7 May 2012

In this edition:

MATTER OF OPINION

Something rotten...
The language is arcane. “Cable”, “not sensitive” “cleared”.  If you’ve ever received an email from someone at the Ministry of Foreign Affairs the words will have stood out from the banalities of arranging a coffee or deciding what movie to see. more...

IN THE NEWS

PROGRESS OF LEGISLATION

IN THE WEEK AHEAD

IN COMMITTEE

IN CONSULTATION

A Matter of Opinion

Something rotten…

The language is arcane.  “Cable”, “not sensitive” “cleared”.  If you’ve ever received an email from someone at the Ministry of Foreign Affairs the words will have stood out from the banalities of arranging a coffee or deciding what movie to see. 

With it there’s a sense of something else – an implied vetting by a patrician Under-Secretary, the hovering potential for redaction.  Whatever it is, it is pre-email and atavistic, redolent of teleprinters, India ink, Windsor knots, polished shoes, Suez and, above all, discretion.

Privy to the nation’s secrets – trade and otherwise – and with at least a passing familiarity with the secrets of others, the Foreign Office is one of the most senior in the public sector pantheon.  Not for nothing has it recruited to itself the gifted and the multi-degreed.  Not for nothing either that it has been for many years the preferred scouting ground for the public sector’s chief executives and mandarins.

The reported leaking of two Cabinet documents dealing with restructuring of the Ministry suggests that things at the Ministry are not what they once were.  Labour’s Phil Goff gets it at least half right when he described events as astonishing in the face of the Ministry’s reputation as one of the most non-partisan and professional under both National and Labour.

But, unable to resist taking the short-term political point, he glosses over a more significant problem, attributing indiscretion within the Ministry as a sign of staff disillusionment, demoralisation and anger in the face of what he describes as a botched restructuring. 

That attribution may be correct.  But if the Ministry is, in fact, the source of the leaks it’s also indicative of something far more worrying.  The person or persons concerned may seek to rationalise passing on confidential documents as some sort of “greater good” issue, but there can be no getting away from the fundamental dishonesty, stupidity and ultimately self-serving nature of the action.

But it is not only a question of individual ethics.  The Ministry’s visibility extends well beyond our borders.  It is our face to the world.  And while it has not been immune to leakage or self-serving behaviour, the profile of the current problem and its handling by Government and Opposition alike will not be lost on our trading partners, hoped-for trading partners and nominal allies.

This brings another apparent atavism into the mix – trustworthiness.  And even if the leak has come from other than the Ministry, the public handling of reform by those who should know better will certainly have eroded international confidence in the Ministry in the first instance and the government (small ‘g’) beyond that.

The State Services Commission is now investigating the leak and it is to be hoped that both the inquiry and its follow-through reflect appropriate rigour.

But the Commission - and the major political parties - need also to concern themselves with what the leak says about the culture of the public sector and its future, when Ministers may be better placed to rely on the discretion of consultants than its nominal servants.

In The News

Pre-Budget announcements

In a pre-Budget speech to Business New Zealand last week, Prime Minister John Key reiterated that the Government is on track to return to an operating surplus in 2014/15.  Mr Key said that the Government will be "taking the same moderate and balanced approach it has to its three previous Budgets" and that in particular Budget 2012 will be based on the following Government priorities:

In terms of specific areas of spending, Mr Key indicated that:

Mr Key also announced that spending on tertiary education will be rebalanced and that savings in this area will be reinvested into improving university teaching and research. 
 
In a separate announcement, Tertiary Education Minister Steven Joyce announced that:

Mr Joyce's announcement is the first substantive announcement to be made by the Government in the lead-up to Budget 2012.  More official announcements on specific policy areas can be expected to be made over the next few weeks leading up to Finance Minister Bill English's delivery of the Budget on 24 May 2012.

More information about Budget 2012 can also be found in the Finance and Expenditure Committee's report on the Budget Policy Statement 2012.  The Report was released last month and can be found here.

Proposed changes to the Public Finance Act

Finance Minister Bill English has announced the Government's intention to make changes to the Public Finance Act 1989 in order to increase the transparency around how government spending decisions can affect the wider economy and future generations.

