Tariff (Malaysia Free Trade Agreement) Amendment Bill

I was pointing out before the break that one of the Māori Party’s concerns about free-trade agreements is that a consequence of the global market is that businesses and workers, including Māori, may be forced to produce their goods at the lowest cost by taking production offshore, resulting in job losses at home, with people buying overseas goods rather than those made in New Zealand. It should not be forgotten that, in April of this year, we had some 20,000 Māori job seekers who could have benefited from employment opportunities. Unemployment creates stress on the whānau, and relying on benefits for income diminishes the ability to manaaki. Yet, on the other hand, Māori enterprises increasingly want to play their part as a significant export earner for New Zealand. We know also that more support is required that would increase the capability for Māori taking their assets to the world. Presumably, Dr Sharples’ mission to Shanghai will help to achieve that.

We question how workers in both New Zealand and Malaysia will be treated with regard to workers’ rights and minimum standards on labour issues. I ask whether the free-trade agreements will comply with our basic employment law and our moral code. For Māori, the expression of manaakitanga towards others means that we ensure respect for the health and safety of all workers, yet we cannot ignore the fact that there are opportunities for Māori to leverage their assets to increase economic prosperity internationally. Every economist will tell us that the transfer of assets following Treaty settlements continues to build a platform for iwi-led economic development.

The Māori Party has been genuinely conflicted about free-trade agreements. We are concerned about their impact on the situation for Māori and on the sovereignty of the nation in the wider sense. We are concerned to see that low work standards and low wage rates are not introduced into New Zealand. We worry about what the agreements mean in the larger context of human rights and indigenous rights. We will be scrutinising the effects of free-trade agreements upon the environment, but we also recognise the significant opportunities that might emerge for Māori to utilise their resources, expertise, and knowledge to open up opportunities in the international market place.

Accordingly, although we initially opposed this bill at its first reading, for the subsequent readings of the Tariff (Malaysia Free Trade Agreement) Amendment Bill, our votes will represent the diverse viewpoints that both characterise our constituents and should be considered in further debates. Thank you.

I listened last night to the debate on the Hong Kong free-trade agreement and the ensuing debate on the Tariff (Malaysia Free Trade Agreement) Amendment Bill with considerable interest. Members may recall the comments I made last night on the Hong Kong agreement, where I critiqued the format of the national interest analyses that the Government currently produces when it addresses free-trade agreements. I challenged the Government to, I would say, come clean on the impact on free-trade agreements on imports and the New Zealand domestic economic sector, particularly the manufacturing sector. I called on the Government to drop the euphemisms that it employs, such as negative adjustment effects when it really means company failures and job losses. I asked the Government to be more specific in its national interest analyses in the future, to drop the ideological fixation, and to acquire a certain new-found objectivity.

I appreciated the response that my remarks elicited from, particularly, Maryan Street, which I thought was very thoughtful and constructive, but also Mr Su’a William Sio’s acknowledgment of those concerns. I actually recall in the 2009 debate on the ASEAN free-trade agreement similarly constructive comments from Pete Hodgson. It is clear, I think, that Labour, unlike National, shares to some extent the Green Party’s concerns over free-trade agreements, at least as they are currently structured and promulgated. I note also, of course, the Māori Party’s position. As we have just heard from Rahui Katene, the Māori Party is literally split over the issue of free trade, and I sympathise.

It is clear to us, I think, that National, however, is regrettably mired in a neoclassical orthodoxy. Most of its members prove unable to emerge into the sunlight of a new economic model. A few of them would not even recognise a new model if they tripped over it—and I say that more in sorrow than in anger. I invite Tim Macindoe to prove me wrong within the next few minutes. Labour, on the other hand, is caught between a legacy and a hard reality. The legacy is a commitment to liberalise the economy from the 1980s—the shadow of Rogernomics still shades its world view. The hard reality is recognition that all is not right with globalisation as it is currently prosecuted and promulgated. So Maryan Street calls for rejigging of the Foreign Affairs, Defence and Trade Committee procedure, and greater transparency. The Green Party appreciates that, and thinks it is a very constructive proposal. I call upon the Foreign Affairs, Defence and Trade Committee chairman to respond equally constructively.

