Questions And Answers Feb 9

by Desk Editor on Wednesday, February 9, 2011 — 7:28 PM

Press Release – Office of the Clerk

1. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister : Does he stand by his statement on the sale of State assets that “we do want to sell to Kiwi mums and dads as a priority”?
(uncorrected transcript—subject to correction and further editing)


Questions For Oral Answer


State-owned Assets—Prime Minister’s Statements

1. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by his statement on the sale of State assets that “we do want to sell to Kiwi mums and dads as a priority”?

Rt Hon JOHN KEY (Prime Minister): Yes. If we were to go ahead with a mixed-ownership model in some Crown-owned companies, we would want to sell shares to Kiwi mums and dads as a priority. There would, no doubt, also be demand from KiwiSaver accounts and other New Zealand managed funds, as well as from iwi, the New Zealand Superannuation Fund, and other Crown financial institutions.

Hon Phil Goff: Will the mums and dads be free to onsell their shares to foreign investors?

Rt Hon JOHN KEY: Yes, but history indicates that they are less likely to do that.

Hon Phil Goff: Actually, does history not indicate that when National sold Contact Energy, the shares to the so-called mum and dad investors that it talked about then quickly flowed to the corporates and to foreign investors, and that most of the dividends from that company now flow out of this country?

Rt Hon JOHN KEY: Unfortunately for Mr Goff, no. The proportion that was originally sold was 31 percent to retail investors. It will be remembered that 51 percent was sold to Edison Mission Energy. That has now fallen to 22 percent in 12 years. But interestingly enough, the member might be interested in the report that I am holding, and I suggest he takes it away and reads it. It is by Pattrick Smellie. Let me just quote a little bit from the report: “One of the least defensible criticisms of the Key Government’s partial privatisation plans have been regular references to Contact Energy as an example of a privatised company which lost control to foreigners. Yet nothing could be further from the truth. The reality of the Contact share register is it remains possibly the most widely held share by domestic New Zealand investors. What it shows is that many small-scale investors have piled into privatised companies like Contact precisely because they want to retain control and as much New Zealand ownership as possible.”

Hon Phil Goff: When the Prime Minister said “no” to my last question, was he denying that the majority of shares are now owned by foreign owners, and that the majority of dividends that are paid back therefore go out of the country?

Rt Hon JOHN KEY: No. What I was saying was that initial public offering started with a 51 percent offering to an offshore party. Any initial public offering that we might do would have 51 percent control by the Crown. On top of that would be the New Zealand Superannuation Fund with its $17 billion, ACC, 1.6 million KiwiSaver accounts, many New Zealand mums and dads up and down the country, and iwi who are interested in buying in. It will not be foreigners who will own those companies; it will be New Zealanders.

Hon Phil Goff: Is it not dishonest to talk about sale to mum and dad investors when in fact all Kiwi mums and dads currently own those companies and the result of his sale will be that those shares go only to those who can afford them and to foreign corporates?

Rt Hon JOHN KEY: No, because 51 percent will be controlled by the Government. There are 1.6 million KiwiSaver accounts. What is interesting about those KiwiSaver accounts is that, firstly, they need investments for the long haul, because they are largely dominated by younger people; secondly, the economic distribution of those 1.6 million accounts is very much skewed to low and middle income New Zealanders; and, thirdly, the New Zealand Superannuation Fund will be buying on their behalf, along with ACC. I think the member should give up and try another question.

Hon Phil Goff: I will, if I get a better answer than that one. Can the Prime Minister guarantee to mum and dad consumers that prices for electricity will not go up at an even faster rate, as the private shareholders seek to maximise their dividends and increase the directors’ fees, as in fact happened with Contact Energy when it was privatised, and as happened in Australia with privatisation?

Rt Hon JOHN KEY: I am pretty sure I can guarantee that they will not go up by 72 percent, as they did under the previous Labour Government in 9 years. Secondly, members need not take my word for it. We can check out the statements of Consumer New Zealand, which is an independent body. Its chief executive, Sue Chetwin, stated that she “agreed with Mr Key’s assessment that electricity prices would not increase with partial privatisation.”

Hon Phil Goff: If it is demonstrated that a clear majority of New Zealanders are opposed to these sales, will the Prime Minister ignore their views and go ahead and sell the assets off anyway?

Rt Hon JOHN KEY: On 26 November we are having an election. I think we will find that their views will be demonstrated through the ballot box.

Budget 2011 and Wider Economic Programme—Focus

2. CRAIG FOSS (National—Tukituki) to the Minister of Finance: What will be the focus of Budget 2011 and the Government’s wider economic programme this year?

Hon BILL ENGLISH (Minister of Finance): Today I have announced that Budget 2011 would be presented on Thursday, 19 May. It will focus squarely on taking further measures in the Government’s programme to build New Zealand’s national savings, increase investment, create jobs, and lift incomes, as well as reducing our vulnerability to foreign debt.

Craig Foss: How will Budget 2011 build on the National-led Government’s first two Budgets?

Hon BILL ENGLISH: In Budget 2009 we had to get on top of spiralling debt, which was out of control as a result of a recession and very poor management by the previous Government. In Budget 2010 the Government changed the incentives in the tax system to reduce the incentive for excessive spending and borrowing, and to increase the incentive for savings, and we will continue along that line in Budget 2011.

