Questions and Answers – June 17

by Desk Editor on Tuesday, June 17, 2014 — 5:19 PM


Government—Policies 1. Dr RUSSEL NORMAN (Co-Leader – Green) to the Prime Minister: Does he stand by all his Government’s policies?

Hon BILL ENGLISH (Acting Prime Minister): Yes, particularly those that are supporting a stronger economy and better communities.

Dr Russel Norman: With regard to the Government’s emissions trading scheme policy, does he agree with OECD Secretary-General Angel Gurría that it is easier to deal with carbon emissions via a tax than an emissions trading scheme, and that a fiscally neutral tax like the Green Party’s climate tax cut is “a more business friendly, labour friendly, and a greener friendly tax structure” than an emissions trading scheme; if not, why not?

Hon BILL ENGLISH: No. New Zealand remains the only country outside the European Union with a comprehensive emissions trading system. I know the Greens believe that the price should be higher, because it wants to punish businesses and households for using any fossil fuels, but the fact that the price is low indicates that demand for carbon credits is low because carbon emissions are lower than people expected them to be. And that is good news, not a problem.

Dr Russel Norman: What is his response to the editorial in the Dominion Post on 5 June, describing the Green Party’s climate tax cut as “a systematic and intelligent attempt to deal with climate change” and the Government’s response to it as “lazy and arrogant”?

Hon BILL ENGLISH: I do not think I read that editorial. I was probably reading the Southland Times editorial. But in this case—[Interruption]

Mr SPEAKER: Order!

Hon BILL ENGLISH: The Greens did make an intelligent and insightful contribution to setting up the emissions trading scheme. At that time, they believed that a pricing mechanism was the best way to alter behaviour—a pricing mechanism that was flexible, according to supply and demand for carbon credits. I am not quite sure why they have changed their point of view. Certainly, the Government has not been arrogant or dismissive about the emissions trading system. We have been a bit dismissive of the Greens’ policy, which is intended to shut down business, destroy jobs, and make households poorer.

Dr Russel Norman: What is his response to business commentator Pattrick Smellie’s description of the Green Party’s climate tax cut as “a good idea” and the Government’s response to it as “mildly hysterical”?

Hon BILL ENGLISH: I do not think either the Dominion Post editorial writers or Pattrick Smellie have thought it through, quite frankly. The Greens were part of the original debate about whether to have a carbon tax or an emissions trading system. They were part of a Government that decided on the emissions trading system, and, frankly, we think they made the right choice. The

emissions trading system is the most efficient way of reducing carbon emissions, and that is why we have stuck to it and we do not agree with the Greens’ policy.

Dr Russel Norman: What is his response to comments by business commentator Bernard Hickey that “the ETS has been a failure” and the Green Party’s climate tax cut would be a more efficient solution?

Hon BILL ENGLISH: He is wrong about efficiency, but a number of commentators simply believe that too much carbon is being emitted and they want to deliver as much punishment as possible to those who deliver it. So why limit the carbon price to $25? You could get to a zero carbon economy if you made it $500 a tonne; people would stop using it straight away. So I expect the Greens to follow the logic of their argument. If they are really concerned about climate change, they would set that price much higher than they have.

Dr Russel Norman: Why do the Government and the Minister prefer an emissions trading scheme where consumers just face increased costs, rather than a climate tax cut, which is fiscally neutral, where the charge on carbon is returned to households and companies through tax cuts—so under a climate tax cut, income tax is reduced and company taxes are reduced to account for the fact that households and businesses face those costs?

Hon BILL ENGLISH: I would acknowledge that the Greens did in their policy follow some sound logic when they said they would reduce income taxes, because up until now they have been strong advocates of increasing income taxes regardless of merit, just on a point of principle. The Government favours an emissions trading system because it is a market pricing mechanism that incentivises everyone participating—from consumers to emitters to Governments, including the fact that it was consistent with the international regimes that were being put in place at the time. So we agree with the original logic that the Greens applied in supporting and developing the emissions trading system, and we have not seen persuasive arguments to change to a carbon tax—and particularly not to a punitive carbon tax, where the tax is higher than it needs to be, given emissions around the world, and it would punish households.

Dr Russel Norman: What is his response to the economist John Small’s assessment that the Green Party’s climate tax cut “would stimulate innovation in New Zealand”, while the risk of doing nothing, as is the case under the failed emissions trading scheme, is that “valued trading partners might one day stop buying from us because they don’t like our production methods”? What is his response to the economist John Small’s comments?

