Questions and Answers – May 28

by Desk Editor on Wednesday, May 28, 2014 — 5:00 PM


Housing, Affordable—Prime Minister’s Statements

1. Hon DAVID CUNLIFFE (Leader of the Opposition) to the Prime Minister: Does he still stand by his statement, “there’s no fundamental underlying reasons to believe there’s a problem in our housing market”; if so, has his Government done enough to assist people into their own home?

Rt Hon JOHN KEY (Prime Minister): Yes, I do not believe there is a crisis in housing, particularly when you compare the current situation with that in the mid-2000s, when house prices doubled and mortgage rates rose to as high as 10.9 percent. In answer to the second part of the question, this Government is implementing a wide range of policies that will help people who want to buy their own home.

Hon David Cunliffe: Does the Prime Minister maintain that there is no housing crisis in Canterbury, when an entire ward of mental health patients who do not need to be there are living in a hospital, costing the district health board $13,000 a night, due to a lack of affordable accommodation?

Rt Hon JOHN KEY: I do not have the details that the member is talking about, but in relation to Christchurch, there is a significant amount of housing under way, taking into context the fact that we have had major earthquakes there.

Hon David Cunliffe: What is he doing to speed up the rebuild of Christchurch when Deloitte* estimates that fewer than 1,000 of the 12,000 to 15,000 houses that Canterbury needs have actually been built?

Rt Hon JOHN KEY: I thank the member for asking that question because it gives me the opportunity to outline what we are doing, which is the housing accord with Christchurch—

Sue Moroney: Not enough.

Rt Hon JOHN KEY: Well, not enough is when house prices double and interest rates go to 11 percent. That is a shocker. But, anyway, we are progressing a housing accord with Christchurch to accelerate development in central government* and local government*. As the member would have seen in the Budget, we are suspending duties and tariffs on imported building materials. We are reforming legislation in this area. We have extended the KiwiSaver first-home deposit subsidy*. One of the things we are doing is addressing the issue of land. Interestingly enough, I did see a report that said: “Increasing the supply of housing through identifying new land for residential development and lowering the cost of construction, which are both inputs into the cost of housing, are the most likely ways to achieve a reduction in house prices in the long run.” That was, of course, the labour house price unit that was established in 2007 in the Department of the Prime Minister and Cabinet*. The then Government, led by Helen Clark, did absolutely zippo*, and that is why house prices doubled under Labour.

Hon David Cunliffe: At least we are not trumpeting a housing accord with bare land—

Mr SPEAKER: Order! Would the member please ask his supplementary question.

Hon David Cunliffe: Minds on maps. Does he agree with the *New Zealand Institute of Economic Research economist Shamubeel Eaqub* that having the most expensive housing in the OECD* relative to rents is driven by speculation; if so, why is he not tackling speculators with a capital gains tax?

Rt Hon JOHN KEY: Well, for a start off, speculators already pay a capital gains tax. Secondly, if the member actually wants to quote the New Zealand Institute of Economic Research, its quarterly forecast yesterday predicted that house sales are likely to drop and house prices are likely to level off. In the next 6 months it expects house price inflation to be 1 percent nationwide and 5 percent in Auckland. That would be consistent with the fact that under this Government, house prices have gone up by 28 percent and mortgage rates are at lows that we have not really seen for a very long period of time, and that house prices doubled under Labour. When the member said: “Oh, well, that just says it all. The housing accord’s the way to resolve the issue.”, actually the answer is yes. Releasing land, actually reforming the *Resource Management Act, dealing with development contributions, and looking at the other bottlenecks in housing is exactly what the Productivity Commission* and everybody has said about housing. This Government is doing it. That Opposition—

Mr SPEAKER: Order!

Hon David Cunliffe: When New Zealand Institute of Economic Research economist Shamubeel Eaqub talked about the “itsy bitsy” housing policies, was he referring to the Government’s trimming a few cents off duties from paint and varnish, or to selling off 13,500 State houses, including selling down broken P houses, to *first-home buyers in the provinces?

Rt Hon JOHN KEY: The member is free to throw around criticism. Unfortunately, the record of the previous Government was so atrocious that it actually left this Government to do the work. The first thing we have done when it comes to Auckland is the Auckland Housing Accord*, which will produce—

Phil Twyford: 6 long years.

Rt Hon JOHN KEY: Well, actually, it might be 9 years very soon, if you keep going the way you are, son. But, anyway, that included 39,000 consents over the next 3 years. The housing accord that we have done with Christchurch—unlike what the member actually said, it is actually not varnish off wood. It is $3,500 off the construction of a new home, and it is a reform of wide-ranging legislation, including the Resource Management Act.

Hon David Cunliffe: Does the Prime Minister take the same view as his *Minister of Housing, which is that he does not care that people in the regions may actually lose the whole value of their home as a result of imposing loan-to-value ratios*?

Rt Hon JOHN KEY: The member is quite wrong in the assertion he makes, but the member is often wrong. I noticed that a couple of days ago he was on TV* with his dog-whistle politics, telling the world that he did not—

Hon David Cunliffe: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! A point of order, the Hon David Cunliffe.