Rahui Katene: Is the Minister aware that in 2008 Treasury observed that the last recession, from 1988 to 1993, had had adverse social and economic effects on Māori that lasted for at least a decade, and what will he be doing in Budget 2011 to prevent the same scenario from reoccurring?

Hon BILL ENGLISH: The Government has moved to prevent that scenario from occurring again by supporting the economy through this last recession, and this year we are borrowing $300 million a week to pump into the economy to maintain transfer payments and income support, as well as to underpin publicly funded jobs. In Budget 2011 we will have a strong focus on investment—that is, getting businesses to invest their money so that they can create new jobs and lift incomes, and that will certainly benefit Māori.

Craig Foss: What specific measures will the Government consider to ensure that it contributes to improving New Zealand’s national savings?

Hon BILL ENGLISH: The Government needs to carry some of the weight of improving national savings. Households are doing their bit, because they are being careful with their spending,

paying off debt, and increasing their savings—in fact, they are doing that faster than we expected. However, at the moment the Government is driving up our external debt. We need to get hold of Government spending in the first place, to improve its effectiveness and focus, and we need to get back to surplus as quickly we can, so that the Government is not driving up New Zealand’s already very high level of foreign debt.

Hon David Cunliffe: Given that the Government’s books have deteriorated on the Minister’s watch from a surplus of $8 billion as at election day to a debt now of $40 billion, and given that he has just admitted that the Government may be taking the country into a double-dip recession, will he now admit that his programme has failed and he has no new ideas for jobs and growth?


Metiria Turei: Why will the Minister not increase the minimum wage to at least $15 an hour, saving around $1 billion in Government social services spending?

Hon BILL ENGLISH: The Government has made a balanced decision about the minimum wage. On the one hand we do not want to take measures that will lock young people, particularly, out of the labour market. On the other hand people on the minimum wage need to be able to deal with the rising cost of living. So the Government has announced about a 2 percent increase in the minimum wage.

Craig Foss: What Budget measures has the Government already rejected and why?

Hon BILL ENGLISH: A number of measures have been proposed that would significantly increase the need for New Zealand to borrow in financial markets that are increasingly reluctant to lend, particularly to countries with already high levels of total debt. So we have rejected the $1.3 billion cost of a tax-free threshold of $5,000, we have rejected the idea of taking GST off fruit and vegetables at a cost of a quarter of a billion dollars, and we are not going to be borrowing another $400 million to add to early childhood education spending.

Metiria Turei: Is the Minister of Finance, like John Key, proud of the 5 percent cut in full-time public sector jobs, given his concern about young people and jobs; if so, why?

Hon BILL ENGLISH: The Prime Minister has outlined his concern to ensure that we provide better public services and do so with fewer resources. Every other business in New Zealand has gone through that process, and most households in New Zealand have gone through that process; the Government has not. We will be investing in improved public services. In some cases that may mean there are fewer jobs but in many cases it will mean a better service.

Grant Robertson: Can the Minister confirm that the grand plan for lifting New Zealand out of economic recession is based on the merger of the Ministry of Fisheries into the Ministry of Agriculture and Forestry; if so, will it generate more savings than the $165,000 a year being saved by merging Archives New Zealand and the National Library into the Department of Internal Affairs?

Hon BILL ENGLISH: The Government is focusing on considering on a case by case basis how to provide better public services for less cost. In that case, the industry has suggested that such a merger would reduce the levy on the fishing industry. That would help it employ more people, grow more exports, and lift incomes across the New Zealand economy. So the Government is going to play its part.

Metiria Turei: Why is the Minister of Finance effectively subsidising the wage bills of large corporates like Foodstuffs and Burger King, rather than supporting families who need just a decent job with a living wage?

Hon BILL ENGLISH: When the Government came in, despite the fact that we faced significant deficits for a long time we maintained the Working for Families programme with only minor changes because we believe that those families need the certainty of the income support, particularly through a recession. Whether or not income support is a subsidy on wages is an old argument, but we believe that, regardless of what one thinks of that issue, those families need cash support, and this Government is borrowing $300 million a week to help ensure they get it.

Education, Māori—Impact on Māori Unemployment

3. Hon CHRIS CARTER (Independent—Te Atatū) to the Minister of Education: Does she agree with the Rt Hon John Key’s comment at Waitangi’s Te Tii Marae last year that improving education outcomes for Māori children would help address rising Māori unemployment?

Hon ANNE TOLLEY (Minister of Education): Of course.

Hon Chris Carter: Can she explain, then, to the House how cutting Government funding to over 2,000 early childhood centres by some $285 million improves the educational outcome for Māori students?

Hon ANNE TOLLEY: First of all I say that this Government is investing more in early childhood education than any other Government has ever done: $1.4 billion, which is up now over 10 percent of the education budget. The second thing I say is that under the previous Government, which that member used to be a member of, a considerable number of children, particularly Māori, did not access early childhood education. In some areas, up to 20 percent of Māori children were unable to access early childhood education. This Government is putting almost $100 million into early childhood education participation projects aimed at lifting Māori participation.

Colin King: What initiatives has she taken to improve Māori education outcomes, since becoming Minister of Education?