The Government is proposing to introduce additional principles into Part 2 of the Act (which currently focuses on principles of responsible fiscal management) to require Ministers to consider the long-term implications of fiscal policy decisions.

Specifically, the proposed changes would require governments to:

The Government is also proposing to add, as a new principle of responsible fiscal management, a spending limit based on the rate of growth in inflation and population.  This proposal was set out in the National-ACT Confidence and Supply Agreement.  Spending on natural disasters, finance charges, the unemployment benefit and asset impairments would be excluded from this limit. Under this proposal, if a government decided to temporarily exceed the limit it would have to clearly explain its reasons and how it intends to ensure future spending stays within the limit.

The Government intends to consult other political parties on a number of proposals to change the Act and expects that a Bill setting out these proposals will be introduced to Parliament around the middle of the year.

Mr English's announcement can be accessed here.

New government share offers website launched

Minister of State-Owned Enterprises, Tony Ryall, has announced the Government has launched a new website to provide the public with information about the Government's mixed ownership programme.

The website, www.governmentshareoffers.govt.nz, provides information about the Government's proposal to sell to the public up to 49% of shares in Genesis Power Limited, Meridian Energy Limited, Mighty River Power Limited, Solid Energy New Zealand Limited and a stake in Air New Zealand Limited.

Mr Ryall announced that the Government is on track to initiate the first share offer, for Mighty River Power Limited, later this year, market conditions permitting.

The announcement of the launch of the website carried with it a disclaimer that no money is currently being sought and no applications for shares will be accepted until after the Government has released an investment statement containing specific information about the relevant share offer.

Productivity Commission releases final report on international freight services

The Productivity Commission has released its final report on its inquiry into international freight transport services.

The Report contains the following key recommendations:

The full report can be found here.

Alcohol Reform Bill to be progressed through final stages

Justice Minister Judith Collins has announced the Government is now ready to progress the Alcohol Reform Bill through its remaining stages in Parliament.  The Bill was introduced to Parliament in November 2010 and was reported back from Parliament’s Justice and Electoral Committee in August 2011.  It passed its second reading in September 2011.

Ms Collins said that issues arising from the Select Committee's recommendations had since been addressed by the Government and the Bill is now ready to be progressed through its remaining stages and enacted.

The Bill includes the following proposals:

The reforms in the Bill will be implemented in three stages, to provide enough time to set up new licensing and enforcement systems.  Most of the changes are expected to come into effect 6 and 12 months after royal assent.  The split purchase age proposal outlined above will be considered as a conscience vote during the committee of the whole House stage of the Bill's progression.

More information about the Bill can be found here.

MED chief executive to head super ministry

The chief executive of the Ministry of Economic Development, David Smol, has been named interim chief executive of the merged super ministry that will be known as the Ministry of Business, Innovation and Employment.

The merger will bring together the functions of the Ministry of Economic Development and the Ministry of Science and Innovation, and most of the functions of the Department of Labour and Department of Building and Housing.

The Government confirmed last month that the super ministry will be established on 1 July 2012.

Rival bidders lodge second appeal against Crafar Farms sale

The Sir Michael Fay-led consortium of New Zealand investors has lodged a fresh appeal against the Government’s latest approval of Shanghai Pengxin's application to purchase the 16 Crafar farms.

The consortium, known as the Crafar Farms Independent Purchase Group, is appealing the decision of Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman to approve the application “on the grounds that Shanghai Pengxin fails the test of business experience and acumen relevant to the overseas investment”.  

The grounds for appeal are the same as those already lodged by the consortium with the Court of Appeal in February over the Government's original approval of the sale.  The second appeal has been lodged in order to challenge the latest decision by the Government confirming its original approval.  The two appeal proceedings are technically separate but the consortium is looking into merging them so that they are heard together in the Court of Appeal as they concern the same grounds.

MED calls for greater accountability from larger New Zealand charities

Commerce Minister Craig Foss last month released a discussion paper on registered charities, entitled Auditing and Assurance for Larger Registered Charities.  The discussion paper contains proposals that are aimed at increasing the transparency and accountability of New Zealand's larger charities.

