borrowers; 50 percent of those were in default and 70 percent of the amount they owed was overdue. It is important that New Zealanders have a chance to go overseas—to travel to gain experience to work. As with many members of the House I too spent some time overseas working. But when I was overseas I had an obligation to a bank through a loan. I had a mortgage when I was there and never once did the bank give me a holiday. I entered into a relationship a contract with the bank and every day I had to work hard to make sure that I met that obligation and paid it back.  
So in this instance we are saying to New Zealanders young or old that if they want to travel that is a good thing and we recommend that they do. They have a year to travel and if they return home they will then meet their obligation and if they are overseas for more than a year they must remember the obligation they have—not to the Government not to this House but to the New Zealand taxpayer the mums and dads who are working hard and providing their taxes to the Government to lend to students so that they can better their lives.  
I think this bill does not ask too much. It merely reminds them of their obligation and helps them with that. I look forward to voting for this bill shortly. I commend the bill to the House. Thank you. 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
: 
 I am pleased to be able to make a contribution in the third reading debate on the Student Loan Scheme Amendment Bill. I want to make it very clear to those people listening that Labour supports the obligation of borrowers to pay back debt in the form of a student loan for their education. But it could be done better and we were simply making that point. When we look at this particular amendment bill on the back of piecemeal changes by National that have limited access to student loans we are simply saying that the signals are all in the wrong places. At the time of a recession it makes absolutely no sense to cap places in our tertiary institutions. We should be signalling that we want a highly skilled highly valued highly paid and productive workforce and now during this period of recession is the time to train and upskill. Those are the types of signals that are absolutely necessary.  
If you listened to members of the Government you would be quite easily forgiven for thinking that those people who have student loans do not want to work. But in fact what I find the most demoralising when I go into my local Work and Income office is story after story of highly skilled people graduates who are looking for work so that they can pay off their student loan but simply cannot find work. This is demoralising because the Government alongside its solution for generating a highly skilled highly valued and highly paid workforce should be also presenting a plan for jobs and it simply cannot do that. In order for students to repay debt they have to have employment and there should be an active Government principle by which it is talking about how regional development is occurring and talking about where the jobs are and those highly skilled graduates that we currently have in the workforce should be able to capture that job market but they simply cannot.  
If we think about education purely in terms of debt then we are missing the point of investing in education. Yes there is $12 billion worth of debt out there but the human capital and the lost potential of that capital not returning its skill set back to the New Zealand economy in some shape or form is a far greater debt I would say. We cannot leave that human potential to languish. It is a very important part of what will make New Zealand a thriving country going forward.  
But the signals are in the wrong place. I want to highlight that because contributions before mine have highlighted the lack of access for a number of groups that one would think under a scheme to encourage repayment would bring a greater return—for example if mature students had access to student loans. Many mature students do know what it is like to have a mortgage. They do know what it is like to balance the budget. They do know the importance of a savings record and therefore they have a debt reduction payment plan. But the National Government has limited the access of mature students transitioning from one career to another to student loans. The signal is in the wrong place.  
The other signal that is in the wrong place concerns repayments for those borrowers who go overseas. We have had this debate quite clearly in the House through the second reading and the Committee stage and this is the point where Labour really started to think again about its position. We do want those students who have got a qualification to go and have their OE and to experience life overseas. It is funny how when you go overseas you do appreciate your own country more. Too few New Zealanders go overseas to be able to have that experience.  
We thought that actually when you look at the repayment holiday it was an arbitrary decision around the setting of the 3-year period so why not align it to 2 years when most working holidays are kind of for that duration? We thought it was a common-sense approach. It was certainly supported by and large by current practice but the Government failed to recognise its virtues and did not support that particular amendment put forward by Labour. We thought it was a practical common-sense amendment that sent the right signals to those students travelling overseas to go and have their experience over there enjoy what there is to offer over there but come back. Having that repayment period looked at in the kind of way that Labour was proposing we thought sent the right signal for the right reason. We do want our skilled people to return to Aotearoa New Zealand so that they can make a contribution in this country.  
I also heard contributions in a very loose sense around the profile of the student borrower. The New Zealand Union of Students’ Associations put out a report some years ago that showed that the average profile was a 35-year-old Polynesian woman. In that regard to the extent that the repayment of student loans is something that this particular bill focuses on I would think—and I would tend to align myself with the comments made by New Zealand First—that if you are going to give a repayment holiday consideration certainly should be given to that same provision in the spirit of fairness applying here in New Zealand. Because for women in particular when they go and study simple things—by way of having children by way of putting their own needs aside for their family’s needs—present very real challenges for women who are taking up tertiary study and may need support such as that. For that reason alone I certainly support the direction of thinking that could be pursued going forward.  
It is also a really important point because at a time when we do know that this is the average profile of students going into tertiary study what did National do? It cut the training incentive allowance which allowed access for a contribution towards higher-level courses. So there are more women going into debt because of actions that the Government has taken to remove the training incentive allowance. That has increased debt for many women and it has actually made it a higher barrier for women to get a higher qualification. Again it sends the signal in the wrong place. It will not lead to a higher skilled and more productive economy. It will just put barriers up.  
There was some debate in the House also on the contact person provision. I want to limit I guess my particular focus to contact persons of those currently with student loans—those parents who might have put their names down and said yes they would be the contact person. This bill will present new obligations. I asked for clarification during the Committee stage about what the Government will do to ensure that those contact persons of existing borrowers are informed of their new obligations and whether they will have the opportunity to opt out. They may be obligations going forward that they had not quite considered. Let us face it: sometimes when your child goes away and leaves home you generally do not know what they are up to. It is just what happens.  
Finally I would really like to impress on this House and on those listening that Labour supports the intent of the bill and the repayment obligations of borrowers. We just think it can be done in a better way. By and large these amendments in this particular bill against the backdrop and panacea of piecemeal changes that the Government has made in the space of tertiary education which certainly send the wrong signals do not support what Labour believes is the future for New Zealand. We think that is a highly skilled high-value productive workforce of people who can contribute to making our country a great thriving nation. On the basis of the repayment holiday provisions that were not supported by National Labour will oppose this bill. 
MAGGIE BARRY (National—North Shore) 
: 
 I rise to speak to the third reading of the Student Loan Scheme Amendment Bill with great pleasure. As a member of the Local Government and Environment Committee I have heard some of the issues that other people in the committee have had against this bill. I would like to remind them that New Zealand has one of the most generous student loan schemes in the world and although we want to keep it that way we also need to ensure that students know what they are getting into when they take up a loan. If you have a loan it is exactly that. It is something that you have to pay back. I think that is something that the Opposition has often lost sight of. It is a loan; it is not a gift. In an effort to make our very generous student loan scheme more sustainable and not to have to borrow more as others would want to do we need to be able to be pragmatic and to look at how to fund it as a nation. We have introduced a number of performance criteria. They have been focused on targeting the money towards those who need it and are importantly prepared to pay it back whether they go overseas or not. These are very fair and very reasonable changes.  
A lot has been made of this idea of having the reduction in the amount of time from 3 years to 1 year for a repayment holiday for students overseas. I think that is fair and reasonable and I utterly support it but a lot of time has been spent on that. So let us look at some of the other changes that have been made. The basic criteria for eligibility for the student loan have been tightened up in a number of ways which I think make the scheme more sustainable and fairer. So we are requiring for example students to pass 50 percent of their courses over 2 years to continue borrowing. What is wrong with that? If you are a failed student why should you continue to get money for something that you are just not actually delivering and performing on? 
I think that limiting borrowing to 7 full-time studying years for undergraduate degrees is only fair. How long does it take to get a 3-year degree? If you are up there at 7 years it may be OK for the other side of the House who think that they can stay on benefits and allowances for the rest of their adult lives but it is not actually the way of the future for this nation. It is unsustainable. 
We have also introduced administration fees. They cover more of the administration costs of the loan. So you borrow you pay for it. It is not as bad as all that. A voluntary repayment bonus I think is an excellent thing to do. 
I am all in favour of people having a nominated contact person. The previous speaker spoke of the fact that a parent might agree to let their child persuade them to be the person who can be contacted if the loan is in default and that the parent might want to get out of that obligation because it might be onerous. I think that is a crock frankly. I think that basically if you stand as somebody who is able to be a contact person for someone you should do that. Let us face it: even if the people on the other side of the Chamber were in default of their loans and had skived off and not bothered to pay them back a call from the mother or the father or someone whom they had put forward as their mentor— 
Todd McClay 
: An auntie. 