Hon David Cunliffe: It is always nice to hear the Prime Minister attempt to address a question, but, preferably, the one that is actually being asked.

Mr SPEAKER: The Prime Minister did, because the question was whether he agrees with the statement allegedly made by the Minister of Housing, and he refuted the statement. He said that he did not agree.

Hon David Cunliffe: Does the Prime Minister not realise that when the median house price has increased over 40 percent in Auckland since he took office and wages have been stagnant, it is harder to get into a home in Auckland after 6 long years of his tired National Government?

Rt Hon JOHN KEY: The member may feel tired but I do not. The second point is that under this Government house prices have risen 28 percent. They might be a little higher than everyone

wants, but it is not 96 percent. You see, if you had, to quote them, “9 long years” and you did something about it, maybe in Opposition you would actually be free to get up and make a few comments or criticise. But given that when Labour was in Government, it did absolutely nothing, it is no wonder that the public think it is a joke when Labour members talk about this issue. [Interruption] No, I am happy to keep going, actually, if you like.

Mr SPEAKER: But I am not.

Tax System Changes—Impact on Households and Businesses

Mr SPEAKER: Question No. 2, the Hon Tau Henare.

Hon TAU HENARE (National): Thank you—[Interruption]

Mr SPEAKER: Order! I have called the Hon Tau Henare. [Interruption]

Hon TAU HENARE (National): Should I go now?

Mr SPEAKER: I would be grateful if the member would.

Hon Members: Go. Go.

Hon TAU HENARE (National): You can wait until the 21st. [Interruption]

Mr SPEAKER: Order! We will have a bit more decorum in the House.

2. Hon TAU HENARE (National) to the Minister of Finance: Over the past six Budgets, has the Government made the tax system fairer for households and businesses; if so, how?

Hon BILL ENGLISH (Minister of Finance): It is a very good question from a *longstanding and insightful member. Yes, the Government has made changes to ensure the tax system is fairer. They include raising the effective tax rate on property investment, increasing funding for the *Inland Revenue Department to target property speculators and others avoiding tax, preventing people using investment losses to make themselves eligible for *Working for Families and other Government support, and bringing in stricter rules to ensure multinational companies contribute to their fair share of tax, as well as reducing the incentives for higher-income people to avoid paying the statutory rate of tax. At the same time, the Government has reduced income tax rates for all income groups, including low and middle income New Zealanders. Almost three-quarters of taxpayers now face a top personal rate of 17.5c in the dollar or less.

Hon Tau Henare: What changes has the Government made to income tax rates and other taxes to help families get ahead?

Denis O’Rourke: None.

Hon BILL ENGLISH: The member may not have noticed that there was a tax reform package in 2010. The effect of that was that *after-tax incomes at all levels of taxable income were immediately increased by more than the increase in GST in 2010. Someone on the average annual wage at the time of around $50,000 was about $15 a week *better off, and a family with two children on the average household income of $76,000 was about $25 a week better off. Two-thirds of the cost of the income tax in 2010 went into reducing the bottom two tax rates, so someone earning $48,000 a year now has a top tax rate of 17.5c in the dollar.

Hon Tau Henare: How does the income tax system interact with income support provided to lower and middle income families, and how does this redistribute income to those most in need?

Hon BILL ENGLISH: Well, the Government maintains a significantly redistributive tax and income support system. At any particular time a large number of households effectively do not pay income tax, because the amount they pay in income tax is exceeded by the amount they receive from welfare benefits, Working for Families, paid parental leave, and accommodation subsidies. The Government believes that this is entirely appropriate for families who are in need, but it also recognises that we must help as many New Zealanders as possible off benefits and into work where they get the benefit of these income support measures.

Hon Tau Henare: How significantly do the income tax and income support systems redistribute incomes for New Zealand households?

Hon BILL ENGLISH: The most recent estimates show that households earning over $150,000—that is, the top 15 percent of households—will pay 49 percent of income tax. But taking into account all income support, these 15 percent of households will actually pay 74 percent of net income tax. By contrast, households earning under $60,000 a year, which is just about half of all households, are expected to pay 9 percent of income tax. But taking into account all of the income support they receive, what they are expected to pay this year will be more than offset by the $7.3 billion they receive in income support, compared with $2.5 billion of income tax. That is, households earning under $60,000 are net recipients of about $5.8 billion.

Emissions Trading Scheme—Fiscal Risks

3. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister for Climate Change Issues: Is he aware of any ongoing fiscal risks to the Crown resulting from the operation of the emissions trading scheme?

Hon TIM GROSER (Minister for Climate Change Issues): The term “fiscal risk” has a very specific meaning in terms of the *Public Finance Act, and all the fiscal risks, from whatever sources, are listed in the Budget documents, but I checked with Treasury an hour ago, and they assured me that there is no risk associated specifically with climate change.

Dr Russel Norman: Has he seen any reports that firms to which the Government has allocated free New Zealand carbon units are engaging in arbitrage, using cheap international carbon units, to meet their New Zealand obligations under the emissions trading scheme?

