Questions & Answers – March 29

by Desk Editor on Wednesday, March 30, 2016 — 11:10 AM


1. ANDREW BAYLY (National—Hunua) to the Minister of Finance: What recent reports has he received on the New Zealand economy?
Hon BILL ENGLISH (Minister of Finance): On Friday the credit rating agency Moody’s confirmed that New Zealand continues to hold a AAA rating—the strongest rating given by that agency. It highlighted solid growth, the 2014-15 surplus, and relatively low Government debt as factors in its decision. Last week Standard and Poor’s, another credit rating agency, also released its analysis reaffirming New Zealand’s AA foreign currency rating and AA+ local currency rating. This confirms that the economic programme is on track.

Andrew Bayly: What do these reports say about the outlook for economic growth in New Zealand?

Hon BILL ENGLISH: Moody’s view is that the New Zealand economy is growing relatively strongly despite the steep fall in dairy prices and that growth is expected to remain relatively robust—that is, at around 2.5 to 3 percent. Standard and Poor’s expects the economy to grow by an average of 2.7 percent over the next 4 years.

Grant Robertson: Has he seen the report from the Prime Minister on 6 August last year saying that a new flag was “gonna be worth billions” to New Zealand; if so, how has the outcome of the referendum been factored into this year’s Budget?

Hon BILL ENGLISH: Yes, and of course, they would have been windfall gains, so they do not have to have been factored in.

Andrew Bayly: What risks are there to New Zealand’s economic growth?

Hon BILL ENGLISH: One risk highlighted by Standard and Poor’s is New Zealand’s level of foreign debt. This is something that the Government has been focused on as well. We have made good progress. The current account deficit is currently 3.1 percent, less than half of what it was back at the peak of the last cycle. Net external debt has fallen to 45 percent of GDP, down from 83 percent back in 2008, and is now at its lowest level since 2003, which means that our stock of external debt as a proportion of our economy is falling and is likely to continue to fall.

David Seymour: Has the Minister seen advice from Treasury to the Welfare Working Group suggesting that a guaranteed minimum income might reduce economic growth by as much as 2.8 percent per annum?

Hon BILL ENGLISH: I will take the member at his word that that may have been its advice in 2012. But he can be reassured that there is no way that the universal benefit income will happen, so we will not have to deal with those sorts of consequences.

Andrew Bayly: What other risks are there to New Zealand’s strong international credit rating?

Hon BILL ENGLISH: Standard and Poor’s highlighted New Zealand’s fiscal settings and Reserve Bank credibility as key factors in its decision to reaffirm its strong rating with a stable outlook. Significant risks could, of course, occur if the Government got off track, where, for instance, politicians started setting interest rates or we provided a universal basic income to all New Zealanders over the age of 18 regardless of whether they work. In the long run, those would probably have a negative impact on our credit ratings.
Deputy Prime Minister—Confidence

2. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he have confidence in his Minister responsible for the flag referendum process?

Hon BILL ENGLISH (Acting Prime Minister): Yes, I do. In fact I have so much confidence that I designated him Acting Prime Minister while I was out of the country.

Andrew Little: In view of the fact that polls during the course of the referendum process repeatedly showed that there was no public appetite for changing the flag, does he now think that spending $26 million on flag referenda was the best use of public money?

Hon BILL ENGLISH: No, and as the member knows, the Prime Minister is not a poll-driven fruitcake in the way that he is. On behalf of the Prime Minister, I think he would note that, despite the fact that it was Labour’s policy to change the flag, the members all voted against it.

Andrew Little: Why does he think it was better to spend $26 million on a failed flag than on funding a medicine like Keytruda that could save the lives of New Zealanders with advanced melanoma?

Hon BILL ENGLISH: That does not make much more sense than asking why it is better to spend money on upgrading the Hercules aircraft for the New Zealand Air Force than it is to spend money on the next most popular drug. The fact is that the Government makes all these decisions in the round, and the Prime Minister makes no apology for the leadership that he showed on this issue, which led to 43 percent of New Zealanders voting for a change in the flag.