MAGGIE BARRY 
: —or an auntie—could in fact be the spur that they need to do the right thing and be honest and actually repay the money that they need to pay. That is what it comes down to—personal responsibility. Some of course on the other side of the House shirk that on every level. But the Inland Revenue Department and StudyLink having access to a compulsory contact person is I think a very fair thing. It will counter the problems that have occurred when you are trying to trace these people. The Inland Revenue Department holds overseas addresses for less than a quarter of the estimated 91000 overseas-based borrowers. In addition to that it also holds details for nominated people for some borrowers overseas. This is very fair. This is not an onerous responsibility. It is the Inland Revenue Department getting in touch with you and saying: “Look we’ve lost contact with this person. They have given us a fake address or they have moved on from there. We need to get in touch with them to remind them of their obligations.” A loan is a loan; it is not a gift. This is something that has been missed on a number of occasions from the questions that have been put when we have been in the select committee. 
I again remind the people on the opposing side that this is a very important thing. A break from compulsory repayments is a privilege rather than a right. Todd McClay has spoken already about the statistics around this. The number of people who actually do not bother to pay back their loan is mostly the borrowers overseas. Fifty percent of those who are overseas are in default. Seventy percent of the amounts overdue are from borrowers overseas. We need to bring these people back into line. We need to have a compulsory ability to get in touch with the people who are the ones who hold the addresses. These are not unfair and unreasonable demands at all. Although opposers might say that we are in a situation where we are trying to make it difficult for people to get an education it is actually anything but. They are missing the point but there you go. That is what happens in a democracy. We are prepared to listen to their viewpoints but we are determined to proceed on the track of making the amendments to the student loan scheme go through in the way that they have. The changes that have been made are full and fair and not too difficult to follow. So I rise happily to support the third reading of the Student Loan Scheme Amendment Bill. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 When Maggie Barry started speaking I thought I had entered a parallel universe in which all of the legislation to do with student loans was considered by the Local Government and Environment Committee. I am not entirely sure what is going on over there. As far as I know the Student Loan Scheme Amendment Bill has never been to the Local Government and Environment Committee. Perhaps they have a little bit too much Roundup going on over there.  
I think that the language Maggie Barry was using was quite revealing. When National members start talking about education as a privilege I think they start to reveal their true colours and what they really believe about education which is that it is a privilege. That is what National is all about. National is the party of privilege. It is the party that stands for those who can afford things and for those who have the money but not for those who are trying to work their way up the ladder of opportunity. In fact this Government is all about pulling the ladder up. Once it has got to the top it will pull the ladder up and rob those who come behind it of that opportunity.  
This student loan scheme is incredibly important in the sense that it offers many people who would not otherwise be able to participate in tertiary education the opportunity to do so. It means that cost is not a barrier. However we should never forget that the student loan scheme was put in place ultimately because an intergenerational compact was broken down whereby previous generations who had their tertiary education for free decided to start charging future generations for that. Under the last Labour Government we saw a lot of progress towards turning that clock back a little bit. We saw the interest-free student loans coming in we saw an increase in student allowances and we saw a cap on tertiary tuition fees—a number of things all designed to reduce the overall cost of participating in tertiary education.  
If we want students—graduates—repaying their loans faster which this bill purports to do one of the things we should be thinking about is how we stop them borrowing so much in the first place. Unfortunately under this Government they are going the other way. We saw just this week the Government announcing that it is not going to increase the parental income thresholds for student allowances in line with inflation. It is an arbitrary cut to the number of students who can get a student allowance. We are going to see more of that under this National Government. That is going to result in more borrowing. It is not going to result in less borrowing; it is going to result in more borrowing. If we want less student loan debt and students repaying their loans faster then avoiding their borrowing money in the first place is a really important way of doing that and unfortunately this Government does not want to go anywhere near that.  
There are some sensible provisions in this bill that the Labour Party supports and we canvassed those in the Committee stage. I am going to focus only on the area where we really disagree with the Government and that is to do with the repayment holiday for those who travel overseas. I think the ground has been well covered on this particular issue. It was a very sensible decision to introduce a repayment holiday when interest-free student loans were introduced in the first place to allow people who were travelling overseas doing their OE to not have to make repayments on their loans. What we saw over a period of time was people travelling overseas racking up huge penalties on their loans while they were away which acted as a huge disincentive for them to return home. Initially that repayment holiday was set at 1 year. Some actually argued that that was probably too much and that in fact it should have been shorter than that.  
I know there was a lot of internal debate within the then Labour Government about what the appropriate time frame was. Michael Cullen who was the Minister in charge of implementing the scheme at the time set the repayment holiday at 1 year. He was right to set it at 1 year at the time. In fact it probably was not long enough; therefore a pragmatic decision was made to increase it to 3 years. We know it was a pragmatic decision because “Mr Pragmatic” himself Mr Peter Dunne argued in favour of that as the Minister of Revenue. In fact I think he sponsored the bill to increase the repayment holiday from 1 year to 3 years. He waxed lyrical about how he was all about pragmatism and how this was such a good thing yet now here we are with another bill sponsored by Peter Dunne that actually reverses it which I think just goes to illustrate that Peter Dunne’s view of pragmatism is whatever it takes to keep him his ministerial job. It was pragmatic for him to support this amendment today because pragmatically that is what he has to do to remain a Minister in this Government. Common sense is basically what is required in order for Peter Dunne to stay a Minister. That seems to be the acid test for Peter Dunne these days: “Will I still get to keep my ministerial job if I vote for it? Yes I will. Oh gosh that must be common sense. I’m going to vote in favour of it even if it was common sense when I voted against it last time.”  
It is a bad provision in the bill and that is the reason why the Labour Party is going to be voting against this piece of legislation. 
GARETH HUGHES (Green) 
: 
 Kia ora. Nga mihi nui ki a koutou. It is great to rise to take a call on the third reading of this bill the Student Loan Scheme Amendment Bill which the Greens will be opposing. We would like to thank the officials thank the submitters and I guess in this very short call round up some of the debate.  
The bill does essentially three things. Firstly it requires you to have a contact person for your student loan. I do not think anyone in the country let alone this Parliament could disagree with this common-sense move. It changes some loopholes around the New Zealand - based borrowers from excluding losses. Again we support closing this loophole. But the third thing and it is a point that I have not heard being raised in the debate by the National members—of course they just want to focus on the non-controversial parts—is reducing the repayment holiday that borrowers overseas can apply for down from 3 years to 1 year. That is why this bill really more accurately should be called the “Kiwis Moving Overseas Bill”.  
We know that at the moment we have record numbers of Kiwis moving overseas. We have a deficit in our net migration figures so we have more Kiwis leaving than people immigrating. Despite members opposite when in Opposition trumpeting on about this issue now we have got more Kiwis going overseas and what members opposite want to do is put legislation in place that will see more Kiwis move overseas and more Kiwis stay overseas.  
At the moment those students who have graduated—they have got a student loan and they move overseas; they are already being charged interest—can apply for the repayment holiday which as we have heard in the debate Peter Dunne introduced as a very pragmatic measure. But what we are going to see is this repayment holiday being reduced from 3 years to 1 year. We know that the average is between 3 to 5 years not 1 year and we know it takes 18 months for the average Kiwi to get set up in an overseas country start earning and start repaying their student loan.  
We are going to see student loans balloon. That is what we heard from Treasury and that is what we heard from the Ministry of Education. We could see loans balloon to two to three times their original size because when you add up the interest when you add up the fees and when you add up the penalties we are going to see these massive loans that sometimes hit the headlines of our newspapers. Those Kiwis who have these massive loans are not going to come home. They are going to stay and it is going to worsen our student loan balance book. It is going to worsen the country and our economy going forward.  
We heard from Holly Walker about the fiasco about the law coming into effect before this Parliament has even passed the third reading and we have seen the Royal assent given. There was a precedent I found in my researching the Maui’s dolphin question today. In fact Prime Minister Muldoon was taken to court in 1974 when he prematurely before legislation had passed announced changes to the superannuation legislation. He was taken to court. What we know is that the law is the law until the law is changed. The law has not changed and the Inland Revenue Department is absolutely inappropriate. It is a shoddy process for it to be advertising that the law has changed when the law has not changed. In fact it is illegal.  
We would like to welcome Labour’s change of heart on this bill. Unfortunately we did not see the amendment to reduce the 3 years to 1 year changed back to 3 years. That was not successful but good on Labour for changing the vote. But what we are seeing in this debate with this tinkering around the edges in this bill which will only see more Kiwis go overseas and stay overseas is that National has a fundamental hatred for interest-free student loans but with the fundamental popularity of interest-free student loans in New Zealand it cannot get rid of them. The politics is too strong. So what National is trying to do is water it down around the edges along with the other changes to the sector which have seen tertiary education become less accessible less affordable and in some cases downright impossible as it slams the door to students with its capped enrolment and as it slams the door to access to student loans for the over-55s.  
This Government is doing everything it possibly can to reduce the numbers. Basically the principle is that the Government does not mind those higher-income Kiwis whom they are representing in this House getting an education because their families can afford it. The gap between the rich and the poor has grown under National. Those lower-income Kiwis have to fend for themselves. If they are on Struggle Street they are going to stay on Struggle Street because this Government is not doing enough to help them and this bill is just another measure to make it harder for Kiwis to get an education.  