So what do we need? I would suggest we need at least six new things. The first is an examination by the select committee of the structure of the national interest analyses themselves as they are currently used by the Ministry of Foreign Affairs and Trade. The second is agreement that in the national interest analyses and in the submissions equal attention should be given to the import sector as to the export sector. The third is that there should be greater transparency in the New Zealand Government’s negotiating process, with the Ministry of Foreign Affairs and Trade reporting to the committee during the negotiations, rather than after them as a fait accompli. The fourth is the adoption of a longer time frame for negotiations, so that New Zealand’s domestic economic interests have more time to make a proper input into the committee’s deliberations and, for that matter, the negotiations themselves. The fifth is a more detailed analysis of the effect of “negative adjustment processes” on the manufacturing sector. The sixth is equal attention being given to the effects of free-investment provisions and to the free-trade provisions, and there should be separate sections in the national interest analyses to that end.

The Green Party submitted a minority view in the report of the Foreign Affairs, Defence and Trade Committee on the Tariff (Malaysia Free Trade Agreement) Amendment Bill, as members know. We advanced three critiques of the agreement. First, the underlying theory on which the Government rests its commitment to free trade is misguided in the sense that it is not necessarily the case that both parties to such an agreement will benefit even in comparative terms, let alone in absolute terms. Secondly, the resulting skew towards economic growth is injurious to our medium-term employment stability and also to our long-term economic resilience. Thirdly, free-trade agreements are misleadingly named. They should be called free-trade and investment agreements.

Our submission to the committee’s report was a shortened version of our written views. I have here a longer version, setting out in more detail our critique of free-trade agreements as currently pursued. I seek leave to table this document for the benefit of the House. Is that possible?

The ASSISTANT SPEAKER (Eric Roy): The process for doing that is that the member raises a point of order then seeks leave. My advice would be that he should do that at the conclusion of his speech.

I shall do that. I conclude by assuring the House that the purpose of our party’s critique of trade policy is not to be perennially negative, as ACT is wont to assume from time to time, depending on which ACT members are sitting there; the purpose is to generate a reasoned debate over New Zealand’s trade policy, and the place of the country’s trade policy in the global economic context. I recall the ASEAN free-trade agreement debate last year when the Green Party made it clear that we were not against trade per se, just against the current manifestations of it under the current agreements. It seems the Labour Party, to some extent at least, shares those concerns. The Green Party will give an undertaking that if we can start afresh with a new look at trade policy, we will be very constructive in cooperating on the committee with not just Labour and the Māori Party but, indeed, National as well.

I seek leave of the House to table the longer version of the Green Party’s minority report on the Malaysian free-trade agreement.

The ASSISTANT SPEAKER (Eric Roy): Leave is sought for that purpose. Is there anyone opposed to that course of action? It appears not. Leave is granted.

Document, by leave, laid on the Table of the House.

It is a pleasure to rise this morning to debate the Malaysian free-trade agreement. I will not be taking the approach that my learned colleague Kennedy Graham took in discussing neoclassical orthodoxies. I have to say that most New Zealanders around the country are not particularly focused on neoclassical orthodoxies—

💬 Hon Maryan Street: It’s neo-liberal, not neoclassical.

Regardless, whether it is neo-liberal or whatever, most New Zealanders do not work in that sort of league, and really understand things at a much lower level. Once the Green Party starts to understand that and speak at a level that most New Zealanders understand, they will be in a far better space. But far be it from me to advise the Green Party on how to run its politics.

I will bring the debate back to a context that most New Zealanders understand—to delivering on promises in elections. That is what National is doing. We made a big commitment to this country when we stood at the election on having a strong growth agenda. We had six levers that we were going to pull extremely hard to ensure that that growth agenda came through.

The first lever was a tax system that encouraged Kiwis to get out there and work hard. We are delivering on that, and that is fantastic. The second lever was an investment in infrastructure to provide a framework for businesses to work under, to grow, and to provide jobs. It is businesses that provide jobs in our economy, and the other side does not understand that. We are pulling very hard on that second lever to make sure that we deliver jobs and growth to the economy.

The third lever was an attack on compliance costs and bureaucracy. We saw that with the aviation bill yesterday, with which we are reining back compliance costs. We are making cheaper the cost of running businesses and getting our product to market. Again, that is another fantastic example of National delivering on its election promises.

The fourth lever was controlling Government spending and focusing on delivering efficiencies and value for money in the Government sector. This Government is delivering really well on that, I am proud to say, which is fantastic. The fifth lever that is part of our vision and strategy to grow the economy was lifting the standards in education. Throughout the country, we are seeing standards throughout primary and secondary schools and tertiary education lifting and growing.

