Questions And Answers Nov 23 2010

by Desk Editor on Tuesday, November 23, 2010 — 7:30 PM

Press Release – Office of the Clerk

1. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance : What factors were identified by Standard and Poor’s that led to them placing New Zealand’s sovereign credit rating on negative watch?
(uncorrected transcript—subject to correction and further editing)




New Zealand—Credit Rating

1. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: What factors were identified by Standard and Poor’s that led to them placing New Zealand’s sovereign credit rating on negative watch?

Hon BILL ENGLISH (Minister of Finance): In fact, the question is not correct. Standard and Poor’s has not placed New Zealand on negative watch. It has affirmed New Zealand’s existing AA+ rating for foreign currency debt but has placed it on negative outlook, and those are considerably different labels. Standard and Poor’s has focused its concerns on two issues: one is the bank credit quality of our Australian banks and the second is New Zealand’s high overseas debt level. Both of those have improved in the last 12 months since Standard and Poor’s last lifted the negative outlook status.

Hon David Cunliffe: Why did he not take action in his first Budget to address the savings problems identified by Standard and Poor’s in its first report of December 2008, and does he now consider that taking 2 full years to set up a savings committee is an adequate response?

Hon BILL ENGLISH: No, I do not agree with that. In our first Budget the Government had to get hold of ever-rising debt levels and ever-rising deficits. New Zealand certainly would have faced the downgrade if we had allowed the forecasts we had inherited to continue. In Budget 2010 we put in place a tax package designed to assist all New Zealanders to increase their level of savings and to discourage excessive consumption and housing speculation. I think that package will turn out to be a pretty important step towards resolving these issues.

Chris Tremain: What else have credit rating agencies said about New Zealand?

Hon BILL ENGLISH: The other credit rating agency, Moody’s Investor Service, continues to rate New Zealand as Aa3, which is the highest available rating. In fact, today Moody’s senior credit officer is quoted as saying: “The nation’s performance during the global financial crisis ‘reinforced’ Moody’s Aa3 credit rating for New Zealand—the highest possible.”

Hon David Cunliffe: How did cutting back KiwiSaver and cancelling contributions to the New Zealand Superannuation Fund contribute to addressing the crucial savings deficit identified by Standard and Poor’s?

Hon BILL ENGLISH: In the first place, there is a significant improvement in New Zealand’s savings rate. New Zealanders are saving considerably more than they were several years ago and they are spending less. In fact, that is one of the reasons why the economic recovery has been more moderate than many people expected. In respect of the two schemes the members refers to, in both cases the Government was in the position of borrowing considerable amounts of money to put into savings accounts, either its own or New Zealanders’ in KiwiSaver, and that, of course, from a national point of view, is a false economy.

Chris Tremain: What other factors did Standard and Poor’s highlight in its assessment of New Zealand?

Hon BILL ENGLISH: Standard and Poor’s repeated what it has regarded for a long time as among the many strengths of the New Zealand economy—that is, the fiscal credibility of the New Zealand Government and the monetary policy framework. It also noted that in the last 2 years the New Zealand economy has outperformed most advanced economies. It also noted the economy had entered recession in early 2008, before the global financial crisis, but had avoided the deep recessions of many other countries. We have only to see the experience of Ireland, which has essentially gone broke, to see just how bad things could have been.

Hon David Cunliffe: When Standard and Poor’s said yesterday that New Zealand had “weakened fiscal flexibility”, can he explain why he continued with high-income tax cuts that he knew the country could not afford?

Hon BILL ENGLISH: Because the country could afford them, as the member will know because he campaigned on it. The Government put up tax on consumption—that is, increased GST—increased the taxation of property, and offset those tax increases with cuts in tax on income, on savings, and on company earnings. It is a largely neutral tax package. The reason we have less fiscal flexibility than Standard and Poor’s would like is twofold: one is because the Government has been committed to supporting this economy through the recession, with extensive spending on infrastructure, public services, and continuing transfers to family budgets, such as Working for Families; the second is because the collapse of South Canterbury Finance and the Christchurch earthquake have used up something like $3.5 billion to $4 billion of flexibility we would otherwise have had.

Hon David Cunliffe: Which of the Prime Minister’s following statements yesterday is true, given that they are mutually exclusive: “Nothing that we have seen has changed from our point of view.”, “If anything, our position looks stronger from our point of view.”, or “We accept that we have had to take the earthquake on the balance sheet, and accept that tax revenues are a little bit weaker this year.”; if the latter, does he consider crashing corporate tax by 22.4 percent below forecasts and GST by 15.8 percent is “a little bit weaker”?

Hon BILL ENGLISH: The Prime Minister’s remarks sum up the situation, which is that nothing material has changed from the point of view of an external credit rating. What has changed is not the situation in New Zealand, although there has been some variation, with the earthquake and so on, but because of the collapse of Ireland the people who lend us money in overseas markets, such as the UK and Europe, are now much more sensitive to the debt burdens of small economies. That is not a new issue in New Zealand; it is one we have been concerned about for 15 years or so—maybe even 20 years. Although we are in a similar situation, those people who lend us what is currently a stock of around $160 billion of debt are more sensitive as to whether we have more debt than a small country can handle.

