Secondary Legislation Confirmation Bill (No 3)

I move, That the Secondary Legislation Confirmation Bill (No 3) be now read a second time.

Hon James Meager: Great bill.

Hon CHRIS BISHOP: My colleague the Hon James Meager says “Great bill”. I don’t know if I would go so far as to call it a great bill; it is certainly a perfunctory bill and it’s a bill that has to be passed every year. And it’s always on the Wednesday around about the middle of December when Parliament—

Arena Williams: It’s up to you; don’t complain.

Hon CHRIS BISHOP: What’s that?

Arena Williams: It’s up to you; you could’ve made it the other day.

Hon CHRIS BISHOP: Well, that’s true. I wasn’t complaining; I was merely making a prefatory remark about where we are at in the system. It always comes at this time of the year. It’s sort of the middle week of December, the middle Wednesday. We’re on the downward slide towards Christmas Day. What are we today, December—what is the date today?

Hon James Meager: 17th.

Hon CHRIS BISHOP: 17th. Eight days to go. My son is joyfully opening his advent calendar—not long to go. And we pass the Secondary Legislation Confirmation Bill (No 3).

This bill is required to confirm legislation that would otherwise be revoked if not confirmed by Parliament. So it’s actually legally important that we do it. And I want to say thank you to the Regulations Review Committee.

Hon James Meager: Great committee.

Hon CHRIS BISHOP: Now James Meager says that’s a great committee; I agree with him. Back in the day, I was a young junior backbench whippersnapper. When I first came into Parliament, I was placed onto the Regulations Review Committee. I remember talking to senior colleagues and they said, “What have you done to deserve that?” And I remember saying, “I’m actually quite excited about it.” Anyone with a legal bent, anyone who’s a boffin—got a legal bent—

Hon Judith Collins: It’s a wonderful committee.

Hon CHRIS BISHOP: The Hon Judith Collins, the attorney, says it’s a wonderful committee. Am I right in thinking, Ms Collins, you’ve previously been on the committee?

Hon Judith Collins: I did, in fact, chair that.

Hon CHRIS BISHOP: The attorney tells me she’s been a chair. I see the Hon Rachel Brooking over the other side. She’s definitely a legal boffin. She’s been on the Regulations Review Committee. It’s a much-mocked committee, but it’s very important.

So this legislation relates to 22 confirmable instruments for 11 Acts, including Acts that many people will never have heard of: the Animal Products Act 1999, the Biosecurity Act 1993, the Civil Aviation Act 1990, the Tariff Act 1988, the Social Security Act—I think people will have heard of that. Most of these confirmations relate to levies with this peculiar situation in which there are industry levies for avocados, oysters, tomatoes, potatoes, and onions. So all of these are, essentially, industry levies that are passed by the—well, they’re forms of legislation, so they have to be confirmed by the House, otherwise they lapse. And we do not want that.

I do want to thank the Regulations Review Committee and also the officials at the various different agencies for all of their advice on this. It’s one of those things that we just have to do this side of Christmas, and it marks the beginning of the end in the parliamentary year because soon after that we will have the adjournment debate and then we will be out of here for the year.

So with those brief remarks, I commend the Secondary Legislation Confirmation Bill (No 3) to the House.

It’s a very important piece of legislation. I was chairman of that committee, of course, so I concur with your views, and I’m sure the views of the next speaker, Arena Williams.

Thank you, Mr Speaker, for the opportunity to speak to the Secondary Legislation Confirmation Bill (No 3). I asked very earnestly when I got to sit down with the Prime Minister when I was very first elected, to set out my aspirations and hopes on what select committee I could be on, “Please can I be on the Regulations Review Committee? I am so interested in that.”—not at all! It took me until this term to get my way in the door, but I’m there now and I’m enjoying this excellent committee, which works very hard. It is a great committee, Mr Speaker, and you have heard from us recently at the Standing Orders review about the role of that committee. I hope this Parliament will find a way through to improve the role of the Regulations Review Committee and make it a more useful body on regulation in this House.

But to this bill, it’s good that the Minister has set out those 22 instruments that were made between 1 July 2024 and 30 June. He’s right to highlight that if we do not pass this law, then a number of regulations, particularly those levy-setting regulations that have already been levied by two private companies, would need to be paid back. So this is very important to confirm this. It’s not like any other sort of confirmation bill. This would have the effect that the Government would be needing to part with levies that it had already collected if this didn’t make its way through.

