Brokering (Weapons and Related Items) Controls Bill

I’m very happy, again, to speak on Part 2 of this particular piece of legislation. This area in the bill is all about the brokering activity, the registration process, and, obviously, the permits that are required if you are a person that has decided that you would like to broker in weapons. It is something that you don’t talk very often about, but these are things that need regulation, and I’m sure that the good New Zealand public would like to know that we, as parliamentarians looking after their best interests, have actually got their back on this front.

So, putting in some regulations: let’s talk, first of all, about the registration process. One thing that I would like to just get some clarification on is about who exactly needs to register and how would they know that. I heard a little bit last night about the Ministry of Foreign Affairs and Trade (MFAT) and how they would do some work in that space to be able to guide those people that are looking to participate in this area. I’m just seeking a bit more clarification about what exactly that entails.

The second part that I’d like a bit of clarification on is about how the Ministry of Foreign Affairs and Trade intends to assess the applications. This is an area that conversations have been had in select committee, I understand. The process would be, as I understand it, that MFAT would look at the applicant and decide whether or not that person was fit and proper to be registered as a broker and in accordance with the bill’s criteria. There are a few things, I understand, which would make them a very undesirable—[Bell rung]—unfit, and improper—Mr Chair? Sorry, can I carry on?

CHAIRPERSON (Adrian Rurawhe): Tamati Coffey.

Thank you. Sorry, I was looking at that time—the things that would make them less desirable to actually be a person that brokers in weapons on behalf of New Zealand: that being, as I understand it, the breaking of any kind of United Nations Security Council resolutions, including arms embargoes, and also contravening some of our international obligations.

I would like some clarification from the Minister, from the Table up the top, about whether or not something like that has already happened. Have there already been contraventions in this space that mean that we’re having to stand here and have these conversations?

I did ask some questions last night about some of the international export control regimes. I wanted to know a little bit about how we’re going to comply and how we participate in them. At the time, I didn’t know; since then I’ve done a wee bit of homework. So if I could just get some confirmation from the Table about the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. That’s just one of the four that we participate with, on an international stage. The other ones—the Nuclear Suppliers Group, the Australia Group, and the Missile Technology Control Regime—they all sound very big and very heavy groups to be a part of. But I’d just like to know a little bit more about that.

Taking a little bit of a step back from the detail in here, I’m also just wondering—because this part is actually about brokering activity, I just wanted to know, for the sake of the people that are listening out there, how much of an issue brokering really is in New Zealand. I understand that there are 10 entities registered with MFAT under the voluntary registration scheme, but there are fewer than 11 that are actually fully engaged in the actual brokering of weapons in New Zealand. So any kind of enlightenment on that front would be welcome.

Just to further supplement the point that I made earlier about New Zealand meeting its obligations under the Arms Trade Treaty—I’m just wondering how we’re sitting on that and if the reason that we’re standing here having this conversation is because there has been a contravention in that space. It would also be really good to understand. I was just talking about how brokers—those few people that are actually looking to engage in that space—how exactly they will be engaged by the Ministry of Foreign Affairs and Trade. I understand there is that website—just a little bit of information about that for prospective brokers would actually be really good.

This is a very good piece of legislation. As I say, it’s a bill that’s going to help New Zealanders to sleep well at night, especially in this political turmoil of a state that we find ourselves in around the world at the moment.

There is the part that I would like to talk about—

💬 Hon Member: Hang in there.

—that being Subpart 3—yes, that’s right; the member opposite also wanted to know about Subpart 3. So for that reason, let’s talk about the criteria around permits—the application for permits—and what, exactly, determines the refusal for giving a permit. I also want to know how long the duration of a permit would go for. I was unsure, as I was reading the document—it might be in there—but just a little bit of clarification around that.

Now, I understand the Secretary of Foreign Affairs and Trade is the person that will receive the applications, and I just wanted some clarification around that, and also around the potential cancellation of a permit. What is it that actually enables the secretary to cancel a permit once an application has been made?

All of this—these points may or may not have been addressed in the select committee process, but I just wanted to take the opportunity, while we’re here in the committee of the whole House stage, just to get some clarification around those points. You can see that a lot of work has been done on this, and I would absolutely commend this to the House.

Thank you very much, Mr Chair. Can I acknowledge the Minister in the chair, Ron Mark, and, in particular, the officials who are doing all the hard work, yet again, in the background. This is the first call I am making on Part 2, and, as the previous speakers indicated, its primary purpose is around brokering activity, the registration of activity, and the permits associated with it. Those on the committee and those who are reading through the bill will understand this is, sort of, the real meat of the bill, and, in that light, there are a few elements that I want to go through.

There are four subparts, and all of those are quite critical in and of themselves. I actually want to start with Subpart 2—

💬 Dr Deborah Russell: Oh, start with 1—go on.

—if I might. I might jump back to Subpart 1 within Part 2, but Subpart 2 is to do with the registration of brokers, and in clause 14 it’s very clear that that application’s done to the secretary. We can completely understand the reasons the Minister has, effectively, delegated that power to the Secretary of Foreign Affairs and Trade to take care of it.