 We could have gone down a different track. We could have looked at ways of paying off debt for those Kiwis who stay in New Zealand—I know New Zealand First has a policy like the Greens’ there—and we could have actually put some carrots instead of these punitive sticks in front of New Zealanders. We could have even looked at agreements with overseas countries like the UK or Australia where we could see taxes paid by Kiwis working in those countries paying off their student loans. Why are we not sending delegations to those Governments to try to negotiate those points? That would be better for the country better for the economy and better for students. It is a pity that the Government has put its focus on this bill. 
A party vote was called for on the question  
That the Student Loan Scheme Amendment Bill be now read a third time. 
Ayes 72 
New Zealand National 59; New Zealand First 8; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 45 
New Zealand Labour 34; Green Party 10; Mana 1. 
Bill read a third time. 
Financial Review Debate 
In Committee 
The CHAIRPERSON (Lindsay Tisch) 
: The House is in Committee on the Appropriation (2010/11 Financial Review) Bill. The financial review debate is the Committee stage of the Appropriation (2010/11 Financial Review) Bill. The time allocated for this debate is 4 hours and comprises two distinct elements. The first is the debate on the annual financial statements of the Government as reported on by the Finance and Expenditure Committee. Once this has concluded the Committee debates individual financial reviews of departments Offices of Parliament and non-departmental appropriations as reported on by the select committees. The debate on the Government’s financial position may be a fairly wide-ranging one but the debates on the individual financial reviews of the departments Offices of Parliament and non-departmental appropriations should be relevant to their performance in the 2010-11 financial year and their current operations.  
The compendium of financial reviews and non-departmental appropriations available for debate is on the Table. A member may have no more than two calls on each financial review. At the conclusion of the debate a single question is put on the provisions of the bill. There is no amendment to or debate on the question. The Chairperson then reports the bill to the House and it is set down for third reading forthwith. There is no debate on the third reading. 
The Treasury and the financial statements of the Government of New Zealand for the year ended 30 June 2011  
Hon DAVID PARKER (Labour) 
: 
 That is the first 10-minute call I have heard from the Chair for a while. I take a call referring to page 376 of the reports of select committees on the financial reviews which does deal with Treasury and I am interested to hear from the Minister of Finance as to what his latest excuse is for the continual slide or lacklustre performance of the New Zealand economy. Indeed as the Finance and Expenditure Committee report says on the second page of its report in the year we are talking about the fiscal year ended 30 June 2011 New Zealand’s operating deficit before gains and losses increased from $12.1 billion in 2010-11 to $18.4 billion in the year ended 30 June 2011. It is no coincidence that during that year we also saw National abandoning its promises that it had taken to the electorate in 2008. It was at that stage talking about closing the wage gap with Australia which was one of its promises that it seems to have given up on. It was promising a step change in the economy. That has also disappeared from National’s language because of course every reference we hear to forecasts is that they go backwards rather than forwards. It seems to the Labour Opposition that it is now abundantly clear that the management of the economy by the National-led Government is not all that it cracks itself up to be.  
We heard—and I note that we can refer also to current events in this part of the debate—from Treasury recently that the tax revenue is nearly $1 billion below forecasts for this year as well. This year Treasury says it is because GST was down 4 percent largely because of earthquake-related GST refunds corporate tax was down 5 percent and the weak job market pushed direct-source tax revenue—that is PAYE and the like—down 3 percent. So we have a billion-dollar forecast hole—which is worse than it was just prior to the election in the pre-election fiscal update—just in the months since the election. So I think it is time for the Minister to say why on the basis of that he is ignoring the advice of his own department which has got some ideas as to how we might turn that round to improve the future of New Zealand by addressing some of the long-term problems.  
The briefing to the incoming Minister supported quite a few of the policies that the Labour Party took to the last election but that National still will not embrace including the need to have a neutral tax signal to the economy so that people are investing for the basis of the profitability of their investment and the success of the business which will grow our exports better than our current business model which is predicated too much on the speculative sector driven in part by the tax advantages that that sector has compared with other sectors of the economy.  
Another recommendation—we have the Government saying that it is going to get these budget things under control in part through welfare reform. Yet it is refusing to deal with the issue of the age of eligibility of superannuation. I would ask the Minister to concede that in the latest forecasts within 4 years we will be spending more on superannuation than we spend on the total of Vote Education—the total—that is preschool primary secondary tertiary and trades training. Yet the Minister says there is no need to change any of that. The Government pretends that its tinkering with the domestic purposes benefit and the unemployment benefit will do the trick. Yet within 4 years the Government’s own forecasts say it will be spending more on superannuation than the unemployment benefit—in fact 20 times the amount approximately.  
This Government will not pull some of the levers that are open to it to improve the economy. We have not rebalanced the economy. Treasury’s own forecasts show that within the forecast period the current account deficit gets worse. Every year we have a current account deficit. The difference between the cost of our imports and our interest bill and the value of our exports is bridged by more borrowing from overseas and every year the forecast has it getting worse from here so that according to Treasury by 2016 our current account deficit will be equal to 6.9 percent of our GDP and between now and then New Zealand will have borrowed an extra $50 billion from overseas— 
Rt Hon Winston Peters 
: Is that New Zealand? 
Hon DAVID PARKER 
: —that is New Zealand—and in addition to that we will have sold some of our assets. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 If you look at the recent report from the IMF it says that a continuation of the dollar at the current levels means New Zealand’s already high debt will continue to accumulate at an unsustainable rate. It also says the kiwi could be overvalued by as much as 20 percent. Very shortly this Government will bring into the House another shonky document of the type we saw last year in May you will recall where it was going to create 170000 new jobs in 4 years. 
Hon Member 
: In Australia. 
Rt Hon WINSTON PETERS 
: He did not say it was going to be in Australia; he said it was in New Zealand. Mind you that was the pre-election Budget of last year and there was an election coming. Here comes the gloom post-election for the Budget in 2012. We are a trading nation. We live or die by our exports and right there is the IMF telling the Minister of Finance that he does not know what he is doing with an export-led economy or a country that is dependent upon exports. The Government runs economic policies that hammer our exporters encourage the importers and hand the last of our thriving enterprises over to foreigners. This is supposed to be a Government for the people of New Zealand. Instead it is a Government for foreign interests for currency traders and for overseas-owned banks. And the National Party—I cannot say it has not got courage or that it is scared—does not have to use that classic old phrase the fortitude to do what is right by its own country and the mass majority of its own supporters. Despite the fact that National claims to be a mass-membership party it is concerned about the few and the very few or as the famous American President Roosevelt once said: “These overmighty subjects.”  
For 20-plus years we have had this economy being run for those sorts of people and the signs of what is to come are already in the Prime Minister’s predilection of saying that this will be a zero increase Budget. It has reached the stage where even tonight we have perhaps the greatest industry we have ever had and Fonterra being opened up for a raid by outsiders some insiders and some people awfully close to the National Party. It is not because they believe in its ideas or its philosophy but because it is the conduit or the elevator for them to massively increase their private wealth whilst they dupe the National Party into thinking this is good for the country.  
That is what the last debate was about on the dairy industry. It is supposed to be a farmers’ Government but it is really a Government of Wall Street traders and dairy interests even though it is controlled by the communist State of China. But that is no surprise of course because former National Party apparatchiks and operatives and even Prime Ministers now work for those companies that are controlled by the communist Government of China. How low can you go? That is what this debate should be about tonight and we are going to make sure that New Zealanders become more and more aware of how it is they thought they could trust a Prime Minister—and a Minister of Finance who was opposed by him of course—because of all things he came from Wall Street. Does anybody not understand what has happened on Wall Street in the last 28 years? They ripped apart the ownership and confidence of business after business in their country and elsewhere. Banks for example no longer lent money; they lent a mortgage then had that mortgage flogged off so that the payment of that mortgage was the last thing the banks were concerned about with all these financial instruments. This is what this Government intends to do again in New Zealand in this Budget coming up in 2012.  
Thousands of jobs have been lost since the Minister of Finance boasted that 170000 new jobs were being created over the next 4 years. Thousands—record levels—are heading across the Tasman. The “Minister of Employment” for New Zealand now is a man called Swan who is the Minister of Finance in Australia. If you ask people who have gone to Australia they invariably say that the Government there looks after people. This Government cares nothing for people. It is only for the few and the very few—and the rich in particular. The Government pretends to care but it is all form and no substance. The Minister of Finance does things for example like fobbing off the Maori Party. 
PAUL GOLDSMITH (National) 
: 
 I am very pleased to be able to speak on the Appropriation (2010/11 Financial Review) Bill for the year coming up to 2011 and a remarkable year it was. Who would have thought that this country would be borrowing $18 billion in a deficit for that year? I spent a lot of time researching the New Zealand economy over the years back in the 1970s and 1980s when Winston Peters the previous speaker was in Parliament—way back then when we had deficits. I never thought we would have the same size and significant deficits again. Yet here we are.  
