Tuesday, 19 March 2024 - Volume 774 Sitting date: 19 Mar 2024 TUESDAY, 19 MARCH 2024 The Speaker took the Chair at 2 p.m. KARAKIA/PRAYERS SPEAKER: Almighty God, we give thanks for the blessings which have been bestowed on us. Laying aside all personal interests, we acknowledge the King and pray for guidance in our deliberations that we may conduct the affairs of this House with wisdom, justice, mercy, and humility for the welfare and peace of New Zealand. Amen. OBITUARIES Rt Hon Jonathan Lucas Hunt ONZ SPEAKER: Members, I regret to inform the House of the death on 8 March 2024 of the Rt Hon Jonathan Lucas Hunt ONZ, who represented the electorate of New Lynn from 1966 to 1993 and continued to serve as a list member until 2005. He was the Speaker of the House of Representatives from 1999 until 2005. Before becoming Speaker, he held several ministerial portfolios, including Minister of Broadcasting, Postmaster-General, Minister of Tourism, and Minister of Communications. I desire, on behalf of this House, to express our sense of loss to his family along with our sympathy as they deal with the death of the late former member. I now ask members to stand with me to observe a period of silence as a mark of respect for his memory. Members stood as a mark of respect. VISITORS Cook Islands—Chairperson of the Cook Islands Parliament Public Accounts Committee SPEAKER: I'm sure that members would wish to welcome the Hon Tingika Elikana, Chairperson of the Cook Islands Parliament Public Accounts Committee, and his accompanying delegation, who are present here in the gallery today. MOTIONS Dame Kiri Te Kanawa—80th Birthday SPEAKER: We come now a very special occasion for Parliament. In accordance with the determination of the Business Committee, I call on the Hon Paul Goldsmith to move a motion without notice. Hon PAUL GOLDSMITH (Minister for Arts, Culture and Heritage): Thank you, Mr Speaker. I move, That this House recognise the achievements and career of Dame Kiri Te Kanawa and congratulate her as she celebrates her 80th birthday. Very few New Zealanders attain global pre-eminence in their field; even fewer hold on to that pre-eminence for decades. Dame Kiri Te Kanawa was one such Kiwi. Her 80th birthday provides an opportunity for us to acknowledge her talent and her distinguished career. This House is a place of debate and confrontation, as well as cooperation, but it should also be a place where, from time to time, we pause to reflect on the great deeds of some of our fellow New Zealanders. Kiri began her journey in Gisborne, then travelled with her adopted family to Auckland to learn her craft from Sister Mary Leo. In 1971, she made her Covent Garden debut as the Countess in Mozart's Marriage of Figaro. From there, she ascended to the highest levels of international opera, thrilling audiences and reviewers alike. One wrote, "She makes hideously difficult music sound easy as pie." When Charles and Diana married in 1981, before a global audience of 600 million, the royal family turned to Kiri Te Kanawa to sing Handel's Let the bright Seraphim—the seraphim is a form of angel, Willie. I remember watching the wedding in the middle of the night and feeling the feeling of pride that came with seeing a Kiwi at the heart of such an event. Honours have been heaped on her, including the Order of New Zealand and the Order of Australia. As well as thrilling audiences, she's inspired many fellow New Zealanders to reach for the stars. She inspires, but she also helps. Twenty years ago, her Kiri Te Kanawa Foundation, as King Charles noticed, has been established and has helped more than 40 singers succeed globally as well. Dame Kiri Te Kanawa, we honour you today. Hon WILLIE JACKSON (Labour): Mihi ki a koe e te whaea, tae mai nei whakarangatira i a mātou i tēnei wā, haere mai, haere mai, haere mai. [Warm convivial greetings to you madam, it is an honour to have you here with us today, welcome, welcome, welcome.] I rise to salute and celebrate the 80th birthday of Dame Kiri Te Kanawa on behalf of the Labour Party and particularly our Labour Māori caucus. And I emphasise Māori because Dame Kiri is probably the most famous Māori performer of the last two generations. She comes, of course, from two very humble tribes: the first humble one, Ngāti Maniapoto, and then the even more humble tribe of Ngati Porou, which, coincidentally, happens to be my iwi also, which, I think, makes us relations. But we do want to wish her happy birthday and, of course, thank her for her significant contribution to music and the fine arts as one of the great world sopranos. We know, of course, of her beautiful renditions of great composers such as Puccini, Mozart, and Strauss, but it is in the Māori language area that I really want to thank her. Her Māori language album in 1999 and her 2014 album Waiata really elevated te reo Māori to the world stage. Beautiful songs like "Karu Karu", "Po karekare Ana", and "Tarakihi" are now absolutely huge hits around the world. So we thank her; we thank her for her contribution to our Māori language. And I was reminded by the Māori caucus that we lost a few seats and we have an available spot in the North at the moment, Dame Kiri! So feel free to get in touch with me if you feel the need to join politics. Tēnei te mihi ki a koe e te whāea, mihi nui ki a koe mō tō tautoko i tō tātou reo. E te māreikura, ko tēnei te mihi maioha ki a koe, ko koe tētahi o ngā tauira mana wahine i te ao Māori i te ao whānui. Kia ora tātou. [This is a warm greeting to you madam, and a thank you also for supporting our language. Dear madam, this is a warm convivial greeting to you, you are a true reflection of Māori woman for the Māori people and everyone else as well. Cheers everyone.] Hon MARAMA DAVIDSON (Co-Leader—Green): E te Māngai, tēnā koe. E te māreikura, tēnei te mihi haritau ki a koe e te whāea, e te kuia. Nei rā taku hōnore te mihi ki a koe i tō huritau me ngā piki me ngā heke o tō haerenga, tēnā koe, tēnā koutou. [Dear friend, happy birthday to you dear matriarch, dear esteemed one. It is my honour to acknowledge you on your special born day and the trials and tribulations of your journey, greetings to you.] It was indeed my honour today to want to speak and put my hand up to be able to honour Dame Kiri Te Kanawa, who I'm not sure will remember, but back in, I think, the mid to late 1980s—my father is Rawiri Paratene. He directed and toured with you for a documentary that was made at the time, and I toured with him. I was on that road trip, which I believe might have started at Te Poho-o-Rawiri Marae, in Tūranga-nui. I think we travelled around Ūawa, Hauiti. We spoke to the Kerekere whānau, the Te Kani whānau, Bob Mahuika. In that documentary, Dame Kiri Te Kanawa was also spreading waiata Māori in among the different captions and the different parts of that documentary. I was a young girl, and I was very, very pleased today—I don't think that I have had the chance to see you up close since those decades ago. It was one of the proudest moments for my father to be able to be involved with touring with you. We got to see a part of the countryside that we hadn't seen before in many of the times. I remember that we also went through the sort of Waitomo Caves area, and one of the biggest memories of that whole trip was I remember us also staying on Lake Taupō for some of your visit, and the interviews that we were doing. I remember us being able to fit in a trip to Waitomo Caves while we were in these areas. I just remember the grace. I was a young girl who wasn't fully steeped in the land of opera, but what I do remember is the grace with which Dame Kiri held what seemed to me like the privilege of returning home and being with whānau on marae. I remember the stays on the various marae, and the whānau being really clear that they wanted to source some caravans for you to also have some space, and we really wanted to honour that. But I just remember your grace and your wanting to be a part of all of these connections back to tūrangawaewae and whakapapa and whānau at the time. My father will be so pleased to know that I have been able to raise that on the floor today, to congratulate you on your incredible international and decades of longstanding fame because of your unique talent and ability—fancy having one of our own wahine Māori right at the top of international and longstanding acknowledgment of talent in opera in the singing space. So it really is my pleasure. Thank you, Mr Speaker. Hari huritau [Happy birthday] Dame Kiri Te Kanawa. Hon DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker, and on behalf of ACT, I'd like to join with other party leaders in offering congratulations and respect and aroha to you, Dame Kiri, at the time of your 80th birthday and for your magnificent career. I think it's fair to say, as Paul Goldsmith has said, that Kiwis love it when one of us stands on top of the world, a pre-eminent for such a long period of time, but also, the fact that you did it at a time when most of us were best known for rugby, racing, and beer, showed the world and ourselves that we could be something different, that we could be at the top of the world in opera. I think it helped New Zealanders find out who we are in the world and not just stand proudly but stand in a different way. And for so many New Zealanders who stand differently in many respects of their life, I suspect that what you did was a revelation. Other members have shared stories and anecdotes of their connection to you throughout their lives. I was unfortunate to have to wait until just this afternoon to meet you, but it was well worth it. And I hear stories about your very accurate shooting of pheasants with none other than the Queen. Now, you know, the Labour Party have offered you a membership, but could I just suggest that maybe they're not the right party for you after all. And besides, I hate to think what they'd tax you. Dame Kiri, you are a true gem and a treasure for our nation. We're so honoured to have you here in our Parliament today. When we hear that soaring note—which I promise I will not repeat—at the end of the first line of Pōkarekare Ana, the hairs on the back of our necks stand up because it reminds us of who we are and the best of all New Zealand. Happy birthday and thank you. JENNY MARCROFT (NZ First): Thank you, Mr Speaker. I begin my contribution on behalf of my leader, the Rt Hon Winston Peters, and the New Zealand First caucus in joining the House in celebrating Dame Kiri Te Kanawa's 80th birthday, acknowledging you here today. We are blessed to have you amongst us. I begin with this whakataukī, Ko te pae tawhiti whāia kia tata, ko te pae tata whakamaua kia tina—seek out distant horizons and cherish those you attain. Today, as we celebrate your birthday, of the legendary New Zealand soprano who has made a remarkable rise to global fame, and started with your very first public appearance at the age of six years old on Gisborne's radio station—boy, the careers that radio has launched. You sang an 1892 ditty called "Daisy Bell". I don't think anyone knows it, but once I say these lyrics, I'm sure many of us know the song: Daisy, Daisy Give me your answer do I'm half crazy All for the love of you You also went on, in terms of music and your career, receiving New Zealand's first ever gold disc for music sales—what an achievement. Others in this House have acknowledged those incredible tohu, those attainments you achieved in your career, but one, for me, really stands out. This is my most favourite period drama ever created for television, Downton Abbey. You performed in that just so beautifully, playing the Australian soprano Dame Nellie Melba, so I think it's appropriate that we also acknowledge your film and stage performances alike. Not only that, you had all the cast and crew in tears throughout your practices for that show. That's the power of your voice, to bring people to an emotional place in themselves. Not only that, you had two little dogs that you took on set, and then your third little dog was named Abbey once she was born, after Downton Abbey. Kiri Te Kanawa, you have enjoyed one of the longest careers in operatic history—we acknowledge you for that—but you continue to make a difference by nurturing new talent, dedicating your time to training and the next generation of singers. As one of the world's greatest opera singers, the iconic New Zealander of the Year in 2012, you never forgot where you came from. As a Māori opera singer, you brought a piece of New Zealand to the world in a vehicle that wasn't Māori. We congratulate you for that. So to conclude, I'll finish with a whakataukī from a beautiful book titled Mauri Ora: Wisdom from the Māori World, "Tohaina ō pāinga ki te ao"—share your gifts with the world. Those gifts we receive, and the impact that these gifts can have on the world, are amplified when we share them, when we share our knowledge with a new generation. So, today, in this House of Parliament, we celebrate our Dame, our Kahurangi, on her 80th birthday. MARIAMENO KAPA-KINGI (Matarau—Te Pāti Māori): Tēnā koe. Waimarie ana au ki te tū ki te mihi atu ki tēnei tōku nei rangatira, e Kiri tēnā koe, e te Speaker tēnā koutou katoa. Tēnā koe e Kiri i tēnei rā whakanui i a koe kua eke ki te 80 tau. E te kura wahine o Ngāti Maniapoto and Willie's crew, tēnā koutou. [I am honoured to stand before you and acknowledge our esteemed leader, Kiri, greetings to you, dear Speaker, and everyone present, greetings to you all. Acknowledgements to you Kiri on this special day of yours turning 80. Dear madam of Ngāti Maniapoto and of Willie's crew, warm convivial greetings.] A woman of many accolades that, of course, would not fit into this brief address to the House, hui anō. What I can and do admire the most is your significant and sustained effort to foster the talent of the younger generations, particularly through the Kiri Te Kanawa Foundation. You've inspired, as well as helped, young Māori invoke the ancestral magic that lies in their whakapapa, and provided the platform to expose that to the world. That is mana tuku iho [handed down], and that is also what we stand for as Te Pāti Māori: creating a mokopuna-centric world, where we can be whole, as opposed to lesser than. Of course, we need look no further than our darling of Te Tai Tokerau Kawiti Waetford, who will be gracing us shortly with his Māori magic. Nāu ia i ako i poipoi nōreira tēnā koe, hari rā whānau, e Kiri, tēnā koutou katoa. [You nurtured and mentored him/her, and so thank you, happy birthday, Kiri, thank you everyone.] SPEAKER: The question is, That this House recognise the achievements and career of Dame Kiri Te Kanawa and congratulate her as she celebrates her 80th birthday. Motion agreed to. Waiata—Pōkarekare Ana [Applause] PETITIONS, PAPERS, SELECT COMMITTEE REPORTS, AND INTRODUCTION OF BILLS SPEAKER: Petitions have been presented to the Clerk for presentation. CLERK: Petition of Louise Bint requesting that the House make available low interest loans or force mortgagors to reduce interest rates for property owners displaced due to the North Island weather events. Petition of Brian Webb requesting that the House pass legislation to allow all those on benefits to earn an amount equivalent to eight hours at the minimum wage a week before any deductions to their benefit and to reduce reduction rates. Petition of Focus on Iran requesting that the House urge the Government to consider and take appropriate action to expel the Iranian ambassador. SPEAKER: Those petitions stand referred to the Petitions Committee. Ministers have delivered papers. CLERK: Government responses to the report of the Foreign Affairs, Defence and Trade Committee on its inquiry into illegal, unregulated, and reported fishing. Report of the Justice Committee on its inquiry into the 2022 local elections. Report of the Primary Production Committee on its inquiry into the future of workforce needs in primary industries in New Zealand. Report of the Regulations Review Committee on its inquiry into bylaws. 2023/24 statement of performance expectations for Te Taura Whiri i te Reo Māori. Reserve Bank of New Zealand monetary policy statement. SPEAKER: Those papers are published under the authority of the House. Select committee reports have been delivered for presentation. CLERK: Report of the Finance and Expenditure Committee on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. Reports of the Foreign Affairs, Defence and Trade Committee on the 2022/23 Annual review of the Ministry of Defence and the New Zealand Defence Force European Union Free Trade Agreement Legislation Amendment Bill. Report of the Health Committee on the Misuse of Drugs (Pseudoephedrine) Amendment Bill. Reports of the Justice Committee on the 2022/23 Annual reviews of the Criminal Cases Review Commission, Crown Law, and Electoral Commission Executive Board for the Elimination of Family Violence and Sexual Violence, HRC, and IPCA Judicial Conduct Commissioner, Law Commission, and Parliamentary Counsel Office Privacy Commissioner and Serious Fraud Office Electoral (Lowering Voting Age for Local Elections and Polls) Legislation Bill. Report of the Transport and Infrastructure Committee on the Road User Charges (Light Electric RUC Vehicles) Amendment Bill. SPEAKER: The bills are set down for second reading. No bills have been introduced. ORAL QUESTIONS QUESTIONS TO MINISTERS Question No. 1—Prime Minister 1. Rt Hon CHRIS HIPKINS (Leader of the Opposition) to the Prime Minister: Does he stand by all his Government's statements and actions? Rt Hon CHRISTOPHER LUXON (Prime Minister): Absolutely, and including yesterday's announcement that this Government will finally hold Kāinga Ora (KO) tenants who are threatening, abusive, and violent towards their neighbours to account for their actions. Our Government believes in rights and responsibilities, so if you contribute to a culture of intimidation and abuse, it's time to change your behaviour, and if you don't, you may not keep your taxpayer-funded State house. There are just far too many families on the wait-list who would respect that property and respect their neighbours to just privilege those current KO tenants who wage a war of abuse in the community. It's not right, and I agree with the member when he said that after six years in Government, he didn't do enough to crack down on unruly tenants. Well, the good news is enough is enough. This Government was elected to change, and we're going to do exactly that. Rt Hon Chris Hipkins: Is the Deputy Prime Minister correct that the Government has a $5.6 billion Budget shortfall and that there is "a huge gap" in its pre-election costings? Rt Hon CHRISTOPHER LUXON: Well, I can tell you I'm not going to take any lectures from that member about economic management. That was a Government that was characterised by spending more, taxing more, borrowing more, and we heard from the new finance spokesperson they want to continue to do more of it. Rt Hon Chris Hipkins: Point of order, Mr Speaker. It was a very straightforward question as to whether a statement by the current Deputy Prime Minister was correct. It had nothing to do with the previous Government at all. SPEAKER: Yes, that's true. It could've been answered with one word and then perhaps some elaboration. The Prime Minister might like to have another go at that. Rt Hon CHRISTOPHER LUXON: Well, we've inherited a struggling economy from the previous Government's economic mismanagement, and we've got some big fiscal challenges ahead of us, but we're the Government that's going to fix it. We'll do it; that's what we always do, and we're going to clean up after your last Government. Rt Hon Chris Hipkins: Is the IRD correct that his Government's proposed tax on offshore online casino operators will raise $155 million over four years, or are the "rock-solid" costings that he and Nicola Willis produced correct suggesting the change will bring $716 million of revenue over the same period—a difference of over $500 million? Rt Hon CHRISTOPHER LUXON: What I can reassure the member about is that this is a Government that's going to give tax relief to working New Zealanders, low and middle income workers who actually deserve a tax break after 14 years of not getting one, particularly from that previous Government. That's what we're going to deliver for them. Rt Hon Chris Hipkins: Which numbers are correct: his rock-solid estimate of the savings that his cuts to benefit adjustments will make, or the latest official advice that they'll save $1.3 billion less than he promised before the election? Rt Hon CHRISTOPHER LUXON: Well, I can tell the member the numbers that we're not going to be doing. We're not going to increase Government spending by 84 percent. We're not going to hire 16,000 more public servants. We're not going to increase Government debt from $5 billion to $100 billion and actually have nothing to show for it. We're a Government that's going to fix this economy, we're going to grow the economy, give people tax relief, and ensure there's a culture of fiscal discipline. Rt Hon Chris Hipkins: Well, which numbers are correct: his rock-solid pre-election estimate of the cost of tax cuts for landlords or the latest official advice that they will cost $800 million more than he promised before the election? Rt Hon CHRISTOPHER LUXON: I think what's great is we care about renters, a group that the Labour Party used to care about a lot. Actually, we're increasing the supply of rental properties, we're lowering costs that have just been passed through to renters—because under that Government, average rents went up $170 a week. That's not going to happen under our Government. We want downward pressure on rents, not upward pressure. Rt Hon Chris Hipkins: Why did he claim on 11 March that he hadn't seen the advice that his Government's tax cuts for landlords had blown out by $800 million given his finance Minister had already publicly confirmed that that was the case, or has he just given up on trying to keep track of all of his Government's Budget blowouts? Rt Hon CHRISTOPHER LUXON: I'll tell you who I haven't given up on, and it's the renters of New Zealand. Under that Government, average rents went up $170 a week. Well, I'm sorry, we're here to fix things. We're here to get the country turned around. We're going to get things done, and we're going to make sure that there's more rental property available. We don't just load up landlords with costs that pass on to renters that lead to higher rents. We want lower rents, downward pressure on rents. Rt Hon Chris Hipkins: Will tenants get $800 million worth of rent reductions as a result of this policy? Rt Hon CHRISTOPHER LUXON: What we will be doing is increasing the supply of rental property and putting downward pressure on rent, as he has received in formal advice before in Government. That's why his policies didn't work. They ended up increasing average rents—that's not acceptable. We're on the side of renters in New Zealand. Rt Hon Chris Hipkins: Point of order, Mr Speaker. I accept the Prime Minister hasn't answered any of my questions thus far, but that was a relatively simple and straightforward question about an $800 million policy which he claims is going to lower rents. I've asked whether it will result in $800 million worth of rent reductions. SPEAKER: Well, as I said just recently in Parliament, it's a good idea if people refer to the point of order or the matter of order they're referring to. Given your opening statement there, I think you probably closed off some opportunities. But can I just say that no member has the right to expect a yes or no answer, and the final line of that line of questioning really did invite the response that the member got. Rt Hon Chris Hipkins: Does he agree with Christopher Luxon, "I can tell you in the National Party we understand the economy and we are rock solid in our numbers.", given his tax promises were $800 million out on interest deductibility, more than $500 million out on gambling, and $1.3 billion out on benefit indexation? Rt Hon CHRISTOPHER LUXON: Well, look, I can tell you it is ironic that you are trying to lecture me on economics after six years of being in Government, of actually causing huge damage to our books, having had economic mismanagement and vandalism on a scale we've never seen before, an 84 percent increase in Government spending. You drove up domestic inflation, you drove up interest rates, the last three quarters of the last year's economic growth went down, and you've got rising unemployment. So I don't take lectures from you on anything to do with economics, thank you very much.. SPEAKER: I just point out that it wasn't me lecturing the Prime Minister of any of those things. Hon David Seymour: Can the Prime Minister confirm that the fiscal impact of the mortgage interest deductibility changes is greater than the estimate of one party and closer to the estimate of another party in the coalition, because this Government is actually a coalition of three partners working together for a better New Zealand; and does he have any advice for the guy on the other side who has no friends? Rt Hon CHRISTOPHER LUXON: I'm very proud of the way that the three parties in this coalition Government are working to actually get things done for New Zealanders. Question No. 2—Finance 2. STUART SMITH (National—Kaikōura) to the Minister of Finance: By how much has Government debt increased in recent years? Hon NICOLA WILLIS (Minister of Finance): In 2008, net core Crown debt—a measure which includes Government financial assets as well as financial liabilities—was 5 percent of GDP. Despite the global financial crisis (GFC), both the Key-English Government and the following Labour Government, at least initially, had a goal of keeping net debt to 20 percent of GDP or below. In 2019, it was 19 percent. What is it now? Net core Crown debt, according to the latest forecasts—[Interruption] Members opposite laugh, but I think most New Zealanders would be interested in this grave number. They don't think it's very laughable— Rt Hon Chris Hipkins: Point of order, Mr Speaker. Previous Speakers have ruled very clearly that Ministers can't ask themselves questions, and they particularly can't ask themselves questions when they're in the process of answering one. SPEAKER: That's quite true, but I think, in this case, the question that was asked was being paraphrased. I'm taking a generous view on that. We will have the answer with the appropriate brevity. Hon NICOLA WILLIS: Net core Crown debt, according to the latest forecasts, is now 44 percent of GDP—44 percent—a considerable increase in only five years. To put it in perspective, members, 44 percent of GDP is the highest that net debt has been as a proportion of the overall economy in 30 years, comparable only with the period from the late 1980s to the mid-1990s. Stuart Smith: What has caused debt to increase so quickly? Hon NICOLA WILLIS: Well, COVID-19 was a big reason that net core Crown debt increased so quickly, but Government spending outside of COVID has also increased significantly, with Treasury advising me that the previous Government left us with a structural operating deficit of around 2 percent of GDP. The result is that net core Crown debt increased from around $59 billion in 2017 to $183 billion this year, an increase of more than $100 billion in six short years. Stuart Smith: Has she seen any other explanations for the recent increase in debt? Hon NICOLA WILLIS: Well, yes, I have seen reports that the reason debt increased so much was that the previous Government was making so many high-quality infrastructure investments. In particular, one not exactly impartial observer recently said that increasing debt "has enabled us to invest more in transport, into health and education capital, more into the things we need to underpin the kind of society and economy we want". I have searched for evidence of such high-quality investment, but amongst the wreckage of light rail, the Auckland harbour cycle bridge— SPEAKER: That'll be enough—[Interruption] That's enough. Can I just remind the member asking the question that you can't use the question process to attack the Opposition. You can, of course, ask it in a way that is reflective of what conditions Ministers may find themselves in. Stuart Smith: Should the Government borrow for productive investments? Hon NICOLA WILLIS: Absolutely. That is one of the reasons the Government should borrow: to fund high-quality investments that provide benefits to New Zealanders over time, including those that increase the productive capacity of the economy. But I would add one important note of caution: economic shocks push up debt quite considerably. We've seen this recently with the global financial crisis and with COVID. After a shock, Governments have to either bring debt down again as a percentage of GDP, which necessarily requires constraint, or let debt settle at a higher level. New Zealand has seen public debt ratchet up like this since 2008. I would invite members to engage in a little thought experiment, where we went through the GFC and COVID with a starting point for net debt of 50 percent of GDP rather than 5 percent; so Governments should always be thinking about the next shock that's around the corner, not just maxing out the credit card today. Stuart Smith: Has she seen any commentators arguing for higher debt? Hon NICOLA WILLIS: Well, yes. I have seen a report saying that a future Government would consider taking on more debt, despite New Zealand's debt being the highest for 30 years, despite us having little to show for it, and despite interest costs rising to $8.8 billion this year. Mr Speaker, I'm disappointed to hear that coming from a member of this House, Barbara Edmonds. Hon Barbara Edmonds: Does she agree with Treasury chief economist who has stated, "Our key point is that current debt levels in New Zealand are well within the range that we would consider prudent."