Hon BILL ENGLISH: He makes the same mistake as the Greens. I mean, the emissions trading system was set up to reflect the world carbon price. At one stage, we thought it would be $25 or $30. Because of recession and other changes in how industries work in different parts of the world, we have ended up with a large supply of credits and, therefore, a lower price on carbon. That reflects the fact that there are fewer carbon emissions than people thought there were. The Greens are picking a random number as a tax, which will punish households and businesses, and actually puts too high a price on reducing carbon emissions—higher than it needs to be.

Economic Growth—Household Savings 2. Hon DAVID CUNLIFFE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement relating to an increased level of household saving that it “is a necessary foundation for more sustainable growth in the medium and longer terms”?

Hon BILL ENGLISH (Acting Prime Minister): Yes, which is why the Government welcomes the recent improvements in household savings. For example, in the 5 years to 2008, household savings averaged minus 4.5 percent, and they slumped to minus 7.6 percent in 2003—the worst on record in the history of that series. Under the current Government, household saving has average minus 0.2 percent. Higher household saving and improvement in the Government’s books has helped reduce the current account deficit to 3.4 percent of GDP—a significant improvement on the current account deficit when Labour left office of 7.9 percent.

Hon David Cunliffe: Since the Prime Minister is so keen on past Governments, does he agree that it was a mistake for National to abolish the compulsory savings scheme in 1975—

Hon Member: How old were you?

Hon David Cunliffe: Well, how long is a piece of string? [Interruption]

Mr SPEAKER: Order! The member has a right to ask the question, and I will judge the Government responsibility.

Hon David Cunliffe: —given that the Financial Services Council has estimated that New Zealand has now foregone $278 billion in savings as a result of that short-sighted National Government decision?

Hon BILL ENGLISH: If we are talking about mistakes of the 1970s, one that Labour made was to make Bill Rowling the leader of the Labour Party—and that member will be finding out what he felt like. No, I disagree with the Financial Services Council. I think its calculations are nonsense, and we also disagree with Labour’s policy of making KiwiSaver compulsory, because it will have to explain to hundreds of thousands of low-income New Zealanders—

Mr SPEAKER: Order! That was not the question that was asked.

Hon David Cunliffe: Is he aware that after 25 years of compulsory savings Australia has built up a savings nest egg of no less than $1.3 trillion, and why does he not think Kiwis should have a similar pool of capital for investment and their futures?

Hon BILL ENGLISH: Because the member is using a very partial measure of the Australian economy. Economists all agree that the best measure of our savings/ investment imbalance is the current account deficit. Since the Australians brought in their compulsory superannuation scheme New Zealand has, on average, had a smaller current account deficit than the rest of the world—that is, a smaller deficit on domestic savings to fund its investment. There is nothing magic about the Australian compulsory superannuation scheme. In another measure, New Zealanders have more money invested in businesses, but they do have less in the products sold by the Financial Services Council.

Hon David Cunliffe: Speaking of the current account deficit, does the Prime Minister accept that Australia’s large compulsory savings pool has enabled it to own its own banks and nearly all of ours?

Mr SPEAKER: The Hon Bill English, insofar as there is ministerial responsibility.

Hon BILL ENGLISH: There is no doubt that it has meant that its stock market is a bigger proportion of its economy. As it happens, in New Zealand, family and cooperative businesses are a much bigger proportion of our economy, and we think that is a quite legitimate form of savings and investment. In any case, Labour will spend the next 3 months promising carve-outs from its compulsory scheme, which will compel hundreds and thousands of the poorest New Zealanders to give up 9 percent of their income when they cannot afford to give up any.

Hon David Cunliffe: Given that the Prime Minister is so concerned about the current account deficit and given that 85 percent of New Zealand’s national debt is private debt, why is he not prepared to support a policy that will grow private savings, shrink private debt, and reduce the current account deficit?

Hon BILL ENGLISH: Because it will not do any of those things—that is why. There are already 2.3 million New Zealanders in KiwiSaver. The member should take some of the credit for the success of KiwiSaver, because his Government introduced it, and people are still joining it at the rate of 15,000 per month. The people who are not in KiwiSaver generally cannot afford to be in it. I invite the Labour Party to explain to hundreds of thousands of low-income New Zealanders why it is effectively going to take 9 percent of their income off them when they are living from week to week on very small margins.

Hon David Cunliffe: Given that the Prime Minister’s party opposed KiwiSaver when Labour introduced it, and now supports it, and given the crocodile tears the Acting Prime Minister has just cried about low-income New Zealanders, will the Minister of Finance and the Prime Minister both

stand up and agree with us that the minimum wage should be raised as soon as possible to $15 an hour, and if he does not, would he like to explain to New Zealanders why he wants to keep their wages down and their savings down, and their banks owned—

Mr SPEAKER: Order! This is question time, not the general debate.

