Questions And Answers June 21

by Desk Editor on Tuesday, June 21, 2011 — 7:34 PM

Press Release – Office of the Clerk

1. AMY ADAMS (National—Selwyn) to the Minister of Finance : What reports has he received on the economy?
(uncorrected transcript—subject to correction and further editing)





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

Hon BILL ENGLISH (Minister of Finance): Emerging evidence suggests that despite the February earthquake the economy has been on track, and perhaps a little stronger than expected, in the first part of 2011. Manufacturing volumes rose by 1.9 percent in the March quarter following a 3.7 percent increase in December. Retail sale volumes rose 0.9 percent in March, wholesale trade was up 2.8 percent, and consumer confidence has lifted. This resilience in the face of adversity highlights the many positives supporting the economy. These include high export prices, strong demand growth from Asia, lowest interest rates for 45 years, and a credible path back to surplus for the Government’s accounts.

Amy Adams: What do the latest New Zealand Institute of Economic Research consensus forecasts show?

Hon BILL ENGLISH: The consensus forecasts are a blend of forecasts from 11 different forecasting organisations. They show GDP growth over the next year to be about 2 percent, followed by 4 percent in the year following that; a large lift in residential investment, growing by 38 percent in the June 2013, year affecting the Christchurch rebuild; interest rates staying low; and the Government’s Budget balance improving.

Amy Adams: How do these projections compare with those in Budget 2011?

Hon BILL ENGLISH: They are fairly similar. The private sector forecast covered by the New Zealand Institute of Economic Research consensus is quite close to those prepared by Treasury. For instance, it forecasts employment rising by 3.8 percent, and Treasury picks about 3.6 percent. Its average consumer price index forecast for inflation is identical to Treasury’s.

John Boscawen: Has the gap between GDP per capita in Australia and GDP per capita in New Zealand narrowed or widened since his Government came to office; or does he not know?

Hon BILL ENGLISH: I cannot give the member the precise figures, but in the first quarter of this year it has probably narrowed, because our economy looks like it has grown a bit and the Australian economy has shrunk. However, a quarter-to-quarter measure is almost irrelevant. In the long term we believe that sound policies and careful and considered decision-making will mean that over time we will close the gap with Australia, and the resilience that this economy has shown in recent times is a positive indicator of that.

John Boscawen: I raise a point of order, Mr Speaker. The member started by saying that he could not give me a precise answer. I was not asking for a precise answer. I was simply asking whether the gap has narrowed or widened, or alternatively, if the Minister did not know that—

Mr SPEAKER: I heard the Minister say distinctly that although he could not give the precise figures, he believed that during the first quarter of this year the gap had probably narrowed. He gave an answer.

John Boscawen: I raise a point of order, Mr Speaker. He answered in connection with the first quarter. I specifically said “since his Government came to office”. I was asking whether the gap has narrowed or widened since his Government first came to office.

Mr SPEAKER: And he said he does not have those precise figures. The primary question asked what reports he has received on the economy. The member cannot expect the Minister to have that kind of specific, detailed information.

Hon David Cunliffe: Does he recall replying to a similar question to this primary question, in September 2009: “I have received reports indicating that the economy is showing some early signs of recovery,” or the one in October 2009, to which he replied: “In recent weeks a number of reports have confirmed an early sign of pick-up in business confidence.”, or the one in March 2010, when he replied: “It is important we convert the early start to recovery into a permanent lift,” or the one in July 2010, which turned out to be a year of zero growth, when he said that the economy was “making very significant progress” and the Government was “working to get this economy on its feet”, or is it his habit—

Mr SPEAKER: I want to hear the question. It is a bit long. [Interruption] I apologise to the member. The question is a little longer usual but there is a pattern to it, and I do want to hear the question, and I want his own colleagues to let him be heard. We will not start the question again.

Hon David Cunliffe: You anticipated my point of order. Not wanting to miss the punchline, I ask is his habit of counting his chickens before they have hatched one of the reasons why Standard and Poor’s has kept his Government’s credit rating on negative outlook?

Hon BILL ENGLISH: I do recall those answers, and I am impressed with what an upbeat and aspirational Government we have been, through some very tough times.

Amy Adams: What factors would put the forecast return to growth at risk?

Hon BILL ENGLISH: There are always risks to the future prospects of this economy—for instance, this week there are critical meetings in Europe, where they are trying to grapple with the problem of the potential default of Greece, and if that were to occur, then the markets in which we borrow significantly and regularly could be disrupted. There are also risks closer to home. We could undermine recovery if, for instance, half-baked spending promises led to soaring debt. That would be bad for the economy.

Hon David Cunliffe: Given his aspirational reply to my earlier supplementary question, is it now he who is dancing from cloud to cloud, or has he seen the new immigration report from Statistics New Zealand that shows chippies, plumbers, and other building industry professionals are leaving the country at a rate of 20 a day, and over 4,000 have left since the first Christchurch earthquake, and how will Christchurch rebuilding happen if his Government makes no effort to retain the skilled workforce we need to undertake that work?