? Hon NICOLA WILLIS: I agree that that definition of prudent is met. What I question is whether New Zealanders can see $123 billion worth of value generated by that Government for the $123 billion worth of debt that they have saddled this and future generations with. Question No. 3—Prime Minister 3. CHLÖE SWARBRICK (Co-Leader—Green) to the Prime Minister: Does he stand by his statement, and I quote, "I think everyone agrees that the State must always provide a safety net for New Zealanders who have fallen on hard times ... and State houses will … play a very important part of that safety net"? Rt Hon CHRISTOPHER LUXON (Prime Minister): Absolutely. But, before I begin, can I just congratulate the member on her ascendancy to the leadership of the Green Party, or co-leadership of the Green Party. Absolutely, including those State tenants who have been abused and victimised by their neighbours. Take Cheyne Smith, who's been a Kāinga Ora (KO) since 2015 and described the actions of some of his neighbouring KO tenants. He said, "I've been beaten, the house has been robbed, egged, bottled. Visitors were assaulted, vehicles got stolen. It was a nightmare." The previous Government, and their friends in the Green Party, promoted a policy that facilitated a culture of intimidation and abuse, and I'm very proud that our Government is going to deliver change. Chlöe Swarbrick: Can he guarantee that no children in this country will be made homeless as a result of his Government's policies? Rt Hon CHRISTOPHER LUXON: Well, we don't want to actually see KO tenants being evicted from KO housing, but, actually, the parents are adults and they have a choice to make about whether they want to meet their obligations and their responsibilities. That is the first port of call. Chlöe Swarbrick: Will he resign if any children are made homeless as a result of his Government's policies? Rt Hon CHRISTOPHER LUXON: There are children that are growing up in motels today, that are living on floors of family or friends, or in community housing provider housing, who actually want a shot, and their families want a shot, at being able to get into the State house. The problem today is that there are 24,000 people on a State house wait-list, which went up four or five times under the previous Government. There are neighbours in those KO communities who are getting abused, and I'm sorry, but we're standing up for those folk and saying to them, "There are rights and responsibilities in this country". Chlöe Swarbrick: So is the game plan here that those who are evicted— SPEAKER: No, stop—stop. Start with a question word. Chlöe Swarbrick: Is the plan here that those evicted from public housing are made homeless or eventually end up in prison? Rt Hon CHRISTOPHER LUXON: The plan here is to give people a shot of getting a State house—who deserve a shot at getting a State House and are going to appreciate it and value it, and actually make sure that they can actually get their shot at the Kiwi dream. That's what this is about. What this plan is about is making sure that neighbours of KO tenants, who are getting abused and threatened every single day—that stops. It stops. Chlöe Swarbrick: Does he care at all about the evidence that his Government's policies will increase homelessness, poverty, and inequality, or is he intent on running this Government on vibes? Rt Hon CHRISTOPHER LUXON: We are wanting to grow this economy so we can drive more prosperity in this economy and lift wages and incomes for everybody. Rt Hon Winston Peters: Can I ask the Prime Minister as to whether he's seen or heard of any policy, either here or anywhere in the world, where a tenant can have absolute contempt for the landlord, whether it be State or whether it be private, and yet be the beneficiary of the largess being suggested by that questioner? Rt Hon CHRISTOPHER LUXON: The deal's very simple in New Zealand: you have rights to a State house when you need it, but you also have responsibilities to look after it like it's your own house. That's the deal. Because a taxpayer has woken up this morning—a low- and middle-income worker that the Labour Party used to care about, who's actually paying their taxes, going to work, giving it to the Government—to, actually, subsidise the living of some other fellow Kiwi. They need to respect their property; they need to respect and have responsibilities as well as rights. Hon David Seymour: Is the Prime Minister trying to say that our society needs people to treat each other well and take responsibility for themselves? Rt Hon CHRISTOPHER LUXON: That is exactly right: our society should be built on the notion of we have rights but we also have responsibilities to each other and to the country. Question No. 4—Finance 4. Hon BARBARA EDMONDS (Labour—Mana) to the Minister of Finance: Kia orana kātoatoa, Mr Speaker. Does she stand by all her statements and actions? Hon NICOLA WILLIS (Minister of Finance): Yes, in the context in which they were given. I particularly stand by my commitment to give tax relief to hard-working New Zealanders in the upcoming Budget in May. Hon Barbara Edmonds: Does she stand by both her statements that she knows a front-line service "when I see it" and that there would be no cuts to front-line public services? Hon NICOLA WILLIS: Yes. Hon Barbara Edmonds: Does she see front-line services when she looks at Customs staff, police officers, firefighters, free school lunches, and carers funded through Whaikaha, and, if so, why is her Government cutting the support for these front-line services? Hon NICOLA WILLIS: Well, what a gift of a question! This is a Government that sees police as front line and is increasing the number of police. This is a Government that wants to continue the school lunch programme that the other Government didn't leave any budgeted funding for, so we're prioritising it in our upcoming Budget. Hon Barbara Edmonds: Does she stand by her statement that she is committed to delivering tax cuts without borrowing a cent? Hon NICOLA WILLIS: That's right. Hon Barbara Edmonds: Does she agree with the Prime Minister when he committed to no new taxes or increasing existing taxes; if so, how does she reconcile that with breaking her promise to axe the app tax, increasing petrol taxes by 22c a litre, and introducing an additional $50 tax on every New Zealander's vehicle? Hon NICOLA WILLIS: I'll give the member a little instruction on coalition Government, because the Government's tax and fiscal plans reflect coalition negotiations which resulted in a number of amendments to the proposals that National and other parties campaigned on. And I'd just reassure the member that we will be delivering tax relief to the hard-working Kiwis who missed out on her Government's watch and who haven't had a tax reduction since 2010. Hon Barbara Edmonds: Why is she introducing at least three new taxes she promised not to, cutting funding for wheelchair servicing, refusing to commit to funding school lunches as set out in her fiscal plan, and is she worried she will run out of election commitments to break? Hon NICOLA WILLIS: Look, the member can list a bunch of assertions that are completely incorrect but it doesn't reflect well on her. Because we are committed to funding the school lunch programme, we are committed to funding disability services, we are committed to sustaining good front-line services—our Budget will reflect that. And here's the thing: when you're actually careful about eliminating waste in the back office, when you actually drive down the amount wasted on consultants and contractors and ridiculous processes and low-value programmes, that frees up more cash for front-line services that New Zealanders rely on. Our Government's doing it; their Government should have—sorry about that. Question No. 5—Housing 5. KATIE NIMON (National—Napier) to the Minister of Housing: What actions has he taken setting out his expectations for Kāinga Ora–Homes and Communities? Hon CHRIS BISHOP (Minister of Housing): Oh, well, yesterday the Minister of Finance and I, as shareholding Minister, sent an interim letter of expectation to the board of Kāinga Ora – Homes and Communities (KO), instructing them to end their Sustaining Tenancies Framework, the policy of the last Government that enabled intimidation, abuse, and destruction in communities up and down this country. We have directed Kāinga Ora to make better use of tools in the Residential Tenancies Act 1986, including formal warning notices, relocations, and, in severe and persistent cases, terminating tenancies. KO records hundreds of serious incidents every month, including alleged illegal activity, harassment, intimidation, threatening behaviour, and verbal abuse. Despite this, only three people were evicted last year for bad behaviour. There is no incentive for tenants to improve their behaviour or to stop damaging their taxpayer-funded house unless they know there are consequences. We're bringing them back. Katie Nimon: What prompted the Government to make this change? Hon CHRIS BISHOP: Well, we've all seen the stories of the kind of misery that the last Government's policy enabled, which is why we have directed Kāinga Ora to stop it. This also fulfils a coalition commitment between the National and ACT parties. To name just one example, we saw the elderly Whangārei couple subject to death threats from the patched Black Power Kāinga Ora tenants next door. They allegedly threatened to slit the 82-year-old man's throat and watch him bleed out. To give you another example, we heard the heartbreaking story from a Te Awamutu homeowner who said a campaign of abuse from his Mongrel Mob Kāinga Ora neighbours cost him his marriage and left him with post-traumatic stress disorder. He told the New Zealand Herald of a night where a meth-crazed man linked to a Kāinga Ora property next door smashed up his house at 3 a.m. and tried to break in. These sorts of activities and behaviours need to stop, and under this Government, they will. Katie Nimon: What did this interim letter of expectations say about rent arrears? Hon CHRIS BISHOP: Well, the Government has laid out its expectation that Kāinga Ora stops letting tenants go into massive rent arrears, as we've seen happen over the last few years. To give you the exact numbers, in 2017, tenants' rent debt was $1 million. Six years later, it has ballooned to $21 million. At the moment, there are more than 450 Kāinga Ora tenants who each owe more than $10,000. That is a staggering amount of debt to let a State house tenant get into. It's not fair on taxpayers. It's not fair on the tenants themselves. We have instructed Kāinga Ora to be much more proactive about preventing this from happening in the first place. Katie Nimon: What else did the letter of expectation say? Hon CHRIS BISHOP: We've made it clear that we expect Kāinga Ora to move families into vacant homes much more quickly than they are currently doing. There are hundreds, if not thousands, of homes vacant at any given time, and when the wait-list is over 25,000 people, that is not OK. We are also concerned about the loss of social licence for social housing in communities, often because communities feel that social housing developments happen without engagement from Kāinga Ora. We have therefore instructed them to do more to genuinely engage with local communities about their development plans and activities, above and beyond their existing legal requirements. We've sent this interim letter to make sure that they are focused on the right things right now, and we intend as a Government to issue an updated letter of expectation later this year in response to the independent review led by Sir Bill English, which is reporting to Ministers very soon. Question No. 6—Police 6. Hon GINNY ANDERSEN (Labour) to the Minister of Police: Does he stand by all his statements and actions? Hon MARK MITCHELL (Minister of Police): Yes. Hon Ginny Andersen: Does he stand by his statement regarding the police pay offer, "No, we are not offering less than what Labour offered. That's not true at all."? Hon MARK MITCHELL: Yes. Hon Ginny Andersen: Does he agree with the president of the New Zealand Police Association, Chris Cahill, "It's like a slap in the face. It's like saying how dare you turn us down, we're going to give you an even lower offer. They just misread the room. They've misread it badly."; if not, why not? Hon MARK MITCHELL: I respect the role of the president of the Police Association and he respects our role. The police and the Police Association are engaged in good-faith negotiations, and they carry on. Hon Ginny Andersen: Is the real reason the police pay offer is not backdated and contains three significant clawbacks due to funding now going to tax cuts for landlords? Hon MARK MITCHELL: No. Hon Ginny Andersen: Which is correct: the coalition agreement that promises 500 new police in two years, or Christopher Luxon's statement that it's "a clear goal that we are heading towards"? Hon MARK MITCHELL: Well, we've been very clear that the coalition agreement says that we will deliver 500 additional police officers in two years, and the Prime Minister is absolutely right in restating that. Rt Hon Winston Peters: Could I ask the Minister whether he's actually dealing with pay for the police from last year, and why would that be? Hon MARK MITCHELL: Well, the offer made by the previous Government was rejected by the police—[Interruption]—that's right, and they failed to really act on that quickly. Whereas the incoming Government: we take it seriously, we've acted quickly, and we negotiate in good faith. Hon Nicola Willis: Can the Minister confirm that where the previous Government was very flinty, our Government has come in and agreed, on this issue, to provide more funding so that a more generous offer could be made to front-line police officers? Hon MARK MITCHELL: Yes, I can confirm that and I can also confirm that probably under the previous Minister that the Labour Government—against convention—asked the police to provide within baseline the competency service increments payment, which is a very important payment that goes to police officers to recognise their progression through the ranks, and that is something this Government has reinstated. SPEAKER: Yeah, just to remind people that asking questions of a Minister about the responsibility of a previous Government's Minister is not within Standing Orders. It might be fun, but it's not helpful. Hon Kieran McAnulty: Point of order, Mr Speaker. Thank you for that, and it is indeed consistent with other rulings that you've made. It would be helpful to the order of the House if that direction was given before the Minister had the opportunity to answer, given that it was the question that was against Standing Orders not the response. SPEAKER: Yeah. Thank you for your advice and I'll take it on board. Question No. 7—Prime Minister 7. Hon MARAMA DAVIDSON (Co-Leader—Green) to the Prime Minister: Does he stand by his Government's policies and actions? Rt Hon CHRISTOPHER LUXON (Prime Minister): Absolutely—in the context that they were made. Hon Marama Davidson: Does he stand by his Minister Responsible for RMA Reform's statement about the fast-track approvals bill that "people who are keen on having the projects inserted into the bill will be able to submit them to the expert panel", and if so, will experts, local communities, and iwi Māori groups concerned by these proposed projects also be able to submit to the panel? Rt Hon CHRISTOPHER LUXON: Well, we've got a very good process that involves Ministers, expert panels, and decisions by Cabinet. Hon Marama Davidson: What advice, if any, has he received on the constitutional appropriateness of adding a list of projects into the legislation after the select committee stage, and the ways in which this could undermine public input, scrutiny, and transparency? Rt Hon CHRISTOPHER LUXON: Completely appropriate, but what I'd say to you: the purpose of fast-track consenting is it's taking too long to get anything done in this country. We have built an obstruction economy. We are here to get things done. That's why we're taking fast-track, introduced by David Parker, beefed it up, put it on steroids, and are actually going to get some outcomes for some people. Hon Marama Davidson: Does he stand by his statement that he will "ensure the fast-track consenting legislation upholds Te Tiriti", and if so, can he guarantee that his Government will not fast-track any mining consents that may impact Treaty settlements? Rt Hon CHRISTOPHER LUXON: In answer to the first part of the question, yes. Hon Marama Davidson: Does he agree with former chief press secretary for the National Party Janet Wilson that "the fast-track consenting bill is not an act of political alliance so much as pork barrelling at its finest, providing a new golden age for National and New Zealand First's backers", and if not, why not? Rt Hon CHRISTOPHER LUXON: Absolutely rubbish. I mean, the bottom line here is that we have an obstruction economy. We've actually taken an awful long time to consent something, and it's costing a huge amount of money. We want to actually deliver on our climate goals, something that I think the Green Party would want to identify and align with us around, but you can't take eight years to consent a wind farm and two years to build it. Why don't we just take one year to consent and build renewable energy and then two years to build it, and get the benefit in three years, not 10 years? Question No. 8—Health 8. Dr VANESSA WEENINK (National—Banks Peninsula) to the Minister of Health: What steps has the Government taken to deliver better health outcomes for all New Zealanders? Hon Dr SHANE RETI (Minister of Health): The Government recently announced that we are putting health targets at the forefront of our health policy. We are introducing five key targets that clearly spell out faster cancer treatment, improved immunisation for children, shorter stays in emergency departments, and shorter wait times for both first specialist assessments and planned care. We are an outcomes-driven Government, and these health targets show that. Dr Vanessa Weenink: Why was it so important to shift health targets to the forefront of the Government's health policy? Hon Dr SHANE RETI: This Government believes that health targets help direct attention and resources and sets a clear agenda for where our health system should be heading. That is why it is important to have targets at the forefront of decision making. Targets are also accountability and transparency at all levels of our health system, which is vitally important for ensuring the delivery of timely access to quality healthcare for all New Zealanders. Dr Vanessa Weenink: How will the Government ensure that the health targets are robust and will deliver better outcomes? Hon Dr SHANE RETI: I am aware of the potential for gaming targets and will keep a close eye on this. There will be mechanisms to ensure that our health targets will remain robust. These include quality assurance processes to validate data, clinical engagement with discussions on emerging concerns, and the use of independent agencies such as the Health Quality and Safety Commission to support reviews, as needed. Dr Vanessa Weenink: Why has the Government chosen immunisation for children as a key target? Hon Dr SHANE RETI: In 2015, when targets were still at the forefront of Government policy, the immunisation rates for children stood at just over 93 percent. Today, that number is worrisome, at 83 percent. This is well behind countries like the UK, Australia, and Canada. We should be doing much better for our children, and this target is one step to enable that. Question No. 9—Environment 9. LAN PHAM (Green) to the Associate Minister for the Environment: Does he stand by his statement, "For now, the Government has agreed to suspend the obligation to impose SNAs under the NPS Indigenous Biodiversity, and we're sending a clear message that it would be unwise to bother"? Hon ANDREW HOGGARD (Associate Minister for the Environment): I stand by my statement that the Government has agreed to suspend the obligations for councils to impose significant natural areas (SNAs) under the national policy statement (NPS) Indigenous Biodiversity. I also stand by my statement last week that there has been no change to statutory or regulatory obligations on councils. Those obligations continue to apply until they are amended. Cabinet has agreed to amend the NPS Indigenous Biodiversity through a legislative vehicle, and suspend the NPS requirements for councils to adopt new SNAs into their plans. Lan Pham: What, if anything, does he consider the biodiversity collaborative group—set up under the Hon Dr Nick Smith—got wrong when they developed the framework of rules for councils to follow when working with farmers and iwi Māori landowners to identify significant natural areas? Hon Chris Bishop: Point of order, Mr Speaker. I'm struggling to work out how that is connected. With the greatest respect to the member, who I know is a new member, I'm struggling to understand how something to do with Dr Nick Smith in relation to something that the member said relates to the actually quite specific primary question around something that the new Minister has said in relation to the NPS Indigenous Biodiversity. Ricardo Menéndez March: Speaking to the point of order. The primary did contain elements of the policy that the supplementary questions followed. Additionally, it is following comments from the answer to the primary question, so, that's well within what has happened before, where people pick up on a statement that touches on a policy, and then they ask supplementary questions in relationship to that policy. SPEAKER: Well, the member is a very good advocate for that cause. I'll hear from the Hon James Shaw. Hon James Shaw: Thank you, Mr Speaker. According to the point of order, the national policy statement— SPEAKER: Just a minute—just a minute. You're very hard to hear there. People might need to do something about that. Hon James Shaw: Speaking to the point of order, Mr Speaker. SPEAKER: Oh, now you're there. Welcome back. Hon James Shaw: Thank you very much. The national policy statement on indigenous biodiversity is derived from the work that was established by Dr Nick Smith in the biodiversity collaborative group for that purpose. I would have thought that the Minister responsible for RMA reform and the Minister responsible for that national policy statement would know that. SPEAKER: Yes, I think the point is, though, it doesn't matter who was the Minister at the time, policy endures. So I think the question might be better worded. Do you want to have another crack at that question, Lan Pham? Lan Pham: Thank you, Mr Speaker. What, if anything, does he consider the biodiversity collaborative group got wrong when they developed the framework of rules for councils to follow, when working with farmers and iwi Māori landowners to identify significant natural areas? Hon ANDREW HOGGARD: The biodiversity collaborative stakeholder group did not actually reach a consensus in the end. There was a minority statement, by a number of groups, so there was no consensus on an outcome. The decision was not taking into account what the biodiversity stakeholder group—actually, they didn't land on a decision. So that's the answer. Lan Pham: What, according to his own ministry's reporting, is the proportion of native species in Aotearoa that are threatened or at risk of extinction? Hon ANDREW HOGGARD: I do not have those numbers on hand at the moment. I can come back to it. Mark Cameron: Why is it important to make this amendment to the national direction to remove the obligation on councils? Chlöe Swarbrick: Kill the birds faster. Hon ANDREW HOGGARD: Because the current use of SNAs are an unjustified intrusion on private property rights, and they are a barrier to the great work that