Hon TIM GROSER: I am aware of many reports on this issue, including reports relating to a rort that this Government has put a stop to, which involved the use of taxpayer funds to put money in people’s pockets from the reregistration arbitrage opportunities. I do not know whether he is referring to that or some other aspect of the emissions trading scheme.

Dr Russel Norman: I raise a point of order, Mr Speaker. My question was about firms that have been allocated free New Zealand carbon units, which did not apply to—

Mr SPEAKER: Order! The question asked whether the Minister had received any reports, and he responded that he had received many reports.

Dr Russel Norman: Is there anything to stop firms that receive New Zealand carbon units each year as free allocations from selling these units and then using cheaper international units to meet their greenhouse obligations in New Zealand?

Hon TIM GROSER: The scheme has been designed so that people can minimise their costs in meeting those obligations within the framework of the *Climate Change Response Act. Even—and I should add this—foresters who remain in the scheme can still use cheaper international units, although we have stopped the inclusion of units of questionable environmental integrity.

Dr Russel Norman: Then is it correct that the 33 million carbon units that were gifted to firms in New Zealand last year at the taxpayer’s expense—these firms can sell these units at about $4 each currently, and then buy cheap offshore units for about 20c each, and then use the offshore units to cover their emissions in New Zealand?

Hon TIM GROSER: The existing structure of the scheme remains as I described. If people wish to maximise their fiscal position in the way set out by the Act, they will do so, and this Government is quite happy with the situation as it stands.

Dr Russel Norman: Then does the Minister agree that firms that receive free allocations of New Zealand carbon units, and then sell those units for a profit while meeting their emissions trading scheme obligations using cheap offshore units, are, effectively, being paid by the taxpayer to produce greenhouse pollution?

Hon TIM GROSER: No. We have set up a scheme that allows people to meet their obligations in ways that the scheme is designed to ensure do not put them out of business. But I am quite confident that in the event that the member has decisive influence on climate change policy, we will have to revise that opinion.

Dr Russel Norman: Does he believe that the purpose of the emissions trading scheme is actually being served when it results in polluters being subsidised by taxpayers to actually produce pollution, as is now the case, using these loopholes in the law?

Hon TIM GROSER: No, that is a complete mischaracterisation of the scheme. What we are trying to do is ensure that people move slowly in this direction of lower carbon emissions—it is, of course, complicated by the very low international price at the moment—and give them ways of adjusting to that. If we or the previous Government had put the full burden of the adjustment process on without giving them some offsetting units, we believe, as no doubt the previous Government also believed, that it would have driven the process too far, too fast, in the wrong direction. But we know the Green Party has no concern whatsoever for the productive side of our economy.

Dr Russel Norman: Will the Minister tell us the names of the firms to which he gave free allocation of New Zealand carbon units in the last year and how much each company received, or is this information kept secret from New Zealanders even though they are paying for the units?

Hon TIM GROSER: I personally do not sit behind a desk doling out money and units to individual firms. It is done by a responsible *Public Service.

Dr Russel Norman: Does the Minister not think that it is only fair that New Zealand taxpayers, who are paying for these free allocations—which the Minister is responsible for giving away as free allocations—are entitled to know whom the allocations are going to?

Hon TIM GROSER: I think the details of this are done deliberately by the officials responsible for the registrar. I do not think you want companies’ confidential information sprayed around the New Zealand public without regard to their own financial positions.

Dr Russel Norman: Is this not yet another example of his Government’s dodgy *backroom deals at the expense of ordinary New Zealanders who are never told the names of the companies who receive hundreds of millions of dollars of taxpayer carbon credits? Is this just another—

Mr SPEAKER: Order! The question has been asked; I will allow the Minister to answer it.

Hon TIM GROSER: The short answer is no, but there is a deeper issue of principle. Is the member suggesting, as is clearly inferred by the question, that from the point of view of any Government he is going to belong to in the future he is going to put around highly confidential company information on their tax burdens, and other such matters, without any regard for the impact on their financial position? The member should reflect on that.

Rt Hon John Key: Has the Minister seen any reports of how the climate changed when the leader of the Green Party went up to the *Dotcom mansion and was—

Mr SPEAKER: Order! I do not see any ministerial responsibility for that.


4. Hon DAVID PARKER (Deputy Leader—Labour) to the Minister of Finance: Does he agree that Scenario 2 in the Budget 2014 Economic and Fiscal Update, which is based on net migration being over 40,000 people, forecasts higher interest rates, increased housing demand, higher inflation, more household dis-savings, and that “… additional consumption is funded through increasing levels of household debt and this constrains consumption growth further as debt servicing costs increase”?

Hon BILL ENGLISH (Minister of Finance): No.

Hon David Parker: Given that immigration numbers are now tracking to over 40,000 net for the year, does he agree with his party’s paid pollster *David Farrar that discussing the relationship between migration and housing is xenophobic?

Hon BILL ENGLISH: No, but we do not agree that there is a problem with the economy or that that problem is too many Chinese, too many Indians, too many Samoans, and too many vans clogging up the truck lane on the motorway. We do not believe that Labour’s answer of slashing immigration is the answer for the economy.