Hon BILL ENGLISH: No, and the member is trying to tell people that low-income New Zealanders who will be hit by a 9 percent cut in their income will not worry about it because they can get a small percentage increase in the minimum wage. Actually, most of them are not on the minimum wage. They have low incomes because they are seasonal workers, casual workers, or not working at all. The member will spend the next 3 months backtracking from his position of compulsory KiwiSaver—you just watch.

Economy—Outlook 3. Hon KATE WILKINSON (National – Waimakariri) to the Minister of Finance: What recent reports has he received about the outlook for the New Zealand economy?

Hon BILL ENGLISH (Minister of Finance): The Reserve Bank last week issued its Monetary Policy Statement for June. It forecast that the economy will expand by around 4 percent in the year to June 2014, with growth increasingly broad-based and increasingly self-sustaining. It also forecast that inflation is expected to remain near the mid-point of its 1 to 3 percent target. However, inflationary pressures are expected to increase. It notes that, despite recent falls in dairy prices, export prices remain high by historical standards. These factors, together with an extended period of relatively low interest rates, are supporting what the Reserve Bank calls robust growth in incomes and in demand.

Hon Kate Wilkinson: In releasing its latest forecasts, what key assumptions did the Reserve Bank make about the economy over the next few years?

Hon BILL ENGLISH: The Reserve Bank says its outlook for the next few years depends on several key assumptions. It says prices for New Zealand’s exports are expected to fall further from current levels, before they stabilise at levels that will remain high by historical standards; the trade-weighted exchange rate is expected to fall gradually over the next 3 years; annual net migration is assumed to peak at the end of 2014, before easing at a similar rate to the last migration cycle in the early 2000s; and annual house price inflation is projected to ease from its peak of over 10 percent late last year, to under 1 percent within the next 4 years.

Hon Kate Wilkinson: What reports has the Minister received about the Government’s financial position as it moves to return its books to surplus next year, in line with its wider economic programme?

Hon BILL ENGLISH: Treasury last week released the Government’s financial statements for the 10 months to 30 April. They showed that the operating deficit was $1.37 billion for the 10 months—about $148 million smaller than forecast in the Budget. Core Crown revenue was $12 million below forecast, while core Crown spending was $90 million below forecast. The results confirm that the economy is on track to meet Treasury’s forecasts, which include a modest Budget surplus in this next financial year.

Hon Kate Wilkinson: In setting a track back to fiscal surplus next year, how has the Government ensured the income tax and income support systems are fair and continue to help those households most in need?

Hon BILL ENGLISH: A combination of decisions over the income tax and support systems provides significant income redistribution from higher-income households to lower-income households. Latest estimates show that households earning over $150,000—that is, the top 15 percent of households by income—will pay 49 percent of income tax in this year. But when benefit payments, Working for Families, paid parental leave, and accommodation support are taken into account, these 15 percent of households will pay 74 percent of net income tax, and that is excluding New Zealand superannuation. Households under $60,000 a year, which is just under half of all

households, are expected to pay 9 percent of income tax, but when we take into account their income support payments, they pay no net income tax at all. The $2.5 billion of income tax expected to be paid by households earning under $60,000 a year will be more than offset by the $7.3 billion they will receive in income support.

Immigration—Policy 4. Rt Hon WINSTON PETERS (NZ First) to the Minister of Immigration: Is he satisfied with the current immigration policy settings?

Hon MICHAEL WOODHOUSE (Minister of Immigration): Generally yes, but I am constantly working to refine policy to ensure New Zealand is at the front of that global contest for skills and investment, tourists, and international students.

Rt Hon Winston Peters: Well, if that is so, is it fair on all other migrants that one country, China, is grossly overrepresented in the number of parent category migrants?

Hon MICHAEL WOODHOUSE: Well, I do not accept that they are, but I will go through with the member what I have already said in question time about the time lag between the bringing in of permanent residents and the subsequent applications for parent category visas for their parents. Chinese skilled migrants were rather more prominent under the previous Government, which was supported by that member’s party, and we are now seeing some coming in, but I note also that this Government has removed the centre of gravity provisions that would have made Chinese parents more likely to gain residence under that category. It is a much fairer system.

Rt Hon Winston Peters: I seek leave to table two sets of graphs compiled by the Parliamentary Library. One is to do with the year ended May 2014, and one is to do with the parent category pending, for which applications are being processed. Both are from the Parliamentary Library.

Mr SPEAKER: Leave is sought to table those particular graphs, prepared for the member by the Parliamentary Library. Is there any objection to them being tabled? They can be. ocsPETERS, Rt Hon WINSTONDocuments, by leave, laid on the Table of the House.