Registered charities are currently required to include financial statements when they lodge their annual return with the Charities Commission but there is no requirement for those statements to be independently audited or reviewed.  The discussion paper proposes charities that spend over $300,000 a year should have their financial statements audited, and charities spending between $200,000 and $300,000 should be required to complete an audit or assurance engagement.

The discussion paper can be viewed here. The Ministry of Economic Development is seeking submissions on the proposals set out in its discussion paper. Submissions are due by 20 July 2012.

Law Commission releases final report on the Credit Repossession Act 1997

On 30 April 2012 the Law Commission released its final report following its review of the Credit Repossession Act 1997.  The Commission recommends the Act be repealed and that provisions covering the repossession and sale of goods be incorporated into the Government’s proposed amendments to the Credit Contracts and Consumer Finance Act 2003 that form part of the Consumer Law Reform Bill currently before the Commerce Committee.

The Commission also recommends changes that would:

The full report can be found here.

First official snapshot of New Zealand's food and beverage industry

The Ministry of Economic Development has released a report, Industry Snapshot, as one step in its five-year comprehensive review of New Zealand's food and beverage industry (known as the Food and Beverage Information Project).  

The Report shows that 75 per cent of the top 64 food industry firms by turnover are owned by New Zealanders.  The majority of foreign ownership is held by Japan, Australia and the US.  The Report highlights the strengths of New Zealand's industry but also outlines opportunities for New Zealand to increase its exporting competitiveness.

The Report can be found here.

Progress Of Legislation

New Bills

Immigration Amendment Bill
Type of Bill: Government
Member in charge: Hon Nathan Guy
This Bill is aimed at deterring people-smuggling into New Zealand and would enable officials to issue group warrants against mass arrivals of illegal migrants.  A group warrant would allow for the mandatory detention of an illegal migrant (other than an unaccompanied minor) who arrived as part of a mass group for an initial period of up to six months.  The Bill would also amend the existing review processes applicable to refugee and protection claims and allow for regulations to be made that would suspend the processing of such claims.

Bills Awaiting First Reading

Administration of Community Sentences and Orders Bill
Child Support Amendment Bill
Citizenship Amendment Bill
Commerce (Cartels and Other Matters) Amendment Bill
Companies and Limited Partnerships Amendment Bill
Depleted Uranium (Prohibition) Bill
Domestic Violence Reform Bill
Gambling (Gambling Harm Reduction) Amendment Bill
Geneva Conventions (Third Protocol-Red Crystal Emblem) Amendment Bill
Health and Safety in Employment Amendment Bill (No 2)
Heritage New Zealand Pouhere Taonga Bill
Holidays (Full Recognition of Waitangi Day and ANZAC Day) Amendment Bill
Human Rights Amendment Bill
Illegal Contracts (Unlawful Limitation on Regulators' Powers) Amendment Bill
International Finance Agreements Amendment Bill
Joint Family Homes Repeal Bill
Lobbying Disclosure Bill
Local Electoral Amendment Bill
Mokomoko (Restoration of Character, Mana, and Reputation) Bill
New Zealand Geographic Board (Ngā Pou Taunaha o Aotearoa) Amendment Bill
Ngā Rohe Moana o Ngā Hapu o Ngāti Porou Bill
Parental Leave and Employment Protection (Six Months' Paid Leave) Amendment Bill
Prisoners' and Victims' Claims (Redirecting Prisoner Compensation) Amendment Bill
Register of Pecuniary Interests of Judges Bill
Shop Trading Hours Act Repeal (Waitaki Easter Trading) Amendment Bill
Standards and Accreditation Bill
Subantarctic Islands Marine Reserves Bill

Bills before Select Committee

Open for submissions

Bill

Select Committee

Submissions close (2012)

Report due (2012)

Building Amendment Bill (No 4)

Local Government and Environment

11 June

1 September

Game Animal Council Bill

Local Government and Environment

20 April

1 September

Members of Parliament (Remuneration and Services) Bill

Government Administration

18 May

28 September

Prisoners' and Victims' Claims (2012 Expiry and Application Dates) Amendment Bill

