Questions And Answers August 2

by Desk Editor on Tuesday, August 2, 2011 — 7:31 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 that “I think we all have to accept that there is a degree of inequality in New Zealand”; if so, has he read any recent reports on the growing …
(uncorrected transcript—subject to correction and further editing)




Living Standards—Inequality

1. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that “I think we all have to accept that there is a degree of inequality in New Zealand”; if so, has he read any recent reports on the growing gap between rich and poor in New Zealand?

Rt Hon JOHN KEY (Prime Minister): Yes, I do stand by that statement, and I have excellent news for the member: a very detailed scientific report on income equality actually went up on the Ministry of Social Development’s website at 2 o’clock today. It is titled Household Incomes in New Zealand. The report shows that the degree of income inequality in New Zealand, under standard measures like the Gini coefficient or the 80:20 ratio, has actually fallen in recent years. I go on to say that in fact the report shows that the distribution of income in New Zealand is more even now than it was at any time under the previous Labour Government. So I point out to the member that he is quite wrong to say the gap between the rich and the poor has been growing; in fact, it has been reducing. I urge the member to read the report.

Hon Phil Goff: Does today’s release from Statistics New Zealand, which shows that wages and salaries have gone up by 1.9 percent over the last year—that is, by well under half the rate of inflation—and the release a couple of days ago from the National Business Review, which shows that 150 people, the richest New Zealanders, increased their wealth by 20 percent, actually suggest to him that the gap between wealthy and other New Zealanders is narrowing?

Rt Hon JOHN KEY: Firstly, let me take things in reverse order. In terms of the rich list, let us understand what that is. It is a list from a bunch of journalists, who are making up stuff on the best estimates they have. If we want to go to the facts, let us go to the household income survey that was just put on the website at 2 o’clock. Secondly, the member uses the labour cost index, which, as he knows, is not the best measure, actually, of the increase in wages in New Zealand.

Hon Phil Goff: Oh!

Rt Hon JOHN KEY: Well the member goes “Oh!”, but for 9 years the Labour Government set New Zealand superannuation off the quarterly employment survey. In fact, the Labour members believed in it so much that in 2001 they changed the law to ensure that the quarterly employment survey was used as the basis for superannuation in New Zealand. So if they want to go out and tell the pensioners of New Zealand they got it wrong, they are welcome to do that. But the quarterly employment survey, which also came out today, shows this: average weekly earnings are up by 1 percent for the quarter, by 4.2 percent for the year, and by 7.4 percent in after-tax terms, and in fact the average wage in New Zealand has now risen to $51,123.

Hon Phil Goff: If there was a skerrick of truth to anything that was in that report, how does the Prime Minister explain that groups like the Salvation Army and the Auckland City Mission are

reporting that more and more people are coming for assistance because the soaring cost of living, particularly for food and other necessities, is forcing them and their kids below the poverty line?

Rt Hon JOHN KEY: Firstly, we need to acknowledge there has been a global financial crisis and that it has dealt a very severe toll to a lot of New Zealanders. We accept that. The second thing we would say is that the Government has spent the last 3 years ensuring that it has done whatever it can to help the most vulnerable New Zealanders through. That is why we did not cut pensions. That is why we did not cut Working for Families payments. That is why we have preserved the income of those New Zealanders as best we can. We do know that we need to move more people off benefits and into work, and the Minister and the Government are working very effectively on that matter. Lastly, I look at the household income survey that came out today and I see that it shows that inequality between the rich and the poor has fallen. It is at the best level that it has been at, including the level under any other previous Labour Government, and what a wonderful report that is.

Hon Phil Goff: Does the Prime Minister not understand that notwithstanding a global financial crisis, the 150 richest people in New Zealand in the last year increased their asset value by $7 billion—$7 billion for 150 people—and every one of those 150 got more than $1,000 a week from him in tax cuts, while somebody on the medium wage got just $14 a week?

Rt Hon JOHN KEY: I deal in facts, and the facts are in the Household Incomes in New Zealand survey, which was put on the website at 2 o’clock today. As I said, the rich list is a report made up by a bunch of journalists. But what I can note is this fascinating fact: I am amazed that the Leader of the Opposition has had time to read the NBR Rich List, because apparently he did not have time to read the briefing report he got on so-called Mossad agents in New Zealand.

Hon Phil Goff: Does the Prime Minister agree with the Children’s Commissioner, Dr Russell Wills, who said paediatricians—and he is one himself—are seeing kids who become ill, develop behavioural problems, fail at school, and do not have their basic needs met because their parents are poor; and does he accept the New Zealand Herald assessment this week that those numbers are growing?

Rt Hon JOHN KEY: I cannot comment on the last bit, but I can comment on the first piece. I agree with Dr Wills—in fact, I met with him this morning. I can also say that he is a very strong supporter of the green paper process that the Government is going through. I think we all need to recognise there is more we can do for the kids of New Zealand.

Hon Phil Goff: Did the Prime Minister fail accidentally to tell the House that the report that he quoted in answer to my first question did not include the tax cuts of October 2010, which gave a huge amount of money, $2.5 billion a year, to the top 10 percent of earners and practically nothing to the bottom 20 percent of earners, who got 3 percent of those cuts?

Rt Hon JOHN KEY: No. What is quite clear is that the report covers from 1982 to 2010. It is the most accurate information we have. As we have said on numerous occasions, even if it does not suit the Leader of the Opposition’s case, in fact two-thirds of all the tax cuts delivered by the National Government were delivered to the bottom two codes in New Zealand.

Hon Phil Goff: Did he include those tax cuts in his answer?

Rt Hon JOHN KEY: The tax cuts are not the issue. The issue is more—

Hon Members: Oh!