Andrew Little: What is more important: $26 million on a failed flag or fixing thousands of State houses that are leaking and mouldy and making our kids sick?

Hon BILL ENGLISH: The member may be interested to know that Housing Corporation’s capital expenditure on State houses in the last 12 months was over $590 million, including—

Hon Member: The kids are getting sick; the houses are mouldy.

Hon BILL ENGLISH: Well, I would agree with them. It has taken a long time to get on top of the neglect of the previous Labour Government that left us with tens of thousands of damp, unhealthy houses. [Interruption]

Mr SPEAKER: Order! Again, the level of interjection that is coming—and it is coming from both sides of the House—is too loud and disruptive.

Andrew Little: Why was it better to spend $26 million on a failed flag than on solving burglaries, given the disgraceful fact that over 90 percent of burglaries now go unsolved?

Hon BILL ENGLISH: As I said before, with reasonable fiscal management the Government gets to do a whole range of positive things for the community at large and for particular groups. The police have had significant pay increases, they have had a significant rethinking of their activities, and they are doing a very good job of getting crime rates to the lowest they have been in a generation. We can achieve that as well as having a referendum on the flag.

Hon Judith Collins: Lowest crime rates since 1978. Thank you, New Zealand Police.

Andrew Little: That will be about the rising prison—

Mr SPEAKER: Order! Just ask the question.

Andrew Little: Is he honestly telling New Zealanders that the Prime Minister’s failed legacy project was more important than saving Kiwi lives, making our homes fit to live in, and making sure our families are safe from criminals?

Hon BILL ENGLISH: As we have said earlier, when the Government has sound fiscal management it can spend money on a whole range of desirable activities. In fact, the debate about the flag has proven to be the most engaging debate about national identity that New Zealand has enjoyed in a long time, and it is just a pity that the Labour Party took such a partisan political view of it.

3. RON MARK (Deputy Leader—NZ First) to the Minister of Finance: Does he stand by his statement from September 2015, “But now we are moving into a bit of the cycle where it’s likely that migration must flatten out sometime.”?

Hon BILL ENGLISH (Minister of Finance): Yes. The pattern of migration in New Zealand is that net migration numbers have been fairly predictable up until recently, and that is that they have peaked at around 50,000 and then dropped off. However, this time they seem to be going up, for longer, and staying up.

Ron Mark: I raise a point of order, Mr Speaker. Is it acceptable for a front-bench Cabinet Minister to refer to another member as a member of a redneck party in this Chamber? [Interruption]

Mr SPEAKER: Order! It is certainly not acceptable. I did not hear any such comment being yelled from the front bench of the National Party, but if I had I would have acted on it. I did not hear it, but it is completely unacceptable. [Interruption] Order! Ron Mark will resume his seat immediately. I realise you were probably responding to an interjection, but when I call you to ask a supplementary question, do so, without also interjecting.

Ron Mark: How can New Zealanders have faith in this Government, when on 9 December 2015 Immigration New Zealand said that migration would peak at around 63,000 this June, but it has soared well past that figure in December and January, and now, in February 2016, it is at 67,400 people and rising?

Hon BILL ENGLISH: One of the significant drivers of that number is the number of New Zealanders staying home and the number of New Zealanders who are returning. In the Government’s view, that is a positive problem. If the Public Service, like the member, underestimated the enthusiasm of New Zealanders for staying here and for coming home, then we do not see that as a big difficulty either.

Ron Mark: In light of that answer can I seek leave to table two documents please, obtained under the Official Information Act. The first is from the Ministry of Business, Innovation and Employment, dated 9 December 2015, entitled Briefing Amendments to the Essential Skills in Demand List. The second is a joint Ministry of Business, Innovation and Employment and Treasury briefing, dated 10 December 2015, entitled Improving the Long-term Contribution of Immigration to the Labour Market.

Mr SPEAKER: I will put the leave for both of those documents. Leave is sought to table both of those documents. Is there any objection? There is none. They can be tabled.

Documents, by leave, laid on the Table of the House.

Ron Mark: Is the Minister unconcerned that these two papers set out concerns about low-skilled immigration and his intention to go on driving down wages in our economy?

