NEWS ON POLICY AND POLITICS
10 April, 2008

Watching Brief is a regular publication from Russell McVeagh on developments in public law and policy of interest to New Zealand business.

www.russellmcveagh.com

IN POLITICS

Labour wins first leg of its political trifecta
With the signing of the trade deal with China, Labour has secured the first of the three legs of its election year strategy. more...

A Matter of Opinion
'Sustainability' and the greening of Government policy has been mainstay of Labour's attempt at reinvention. more...

IN FOCUS

Inquiry into the management of conflicts of interest at the Hawke's Bay DHB
The recent report into the Hawke's Bay DHB followed a comprehensive nine month inquiry carried out by a three member review panel.  more...

IN OTHER NEWS

Commencement of biofuel obligation may be delayed
The Government has conceded that obligations under the Biofuel Bill, which require a certain proportion of fuel sold by fuel companies to be biofuel from 1 July, may have to be delayed. more...

ACC Review
ACC recently commissioned PricewaterhouseCoopers (Australia) to conduct independent research and evaluation into the future delivery of the Woodhouse Principles. more...

PROGRESS OF LEGISLATION

Bills Introduced/Awaiting First Reading more...

Bills Open for Submissions more...

Submissions Closed more...

Bills Reported Back / Awaiting Second Reading more...

Bills Delayed more...

Bills At Second Reading / Awaiting Third Reading more...

Supplementary Order Papers more...

Bills At Third Reading more...

Acts Assented more...

Regulations more...

IN COMMITTEE

Committee hearings of note more...

IN CONSULTATION more...

Labour wins first leg of its political trifecta

With the signing of the trade deal with China, Labour has secured the first of the three legs of its election year strategy. If its ambitions for biofuel sales and emissions trading can also be brought home without controversy, and its May 22 Budget is judged more responsible than cynical, Labour may be well on the way to a fourth term.

Of course, whether the Government can silence growing criticism of the proposed emission trading scheme, or can resist its tendency to seek short term political capital from critical budgets remains to be seen.  It may well be a bridge too far.  But at the very least Clark’s successful jaunt to the Great Hall of the People will give her Party the fillip that Labour strategists hope will carry them through to the end of May and the more formal start to Government’s electioneering. 

If the past two weeks have been any indication, the Government has its tail up and it has undoubtedly succeeded in recapturing some of the momentum enjoyed by National over recent months.  That’s hardly surprising; it is of course difficult for any opposition Party to hold centre stage against a carefully timed and substantial international trade deal. But the question is whether National is showing signs of a deeper malaise, one manifested by some as an over-reliance on the ‘mood for change’, as well as its more persistent failure to connect often enough with issues close the hearts of New Zealand’s rank and file. Tactical wins on the Electoral Finance Act may excite Wellington’s chartering classes, but it will not win National the election. 

That said, John Key’s instincts and personal style are sound. He foots it easily and well with the punters and conveys a sense of real personal interest. He has a common touch where Clark does not and he is not about to let himself be a pushover. Labour’s challenge will be to take the real win it has achieved with the China Free Trade deal and turn its attention back to what will be a testing slog.

A matter of opinion

'Sustainability' and the greening of Government policy has been mainstay of Labour's attempt at reinvention.  The cynic might see it as an attempt to capitalise on the motherhood and apple pie that has allowed the Greens to pursue a policy agenda that in another time would have been too off-putting for the Kiwi rank and file.

Certainly the Government has been quick to recognize and seize partisan advantage from public concern and the environment is no exception. But the comments of Energy Minister, David Parker reflect a zeal that some would see as unusual in a typically pragmatic and tactically minded Cabinet.

In the face of serious questions about the operation and impact of the Emissions Trading Scheme, the biofuel mandate, and energy policy, Parker has held the policy line.  Whilst the signs of commitment to principle might be welcome, the apparent desire to press on in the face of fact or concern is less so, suggesting that the Minister is a believer all too ready to dismiss those who question as either misguided or basely self-interested.

The risk that the Minister faces in all this is that he will be seen as explicitly rejecting evidenced-based policy advice, something that will damage not only his credibility, but the credibility of the Government in the management of national interest.