Why did we get in this situation? Well firstly obviously the global financial crisis has hit a number of countries around the world and economies have been knocked sideways by that and are having to stimulate their economy. Secondly we have been hit by the earthquake in Christchurch which we all know was one of the most substantial natural events in the modern economy in a developed economy. But finally the main reason that we have had this large deficit also has been the settings inherited from the Labour Government in 2008 when National inherited an economy pregnant with 10 years of deficits on the books. The Labour Party had abandoned discipline in the last 3 years particularly of Government. It had turned the taps of spending on and left this Government with 10 years of prospective deficits that we had to rein in. So there is no easy task for this Government in trying to restore some order to the books and that is what the last 3 years have all been about. We need to pay our way.  
It is not written in stone that this country will always be a rich country. It is not given to us as of right. It is not something that will happen automatically. Every generation in every year has to go out and earn it and we will earn that only if we have an economy that is dynamic where people want to save. You do not get a dynamic economy when the Government is soaking up all the capital and all the resources and that is why it is so essential that we bring down the deficit as quickly as we can and why I am pleased to be part of a party that has a clear plan to get back to surplus by the 2014-15 year. It is not going to be easy. It is difficult. It is much harder to turn off the tap than it is to turn on the tap but I am sure we will be getting there soon. 
I was glad that Mr Peters referred to the IMF in his speech because the IMF did have something very relevant to say. It said: “In our view [the Government has struck] the right balance between the need to limit public debt increases while containing any adverse impact on economic growth during the recovery.” So in other words in what is a very difficult environment this Government not only has struck a good balance between the need to maintain the dynamism of the economy through spending but also is setting a clear path so we can get back to a more sustainable position.  
We cannot continue to keep borrowing billions on volatile global markets as we have done for the last couple of years. We have been privileged in the sense that we have had relatively low Government debt levels over the last couple of decades and that has given us the room that we have to move in the last couple of years but we cannot keep on doing that indefinitely. So the figures and the plans that the Government has to get back into order quicker rather than later are well worthwhile.  
Finally before I finish I just want to talk about why the economy is so important. We hear particularly from the Greens that somehow all this focus on economic growth is materialism gone mad and misplaced. But the reality is that constantly we hear talk about people going to Australia. Why do the people want to go to Australia? Often they want to live in dynamic exciting economies and cities with the opportunity to do well.  
What I am in politics for and what we are all here in politics for is to do what we can to create that dynamic environment and that requires a strong economy. It means not saying no to every opportunity that comes our way as a country. It is being open to making use of our resources. It is being open to understanding the needs. It is actually private enterprise that creates wealth. It is people risking their livelihoods and their own capital to create jobs and to create products that people want to voluntarily buy on the markets not things that the Government does that makes all the difference. 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Chairperson. Nga mihi nui ki a koutou. Kia ora. I rise to take a call on the Appropriation (2010/2011 Financial Review) Bill. In summary the Government has been a poor manager of the economy. In the 2011 year-end Budget what we are seeing is a deficit of over $18 billion—the largest in New Zealand’s history. That is poor economic mismanagement. In 2010-11 Crown debt rose by $13.4 billion to over $40 billion—again that is poor economic mismanagement. With economic activity that is stagnating just above the technical recession level we are again seeing poor economic mismanagement. The mismanagement of the economy is being characterised by poor decisions that have benefited the few but are paid for by the majority. 
What I want to talk about in this financial review is the narrative of this Government which as we saw led to tax cuts for the wealthy that we could not afford which led to a budget deficit and which led to cuts in spending. What we are now seeing is the third act of this narrative which is raising revenue by flogging off the State assets. When you go back to 2010 and the tax cuts what we saw was the big gains being delivered for the wealthiest New Zealanders. We saw the head of Westpac getting $5000 a week. What we had to do to respond to that was see increased borrowing for tax cuts to pay for tax cuts that were targeting the wealthiest. That is both reckless and immoral. But in addition to the inequity what we have also seen is that the tax switch which was not fiscally neutral was a fiscal blunder—another case of poor economic mismanagement. 
On the expenditure side what we have seen is this Government throwing $2 billion per year at the motorways. Meanwhile traffic is down petrol is up and public transport grows through the roof. We are seeing this Government throw $1.2 billion annually at polluters in New Zealand through its amended emissions trading scheme. We are seeing this Government sell our assets to fund $400 million worth of irrigation—again what we are seeing under this Government is it says it does not pick winners but when it comes to irrigation it is surely picking winners. When it comes to Skycity it is picking winners. When it comes to Warner Bros it is picking winners. What we are seeing is we are picking winners in the old style economy which has harmful social and harmful economic impacts on our country. 
But on the revenue side this is where the Government has failed to make up the books. To balance the books it is requiring the third act in this narrative which is to flog off the State assets. The Government turned down the Green Party’s sensible and popular proposal for a temporary earthquake levy for Christchurch. That could have raised over $1 billion per annum which would have helped with the $9 billion costs that Treasury estimates will be projected to be spent by the taxpayer. Rather than putting the cost of the earthquake on the taxpayers’ credit card we could have shared the cost more fairly across all New Zealanders and not put the burden on the many again. A comprehensive tax on capital gains would not have affected the family home. The Tax Working Group predicted that it could have brought in $4.5 billion in a year and would have helped move our economy to a more productive footing. A charge on commercial water use would have raised $500 million a year. 
But instead of taking these smart common-sense alternatives this Government—because it has got tax cuts for the rich because it has got a Budget blowout and because it is borrowing too much money—now has got to sell the assets. The problem is though when it comes to selling the assets the economics do not even stack up there. Our energy assets are getting a very good return at the moment—in fact more than repaying the debt is costing at the moment. Treasury’s Budget Policy Statement 2012 quantifies this amount. It shows that if the Government proceeds with the partial privatisation it will cost $94 million a year. Selling assets to reduce debt costs the Government money. That is the key message we have got to take to the country to stop this mindless selling of assets and the mindless arguments justifying it. 
The conclusion is that when you have got this destructive narrative affecting our economy we need to get into a good story. The good news is that there is a hero in the story. It is a smart clean economy. This is what we can deliver that is going to lift our kids out of poverty and it is going to see actual work coming to New Zealand. Take the “drill it mine it” approach this Government has got to economic development and the resource sector—there are hardly any jobs for Kiwis; hardly any royalties because we have got one of the fourth-lowest royalty rates in the world; and hardly any tax income because we have got so many tax exemptions. But what we are seeing is the profits go offshore. If we were investing in sustainable clean energy and if we were driving export growth through our international champions—these State-owned energy assets that at the moment are selling our expertise on geothermal energy around the world—we could be delivering prosperity for Kiwis and we could be growing the economy so we can lift those Kiwis out of poverty and actually give our kids a good start in the future. That is the path the Green Party will be focusing on. Thank you.  
DAVID BENNETT (National—Hamilton East) 
: 
 When we look at the Financial Statements of the New Zealand Government for the year ended 30 June 2011 and Treasury we need to take a good look at what we inherited from the previous administration and that was an economy in recession. We got an economy in recession before the rest of the world. That was what we inherited from the Labour - New Zealand First coalition. It was an economy in recession. Since then we have managed to turn that round. In the most difficult of economic times we have turned that round. Not only have we turned that round but also we have set up the infrastructure and the economic platform for New Zealand to grow.  
Today we had a question in the House from the Green Party about the roads of national significance. The Green Party was wondering why we should have them. Well that is investing in the future growth of New Zealand.  
Sue Moroney 
: Ha ha! 
DAVID BENNETT 
: That is investing in the future of this country. Sue Moroney there is laughing. I would like to see her go to the people of Hamilton and laugh at them when they see those roads being built around their city. They will link us to Auckland and grow our city. That growth is imperative and important for New Zealand going forward. National has delivered that infrastructural growth in the most difficult of times. 
Not only have we delivered it but also we have set up structures so that New Zealanders have the right signals and incentives out there. If you get a good education and if you work hard you are going to get some rewards. That is what we want. We want New Zealanders to know that if they work hard and they get an education the future is theirs. The other side would rather take from people and try to redistribute it to make everybody equal and therefore control them. That is the party of the Opposition. That is how it has always been and always will be. The National Party has a different vision and it is a vision that we have enacted in the most difficult of times. It is a vision that is working. 
New Zealand is doing as well as any country in the Western World has done in these difficult times. Would you rather be in Europe or America? Well the Opposition would not want to live in Europe or America; those members want to be in New Zealand. It is all right for the New Zealand First Party to come into this House and try to put down the Chinese but the Chinese Government and the Chinese economy are saving us by buying our dairy products. It would be interesting to see if we did not have that market how smart people in the New Zealand economy would be. This is a Government that understands economic fundamentals. That is the difference between the Government and the Opposition. We understand what you need to do to build a strong economy and we are doing that. At the same time we have delivered the social services that New Zealand people need. We did not scare the horses. We did not go out there and cut social services. At a time when we could have done that we did not. We maintained those social services. We maintained the integrity of the New Zealand social welfare system. We had to borrow to do that but we did it.  