Hon ANNE TOLLEY: We are taking this issue extremely seriously. It is why we have introduced national standards and now whanaketanga rūmaki Māori to pick up struggling kids before it is too late and help them to read, write, and do maths. We are introducing the Youth Guarantee to help address the fact that more than half of Māori students are dropping out of school without a worthwhile qualification. We also have a number of Māori-focused initiatives—it is a long list; I will keep it as brief as possible—early childhood education participation projects and extending 20 free hours to kōhanga reo; $36 million to support schools with national standards and now whanaketanga rūmaki Māori; $45 million in this financial year alone on kura developments; extending Te Kotahitanga and He Kākano; helping to better manage Māori learner engagement and attendance of students; the parents, families, and whānau programme; the 43 iwi relationships; and more te reo teachers. This list compares with the Labour Government’s great initiative to improve Māori learning: the “Wassup!” badges. Do members remember them? That was Labour’s answer to Māori—

Mr SPEAKER: I allowed the Minister to go on for quite a while on that answer. I think we have heard sufficient.

Hon Chris Carter: Mr Speaker—

Hon Members: Wassup!

Hon Chris Carter: What is up is that education is being wrecked—

Mr SPEAKER: I intend to make sure that we start this year as we are going to carry on. I have just reminded the Minister that answers are not time for a speech. I listened while the Minister was giving information, but once she went on to attack the Opposition in response to a question from her own colleague, I interrupted her. I ask the member, when I have called him, to just ask his question, please.

Hon Chris Carter: Is she aware of Ministry of Education statistics that clearly demonstrate that increased early childhood education funding by the Labour Government between 2000 and 2007 led to an increase in participation of Māori preschoolers from 84 percent to 90.6 percent, and Pasifika preschoolers from 76.1 percent to 84 percent, and does that not just prove that educational success happens when we put in more resources, not cut them?

Hon ANNE TOLLEY: Yes, the Labour Government increased funding dramatically—in fact, three times. It trebled the money that was going to early childhood education. Unfortunately, across the board the children turning up at school having had early childhood education experience grew by less than 1 percent. So throwing money at something does not get good results. All it gets is an out-of-control education system.

Hon Chris Carter: I seek leave to table some statistics prepared by the Ministry of Education showing increased participation through the period that the Labour Government spent extra on early childhood education funding.

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.

Hon Clayton Cosgrove: I seek leave to table a report in which the Swannanoa Preschool makes two points: one, that they are losing $100,000—

Mr SPEAKER: Order!

Hon Clayton Cosgrove: —a year in their budget.

Mr SPEAKER: The member will resume his seat immediately. He will not go on to make a statement like that without making very clear what the report or document is that he is seeking to table. He did not make the source of the document clear. Before he says what is in it, he will make the source clear.

Hon Clayton Cosgrove: Sure. The $100,000 cut is noted in the Northern Outlook community newspaper.

Hon Trevor Mallard: Widely read!

Mr SPEAKER: I am on my feet. That is exactly why the member should have identified what the document was before he sought to make his political point. I will not tolerate that kind of thing.

Sue Moroney: I seek leave to table a letter from the Minister of Education to the Matua Plunket Kindergarten, proposing that it increase fees for 20 hours’ free early childhood education to make up for her funding cuts to the kindergarten.

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.

Egypt, Protests—Government’s Position

4. KEITH LOCKE (Green) to the Minister of Foreign Affairs: Why is he not calling for the immediate resignation of Hosni Mubarak as Egypt’s President?

Hon MURRAY McCULLY (Minister of Foreign Affairs): Decisions about the future of Egypt are for the people of Egypt to determine. President Mubarak has announced he will stand down in September, and it is clear that a transition in Egypt’s leadership is under way. Along with Governments of many other countries, the New Zealand Government has called for that transition to be orderly and non-violent, and for the end result to reflect the democratic wishes of the people of Egypt.

Keith Locke: Does the Minister agree with the Nobel Peace Prize winner and democracy leader Mohammed ElBaradei that “Mubarak is a symbol of an outgoing regime … If he doesn’t leave, the regime would retrench and then come back … with vengeance.”?

Hon MURRAY McCULLY: The Government of New Zealand believes that decisions about the future of Egypt are for the people of Egypt to make. As I noted in my primary answer, President Mubarak has announced his intention to stand down in September of this year, commencing a transition process that the New Zealand Government hopes will be orderly and non-violent and will result in a situation that reflects the wishes of the people of Egypt.

Keith Locke: If, as the Minister says, the decisions are to be made by the people of Egypt, why is the Government not listening to the people of Egypt who are demonstrating in their hundreds of thousands—for example, today? Is the Government’s reluctance to say that Mubarak should stand down now because the Government is reluctant to take a different foreign policy position from that of the United States Government?

Hon MURRAY McCULLY: The Government of New Zealand is aware that Egypt is a Sovereign nation. Therefore, it is for the people of Egypt to determine their future. I note the demonstrations that the member refers to. I also note that a transition has commenced, which the New Zealand Government welcomes.

Keith Locke: Does the Minister agree with John Key, who said on Breakfast that Mubarak had provided stability for Egypt, and should a New Zealand Prime Minister be supporting a stability enforced by 30 years of suppressing all dissent?

Hon MURRAY McCULLY: I have read the Prime Minister’s comments very carefully. Clearly, he was reflecting on the long history of conflict in the Middle East and the constant risk of that conflict sparking other tensions around the world. The Prime Minister gave appropriate credit to President Mubarak for his role in achieving and maintaining peace between Egypt and Israel. The fact that that peace has held for over 30 years is indeed a significant achievement for which the Prime Minister quite rightly gave President Mubarak credit.

