Questions and Answers – June 19

by Desk Editor on Tuesday, June 19, 2012 — 6:58 PM


Economic Programme—Economic Challenges Addressed

1. TODD McCLAY (National—Rotorua) to the Minister of Finance: How is the Government’s economic programme helping New Zealand manage through current global uncertainty?

Hon BILL ENGLISH (Minister of Finance): The Government continues to focus on its longer-term programme for increasing New Zealand’s growth prospects by continuing investment in new infrastructure, increasing investment in science and innovation, improving incentives to get New Zealanders out of welfare and back into work, and increasing public sector productivity and results. In addition, the Government is managing financial uncertainty, working with the Reserve Bank, to introduce stronger requirements on banks, and assisting those banks in accumulating cash reserves and pre-funding debt to protect themselves against any interruption of access to international borrowing.

Todd McClay: What are the anticipated effects of recent elections in Greece for New Zealand?

Hon BILL ENGLISH: There are no particular effects directly. The election in Greece is just one of any number of factors that are creating uncertainty in the global environment. It does appear that there has been a positive reaction to the election result in Greece. Nevertheless, Greece has significant, very deep-seated problems, and it is not yet clear that those problems will be able to be resolved. New Zealand continues to focus on our own ability to grow our own economy, bearing in mind that each week there could well be a different version of the problems in Europe in our media, but Europe makes up only about 20 percent of our trade.

Todd McClay: What reports have you recently received on the New Zealand economy?

Hon BILL ENGLISH: There have been a number of reports that reflect the degree of uncertainty that we all face—both Government businesses and our trading partners. The International Monetary Fund gave a report recently that suggested that the Government had the balance about right, between supporting the economy through difficult times and getting back to surplus. There have been a range of other reports of forecasts trying to work out what is going to happen over the next few years, and that range of forecasts reflects the high degree of uncertainty that we are all dealing with.

Hon David Parker: If the Government’s economic programme is working, why are New Zealand’s exports dropping, and wages growing more slowly than in most economies outside of Europe?

Hon BILL ENGLISH: The Government has set out to rebalance the economy away from an economy driven by excessive debt, excessive consumption, and high levels of Government expenditure, towards a focus on savings, investments, exports, and worth. Because of the global uncertainty, it has been difficult to make as much progress as we would all want. However, we

remain focused on more jobs and higher incomes for New Zealanders, whatever the world throws at us.

Hon David Parker: If reducing debt is his Government’s answer to global uncertainty, why is it that New Zealand’s net international liabilities are set to grow by $70 billion between 2011 and 2016?

Hon BILL ENGLISH: I think it is positive that all New Zealanders understand the need to reduce debt, and New Zealand households are well ahead of the New Zealand Government in that respect. Household debt had started to drop a couple of years ago and continues to drop. Currently, the Government debt is still rising rapidly. Because we are running deficits, by 2014-15 we would hope that we are able to stop the increase in Government debt in respect of the external liabilities that are part of the long-running challenge for New Zealand, to rebalance its economy to earning a living—earning it before we spend it—and not borrowing to make up for less income than our spending.

Todd McClay: What effect will events in Europe have on the Government’s plan to return to surplus by 2014-15?

Hon BILL ENGLISH: The Government has committed to a return to surplus in 2014-15, and will not let this target slip lightly. We are not prepared to cause long-term damage to the economy, simply for the purpose of achieving that target, if it happens that global events mean that our revenue drops sharply. However, it is very difficult to predict not only what will happen in Europe but what would be the effects of any particular event in Europe. That is why we are focusing on what we can control, which is our own productivity, our own competitiveness, and our own Government spending, and in all those respects we are making moderate progress.

Economic and Fiscal Strategy—Progress

2. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Finance: Is he confident that the Government’s economic and fiscal strategy is on track; if so, why?

Hon BILL ENGLISH (Minister of Finance): The Government’s economic and fiscal strategy reflects the circumstances that we found when we came into Government in 2008, and the very difficult global situation since then, as well as the effect of major earthquakes in Canterbury. All those circumstances have been difficult; despite that, New Zealand has now grown in nine of the last 10 quarters. That is a tribute to the businesses and households that have adapted with so much resilience to such difficult circumstances. We will continue to support them with our plan for greater productivity and competiveness, as well as a return—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Some time ago in this answer I thought someone would have been stopped, because I asked him whether it was on track, not about a long—

Mr SPEAKER: Could I assist the right honourable gentleman. There have been a series of questions to the Minister of Finance that have been quite particular questions, and in response we have really had reiteration of the Government’s policy. In question time Ministers should answer questions. I take it the Minister is actually telling the House he believes that the economic and fiscal strategy is on track, but he has not actually told the House that. The question asked whether he is confident that it is on track, and, if so, why he is confident that it is on track. That was the question asked. I think the member asking the question has a right to be aggrieved by the answer.

Hon BILL ENGLISH: He stood up before I had completed the answer, so—

Mr SPEAKER: There had been an awful lot of—[Interruption] Order! There had been an awful lot of answer given before I heard an answer, and that is why I believe the member had every right to be aggrieved. I invite the Hon Bill English now to answer the question.