Rt Hon JOHN KEY: Well, they are not the issue. The issue is what the report actually shows.

Hon Trevor Mallard: Own goal. Own goal. What an idiot.

Rt Hon JOHN KEY: The own goal was the thing you read out about 3 weeks ago, I say to Trevor Mallard, because it is not going very well. If we look at the report, we see it quite clearly shows that income distribution in New Zealand is narrowing, not widening as it did under a Labour Government.

Hon John Boscawen: Given that the Government has made such good progress in helping the most vulnerable in society, what progress has been made in reducing the income inequality between those living in New Zealand and those living in Australia?

Rt Hon JOHN KEY: If we have a look at after-tax wages, we see that the gap between New Zealand and Australia is narrowing. In fact it is narrowing slowly, and we accept that, but we are making progress. There is a lot more work to be done. That is why this country needs another 3 years of a National-led Government.

Mr SPEAKER: Just before I call the honourable Leader of the Opposition, I say the Hon John Boscawen asked a perfectly fair question and had a right to hear the answer. I just ask members to be a little more reasonable about the interjection level.

Hon Phil Goff: If, as the Prime Minister just claimed, the gap is narrowing, how does he explain the fact that Australia, which had a higher rate of unemployment than New Zealand at the time that the last Labour Government left office, now has a one-third lower rate of unemployment than New Zealand, and the fact that wages are one-third higher in Australia than in New Zealand, which perhaps explains why in the last 2 months the highest number of New Zealanders ever, in the history of this country, left permanently for Australia?

Rt Hon JOHN KEY: Minerals.

Hon Phil Goff: I raise a point of order, Mr Speaker. I am sorry, but the Prime Minister garbled something very quickly. I could not hear it, and I was listening.


Hon Pete Hodgson: They had minerals during the Labour Government.

Mr SPEAKER: I am on my feet, I say to the Hon Pete Hodgson. I do not think the House heard the answer. I ask the Prime Minister to repeat his answer.

Rt Hon JOHN KEY: Minerals.

Hon Phil Goff: Why are wage and salary earners taxed on every dollar that they earn, while high income earners can earn enormous sums of money through capital gains and pay no tax at all on them; and is that one of the reasons why we are becoming a less equal society?

Rt Hon JOHN KEY: Firstly, we are not becoming a less equal society. It may not suit the Leader of the Opposition, but he should wander off and read the Ministry of Social Development report. That is the first thought. Secondly, it is not true that New Zealanders are not taxed on capital gains that they might incur. In fact, the member should go and ask many, many thousands of New Zealanders who pay a capital gains tax all the time in New Zealand. The truth is that this Government has put more money into making sure that those who might avoid that capital gains tax are found out and made to pay it. One only needs to look at the changes that took place in Budget 2010 to see the enormous amount of money that was taken out of the property sector as a result of those changes.

Hon Phil Goff: Is Sam Morgan wrong, then, in saying that when the owners sold TradeMe they made $700 million that they did pay a cent in tax on, and was he wrong in saying it is simply not right that he paid no tax on that, when every other New Zealander who is a wage and salary earner pays tax on every dollar they earn?

Rt Hon JOHN KEY: No, but he pays tax on every dollar he earns off that money now.

Hon John Boscawen: If the Prime Minister believes that minerals are the main cause of the disparity in income and equality between New Zealand and Australia, what steps is his Government taking to develop New Zealand’s not inconsiderable mineral wealth?

Rt Hon JOHN KEY: This Government has actually been taking quite considerable steps. If one looks at oil and gas exploration, for instance, one sees that we have been not only looking at new areas where we can prospect but also looking at new legislation for the economic zone, looking at where it might be possible to increase New Zealand’s coal activities, looking at where it might be possible to look at lignite activities in New Zealand, and working on greater prospecting for ironsand in New Zealand. What is true is that the Government rejected the option of going into

schedule 4 land. The reason we did that was that in the end the opportunities presented, relative to the environmental concerns that New Zealanders had, did not make that proposition worthwhile.

Economics, International—Effects on New Zealand Economy

2. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Finance: How is the New Zealand economy placed to deal with global uncertainty created by debt problems in the United States and Europe?

Hon BILL ENGLISH (Minister of Finance): The Government has taken several steps to ensure that New Zealand can deal with what is likely to be ongoing fall-out from very large debt problems in the US and Europe. Our financial system and our economy are both in better shape to manage these uncertainties than they were a few years ago. Our main focus has been on getting on top of the growth of Government debt by keeping it below 30 percent of GDP. We will be back in surplus by 2014-15. We have pursued policies that have discouraged the taking on of more household debt, and households are responding positively to those. We have also taken important measures to strengthen our financial system.

Peseta Sam Lotu-Iiga: What are some of the steps the Government has taken to ensure that New Zealand can minimise any impact from global debt problems?

Hon BILL ENGLISH: It is becoming increasingly apparent that foreign lenders have reduced appetites for lending to countries that want to run up more debt. Since 2008 the Government has turned back 2008 forecasts of never-ending deficits and soaring debt by setting a path back to surplus in 2014-15. This will keep net Crown debt below 30 percent. We front-loaded the Government’s borrowing programme when market conditions were favourable last year and earlier this year. We have introduced the biggest tax reform in 25 years, which rewards work and savings, discourages excessive borrowing and consumption, and significantly tightens the tax rules on property speculation. We have also overhauled capital market regulations and established the Financial Markets Authority to give confidence to investors and thereby encourage more saving.

Peseta Sam Lotu-Iiga: What extra measures has the Reserve Bank taken to improve the resilience of New Zealand’s financial system?