Where some of the questions arise—and there are quite a number for me in this section. The first is around clause 15(1), where “the Secretary is [to be] satisfied that the person is … fit and proper”. Look, I’m no lawyer, as I always keep saying in this House, but it would be useful to understand if there is, I suppose, a legal or common law precedent around this. Intuitively, I and the House would understand what is “fit and proper”, but does that have a legal aspect to it? Some surety around that would be fantastic.

I notice in clause 15(2) that the secretary is directed to make certain considerations in terms of whether a person is fit and proper. That partly begins to answer my question. However, as I read through clause 15(2), I don’t think that’s a complete set of definitions to make sure someone is fit and proper. In other words, if someone was to pass through all the criteria of registration in 15(2) onwards, does that therefore ipso facto make them fit and proper, or are there wider considerations? If I could, again, perhaps phrase it in a slightly different way, is there discretion available to the secretary to intervene?

Perhaps on top of that—and I don’t think it is later in the bill—is there any mechanism, ultimately, for the responsible Minister to step in and to, effectively, override? If that’s the case, what is the mechanism there? I can imagine situations where the secretary, in complete good faith and with excellent judgment, allows someone to have a registration as a broker, but it may become known, perhaps because of the Minister’s level of knowledge and information, that it’s not proper—can they overturn that?

In clause 15(2)(a), as it begins to define what is “fit and proper”, one of the first elements to be taken into account is whether this person applying has had a conviction for an offence punishable by imprisonment for 12 months or longer. Having chaired the committee, we did look at all of this, but a question in my mind is: is 12 months sufficient, or is it a little too low? Again, I suspect there’s legal precedent of what certain crimes and activities are within a 12-month imprisonment or not. But, I suppose, if you wanted to play a really straight bat and play this very strongly, we are talking about people here who are involved in a business selling weapons, be they dual or single use. They are involved in a fairly dangerous—some, at times, might find it even unsavoury—form of work. Is having any conviction acceptable? Is any conviction acceptable at all? Should they really come in with an absolute clean slate? Are we being a little bit too soft on this?

But, I suppose, the corollary to it, to the Minister in the chair, is: are we being a little bit too tight here? I suppose the flip side is that a lot of people have committed little crimes in the past, particularly when they were younger. Should this now stop them continuing their legitimate business?

The next part—and I’m afraid I never quite know how to properly describe it, but it’s clause 15, part (2), section (a), subpart (i)—I’m looking forward to some of the lawyers getting up afterwards and giving me a bit of counsel on this.

💬 Hon Member: Careful what you wish for.

It’s a bit of a—yes, I better be careful. That’s all right; I’ve had three lawyers on the committee with me. It’s talking about “the conviction was in a New Zealand court”, and this is a concern—[Interruption] It states that “the conviction was in a New Zealand court”—makes perfect sense. I can think of instances, though—because we, obviously, are a country of migrants; what happens if that person has been convicted in a court outside of New Zealand? It will be a relief, I’m sure, to Dr Russell that I’m not going to go through all 168 known countries to work—

💬 Hon Tim Macindoe: Oh, go on—go on.

That would be wasting—

💬 Hon Tim Macindoe: She was hoping you would.

I’m sure she was. But it is actually a serious question: if it is known to the Secretary of Foreign Affairs and Trade that someone has a conviction over 12 months, according to this proposed legislation—if the conviction was in a court other than in New Zealand, are we allowed to act on that? So, really, at this current time, a New Zealander who’s had an offence over 12 months may well not get a registration as a broker, but we can probably think of examples—and I won’t name names—of people who have convictions from overseas, be it in fraud, dishonest behaviour, or other tautologies. Can that be taken into account?

I know this is getting quite forensic, Minister, and there’s quite a bit more to go, but, in effect, should we have here a further line that convictions from jurisdictions other than the Realm of New Zealand should be taken into account? I assume, by talking about New Zealand courts and speaking of the Realm, that those from Tokelau, Cook Islands, and stuff are already included, but should we have people from overseas?

I think it’s absolutely prudent that having that point about the offence committed before the commencement of the Act—I think that’s very prudent. The other elements in 15(2)(c) and (b), again, make perfect sense—whether they’ve been registered before. I do have a small question, though, around why we still have 15(2)(d), which is around the financial position of the person. You’d have to ask the question: why is that particularly relevant to the brokering of weapons? I suppose, if it is a business, you want to know that they can do a business well and that the secretary doesn’t want to be giving permits to business people who are going to fall over or have a proven ability to fall over again. So I suppose it’s a question of asking: why is that particularly relevant?

The last two points that I would like to raise around the criteria for registration—and, again, always asking: are those criteria for registration the only reasons a person can be deemed fit and proper—is that I don’t see anything here to do with a police check. Will we be doing police checks? Is that, again, just sort of already a given? Does it not need to be in the legislation? I know, in this House, I think, pretty much both sides have always moved to put police checks on just about everything these days. We’re almost at the paradox of needing to get a police check to get a police check. So why is that not part of Subpart 2 of Part 2, the “Registration of brokers”?

Finally, I would want to know, around this particular clause, whether other permits the person may hold become relevant. In my contribution yesterday, I was at pains to stress to the House that there is quite a difference between the brokering activity and then the manufacturing and selling of military grade or military quality supplies. Why that remains vitally important is, if someone is manufacturing and selling weapons—to use a rather colloquial term, but if they’re selling weapons we have separate legislation for that which makes perfect sense compared to this brokering one. I think it would be good for us to know, when we’re dealing with the registration of brokers over here, will the secretary be moving to check what other permits have been issued; will they come into effect?