Hon BILL ENGLISH: Despite the significant challenges that New Zealand has faced, the economy has grown in nine of the last 10 quarters, and in that sense the economic and fiscal strategy is on track. But the reason it is on track is that New Zealanders have been so resilient in

adapting to these difficult circumstances. We will continue to support them and that will help us stay on track.

Rt Hon Winston Peters: How can he be at all confident that the Government is on track to—to quote those members—“responsibly manage the Government’s finances”, given that the Reserve Bank now forecasts that Government debt will be $10 billion higher in 2014 than the figures he gave the House on Budget day in this Budget document?

Hon BILL ENGLISH: As I said in answer to an earlier question, there is a range of forecasts now that reflect the uncertainty that, I think, not just forecasters but many New Zealand businesses and households feel. The Reserve Bank happens to have moved from a view that the economy was much better than Treasury thought to a view, 3 months later, that says it is much worse than Treasury thought. Well, you know, that is one opinion. However, we stay focused on our plan to lift competitiveness and our growth prospects and support New Zealanders, who, whatever the uncertainty, are continuing to make sensible decisions that keep the economy on track.

Rt Hon Winston Peters: When will he stop hiding behind the European situation and take responsibility for his own policy failures at home, such as, for example, his inability to balance the books by 2014-15, which was the Government’s stated objective of the May Budget, this document, just 4 weeks ago?

Hon BILL ENGLISH: As my colleagues have pointed out, we take responsibility for all the decisions we make and what they cost, and we welcome the Opposition starting to take responsibility for all the stuff it is promising, which we know it would not able to pay for.

Rt Hon Winston Peters: Mr Speaker, was that an answer?

Mr SPEAKER: I take it this is a point of order.

Rt Hon Winston Peters: Actually, I was hoping you would volunteer it yourself.

Mr SPEAKER: Order! I would have been very tempted to assist the member, but he started out his question asking why the Government is hiding behind the European situation. If he wants the Speaker to assist, he does not ask questions like that, because it leaves a lot of latitude to the Minister. Otherwise I would have assisted, but I think, given the wording of the question, there is not a lot the Speaker can do.

Rt Hon Winston Peters: How can New Zealanders be confident that he is managing anything other than economic decline when, according to the Reserve Bank, unemployment remains “near its recessionary peak” and New Zealand’s capacity for GDP growth has halved—halved, I say—under his management?

Hon BILL ENGLISH: In the first place, I just disagree with the Reserve Bank’s view on the final point. I think the reason New Zealanders are confident is that they have a quite realistic grasp of the economic uncertainty that we all face, but in the face of that uncertainty they have done very well to adapt to it. So our businesses and households have been remarkably resilient, and, actually, that is the main reason the Government has confidence that we can stay on track. New Zealanders understand what needs to be done, and they are getting on and doing it.

Rt Hon Winston Peters: How can the New Zealand public believe the Prime Minister’s statements on the economy when a yawning credibility gap has opened up between Treasury’s and the Reserve Bank’s view of the economic prospects for New Zealand?

Hon BILL ENGLISH: Well, they are a couple of agencies that make independent forecasts, and they clearly have some differences of opinion. I mean, in the end they are just spectators trying to predict how the game is going to play out. What really matters is New Zealand households and businesses, which are increasing their savings, which are making investments carefully, which are reducing their debt, and which are creating new jobs and paying wage increases month by month. So we are on a track to moderate growth, and we believe we can stay on that track.

Prime Minister—Statements

3. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

David Shearer: Does he stand by his statement that “The mixed-ownership model is there for a variety of extremely sound reasons.”?; if so, has he read Treasury advice that estimates that the Government earns $360 million a year in profits from our energy State-owned enterprises, but will save only $266 million a year in borrowing costs by selling them—a loss of $100 million a year?

Rt Hon JOHN KEY: Yes to the first part of the question, and to the second part of the question, what I have seen is advice from Treasury that indicates that the forgone dividends for retaining only 51 percent, and not 100 percent, of the State-owned enterprises will be offset by the otherwise borrowing costs that we would face—in other words, it is about a wash.

David Shearer: Is it his intention to amend legislation to prevent the on-sale of shares to foreigners; if so, why not?

Rt Hon JOHN KEY: No.

David Shearer: If only 15 percent of the shares sold end up in overseas hands, that will mean $100 million a year in profits going to offshore owners. Can he think of any other, better reason for using $100 million in New Zealand?

Rt Hon JOHN KEY: Of course some dividends may go to foreigners. Many dividends will go to New Zealanders. But if we were borrowing the money, I give the member a tip: we would be borrowing it from overseas.

David Shearer: Given that the average residential electricity cost for the average consumer is 13 percent less from State-owned companies than from private energy companies, can he say that prices will not rise to private company levels in the future?

Rt Hon JOHN KEY: If one goes and has a cursory look at the price increases for electricity under the 9 years of the previous Labour Government, they went up 72 percent. If one goes and has a look at the increase in the equivalent period of time under National, they have gone up less. If one goes and has a look at the—

David Shearer: I raise a point of order, Mr Speaker. That was quite a specific question about the difference between State-owned enterprises and private energy companies.

Mr SPEAKER: I have got to accept the question was specific in the way it related to energy prices from State-owned enterprises and private companies. The member argued that there was about a 13 percent difference, from memory, and the Prime Minister has not referred to that in his answer, so far—[Interruption]—so far.

