Subordinate Legislation (Confirmationand Validation) Bill (No 3)

I hope that other members of the Committee, like Mr Copeland and perhaps Dail Jones, will feel constrained to make some comment on the very important Part 2. I will deal with one aspect, which touches clause 9. That clause refers to the Commodity Levies Act, in which, curiously perhaps, “commodity” is defined as meaning “any agricultural, farmed, forestry, horticultural, mineral, or wild product:”. That legislation provides the basis for those levies to be imposed annually.

Only four levies have been picked out here: the Commodity Levies (Tamarillos) Order, the Commodity Levies (Meat) Order, the Commodity Levies (Wool) Order, and the Commodity Levies (Winegrapes) Order. All those orders, except for the first, are from 2004. Of course, there are a host of commodity levies that go back to the period generally commencing from 2000. I ask the Minister in the chair, Michael Cullen, what has happened to the Commodity Levies (Arable Crops) Order, the Commodity Levies (Asparagus) Order, the Commodity Levies (Avocados) Order, and the Commodity Levies (Bee Products) Order. Only three orders are directly picked up, as I said. The Commodity Levies (Winegrapes) Order of 2004 does not appear in the predecessor orders, except under a different name: the Commodity Levies (Winemaking Grapes) Order, the statutory reference of which is 1998/349.

What we see in the structure of the Commodity Levies Act, as it is reflected in Part 2 of this bill and in the orders made in terms of clause 9, is the confirmation of orders, following a statutory process. That statutory process is in many respects quite unusual. I just flag, for example, section 8 of that Act, which deals with the issue of conscientious objection. It is very refreshing to see that there may be an ability to refuse to pay a levy for a reason relating to conscientious or religious grounds. That is what section 8 of that Act provides. It states: “Every levy order shall make special provision for the payment of amounts of levy by persons who object on conscientious or religious grounds to paying it in the manner otherwise provided for in the order.” We do not know yet whether challenges will be made to this legislation by people who, for conscientious or religious grounds, do not want to pay levies in respect of tamarillos, meat, wool, or wine grapes. But that possibility cannot be ruled out. Certainly, National is interested to know how the Government would approach a conscientious objector’s claim. Either the levy would be paid or it would not. How is it intended that there would be an adjustment that would reflect in a conscientious way the very purposive provisions of section 8 of the Act?

Of course, Subpart 1 of Part 2 of the bill is much wider than simply a reference to the Commodity Levies Act, because it deals with legislation such as the Animal Products Act, the Animal Welfare Act, the Biosecurity Act, the Customs and Excise Act, the Gambling Act—which my friend Mr Tisch has spoken on—the New Zealand Superannuation Act, the Primary Products Marketing Act, and the War Pensions Act.

It is also in Subpart 2 that the issue of “Validation of payments under levy notices under Alcohol Advisory Council Act” arises. I briefly referred to what seems to be an area that requires clear, remedial, legislative intervention. The Distilled Spirits Association made it very clear to us that it was not opposed to the supplementary audit of this bill that inserted Subpart 2.

I say, just briefly, that in terms of clause 9, levies have to be confirmed within that Parliament or they lapse. Once confirmed, they do not need to be reconfirmed later. In terms of the other matter, I refer the member to clause 15(2), which validates the fact that in effect the levies have been properly collected and therefore are due. Of course, if this bill were not passed, then the member would be quite correct to raise the issue. There would then be a case to argue that the levies were invalid and therefore should be refunded.