Hon BILL ENGLISH: I have not seen those figures. In the first place, it is the responsibility of the companies that expect to rebuild Christchurch to ensure that they have skills. Of course it will be tight, because they are competing with very, very large salaries, particularly those in Western Australia where something like $250 billion worth of capital projects are in the pipeline. However, we are confident that we have the resources of both funding and skills to rebuild Christchurch.

John Boscawen: Has the gap between GDP per capita in Australia and GDP per capita in New Zealand narrowed or widened since his Government came to office, or does he not know?

Hon BILL ENGLISH: I cannot give the member those precise figures, but, as the member knows, the Government wants to close the gap with Australia by 2025. In any given year or two the gap might move one way or the other, as, for instance, in the last quarter it has probably moved in favour of New Zealand. Our policies are focused on a longer-term increase in New Zealand’s

growth potential, and we are putting in place policies such as investment in infrastructure, a major tax change, and a very efficient public sector, which will enable us to achieve that increase.

John Boscawen: Has the Government instigated any investigation into how South Canterbury Finance was underwritten by the taxpayer to the tune of $1.7 billion, now that its president for life has been charged with over 50 counts of fraud, including theft?

Hon BILL ENGLISH: I could not comment, at all, on the matters regarding South Canterbury Finance that are now before the court, but the existence of the guarantee not of South Canterbury Finance but of its depositors, which is a different thing, came into existence in the financial crisis in late 2008. As I recall, the whole of Parliament supported that guarantee being put in place to prevent financial contagion, which could have potentially brought down much larger financial institutions, such as our banks. On reflection, New Zealand is in a much stronger position than many developed countries, because we did not have a banking collapse.

Youth Minimum Wage—Minister of Labour’s Statements

2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he agree with all the comments of his Minister of Labour regarding minimum wage rates for young people?

Rt Hon JOHN KEY (Prime Minister): As far as I am aware of them, yes.

Hon Phil Goff: Which view best represents the position of this National Government: Kate Wilkinson’s suggestion that a return to youth rates might be a good idea, or Paula Bennett’s contradictory view that youth rates would not reduce youth unemployment?

Rt Hon JOHN KEY: I have not seen the context of the statements, and even the member himself said they were suggestions. It would be better to frame it by saying the view of the Government is that it is concerned about high levels of youth unemployment, and we will be announcing policies that will address that.

Hon Phil Goff: Why does the National Government not, in order to reduce youth unemployment, focus on upskilling young New Zealanders to meet the critical shortage of skills in this country, rather than wasting time on talking about cutting the wages of young people?

Rt Hon JOHN KEY: Because we are doing exactly that. That is why we have announced 7,500 youth places; that is why we have looked at implementing and rolling out eight trade academies in New Zealand schools this year; that is why we have a record number of young New Zealanders going to universities, polytechs, and wānangas; and that is why we are working very aggressively through the Budget to allocated $42 million to additional training places.

Hon Phil Goff: If the Prime Minister claims that he is “doing exactly that”—to use his words— how does he explain the $90 million cut in this year’s Budget to Youth Training, on top of a $55 million cut in the supplementary estimates last year, cutting skill training so that fewer people are going into skill training now than at any time over the last 5 years?

Rt Hon JOHN KEY: All I can say to the Leader of the Opposition is that he is wrong in his facts. But one thing worth looking at is that if one looks in some areas where there was a reduction of training, one sees that that was simply because the completion rates in those courses were so abysmal that no training was actually taking place.

Hon Phil Goff: If the Prime Minister claims I am wrong in my facts, does he deny that $57.7 million has been cut from industry training on the basis that the demand for trainees has reduced, $32.9 million has been cut from industry training by industry training organisations dealing with health and safety courses, and Mr Joyce took $55 million out of skill training last year through the supplementary estimates?

Rt Hon JOHN KEY: No, I cannot confirm those facts. I can confirm that the Government is very focused on having good outcomes. That is the big difference between this Government and the previous Labour Government, which simply threw money—

Grant Robertson: There’s just nothing happening.

Rt Hon JOHN KEY: I tell members what is happening: obviously the Labour Party is training people in Te Tai Tokerau, because none of them are here today—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think you are aware that there is a cross-party agreement that those people who are concerned about Christchurch are able to be there. We happened to win seats there—

Mr SPEAKER: That is enough of that sort of thing. The Prime Minister erred on two counts. The first was that there is a cross-party agreement that Canterbury members can be looking after the needs of their constituents and treated as present in the House. He also knows that it is not in order to refer to anyone’s absence from the House. The Hon Trevor Mallard erred in his point of order because he put a political statement in his point of order, and that was totally unnecessary. So I guess that is—

Rt Hon JOHN KEY: One all.

Mr SPEAKER: —one all, but let us not have the score go any higher today.

Hon Phil Goff: If the Prime Minister is worried about youth unemployment, why has he allowed a consistent decline in the intake into apprenticeships since he became the Prime Minister, and why does he not do something about that, instead of looking at cutting the wages paid to young people?

Rt Hon JOHN KEY: I think the Leader of the Opposition is confused in his facts and incorrect.