Rt Hon JOHN KEY: The second part of the answer would be that if one goes and looks at the Powerswitch website and has a look at who has the cheapest prices, funnily enough they are actually companies in the private sector, not the State-owned enterprises.

David Shearer: Does he think that paying $120 million to multinational merchant bankers Goldman Sachs Group, Macquarie Capital, and Credit Suisse to sell our assets is a good use of Government money?

Rt Hon JOHN KEY: Yes, because we will be realising between $5 billion and $7 billion worth of capital. But everybody watching this debate understands the difference between Labour and National. Labour wants to borrow more money, spend more money, put this country in hock, and on this side—

Mr SPEAKER: Order! It is not time for a speech.

State-owned Assets, Sales—Cost of Contracts for Related Services

4. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: What is the value of contracts entered into to date for spending on advertising, communications and banking services relating to the Government’s asset sales programme?

Hon BILL ENGLISH (Minister of Finance): The actual total amounts of contracts are commercially sensitive, and the reason for that is that the Government intends to renegotiate these contracts after each float. As we have said before, though, costs for all suppliers and contractors across the entire share offer programme—and that is not just the Mighty River Power one—are expected to be around 2 percent of the total programme proceeds, which is very low by market standards. To date about $800,000 has actually been paid out pursuant to those contracts.

Dr Russel Norman: Does he know the value of the contract signed earlier this year with Clemenger BBDO to provide advertising services relating to the Government’s asset sales programme, and why does the public not have a right to know how much the Government is spending with Clemenger BBDO for that advertising?

Hon BILL ENGLISH: In due course, of course, that will become public. I would expect it is a significant spend because we want widespread ownership of these shares by New Zealanders. Not many New Zealanders actually know about Mighty River Power or about the nature of its business, so we would be expecting to spend on an advertising campaign to make sure New Zealanders do know about the opportunity that they have. But I would expect in the long run that those numbers would be available. Bear in mind that in the current environment the Government can get good rates for all these services, and we would expect to continually renegotiate the contracts to drive the price down.

Hon Clayton Cosgrove: Are the expensive advertising consultants responsible for the statement on the Government share offer website that “Persons who are accessing this website from within Australia should exit the website immediately”; if so, is that all the protection he is planning against these assets being sold off to Australians?

Hon BILL ENGLISH: No, and I think the member’s question illustrates the fact that he does not take the securities law of New Zealand seriously. In fact, the website has to comply with New Zealand securities law, Australian securities law, and US securities law because of their requirements, not ours. We are, as a sovereign, obliged to comply with their law whatever they think of it.

Dr Russel Norman: What exactly is the nature of SenateSHJ’s role in the asset sales programme, and why is it necessary to have spin doctors from a public relations firm involved when the Government already has press secretaries and Treasury staff working on the asset sale programme?

Hon BILL ENGLISH: I cannot tell the member the detail of the role of that particular contractor. What I can say is that the Government is committed to widespread New Zealand ownership of these companies. They are not as well known in New Zealand as many politicians certainly assume, and it is important that we do communicate with the wider public, consistent with the securities law, about these companies and the nature of their business.

Dr Russel Norman: What is the upper limit that he is willing to spend on loyalty schemes around this privatisation programme, given that the loyalty scheme associated with Queensland Rail’s privatisation cost about 6 percent of the proceeds, which, in the case of his privatisations, would be something around $400 million?

Hon BILL ENGLISH: Well, we do not want to jump to conclusions about the detail of loyalty schemes, because the Government is still considering that option along with others. What we are going to do, consistent with what the Government said right back in January last year, is make this offer attractive to as many New Zealanders as possible. New Zealanders will be interested in these assets, but they will want to understand how the deal works for them, and the Government is considering options that would help attract the most possible New Zealanders into the ownership of these assets.

Michael Woodhouse: What reports has he seen about other publicly funded contracts let in relation to the Government’s sales programme?

Hon BILL ENGLISH: I have seen some reports that initially I did not believe, actually, that the Green Party was using $75,000 of public money to pay for people to collect signatures for a referendum to stop the asset sales, which I think tells us that most New Zealanders, although they may be uncomfortable about the sales, are finding that you actually have to pay a public contract to get them to sign a referendum. So they are probably not as motivated as the Green Party would like.

Dr Russel Norman: Thank you, Mr Speaker. [Interruption]

Mr SPEAKER: Order! I want to hear this supplementary question.

Dr Russel Norman: Given that it is—[Interruption]

Mr SPEAKER: I apologise to the member. I cannot hear the supplementary question. I want to hear it.

Dr Russel Norman: Given that the Green Party has gone on the public record as to how much spending we are doing to oppose the State asset sale programme, why is his Government not willing to tell the public how much it is planning to spend on spin doctors, advertising, and banking fees in the privatisation programme?

Hon BILL ENGLISH: Well, of course, that information will be available, but I think it sums up the difference between the parties. We are getting on to get things done, and the Greens, as usual, are just trying to stop anything happening. In this case, they are using public money to try to stop anything happening. Is it not odd that the Greens used to support citizens initiated referenda, whereas now we are paying for a Greens initiated referendum?