Keith Locke: I seek leave to table a document from the Hindu newspaper of 8 February 2011 quoting the Nobel Peace Prize winner Mohammed ElBaradei calling for Mubarak to go.

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

Vulnerable Citizens—Government Measures to Assist

5. Hon ANNETTE KING (Deputy Leader—Labour) to the Prime Minister: In light of his statement “I have spoken previously of my concerns about a growing underclass, and vulnerable children are at the heart of that issue”, what specific improvements has his Government made to address both the underclass and vulnerable children in New Zealand?

Rt Hon JOHN KEY (Prime Minister): This Government has supported lower-income families and vulnerable children through a difficult economic time by maintaining benefits and income support payments, including Working for Families, and through additional assistance, such as the ReStart package and the 9-day fortnight job support scheme. The Government is also soon to increase the minimum wage from $12.75 an hour to $13 an hour. It has invested $125 million in the upgrade of State housing. It has seen 47,000 homes retrofitted for low-income New Zealanders. It has increased the number of under-sixes who are getting free access to doctors. It has increased significantly the number of infants who are being immunised. We have undertaken a range of other initiatives.

Hon Annette King: Is he aware that 30,000 more children are now living in severe hardship since he became the Prime Minister; and if his policies are so successful, why are more children worse off now than when he visited McGehan Close before the last election to highlight what he called the underclass in New Zealand?

Rt Hon JOHN KEY: It depends on how we define that; a lot of different measures are used. But what is true is that more people are on a benefit in the last couple of years, and that reflects the fact that we have been in a global recession. Those who have the lowest levels of skills are likely to be laid off first, and we have seen that being consistently applied around the world.

Hon Annette King: When he said he had the concerns of the underclass at heart, did he imagine that the number of people on all benefits would go up by almost 100,000 since 2008—as released in official statistics just a few moments ago—despite his so-called improvements?

Rt Hon JOHN KEY: What I did have concern about was the fact that so many New Zealanders find themselves in a position where they are living on a low income, and it is quite clear that we need to make significant changes to help those people. One of the ways to do that, of course, is to allow people to transition off welfare and into work, and the Government will be addressing that issue in the next few months.

Hon Jim Anderton: When the Prime Minister said in his speech to the House yesterday that a society should be judged by how it treats its most vulnerable citizens, how would he judge the

actions of his own Government in cutting by 30 percent this year the funding for conductive education programmes and the removal of all funding by 2014, when by any measurement the seriously disabled and fragile children who are so badly affected by that are clearly amongst New Zealand’s most vulnerable citizens?

Rt Hon JOHN KEY: I am advised, in terms of that programme, that only a group of children got that funding. But overall, we have increased significantly the amount of money spent on education in that area.

Hon Annette King: When he said he had done “as good a job as we can” for low-income families, did he at any time consider giving up his or his mates’ $1,000 a week tax cut, to ensure that the children from the so-called underclass that he mentioned in his speech could have just a little bit more?

Rt Hon JOHN KEY: I am struggling with where the member gets a $1,000 a week tax cut from, because, without going into too fine a point, the last time I looked at the figure from the Remuneration Authority, I saw the Prime Minister of New Zealand earns $400,000 a year. The difference between the top personal tax rate, which was 38c in the dollar, and the new rate of 33c in the dollar is 5 percent, and 5 percent of $330,000 is about 15 grand.

Hon Jim Anderton: What responsibility does the Prime Minister take for the ever-widening gap between those at the top of the income scales in New Zealand and those at the bottom, with all the associated health, education, housing, employment, and social problems that are attendant on those situations, given that he said he believes that our society should be judged on how it treats its most vulnerable citizens?

Rt Hon JOHN KEY: There is always a debatable issue about that gap, and it is quite subjective. But I would say that one can go and look at the range of things that the Government has been doing, and I listed before a whole range of them that are helping lower-income New Zealanders. I also make the point that if we look at the advice from the New Zealand Institute of Economic Research about the 90-day trial period, which is something that I know members opposite are vehemently opposed to, we see that measure is likely to have created 13,000 jobs.

Tax System Changes—Effect on New Zealanders’ Earnings

6. AMY ADAMS (National—Selwyn) to the Minister of Finance: How did the Government’s tax package in October contribute to increasing New Zealanders’ real after-tax earnings?

Hon BILL ENGLISH (Minister of Finance): The figures recently released by Statistics New Zealand show that real after-tax average earnings in New Zealand increased 3 percent in the December quarter, reflecting the benefits of the Government’s tax package and ongoing wage increases. The tax cuts more than compensated for the rise in GST at every level of income, which is why the vast majority of New Zealanders were better off as a result of the tax switch.

Amy Adams: How have real after-tax wages grown since October 2008?

Hon BILL ENGLISH: If we use the measure of wages that is used for calculating national superannuation, which has been used in that way for quite some time now, we see that real after-tax earnings have grown 10 percent since October 2008. Prices have gone up by 6 percent over that time, while after-tax wages—that is, wages after tax reductions—have risen by 16 percent. The strong increase in after-tax wages is a result of three rounds of tax cuts combined with the normal annual movements in wages. This is a big improvement—10 percent since 2008 is a big improvement—on the 4 percent growth in real after-tax wages during the previous 9 years.

Amy Adams: How are the figures on real after-tax wages calculated?