The political assumption may be that 'if you're not for us you're agin us', but in this high stakes game Government cannot responsibly afford to dismiss rational concern.  The difficulty that it has in the present context though is that so much of its electoral agenda is tied up with being seen to have a strong hand on future direction. Sustainability has been the Prime Minister's watch word and any perceived failure in management of that policy agenda will be damaging. Against that, the Prime Minister will need to weigh the damage of being seen to be unresponsive in the face of genuinely held concern.

Inquiry into the management of conflicts of interest at the Hawke's Bay DHB

The recent report into the Hawke's Bay DHB followed a comprehensive nine month inquiry carried out by a three member review panel.  [See the report here]

The Inquiry was called in early July 2007 when HBDHB board member, Peter Hausmann, wrote to the then Minister of Health and requested an independent review into the management of conflicts of interest at the HBDHB board.  The Minister then requested the Director-General of Health to establish an independent review panel to carry out the inquiry.

The review panel's terms of reference included the examination of two conflicts of interest associated with Hausmann and how these conflicts were handled.  The review panel also considered conflicts of interest arising for other board members, as well as the associated governance issues (and in particular the breakdown in relationship between the board and management).

In his comments on the release of the final report, Review Panel head, Ian Wilson, said that the Review Panel had found that handling of conflicts of interest by the HBDHB board did not pass even the low threshold of good practice (as compared to best practice).  Describing the situation as akin to approaching a railway crossing with the lights flashing and driving through regardless, Wilson said "we do not make judgement as to whether it was inattention or deliberate, but it was definitely unsafe and not good practice".

At a high level, key observations made by the Review Panel include:

full and detailed disclosure of interests is required by board members - both on appointment to the board and then continuously.  In short, it is not enough to simply note what your interest in a particular company/trust is - the disclosure must identify any links between personal interests and a particular transaction that the DHB (or Crown entity) is, or may be, entering.  In addition, even if a disclosure makes the link between a private interest and a particular transaction, the disclosure must go into enough detail so that the board, as a collective, is fully informed of all details so that it can then decide how best to manage that interest at the boardroom and management level;

in addition to the legal and ethical dimensions, there is third 'good practice' dimension existing in the framework for board members when fulfilling their duties and obligations;

the management of conflicts of interest requires consideration of behaviour and events outside of the boardroom as well as inside the boardroom.  In particular, care must be taken in respect of board members' interactions with the entity's management and staff; and

comprehensive governance manuals and induction training for board members is necessary in relation to conflicts of interest management.

The implications for the State sector (DHBs in particular) as a result of this review are significant. Certainly, those with responsibility for board governance manuals and conflict of interest management guidelines will need to ensure that they understand the implications arising from the report. 

Disclosure of Interest

Russell McVeagh acted for Peter Hausmann and Healthcare of NZ Ltd during the HBDHB Inquiry.  We are currently in the process of assisting a number of clients to review their governance manuals and board practices in relation to the management of conflicts of interest. 

If you would like to know more about the report's recommendations and possible implications arising for your organisation, please contact Andrew Butler at [email protected] or telephone 04 819 7523.

Commencement of biofuel obligations may be delayed

The government has conceded that obligations under the Biofuel Bill, which require a certain proportion of fuel sold by fuel companies to be biofuel from 1 July, may have to be delayed. Problems arising from the legislation include concerns around the sustainability of the biofuel to be sold in New Zealand to enable fuel companies to meet their obligations.  It is claimed that some biofuels lead to no overall reduction in greenhouse gas emissions when compared with fossil fuels.  There are debates over whether some biofuel production will displace production capacity for food (which, it has been alleged, could lead to food shortages in some areas). There are also concerns about the potential for biofuel production leading to the destruction of rainforests.

The Bill's fortunes have not been helped by the submission of Parliamentary Commissioner for the Environment, Dr Jan Wright, who told the Local Government and Environment Select Committee that the Biofuel Bill should not be passed.