I would like the Minister to explain the weightings in the levy formula, if he can. I know that it is a technical matter, but I did mention it in the second reading debate. When recommendations were first made—and I have the figures from a Cabinet policy paper—the presentation figures were 0.8 or 80 percent, and the expenditure items were 20 percent, based on turnover. In the Gambling (Problem Gambling Levy) Regulations of 2004, why do we find that the presentation figures are at 0.9 or 90 percent, and the expenditure or turnover figures are at 0.1 or 10 percent? The point I am making is that there is no substantive information, in changing the recommendation that was made some time ago, to justify why the weightings between W1 and W2 were changed in the problem gambling levy formula. I think that is significant, because when we remember that these levies have been set now for 3 years, we know there will be a distortion within the industry as to what those weightings will mean in 3 years’ time. I am thinking 3 years ahead to 2007, when we will see major distortions, in my view, as to what the weightings actually mean.

All the research that has been done, and certainly that I have had access to, would indicate a weighting even lower than the Cabinet paper states—even as low as 70 percent—for presentation. I will explain what presentation means. It is the incidence of someone coming along and saying that he or she has a problem. That is what that 0.9 figure has been based on, not on whether the person has been assessed as having a problem. It is just a matter of someone coming along and saying he or she has a gambling problem; that is where the presentation and the 0.9 figure comes from. There is no clinical analysis, and no one sits down and analyses whether the person does actually have a problem and what sort of help may be needed. If we take that into account, then the figure here in this bill of 0.9 or 90 percent is far too high. It cannot be justified by the Ministry of Health, and it cannot be justified by the treatment providers whose job it is to be at the forefront of trying to work this problem through. So I question the Minister about that figure. I see him throw his hands up in horror, but he should be aware that we are supporting this bill. I just want to be given some clarification of that figure. Maybe the advisers could come back to me at a later time, because I know the Minister will discuss the issue with them. I think that when statistics have been used and figures have been taken out of national statistics, then there certainly can be some room for error. That is the first point, and I am happy if I can have an answer on that at a later date.

The second point I want to raise concerns the actual percentage of the problem gambling levy. When we look at what the levy states, which is in the schedule under problem gambling levy rates, we see that the casino operator will pay 0.51 percent, the gaming machine operator 1.11 percent, the Lotteries Commission 0.14 percent, and the New Zealand Racing Board 0.57 percent. That is fine; I have no difficulty with that, at all. But I also ask the same question of the Minister about another memo that has different figures for the 3-year period. The figures in the bill are actually lower than those, so that is fine—I am happy with that. But I want to know why the figures are lower now than those in the earlier recommendations when the levy calculations were being worked out for the proposed problem gambling levy. We agree that they should be lower, for some of the reasons that I mentioned before, but once again there has been no justification given in replies to questions I have asked as to how those figures have been worked through.

When the proposed problem gambling levy was mooted, the requirement was for a sum of up to about $56 million over a 3-year period, and that figure has come back to $54.5 million. We are comfortable with that. Although, as I said earlier, there is no justification for the huge increases, at least the percentage has come down. In terms of gaming operators, whether they be the Lotteries Commission, the Lottery Grants Board, of which I am a member, the Racing Board, casinos, or non-casino operators, huge compliance costs have been put on them. The figures have not been justified; they have been just plucked out of the air. No doubt members are being inundated at the moment by groups, especially those in the charitable, cultural, and sporting areas, that are being told by the major gaming operators that less funding will be available to them for their purposes, and that they will have to budget accordingly. When we look at where the proceeds of the levy go in terms of funding for organisations, we see that it is just another huge compliance cost that adds to the burdens and woes of those groups. The organisations that need to be helped in the community will be the losers from that.

I rise to speak to Part 2, and in particular I wish to refer to subpart 2, “Validation of payments under levy notices under Alcohol Advisory Council Act 1976”. I would like to go back to the beginning of the process when the Minister of Health wrote a letter to each of the parties, asking for their support for this part. She said: “It has recently become apparent that even though the aggregate Alcohol Advisory Council levy has been assessed in accordance with the Act, the levy is not, and in fact is unable to be, apportioned to the classes of liquor in accordance with the Act. As a result, the annual levy notices that fix the levy rates for each class of liquor, including the present 2004-05 notice, have not set the levy rates in accordance with the Act.”