Hon David Cunliffe: I seek leave to table the statement from Standard and Poor’s on New Zealand’s credit rating outlook, which makes no mention whatsoever—

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Marine and Coastal Area (Takutai Moana) Bill—Notification of Customary Title

2. Hon RODNEY HIDE (Leader—ACT) to the Attorney-General: Is it the Government’s intention to notify local residents that the Minister responsible is considering an application to grant iwi customary marine title over the foreshore and seabed of their local beach; if so, will the procedure for that notification be set out in the Marine and Coastal Area (Takutai Moana) Bill?

Hon CHRISTOPHER FINLAYSON (Attorney-General): An application is made to the High Court, and the Minister is not responsible for notifying anyone about the application. The notification procedure is set out in clause 102.

Hon Rodney Hide: Is it the Government’s intention that the Minister will hear, before granting an application, from the local residents; if not, why not?

Hon CHRISTOPHER FINLAYSON: I believe that the member is muddling up the procedure. The Minister will not hear any application. As I said, applications are made to the High Court. A person wanting to enter into an agreement with the Crown gives notice of an intention to seek an agreement under clause 93(2).

Hon Rodney Hide: Before the Minister responsible grants the application, is it the Government’s intention that that Minister hear from other people; or how will they get their views put across to the Crown?

Hon CHRISTOPHER FINLAYSON: Once again, the member is muddling up the procedure. The Minister does not grant any application. An agreement is entered into with the Minister on behalf of the Crown, and the agreement will be subject to very intensive scrutiny by Cabinet committees and then Cabinet. Then there is a notification procedure for agreements, which is set out in clause 95 of the bill.


3. AMY ADAMS (National—Selwyn) to the Minister of Finance: What reports has he received on the economy?

Hon BILL ENGLISH (Minister of Finance): Yesterday we received a report from the creditrating agency Standard and Poor’s pointing to the country’s longstanding external imbalances as a risk. The ratings agency concluded that this external debt, driven mainly by private sector debt, leaves us vulnerable as a country. The Government identified those risks 2 years ago and set out on a programme to address them. Standard and Poor’s noted the New Zealand Government’s commitment to getting back to a Budget surplus by 2016, and acknowledged that New Zealand had outperformed most advanced economies in the past 2 years. However, it said that the negative credit-rating outlook reflected risks stemming from long-running external debt, particularly the current account deficit, and relatively high levels of foreign debt.

Amy Adams: What trends are evident in the external imbalances highlighted by Standard and Poor’s?

Hon BILL ENGLISH: Where Standard and Poor’s referred to New Zealand’s savings record, we are seeing a few early signs that those indicators are starting to improve. Households are starting to save and reduce debt, rather than continue to borrow and spend. It is also evident that our external debt appears to be rising more slowly than we had anticipated. However, it will take a concerted effort over a number of years—I would estimate anything from 5 to 8 years—to deal with the longstanding external imbalances. International financial markets are now much more sensitive about how much more debt countries are carrying, and whether that debt is growing. On current projections New Zealand’s external debt will continue to grow from around $160 billion currently to somewhere over $200 billion in the next 4 or 5 years. We now have one of the highest rates of external debt in the developed world.

Hon David Cunliffe: Does he still maintain that the removal by Standard and Poor’s of the negative watch following his 2009 Budget was a “verdict” on that Budget; if so, does he now admit that downgrading the outlook can only be a verdict on the policies he has implemented since that date?

Hon BILL ENGLISH: To the first question, yes; in respect of the second question, no. Most people who have observed this situation are a bit puzzled. In fact, last year we had conditions where the statement that Standard and Poor’s has made might have been warranted, but most of the

imbalances it refers to in the statement are better now than 12 months ago, when it lifted the negative outlook.

Amy Adams: What policies has the Government introduced to address the imbalances highlighted by Standard and Poor’s?

Hon BILL ENGLISH: Fixing our external imbalances will take a concerted effort over a period of years, and we took some first steps in Budget 2009, when we turned round post-election forecasts of never-ending deficits and ever-increasing Crown debt. That was done to get under control the amount of borrowing the Government itself would need to do in overseas markets. Since then we have taken steps to address the majority of the overseas debt, which is held by New Zealand households, by following policies that tilt our economy more towards savings, investments, and exports, and away from consumption and excessive property speculation, all financed by debt. We will also be picking up the work of the Savings Working Group, which expects to report to the Government early in the new year.

Hon David Cunliffe: Given that he cancelled in Budget 2009 the second and third rounds of his unaffordable tax cuts, in part to avoid a credit-rating downgrade by Standard and Poor’s, why did he change his mind and bring in unaffordable tax cuts a year later, only to receive the negative outlook that he initially sought to avoid?

Hon BILL ENGLISH: The Government cancelled the further rounds of its 2008 tax cuts because we needed to get on top of ever-increasing debt and deficits. Despite the fact that the National Party had promised those tax cuts, we felt it would be irresponsible to follow through on them. The tax package announced in Budget 2010 was, as I have described to the member a number of times, roughly fiscally neutral—that is, the tax cuts were financed by an increase in GST and an increase in taxation of property. Most New Zealanders believe that that has been the right thing to do, even if they do not feel that they have a whole lot of extra cash in their pockets.