Justice and Electoral

11 May

11 June

South Taranaki District Council (Cold Creek Rural Water Supply) Bill

Local Government and Environment

3 May

21 September

 

Submissions not yet called

Immigration Amendment Bill
Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill

Submissions closed

Bill

Select Committee

Report due (2012)

Consumer Law Reform Bill

Commerce

9 August

Corrections Amendment Bill

Law and Order

28 August

Dairy Industry Restructuring Amendment Bill

Primary Production

1 June

Defence Amendment Bill

Foreign Affairs, Defence and Trade

6 September

Electronic Identity Verification Bill

Government Administration

29 June

Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill 

Local Government and Environment

15 May

Financial Markets Conduct Bill

Commerce

7 September

Hutt City Council (Graffiti Removal) Bill

Local Government and Environment

28 August

Legal Assistance (Sustainability) Amendment Bill

Justice and Electoral

6 July

Manukau City Council (Regulation of Prostitution in Specified Places) Bill

Local Government and Environment

31 July

Maraeroa A and B Blocks Incorporation Bill

Māori Affairs

8 September

Maraeroa A and B Blocks Claims Settlement Bill

Māori Affairs

8 September

Marine Reserves Bill

Local Government and Environment

14 December

Marine Reserves (Consultation with Stakeholders) Amendment Bill

Local Government and Environment

14 December

Medicines Amendment Bill

Health

2 July

Mixed Ownership Model Bill

Finance and Expenditure

16 July

Natural Health Products Bill

Health

31 July

Ngai Tāmanuhiri Claims Settlement Bill

Māori Affairs

16 August

Ngāti Mākino Claims Settlement Bill

Māori Affairs

16 August

Ngāti Manuhiri Claims Settlement Bill

Māori Affairs

8 September

Ngāti Whātua Ōrākei Claims Settlement Bill

Māori Affairs

8 September

Non-Bank Deposit Takers Bill

Finance and Expenditure

1 June

Privacy (Information Sharing) Bill

Justice and Electoral

15 June

Regulatory Standards Bill

Commerce

30 July

Rongowhakaata Claims Settlement Bill

Māori Affairs

8 September

Social Security (Youth Support and Work Focus) Amendment Bill

Social Services

31 May

Statutes Amendment Bill (No 3)

Government Administration

16 August

Victims of Crime Reform Bill

Justice and Electoral

3 July

Bills Awaiting Second Reading

Antarctica (Environmental Protection: Liability Annex) Amendment Bill
Arms Amendment Bill (No 3)
Arms (Military Style Semi-Automatic Firearms and Import Controls) Amendment Bill
Arts Council of New Zealand Toi Aotearoa Bill
Children, Young Persons, and Their Families Amendment Bill (No 6)
Consumer Guarantees Amendment Bill
Crown Entities Reform Bill
Employment Relations (Rest Breaks and Meal Breaks) Amendment Bill
Food Bill
Housing Corporation Amendment Bill
Identity Information Confirmation Bill
Inquiries Bill
Insolvency Practitioners Bill
Juries (Jury Service and Protection of Particulars of Jury List Information) Amendment Bill
Lawyers and Conveyancers Amendment Bill
Legislation Bill
Māori Trustee and Māori Development Amendment Bill
Patent Attorneys Bill
Patents Bill
Public Health Bill
Radio New Zealand Amendment Bill
Reserves and Other Lands Disposal Bill
Social Assistance (Living Alone Payments) Amendment Bill
Social Security Amendment Bill (No 3)
Spending Cap (People's Veto) Bill
Taxation (Income-sharing Tax Credit) Bill
Therapeutic Products and Medicines Bill
Trustee Amendment Bill

Bills Awaiting Third Reading

Airports (Cost Recovery for Processing of International Travellers) Bill
Alcohol Reform Bill
Biosecurity Law Reform Bill
Commerce Commission (International Co-operation, and Fees) Bill
Cultural Property (Protection in Armed Conflict) Bill
Employment Relations (Secret Ballot for Strikes) Amendment Bill
Fair Trading (Soliciting on Behalf of Charities) Amendment Bill
Gambling Amendment Bill (No 2)
Regulatory Reform Bill*
Regulatory Reform (Repeals) Bill*
Sentencing (Aggravating Factors) Amendment Bill
Trade (Safeguard Measures) Bill

* = these Bills will have their third readings together, as cognate Bills.