Rt Hon Winston Peters: Is the public to understand that as well as the $120 million figure that Mr Key gave to Mr Shearer—that is $120 million they are spending on advertising, communication, and banking services related to selling the assets—to this has to be added the Business and Economic Research Ltd and others’ estimate of $100 million losses that will ensue to the Government’s revenue stream when they are sold, even though the man over there with the follicly challenged head does not like it; and—[Interruption] Well, he is chipping away. And how could any reputable financial manager follow such a course of action?

Hon BILL ENGLISH: The member is welcome to comment on his Labour Opposition any time he likes, as far as we are concerned. All I can say is this: if the member believes any of that, then we are waiting to hear in this Chamber, this week, that the Labour Party and New Zealand First are going to buy the assets back.

Hon Tony Ryall: They said it’s not off the table.

Hon BILL ENGLISH: It is not off the table? Or is it on the table? Well, by the end of this week, that is what we are expecting to hear.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I have been very, very reserved today, as you will have noticed, but I asked him to reconcile a—

Mr SPEAKER: Order! If the member wants to get particular answers to his questions, he will just have to be more disciplined. I am not going to support a member in seeking answers to questions if they refer to other members of the House in a disparaging manner. The remedy is in the member’s own hands: avoid unnecessary comments in asking questions and I promise the member I will get answers for him. But I cannot when disparaging comments are made while a question is being asked.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. With the greatest respect to the freedom and character of this House, if somebody over there is chipping away at the whole of question time—

Mr SPEAKER: Order! The member is senior enough and has been around the place enough not to let more junior members upset him by the odd interjection around the House. [Interruption] Order! I am on my feet. [Interruption] I am on my feet and comments will cease. Members have to be disciplined in asking questions if I am to be able to elicit answers for them.

Dr Russel Norman: Given that the Government has already acknowledged that it is spending $120 million on communications, public relations, and banking services, and that in addition to that

it could spend another $400 million on loyalty schemes, does he believe it is a good use of Government money to spend up to half a billion dollars on the privatisation programme?

Hon BILL ENGLISH: Well, I just do not agree with the member’s numbers that he is using. But, yes, the Government is committed to a process that is going to give us 51 percent Government ownership and 49 percent public float, and that will help us to avoid $7 billion more borrowing. We think that is worth an effort to do a good job of it. There will be widespread New Zealand ownership. We would rather pay dividends to New Zealanders, as opposed to the Green Party, which wants to pay interest to foreigners. That is the difference.

Dr Russel Norman: Is he aware that, according to former senior Goldman Sachs executive Greg Smith, Goldman Sachs internally described its clients as muppets, and hence does that make this New Zealand Government a muppet for using Goldman Sachs to manage the privatisation programme?


Health Personnel—Voluntary Bonding Scheme

5. Dr PAUL HUTCHISON (National—Hunua) to the Minister of Health: How is the Voluntary Bonding Scheme improving health services?

Hon TONY RYALL (Minister of Health): The number of doctors, nurses, and midwives around the country who have signed up to the scheme since 2009 to work in hard-to-staff communities and specialties is now at 1,790 young people. The fourth intake opened on Friday and covers specialties including intensive care medicine and rural hospital medicine. I am advised that so far 278 graduates have had their applications for payments to cover student debt or other costs approved, with another 460 yet to apply. The Voluntary Bonding Scheme is helping to protect and grow our public health services, particularly in vulnerable communities in isolated areas.

Dr Paul Hutchison: What recent changes has the Government made to the scheme?

Hon TONY RYALL: In line with our election commitment, the Government has expanded the scheme to include radiation therapists and medical physicists as part of the drive to reduce waiting times for cancer patients, and to grow and retain key health front-line staff. Radiation therapists and medical physicists are in demand worldwide, and keeping these specialised staff in New Zealand is essential to providing better cancer services for New Zealanders.

Power Prices—Comparison of State-owned Energy Companies with Private Companies

6. Hon CLAYTON COSGROVE (Labour) to the Minister of Energy and Resources: Does he agree with Molly Melhuish’s calculation that the amount charged by SOEs for electricity for an average consumer is $265 per annum less than is charged by non-SOE retailers, and if not, what was the weighted average of the annual total retail price charged by SOEs and their subsidiaries to a residential consumer using 8,000 kilowatt hours of electricity compared with the weighted average of the price charged by non-SOE suppliers, according to the most recent data?

Hon PHIL HEATLEY (Minister of Energy and Resources): No. I am advised that she has not included all underlying factors—for example, she does not note that private retailers generally have a stronger market presence in more expensive-to-serve areas, whereas State-owned enterprises are more concentrated in the three largest cities, which are less costly to serve. Her calculation also does not account for variation in line charges, which can vary by as much as 11c per kilowatt hour, and it does not account for regional variations or seasonal variations.

Mr SPEAKER: Order! This was a primary question on notice. The Minister in answering would have been absolutely correct had the question asked whether he agreed with Molly Melhuish’s calculations, and if not, why not. But the question did not ask that. The question asked whether or not the Minister agreed with those calculations, and if not, what was the weighted average of the annual total retail price charged by State-owned enterprises and their subsidiaries to a residential consumer using 8,000 kilowatt hours of electricity compared with the weighted average of the price

charged by non – State-owned enterprise suppliers according to the most recent data. The Minister’s officials have had a couple of hours to work out the arithmetic, and if they cannot work it out, they should be sacked. The House deserves an answer.