landowners have already been doing on their farms. This change will give us time to review the operation of SNAs and formulate ways to work with landowners to recognise them for the work they're already doing and to incentivise them to do more. Hūhana Lyndon: Did the Minister engage specifically with whenua Māori landowners in the suspension of SNAs; and, if you did, what was their feedback? Hon ANDREW HOGGARD: No consultation has been undertaken in this. There will be consultation going into what will be the future use of SNAs. Basically, this was signalled in our coalition agreement in the 100-day plan. Hon David Seymour: What is the effect on people in rural New Zealand when they hear statements from urbanites such as "they want to kill the birds faster", as the Green co-leader Chlöe Swarbrick just heckled while he was answering questions about a serious topic? SPEAKER: Yeah, we'll try the question a different way. Hon David Seymour: What is the effect on the psyche, morale, and mental health of those in rural New Zealand when it is assumed they want to remove intrusive regulations such as SNAs in order to "Kill the birds faster.", as I just heard from a member opposite. Ricardo Menéndez March: Point of order. I don't believe the Associate Minister has any responsibility for the first part of that question, beyond the fact that it is, frankly, just ridiculous that it is even being asked. SPEAKER: Well, that would really render question time quite useless if we took that view, because, in the end, every Minister's decision affects New Zealanders. If you couldn't ask a question related to that, then we'd be in big trouble here. Hon ANDREW HOGGARD: I think rural New Zealand are sick and tired of being portrayed as people who don't care about their land. Our land is so important to us—it is vital. Up and down this country, I see more and more farmers engaging in planting activities on their farms, creating wetlands, planting off streams, riparian planting—this is all happening. This is happening under farmers' own steam at the moment. We intend to encourage that and incentivise them to do more. Hūhana Lyndon: How, then, will this Government protect indigenous biodiversity and taonga species on private land once the requirement for councils to do so has been stripped away and undermined? Hon ANDREW HOGGARD: How we will encourage this is by encouraging the behaviour that has already been happening. As I have said to this House a number of times, in my time in farming I have seen a complete mind shift from farmers, who are doing more and more every day on protecting biodiversity on their farm, encouraging more of it. That is how we are going to be working with farmers to do more of this. SPEAKER: Before we move to question 10, can I just make a broad plea to the House that when questions are being asked or lodged with the Clerk's office, the use of acronyms is absolutely minimised so that everybody reading the question can know fully what it's about. During the course of the answers there, we had those various acronyms used in their full names—it would be good if they were also in the question. So if the House could take that on board, that would be useful. Question No. 10—Police 10. SAM UFFINDELL (National—Tauranga) to the Minister of Police: What recent results has he seen from Operation Emerald? Hon MARK MITCHELL (Minister of Police): Today, Police announced outstanding results, including in the member's electorate. In a recent five-day operation, Bay of Plenty police have delivered a massive blow in stopping a major source of funding for organised crime groups. The execution of 39 search warrants saw 29 firearms seized and 25 arrests made. Additionally, police seized more than 80 grams of methamphetamine, over $7,000 in cash, two stolen vehicles, and a stolen motorbike. During the operation, 11,372 cannabis plants were destroyed. Operation Emerald targets the back pockets of gangs and organised crime by targeting the large-scale commercial cultivation of cannabis, and I'm proud of the work that police have done around the country to keep their communities safe. Sam Uffindell: How much money did Operation Emerald prevent going into the hands of gangs last year? Hon MARK MITCHELL: Police destroyed over 35,000 cannabis plants and prevented $128 million going into the pockets of gangs through Operation Emerald. Based on the drug harm index, the estimated social harm prevented by Operation Emerald last year was $127 million. Sam Uffindell: Does the Minister agree with the characterisations of Operation Emerald as "ineffective" and "police playing tin soldiers in the sky"? Hon MARK MITCHELL: Comments like that show a lack of respect or understanding for the outstanding job our police officers do, in often difficult situations and circumstances, keeping our community safe and slowing down and disrupting the flow of harmful drugs into our communities. Sam Uffindell: What is the Minister's message to criminals taking part in large-scale cultivation of cannabis? Hon MARK MITCHELL: My message is quite simply this: if you choose to cultivate a drug that remains illegal and if you use it to fund your criminal lifestyle and perpetuate misery in our communities, you can expect police to hold you to account and to seize illegal firearms, drugs, and ill-gotten gains. I'm proud of the police and the work that they do in targeting organised crime, and I back Operation Emerald 100 percent. Question No. 11—Disability Issues 11. Hon PRIYANCA RADHAKRISHNAN (Labour) to the Minister for Disability Issues: Does she stand by her statement regarding changes to purchasing rules and equipment and modification services, "These changes are happening from 18 March and are intended to be temporary changes until later this year"; if so, will she commit to restoring flexibility of funding as was available to the disability communities prior to 18 March 2024? Hon PENNY SIMMONDS (Minister for Disability Issues): These changes are happening from 18 March 2024 and are in place while we complete work on the long-term settings for the use of flexible funding. Whaikaha is working to manage a forecast overspend in the disability support system in this financial year. It is important to take a balanced and fair approach to prioritising disability support funding within the budget available. Whaikaha is prioritising across the system and making changes from 18 March 2024, changes to the purchasing rules which are intended to provide clarity about what supports can be purchased using disability funding and to prioritise spending towards supports accessed by disabled people. Equipment and modification services will be prioritised to provide support to those disabled people with the highest needs first. SPEAKER: I just say to members on the left, I do need to hear the answers to these questions. Hon Priyanca Radhakrishnan: Why was there no consultation with those who would be most impacted by these changes? Hon PENNY SIMMONDS: As I said, the increase in the use of these services has caused a funding blowout, and it is somewhat disingenuous for the member of that party, who put the policies in place that set up the situation that Whaikaha is now facing in terms of flexibility of purchasing and ring-fencing the funding, taking it out of a demand-funding situation. Hon Priyanca Radhakrishnan: What does the Minister say to a mother who contacted me today to say that "flexible use of respite funding has been absolutely essential for the wellbeing of our whānau", and she goes on to say that "we cannot use a professional support person, so then you have effectively taken our respite funding away"? Hon PENNY SIMMONDS: I say, as I said in my initial answer, that we need to take time to have a look at the flexible funding and how we are going to manage it going forward. But the manner in which it was put in place, without criteria and without support there for how it can be used, has seen more than doubling of the use of that fund and therefore the pressure that Whaikaha are now under. Debbie Ngarewa-Packer: How do you respond to Carlos Cordero, who is concerned that the new rules restrict funding for whānau carer and ignores their experience as whānau carer who actually are on the ground doing the mahi? Hon PENNY SIMMONDS: This has been a difficult time for Whaikaha trying to deal with the policy settings that the previous Government put in place of ring-fencing the funding but still allowing major flexibility for purchasing using that funding. That funding is for disabled people, and the priority has to be for use of that funding for those with a disability. Hon Priyanca Radhakrishnan: Does the Minister agree with Maureen Pugh who said, and I quote, "If you're talking about wasted expenditure then that's very much where we'll go. But reducing funding and support for those in need, we are actually looking to increase support.", and will she commit to increasing support in Budget 2024? Hon PENNY SIMMONDS: The fund for the equipment and modification of services has been increased by 10 percent. So the misleading statements from the Opposition about funding cuts is completely incorrect. The issue is the policy settings that were put in place by the previous Government that has seen a blowout in the funds available. Debbie Ngarewa-Packer: What does the Minister say to Huana Hickey, a tāngata hauā advocate, who feels these changes attack the very heart of the disabled's needs? Hon PENNY SIMMONDS: It is a difficult time for Whaikaha trying to prioritise the funding. There is not an open cheque book, and therefore they do have to make priorities. So the priority has been that the funding must be spent on the person with the disability, when in the past the previous Government allowed such flexibility for carers to be able to spend on such things for themselves as pedicures, as massages, as overseas travel. So when the funding is under constraint, then the priority must be for the disabled person to receive the funding. Hon Priyanca Radhakrishnan: Mr Speaker? SPEAKER: No, you've used them all up. Question No. 12—Health (Pharmac) 12. TODD STEPHENSON (ACT) to the Associate Minister of Health (Pharmac): What recent announcements has he made about improving New Zealanders' access to medicines? Hon DAVID SEYMOUR (Associate Minister of Health (Pharmac)): Thank you to the member for his question. Pharmac is changing its processes so that it can assess a funding application at the same time Medsafe is assessing an application for regulatory approval of the same product. This means that medicines will be able to be considered sooner for funding in New Zealand. Access to medicines is a crucial part of many Kiwis' lives, and this Government is speeding up the process so that more people have access to the medicines they need, quicker and sooner. Todd Stephenson: How will the parallel assessment process that the Minister has outlined improve access to medicines? Hon DAVID SEYMOUR: Well, currently, Pharmac waits until Medsafe has completed its assessment before it begins a funding assessment, unless the treatment is in relation to cancer. Doing both the regulatory assessment to see if it's safe at Medsafe and the funding assessment to see if it is a good use of taxpayer funds at Pharmac at the same time is common sense. It's a change that costs nothing but it will help Kiwis in need by shaving up to nine months off the approval process. It will also bring us into line with countries such as Australia and Canada, which do it, and have been doing it, exactly the way that we now will. Todd Stephenson: Has he seen any reports of any risks to access to medicines for New Zealanders? Hon DAVID SEYMOUR: Yes. In fact, I have been looking at Budget documents that show that Pharmac's funding over the next three years was left by the previous Government as reducing by several hundred million dollars each year for the next four years. In total, to maintain the level of pharmaceutical funding that New Zealanders are used to, the Government would have to find nearly $2 billion of extra funding over four years, and that is something that this Government is now working very hard to do in challenging economic conditions. Todd Stephenson: What steps is he taking to ensure even more access to medicines for New Zealanders? Hon DAVID SEYMOUR: The coalition Government is based in part on an ACT-National coalition agreement which contains a commitment to updating the rules for Medsafe to speed up the processing of new medicines for regulatory approval to within 30 days if two recognised overseas regulators have already approved it. It is to design and publish a medicines strategy and to update Pharmac's decision-making model to ensure that it appropriately accounts for patient voice. URGENT DEBATES DECLINED Disability Funding—Purchasing Rules SPEAKER: I have received a letter from the Hon Priyanca Radhakrishnan seeking to debate under Standing Order 399 an announcement about purchasing rules for disability funding. This is a particular case of recent occurrence for which there is ministerial responsibility. However, I've listened to the answers to questions asked today and considered the matter because I have an interest in it, but I am not convinced that the time of the House should be set aside today to debate the matter. The annual review debate would be an appropriate vehicle to debate this matter since it covers the performance and current operations of departments. The Leader of the House has indicated that that debate will start in April and has called for parties to nominate which Ministers will appear before the committee of the whole House during the debate. The application is therefore declined. I call on order of the day— Hon KIERAN McANULTY (Labour): Point of order, Mr Speaker. Thank you, Mr Speaker. We accept that. The concern that I have, however, is that there is still no requirement for the Government to accept the proposals from the Opposition on the topics and portfolios which will be debated during the annual review debate, so this House can't be assured that the opportunity to debate this will be given during the annual review debate. SPEAKER: Well, that's true. But the member knows also that the Business Committee will be involved in that process, and I would certainly be an advocate for the Opposition having the opportunities that they seek. APPROPRIATION (2022/23 CONFIRMATION AND VALIDATION) BILL First Reading Hon NICOLA WILLIS (Minister of Finance): I move, That the Appropriation (2022/23 Confirmation and Validation) Bill be now read a first time. Motion agreed to. Bill read a first time. TAXATION (ANNUAL RATES FOR 2023-24, MULTINATIONAL TAX, AND REMEDIAL MATTERS) BILL Second Reading Hon SIMON WATTS (Minister of Revenue): I present a legislative statement on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. SPEAKER: That statement is published under the authority of the House and can be found on the Parliament's website. Hon SIMON WATTS: I move, That the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill be now read a second time. The purpose of this bill is to set the annual rates for income tax for the 2023-24 tax year. The bill also makes proposals to improve the current settings for a broad based - low rate framework. Public consultation is an important part of the tax development process and it is also equally important to the parliamentary process. As reported back from the Finance and Expenditure Committee, the bill contains a range of adjustments as a result of public feedback. These adjustments have strengthened the bill and I wish to acknowledge the members of the Finance and Expenditure Committee across the House for their input into this bill. I would like to briefly touch on the more significant changes that have been made to the bill since its introduction. The centrepiece of the bill is a measure aimed at reducing the benefit to multinational corporations of profit shifting. Under the existing setting, some countries have attempted to attract economic activity by offering multinationals low, effective income tax rates. This is particularly problematic when the income is from cross-border capital investment or the use of intellectual property. It has helped contribute to base erosion and profit shifting, where a multinational can achieve low or even no taxation by shifting their profits to low tax jurisdictions. To tackle profit shifting, the OECD has led the development of a global minimum tax, the GloBE rules, which ensures that large multinationals at least pay 15 percent tax on their mobile income where it is earned. Adoption of the GloBE rules by a critical mass of countries will help reduce the profit-shifting pressures on countries like New Zealand with higher corporate tax rates without preventing the use of tax incentives to attract real investment. Now that it is clear that a critical mass of countries will be adopting these GloBE tax rules, we are proposing in this bill to enact dates for its imposition by New Zealand Government. On 1 January 2025, the income inclusion rule and under-taxed profits rule will be enacted, and on 1 January 2026, the domestic income inclusion rule will be enacted. The GloBE rules are extremely complex. Rather than enacting them directly into our legislation, we are proposing law that will make sure that these rules are modelled through and developed in effect with the OECD countries along with New Zealand. This is the best approach to ensure that our rules are internationally consistent while keeping the Government's implementation and administration costs low. Crucially, future Governments remain free to disapply any future updates to the OCED's commentary or guidance on the GloBE rules which affect their application, so there's no loss of sovereignty involved. Another significant measure in the bill is the trustee tax rate proposal. Following consultation and public submissions, we have made a number of adjustments to this proposal. While most trusts will be unaffected by the proposals in the bill, there did remain a risk of over-taxation of trusts with lower-rate beneficiaries and set laws. That is a crucial point because over taxation can't be determined by looking at the income earned by the trust, but only by reference to the income of set laws and the beneficiaries in the trust. Inland Revenue estimates that there are at least 400,000 trusts. In 2022, approximately 76,000 trusts paid taxes at the trustee tax rate. To help mitigate the risk of over-taxation, we are proposing a $10,000 trustee income de minimis. This will mean that a further 27,000 trusts will not be affected by the 39c tax rate. Based on this, only 12 percent of all trusts would be affected by the 39c tax rate. This reduces the risk of over-taxation while also addressing the vast majority of the under-taxation of trustee income. Trusts in estates with up to $10,000 in trustee income in an income year would continue to be subject to the 33 percent tax rate. Trusts with over $10,000 in trustee income in an income year would be subject to the 39c tax rate on all income. At the committee's recommendation, disabled beneficiary trusts would be taxed at 33 percent instead of a 39 percent personal tax rate. We are also simplifying and expanding the proposals relating to estates. An estate would continue to be taxed at 33c in the dollar for the year of death, plus a further three years. We're also making sure that energy consumer trusts and legacy superannuation funds are excluded from the 39c tax rate. The committee also made a number of recommendations to improve the fairness, certainty, and consistency of tax treatment. For instance, to improve the current proposal on the tax treatment of backdated lump-sum payments from ACC and Ministry of Social Development, the committee recommended including backdated lump-sum payments for attendant care, and related to the Cyclone Gabrielle in North Island flooding event relief measures, the committee made a number of recommendations, including the adding the August 2022 Nelson flood buy-out to the list of events covered, by turning off the brightline and other timing tests. The committee was also concerned at the potential for overreach in the proposed charities and the deregistration tax integrity measures. They therefore recommended providing relief when assets are transferred to other New Zealand tax resident exempt entities and deferring the application date. Along with these, there are a number of other smaller policy matters which have been suggested by policy officials in response to issues brought to them by third parties. This is good news. It shows that the Inland Revenue is working in collaboration with the private sector and with the wider Public Service in order to improve efficiency. An example is the new proposal relating to the Ministry of Disabled People. District health boards and the Ministry of Health had historically made direct funding for disability support payments to their clients. The Income Tax Act provides an income tax exemption for these payments. However, due to an oversight, the exemption was not correctly updated to reflect the fact that the newly established ministry was now responsible for administering some of the direct funding disability support payments. This means that those support payments won't technically meet the requirement for the exemption. The remedial amendment makes these payments exempt and has retrospective application to July 2022, as these payments were always intended to be exempt. Similarly, Health New Zealand has taken over contact tracing from the Ministry of Health. Inland Revenue shares information with the Ministry of Health to help make more efficient processes and procedures, however that arrangement cannot continue for the purpose of the legislation enabling such sharing of information for Health New Zealand as it was not referred to as a Government agency. For the purposes of information sharing, the bill therefore proposes adding Health New Zealand to the definition of a Government agency. Another adjustment to the bill is a proposal to provide more certainty to the early payment discount offered by the IRD. This intends to encourage businesses to pay their taxes in the first year. Inland Revenue applies interest to unpaid tax bills, which is known as the use of money interest. That interest charged depends on the economic conditions of the entity. The application rate for this discount has moved more often than was envisaged in recent times, and due to economic conditions, this has created uncertainty for taxpayers and has undermined the ability of an early payment discount to incentivise voluntary tax payment by businesses in their first year. To maintain this incentive, the bill proposes tidying up and ensuring the early payment discount rate for the use of money interest at 31 March of the preceding income year. This would be applied to the 2024-25 and later income years. As you can see, this is a comprehensive, complex, and detailed tax bill. There have been significant changes and modifications as a result of the Finance and Expenditure Committee working across party lines in order to listen to feedback from a large number of people making consultation and inputs into this bill. It is important to note that many of these changes that were made by submitters to the select committee have been very carefully and diligently considered by the select committee, and as a result, have been reflected in the bill in which we are tabling in this House today. That is an appropriate use of parliamentary time. That is an appropriate mechanism, and it is a good example of how legislation can and should be improved by a select committee process, and again, I acknowledge those members of that committee for their contribution. I commend this bill to the House. ASSISTANT SPEAKER (Greg O'Connor): The question is the motion be agreed to. Hon Dr DEBORAH RUSSELL (Labour): Thank you, Mr Speaker. The first part of what I would like to say today is that I would like to draw the House's attention to page 14 of the report back from the Finance and Expenditure Committee and a particular paragraph in there, in which the committee says—and I want to read this into the record—"We wish to register our sincere thanks to Therese Turner for her work as the independent specialist adviser on tax bills over the last 25 years. Her advice has been invaluable to members of the Finance and Expenditure Committee and undoubtedly improved parliamentary scrutiny of tax legislation. We wish her all the best." Therese Turner was the independent adviser to the committee for a long, long time. In fact, when I started work at Inland Revenue back in 2004, in the policy advice division then, Therese Turner was then the specialist adviser whom we consulted as tax officials, whom the select committee worked with, and who has provided extraordinary advice to the committee over a very, very long time. Tax can be complicated. Therese Turner looked at it, reviewed it, explained it to committee members, and gave us that independent advice—independent from officials, independent from Treasury, independent from political processes—as to whether or not the tax legislation in front of us was workable. The Finance and Expenditure Committee, over 25 years, owes a great deal to Therese Turner, as does this House, and so I'm very glad to have that recorded in the select committee report. Mr Speaker and other members of the House, you will notice as you read this report—as I'm sure you all do—that it was unanimously agreed to by the Finance and Expenditure Committee. That is unsurprising. This bill started in the previous Parliament, under the previous Ministers of Revenue, and then continued in the current Parliament, so these are tax measures that were introduced during the last Parliament. It is unsurprising that members on this side of the House agree to these tax measures. There has, however, since then been an Amendment Paper introduced, which will be introduced at the committee of the whole House stage. Obviously, we will want to debate that Amendment Paper, but the bill as it stands at the moment is one which all members in this House agree to. However, there are some matters that I would like to address a little. I first want to point out that it is the annual rates bill. As a constitutional requirement, the Government is required to ensure that the tax rates are set by legislation every year, by 31 March of the year for which the tax rates apply. This bill does that job and it is the Government's responsibility to ensure that it is passed through all its stages by 31 March, and so members will find that the tax rates are set in, I think, clause 3 of this bill. But I do want to take issue with something that the Minister of Revenue has said in his speech. He said that setting the tax rates confirmed—I think he said that it confirmed it was part of the commitment we have to a broad based - low