We see this as an important piece of legislation that must be passed today, which is why the committee laboured over one potential change that we took advice on in that room and quite carefully considered. We strove for consensus around that issue, and that’s why there is not an amendment, because the committee did not arrive at a consensus view around whether there should be an amendment. I was one of the members of the minority who was giving careful consideration to whether this particular instrument was made in the normal way, particularly whether those grounds of it being a usual way to make regulation were made out or if it wasn’t something that was more appropriately carved out for debate by this House, as a matter for Government policy and then lawmaking in the usual way. Those two things are important because when the executive delegates to a department to be, in this case, the lawmaker, it’s important that it is known and knowable how that department will use its regulation-making power and that it’s not making Government policy on the hoof. That is the point of the Regulation Review Committee’s powers to look into these levy-making powers.

That power is to be found in the excise setting for heated tobacco products. Heated tobacco products will see an excise reduction under this bill of 50 percent. This is the bill which gives effect to the Government’s policy to reduce taxation by half to heated tobacco products. It’s unusual for a bill like this to do that. It would be more usual for the Government to decide upon a policy which changed the way that public health was to regulate those sorts of products and to do that in either a health bill that the then Health Committee could consider, or in its taxation measures whereby it sets levies and then those can be debated in the normal way. Because both health policy and levy-making powers, which create taxation duties, are important parts of our democratic process which people deserve to comment on, which those people who will be paying for them deserve some sort of recourse for, and so those people and future people who will be affected by those decisions can at least have some transparent oversight over or at least understand the governance relationships that exist in that chain of decision making.

It’s not what’s happened here. The regulations were made at the departmental level, based on a Government policy change, and that is what the committee inquired into. The reduction was made through an Order in Council under the Customs and Excise Act 2018, and members across the committee took that issue seriously and examined it closely. Mr Speaker, if you’ll indulge me, this is something that members of the committee are interested in potentially bringing a disallowance motion to the House about. It’s still under discussion, but I bring it up here because it’s useful for all members to know what we’re dealing with here. The concern is that the regulation-making power being used is unusual—unusual in the natural English meaning of that word: it’s never been used in that way before. It’s unusual also in the sense that excise duties are not designed with the power to go down. You might need that power and flexibility if there were a mistake, but not in the situation where you intended to give a tax cut to incentivise a particular product over another. Excise duties are about incentivising behaviour in a market. This is not a regulation that was made in that way to give effect to that kind of policy. It would usually allow Consumers Price Index indexation of excise rates and not policy shifts like this.

Customs was also unable to point to any comparable excise reductions ever made using this power. So that is why this might be prime for something that we examine more closely through the power of disallowance of the Regulations Review Committee when we return to Parliament in the next year.

It would be inappropriate, though, for the committee to have recommended, in my view, that the bill did not proceed. If this bill did not proceed only for that one concern, then levies which have already been levied would have been levied unlawfully, and that’s also inappropriate, especially in relation to any exercise of the Government’s power to taxation.

So without wanting to drag this on, we support this bill. This is useful and it tidies up all of those other 21 instruments we have no issue with. We will, hopefully, be back here, though, to discuss why it is always appropriate for the House to have proper oversight of whether regulations are made lawfully and in their usual way, and that we do not expect departments to give effect to regulations which do something unusual. “Unusual” is exactly the word we’ll be debating then: whether a new rate for the excise that is applied to heated tobacco products, which has never gone down before in this way, which is not designed in the primary legislation to be able to give effect to such a policy change, and which was not done alongside a shift that was advised upon by the other departments involved in this—that’s what makes it unusual. That’s why we’ll be back.

Thank you, Mr Speaker. I just want to follow on from the previous speaker, Arena Williams, and I also acknowledge all members of the Regulations Review Committee. Even though I am not a permanent member of that committee, I have found that to be one of the most enjoyable and rewarding committees to sit on this term.

Nancy Lu: You’re welcome.

Dr LAWRENCE XU-NAN: Yes—and I acknowledge the chair, Arena Williams, and the deputy chair, Nancy Lu, as well as the previous chair, the Hon David Parker.

This particular bill does confirm secondary legislation made in the period of 1 July 2024 to the end of 30 June 2025. There is a number of secondary legislation that is covered, and most of it is to do with, as one would imagine with secondary legislation, fees, levies, duty, and tax settings, and this includes—and I think the Hon Chris Bishop has mentioned some of these names as well—the Animal Products Act and regulations under the Animal Products Act; the Biosecurity Act; the Civil Aviation Act; the Commodity Levies Act; the Food Act, pertaining to things around apples and pears and, I think, onions as well; the Gambling Act; the Land Transport Act; the New Zealand Superannuation and Retirement Income Act; and the Tariff Act, particularly addressing, I guess, the ratification of the ACCTS—the Agreement on Climate Change, Trade and Sustainability.

But I do think that one of the ones the previous speaker has noted is the one that is of most concern to the Greens, and it is important for us to spend a little bit of time unpacking this particular secondary legislation, or the regulation, and this is to do with the Excise and Excise-equivalent Duties Table (Tobacco Products Indexation and Reduction) Amendment Order 2024, which, I believe, was ratified on 1 January 2025.

