NEWS ON POLICY AND POLITICS
19 October, 2006

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

A MATTER OF OPINION

Placing Limits on Dissent?
There can be no doubt that after the last general election the government felt itself hard done by. Energy Minister, David Parker, voiced then what has become since a general view on Labour's front bench that the Party's electoral misfortunes had more to do with knocking campaigns funded by "big money interests", than a genuine public disregard. more...

IN POLITICS

Validation of Election Spending
Government has introduced legislation validating historical electoral expenditure to deal with its 'unlawful' character. more...

IN PARLIAMENT

Bills Introduced more...
First Reading more...
Bills Before Select Committee more...
Bills Reported Back more...
Third Reading more...
Bills Passed more...
Committee Hearings more...

Easter Sunday Shop Trading Amendment and Shop Trading Hours Act Repeal (Easter Trading) Amendment - Commerce Select Committee.

Employment Relations (Probationary Employment) Amendment Bill - Transport & Industrial Relations Select Committee.

IN OTHER NEWS

Insider trading criminalised more...
Liberalisation of tax penalties proposed more...
Blue-Greens Discussion Paper on Climate Change. more...

IN CONSULTATION more...

Placing Limits on Dissent?

There can be no doubt that after the last general election the government felt itself hard done by. Energy Minister, David Parker, voiced then what has become since a general view on Labour's front bench that the Party's electoral misfortunes had more to do with knocking campaigns funded by "big money interests", than a genuine public disregard.

Over the intervening months, this perception has been played out in the increasingly bitter attacks on the Exclusive Brethren and assertions by no less than the Prime Minister that organised campaigns hostile to a sitting administration should be legislated against.

Against this backdrop, the revelation that from February next year the Charities Commission will assess whether the political purposes of a group outweigh its charitable ones, looks - or rather can be made to look - more sinister than in fact it is.

For those easily given to outrage, the prospect that charities will lose their tax exempt status for taking political positions provides ample fare. Certainly, the charities legislation expressly allows registered organisations to engage in advocacy and, on the face of it anyway, the suggestion that government will put such charities under the spotlight has the unsatisfactory whiff of trying to place limits on dissent.

What's easily overlooked though is that there is nothing at all new, or indeed illegitimate, about government policy. The Charities Register has been long-planned and owes its existence to legislation passed over a year ago. Further, just as charities have always engaged in some degree of advocacy, so too there has been a valid concern about whether that advocacy, or other non-charitable activity is a defining characteristic. If an organisation's purposes are not primarily charitable, then denial of a preferential tax status appropriate to a charity is not at all unreasonable.

Amnesty International is a case in point. Most of us would look upon it as having pro-social and entirely benign purposes, but is it a charity? In the UK, Amnesty's application for charitable status was turned down because most of its work, philanthropic though it might be, was considered political in nature.

Drawing the line between the charitable and political, though, is not easy. Advocacy is an often integral part of a charitable purpose, as any religious group, aid organisation or environmental body will aver. Having recourse to the common law or, more usually, the too hard basket when trying to sift through this is understandable if not exactly desirable.

However, this is not a luxury that the Charities Commission will have. The task it has ahead will be difficult and made more so by the political climate within which it falls. The apparently visceral nature of Labour's reaction to those who have campaigned against it and the equally visceral assertions of the Opposition have created an environment in which government's motivations and the independence of the Charities Commission will inevitably be questioned.

The Prime Minister has been swift to reassure those concerned that the Charities Register might be used as a weapon against dissent. However, the readiness with which the establishment of the Register has been painted as proof of a malign intent should cause the government to reflect. At the very least it is evidence of how corrosive political debate in New Zealand has become. Public faith in the institutions of government has been shaken and shaken to the point where it will believe anything.

Validation of Election Spending

Government has introduced legislation validating historical electoral expenditure to deal with its 'unlawful' character.

Driven more by Treasury's preoccupation with the technicalities than with the creation of a backdoor option for a Labour party scrambling for cash, the Appropriation (Parliamentary Expenditure Validation) Bill validates the costs and expenses incurred and the public money spent under Vote Parliamentary Service from 1989/90 to 2006/07. The legislation attempts to clarify doubts about the legitimacy of election expenditure by providing a bright line test for determining what is 'in' or 'out'. Further legislation will be developed to address the wider questions around the election funding and expenditure.