rate tax system. As I've said many times before, we do not have a broad based - low rate tax system. There is a significant gap in our tax system where capital income is not treated as income for income tax purposes. Now, to a large extent the brightline test addresses that. However, coming up in the amendment bill, the Government is proposing to remove the brightline test, or to reduce it down to two years. It is moving further away from a broad based - low rate system, and we need to remember that we might have a low-rate system, but we do not have a broad-based tax system. However, aside from that, there is a great deal in this bill which we do agree with, and which I think it is important for people to understand. There are a couple of matters I would like to talk through and, if I have time, a third. But I'm sorry, Mr Speaker, when I start talking about tax, I sometimes get a little carried away and concentrate a little too much. ASSISTANT SPEAKER (Greg O'Connor): Yeah, well, five minutes in to get to the bill wasn't bad, actually, Ms Russell. Hon Dr DEBORAH RUSSELL: I've been speaking to the bill all along, Mr Speaker. I want to talk about the changes to the trustee tax rates. Now, the bill as introduced proposed increasing the trustee tax rate to 39 percent to align it with the top personal tax rate. However, we received a number of submissions—quite a significant number of submissions—from accounting firms, from lawyers, from practitioners, and from people affected by this, saying that that might be inappropriate for a large number of trusts in this country. It might be appropriate to have trusts which earn a large amount of income to have that 39 percent tax rate aligned with the top income tax rate, but a great many trusts in this country do not earn a lot of income, and that might have been overreach, going for the 39 percent rate. So the committee and officials and submitters all worked together to work out what would be an appropriate threshold if we had two trust tax rates—one for tax below a certain threshold; one tax rate for trusts above that threshold—and it turns out that there's an appropriate flex point. It's at about $10,000 or so. Now, $10,000 is a nice, round figure, so we've worked with that. What it means is that in the bill, as it has come back from the committee, if a trust earns over $10,000 in trustee income, then that income will be taxed at 39 percent—all of it, from the first dollar right up through. If a trust earns below $10,000, then the trustee income will be taxed at 33 percent, and that provides small trusts with a bit of relief from that top tax rate. However, that figure was chosen quite carefully, because at that $10,000 point, the advantage of having a 33 percent tax rate over a 39 percent tax rate is just $600—right? So a person could be better off by $600 if they kept the income below $10,000, or if you set up a number of trusts, you could maybe spread all the income across a number of trusts to try to get around that top tax rate. So, instead of having one trust with $100,000 of income taxed at 39 percent, you could maybe have 10 trusts with $10,000 of income each, taxed at 33 percent. But the compliance costs of running a trust, of getting it set up, and of doing all the processing for it is probably more than the $600 is worth. It's a good flex point to choose, both in terms of the number of trusts which actually fall below that threshold but also in terms of working out where the point is where compliance costs overweigh the benefit of a particular tax gain, so we all supported that threshold. I think the committee showed really good sense too with the changes it made with respect to deceased estates, where, again, taxing them all at 39 percent was inappropriate. Most deceased estates don't have that kind of income sitting in them, but, more to the point, it can take a bit of time to wind up a deceased estate. When we talked to practitioners, we found that they were telling us that, actually, most deceased estates can get wound up within 18 months to two years, and some may take a little bit longer, so what we have put in place is three years. There's a three-year grace period to get those deceased estates wound up, so that's three years past the income year in which the trust begins. So that's quite a considerable period of flexibility, and it's a very sensible change. I just wanted to speak very briefly to the taxation of backdated lump-sum payments. This is where ACC lump-sum payments are backdated. If a person gets a lump-sum piece of income in one year by chance—so, for example, if they got, say, $200,000 of backdated income—then some of that would be taxed at the top tax rate of 39 percent because it was all received in a lump. So what we've said is that in actual fact, what should happen is that for that sum of money, the appropriate tax rate should be determined by looking at the average tax rate over the previous four years and applying that rate. So that seems to be a fair thing to do, and I think having that spread over four years is quite reasonable. I suppose we could try to go back many years to when the injury was first incurred for ACC purposes, but, in actual fact, in some cases there might have been higher tax rates in force at the time. I think that spreading it back over the four previous years strikes a reasonable balance between getting it right for the individual taxpayer and making it comparatively easy to calculate, and I think that in the large majority of cases it means that the actual amount that is taxed is about right. It won't be perfect, but it will be pretty good, and so for that reason we support that change. So, Mr Speaker, there's a lot to talk about in this bill. I could take another call, perhaps, or maybe not. There is plenty for people to talk about and it is a good bill, and, at this second reading, I commend it to the House. CHLÖE SWARBRICK (Co-Leader—Green): E te Māngai, tēnā koe. Tēnā koutou e te Whare. I hope I'm not betraying the confidence of my mates across these seats, but Rawiri Waititi, the co-leader of Te Pāti Māori, just dared me to make this exciting—so, Mr Speaker, if you will indulge me. Unfortunately for Mr Waititi, the fact of the matter is that the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill as recommended back from the Finance and Expenditure Committee, as the Hon Dr Deborah Russell just outlined very articulately and very clearly, was unanimously supported. I think the fireworks are probably going to fly at the committee of the whole House stage. So let me just unpack some of that kind of technical basis that I'm talking about here, for those who are following along at home. What the bill does, the Minister of Revenue just outlined pretty clearly, and it was, with that unanimous support, to raise the trustee tax rate to 39 percent to align with the top income tax rate. That, of course, is to stop people from moving their money around in such a way that they avoid paying that top tax rate of 39 percent, some evidence of which we saw borne out in some of the reporting from IRD to the Finance and Expenditure Committee. There also is the establishment in law requiring multinationals headquartered in Aotearoa to pay a top-up tax to the IRD if their effective tax rate is lower than 15 percent. And this is, of course, part of an international coordinated push by the OECD to implement a set of rules to stop a race to the bottom when it comes to corporate taxation. Also, those changes with regard to ACC and Ministry of Social Development payments and lump sums, requiring the Government to match the 3 percent contributions to KiwiSaver made by those on paid parental leave, and relief from recognising insurance income for businesses impacted by flooding and cyclones recently—those are the relatively uncontroversial pieces of this legislation. However, for those following along at home, they may have seen that this Government has recently stated that they will be putting forward a number of new policies, as tabled by the Minister and foreshadowed by the Hon Dr Deborah Russell, which we will be debating at the committee of the whole stage. So I just want to make it really clear to those who are following along at home that the Green Party of Aotearoa New Zealand currently supports the bill at the second reading because it is the version of the bill that does those things which I have just outlined. It is not the version of the bill which will come into effect after the Government uses its three-headed taniwha majority to push through the changes for repealing back to the two-year brightline test and those interest deductibility changes, as well as removing depreciation deductions. So, relatively uncontroversially, again, the Greens support this. So if I can just offer some broader reflections, particularly on that select committee process. I also wanted to join with the Hon Dr Deborah Russell in offering our appreciation to Therese Turner, who, as the Hon Dr Deborah Russell outlined, offered many, many years of service, expertise, and independent advice to subsequent Finance and Expenditure Committees in this Parliament and those beforehand. Ryan Hamilton: When's the exiting part? CHLÖE SWARBRICK: So, to the exciting parts, as the members of the Government are asking me for. Well, the exciting part is—or, rather, the rather depressing part is—that we know, based on IRD's other reporting from, for example, last year, with subsidiary papers from Treasury, that we have a tax system in this country that sees the top 311 families pay an effective tax rate less than half of that of the average New Zealander. And, unfortunately, this bill does nothing to fix that unfairness—that fundamental unfairness—in the way that our tax system operates. And, in fact, even worse than that, prior to Christmas, under urgency, this Government introduced legislation which repealed requirements for the IRD to report against a set of tax principles, basically, to showcase to New Zealanders whether the tax system is working efficiently and fairly in such a way that all of us could expect—i.e., to inform the public debate on tax with evidence. Spooky stuff—spooky stuff—as far as the tax debate here in Aotearoa New Zealand is concerned! If I can allude to other hearings that we've had at the Finance and Expenditure Committee, particularly related to the subject of tax, we recently had Treasury officials in, who I questioned about the productivity implications of our tax system, and they made it abundantly clear that were we to introduce the capital gains tax, we would not only generate the revenue necessary to invest in the infrastructure that all New Zealanders deserve but also that we would have a fundamentally more productive economy. So finishing on that point, the Green Party supports the bill in its current version, but the far more deeply unequal and, dare we say, rather undemocratic process to introduce substantive and material changes at the committee of the whole House stage, whereby we are not going to be able to have that select committee process, such as the Government intends to do by virtue of what they themselves have tabled in the House today, is something that we will be opposing further down the track. So just to make that abundantly clear to all who may be following along at home—I apologise for not being able to make all this too exciting, but I guarantee you the fireworks will be coming, because we will not be letting this Government get away with increasing inequality, which, they know full well and their advice bears out, will occur as a result of them progressing this policy agenda. TODD STEPHENSON (ACT): Thank you. I arise to speak in support of the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, which is—yes, it's not very exciting, but I did think that the Hon Dr Deborah Russell did do a good job of trying to make it exciting. I just want to join with her and Chlöe Swarbrick in just acknowledging Therese Turner. Obviously, I'm a first-term member of both this House and of the Finance and Expenditure committee— Chlöe Swarbrick: Great committee! TODD STEPHENSON: Thank you, it is a great committee—and I do want to thank Ms Turner for her contribution. Obviously, 25 years of providing advice to the select committee is quite an achievement and she again delivered when giving advice to the select committee on this bill. This was, I think, a process where we actually did improve the bill at the select committee. A lot of that has been touched on, but I just do want to mention that we actually did listen to submitters and some of the, you know— Chlöe Swarbrick: De minimis. TODD STEPHENSON: Yeah—the problems that were raised and the issues they saw as problematic, and we actually did address them. And, yes, the de minimis tax threshold for trustees rates is one such issue, where we ensured that some common sense was applied so that people wouldn't actually be making decisions regarding their trusts—which could be detrimental—but also ensuring that they were being taxed at the correct rate. Another one was the deceased estates. Again, we had a lot of submissions talking about how one year would be too short a period to make sure that deceased estates could be actually be wound up. Again, we reflected on that, we took advice, and we arrived at the three-year position—which, again, I think is a really sensible one to make sure that in this important area the affairs of a deceased estate can be properly wound up, but done so in a timely manner but one which also doesn't disadvantage those taxpayers. I think—again, it's already been touched on—the lump sum payments and ACC and making sure, again, we delivered some fairness to taxpayers when they receive a lump sum payment. Again, this can often be where it takes a number of years for a complex ACC case to be worked out and actually for someone to receive their lump sum payment and, again, making sure that they weren't disadvantaged by the time taken. I think, again, we arrived at a really pragmatic and sensible solution to that issue. For me, it was obviously interesting watching all parties represented on the select committee actually working together—and, again, there were some very experienced members on the select committee and I think it was really useful to have their insights and knowledge as we worked through the issues and tried to find pragmatic solutions. So I really want to say thanks to my fellow select committee members. I think there will be a lot more discussion and obviously further readings on this bill, but I want to commend this bill to the House. Thank you. TANYA UNKOVICH (NZ First): Thank you. I rise on behalf of New Zealand First and the challenge to make this exciting. I will do my best. As they say, to become good at speaking in the House, one needs to keep speaking in the House, so I will do that. I apologise if there is repetition, and I will completely understand if there are more cellphones being lifted up, but it is a very good bill to speak on. Now, I'll call out—actually, it's called the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. That was a bit of a mouthful. Now, this omnibus bill introduces amendments to a number of Acts, with the addition of proposing amendments to the Income Tax Act 2004. One of the purposes of this bill is to set the annual rates of income tax for this 2023-2024 financial tax year. Another purpose of this bill is to improve the current settings within a broad based - low rate framework for income tax. Also, this bill aims for improving settings for tax administration, KiwiSaver, and child support rules administered by the Inland Revenue Department. Now, to speak on some of the items of the bill which I know have been spoken on, but I will once again speak about, the increase of the tax rate from 33 percent to 39 percent: when originally drafted, this bill would have required many lower income trusts to pay this top rate of 39 percent, or 39c in the dollar, but thankfully the Finance and Expenditure Committee has accepted the Government's advice that a $10,000 trustee income de—my Latin's not that good—minimis be introduced. So that has been done and this is excellent as it will stop people trying to set up multiple trusts and avoid taxation. Now, the other part that I will speak about is the disabled beneficiary trust. To mitigate over-taxation, this bill proposes—maybe I'm not going to repeat myself too much there, because otherwise I will see a few more cellphones coming up, but, in short, it is recommended that a 33 percent flat tax rate is applied to beneficiary trusts as well. Also, deceased estates—trustee income of estates would continue to be taxed at 33 percent. Now, there are many other areas that I could speak on. I will touch on the energy consumer trusts. Submissions were received that trusts with beneficiaries representing a wide range of the public, such as trusts that own electricity distribution companies, should be excluded from the 39 percent trustee tax rate due to the risk of over-taxation. So, again, it is agreed that a 33 percent rate should remain. Also, legacy superannuation funds—they will be excluded from the 39 percent trustee tax rate. They will be subject to the same tax treatment as widely held superannuation funds, currently at 28 percent. Now, I won't touch on a couple of items that I feel might change the mood of the House. Just, in short, New Zealand First will happily recommend this bill to the House. Thank you. RAWIRI WAITITI (Co-Leader—Te Pāti Māori ): Kia ora, Mr Speaker, otirā, tēnā tātou. Tēnā tātou i tēnei rā i runga i te āhuatanga o tēnei pire— [Kia ora, Mr Speaker, and everyone else present here today. Greetings to us on this day, and in regards to this bill—] I'm not going to speak too long on this particular bill, but I do find it exciting to listen to everybody's kōrero, and I think the most exciting part is to acknowledge Therese Turner for the mahi that she's done over the over the few years—25 years, in actual fact—advising this particular Finance and Expenditure Committee. You know, it's people like that that make this—it must've been an exciting job for her to be here 25 years and to advise this particular committee. I'm new to the committee, so I was new to the people and the people who are part of the committee, but I just want to support all the kōrero and acknowledge her mahi at this particular time. In particular, increasing the trustee tax rate from 33 to 39 percent for trustee income over $10,000 is a small part of, actually, what Te Pāti Māori's tax policy was to address in terms of the injustices within our tax system. The tax system has only been there to service the wealthy and actually put a pinch on the working class and the poorer whānau. What this tax bill actually does—its current form we support, and so we supported it to the second reading, we supported it to select committee, and I think that was unanimous across the House. We are going to support this to there, but the amendments on the other hand we take issue with. While the average person in Aotearoa is paying 20.2 percent in tax, the wealthy are only paying 9.4 percent, and they are the ones that usually benefit from these trusts. Our tax system allows the wealthy to illegally avoid tax through housing, investment funds, property, and through trusts, hence why we are supportive of this particular bill, in its current form, introduced originally by the last Government—so we probably would've supported it if it was still a Labour Government. We're supporting this bill in this current form, because it's still in the form that they presented, but the amendments that actually give tax breaks to the more wealthy, I think, coming into the committee, that's where we're going to get some—like Chlöe said, it's going to get exciting. It's going to get exciting, because what it does is—in actual fact, it does not benefit the 98 percent of the people who pay more tax in this country. Again, what it does is it gives support to the 2 percent who control 50 percent of this country's wealth and continue to get the tax breaks that this Government is so openly supportive of—and you can see it across a whole lot of other legislation. You know, it is unacceptable that over 2 million people in Aotearoa earn less than $30,000 per year while the rich avoid the use of trusts to illegally avoid paying taxes. Now, if the current form of this particular bill holds on to that, we would support it all the way through to third reading, but it will not—it will not—and we will head into the committee having to challenge and continue to challenge this Government's agenda for tax breaks for the rich and for the wealthy. I told you I was going to take a short call on this, Mr Speaker, and so I thank you for that particular opportunity. We will be supporting this particular bill at second reading but look forward to the robust discussions within the committee process. Therefore, we commend this bill, in the second reading, to the House. Kia ora tātou. Steve Abel: Mr Speaker. ASSISTANT SPEAKER (Greg O'Connor): Steve Abel—and I should've announced that this is five-minute calls. STEVE ABEL (Green): Kia ora, I appreciate that, Mr Speaker. I'd be very willing to take a shorter call if it was permitted. I mean, we all love taxation, but taxation does have a real effect on people's lives: it does very much determine the fairness of our society. What this current version of the bill before us did is it made a fairer taxation system, therefore we will be supporting it at this reading. But, as has been articulated by other members from this side of the House, the proposed changes in the lodged Amendment Paper—which we're not discussing right now—will reinstate interest deductibility, reduce the brightline test from 10 years to two years, and removed depreciation deductions for commercial and industrial buildings. Now, I want to speak to why a brightline test at 10 years is such an important thing and why it shouldn''t be moved to two years—that would be a terrible amendment. What we currently have with a brightline test at 10 years—in the current proposal, it means that sellers, if they had a shorter time frame, which they used to, would be required to pay income tax on profits from the sale of residential properties when they are sold within two years of purchase and don't qualify as the main home. That is why it was moved to 10 years. The objective in doing that was to incentivise development and put downward pressure on rents. Now, this change is, essentially, retrospective, as investors, who may have previously been willing to wait five years or 10 years to sell their property, will now be able to sell much sooner and pay no additional tax—that is if it is to be amended and changed. A fair taxing tax system is— ASSISTANT SPEAKER (Greg O'Connor): Ah, just, Mr Abel, the rules of the second reading are: you can refer to possible amendments at the committee, but not discuss them in detail—just for your information. STEVE ABEL: OK. Thank you, Mr Speaker. So we do not want legislation in our tax system, that constitutes a significant tax break for property investors. That is why the current formulation of this legislation does make a fairer tax system. That is what we should be endeavouring to do, because fairness is a core principle of our society, that is agreed to by members of the public. We want a fairer system, and that is why we commend this current version of the bill to the House, and we will be debating the harms done to this bill, by the proposed amendment, at further readings. Thank you, Mr Speaker. CAMERON BREWER (National—Upper Harbour): Thank you, Mr Speaker. It gives me great pleasure to rise in support of the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. Again, I commend all the work and observations that have been made to get us to this point on this omnibus bill. I was hoping to talk more to the Government's Amendment Paper, but I respect the process of the Chamber and that that will come at the next stage. Although referring to it—as you've said, we're allowed to in passing—this omnibus bill with the Government amendments will certainly restore a lot of fairness to those mum and dad landlords that dominate our landscape. In fact, about 80 percent of landlords in New Zealand own one property—they are mum and dad landlords. So restoring interest deductibility for them and returning the brightline test to two years is going to make a real difference. And as this bill will cover off, a lot of us heard on the doorstep just how much people, mum and dad landlords, were looking forward to the Government looking at that restoration of interest deductibility. Again, that is a legitimate cost, a tax expense that should be claimed as an expense, and that is something— ASSISTANT SPEAKER (Greg O'Connor): Having pointed out you understood the ruling, you're probably putting it a little bit far there, Mr Brewer. CAMERON BREWER: Oh, it's the much more exciting part of the legislation. Like member Swarbrick said, it's difficult to make it exciting— ASSISTANT SPEAKER (Greg O'Connor): Well, another good rule of the House is don't get ahead of yourself. CAMERON BREWER: Thank you. The main provisions—if we go back to the purpose of the bill—is about redefining New Zealand's tax framework towards a broad base, a low-rate model; and improving the administration of taxes, Kiwisaver, and child support by the Inland Revenue Department. And if we look at across—just to recap for those viewers as to what this omnibus bill actually looks at and addresses is setting annual tax rates; global anti-base erosion; trustee tax rate, which has been well-exorcised to align the trustee tax rate with the top personal tax rate; the taxation of backdated lump sum payments; taxation rollover relief; the Nelson floods and brightline test there; and the overseas donee status; and the correcting extra pay inaccuracy on termination. So, as our Minister Simon Watts introduced this stage with, this is something that's been a huge effort that pulls a lot of strings together. And as I alluded to and I will allude to one more time, with the amendment bill that's coming to this taxation bill, it will focus on the Government's determination to reform our tax policies and address the tax anomalies. The residential property investment support, again, measures the restoring interest deductibility and reduces that brightline test, which is key. The select committee report that others have referred to, the Finance and Expenditure Committee examined this and unanimously recommended its passage, along with unanimous amendments and further recommendations for streamlining the legislative process for tax purposes and emergency responses. So I finish as I began. I am looking forward to talking about the Government's Amendment Paper, where we're looking at and the Minister's proposing the restoration of interest deductibility on rental properties