Standards and Accreditation Bill

I move, That the Standards and Accreditation Bill be now read a third time. The Standards and Accreditation Bill will put in place new arrangements for New Zealand’s standards and conformance system. This will ensure that the system is viable, well functioning, and responsive to the needs of business, consumers, and regulators into the foreseeable future.

Since becoming the Minister of Commerce and Consumer Affairs I have had the pleasure of progressing a number of bills and regulations to improve the regulation of New Zealand’s commercial systems, including the legislation arising from the Accounting Infrastructure Reform Bill, financial markets conduct regulations, the release of the Responsible Lending Code, the regulations implementing the Credit Contracts and Consumer Finance Amendment Act 2014, and now the Standards and Accreditation Bill.

This bill establishes new arrangements for standards development and approval and updates the institutional arrangements for the Testing Laboratory Registration Council to better reflect the nature of its functions. This speech gives me a final opportunity to emphasise some of the key aspects of the new arrangements before the House. I want to emphasise the independence built into the new standards arrangements. Standards will be approved by an independent statutory board, the New Zealand Standards Approval Board. Collectively, the board must have knowledge of standards and the sectors that use standards. The board will be guided by decision-making criteria in the legislation when considering proposed standards and members of standards development committees.

Standards development will be the responsibility of the New Zealand Standards Executive, an independent statutory officer within the Minister of Business, Innovation and Employment. Both the board and the Standards Executive will have statutory independence. Neither is subject to the direction of Ministers. I am confident there is sufficient independence built into the new arrangements to preserve the robust reputation of New Zealand standards.

Further, the New Zealand Standards Executive is required to continue using independent committees of technical experts to develop standards. The bill requires standards development committees to have balanced representation from interests of stakeholders such as industry, consumers, and worker representatives and regulators. This remains consistent with current practice and reflects international and domestic expectations. I have heard stakeholder concerns, and I am confident stakeholder representation in committees will be appropriately broad.

The need to place the standards system on a sustainable financial footing was one of the key drivers for change. The bill does this by strengthening the current cost recovery model. The New Zealand Standards Executive will be able to negotiate arrangements that cover the full life cycle of standards, balancing initial development and approval costs with ongoing costs for maintenance and access. Locating the standards development function within the Ministry of Business, Innovation and Employment will also provide efficiencies and scalability that are simply not possible in a small, stand-alone entity.

The other drivers of change were to ensure standards are responsive to user needs and to ensure closer alignment and contribution of standards to health and safety, productivity, innovation, and international trade for the benefit of New Zealand. I am assured that the provisions in this bill are sensible and will be implemented effectively by officials.

New Zealand’s engagement with the International Organization for Standardization remains important. This bill will build on the robust international reputation of New Zealand standards and the involvement of New Zealand in the international standards arena. New Zealand is, and will continue to be, an active member of the International Organization for Standardization and the International Electrotechnical Commission. Standards will continue to be developed in accordance with international directives and expectations.

Worldwide a number of models for standards development are used. Many countries locate the standards development function within a Government agency. The institutional arrangements for standards in New Zealand need to be fit for purpose for New Zealand’s own circumstances. The bill expressly provides for New Zealand to continue the important function of contributing to standards development by international bodies and other national standards bodies. The bill provides for New Zealand to nominate members to other standards development committees, to attend international meetings of standards organisations, and to contribute to the work of other standards bodies.

In relation to accreditation, the bill updates the provisions of the Testing Laboratory Registration Act 1972 to reflect the contemporary nature of the functions of the Testing Laboratory Registration Council that relate to accreditation of testing and inspection services. The bill will also rename the council as the Accreditation Council.

I once again thank those who submitted to the Commerce Committee and the committee itself for producing useful commentary in only 4 months. As I said in my second reading speech, my view is that the bill is stronger for having been through the select committee process. I am confident that the bill can provide a sustainable and responsive standards and conformance system that meets the needs of business, consumers, and regulators and contributes to the health and safety and prosperity of New Zealanders, both now and into the future. I commend this bill to the House.

It is a pleasure to speak to the third reading of the Standards and Accreditation Bill. I want to acknowledge the Minister of Commerce and Consumer Affairs and his remarks. There are some issues that he raised that we would agree with on this side of the House, but, in essence, since the select committee process we have had major concerns with how this piece of legislation has progressed.