We have also delivered a rebuild programme for Christchurch after the major natural disaster there. That city will be rebuilt. Those people know that this Government stands behind them. They know that this Government is here for the people of Christchurch unlike the Opposition which will come into this House and try to pull down the regrowth of that city just for political purposes. That is not good enough. New Zealanders expect more from their Government and they have got more. They have got good leadership they have got an economic plan that will be successful and will work— 
Grant Robertson 
: Where? Where? Show it. 
DAVID BENNETT 
: The Labour Party asks where this economic plan is. Well we want to see what David Shearer has got to say. He has not said anything in 4 months has he? Grant Robertson has said more than David Shearer has said in the last 4 months and he is not even the leader. He might want to be the leader but he is not. The Labour Party has not got a plan. Its members know that it has not got a plan. They look across to us and see that we have got a plan. We have got a direction. We are investing in that infrastructure. We are investing in education. We are telling our people: “If you make the right decisions and you work hard then the opportunities—” 
The CHAIRPERSON (Lindsay Tisch) 
: Order! 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. Is your stopwatch going? That speech seems a whole lot longer than 5 minutes. 
The CHAIRPERSON (Lindsay Tisch) 
: I am very mindful of the time. I just remind the member that on numerous occasions you have brought the Chair into the debate. You cannot do that. Also focus back on what this debate is. We are looking at the Finance and Expenditure Committee’s financial review. That is what we are concentrating on. 
DAVID BENNETT 
: We are on the financial review and those Financial Statements show that this Government is making the right decisions to take New Zealand forward. It is investing in the infrastructure it is investing in that social spending but at the same time it is recognising the demands on this economy and the demands on this Government going forward in these very difficult times. We have had to borrow under those Financial Statements to get through these difficult times but that was the right decision for New Zealand going forward and nobody would dispute that. I would imagine that if the other side had been anywhere near the chains of power those members would have borrowed a lot more and that would have sent this economy spiralling into disaster. We did not. We borrowed what was prudent for this economy going forward and we have delivered at the same time the right investments with that borrowing. We have not spent it on silly things. We have spent it on the things that count giving the right incentives. 
TODD McCLAY (National—Rotorua) 
: 
 What a pleasure it is to rise this evening in this Chamber and speak after Mr David Bennett the member of Parliament from Hamilton East. That was one of the best speeches I have heard from that member in quite some time. Can I say to members opposite that that did not seem like a long 5 minutes to us on this side of the Chamber. I could imagine if one was not enjoying it on the other side then it would have seemed like a long period of time. But Mr Bennett who is well known for drinking very large glasses of clean Waikato River water was in full flight talking about the wonderful things that his Government has done and the important things New Zealanders have asked us to do.  
What have we heard from the other side of the Chamber so far in the debate? We have heard the politics of envy. We have heard from those members that everything is wrong in New Zealand that they are depressed that nothing is going right for them but actually after a lot of puff there was not a single good idea between them: a few things they spoke about back in 2008 regurgitated to the electorate in 2011. What happened in 2008? The largest single vote under MMP for any party.  
What happened in 2011 when they said everything had gone so wrong? Again the largest vote for any party under MMP. Was it for the Labour Party? Was it for the Green Party? It was for John Key’s National Party and it was for John Key’s National Party because New Zealanders resoundingly wanted a brighter future—not the slogan that was stolen by members opposite but a brighter future. They wanted direction they actually wanted hope they wanted to recognise the good things that happen in this country and they wanted to do more for themselves for their family members and for others.  
I heard members opposite say earlier when Mr Bennett was speaking that it was 4 years ago when we went into recession a recession that was the steepest New Zealand had faced in 60 years. The world’s economy was failing. But when we came into Government we inherited books that had debt growing and a forecast of debt into the future that was spiralling. The members opposite say: “That is the past. Why are we talking about that?”.  
If you do not know where you have come from as a country it is hard to know where you have gone to and what I have got to say is that over the last 3 years the National-led Government has provided the reasonable economic management that New Zealand was in such need of after 9 years of Labour mismanagement of this economy. I can see why they do not want to talk about those 9 years but it is a reality. It is a fact. New Zealanders cast their judgment on that not only in one election but also in two elections. I can understand why those members would not want to look at that.  
When we took the reins of office and the financial crisis had reached its peak in the New Zealand economy in that year the economy had shrunk by 3 percent topping off 5 years of historically low growth. I can remember back then reading newspapers about the wonderful things the Opposition had said were happening in the economy. But the important part of our economy the part of our economy that produces things the productive economy—the businesses that invest their own money and that produce things to sell them export reinvest that money and employ New Zealanders—had been in a recession long before the rest of New Zealand’s economy got there long before the rest of the world and it was going backwards.  
We were losing competitiveness and thank goodness that New Zealanders woke up and said they wanted a change. They wanted new direction with John Key. They wanted a finance Minister Mr English who would get Government spending under control who would move New Zealand in a more productive direction and who would say to our ministries that they must deliver more for New Zealanders with the resource that they are given the taxpayer resource—not more money but more hard work for that.  
Every day New Zealanders work hard for their money. Why should not the Government and our ministries do the same thing? Well on this side of the Chamber that is important to us and you know to New Zealanders it is important as well. They told us that in the last 3 years when they went to vote.  
Can I say to you that we have done a number of things—a raft of things—that helped New Zealand become more competitive and more productive. We have looked at the tax system and we have changed it to encourage work and savings. That is very important to New Zealanders. Over 9 years we did not hear about that. All we heard about were handouts and borrowing—handouts and borrowing.  
You know it does not matter whether it is you in your home in a business in your local government or in your Government if you spend more than you earn every single— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! 
TODD McCLAY 
: If one spends more than they earn every single year then sooner or later you have got to pay the piper. Well in this case Governments do not have to do that. Governments just keep putting up tax keep taking your money and keep spending it or at least that is what New Zealanders saw over 9 years of a Labour Government. Well we came into Government and we made one of the most important— 
Hon BILL ENGLISH (Minister of Finance) 
: 
 It has been interesting listening because the one thing we should have heard and still have not heard is Labour apologising for the damage it did to the New Zealand economy. These estimates cover just the cost of another year of this National-led Government trying to undo the wreckage disentangle the wreckage of an economy that used to be a proud exporting economy. But here is one simple fact for those who profess to care about jobs: in 2009 there were no more jobs in exporting than there had been 10 years earlier—10 years earlier. So after 10 years of the great moderation of a global economic boom with unfortunately a Labour Government in charge there were no new jobs in the New Zealand export sector—none. Our capacity to earn had not increased in 10 years. 
But what about our capacity to spend? Well there were jobs everywhere jobs everywhere—public servants real estate agents finance companies. That is what went so wrong with the economy and that is why the Labour Party should apologise. Until Labour apologises the public is not going to listen to it on the economy. The public rightly thinks it is still the same old nasty big government taxing spending Labour Party. 
Changing the leader does not make any difference. There is no change of heart. There is no discussion tonight about respecting the people who invest take risks and create jobs the people who show up to work every day and do not want to be taxed out of their pocket so that they cannot pay their bills. No there is no indication from the Labour Party that anything has changed from “Helen-omics”. At least when Michael Cullen was running economic policy it was reasonably sound. But in about 2004 that stopped. The left took over. It blew the Budget wrecked the economy and it is still in charge. That is why the New Zealand public—well the New Zealand public hope that if Grant Robertson is the leader he will apologise. Phil Goff certainly would not. David whatever-his-name-is thinks he—well I do not know if he thinks he should or not because he does not really say much. I was hopeful. I was hopeful. I thought David Shearer might get up clear the decks and say: “We’re sorry we made a mess. We understand why our vote keeps going down.”—and it went down again in the last election—“We are sorry.” But no he cannot bring himself to do it. But Grant Robertson probably can because I think he might have the ruthless streak. And the rest of the caucus just have to get used to the idea that when he becomes the leader he will apologise. I do not think he believes he should; I just think he believes that is probably what you need to do if you become the next leader of the Labour Party and you want to get the public’s vote and win. 
 That is one of the reasons why the Government is able to continue with a credible economic programme that sets out to achieve some pretty straightforward objectives: to get back to surplus and to rebalance this economy. By that I mean to get people and capital back into the income-earning side of the economy. We will not be able to borrow our wealth in the next 10 years like we did in the last 10 years; we will actually have to earn it. That is what these estimates cover: the continued considered and consistent economic strategy that the Government is following. It is taking the public along making significant change where it is warranted careful change where that is what is required and dealing with the unexpected events like the earthquakes—not complaining about them; just getting on with it. That is why the programme of the Government is starting to earn the respect of entities like the IMF as being a sensible programme. 