But the area I want to focus on today is the sixth lever, and that is innovation and trade. We have seen in this urgency debate two examples of trade bills coming through, firstly in respect of the Hong Kong free-trade agreement and, secondly, in respect of the Malaysian free-trade agreement, which is before us on the table today. It is a big part of our trade agenda and is supported by the Opposition and most parties within this Parliament, with the exception of the Greens. Most parties understand that exporting is the key driver of our economy. That is what will grow businesses and grow jobs, and it gives us options within government to collect more tax over time and deliver better education and better health services. That is how it works, I say to Mr Graham.

Rather than focusing again on neo-liberal orthodoxies, I really want to give voters out there a really good example of what this means at the coalface. I will use the example of Zespri, whom Maryan Street mentioned yesterday when talking about the kiwifruit industry. I will give members an exact example of how this free-trade agreement will work for New Zealanders and for Kiwi business, using a green product with a low carbon footprint, which is the kiwifruit industry. Zespri is a company that is getting behind this Government’s agenda. It has set a growth projection for their industry of taking kiwifruit sales from $1 billion to $3 billion by 2025. It is absolutely fantastic to see what they are doing. If we compare the growth in the kiwifruit industry with some of our other industries, we can see what an industry like the kiwifruit industry can do when it gets its whole plan together and goes well.

Right now, the kiwifruit industry is up there at 9.88 percent growth annually, year on year, even ahead of the dairy industry. We would not think that, but dairy is at 9.71 percent growth. The kiwifruit industry is even ahead of the meat industry at 5.62 percent. So the kiwifruit industry is getting behind this Government’s agenda, is really on board, and is taking it ahead.

The key points that Zespri spoke about, which will ensure that they can grow and achieve that $3 billion, is maintaining a single point of entry. That is something other industries around the country, particularly the meat and wool industries, need to have a strong think about if they are to grow their own industries and utilise the free-trade agreements that we are bringing out. If we have a look at those growth figures I was talking about before, we see that the wool industry, in particular, has not grown at all in the last 10 years; in fact, it has gone backwards. It has to have a long hard think about how it will take its industry to the wider market to utilise the free-trade agreements.

If we think about an industry that has a green, sustainable product, then it has to be wool. There has to be a story to tell there. There has to be a way that farmers can drive more revenue into their profit/loss accounts and balance sheets. They can use wool to grow jobs in this country, so I think they have a lot of thinking to do there.

In terms of Zespri, a big chunk of driving the growth to $3 billion is through using these free-trade agreements. In their document, they are fully behind this Government taking their industry to a $3 billion level. I think that that is to be applauded. With the free-trade agreements, we are in a great space. I am proud to be supporting the bill at this point in time. Thank you.

I am very pleased to hear from the senior Government whip that the Government is in a good space! But I have to say that I felt like that speech was a somewhat patronising contribution, which is a shame. I do not think those Kiwis out there watching the debate in the House today necessarily tuned in to hear the senior whip tell them what they would and would not understand of the Green Party’s contribution. I think members are perfectly entitled to raise issues in whatever language they choose, and people will judge that on its merits, as they will judge the previous speaker’s speech.

I rise to talk briefly on the Tariff (Malaysia Free Trade Agreement) Amendment Bill in the second reading. Obviously, Labour supports this bill, because it was the good work and steerage of Jim Sutton and the Hon Phil Goff that saw the majority of this agreement fall into place. That demonstrates, as well, that some of these negotiations started as early as 2005. Now we are looking at supporting these measures, which will allow the Malaysia - New Zealand Free Trade Agreement to be ratified.

To give a bit of background, which has probably already been mentioned by some of my colleagues, I tell members this deal expands on the New Zealand - Australia Free Trade Agreement signed in February 2009, and it essentially cuts the trade barriers between Malaysia and New Zealand.

I will talk a little bit in greater detail about the issue of an export-led recovery, because it is something that we have heard a lot about from the Government, and it is relevant to this debate. In all of these debates, we hear the upsides and the downsides of free-trade agreements. I will talk about the merits of the Government talking solely about an export-led recovery without talking about the framework that exporters are working within, because I believe that is relevant. I think it was on 8 September 2009 that Bill English said: “We’re looking for how to make sure we get a sustainable, export-led recovery.” This agreement, in my view, is only part of a solution, in that regard. Sadly, the National Government has failed to look beyond free-trade agreements at other measures to assist New Zealand exporters. For instance—and this is probably the most important measure I want to speak to—National’s refusal to even consider examining monetary policy will, I think, limit the extent to which new potential exporters will enter into the fray. John Key and Bill English have both said that they think we have the best monetary policy in the world, but if they took the time to speak with struggling exporters, who see their gains wiped out by very volatile exchange rates, I think they would see the issue a little differently, as Labour does.