Hon BILL ENGLISH: The Reserve Bank has followed up on changes, given the unprecedented steps it had to take around 2008 with the global financial crisis. Non-bank deposit takers—that is, finance companies—are now under Reserve Bank supervision, and the Reserve Bank is applying minimum capital adequacy and credit rating requirements to finance companies, which lost $8.5 billion over the last 4 years. In addition, the Reserve Bank has introduced new core funding requirements for our banks, which require 70 percent of their funding to come from sources such as retail deposits and long-term wholesale funding. This makes them less reliant on volatile short-term international markets. The Reserve Bank has ensured that in another financial crisis it could supply temporary liquidity to sound institutions.

Hon David Cunliffe: Given that the uncertainty created by the United States debt crisis has been in part caused by the refusal of the Republican Party to compromise on sensible revenue measures, why should New Zealanders view his National Government as any different when it refused to enter into bipartisan discussion on a capital gains tax, despite authorities such as the International Monetary Fund and the OECD saying that it is an obvious requirement for New Zealand?

Hon BILL ENGLISH: Because, as I think is now becoming increasingly clear internationally, this country has a stable and sensible Government making sound and considered decisions, which means that we are one of the few developed countries now with positive economic prospects and financial stability. That is a considerable achievement in the circumstances.

Peseta Sam Lotu-Iiga: In the current uncertain global environment, why is it important that New Zealand continue with sound economic policies that get on top of the debt?

Hon BILL ENGLISH: It is pretty important because, as the months tick by and financial markets realise the long-term impact of extremely high debt levels in Europe, the UK, and the US,

those lenders have become more nervous about Governments that are running up debt. In fact, some Governments are being forced into slashing public services, putting up taxes, and reducing welfare benefits to the elderly and the vulnerable. This Government has taken a series of balanced and considered measures to keep a lid on spending, to get on top of growing debt, and to build a fastergrowing economy. We certainly will not be advocating policies that mean significant new borrowings over and above those that are budgeted.

Question No. 3 to Minister

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. It relates to question No. 3, which was originally lodged to the Prime Minister. I refer you in particular to the interplay between Speakers’ rulings 145/1, 145/2, and 145/4, at least. This question was originally lodged to the Prime Minister and asked about the Prime Minister’s views and, effectively, whether he was satisfied with some statistics that related to a view he had expressed. I am not challenging the ability—and it has been well established under Speaker’s ruling 145/1—for a question to be transferred, but when that happens there is still a requirement under Speaker’s ruling 145/4 that there is ministerial responsibility for the question as it is changed. Under Speaker’s ruling 145/2 there is a right to make textual changes provided they are entirely consequential. This question was lodged to the Prime Minister and asked about his view. It has been transferred to the Minister for Social Development and Employment and now asks about her view. My submission to you is that the second change was not one that was necessary in the context of the transfer. In fact, it was not the area on which an opinion was sought. Frankly, we are not so interested in the view of that Minister on this; we are interested in, and asked the question about, the Prime Minister’s view on his statement and what has happened since that time. The problem with the transfer would be, of course, that the Minister for Social Development and Employment does not have ministerial responsibility for the Prime Minister’s views; she has responsibility for her own views. My submission to you is that the transfer of this question has resulted in the so-called consequential textual changes changing the meaning of the question to such an extent. Obviously the Prime Minister did not want to answer it, but my view is that when it is in that form—

Mr SPEAKER: The member was doing fine until that point. I think I have heard sufficient on the point of order. He cannot make allegations about whether a Minister wanted to answer questions. The point the member raises is a perfectly legitimate point of order, but my ruling on the matter, though, would be this. The Government is perfectly entitled to transfer questions from one Minister to another or from the Prime Minister to another Minister, except were the transfer to be anathema to the obtaining of information. If the Minister or Prime Minister being questioned could be the only person who had particular information and the question was transferred to make it not possible to obtain that information, then I would have real concerns. In fact, I suggest we would start debating and negotiating whether the question could be transferred. But where an opinion is being sought about the Government’s position on things, that is not, in my view, the same as where information—real information about Government policy, or what has happened, or where money is being spent—is being sought and only one Minister can have that knowledge; it would be wrong for that question to be transferred. But where an opinion is being sought I do not see that it is contrary to the bracket of Speakers’ rulings that the member mentions if the question is directed to another Minister, and to make sense of the question it asks whether that Minister is satisfied with the most recent statistics on child health. Were the question not to have been changed textually, it would have left the question meaningless. I do not believe that this particular question is the kind of question that makes it wrong for it to be transferred, or one where the Prime Minister could be the only person who had serious information that was important to this House.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. I am going to respectfully disagree with your views. My view is that the Prime Minister is accountable in this House for opinions he has expressed. He is the only person who can be accountable for opinions he has expressed. I accept that the question is not asking for information; it is effectively asking him whether he is satisfied with his Government’s delivery on his priorities. My view is that no other Minister can answer those questions. It removes accountability in this House if the Prime Minister is allowed to duck those questions.

Mr SPEAKER: I will not tolerate that kind of language being used for a point of order. The member knows that a few years ago questions that sought opinions could not even be asked in this House. In the overall hierarchy of seriousness of questions, the member has been around long enough to know that when opinions are being sought the Speaker cannot even determine whether an answer is addressing the question. And to argue that when opinions are sought questions cannot be transferred is, I believe, not consistent at all with the Standing Orders of this House. As I said, if a question is seeking information where only one Minister or the Prime Minister is the only person who has that information, then it would be impeding the processes of this House were such a question to be transferred. But where opinions are sought —forgive me; the member is certainly entitled to disagree with me, I have no problem with that—my ruling on this matter is that that is not the kind of question that cannot be transferred.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker.