Hon DAVID PARKER (Labour) 
: 
 Revisionist— 
Hon Bill English 
: Apologise! 
Hon DAVID PARKER 
: Well “Apologise!” says Mr English having criticised the election result of the Labour Party at the last election. He seems to conveniently forget that in 2002 he presided over the worst defeat ever—worst defeat ever—of the National Party. What did he get? Twenty-one percent! But of course he is not very good with figures this Minister of Finance because he overlooks that. He overlooks that.  
Similarly Mr Bennett’s contribution to the debate was to say: “Be thankful we’re not Greece.” It is a similar line to that run by Mr English. He says we are not as badly off as Greece. Well why is New Zealand not as badly off as Greece? Because the last Labour Government ran surpluses every one of which was opposed by Mr English when he was Leader of the Opposition by Mr Key when he was Opposition spokesperson on finance and by Mr Brash. All of them opposed the surpluses of the Labour-led Government which were supported by New Zealand First and the Greens and at one stage the United Future party. Those surpluses were all opposed by National.  
Mr English you even forget the comments that you made shortly after the 2008 election when you had the good grace to concede that “This is the rainy day that Government has been saving up for.” because your Government—sorry the National Government—inherited amongst the lowest government debt in the Western World. In fact net debt was zero. Net debt was zero. Gross debt was 17 percent. Even after all of the problems of the earthquake and the global financial crisis New Zealand should be back in surplus in 2014-15. It should be and I think we will be or close to it. Even National cannot so mismanage our affairs that we do not get back to surplus by then.  
Even then New Zealand’s government debt will be amongst the lowest in the developed world. But we still will not have cured our fundamental problems which relate to imbalances in the economy. Mr English talks a good game when it comes to rebalancing the economy but he has not done it; he will not pull the levers that are open to him to cause the economy to change. That is clear from the Government’s own projections. The current account deficit goes up every year. Far from having cured this deficit being the difference between the cost of our imports and our interest bill and the value of our exports it gets worse from here. Treasury says that by 2016 New Zealand’s deficit will be out to 6.9 percent of GDP and by then New Zealand will have added $50 billion worth of overseas debt mainly private debt—$50 billion extra of debt. That is the reason why we were downgraded last year. It was misrepresented by the Prime Minister at the time as the ratings agencies saying it would have been worse under Labour. Subsequently that was denied by the ratings agencies. They downgraded New Zealand because of private debt in the main not government debt. Private debt gets worse every year from here on because it keeps growing under an unbalanced economy that this Government failed to change.  
These phoney promises are backed by no plan. In response to the fact that the Government was hurting because it did not have a plan it came up with this hare-brained scheme to sell off our State-owned enterprises which makes the Government deficit worse. It makes the Government deficit worse to the tune of $94 million per annum. We are around $100 million a year worse off because of course the interest saved is less than the profits and dividends forgone.  
The Government is getting distracted by scandal after scandal at the moment whether it is ACC or the Ministry of Foreign Affairs and Trade or mistakes by Treasury monitoring the Crown Retail Deposit Guarantee Scheme causing hundreds of millions of dollars of costs. The economic credentials of this Government are being slowly eroded as the public sees that it is mismanaging it. It is too distracted. It is looking after the people it likes whether it is Mr McElreabeing put in charge of the Broadcasting Commission or insiders of the National Party getting preferential treatment from ACC. This Government is more about looking after its insiders than it is about taking care of New Zealand’s serious economic problems. 
Reports noted. 
Office of the Controller and Auditor-General  
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Kia ora tatou katoa. I will take a few minutes just to focus on the financial review of the Office of the Controller and Auditor-General. I note that the Finance and Expenditure Committee report on the Office of the Controller and Auditor-General was pretty succinct; in fact it had only two lines. But I did want to mention some of the work that did occur during the period of the review because it is key to I suppose making sure that we hold the Government to account. 
A massive 100-page report into the central government results of the 2010-11 audits asked some key questions about the Public Service. For example is the one-size-fits-all approach the appropriate approach to take for the future? Should there be a more collective approach to reporting? Is a simpler more flexible approach desirable? These are great questions and I want to just take a couple of examples to sort out why. In the health sector audits the Auditor-General tells us that despite there being specific legislation in place to reduce the disparities for Maori the lack of information in the annual reports and the absence of targets to reduce disparities makes it pretty hard to gauge district health boards’ progress. Some district health boards had great intentions to improve the health outcomes for Maori but for four district health boards there was not even a mention of health disparities for Maori in the plans at all. For 14 district health boards there was a mention of initiatives to address some disparities but the descriptions were pretty general rather than specific in detail. Can I suggest that a collective approach might result in measures and targets for Maori with trend data reported in the annual reports being a pretty good approach. 
Moving to the education sector I was interested in the 2011 audit of Maori immersion schools. One of the aspects of interest was around the notion of conflicts of interest. Given the close association by whakapapa and by whanau associations in kura there is every likelihood that kura will be employing staff who are actually whanaunga—relations—of the trustees who obviously run the schools. The Auditor-General acknowledges that this is a reality and in fact out of the 64 kura or schools that had boards 46—that is 72 percent—were in this position. The report had some really simple advice around how one might manage the perception of conflict of interests. In one school in one kura for example the principal’s husband tendered for the contract to paint the school fence. When it came to the discussions around the contract the principal abstained from the vote. In another kura the brother of a trustee tendered for a contract. The board minutes stated that the board member concerned was not consulted because there would be a conflict of interest. This is the sort of information that we would expect as a part of the auditor’s key function: really specific useful measurable actions that make the words mean something.  
Finally the reason that I think the work of the Office of the Controller and Auditor-General is so important is basically around the whole notion of accountability. It is pretty simple: we need to know that any service or agency being funded by the taxpayer has made and is making a real difference to the communities. It has got to be more than just having documents or plans; we want to know that the plans have made life a lot better and that the results of those plans are being communicated in a meaningful way. That is at the heart—and in a sense the genesis—of Whanau Ora. We want the Government to be more transparent and accountable to Parliament and to the public. 
The Auditor-General talks about the cost of producing reports for the sake of having some reports. We want to be able to trust that public funds are being spent to improve the situation for people. The classic example is in local government. In 2010-11 local authorities receiving $14.5 billion to finance the services they deliver to the community seems way over the top. The Local Government Act 2002 requires that councils consider and promote current and future well-being of communities. It has also introduced new responsibilities and opportunities for engagement and cooperation between councils and Maori. Yet what we know is that the performance against these criteria is at best variable and the Maori Party is determined that local authorities must comply with these requirements by law. So again that is why the appropriations report is pretty vital as we move forward. Kia ora. 
Report noted. 
Office of the Ombudsmen  
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 This is one of the most disturbing parts of this financial review process. The report of the Government Administration Committee into the Office of the Ombudsmen during 2010-11 is something that we should all be concerned about. The Ombudsman came to the Government Administration Committee and said that her office was in crisis. A budget established for a workload of 800 to 1000 cases was now dealing with 1600 to 1800 cases there were 1854 live cases on hand and 300 cases had not been assigned to an investigator because of the workload. As the Ombudsman herself said justice delayed is justice denied.  
The Ombudsman went on to talk about concerns over staff well-being. The report of the Government Administration Committee notes that the office said it was worried about staff sickness high rates of serious illness and staff placed on stress leave. The Ombudsman’s office noted that it would like to reward its staff better and to recruit additional investigators but it did not have the funding to do so. These are among the most serious issues that could be raised in this process.  
The Office of the Ombudsmen plays a critical role in our democracy. It is one of the pillars of our democracy by ensuring accountability by ensuring that New Zealanders can have trust and faith in the systems of government and that they have a place to go when other options have run out. Many New Zealanders will associate the Ombudsman’s office mainly with the Official Information Act but it also has an important role in determining how other Government agencies operate in particular around the Department of Corrections. It is simply unacceptable for the Ombudsman’s office to have got into this state.  
We do need to note that the Officers of Parliament Committee has allocated additional funding to the Ombudsman’s office and that is something that is to be welcomed but it is still well short of the $1 million extra that Beverley Wakem told the Government Administration Committee she needed to ensure that her office could operate in the way that most New Zealanders would want it to do. There is little more important in our democracy than knowing that an office like the Ombudsman’s office can operate without having to concern itself with staff who are simply unable to work because of the levels of stress that they are operating under.  
It was John Armstrong in the  
New Zealand Herald  
who asked the question: “is National now benefiting from delays in the Ombudsmen ruling on cases taken against ministers who block requests under the Official Information Act?”. That is the serious concern. Many members of this House will have Official Information Act requests dating back months if not years. I have one that goes back to May 2010 and the Ombudsman’s office comes back to me and says it simply does not have the resources to investigate these cases at this time.  