For those with an interest in this issue, I really recommend their looking at the speech that the Hon David Parker made on this issue recently, and also the one made earlier on this year by Phil Goff, when he said—and it was quite a historic move on our part—that the consensus on monetary policy was over, and for good reason. We have a relatively low level of exporters in New Zealand, comparative with the number of industries and entrepreneurs that we have in this country, and it is time that we start asking questions about that.

National’s closed mind on monetary policy has not only been challenged by Labour; it has been challenged by the IMF, which I always quote with a few disclaimers. It recently issued a report that stated that inflation targeting was a necessary tool but not a sufficient tool for economic stability. If, indeed, the National Government’s sole focus was economic stability through controlled inflation, one would think it may have taken that into consideration when looking at the forecasting Treasury delivered to it over the increase in inflation that would be generated via its latest Budget. This forecasting predicts some of the highest levels of inflation we have seen in some time—5.9 percent, from memory—which will have a significant impact on many New Zealand householders. But that, of course, is an ongoing debate.

The IMF actually advocated additional use of monetary tools, including the exchange rate and limiting the amount banks can lend against the value of property. That suggests that other tools are available, and that perhaps we should be looking more broadly at some of them.

💬 Paul Quinn: Stick to what you know best; it’s certainly not economics.

I look forward to hearing Paul Quinn’s contribution on this debate. He obviously wants to give the House a diatribe on his view of economics.

But before he does that, I will talk briefly about the foundations that need to be laid at the same time as a free-trade agreement is signed. I do not think it is just a matter of the Government facilitating these kinds of agreements and then stepping back. In fact, I think the agreement with China was a very good example of how we can aid our exporters to enter into a massive and difficult market with success. We did that in 2008 by running a nationwide China roadshow, and also launching a Government website with information on the free-trade agreement and assistance on doing business in China. I think that was an incredibly important move towards assisting our exporters in that regard. Given that we are such a small market, I think it takes the Government to invest in some of those measures.

What is National doing to help New Zealand businesses make the most of opportunities in Malaysia? I guess one of the best indicators we have is what measures have been put into the Budget, and I have to say that not only is there very little but, actually, the Government is scaling them back. In the 2009 Budget, for instance, National cut funding to New Zealand Trade and Enterprise by $101 million over the following 4 years. That is another example of where a cut in investment in the long term will lead to a reduction in New Zealand’s potential growth, so it is a short-term band-aid fix that sets us back for very minimal savings. There have also been budget cuts to New Zealand’s Market Development Assistance fund. That stands in direct contrast to what was quite a considerable investment by Labour in this area. In fact, in its last term the Labour Government increased the funding for Market Development Assistance for New Zealand Trade and Enterprise from $6 million to $54 million—again, in recognition that, collectively, investment in this area would reap even greater gains.

Investment in this area is one thing; it is also incredibly important to make sure that New Zealand has an appropriate brand to trade on. We have several significant exporters who can, of course, trade off their name. Zespri is one of them. One of Zespri’s successes has been the fact that it has been able to trade as a single export desk. It does not have a multiple range of exporters all marketing different brands of kiwifruit, for instance, and that is something we have to keep an eye on; it is something that is under threat. In the same way, New Zealand’s brand becomes a brand across a whole range of products for small exporters. They capitalise and trade off our brand, because in and of themselves they may not be significant enough to trade solely on their own brand. This means that brand protection around New Zealand is incredibly important. Not only has the National Government depleted some of its investment in the marketing on behalf of our exporters but also it has done some damage to New Zealand’s brand.

I reflect briefly on the three recent issues in which New Zealand has made national headlines—I will make that four, as there may have been some redemption, in regard to the All Whites. That one I am proud of. The All Whites have got us into the international headlines. The second most recent one is the Prime Minister’s vasectomy—not something I personally wish my country to be known for. That made international headlines on the world stage. Then there was the lack of respect the Prime Minister showed by making cannibalism jokes at an inappropriate time—again, not something that I would wish my country to be known for. Finally, there are the proposals from the Government for the mining of parts of New Zealand’s most precious conservation estate. Again, that was noted in the Economist and the Guardian as undermining our brand. These things do not help the New Zealand brand, and they do not, as a consequence, help our exporters. I do not think they help any of us as individual citizens who might be proud of our record and of our reputation.