Mr SPEAKER: I will hear the member further, as long as he does not make any comment that is derogatory of any other member, under a point of order.

Hon TREVOR MALLARD: In light of your decision and the Prime Minister’s decision not to answer the question, we will not proceed with it. Question withdrawn.

Question No. 1 to Minister

Hon PHIL GOFF (Leader of the Opposition): I seek leave of the House to table an extract from Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2010. It shows that from 2004 inequality fell because of the work of the Working for Families policy introduced by Labour.

Mr SPEAKER: The source of this document is?

Hon PHIL GOFF: It is the Ministry of Social Development, Wellington, July 2011.

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

Pay Equity—Gender Gap

CATHERINE DELAHUNTY (Green): Tēnā koe, Mr Speaker.

Mr SPEAKER: I have called Catherine Delahunty. I just ask some of the front-bench members to show some courtesy to a member sitting at the back of the House. It is totally unreasonable to carry on those interjections.

4. CATHERINE DELAHUNTY (Green) to the Minister of Women’s Affairs: Does she consider she is doing enough to close the gender pay gap given the Herald Digi-poll today that showed 65 percent of women believed they were paid less because of their gender?

Hon HEKIA PARATA (Minister of Women’s Affairs): Tēnā koe, Mr Speaker. While the gender pay gap is the lowest it has ever been, at 10.6 percent, there is always more that can be done.

Catherine Delahunty: Does she agree with 65 percent of women polled by the New Zealand Herald, who consider they get paid less than men because of their gender?

Hon HEKIA PARATA: As the member knows because we have had a very detailed meeting about this matter, there are numerous causes of the gender pay gap, and therefore there are a range of solutions. I cannot be responsible for the Herald-DigiPoll’s views as they are reported.

Catherine Delahunty: Does she support allowing women to learn how much their equivalent male colleagues earn by requiring employers to report on gender pay in the workplace?

Hon HEKIA PARATA: Again as the member well knows because of the detailed discussion I have had with her, there are already mechanisms under the Equal Pay Act 1972 that provide for an employee who believes they are being discriminated against on the grounds of gender or other things to make a complaint to the Department of Labour, whereupon that complaint can be investigated, including requiring the provision of documents by their employer.

Catherine Delahunty: Does she consider that the current system whereby women have to take a case against their employer under the Human Rights Act or the Equal Pay Act 1972 is actually working; if so, why?

Hon HEKIA PARATA: As the member knows, we are concerned that, given the underuse of this mechanism, it may not be as well promoted as it could be, and we are working on how we can promote that opportunity to women who may feel they are being discriminated against.

Catherine Delahunty: How can her suggested solution of career guidance for women deal with the “unconscious bias” of employers against equal pay and pay equity for women?

Hon HEKIA PARATA: Sorry, Mr Speaker, can I ask that the question be repeated?

Mr SPEAKER: Most certainly the Minister can. Could Catherine Delahunty please repeat her question.

Catherine Delahunty: How can her suggested solution of career guidance for women deal with the “unconscious bias”—a comment of the Minister—of employers against equal pay and pay equity for women?

Hon HEKIA PARATA: In fact, my comment relates to the point I made earlier, and that is there are a number of causes of the gender pay gap. They include occupational segregation whereby half of all men and women are employed in occupations where 70 percent or more of those employed are of the same gender. There is a requirement for greater flexibility in workplaces. We know that the career guidance that is offered to students often results in girls choosing more lowerpaid trade options than boys do, so we are working with the Minister of Education to address that. We are focusing on—

Catherine Delahunty: I raise a point of order, Mr Speaker. I am sorry but I asked the Minister about dealing with the unconscious bias of employers, and we have not heard anything relating to that, at all.

Mr SPEAKER: If I recollect the—[Interruption] A point of order has been called. If I recollect the member’s question, she started the question by asking something about guidance for women, and I think the Minister is answering that part of the question.

Catherine Delahunty: Can I repeat the question, Mr Speaker, because the question was about how her solution would deal with the bias of employers?

Mr SPEAKER: The member cannot expect the Minister to answer the question in exactly the way she might want her to. I think the Minister has answered that question.

Catherine Delahunty: I raise a point of order, Mr Speaker. I asked a question about career guidance dealing with the unconscious bias of the employer. I have not heard an answer on that question.

Mr SPEAKER: Well, I am sorry, because I have.

Catherine Delahunty: Perhaps this is the issue. Why is the Government putting the burden on individual women to search for pay information and take action against their employers to solve the system-wide discrimination against women?

Hon HEKIA PARATA: I am not sure that the member has any evidence for system-wide discrimination. What we have in New Zealand is three pieces of legislation that together provide the

opportunity for men and women alike who feel they are subject to some kind of discrimination to be able, as has been traditional in this constitutional democracy, to pursue their rights.

Carol Beaumont: What decision has the Minister made on my request that the Government pick up the Pay Equality Bill drafted by the Human Rights Commission, which would provide real mechanisms to address pay inequality?

Hon HEKIA PARATA: I am continuing to read the report provided by the human rights commissioner. My officials are studying what the proposal is. The proposal is distinctly different conceptually from the current approach that New Zealand has used for discrimination. It takes some time to consider it.

Capital Gains Tax—Minister’s Statement

5. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he stand by his statement that “theoretically, the right thing to do would be to have a comprehensive capital gains tax”?

Hon BILL ENGLISH (Minister of Finance): Yes, I stand by the statement that tax theorists do support a comprehensive capital gains tax—that is, on all capital gains, including the family home. However, the Government certainly does not support a complicated new tax that is part of a bigspending and increasing-debt package, which is advocated by that member.