This is a crisis as Beverley Wakem said. Additional funding of $300000 from the Officers of Parliament Committee will go some way to addressing the staff remuneration issues and the staff retention issues but it will not reach the heart of the problem that we have here that an institution of Government that is charged with ensuring transparency and ensuring accountability is being starved of funding to the extent that the Ombudsman would come to a select committee and say her office was in crisis. That is something that members on the other side of the Chamber should take very very seriously indeed.  
It is not just about MPs or media wanting their Official Information Act requests fulfilled. It is about whether Government agencies are treating people fairly and we have a huge number of cases emanating from the Christchurch and Canterbury earthquakes that are coming towards the Ombudsman’s office and some that are already there and they are held up in this backlog as well. The Ombudsman’s office itself acknowledged that further public sector reforms would add more to the backlog.  
We need an assurance from this Government that it will fund an institution like this properly. We have seen too many examples of issues like conflict of interest cronyism and other issues from this Government that are not being properly addressed. We need the Ombudsman’s office to be in a position to undertake the kinds of inquiries that give New Zealanders confidence that the system of government we have is transparent and accountable. I cannot stress more how seriously we take this and how much this office needs to be supported. 
Dr The Rt Hon LOCKWOOD SMITH (Speaker) 
: 
 I cannot let those issues go unanswered because under our constitutional arrangements it is not the Government that determines the funding for the Office of the Ombudsmen; the recommendations are made by the Officers of Parliament Committee which includes members from all sides of this House. I chair the Officers of Parliament Committee and as for all agencies of the Crown there is an expectation that all agencies will operate with the utmost efficiency. Just because agencies or departments seek extra funding does not mean to say that they should be allocated extra funding. I think I have told this House previously for example that I run the Speaker’s office on less than half the funding of my predecessor—less than half.  
The Office of the Ombudsmen has been allocated additional funding to deal with an increase in complaints. The Ombudsman’s office was allocated on a temporary basis $370000 to help the office cope with the increase in complaints. It was not made permanent because there was no certainty that the increase in complaints would be ongoing. The Officers of Parliament Committee is now satisfied that that increase in complaints with events like the Canterbury earthquake is likely to be ongoing for the foreseeable future and so that temporary additional funding of $370000 has been recommended by the Officers of Parliament Committee to be made permanent to give the Ombudsman’s office the certainty of that. In addition to that all the additional funding requested by the Ombudsman’s office has been recommended by the Officers of Parliament Committee to be allocated in this next financial year and that is the $300000 that the honourable member Grant Robertson was referring to. 
 So I want the House to understand that it is not the Government that on its own determines the funding of the Ombudsman; it is the Officers of Parliament Committee which comprises members from all sides of this House. That committee has listened to the representations of the Ombudsman and has accepted that there is a seemingly permanent increase in the level of inquiry required by the Ombudsman’s office at present. What is more there have been additional functions allocated to the Office of the Ombudsmen and those have been funded. There have been funding allocations made to meet those additional functions required.  
I just want the House to understand that the current situation is that in this next financial year in terms of all the requests made by the Ombudsman the recommendations have been met by the Officers of Parliament Committee. 
Report noted. 
Department of the Prime Minister and Cabinet  
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 We once had a great Prime Minister in the National Party and he governed for longer than anyone in the National Party. His name was Keith Holyoake and he did all that in very trying and difficult times with five people in his office. His name as I say was Keith Holyoake. He was not a greatly academic educated person but easily the most competent National Party leader that there ever was. For over half this past century we have had in New Zealand some great Prime Ministers and Cabinet Ministers who did great things. Unhappily for the people of this once great country we no longer have a great Prime Minister and he certainly does not have a great Cabinet. But my real point is this: why does the Prime Minister need if you take all the people who work for him not 126 but about 150 people in his service? It is 150 if you add it all up. It is 150 people for a Prime Minister who posed as being the best economic and financial brain this country had ever had because he went to the United States and was trained by Merrill Lynch. Why on earth the country would trust someone whose training came from Merrill Lynch and whose company and its ilk took the Western World to the worst global financial crisis since 1929 I would not know. But as time goes by New Zealanders will wake up to the fact that this man has had no training at all to run this country that he has no economic principles and that he has fewer social ones when it comes to running a fair country.  
Why does he need so many people to run his office when a man like Holyoake needed so fewer? The answer is he cannot trust his Ministers. He has to have somebody spying on them all. They do not do a very good spying job. Oh yes they do! I know Madam Minister that somebody is in the Prime Minister’s office watching you right now—not you Mr Chairman. They are watching the performance. Mind you that Minister starts from a flying start because the person she inherited the job from was absolutely and totally incompetent. That was another choice made by the Prime Minister. He may have made a correct one in this Minister’s case but the last one was the least qualified person in the whole of Parliament to be a Cabinet Minister. Why is it for example that this Prime Minister has his holidays in Hawaii or Europe? What is wrong with New Zealand? What is wrong with— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! 
Rt Hon WINSTON PETERS 
: No no no it is an explanatory matter and I will tell you how. 
The CHAIRPERSON (Lindsay Tisch) 
: We are actually on the Department of the Prime Minister and Cabinet—the department. If the member wishes to look at page 352 he might actually bring the debate back to what is on those pages. 
Rt Hon WINSTON PETERS 
: I most certainly will. Mr Chairman you should be aware that when he travels unlike others in the past he demands to take his security with him and that is a taxpayers’ cost assigned to his department right? That is a fact. Tell me this: why can he not holiday in New Zealand without taking these people all on the plane probably going business class all as security? Worse still why can we not access this House during the day when Parliament is sitting without having to walk behind these guys who are about 6 feet 5 inches tall stopping members of Parliament accessing the very place that they have been elected to all at the taxpayers’ cost?  
The answer is the boy from the State house has forgotten where he comes from. He has forgotten where he comes from. He loves the rich life. He loves the baubles and joy of it all. He loves the travel. Oh yes because to go to Hawaii with your bodyguards is in an atmospheric sense when it comes to the profession merely a bauble. He does not have to go there. Or if he has to go there why can he not go there and rely upon the local security? No no no not him. He has to be like somebody from a Third World dynastic dictatorship. The last person I saw do that was a guy called Saddam Hussein.  
Hon David Cunliffe 
: Mu’ammer Gaddafi. 
Rt Hon WINSTON PETERS 
: Yes Mu’ammer Gaddafi. In fact with Gaddafi the Chinese Foreign Minister said to me that one time this man called Gaddafi came to China and he had 26 magnificently built bodyguards all 6 feet tall all beautiful all women. Then in English he said: “Good eh?”. That is the parallel. 
Report noted. 
Canterbury Earthquake Recovery Authority  
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 When the Canterbury Earthquake Recovery Authority was established it was at a time when it was replacing the Canterbury Earthquake Recovery Commission which the Government had set up after the September earthquake. After February the Government felt that a stronger body was required and that was true. The Canterbury Earthquake Recovery Commission simply did not have the powers that were needed under the circumstances of the February earthquake. It was insufficient. It was a coordinating body a recommendatory body and it simply did not have the powers. But it did have one thing that the Canterbury Earthquake Recovery Authority does not have and that is independence. So it was an independent body that did not have sufficient powers—a powerless independent body. The Government replaced it with a powerful body that has no independence—it is a Government department.  
Just prior to its establishment our then leader Phil Goff wrote to the Prime Minister John Key and suggested that if the Government really did want to do things well in Christchurch and to have a genuine bipartisan approach to rebuilding Christchurch which the Government had said it wanted to achieve for it to be meaningful there had to be full engagement before decisions were made and consulting on proposals when they are ready to go to Cabinet does not make the resulting decision bipartisan. I think that is a very good point for us to note.  
Then he went on to say that Christchurch requires a separate recovery model so that the Christchurch City Council can get on with business as usual with key personnel seconded to a separate authority which is given all the powers to implement the recovery component of the city council’s civil defence emergency management obligations. Unfortunately the Government did not listen to us and that is because it does not understand international best practice when it comes to recovery. I know that that is the case because I listened to the Minister when he responded to a contribution that I made to the panel on Radio New Zealand National’s  
Afternoons  
with Jim Mora on 10 February this year when he suggested that what I wanted in terms of community engagement when I was talking about international best practice was that I was suggesting we sit around and play guitars and sing “Kumbaya” over it which I thought was very funny. I mean he is a very clever speaker when it comes to making humorous points such as that but this is a serious matter. What he told us in that same public statement was that he can rewrite the evidence he can rewrite the experience of the past when he said: “I think we are actually rewriting international best practice down here on a day-by-day basis.”  
I just want to remind the Committee that international best practice comes from the experience of failure and success. When things work well we learn from those but when things fail we learn from them as well. If we do not learn from failure we condemn ourselves to repeat it over and over again. What the Minister was actually telling the people of New Zealand was not that they were rewriting international best practice on a day-by-day basis in Christchurch. What he was telling New Zealand was that they were making it up day by day and they are getting it so terribly wrong. The people of Christchurch are finally starting to cotton on to the fact that this Government has no idea what it is doing.  