Rt Hon Winston Peters: Of the people granted residence in New Zealand as at the end of May 2014, why is one country, China, so overrepresented in the parent category, and what is the Government doing about it?

Hon MICHAEL WOODHOUSE: I am sure I explained the reasons for that in my previous answer, and I have nothing to add to it.

Rt Hon Winston Peters: If that was an explanation we should all believe, why is it that the parent applications on hand category show that one country, China, has more applications than all other countries put together?

Hon MICHAEL WOODHOUSE: That may very well be the case—I have not seen the data—but what is of interest to me is not the applications but the acceptances.

Rt Hon Winston Peters: Why is the Minister and his Government encouraging one country to use New Zealand as a retirement home with all the benefits and superannuation and health care and infrastructural investment that New Zealanders work—[Interruption] Mr Speaker, can I possibly hear myself—

Mr SPEAKER: I can hear you quite—[Interruption] Order!

Rt Hon Winston Peters: They’re all shouting at me here.

Mr SPEAKER: Order! The member will resume his seat. The member has a right to have his question heard. I was actually having no trouble hearing it because of the loud way in which the member was delivering his question. If he could bring his question to a conclusion rather than a statement, I would be very grateful.

Rt Hon Winston Peters: Thank you very much, Mr Speaker, for your help. It is always appreciated. Why is the Minister and the Government encouraging one country to use New Zealand

as a retirement home with all the benefits that most New Zealanders work 40 or more years for and pay for in their taxes?

Hon MICHAEL WOODHOUSE: I reject the premise that one country is being favoured over another. I note that since that member’s party supported the previous Government, the parent category approvals have dropped, the centre of gravity provisions have been removed, the sponsorship requirements have been increased, the family income thresholds have been increased, and I have a bill in the House that would extend the sponsorship period from 5 years to 10 years, and that member’s party is not supporting it. So if he is serious about this, he would support the Immigration Amendment Bill.

Budget 2014—Cost of Canterbury Recovery 5. Hon DAVID PARKER (Deputy Leader – Labour) to the Minister of Finance: Does he stand by the Cost to the Crown of the Canterbury Rebuild presented in Budget 2014?

Hon BILL ENGLISH (Minister of Finance): Yes. That is Treasury’s best estimate, based on current information and according to the criteria it has to apply for the accuracy of the estimates.

Hon David Parker: Does he agree with the Prime Minister’s statement last week that the cost to the Crown of the rebuild will increase to around $20 billion?

Hon BILL ENGLISH: I think the Prime Minister suggested that it could. Of course, that is yet to be seen, but the best estimate at the moment is around $15.4 billion. There has been some airing of differences of view, for instance, around how much of the cost councils should carry compared with the Government, and we are engaged in constructive discussions about that. That could possibly see the costs rise.

Hon David Parker: Given that even before the Budget the Christchurch City Council said its share of infrastructure rebuild costs was higher and the Prime Minister has lately said that he thinks the costs are going up too, why did the Minister present a Budget showing the Crown’s share of those infrastructure rebuild costs had dropped compared with the prior Budget?

Hon BILL ENGLISH: Because that is, and, I have to say, remains the best assessment of the cost of the infrastructure. The council has been becoming much more familiar with its current financial circumstances and its outlook. It has some views about what costs it should carry and those, of course, will be constructively discussed with the Government. But, in the end, Treasury sets the amount according to the valuations of the insurance liabilities and the best estimates of future costs to the Government.

Hon David Parker: Why would anyone have confidence in his numbers, when at the last election the Pre-election Economic and Fiscal Update booked the proceeds of asset sales but failed to account for the decrease in dividends?

Hon BILL ENGLISH: As was extensively discussed after the last election, as part of Labour’s usual relitigation of election results where it thinks the public got it wrong, including back in 1975, which it is still relitigating—as part of that discussion it became quite clear that Treasury followed the correct statutory processes, as it has for this Budget.

Hon David Parker: Can he assure the House that the rebuild figures published by Treasury in this year’s Pre-election Economic and Fiscal Update will be accurate and will fully represent the true and higher costs of the rebuild, as belatedly acknowledged by the Prime Minister just last week?

Hon BILL ENGLISH: As the member will know, the Pre-election Economic and Fiscal Update is prepared by Treasury in its capacity, under the Public Finance Act, as an independent statutory agency. It will decide what those numbers are, and I expect it will apply the same objectivity and integrity it has to the Budget 2014 number. It could be higher. That is up to Treasury. It depends on a lot of moving parts in respect of Christchurch funding.