Early Childhood Education—Minister’s Statements

4. SUE MORONEY (Labour) to the Minister of Education: Does she stand by all her statements on early childhood education?

Hon ANNE TOLLEY (Minister of Education): Yes.

Sue Moroney: Can services now charge an optional fee to families of children accessing 20 hours’ early childhood education if they have more than 80 percent qualified staff, despite her statement in Parliament on 26 October repeating her election promise that National would keep 20 hours’ early childhood education, including the same fee controls?

Hon ANNE TOLLEY: This Government promised that it would retain the subsidies and fee controls that make up 20 hours’ early childhood education. Those fee controls still apply.

Sue Moroney: Why was the Early Childhood Education Funding Handbook amended recently, removing the fee control that prevented services from charging optional fees for providing qualified staff?

Hon ANNE TOLLEY: I repeat for that member: the fee controls that would have allowed centres to charge compulsory top-up fees still remain.

Louise Upston: What other statements has the Minister seen about early childhood education?

Hon ANNE TOLLEY: I have seen one statement from an owner of nine early childhood centres, who said in an email to me: “We commend you for the decisions you have made. We have spent years trying to employ fully qualified people in our centres. Some of our difficulties are now being addressed through your policy of 80 percent qualified staff in centres.”

Sue Moroney: Why did a ministry official report to the sector last week that they could now charge fees for providing more than 80 percent qualified staff for children attending under the 20 hours’ early childhood education scheme?

Hon ANNE TOLLEY: They have always been able to charge for that, as long as the fees are optional. They cannot charge compulsory top-up fees, and that has not changed.

Sue Moroney: If she stands by her statement that “Quality early childhood education and care is a high priority for the Government.”, will she ensure that the Prime Minister works with the Opposition to find a time for Opposition members to present the 20,000 postcards that oppose the budget cuts and call for the target for 100 percent qualified and registered teachers to be reinstated?

Hon ANNE TOLLEY: I have no responsibility for the Prime Minister, and if the Opposition members wish to speak to him, I am sure he would be willing to make time for them.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. The question was straightforward: “Will she work with the Prime Minister?”, and that is not the Prime Minister’s responsibility; it is the Minister’s.

Mr SPEAKER: That member is normally pretty good at picking which questions to make a stand on but, forgive me, that question contained a fair bit of political content, and it received a pretty modest answer in response.

Sue Moroney: I seek leave to table a document showing the new requirements under the Early Childhood Education Funding Handbook, which shows that services can now—

Mr SPEAKER: All we need to know is that the document is from the Early Childhood Education Funding Handbook. Is it?

Sue Moroney: Yes.

Mr SPEAKER: Leave is sought to table that part of the handbook. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Kiwifruit, Pseudomonas syringae pv. Actinidiae—Government Response

5. TODD McCLAY (National—Rotorua) to the Minister for Biosecurity: What recent developments have there been in response to the kiwifruit disease Psa?

Hon DAVID CARTER (Minister for Biosecurity): Last Friday night, after 2 days of intensive grower consultation, the Kiwifruit Industry Advisory Council announced that it strongly supported the $50 million Government and industry plan to aggressively contain the Pseudomonas syringae pv. Actinidiae (Psa) disease. This is great news, and gives the green light for the fight against Psa to get under way. The response is a first-rate example of Government and industry working in partnership in real time to tackle an urgent and serious biosecurity issue.

Todd McClay: What are the next steps in the Psa response?

Hon DAVID CARTER: With funding approved from both industry and Government, the aggressive containment strategy is now under way. A technical advisory group has been convened, and vine prunings from quarantined orchards are being incinerated or deep buried by Ministry of Agriculture and Forestry at a site near Te Puke. As of yesterday evening, 61 properties have tested positive for Psa, with the vast majority of those properties centred in the Te Puke region. This is the approximate level of spread that had been anticipated within the agreed response plan.

Hon Steve Chadwick: Has he made any commitment to kiwifruit growers that he will reinstate the 54 front-line biosecurity jobs that were cut last year?


Health Care—Prioritisation of All Communities

6. Hon RUTH DYSON (Labour—Port Hills) to the Minister of Health: Are all communities his priority for better, sooner, more convenient health care?

Hon TONY RYALL (Minister of Health): The Government wants all communities to receive the best possible health services. How these are provided at different communities will change over time, as we are seeing, for example, in Taihape, where the individual circumstances of a contracted provider can mean that services need to be provided in a different way.

Hon Ruth Dyson: When he told district health boards earlier this year that 2010 would see him target primary care, did he mean target it for scrapping, including stripping elderly couple Joan and Lou Campbell of their right to live near their daughter in Taihape?

Hon TONY RYALL: This is, of course, a concerning time for the people of Taihape. When a provider cannot carry on, then there is always uncertainty. What is certain is that the Whanganui District Health Board is working closely with the liquidator, the primary health organisation, and other interested parties to ensure that the health needs of the community, particularly those of the elderly, are met. The district health board has been working with the trust to help it to get on to a firmer financial footing, including writing off back rents of $450,000, and providing outside financial expertise and other support over and above the normal payment for services. I am advised that this additional support totals over $1 million.