Climate Change Minister David Parker said that while the start date of the legislation may have to be put back, the delay is likely to be more in the order of months rather than years, and there is no talk of the biofuels regime being pulled altogether.

The Bill does provide for the imposition of sustainability standards, meaning that biofuel sold in New Zealand would have to meet certain environmentally friendly criteria to be acceptable.  However, the question of how to formulate these standards is proving difficult, as there is very little reliable international precedent to draw from.  Officials have indicated that such standards are not likely to be in place before 2010 or 2011.

The report back of the Bill has now been deferred to early June.

ACC Review

ACC recently commissioned PricewaterhouseCoopers (Australia) to conduct independent research and evaluation into the future delivery of the Woodhouse Principles.  The Woodhouse Principles were established by the Royal Commission which recommended the introduction of ACC.  The scheme was to be established in accordance with these Principles, which include community responsibility, comprehensive entitlement, complete rehabilitation, real compensation, and administrative efficiency.

The Research Report, released on 31 March, incorporates an assessment of the social and economic impacts of the New Zealand Accident Compensation scheme.  It finds that New Zealand's implementation of the Woodhouse principles via the ACC scheme has provided New Zealand society with four decades of added economic and social value.  However, three areas where the scheme does not fully align with the Woodhouse Principles were identified:

• The Injury Prevention, Rehabilitation and Compensation Amendment Bill (No 2) 2007 (currently before the Transport and Industrial Relations Committee) seeks to extend coverage to psychological injury which is the result of a traumatic event in the workplace, but not elsewhere.  If passed, this would create a coverage boundary between the workplace and other injury environments.
• Some scheme stakeholders contend that claims management (including assessments) can be fundamentally different depending on whether they are handled by accredited employers or their appointed agents.  The report notes that this point, if valid, would be inconsistent with the "same uniform method of assessment" articulation of the Comprehensive Entitlement Principle.
• The lack of ongoing income benefits for claimants who suffer a permanent partial disability which leads to a significantly reduced capacity to earn (but who are still able to work in some form of employment) is seen by many to fail to fulfil the principle of Real Compensation ("for the whole period of incapacity").

A number of recommendations are made, calling for ACC to:

• maintain and prioritise its focus on prevention to capitalise on its unique position to contribute to any improvement in the rate and incidence of injury in New Zealand;
• continue to vigorously pursue rehabilitation improvements under its Rehabilitation Framework;
• explore the establishment of a separate, non-entitlement programme for extended vocational development for those with permanent partial impairment;
• continue to develop plans for self purchasing arrangements for serious injury clients; 
• consider the development of long term longitudinal monitoring and benchmarking of serious injury clients, in line with this type of research funded by the Transport Accident Commission in Victoria, Australia; and
• consider changes to its funding model which would better align with the broader New Zealand Primary Care Strategy and mitigate the problematic incentives to augment base GP income through fee-for-service ACC treatment.

The timing and purpose of the review has been questioned by National spokesperson on ACC, Pansy Wong.

Telecom's Approved Separation Plan

Telecom New Zealand resubmitted its Separation Plan to the Minister for Communications and Information Technology on 25 March 2008.  It includes:

• Telecom Separation Plan - an introduction to Telecom's undertakings; and
• Telecom Separation Undertaking.

The Separation Plan (comprising the undertakings) was approved by the Minister on 30 March 2008, and became legally enforceable on Separation Day, 31 March 2008.

Bills Introduced/Awaiting First Reading

Electoral Finance Amendment Bill
Type of Bill: Member's
Member in Charge: Hon Bill English

This Bill amends the Electoral Finance Act 2007 to ensure that financial agents of political parties and candidates do not have to publish their physical home address on election advertisements that they promote. The Bill authorises the use of a corporate or organisational address instead.

Bills At Select Committee

The Commerce Amendment Bill was read for the first time and referred to the Commerce Committee.  Submissions are due on 9 May 2008.  The Committee is due to report back on 22 July 2008.