Hon David Parker: Is it xenophobic or racist of *Treasury to say that “immigration policy should be more closely tailored to the economy’s ability to respond to population increase.”?

Hon BILL ENGLISH: No, but it is surprising that the leader of the Labour Party believes that he can slash inflows of migration without any impact on the supply of skills to the economy or without getting a few questions at the next ethnic celebration day that he goes to where he says that he loves having them in New Zealand.

Hon David Parker: I seek leave to table a Treasury paper dated April 2014 entitled **Migration and Macroeconomic Performance in New Zealand, which includes—

Mr SPEAKER: Order! The paper has been well described. I just need to check whether it is something that is freely available to members.

Hon Dr Nick Smith: It’s on the web.

Hon David Parker: Well, just about everything is on the web, but it has not been circulated. I had to find it.

Mr SPEAKER: Order! I will put the leave. The House can determine. Leave is sought to table a Treasury document dated April 2014. Is there any objection? There is not. Document, by leave, laid on the Table of the House.

Hon David Parker: Is it racist or xenophobic of the Government of China to control immigration levels and ban overseas purchase of Chinese houses and farms by New Zealanders?

Mr SPEAKER: In so far* as there is ministerial responsibility, the Hon Bill English.

Hon BILL ENGLISH: No, we do not have any responsibility for the policies of the Chinese Government, in the same way as the Labour front bench wishes it did not have responsibility for its leader.

Louise Upston: How does the forecast net migration peak of 41,500, under Treasury’s scenario two** in the Budget, compare with recent trends in net migration?

Hon BILL ENGLISH: The forecast peak is not unusual by recent standards. For example, in the year to May 2003 net migration peaked at more than 43,000—somewhat outside the range that the Leader of the Opposition said was the case—and net migration was above 30,000 to February 2004. That followed a period of net outward migration that had hit negative 13,000 in February 2001. So in the space of just over 2 years at that time, net migration went from minus 13,000 to plus 43,000 under a Government that has now been described as “managing a period of steady, predictable migration flows”.

Hon David Parker: Is it xenophobic or racist of the Reserve Bank to link immigration to house prices when it says that a 1 percent increase in population causes an 8 percent increase in house prices over 3 years, and is it not the truth that it is the Prime Minister who is dog whistling* in an attempt to cover up his Government’s failure to control house prices at affordable levels for all New Zealanders, be they recent migrants or born here?

Mr SPEAKER: Order! The question has been asked—the Hon Bill English.

Hon BILL ENGLISH: I disagree with the member’s assertions. The Labour Party has a dog whistle* in its mouth and it cannot decide whether to blow it or not. And then when it talks to its front bench, it disagrees.

Louise Upston: What recent reports has he seen about possible ways of managing migration flows in and out of New Zealand?

Hon BILL ENGLISH: Because this issue has been discussed extensively, there are a number of reports, but I have sorted out one or two. The first, from Saturday, 18 May, said that the easiest way to keep net migration within a zone of 5,000 to 15,000 was to better manage the points system; the second report, on Monday, 20 May, was from a spokesman, confirmed as leader of his party, who would look to get net migration stable between 5,000 and 15,000; and a third report just the next day said “That’s not our position. I think at the present time it is going to be difficult to do that.” That was from the leader of the Labour Party, who had originally proposed the policy.

Science and Innovation—Investment

5. TIM MACINDOE (National—Hamilton West) to the Minister of Science and Innovation: What recent announcements has he made about the future direction of investment in science and innovation in New Zealand?

Hon STEVEN JOYCE (Minister of Science and Innovation): Today I released the draft **National Statement of Science Investment, which sets out the current settings and proposed future priorities for Government science investment. This Government’s investment in science is very significant, with funding budgeted to reach $1.5 billion in the year 2015-16, which is an increase of more than 70 percent since 2007-08. The draft statement up for consultation and feedback is intended to encourage discussions with the sector in regard to the overall direction of science investment and the balance of that *spend, for example, between investigator-led, mission-led, and business-led research and development.

Tim Macindoe: Why is it important for the science community to contribute to the proposed shape and direction of Government investment in science?

Hon STEVEN JOYCE: Well, New Zealand is now making a much bigger investment in science than it was just 6 years ago. It is vital that the science community and those who have an interest in the results of science have the opportunity to contribute to the Government’s priorities in responding to the unique economic, environmental, and cultural challenges that this country faces. The Government has undertaken a number of new initiatives in the science sector, including, for example, the establishment of *Callaghan Innovation, the *Primary Growth Partnerships, and the *National Science Challenges. Now is a good time for a stocktake in the overall shape of the science system to consider where investments should be made in the next 5 to 10 years and to consider further opportunities to enhance the impact and effect of our overall investment.

Tim Macindoe: How is the Government supporting high-quality scientific research in New Zealand?