Hon David Cunliffe: Is the Minister aware of the overwhelming importance of tax theorists in the 31 of 34 OECD countries that in fact have a capital gains tax, and who, of course, reside in the OECD, the IMF, the New Zealand Treasury, and the New Zealand Reserve Bank, which have all recommended that one be adopted here?

Hon BILL ENGLISH: The experts the member quotes all favour a comprehensive capital gains tax. I note the member does not, because his would reduce the capital gains tax on property traders and provide a number of exemptions, which will mean that not much revenue will be raised. The total effect of the package he has produced is that it would require borrowing of about $18 billion extra over the next 10 years.

Hon David Cunliffe: If his criticism of Labour’s capital gains tax policy is that it is not comprehensive enough, is he aware that of the 31 of the 34 OECD countries that have capital gains taxes, only Japan includes the family home; therefore, can he confirm that he would support a capital gains tax that did include the family home?

Hon BILL ENGLISH: I can confirm that we do not support a big-tax, big-spending package that would leave the country with a large legacy of extra debt.

Hon David Cunliffe: If the Minister is alleging that Labour’s package is big-spending, is he aware that it reduces net Crown debt to zero before the plans outlined in his own 2011 Budget; if so, does he agree with himself that the tax system relies too heavily on those taxes most harmful to growth, such as corporate and personal income taxes, and that sectors with low effective tax rates, notably property, have expanded at the expense of the rest of the economy; if so, will he now endorse Labour’s policy that reduces income tax by $1,000 for every household and replaces it with a capital gains tax that closes the largest tax loophole?

Hon BILL ENGLISH: In that case, the member should have supported the Government’s Budget and tax package last year, which this year is taking $1 billion of extra tax out of the property sector. But our main objection to the member’s package is it represents big tax, big spending, and big debt, when this economy needs exactly the opposite if it is to grow.

Hon David Cunliffe: Which is better for the economy: his Government’s plan to sell profitable, publicly owned assets that bring a bit of cash upfront but sees billions of dollars of dividends flow offshore forever, or Labour’s fair tax plan that gives every Kiwi a tax cut on the first $5,000 that they earn, closes the capital income tax loophole, and keeps Kiwi assets and dividends in Kiwi hands?

Hon BILL ENGLISH: Our plan is much better because it incentivises work, exporting, savings, and investment, and it disincentivises excesses, borrowing, and consumption. His plan is worse because it means a big new tax, big Government spending, and a lot more debt for New Zealanders, just at the time when debt is toxic.

Amy Adams: What reports has he seen about how a capital gains tax might apply to KiwiSaver and other retirement savings?

Hon BILL ENGLISH: Among the many dodgy assumptions and rubbery numbers in a package announced recently, I have seen a report from the New Zealand Shareholders Association that was very concerned at the impact of the capital gains tax proposed on 1.6 million KiwiSaver accounts. The association asked whether the proposed tax would apply to KiwiSaver. Labour’s finance spokesperson said that the 15 percent capital gains tax would apply to those savings. The Shareholders Association noted that the compounding effect of this new tax on KiwiSaver savings would be very negative for the balances in New Zealanders’ KiwiSaver accounts.

Hon John Boscawen: If big spending, big tax, and big debt are harmful to the economy, why is his Government running a deficit this year of $16.8 billion?

Hon BILL ENGLISH: That is a very good question. The main reason the deficit is so big is that we have allocated in the last financial year most of the Government cost of dealing with the Christchurch earthquake. But we share the member’s concern about the size of that deficit, and that is why in the last Budget we put in a plan that will get us back to surplus by 2014-15, which I think will make us one of, I think, only three developed countries in the world that will have that degree of financial security. And it is why we will argue vigorously this year against other plans to significantly increase New Zealand’s debt at a time when that is a dangerous thing to do.

Hon David Parker: Is the Minister aware of whether KiwiSaver accounts currently pay tax on their profits from share trading; if he is not aware of the answer to that, why did he answer the question from Amy Adams in the way that he did?

Hon BILL ENGLISH: It is not my package. The more important question is whether the Opposition spokespeople—

Mr SPEAKER: Order!

Hon BILL ENGLISH: —are aware—

Mr SPEAKER: Order!

Hon BILL ENGLISH: —of the impact of their own policies—

Mr SPEAKER: What is wrong with the Minister’s ears? I was calling for order for quite some time before the Minister responded. Ministers know that when they start commenting on other parties’ policies they are at risk. The questions to the Minister invited that earlier on. The question of his own colleague went on to attack the Opposition’s policies, which was starting to tread on thin ice. But the question from the Hon David Parker asked whether, in the Minister’s answer to a previous question, he had considered whether what I presume he was claiming to be capital gains in profits from KiwiSaver were taxed. I believe it was a serious question that deserved to be treated seriously, but, instead, there was an attack on the questioner. I invite the Hon David Parker to repeat his question.

Hon David Parker: Is the Minister aware of whether KiwiSaver accounts already pay tax on their profits from trading in shares; if he is not aware of whether that is true, why did he answer the question from Amy Adams in the way that he did?

Hon BILL ENGLISH: I am aware of the current rules, and I am also aware that a recent package was proposed that would extend the application of a capital gains tax to all capital gains in KiwiSaver accounts, which will make 1.6 million KiwiSavers worse off under Labour.

Leaky Homes, Financial Assistance Package—Reports

6. NICKY WAGNER (National) to the Minister for Building and Construction: What reports has he received on the interest in the Government’s Financial Assistance Package from owners of leaky homes?