Hon PHIL HEATLEY: Further to answering the first part of the question, as the member can appreciate, the second part of the question is complex. It has not been possible to provide a detailed analysis of the calculation, because of all the scenarios provided—first of all, where in the region the generation occurs, what type of electricity generation it is, what season it is, whether lake levels are high or low, what the lines company charges are, and there are 27 lines companies. It is simply not possible to provide that information.

Mr SPEAKER: I have got to accept that the Minister does not have the information, but it would seem to me that where a question is on notice it should be answered. There is no problem in explaining why an answer may be misleading, but—members should not interject—it would have been helpful, though, to have an answer. I mean, it is possible to calculate the answer to that question. There may be all sorts of reasons why the answer is actually misleading for a whole lot of reasons, and there is nothing wrong with explaining those reasons once the answer is given. But what the Minister is telling us is that it is just not possible to calculate an answer to that question, when all the officials in that Minister’s department have had a couple of hours to actually work it out. It is just, to me, a great concern where officials think they can get away without answering a question on notice. There may be all sorts of reasons why the answer to the question is misleading for a whole range of circumstances, which the Minister has told the House about. But that does not preclude an answer to a question being given. I will hear the Minister further if he has a further answer on that.

Hon PHIL HEATLEY: Perhaps I have not been clear. There are such a large number of answers to that question based on various scenarios that have not been detailed enough in the question; what time or where, where in the country, under what circumstances, which lines company, what season, what region, and so on and so forth, whether it is rural or urban—there are so many answers. That is my point.

Hon Trevor Mallard: Is the Minister aware that the average price and the volume sold for each of the private and State-owned enterprise companies sit on the Ministry of Economic Development website, and it is possible to do the calculation, as Molly Melhuish did, by reading that website?

Hon PHIL HEATLEY: I am aware of the website, and I am aware of the prices on that website. What it says is that private companies are currently the cheapest in Auckland Central, Hamilton, Manukau, Christchurch, Dunedin, Northland, Whangarei, Counties, Waikato, Hutt Valley, Porirua, and Golden Bay. But that could change at any time depending on the season, which lines company, and whether it is a dry year or not, etc, etc, etc.

Hon Clayton Cosgrove: Does the Ministry of Economic Development’s quarterly survey of electricity prices for a customer using 8,000 kilowatt hours of electricity a year show that Stateowned enterprises charge on average less than private energy companies?

Hon PHIL HEATLEY: That would depend on which energy companies they are being compared against; what part of the country they are providing for, North Island or South Island, or what region; which lines company they are using; what season it is, whether it is a dry year or not, etc, etc, etc. There is such a variance in factors that the question is simply not specific enough.

Hon Trevor Mallard: This was a very tight question, which asked about the average. I thought that Minister would recognise that word.

Mr SPEAKER: Order, order; no, no, order! That is not the way points of order are to be handled at all. I think, given the answers that the Minister has been giving to the House I have to accept that it is the Minister’s view that such an average cannot be calculated, so I have to accept that advice. The member heard my view of the initial question that mathematically, I believed, it was possible to calculate an answer to it, but the Minister has told the House that for a range of reasons such figures cannot be produced realistically, and I have to accept that.

Hon PHIL HEATLEY: I raise a point of order, Mr Speaker. Can I just make a correction there: what I said, I believe, in my previous point of order—I just did not want you to feel that I misrepresented it—was that there is such a range of answers, because it depends on such a wide range of factors. Yes, certain calculations can be made, but you need more input information in order to come up with the information, so that is what I was saying.

Mr SPEAKER: Order! We will not continue this by way of debate. One of the interesting things is that, mathematically, it is still possible to come to a weighted average, but still, that is only the stupid Speaker who thinks that.

Hon Clayton Cosgrove: We do not think you are stupid, sir. Are the lowest prices in the electricity market, according to the Ministry of Economic Development, charged by the Stateowned subsidiary Energy Online?

Hon PHIL HEATLEY: Sorry, could I hear the question again?

Hon Clayton Cosgrove: I will go slow.

Mr SPEAKER: Order! The member will not make that kind of comment. Just repeat the question.

Hon Clayton Cosgrove: To the Minister—

Hon Gerry Brownlee: He wants to understand it himself.

Mr SPEAKER: Order! I will ask the member to repeat his question, please.

Hon Clayton Cosgrove: Are the lowest prices in the electricity market, according to MED—that is, the Ministry of Economic Development—charged by the State-owned enterprise subsidiary Energy Online?

Hon PHIL HEATLEY: I do not have that information in front of me at this specific amount of time. But what I can tell you is that private companies at the moment that are cheapest, from what I understand, are in Auckland, Hamilton, Christchurch, Dunedin, Whangarei, Counties, Waikato, Hutt Valley, Golden Bay, Marlborough, Nelson City, and Tasman. That could change at any time. I am sure there are places in the country where State-owned enterprises provide the cheapest electricity prices, but that would depend on a range of factors, which I have listed in previous answers.