Transport—Funding 6. DAVID BENNETT (National – Hamilton East) to the Minister of Transport: What recent announcements has he made on funding for transport?

Hon GERRY BROWNLEE (Minister of Transport): Last week I released the draftGovernment Policy Statement on Land Transport 2015/16 – 2024/25. This is a very thorough document, which proposes investing $38.7 billion in land transport over the next 10 years. It continues the Government’s prioritisation of economic growth and productivity, road safety, and value for money. It continues to focus on fixing the infrastructure deficit, which this Government has set about rectifying.

David Bennett: What specific gains are there for regions in the Government policy statement?

Hon GERRY BROWNLEE: Our regional networks are of critical importance to New Zealand’s economy, and the draft Government policy statement recognises this by increasing the funding to maintain local roads and replacing regional funding, which was scheduled to expire on 31 March 2015. It is replaced with a dedicated activity class for regional improvements of up to $90 million a year, and that funding package, although contestable, is available for both local and State highway projects. There is also an exclusion on it for metropolitan councils.

Denis O’Rourke: Why is the Government preventing funding to restore the Napier-Gisborne rail link, when the road route cannot be expected to cope in the long term?

Hon GERRY BROWNLEE: No, we are not.

Denis O’Rourke: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! This is a point of order.

Denis O’Rourke: The Minister seems to have misunderstood the question. He said he was not, and that was not the question. The question asked why the Government is preventing funding.

Mr SPEAKER: Order! That was the question, and the Minister responded by saying it was not preventing funding. That is the Minister’s answer.

David Bennett: What other areas of land transport are receiving a boost in funding?

Hon GERRY BROWNLEE: The draft Government policy statement also proposes increases in funding for a range of activities, including walking and cycling, road safety promotion, and road policing. It continues increasing funding for public transport, as set out in the current Government policy statement. Not all of the Government’s commitments to these activities are included in the Government policy statement. For example, the bulk of the $1.3 billion spent on Auckland rail was funded outside the Government policy statement. Walking and cycling also received money outside of this activity class—for example, funding the cycleway alongside the Christchurch road of national significance, the Christchurch Southern Motorway, which is part of the State highway budget.

Phil Twyford: Why will he not take a more balanced approach and move freight by whatever combination of rail, coastal shipping, ports, and roads is the most efficient and sustainable for any given route, instead of his approach, which is just bigger trucks and bigger motorways?

Hon GERRY BROWNLEE: We do not support Labour Party policy.

Family/Whānau Violence and Child Abuse—Government Response to Report 7. SUE MORONEY (Labour) to the Minister for Social Development: Will she agree to establish a cross-party taskforce to address the rates of child abuse and domestic violence in New Zealand as described in The People’s Report: The People’s Inquiry into Addressing Child Abuse and Domestic Violence?

Hon PAULA BENNETT (Minister for Social Development): No, we are 95 days out from a general election, and setting up a cross-party task force now would simply be all about politics.

Sue Moroney: Talking about playing politics, then, does she recall that Labour, when in Government, did set up a multi-party working group on family violence, and every party participated except the National Party, which withdrew from the group in September 2006 and were

invited to re-join in August 2007 but declined—and that was quite some time before an election, Minister?

Hon PAULA BENNETT: And what a waste of time that was; it did nothing. So, effectively, your little cross-party task force did nothing to actually better the lives of the people who are living with domestic violence. You have proved your point—that your cross-party task force was ineffective and inefficient.

Sue Moroney: Why did it take an individual businessman to initiate a report into our horrific rates of child abuse and domestic violence rather than the National Government stepping up and taking some responsibility?

Hon PAULA BENNETT: Actually, this Government has done many reports, many reviews. I can point to the Children’s Action Plan as the first one, when we did a white paper—actually, there were 10,000 submissions to that. We travelled up and down the country making sure that we got people to actually address it. The fact that Sir Owen Glenn has chosen to do this is actually a good thing, if that is what he wants to do. We take it seriously, we are interested in the outcomes of it, and we will go forward from there.

Sue Moroney: Can the Minister still claim that addressing domestic violence is a priority—[Interruption]

Mr SPEAKER: Order! I am having trouble hearing the question. I invite the member to start again.

Sue Moroney: Can the Minister still claim that addressing domestic violence is a priority when under National the Task Force for Action on Sexual Violence was shelved, the advocates for children and young people who witness family violence were scrapped, the Te Rito Collaborative Community Family Violence Prevention Fund was canned, and the family violence education services were disestablished?