Open For Submissions

Submissions Closed

Bills Reported Back / Awaiting Second Reading

Family Courts Matters Bill
Māori Purposes Bill (No 2)
Treaty of Waitangi (Removal of Conflict of Interest) Amendment Bill (Recommended that Bill not be passed)
Waste Minimisation (Solids) Bill

Bills Delayed

The following Bills have been delayed:

• Education (Establishment of Universities of Technology) Amendment Bill  (Select Committee Report delayed from 6 May to 30 May)
• Trustee Amendment Bill (Select Committee Report delayed from 15 April to 30 May)
• Biofuel Bill (Select Committee Report delayed from 15 April to 4 June)

Bills Passed Second Reading / Awaiting Third Reading

Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill

Second Reading Negatived

None

Supplementary Order Papers

SOP 194 Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill
Member in Charge: Hon Jim Anderton
Type: Substantive amendment

This SOP amends the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill to provide that no biosecurity clearances may be given for any goods to which the Import Health Standard for the Importation into New Zealand of specified Bee Products from Australia applies until an independent review panel has conducted a review as provided for in clause 7A(a).  The Director-General will then make, and publicly notify, the necessary determination.

SOP 193 Copyright (New Technologies) Amendment Bill
Member in Charge: Hon Judith Tizard
Type: Substantive Amendment

This SOP amends the Copyright (New Technologies) Amendment Bill as reported from the Commerce Committee.  Amendments include:

• Replacement of clause 18(2) of the Bill, which amends section 35 of the Copyright Act 1994. Section 35(3) will make it an infringement of the copyright in a work if a person who does not hold the New Zealand copyright imports a film into New Zealand within nine months of the film's first public release date;
• Extending to educational resource suppliers the same protection from liability for infringement of copyright currently enjoyed by educational establishments;
• Adding a requirement that an internet service provider ("ISP") must have a policy for terminating the accounts of repeat copyright infringers;
• Clarifying that an ISP who knows, or has reason to believe, that material posted on the ISP’s website infringes copyright is liable if they do not delete or prevent access to the material as soon as possible after becoming aware of it. A factor in determining whether an internet service provider knows or has reason to believe that material infringes copyright is whether the internet service provider has received an infringement notice in respect of it; and
• Adding a further exception to liability for commercial dealing in a work when someone has interfered with the commercial management information attached to or embedded in the work.

 SOP 192 Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill
Member in Charge: Hon Tariana Turia
Type: Substantive Amendment

This SOP amends the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill to ensure that the import decisions for any organism which the Environmental Risk Management Authority ("ERMA") has gazetted as a new organism under the Hazardous Substances and New Organisms Act 1996 ("HSNO Act"), will be appropriately determined by ERMA under the HSNO Act.

This is consistent with the Court of Appeal decision in National Beekeepers’ Association of New Zealand v Chief Executive of MAF which determined that a gazetted new organism is to first gain approval for import into New Zealand under the HSNO Act.  

SOP 189 Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill
Member in Charge: Hon Tariana Turia
Type: Substantive Amendment

This SOP amends the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill to ensure that the 90 day suspension period to give biosecurity clearance can only come into effect after the independent review panel has become operational, and not before.

SOP 188 Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill
Member in Charge: Hon Tariana Turia
Type: Substantive Amendment
This SOP amends the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill to provide for its expiry 18 months after its entry into force.

Inclusion of this sunset clause allows existing import health standards to be validated and new import health standards to continue to be issued, while setting an 18 month time frame for the Ministry of Agriculture and Forestry to develop a more robust regime under which the biosecurity risk of passenger organisms that incidentally arrive into New Zealand can be assessed.

SOP 187 Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill
Member in Charge: Hon Jim Anderton
Type: Motion to Divide Bill

This SOP divides the Biosecurity and Hazardous Substances and New Organisms Legislation Amendment Bill into:

• the Biosecurity Amendment Bill (No 4); and
• the Hazardous Substances and New Organisms Amendment Bill (No 2).