Hon David Parker: I raise a point of order, Mr Speaker. This sort of underlines the point that you yourself made in response to the Minister’s lack of an answer on the first question, because we are left flailing, asking these questions, when on notice we asked “What was the average?”. He can point to individual instances, and that is why we actually wanted to know what the meaningful figure is, which is the average. I invite you to give a considered ruling as to whether the Minister ought to have answered the second part of the primary question No. 6, because what are we to do in the Opposition if we cannot get the Government departments to address what are reasonable questions, to which there are real answers?

Hon PHIL HEATLEY: One of the difficulties is that they have actually asked for the weighted average, and we have taken that—or I have certainly taken that—as the number in the population in each area that is paying a certain amount of price, versus the other, a weighted average. The difficulty is that we have got about 35,000 people switching a month, which is over 1,000 a day, so it is such a moving feast that it is very difficult at one point of time to calculate.

Mr SPEAKER: Order! I think I have heard sufficient on this. Look, it would be most unusual for a considered ruling to be required on such a matter as this. I think the Speaker has made his view pretty clear on the matter, and I think that is where it has to end. But I would have been surprised had the weighted average related to switching consumers. I would have thought electricity usage and the rates charged for the amount of electricity being used would have produced a weighted average, and mathematically I am sure that I could have sat down, myself, and worked something out, but still.

Hon David Parker: I raise a point of order, Mr Speaker. The reason I raise it is what remedy do we have? The Minister can ignore that, and we—

Mr SPEAKER: Order! I think the remedy is that officials know that the Speaker expects this kind of question to be answered. Ministers and officials know that it is not that great to have the Speaker concerned that officials have left a Minister exposed through not providing the information. I suspect that that is enough discipline to make sure it is unlikely to happen too often in the future.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I am a former Minister of State Services, and I would like to ask you to think carefully about your last ruling, which I think you headed towards in an earlier ruling. In the House Ministers are responsible. We do not know what briefings they have, and he should take responsibility in here, not his officials.

Mr SPEAKER: Order! I hear what the member has said. We are not going to take any more time on this today. I do not think the House has heard a Speaker be as tough on a Minister and officials as you heard today, and I think the Opposition should be fairly grateful that a Speaker is prepared to go to that length to make sure questions are answered.

Hon Clayton Cosgrove: If the State-owned enterprises charged more on average than private companies, does not the Minister think he would have made that point the primary argument of his Government’s campaign to sell State-owned enterprises?

Hon PHIL HEATLEY: I disagree with the basic premise of the question, and we are not selling State-owned enterprises, we are presenting a mixed-ownership model whereby the Government will retain majority control.

Hon Clayton Cosgrove: Why has he, as Minister of Energy and Resources, along with his colleagues the Minister of Finance and the Minister for State Owned Enterprises, not sought advice about the residential price impact of the biggest change in the industry, which is on his watch?

Hon PHIL HEATLEY: The Minister for State Owned Enterprises has stated publicly that it is not who owns the energy companies that influences prices. It is more like the big list that I gave—

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. With respect, the question was specific and asked why advice had not been sought. We have had it confirmed, both by the finance Minister and the Minister for State Owned Enterprises, in different forums that they have not sought advice, and this Minister—

Mr SPEAKER: Order! I think in fairness the Minister is giving his response to that. It asks for an opinion why something was not done, and I think the Minister is doing that.

Hon PHIL HEATLEY: The Minister for State Owned Enterprises has stated publicly that it is not who owns the energy companies that influences prices. He has had assurances from his team, and I have had the same feedback from him.

Trans-Pacific Partnership—Addition of Mexico

7. Hon TAU HENARE (National) to the Minister of Trade: Can he confirm that Mexico is now a full participant in the Trans-Pacific Partnership Agreement?

Hon TIM GROSER (Minister of Trade): Yes, but the word “full” needs a little elaboration. New Zealand, Australia, the United States, and the other existing members of the Trans-Pacific Partnership have been negotiating for about 2 years, and it has been very important to ensure that bringing Mexico into this negotiation, or any other country that wished to participate, is not going to slow the process down. The House should be aware that there are intense discussions going on now around Canada and Japan. But I am confident, given the discussions I have had in Mexico City, Auckland, and, more recently, Russia with the Mexican Minister of commerce, that Mexico’s participation will not slow the negotiation down and will add a great deal to it.

Hon Tau Henare: If the enlarged Trans-Pacific Partnership results in New Zealand having free access to the Mexican market, what benefits are there likely to be for New Zealand?

Hon TIM GROSER: As with all trade agreements of this type, assuming we can complete it successfully, it is about jobs, better-paid jobs, and the need to borrow less money overseas. Mexico is a giant economy, the 14th largest economy in the world. We sell already around half a billion

dollars of exports and face very considerable barriers. So I would anticipate, at the end of a successful negotiation, many benefits to New Zealand.

Hon Tau Henare: Why, in his view, has Mexico decided to take this step?

Hon TIM GROSER: Because like Governments around the world, including this Government, it sees the pathway to improved jobs, better incomes, and, above all, growth through export-led growth. The growth story for all of us is in the Asia-Pacific, and I am certain that that is the underlying calculation behind its decision.