The government has given assurances in Parliament that notwithstanding any retrospective validation of election expenditure, Labour will pay back the money identified by the Auditor-General as improperly spent.

Bills Introduced

Appropriation (Parliamentary Expenditure Validation) Bill - Government Bill
The Bill is intended to validate the costs and expenses incurred and the public money spent under Vote Parliamentary Service which might have been outside the scope or purpose of the relevant appropriation for the 1989/90 to 2006/07 financial years, up to the day on which the Bill comes into force.

Foreshore and Seabed Act (Repeal) Bill – Member’s Bill (Tariana Turia - Maori Party)
This bill aims to repeal the Foreshore and Seabed Act 2004 and return everything to the prior status quo.

Injury Prevention, Rehabilitation, and Compensation Amendment Bill – Government Bill
The Bill will merge the Employer's Account and the Self-Employed Account into a single Work Account. The bill also proposes to rename the Medical Misadventure Account the 'Treatment Injury Account'. Entitlements currently provided under the Act to employees, self-employed people, and private domestic workers for work-related personal injuries will be funded by the Work Account.

Local Electoral (Repeal of Race-Based Representation) Amendment Bill – Members Bill (Tony Ryall - National)

Treaty of Waitangi (Removal of Conflict of Interest) Amendment Bill – Members Bill (Pita Paraone – NZ First)

The Bill seeks to remove any conflicts of interest in the operation of the Courts and Special Jurisdictions sphere of the Ministry of Justice. This Bill seeks to remove the ability of serving Judges to be members of the Waitangi Tribunal in any capacity.

First Readings

Arbitration Amendment Bill

Building (Late Consent is a Free Consent) Amendment Bill

Succession (Homicide) Bill

Wills Bill

Resource Management (Restricted Coastal Activities) Amendment Bill - 1st reading interrupted

Before Select Committee

Open for submissions

Submissions closed

Reported Back

Securities Markets Amendment Bill
This Bill was reported back from the committee of the whole House on 10/10/06. The Bill was formerly part of the Securities Legislation Bill as reported from the Commerce Committee. The committee of the whole House has further amended the bill and divided it into the following bills:

The Securities Amendment Bill, comprising subpart 1 of Part 1 and Schedule 1

- This bill, comprising subpart 2 of Part 1 and Schedule 2
- The Takeovers Amendment Bill, comprising Part 2
- The Fair Trading Amendment Bill, comprising Part 3.

Takeovers Amendment Bill
The Bill amends the Takeovers Act 1993. It was reported back from the committee of the whole House on 10/10/06.

Reported Back
Reserve Bank of New Zealand Amendment Bill - awaiting second reading
Securities Legislation Bill - split.

Second Reading

Sports Anti-Doping Bill

Manukau City Council (Control of Street Prostitution) Bill - Negatived

Committee Stage

Communications Legislation Bill (Committee stage interrupted)
Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill (Stalled at committee stage)
CYF Amendment Bill (No 2)
Independent Police Complaints Authority Amendment Bill
Insolvency Law reform Bill (Committee stage interrupted)
Reserve Bank of New Zealand Amendment Bill

Third Reading

Criminal Procedures Bill
Geographic Indications (Wine & Spirits) Registration Bill
Parental Leave and Employment Protection (Paid Parental Leave for Self-Employed Persons) Amendment Bill
Sports Anti-Doping Bill
War Pensions Amendment Bill - (3rd Reading Interrupted)

Bills Passed

Securities Legislation Bill - split into:

234-3A Securities Amendment Bill
234-3B Securities Markets Amendment Bill
234-3C Takeovers Amendment Bill
234-3D Fair Trading Amendment Bill

Southland Agricultural and Pastoral Association Empowering Bill

Committee Hearings

Easter Sunday Shop Trading Amendment and Shop Trading Hours Act Repeal (Easter Trading) Amendment - Commerce Select Committee

Submissions on these bills continued, with the committee hearing from the New Zealand, Wellington and Wanaka Chambers of Commerce. The Chambers supported Easter Sunday shop trading and advocated its extension across the entire economy.