and reducing that brightline test from 10 years to two. I commend this bill. Hon BARBARA EDMONDS (Labour—Mana): Thank you, Mr Speaker. It's a pleasure to be able to rise for the second reading of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill. This particular bill has had two fathers and one mother. The two fathers—it first started in the office of the Hon David Parker. I then became its mother and took over the bill as it was progressing through the last sort of stages of the previous Government. Then the final father, who will be shepherding this bill through the rest of the stages, is the Hon Simon Watts. So I just want to make it really clear that there will be parts of this bill that this side of the House will absolutely agree with and we will provide our support for this second reading; however, the last bit that is on the Table, by the new Minister, the new father, we will have a lot to say during the committee of the whole House stage, so I hope the other side of the House is ready for some good debate. I do want to take this opportunity to thank the Inland Revenue officials who have worked on this bill and the drafters that sit within the Inland Revenue Department. A lot of them are actually colleagues that I have worked with in my previous career. They are good folk and they have been able to do their best with this bill and the changes that the Finance and Expenditure Committee (FEC) wanted. I also want to take the opportunity, which is covered briefly in our report, to thank the independent specialist adviser Therese Turner. Now, for any members who have been in this House for a longer time, any tax bill that had basically come through this House in the last 15 years, I would say, Therese Turner has been the independent adviser for the select committee that has provided some of the best advice that I would say that I've seen. I have a little bit of bias, because I went to tax camp with Therese Turner in my first—yep, tax camp; that one time at tax camp. I went to tax camp with Therese Turner— Rawiri Waititi: Were there flutes? Hon BARBARA EDMONDS: Well, you know. So I went to tax camp with Therese Turner. She basically distilled what I learnt in taxation law in university over 12 weeks—she managed to distil that within five days. It was intense and it was definitely a really good reminder of the reason why I chose to become a tax lawyer. So I want to mihi to Therese Turner, thank her, and thank her husband, Ian , for supporting Therese to be able to do a stellar job for New Zealand and for our Parliament. So going back to the bill, I'd like to acknowledge, actually, the Government members of the Finance and Expenditure Committee. They've come on to the bill at quite a sort of a difficult stage, but the work that we did within the select committee, particularly on the revision-tracked version of the bill, was very cordial, so I want to acknowledge those members, because it's not easy just picking up a tax bill sort of part-way through the process and then basically listening to a lot of long hours of submissions, and being able to work cordially with the other side, so I just want to mihi to them as well. One of the elements of this particular tax bill is the Global Anti-Base Erosion model (GLoBE) rules. For a long time, there's been what's called the base erosion and profit shifting policy work that's been happening in the OECD in Paris. Inland Revenue has been sending people to be part of the working group to basically remove the ability to arbitrage between different jurisdictions for tax purposes. So the GLoBE rules that this particular bill brings in basically remove another element of that arbitrage. We had a number of submitters come to the committee, because what this particular bill says is that we will basically enforce these new particular rules but with reference to the OECD guidelines, so that's basically what this bill does. We had a number of submitters come to FEC saying that, well, actually it shouldn't be in reference to the OECD rules, because if the OECD changes the rules and then here in New Zealand we don't agree with them, we don't really have an ability to be able to change that quickly. However, some of these submitters said that, actually, we should just have those particular rules in this primary legislation. However, the advice from officials and, actually, through a number of submitters—because the FEC worked really cordially together and we tested the other submitters as they came through—was that because the way that arbitrage is happening across different tax jurisdictions can happen quickly, the OECD, who, basically, have a full unit that works with the different countries can make those changes and New Zealand can input into that process through the working group. So the committee agreed with officials, which is why it's still by reference in this particular revision-tracked version. However, the FEC did say to officials that we want to ensure that people have certainty of those rules, and we asked them where they will publish them. They advised it would be in a web page, the tax information bulletin, but basically we were comforted by the fact that, actually, Inland Revenue would do their job to make sure that taxpayers here—because it's only if you earn a significant revenue that you would come within these new GLoBE rules. The Inland Revenue basically said, "Well, actually, we have case managers for a number of those significant enterprises, and we will make sure that they can comply with these rules even if the OECD in France changes it." One of the things that we did look at was around the application date of those GLoBE rules, and the select committee—the bill when it was introduced, it was through Order in Council. However, through our deliberation as a select committee, we decided, actually, we believe that we should have an application date within the bill. So that is a change from the bill that was introduced to this revision-tracked version. So the FEC has recommended amending the bill so that the income inclusion rules, part of the GLoBE rules, under tax profits rules applies from 1 January 2025, and the domestic income inclusion rule applies from 1 January 2026. So that's a small change, which, even though it looks small on paper and in our report back, it's actually a bigger change, because previously before it was through regulation. The trustee tax rate: this side of the House believed, when we introduced some of the changes actually a couple of years ago, the trustee tax rate was at 33 percent, and what, basically, the Hon David Parker said to his officials at the time was "Keep an eye on this change between 33 percent and 39 percent.", which is the top personal tax rate, which they had changed in the 2024-2025 tax year. So he said to his officials, "Just keep an eye on that. If you think that we need to change it for integrity reasons, then we will look at doing so." So, therefore, that's why this particular bill does include an increase to 39 percent, to align with the top personal tax rates from the 2024-2025 tax year. One minor change, though, that came out strongly through the submitters who came to the Finance and Expenditure Committee was they were saying, "If you don't put in a threshold, there's going to be a lot of compliance cost for barely any revenue." So the recommendation that came out quite strongly from submitters was that we should bring in a threshold of $10,000. The committee did have some good debate on it, and, basically, we agreed with those submitters, which is the change that you'll see in this bill, which is basically a de minimis rule, so that's for trusts that basically have under $10,000. There's a couple of changes there around the disabled beneficiary trust rule and, again, it's to make sure that they're not being over-taxed. That is a change which we believed as a committee that needed to be done so that—especially for those who are beneficiaries of trusts and who are disabled, to make that compliance a little bit easier for them as well. A really important change that is in this bill which, probably over the last maybe eight years that I have seen through various roles is the taxation of backdated lump-sum payments. This bill changes the way that backdated lump-sum payments from ACC and the Ministry of Social Development (MSD) are treated. So, basically, rather than a person getting a lump-sum payment and they're getting fully taxed on the year that they received that backdated lump-sum payment, this bill changes it to look over the four previous tax years. We believe that this was basically bringing greater fairness into the system, because a lot of these ACC clients and MSD clients, for no fault of their own, they were absolutely applicable for these backdated payments and we just thought to be able to treat it a bit more fairly, you look back over the four years. So just to finish off, probably the last bit, which is at the time I was the mother of the bill, the taxation rollover relief for the 2023 North Island floods—I want to thank the Minister for agreeing to that particular Supplementary Order Paper (SOP). That was introduced after the bill was introduced, but we could allow for submissions on it through releasing that SOP. I want to thank the Hon Simon Watts, because one of the early deliberations of committee was whether he was going to accept it or not; he did accept it. I believe for those who were in the North Island floods in those particular areas who already had a difficult time, some of this rollover relief for them will be absolutely pivotal. So I do support this bill at the second reading. We will have a lot to say in the committee of the whole House, and I commend this stage to the House. ASSISTANT SPEAKER (Greg O'Connor): Thank you. And just for the clarification of members, the previous speaker spoke on amendment that had actually gone through the committee, so she was able to speak at some detail about that amendment. NANCY LU (National): As a member of the Finance and Expenditure Committee, I am very pleased to stand in front of you today to commend the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill second reading, to the House. The Finance and Expenditure Committee met multiple times, and heard from many public submissions from industry experts, tax experts, independent specialist advisers, policy advisers, as well as individual, day to day New Zealanders who have had genuine interest, and their best intention to give their recommendation to the Finance and Expenditure Committee. If I can share a little bit of that, the public submission that we heard, there were 67 interested groups of written submissions and individuals that we received and considered. As the select committee, we also heard the oral evidence from 25 submitters. As a Finance and Expenditure Committee member, and as my first term as a new member of Parliament, I wanted to really say a big thank you to these New Zealanders who have come forward to give their best advice to the House, to the select committee, on what they see are the best future for New Zealand. If I now may, to join the many people before me, the many members before me, to thank Therese Turner for her excellent contribution of 25 years as an independent specialist adviser on many, many tax bills. When I have the opportunity to listen to her, and to have her advice, I thought she would have been one of the best tax lecturers that I could wish for during my university years. And, during the later stages of our select committee meeting, when I found out that she has decided to take a step back, and step down as adviser to us, I felt very disappointed, disappointed in a way that I didn't meet her earlier, so that I can learn more from her, and be a good contribution to the House. So, I look forward to the second Therese Turner, to the third Therese Turner, who can be very helpful to us. If I can, in my time, to bring us back to the 10 main provisions of this bill in front of the House. Those were clearly laid out by members before me already, so I won't repeat them. But the main provisions that I really, really wanted to talk on today are the three which are globe rules, the trustee tax rate, as well as the taxation—the restoring of the brightline test back to two years. The reason why I wanted to address these three main provisions particularly are because of the messages that I have received, through email, through doorsteps, through phone calls, through the many, many of my former colleagues in the tax and accounting industry, who have come forward to say to me, "finally, finally you guys"—"you guys" referring to the Government—"are finally listening to what people in the industry really wanted". For that, I wanted to give three key messages that I have received. One is around our adoption of OECD's globe rules. The key point that I received was: we are not re-creating the rules. We are learning from the best practices, and we are adopting them. We are looking for ways that we can be efficient and effective, and we are bringing the best practices to New Zealand. Also, on the trust tax rates, what I have also heard was our best effort to understand what really captures between the trusts and between the individual tax rate—the discrepancies in the tax system. The compliments that I have received was about the de minimis of $10,000, that we have thought about the alignment, but we have also thought about what is practical for New Zealand. Lastly, the amendment that I have received a lot of compliments about was restoring the brightline test to two years. Because on the many, many doorsteps and phone calls that I have knocked on or made calls on, the fact is, most of the households here are the mum and dads who really just wanted the 2 years back, because they need the flexibility— ASSISTANT SPEAKER (Greg O'Connor): Ms Lu, you've been sitting in the House. You know that's a proposed amendment that you can refer to, but you're getting into some tintacks. NANCY LU: Thank you, Mr Speaker. So, if I can say, listening to all the opinions from the many different perspectives, different political backgrounds from the select committee, but also the many different social background, many different targets, and different goals, and from the many stakeholders, I wanted to say, I am honoured to be part of a team; that we were able to see across all the differences and rise above, stand back, and finally, agree on something, that we can highlight New Zealand's dedication to reforming tax policies that are modern, that are efficient, and that are effective. As a member of the Finance and Expenditure Committee, and for the National Party, I am pleased to present to this bill to you, that we've agreed on unanimously, to recommend this stage to the House. Thank you, Mr Speaker. ASSISTANT SPEAKER (Greg O'Connor): This is a 5-minute split call. Rachel Boyack. RACHEL BOYACK (Labour—Nelson): Thank you, Mr Speaker. It's a pleasure to take a short call on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. This is a very good bill, and I want to begin my contribution by thanking the three Ministers that have worked across this bill and also to put on record my thanks to the Finance and Expenditure Committee—of which I'm not a member so I haven't been part of the select committee process. So my thanks to both the former committee and the current committee and all of the officials—particularly Therese Turner—who have worked in providing advice to Ministers and also to the committee. It is a very good bill. Unfortunately, as other members have noted during their contributions—and I'll just speak briefly to it—we have seen some of the proposed amendments from the Government that will come forward at the committee stage. Unfortunately, it's opinion on this side of the House that the bill will no longer be as good as it is today. So I wanted to take some time today to talk to two particular matters in the bill that are relevant to the work that I do as a parliamentarian. The first is around my role as spokesperson for ACC, and, secondly, there is some improvement here in the bill that will affect some of our homeowners who were affected by the Nelson floods nearly two years ago, and I'll talk to that briefly also. So I'll begin by just speaking around the changes that the bill makes to the taxation of backdated lump-sum payments. As ACC spokesperson, but also as a constituent MP, I have spoken to people who have received these lump-sum payments and I'm sure nearly every electorate MP and many other MPs would have spoken to people in those situations. I want to talk specifically around ACC lump-sum payments given to those who have had sensitive claims. Sensitive claims are an important part of the ACC system. So people who may have been subjected to often quite horrific examples of sexual abuse—often when they were younger—who, later in life, have been able to take a claim from ACC and receive both support through things like counselling but also a lump-sum payment that allows them to have access to some income. The reason that that is so important—and I want to speak particularly to a constituent who I've gotten to know very well over the last couple of years who came to me about this very issue. What she's told me is that the impact of that abuse when she was a little girl has robbed her of her opportunities. It has robbed her of the income that she could have earned if she'd been able to go to work like others who haven't had such significant offences committed against them. One of the things that I think this bill addresses so very well is that people who receive these payments would often end up receiving a large payment that would pop them up sometimes into the highest tax bracket. Even if you looked at it only over a year, often it would be significantly more income than a person would earn in previous years. So it is a very good change in the bill that people will be able to have that lump-sum payment assessed across a four-year period. I think it's one of those issues that all of us across the House, we would all have met with people who have been subject to these particular circumstances. I think the only message I would want to send to my constituent—who I've met with on many occasions who has lobbied for this type of change—is just how unfortunate it is that we can't make these changes retrospective. That is the nature of our lawmaking. Unfortunately, we can't go back in time across all of those lump-sum payments that have occurred. But what I do want to be able to say to my constituent is that she and others like her have been heard—you have been heard by the House—and this is one of those changes that does make this bill a very good bill. Just in my final few seconds of contribution, I want to acknowledge the change in here for the small number of people who were impacted by the Nelson floods nearly two years ago, and I'd just like to put on record, before he gives his final speech tomorrow, my thanks to the Hon Grant Robertson, who made this happen. It was a couple of phone calls after we'd been having real challenges, to be honest, with officials both at the council and departmental level that actually got this buyer across the line. And my thanks specifically to Grant Robertson for making that happen. But what it would have done, this bill, would have meant that, again, those affected by Cyclone Gabrielle and the Auckland floods would have had the benefit of this bill, but not my constituents in Nelson. So it's a very good change and I do want to thank the committee from the bottom of my heart that, once again, my constituents in Nelson have been treated fairly as they needed to. It's a great bill at this stage—might not be so great in a in a few weeks' time—so I commend it at this stage to the House. DAVID MacLEOD (National—New Plymouth): Thank you, Mr Speaker. It's a pleasure for me to stand and talk to this bill, the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. And it's very pleasing to have just recently returned to the House to find that everybody is, basically, supporting this through this particular stage, although it may be questionable about future parts, according to the Opposition there. But when I joined Parliament and was lucky enough to be on the Finance and Expenditure Committee, I soon realised the amount of work that had already been done. And, as was previously mentioned, I think it was Barbara Edmonds who called this the two fathers and a mother bill. It's been through a number of Ministers hands to get to where it is today. I look at the process that has been run, and I do feel that what I have been involved with the many submitters that have come forward to present and the way in which the committee has resolved with what it has presented to the House today has been a very thorough process. If I look at the purpose, and without reading the purpose of the bill, I would summarise it as being a bill about fairness. It's about fairness of individuals not being overtaxed; it's about fairness of entities, being trusts or that, not being overtaxed; but it's also about the reasonableness, and that's about individuals and entities that have earned profits to actually be paying their fair share of tax as a result of that. There are other many main purpose of this bill. One of them that I would like to speak to is the global anti-base erosion (GloBE) rules, and that is the one with regards to multinational entities. Obviously, we're talking about entities that do have a significant revenue. In fact, it only reaches the threshold of being attached to these rules once they've reached the €750 million that provides them the position of having the effective rate of 15 percent. That rule is all about making sure that we don't have entities shifting their profits around the world and removing the ability to pay taxes. So the many countries that have already signed up to the GloBE is a very good step forward to making sure that any profits that are earned in a jurisdiction are paying a fair and reasonable tax in that jurisdiction. I'm hoping that the GloBE rules is, actually, ultimately, affecting that outcome, particularly once more countries attend. I understand it's north of 130 countries that are looking at that at this particular point in time. And I'm sure many of those countries are very fortunate that they've actually got that passed through. With those GloBE rules, obviously with those rules administered at an OECD level, they are up for change. There are clauses within the bill that allow our country to have our autonomy to that if we don't agree with it. So it's not like it's a catch all. So I think we've got sensible clauses within the bill that protects our sovereignty, but at this stage, us joining with the rest of them, I think that makes sense as well. There's been considerable debate amongst the submitters. There's been plenty of submissions about the trust tax rate. Clearly, of that there, I think there was argument of what is a reasonable threshold. At the beginning, it was every trust was going to be paying the highest tax rate of 39c on the dollar for all of their profits or income earned. Obviously, it came to the point with the submissions that we felt that that wasn't actually fair, and the $10,000 threshold of the 39c tax rate coming into play, the committee felt that was fair and reasonable. We did have a look at many different levels, including right up to as high as $100,000 and maybe even further north of that. All of them have—probably for every action there's an equal and opposite reaction, and we felt that this $10,000 threshold ensures that maybe large taxes aren't incentivised to cut themselves down into smaller revenue earning trusts and endeavouring to play the tax system that way. So the cost of not just starting up a trust but also yearly or annually administering a trust probably dissuades people from actually doing that. So I'm pleased to take this short call and I'm happy to support the bill to the House. INGRID LEARY (Labour—Taieri): Mr Speaker, if you'll indulge me, I'd like to acknowledge the previous speaker, David MacLeod, and seeing him enjoy WOMAD in his rohe yesterday. It was great to see such a great arts event. Congratulations to you as the local MP and to the organisers, and I do hope that he goes into bat for the artists when the inevitable cuts come, around the 6.5 to 7.5 percent, because we do know they're a vulnerable group. But, Mr Speaker, you will be happy to know that I plan today to talk about the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, and I would like to focus my comments on the brightline test. I do so because of the report, on page 11, around the Nelson floods and the brightline test, alluded to by my colleague Rachel Boyack. What this bill does—we know that there is unanimous support for it across the House—one of the really good things it does, is it proposes section CZ 26B of the Income Tax Act, to be inserted by new clause 18C, to ensure that the brightline and other time-related tests do not apply to a property that's been affected by North Island adverse weather events and subsequently bought out by the Crown or a local authority. As Rachel Boyack said, in Nelson there are actually about 14 properties that the local council is looking to buy out, and without this proposed amendment that was suggested by the Finance and Expenditure Committee, it would mean that the brightline test would have applied. Now, would that be a good idea if a local council was purchasing a property in those situations? Let me unpack that a little bit. First of all, for those who are following along, a brightline test is, basically, a way to tax the financial gains that people make when they buy or sell a house for income. We know that the brightline test currently is at five years, and other members have alluded to a tabled but not moved amendment that proposes to move that to two years. Now, if we did not have the suggestion in the report by the select committee and the change to the bill, those 14 houses would be subject to the current brightline test of five years, which would seem terribly unfair, to tax the owners of those houses; to say, even though these weather events mean they are forced to sell their houses, effectively, to the Nelson Council—it would seem very unfair to tax them. So the fairness principle does seem to apply here. That also raises the question of when is it fair to tax properties in those circumstances? Now, as other speakers have said, if we had retained the taxation principles Act, we might have had a better barometer, in my view, because that did have six criteria—universally accepted criteria—by which to say, very clearly, we could measure vertical and horizontal equity, and so on. We no longer have that Act, so the idea about when it is or isn't fair becomes, effectively, a political judgment. And that, then, for me, raises the