Hon STEVEN JOYCE: [Interruption] They love to hear about it on the Opposition benches. I mentioned in answer to the primary question that the Government will be investing around $1.5 billion in 1 year in 2015-16, which is an increase of more than 70 percent since 2007-08. As part of that, in Budget 2014 the Government is committed to increasing its investment in contestable science, with $56.8 million over 3 years starting from 2015-16. Contestable science funding is an important component of the overall system and it is critical to increasing innovation and economic growth. This announcement continues a commitment to keep significantly growing the science investment budget in tough fiscal times, to position New Zealand well as an innovative small country on the global stage.

Dr Megan Woods: Why does he continue to refuse to reintroduce full-scale research and development tax credits, given that industry has identified them as the best incentive for encouraging private investment in research and development and the draft National Statement of Science Investment states that across a range of measures New Zealand’s connections between research and businesses are poor?

Hon STEVEN JOYCE: The member should actually read the draft, because we put more into business research and development than a tax credit ever would—$140 million-odd a year. I appreciate that the only thing that Opposition members have to say on this subject is on research and development tax credits, but after announcing it for about the eighth time, you would think that they would think of something new.

Child Poverty—Impact on School Rolls

6. CATHERINE DELAHUNTY (Green) to the Minister of Education: What action will she take to tackle the problem of children coming and going at decile one schools at a rate equivalent to half those schools’ rolls, as the Child Poverty Action group found in their latest report?

Hon HEKIA PARATA (Minister of Education): *Talofa lava, Mr Speaker. I am taking a number of actions to tackle this problem and to raise achievement for all. That is why this Government is investing more in schools than ever before. Those actions include, for example, a new attendance service; student management systems where schools text parents when kids are away; social workers for every *decile 1, 2, and 3 primary school; around 300 nurses to work with most schools around the country; a breakfast in schools programme 5 mornings a week; child care, after-school care, and holiday care for about 47,000 kids; and a further $85 million in operational grants. Let us be clear: fewer than five kids in every 1,000 move schools twice in a year, and that has been stable since this Government came into office. The rate of kids moving has been decreasing across *low-decile schools in the same period, and the *Child Poverty Action Group acknowledges that.

Catherine Delahunty: Does she agree with the school principal quoted in the *Child Poverty Action Group’s report that role churn in low-decile areas is a major problem that is not given proper recognition by the *Ministry of Education; if not, why not?

Hon HEKIA PARATA: No; I accept that it is for that particular principal. I accept that for the 55 percent response rate to the survey conducted by the Child Poverty Action Group, they have particular challenges. We are working with each of those schools as well as across the system. That is why we know that movement of kids in and out of schools is lower than it was before 2009 and has remained stable since that time. The Child Poverty Action Group’s report acknowledges that.

Catherine Delahunty: Why is she spending $27 million for the current five small charter schools when she could tackle a widespread problem that is clearly holding kids back in terms of their educational achievement—i.e., churn of up to 52.8 percent?

Hon HEKIA PARATA: I will just refer the member to the significant range of actions we are taking that I gave in my principal answer. In addition, we are not going to do all the same things we have always done or we will keep getting what we have always got. We are investing in five partnership schools, none of whose parents are compelled to send their children there but are doing so. They are having significant attendance and engagement at those schools.

Catherine Delahunty: When will she stop diverting resources into sideshows like charter schools for about 300 children and start dealing with widespread problems like school churn in lowdecile areas?

Hon HEKIA PARATA: The Green Party might want to dismiss this as a sideshow, but parents have chosen these options for themselves, in the same way that parents who choose *kura kaupapa, *kura-ā-iwi, State-integrated, mainstream, single-sex, or co-ed schools do—because they consider that their children will do better there. That is a choice that we respect.

Jacinda Ardern: Does she agree with the Child Poverty Action Group’s findings that the problem of high transient rates goes beyond the capabilities of the education sector; if so, which other Ministers has she raised this issue with specifically?

Hon HEKIA PARATA: I certainly agree that education has a significant contribution to make, together with the efforts that my colleagues are also making. That is why, for instance, I have already indicated that for every *decile 1, 2, and 3 school, there is a social worker available. That is why we have increased the investment into rheumatic fever and supporting kids’ health so that they can be at school. That is why my colleague has been investing in social housing and support for families in turn. That is why our Government is investing in a strong economy—so that there can be the creation of the 84,000 jobs that have been delivered in the past year. It is not one thing or another; it is how all of those come together. That is why we have a higher achievement rate than ever before.


7. GRANT ROBERTSON (Labour—Wellington Central) to the Minister for Tertiary

Education, Skills and Employment: Is he satisfied that the Government’s policies have contributed to fair employment outcomes?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): Yes, in the context of a challenging world environment and the twin shocks of the global financial crisis and the Christchurch earthquakes. Against that backdrop, 84,000 more New Zealanders are in work this year compared with* a year ago, which is the fastest job growth in a decade. Wages are increasing faster than inflation. Average weekly earnings rose 3.2 percent over the last year. The Budget forecasts show 172,000 more jobs in the economy by 2018, with average annual wages continuing to rise well ahead of inflation to almost $62,300, which is up from $48,700 in 2010.