Bills Awaiting Assent

Appropriation (2010/11 Financial Review) Bill
Crown Pastoral Land (Rent for Pastoral Leases) Amendment Bill
Southland District Council (Stewart Island/Rakiura Visitor Levy) Empowering Bill
Taxation (International Investment and Remedial Matters) Bill

Regulations

Auditor Regulations 2012
Customs and Excise (Rules of Origin for Australian Goods—ANZCERTA Article 3) Amendment Regulations 2012
Electricity Industry (Enforcement) Amendment Regulations 2012
Electricity Industry (Participants and Roles) Regulations 2012
Financial Advisers (Fees) Amendment Regulations 2012
Parliamentary Annuities Determination 2012
Tax Administration (Information Sharing with Ministry of Social Development) Order 2012

In the Week Ahead

The House is sitting this week and is likely to progress a number of Bills through the first reading stage, including the International Finance Agreements Amendment Bill and the Child Support Amendment Bill.  This Wednesday is a Members' Day.

The House will be in recess next week and sitting the following week (Budget Week).  Finance Minister Bill English will announce the Budget on Thursday 24 May.  We will be releasing a special Budget edition of Watching Brief.

In Commitee

Finance and Expenditure Committee
The Committee heard a number of submissions opposed to the Mixed Ownership Bill, including the following:

Primary Production Committee
The Committee heard submissions on the Dairy Industry Restructuring Amendment Bill.  Submissions included the following:
Fonterra’s Chairman Sir Henry van der Heyden said Fonterra broadly supports the Bill in principle.  In contrast to the Shareholders' Council, the Chairman said from the Board's perspective, milk price oversight is unnecessary as a robust process for price setting is already in place.

Simon Cooper, the Chairman of the Chairman of the Shareholders’ Council, said the Council was concerned about the following aspects of the Bill:

Dr John Penno (Chief Executive of Synlait) and Steven Smith (Chief Executive of Open Country Dairy) made submissions on behalf of Synlait, Miraka Limited and Open Country Dairy.  The three companies were concerned the Bill would squeeze competition by entrenching Fonterra’s ability to pay a significantly inflated price for milk relative to commodity prices.  Dr Penno called for amendments to the Bill requiring Fonterra to set milk prices via a codified manual based on the actual commodity business.

Andrew Hoggard for Federated Farmers also called for the methodology for setting milk prices to be codified in legislation.  Mr Hoggard emphasised that if TAF goes through then there should be limits on the number of shares that non-farmers may own and on the percentage of shares that a single entity may own, and t these protections should be legislated rather than relying on using the company's constitution.  Similarly, Leonie Guiney, on behalf of individual private farm owners, emphasised the need for investment interests of cooperative members to remain subordinate to the members' primary production interests.

Social Services Committee
The Committee heard submissions on the Social Security (Youth Support and Work Focus) Amendment Bill last month.  The Bill would reform support, obligations and services for 16-17 year olds and 16-18 year old parents and extend work availability expectations to a wider group of beneficiaries in the sole parent, widow, woman alone and spouse/partner of benefit recipient categories.

A number of submitters were dissatisfied with the Bill's short public consultation time as well as opposed the content of the Bill:

Representatives from the Salvation Army and the New Zealand Council of Trade Unions both called for a move away from a punitive regime focusing on welfare dependency and towards government investment in taking people out of poverty and improving the opportunities available to beneficiaries.

In Consultation

New

Who

What

By when… (2012)

Auckland Council (on behalf of the Upper North Island Strategic Alliance)

RFP for technical study on upper North Island ports

16 May

Department of Conservation

Kaikoura sperm whale tourism review

11 May

Draft Conservation Services Programme Annual Plan 2012/13

5 June

Ministry of Economic Development

Discussion paper -  Auditing and Assurance for Larger Registered Charities

20 July

Electricity Authority

Part 10 implementation: Proposed Guideline for Metering Equipment Providers

12 June

Ministry of Fisheries

No in season increase in FLA3 TAC for 2012

N/A

Food Standards Australia New Zealand

Ethyl Lauroyl Arginate as a Food Additive in Sausages

15 May

Hydrogen Peroxide as a Processing Aid

5 June

Companion Dogs in Outdoor Dining Areas

13 June

Inland Revenue Department

Do the historic depreciation rates continue to apply to grandparented structures acquired before 1 April 2005?