Hon MAURICE WILLIAMSON (Minister for Building and Construction): Since the financial assistance package became law just last Friday, the Department of Building and Housing has recorded a high level of inquiries from owners of leaky homes who are interested in taking up the package. Not only have we had a considerable number of inquiries from people who already have existing claims, but also we received 43 calls on Friday from brand new claimants. The department’s leaky home package website,, has so far had a total of 1,210 hits, resulting in the download of 892 financial assistance information packs. Just yesterday the website received 422 hits, and 345 financial assistance packs were downloaded. This is a positive sign that the Government’s package is being viewed by the public in a very positive way.

Nicky Wagner: What benefits will the financial assistance package provide to the owners of leaky homes?

Hon MAURICE WILLIAMSON: First, the package will suit both apartment owners and homeowners who want to avoid lengthy and costly legal battles in the courts and want to move on with their lives. Second, it will help owners of leaky homes get their homes fixed a lot faster. The financial assistance package is but one more option for owners of leaky homes. It will be in addition to the current disputes process. Homeowners who choose to take the financial assistance package will still have the right to pursue other liable parties such as builders, developers, and the manufacturers of defective products. This package sees a contribution of 25 percent from the Government and 25 percent from the local authority, with the remaining 50 percent being funded by the homeowner.

Capital Gains Tax—Gareth Morgan’s Views

7. Hon DAVID PARKER (Labour) to the Minister of Finance: Does he agree with economist Gareth Morgan that the lack of a capital gains tax is “the biggest tax rort in the country and one that has cost us all dearly in terms of efficient allocation of capital, economic growth and employment”?

Hon BILL ENGLISH (Minister of Finance): I think if Mr Mallard had seen what Dr Morgan has said on this, he would have prevented this question too from being asked. In respect of capital gains, Dr Morgan has said: “There should be no exemptions—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I reflected on the beginning of that answer. It would, of course, be a breach of privilege for a member to prevent another member asking a question, and members are not allowed to make that allegation in this way.

Mr SPEAKER: The member makes a perfectly reasonable—

Hon BILL ENGLISH: I raise a point of order, Mr Speaker.

Mr SPEAKER: I will hear the Hon Bill English on the point of order.

Hon BILL ENGLISH: I was simply observing what occurred in the House. I am not trying to say whether it was procedurally correct, but quite clearly that member overruled the asking of a question. That may be against the Standing Orders; we did not draw attention to that.

Mr SPEAKER: I do not think we need to pursue this further. I think when answering questions it is not helpful to make that kind of comment.

Hon BILL ENGLISH: Dr Morgan has said: “There should be no exemptions, certainly not on the family home which is the biggest tax shelter” of all. I understand that his comment after the recent package was announced was that if we exempt the family home from our tax, we are sort of knocking ourselves over the head before we start running, which I think was a very good description of Labour’s whole package.

Hon David Parker: Does the Minister of Finance agree with Westpac Chief Economist Dominick Stephens that “New Zealanders are incentivised to borrow money to buy land rather than

invest in productive assets. If we introduced a capital gains tax, that incentive would be diminished, and there would be a greater incentive for people to save via bank deposits or productive business ownership.”?

Hon BILL ENGLISH: That economist should get himself up to date with the measures the Government took in last year’s Budget, which mean that this year we will take about $1 billion extra tax—or a bit under, actually; about $850 million extra tax—from the property sector, which is a much larger amount of tax revenue than that member’s package would take out of that sector for probably about 10 years.

Hon David Parker: Does the Minister’s Budget forecast, under current economic and tax settings, show an increasing current account deficit, rising to around 6 percent of GDP, funded by more overseas debt each and every year to the end of his projections, and does that not suggest to him that significant structural changes like a capital gains tax are needed to cure New Zealand’s structural problems?

Hon BILL ENGLISH: The Government is applying itself to New Zealand’s structural problems. I can tell that member that both we and the public believe that packages that include significant increases in taxes, increases in Government spending, and increases in Government debt will make those problems worse, not better. In fact, I warn that member that a predecessor of his— Dr Cullen—campaigned on the current account deficit, and managed to double it in the time he was Minister of Finance under the previous Government.

Hon David Parker: Was the Government embarrassed when Pattrick Smellie reported that “Finance Minister and Facebook page-owner Bill English didn’t get the presumably intended answer when he asked visitors to the page whether they supported the Labour Party’s proposal for a capital gains tax. When BusinessDesk last looked, at 4.15 p.m., 314 people had voted 88% in favour of a capital gains tax.”?

Hon BILL ENGLISH: No, and I was not aware that the Labour Party research unit was as big as that.

Hon David Parker: Was the Government—[Interruption]

Mr SPEAKER: I want to hear the question.

Hon David Parker: Was the Government embarrassed to read the Herald on Sunday state: “Apart from borrowing money and talking up a questionable programme of asset sales, National is showing no signs of a plan to get us out of the mess we’re in.”; if he is not embarrassed, is he at least very concerned that he might be on the wrong side of this issue, given that so many senior economists and commentators believe that New Zealand’s structural problems need a structural cure that the Government has not delivered?

Hon BILL ENGLISH: No, but I was embarrassed for the Labour Party to see people whom it would expect to vote for it quoted in the media in the last week supporting the Government’s plan. In fact, most New Zealanders understand what needs to happen in this economy, and they have confidence in the John Key – led National Government to find our way through the recession in a considered way and to build a platform for strong economic growth over the next 5 years.

Drugs, Control—Classification Notices

8. JONATHAN YOUNG (National—New Plymouth) to the Associate Minister of Health: What measures has the Government taken to control new psychoactive substances?