question, "Well, if we're looking at brightline tests"—which is brought into this debate under the Nelson changes and recommendations. I'd just like to make a few comments about that, because there are assumptions about brightline tests and interest deductibility that have been made, about increasing housing supply, and they've been made in this debate. But, actually, that only applies in a competitive market. And the issue that we have here, as everybody knows across the House, is New Zealand does not have enough houses being built. I'd like to add that there's also $2 billion going each year to landlords for an accommodation supplement. So it starts to create perverse drivers where a brightline test and interest deductibility are a way of allowing people to double dip. They don't pay tax on their capital gain if they are selling the house outside of the brightline and yet they are able to claim interest deductibility. That will encourage more landlords to purchase large numbers of houses, which is what we have seen previously, which makes the market tighter. They're incentivised by the accommodation allowance—$2 billion a year—and, ultimately, rents go up. And I would say that the justification of a kind of trickledown economics in this kind of scenario doesn't work, especially in an environment where councils are adding significantly to rates bills because they have repealed the affordable water reforms that this previous Government brought in and, therefore, there are incentives for landlords to actually use any surplus that they generate or any profit to try and offset those increased costs. As I say, I raise this because there is an amendment that's been referred to, and I'm not going to go into the provisions of that amendment; I know, under Standing Orders 122(3) and 123(1), that wouldn't be appropriate, but I do note that I can refer to the subject matter, and that subject matter has certainly been traversed by speakers of both sides of the House. So I would just ask those who are listening in—this is a little bit of my view on why we are signalling that, although we support this bill as it currently stands, there is a tabled amendment yet to be moved, which raises these very issues that are also raised by the Nelson scenario, which we will be vehemently opposing. The other element to that is that it's very cynical, in my view, to introduce that amendment after the select committee process. So the debate has been confined. The debate that we had on this very issue—about brightline and interest deductibility, and what's fair, and how markets may or may not move—will not be able to take place now. I understand that; it has to happen at the committee stage. But I would urge people to be watching at the committee stage, because that is when we will have licence to do so. So, in summary, I just want to say that it's very useful having this reference to the Nelson situation, to the 14 houses. It gives us an example of where the brightline does have a direct impact and where we can see that it would be very unfair to apply that test, or only let North Island flood-affected houses have the benefit of that, where Nelson wouldn't have been able to. And I also think it's really important to acknowledge Therese Turner. As a former chair of the Finance and Expenditure Committee, I also had the benefit of her very pragmatic and sound and solid tax advice as we worked through similar complex bills in the committee. Finally, just also to endorse—and thank, actually—the chair of the select committee and the comments that have been made about making sure that taxation on lump-sum payments, under the Ministry of Social Development in particular, are now fairer through the amendments of this bill. I remember when I was at the Brighton fair a couple of years ago and one of my constituents came up to me. I do hope he is still with us. He had stage 4 terminal cancer. He had been able to get a lump-sum payment on the basis of medical misadventure associated with treatment for that, but because the lump sum had come in at the end of a very late period, he was due to pay a lot of tax on it. He had been fighting for many years to get equity around that issue. So this is a great day if he's still with us; if he's not, I want to salute the work that he did and his advocacy for this. But it is only fair that lump sums are paid at the equitable rate of when the tax payment would have been due, not a lump sum at the end, which is likely to increase people's income and, therefore, lead to a higher tax rate. So, in the dying moments of this debate, while we do support the bill, it has had many mothers and fathers, as the Hon Barbara Edmonds has said. I look forward to some fireworks at the committee stage, when these very important questions about tax fairness, about the brightline test, about interest deductibility, and about what is appropriate and what is the true impact for renters in the market will come to the fore. It will feel truncated because it hasn't been to select committee, and therefore, we will certainly make our views known, and we invite viewers out there to follow the debate closely, because there is something about the logic of the National-led Government that doesn't add up. It's trickledown economics. So I'll reserve my comments for then and commend this bill currently as it is to the House. CATHERINE WEDD (National—Tukituki): Look, I thank you for this opportunity to speak in support of this bill. It's great to see cross-party agreement across the House on this, and we've enjoyed our discussions through the select committee process and listening to submissions on various parts of the bill. But, you know, on this side of the House, we are laser focused on creating a better tax system in New Zealand, that is fairer and does enable hard-working New Zealanders to keep more of what they earn and get ahead. But there are many parts of this bill and there's many complexities to it, but it is all focused on creating a fairer tax system for all New Zealanders. But one area that I do particularly want to comment around is the tax relief that it will provide for a lot of the victims of Cyclone Gabrielle. I'm the MP for Tukituki, and in my electorate we still have hundreds of families that are doing it really, really tough out there, in our cyclone-ravaged region. The amendments to this bill will ensure that those property owners whose assets have been destroyed by the cyclone get deferral of tax liability on insurance proceeds for assets affected by the floods. This is a practical approach for many people who are going through an extremely stressful time, and they just don't need added stress of tax at this very, very tough time—the last thing they need is that, when they have so much to do to, basically, repair their properties. Many are currently going through category 3 buy-outs of their homes. It's really, really tough. It's a year on, and they're still dealing with quite a slow process, trying to get the buy-outs for their homes. So, also, adjusting the brightline test will provide relief for flood victims as well. So this is something that I think we should all be very, very supportive of, particularly for so many doing it tough, not only in Hawke's Bay and the East Coast but also across Nelson and that particular area as well, where those property owners are going to be given a lot of relief from this bill. Similar tax relief was provided in Christchurch, with the earthquake in Kaikōura, so it makes sense that we are looking at practical solutions around tax, and providing tax relief and respecting those people that are doing it tough across the East Coast and Nelson. So I do really, really support this particular area of the bill. We made a number of recommendations around the select committee process, when it came to tax relief around Cyclone Gabrielle and the Nelson floods and the North Island weather events. And I do believe that this bill is very supportive of the people in those regions and what they're going through, and will be very, very beneficial for them. But I think that, overall, this bill is about fairness, it's about creating a tax system that is fair for everyone. We spoke, in the select committee process, around the global anti-base erosion rules, which will prevent tax-base erosion by multinational companies, to ensure global consistency. That, again, is going to create more fairness within the tax system. And the trustee tax—to create more consistency, again, across the tax system, to ensure that we do have a fairer, broader, better tax system. Then, the lump payments—as the member across the House has also alluded to earlier, that this is fairer. You know, we heard submissions on people that were getting lump sums, and it only seems fair that it shouldn't be all specifically taxed at once. So these are all targeting a fairer system, which we absolutely agree with because, on this side of the House, we are very, very focused on ensuring that hard-working New Zealanders are able to keep more of what they earn. And, as the member across the House has also spoken about, the brightline test, and looking at where we can see benefits in reducing that brightline test back to two years, is going to be very, very beneficial. Then, when we look at the select committee process, as she spoke about, in terms of interest deductibility and the benefit that that is going to have on our housing sector and relieving the housing crisis—because we have seen rents go up $170 a week in this country. So restoring interest deductibility is really going to look at downward pressure, it's going to look at lowering rents, opening more houses up, so that we're not inflicting more cost on landlords. So there's no types of things— Ingrid Leary: Point of order. Mr. Speaker, I just refer you to Speakers' rulings 122/3 and 123/1, where the speaker may refer to matters in the amendment but not speak to that. The points that I made were in relation to Nelson, which was mentioned in the current bill, but I believe the speaker is going outside of that purview. ASSISTANT SPEAKER (Teanau Tuiono): I'll just take some advice. D Catherine Wedd: That's OK, I will round it up now, anyway. ASSISTANT SPEAKER (Teanau Tuiono): I'll take this point of order, thank you. Thank you to the member for that point of order. I do understand that the previous Speaker that was sitting in the Chair had taken your point, so I hear your point. So I would invite the member to wrap it up. CATHERINE WEDD: Yes, OK. Absolutely. There's many great things about this bill that we have discussed through the select committee process—many benefits, particularly in cyclone ravaged Hawke's Bay. So I do commend this bill to the House. Motion agreed to. Bill read a second time. ASSISTANT SPEAKER (Teanau Tuiono): This bill is set down for committee stage next sitting day. ROAD USER CHARGES (LIGHT ELECTRIC RUC VEHICLES) AMENDMENT BILL Second Reading Hon SIMEON BROWN (Minister of Transport): I move, That the Road User Charges (Light Electric RUC Vehicles) Amendment Bill be now read a second time. This bill, which we are now putting through Parliament, through its second reading, is an important bill in order to ensure that all vehicles that use our roads are paying towards, contributing towards, the maintenance and upkeep of our roading network. In 2009, the previous National Government put in place an exemption for light electric vehicles and plug-in hybrid vehicles from paying road-user charges (RUCs) in order to encourage their uptake. The exemption was always to end once those classes of vehicles reached around 2 percent of the light vehicle fleet, which they have now passed, so this legislation has been brought into the House in order to transition those vehicles into the road-user charge system on 1 April. I note that this legislation has been brought to the House and has had to go through a relatively quick process through a select committee due to the fact that the last Government failed to address these issues prior to the last election. They consulted back in 2022 in relation to what changes were needed to transition plug-in hybrids and electric vehicles into the system but failed to make any actual legislative changes. One of the key issues which I asked the Transport and Infrastructure Committee to look at is in relation to plug-in hybrid vehicles, because, of course, if we didn't bring this bill to the House, those vehicles would have to pay the full road-user charge rate, by means of the fact that they both are powered by a petrol engine and also by an electric battery which can be plugged into the wall and receive electricity. So if this legislation wasn't brought to the House, on 1 April this year, the reality is that the owners of plug-in hybrid electric vehicles would be paying the full road-user charge rate of $76 for 1,000 kilometres. In order to ensure that that didn't happen, because, of course, that would be unfair based on the fact that they do consume fuel and pay fuel excise duty, we put this legislation to Parliament in order to address the fact that the RUC rate needed to reflect the fact that they were also paying petrol excise as well. We proposed in that legislation a 30 percent RUC rate reduction based on the fact that those vehicles consume on average around 2 litres per 100 kilometres, but also reflecting the fact that the real-world usage is often different from what the manufacturer data says. And, of course, we asked the committee to particularly look at that issue to ensure that we had a fair outcome from it. The Government has announced today that we will be ensuring that that RUC rate is extended to 50 percent, reflecting the fact that, actually, particularly, older plug-in hybrid vehicles do have a higher fuel consumption due to their battery life being either diminished or not being as good as some of the newer plug-in hybrid vehicles. So we think this is an ability to compromise and get to a better approach on this particular issue. Of course, the select committee heard from hundreds of submitters over a very short period of time. We thank the select committee for the time that it took to listen to those submitters. As I outlined, the reason for the short select committee was, unfortunately, due to the fact that the last Government didn't deal with this problem, but I do just want to thank the committee for dealing with those hundreds of submitters and to be able to come back to the House in such a short period of time, and I want to thank all the members of the committee for their contribution towards that. Of course, the other change that this bill does make is in relation to battery electric vehicles, and, of course, it requires those vehicles to pay the RUC rate of $76 per 1,000 kilometres from 1 April this year. Of course, this legislation isn't proposing to adjust the RUC rate, as other members may be wanting to do. But I do just want to make the final point in this debate—two final points—in relation to the next steps. Firstly, this is a transition. The reality is that this bill has highlighted the fact that there are significant variances in terms of how much vehicles pay to use the road depending on what type of fuel they use. So if you have a hybrid or a plug-in hybrid or a battery electric or a diesel, the reality is that vehicles are paying a different amount to use the roads compared to others, based on the fuel that they've used. That's because our system for paying to use the road has been based on fuel excise duty, which charges a certain number of cents per litre, rather than a predominantly road-user charge system, which charges based on how many kilometres we use the roads. So it's this Government's intention that this is the first step in transitioning all vehicles to a road-user charge so that all vehicles, regardless of what type of fuel they use, whether they're a petrol car, whether they're a hybrid, whether they're a plug-in hybrid, whether they're diesel, whether they're battery electric, whether they're hydrogen—regardless of what type of vehicle is using the road, ultimately, it is this Government's view that vehicles should pay road-user charges based on the weight and the distance that they use the road, rather than based on the type of fuel that they use. So this Government will be progressing further changes in regards to moving all vehicles to a road-user charge based on distance travelled and vehicle weight. We're currently receiving advice on that, and we'll be moving at pace and doing that as quickly as possible, and I note that the select committee also made that particular point in their report back to the House. The final point is that there will be a two-month transition from 1 April, and so there are over 100,000 vehicles which will be impacted by this change. We note that that is a significant number of vehicles to bring into the road-user charge system. The New Zealand Transport Agency is communicating with all of those owners of those vehicles, and there will be two months which, by the end of that two-month period, by the end of May, all those vehicles will have had to have purchased their first road-user charge licence. So we've tried to provide maximum flexibility in order to smoothen that transition and also to ensure that the agency is able to have time, people are able to have time, before they have to have purchased their first road-user charge licence. So this Government supports the intent of this bill. We're pleased with the progress it's made. We are making the change around the plug-in hybrid rates, but we're also, as I said, outlining our intent to continue to progress work for all vehicles to be paying a road-user charge based on distance and vehicle weight. I commend the bill to the House. Hon DAMIEN O'CONNOR (Labour): Mr Speaker, thank you very much and it's an honour to speak on this important piece of legislation. Transport across our big country for everyone—individuals or commerce—is vitally important. I wasn't on the select committee, but I want to thank my colleagues who arguably have saved the day, actually, particularly for plug-in hybrid vehicles. Can I just go back a couple of steps? I'll confess that as someone who drives probably 60,000 to 70,000 kilometres a year, owns a truck that probably creates the potholes, rides a motorbike that suffers when you hit the potholes, and has a car somewhere in the middle there, our roading system is in a dire situation, in large part because we bought heavier trucks—the last National Government put heavier trucks on the road—and then froze the funding for maintenance and improvements. So when we came into Government we had a big challenge of increasing substantially the funding for roading, and indeed we did do that. As was pointed out before by the Minister, in 2009, the National Government saw the need for electric vehicles and so brought in some—well, what they thought were exemptions, of course, for electric vehicles. The idea was that we'd have a transition through to more electric vehicles in our fleet—in fact, the target being 2 percent. In fact, that only started to occur when the Labour Government brought in incentives—or the Labour coalition Government, when New Zealand First had had some sense—when we brought in the Clean Car Discount that did provide a direct incentive for people to buy Teslas. Indeed, the Prime Minister took up that opportunity—and because, as we know, there's market failure through our economy and if we're wanting to transition forward then we have to provide the incentives. This piece of legislation indeed moves that forward. It was going to park the incentives, because at a 30 percent discount for plug-in hybrid vehicles, they would have been paying more than the equivalent petrol vehicle. That anomaly, which would have discouraged people from the transition, was addressed by my colleague who brought in an amendment which the Minister in his wisdom is going to carry through. So thank you very much to members on the committee. If I go back to Labour in Government, we did see this anomaly and this challenge of how we would get vehicles that, clearly, are using the road, to contribute to road maintenance. So Waka Kotahi, who I think, in my personal experience, is not the best Government organisation—I've seen over many, many years, them in their different forms, come to Government with advice, much of it flawed in my view. They have changed systems. We have a road system that's not safe, a road system that is not maintained, and a road system in which consecutive Ministers have taken advice from Waka Kotahi. I hope this current Minister is going to shake them up because I don't believe they've provided the right advice on driver licensing and, as I say, on road safety and many other things. And I'm not sure that their advice on road user charges is the fairest way, across the board, to provide direct contribution to road maintenance, or is the right way forward. As a truck owner, you can go online, and you can pay road-user chargers (RUC) and you'll get a ticket in the mail and then you put it on your windscreen. It's all OK and many diesel vehicle owners would know that system. But if we're going to apply that across the whole fleet it is going to be, in my view, a bit of an administrative challenge. That's one of the things that is being looked at—and I'm sure the Minister might come to it—so I'm just putting on the record that what we're doing here, in making adjustments for the right reasons and finally having the incentives in place for a decarbonised lower-emissions fleet, which we all agree is necessary, I hope that we're not going to bring in an administrative system that becomes another challenge for the average Kiwi. If you run a fleet of trucks, you'll have a sound administrative system. Even if you run a couple of trucks or you run one truck, you kind of put up with the road-user charges application system. It's not that complex but it is nonetheless an administrative requirement. For the average Kiwi to transition from a petrol vehicle, where every time you fill up you pay your excise, into one of having to actively apply for road-user charges, then I think there may be some challenges. Now there's an electronic alternative. And the question I'd ask of the Minister or of Waka Kotahi as we move forward is what's the cost of that system relative to the benefits? And is there an alternative? Because I think that the Minister of Transport will come back to this House, in this Government, and propose that road-user charges go up. They've said there will be no extra taxes or charges. Well, I don't believe them. I've seen too many false statements on that area, so the issue of not only the charges for RUC but then the system of rolling that through the whole fleet is one that we in Labour, in Opposition, will challenge the Government as they move forward. Can I acknowledge the areas in the bill where there have been exemptions made, particularly for rural vehicles? I think that's important, particularly for rural vehicles. I think that's important, and I'm sure that those people moving out in areas—and obviously there's the evolution, in spite of what farmers might have denied, of electric vehicles on farm which will be more efficient and more effective as well, in many ways, to get around the farm. That is an evolution that I think we must also welcome. Can I just say that the other thing that this bill will do is put the Government and our country in a better position to honour its commitments in the EU-New Zealand free trade agreement which we will be debating after this. Because if the changes hadn't been made by my Labour colleagues to provide a 50 percent discount for RUC for plug-in vehicles, and they had left it at 30 percent, then in fact we would have been stepping back from what has been in place an incentive to move to a decarbonised passenger fleet. The EU trade agreement says—and it might be discussed later—that we, as two parties to agreement, must continue to do our best to reduce emissions across our economies and contribute positively to the Paris accord goals. So, they are noble and, in fact, legal obligations, and the adjustments made in this bill mean that we will continue on that track, hopefully with people who buy plug-in electric vehicles who now will at least have the same benefit, if not a greater benefit, than remaining with an electric vehicle. The reality is that human nature likes incentives. We heard it from a couple of the Ministers there that the farmers want incentives, they don't want to be driven by regulation. Some would call it subsidies, I guess, and subsidies and incentives are part of human nature. What we're doing in this piece of legislation here is shifting the obligation to pay for your use on the roads and arguably, your impact on the roads, although in my view that still has to be properly assessed. But electric vehicles and plug-in hybrid vehicles do clearly contribute to some impact on the roads, and they do have to pay through RUC, but the plug-in hybrid vehicles will pay at the appropriate level, with still a little incentive to move in that direction. This is an important piece of legislation. It's one step down the track to a fairer system of paying for our highway network. But if this coalition Government did as its previous National Government did—that is, move to a philosophy of sweat the assets and minimise the investment in road maintenance, safety upgrades, and road improvements then will be left when they exit office with the same dilemma we faced in 2017 when we came in, and that is the need to significantly increase the funding for our roading networks and for alternative methods of transport, including rail, cycling, walking, and just getting around our country. We did a good job. We moved us forward. This issue of RUC or the issue of electric vehicles and plug-in hybrids and how they contribute is now being addressed through this legislation, improved dramatically by the simple rebalance of the discount rate for plug-in hybrid vehicles. So thank you to my colleagues, thank you to the Labour Party and their commitment on the select committee. We, in Labour, support this bill through the House. Kia ora. Hon JULIE ANNE GENTER (Green—Rongotai): Tēnā koe, Mr Speaker. Tēnā koutou e te Whare. Climate change is the single biggest issue facing us right now as a country, as a people, and as a planet, and the reality is that we need to work together and cooperate on a level we never have before in order to address this challenge. It's going to affect farmers, it's going to affect tradies, and it's going to affect our infrastructure if we don't take action now. If I told you that there was a way we could take action on climate change that not only didn't cost us money but it saved us money and it made a more productive and efficient transport system and a more productive and efficient way of living and doing business in New Zealand, I