Hon BILL ENGLISH: The figures used are data on average, weekly, ordinary-time earnings, from Statistics New Zealand’s quarterly employment survey issued last week. This is the official series used to calculate the wage floor for New Zealand superannuation. Householders do not do that calculation when they are out shopping. We understand the pressure that is on households, but

we are determined to continue with economic policy that will support them by lifting their real after-tax wages.

Stuart Nash: Does he agree that inequality in New Zealand has increased due to tax cuts, where someone earning $1 million a year received a tax cut of $930 a week, yet someone on the median wage received about $15 a week; if not, why not? [Interruption]

Hon BILL ENGLISH: Labour members need to decide on their numbers, but that is not unusual. When the Government released the tax changes in the last Budget, it published a number of different measures of income equality—including Gini coefficients and other measures—all of which showed that the impact was roughly equal across the income distribution, taking into account all of the tax changes. As I recall it, no one in the Opposition questioned any of that substantial analysis.

Amy Adams: Has the Minister seen any reports on why real after-tax wages grew so slowly in the 9 years to October 2008?

Hon BILL ENGLISH: I could sum up those reports as saying that they are “bad policy”. Under the previous Government, in what was probably the most benign economic decade in about 50 years, it managed to achieve negative real per capita income growth—that is, real per capita incomes shrank. When people did get new jobs, they were funded by debt and were unsustainable. So people who relied on the Labour Government in the belief that their incomes were going up have now been let down, and we have to rebuild incomes and rebuild those families’ prospects.

Government Debt—Prime Minister’s Statements

7. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he agree with the Prime Minister’s statement: “New Zealand’s government debt as a percentage of GDP relative to the other countries is low, in other words we don’t owe very much”?

Hon BILL ENGLISH (Minister of Finance): Yes, of course I agree with the Prime Minister. Net core Crown debt is relatively low by the standards of many other countries, but what matters is that over the next few years that debt will rise sharply, and it would rise even more sharply if we did what Labour said. Secondly, the Government has now become the driver of the growth in our debt to foreigners, and our total public and private debt to foreigners is the highest in the world. We are already borrowing $300 million per week and borrowing more than that would be totally irresponsible.

Hon David Cunliffe: If the Minister inherited Government books that were in surplus, if New Zealand’s Government debt is now relatively low, and if private debt is very high, why is he not focused on reducing private debt instead of privatising State-owned enterprises, ultimately to foreign buyers, which will make it worse?

Hon BILL ENGLISH: The Government is focusing on reducing both. New Zealand’s total indebtedness to the world is up there with Portugal, Ireland, Greece, and Spain at about 85 percent of GDP. New Zealand households have started to reduce their borrowing. They are being careful with their spending, and are not rushing back to the housing market. The New Zealand Government needs to make the same effort as New Zealand households are making.

Aaron Gilmore: What measures of New Zealand’s indebtedness are of most concern to overseas lenders, and how do we compare with other countries?

Hon BILL ENGLISH: There are a number of ways of measuring our total indebtedness, but the one that gets used by those who lend to us—that is, the people who lend us $300 million a week so we can pay for Working for Families, and so we can keep our schools going and maintain our police—measures total indebtedness as a proportion of GDP. New Zealand’s is 85 percent, along with Spain, Greece, Ireland, and Portugal, which makes us among the highest in the world. A better level would be somewhere around 60 percent of GDP, which is about where Australia is, and internationally regarded as low risk.

Hon David Cunliffe: Given that 90 percent of that total debt is private debt, why is he, according to Professor Bowden of Victoria University, “spin doctoring” public debt as a pretext for privatisation and savage budget cuts instead of fixing the underlying private debt problem?

Hon BILL ENGLISH: Last year when we put up a Budget to increase taxes on consumption and on investment housing, which was designed to reduce demand for private debt, Labour voted against it. The previous question just illustrates that Labour members believe—alone in New Zealand—that the Government should go out and borrow as much as it possibly can, give it to anyone who wants it, and that that amounts to responsible economic management. I invite them to keep arguing that through the election year.

Aaron Gilmore: What were Treasury’s forecasts of net core Crown debt around the time of the 2008 election?

Hon BILL ENGLISH: The forecasts at that time were not that flash. Forecasts showed net debt jumping to 26 percent of GDP, as well as a decade of deficits. By December 2008, the forecasts were for net debt to soar to 50 percent of GDP by 2023, to never fall, and to show permanent Government deficits. So the impact of Labour’s bad policy and the global recession meant that at that stage our debt could have spiralled out of control. Fortunately, we got it under control.

Hon David Cunliffe: Can the Minister name any other OECD country that appears to be headed for a double-dip recession; if not, what is so special about his economic management?

Hon BILL ENGLISH: I would suggest Australia. Recent figures out of Australia show that that economy has to make the same adjustments as the New Zealand economy. There are very high levels of household debt. Australians have decided that they cannot get wealthy by buying houses off each other, and their consumer and housing markets are slowing down quite significantly.

Primary Sector, Innovation—Announcements

8. SHANE ARDERN (National—Taranaki – King Country) to the Minister of Agriculture: What major developments in primary sector innovation has he recently announced?

Hon DAVID CARTER (Minister of Agriculture): Last week I announced a further round of successful bids under the Government’s Primary Growth Partnership, which will see $107 million invested in the aquaculture, wild fish, and timber industries. In less than 17 months, the Primary Growth Partnership has delivered close to half a billion dollars of investment in the primary sector. When it comes to boosting economic growth through innovation, this Government is taking real action.