There was an issue fixed here, and it was, as the Minister pointed out, around the financial viability of our standards process. I think there is no doubt that we agreed and that the Government has taken action to try to address that. But in this piece of legislation we believe the Government has tried to address that and has not addressed that, but has created a completely new issue around the independence of our standards-setting process. Concerns were raised, not just from the Opposition but—more important in this case, I believe—from a number of submitters to the select committee who have had decades of experience in this field. I will go into that a little bit later in my contribution.

I think that this is an example, though—because of the Government’s inability to listen to some of those concerns—where the Government has looked a little bit out of touch with what the industry, certainly, and those experts in this field have been calling for. We supported this piece of legislation at its first reading because we wanted it to go to a select committee to have those concerns heard, and we expressed concerns about the independence of the standards-setting body then.

We thought and hoped that after concerns were raised by us and by submitters, and being able to get some more scrutiny from officials through the select committee process, the Government might see that it was worth listening to some of those concerns. But unfortunately, in this case, the Government ploughed on, and the concerns of the Opposition and the stakeholders were not listened to. We believe that although the select committee did change this piece of legislation—for some it is better—it still has some fundamental issues that we do not believe have been addressed.

We do not believe, as I have said earlier, that the issues around the financial viability of the process have been addressed, and certainly we do not believe that the Government has made a positive move by putting the standards body, which used to be independent and stand-alone, within the Ministry of Business, Innovation and Employment. So we do continue to have concerns about that.

A lot of concern was raised about the independence issue, around our international reputation. I believe Minister Goldsmith raised that towards the end of his speech and said he was confident that New Zealand’s international reputation—a very good reputation; an excellent one, as we have heard through the select committee process—would stay intact. Unfortunately, that is not what many of the submitters who have been in this sector for decades said.

I do want to take the House to some verbatim quotes from the select committee submitters. One, from a member of the joint New Zealand - Australia committee on standards since 1995—a couple of decades of experience that should not be scoffed at—by the name of Diane Baguley, said that she opposed the disestablishment. If I can read this from the submission, she said she opposed “the disestablishment of the Standards Council and Standards New Zealand.” She “did not consider that the provisions set out for the establishment of the standards function within MBIE can adequately control the risks associated with the new structure, whether to the management of standards development or the reputation of New Zealand in the international standards community.”, so she was speaking directly to that international reputation. She went on to say: “The model proposed in the Bill, if realised,”—and this is what this third reading will do—“might even be used as an example by countries without robust government systems, with undesirable results.” She went on to say, with the example being that New Zealand is a well-respected country in the international standards community, that the argument from less-reputable nations was that “If New Zealand does it this way, then we should do it this way too.”

Also, another experienced person in the sector, by the name of Patricia Cunniffe—I think, if I remember—from memory, she made her submission on New Year’s Day. So she is someone who could have been out there having a summer holiday, but felt so passionately about this issue that she decided on New Year’s Day to send a submission on the Standards and Accreditation Bill to the Commerce Committee, which I think is an absolute commitment to the cause. She went on to say, also as a submitter to the Commerce Committee, “I remain unconvinced that placing New Zealand’s national standards body within MBIE will indeed ensure that the Standards system is viable and well-functioning”.

A matter of 5 minutes ago our Minister of Commerce and Consumer Affairs, Paul Goldsmith, said that he was relatively confident of those two things, yet we have got people who are dealing with this on a day-to-day basis—one of whom I mentioned made a submission on New Year’s Day—completely and utterly disagreeing with the Minister. That submission was made during the select committee process. Those kinds of sentiments, I think to the detriment of this piece of legislation, have not been listened to. I think she went on to say that the bill as it stands now is predicated on consumers being the recipients of standardisation, and not participants. She wanted to make sure that consumers were at the centre of that process.

There are other issues that we have with this piece of legislation that we have continued to voice during the select committee process, the second reading, and also at the Committee stage, some of them being concerns that were raised by the Council of Trade Unions—some of our brethren who are with us tonight, up in our caucus room. Those concerns were talking about not only the long-term financial sustainability of this piece of legislation and whether or not the standards process will be able to be continued as we know it but also were making sure that—they made a submission to try to make sure that there were protections within this piece of legislation for workers, which is one of the fundamental things that we do. It is one of the fundamental things that the Council of Trade Unions does and that this side of the House does. But, obviously, that was not heeded to in this piece of legislation, which goes to another piece of legislation that was passed earlier this year in this House around the protection of workers in the workplace—not just in the workplace, but also consumers and the general public.