would think that Government parties would support that, because here's an opportunity to do something that's not just good for the climate but it actually, in the short term, saves us money, and in transport, it's precisely that. Everything we can and need to do for a more sustainable transport system that's going to be better for the climate saves New Zealanders money and it creates a more productive and efficient transport system and better cities, and yet the Government is doing the opposite in almost every area of transport of what is good for the climate and good for New Zealand. That's unfortunate, and this bill—this is the second reading of this bill—is a proposal that in the short term really goes in the opposite direction of what we need to do in terms of supporting more electric and low-emissions vehicles into New Zealand. Low-emissions and electric vehicles are really a huge opportunity for New Zealand because so much of our electricity is renewable already. We're spending so much money on imported fossil fuels to run our vehicles, and we have such a vehicle-intensive transport system—a private vehicle - intensive transport system. We're spending all this money on vehicles, plus the fuel to run them, and the fuel to run them is mostly generating energy-related carbon emissions, which is bad for the climate. So here's this win-win opportunity, but, unfortunately, what the Government is doing is simply taking away any incentive to switch to electric vehicles right at the time when we most need Government support and incentives in order to get that transition. The reason the bill does this—and we heard it through the submissions. The other downside to this whole process has been that it's been incredibly short. It's been rushed. The select committee was given only nine days to announce submissions on the bill, to hear submissions, and to report back. The normal Parliament process is six months. Even four weeks would have allowed a better process, but we only got nine days, and in the very short time that the public had to submit on the bill, we got over 500 submissions. Now, I think we had like 36 hours for submissions. We got over 500 submissions, and in the departmental report from the Ministry of Transport, it says that the main focus of submissions was advocating for battery electric vehicles being charged a lower road-user charge rate than what is proposed by the Government and that plug-in hybrids should be charged a lower rate. All of these submissions, the majority of these submissions—if you look on page 14 of the departmental report, it says, "the majority of these submissions agree that [electric vehicles] should contribute towards the cost of the transport system". However, the appropriate road-user charge rate for battery electric and plug-in hybrids "should reflect their important role in reducing greenhouse gas emissions and addressing climate change concerns." Now, what we're interested in here more than anything else is outcomes: what will the outcome of the policy be? When you combine the outcome of this policy with the outcome of removing the Clean Car Discount—which was having a transformational impact on the vehicles coming into the country—then the reality is we're going to import fewer electric vehicles in the next few years. That means that every extra higher-emissions, fossil-fuelled vehicle that we get in the country locks in 20 years of emissions, and not just 20 years of emissions but 20 more years of New Zealanders paying for overseas fossil fuels, rather than using cheaper, cleaner, renewable vehicles using electricity generated right here in New Zealand, which is good for our economy and good for consumers. So the reality is that the majority of the submissions were opposed to the proposal, even though they support road-user charges being applied to battery electric and plug-in hybrids. They support it, and there was a particularly strong submission from an industry group. We had, basically, the whole industry: the Automobile Association, the Motor Trade Association, the motor vehicle importers' association, the vehicle importers—that's the second-hand vehicle and the new vehicle industry groups—Drive Electric, and others. They had a big, joint submission that said, "We believe that the current planned [road-user charge] rates that will apply from 1 April [this year] on [battery electric vehicles and plug-in hybrids], creates a significant distortion between [road-user charges] and [fuel excise duty]. Reducing these RUC rates, as requested"—so the rates in this bill were requested, and the Green Party supported their proposal that we reduce our battery electric rate to $60 and for plug-in hybrids. We advocated for $38. Now, as it happened during this rushed process, if you read the select committee report, you would think that the Government was not going to amend the bill as introduced, and yet attached to the bill, it is amended, and it is amended to have a lower rate for plug-in hybrid vehicles, which is great. So look, if one thing can be taken away from this, because the Government embraced this change of the lower rate of $38 rather than $52, which it was going to be— Tom Rutherford: $53. Hon JULIE ANNE GENTER: —$53. Sorry, it's $53. So here, in clause 15(2), the amendment was made, even though the Government members of the committee said that they weren't supporting that change. They did vote unanimously to support it, and now the Minister of Transport is saying, "Hey, actually, I did want that. I did want the committee to consider options." So please let that be a lesson to Government members of the select committee that they have a really important role to play in improving the legislation from the executive. You all—Mr Speaker, I'm not referring to you. But you all, in the Government—you didn't come here to rubber-stamp what the executive is doing. You're hearing from the public, you're hearing from industry, and you can make an informed call if that could help improve the executive's lawmaking, which happened in this case. So I really encourage members to take seriously the role of select committees in improving the legislation handed down by Ministers. You're not here at the beck and call of Ministers. You're here to hear from the public and make that law better, and in this case it has happened. The Greens supported the amendment at the select committee, and all kudos to my Labour colleagues, who ensured that that amendment was in the version of the bill that was voted on by the select committee. So here we have a reduced rate now for plug-in hybrids, which is good, but the Greens still cannot support the bill because we don't have the reduced rate for the battery electric vehicles. You know, everyone can talk about fairness until we're blue in the face, but the reality is—this is very clear from the submitters—that people who own electric vehicles are going to be paying almost twice as much as a comparable petrol car. To me, that's not fair, and that's what the majority of the submitters said. A reduced rate for battery electric vehicles would actually be fairer, and not only that. It does help, but like the— Grant McCallum: You've got to fix the roads somehow. Chlöe Swarbrick: Take the freight off. Hon JULIE ANNE GENTER: There are ways to ensure— Tom Rutherford: And put it where? Hon JULIE ANNE GENTER: —that they're— Chlöe Swarbrick: Put it on trains. Hon JULIE ANNE GENTER: Sorry, I'm getting a little bit derailed here by the debate next to me, which is that— Tom Rutherford: "Derailed"—well done. I see that—I see that. Hon JULIE ANNE GENTER: Members opposite should consider whether or not we have a transport system that is user-pays, because at the moment it's not, and this was also clear. I'd call the attention of the Government members to this lovely flow chart on page 2 of the departmental report, which makes it very clear that road-user charges and fuel excise duty—petrol tax—do not pay for the total cost of the roads. There's both massive taxpayer money going into highways and there's ratepayer money going into local roads, and so it's not a user-pays system, firstly. Secondly, the more important thing is are we going to get the transition to the electric vehicles that we desperately need, because every year we don't, it's going to cost New Zealand more. It costs New Zealand at every stage. All of our dairy exports do not cover the cost of our vehicle and our fuel imports annually. Everything we can do to reduce that fuel bill now means more money in the pockets of New Zealanders, more money in New Zealand, and, at that same time, it's really essential and necessary for the climate. What we need to do here—everyone—is think past the debate of the last century and the last few decades, and start thinking about the present and the future: how we can actually get outcomes-focused policy that's going to be effective. If there's one thing that members opposite cannot deny, it's that the Clean Car Discount got outcomes for New Zealand, and all this rhetoric and slang about tradies and farmers—it's rubbish. The vast majority of the fees were paid by high-income people, paid by businesses, and paid by people in urban areas. So if farmers need the urban places to pull their weight, that's what the Clean Car Discount did. CAMERON LUXTON (ACT): Thank you, Mr Speaker. I endorse a few of the things—to the surprise of this House, potentially—of the previous speaker, the Hon Julie Anne Genter. I do agree that our road budget is not being a user pays and is too highly subsidised. Hence why I was quite glad to be in the Transport and Infrastructure Committee hearing about a discount that reflects real use and costs contributing to the national road transport fund based on what the actual damage of a car, vehicle, truck, type of vehicle, type of fuel is. Now, the thing is we've heard that it was a rushed select committee, and it was a decent hearing of the evidence, I thought. We heard from over 500 submitters and, as the previous speaker has said, a few industry organisations as well. I must say I heard a lot of support for paying our way. Many people who submitted said that they feel that it is time; that this has been a well-signalled transition; that we are going to have two months, which is long enough for people to get their head around it; and that 2 percent has been well matched. Forty-nine out of the 50 cars on the road also feel like it is time to have the last 1 in 50 pay their way. The 50 percent discount, people should know, is based on the road-user charge (RUC) of $76 per 1,000 kilometres. Now, a 30 percent discount was seen by some submitters as not fair, but that is because, in my understanding of the evidence, they were measuring that against the fuel excise duty paid by petrol vehicles. Now, we could have a discussion, but I don't think we will right today, about whether everybody is paying their fair share for the road, and if there is a concern about polluters paying their way, perhaps the Green member who spoke before would like to address that everybody using the road pays their way. I think freight transport has been paying a fair share. The damage that they cause means that they are paying a higher rate for their RUC, unlike under-3.5 tonne vehicles, which pay between $1 and $3 out of their road-user contribution towards roads damage. Hon Damien O'Connor: Rubbish. CAMERON LUXTON: Well, I hear "rubbish" from the member Damien O'Connor, but I must say that wasn't the information, despite his misgivings of the officials, that the select committee heard. Now, I also think, Damien O'Connor, you did have a good point in your speech before: the admin fee needs to be looked at. There are many ways in which we could do this, and going forward, I hope that the Government makes steps towards having a broad-based and fair coverage for every road user through a RUC scheme. Because the way it is being measured currently, off the fuel excise duty, although it was good for its time, is well past its use by date and it needs to be reviewed. As a resident of the great city of Tauranga— Tom Rutherford: Great place. CAMERON LUXTON: It is a great place, Tom Rutherford. We have two of the three toll roads in New Zealand. Tom Rutherford: Toll-ranga! CAMERON LUXTON: Tauranga—yeah. I understand that many people around the country haven't had the experience of using a toll road in their driving life. Well, I can confirm, as a resident who uses one or two regularly, that it is a seamless experience, on a beautiful road, especially the Eastern Link, and when it comes to paying for our use of that road, we get an automatic bill. If you sign up, as most residents do, to the tolling portal on the internet, you get an invoice at the end of the month and it's paid very seamlessly. I realise that a large part of the cost that comes about through the tolling scheme is through recouping from people who have missed their payment, but I think the bulk of New Zealand, as the bulk of the people of Tauranga are currently registered, will understand how easy it is to actually pay a user-pays fee. I commend this bill to the House despite the need for having more money from the users of a service paying for it. I think that it is about time that every user of the road pays their fair way. I thank you, Mr Speaker. ANDY FOSTER (NZ First): I'm pleased to rise to support this Road User Charges (Light Electric RUC Vehicles) Amendment Bill. Actually, I would note that this is the first bill to come from the 54th Parliament and be reported back to the 54th Parliament, so I'm quite pleased to have been involved in that process. It's about road-user charge (RUC)—what is RUC? RUC, effectively, is a charge for the access to and the use of the roading system. What it is not is a charge for carbon emissions, and we've seen the sort of interplay between them. That is dealt with in another way, through the emissions trading scheme (ETS) cost that is applied to fuels. Light electric vehicles (EVs) and plug-in hybrid vehicles (PHVs) were always liable for RUC. What has been happened, though, is they haven't been paying RUC because there's been a specific exemption. Why was that exemption there? That exemption was there to incentivise the uptake of those vehicles until they got to about 2 percent, and that's where we've got to. We're at 2 percent now, so now that is coming off. This has been signalled for a long time. It has been signalled that it was going to drop off at the end of next week—31 March, that the charge would start to apply and the exemption would end. So if this bill were not introduced, what would happen is that EVs and PHVs—light EVs, light PHVs—would all be paying the full RUC charge right from the beginning, so we had to do something about that if we weren't going to apply that. Look, it was done at pace, and we've heard from the member opposite, from the Hon Julie Anne Genter, that it was done at pace, and maybe we should have taken six months. Well, I don't think either side can really beat each other up too much about that. You could say that the last Government should have done something about it, because if you're going to do it in six months, if I count back six months, it would have been September, which, by my calculation, is before the election. That wasn't done. You could say, "Well, this side of the House could have done it quicker.", but, by crikey, we've been doing all kinds of different pieces of work, and it's been a very, very busy schedule. So, look, we were left in this situation where this had to be done at pace, and it was. Since the first reading on Tuesday a fortnight ago—so a fortnight ago today—it was reported back to the House on Thursday last week. You will note the dissenting views from Labour and the Greens around that timing issue, but, look, that's the reality of it. We were put with the work we had to do and we did it. The timetable was tight. We heard from submitters Friday before last. We dealt with the officials' feedback, drafting, and final decisions by Zoom, because the House wasn't sitting. That did cause us to make one slight whoopsie there, but that's OK; we've ended up in the right place, I think. Look, I want to thank everybody for the work done in a tight timetable. It involved some late hours. I want to thank the members and the alternate members from both sides of the House for their participation. I want to thank the Office of the Clerk who worked very, very hard on this, and the parliamentary drafting office and also the Ministry of Transport and the New Zealand Transport Agency (NZTA), who provided us with some great information and worked very, very hard. Hon Mark Patterson: Well chaired, too. ANDY FOSTER: Oh, thank you very much. Thank you very much, Mark Patterson. Look, I especially want to thank the 518 people and organisations that made submissions in a very short period of time. They had less than 48 hours to make submissions, but they did it. I was really, really impressed they did it, and they were quality submissions too. We had 19 who appeared the following day on that Friday. Submitters were almost entirely owners of electric vehicles, PHVs, or industry organisations, so it wasn't like the people who own petrol vehicles were making submissions. It was the owners of PHVs and EVs who were making submissions, and, almost without exception—certainly those that we heard—they all said, "We should be paying a share. We should be paying towards the use and maintenance of the roads." The only argument was about how much. The EVs—I'll deal with that one first. Several submitters noted that the RUC charge per distance travelled—and you've heard that again from across the House there—would actually be, while it's the same as the light diesel vehicle, it's actually higher than the average light petrol vehicle. The reason for that is that since the RUC level was set, petrol vehicles have got more efficient. So that's a good thing, but what it does mean is that the petrol vehicle is actually going to be paying slightly less on average than the RUC charge. And if the RUC charge is applied to EVs, they're paying slightly more than that for the moment, for the same distance travelled. So you could consider that to be a good thing, because it means we've got less emissions, less petrol being used by our petrol fleet, which, of course, is the bulk of the fleet. We did consider this. The advice we got from officials was that this would have been within the legislative scope but not within the policy scope of what we were presented with. Despite the Greens, in particular, here—the alternative view that they've put in the report back—when we talked about whether we would actually advance this idea within the Transport and Infrastructure Committee deliberations, nobody wanted to do so—nobody wanted to do so. So the opportunity was there to raise it—probably not to win it, but the opportunity was there and it was not taken, not by the red party, not by the Green Party. So I think that is important that you know that. So moving on to PHVs: we're talking here about a very small proportion of the vehicle fleet—about 30,000 to 40,000 vehicles out of 4.5 million vehicles in the fleet. That's about two-thirds of 1 percent of the entire vehicle fleet. The rate that we applied to them, the discount rate that we applied to them, was a specific issue that the Minister asked us to consider, and we've had pointed out to us across the House that we should have considered it and we did. We thought very carefully about it. The issue is that PHVs, of course, use both petrol, so they pay the fuel excise duty, and they will pay RUC through the battery use. The question we've got there is we didn't—and this is the important part of the bill—want them to be ending up, essentially, being double-taxed, paying for both at the full rate for the full distance that they travelled. That would have been unfair to PHV vehicles. So the question, then, is: what is the discount rate? We heard lots of submitters, and they were all arguing for all kinds of different ways of administering it, because every single vehicle is going to be different and used in a different way. There'll be vehicles which are used in urban environments, which are largely using battery. There'll be vehicles which are older, so their batteries have lower capacity, so they're more likely to be using petrol more often. So how do you end up with a fair system? Some people argue for doing it on the basis of the age of the vehicle. Some people went even further and said you should do it by the individual circumstances of the vehicle, but you've got to make it administratively efficient; you can't do it in any other way. So, really, what it came down to is what is a fair, balanced approach in terms of the discount rate that we chose. Well, that was, I think, well reflected in our select committee commentary, although the select committee commentary—and, as we've heard, the actual rate that was applied is slightly different because we didn't get everything 100 percent right there, but never mind. Labour started consulting a couple of years ago on a 20 percent discount. The bill, as introduced, said a 30 percent discount, and that really was saying that we think it's 20, but because of the variation of the fleet, maybe we'll be conservative; we'll make it 30. We kind of reported back somewhat accidentally at 50 percent. and that is what Cabinet has agreed at 50 percent, and I think it's a very, very good outcome. I think you could argue for anything between 30 percent and 50 percent. But the really interesting bit that we found when we asked officials about this, they found a European study, and that European study of 9,000 PHVs indicated an average of 4.1 to 4.4 litres of petrol per 100 kilometres, and that's equivalent to a 50 percent discount, so that doesn't seem an unfair outcome. So I think the other point to make in terms of RUC is that whatever you do, it's going to be unfair to somebody, and we need to make sure that we move to something which is fairer, and that is a RUC system right across the board. I want to finish by addressing a couple of other issues which arose in the bill or during submissions and consideration. First of all, you've already heard from the Minister that there's a two-month transition period. That is going to be quite challenging, because a lot of people—EV owners, PHV owners—are not going to be familiar with the RUC system; I acknowledge I've not ever been involved directly in the RUC system, and I'd imagine most of those vehicle owners won't have been, and they're going to need to be educated to get involved in that system and to know what they're supposed to do. The next point to make is that the bill exempts light EVs under 1,000 kilograms. If you look at the vehicles that are around, virtually there is no car that I can see that's a proper-looking car that actually is under 1,000 kilometres, so you're talking about motorbikes and light vehicles of that nature. It also makes clear that light all-terrain vehicles are also going to be exempt, because they're generally used off-road. We've heard from some of the submitters that the RUC level might disincentivise the uptake of EVs, and, in the short term, that may be true, but if we move to RUC relatively quickly, it's not going to be a big issue. The issue is much more the rate that you apply through the ETS for the ETS charge on fuel, petrol, or diesel. Also, there are other more significant issues there, not only the ETS running costs, environmental outcomes, and, of course, the cost of buying the vehicle in the first place. We had a bit of discussion about weight, but it's very clear that under 3.5 tonnes, the impact of weight on the road is not particularly significant, and that only 1 percent of the cost of fuel actually relates to weight. The rest is all about access and about the use of the roads and so on. The final point I want to make, in the last few seconds that I've got available, is those issues which the Hon Damien O'Connor raised around RUC administrative costs—those are really important ones, and that is something which we think is really, really important that NZTA and the Government pays a lot of attention to dealing with. Those costs are too high, especially if you buy your RUC in small parcels. They're going to be likely to be regressive. They're largely made up of bank charges and NZTA overheads, and so they do need to be addressed and got down. Again, I want to thank everybody who's been involved in bringing the bill to this point and to commend the bill to the House. ASSISTANT SPEAKER (Teanau Tuiono): The next call is a split call, I understand—Scott Willis. SCOTT WILLIS (Green): Thank you, Mr Speaker. To be clear, the Minister and his merry hand of free-market preachers and adherents to the prosperity gospel seem to want to drive to the Rapture in their SUVs, because the Minister can't abide electric vehicles (EVs), and God forbid travelling on public transport. There's nothing like a thirst for fossil fuels to power the end times, is there? Is it because the Minister is awaiting the Rapture that he can't be bothered with earthly details like good legislation, like climate initiatives, like a livable planet? This Government cancelled the Inter-island Resilient Connection with no plan B for safe ferry travel across Cook Strait. The Government's killed off light rail for Tāmaki-makau-rau, stopped Wellington moving, and supported road speed increases which will increase fatalities on our roads, so no they haven't started. They want to get started on increasing fatalities on our roads— Andy Foster: Point of order, Mr Speaker. As much as we're enjoying the speech, I haven't yet heard one reference to the bill at all. ASSISTANT SPEAKER (Teanau Tuiono): Just to note that relevance is the role of the Speaker—that's me. The member may continue. SCOTT WILLIS: Thank you, Mr Speaker. We do need road-user charges and fuel excise duty to help pay for the upkeep of New Zealand roads—that's true. But the Road User Charges (Light Electric RUC Vehicles) Amendment Bill, driven through urgency, has shown us the danger of speed. Chlöe Swarbrick: It's off track. SCOTT WILLIS: Ha, ha! Speed in this legislative space makes for mistakes—mistakes that the member opposite has admitted—and poor policy. Mistakes that have fallen well this time, but it's a blitzkrieg of destruction which only really serves the fossil fuel sector. I read in National's electrifying New Zealand policy that "National wants a future where buses and trains are powered by clean electricity, where we go on holiday in cars powered by clean electricity," and yet what we see is far from the rhetoric. Forget buses and trains, forget ferries, all National has done is work to disincentivise EVs and ignore the rest. The Better New Zealand Trust submission stated "To have any chance of meeting our climate goals the Govt must reduce … fossil fuels by