Bill Passed Third Reading

Corrections (Social Assistance) Amendment Bill
Customs and Excise (Social Assistance) Amendment Bill
Injury Prevention, Rehabilitation, and Compensation (Social Assistance) Amendment Bill
Melanesian Trust (Income Tax Exemption) Amendment Bill
Waitakere Ranges Heritage Area Bill

Acts Assented

Biosecurity Amendment Act 2008,
Cadastral Survey Amendment Act 2008
Crimes Amendment Act 2008
Criminal Investigations (Bodily Samples) Amendment Act 2008
District Courts Amendment Act 2008
Fisheries Amendment Act 2008
Historic Places Amendment Act 2008
Misuse of Drugs Amendment 2008
National Parks Amendment 2008
New Zealand Horticulture Export Authority Amendment Act 2008
Radiocommunications Amendment Act 2008
Reserves Amendment Act 2008
Summary Proceedings Amendment Act 2008
Veterinarians Amendment 2008

Regulations

Civil List Determination 2008
Civil List (Annuities) Determination 2008
Limited Partnerships Act 2008 Commencement Order 2008
Limited Partnerships Regulations 2008
Immigration (Transit Visas) Amendment Regulations 2008
Social Security (Income and Cash Assets Exemptions: Superannuation Schemes) Regulations 2008
Social Security (Long-term Residential Care) Amendment Regulations (No 2) 2008
Social Security (Temporary Additional Support) Amendment Regulations (No 2) 2008
Electricity (Levy of Industry Participants) Amendment Regulations 2008
Energy Efficiency (Energy Using Products) Amendment Regulations 2008
Court of Appeal (Criminal) Amendment Rules 2008
Securities Act (Local Authority and Other Venture Capital Schemes) Exemption Amendment Notice 2008
Game Licences, Fees, and Forms Notice 2008
New Zealand Customs Service Medal Regulations 2008
Parliamentary Annuities Determination 2008
Securities Act (ABN AMRO Equity Derivatives New Zealand Limited) Exemption Amendment Notice 2008
Lotto Amendment Rules 2008
Keno Amendment Rules 2008
Big Wednesday Amendment Rules 2008
Immigration Advisers Licensing Regulations 2008
Taxation Review Authorities Amendment Regulations 2008
Fisheries (Southern Blue Whiting Total Allowable Catch) Amendment Notice 2008
Fisheries (Interim and Annual Deemed Values) Notice (No 3) 2003 Amendment Notice 2008
Fisheries (Quota Management Areas, Total Allowable Catches, and Catch Histories) Amendment Notice 2008
Fisheries (Interim and Annual Deemed Values) Amendment Notice 2008
Fisheries (Rock Lobster Total Allowable Catches) Amendment Notice 2008
Fisheries (Rock Lobster Total Allowable Commercial Catches) Amendment Notice 2008

In Committee

The Commerce Committee continues to hear submissions on the Electricity Industry Reform Amendment Bill. Issues considered include balancing the Bill's emphasis on renewable energy with the objective of the principal Act (which is to ensure competition in the industry), the Bill's relaxation of ownership separation, and the relationship between the Bill and the Commerce Amendment Bill. The Committee continues to hear submissions on the Companies (Minority Buy-out Rights) Amendment Bill, including similar issues to those raised by earlier submitters, such as share valuation methodology and the passing of share title from shareholder to company.

The Finance and Expenditure Committee continues to hear submissions on the Climate Change (Emissions Trading and Renewable Preference) Bill. Submissions continue to focus on international competitiveness, allocation of emissions units, timing, linkages with overseas emissions trading schemes, property rights, and the limits placed on emissions reductions by current technology.

The Government Administration Committee continues to hear submissions on the Protected Disclosures Amendment Bill, including a submission from the Public Service Association.

The Justice and Electoral Committee continues to hear submissions on the Real Estate Agents Bill.

The Local Government and Environment Committee continues to hear submissions on the Biofuel Bill. Of particular note is the submission made by the Parliamentary Commissioner for the Environment, Jan Wright, which recommends that the Bill should not proceed.

The Transport and Industrial Relations Committee continues to hear submissions on the Public Transport Management Bill, the Land Transport Amendment Bill (No 4), the Land Transport Management Amendment Bill, and the Industry Prevention, Rehabilitation, and Compensation Bill (No 2).

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