I think that it is another sad and sorry state of affairs, where we can have this piece of legislation come through this House and concerns again raised by people representing workers and the Labour Party, and again ignored in this piece of legislation, through the many stages when it could have been taken on board by the Government. That was a concern, again, of our brothers and sisters at the Council of Trade Unions.

The bell has rung, so I believe I have got limited time left, but this was and is a missed opportunity for us to continue to keep our longstanding and excellent international reputation within the standards and accreditation community. But, again, it was overlooked and ignored by this Government. I think it is the very early stages of third-term arrogance where, despite the people who know better or who have more experience in this field on a day-to-day basis, the Government says: “No, thank you very much. We know what’s best. We are going to ignore what you, the practitioners, believe is best, and we are going to do what we think is best.” It does not solve the issue of financial viability around the standards process; in fact, it might make things worse. It also creates another, bigger problem around the independence of our standards-setting process, which Patricia Cunniffe and Diane Baguley I think spoke about more eloquently than any of us could.

It does matter that our international reputation stays intact, and therefore, for those involved, it does matter that our standards process is independent of any Government influence. Although the Minister can sit or stand and speak on that side of the House and talk to the confidence that he has in independence and our international reputation, well, I am sorry, Minister, but those at the coalface disagree. I think this Government and that Minister ignores them at their peril.

It is a great pleasure to rise to speak on the third reading of the Standards and Accreditation Bill. I commend the Minister for the hard work that he has actually given on this bill.

I would like to begin by thanking everyone who has actually been involved with the select committee process. As the chair of the very vibrant Commerce Committee I say we have a very good committee process, and I would like to thank the Opposition members, as well as our Government members, and the clerks and the secretariat who have actually given a lot of hard work in getting this bill to its third reading.

When this bill was brought before the Commerce Committee I think we had around 130 submissions, and we heard about 21 of them. We have as a committee recommended a more flexible and proportionate approach to managing actual and perceived conflicts of interest for members of standards development committees, which was actually raised as a big concern at the committee when we were debating this bill. In addition, we have also made it clear that New Zealand will continue to be involved in the development of international standards. As I said earlier, the Commerce Committee undertook the role well, and I commend my colleagues for their contribution and time and effort to bring this bill back to the House.

I would also like to make it very clear that standards are very, very important to New Zealand’s economy and safety as a growing OECD economy. Standards are put in place to ensure that our homes, public buildings, playgrounds, electrical appliances—I even talked about light bulbs in previous speeches about this, I think—and health services are in fact safe for all New Zealanders.

Standards can be used, obviously, to protect people in our environment but they also have the capacity to increase productivity and drive innovation. In addition, they are generally voluntary. Firms can choose to use them, and support a standard, support competitiveness, productivity, and trade. Especially with the advent of the New Zealand - Korea free-trade agreement that was signed earlier in the year, in March, and with the Trans-Pacific Partnership agreement, we are actually dealing with numerous countries that we are working together with as trade partners, and I think standards actually become prominent and more important as a result. If, for example, when we are talking about standards, an electrical product is marked as meeting a standard, it means it has satisfied the minimum safety requirements—that is what we are talking about. Therefore, it is easy to see why standards are in fact crucial for our safety.

There is a huge impact on our economy as well. Standards actually underpin billions of dollars’ worth of exports, as I was alluding to prior, when talking about the Trans-Pacific Partnership agreement and the free-trade agreements with other nations. When we are talking about exports, New Zealand firms are dealing in a competitive environment with international partners, and standards actually become crucial. Standards provide access to markets and give quality assurance for the products and technologies that New Zealanders use on a daily basis. Standards improve the effectiveness, safety, and reliability of many goods and services used by consumers and businesses. It is clear that standards and accreditation make an important contribution to a more productive and competitive economy.

The new bill is designed to ensure that New Zealand’s standards, conformance, and accreditation system functions well and meets the needs of businesses, regulators, and consumers. The Standards and Accreditation Bill is part of the Business Growth Agenda and is aimed at strengthening the development and delivery of New Zealand standards, just as fresh legislation is being looked at to tackle obsolete laws, loopy rules, and out-of-date Acts of Parliament that are no longer needed in our modern and innovative society.

The new Standards and Accreditation Bill follows a comprehensive review to ensure our standards systems remain independent and sustainable. We sought stakeholder views on the effectiveness of current arrangements for standards, on options for changes to organisational arrangements, and on how standards could be developed and approved. With this new bill we will implement those voices that were actually heard as a result of the stakeholder consultation.