Grant Robertson: How is it fair that unemployment among *Pasifika New Zealanders is still double the rate of unemployment among the rest of the population and that according to the *Salvation Army report released this week a staggering 26 percent of young Pacific* women are not in employment, education, or training?

Hon STEVEN JOYCE: I acknowledge for the member that Māori and Pasifika unemployment rates are higher—as, I think, unfortunately, they have always been—than for those in other ethnic groups in our society, but rather than shut them out of the country, my preference is to get them into higher education and tertiary education. We are doing very well. We have had significant increases in the numbers of young Māori and Pasifika studying at degree level and higher in New Zealand over the last 5 years. It is something like about 4,000 for Māori and about 3,000 for Pasifika, and we are achieving far better course completion and qualification completion rates for young Māori and Pasifika than they have ever had before. It is not perfect but we are making good progress.

Grant Robertson: How is it fair that since 2007 earnings for Pasifika workers have increased by an average of $2 per week, when the cost of living has increased far in excess of that during that time?

Hon STEVEN JOYCE: I am not sure exactly about the numbers that the member raises, but there is no doubt that, actually, since 2007 this country has experienced two big fiscal shocks— firstly, the global financial crisis; and, secondly, the Canterbury earthquakes—and those things have had an impact on everyone’s earning ability. The challenge here is to lift the skills of Pasifika people, particularly of young Pasifika people. This Government has a far better record on that than any previous Government, and, in particular, the previous Labour Government.

Grant Robertson: In light of the Minister not being aware of the statistics, I seek leave to table the section of the Salvation Army’s report that shows that average earnings—

Mr SPEAKER: Order! The document has been described. I will just ask the member, has—

Grant Robertson: Supplementary question.

Mr SPEAKER: Order! I have not put the leave yet.

Hon STEVEN JOYCE: I raise a point of order, Mr Speaker. I just think it would be helpful if he actually tabled the whole report, which includes the big lift—

Mr SPEAKER: Order! I appreciate the point. The more important thing is that I think that that document has already been tabled in this House. To move it forward, I think the easiest way forward, accepting the point—is the member happy to move the tabling of the whole of the Salvation Army report? [Interruption] Leave is sought to table that particular document. Is there any objection? There appears to be none. It can be tabled. Document, by leave, laid on the Table of the House.

Grant Robertson: Does he think it is fair that in the period his Government has been in office, pay rates for chief executives have risen to be 26.4 times the rate of pay for an average employee, or is he satisfied about the gap between the rich and the poor getting wider and wider?

Hon STEVEN JOYCE: Unfortunately the second part of that member’s question is wrong. Under any independent assessment of the New Zealand economy in the last few years, there has not been a widening of the gap between rich and poor, and in fact—

Andrew Little: Yes, there has been.

Hon STEVEN JOYCE: Well, the members can say it if they like because they read the British **Labour Party newspapers, but the reality in this country is that it has not occurred.

Budget 2014—Early Childhood Education

8. COLIN KING (National—Kaikōura) to the Minister of Education: What recent announcements have been made on the Government’s investment in early childhood education?

Hon HEKIA PARATA (Minister of Education): A further $155.7 million over 4 years will be invested in early childhood education services in Budget 2014, to help give all children a great start in life. This will support an estimated 5,800 more of our youngest children to access quality early childhood education by June 2018. Over one-third of these children will be from areas where participation is low and extra support can help regular participation.

Colin King: Why has the Government prioritised participation in early childhood education?

Hon HEKIA PARATA: Government spending on early childhood education has almost doubled, from over $800 million in 2007-08 to $1.5 billion in 2013-14.

Hon Tony Ryall: How much?

Hon HEKIA PARATA: It is $1.5 billion. We know that regular participation in quality early childhood learning significantly increases a child’s chance of future educational success, particularly those from vulnerable families. That is why we have set a target of increasing participation to 98 percent of children starting school in 2016. The additional funding in Budget 2014 will help to achieve that target.

Wage Rates—Growth

9. ANDREW LITTLE (Labour) to the Minister of Labour: What new measures, if any, is he considering that will lift pay rates so that all wage and salary earners share in a growing economy?

Hon STEVEN JOYCE (Minister for Economic Development) on behalf of the Minister of

Labour: The Government is committed to continuing to grow the economy through both the recent Budget and our *Business Growth Agenda, and ensuring that everyone gets a fair and growing share of the pie. This includes our *year-on-year increases to the minimum wage, which now sits at $14.25 an hour. The April increase of 50c was higher than the *CPI, which helps lift the real incomes of the lowest paid while not damaging their job prospects. Job growth in our economy has been strong over the last year, and we are seeing in Budget 2014 that this trend is likely to continue, with forecasts of average wage growth of $7,600 by 2018 and around 170,000 new jobs in the next 4 years.

Andrew Little: What exactly is intended by the statements in the Ministry of Business, Innovation and Employment statement of intent 2014-18 that *“We will review employment standards to make sure they are encouraging fair and productive workplaces.”, and that *“We will also look at the employment framework more generally to ensure it remains fit for purpose …”, and will we see more changes to the *Employment Relations Act along the lines of those currently being made?