I suppose the wider question, when I actually think about it here, is: does the secretary of the ministry look at all its information on that person. So if I’m someone who’s had multiple interactions with the ministry over time—be it as a diplomat, be it as a civil servant, be it as someone who has been manufacturing weapons; whatever it is—are those factors coming in?

So, look, I’ll round off this contribution on this very small part of Subpart 2 of Part 2 and I’ll return to some others. But it’s really just coming back to that core notion of what is deemed to be a “fit and proper person”. Why is it that it’s only convictions in New Zealand and not overseas? Why is it that the imprisonment is sitting at 12 months—and I put forward, I suppose, the two reasons why it could be less and why it could be more. The question around the financial position: why—particularly relevant, then, of course—the elements that are the police check and so forth.

Thank you, Mr Chair. I do just want to clarify one minor point that my colleague across the House raised. I am not a lawyer either, so I approach this as someone who is not a lawyer and is not reading it as a lawyer but rather looking at some of the power relationships in this. There’s a particular issue that I want to raise that I did raise in respect of Part 1, and it was satisfactorily answered there to my knowledge last night, but I want to raise it again here. That is to do with the secretary and the powers that the Secretary of Foreign Affairs and Trade has in respect of this bill.

Last night, when we were debating Part 1, I raised an issue in respect of—they’re called—equivalent overseas regimes: why was the secretary judging them, not the Minister. I got a very good answer: it’s to do with the technical nature of an equivalent overseas regime and how that’s assessed. So when I came to Part 2 of the bill and I found that again the secretary is involved in making various decisions and in signing off on them, I actually thought that the same issue raised its head—the same worry as to why it was the secretary who was vested with this power.

It seems to me that when we’re looking at someone who is going to be registered as a broker, this is not so much a technical matter of assessing an equivalent regime or assessing the nature of particular goods; we’re actually looking at the character of a person. Now, that’s a different sort of thought, and, ordinarily, I would have thought that if we were making assessments of someone’s character, we might expect that responsibility to rest with the Minister. The reason for having it rest with the Minister is because the Minister, of course, is subject to review every three years through the power of our triennual elections and the Minister, of course, is much more subject to public scrutiny in her or his actions than the Secretary of Foreign Affairs and Trade, who acts as one removed, as it were, from the Minister.

Now, I would expect that the Minister, when she or he is making those decisions, would be making them based on the advice of the secretary, but nevertheless the responsibility would rest with the Minister. But in the Act we’ve got that the person who registers someone as a broker is, in fact, the secretary. I’m sure there is a good reason for that. I’m sure there’s a particular reason why it rests with the secretary, but I would very much like to understand exactly what that reason is, and I am sure that it is something that other people would like to understand as well.

So that’s all in clause 15, but if we go on to clause 16 there’s another power that the secretary has. As the corollary of registering a broker, she or he can also refuse to register someone as a broker. Now, they’ve got to give written notice of that refusal, but I would like to know if that written notice is going to include the reasons for the refusal. It just strikes me that as a matter of natural justice it, in fact, would be good to have those reasons as well—that someone might like to understand why they were not able to carry on in their chosen trade. So it would be good to have those reasons set out for them.

Again, carrying on with the secretary, who does have all these powers—I just notice in clause 18A that brokers must provide an annual report. Now, that’s well and good. I think that’s great, to have that kind of scrutiny. But the annual report must be provided in the prescribed form and manner and contain these prescribed particulars. I did have a hunt through the bill to see what that prescribed form and manner and prescribed particulars might be, but they’re not actually specified in the bill, as far as I can tell. So I’d like to know what the secretary thinks a broker might be required to report on—now, obviously, there’ll be a particular form, but just the sorts of things that a broker might need to report to the secretary, in this case, so that the secretary understands what the broker has been doing—and in exactly what sorts of details. Again, we are supervising someone’s business—someone’s livelihood—and I think we should be entitled to know a little bit about exactly what details that person must provide to the secretary.

As I said, I feel as though the secretary does have a lot of powers under this Act. I’m sure it’s entirely appropriate. I would like to know why they rest with the secretary in some cases rather than with the Minister, and I’d like to know a little more detail around some of those powers that the secretary has.

Kia ora, Mr Chair, and tēnā tātou katoa e Te Whare. This Part 2 of the Brokering (Weapons and Related Items) Controls Bill is clearly a very detailed, specific, and substantial part of the bill, and so I think it’s absolutely right that members on both sides of the House are showing the inclination to adopt what my very good friend and colleague the member for Tāmaki, Simon O’Connor, described as a forensic approach to it.

I would like to pay a compliment to the Hon Tracey Martin, who was in the chair last night when we were considering Part 1 of this bill. I was impressed, given that she’s not the Minister in charge of the bill, that when we put a number of questions to her, she did her level best to answer those, and I thank the officials who clearly assisted her to provide those answers. And I very much hope that the Minister who is in the chair tonight, Ron Mark—and I acknowledge the fact that it’s not his bill either, but nevertheless, given his current role as Minister of Defence, I’m sure he has a very strong interest in it—will be prepared to take note of the questions that have already been indicated from both sides of the House, and I’m about to put a few as well, and ensure that we do receive some answers to them, because New Zealanders will, even if they’re not aware of it at this stage, have a very strong interest in ensuring that we get this bill right.

