This is a crucial conference for ACT and is another step in the rebuilding and the rejuvenation of our party.

Thank you for coming and for your support.

Thank you, to you Alan Gibbs, your family and staff for hosting us on your magnificent, inspirational property.

I would also like to acknowledge a number of people here today.

Firstly, I would like to thank you John Banks, for your commitment to, and leadership of, our party. You have taken on a very difficult and lonely job in circumstances you didn’t expect. A job that involves personal sacrifice, unrelenting demands of the party and electorate and constant public scrutiny.

As Associate Minister of Education with responsibility for introducing Partnership Schools, you are on the verge of achieving finally, after 17 years, what has been one of ACT’s key policy planks – greater choice in education, which we believe will significantly address the educational underachievement in some sectors of our society. You have our full support.

Secondly, I wish to acknowledge and to thank on behalf of the party our outgoing President, Chris Simmons. Chris, you have led the party through two and a half very turbulent years and have admirably overcome the many challenges that you were presented.

Thirdly, to you Rodney Hide – your contribution to New Zealand politics and ACT over five Parliamentary terms – 15 years – has been huge! You made history by winning the seat of Epsom from the National Party for the first time in 50 years. None of us should ever forget that you winning, and then retaining Epsom ensured that the party remains in Parliament today. We collectively owe you huge gratitude.

On a personal level, I’d also like to thank you for your mentoring of myself and my former Parliamentary colleagues when we entered Parliament and for your continued support when I took over from you as the Parliamentary Leader.

I also acknowledge Vice President Barbara Astill and the other members of our Board.

I have been elected to a two year term as President of the ACT Party. As President I chair the Board of Trustees, the body responsible for running ACT and in particular developing and approving policy; identifying, selecting and ranking candidates; and raising the money required to run a successful election campaign every three years.

This is not a job I sought, nor one I would have challenged Chris Simmons for, but when Chris advised me that he intended to stand down and asked if I would be prepared to put my name forward, I seriously considered it.

You should know that I regard this role as one of the most important in New Zealand politics today. It is vital that ACT be rejuvenated and rebuilt for the sake of our country. We occupy a very important part of the New Zealand political spectrum and represent views and promote policies that no other political party does.

Since our founding in 1994, ACT has been the only party in New Zealand that has constantly elected into parliament a group of MPs who all agree on privatisation, free trade, the Reserve Bank Act, flexible labour laws, the importance of private property rights, one law for all and the rule of law.

I joined ACT 18 years ago. During this time I stood for the party in Epsom in the first MMP election in 1996 and served on the Board of Trustees for seven years in total, first as a regional representative, then Treasurer and finally Deputy Leader.

In 2008 I had the privilege of being elected an ACT List Member of Parliament and was appointed Minister of Consumer Affairs and Associate Minister of Commerce in August 2010, positions I relinquished in May 2011 to focus on my new role as Parliamentary Leader.

So ACT has been a big part of my life.

When I look back over those last 18 years, I despair at New Zealand’s lost opportunities.

I despair at successive government failure to build on the reforms of the 1980s and the early 1990s.

I despair at the welfare dependency culture that we’ve created in our society where people are concerned with their rights and think little about their responsibilities back to society.

I despair at how the Resource Management Act has become a massive and costly impediment to investment and growth, how it has reduced our living standards and further delayed infrastructure that should have been built 20 or 30 years ago.

And in particular I despair about the chronic levels of underachievement amongst some of our children – disproportionately, Maori and Pacific Islanders. I cringe when I see the desperate efforts of our opponents trying to misrepresent our position on partnership schools. If this is the calibre of the Teacher’s Union, no wonder we have a problem with some of our teachers.

I have watched as governments have wasted billions of taxpayers’ dollars – your money and as a result have been unable to substantially lower taxes to provide real incentives for those who want to work, save, invest and get on in their lives.

Our problems are man-made. We have done it to ourselves. New Zealand could be so much more prosperous than it is currently.
ACT has a vision for the future but we need to learn from the mistakes of the past.

Following that first MMP election in 1996, Prime Minister Jim Bolger went on a massive spending spree – much of it poor quality! This was the price he was prepared to make you the taxpayer pay so he could remain Prime Minister in coalition with Winston Peters. New Zealand is still paying the price of those mistakes today.

Then followed nine years of Labour government and more lost opportunity!

Helen Clark’s desperate last minute bribe to students and their parents to try and win the 2005 election by extending the interest-free student loan scheme represents all that is bad about politics and politicians.

We now have a scheme where students are incentivised to borrow the maximum that they are permitted and to invest any surplus – only to repay it years later in devalued dollars or at a substantial discount.

And if they don’t trust themselves to invest it successfully, they should just put it in the bank and earn 3%! To do otherwise is simply not economically rational.

But it gets worse! National who so severely criticised the massive extension to interest-free student loans in opposition, has done little to wind it back. You won’t hear a single National MP criticise this loan scheme.

And nor will you hear a single National MP advocate what most other Western countries recognise as blindingly obvious – simple demographics demands that the age of entitlement for superannuation should be progressively increased unless we are to be burdened by heavier and heavier taxation.

Therein lies National’s problem, and ACT’s huge opportunity and in fact, ACT’s huge responsibility!

Under MMP National must position itself as a party capable of getting at least 40% of the party vote, and from National’s point of view, closer to 50%.

However, in doing this, National has been far too timid in advocating policy change for the good of the country, focusing instead on not offending anyone in their support base.

New Zealand is screaming out for leadership! True leadership would have the National Party advocating for FAR greater reform than what they are currently proposing.

And that ladies and gentlemen is the role that falls to us.

ACT can and MUST provide that leadership.

It’s the reason that this party has a future and always will have.

It’s the reason why we must rebuild our membership and our electorate organisations.

I believe that young people will be the key to the future of our party and we must find a way to really engage them – technology and social media are obvious tools but they won’t be the only solutions.

Similarly, I have always believed that Asians should be much bigger supporters of our party. They subscribe to the ethics of hard work, thrift and enterprise and a party that believes so strongly in low flat taxes should be a natural one for them to support.

ACT has always believed that your efforts should make a difference and it’s the immigrants who sacrifice so much to come here who would have so much to gain from ACT policies and philosophies.

I’m not saying that’s going to be easy! In fact, I’ll say the opposite. It’s going to be hard. Very hard! But we are fighting for our country and it is so important that we are successful.

Our goal at the next election in 2014 must be to achieve a minimum of 5% of the party vote, and to retain the seat of Epsom.

We’ve proved before that we can get 5% and more – we’ve done it three times before!

We built this party person by person. We had a vision for how great this country could be in 1995 and we went out and signed people up one by one at meetings all over the country. Jo Walsh who is here this afternoon reminded me recently that she signed me up following a Roger Douglas church hall meeting in St Heliers in 1995. For someone who went on to become an MP, a Parliamentary Leader, a Minister and now the President….that was a pretty good signing Jo!

But there is a second very important reason why ACT needs to rejuvenate and rebuild. Some would even argue it is more important.

And that is the simple fact that the National Party will need a coalition partner if it is to remain in Government. No party has gained more than 50% of the popular vote since 1951 and it’s even harder under MMP.

If ACT is not back in 2014 in even bigger numbers, National will be dependent on either the Maori Party, New Zealand First or worse still, both of them!
The country would pay a very high price for this. In fact it’s already paid a high price over the last five years and that would only get substantially higher if the Maori Party held the balance of power.

To get just a glimpse of this cost, one only has to look at the Emissions Trading Scheme. ACT is a party of principle and when we weren’t prepared to burden the country with the excessive costs of the ETS, a position vindicated by National substantially amending the scheme in the most recent term, the National Party went out and bought Maori Party support.

As part of that deal, National agreed to transfer 40,000 hectares of DOC land to four iwi with the intention that iwi would plant native trees and transfer the land back in 75 years time.

Iwi were to retain the carbon credits which in 2010 were valued at over one billion dollars. The market has subsequently collapsed and so today its value is a tiny fraction of this, but it remains a fact that that was the price the Maori Party was able to extract to support a single piece of legislation.

I have a great deal of respect for Tariana Turia and her ability to extract benefits for her people. I think Maori electors generally fail to appreciate just how successful the Maori Party has been.

Since then, we’ve also had the Marine and Coastal Areas Act – our new seabed legislation and the government’s current Constitutional Review. One can only imagine the list of demands that will come from that should the Maori Party hold the balance of power in 2014.

Having painted such a negative scenario, I should at least highlight some of the positives.

Paula Bennett has made a great start to the social welfare reforms so badly needed and so strongly advocated by former ACT MP, Muriel Newman during her time in parliament and since.