all means possible." And we've heard submitters' extensive concerns about this bill through the select committee process—the foreshortened select committee process. The Motor Industry Association talked about the timing for the removal of the road-user charges exemption for light vehicles on 1 April so soon after the repeal of the Clean Car Discount. And their second concern was about the equity of road tax, regardless of vehicle engine type or motor power and the tax system used. They argued that "Motorists deserve to contribute equitably [for] their fair share for roading costs." So yesterday, the rewiring New Zealand report on Electric Homes: The energy, economic, and economic opportunity of electrifying New Zealand's homes and cars was released. I just had a meeting with Mike Casey and co. It tells us what we already know. In a petrol vehicle, only about 16 percent to 25 percent of the energy in petrol is turned into motion. Most of this energy is lost as waste. In an electric vehicle, 87 to 91 percent of the electricity it receives is converted into motion at the wheels. This Government is simply pulling the RUC on electrifying land transport. There's worse. This is simply bad for our rural communities. This is so bad for our rural communities. We know that rural people drive three times further than urban people and drive on the worst roads. I know where Mark lives. We could do so much better. ASSISTANT SPEAKER (Teanau Tuiono): And could the member come back to the bill and not worry about that. SCOTT WILLIS: Think about the Finnish example, where RUCs are based on the roads you drive on. Poor quality roads cost less in road-user charges than urban highways with overbridges. All our rural people who drive EVs are now being doubly punished—punished for driving an EV and subsidising diesel fossil fuel vehicles, punished for paying for the privilege of driving on the worst roads in Aotearoa, and subsidising the motorways. This bill is a disaster that comes from speed. We can do so much better. Chlöe Swarbrick: Let's get back on track. SCOTT WILLIS: Let's get back on track, not back on backie. TĀKUTA FERRIS (Te Pāti Māori—Te Tai Tonga): Tēnā koe e te Pīka. [Authorised te reo Māori text to be inserted by the Hansard Office.] [Authorised translation to be inserted by the Hansard Office.] Te Pāti Māori have challenged the direction and vision of this Government, of course. And, you know, the real question is: what is the vision? The vision, the direction that the Government is intending for us. It's clear that the direction of this Government is towards profit and capitalism. So whilst their vision is fine, we must now ask ourselves, "Profit, capitalism—but at what cost, and to what expense?" [Authorised te reo Māori text to be inserted by the Hansard Office.] [Authorised translation to be inserted by the Hansard Office.] So right now, it is evident to see that it is te taiao—our environment and the land—that will bear the brunt of the cost. The amendment to this bill is reflective of a Government that prioritises profit over the environment. Since the beginning of this Government's term in Parliament, we have seen the prioritisation of profit across various bills, including the repeal of the regional fuel tax and the current Resource Management Act amendment bill. I now stand to discuss the road-user charges amendments. Let me remind the House, and in particular tēnei taha—and particularly the members opposite us—that the bill was introduced as an incentive—an incentive—not a disincentive. An incentive for our communities to transition from vehicles reliant on fossil fuels to electric vehicles instead. By making it cheaper for an electric vehicle user to use our roads, it was made more accessible and, in essence, a legitimate option for our people to consider—something that would most likely have missed the consideration of our colleagues across the room. By introducing road-user charges, we make it less appealing and less realistic for people when faced with the choice between vehicles that run on unsustainable fuel sources and vehicles that run from a renewable energy source. This is a conversation that for us, for Māori, we often don't get the chance to engage with. Conversations around electric vehicles or renewable energy, and the chance to have our own electric vehicles, is often exclusive of our communities—our communities that live rurally, on their whenua, by their marae, or urban communities that often survive and disconnect from their whenua, their marae, and their iwi and hapū bases. We as Māori are left out—yet again. Or, indeed, cut out. And so I stand here to enter into the conversation to prove to our people that we have every right to be here, and that while these kaupapa seem far away from our tao Māori, our reality, all of these bills in fact do impact us, do impact our people. They work as ways to segregate us from the rest. And so, when we consider the amendment to this bill in the context of climate change—which we must do, we must consider our climate and the impact we as a nation have on our whenua—it is clear that previous efforts made to support the reduction in emissions, to create accessibility to clean technology, and create sustainable public and private transport, is not prioritised by the current Government. Ina kei te wero—I question those sitting on the other side of the House: how will the emissions reduction plan, the national adaptation plan, the carbon-neutral Government programme, the Climate Emergency Response Fund, be impacted by this change? Again, another vision, another amendment to another bill where profit is prioritised at the expense of te taiao and the whenua. And when we actually look to the so-called profit, ineffective planning and management from the current Government, it has forced them into a position where a $24 million pothole in their budget has meant that those who use electric vehicles will have to foot the bill. I'm sure that over the short time the Government has been in term, they've struggled to deliver their promises, when they realise that repealing and amending all of these bills and promising tax cuts to the people has only meant that the money lost from that particular revenue stream will now have to be sourced elsewhere. [Authorised te reo Māori text to be inserted by the Hansard Office.] [Authorised translation to be inserted by the Hansard Office.] ASSISTANT SPEAKER (Teanau Tuiono): [Authorised te reo Māori text to be inserted by the Hansard Office.] [Authorised translation to be inserted by the Hansard Office.] GRANT McCALLUM (National—Northland): I rise to proudly support this bill because we're actually a Government that was faced with a problem and we had to fix it. The previous Government hadn't gotten around to actually solving the problem of what was going to happen when the electric vehicle (EV) subsidies finished and, suddenly, they were going to go to 76c. That's where they were going to sit. According to the other side, that seemed, obviously, to be the solution: leave them at 76c. So we inherited this problem, and we have solved it. We've put a bill together, which is a transition bill, to allow for plug-in electric hybrids to receive a discounted rate because they use two sources of power, and also for EVs to contribute something to the roads that they drive on. It was interesting, the submitters we received—and thank you to the submitters. Yes, they didn't have much time, but the reason there was not much time is that we had to get a solution so this could be enacted by the 1 April, and that's what we did. This is why we're in this position. They also said, "We're happy to contribute towards maintaining the roads." Well, that's great. I applaud them for that, particularly as somebody who's had to drive around the roads of Northland, which have suffered through lack of maintenance from the previous Government, and had to put up with extra potholes, and the member opposite—Damien—would had to dodge them on his motorbike. Because of that, it's great to suddenly have an opportunity to have more income to actually help fix the roads, because people using the roads should help pay for it. The reason that this is only a transition is because we're going to be moving to a fairer system, as more and more people buy EVs—and they will, because the price of EVs, surprise, surprise, is coming down. So there's no need for us to actually subsidise people who can afford to buy them themselves, right? So we've got to transition to a system whereby you don't fund the roading maintenance and building of new roads—you don't fund it through the energy source; you fund it through weight and distance travelled, which is a fair system. That is what we've got to move towards— Hon Damien O'Connor: Where's the incentive to be more efficient? GRANT McCALLUM: —and that is the direction. The incentive is there, because, actually, with an electric vehicle, it is cheaper to run—they're actually cheaper to run than a petrol vehicle and a diesel vehicle. Believe me, I know—I drive a diesel vehicle and pay plenty for the road-user charges going around. So I commend the Government for actually acting on this and getting a solution. So I'd like to say, finally, that the people of Northland will really be very happy to finally have a bit more money spent on the roads so that we can have better roads to drive on, and the other rural people in New Zealand the same, right. That's really, really important. So I commend this bill to the House. ARENA WILLIAMS (Labour—Manurewa): Mr Speaker, if you'll bear with me, I am going to explain some of the changes that have occurred in this bill. Because there were a number of changes which Government members are very keen on in this reading that they weren't so keen on in the select committee room— Tom Rutherford: Oh, well we voted for them. ARENA WILLIAMS: The member opposite—Tom Rutherford— Hon Member: He's from Hamilton. ARENA WILLIAMS: —he says "We voted for them". He's not from Hamilton, and he says "We voted for them". Actually, that wasn't the case and I will explain that for the House's record, if you'll bear with me. But, Mr Speaker, what I first want to do is to tell you why the amendment that the Transport and Infrastructure Committee made is important and to explain it for the record so there is no confusion about it. This was inserted at the select committee stage. The select committee instructed the Parliamentary Counsel Office (PCO) to develop an amendment to the bill as proposed by the Minister—that was supported by a bare majority of members—that changed the discount rate for PHEVs, or for plug-in hybrid electric vehicles. That was because a 2022 study of 9,000 plug-in hybrid EVs in Europe suggested an average fuel consumption of 4 to 4.4 litres of petrol per 100 kilometres. That's relevant because the average fuel consumption of light petrol vehicles in New Zealand is around 8.1 litres per 100 kilometres, and those rates are the rates that the select committee heard from officials from Waka Kotahi should be taken into account when designing the discounts for plug-in hybrid vehicles. When the select committee heard evidence from the 518 interested groups and individuals who submitted on the bill, it was clear—and in further advice from Waka Kotahi—that the evidence for what the discount rate should be was limited. But that European study supported a 50 percent discount instead of a 30 percent discount, and that's why PCO was asked to draft an amendment. At the time the committee came to vote on the report, the report is drafted as if the 30 percent discount was the one that would come back to the House at committee stage. But that is not the bill that we are debating now. So the select committee's report does not record the majority—well, the unanimous—vote that then occurred to support the 50 percent discount. So anyone looking through the records will see that the select committee's report treats it as if it was a 30 percent discount, whereas the Labour amendment that was put up and drafted by PCO for 50 percent discount was the one that is supported and now the Minister has confirmed will be supported at committee stage. So it is Labour's position that we consider that a 50 percent discount in the road-user charge rate would be better reflective of the relative efficiency of plug-in hybrid EVs compared to petrol vehicles, and we recommended amending the clause because of that. So that is how, procedurally, we have got here. I think it is a good change and I'm glad that the Minister has accepted the change from the select committee. He asked the select committee to consider that particular point, and we did have some really good cross-partisan discussion about how to make this rate an effective thing for PHEV drivers. Because drivers and users have already invested in their cars. This is not a decision that only effects future purchases and incentives on users; this is actually a decision which makes someone's investment in their personal car—or their investment in their business if they are someone like a taxi driver or an Uber—significantly different about the way that the costs will fall out for that person. So we heard from a number of submitters who drove PHEVs themselves that they would need to do things like hang up the keys on their PHEV because they wouldn't be able to operate that as a taxi, or to change the way that they were using their car and they would use it less if that rate was applied. So I'm glad that we have made that change. This should be viewed alongside the removal of the Clean Car Discount. That was something that the committee heard evidence on being a very effective tool of incentivising the uptake of plug-in hybrid vehicles. But that that went along with the policy for plug-in hybrid vehicles not to pay user charges. Those two things together would have otherwise been removed, and so there would have been a sort of double change for PHEV users that we didn't think was appropriate, and that's why we proposed the amendment. So I want to thank my fellow committee members that, despite it being a very short submission period, was, I think, an example of committees being able to work together well. That committee was chaired by Andy Foster in a way that allowed discussion around this particular point and on the point of how much subsidy should be applied to EVs. These are technical pieces of legislation; we needed a lot of advice from the officials from Waka Kotahi and the transport ministry, and I thank those officials who engaged with us in what was a very, very quick time frame for them to need to turn around reports. That said, it was very difficult for the committee to consider what the policy change was in the context of dumping the Clean Car Discount and the Government's priorities on emissions, and, further, this idea that all cars would be moving towards road-user charges and the effect of this interim change on that broader change when we had no time frame of that. Those are things that should have been, and could have been, worked through by what was essentially a very good cross-partisan committee that was engaging in the policy detail; it was engaging with the technical advice that we were receiving and was asking good questions of submitters. It is there that this House should be able to get into the detail of legislation and it is a casualty of the urgency process when committees are not able to do that fully, and engaging with something which has been called a "transitional process". This will not be a transitional process that will be resolved quickly. A transitional process—for the benefit of the Government members who have made these submissions today—would have been to extend this legislation, because this legislation had been extended several times. That should have been the policy that we examined it against: extending the exemption for EVs and PHEVs, as has been Government previously—the appropriate thing to compare this change to. Instead, we were being asked to compare it as if it would not continue at all, and that was not the right policy equivalent to be making at the select committee time. But we were doing that because we were under time pressure. Just speaking a little bit to the thanks to the submitters. I, too, joined with my other fellow committee members in thanking the submitters who made submissions in what was essentially a day to put together those submissions—518 of them took the time to do that and they were technical submissions. They included a breakdown of the numbers and their projections about how not only this policy decision that the Government is taking would affect users now but users in the future. I believe that the numbers that the submitters provided us with also influenced and helped the advice that we were receiving from officials who were working under a very short time frame. That goes, again, to the need to prioritise these pieces of technical legislation through select committee stages. It is useful for this House to have those submissions, it is useful for the officials to be able to engage with it, and it is useful for parliamentarians to appreciate what policy choices we're being asked to make. Because not to bang on about this process, but it is not right that we are in this position of using a nine-day select committee process because the previous Government delayed it. We are in this process because this Government did not prioritise this on their legislative agenda. If this had been ready for first reading earlier in the process, the select committee would have been able to undertake a four-week select committee inquiry or they would have been able to extend this legislation while we were making these decisions. Using the length of the select committee process could have been an ordinary one, and that would have helped this House make reasonable and rational and cross-partisan decisions about this. It's important that we acknowledge what we're doing here. We are supporting this bill because we do need to make sure that people are paying their fair share on our roads. But what "fair" is— Grant McCallum: Cover up your own inaction. ARENA WILLIAMS: —when we're—I hear from the other side "to cover up our own inaction". I've just explained that it is, in fact, the Government's prerogative to use urgency, but I can help the new member with understanding Government processes around urgency a little bit later on. He can meet me down in the select committee room and I can school him again on the use of Standing Orders, as I did last week. But, you know, I'll help him along then. But for this reading, we do support this bill. There is change needed, but the policy we should have been considering is how to appropriately take into account emissions and the environmental considerations that go alongside those considerations like the Clean Car Discount which have been removed. If a Labour Government had been making these kinds of changes, we would have done that alongside the Clean Car Discount. We would have been protecting people's ability to choose better options for the environment, and that's why we need to be able to really get into the detail in the select committee discussions and understand what's being chosen between. Grant McCallum: Had your chance. ARENA WILLIAMS: I hear from the other side that we had our chance. I did have my chance in the committee and I used it. TOM RUTHERFORD (National—Bay of Plenty): Thank you very much, Mr Speaker. I just want to commend the previous member, Arena Williams, for her contribution both in the House and on the Transport and Infrastructure Committee, amongst all the members that contributed on the select committee process that we have been on over the last couple of weeks. It was an interesting process, no doubt. There were some decisions made and some challenges that we faced on the select committee, but, ultimately, what we are reporting back to the House is a pragmatic approach: those that use it, should pay for it. Now, what we're talking about, here, are the contributions that people should make to the upkeep and maintenance of our roads in New Zealand. In the electorate that I'm fortunate enough to represent, the Bay of Plenty, without a doubt—without a doubt—putting the cost of living to the side for a moment, the biggest issue facing the Bay of Plenty is transport. It's transport, without a doubt. Let's have a look at it: two main State highways, in our community, that are fundamentally way behind where they should be in 2024. Start with State Highway 2, the Takitimu North Link. Stage 1 is currently being progressed. State Highway 2, Takitimu northern link—it's currently being progressed. That programme and that State highway was consented and ready to go in 2017. Cancelled, delayed, pared back by the previous Government—now being delivered by National. The second, stage 2, will be as well—all the way through to Ōmokoroa, servicing the community of the wider Bay of Plenty. The second is State Highway 29, over the Kaimai Ranges, a really vital network that connects the city of Tauranga with the golden triangle of Waikato and Auckland. The reason I bring up those two key State highway networks in relation to this bill is that it is only fair that those people that use the roading network in New Zealand pay their fair share towards its upkeep and its maintenance. That's what this bill proposes to do. The Road User Charges (Light Electric RUC Vehicles) Amendment Bill amends the road-user charges (RUC) regulations to add a new vehicle type, PHEVs—plug-in hybrid electric vehicles—and amends the road-user charges rates regulations to apply a reduced rate of $38 per 1,000 kilometres for plug-in hybrids. Had we done nothing, come next week, every single vehicle on the road would have paid the $76 dollars—$76 per 1,000 kilometres. Simply kicking the can down the road on this issue wasn't feasible for us to do. On this side of the House, rather than just talking about it, we're actually going to action and deliver it. I would note some comments made, both by the Minister of Transport and some of my colleagues, around action that the previous Government took. In 2022, they looked into proposed options for the Government to look into what may be an equitable system to move forward with. They proposed, at that time, that plug-in hybrids pay a reduced RUC rate of 20 percent less than EVs. Yet, after going out, proposing that, talking about it, two years down the track, nothing happened—nothing happened. They went out with a proposal of 20 percent reduced and then nothing. Radio silence. Absolute silence on the issue. And now they have the fortitude to front up and complain and say, "You're rushing us." Well, let's just say, you had two years where you proposed and talked about it and delivered absolutely zilch. Absolutely nothing. Sam Uffindell: It's trademark. TOM RUTHERFORD: It's trademark. It is trademark, Sam, in the sense that talking about it is really good, but the actual delivery is rubbish. So on this side, we listened to the submissions that came through the select committee. It was great to do it with my colleagues across the House, where we had some really robust and engaging discussions around the submissions we received. Now, in that process, we received 518 submissions from a variety of individuals, organisations, and different groups. And the vast majority of the submitters expressed a really clear sentiment that both EVs and plug-in hybrids should pay their fair share to the upkeep and maintenance of our roads. Submitters expressed support for several parts of the bill, including the exclusion of light EVs, a two-month transition period so people can get their vehicles up to scratch, and the expanded definition of all-terrain vehicles (ATVs). I want to highlight that part in particular, because we haven't actually talked about that bit from any of our speakers so far. And what I'm getting at is, firstly, we're excluding light EVs, so anything weighing one tonne or less, which includes vehicles like electric motorcycles. The bill also includes an automatic exemption for all-terrain electric vehicles weighing one tonne or less. This acknowledges that electric ATVs weighing 3½ tonnes or less are currently entitled to an exemption on application if they are used almost exclusively off road. Let's look at that differentiation there: off road versus on road and what's fair around the maintenance and upkeep and what they contribute. That's why we've talked about removing them and providing them the exemption. The bill also amends the definition of ATVs to include electric ATVs. Heavy EVs weighing more than 3½ tonnes are exempt from RUCs until 31 December 2025. And the reason I bring that up is it comes back to the crux of why we've proposed this bill, and why the Minister's brought it to the House, why we opened for the select committee process, and why we're here now debating it at its second reading. And it simply is: if you use the roads, you should pay your fair share to contribute to the upkeep and the maintenance of it. And the change that has been talked about by members opposite, where we initially are consulted on $53 to 1,000 kilometres, and now we're back at $38 per 1,000 kilometres, is to seek the balance for the need for these vehicles to pay for their fair use of the road. And noting that plug-in hybrids have a reduced rate in a sense because they also pay the petrol excise and finding an equitable outcome is the only fair approach to take. The reduced RUC is also a temporary measure. We will be coming back in the future, as highlighted by the Minister of Transport, proposing the move for all vehicles to move to RUCs and moving them away from having excise tax on petrol to create an even more equitable system where we believe, actually, you use the road, you should pay your fair share. Increased fuel efficiency of vehicles and the rise of electric vehicles has created variances in what motorists currently pay for the use of the road. This has meant that less fuel-efficient vehicles, often owned by low-income households, end up paying more in fuel excise duty than owners of later model, more fuel-efficient vehicles. I see my colleague Minister Goldsmith, who I know is eager to eat his dinner—eager to get out of his seat— Hon Chris Penk: He'd rather eat someone else's! TOM RUTHERFORD: Ha, ha! I couldn't possibly repeat what was just said. But I just want to reiterate to the House that this has been a pragmatic outcome reached by the select committee and taken by the Minister, that it is only fair that those who own plug-in hybrids pay a reduced rate of $38 per 1,000 kilometres. And if you use the road, then you should be paying for its upkeep and its maintenance. I commend the bill to the House. ASSISTANT SPEAKER (Teanau Tuiono): Well, it's kai time. The House is suspended for dinner, and it will resume at 7.30. Sitting suspended from 6.01 p.m. to 7.30 p.m.