Hon STEVEN JOYCE: I think the matters in relation to employment standards are to strengthen the requirements to meet the employment standards in legislation, and I imagine the Minister will make announcements in due course about that. In relation to employment relations generally, my understanding is that there are no plans for further changes at this point, beyond what is already in front of the House.

Andrew Little: In view of his claim made previously in this House, and, indeed, the claim made by the Minister for Economic Development today, that wage rates have increased 3.2 percent on

average last year, and in view of reports of, for example, *Universal College of Learning staff settling on a pay rise of 1.25 percent, Christchurch port workers settling on a pay rise of 2.85 percent, print workers settling on 1.6 percent for 18 months, and many other workers struggling to get a 2 percent pay increase, who does he say is getting increases in pay rates of 3.2 percent and more?

Hon STEVEN JOYCE: It is not the Government saying that. It is actually Statistics New Zealand saying that average weekly wages are—

Hon David Parker: Not correct.

Hon STEVEN JOYCE: It is correct. Go and look at it, Mr Parker. You are going to go back down your little *labour cost index hole again. The reality is that under the quarterly employment survey, average weekly wages have lifted by 3.2 percent over the last year.

Grant Robertson: It means nothing.

Hon STEVEN JOYCE: It is actually significant, and it refers to actual wage increases. Members opposite can hate it if they like. They hate success and they hate progress in the New Zealand economy.

Andrew Little: Does he accept that when 46 percent of wage and salary earners in one year, namely last year, got no increase in their pay rate, achieving a 3.2 percent average increase across all wage and salary earners means that some are getting extraordinary pay rises, and could he please tell us who they are?

Hon STEVEN JOYCE: It is important the member notes that his premise at the start is actually incorrect. Again, members opposite are working off the labour cost index, which is only one small element of the overall wage increases for New Zealanders. Wage increases are made up of increases as a result of productivity increases, increases as a result of promotion, and so on, increases as a result of increases in hours worked, and increases as a result of inflation, which is the only bit that is measured by the labour cost index. Members can wander down here and pretend that that is the actual situation, for as many months as they like, but it is not.

Andrew Little: Why will he not accept that when nearly half the workforce cannot get a pay rise in a growing economy, there is something wrong with wage setting in this country, and that workers and employers need a better approach than this Government has so far offered?

Hon STEVEN JOYCE: No, what we have seen in this economy over the last year is 84,000 new jobs, the fastest job growth rate in a decade. What we have also seen is an average weekly wage increase of 3.2 percent, which is well ahead of the cost of living increase of 1.5 percent. If the member thinks that that needs reform, well, he is entitled to his view, but most New Zealanders understand that the New Zealand economy is on the right track. It is going to deliver better job growth and better incomes for New Zealanders in the years ahead, provided that that lot does not get control.

Prime Minister—Statements

10. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes, especially the one when I said: “Gosh, things aren’t going well with Brendan Horan then.” [Interruption]

Mr SPEAKER: That does not help the order of the House.

Rt Hon Winston Peters: How can he say that high immigration numbers are, to use his words, a “good news story”, when so many New Zealanders are being shut out of the New Zealand housing situation?

Rt Hon JOHN KEY: Because high immigration numbers are, broadly speaking, a *good-news story for New Zealand. If I look back over the last 6 years of the National Government, on average the net increase has been 8,785 people per year. I would have thought that for a population of about 4.5 million people, the addition of 8,785 people on average per year is about right.

Rt Hon Winston Peters: Does he agree that immigration policy must first ensure that migrants do not displace New Zealanders already living here from first obtaining jobs or housing in their own country?

Rt Hon JOHN KEY: Yes, and that is the very reason why, when you look at the requirements on employers, they need to go and look for New Zealand workers first. There are certain circumstances where they cannot find them, and, on that basis, they bring workers in. Or there are certain circumstances where it actually makes sense to convert workers—for instance, students who have studied in New Zealand and have got a degree. On the other side of the coin, 25,000 of those migrants who come to New Zealand each year on average come from Australia.

Rt Hon Winston Peters: Why does his Government’s immigration policy not take into account the housing crisis in Auckland or the fact that almost 150,000 New Zealanders are unemployed in their own country?

Rt Hon JOHN KEY: There is no housing crisis in Auckland, but there is a lot of work going on from the Government to ensure that more houses are built.

Rt Hon Winston Peters: If it is good enough, after a Credit Suisse* report, for the Australian Government to launch a federal inquiry into foreign purchasing of Australian housing and apartments, why is he so set on doing nothing when the same thing is happening in New Zealand?

Rt Hon JOHN KEY: Far from doing nothing, the Government is doing a wide range of things that are actually in line with what the Productivity Commission* thought were the right things to do in relation to the housing market. Actually, Australia does have a ban on foreigners buying properties other than new properties, and it has a capital gains tax, which is broader and does not work. I can see why that member now wants to talk about xenophobic policies when it comes to immigration, because he has got so much—

Mr SPEAKER: Order!