Finance Minister, Bill English has also done his best to rein in the growing government expenditure given that his hands have been tied by others with regard to so many of the entitlement programmes.

And while National has been disappointing in so many areas, the alternative of a Labour/Green government doesn’t bear thinking about.

In the last month, we have had the charade of the opposition’s inquiry into the effects of the high exchange rate on our farmers and manufacturers.

This is their attempt to pretend that they care. It was the Green’s and Labour who wanted to impose massive additional costs on our farmers by taxing them on their animals burps and farts under the Emissions Trading Scheme when no other country in the world would remotely contemplate it.

It was also the Green’s and Labour who wanted to drive up the price of our electricity for our manufacturers and all New Zealanders and then pretend in Parliament that they care for those in poverty.

Before concluding, let me specifically address some comments to the people of the Epsom electorate.

The voters of Epsom have played a critical role in the outcome of the last three elections, firstly by electing Rodney Hide over Richard Worth in 2005 and 2008 and more recently John Banks over Paul Goldsmith in 2011.

The people of Epsom have huge power and have used it very wisely.

The Epsom electorate votes overwhelmingly National with their party vote, but it remains an undeniable fact that had John Banks not been elected MP for Epsom, the National Party would not have been able to form a majority government with ACT and Peter Dunne’s United Future.

Having ruled out Winston Peters as a possible coalition partner, National would have been left with only one alternative – The Maori Party. I believe had Epsom voters not elected John Banks, the Maori Party would have held the balance of power and would have been in a position to have decided who governed New Zealand. They would have extracted a huge price for their support!

We need to constantly remind Epsom voters of how crucial their support for John Banks was in the last election, and why it will be so important that ACT retains Epsom.

I have told John that in my new role as President, I want to go out with him every week on to the streets of Epsom, into the shops and on to the doorsteps, and constantly remind Epsom voters of how crucial their vote was in securing a further three years of National government.

During the many phone calls I have made over the last week promoting our conference, I learnt that National’s MP resident in Epsom, Paul Goldsmith recently held a barbecue at his home for his supporters. I don’t know how many of those supporters actually voted for Paul Goldsmith personally with their electorate vote, but those that didn’t should be very thankful that the majority of Epsom voters did. Because if they hadn’t, Paul Goldsmith would have found himself either in opposition now or at best, part of a government dependent on the Maori Party for the passage of every single piece of legislation.

I’d like to personally invite those supporters, the people who deliver Paul’s brochures to come and join the John Banks and ACT team in Epsom instead.
Because if those National supporters really want to the see the National Party in power with a strong dependable coalition party in ACT, they should throw their weight behind us instead.

And that’s why my fellow trustees and I will need your help. My commitment to you today is to do all I can to rejuvenate and rebuild this party. Over the years I have made literally thousands of ACT telephone calls, either asking for help or money, inviting people to functions or thanking people.

Following this conference, I intend to travel throughout New Zealand to meet and talk with both our current and our past members and supporters. I want to explain to them why it is so important that they support ACT and help us rejuvenate and rebuild a party that is vital for the future of this country.

Thank you.

Good morning, ladies and gentlemen.

Thank you for your invitation to speak today and thank you, Angus [Fletcher], for your introduction.  I also wish to acknowledge my Parliamentary colleague, good friend and member of your club Sam Lotu-Iiga.

As Angus said, I am the Minister for Consumer Affairs and the Associate Minister of Commerce.  However, under the Confidence & Supply Agreement negotiated between ACT and National immediately after the last election, ACT Leader Rodney Hide – the Minister of Local Government – and I are free to comment critically on Government policy that falls outside of our immediate portfolios.  It is only when we speak as Ministers on behalf of the Government that we are required to articulate and support Government policy.  Today I speak clearly as the Deputy Leader of the ACT Party.

When I was first invited by Angus to speak at the end of January, my mind immediately turned to the Marine and Coastal Area (Takutai Moana) Bill currently before the House.  This Bill repeals the Foreshore and Seabed Act and puts in place a regime for the granting of Customary Title over the foreshore and seabed – now renamed the common marine and coastal area.  Those granted Customary Title by negotiation, or awarded it by the courts, will achieve rights akin to freehold title and potentially better – including an absolute right of veto on any resource management consent application over a Customary Title area.
 
ACT believes that this Bill will have huge constitutional significance, and that very few New Zealanders understand its far reaching significance.  This will only become apparent once the Bill is passed in the same way that Aucklanders – and, indeed, all New Zealanders – only woke up to the significance of the Maori Statutory Board and its ability to appoint non-elected voting members to Auckland Council committees recently, despite the fact this was initially reported on by the ‘New Zealand Herald’ over a year ago in December 2009.

Over the past four months, my colleague Hilary Calvert and I have led ACT’s opposition to this Bill.  However, I have decided to use this opportunity to talk about wider issues.

The past week is one that will remain in our national consciousness for generations to come.  The Christchurch Earthquake will forever be a part of New Zealand history.  Christchurch has changed.  New Zealand will change – potentially forever.

But out of misery and destruction comes opportunity; an opportunity to rebuild, not just a city but, a country.  It remains to be seen whether New Zealanders are prepared to take the bold and courageous steps that are needed to rebuild this country; a country that started to break many years before the earthquake.
To see this, one only has to realise that at the turn of the last century New Zealand was regarded as having the highest standard of living in the world.  By the 1950s we had dropped to fourth.  Today we are ranked about 25th of the 30-odd countries making up the OECD. New Zealand has indeed suffered a massive drop in its prosperity and its standard of living by comparison.

Had I been speaking to you this time last week, I would have told you that the economy is the key issue facing New Zealand today.  I would have told you that the New Zealand Government is borrowing around $300 million a week – over $1 billion a month – and that this simply can’t continue.

Sooner or later, the countries lending to us will demand a higher rate of return to reflect the higher risk – or, worse still, will stop lending to us and demand repayment.

Notwithstanding the Government’s moves to restrict the growth in expenditure, it is still spending over $1 billion a month more than what it takes in taxes.

Few people appreciate that, in the year prior to 2005 – before Labour went on an election-winning spending spree on extensions to the interest-free student loan scheme and Working for Families, and other projects of dubious merit – government expenditure was 29 percent of GDP.  Today it is 36 percent of GDP.  If New Zealand could just simply reduce government expenditure back to where it was in 2005, at 29 percent, we could have an economy boosting flat tax regime of no more than 20 cents in the dollar.  One only has to look at the booming Asian economies – such as Hong Kong and Singapore – to see the advantages of getting the incentives right and encouraging people to work and to save.

I would have also told you that we have a social welfare system currently supporting over 360,000 beneficiaries and their families on benefits – such as the Domestic Purposes Benefit, Sickness Benefit, and Unemployment Benefit.  This excludes those on National Superannuation.  ACT believes we can no longer afford a system that has entrenched an attitude of entitlement and intergenerational welfare; welfare that traps people, robbing them of their self-esteem, and disincentivises them against returning to work through high effective marginal tax rates and abatement rates.

I would have also told you that over the past 20 years we have seen a mass exodus of our citizens to Australia, where the opportunities and incomes are greater.  Today, incomes in Australia are some 35 percent higher than in New Zealand.

At the last election ACT campaigned on ‘bringing our children home’ and laid out in our comprehensive 20-Point Plan policies to eliminate this income differential by 2020.

National also campaigned to reduce this income differential, and ACT was successful in getting National to agree to setting up a special task force to consider and recommend sound economic policies to achieve this.  National’s aspirations were not as great as ours, so we compromised on a concrete date of 2025, and the 2025 Taskforce under the Chairmanship of the former Reserve Bank Governor and National Party Leader Don Brash was established.  Sadly, a lot of what this group has recommended has been dismissed.

I would have also told you that we have an Emissions Trading Scheme (ETS) that effectively operates as a massive tax on electricity and fuel and raises around $500 million per annum which the Government is effectively giving to foresters.

ACT strongly opposed this scheme and I addressed over 45 public meetings throughout New Zealand – from Dargaville and Whangarei in the north, to Gore and Invercargill in the South.  From those public meetings the most common question asked was: “where does the money go?”  Because most simply didn’t know and were horrified when I told them.

You may be aware that Europe as a whole has an Emissions Trading Scheme.  But you may not be aware that the scope of that scheme is much narrower and less comprehensive than New Zealand’s – even before we include agriculture, which is due to come into the ETS in 2015.

You may also have thought that New Zealand must be seen to be ‘doing its bit’ to protect our clean green image.  What you may not have known is that our four largest trading partners – Australia, China, the US and Japan – don’t currently have an ETS and that, rather than being a fast follower as the Government promised when in Opposition, we are leading our major trading partners.  I acknowledge, however, that Australia last week announced plans – albeit vague – to price carbon.