Hon PAULA BENNETT: And is this not the difference? That is all about the adults who pontificate to each other, talk about what they want to do. None of it is about what is actually happening in a house and the services that need to really happen. So it is all about the next task force, the next report, the next kind of talking to each other that Labour would have us do, when it is actually about services on the ground that are able to address it. I point to Whānau Ora. I point to the Children’s Action Plan. I point to the work on drug and alcohol abuse that is going through the health and justice systems. Those are the things that will make a difference.

Carol Beaumont: What action will she take to ensure women’s refuges can meet the increasing demand from victims of domestic violence, given that they are struggling to respond in the face of real cuts in baseline funding?

Hon PAULA BENNETT: Women’s Refuge have millions more dollars a year now than it did under Labour. [Interruption]

Mr SPEAKER: Order! Question No. 8—[Interruption]—Order!

Hon PAULA BENNETT: Is that it?

Mr SPEAKER: Yes, that is the end of that question.

Child Poverty—Response to Recommendations 8. JAN LOGIE (Green) to the Minister for Social Development: Will she support a Child Poverty Act that sets out targets and measures for eliminating child poverty as recommended by the Tick4kids campaign; if not, why not?

Hon PAULA BENNETT (Minister for Social Development): No. We already measure poverty in a variety of different ways that are all published in the Ministry of Social Development’s household incomes report. We are focused on getting on with things that will make a difference.

Jan Logie: I raise a point of order, Mr Speaker. I am not sure whether the Minister heard my question.

Mr SPEAKER: Order! I heard the question. I am sure that the Minister heard the question because it has been addressed, but the member does have supplementary questions.

Jan Logie: Does she think her policies warrant a “tick 4 kids” for September when she will not commit to ending child poverty?

Hon PAULA BENNETT: Well, that is simply not true. We are getting on with warming up homes, we are getting on with immunising kids, we are getting on with putting more money into preventing rheumatic fever, and we are getting on with making sure that those children are no longer living in welfare-dependent homes. We have got the Children’s Action Plan, which fundamentally makes a difference. Those are the things that actually need to be done and that we are doing.

Jan Logie: How can she think her policies warrant a “tick 4 kids” when the College of Public Health Medicine says her Government’s investment in children is barely half the OECD average and is “insufficient to reduce the impact of poverty on their health and well-being.”

Hon PAULA BENNETT: I would say that for those who are the most vulnerable we have one of the most generous welfare systems in the world. Last year alone we gave out $262 million just in hardship grants, let alone what is going to welfare and support for those who need it. So I disagree with those figures, but I suppose if the member wants to give me all of the research behind them I can have a look.

Jan Logie: How do her policies warrant a “tick 4 kids” when one baby on average dies each week in this country from an illness linked to poverty and yet she refuses to restore real benefits to the level they were before they were cut 23 years ago?

Hon PAULA BENNETT: I think the member is making a correlation there that I am not sure absolutely fits. I think we have one of the most generous welfare systems in the world. I have not seen the research behind the figure of 60 children a year. I am not sure exactly where that has come from. What I do support, though, looking at the Tick4kids campaign, is where it says it wants political parties to prioritise children’s access to quality health, housing, education, and welfare to ensure every child has what they need to live a safe, happy, and fulfilled life. I would argue that so does this side of the House, most definitely. That is what we are putting our resources in. As we had a bit more money we put an extra $500 million into those vulnerable children and families just in this past Budget alone.

Business Growth Agenda—Future Direction 2014 Report 9. MARK MITCHELL (National – Rodney) to the Minister for Economic Development: What announcements has he made about the future direction of the Government’s Business Growth Agenda?

Hon STEVEN JOYCE (Minister for Economic Development): Last week the Minister of Finance and I released the Business Growth Agenda Future Direction 2014 report. This report outlines the significant progress the Government has made in creating the conditions for business to invest for jobs and growth. More than half of the 350 Business Growth Agenda actions across the six key areas are either complete or in the implementation phase. The results so far have contributed to New Zealand’s business confidence, strong growth, increasing employment, and improved trade balance, stronger productivity growth, and real wages rising faster than the cost of living. The challenge for the Business Growth Agenda now is to help reduce further the capacity constraints for the New Zealand economy and help convert a couple of years of good growth into sustained longer-term growth and a lift in incomes for Kiwi families.

Mark Mitchell: What will the Government’s Business Growth Agenda now focus on?

Hon STEVEN JOYCE: We intend to focus the Business Growth Agenda on around 60 key initiatives that we see as essential to further fostering business confidence and growth. For example, in the area of innovation we have an ambitious work programme that will continue to help the business sector double its expenditure on research and development to around 1 percent of GDP.

Amongst other things we will implement changes to the tax treatment of research and development to further increase investment. We will support Callaghan Innovation to develop the suite of research and development grant programmes further and establish our new technology-focused incubators, all those things that are—

Hon David Cunliffe: Labour policy.