Hon Ruth Dyson: How does making front-line nurse Donna Wood and midwife Angelique Tucker redundant and leaving their community in Taihape without their services make anything more convenient for local residents?

Hon TONY RYALL: It is very important that the member understands the full transitional arrangements that are under way. It is proposed that the midwives will be employed by a different entity. The district health board advises that the primary maternity services will continue, and that the families of Taihape will receive the same services from the same midwives in the facility. The district health board has been working very closely with the trust, and when a provider cannot carry on it is always a difficult time for a community.

Nicky Wagner: Are all communities in the Wellington region a priority for better health care; if so, what decisions have been made to deliver this?

Hon TONY RYALL: Yes; and yesterday the Government announced the chairs, the deputy chairs, and members of the district health boards, including a joint chair for the Hutt Valley District Health Board and the Capital and Coast District Health Board. This is part of the Government’s drive for closer collaboration between the boards, to improve services for patients. These two boards are dependent on each other to be successful. Last year 2,600 Hutt Valley patients had operations in Wellington, and 1,300 Wellington people had procedures in the Hutt Valley. It makes a lot of sense for these boards to work well with each other.

Hon Ruth Dyson: Why did John Key promise Taihape residents on his visit just 1 month ago that everything would be all right, yet now the locals are facing the closure of their health centre, with a loss of 50 jobs and all the services they provide, including primary care, maternity services, community nursing, allied health services, and the closure of their only rest home?

Hon TONY RYALL: The premise of the member’s question is not correct. The fact is that services in Taihape are going through a period of transition because the provider cannot carry on. The district health board was prepared, for example, to put almost $400,000 extra in on an ongoing basis. But arrangements are being put in place to make sure that services can continue as best they can, and the people of Taihape will be kept fully informed.

Hon Clayton Cosgrove: When he told the House on 29 July 2010 in response to my question about the termination of after-hour general practitioner services in Rangiora: “… I am advised that discussions are under way between Pegasus Health, St John, and the acute demand programme about improving services in that area, and that we hope there will be some announcements following that shortly.”, was he aware that the services in the deal that he and his colleague Kate Wilkinson were claiming to have brokered already existed; and does he really think that over 8,200 people who signed a petition calling for the Government to reinstate a service they have had for over 22 years will not see through his and his colleague’s false promises?

Hon TONY RYALL: The premise of the member’s question is simply not correct. Those services may have existed in Christchurch, but they did not necessarily exist in the area of debate at the moment. They are working very closely to improve the situation there, and I think there will be an outcome that is very positive for the community.

Competition Regulators—Relationship Between New Zealand and Australia

7. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Commerce: What recent steps has the Government taken to enhance cooperation and coordination between New Zealand and Australian competition regulators?

Hon SIMON POWER (Minister of Commerce): Today I can advise that the New Zealand Government and the Australian Government have finalised cross-appointments between the Australian Competition and Consumer Commission and the New Zealand Commerce Commission. Dr Mark Berry, the chair of the New Zealand Commerce Commission, has been appointed to the Australian Competition and Consumer Commission as an associate member, and Dr Jill Walker, a member of the Australian Competition and Consumer Commission, has been appointed to the New Zealand Commerce Commission, also as an associate member. Cross-appointments will improve consistency in the way the two regulators approach similar interests and issues under competition and consumer law.

Peseta Sam Lotu-Iiga: How does this announcement fit into the single economic market work programme?

Hon SIMON POWER: This cross-appointment is one of the key regulatory outcomes under the single economic market outcomes framework identified in the joint statement of intent by New Zealand and Australian Prime Ministers. That framework is now reflected in the revised Memorandum of Understanding on Coordination of Business Law, as we continue to deepen the economic relationships between the two countries.

Hon Lianne Dalziel: Why, if he is committed to enhancing cooperation and coordination between competition regulators, has he introduced a bill that will place completely different obligations on our respective stock exchanges, which appears to breach the very competition principles the Australian Competition and Consumer Commission and the New Zealand Commerce Commission are designed to protect?

Hon SIMON POWER: I do not accept that assertion from the member, but I am confident that the smarter members of the Commerce Committee will be able to work that out.

Environment Canterbury—Assessment of Commissioners Performance

8. CHARLES CHAUVEL (Labour) to the Minister for the Environment: What measures, if any, have been put in place by which to assess the performance of the commissioners appointed to replace the elected Canterbury Regional Council?

Hon Dr NICK SMITH (Minister for the Environment): Key measures for the Government are improved water and resource management in Canterbury. Despite it being 19 years since the Resource Management Act was passed, and over half the allocated hydro and irrigation water in New Zealand being in Canterbury, the previous elected council failed to provide an operative water plan. Good progress has been made, with the commissioners notifying the decision on the natural resources plan in October. I also note that in 2008 Environment Canterbury had the worst record for resource consent processing of 84 councils, with only 29 percent complying with statutory time frames. I note that in the first quarter of this financial year that percentage improved to 95 percent. A further key measure in respect of water quality is compliance with resource consents. These have improved from 43 percent in 2009 to 59 percent in 2010. I also note the huge progress that the commissioners have made in putting in place the Canterbury Water Management Strategy, with five zone committees having been set up.