The Government is essentially taxing you and me an extra $500 million a year to give away as free forests.

You may be aware that foresters earn carbon credits, and that they have to surrender these credits when their trees are felled.  But you may not be aware that not all credits are surrendered immediately when the trees are felled – and for a pine forest the scientists have calculated that for every hectare of trees, 300 of the 800 tonnes of carbon sequestered is released in the 10 years after the trees are felled as the roots rot and the twigs and branches on the forest floor decay.

But a forester who immediately replants his forest is able to offset the deferred repayment of credits against the gains from the new forest.  This essentially means a forester gets a one off gain of around 230 tonnes of carbon or on current market valuation a one off subsidy of around $4500 per hectare.  This is more than enough to meet planting costs of $2000 per hectare for a pine forest and the cost of hill country land. So while some people celebrate the fact that we lead the world with an ETS, few appreciate that the government is essentially giving away free forests to any smart business person who understands how the scheme works.

And the National Party response to this – they are proud of the fact that under Labour electricity would have gone up by 10percent rather than 5percent and that petrol would have gone up by 7 c per litre rather than 3.5 c per litre. In doing so, they have done nothing about the massive subsidies going to foresters.

I would also have told you that we have the most generous interest-free student loan scheme in the world, one which incentivises every student to borrow the most they can – irrespective of their circumstances. And then allows the value of this debt to erode in real terms over the many years it is paid back, if it is paid back at all. And we are prepared to allow this to continue, year after year, despite the fact that our foreign creditors are funding it.

My colleague Sir Roger Douglas is fond of telling the caucus you have to get the incentives right. If you incentivise people to borrow interest free and then repay those debts many years later in devalued dollars, don’t be surprised if that is what they do!

Over the last six years outstanding student debt has risen from $5 billion to $11 billion. The time has come to stop tinkering around the edges as the Minister for Tertiary Education has been doing.

I would also have told you, that following the previous Labour government’s move to abolish youth rates and require employers to offer 16 and 17 year olds the adult minimum wage of $12.75 per hour, soon to be $13 from 1 April, rather than their economic worth, youth unemployment has exploded.  The Canterbury University economist Eric Crampton has calculated that there are approximately 12,000 more young people unemployed than there would have been had New Zealand retained youth rates.

In opposition the National Party strongly opposed this because they could see what has actually happened. Employers faced with paying an inexperienced younger worker or the same wage to someone older and more mature have simply chosen the latter. The youth then, have been left to languish on the scrap heap.
Parliament has legislated to prevent them from getting employment at $8, $10 an hour and has decreed they should be paid the unemployment benefit of $5 an hour instead. What might surprise you however is that the Minister of Employment, Kate Wilkinson, who so strongly opposed this in opposition voted with all her national colleagues against Sir Roger Douglas’s Private members Bill to reinstate youth rates and to give young 16 and 17 year olds an opportunity to reach the first rung on the employment ladder.

I would also have told you about the opportunity and indeed, the desperate need to better exploit our natural resources. While we are not as well-endowed as Australia in this regard there is much we can develop to increase our prosperity and raise our living standards.

During my time on the Commerce Select Committee I was privileged to hear from Dr Don Elder, CEO of the government owned Solid Energy. On the first occasion Dr Elder explained that New Zealand has literally billions and billions of dollars of high quality lignite in Southland – basically water-logged coal. Not only that, rather than sitting in a national park, these resources are lying under dairy farms in Southland and better still these dairy farms are owned by you and I the taxpayer. I was dumbfounded and completely unaware of this very valuable undeveloped resource.

Dr Elder also explained that this lignite is of a very high quality and has some 15 units of energy per tonne, compared with 5 units of energy for low quality lignite and 24 units for good quality export grade thermal coal.

Since that first meeting Solid Energy has continued to work on commercialising these resources. Three trials are currently underway to make synthetic diesel, urea and briquettes.

You might be surprised however, that late last year the Commissioner for the Environment released a report and recommended that these resources not be developed on the grounds of the carbon emissions that purportedly would be released. The Green Party has a similar view.

Solid Energy refutes these claims but regardless, we would be naïve to think that China won’t source the coal it needs for its thermal power stations from other countries.  To my mind, we are not only stupid to think that we shouldn’t develop these resources, we have no choice.
 
We also have massive reserves of iron sands. Some of these, off the western coast of the North Island are currently being prospected by Fortescue Minerals of Australia. I am advised that the last Labour government accepted a royalty of the higher of just one percent of revenue, or five percent of the profit.  We need to become far more commercially savvy in negotiating such agreements.

And, sadly, I would have also told you about a National-led Government that – in the eyes of the ACT Party and an increasing number of National supporters – is moving far too slowly in addressing the key economic issues that are facing our country.

Ladies and Gentlemen, that is what I would have said to you last week.

However, the problems facing New Zealand, and not just Christchurch, have just become a whole lot more serious, and the need for solutions far more pressing.  We can no longer afford to continue to tinker around the edges.

Firstly over 200 lives have tragically been lost and the hopes and dreams of the whole city shattered. Cantabrians have lost loved ones, their homes, their jobs and their businesses. It is impossible to put a financial cost on this human loss and suffering.

Secondly there is a real cost in rebuilding the city. We face a very, very serious situation in Christchurch.  Destruction in our second largest city is on a scale that few can simply comprehend – whole blocks of the CBD has been destroyed or will need to be demolished because they simply cannot be made safe.

Reconstruction will cost billions of dollars – funded in part from insurance companies, both domestic and international; secondly from central and local government; and thirdly private sources.

In the last week alone we have seen tens of thousands of Cantabrians leave Christchurch.  While many of these people will be leaving only temporarily some will never return.

People who have lost jobs and businesses will need to search out other ways to support their families. While government will rightly come to the aid of the unemployed for many this will be but a fraction of what they earned before the earthquake.

We need to face the fact we are likely to have an even greater number take their skills to Australia and further a field and are likely to be a permanent loss to New Zealand.

The Government needs to come up with innovative ways to keep these people here and to attract other New Zealanders who are currently overseas to return.

Far from increasing taxes as some have proposed to pay for this tragedy now is the time to take a good hard look at government expenditure and cut taxes to ensure there is an even greater incentive for New Zealanders to stay in this country and others to return.
The fact is that this is an opportunity that we cannot afford to miss.

In 1984, ACT founder Sir Roger Douglas – then Labour Minister of Finance – was confronted with a closed, over-regulated and protective economy.  An economy that subsidised farmers to raise sheep on marginal land that no one wanted and then paid for that with prohibitive marginal tax rates.  New Zealanders were taxed at 66 cents in the dollar – which sapped the incentive to work. Looking around the room this morning I can see many who will remember losing $2 in every $3 of their marginal income.

In the face of an economy dominated by the so-called ‘Think Big’ projects, Sir Roger Douglas – backed by the likes of Richard Prebble, David Caygill, Mike Moore and others – set out clearly the problems we confronted and articulated what they believed to be the solutions and then showed immense political courage in implementing them.   In doing so they saved New Zealand – from the sort of fate we see now in countries like Spain, Portugal, Ireland – and laid the foundation for strong recovery in New Zealand through the 1990s. 

Sadly, however, he was interrupted.  Following the now infamous ‘cup of tea’, Sir Roger’s reform programme was brought to a grinding halt – only briefly being resurrected years later under the stewardship of former Finance Minister Ruth Richardson.

Sir Roger’s reforms changed our lives.  And, this week, so too did the Christchurch Earthquake.  New Zealand will struggle to grapple in the aftermath of this national tragedy and our lives have changed in ways that we cannot yet even begin to comprehend.

Now is the time for John Key and the National Party to show the same political courage  ACT’s co -  founder displayed over 20 years ago.
 
Now is the time to explain to New Zealanders why we have no alternative but to reform our economy and to first save and then transform this country.

John Key has previously gone on record as saying he didn’t want to take the “big bang” approach in the same way that Sir Roger Douglas did in the 1980s. Instead he preferred a slower, more incremental approach. Obviously with National polling so well, many people agree with him.

However ACT believes the time for that has come and gone.

If we were borrowing $300 million a week before the earthquake, one can only guess what we will be borrowing after it, clearly income tax revenues from Canterbury businesses and indeed the whole country will fall and social welfare payments will necessarily rise.
 
The time to act is now.

Thank you for the opportunity to speak to you today.

Good morning ladies and gentlemen, it’s great to be here.  I’d like to begin by extending a warm welcome to everyone who was made the effort to be here today – it’s great to see how many agencies are represented here today to demonstrate what they can do for the community.