Shane Ardern: What type of work will be funded under these latest projects?

Hon DAVID CARTER: The latest round of successful bids includes a $52 million project aimed at transforming New Zealand’s aquaculture industry through selective breeding, a $51 million programme to develop improved wild fish harvesting technology, and a $2.5 million project to explore alternatives to methyl bromide. These projects collectively demonstrate the wide scope of innovation that is being funded by the Primary Growth Partnership.

Shane Ardern: Why is the Government making such a major commitment to primary sector innovation?

Hon DAVID CARTER: This Government is absolutely committed to improving export performance and primary sector productivity through science and innovation. The $475 million invested by the Primary Growth Partnership so far demonstrates our firm focus on lifting economic growth and getting our tradable sector back on track after a decade of neglect by the previous administration.

State-owned Assets—Prime Minister’s Statements

9. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Prime Minister: Does he stand by his statement yesterday about SOEs that “we want to give New Zealanders a chance to invest in these assets”?

Rt Hon JOHN KEY (Prime Minister): Yes. Of course New Zealanders would be a top priority. Can I just say how surprised I am that the member is asking me that question, because David Parker was reported in the Otago Daily Times yesterday saying that he would lead the charge on Stateowned enterprises.

Hon Clayton Cosgrove: To the Prime Minister—[Interruption]

Mr SPEAKER: I have called the Hon Clayton Cosgrove. [Interruption] I say to Government members this time that I have called the Hon Clayton Cosgrove.

Hon Clayton Cosgrove: Can he specify which New Zealanders will get a chance to invest in State-owned assets, given that New Zealanders already own these assets via the Crown, through their taxes?

Rt Hon JOHN KEY: Yes. I daresay the providers of the 1.6 million KiwiSaver accounts are likely to be interested. I would have thought the New Zealand Superannuation Fund, which holds assets on behalf of all 4.4 million New Zealanders, would be interested, as well. I would have thought ACC would be interested. I would have thought quite a number of high retail investors would be interested. If the member taps his mate on the shoulder and asks him, he will find out that iwi are interested in buying some shares, too.

Hon Clayton Cosgrove: Will the New Zealanders who have a chance to invest in State-owned enterprises include those people who, according to Statistics New Zealand, received an average wage increase of 1.7 percent last year, which was then completely eroded by the 4 percent increase in prices, meaning they have little or no disposable income?

Rt Hon JOHN KEY: I remind the member that wages have gone up by 16 percent and costs have gone up by 6 percent. But putting that to one side, as I said earlier, one of the things that really surprised me was that the distribution of the 1.6 million KiwiSaver accounts is heavily skewed towards low and middle income New Zealanders. They are saving for the long haul.

Jacinda Ardern: Will the New Zealanders who have a chance to invest in State-owned enterprises include the 158,000 people who are currently unemployed and have little or no disposable income?

Rt Hon JOHN KEY: Yes, of course. They are free to do so, like any other New Zealander. But, of course, those who have very low levels of disposable income are not likely to do so, for that reason. That is one of the reasons why welfare reform will help those New Zealanders get into work. I say to that member how lucky those New Zealanders are that Labour is not in office, because if its emissions trading scheme had been rolled out they would be paying so much more, and if its air quality standards had been rolled out thousands of them would have lost their jobs. And, by the way, if they were working on The Hobbit, they would be working overseas.

Kelvin Davis: Will the New Zealanders who have a chance to invest in State-owned enterprises include those people who are paying $25 to $40 extra a week for early childhood education and have less disposable income as a result?

Rt Hon JOHN KEY: If there are those people, then, yes; actually, their children would probably be at 100 percent teacher-led centres, so they are likely to be higher-income New Zealanders. I ask that member to please have the decency to pass his supplementary question to David Parker, because so far we have gone from Phil Goff, to Shane Jones, right through to that member, Kelvin Davis. I do not know who is next. Does Jacinda Ardern or anyone else want to ask a question over on that side?

Mr SPEAKER: I call the Hon Clayton Cosgrove. [Interruption] I know that the issue is a hotly contested issue, but the member has the right to ask a supplementary question.

Hon Clayton Cosgrove: Government diversions aside, is it not actually the case that the only people who will be in a position to invest in State-owned enterprises are the wealthiest 10 percent of New Zealanders, who received, thanks to the Prime Minister and his Government, 42 percent of the National Government’s tax cuts last year, and, of course, foreign institutions, which already own many of the former State assets?

Rt Hon JOHN KEY: I remind the member that two-thirds of all the personal tax cuts actually went to lower and middle income New Zealanders. Secondly, let me run through this one last time: there are $1.6 million KiwiSaver accounts; if the providers are not investing in a blue-chip company like Meridian Energy, what are they investing in? I make the offer one more time: could someone please pass a supplementary question to David Parker? I am thinking about letting him answer the questions, if he is not allowed to ask them.

Mr SPEAKER: I call the Hon Trevor Mallard. [Interruption] I am on my feet. There will be silence when I am on my feet, on both sides of the House.

Hon Trevor Mallard: My question is to the “Prime Mincer”.

Mr SPEAKER: The member knows he cannot do that. He has just lost his supplementary question. But, indeed, he has got another one.

Hon Trevor Mallard: Is it his expectation that someone with assets of $50 million and a 2 percent current return, which results in a $1,000-a-week tax cut, will find this share offer attractive?