It is interesting that we have got to this point 21 years down the track, that we have had those notices in place for all that time, and that in fact the levies have not been applied appropriately. When looking into this first proposal, I spoke to several of the people involved in the industry and asked them what they thought of it. They said that it had really only just been brought to their attention, but it seemed they were in general agreement that these loopholes should be fixed. But they were really quite within their rights. It would seem that the law has not been administered legally, so they were quite within their rights to have made quite a fuss about this, and perhaps to have even sought reimbursement for inappropriate levying.

There were several problems. The formula to calculate the proportion of the levy rate for spirits requires the use of the quantity of proof litres for spirits but in fact the calculations were made in various different ways, and in some cases were made according to the amount of alcohol content, particularly in liquor.

However, the industry was keen that these loopholes were rectified, and it acted, I felt, in a very cooperative way. But when the industry was invited to submit to the Regulations Review Committee, the Distilled Spirits Association of New Zealand raised some other very valid points. The Regulations Review Committee determined that in fact these issues were beyond the scope of the bill, but these are still very relevant points, and I invite the Minister in the chair, Dr Cullen, to perhaps give some indication to this Committee and to the industry itself—particularly the Distilled Spirits Association—as to where the Government might go or whether it will in fact address these other points relating to levies that the association has raised.

There were three in particular, and they are summed up very well in the commentary on the bill. The first issue is the proposal of a new model of product classification in bands based on alcohol content. Secondly, it suggested a requirement that information about how levy rates are determined are provided to interested parties. Thirdly, there is a suggestion that requirements for officials to consult with and provide advance notice of levies to the industry should be addressed. I would ask the Minister in the chair to give an indication of where he thinks the Government might go and whether it is prepared to take these into account. I realise that it is beyond the scope of this particular piece of legislation, but it was this legislation that raised these issues and brought the distillers before the select committee, and I invite the Minister to comment.

ACT will be supporting this bill. We feel that this is a loophole that is long overdue to be fixed, and it is very good of both sides of the House, I think, to say that these issues should have been addressed previously. But I would welcome some comment from the Minister on those points.

I, too, would like to make a brief comment on clause 17, “Levy notices”. As the Minister in the chair, Dr Cullen, has pointed out, it is an amazing situation in that from Prime Minister Rob Muldoon in 1983 right through to Prime Minister Helen Clark in 2004 these levies have been consistently miscalculated. Since that is a span of some 21 years, I think the Government would be wise to figure out exactly how that sort of situation can be avoided in the future. I wonder, for example, whether the auditors of the Alcohol Advisory Council should have a specific function, every year, to check to make sure that the levies are being calculated correctly. Although the amounts are relatively small, it is in principle a fairly serious matter if a miscalculation continues for 21 years under a number of different regimes.

The only other thing I noticed in clause 17—and the Minister in the chair may be able to tell me about this—is that the references in the Act are to the Alcohol Advisory Council Act of 1976, but the actual levy notices from 1983 to year 2000 refer to the Alcoholic Liquor Advisory Council levy notice, before they then revert back to using the word “Alcohol”. So I am not sure whether that signifies some change in the status of the personnel of the council, but it is just a curious fact that we also decided to call something the Alcoholic Liquor Advisory Council levy for all those years and then switch back to something that seems a bit more reasonable.

I will briefly respond. I understand that that name of the principal Act changed subsequently to use the word “Alcoholic”. On the points raised by Heather Roy and indeed Mr Copeland, I can advise that the Associate Minister of Health is looking at those issues, particularly those raised by the Distilled Spirits Association; we do expect some change in process over the coming year. To Mr Tisch I say that I will get an undertaking from the Minister of Internal Affairs to come back to him with a response to the questions he has raised. I have to confess that I cannot remember what the reasoning was, at this distance of time.

Part 2 agreed to.

Clause 1 agreed to.

Clause 2 agreed to.

Bill reported without amendment.

Report adopted.

Third Reading