Hon Phil Goff: I raise a point of order, Mr Speaker. I could ask the permission of the House to table a series of documents from the news media, widely reporting the facts that I have just mentioned. You would not normally allow that to be done, but I ask you to consider allowing it on this occasion, as the Prime Minister’s standard answer is to reject the facts that he claims are wrong in what I have been saying to him.

Mr SPEAKER: One of the reasons why we do not do that is that the information is readily available to all members of the House. What is more, what is printed in the media may be no more “fact” than anything else. In all my 27 years’ experience in this place, I have found that it is extremely unlikely to be “fact” if it has been printed in the media. That is one reason why we do not table recent newspaper clippings. I realise that the member could be frustrated by that kind of answer, but a Minister is entitled to dispute the information provided in a supplementary question. Ministers should be careful in doing so, and I am sure the Prime Minister will have been careful in doing that.

Hon Phil Goff: I raise a point of order, Mr Speaker. Is it in order for the Prime Minister to dispute facts that are available to every member in this House in order to avoid answering a question?

Mr SPEAKER: If that was established to be correct, that would be a very serious issue, because the member is suggesting that a Minister not only gave the House incorrect information but also did so in order to impede the business of the House. That is very serious, and that is why Ministers need to be careful if they refute information contained in members’ questions. But we also acknowledge that information in supplementary questions has not been validated. As the Speaker I cannot act as a referee on any of that. Certainly, refuting the information is a valid answer, but if it was to be done simply to avoid answering a question, that would be a very serious issue.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It goes, I think, to your original response. You were somewhat critical of news media reports and the quality thereof, but in the earlier set of supplementary questions the Leader of the Opposition asked questions of the leader of the National Party using Budget figures that had been tabled in this House, and Mr Key disputed those figures and used that to avoid answering the question.

Mr SPEAKER: The member is now getting into a debate on the issue, and I do not want to prolong that. But if Ministers refute information contained in questions, they need to be careful about doing that. I have made it very clear that were it to be established that it was done to avoid answering a question—that is, if it was not correct—and incorrect information was given that impeded the business of the House, then that would be a serious issue. Members have to be careful

when making claims in their supplementary questions. I hear all sorts of claims made that even I know may not actually be factual, but I still accept the point that it may be perfectly factual information. If it is refuted, then Ministers need to be careful about doing that.

Hon Phil Goff: Does he believe that a young person doing the same job with the same skills should be paid less than an older person, simply because of the younger person’s age?

Rt Hon JOHN KEY: I do, inasmuch as that was why, no doubt, we thought it was reasonably sensible when Labour brought in the training allowance for a younger person.

Rheumatic Fever—Government Initiatives

3. Dr JACKIE BLUE (National) on behalf of Dr PAUL HUTCHISON (National—Hunua) to the Minister of Health: What initiatives have been undertaken to tackle rheumatic fever in New Zealand?

Hon TONY RYALL (Minister of Health): In this year’s Budget Mrs Turia announced that we are investing $12 million over 4 years to reduce rheumatic fever in vulnerable communities around the nation. This will involve up to 22,000 children in high-risk areas. Prevention programmes focused on this Third World disease are already under way in a number of vulnerable communities. In Flaxmere, for example, there have been no more cases since its programme began last year, and at the recent programme launch at Makaurau Marae in South Auckland it was announced that it will be the first place in New Zealand where children can turn up without an appointment and be tested and diagnosed within minutes in a new rapid diagnosis test.

Dr Jackie Blue: How long has tackling rheumatic fever been a Government priority?

Hon TONY RYALL: The previous Government boasted in 2001 that rheumatic fever was a priority, but nothing happened except that more kids got it. This Government takes rheumatic fever seriously. A sore throat can lead to permanent and quite serious heart damage, and it is crucial that we tackle this preventable disease head-on. Continuing and contributing to our other prevention work in this area is the Warm Up New Zealand: Heat Smart programme, whereby 100,000 homes were retrofitted as of 1 March this year.

Grant Robertson: Does the Minister accept that overcrowded housing is one of the main issues with rheumatic fever in New Zealand, and how does the Government cutting funding for State housing help that?

Hon TONY RYALL: What I can advise is when it comes to housing as a contributing factor, certainly the temperature of houses has been found to be a contributing factor and that is one of the reasons why we have the Heat Smart campaign. On the issue of overcrowding, I think the Minister of Housing has done a superb job in the work he has done in tidying up the very poor state of public housing that he inherited from that failed party opposite.

Rahui Katene: Is he aware of the particularly high rates of rheumatic fever in Northland, and what response has he received from people in Northland to the announcement by Māori Party coleader Tariana Turia of the $12 million invested in eliminating rheumatic fever in high-risk areas?

Hon TONY RYALL: Yes. I am aware of two particularly positive responses to the announcement by Minister Turia. Both are from Northland general practitioners who say they are delighted by the $12 million boost, and that Mrs Turia should take a bow for championing the cause for more resources. As the member knows, Northland is one of our most vulnerable and high-risk areas in terms of this particular issue, and the new funding will provide a much needed boost in their fight against rheumatic fever and complement the work that is already under way.