The reason that this particular one is of concern to us—sorry, the date made is 18 November 2024, and the commencement date is 1 January 2025—is that the Regulations Review Committee, as it does with all secondary legislation, go through a scrutiny process within that particular committee to have a look in terms of their consistency with a number of criteria. This is something that the Regulations Review Committee does both in terms of complaints from the public but also in terms of the general work programme of the committee in scrutinising secondary legislation, and this particular power granted to the select committee is under Standing Order 327(2)(a) to (i), and paragraph (c) is the one I want to focus on. It is one of the things that has piqued the committee’s interest while I was attending on that committee. It is Standing Order 327(2)(c), which is where the secondary legislation “(c) appears to make some unusual or unexpected use of the powers conferred by the enactment under which it is made:”.

In this particular one, in terms of the duty table of tobacco products indexation and reduction, which is something we spoke about in terms of the Customs Amendment Bill as well, in general under the primary legislation and under the empowering provisions under the primary legislation, one could only increase the excise duty up to and being in line with the Consumers Price Index (CPI). It does put up a threshold to how the excise tax could be calculated and what increases it could make.

However, within that empowering provision under the primary legislation, there was no provision being given on how much one could reduce that excise tax, and here is the loophole that potentially has been exploited when we were looking at this particular part, which is reducing the excise and the excise-equivalent duty rate for heated tobacco products by 50 percent.

Read as written under the empowering provisions, this is something that is allowed. But if one goes into the purpose of that particular section, this is considered unusual. One of the things that the committee did was to look at a broad power to make non-CPI - related reductions, and we sought some advice from the New Zealand Customs Service, who administer the order. I just note the concern that this is something that is unexpected and unusual. We also asked Customs at that stage whether they could provide any examples of any comparable excise reductions made under section 21 of the principal Act, and they were unable to provide any example of how this was used in the past.

The rationale for this from a Government perspective is that the 50 percent decrease on the basis of reducing the price of heated tobacco products would encourage a cigarette smoker to transition to them. Although the 50 percent is technically permitted by the empowering provisions, the committee considered it does not align with the general policy intent of the empowering Act.

There are a couple of issues there, and I think this is where the Regulations Review Committee performs an incredibly important role in terms of scrutinising, and this is something that we have heard in multiple avenues in terms of Parliament’s ability to potentially disallow secondary legislation or have more instances, and we have heard that particular aspect from both sides of the House on this particular matter, not necessarily in terms of the excise and excise-equivalent duties table but more in terms of disallowance of secondary legislation or more ability to disallow secondary legislation.

I have two concluding remarks on this in terms of the interaction between the Regulations Review Committee and also when it comes to secondary legislation. The first is that despite the unusual and unexpected nature and the fact that the committee itself considered that this does not align with the general policy intent of the empowering Act and it is considered unexpected or unusual, the committee couldn’t reach a unanimous agreement to recommend amendments to the bill to remove confirmation of the order. As part of the consideration by the select committee, the committee did consider withholding confirmation of this order because if the order is not confirmed, anything levied under the order of the relevant part and of that particular part of the order was required to be refunded in accordance with section 125(1)(a) of the Legislation Act 2019. But the problem is that it couldn’t come to a unanimous decision and this is one of the areas where I genuinely do believe that the Regulations Review Committee should have the independence and also the ability to make consensus decisions on something that the committee itself has deemed to be unexpected and unusual, and we have seen, potentially, the dichotomy or the lack of willingness or, I guess, the inability for that particular committee to make those kinds of decisions that are in line with Standing Order 327 or alternatively not in line with Standing Order 327 going through the Regulations Review Committee during this particular term, and the tikanga Māori regulations and disallowance there is a good example of that. So that is something, I think, for the committee to consider.

The other concluding remark that I would make follows very closely to the previous speaker, Arena Williams, in terms of what is potential recourse for this. And this is the thing where the Regulations Review Committee members, permanent members, unlike myself, have a specific provision under Standing Order 329 to disallow secondary legislation—and that is done by a member of that committee—or any provision of secondary legislation that does not lapse and is retained on the Order Paper. And this is something that, again, we have seen being used on the tikanga Māori regulations. It is a call to the permanent members of the Regulations Review Committee to actually put forward a disallowance motion under Standing Order 329 for next year on this particular part. And like I said, not simply in terms of the policy intent, not anything to do with the policy intent of that, but mainly because of the unexpected and unusual, and the general, I guess, moving away from the empowering provision under the principal Act. But because of that—and we haven’t been able to do that—the Green Party will not be supporting this confirmation.