Hon PETER DUNNE (Associate Minister of Health): The Government has decided to amend the Misuse of Drugs Act to enable the issue of temporary class drug notices for currently unregulated substances of concern. This new mechanism will place a temporary ban on such substances for up to 12 months while their risk is assessed, and will enable us to deal with synthetic cannabinoids like Kronic. I expect that once this amendment is passed, temporary class drug notices for these substances will be gazetted, and the substances will be off the shelves a week later.

Jonathan Young: What does he say to the industry claims that it will devise new products to get around the law?

Hon PETER DUNNE: We will certainly be monitoring the industry’s activities very closely, but I say to the industry that the moment it attempts to bring a new product on to the market, we will invoke the powers of this legislation, gazette the product, and have it off the shelves within 7 days.

Iain Lees-Galloway: Does he still claim that taking action on drugs such as P and Kronic is a priority for his Government, given that the Misuse of Drugs Amendment Bill has been buried on the Order Paper since November last year?

Hon PETER DUNNE: Absolutely. In fact, we have been making sure that the measures the bill contains, when put in place, will work effectively. If the member looks at what has happened overseas he will see a number of jurisdictions that have imposed short-term bans that have not worked. We have done the job comprehensively and properly. These restrictions will work.

Freshwater Management, National Policy Statement—Cawthron Institute Report

9. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister for the Environment: Does he agree with the Cawthron Institute that despite his Government’s National Policy Statement for Freshwater Management, “the condition of New Zealand’s lakes, rivers and wetlands is likely to continue to decline for several more years and possibly much longer”’ if not, why not?

Hon Dr WAYNE MAPP (Minister of Defence) on behalf of the Minister for the

Environment: No. The report makes the incorrect assumption that regional councils will be too slow in acting on the new national policy statement to improve water quality. The experience last month since the national policy statement took effect is that regional councils are taking the requirement to step up their management of fresh water very seriously. There has previously been no national direction for regional councils to improve water quality. Although some have criticised the policy as being too tough and others as being too soft, all of them have welcomed at least some clear direction from the Government on water quality.

Dr Russel Norman: Is the Cawthron Institute wrong when it says his Government’s own irrigation subsidies—the possibly $400 million of irrigation subsidies the Government has talked about—are likely to result in further intensification of land use and further decline in our lakes, rivers, and wetlands?

Hon Dr WAYNE MAPP: The Cawthron Institute report is one of opinion; it is not actually a scientific survey. In fact, no irrigation schemes will be eligible for Government funding unless environmental planning conditions are met, which include, in fact, the national policy statement, as well. The Government has, in fact, increased its spending on waterways by 500 percent over the last 3 years. For instance, in the 5-year period commencing in 2009, $94 million will be spent, compared with $16 million in the previous 5 years.

Dr Russel Norman: Does the Minister think it is a paradox that on the one hand his Government is increasing spending dramatically to clean up the mess created by earlier intensive agriculture projects, and on the other hand it plans to subsidise hundreds of thousands of hectares of new intensive irrigation projects that will increase water pollution? On the one hand the Government is spending money to clean it up, and on the other hand it is spending money to create it.

Hon Dr WAYNE MAPP: I think the member may not have heard the previous answer. No new irrigation schemes will be eligible for a Government subsidy unless they have a plan to deal with the potential increased runoff. That is one of the conditions of such a subsidy.

Dr Russel Norman: Will the Minister therefore provide a guarantee that not a single dollar will be paid in irrigation subsidies without a guarantee that there will be no negative downstream environmental effects on water quality?

Hon Dr WAYNE MAPP: Obviously, in any such application all the factors of the risks will be properly assessed on a scientific basis—unlike this particular report, which is in essence a matter of opinion.

Dr Russel Norman: I seek leave to table the Cawthron Institute report, Implications of the National Policy Statement on Freshwater Management, which was released in June 2011.

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.

Dr Russel Norman: I seek leave to table a statement by Professor David Hamilton, debunking the Yale report on water quality, which has repeatedly been used by the Minister from this year.

Mr SPEAKER: Is this a personal letter, or is it a—

Dr Russel Norman: It is a media statement by Professor David Hamilton. It is not otherwise publicly available.

Mr SPEAKER: It has not been published in the New Zealand media?

Dr Russel Norman: No. That is correct.

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.

Dr Russel Norman: I seek leave to table four documents, so I will do them as one block. These are from water scientists in New Zealand, all of which raise concerns about the National Policy Statement on Freshwater Management. They are published by the Science Media Centre. They are from Professor David Hamilton, Dr Mike Joy, Professor Jenny Webster-Brown, and Angus McIntosh, a professor at the University of Canterbury.

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

Brendon Burns: Will the Minister confirm that whereas the Land and Water Forum he established to consider the National Policy Statement on Freshwater Management made just four modest changes to the board of inquiry’s version, he allowed Cabinet to insert 19 more changes, none of them protecting the environment for which he holds the ministerial warrant?

Hon Dr WAYNE MAPP: Cabinet took a balanced approach to this. It balanced, obviously, the need to improve water quality with the need to improve growth.

Children, Protection—Green Paper Announcement

10. KATRINA SHANKS (National) to the Minister for Social Development and

Employment: What is the Government doing to ensure New Zealand better cares for and protects our most vulnerable children?

Hon PAULA BENNETT (Minister for Social Development and Employment): We have released a green paper on vulnerable children. Too many of our children are being hurt, abused, and neglected, but I believe we can change that. Some of the complex issues the paper raises include whether vulnerable children should be prioritised for services over others, how the Government can encourage communities to take more responsibility for the well-being of their children, and how much monitoring of vulnerable children there should be amongst Government and nongovernmental organisations. Submissions on the green paper are now open, and I certainly encourage people to get involved.

Katrina Shanks: What response has she received on the release of the green paper on vulnerable children?