I have to say I am a little bit struck by the irony of the fact that the Minister in the chair, as has been noted—and I won’t go over it in great detail—just nine months ago, when he was not a member of the Government, was saying that this is a bill that isn’t necessary. Tonight he finds himself, perhaps ironically, in the chair having to promote it. It’s good to see him smiling. I hope that therefore this shows that he has had a genuine road to Damascus moment and that he will be sharing with us—

💬 Rt Hon David Carter: He’s been told to—he’s been told.

I wouldn’t dream of coming to that conclusion, Mr Carter. You may think that; I couldn’t possibly comment. But I hope that he has, nevertheless, as Minister of Defence, genuinely come to see that this is not only something of significance for New Zealanders but for all of our international partners.

💬 Chris Bishop: He’s had a “road to Carterton” experience.

Ha, ha! A “road to Carterton” experience, Mr Bishop, indeed. But I didn’t believe he used the roads; I thought he used alternative modes of transport!

But it’s important—this is a serious matter. So could I please concentrate, at least initially, in this call, on Subpart 1. Now, as I’ve mentioned, this is an international treaty, and clause 9, “Registration and permit required for brokering activity”, in subclause (1) lays out this provision: “A person must not carry out a brokering activity unless the person—(a) is registered as a broker; and (b) has a permit for the activity.” So what I want to ask first up—because I do think it’s an important question—is whether this requirement is mirrored in the legislation that may already be in train or that has been contemplated in comparable jurisdictions. Because, if it’s not, I question just how effective it could possibly be, and we do need, in New Zealand, to have an assurance that it will be.

Can we in New Zealand be confident that the regulatory framework in countries with a greater history of insecurity, terrorism, and so on will be able to guarantee the safeguards that this subpart seeks to guarantee to us here in New Zealand? I think we have to have an answer to that question. What are we doing to monitor this? Or what will we do, given that we’re probably looking at something that is still ahead of us? Will there be an international agency to oversee this requirement to achieve consistency and the highest safeguards? Because, without them, this bill probably falls into a description of being something of good intentions but not likely to achieve its purpose.

In clause 9A, “Exceptions to requirements for registration and permit”, we’re told that “Section 9 does not apply to a person—(a) who carries out a brokering activity in relation to a weapon or related item that is dual-use goods; and (b) who, before the person carries out the brokering activity, has taken reasonable steps to ensure that the dual-use goods will not be used for a prohibited use.” Well, those who are interested in legislative interpretation will probably be looking at that very closely, wanting to have a clearer understanding than I confess I have at the moment. These questions are particularly important when read in conjunction with clause 9A because we need to know what is the meaning of “dual-use goods”. Why is it considered to justify an exception to such an important requirement? Because it is an important requirement. Clause 9 does not apply to a person.

Thank you, Mr Assistant Chair. Firstly, I want to start this, being my first call in the committee stage—just to acknowledge and congratulate all of the honourable members who sat on the Foreign Affairs, Defence and Trade Committee, who heard the submissions on this bill and, clearly, no doubt, put many of the questions that they are discussing here this evening to those submitters and to the officials at the time. I just want to acknowledge them for the work that they did.

I just also want to acknowledge that I am told that all of the recommendations that that committee put forward to the Government were accepted, so, given that scrutiny by the select committee and their very thorough questioning, I will take these questions as being meaningful and purposeful. I’ll attempt to answer them, given that, clearly, these questions weren’t discussed at select committee, but we’ll have a conversation about that some other time.

There’re a couple that stand out. There’ve been a lot of questions in the last few speeches, and I’ll try to address a few of them. The first one I want to address is around the question of “fit and proper”. I have no doubt that the very learned members of the select committee—as very experienced as many of them are, including the Hon Gerry Brownlee, who’s been a Minister of Defence and a Minister of Foreign Affairs—would be very familiar with the term “fit and proper” as pertains to licensed firearms owners, which is a well-accepted definition that is used in the Arms Act and which is used by the police to calculate, determine, and ascertain as to whether a specific individual who’s applying for a firearms licence should be entitled and trusted to have such a licence and buy and sell and use firearms. So the advice that I have—“fit and proper” is a common term used throughout New Zealand, as I’ve already explained. It’s currently described in existing legislation. It’s appropriately flexible for the secretary to make a judgment on a particular case. I want to acknowledge my Labour speaker Dr Deborah Russell off to my right who, I think, hit the nail squarely on the head. It is a test of character, as far as I can determine from the bill. It’s a test upon which the secretary will make a judgment of that particular individual in that particular case.

It’s not possible to set an exhaustive criteria to account for every possible variation, but what it does give—and the members of the committee, I know, from their experience are very aware—the assessing authority is the ability to look further into the nature and the character of that individual. It certainly does; there’re a number of benchmarks and tests, the 12-month threshold being one such threshold which is set, and that’s a very clear threshold. That is set to exclude minor regulatory crimes that do not reflect on their fitness or properness to be a registered broker. So, I think, in the terminology and the description within the clause, it gives scope for the secretary to seek information as the secretary sees fit.