Dental Treatment, Under-5-year-olds—Hospital Admissions

4. Hon JIM ANDERTON (Leader—Progressive) to the Associate Minister of Health: Does he agree that in the year ended 30 June 2008, in excess of 2,600 children under the age of five years were admitted to public hospitals for dental health procedures, and how many of these young children were treated under a general anaesthetic?

Hon PETER DUNNE (Associate Minister of Health): Yes, but the information provided by district health boards does not contain the numbers treated under general anaesthetic.

Hon Jim Anderton: Does he believe it is acceptable that thousands of children under 5 years of age are being admitted to hospital each year for dental health procedures, including tooth extraction, under either a general or a local anaesthetic; if not, what steps is the Government taking to reduce this unacceptable situation, including an inquiry into the fluoridation of our water supplies as a nationwide health measure?

Hon PETER DUNNE: Obviously, the oral health care of all ages of young people is important, and I would rather that we had numbers presenting to public hospitals for treatment than numbers not presenting in the first place. I should tell the member that increasing preschool enrolments is a priority. In fact, in the 2008 year around 43 percent of all preschool children were enrolled, by the end of the calendar year 2009 that figure was 49 percent, and by the end of this year it is expected to be 64 percent.

Hon Jim Anderton: Does the Minister believe there is a need for a paradigm shift in the way parents are helped to look after their children’s teeth; if so, will he support the introduction of an improved education programme from preschool to primary school?

Hon PETER DUNNE: The paradigm shift the member refers to is occurring under current oral health policy, which is seeing the roll-out of a whole new network of community oral health facilities, some $116 million in capital funding, and $36 million a year in operating funding. We are now starting to see a system being put in place where more children will get access to the care they need, and we are encouraging their parents and whānau to be part of that treatment programme.

Hon Jim Anderton: Can the Minister confirm that although pregnant women can access free maternity care during pregnancy, at birth, and after their pregnancy, they cannot access free dental care, and does he support extending free dental care to this key sector of our population?

Hon PETER DUNNE: I am not in a position to confirm that particular line of argument, but I can say that the range of programmes now being rolled out will provide for much greater community involvement in the future, because we will have a much better network in place. Already, we are starting to see some positive results emerging from that.

Hon Jim Anderton: Does the Minister acknowledge that many older people cannot afford dental health care; if so, does he believe that the mobile dental clinics presently being rolled out throughout the country could be used to treat the elderly?

Hon PETER DUNNE: We have traversed the territory from preschool now to the elderly. In principle, I agree with the proposition the member advances. One of the things we have been talking to district health boards about is precisely how not only the mobile units but also the new community oral health facilities can be used more effectively not just for a particular segment of the year, as has been the case previously.

Social Services, Canterbury—Government Support

5. AARON GILMORE (National) to the Minister for Social Development and Employment: How is the Government supporting social services in Canterbury?

Hon PAULA BENNETT (Minister for Social Development and Employment): As part of Budget 2011 we have announced a further $10 million to support Canterbury social services. This takes the Government’s social services support to a total of $20 million. It is clear there is ongoing demand for support as the response and recovery effort unfolds, particularly given the consequences of the ongoing aftershocks. This funding is going to counselling and local social services agencies in order to support Cantabrians as they deal with this disaster.

Aaron Gilmore: What social support has the Government given so far?

Hon PAULA BENNETT: To date, the Government has granted $7.3 million of the $7.5 million through the special Canterbury Community Response Fund round. The Community Response Fund has been distributed to 335 organisations—$3.2 million of that is for increased demand, $2.8

million is for coordination services, and around $1 million is for non-governmental organisation relocation.

State-owned Assets, Sales—Costs to Households

6. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he agree that, under his plan to sell $6.8 billion worth of State-owned assets, each of the 1.6 million kiwi households would have to pay over $4,000 to keep their share in these assets that they already own?

Hon BILL ENGLISH (Minister of Finance): No, but the Government remains keen to move some of these assets into community ownership.

Hon David Cunliffe: As if they are not already.

Mr SPEAKER: Order!

Hon David Cunliffe: If Kiwi households cannot afford to spend more than $4,000 each on paying for assets they already own, would he sell those shares offshore instead, as Treasury foreshadowed when it said that “significant participation by foreign investors would be essential”?

Hon BILL ENGLISH: Quite a number of households will decide that they can participate if the price is right. A number of organisations will also be purchasing on their behalf. For instance, their KiwiSaver funds—and 1.7 million New Zealanders are members—are quite likely to be buying these shares on behalf of New Zealanders who have decided to save for their future.

Hon David Cunliffe: Has the Minister seen the various polls that show that New Zealanders oppose State asset sales by a majority of two to one; if so, and if he genuinely believes that the election will be the test of his mandate to sell public assets, why is he already employing staff to begin the sale process?