Hon Ruth Dyson: Does he agree with the decision of his Government-appointed commissioners to sack the seven staff involved in the Clean Heat project, which has improved Christchurch’s air quality and assisted almost 19,000 homeowners to install cleaner heating and to insulate their homes; if so, how will their sacking and the delaying of air quality standards keep pressure on councils such as Environment Canterbury, to quote the Minister’s own words, to “improve air

quality at the fastest practical rate, to minimise harm, and to protect the public health” of communities?

Hon Dr NICK SMITH: The question the member has raised really highlights the difference between the Government and the Opposition, and it is this. What will make a difference to air quality is installing more Clean Heat systems, and the interesting thing is that over five times as many new Clean Heat systems have been put in place under this Government in 2 years than were put in place under the previous Labour Government in 9 years. It is Clean Heat devices, not bureaucrats, that will clean up the air in Christchurch.

Colin King: Has the Minister received any further advice from the commissioners and the Hurunui-Waiau zone committee on the additional steps necessary to ensure an orderly and sustainable development of water resources in North Canterbury?

Hon Dr NICK SMITH: Yesterday I received a formal application from the commissioners to extend the moratorium on the Hurunui River to include the adjacent Waiau catchment. Today, after consultation with Cabinet and caucus, I have approved this proposal. I note that such a moratorium in Canterbury is possible only because of the special Environment Canterbury legislation that was passed by this Government, and that is enabling a far more orderly approach to irrigation development in Canterbury. This moratorium will stop a “first in, first served” rush for the considerable water that is available from the Waiau, and will enable the Hurunui-Waiau zone committee, which was set up under the Canterbury Water Management Strategy, to develop a sensible and balanced water plan for North Canterbury.

Hon Lianne Dalziel: Is the Minister satisfied with the operation of Environment Canterbury in relation to the statement on the front page of the Press that the sting operation that saw 28 buses immediately ordered off Christchurch roads last week was prompted by letters to the editor and “If it wasn’t for the letters to the editor this would not have come to our attention.”, in light of the fact that Environment Canterbury had been receiving complaints from the public ever since the new tenders were let?

Hon Dr NICK SMITH: The Government does have concerns about the recent performance of public bus services in Canterbury, particularly in respect of Christchurch Bus Services. I would note that the decisions over those contracts were made by the previous elected council, not by the commissioners. I think the commissioners have played quite an important role in that they have enabled Go Bus in Hamilton to buy out Christchurch Bus Services, and I am hopeful that we will see an improvement in the quality of service as a consequence of that change. The issue of who manages bus service contracts in Canterbury was highlighted in the investigation led by Wyatt Creech. It is the Government’s intention, with Environment Canterbury’s commissioners, to have a wider review of what is the best way in which we can sensibly manage ongoing bus service contracts in Canterbury.

Hon Lianne Dalziel: I raise a point of order, Mr Speaker. That answer was interesting, but it was not an answer to the question I asked. The question I asked was who was being held accountable for the fact that the police did the investigation, or the sting operation, as a result of letters to the editor—

Mr SPEAKER: I must confess I find it difficult to understand exactly the member’s question, because what she just told the House now does not seem totally consistent with what she asked. She did mention a sting in her original question, but I do not remember her mentioning a police investigation, but I might be wrong. What I will do is allow her to repeat her question, but if it contains politics, I will not ask the Minister to answer any further.

Hon Lianne Dalziel: Is he aware that the police said that the sting operation that saw 28 buses immediately ordered off Christchurch roads last week was prompted by letters to the editor—and the quote on the front page of the paper was: “If it wasn’t for the letters to the editor this would not have come to our attention.”—in light of the fact that Environment Canterbury had been receiving complaints from the public ever since the new tenders were let?

Hon Dr NICK SMITH: I think it is a very important principle in this country that decisions to prosecute are made by the police, without influence from elected representatives. The member or others may have concerns about the enforcement by the police, but I actually commend the police for their operation in respect of the buses, and I am surprised that members opposite would be asking for either Environment Canterbury or Ministers to be interfering in the independent prosecution decisions of the New Zealand Police.

Brendon Burns: Has the Minister now seen the comments of the Prime Minister, John Key, in February that he wants to see new water schemes in place in Canterbury next year; and given that he as Minister cannot get new environmental controls in place within that time frame, does that political agenda not leave the Environment Canterbury commissioners up an increasingly dirty creek without a paddle?

Hon Dr NICK SMITH: I would point out, firstly, that under the commissioners compliance with resource consents has substantially improved—substantially improved—and I thought that members opposite would welcome that. I also note that under the previous Government, only 29 percent of resource consents were being processed on time, and that figure is now 95 percent—95 percent—and I thought that would be welcomed by members of this House.

Brendon Burns: I raise a point of order, Mr Speaker. With respect, my question was about what—

Mr SPEAKER: I listened very carefully this time, and the member talked about someone being up a dirty creek without a paddle. If he injects that kind of language into a question, the Minister is pretty much at liberty to answer however he sees fit.