It probably explains why this has been done by the secretary, as opposed to the Minister. Those members of the committee who have been Ministers know that this is an operational matter. This is an assessment that is done lower down the tier, and the last thing the Minister wants to be involved in is analysing each and every application that is tabled. As the committee knows, they were right not to seek any amendment to that clause. They were right not to propose any changes in their report back on the bill. So I think, all in all, the House has clearly indicated to the Government that it’s comfortable with those clauses.

Overseas convictions has been another question that’s been raised in the House. The bill provides that the secretary may, when considering whether a person is a fit and proper, take into account any conviction, whether or not the conviction was in New Zealand. That’s covered under clause 15(2)(a)(i). I have no doubt that that was probably canvassed by the committee at some stage, but the committee of the whole House is clearly asking for some clarification, and I give it that clarification. This will be ascertained by police checks. Twelve months is a pretty standard definition of a serious crime, and I think some might argue that it’s a very low threshold, but I’d ask you to consider the nature of the bill and the importance and the significance and the consequences of a permit being given inappropriately.

Applications for a permit will be assessed against the export controls criteria. That is currently published on the Ministry of Foreign Affairs and Trade (MFAT) website. For the questioner around that, can I just suggest they have a look at the MFAT website.

Yes, the secretary will take into account all relevant information indicating whether the broker has been a New Zealand exporter of controlled goods. There are other questions around why the secretary and not the Minister—I think I’ve covered that off already.

What will be included in the annual report? The broker will have provided significant detail in their application. The annual report will not require the broker to duplicate that information, rather it will seek to confirm what activity has taken place under the permit.

Further advice. Do other countries have brokering laws? Another question. The bill is modelled on similar laws in Australia. Other countries including the United Kingdom, the United States, and the European Union all have brokering laws. This bill also draws on best practising guidelines in brokering.

There were a number of other questions. In the time I have available, let’s deal with another one. How would MFAT assess the applications? MFAT firstly needs to assess whether an applicant is a fit and proper person. We’ve discussed that. To be a registered broker, in accordance with the bill’s criteria—in assessing the individual brokering permit applications, MFAT intends to apply the criteria currently used to assess applications to export strategic goods. That’s already been covered off. This means MFAT would refuse an application for a permit to broker goods if the brokering transaction would breach New Zealand’s obligations under the United Nations Security Council resolutions, including arms embargoes; the brokering transaction would contravene New Zealand’s other international obligations; or MFAT has knowledge at the time of considering the application that the goods are to be used in the commission of genocide, crimes against humanity, or war crimes—sounds all sensible stuff to us. And if a permit is not declined on these grounds, a risk assessment would then be undertaken against the criteria.

There was another question about the level of trading activity, and I’ve got a sneaking suspicion that was discussed at select committee, but let’s go back through that ground again. The four export control regimes that New Zealand participates in, as you know, are the Wassenaar Arrangement; the Missile Technology Control Regime; the Australia Group, which controls chemical, biological weapons - related materials; and the Nuclear Suppliers Group, which controls nuclear material, equipment, and technology. There are approximately 45 members there. They produce lists of goods to be controlled. The secretariat’s had expert groups decide on the control lists. They share the information on proliferation and establish best counter-proliferation practices.

The area that I really wanted to cover off was on the scale of brokering. It pretty much reflects what I said in my first reading speech. The scale of brokering activities taking place in New Zealand is limited. There are currently 11 entities registered with MFAT under the voluntary registration scheme, so let’s see where that ticks up once it becomes mandatory. It could well be different. However, of those 11, less than five were potentially interested in actual brokering. I think let’s just take a pinch of salt and see. While some of us may have thought that the level of trading and the level of traders in New Zealand was very small, that was under a voluntary regime. So once this is enacted, let’s see how those numbers shift.

I raise a point of order, Mr Chairperson. I noticed when the Minister commenced his second call then that the digital clocks appear to be malfunctioning. I just wonder if it’s possible to ensure that they do count down accurately from five minutes, because it’s quite disconcerting if you’re taking a call and you think, “OK, I’ve got to try to get to it within a certain time.”, to find that the timing is not being accurately displayed.

I can assure the member that the clock that I’m watching here is showing the correct one. [Interruption] Let me finish. The clocks there are indicative only. The clock that matters is here. It does have some funny peculiarity from time to time, which I haven’t figured out myself.

💬 Hon Tim Macindoe: Mr Chair?

💬 Chris Penk: Mr Chair?

I call Chris Penk.

Apologies, Mac. Thank you, Mr Chair. Thank you very much indeed. I’ll try and live up to the speech that I know that my colleague the Hon Tim Macindoe would’ve given had he had the opportunity.

💬 Hon Tim Macindoe: Still will.

And still will, no doubt. As to Part 2 of this bill, it seems to me that Subpart 1, being at the very beginning, would be a very good place to start, as Maria von Trapp would no doubt have said if she were speaking and had been able to take the call on this.

💬 Chris Bishop: What did Maria von Trapp say?

Ha, ha! She said, Mr Bishop, that the beginning was a very good place to start. So, within Part 2, the first place that I would like to start is clause 9, namely, “Registration and permit required for brokering activity”. This is very much the heart of the bill, it seems to me, because it states very definitively in subclause (1) that a person must not carry out a brokering activity unless one of two things applies: the first being, of course, that they are registered as a broker, and that he or she, or indeed it—if we’re talking about a person that’s not an actual person—has a permit for that activity. So much is straightforward, and therefore I shan’t belabour that point any further nor call upon the Minister in the chair, Ron Mark, to provide any further explanation or clarification in relation to that. But perhaps in relation to clause 9A—the exceptions—some further guidance would in fact be useful.