I’m very pleased to be here today to formally open this Consumer Rights Day.  In fact, I believe this to be such a worthwhile event that I have encouraged the Ministry of Consumer Affairs to consider holding more days like this around the country.

The Ministry of Consumer Affairs aims to ensure that consumers can have confidence in the marketplace, and my Ministry appreciates the support and networks you provide in your communities.

In order to have confidence in the marketplace, consumers need to be able to access enough quality information to enable them to make the decisions that are right for them.  They also need to know that there are ways to resolve any disputes they might have should a problem arise.

I’m pleased to say that we’re not doing too badly on that front.  Last year’s National Consumer Survey found that New Zealanders generally have a fairly good understanding of their consumer rights and that many are aware of their right to have faulty goods repaired, replaced or refunded. 

The was commissioned by the Ministry of Consumer Affairs and also indicated a generally strong level of consumer confidence throughout New Zealand – with most consumers believing that the current law will protect them if they encounter a problem with a transaction.

That same survey, however, also showed that 16 percent of respondents couldn’t name a single organisation or service that could help them when things went wrong.  Clearly, there is still work to do if we are to ensure that people know where to turn for assistance or advice.

It is on these people that I want to focus; the people who don’t get their problems resolved for the simple reason that they’re either unaware of the protections exist for them, or they don’t know where to turn to for help.

In fact, it is the latter – the knowing where to turn for assistance – that can prove the biggest stumbling block for people trying to get their problem sorted.

Around the room today I see representatives from agencies and organisations that listen to consumers and help them with their complaints.  Even better, many of these services are free for the consumer.

But there are around 20 statutory, Government and self-regulatory entities that have disputes resolution and/or investigation and enforcement roles – and it isn’t always easy for people to find the one that is suitable for their specific complaint.

Not only that, but having to explain their complaint or understand the process they must follow, can be very daunting for consumers.  After all, while some people are confident enough to negotiate the process themselves, there are others who need support to get their complaint and heard.

These are the people who often fall through the gaps, and that’s why the role of community groups and agencies are so vital – you fill the gaps by guiding people through the processes and procedures, encouraging them to get their evidence together, so they can get their problem solved.

As you do this important work, the Government is working to make our consumer laws easier to use and understand.  Seven consumer laws are currently being reviewed – the objective being to have principles-based consumer law, and simplification and consolidation of existing laws.

The Ministry of Consumer Affairs released a discussion document on Consumer Law Reform earlier this year.  Submissions on this document are currently being considered with the aim of ensuring the law is relevant today and will continue to be relevant into the future.

We are also making progress on the review of the Credit Contracts and Consumer Finance Act (CCCFA).  This looks at addressing issues around hardship, fees, unsolicited credit, disclosure, repossession and pawn-broking.

From tomorrow, new laws for financial service providers mean there are dispute resolution schemes that people can go to if they have a problem with creditors and other financial service providers.

But making sure that consumer laws are effective, and that complaints processes work properly, means little if consumers do not first know about them or understand how to use them properly – because complaints can’t be investigated or dealt with if they don’t reach the right people or agency.

The Government wants to make it easier for consumers to complain, and to find the appropriate avenue and organisation to help them.  But we also admit that it can sometimes be difficult to reach every person who is in need of help.

And that’s what Consumer Rights Day is all about – it’s about Government working with community groups and agencies to help consumers to know their rights and where to turn if things go wrong.

We here in this room have a common goal: to ensure that consumers are able to find out about the rights that protect them, and the services and channels they can use to solve a problem.  We all want to create and empower confident consumers in New Zealand.

I have no doubt that, together, we can achieve that goal.  I’d like to thank all the agencies here for their ongoing supporting, and for the fantastic work you have done and continue to do.  My staff and I look forward to working with you all in the future so that, together, we can help your communities.

Thank you.

Good afternoon ladies and gentlemen and thank you, Brent [Smallbone, Wellington Referee], for the introduction.  I’m very pleased to be here to talk to you today.

I’d like to begin by formally acknowledging the valuable work that the Disputes Tribunal does to provide consumers and traders with accessible justice, and I especially want to recognise the Referees and the staff who support you.

Consumer complaints are the most common type of legal complaint in New Zealand, and the Disputes Tribunals are the main avenue for resolving consumer grievances.  As Referees, your job is to ensure that people are not excluded from the justice system simply because their dispute may be at the smaller end of the scale; fairness is fairness – no matter what the degree – and you do valuable work by helping to resolve disputes in a low cost, effective and approachable manner.

Over recent years this work has been enhanced, with Judge Spiller having overseen a number of significant steps forward for the Disputes Tribunal – particularly the raising of the level of claims that can be heard by the Tribunal from $7,500 to $15,000.  This change improves access to quick resolution of disputes and redress for consumers and businesses whose claims have previously been outside the Disputes Tribunal limits.

Another initiative is the publishing of cases that Referees have identified as being of particular public interest – a move that is aligned with international best practice, and also helps improve public awareness of the Tribunal.

I understand that Principal Disputes Referee Judge Spiller has recently handed over the reins to Anne Darroch.  I am sure that, with Anne at the helm, the momentum to improve the Disputes Tribunal processes will continue and that her extensive experience as a Referee will stand her in good stead to navigate the exciting times ahead.

As Minister of Consumer Affairs I continue to support the vision of consumers transacting with confidence and being able to rely on representations made to them about goods and services. 

I have strong views on people taking advantage of others and do not want to see people being conned or experiencing harsh and unconscionable conduct.  Sadly, far too many New Zealanders have a low level of financial literacy, and the behaviour I have just mentioned is sometimes experienced by people who are less sophisticated or experienced in financial matters.  I’m sure that everyone here has, at some time or another, come across someone who for this very reason has found themselves in a difficult and distressing situation.

Financial literacy is a personal interest of mine and I hope to make a positive contribution to improving New Zealanders’ levels of knowledge.

The focus of this session today is the Consumer Law Reform, which is the top priority for my portfolio and is currently being progressed by the Ministry of Consumer Affairs.

Having strong and relevant consumer legislation is vital for both consumers and businesses.

For consumers, such legislation provides confidence and successful participation in the marketplace – subsequently allowing them to contribute to a productive and innovative economy.  For businesses, effective consumer laws help to create a competitive business environment where reputable suppliers are protected from the inappropriate market conduct of competitors.

The primary objective of the Consumer Law Reform is to implement principles-based consumer law that achieves these aims for consumers and businesses.  It is this goal that drives the Consumer Law Reform project currently under progression and why the Ministry of Consumer Affairs and I are considering various improvements and enhancements to our fundamental consumer legislation – the Fair Trading Act (FTA), the Consumer Guarantees Act and the Weights and Measures Act – even though they have stood the test of time well.

Additional objectives are that the legislation is: up to date; relevant now and into the future; aligns, where appropriate, with international best practice; and, most importantly for the Disputes Tribunal, is easily accessible to those who are affected by it and is effective and enforceable.  As such, the Ministry is working hard on proposals to enhance and futureproof the legislation.

Key proposals the Ministry is considering are the introduction of prohibitions of unfair terms in consumer contracts, of unconscionable conduct, and of unsubstantiated claims.  These proposals mirror those available in Australia under its Australian Consumer Law – while consistent law between our two countries is not an aim on its own, it is certainly one thing to consider in reviewing whether we proceed down these paths.  Likewise, it is important to ensure the benefits that any changes in the law exceed the costs.

Also of interest to you may be proposals around the application of the Consumer Guarantees Act to online auctions – which, over the past few years, have significantly increased in number – and to the Carriage of Goods Act.

As you will probably be aware, the Government earlier this year released the Consumer Law Reform discussion document and invited submissions on the proposals it outlined.  The proposals drew mixed reactions and generated 113 submissions from individuals and organisations – all of which the Ministry is taking into account.

Among those submissions was one from Judge Spiller, on behalf of the Disputes Tribunal, which proposed that the Tribunal jurisdiction be extended to include section 9 of the Fair Trading Act – which prohibits misleading and deceptive conduct.

Historically, only judges had the authority to rule on Section 9 cases.  The calibre of referees in this room makes a strong argument for extending Disputes Tribunal Referees’ jurisdiction to include Section 9.  I welcome the opportunity to further explore this proposal which, I see, has benefits for consumers.

I envision decisions on the Consumer Law Reform being taken in December.  This is in advance of the original timetable and would mean that legislation could be introduced to the House early next year.

Many of the proposals would have an effect on the types of cases you hear, and would open up the Tribunal to a wider range of disputes.  I am sure that, once the Government has made its decisions, you will all be able to meet the challenges and opportunities that this would provide.

Once again I wish to acknowledge and commend your contribution to providing such a valuable and valued service, and I wish Anne all the best in her new role.
Thank you.