In short, the new bill will better align standards development with important Government priorities that are vital for our economy, such as innovation and trade facilitation. The focus of the Standards and Accreditation Bill is on preserving and strengthening what works with our current arrangements, and improving and reforming what is lacking from that. We are aiming to improve standards development that has been slow to reform standards that are out of date, as well. We are aiming here, in this House, to give real outcomes to business and industry. It is vital that New Zealand continues to be involved in the development of international standards and maintains its linkages with the international standards community, including the International Organization for Standardization and the International Electrotechnical Commission.

Through the Standards and Accreditation Bill we aim to provide an assurance that products and services are, in fact, fit for purpose—that standards play a crucial role in contributing to trade, innovation, health, and safety. As chair of the Commerce Committee, and as a National MP, I say that it is part of the amazing work that the Ministers in the House have put together, and I am very satisfied with the outcome. I commend this bill to the House.

Well, from this side of the House you will hear a completely different perspective on this bill. Labour tried very, very hard during the progress of this bill, through the select committee process, listening to submitters—we tried very hard to support this bill because, on the face of it, it did not seem hugely controversial. It seemed as if there was a problem that had been defined.

There were some differences around the process that had been undertaken. The previous Labour Government had undertaken a process that had come up with a way of dealing with the problem. When the National Government got elected, it ditched that process and undertook its own. But we were open, our ears were open, and our eyes were open when this bill went through its first reading, which we supported, and it felt like it was not going to be hugely controversial.

How disappointed we are—how disappointed we are with the outcome. And listening to the member Melissa Lee just speaking on this bill as if somehow it was all terribly straightforward, and we are entering some bright new world, is a completely different perspective on what we have ended up with. What we have ended up with is a downgraded standards system in this country. I think that is really disappointing for a nation that is trying to pitch itself to the world as a modern trading nation that has high standards and that takes its role seriously in the world as a small, innovative country.

Unfortunately, the standards system that we have ended up with is open to concerns about conflicts of interest, regulated capture, and a lack of independence. The bill does not address the problem that it was set up to attempt to address, which was to establish a financially sustainable model, going into the future, for the development of independent standards that are fit for a nation of our calibre. Unfortunately, it does not reach that calibre. Instead, it actually opens up questions of New Zealand’s international reputation.

It is our belief that the approach that the Government has taken to this has been an approach that is based on the wrong premise, which was a premise of cost saving—how do we save some money? Therefore, we will absorb the standards function, the standards body, into a great big, monolithic department called the Ministry of Business, Innovation and Employment and we will make a few token gestures towards providing some statutory independence around that.

This is not just the Labour Party making it up, because we had numerous submitters. As I said, we went into this process with our eyes open. We did not have preconceived ideas about it. We sat at the select committee and looked at each other and said “Hang on a minute. There’s a problem here.”, and the problem became bigger. Unfortunately, the Government never addressed the problem—never substantially addressed it. It threw, as I said, a few token measures around it. So I think the people listening at home tonight should be a bit worried about this.

When listening to the Minister’s third reading speech, one of the telling phrases was “establishing an independent officer within the department”—within the department. An officer within the department is somehow going to provide independence for the standards function. The other critical phrase that was used by the Minister was that this was around “achieving efficiencies and scalability”. Well, that is ultimately the guts of this bill, and what it is intended to do is achieve efficiencies.

The Minister also referenced the alignment of standards—and I am paraphrasing here—with the determination of Government priorities. This is the crux of the problem with the bill: aligning standards with Government priorities takes away its intrinsic independence and the importance of that independent function. Unfortunately, this will not build our reputation. We believe that it will undermine it, and I would like to actually draw a little bit of a contrast between the New Zealand approach in this bill and Standards Australia, which is the organisation in Australia. It is “the nation’s peak non-government”—non-government—“Standards organisation. It is charged by the Commonwealth Government to meet Australia’s need for contemporary, internationally aligned Standards and related services.” That is about enhancing “the nation’s economic efficiency, international competitiveness and [contributing] to community demand for a safe and sustainable environment.”

Within this bill we have the establishment of a New Zealand Standards Approval Board, which consists of five to seven members appointed by the Minister, and we have a Standards Executive, which is where “The chief executive must appoint a suitable employee of the Ministry to be the NZ Standards Executive.” If that is not a downgrading of the functions of the independent standards body—and that is not discounting that there was a problem that needed to be solved around the financial sustainability—then I do not know what is.