Sue Wells for the Christchurch City Council focused on the need for wider debate regarding whether people want to shop, and work, on Good Friday and Easter Sunday.

The Hospitality Association of New Zealand noted the anomalies that result from several localities holding partial exemptions from current requirements. Under the present framework a particular item can be bought from an exempt shop, such as a petrol station, but not from a type which must remain closed, such as a book shop.

Finally, Laila Harre, representing the National Distribution Union, noted that many employees feel entitled to a day off at Easter. She noted that changing the law in the way proposed by the bills would result in employees potentially having to work or face cuts in their hours.

Employment Relations (Probationary Employment) Amendment Bill - Transport & Industrial Relations Select Committee

Two individual submitters spoke in opposition to the bill. They addressed the committee from the perspective of the young and uneducated, and the disabled community. Both felt that the groups they purported to represent would lose rights of recourse and would be particularly badly affected by the bill. John Kerr, representing the National Union of Public Employees, reinforced these statements, saying vulnerable workers would be denied natural justice and have their rights reduced. Steve Hewitt from the Amalgamated Workers Union also said the shearing industry was particularly vulnerable, with many workers not having employment agreements and thus very few rights at present. Since most shearing contracts last fewer than 90 days, shearers would have almost no rights and would not be subject to any period of protection.

Andrew McComish from the recruitment industry, stated that the probation period would be useful for employers, particularly as the balance of power in the labour market currently favours employees. He suggested the addition to the bill of a mediation process for employees.

The Canterbury Manufacturers Association said that employers support the bill because it mitigates the risks of taking on new staff. Currently, poor employment decisions and grievance processes could cost small manufacturers significant amounts of money and were an emotional drain. Without the bill, increasing numbers of manufacturers would move production offshore.

Hearings continue.

Insider trading criminalised

The Securities Bill amends the Securities Act, Securities Markets Act, the Takeovers Act and the Takeovers Code to criminalise insider-trading. The legislation and provides penalties of up to five years' imprisonment and or fines up to $300,000 for individuals and $1 million and for companies.

An insider trader could be any person with material inside information not generally available to the market and who "knows or ought reasonably to know" that that was the case.
The other key change to the law requires investment advisers and brokers to disclose important information to clients before giving advice.

Liberalisation of tax penalties proposed

Finance Minister, Dr Michael Cullen and Revenue Minister Peter Dunne have released a discussion paper proposing the liberalisation of a range of tax penalties and associated legislation.

"The idea behind the proposed changes is to encourage voluntary compliance by having tax penalties that reflect the seriousness of the offence," Mr Dunne said.

The discussion document examines the current rules on tax penalties and identifies several areas where the rules could be clearer, more consistent and better targeted at promoting voluntary compliance.

The discussion document also proposes updating the definition of 'tax agent' to exclude people who do not meet defined standards of behaviour - such as those who have been convicted of a crime of dishonesty.

Other proposed changes include replacing automatic default assessments with a potential $250 penalty on GST returns that are filed late, and repeal of the threshold for having an abusive tax position.

The discussion document, "Tax penalties, tax agents and disclosures", is available at www.taxpolicy.ird.govt.nz. Submissions close on 30 November 2006.

Blue-Greens Discussion Paper on Climate Change

National's environment spokesperson, Dr Hon Nick Smith, chose the occasion of another high level statement by Environment Minister, Hon David Parker, to launch a detailed discussion paper on the environment. Addressed in the discussion paper are proposals dealing with:

• the use of tradable rights and permits for water and nitrogen as well as carbon emissions;
• the establishment of a sustainability fund for "eco-restoration";
• biosecurity (more container inspections, deportation for visitors who breach biosecurity laws and increased surveillance;
• amendment of the Resource Management Act to:
  • redefine the 'environment' to limit it to natural and physical resources and amenity;
  • remove references to the Treaty of Waitangi;
  • provide more national standards
  • allow direct referral to the Environment Court for major projects involving the national interest.
• the establishment of an environmental protection agency.

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