I extend a challenge to the National Government, and say that it is not just about signing free-trade agreements; it is about supporting our exporters and making sure the appropriate statutory framework is in place for them to be a success. That means reviewing our monetary policy. It is also about our brand.

It is a pleasure to rise and speak briefly on the second reading of the Tariff (Malaysia Free Trade Agreement) Amendment Bill. It is the sinews of trade that bind the world together, and the sinews of trade that allow countries to have a relationship that means they are likely to maintain friendly relationships rather than unfriendly relationships. An ability to communicate between countries is enhanced by trade between those countries.

It was a source of great surprise to me that in the world’s best economic conditions under the last administration—conditions unsurpassed in decades—the tradable sector declined, year after year after year. This means that in terms of the goods we sell overseas to allow us to provide the services we need here at home for our people, to protect our most vulnerable and to provide world-class services in medicine and education, we were not doing as well as we could.

This bill, the Tariff (Malaysia Free Trade Agreement) Amendment Bill, will boost innovation and improve export access to one of the key markets in Asia to which New Zealand exports. This agreement with Malaysia is an important part of National’s focus on free trade, and on improving access for our exporters to world markets—a priority that the Prime Minister mentioned in his speech to Parliament in February. It is only, as I said before, by lifting our economic performance through selling our goods and services overseas that we can create jobs, boost incomes, and improve living standards here in New Zealand.

More than 70 percent of New Zealand’s trade is within the Asia-Pacific region, and at this stage I pay tribute to the excellent work done by our Minister of Trade, Mr Tim Groser, who has been travelling all over the world and opening up markets for our products all over the globe. There will be greater certainty and opportunity—

💬 Hon Tony Ryall: Tireless and relentless.

He is tireless and relentless, as another extremely well-performing Minister, Mr Ryall, has observed.

There will be greater certainty and opportunity for New Zealand businesses in future trading and investment in Malaysia. There are potential longer-term gains from regional integration. I give just a few details: 95 percent of New Zealand’s exports to Malaysia will be duty-free from day one—95 percent. On full implementation, this agreement will amount to duty savings of over $10 million a year for our exporters. I commend this bill to the House.

It is an honour to rise in this debate today. The first thing I will do in debating the Tariff (Malaysia Free Trade Agreement) Amendment Bill is to welcome the Minister of Trade back to New Zealand from his successful foray into supporting Australian politicians.

💬 Hon Tim Groser: I wasn’t consulted!

Ha, ha! I am sure as the day evolves, we will be able to see the impact of the Minister’s triumphal visit to Australia on the fortunes of the Australian Prime Minister.

💬 Hon Maryan Street: Where are you going next?

Yes! Some colleagues have suggested that Mr Groser’s visa for the United States has been revoked by Barack Obama for fear of what might happen to him while Mr Groser is over there. In all seriousness, I congratulate Mr Groser as the Minister of Trade and, indeed, in his role in his former career, on the work he has done on free-trade agreements; he has had a bit to do with this one in particular. I also congratulate former Labour Ministers Phil Goff and Jim Sutton, who played a key role in the initial development of the Malaysia - New Zealand Free Trade Agreement, and the many foreign affairs officials who work on these agreements. An awful lot of work goes on behind the scenes not just, it might be said, from trade negotiators but also from those who manage the overall relationship between New Zealand and countries like, in this case, Malaysia. The trust that is built up over time lies behind an agreement like the Malaysia - New Zealand Free Trade Agreement. We are not able to make these kinds of high-quality agreements if we do not have high-quality diplomats and foreign affairs officials working overseas and negotiating for them. I offer my congratulations and thanks to those foreign affairs officials and, indeed, to the officials from other departments and agencies who have been involved in this particular agreement.

This agreement is highly significant. It is also a high-quality agreement, as well, as free-trade agreements go. Malaysia is a significant country for New Zealand trade, as other speakers have noted. Between 2004 and 2008 there was an 80 percent increase in New Zealand exports to Malaysia, and in 2008 our exports were worth nearly $1 billion. It is a significant trading relationship for New Zealand and one that is obviously growing. It is a high-quality agreement in the sense that 95 percent of the tariffs that are being reduced will come into force on the day of agreement. That is excellent. It will be 99.5 percent by 2016. That is 5 years earlier than for the ASEAN free-trade agreement, so that is an improvement in quality. It is a step forward in terms of how our trade agreements are progressing.