Rt Hon Winston Peters: Why is the Prime Minister so dismissive of the concerns of so many New Zealanders when net *inflow immigration predicted by Treasury* in the Budget *Economic and Fiscal Update—[Interruption]—at page 55, for “Big Ears’ ” sake—is for it to reach as high as 41,500 this year?

Rt Hon JOHN KEY: Well, you will always get flows in immigration. That is largely driven, actually, by the number of New Zealanders who leave. We have a period at the moment, because the economy is so strong and things are going well, when very few New Zealanders are actually leaving and, on that basis, net migration is a little bit higher. As I said, under our Government, on average it has been 8,785 people. But in answer to that question I could just say “Next question?”, which is what the member said 11 times when he was asked about his comments—

Mr SPEAKER: Order!

Better Public Services Targets—Immunisation Rates

11. CLAUDETTE HAUITI (National) to the Associate Minister of Health: What recent announcements has she made to support increased immunisation?

Hon JO GOODHEW (Associate Minister of Health): Talofa lava*, Mr Speaker. I am really pleased today to announce that I will launch the updated **Immunisation Handbook. The handbook is a key reference guide for health professionals, and it includes the latest best-practice advice about diseases and the vaccines available to prevent them. The guide is now in its sixth edition, but this is the first time that it is available as an e-book*.

Claudette Hauiti: What changes to the vaccines and immunisations are highlighted in the new handbook?

Hon JO GOODHEW: To help keep our children healthy and well, this year we have added new vaccines to the immunisation schedule. From 1 July 2014 rotavirus and an improved pneumoccocal vaccine will be funded. This Government has made immunisation a priority. We have seen immunisation rates rise considerably, to 93 percent for 2-year-olds and 91 percent, at the moment,

for 8-month-olds. But under the previous Labour Government, immunisation rates sat at only 67 percent. The Immunisation Handbook supports this improvement. Having information at hand helps health professionals safely and confidently deliver immunisation services to the people whom they care for.

Budget 2014—Wage Growth

12. DARIEN FENTON (Labour) to the Minister of Labour: What specific initiatives, if any, can he point to in Vote Labour in Budget 2014 that will help raise the wages of low income and insecure New Zealand workers?

Hon STEVEN JOYCE (Minister for Economic Development) on behalf of the Minister of

Labour: In Budget 2014 the focus was on the considered and positive changes to paid parental leave, which not only extend the paid leave period by 4 weeks by April 2016 but ensure that more parents will be eligible. This will include precisely those workers who miss out because they—if they are in the casual workforce, for example—will have more than one employer. There are also planned increases in the length and amount of the parental tax credit for those who do not qualify currently for paid parental leave. More generally, in Budget 2014, the best way to raise the wages of low-income* workers is to grow the economy and add jobs. We have added 84,000 jobs in the last year, and I would point to the positive Budget 2014 forecasts of average wage growth of $7,600 by 2018 and around 170,000 new jobs in the next 4 years.

Darien Fenton: Why has he implemented miserly increases to the minimum wage each year that barely cover inflation when New Zealand faces a significant income disparity between rich and poor?

Hon STEVEN JOYCE: As I have said in response to the previous question, the increase in the minimum wage this year to $14.25 was actually ahead of the cost of living and, actually, most workers are receiving wage increases and increases in earnings each year at the moment that are higher than *cost of living increases, which is exactly the reverse situation from prior to 2008, when cost of living increases were rampant and people’s real wages were going down because their nominal wages were going up slower than inflation.

Darien Fenton: How does he intend to tackle the fact that the top 10 percent in New Zealand are earning eight times more than the bottom 10 percent when he refuses to address wages at the bottom end through bringing in a significant minimum wage increase or a living wage?

Hon STEVEN JOYCE: We do increase, and have been increasing, the minimum wage at a rate faster than that of inflation, but you do have to be careful because of the risk to job growth. For example, if you immediately raise the minimum wage to $15, which I understand is some people’s policy, then there would be at least 5,000 jobs gone overnight.

Grant Robertson: Rubbish! Absolute nonsense.

Hon STEVEN JOYCE: This is according to independent analysis by the *Ministry of Business, Innovation and Employment, and if you actually supported the *Living Wage campaign, then you would place around 26,000 jobs at risk. I know that the member thinks you can just arbitrarily increase everybody’s wages and nothing else happens, but that is the sort of attitude that led to the economy falling off a cliff in 2008, before the global financial crisis.

Darien Fenton: Which of his Government’s policies does he think contributed the most to the increase in the average chief executive officer’s pay compared with the average worker, from 22.5 times in 2011 to 26.4 times in the most recent survey?

Hon STEVEN JOYCE: Actually, chief executive officer wages have been significantly higher than the average wages for as long as I can remember, and also for as long as the previous Government was in office. Actually, what you do have to focus on is lifting job opportunities for Kiwis so that it increases competition for their labour, and that is what is happening. We have seen the biggest job growth in the last decade—in the last 12 months, 84,000 more people are employed, and average weekly wages are going up by 3.2 percent, which is significantly faster than inflation of

1.5 percent. If we continue on the steady economic growth path that this Government has us on, then you will continue to see further improvements in the years ahead.


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