Hon BILL ENGLISH: If polls were a measure of policy success, then the Labour Party clearly would have some way to go. The Government has signalled its intent, it is putting its proposals to the public in an absolutely transparent way, and if it obtains a mandate in the general election, it will proceed with the partial sales of some assets.

Chris Tremain: What economic benefits does the Government expect from the mixedownership model?

Hon BILL ENGLISH: I expect we will get the same benefits as Air New Zealand does from the Labour Government having set Air New Zealand up under the mixed-ownership model. It will deepen local capital markets; it will give a wide range of New Zealand investors, including Kiwi mums and dads, KiwiSaver funds, the superannuation fund, ACC, and other local investors, better investment opportunities; and it will give the companies themselves wider access to capital to expand and grow, rather than their simply relying on the Crown. It will also help the Crown to lower its debt, and improve cash-flow back to the shareholder, by selling assets whose holding cost is more than twice the dividends that they deliver.

Hon David Cunliffe: If the Minister is such a late convert to transparency, will his Government be adopting as a Government bill my colleague Clayton Cosgrove’s member’s bill that would ensure that Kiwi families have the opportunity to vote in a referendum before any State-owned enterprises could be put up for sale?

Hon BILL ENGLISH: Well, that bill will not be debated by this Parliament, because the Labour Party is totally obsessed with stopping voluntary student union membership. Everyone knows that is a stunt. Labour members will filibuster the student bill until the end of this term, and that bill will never be debated. That is how we know that Labour is more serious about voluntary student union membership than it is about State-owned enterprise sales.

Hon David Cunliffe: I raise a point of order, Mr Speaker. I seek your advice on whether the Minister actually answered the question, because the question asked whether he would consider adopting it as a Government bill, in which case it would have nothing to do with the order of business on members’ day.

Mr SPEAKER: From the Minister’s answer I think the answer was pretty clear. Even I could discern that.

Hon David Cunliffe: If his Government will not let New Zealanders have a referendum on his plan to sell their assets, can he confirm that the only way New Zealanders can stop asset sales is to vote his party out of office on 26 November?

Hon BILL ENGLISH: New Zealanders will get to make their choice across a range of policies on 26 November. Of course, if they do not want to own these assets, then they have the choice of simply not buying them or of instructing their KiwiSaver fund not to buy them.

Budget 2011—Alternative Education

7. JO GOODHEW (National—Rangitata) to the Minister of Education: What support was provided for alternative education in Budget 2011?

Hon ANNE TOLLEY (Minister of Education): I am pleased to inform the House that from July of this year this Government has committed an extra $6.1 million over 4 years for alternative education. This will provide for an extra 68 places and will provide specialist professional learning and development for staff. Alternative education aims to provide a constructive alternative delivery of education for students aged 13 to 15 years for whom traditional methods have not worked. This is done while maintaining high expectations of student potential.

Jo Goodhew: What other changes has she made to alternative education?

Hon ANNE TOLLEY: In addition to giving the very first funding increase in 10 years—the first in 10 years—in September last year of $1.5 million a year, I have also ensured that there have been a number of changes to alternative education. They include ensuring that registered teachers are supported to increase the capability of providers. I have allowed for national professional development for alternative education providers. We have raised the overall funding to help providers respond to increasing costs. That is on top of increasing the number of alternative education places available for at-risk students, from July. This Government is committed to supporting all students in ways that work for them. We believe that every young person should have the opportunity to reach their full potential.

Trans-Tasman Therapeutic Products Agency—View

8. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Health: Does he believe that a trans-Tasman therapeutic products agency will be “costly, restrictive and unnecessary for New Zealand”?

Hon TONY RYALL (Minister of Health): No, if it was the agency that was announced yesterday by the New Zealand and Australia Prime Ministers, which is not dependent on natural health products being part of that regulatory regime. This is what National has always sought, and it is an outcome of the Prime Minister’s outstandingly successful visit to Australia, and I congratulate our Prime Minister.

Grant Robertson: Can the Minister confirm that, in fact, it was he who described the agency as being “costly, restrictive and unnecessary”, despite it achieving the same things that the agency announced yesterday, including an opt-in for natural products that his leader agreed to at the time?

Hon TONY RYALL: That quote was with regard to Labour’s proposed scheme, which included natural health products. Our Prime Minister has gone to Australia and delivered a scheme that does not include natural health products. He was the first New Zealand Prime Minister to speak to the Australian Parliament, and how proud we are as a nation of that.

Grant Robertson: Does he recall Michelle Beckett, Executive Director of Natural Products New Zealand, saying that the National Party see the natural products sector only as “a political football to be leveraged to any political advantage,” and why will he not accept that National’s flip-flop on the trans-Tasman agency only reinforces Ms Beckett’s view?

Hon TONY RYALL: Mrs Beckett was a supporter of the Labour Party’s plan to include natural health products in the joint trans-Tasman agency. The agreement between the Prime Ministers is that that does not need to be the case. This is a successful win-win for New Zealand, which has been delivered by our Prime Minister because of the close, improving, and strong relationship with Australia.