A conservative estimate would tell us that there is a benefit of probably $10 million per annum just in the tariff changes. This agreement will really benefit exporters. It is of high quality. It has the elements of a free-trade agreement that we are used to. It takes into account services as well as goods, and I do not think we always give as much attention to the importance of the services side of these free-trade agreements. A lot of successful New Zealand businesses are involved in the services sector perhaps, as well as in the exporting of goods, but this is a high-quality agreement in terms of services as well as in terms of our core exports.

I think my colleague Maryan Street has already talked about the importance of the kiwifruit sector, and clearly the removal of the tariff there will make a huge difference for Zespri. I know that Zespri and some of our other large exporters have also played a key role in this agreement. The agreement also binds in the existing duty-free access for New Zealand dairy products. Dairy products are usually a problem for us in our free-trade agreements, but it is good to see that we have managed to put a situation in place in this agreement where we bind in what is already a good situation and hopefully improve on it as we go ahead.

I will talk about two elements that sit around this agreement, having now outlined the fact that obviously Labour supports this bill. We support the free-trade agreement, and we recognise the quality of it. Free-trade agreements need to be seen as part of our overall economic approach. I think my colleague Jacinda Ardern has already addressed the question of monetary policy and the fact that it is important to talk about what we can do better in terms of monetary policy. We have had a consensus in that area, but the question many exporters raise with me and with other colleagues is whether that balance of monetary policy is right in terms of supporting the exporters, who are a key part of this free-trade agreement. Those exporters are worried about the volatility of exchange rates. They are concerned that our current monetary policy focus is too narrow. I think that when we look at free-trade agreements, we need to look at them alongside the rest of what we are doing.

We also need to look at them alongside domestic policy. We need to look at how we are encouraging and supporting exporters; at what kinds of regional development plans we have; at what the plan for growth and jobs in New Zealand is; at whether we are creating the skilled population, the productive population, that will be able to take advantage of an agreement like this; at where the Government’s skills strategy is; and at why the Government is not encouraging more people into tertiary education, rather than shutting the doors on people going into tertiary education. Free-trade agreements are fantastic and give a deliverable outcome to New Zealand, but if New Zealand is to take advantage of those agreements, it needs to have the infrastructure behind it. We need the infrastructure behind that in terms of how the economy is organised. We need to ask how we can have a skilled and productive workforce and how innovative ideas are able to be supported and taken forward. The Government is very proud of this bill, as it should be, but we need to ask where is the overall economic plan to deliver high-quality jobs to support the people who have the skills and to give people new skills to make sure they can contribute to this free-trade agreement and to growing the New Zealand economy.

The other element I will raise relates to what I call the side agreements to this free-trade agreement. In particular in this case, as has been the case in a number of recent free-trade agreements, there is an environmental cooperation agreement and a labour cooperation agreement. These have become a feature of recent bilateral free-trade agreements for New Zealand, and I think that is an extremely positive thing. For some time, since around the beginning of the century, the Ministry of Foreign Affairs and Trade and others were very reluctant to negotiate environment and labour cooperation agreements, and some of our partner countries were also clearly reluctant, but they have now become a regular feature. They offer a very important alternative and a very important different track for our relationships with these countries.

I have just come back from China with a Wellington City delegation, and one of the main things being raised with us as a delegation was the question of how we could work together in terms of environmental cooperation. The Chinese—and, I am sure, the Malaysians, as well—are very interested in renewable energy. They are very interested in freshwater management. They are very interested in a range of environmental issues, such as air quality, where New Zealand has some expertise and knowledge and where they also obviously have a great deal of expertise and knowledge.

I believe that these environmental cooperation agreements, in particular, are a real opportunity for New Zealand. I hope that the Government will not see these agreements just as a tack-on that has been put on to the end of a free-trade agreement to placate people, but rather as an opportunity to actually grow our relationship with countries that are developing at an enormously fast rate, which is putting huge pressure on their environment. Here is an opportunity for us. We have the framework; let us use it. Let us make it a key part of our relationship, with Malaysia, in this case, and with all the countries that we have free-trade agreements with.

The same goes for labour cooperation agreements. The labour cooperation agreements have sometimes been even more controversial, because they cut to labour standards issues, such as issues about wages and about health and safety. In China those are major issues at the moment. Foxccon faces huge issues with its workforce. It has massively increased the wage bill, but it is still having major issues. We have a lot to offer countries with regard to a cooperative model of labour relations and the importance of health and safety. I just urge, in closing, that this is a high-quality agreement, but there are also side agreements that offer a huge opportunity for New Zealand to broaden and deepen our relationship with Malaysia, in this case, and our relationships with other countries that we have a free-trade agreement with.