The four subclauses to this clause, naturally enough, start with the words “ ‘Section 9’ does not apply”, and so forth—being exceptions, of course, to what would otherwise be the requirements for registration and permitting. The first such exception is that for a person who carries out a brokering activity, as defined, if they’re doing so in relation to dual-use goods—again, as defined—and take reasonable steps to ensure that they won’t be used for a prohibited use, then that’s a sufficient exception to avoid prosecution under the Act—as it will become in due course, no doubt. So my question to the Minister in the chair—whom I acknowledge is the Minister of Defence, which is not technically the sponsor of the bill, therefore, but in an area that is related—is what meaning does he think might be accorded to the phrase “reasonable steps” within clause 9A(1)(b)?

If I were to hazard a guess, subject to such confirmation, I would say that reasonable steps indicate that an objective standard is implied there. So the determination about whether reasonable steps have been taken to ensure that the dual-use goods won’t be used for a prohibited use would be in the mind of the decision maker, in the shoes of a reasonable person, as he or she would no doubt be considered to be. So whether there are any criteria that might guide such determination is something that I think would be useful to canvass. I acknowledge the new Minister in the chair, Carmel Sepuloni, and hope that I will be able to have an answer from her, perhaps, in due course.

The next subclause, being subclause (2) of clause 9A, again, starts with the phrase “Section 9 does not apply”, but this time the exception relates to brokering activity from a place outside New Zealand. I think the meaning of that’s probably clear enough, and it talks also about compliance with an equivalent overseas regime, and, of course, the structure of that subclause is that both elements must be satisfied for this exception to apply because of the word “and” rather than “or”, for example, having being used.

More interesting, I think, perhaps, is clause 9A(3), yet another exception, which talks about reasonable grounds again. In this case, it’s where a person has carried out a brokering activity but on behalf of their employer. So the reasonableness and the objective standards in this case apply to whether there were reasonable grounds for the person carrying out the activity to believe that the employer had complied with an equivalent overseas regime.

I move, That the question be now put.

Thank you very much, Madam Chair. We’re still on Part 2, and I think I do just need to remind the committee that we have four subparts here. I’ve just been able to spend 10 minutes prior talking about Subpart 2, and, being slightly Irish, I have gone to Subpart 2 and now I want to go to Subpart 1.

I also wouldn’t mind reminding the House that this is the substance of the bill. We’ve also had, actually, I thought a very good contribution by one of the Labour members who was looking—granted—at clause 18A around of what the nature of annual reports are. I suspect she was interested in the grams per square metre paper quality, and so forth.

But, look, Part 2, Subpart 1, is looking around the whole notion of the registration and the permit required for a brokering activity. The questions that are about to follow are actually very similar to what I raised in Part 1, around the purpose about why we split things. My colleague Chris Penk noted that a person must not carry out a brokering activity unless they’re registered as a broker and have a permit for the activity. I suppose the question to the Minister in the chair, Ron Mark, is why that has been split out. What is happening there?

Obviously, to be registered as a broker, one might assume that your activity is therefore permitted. So what is the distinction that is being sought in clause 9(1)(a) and (b)? I suppose, to the layman, once you’re registered as a broker would it not follow that you are therefore doing an activity which is permitted?

I suppose that I theorise out loud in the committee of the whole House that the registration is in the nature of you being a broker; the activities become a whole lot of separate activities that while you may have a registration to be a broker, you may be undertaking a whole series of other activities that may need to be regulated. Perhaps, it’s a little bit similar to when we did some legislation in the Health Committee a couple years back around the use of radiation; that, actually, there are permits for the people, but then the activities need to be prescribed. But I wouldn’t mind just a little bit of clarity around that.

As I mentioned earlier, I sought some clarity on Part 1, clause 3, around a distinction. I found the Minister’s response last night very useful. I would find it helpful here to just understand that a little bit further. I know the Minister, in his reply earlier, noted that the Foreign Affairs, Defence and Trade Committee had probably asked a number of these questions. I would just note, as a committee of the whole House, that sometimes as select committee chair I may be asking questions, perhaps, for the interest of other members, but in this particular case, it’s one that’s, I suppose, approached my mind as I came in here today. So why has that been separated out?

Look, the removal, as promoted, of what’s now crossed out as subclauses (2), (3), and (4) of clause 9 makes perfect sense, and if I could, I thank the Parliamentary Counsel Office and the officials for clarifying this point—this is around, particularly, exceptions. In the new clause 9A(1)(b), it’s saying that the exemptions do not apply to a person “who, before the person carries out the brokering activity, has taken reasonable steps to ensure that the dual-use goods will not be used for a prohibited use.” So, fundamentally, and really importantly, we err on the dual-use goods; not the single use.