Schools, Building Projects—Public-private Partnership for Hobsonville Schools

8. CHRIS HIPKINS (Labour—Rimutaka) to the Associate Minister of Education: Does he stand by his statement with regard to the public-private partnership for the Hobsonville schools “you can be assured that the contract that we’ve signed today, the taxpayer will be better off under this arrangement”?

Hon CRAIG FOSS (Associate Minister of Education): Yes. In relation to these schools the taxpayer will not face the risks nor costs such as those associated with leaky buildings or earthquake strengthening requirements. There is an upfront cost saving of 1.7 percent over the public sector comparator, a total value of $111 million in the contract with Learning Infrastructure Partners. If Learning Infrastructure Partners does not meet its performance targets under the contract, the cost to the taxpayer will be less.

Chris Hipkins: What is the estimated saving in dollar terms from using a public-private partnership to build the Hobsonville school, instead of using regular public sector processes?

Hon CRAIG FOSS: In notional terms, I think the net present value was $111 million, which is about $2 million less than the public sector comparator. The absolute notionals, from memory, are something like $125 million or $128 million.

Chris Hipkins: How much has been spent over the last 2 years developing the business case for the Hobsonville schools project?

Hon CRAIG FOSS: I do not have that answer to hand, but the costs for the partners associated with this—of course, those partners have to bear those costs themselves.

Chris Hipkins: Is he aware that Budget 2011 documents show that the Government spent $3.5 million over the last 2 years simply to prepare that business case—significantly more than the $1.98 million saving the public-private partnership is supposed to produce?

Hon CRAIG FOSS: The member is correct on the savings under this particular model. The actual amount spent would be based on the general model for modelling potential public-private partnerships, which we utilised in this example.

Chris Hipkins: Has he informed the Prime Minister that the Hobsonville school public-private partnership will cost more than building the school using regular public sector processes, and did the Prime Minister inform him of his previous commitment that if public-private partnerships “weren’t [cheaper], no Government would consider them.”?

Hon CRAIG FOSS: The model has been chosen because it is less than the public sector, comparatively.

Welfare Reforms—Initiatives Targeting Young People

9. MELISSA LEE (National) to the Minister for Social Development: How will the Government’s welfare reforms, currently before the House, support young people on a collision course with the welfare system?

Hon PAULA BENNETT (Minister for Social Development): We know that 90 percent of 16 and 17-year-olds who are not currently in education or training may end up on a benefit when they turn 18 years old. Right now, that could be between 11,000 and 14,000 young people. Under the Social Security (Youth Support and Work Focus) Amendment Bill we will target services to these 16 and 17-year-olds, connecting them with contracted youth providers and turning their lives round.

It is a good message to all those children up there watching us today to stay in school, study hard, and make sure that you have good opportunities when you are older.

Melissa Lee: How will youth providers work with the target groups to ensure that these young people are placed and succeed in education, training, or work-based learning?

Hon PAULA BENNETT: We will pay providers more to work with those who are higher risk. We will do this and prioritise this funding so providers do not go just for those who are easier to work with. We have seen past examples that when you have one price, as a consequence everyone eschews working with those who are harder. What we will do is take information from the Ministry of Education and the Ministry of Social Development, we will combine it to actually put an assessment on who is more at risk, and we will pay significantly more for them and less for those who we know do not need as much intensive support.

Melissa Lee: How will these changes impact on these young people already on benefits, and how will youth providers work with them?

Hon PAULA BENNETT: We have, just in the last week, chosen those providers that will be working with these young people. Just last week I was at the teen parent unit out in the Hutt. I must say that when I spoke to the girls and the young women there, once they heard that they would be working with an organisation like Vibe—that actually they could have a bit less contact with Work and Income, to be fair, and have a provider that understands them, has a more personal relationship with them, and can help them work through what they need to know and how they can get the support around budgeting and parenting—they were quite thrilled to hear about that extra support that they would be getting from this Government.

Accident Compensation—Green Party ACC Rehabilitation Plan

10. KEVIN HAGUE (Green) to the Minister for ACC: Will she return ACC to the pay-asyou- go funding model, outlined in the Green Party’s ACC Rehabilitation Plan and emailed to her this morning, and are there any points in the plan she will not consider implementing?

Hon JUDITH COLLINS (Minister for ACC): I have not yet considered the member’s ideas, but whatever outcome we arrive at regarding funding will need to be affordable and responsible, although no formal decision has yet been made on any changes to ACC’s funding model. This Government does not want to burden future generations of New Zealanders with the cost of injuries that occur today as well as the cost of their own injuries.

Kevin Hague: Will she implement another point in the plan and ensure that medical assessments are undertaken by practitioners who are independent of the corporation, something that was also recommended in the last major review of ACC, undertaken by Judge Trapski in 1994?

Hon JUDITH COLLINS: As I have stated before, I have not yet had the opportunity to consider the member’s ideas, but I am happy to look at them and to discuss them with him.

Kevin Hague: Will she consider another point in the plan, also recommended by Judge Trapski: introducing an ACC ombudsman who would investigate the abuses of process that have characterised the culture of disentitlement in ACC over the last couple of years?

Hon JUDITH COLLINS: As I have said, I have not had the opportunity yet to consider the member’s ideas, but I am happy to discuss them with him.