I am happy to support this bill. Free trade is not the be-all and end-all of our economic relationships, but it is an important part of driving our economic growth and improving our relationships with the countries in our region.

I did not take the ACT call in the normal order when the Tariff (Malaysia Free Trade Agreement) Amendment Bill came up late last night, but I will do so now. I have listened with interest to the debate over the last half hour or so, and it is interesting that Grant Robertson concluded his speech by saying that free trade is not the be-all and end-all of raising economic aspirations but that it is a very important part. I agree with him.

I was particularly interested to hear the contribution of Rahui Katene this morning. She talked about the competing concerns within the Māori Party caucus. She talked about the fact that when this bill is enacted, it will reduce the tariffs that apply to imports from Malaysia and it will introduce greater competition for products manufactured in New Zealand. However, the benefit, of course, is that it will reduce the price of products and goods purchased from Malaysia and, as such, it will raise the living standards of New Zealanders. If New Zealanders can buy those same products cheaper, then their money and their spending power goes further. As Rahui Katene said, it enables the Māori iwi, Māori interests, to leverage their assets to look for trading opportunities in Malaysia, to export products into Malaysia, and also to build on Māori development and Māori employment.

Then the debate became quite wide ranging. Chris Tremain used the opportunity to outline the six key planks that the National Party stood on in the last election campaign. In particular, he focused on the growth of Zespri. Jacinda Ardern then took the opportunity to speak about the Labour Party’s policy in respect of monetary policy, and she suggested that the Government should be looking beyond simply facilitating free-trade agreements.

But the contribution that interested me the most was Mr Cam Calder’s contribution. Cam Calder made the point that 70 percent of what this country sells is sold to Asia—70 percent of what we sell. Asia is our future; Asia is where we are marketing our products. I think that is a very important issue.

Jacinda Ardern talked about four headlines. She talked about the four headlines that New Zealand had achieved on the international stage in the last couple of months. We will make another headline, and it will come on 1 July. It will have a huge impact on the welfare of New Zealanders and our exporters. I refer, of course, to the emissions trading scheme.

On 1 July we will introduce the most comprehensive emissions trading scheme in the world. We will introduce the first emissions trading scheme outside Europe and it will be the most comprehensive scheme. How do I know that? I listened with interest to the speech of the Hon Dr Nick Smith, the Minister for Climate Change Issues, when he spoke in the first reading debate of the National Government’s amendment bill. What did Dr Smith say? On 24 September last year—not 5 years ago, when Dr Smith was in the Opposition, but 6 months ago, when he was the Minister for Climate Change Issues—he said that this emissions trading scheme would be the first for any country outside Europe, and that on 1 July 2010 it would become the most comprehensive scheme by including transport, industry, and energy emissions. To all of the New Zealanders who listened to Dr Smith when he was travelling up and down the country trying to minimise the damage that this emissions trading scheme will do to New Zealand exporters and New Zealanders, I repeat that Dr Smith told this House on 24 September last year that it will become the most comprehensive scheme by including transport, industry, and energy emissions.

I will bring it back to the issue of our free-trade agreement with Malaysia and to Cam Calder’s comment that 70 percent of what we sell, we sell to Asia. Dr Smith is very fond of saying that 29 of the 38 developed countries that signed the Kyoto Protocol—the annex 1 countries—have an emissions trading scheme. The countries that Dr Smith refers to are the countries of the European Union plus Norway and Switzerland. Eighty percent of what those countries sell is sold to themselves—80 percent of their exports are to other countries within Europe. Only 20 percent of their exports leave Europe. If we contrast that with our situation, we see that we sell 15 percent of our exports to Europe, so by definition we sell 85 percent to countries outside Europe.

By Dr Smith’s acknowledgment, we are selling 85 percent of our exports to countries that do not have an emissions trading scheme. As Mr Cam Calder reminded the House this morning, of that 85 percent of exports, 70 percent goes to Asia. Seventy percent of what New Zealand exporters are selling goes to countries that do not have the extra cost of an emissions trading scheme—85 percent in all. For the National Government to go up and down the country trying to convince New Zealanders that the emissions trading scheme is good for our exporters is an absolute disgrace. Europe has exposed 20 percent of its exports outside Europe, and is competing with countries that do not have that cost, but we are exposing more than four times that number of exports.

Trade is very important. The ACT Party, probably more than any other party in this House, is concerned about the need to raise New Zealanders’ prosperity and is interested in implementing policies that will do something about that.