Sue Kedgley: Why on earth would we join up to an Australian agency to regulate our medicines and medical devices when it is located in Canberra, staffed by Australians, and has a reputation for being a heavy-handed regulator with a costly bureaucracy?

Hon TONY RYALL: Those details are yet to be determined. The work is about to begin very soon, but I would expect that we would see a move to centres of excellence, whereas the various parts of the two systems were able to concentrate on those parts that they do best.

Grant Robertson: Will he guarantee that natural products will not be part of the trans-Tasman joint regulatory arrangements in the future?

Hon TONY RYALL: I cannot guarantee that there might not be a Labour Government that wants to force them in. The agreement that has been designed between the two Prime Ministers is that that is a choice for New Zealand, and the scheme does not have to happen with natural health products. It is a real win-win for New Zealand. Labour was never able to achieve it.

Housing Innovation Fund—New Projects

9. TODD McCLAY (National—Rotorua) to the Minister of Housing: What recent announcement has he made about successful 2010/11 Housing Innovation Fund applications?

Hon PHIL HEATLEY (Minister of Housing): Last week I announced a further five projects in Kaiapoi, Wellington, Auckland, and Queenstown, delivering 34 new homes, which will receive $5 million from the fund for this financial year. These include $354,000 for Habitat for Humanity, who will build three 4-bedroom homes in Kaiapoi for affordable homeownership; $1.65 million for the Salvation Army to purchase 10 new two-bedroom units for older people in Auckland; and $790,000 for the Wellington Housing Trust to build four new houses for affordable rental and homeownership.

Todd McClay: Could he tell the House what the aim of the Housing Innovation Fund is?

Hon PHIL HEATLEY: The fund encourages partnerships with community housing organisations. It is about making the taxpayer’s dollar go much further. So far this year the Government’s $11 million contribution has been met by $25.6 million from community organisations, delivering a total of 70 new houses across New Zealand. As part of this Government’s commitment to increasing the quantum of social housing in total, I recently announced the creation of a social housing unit from 1 July, as well as increased funding of $40 million for the year 2011-12 to help to grow the community housing sector.

Minimum Wage—Prime Minister’s Statements

10. DARIEN FENTON (Labour) to the Minister of Labour: Does she agree with the Prime Minister that it would not be easy to live on the minimum wage?

Hon KATE WILKINSON (Minister of Labour): Of course I agree with the Prime Minister.

Darien Fenton: Does she think it would be easy to live on a youth minimum wage, given that those people who are on the current minimum wage are already struggling to survive?

Hon KATE WILKINSON: We are aware that for those people on the minimum wage, budgeting is tight. But we do want people to earn a lot more than the minimum wage by developing their skills, being given a job, and being promoted to more senior roles.

Darien Fenton: If her Government is aspirational, as her Prime Minister claims, why is she considering lowering minimum wages for young people rather than lifting wages for all workers?

Hon KATE WILKINSON: That question relies on a false premise. No decision has been made to lower the minimum wage—or set youth rates related thereto.

Jacinda Ardern: What is having a greater impact on youth employment levels, based on the advice she has received: minimum wage rates, or her Government’s lack of a plan to create jobs?

Hon KATE WILKINSON: We have a cogent plan to increase and improve our economy, which includes growing the number of jobs. We would rather see young people have a job than be priced out of getting a job.

Jacinda Ardern: Can the Minister explain to the House what the Government’s “cogent plan” on job creation is?

Hon KATE WILKINSON: Our plan is basically about building a stronger economy. I can understand that members from that party do not understand that, but we do.

Living Standards, Inequality—Statement Made on Behalf of Prime Minister

11. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by the statement made on his behalf “I do not accept the view that we are a deeply unequal country. I do not think the evidence suggests that, and people drawing that conclusion are wrong”?

Rt Hon JOHN KEY (Prime Minister): Yes.

Metiria Turei: Are the following, who have all said inequality is a serious problem in New Zealand, all wrong: his own Treasury officials, the New Zealand Council of Christian Social Services, the OECD, and even his own Chief Science Advisor, who is one of the most trusted people in this country? Are they all wrong?

Rt Hon JOHN KEY: I think we all have to accept that there is a degree of inequality in New Zealand, as there is in every country around the world. The proposition the member is putting up is that New Zealand is more deeply unequal than other countries. That is a proposition that we reject.

Metiria Turei: I raise a point of order, Mr Speaker. The question, although it was long, was very specific. It asked whether they were wrong. The Prime Minister did not answer that question.

Mr SPEAKER: Members cannot expect a Minister to say yes or no specifically to whether someone is right or wrong. I think the Prime Minister, in answering that question, made pretty clear his view in relation to the issue. I think it was a reasonable answer.

Metiria Turei: Does he stand by a further statement made on his behalf last week: “Having had a very good look at the Welfare Working Group report, I do not see any recommendations there that will increase inequality.”?

Rt Hon JOHN KEY: Yes. The reason why the Deputy Prime Minister made that statement on my behalf was that one of the core fundamental issues and propositions put up by the Welfare Working Group is to encourage and have measures to enable people to go into paid work, if they possibly can. One of the reasons why there is tremendous inequality in countries and why there is inequality in New Zealand is that 13 percent of our working-age population are on a benefit. If as a country we can encourage people and give them the skills, the training, and the childcare needed to get them into work, then I believe we can narrow that inequality.