Hon STEVEN JOYCE: —not Labour Party policy. Mr Cunliffe wishes it was Labour Party policy, but he wishes for lots of things. Likewise in the skills space, we have a series of initiatives to lift our longer-run productivity growth rate, like investing in apprenticeships and vocational skills; encouraging sole parents into higher education; investing more in engineering and sciences; and setting up new information and communications technology graduate schools in Auckland, Wellington, and Christchurch. We will lift high-quality information and communications technology graduate numbers, an area of critical importance to our economic future.

Mark Mitchell: What initiatives will the Government focus on in the areas of building export markets and developing our natural resources?

Hon STEVEN JOYCE: In the exports area we are working to increase our ratio of exports to GDP to 40 percent by 2025, and we are making good progress there with the big lift in goods exports in the year to March, and our areas of focus towards that goal. That means we will keep negotiating, of course, comprehensive high-quality free trade agreements, which the Opposition is pretty ambivalent about these days. We will boost our representation in China, ASEAN, and other emerging markets, and capitalise on the 2013 growth package for tourism and education. We have a large range of initiatives to help manage and develop our natural resource endowment. In the next few years we will focus on increasing value from, and improving the quality of, water; improving environmental reporting; accelerating petroleum exploration; combatting kauri dieback; and improving the productivity of Māori land.

Economic Growth—Impact on Workers 10. GRANT ROBERTSON (Labour – Wellington Central) to the Minister for Economic Development: Does he agree with the Minister of Finance that workers “have a right to expect to see some of the benefits” of growth in the economy?

Hon STEVEN JOYCE (Minister for Economic Development): Yes, and they are. The average wage has increased by $3,000 in the past 3 years to $54,700.

Grant Robertson: No, it hasn’t.

Hon STEVEN JOYCE: Yes, it has, and I sense an oncoming labour cost index discussion. Based on the latest strong economic growth forecast, the average wage is forecast by Treasury to increase a further $7,600 to $62,300 over the next 4 years. Wages are increasing faster than inflation. Average weekly earnings rose 3.2 percent in the last year while the cost of living grew 1.5 percent.

Grant Robertson: In light of that answer, is an effective 1 percent pay increase a reasonable pay offer this year for workers at the Ministry of Business, Innovation and Employment, in light of his claims about wage growth?

Hon STEVEN JOYCE: Well, I thought the member actually understood that Ministers do not get involved in Public Service pay negotiations.

Hon Members: Ha, ha!

Hon STEVEN JOYCE: Well, it is an important thing, and Mr Robertson often comes down to the House and tries to quote the Cabinet Manual or the State Sector Act, and both of those make it clear that Ministers are not to get involved in pay negotiations—unless the Labour Party’s approach is now to go back to the 1970s and to the Federation of Labour and the Minister of Labour sitting down and doing the general wage order.

Grant Robertson: In light of that answer, what pay offer for Ministry of Business, Innovation and Employment staff did he suggest, or agree to, when he met Ministry of Business, Innovation and Employment chief executive David Smol on the afternoon of 4 June? [Interruption]

Mr SPEAKER: Order! A question has been asked; I want to hear the answer.

Hon STEVEN JOYCE: Well, firstly, if the member would like to have a look at the Cabinet Manual, it says the Minister should maintain the independence of the chief executive’s decision-making process, and that is what I have done in this regard. Mr Smol updates me on a range of things from time to time. In terms of a particular day, I have no idea, but in terms of the particular negotiations, that is very much the chief executive’s responsibility.

Grant Robertson: Has he discussed with David Smol the specific details of the offer made to Ministry of Business, Innovation and Employment staff, including at a meeting on 4 June?

Hon STEVEN JOYCE: I just told the member that the chief executive has kept me updated. I cannot recall a particular date, but I am prepared to accept there might have been a date on 4 June. The point is that he has kept me updated. At all times they are his decisions.

Grant Robertson: Did he express a view to Mr Smol about what he would consider to be an appropriate maximum offer that should be made to Ministry of Business, Innovation and Employment staff?

Hon STEVEN JOYCE: No, I do not believe I did. The chief executive updated me as to the progress of negotiations. He is making the offer and he gets to determine it, and he consults with the State Services Commission.

Consumer Rights—Legislative Reform 11. JONATHAN YOUNG (National – New Plymouth) to the Minister of Consumer Affairs: How will consumers benefit from the improvements to consumer law that come into effect today?