We had submitters of high calibre who came before the Commerce Committee and spoke with eloquence and power to their deep concerns about the lack of independence, about the possibility of regulatory capture, and about the downgrading of the international reputation. Those are the things that moved the Labour members sitting on the committee to dig deeper, to ask more questions of the officials, and to not feel as if those issues were truly addressed in the final bill that came before the House.

Instead, what came back to the select committee and the changes that were made through the select committee process were in the nature of tinkering around the edges. It got to the point where we could not support the way forward because we feel that the lack of independence and the lack of representation, as my colleague Kris Faafoi said, of stakeholders—particularly stakeholders representing workers—on the overall committee was not dealt with and not listened to. The important concerns of submitters who talked about the lack of independence, the conflicts of interest, and the impact on our international reputation were of a magnitude to make us feel that this issue has not been properly dealt with, that it will have to be dealt with in the future, and that it will have to be relooked at in the future. That is a great shame, because there has been a lot of time and energy wasted in this process. Labour cannot support this bill.

I rise in support of the Standards and Accreditation Bill in this, its third reading. This bill is aimed at supporting our Business Growth Agenda to raise the prospects of Kiwis and their families. It provides structures, processes, and supports to help our businesses grow and compete both at home and abroad. Standards will improve the effectiveness, safety, and reliability of many goods and services used by consumers and businesses every day and throughout the economy. The proposed changes are aimed at ensuring that our standards system is well functioning and, importantly, meets the needs of businesses, regulators, and consumers. A well-managed standards system builds innovation by facilitating the creation and diffusion of technology by codifying technical excellence. What this bill will do is create a statutorily independent Standards Approval Board and, similarly, a statutorily independent Standards Executive, one that, among other things, will be responsible for appointing independent standards development committees.

It is somewhat unfortunate hearing again tonight the Opposition try to claim that this bill somehow weakens the independence of standards in New Zealand when it does exactly the opposite. If members had actually read or comprehended the bill, they would understand that in clauses 8 and 12 the bill is very clear that both the Standards Executive and the Standards Approval Board must act independently.

💬 Simon O’Connor: Which clauses?

Clauses 8 and 12. Somewhat more regrettably, at the Committee stage a member of the Labour Opposition, Stuart Nash, seized upon one subclause that he said he believed showed that actually the Standards Executive would be at the behest of the Ministry of Business, Innovation and Employment’s chief executive officer. Never mind the fact that that subclause related only to elements that were not about the core functions of the executive’s role, such as ensuring that we meet our international obligations, that development committees are properly put together, and that they actually discharge the work of the standards appropriately and relate it to consequential impacts or conditions from other enactments. Never mind that—he simply meant that because it was there in some form, that would weaken independence. As I say, it was a shame those members either did not read or comprehend the bill.

But then, of course, there is also the real world that they have also missed out on. So again tonight we heard Ms Curran talking about how the Standards Executive being resident in the Ministry of Business, Innovation and Employment would somehow weaken its independence. Well, neither she nor any of the submitters raised the Registrar of Companies, the Commissioner of Patents, or the Official Assignee—each of which is a statutorily independent officer resident actually within Ministry of Business, Innovation and Employment. In the real world these officers are able to discharge their duties and act independently. It was Daniel Patrick Moynihan who pointed out that although people are entitled to their own opinions, they are not entitled to their own facts. Labour members clearly seem to think differently.

The reality is that this bill is a great measure to help support our businesses grow and compete in New Zealand and abroad. I commend it to the House.

💬 James Shaw: Mr Assistant Speaker.

Does the member want a call?

💬 James Shaw: Yes, please, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): I call James Shaw, if you want the call.

I do, Mr Assistant Speaker. I was not actually anticipating rising so early. I mean, my friend over there Brett Hudson was in such full flight—such poetry about this most poetic of subjects—that I was actually anticipating his going on for quite some time and I was not really prepared to rise to join with the other Opposition parties to oppose the bill.

We also supported the bill’s referral to the Commerce Committee, and that was because we acknowledge that the current system is not fit for purpose. The Standards Act dates back to 1988 and the Testing Laboratory Registration Act to 1972. We completely recognise that funding is a real problem and that the current system is not able to deal with the volume of demand for new standards and revisions of standards, or, as Melissa Lee said, to deal with the growing integration with our international trading partners and the need for international standards as well.

Debate interrupted.

The House adjourned at 10 p.m.