Hon John Boscawen speech to the Citizens Advice Bureau New Zealand (CABNZ) National Forum; the Brentwood Hotel, Kemp Street, Kilbirnie, Wellington; Thursday, October 28 2010
Good morning Ladies and Gentlemen and thank you, Kerry, for the introduction.  I’m very pleased and honoured to be here to talk to you today.

Honoured, because I have always felt a very special affinity to the Citizen’s Advice Bureau.  My own mother, Beverley Wheeler, was a volunteer at your Papatoetoe Office in South Auckland for eight years from 1995 following her retirement.

She thoroughly enjoyed being able to help people with all sorts of problems for a half-day every Monday morning, and was able to bring to her volunteer role the skills and abilities she acquired as a former Human Resource Manager at South Auckland Health.

She continued her voluntary work at Papatoetoe for four years after she moved from the district because she so much enjoyed helping people and working with her co-worker Doug Funnell, a retired former principal of Remuera Intermediate.

Doug and my Mother were just two of the 2,600 volunteers I am told that the CAB currently has working for them.

Volunteers are a core part of New Zealand society.  They strengthen communities by building networks of trust, reciprocity, and shared values.  Many community and voluntary organisations – including the CAB – rely on volunteers’ goodwill and efforts.

In total CAB volunteers provide in excess of 600,000 hours work every year, the equivalent of over 300 full-time jobs.

To those of you who volunteer your time, knowledge, and skills, and to the fulltime paid support staff I thank you very sincerely on behalf of the Government for the major contribution that you make to New Zealand and your own communities. You do a fantastic job.

I know that these are exciting times for the Citizens Advice Bureau.  I see around me your new branding, and I’m especially taken with your new artwork.  I also want to congratulate you on your new website, which went live last month.  It is a very extensive resource that provides a wealth of information ranging from what to do if a tradesman does a bad job, to advice on which beaches you can walk your dog during summer.

Your leap into the digital age has been a massive undertaking in which you’ve all been involved.  As society moves increasingly into the digital world, it’s great to see that you have identified the need to make your information and services available to people online as well in person and by phone.

As such, your organisation remains accessible as people shift their activities more into the online realm and ensures you’re positioned to help young people who expect to be able to find information and assistance in cyberspace.

Another exciting development is your new ‘CabNet’ system – which combines an integrated national database of community directory information and legal information about people’s rights with an electronic system for entering client enquiries into the national system.  This allows you to identify enquiry trends and produce information that can be used in many positive ways – including strategic planning.

It must have been a huge task to familiarise everyone with the system, but the changeover has been smooth – proof that your intensive preparation was worth the effort and has paid off.

While mentioning these new developments, I also wish to acknowledge those who have worked with you in your digital journey.  Microsoft donated software licences worth around $5.5 million, while Westpac donated 600 computers and laptops to ensure you can make full use of your new systems. Datacom also went out of their way in pulling the project together.  This is a great example of private organisations working with the voluntary sector to give something back to the community.

I am pleased to have this public opportunity to acknowledge Microsoft, Westpac, and Datacom for their contribution because it has been key to supporting the contribution of your 2,600 volunteers and staff.  I hope these relationships continue to develop.

Of course, all the new and exciting technology doesn’t replace the frontline face-to-face or verbal interaction on which you are all experts.  Many people still prefer to interact with a ‘real person’ and will continue to seek face-to-face or verbal interaction for the foreseeable future.

I would now like to touch on a number of consumer issues and begin by saying that, as Minister of Consumer Affairs, I share some of your goals – particularly when it comes to ensuring consumers can transact with confidence in the marketplace, and making sure that both businesses and consumers know where to find help if things go awry.

It’s the ‘where to turn’ that can pose the biggest stumbling block for people seeking resolution to their problems.  A survey commissioned by the Ministry of Consumer Affairs, to gauge consumers’ knowledge of consumer law and where to turn to for help returned a mixture of results – some positive, some less so.

For example: 80 percent of New Zealanders know there are laws that outline consumers’ rights, 53 percent can name at least one – the most well-known being Consumer Guarantees Act, followed by the Fair Trading Act – and over 75 percent are at least somewhat confident the law will protect them if they experience a problem.

You’ll also be pleased to know that the CAB was the most common answer given when respondents were asked name an organisation or service to approach for and advice regarding a consumer-related dispute.

But 16 percent of respondents couldn’t name any organisation or service – and this means there is still much work to do to ensure people know where to turn to for assistance or advice.

Here, however, is another obstacle: rather than having nowhere to go for assistance, consumers face a bewildering raft of organisations that offer some form of resolution of assistance.

Of the 200-plus professional and industry bodies in New Zealand, around half provide some type of mediation and disputes resolution.  Then there are around 20 statutory, Government and self-regulatory entities with disputes resolution and/or investigation and enforcement roles.  Then there’s a further layer of judicial bodies that includes the Disputes Tribunal, Motor Vehicle Disputes Tribunal, Tenancy Tribunal and the District Court.

Such a confusing array of bodies and organisations brings the risk that consumers – especially those who are unsure which law applies to their problem, and where and how to seek a resolution – will simply give up rather than persevere to resolve their complaint.

This is why we need a single portal where consumers can get information on where to direct their complaint and how to go about it.  This is the ‘One Door’ aspect of the ‘One Law, One Door’ programme initiated by my predecessor.

‘One Law’ – or the Consumer Law Reform review of seven pieces of consumer legislation – is currently in progress.  The objective is principle-based consumer law, and simplification and consolidation of the existing laws.  Submissions to the Consumer Law Reform discussion document are currently under consideration.

The ‘One Door’ part of the project refers to a simplified complaints apparatus consumers can use to work out ‘where to from here’ when a problem arises – rather than having to navigate their own way through a host of complaints or disputes tribunals, ombudsmen and so on.

The vision is that ‘One Door’ will not duplicate currently available services; will be visible, easy-to-use and have no significant cost barriers; will be able to handle a large volume of enquiries; will provide accurate and current information on a wide range of complaint types; and, ideally, will offer an integrated service with a range of ways to access the service.

Many of you may note that the vision for ‘One Door’ is very similar to the development work that you yourselves have undertaken and celebrate here today, with your new website, cabnet, an integrated database, enhanced free-phone service, and so on.

In fact, the path that you yourselves have chosen to take is so similar to the vision of ‘One Door’ that there really is no doubt that the Citizens Advice Bureau has, in fact, become that One Door for consumers.  

Yours is a well-known brand, a familiar presence in the community, with aims to deliver the type of service that was envisaged for ‘One Door’.  You have all the bases covered in order to provide the level of advocacy your clients need – which again fits the One Door ethos.  So I would like to take this opportunity to formally acknowledge the Citizens Advice Bureau’s place as the One Door for New Zealanders.

It is for this reason that the Ministry of Consumer Affairs – which made a significant funding contribution to the CAB at the start of your digital journey – will continue to work closely with you.  Although there is no additional funding available for this status of One Door, the continuing support from the Ministry includes the ongoing provision of training, resources and a freephone number to the Consumer Affairs contact centre.  The Ministry will continue to promote the CAB in recognition of your work to make it easier for consumers to resolve their problems.

I would like to conclude by congratulating you all once again on the fantastic work that each and every one of you has done and continues to do.  My Ministry and I look forward to being a part of your continuing journey.

Please enjoy the rest of your Forum and thank you for your time here today.