Metiria Turei: How does the fact that most beneficiaries will have less income under the Welfare Working Group recommendations impact on inequality?

Rt Hon JOHN KEY: By definition, someone who is in paid employment will earn more than if they are on a benefit.

Metiria Turei: Is it not the case that the Welfare Working Group recommendations on abatement rates would actually penalise a sole parent in part-time work, leaving her with less money to feed her kids than she has now?

Rt Hon JOHN KEY: No, because I think one needs to look at all of the factors. The member, I am sure, will be aware by now that Working for Families has an in-work tax credit. If one looks at all of the redistribution mechanisms that take place under the Government’s schemes, one will see that in totality—there is no question in my mind—someone would be better off in paid employment than on welfare. If they were not, that is a real indictment on the welfare system in New Zealand, because working New Zealanders should by definition have more income than beneficiaries.

Metiria Turei: Does the Prime Minister not realise that an estimated 65,000 invalids beneficiaries will lose 9 percent of their income under the Welfare Working Group recommendations; if so, how does this not increase inequality, particularly for the nearly 11,000 children in those families?

Rt Hon JOHN KEY: I think the member needs to wait to see the final recommendations from the Government. We have seen recommendations from the Welfare Working Group. As I have said, as a general proposition its proposition is that if one can work, one should work. It came up with 43 recommendations, only one of which the Government has said flatly it will not consider. We will go away and look at the other 42. As I said to the member, it is the Government’s view that if we can get people into paid employment, then we are making great strides for them. Not all people will be able to go into paid employment, for obvious reasons.

Metiria Turei: Will the Prime Minister now direct the ministerial group that is working on welfare reform to analyse the Welfare Working Group’s recommendations in terms of their impact on increasing inequality in Aotearoa?

Rt Hon JOHN KEY: I cannot say that that direction will be occurring exactly in the way that the member has said, but I can say that of course we will be asking the ministerial group, and also all the advisers, from Treasury down, to make sure that we get advice on the overall impact on individuals. The Government’s aim is to see people get into work if they possibly can, in order for their standard of living to increase, and for their choices to increase. We know, if we go and look at the approximately 360,000 working-age New Zealanders who are on a benefit—who are supporting, broadly, 220,000 children—that they come from, for the most part, the lowest-income homes. If that member was actually serious about trying to fix this issue, she would join the Government and celebrate the fact that we are doing something about it. But she seems to want people to be stuck on welfare for their entire lives. No wonder she will be stuck in Opposition for her career.

Hon Trevor Mallard: Is it the Prime Minister’s view that the increased number of formerly low-waged workers who are now unemployed and the disproportionately high tax cuts for wealthier people have helped or hindered inequality in New Zealand?

Rt Hon JOHN KEY: By definition, if someone goes from paid employment to a benefit, then that is negative for them. That is why the Government has worked so hard and delivered such an outstanding Budget, which will create, in our view, about 170,000 jobs. But I draw the member’s attention to this fact, and it is that the Tax Working Group, when it looked at this issue, reported that the top 10 percent of income earners pay 44 percent of all personal income tax. If the impact of Working for Families, New Zealand superannuation, and other benefits is included, the top 10 percent of taxpayers in New Zealand pay 76 percent of all net tax in New Zealand. If 10 percent of New Zealanders are paying 76 percent of all net tax, I would say that is a fair contribution from that 10 percent.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. There was a lot of very interesting information in that answer, but the question was about the growth in inequality, which was not addressed by the Prime Minister.

Mr SPEAKER: I thought he said that if more people go on to benefits, then that is negative—I think the Prime Minister used that language—for equality. It may not have been the exact answer that the member was looking for, but I think it would be unreasonable if I ruled that it was not an answer.

Broadband—Progress Compared with Other OECD Countries

12. CLARE CURRAN (Labour—Dunedin South) to the Minister for Communications and

Information Technology: What progress has New Zealand made compared to other OECD countries in terms of broadband download speed, connection speed and price since November 2008?

Hon STEVEN JOYCE (Minister for Communications and Information Technology): New Zealand has made excellent progress compared with other OECD countries since November 2008. The National Government has signed agreements with various investment partners that will dramatically improve download and connection speed while ensuring customers receive a vastly superior service for similar prices. I am certain these changes will drive economic growth, improve the competitiveness of our companies, and further improve our comparisons with other OECD countries.

Clare Curran: How will reinforcing Telecom’s market dominance by giving it $1 billion of taxpayers’ money reverse our declining international rankings on broadband performance and make us more digitally competitive, given that New Zealand’s performance has fallen sharply on several OECD indicators since 2008, including going from 12th to 21st for download speed, going from 12th to 24th for connection speed, as well as going from seventh cheapest to fourth most expensive?

Hon STEVEN JOYCE: I am not quite sure about those numbers the member mentions, but to the extent they are as she says, they could be attributed to the regulatory approach of the previous Labour Government, which, of course, has continued until now.