Lincoln University and Telford Rural Polytechnic—Merger

9. COLIN KING (National—Kaikōura) to the Minister for Tertiary Education: What benefits will be realised from the merger between Lincoln University and Telford Polytechnic?

Hon STEVEN JOYCE (Minister for Tertiary Education): Students will benefit from the creation of one larger institution with a stronger base to support education and research in the landbased sector. Having a specialist research and teaching university, combining the best of Lincoln University and Telford Rural Polytechnic, will improve the speed, reach, and effectiveness of knowledge transfer as we continue to build up our skills base to support the export-led recovery.

Colin King: What can students expect from a combined institution?

Hon STEVEN JOYCE: Effective from 1 January next year, the merged entity will provide quality land-based training for around 3,600 full-time domestic students. Lincoln University will retain Telford Rural Polytechnic’s sub-degree courses but also provide students at the southern campus with access to higher-level study, especially in agriculture and agricultural science. With the combined scale, the institution will be more efficient and more effective, bringing better results for students and for taxpayers who fund the tertiary education system.

Free-trade Agreements—Suits for Breaches

10. Dr RUSSEL NORMAN (Co-Leader—Green) to the Prime Minister: Does he stand by his comment, in relation to claims that investors are able to sue Governments for breaches of free-trade agreements, that such claims are “far-fetched”?

Hon TIM GROSER (Minister of Trade) on behalf of the Prime Minister: Yes.

Dr Russel Norman: Does the New Zealand – China free-trade agreement have provisions that allow investors to sue the New Zealand Government?

Hon TIM GROSER: The provisions negotiated—and I congratulate the previous Government on negotiating these safeguards—allow investors to raise issues of concern, but there are very careful safeguards in that agreement, and the agreement has worked extremely satisfactorily.

Dr Russel Norman: Given that the Minister has just agreed that the New Zealand – China freetrade agreement has provisions that allow investors to sue the New Zealand Government, how can it possibly be true that claims that such provisions exist are “far-fetched”?

Hon TIM GROSER: Because they are far-fetched. They are deeply implausible.

Dr Russel Norman: I raise a point of order, Mr Speaker. I could not hear the end of the Minister’s answer. I wonder whether the Minister could repeat the end of his answer; I could not hear it.

Mr SPEAKER: I think that is a fair request.

Hon TIM GROSER: I redefined “far-fetched” as deeply implausible.

Dr Russel Norman: If a Chinese corporation were to sue New Zealand under the investor-State disputes mechanism of the New Zealand – China free-trade agreement, would the case be heard in New Zealand?

Mr SPEAKER: Before I call the Minister, I ask members on the front benches to please cease their interjections. I am struggling to hear.

Hon TIM GROSER: Detailed provisions in the relevant articles—I think they are articles 152 and 153—set out our procedures. At the very end of the day there is provision for a neutral observer to come in and make a judgment, but we have never encountered that and I do not expect to.

Dr Russel Norman: I raise a point of order, Mr Speaker. The question asked whether this case would be heard in New Zealand; I do not believe the Minister addressed that.

Mr SPEAKER: The member can repeat his question so there can be no uncertainty. The noise level meant that I was struggling to hear. I invite the member to repeat his question.

Dr Russel Norman: If a Chinese corporation were to sue New Zealand under the investor-State disputes mechanism of the New Zealand – China free-trade agreement, would the case be heard in New Zealand?

Hon TIM GROSER: Not necessarily; it could be held in Beijing.

Dr Russel Norman: Is it not the case that under article 153 of the New Zealand – China freetrade agreement the dispute would be heard under the auspices of the World Bank or the United Nations, and there is absolutely no guarantee at all that it would be heard in New Zealand?

Hon TIM GROSER: There are detailed provisions in the agreement. There are adequate safeguards to protect the sovereignty of the New Zealand Government, and we are very happy with the way the agreement is proceeding.

Dr Russel Norman: I raise a point of order, Mr Speaker. It was a very specific, non-political question about a specific provision of the free-trade agreement: where the dispute would be heard. I asked whether the Minister agreed that article 153 states that it would be heard under the auspices of the World Bank or the United Nations. It is a simple question.

Mr SPEAKER: But the member went on to ask, if I remember correctly, whether that meant that it would not necessarily be heard in New Zealand. The Minister already answered that question; he had already indicated that it could be held offshore. The answer to the previous question covered that, and that is why I believe the Minister had answered the question. He has already acknowledged that it could be held offshore.

Dr Russel Norman: Does the Prime Minister stand by his comment that he would rule out signing the Trans-Pacific Partnership if it includes investor-State disputes mechanisms that allow investors to sue Governments?

Hon TIM GROSER: The Prime Minister has regarded this as far-fetched. I do not recall the statement that the member uses being used by the Prime Minister.

Mr SPEAKER: I invite the member, on this occasion, to repeat his question. As I understood it, that question was not referring to the Prime Minister’s statement; it was actually asking specifically with regard to the Trans-Pacific Partnership provisions. I invite Dr Russel Norman to repeat his question.