Hon CRAIG FOSS (Minister of Consumer Affairs): The Consumer Law Reform Bill, which was passed last year, is a comprehensive update of New Zealand’s consumer legislation. The changes that come into effect today will strengthen consumer rights, simplify business compliance, and ensure consumer protections are clear and accessible. Consumers now have the same rights when purchasing goods and services, regardless of whether they buy online, in a store, by auction, over the phone, at home, or anywhere else.

Jonathan Young: What are some of the key changes that will benefit consumers?

Hon CRAIG FOSS: Some of the key changes for businesses and consumers include that protection under the Consumer Guarantees Act will include online businesses and auction sites such TradeMe, traders will be liable if goods do not arrive on time or are damaged, a 5-day cooling-off period will now apply to uninvited direct door-to-door and telephone sales, new disclosure rules affecting extended warranties, and a new provision will require traders to be able to substantiate any claims they make as opposed to the Commerce Commission having to test that claim. These changes give more rights to consumers and will toughen up on unscrupulous traders.

Housing, Affordable—House Prices and Rents 12. PHIL TWYFORD (Labour – Te Atatū) to the Minister of Housing: Will New Zealand return to its historic average levels of house prices to incomes and house prices to rents under his Government’s housing policies; if so, how long will it take for this to occur?

Hon Dr NICK SMITH (Minister of Housing): The ratio of national household income to house price deteriorated from 4.8 to 6.3 between 2000 and 2008, but has improved under this Government to 5.5—that is, it got 24 percent worse under Labour and has improved by 15 percent under National. This would suggest it would take about 12 years to reverse the damage of the previous Government in respect of housing affordability and to get back to 2000 levels. The reason I have confidence that the Government’s housing policies will improve affordability is that they are based on the comprehensive report from the Productivity Commission, the new house build rate has

increased from 14,000 houses per year to 24,000 per year, and new initiatives like the housing accords are freeing up land at the fastest rate in decades.

Phil Twyford: Does he agree with the Reserve Bank’s view that a rise in annual net migration to 45,200 by mid-2015 under current policy settings would force annual house price inflation up by 4 percentage points and force the bank to raise interest rates by as much as a further 55 basis points, or 0.5 percent; if so, will this make it harder or easier for Kiwi families to get into their own home?

Hon Dr NICK SMITH: There is some relationship between migration and the overall demands on housing levels, and that is reflected in the latest OECD housing data, which shows that the most affordable houses in the world are in Greece because everybody is leaving there. That makes it very affordable housing. That is not quite the economic plan of this Government, but I do understand that members opposite are quite keen on the Greek approach.

Phil Twyford: Has he seen new research showing that the average New Zealand house price rose by $98 a day over the past year and by $289 a day in parts of Auckland, with the average price in Auckland City now $842,000, according to Quotable Value, and what is he doing to ensure that Kiwi first-home buyers can save at the rate of $100 a day—or $300 a day in Auckland—with interest rates heading north of 8 percent because of his failed housing policies?

Hon Dr NICK SMITH: The official data shows that house prices nationally over the last year have increased by 9 percent. I note that during the previous Government house prices increased in a single year by 28 percent, and Labour members insisted that that was not a problem and did absolutely nothing. In contrast, this Government has a very wide programme of freeing up land supply, dealing with issues of building materials costs, and bringing bills before the House to deal with those big increases in infrastructure costs that occurred with failed legislation from the previous Government. That is why I have confidence in this Government’s housing affordability agenda.

Phil Twyford: Does the 39,000 new affordable homes he has promised Auckland include the 700 to 800 affordable homes the Auckland Council says will actually result from his promise, and how will he make up the shortfall between his promise and the actual number of affordable homes needed in Auckland for people to live in?

Hon Dr NICK SMITH: I note that the increase in the issuing of building consents in Auckland in the last quarter is the fastest rate of increase in new house build for 12 years. It is the fastest rate of increase in 14 years. We now have 24,000 houses a year being built, with a good number of those in Auckland, and that is a direct consequence of this Government’s measures through the Auckland Housing Accord and other measures to increase both supply and affordability.

Phil Twyford: Rather than blaming councils for holding back affordability, why does he not implement a national policy statement on affordable housing under the Resource Management Act or split out the Government’s housing affordability provisions in its Resource Management Act reforms so that they can be passed before the election, or would he rather just continue to blame other people for his failed housing policy?

Hon Dr NICK SMITH: I am actually encouraged by the member’s question, because for 10 years Labour has denied there is any connection between the Resource Management Act and housing affordability. But the key problem is this. Labour is saying the answer is a national policy statement on housing affordability under the Resource Management Act. But the advice from officials is you cannot do a national policy statement on housing affordability unless you amend Part 2 of the Resource Management Act, which is something that members on this side of the House want to get on and do and members opposite have opposed at every step of the way.


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