Mr SPEAKER: I have some difficulty with the way the Minister is answering this question. Had the Minister answered the primary question he would have had those figures in his answer. If the figures are not right, the Minister would have had the right figures in his answer. The primary question was capable of answer. I let the Minister get away with a very spongy answer to it. To then turn round and attack the Opposition in response to the supplementary question is a bit rich. If the Minister had given the actual figures for those changes in download speed, connection speed, and price since November 2008 in relation to other OECD countries, I would have had no problem with his attacking the Opposition in response to a supplementary question. But the Minister did not give those figures, and to then argue that the Opposition’s figures are not right troubles me. I would like the Minister to reflect on that in answering the question, and I invite him to answer the question.

Hon STEVEN JOYCE: I raise a point of order, Mr Speaker. There are two things. Firstly, the primary question asked what progress New Zealand has made compared with other OECD countries in terms of those particular attributes. That progress can be measured in terms of a regulatory progress, in terms of investment progress, and in terms of actual raw numbers. There was no reference to particular measures in that primary question. In terms of the numbers that are there, there are some numbers, but it is not as exact a science as the Speaker indicates the member may believe, and that is the difficulty I have with it.

Mr SPEAKER: I hear the Minister’s point but with a primary question I expect the interpretation to be a reasonable interpretation. I accept the point the Minister is making that progress can be interpreted in many ways, but it was pretty clear to me what was intended by the primary question, and I thought the Minister’s answer was on the vague side. Given that, to then attack the questioner on information included in the supplementary question was, I felt, a bit unreasonable. I accept that my position on that may not be perfect, but time has gone on and I invite Clare Curran to repeat her supplementary question.

Clare Curran: How will reinforcing Telecom’s market dominance by giving it $1 billion of taxpayers’ money reverse our declining international rankings on broadband performance and make us more digitally competitive, given that New Zealand’s performance has fallen sharply on several OECD indicators since 2008, including going from 12th to 21st for download speed, going from 12th to 24th for connection speed, as well as going from seventh cheapest to fourth most expensive?

Hon STEVEN JOYCE: There are a couple of things there. Firstly, those figures do not correlate with my understanding of OECD measurements, and I cannot do anything other than say that. The second point is that I think it is fair to say that, obviously, changes from 2008 to 2010 will have come about as a result of regulatory settings that occurred prior to that date, given the time lags with infrastructure investment in such a thing as communication and information technology. My third point—and probably in answer to the first part of the member’s question—would be to say that by

changing the regulatory environment we are likely to achieve a far better result. I think she misunderstands, if I may say so, the big change that occurs in terms of structurally separating Telecom into two companies. One is an infrastructure company and the other is a retailer that competes on the same basis with every other retailer. I think one of the difficulties with the previous operational separation situation is that it did not give the sorts of outcomes that were being sought, and I am confident that structural separation will help achieve that.

Clare Curran: Given that his Government will be signing broadband contracts with pricing and speeds that will have effect until 2019, what mechanisms are in place to ensure that New Zealand’s broadband performance does not, once again, begin to fall behind the OECD average over the next decade?

Hon STEVEN JOYCE: In terms of speed, I think it is reasonably obvious that a fibre-optic access network will achieve far greater speeds than a digital subscriber line network. That is the first bit of good news for the member. The second bit of good news is that the prices that have been negotiated by Crown Fibre Holdings are competitive with the much lower-speed copper networks, which I think is a second win for the member and for the country. The third bit of good news is that the Commerce Commission, of course, will have oversight over those prices over the period and the network will be competing against a regulated copper network. I think it is a win-win for all New Zealanders.

Clare Curran: Why does he believe using contracts to remove the regulatory risk faced by Telecom will encourage it to behave in a pro-competitive way, given Telecom’s historic abuse of free rides on the regulatory front?

Hon STEVEN JOYCE: I think the difficulty is that the member is alluding to many of the concerns that occurred as a result of the previous structures of the New Zealand telecommunications industry and the vertically integrated nature of it. Operational separation, which was from the previous Government, sought to address some of those issues, but I think what is becoming apparent to all industry players now is that unless there is a structurally separated situation we will not achieve the sorts of competitive outcomes that the member is seeking. I think we will achieve that with the legislation that is before the House, and I invite the member and her party to change their minds and support it.

Clare Curran: I seek leave to table three documents, the OECD broadband statistics from September 2010. The first document has the fastest broadband speeds advertised by the incumbent telecommunications operator—

Mr SPEAKER: That is a different document from the first one?

Clare Curran: That is the first document.

Mr SPEAKER: The first document, I thought, was an OECD document.

Clare Curran: They are all OECD documents.

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.

Clare Curran: The second document is the range of broadband prices for a monthly subscription.

Mr SPEAKER: This is also an OECD document?

Clare Curran: It is the OECD broadband statistics for September 2010.

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.

Clare Curran: The third document is an OECD broadband statistics document dated September 2010 on average advertised broadband download speeds by country.

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.


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