Hon PAULA BENNETT: There has been a lot of response to the green paper on vulnerable children, and it has come in a number of ways and from a number of sources, including via Facebook and the Ministry’s website. I have also seen reports welcoming the green paper from places like Plunket, the New Zealand Medical Association, Save the Children, Barnardos, the Male Survivors of Sexual Abuse Trust, the New Zealand Educational Institute, the National Council of Women, Te Kāhui Mana Ririki, and the Children’s Commissioner. It seems that the paper has certainly been well received, and I look forward to receiving submissions on it.

Hon Annette King: In light of her comment that “Too many children are being hurt, abused, neglected, and badly let down but we can change this and now is the time to act.”, what is her definition of “now”?

Hon PAULA BENNETT: It would be fair to say that in the last 2½ years I have been working continuously on changes both within Child, Youth and Family and across Government about what we can do for our vulnerable children—for example, the Never, Ever Shake a Baby campaign and having Child, Youth and Family social workers in hospitals. We have put more into teen parents than any other Government has previously in terms of supported housing. We have also done more to support teen fathers, and we have introduced Home for Life, which has made a big difference in the protection of, and permanency for, those children. There was $44 million more in the last Budget for kids in care to make sure that we get the right sorts of services from those who care for them. So a lot has been done, but there is a lot more to do, as I am sure the member would agree.

Women’s Refuges—Funding Cuts

11. CAROL BEAUMONT (Labour) to the Associate Minister for Social Development and

Employment: Is she concerned about the warning of Heather Henare that waiting lists for places in Women’s Refuges may have to be contemplated as a result of cuts in Government funding?

Hon TARIANA TURIA (Associate Minister for Social Development and Employment): No. I would be concerned if that statement was true, but the fact is that since the 2007-08 financial year the Government has increased core funding to the National Collective of Independent Women’s Refuges by 25 percent. In addition, overall funding to refuges both part of, and separate to, the collective has increased by 43 percent.

Carol Beaumont: Why did she cut $382,000 of funding to the National Collective of Independent Women’s Refuges, which was used to fund the baseline activities of most of the women’s refuges around New Zealand, including providing short-term, safe shelter to women and children escaping violent relationships?

Hon TARIANA TURIA: The $382,000 was, in fact, money that was given to the refuges for educational purposes, not for the housing of women in those situations. The refuges have had considerably increased funding. The issue the member has raised is that they have had funding cut.

Rahui Katene: How much funding did members of the National Collective of Independent Women’s Refuges receive from the newly established Family-centred Services Fund?

Hon TARIANA TURIA: There were 24 applications from members of the collective, of which 20 were successful. I consider that a very good strike rate. Those 20 refuges received something like $1.683 million, and I am happy to inform the House that this is an increase in funding of 94 percent for affiliated refuges. The other two refuges that received money, which are not affiliated, received—[Interruption] Do members opposite want to hear the answer or do they want to rabbit on? The other two refuges received $1.1 million.

Carol Beaumont: How would the Minister describe the provision of short-term, safe shelter to women and children escaping violent relationships: as a front-line service or a back-office function?

Hon TARIANA TURIA: I think I have made it very clear that a 94 percent increase in money to the refuges hardly equates to preventing women from getting safety when they need it. I also want to point out that there has been a huge investment in front-line services to other family violence service providers right throughout the country.

Carol Beaumont: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: A point of order has been called.

Carol Beaumont: I asked a clear question, which was how would she describe the provision of short-term, safe shelter to women and children escaping violent relationships and would she describe that as a front-line service or a back-office function? I do not think she answered that question.

Mr SPEAKER: My interpretation of the Minister’s answer was that she confirmed that it was a front-line service, but if the Minister wishes to clarify that then I would be grateful.

Hon TARIANA TURIA: Of course it is a front-line service. They get 94 percent extra money to do it.

Mr SPEAKER: I thank the Minister. [Interruption] I want to hear Carol Beaumont’s question.

Carol Beaumont: What analysis was or will be undertaken of the impact of cutting funding that pays for short-term, safe shelter for women and children escaping violent relationships at a time when family violence continues to rise?

Hon TARIANA TURIA: I have answered that question continually this afternoon. There has been no cut to Women’s Refuge funding.

Hamilton—Services for Cancer Patients

12. TIM MACINDOE (National—Hamilton West) to the Minister of Health: What reports has he received regarding improved services for cancer patients in Hamilton?

Hon PETER DUNNE (Associate Minister of Health) on behalf of the Minister of Health: I am advised that more cancer patients receiving treatment at Waikato Hospital will now be able to stay free of charge in Hamilton during their care. Patients who live more than 30 kilometres away from the city can now stay during the week at the new Lions Lodge, which is run by the Waikato Bay of Plenty division of the Cancer Society. Until now, they have had to live more than 100 kilometres away, and patients who live closer to Hamilton can stay there if there are vacancies, along with a family support member. In a New Zealand first, the Waikato District Health Board, the Bay of Plenty District Health Board, and the Lakes District Health Board are together putting more than $900,000 into the lodge, which will result in improved access and make a big difference to around 50 extra families a year.

Tim Macindoe: What other cancer services have been improved for patients in Hamilton?

Hon PETER DUNNE: A new centre providing PET and CT scans in Hamilton means that patients from New Plymouth through to the Waikato will no longer have to travel to Wellington or even Australia for these important tests. These scans are a valuable tool in diagnosing and monitoring the progression of cancer and allow clinicians to plan and adjust to a patient’s treatment accordingly, at earlier stages of the disease. The Government is providing an extra million dollars every year for district health boards to purchase more PET scans, and this is supporting at least 550 additional patients each year.


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