Rt Hon JOHN KEY: If there were such a mythical person, they might; I am sure there are lots of New Zealanders who would want to invest in those assets. Can I say to the member that I appreciate the fact that he has his hair very similar to mine—undyed and quite short, and grey on the sides.

Mr SPEAKER: Order! The House will come to order straight away! I have allowed too much misbehaviour today. Members who do not usually misbehave were quite disorderly there. I penalised the Hon Trevor Mallard for a very disorderly comment, and I do not think the Prime Minister’s comment at the end of that question was helpful. Labour has just regained its supplementary question.

Hon David Parker: Point of order. [Interruption]

Mr SPEAKER: I meant what I said to the House. A bit of fun is fair enough—the member will resume his seat for a moment—but we cannot be too disorderly. Today has been pretty noisy. It is the first question time of the year—I understand that—but I cannot let it go too far.

Hon David Parker: I seek leave to take up the Prime Minister’s offer that I answer the question that Clayton Cosgrove put to him.

Mr SPEAKER: Leave is sought for the member to answer a question that was put to the Prime Minister. Is there any objection to that? There is objection.

Hon Dr Nick Smith: I seek leave of the House to table the speech made by Labour’s finance spokesperson, David Cunliffe, supporting mixed-ownership of State-owned enterprises and private shareholding in those companies.

Mr SPEAKER: This speech—where was it made?

Hon Dr Nick Smith: It was made by the Labour finance spokesperson, David Cunliffe, in November 2010.

Mr SPEAKER: Whereabouts, though? Where was this speech made?

Hon Dr Nick Smith: The speech was made in Wellington.

Mr SPEAKER: Whereabouts?

Hon Dr Nick Smith: At Victoria University.

Mr SPEAKER: OK. 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.

Employment, 90-day Trial Period—Effect on Employment

10. DAVID BENNETT (National—Hamilton East) to the Minister of Labour: What reports has she received regarding the effects of the 90-day trial period on job creation?

Hon KATE WILKINSON (Minister of Labour): I have seen a report from the New Zealand Institute of Economic Research that concluded that the trial period increased hiring from small

employers by 6 percent above expectations. During tough times in the labour market, trial periods are helping Kiwis to get into jobs.

David Bennett: How many jobs has the trial period helped to create?

Hon KATE WILKINSON: Heaps. The New Zealand Institute of Economic Research has estimated that 13,000 New Zealanders have jobs they would not otherwise have, because of the trial period. That is 13,000 New Zealanders. These findings are consistent with earlier research from the Department of Labour. I expect the number of jobs created to grow as the trial period becomes available to larger employers from 1 April this year.

Darien Fenton: Is it not true that the conclusion from the New Zealand Institute of Economic Research that the fire-at-will law appears to be working is based only on 6 months of raw data showing that hiring has declined less in small firms than in big firms; if so, does the latest increase in unemployment mean the fire-at-will law has stopped working?

Hon KATE WILKINSON: I think it is fairly obvious to everybody that the trial period is working and is creating jobs for New Zealanders. It is giving New Zealanders opportunities to get their foot on the employment ladder, which they might not otherwise have been able to do, and it is giving businesses the confidence to take on people whom they might not otherwise have employed.

Chidlren, Health—Access to and Cost of Primary Health Care

11. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Health: Does he believe affordable access to primary health care for children under 6 is important for delivering health outcomes; if so, how much does he believe parents should pay when they take children to see a doctor in 2011?

Hon TONY RYALL (Minister of Health): Can I start by congratulating the member on his new role. Yes, it is important that children under 6 have the best possible access to primary care, and that is one of the reasons this Government has increased funding for primary care by $144 million over 4 years. Some of that extra money is going to increasing subsidies for the under-sixes scheme. The proportion of children under 6 years of age who qualify for free doctors’ visits has risen, from 70 percent in 2008 to 83 percent today, under the National Government. Despite this progress, the cost of after-hours care at some practices has been, and continues to be, a longstanding concern.

Grant Robertson: I raise a point of order, Mr Speaker. This was a question on notice, and it had two parts to it. The Minister certainly dealt with the first part of the question, but he did not deal with the second part, when he was asked how much he believed parents should pay when they take their children to the doctor.

Mr SPEAKER: The member will be aware that when he puts down a question on notice, there is no particular answer to what the Minister believes. The Minister told the House what he believed about that, and it was not exactly what the member was seeking, but that is the problem with seeking opinions.

Grant Robertson: Does the Minister agree with the Ministry of Health that $15 or more for an after-hours visit for a child aged zero to 7 represents “a high fee”?

Hon TONY RYALL: I am not aware of the correspondence that the member is referring to, but what I can say is that of course these things depend on the various circumstances surrounding the practice that provides the service. What I can say, though, is that 94 percent of high-needs children are going to a free under-sixes practice.

Grant Robertson: Does he think it is acceptable that it cost Kapiti coast resident Linley Williams $41, or 20 percent of her family’s weekly grocery bill, to get treatment for her 20-monthold daughter’s badly cut lip at 5.30 p.m. last Thursday?