Dr Russel Norman: Let me attempt to—

Mr SPEAKER: I have invited the member to repeat his question, and he should respect that.

Dr Russel Norman: Will he rule out signing the Trans-Pacific Partnership if it includes investor-State disputes mechanisms that allow investors to sue Governments?

Hon TIM GROSER: We will look carefully at these provisions—they are not yet negotiated— and we will give an unqualified assurance to the New Zealand public that we will carefully safeguard the sovereignty of New Zealand to entertain good public policy in accordance with the principles of open government.

Dr Russel Norman: Will the Prime Minister rule out signing the Trans-Pacific Partnership if the agreement includes investor-State disputes mechanisms that allow investors to sue Governments— yes or no?

Hon TIM GROSER: I have already answered that question. We are dealing with a hypothetical situation. The Prime Minister has made the Government’s position quite clear. This is a far-fetched, hypothetical hunt, and I will not go beyond the statements the Prime Minister has issued.

Dr Russel Norman: I seek leave to table chapter 11, section 2, of the New Zealand China freetrade agreement, called “Investor-State Dispute Settlement”.

Mr SPEAKER: Leave is sought to table part of that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Dr Russel Norman: I seek leave to table all the cases that have been lost under the North America Free Trade Agreement, in which corporations have sued Governments and won many hundreds of millions of dollars—

Mr SPEAKER: What is this document?

Dr Russel Norman: It is a table of North America Free Trade Agreement chapter 11 cases, published in November 2010.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Dr Russel Norman: I seek leave to table the transcript of the Prime Minister’s comments about investor-State dispute resolution mechanisms. They are not publicly available otherwise; we transcribed them from the videotape.

Mr SPEAKER: Leave is sought to table this document. Is there any objection? There is objection.

Education Amendment Bill (No 2)—Minister’s Statement

11. Hon TREVOR MALLARD (Labour—Hutt South) to the Minister of Education: Does she stand by her statement made during the first reading of the Education Amendment Bill (No 2) that “it’s not intended” that the bill remove the requirement for carers at limited attendance centres to have police checks?

Hon ANNE TOLLEY (Minister of Education): Yes. However, I am advised that it is not appropriate for these requirements to be in the Education Act, as these are not providers of early childhood education but simply creche or babysitting services, in places like gyms and malls, where parents choose to leave their children for an hour or two.

Hon Trevor Mallard: Is she suggesting that individual parents should ask the carers whether they are paedophiles, and does she seriously think they will get honest answers?


Hon Trevor Mallard: Whose responsibility is it, then, to ensure that these careers are not convicted sex offenders?

Hon ANNE TOLLEY: There are a number of legislative requirements that will continue to apply to this type of short-term child-minding. There is also an onus on the creche providers, via

contractual obligations to parents, to ensure that they provide an environment suitable for the safety and well-being of children in their care.

Hon Trevor Mallard: Which parents sign a contractual obligation with a gym when they drop their kids off for 1 hour?

Hon ANNE TOLLEY: It is my understanding that they do not have to sign anything.

Hon Trevor Mallard: Will she take responsibility—to the parents—for the first case of a convicted sex offender being allowed to be a carer as a result of the changes that she has made in the Education Amendment Bill (No 2)?

Hon ANNE TOLLEY: I find the implication of that question absolutely offensive. The bill is making a distinction between an early childhood education centre and a creche or a babysitting service that is in a gym or in a shopping centre where a parent leaves their child for a small period of time. Often they have sight of that child—constantly. The parent has the responsibility to ensure that they are leaving their children—and this Government trusts parents to make those decisions— in a safe environment.

Hon Trevor Mallard: Does the Minister not understand that she is not trusting parents but she is trusting sex offenders, because they will no longer have to have police clearances, because of the changes she is making?

Hon ANNE TOLLEY: Mr Speaker, I seek your help. I find that question absolutely offensive. I am not trusting sex offenders.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It has been well established and accepted by the Minister that she is removing the protection that stops sex offenders from working as carers in gymnasia and shoppers’ creches. She is saying we should trust the parents, when in fact what she is saying is that we should trust the sex offenders.

Mr SPEAKER: That was not a point of order. I listened to the member because I know that the member is not satisfied with the Minister’s answer, and I was listening to try to assess the basis of the dissatisfaction. The question contained an element of accusation that the Minister found objectionable. If it were possible to frame questions that—forgive me; time has passed. I am not sure whether it was the question that started with: “Does the Minister not understand”, and forgive me if it was not the way this one started. But usually that kind of construction for a question is intended to make a statement, and previous Speakers have just ruled that kind of question out of order. But given the way the Minister has responded to the question, I think that, rather than ask the Minister to answer it further, the member could ask a supplementary question, as he has more available. Framing a question that is asking, rather than making a statement that the Minister finds offensive, would be a better way to proceed.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I want to be clear. Are you ruling my supplementary question out of order on the point of order from the Minister, or are you asking me to rephrase it?

Mr SPEAKER: No. I am ruling that I will not ask the Minister to answer it any further. Her answer was that she found it offensive, and that—

Hon Trevor Mallard: She took a point of order, Mr Speaker.