I noticed Rahui Katene commented that she was concerned about the impact of the free-trade agreement on workers’ conditions and wages, and, in particular, on unemployment among young Māori, and, I dare say, among young Polynesians and all other young people. We had a chance to do something about that earlier this year. The House could have supported the legislation of my colleague Sir Roger Douglas on youth wages that would have given 16 and 17-year-olds the chance to gain employment by being employed on less than the minimum wage. What choice would an employer make between a young 35-year-old, who possibly has a wife or a husband and two young children and who needs reliable employment, and a 16-year-old? I suspect that if an employer had to make a choice between a 35-year-old with commitments and a young person, the employer would choose the more mature person all the time. Young people are being denied the chance to get employment.

The ACT Party will be supporting this bill. We support free trade. We support the opportunities that it gives our exporters and businesses. We support having the opportunity to try to raise New Zealand’s prosperity and living standards. Only by creating employment and investment will we create a more prosperous country.

If Jacinda Ardern is concerned about world headlines, then I suggest that all the parliamentarians in this Parliament should hang their head in shame. On 1 July we have an emissions trading scheme—I think Mr Groser is laughing. I invite Mr Groser to explain how he thinks it can be good for those who sell 85 percent of our exports to be exposed to trading with countries that do not have the extra cost of an emissions trading scheme.

Mr Groser may not think that is important, but Meat and Wool New Zealand has stated that the cost for the average dairy farmer from 1 July this year will be $3,900. Those farmers will pay that. That is 3c a kilogram on milk fat. It is $75 a week for the average dairy farmer. It is about $35 a week for the average beef and sheep farmer. Parliamentarians in this Parliament may like to laugh about that, but if we are really concerned about raising New Zealand’s prosperity, our livelihoods, and our incomes, then we need to be doing a lot more than trying to penalise exporters in the way that the emissions trading scheme will do. Thank you.

About half an hour ago, speaking more in sorrow than in anger—I think those were his words—our Green Party colleague Dr Kennedy Graham invited me to dispel his and the Green Party’s fears over free-trade agreements. I suspect that the huge number of Green Party members and supporters in the Chamber and the gallery at this moment, and the thousands more glued to their broadcasts on TV and radio at home as I rise to take this call on the Tariff (Malaysia Free Trade Agreement) Amendment Bill, are, sadly, probably fairly unshakeable on this topic. Nevertheless, I will have a go; the challenge was extended so earnestly and so thoughtfully in the best inter-party spirit of neo-liberal orthodoxies, and I do appreciate it.

Perhaps the first topic I could explore that might appeal to my Green Party friends and supporters at home in Hamilton West is the environmental aspect. This agreement that we are steering into the statute book is Malaysia’s first bilateral treaty on environmental cooperation to be negotiated in the context of a free-trade agreement.

💬 Dr Cam Calder: The first?

The first, I tell Dr Calder. It establishes a set of shared trade and environmental principles to promote sound environmental practices and sustainable development. That is surely worth a celebratory bowl of lentil soup and a burst of morris dancing at the next Green Party regional conference.

Another aspect that may see the Greens treat themselves to an extra pumpkin and herb muffin is the continuing appeal of New Zealand’s education system to Malaysians. The strengthening economic and cultural ties reflected by this agreement stand to get a further boost, and are very significant, especially at a tertiary level. I am sure that will appeal to the previous Labour speaker, Grant Robertson, who is the new spokesperson on tertiary education, and who is, I understand, especially excited and inspired by events unfolding across the Tasman as we speak this morning. It is worth noting that between 2003 and 2008 the number of fee-paying Malaysian students in New Zealand increased by more than 70 percent.

💬 Hon Member: What percent?

More than 70 percent; it is a popular statistic this morning. That made Malaysian students New Zealand’s third-largest source of international fee-paying students. It is worth noting also that international full fee-paying students are worth over $2 billion a year to our economy.

The final point I make is just very quickly to reiterate the benefits of that to some of our major exporters. The Malaysia free-trade agreement eliminates Malaysian tariffs on 99.5 percent of New Zealand exports within 7 years of the agreement’s entry into force. Specifically—just looking, say, at the kiwifruit industry—this means that exports that currently incur a 15 percent tariff from Malaysia will become duty-free by 2012; based on the latest figures, New Zealand’s exports to Malaysia have grown already by 173 percent since 2007. There are great benefits for the milk industry, as well.

There we have it; I do not have a lot of time. Those are three great benefits. This agreement is another great step forward from a great Government. It is enough to make Dr Graham and his supporters green with envy.