Hon TONY RYALL: I am aware of that correspondence from the lady concerned. It is a matter that we are looking into. On the Kapiti coast, of course, there is a major problem with the supply of doctors, a problem that we inherited from the previous Government. Certainly we think that the

Government’s move to make sure that more and more people are getting access to free under-6 health checks is a benefit, but there are, no doubt, parts of the country where there are problems. That is one of the reasons why in Auckland, for example, we are developing a network of 10 extended-hours clinics, which will provide targeted support for lower-income people.

Grant Robertson: Would the Minister rather that the Williams family drove to Wellington Regional Hospital and clogged up the emergency department, or is he prepared to actually address the cost of taking young children to after-hours care on the Kapiti coast?

Hon TONY RYALL: The Government is concerned about the cost of after-hours care, and a number of initiatives are being taken. As I said, in Auckland within the next 6 months we will have a network of 10 after-hours clinics providing lower-cost access to health services for many children in particular areas—

Charles Chauvel: How’s that going to help anybody on the Kapiti coast?

Hon TONY RYALL: The issue on the Kapiti coast remains the long-standing shortage of general practitioners that we inherited from the previous Government, and that is why a number of initiatives are under way, and more and more people in Kapiti are getting access to care.

Grant Robertson: Will the Minister commit to making access to after-hours care for all undersixes free across New Zealand, to give Linley Williams, as she says, “a fairer system for working families”, or is it just, as John Key said in 2007, a matter of letting the market decide?

Hon TONY RYALL: New Zealand is living in very tough economic times. Mr Robertson’s predecessor as spokesperson on health promised an extra $500 million to pay workers who had a claim under sleepovers, and now we hear another promise of tens of millions of dollars being made off the hoof. But this Government is concerned about making sure that more and more young New Zealanders get access to the free under-sixes scheme, which was started under the National Government, and 83 percent of young New Zealanders under 6 now have free access to a general practitioner, compared with 70 percent when the party opposite was last in Government.

Rahui Katene: What will he be doing to respond to the increasing number of hospital admissions from socioeconomically sensitive conditions, particularly for Māori and Pasifika children, estimated at approximately 2,000 additional such admissions in 2009?

Hon TONY RYALL: A number of initiatives are under way to address the issue that the member has raised. Of course, the first is the leading-edge programme Whānau Ora, which will provide much better cross-agency support for families, and the second is the before-school checks programme. When I became Minister of Health something like about 8 percent of kids were getting a before-school check; I have now got that figure up to 70 percent. Here is the really important message: we now have more Māori kids being immunised at age 2 than ever before in the history of New Zealand. I am not prepared to tolerate the poor immunisation rates of Māori kids that the previous Government did.

Tax System Changes—Rate Required to Implement Policies

12. Hon RODNEY HIDE (Leader—ACT) to the Minister of Finance: What would the top rate of tax need to be to implement a $5,000 tax-free threshold, reverse the Government’s spending cuts, remove GST from fresh fruit and vegetables; all while not increasing New Zealand’s debt track any further?

Hon BILL ENGLISH (Minister of Finance): Such a rate is very difficult to calculate, because, in theory at least, the rate we would need to strike in order to raise $1.55 billion would be around 58c to 60c in the dollar, which would be the highest rate in the world. Of course, if we struck that rate, we would get many times over the rash of avoidance that occurred when the previous Government put up the top rate to 39c in the dollar. I suspect that Labour would not be able to go to 50c in the dollar, and that it would have to put up tax rates right across all income ranges in order to pay for the $5,000 tax-free zone. That is before we get to raising tax to pay for all the other promises in addition to those two.

Hon Rodney Hide: How would that required tax rate compare with taxes around the world and, in particular, in Australia?

Hon BILL ENGLISH: The comparison would show it to be the highest tax rate in the world. If we have learnt one thing in recent years, it is about the mobility of income and the ability of people to organise their affairs in order to avoid paying a top tax rate. Even the highest personal tax rate in the world would not be anything like enough to raise the revenue required to fund the tax-free zone. In fact, Labour would have to increase tax rates right across the income range to pay for that promise.

Hon Rodney Hide: Has New Zealand ever had tax rates at that level; if so, what were the comments of the Government of the time that reversed that figure?

Hon BILL ENGLISH: Mr Speaker—

Hon Annette King: It was 66c under Muldoon. Under a National Government it was 66c.

Hon BILL ENGLISH: That is exactly right. It was 66c in the dollar, and that was progressively reduced to 33c in the dollar by the Labour Cabinet of the time, of which Phil Goff was a member as well as a strong advocate of reducing the top tax rate, for all the reasons that I have just said. If we put a tax rate at 66c in the dollar, hardly anyone would pay that, and that would undermine the integrity of the system. What Labour would have to do to pay for the tax-free threshold would be to lift the tax thresholds for all working New Zealanders, and that would mean they would not be better off.


Question No. 1 to Member Question ruled out of order.

Question No. 2 to Member Question ruled out of order.

Question No. 3 to Member Question ruled out of order.

Point of Order—Questions to Members

Hon DAVID PARKER (Labour): I raise a point of order, Mr Speaker. Members of the Opposition are in a difficult position here, because the normal procedures of the Māori Affairs Committee have been severely truncated. We have only one House in this Parliament, and therefore we are reliant on good select committee procedures in order to get good law. What remedy do I have but to ask questions about those poor processes?

Mr SPEAKER: Now that the Marine and Coastal Area (Takutai Moana) Bill has been reported back to the House, the member will have ample opportunity, I am sure, during what I am sure will be significant debates in this Chamber, to raise all the concerns that he has about that.


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