Hon John Boscawen speech to Member Forum for Electricity and Gas Complaints Commissioner Scheme DVD Launch; The Holiday Inn, Featherston Street, Wellington; Wednesday, August 25 2010.
Good afternoon ladies and gentlemen.  Thank you for inviting me to speak to you today and thank you,  Electricity and Gas Complaints Commissioner Judi Jones, for your introduction.
I’m sure many of you are aware that this is my first speaking engagement since I became the Minister of Consumer Affairs, and I’m delighted to be able to speak to so many representatives of the electricity and gas industry. 
Before I go any further, I would like to assure you that I’m eager to continue making it easier for businesses and consumers to deal confidently in a fair marketplace.
The Electricity Industry Bill is a part of this, and will bring many changes for your industry.  For example: responsibility for the compulsory complaints scheme was previously held by the Electricity Commission and the Gas Industry Company.  Under the Bill, this responsibility will pass to me as Minister of Consumer Affairs.
The compulsory complaints scheme has gone from strength to strength in the almost nine years since its inception and is now the approved complaint resolution scheme for electricity and gas complaints.
This means consumers will continue to have access to the information they need to make informed decisions, and know that there are suitable remedies available if things go wrong. 
Consumer confidence is vital to the success of markets.  Part of ensuring that confidence is making sure consumers have the ability to make a complaint to a free, independent complaints scheme.
Doing so is an important part of ensuring our markets and laws are effective – after all, an inability to resolve complaints creates an unfair market that disadvantages consumers and honest businesses.
This is why I am so pleased that the industry has been so supportive of the scheme.  Industry self-regulation – by businesses like yours taking ownership of a problem and providing members with advice on compliance – can always improve on legislation.  The fact is that industry can be more responsive than regulation can, and can ensure that new issues are dealt with faster and more efficiently.
It’s also important for people to be able to make a complaint when aggrieved, and for those complaints to be taken seriously.  I hope the scheme will continue to improve, and will soon be able to deal with cases of higher value.  This will save court costs for both parties.
I would also like to take this opportunity to thank you for the submissions you have made regarding the Ministry of Consumers Affairs’ review of consumer legislation.  We need principles-based legislation to cover, what is essentially, a simple transaction between a buyer and a seller, and that is what ‘One Law’ is all about.
I also want to make it easy for consumers to deal with a complaint.  It can be difficult to negotiate the host of complaints and disputes tribunals and ombudsmen that currently exists, which is why the Ministry is also working on ‘One Door’ – a single portal through which consumers can obtain advice on where to take their problem.
By working together, industry and Government can create a fair marketplace that respects consumer choices.  The commitment from everyone in this room to the EGCC Scheme helps to achieve that goal for the electricity and gas industry.
Thank you again for inviting me to be a part of your day.  I look forward to talking to some of you at lunch, and working with you in the future.

I’m sure many of you are aware that this is my first speaking engagement since I became the Minister of Consumer Affairs, and I’m delighted to be able to speak to so many representatives of the electricity and gas industry. 

Before I go any further, I would like to assure you that I’m eager to continue making it easier for businesses and consumers to deal confidently in a fair marketplace.

The Electricity Industry Bill is a part of this, and will bring many changes for your industry.  For example: responsibility for the compulsory complaints scheme was previously held by the Electricity Commission and the Gas Industry Company.  Under the Bill, this responsibility will pass to me as Minister of Consumer Affairs.

The compulsory complaints scheme has gone from strength to strength in the almost nine years since its inception and is now the approved complaint resolution scheme for electricity and gas complaints.

This means consumers will continue to have access to the information they need to make informed decisions, and know that there are suitable remedies available if things go wrong. 

Consumer confidence is vital to the success of markets.  Part of ensuring that confidence is making sure consumers have the ability to make a complaint to a free, independent complaints scheme.

Doing so is an important part of ensuring our markets and laws are effective – after all, an inability to resolve complaints creates an unfair market that disadvantages consumers and honest businesses.

This is why I am so pleased that the industry has been so supportive of the scheme.  Industry self-regulation – by businesses like yours taking ownership of a problem and providing members with advice on compliance – can always improve on legislation.  The fact is that industry can be more responsive than regulation can, and can ensure that new issues are dealt with faster and more efficiently.

It’s also important for people to be able to make a complaint when aggrieved, and for those complaints to be taken seriously.  I hope the scheme will continue to improve, and will soon be able to deal with cases of higher value.  This will save court costs for both parties.

I would also like to take this opportunity to thank you for the submissions you have made regarding the Ministry of Consumers Affairs’ review of consumer legislation.  We need principles-based legislation to cover, what is essentially, a simple transaction between a buyer and a seller, and that is what ‘One Law’ is all about.

I also want to make it easy for consumers to deal with a complaint.  It can be difficult to negotiate the host of complaints and disputes tribunals and ombudsmen that currently exists, which is why the Ministry is also working on ‘One Door’ – a single portal through which consumers can obtain advice on where to take their problem.

By working together, industry and Government can create a fair marketplace that respects consumer choices.  The commitment from everyone in this room to the EGCC Scheme helps to achieve that goal for the electricity and gas industry.

Thank you again for inviting me to be a part of your day.  I look forward to talking to some of you at lunch, and working with you in the future.

Key Points:

1. Electricity and petrol to rise on July 1. Windfall profits to government generators. Government still denying these profits.

2. The extra costs are not compensated for in Budget 2010. The ETS will take at least half of your tax cuts and superannuation increase.

3. Delaying the ETS would be more in line with ‘National’s principles’ on the ETS set out in its 2008 ETS policy, than implementing the scheme on July 1.

4. The EU ETS is not a justification for continuing with the NZ ETS; only 20 percent of EU trade is with countries that don’t have an ETS, whereas 85 percent of NZ’s trade is with such countries.

Speech:

Ladies and Gentlemen, thank you for the opportunity to address your meeting this morning.

Before updating you on National’s Emissions Trading Scheme, may I briefly raise one other issue.

I am well aware that some of you will have incurred losses through the collapse of various finance companies. Since being elected I have led a campaign in Parliament to address some of the issues that contributed to those losses and I was successful in securing first Labour and Maori Party support, and then National’s support for a Commerce Committee inquiry into finance company collapses.

I have also publicly announced my support for Lianne Dalziel’s private member’s bill to get better compensation for those who lost through ING/ANZ.
That is why I was pleased with ANZ’s announcement last week that it had reached a record $45 million settlement with the Commerce Commission over the losses suffered by investors in ING’s Regular Income Fund (RIF) and Diversified Yield Fund (DYF).

While many investors will feel that a more substantial settlement should have been given, I feel happy for those ING investors who will receive additional compensation.

I congratulate the Commission on its investigation and the result it achieved. I particularly pay tribute to those members from the Frozen Funds Group who campaigned up and down the country for proper compensation from ANZ/ING, as I doubt such a settlement would have been achieved without their efforts.

Turning now to the Emissions Trading Scheme. I want to cover two main points this morning; first, I will outline what the ETS is and how it will impact on you. Second, I will take some time to respond to National’s allegations that I’m spreading ‘myths’ about the ETS, to use Nick Smith’s words.

WHAT THE ETS IS AND WHAT IT MEANS FOR YOU

On July 1 this year, the effect of National’s ETS will be extended throughout the whole economy. The Treasury forecast that electricity will increase by five percent and petrol by four cents per litre. There will be another round of identical increases from January 1 2013 making a combined ten percent increase in electricity and eight cents a litre for petrol.
The Reserve Bank estimates that the ETS will push up inflation by 0.4 percent.

National argue that they have modified Labour’s ETS. This is correct. Under Labour, we would already have had a ten percent increase in electricity from the beginning of this year. So while National argues that a five percent increase is not as bad as a ten percent one, ACT asks why we should have any increase at all.

The ETS operates by imposing a cost – or tax – on emissions of carbon dioxide given off from the burning of coal and gas to produce electricity. It will drive up the cost of producing electricity from these sources.

However, because of the way our electricity market works, all generators will get the benefit of being able to charge the higher wholesale price of electricity. Generators will be able to increase their price whether they incur the carbon cost or not and will make windfall profits as a result The Government doesn’t want you to know this but I assure you it is true and that is why I am telling you.

In April of this year I was invited to speak to the Annual General Meeting of the Grey Power Federation in Christchurch. I think most members of the audience were both surprised and shocked by what they heard.

My predictions then of windfall profits have come to fruition. Just last month Mercury Energy and Contact Energy announced power increases of 3.3 percent and 3.2 percent from July 1, purely on account of the ETS.

While Contact’s situation is different because it has a high proportion of gas fired generation, Mercury Energy’s parent company, the Government owned Mighty River Power generates most of its electricity from hydro power stations along the Waikato River that you can see outside the window, as well as from geothermal power stations. It will incur relatively little carbon emissions cost.

Despite the fact that Mighty River Power incurs little carbon emissions cost, it gets the benefit of the higher wholesale price and realises it by increasing its prices to you, through its subsidiary Mercury Energy.

ACT forecasts that the total windfall gains to the Government from its three generators – Mighty River Power, Genesis Energy and Meridian – will be in excess of $150 million per annum from July 1. Worse still, the Government does not want to acknowledge to you, the consumers, that it is making these windfall profits. Regardless of whether these profits are returned as taxation, dividends or retained in the generating companies themselves, the Government continues to downplay its gains from the ETS. It repeatedly says in Parliament that its revenue from the ETS will be around $350 million per annum, when it is likely to be well in excess of $500 million per annum from July 1.

You may be surprised by this news, but ACT is the only party in Parliament that has been speaking out on this issue. Naturally the Labour Party – who would have enforced a ten percent power increase from January 1 – is silent.
You will be pleased to know however, that there is growing awareness of this issue. On May 28, just after the price increases were announced, ‘The Dominion Post’ printed a critical editorial of Mercury Energy’s power price rise. It said:

‘Its price increase is not a matter of the company passing on increased costs to its customers, but of the company taking advantage of changed circumstances to inflate it’s profit margins.’