But the question becomes: who is checking? Now, I assume it’s the Ministry of Foreign Affairs and Trade itself. As the Minister himself indicated earlier, he or she is too busy to be doing the operational side. But if someone is not having to seek registration on the basis that they, the person—the potential broker—has taken the reasonable steps to ensure that their goods, their dual-use goods, are not going to be used for prohibited use, who’s checking up on that? I mean, the obvious thing, through to the Minister, is that someone who is intending to use dual-use goods for a military purpose just continues to be under the radar. They say, “Oh, well, you know, I’m not going to register. It’s not going to apply to me. I did some steps to ensure that, you know, it’s all OK.” Who’s checking up on that? How is that going to be found out?

In new clause 9A(2), we’re in a negative space here. It’s that “Section 9 does not apply to a person—(a) who carries out a brokering activity from a place outside New Zealand”. Now, I know this was of very particular interest to a Labour member on the select committee and very much, for quite a period of time, to Green Party members around why we’re only including New Zealand. I think it would be helpful—and I certainly would find it helpful—if the Minister will be able to articulate the reason why we are only including brokering activity inside New Zealand. Why does it not apply to someone who is outside of New Zealand? Now, obviously, it’s not that our law is going to apply to someone in the United States or in Tonga. However, the really fundamental question becomes—

Thank you, Madam Chair. I’m very pleased to be able to resume my call, which was interrupted when the Minister in the chair, Ron Mark, took the first of his two calls a short time ago. I do want to thank him for doing so—I mean, I was upset to be knocked off my stride in mid-flight, but I want to acknowledge the fact that the Minister did attempt to answer some questions and, I think, in a very helpful way.

We are looking at clause 9, and as my colleague, the member for Tāmaki, has pointed out, this is the substantial part of the bill. So I was concerned when the member for Christchurch Central attempted to move a closure motion a short time ago. There’s a lot in this part of the bill that we do need to look at.

If I could just resume—we’re, obviously looking at the provisions outlining the registration and permit required for brokering activity—in new clause 9A(1)(b), we read that it specifies that “Section 9 does not apply to a person—who, before the person carries out the brokering activity, has taken reasonable steps to ensure that the dual-use goods will not be used for a prohibited use.” Well, others of my colleagues have asked for an explanation of what those reasonable steps are. I’d like to go beyond that and ask, again, in the international context, how is international consistency being achieved in this regard? In particular, how can New Zealanders be confident that what are deemed to be reasonable steps in New Zealand will apply equally in Guatemala, Malaysia, Malta, Mali, Malawi—wherever we might be looking at?

Now, I was very pleased to hear the Minister give an assurance that this bill is modelled on international best practice and, in particular, reflects similar measures being adopted in Australia and other countries. I know that will be comforting to those who are listening, but the Minister in the chair made the point that some of these questions had been answered in select committee. I would just point out to him that this is the committee of the whole House. Members of the public who may be tuning in to this debate tonight didn’t have the opportunity to sit in on the select committee, and most members of this Parliament were not part of that select committee, so this is our opportunity to have very detailed, clause by clause analysis of the bill in the committee of the whole House and to ensure that a much wider audience gets to hear those answers.

New clause 9A(2) goes on to indicate that “Section 9 does not apply to a person—(a) who carries out a brokering activity from a place outside New Zealand”. I’d like to ask, again, what assurances can New Zealanders have that other New Zealanders—because, obviously, they’re the ones who are being referred to when we look at legislation that we are passing—who may be of less than honest and possibly even of evil intent won’t cultivate connections in countries, and, sadly, this is a feature of international terrorism, that are less committed to the rule of law and the suppression and prevention of terrorism and, frankly, our high standards of human rights in order to engage in inappropriate and/or criminal brokering? We do need to know, and we do need to be able to assure the public, that this particular bill will be able to answer those very serious concerns.

In clause 10, which deals with the fact that it’s an offence to carry out brokering activity without registration or a permit, new subclause (1) indicates that “A person commits an offence if—(c) at the time that the person carries out the activity, the person knows or ought to know that (except in some circumstances) a person must not carry out a brokering activity unless the person—(i) is registered as a broker; and (2) has a permit for the activity.” I have to confess, I had to read that particular subclause several times and I’m still confused by it. In particular, I’d like to ask the Minister what is contemplated by the proviso “except in some circumstances”? What examples can the Minister give us of what those circumstances might be? I appreciate the fact that from a legal drafting point of view, it can be fiendishly difficult to cover all possible eventualities, but, nevertheless, this is such a significant question of international security that we have to ensure that we’re not just legislating for the sake of saying, “OK, well, we can tick the box. We’ve met our international obligations.” We have to ensure that these provisions are watertight.

So, again, we’re still just talking about clause 9 and the following clause here. There’s a lot still to be covered from Part 2. I appreciate the fact that I’ve raised a number of questions, so perhaps if the Minister would be good enough to take a call to answer those, and then we might be able to move further on in to Part 2 of this bill.

Thank you, Madam Chair. Look, I’ll start with the last question first. Acknowledging that the Hon Tim Macindoe was on the Foreign Affairs, Defence and Trade Committee and assisted in the compilation of the report, could I draw his attention to page 3 of the select committee’s own report. Now, I do accept the explanation this evening from the honourable members of the Opposition that they’re going through this exercise of questioning for the benefit of the mums and dads that are tuned in right now and all the school kids who are doing their homework around this particular topic and are looking for some guidance as to what the legislation really intends, but I would draw the member back to their own report and the particular paragraph on page 3 that deals specifically with clause 10(1)(c).