I want to tell the Committee that the Office of the Prime Minister’s Science Advisory Committee headed by the exceptionally brilliant professor Sir Peter Gluckman has done an exceptionally brilliant briefing paper to the Prime Minister and I would like the Minister in the chair the Minister of Education to actually respond to this paper on the psychosocial consequences of the Canterbury earthquakes. He says this: “It would appear that key to minimising this phase of anger and frustration which becomes inevitable when people are treated the way they are treated by this Government is the promotion of local empowerment engagement by working closely in a collaborative way with the affected population in coordinating and co-leading the response effort. If the population do not sense this is happening then the phase may well be longer and the symptoms of anger and frustration more intense.”  
Sir Peter Gluckman knows exactly what he is talking about when he is talking about evidence and international best practice. Unfortunately the Canterbury Earthquake Recovery Authority has not been set up to undertake that approach at all. I understand that tomorrow the Government is going to announce a new direction for the Canterbury Earthquake Recovery Authority to take over that role from the council. 
EUGENIE SAGE (Green) 
: 
 I rise to speak on the review of the Canterbury Earthquake Recovery Authority at pages 47 to 52 of the combined reports of select committees. The Canterbury Earthquake Recovery Authority as the previous speaker Lianne Dalziel has alluded to was established in March 2011. It has extensive powers under one of the most Draconian pieces of legislation this House has passed since World War II. Its task is to plan and coordinate Christchurch’s recovery until 2016. I certainly acknowledge the considerable work that it has done in carrying out land and building assessments as a basis for rebuilding and insurance decisions and its work with the Christchurch City Council Orion and others in coordinating the rebuilding of water sewerage electricity and other infrastructure. But I want to concentrate on the authority’s role in overseeing demolitions which is specifically referred to on page 50 of the combined select committee reports. 
In the last year the Canterbury Earthquake Recovery Authority has decided that more than 1200 buildings should be demolished in Christchurch’s central city with 900 of these in the cordoned-off central business district area. This is roughly half the buildings in Christchurch’s commercial and cultural heart. They include more than 140 heritage buildings that are recognised in the Christchurch city plan more than 70 buildings that are listed and registered with the Historic Places Trust and hundreds of buildings that have contributed to the city’s character even if they are not formally recognised as heritage buildings. Yet because the public has had such limited access to the red zone with only a few bus tours very few people know how much has gone and how little is going to be left.  
The Canterbury Earthquake Recovery Authority has in its haste to demolish failed to heed international best practice and international experience. Dr Kit Miyamoto of Miyamoto International which has helped and advised a number of cities recovering from more than 100 natural disaster events from hurricanes to earthquakes warned that Christchurch was headed down completely the wrong track with the authority’s strategy of demolishing half of the central city. He said it was more appropriate to have a take-down rate of between 10 and 20 percent of buildings. He said that many of the buildings now—or that have been demolished by the Canterbury Earthquake Recovery Authority—could be repaired for 20 to 30 percent of the cost of a new building.  
So it is the haste and the extent of the building demolition strategy of the Canterbury Earthquake Recovery Authority that is impeding the city’s recovery. The authority is creating a stark and bleak wasteland with huge vacant lots which may remain that way for decades particularly if the former owners of the buildings that have been demolished take their insurance payouts and go elsewhere—as the owners of the big Crowne Plaza Hotel are understood to be doing.  
Christchurch is known internationally for its stone Gothic revival buildings. They include the Arts Centre of Christchurch the Christchurch Cathedral the Canterbury Museum the Canterbury Provincial Council Chambers and numerous churches. They are a key part of the city’s architectural heritage. They are objects of beauty and of considerable artisanship and they have a key commercial value in attracting visitors to the city and providing the backdrop to a vital cultural life. Yet the authority’s enthusiasm for demolition and its failure to seek proper advice from engineers who are experienced in retrofitting rebuilding and strengthening heritage buildings mean that the Wizard is now conducting regular pray-ins to try to save that symbol of Christchurch—the Christchurch Cathedral.  
The  
Listener 
 reported last November: “ ‘We have owners desperate for us to say the building has less than 33% of new code strength and is therefore classed as a dangerous building’. Then they go along to Cera and have an exchange of letters. The owners hand over the letter from the engineer saying it’s under 33% and Cera hands them a letter saying ‘Tell us how you’re going to knock it down within 10 days.’ ” Because of that when owners have the option of repairing their damaged buildings or getting an insurance payout there is a very powerful incentive to go for the cash. With the cathedral not enough has been done to investigate ways of repairing and strengthening the building. The Canterbury Earthquake Recovery Authority is encouraging with its haste to demolish to meet its April deadline a bleak and stark wasteland within the city.  
We need the authority’s extensive powers to be curtailed. We need the city council to go back to making decisions on the buildings that should be demolished using a public process where there is an opportunity for public submissions. The Canterbury Earthquake Response and Recovery Act has a lifespan of 5 years and it includes a commitment that it will be reviewed annually. The previous speaker has indicated that the Government is going to make some announcement tomorrow. That 1-year anniversary is approaching and the powers of the Canterbury Earthquake Recovery Authority need to— 
The CHAIRPERSON (Lindsay Tisch) 
: Is the member going for another call?  
EUGENIE SAGE 
: —be substantially curtailed. 
The CHAIRPERSON (Lindsay Tisch) 
: If the member keeps talking after I have rung the bell that constitutes another call. I did not dock you for one and I did not dock the previous Labour member as well. But just be mindful if you continue talking and I call you again that constitutes another call. It means that later on you will not have that call if you want to speak on something else. So I just remind all members of that.  
Report noted. 
Ministry of Transport  
DAVID BENNETT (National—Hamilton East) 
: 
 The Ministry of Transport has an important role in our transport sector in that it provides the advice to the Minister around transport objectives and opportunities and it is a means for the promotion of changes in rules and regulations to make transport a much safer environment for New Zealanders who travel on our transport systems but also the importance that transport has as an economic growth agenda and a very strong part of this Government’s agenda of how we build a stronger and brighter future for New Zealanders going forward.  
I would like to focus on just a couple of things of prime importance in the transport sector that the Ministry of Transport has been involved in in providing advice to the Minister in that regard. One of those is in regard to the roads of national significance. This is probably the biggest initiative that has happened in the transport sector for the last decade. The roads of national significance are essentially a matter of identifying the main roads that in terms of economics safety and population demographic require substantial Government investment and funding.  
If you look at those roads of national significance they are typically situated in the large urban centres. For example Auckland has a large number of roads of national significance. There is the Waikato Expressway through the Waikato which you Mr Chairperson Tisch will be well aware of as it is through your electorate. Also we have the Wellington Christchurch and other roading projects.  
The initiative that the roads of national significance illustrate is that they are an indication of where we have identified the prime roads that need that investment. Rather than going through a system that we have had for many years of trying to politically go from section to section in those roads we have actually said that these are big economic growth agenda projects that are more important than just building the roads. They provide the focus and delivery of economic growth to our regions and a connectivity between our cities. So in identifying those roads and then funding them this Government has invested a lot of money in these times in economic growth providing that infrastructure for the country to go forward.  
I think we need to commend the ministry and the Ministers involved for the hard work that has been done in that area and the great benefits that you are seeing in the areas where those roads are being built. That will actually benefit all New Zealanders because the economic growth that comes out of the areas that are being serviced now by this infrastructure will be vital for the economic growth of New Zealand as a country as a whole.  
The other area around transport that we should probably make mention of is road safety. You have seen a number of initiatives in that area over the last few years ranging from the drug-driving requirements to the lower breath-alcohol levels for young people and recidivist offenders to the most recent changes that we see with the give-way rules in the last week or so. I would like to commend New Zealand motorists for taking the opportunity to understand those rules and act with a sense of respect to their fellow drivers in the way that they have engaged and made that transition from the old rules to the new rules—something that in practical effect has been successful and not with a lot of accidents or anything that would be seen as untoward.  
I think the Ministry of Transport needs to take credit for a lot of the work in those areas for its ability to assist in road transport and road safety and I think the Government organisations involved can take a lot of credit for the way that has been done. It shows that you can make practical changes on the ground level where if you get that public education right if you get the right promotion of the change if you get the understanding from the sector and if you get a cohesive approach to it then you can deliver those kinds of changes without too much effect on the ground. That is something that I think is important for us going forward in this sector.  
The road toll is another issue that is very close to our hearts. 
Report noted. 
Ministry of Economic Development  
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The year 2012—5 years after the former Labour Government reduced Crown debt to zero nearly 3½ years after this Government took office—far too late to blame history and time to take responsibility. 
Progress reported. 
Report adopted. 
The House adjourned at 9.55 p.m.