Earlier this year the Prime Minister addressed your sister group, North Shore Grey Power, on the upcoming budget and speculation that there would be an increase in the rate of GST. He of course was at pains to point out that if the Government decided to increase GST to fifteen percent, superannuitants would be fully compensated through tax cuts and superannuation increases for the GST rise. Since that time we have now had the budget; as expected GST has been increased and there has been compensation.

As an ACT MP whose Party has a Confidence and Supply Agreement with National I can tell you that there are many very good things in Budget 2010. All income tax rates have dropped and the top marginal rate of tax is no longer such a disincentive to working hard and getting on in life. As a result of the tax cuts, around seventy-five percent of New Zealanders will have a tax rate no greater than 17.5 percent.

In addition, there are further incentives to save with a reduction in the top PIE tax rate to twenty-eight percent and a number of tax loopholes have been closed.

However, when the Prime Minister’s North Shore speech was publicised earlier this year I was immediately suspicious as to whether or not the tax cuts would take into account the extra costs you will incur from the ETS. The Prime Minister was strangely quiet on that subject and I said so at your Federation AGM in Christchurch in April.

We now have the Budget and there will be increases in superannuation and all main benefits. However the budget says: ‘This will be sufficient to offset the estimated impact on prices due to the rise in GST.’

There you have it, Ladies and Gentlemen. You are being given just enough to be ’sufficient’.

On page seven the Budget gives the example of a retired couple who receive New Zealand superannuation; I quote:

‘A retired couple receive New Zealand Superannuation. They own their own home. Under Budget 2010 changes, they get a tax cut of $11.52 a week, plus an additional $10.12 increase in their New Zealand Super and pay $10.87 extra in GST to buy the same goods and services as before. Overall they are $10.77 a week, or $560.04 a year better off.’

My mother recently received a letter from the Prime Minister reciting the above example. I suspect most of you and hundreds of thousands of superannuitants around the country received it also. What that letter didn’t say, and what the budget didn’t say, is that the retired couple used in the example will suffer extra costs on virtually everything they buy as a result of the government imposed ETS cost on electricity, gas and petrol and its flow on effect throughout the whole economy.

ACT estimates that you will lose around half of what the government purports to be giving you in the Budget. In other words, what Bill English has given you, Nick Smith is taking away.

So, in conclusion, the ETS is designed to and will increase prices for electricity and petrol in particular, with flow on effects for all other goods.

REBUTTING THE ETS MYTHS

Climate Change Issues Minister Nick Smith has repeatedly accused ACT and myself of misrepresenting the ETS. Recently, on TVNZ’s ‘Q+A’ show he went so far as to accuse me of spreading ‘myths’. Frankly, this is a bit rich. It has been Nick Smith and the National Party who have been misleading on this issue in a desperate attempt to justify their ETS. You and New Zealanders around the country are being fed false information on the basis of which you’re expected to make up your mind about the scheme.

Nick Smith claims New Zealand is not leading the world, because 29 out of 38 countries with Kyoto obligations already have an ETS.

Those 29 countries all operate under the European Union ETS (the 27 EU countries plus Norway and Switzerland). The EU ETS is not comparable to our ETS and certainly is not a justification for proceeding with it.

First, it is nowhere near as comprehensive as ours. Indeed, speaking to the first reading of the Climate Change Response (Moderated Emissions Trading) Amendment Act on September 24 last year, Nick Smith himself said that our ETS ‘will be the most comprehensive by including transport, industrial and energy emissions.’

Since then, Nick Smith has said that some EU countries do cover some transport emissions. I’ve asked the Parliamentary library to look into this; they could only find three countries. In the mean time, President Nicolas Sarkozy of France tried to introduce a petrol tax earlier this year, but had to give up the plan after voter backlash in a regional election.

Second, eighty percent of EU trade occurs amongst EU countries; therefore less than twenty percent of their trade will be exported outside the EU to countries whose producers don’t face ETS costs. By contrast, only fifteen percent of our trade is with the EU; that means eighty-five percent of our trade will be with countries whose producers don’t face ETS costs. In other words a much, much larger proportion of our industry will be at a competitive disadvantage vis-à-vis their foreign competitors because of the ETS, than will be the case for European industry. Our ETS imposes a greater risk to Kiwi jobs and businesses, the source of the taxes that pay for your superannuation.

Nick Smith also overlooks the fact that our top four major trading partners, Australia, the United States, China and Japan don’t have an ETS. Former Australian Prime Minister Kevin Rudd announced earlier this year that the Australian ETS is off the table until at least 2013. We have since learnt that the new Prime Minister, Julia Gillard, was one of those lobbying for the delay. Therefore, it seems unlikely that the Australian Government’s policy will change on this front.

The probability of an ETS making it through the United States Senate before their elections in November is fifteen percent. No one seriously thinks the Chinese will implement an ETS.

Nick Smith claims the cost of the ETS to the average household will be ‘only’ $3.17 per week. That is correct – if you only count electricity and petrol. However, when the Reserve Bank appeared before the Finance and Expenditure Select Committee on March 11, they told us that for every one dollar rise in the price of petrol and electricity there will be a seventy-five cent flow on effect to other costs. When these flow-on effects are taken account of, the $3.17 figure appears to be a considerable underestimate.

Nick Smith has also tried to undermine my credibility by claiming that ACT doesn’t believe in human induced climate change. Frankly, what ACT or I believe is irrelevant. The key question facing New Zealand at the moment on the environmental front is whether, given the lack of meaningful international action, anything we do as a nation will make even an iota of difference to the world’s climate. The answer of course is ‘no’. In the words of the Prime Minister’s Chief Science Advisor Professor Sir Peter Gluckman: ‘anything we do as a nation will in itself have little impact on the climate – our impact will be symbolic, moral and political.’

Finally, Nick Smith has said that National needs to proceed with the ETS to keep its pre-election campaign promises to New Zealanders. Yet, if one reads National’s 2008 ETS policy it quickly becomes clear that delaying the ETS is more in line with their election promises than implementing the scheme. Outlining ‘National’s principles’ the document says: The ETS ‘should not attempt to make New Zealand a world leader on climate change.’ By implementing the scheme we will be world leaders.

It also says ‘The ETS should be as closely aligned as possible to the planned Australian Carbon Pollution Reduction Scheme, with, where possible, common compliance regimes and tradability.’ Australia has scrapped its ETS; we should do the same.

Finally it said: ‘The ETS should have the flexibility to respond to progress in international negotiations rather than setting a rigid schedule. This way, industry obligations can be kept in line with those of foreign competitors.’ There has been no progress in negotiations and no other country has an ETS anywhere near as severe as ours. Industry obligations can only be kept in line with those of foreign competitors by delaying the ETS.

CONCLUSION

ACT has run a nationwide campaign against the ETS. Between us, Rodney Hide and I have held over 40 meetings up and down the country. Ordinary New Zealanders are not happy about the ETS. They see that the scheme won’t make an iota difference to the world’s climate and don’t see the point in having to pay more for their electricity, petrol and coal so that the National Government can make a ‘symbolic’, ‘political’ statement to the world.
Sadly, with only two days to go, it looks unlikely that the National Government will delay the ETS. That is a huge mistake on its part and very disappointing.

However, there is some light at the end of the tunnel. It looks likely that stages two and three of the ETS, which are scheduled to come into effect on January 1 2013 and January 1 2015 respectively, will be delayed. As the pressure on the Government from ACT and the public has increased, Nick Smith has repeatedly raised the threshold for continuing with those stages. That is a good thing, but it is not yet certain.

It is important that the pressure remain not only to delay stages two and three, but also to scrap stage one in the near future. ACT and I are committed to these goals, and will continue to work as hard as we can to achieve them.

If you are as concerned about this issue as ACT is, I urge you to contact the Prime Minister and tell him so. His email address is john.key@parliament.govt.nz, or you can write to him at John Key, Freepost, Parliament Buildings, Wellington.

In fact, I would urge you to email every member of the cabinet and better still, the entire National Party caucus. Their contact details can be found at www.parliament.govt.nz.

Thank you very much ladies and gentlemen for the opportunity to speak to you today.

Key Points

1. Electricity and petrol to rise on 1 July. Windfall profits to government generators. Government still denying these profits.

2. The extra costs are not compensated for in Budget 2010.
The ETS will take at least half of your tax cuts and superannuation increase.

3. Over $2 billion of emissions credits to be allocated to foresters, most of whom did not expect them at the time their trees were planted.

4. We can meet our Kyoto obligations without paying $2 billion to foresters.

5. Government is running a campaign of mis-information. Contact the Prime Minister and the National cabinet to express your concerns.