Mr SPEAKER: I thought the Minister was answering. I did not call the Minister to a point of order. I called her to answer the question. Let me come back to the Minister. Did the Minister take a point of order, or did she answer the question?

Hon ANNE TOLLEY: I answered the question.

Mr SPEAKER: The Minister has indicated that she answered the question. [Interruption] That member has been around the House for a while, and she will not interject when a point of order is being dealt with. If I remember the question correctly, it went along the lines of: “Does the Minister not understand”, something and the Minister objected to that and said she found the question offensive. Under the circumstances I am accepting that as a reasonable answer. I am saying to the member that the subject area is certainly not out of order. As I understand the question, it appears

that there might be an amendment, or it is intended that there be an amendment—or there is an Education Amendment Bill (No 2) that does something. The subject matter is a perfectly legitimate area to question a Minister on. But the questions should not be of that nature, especially with this kind of issue. By and large, questions that say: “Does the Minister not understand” something are not proper questions at all. They are simply a means to make a statement, and the Minister found that statement offensive, and that is why I am supporting the Minister in her answer. But the member has further supplementary questions to pursue the fundamental issue.

Hon Trevor Mallard: Does the Minister believe that it is desirable for a paedophile to be employed to care for children in a limited attendance centre; if not, why has she removed the primary protection against that happening?

Hon ANNE TOLLEY: Of course I do not support that. However, as I have said before, the Education Act is not the appropriate place for these types of regulations, because those are not providers of early childhood education. I note that the member has been looking at other jurisdictions, and I would always be very happy to discuss how other countries have addressed this issue. But in the meantime this is not an issue for the Education Act, because they are not providing early childhood education.

Hon Trevor Mallard: Why, then, if it is not appropriate for it to be in the Education Act, did she not promote an amendment to another Act where she thinks it is more appropriate, when she removed the protection of young children from paedophiles in gymnasia and in shopping centres?

Hon ANNE TOLLEY: First of all, we are dealing with an Education Amendment Act, so I am making changes. One of the difficulties was that the previous Government over-regulated to such an extent that we had to come in and make changes. These were creches. In fact, I visited one with the Minister of Māori Affairs—a room no bigger than an average living room, with a small section in the corner in full view of the parent, where their child was minded while they were doing exercise. The previous Government put in regulations that required a qualified teacher, an education plan, and a whole raft of requirements that were way over the top for a couple of hours of child-minding.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It was a very long answer, but it did not go to the question, which asked why the Minister did not promote an amendment to another Act as she opened up the gap to paedophiles.

Mr SPEAKER: That last comment should not have been made under a point of order. I heard the question very clearly and I listened very carefully to the Minister’s answer. The question asked “Why did she not”, and the Minister explained why. It may not be the “why” the member might have expected, but it was certainly a reason why. The Minister talked about excessive regulation, etc., and that is certainly a reason. Whether it is exactly the reason that satisfies the member, I am not sure, but the member does have a further supplementary question if he wishes to pursue it further, I believe.

Schools, Secondary—Class Sizes

12. TE URUROA FLAVELL (Māori Party—Waiariki) to the Minister of Education: Has she seen reports that secondary school teachers and principals say that some classes can get as large as 40, and what is the best-practice advice about the relationship of class size to learning outcomes?

Hon ANNE TOLLEY (Minister of Education): I have seen some reports from the secondary teachers union along those lines. However, the Ministry of Education advises me that no secondary school has contacted it with concerns about classroom overcrowding. Research shows that effective teaching has the biggest single impact on student achievement, regardless of class size.

Te Ururoa Flavell: Does she agree with a paper presented to the School Staffing Review Group by the New Zealand Post Primary Teachers Association in June 2000 that there is strong evidence that small classes assist with the academic success of students from low socio-economic backgrounds, and what has changed a decade on to suggest that small classes are no longer a priority?

Hon ANNE TOLLEY: Actually, the evidence is very clear that effective teaching is the most important factor in student achievement. Research by Auckland University’s Professor John Hattie has shown that in comparison with other changes that can be made to improve student outcomes and achievement, class size has a considerably small effect.

Te Ururoa Flavell: Does she support the goals of Ka Hikitia—Managing for Success, specifically to increase the effectiveness of teaching and learning for Māori students in years 9 and 10, and how does a class size of 40 enable that goal to be achieved?

Hon ANNE TOLLEY: Absolutely, I support the goals of Ka Hikitia. We must do much better for our Māori students. But, as I said to the member in the primary question, I have no evidence before me about overly large classes in secondary schools. This Government is investing, with the support of the Māori Party, in Te Pūtahitanga Mātauranga to increase the effectiveness of teaching in secondary schools. The introduction of national standards will ensure that students arrive at secondary school with good literacy and numeracy skills, which we know they need in order to remain engaged at secondary school.

Hon Trevor Mallard: Is she prepared to approach the Minister of Finance for additional funding in order to settle this teacher pay and conditions dispute; if not, why not?

Hon ANNE TOLLEY: This Government has a responsibility to keep faith with those members of the Public Service who have already settled, and who have recognised the very difficult financial times we are facing. So, no, I will not.


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