Kevin Hague: Will she also consider another point in the plan: auditing the service delivery model at the corporation against the five Woodhouse principles; and is she prepared to work with the Green Party on her review of ACC?

Hon JUDITH COLLINS: As previously stated, I have not had the opportunity yet to consider the member’s ideas, but I am happy to discuss those with him.

Accident Compensation Corporation—Inquiry into Release of Personal Information

ANDREW LITTLE (Labour): My question is to the Minister for ACC and asks: On how many occasions, and for what periods of time on each occasion, did she meet with or discuss with the

ACC Chairman or Chief Executive the matter of the mass privacy breach, including—sorry, I think I have got the wrong text. Let me start again.

Mr SPEAKER: Order! I invite the member to start again, because he did get a wee bit away from it.

ANDREW LITTLE: Sorry, I have the wrong text in front of me. My apologies. I am obliged.

11. ANDREW LITTLE (Labour) to the Minister for ACC: On how many occasions, and for what periods of time on each occasion, did she meet with or have discussions with the ACC Chairman or Chief Executive, including about the matter of the mass privacy breach involving Bronwyn Pullar, between 13 March and 19 March when that matter was referred to the Police by way of formal complaint?

Hon JUDITH COLLINS (Minister for ACC): The Chief Executive of ACC texted me on Tuesday, 13 March that there was a story in the Dominion Post. He subsequently spoke to me to advise that ACC was investigating the matter and he would keep me informed. I met the chair of the ACC board and the Chief Executive of ACC in Auckland on Wednesday, 14 March. The focus of that meeting was the 6,700 claimants whose privacy had been breached. On Friday, 16 March, the report from ACC was provided to me when I was in Auckland—the same day it was publicly released. I had my regular meeting with the Chief Executive of ACC, the Department of Labour, and officials on Monday, 19 March, which commenced at 4.15 p.m. I do not know whether that was before or after the final police complaint was signed.

Andrew Little: Does she accept that her answer to question No. 12 last Thursday that “The 16 March report clearly states, on page 3, that the matter was referred to police on 13 March …” is wrong, in light of both the 16 March report itself, which actually states: “The police were contacted regarding the meeting with the client in December …”, and a statement from the police last Thursday confirming that the matter was not referred to them until Monday, 19 March?

Hon JUDITH COLLINS: The member is wrong. The report itself at 6.5 says that “The Privacy Commissioner was advised of the breach.” It then goes on at 7.0 to say that “The police were contacted regarding the meeting with the client in December and the threat made.” Quite clearly, that is a referral. It is not saying, and I did not say, that a written complaint had been signed and laid.

Andrew Little: Does she accept that the term “referral” means to hand over for consideration, investigation, or decision, and that the term “contact” does not mean handing something over? And does she understand that the police report last Thursday stated that the matter was referred to them by way of a formal complaint on 19 March?


Andrew Little: What information did she become aware of between 13 March and 19 March that saw the 1 December meeting change from being regarded as a privacy matter on 13 March to being a potential criminal matter justifying a police complaint on 19 March?

Hon JUDITH COLLINS: I cannot answer that question, because the referral was made by the Chief Executive of ACC. It was not referred to me, and I was not party to any discussions with the police.

Andrew Little: At what point did she become aware that what was originally thought of as a privacy matter was going to the police by way of a formal complaint as a potentially criminal matter?

Hon JUDITH COLLINS: The best information I have is that after the matter was actually signed, which was on Monday, 19 March. The other information I have is quite clear in the report on 16 March from ACC, which says: “The police were contacted regarding the meeting with the client in December and the threat made.” I do not think even Mr Little would not realise that when it says “threat made” that is clearly referring to a criminal matter; otherwise, it would not have gone to the police. The privacy matter was actually referred to the Privacy Commissioner at 6.5 of the same report.

Andrew Little: Is not the truth behind this whole affair that she wanted to cause maximum embarrassment to Michelle Boag, which is why an unusual but otherwise innocent meeting was twisted into something criminal, and a personal communication from Michelle Boag was leaked to the media from her office?


Budget 2012—Warm Up New Zealand: Heat Smart

12. JONATHAN YOUNG (National—New Plymouth) to the Minister of Energy and

Resources: What decisions were made in Budget 2012/13 about the Warm Up New Zealand Programme?

Hon PHIL HEATLEY (Minister of Energy and Resources): It was my pleasure as part of the Budget to announce the extension of the Government’s Warm Up New Zealand: Heat Smart programme. As a result of this extension, an extra 41,000 New Zealand homes will be warmer, drier, and healthier, including targeting an additional 20,000 low-income earners. Overall, a total of 230,000 houses will be now insulated through this programme. Additionally, my close colleague the Minister of Housing is seeing that all State houses are insulated by the end of next year.

Jonathan Young: What are the benefits of the Warm Up New Zealand programme?

Hon PHIL HEATLEY: New Zealanders who have accessed the programme are living in warmer, drier homes. Our experience is that people need to go to hospital and the doctor less often. Families are healthier, resulting in less time off work and school for sickness. Of course, lots of jobs have been created, and the extension of the scheme means that there is planning certainty beyond 1 July next year while further funding decisions are made in next year’s Budget.


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