Ladies and Gentlemen, thank you for the opportunity to address your AGM this afternoon.

Before updating you on National’s Emissions Trading Scheme may I briefly raise two other issues.

Firstly, some of you may recall that I addressed North Shore Grey Power in December 2007 during my campaign against Labour’s Electoral Finance Act. While that was very much a personal campaign, independent of any political party, I subsequently was elected an ACT MP at the last election and I am please to report that both National and ACT have now repealed the Electoral Finance Act.

Secondly, I am well aware that some of you will have incurred losses through the collapse of various finance companies. Since being elected I have led a campaign in Parliament to address some of the issues that contributed to those losses and I was successful in securing first Labour and Maori Party support, and then National‘s support for a Commerce Committee inquiry into Finance company collapses.

I have also publicly announced my support of Liane Dalziel’s Private Members Bill to get better compensation for those who lost through ING/ANZ.

I would like to turn now to the Emissions Trading Scheme. On July 1 this year, the effect of National’s ETS will be extended throughout the whole economy. The Treasury forecast that electricity will increase by five percent and petrol by four cents per litre. There will be another round of identical increases from January 1 2013 making a combined 10 percent increase in electricity and eight cents a litre in petrol.

The Reserve Bank estimates that the overall effect on inflation this year will be 0.4 percent as a direct consequence of the ETS.

National argue that they have modified Labour’s ETS, which is true. Under Labour, we would already have had a 10 percent increase in electricity from the beginning of this year. So while National argues that a 5percent increase is not as bad as a 10 percent one, ACT asks why we should have any increase at all.

The ETS operates by imposing a cost, or tax, on emissions of carbon dioxide given off from the burning of coal and gas to produce electricity. It will drive up the cost of producing electricity from these sources. However, because of the way our electricity market works, all generators will get the benefit of being able to charge the higher wholesale price of electricity. Generators will be able to increase their price whether they incur the carbon cost or not and will make windfall profits as a result. The government doesn’t want you to know this but I assure you it is true and that is why I am telling you.

In April of this year I was invited to speak to the Annual General Meeting of the Grey Power Federation in Christchurch. I think most members of the audience were both surprised and shocked by what they heard.

My predictions then of windfall profits have come to fruition. Just this week Mercury Energy and Contact Energy have announced power increases of 3.3 percent and 3.2 percent from July 1, purely on account of the ETS.

While Contact’s situation is different because it has a higher proportion of gas fired generation, Mercury Energy’s parent company, the government owned Mighty River Power generates most of its electricity from hydro power stations and geothermal power stations. It will incur relatively little carbon emissions cost.

Despite the fact that Mighty River Power incurs little carbon emissions cost, it gets the benefit of the higher wholesale price and realises it by increasing it’s prices to you, through its subsidiary Mercury Energy.

ACT forecasts that the total windfall gains to the government from its three generators – Mighty River Power, Genesis Energy and Meridian – will be in excess of $150 million per annum from July 1. Worse still, the government does not want to acknowledge to you the consumers that it is making these windfall profits. Regardless of whether these profits are returned as taxation, dividends or retained in the generating companies themselves, the government continues to downplay its gains from the ETS. It repeatedly says in Parliament that its revenue from the ETS will be around $350 million per annum, when it is likely to be well in excess of $500 million pa from July 1.

You may be surprised by this news, which is only just now being picked up by the wider news media, but ACT is the only party in Parliament that has been speaking out on this issue. Naturally the Labour Party who would have enforced a 10% power increase from 1 January, are silent.

You will be pleased to know however that there is growing awareness of this issue. Just today, the Wellington newspaper ‘The Dominion Post’ printed a critical editorial of Mercury Energy’s power price rise. It said:

“Its price increase is not a matter of the company passing on increased costs to its customers, but of the company taking advantage of changed circumstances to inflate it’s profit margins.”

This was somewhat ironic for ACT and myself because just yesterday the other major Fairfax newspaper, The Christchurch Press, ran an editorial criticising ACT for scaremongering and over-hyping this issue. I totally reject any allegation that ACT has tried to deliberately mislead New Zealanders on this issue. On the contrary, it has been the National Party which has been misleading New Zealanders and continues to do so to this very day.

Earlier this year the Prime Minister addressed your group on the upcoming budget and speculation that there would be an increase in the rate of GST. He of course was at pains to tell you that if the government decided to increase GST to 15 percent you would be fully compensated through tax cuts and superannuation increases for the GST rise. Since that time we have now had the budget and as expected GST has been increased and there has been compensation.

As an ACT MP whose Party has a Confidence and Supply Agreement with National I can tell you that there are many very good things in Budget 2010. All income tax rates have dropped and the top marginal rate of tax is no longer such a disincentive to working hard and getting on in life. As a result of the tax cuts, around 75 percent of New Zealanders will have a tax rate no greater than 17.5 percent.

In addition, there are further incentives to save with a reduction in the top PIE tax rate to 28 percent and a number of tax loopholes have been closed.

However when the Prime Minister’s visit to you earlier this year was publicised I was immediately suspicious as to whether or not the tax cuts would take into account the extra costs you will incur from the ETS. The Prime Minister was strangely quiet on that subject and I said so at your Federation AGM in April.

We now have the Budget and there will be increases in superannuation and all main benefits. However the budget says: “This will be sufficient to offset the estimated impact on prices due to the rise in GST.”

There you have it, Ladies and Gentlemen. You are being given just enough to be ‘sufficient’.

On page 7 the Budget quotes the example of a retired couple who receive New Zealand superannuation and I quote:

“A retired couple receive New Zealand Superannuation. They own their own home. Under Budget 2010 changes, they get a tax cut of $11.52 a week, plus an additional $10.12 increase in their New Zealand Super and pay $10.87 extra in GST to buy the same goods and services as before. Overall they are $10.77 a week, or $560.04 a year better off.”

What the budget didn’t say is that this retired couple will suffer extra costs on virtually everything they buy as a result of the government imposed cost on electricity, gas and petrol and its flow on effect throughout the whole economy.

ACT estimates that you can expect to lose around half of what the government purports to be giving you in the Budget. In other words, what Bill English has given you, Nick Smith is taking away.

So what is the solution?

ACT believes we are unnecessarily imposing additional costs on our citizens and businesses. None of our four major trading partners, Australia, China, the US and Japan, has an ETS. This puts us at a major disadvantage. We believe the government should be delaying the introduction of the ETS until our major trading partners catch up.

The government argues that already twenty nine countries have an ETS, but this is extremely misleading. This is an ETS for the whole of the European Union and over 80 percent of European exports are internal with only 20 percent being exported outside of Europe.

New Zealand on the other hand, clearly has 100 percent of its exports leaving our shores.

The European Union ETS also doesn’t include transport fuels such as petrol and if our scheme commences as scheduled on 1 July, make no mistake, we truly will be a world leader on climate change despite the Prime Ministers assurances prior to the last election that we would not be.

Finally, many people ask me where this money is to go. The government has announced it intends to allocate over $2 billion worth of emissions credits to foresters in the period to December 31, 2012. Of these, $400 million will be allocated to forests planted prior to 1990 and $1.6 billion to forests planted in 1990 and beyond.

Under Kyoto, some of the pre-1990 foresters could suffer real loss if the Kyoto rules are not changed and may have a genuine claim for compensation.

However, the overwhelming bulk of the credits will be going to foresters who planted their trees in 1990 and beyond and most of these did so with no expectation of taxpayer subsidies.

ACT has run a nationwide campaign against the ETS and earlier this week I had three meetings in Southland. In Gore, the heart of Bill English’s electorate, residents were very concerned that they were going to have to pay more for their electricity, petrol and coal and that this money would be going as subsidies to the large amount of Japanese owned forests in Southland. They, and you, have every reason to be concerned.

You may hear Climate Change Minister Nick Smith argue that we will not meet our Kyoto obligations without an ETS. I believe this is also misleading as the ETS imposes a negative incentive on harvesting pre 1990 trees without replanting them. It would be very easy to leave this negative incentive in place until 31 December 2012, while we wait to see the outcome of international negotiations for a Kyoto replacement. We can do this without having to pay $1.6 billion.

Finally, while the government has said it has no intention of backing down. I believe public pressure can be brought to bear so that it does. We saw this with Tuhoe and the Urewera National Park.

If you are as concerned about this issue as ACT, I would urge you to contact the Prime Minister and tell him so. His email address is john.key@parliament.govt.nz

In fact, I would urge you to email every member of the cabinet and better still, the entire National Party caucus. Their email addresses can be found at www.parliament.govt.nz

Thank you very much Ladies and Gentlemen for the opportunity to speak to you today.