If I might indulge the House just for a moment and read out the select committee’s own report on that particular clause, it says, in particular, “The elements of the offence—We recommend amending clause 10(1) to set out more clearly the elements of the offence.”—something which I understand from officials was accepted—“In particular, clause 10(1)(c) [which] would provide that a person commits an offence if, when carrying out the brokering, they know or ought to know that (except in some circumstances) they must not do so unless they are registered or have a permit. The ‘circumstances’ referred to are the exceptions in [the] new clause 9A.” Now, members might not have caught up with the amendment, but it is covered off already in the legislation, very much on the recommendations of the committee. So I thank the committee for the constructive approach to the bill, but I wouldn’t have expected anything else, because, you know, the majority of the committee are National Party people who proposed the bill in the very first place and who have deep understanding of these very issues that they’re canvassing here tonight.

I’ll just come back to one other question from the honourable Simon O’Connor—my travelling companion from Iraq and Afghanistan—who, clearly, in his position as chair of the committee, has a very genuine and serious interest in these matters. The question is around what amounts to a person taking reasonable steps to ensure that the dual-use goods will not be used for a prohibited use under the bill. It really does, from my reading of the advice, put the onus back on to the person applying. The bill only applies to dual-use goods that are listed in the New Zealand Strategic Goods List, so that puts the onus on the applicant to go and read what’s listed there in New Zealand Strategic Goods List. Dual-use goods listed in the New Zealand Strategic Goods List are already subject to strict export controls in New Zealand and elsewhere under the four international export control regimes, so they should know that, if they’re professionals in the field. As dealing with dual-use goods is already a controlled activity, it is not unreasonable—and this advice was given to the committee, I know—to expect individuals, given that this is their trade, this is their business, this is their craft, to have knowledge of their status as listed dual-use goods and to themselves, as good business practitioners, undertake due diligence as to whether they may be subject to controls and their intended end use or end user.

Reasonable steps to ensure that dual-use goods will not be used for a prohibited use under the bill include making appropriate inquiries to ascertain the intended end use or end user to see if they would be used only for a civilian purpose, and an assessment of the reliability of that information. I guess that’s where we come right back to the first point, and that is ascertaining the secretary’s responsibility to ascertain whether or not the applicant is a fit and proper person. Of course, a fit and proper, legitimate person who does not wish to breach international laws or contravene the treaties we have signed into would, of course, do that due diligence themselves, would they not?

Thank you, Madam Chair. The fourth exception to the regime, in clause 9A, I can touch on pretty quickly, you may be relieved to know. This is where the bill states that the main provision prohibiting essentially brokering activity “does not apply in relation to anything done by or on behalf of a department.” Now, the term “department” is, of course, defined within the bill, essentially by pointing to that equivalent definition within the Public Finance Act. That is pretty helpful, but we’re still left with the implication that the bill or the activity prohibited under the bill does not apply, effectively, to the Government. So a department of the State of New Zealand can’t be prosecuted under this bill because an exception is provided by the operation of clause 9A(4). So this gives rise to a couple of questions in my mind on which I would appreciate some clarification on behalf of the many New Zealanders who are no doubt following along with great interest.

The first is whether such activity undertaken by a New Zealand department or an employee or an individual acting on its behalf is covered elsewhere on our statute book. In other words, is there somewhere else in our legislative framework that says that such brokering activity can’t be carried out by a Government department or that perhaps the Government department could be made vicariously liable for the actions of a civil servant doing the things that are prohibited by this bill? Perhaps, more of interest, more on the basis of interest than practical effects, I wonder what the justification for separating out the actions of a department are, in this way. Perhaps it relates to the historical notion of sovereign immunity such that a nation State will not be held accountable for actions that are traditionally an exercise of prerogative, but that may or may not be the case. That’s simply my speculation, and I’d certainly be interested to know if there is some answer that can be provided through the Minister, but perhaps by the officials on that one as well.

In relation to the following clause, clause 10, “Offence to carry out brokering activity without registration or permit”, it’s stated at new subclause (1A) that “It may be presumed, in the absence of any evidence to the contrary, that an exception described in section 9A does not apply.” So this seems on principle a valid thing for the law to set out—that an exception won’t apply on a presumed basis—but the evidence to the contrary that’s referred to in that provision isn’t defined any further. So we don’t know if the evidence to the contrary need only be prima facie evidence, or perhaps merely on the balance of probability, which would be a civil standard, or would it be expected that if a matter were prosecuted in the courts, the traditional criminal standard of “beyond reasonable doubt” would apply? That much is not clear from the wording of new subclause (1A)—

💬 Kieran McAnulty: Oh, we’ve been over this. Say something new.

—and, it seems to me that for the sake of clarifying the record, and for the edification of Mr McAnulty and any others who perhaps may be struggling with that particular section, that would be a useful matter on which to have some guidance.

Then my next question or discussion on which some guidance might be helpful is to do with the maximum amount of the fine in that same clause. There is an additional fine calculation to be made where the offence, in the opinion of the court, occurs in the course of producing a commercial gain. So my question then is: if a commercial gain is not in fact “produced” but is merely sought, then will the additional penalty of “3 times the value of that [commercial] gain” apply? In other words, will we be rewarding an individual or a person for committing an offence that does not satisfactorily or successfully result—[Time expired]

I move, That the question be now put.