1 June

Department of Labour

Review of the Health and Safety in Employment (Petroleum Exploration and Extraction) Regulations 1999.

1 June

Law Commission

Review of the Evidence Act 2006

1 June

Standards New Zealand - Joint Draft Standards

Geographic information - Encoding

15 June

Requirements for records in electronic office environments

8 June

Information technology - Security techniques

4 June

Management systems for recordkeeping

4 June

Safety of toys

4 June

Electromagnetic compatibility - Voltage dips, short interruptions and voltage variations immunity tests

25 May

Electromagnetic compatibility - Limits

16 May

NZ Transport Agency

Proposed changes to agricultural vehicle rules

25 May

Current

Who

What

By when… (2012)

Biosecurity New Zealand

Draft IHS for Zoo Rodents from Australia, the European Union and USA

14 May

Draft IHS for Animal Fibres

11 May

Department of Conservation

Kauri National Park proposal

tbc

Canterbury draft guidelines for aircraft access

Ongoing

New listing of the threatened status of New Zealand frogs, reptiles, bats and birds

5 June

Ministry of Consumer Affairs

Credit Contracts and Consumer Finance Amendment Bill Exposure Draft

11 May

Ministry of Economic Development

Business consultation on regulatory reform

31 December

Electricity Authority

Voluntary consultation guidelines for proposed changes to distributors’ tariff structures

9 May

FTR manager consultation – draft FTR allocation plan

15 May

Asset Commissioning and Testing Issues

15 May

Mandatory population of new fields in the registry

15 May

Clearing manager – draft FTR prudentials methodology

22 May

Ministry for the Environment

Consultation document: Updating the New Zealand Emissions Trading Scheme

11 May

Financial Markets Authority

Second consultation: Guidance note on effective disclosure

10 May

New Zealand Food Safety Authority

Proposals to Amend (No. 2) the New Zealand (Maximum Residue Limits of Agricultural Compounds) Food Standards 2011

18 June

Future Controls on Printing Reduced Size Legend

18 May

Proposed Animal Products (Regulated Control Scheme - Dairy Export Quota Products) Notice 2012

14 May

Food Standards Australia New Zealand

Proposed Future Regulation of Nutritive Substances and Novel Foods

21 May

Primary Production & Processing Standard for Minor Meat Species & Wild Game

21 May

Primary Production & Processing Standard for Horticulture

21 May

Inland Revenue Department

Income tax – whether residual land is part of an undertaking or scheme of development or division of land

11 May

Department of Labour

Consultation on Hazardous Substances in Workplaces

21 May

Productivity Commission

Issues Paper - Strengthening economic relations between Australia and New Zealand

31 May

NZX

Main Board / Debt Market Listing Rules - consultation memorandum and Draft Rules

30 May

Standards New Zealand - Joint Draft Standards

Electromagnetic compatibility - limits

14 May

Recessed luminaire barriers

17 May

Electrical equipment in mines and quarries

15 May

Electrical portable outlet devices

15 May

Collection, storage, transport and treatment of used electrical and electronic equipment

15 May

Remote control systems for mining equipment

10 May

LP Gas fuel systems for vehicle engines

21 May

Personal eye protection

18 June

Plugs and socket-outlets for household and similar purposes

18 June

Luminaires

15 June

Electromagnetic compatibility - unbalance, immunity test

14 May

Code of practice for handling combustible dusts

24 May

Connecting devices for low-voltage circuits for household and similar purposes

24 May

Standards New Zealand - New Zealand Draft Standards

Chemical preservation of round and sawn timber

9 May

NZ Transport Agency

High-risk intersections guide

14 May

Traffic Control Device Manual Part 9 Railway Level Crossings

16 May

ZESPRI Group Ltd

Industry Recovery Discussion Paper

tbc

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