Hon BILL ENGLISH: I am not sure what pieces of paper the member is referring to, but I certainly would not agree with his assertions. But I am a bit disappointed that a party that calls itself New Zealand First does not seem to think it is a good thing when New Zealanders are so enthusiastic about staying in their own country or coming home.

Ron Mark: If record migration is so good for the economy, then how come a joint Treasury and Immigration New Zealand briefing said: “Migrants are meeting firm demands for labour and skills, but increasingly in low-productivity, low-growth industries, and low-wage skilled jobs?

Hon BILL ENGLISH: I am not quite sure of the connection between those two statements, but we do need a flow of skilled migrants coming into New Zealand to fill those jobs where we are unable to fill them domestically. Some of our industries, which are lower skilled, do need the same kind of supply of labour. But the important thing is that our labour supply has been flexible, particularly through the Canterbury earthquake, and it is not the Government’s intention to make major changes to the policy setting.

Ron Mark: Given that these papers show low-skilled migration with a significant number of low-skilled migrants, why is the Government providing competition for low-skilled New Zealand workers by artificially inflating the numbers from offshore?

Hon BILL ENGLISH: I think the member is generalising from the analysis. We have quite a complex—

Hon Member: You just quoted from it.

Hon BILL ENGLISH: Well, the inflow of migrants is driven by students, which is a fast growing business of international education that requires high levels of skill to grow that business, and we have a flow of skilled migrants who have to meet pretty precise criteria in order to get in. So if the member is saying that the flow in migration is all about more low-skilled people, then he is not correct.
Tax System—Multinational Enterprises

4. JAMES SHAW (Co-Leader—Green) to the Minister of Revenue: What estimates, if any, does he have for the total amount of tax multinational enterprises operating in New Zealand may have avoided paying in the last tax year through incorrect transfer pricing practices?

Hon MICHAEL WOODHOUSE (Minister of Revenue): The Inland Revenue Department does not distinguish between companies based on whether they are multinational or not. This is because we expect all companies to pay the correct amount of tax, regardless of where they are owned. But to the extent that incorrect transfer pricing practices are identified by the Inland Revenue Department, they would be disallowed.

James Shaw: Is New Zealand Herald investigative journalist Matt Nippert’s figure of $500 million of lost tax revenue from multinationals in the last financial year about right, or is tax expert Professor Craig Elliffe’s estimate of $1 billion more accurate?

Hon MICHAEL WOODHOUSE: Well, both estimates are speculative, based on their value judgments about what companies with that level of turnover should pay. It is not the Inland Revenue Department’s job to estimate based on gross turnover. As I am sure the member is aware, the amount of tax paid is assessed on the taxable profit, and that is what they pay.

James Shaw: So is the Minister of Revenue saying that he has less of an idea about how much revenue is being lost than Matt Nippert and Craig Elliffe?

Hon MICHAEL WOODHOUSE: I should hope so. But look—if the member is saying that this does not look right or does not look fair, I have some sympathy with that point of view. But what is considered unfair is multinationals not paying tax anywhere in the world, and for that reason this is a global issue that requires a global response. I think the OECD is the best place in which to have that analysis.

James Shaw: Given that the Inland Revenue Department advised his office in 2013 that “We will be closely involved in, and guided by, the OECD work. However, this does not prevent us from addressing potential deficiencies in our own rules, which we have concerns about.”, why is he still to address these deficiencies in our own tax rules?

Hon MICHAEL WOODHOUSE: I do not accept that they have not been addressed, to the degree that there are robust tax policies already in place for the establishment of rules around permanent establishment and for the unfair transfer pricing for the purpose of avoiding tax. I think we have a really good tax policy framework. The Government invested nearly $20 million in last year’s Budget for the audit and compliance work that needs to go on in those large businesses, and I think we have a good system.

James Shaw: Well, given that answer, how many staff at the Inland Revenue Department currently work on base erosion and profit shifting, to address multinational tax avoidance?

Hon MICHAEL WOODHOUSE: I do not have that specific number to hand, but I would be very happy to get it to the member if he wanted to put that question down in writing.

James Shaw: Then will he introduce new law, like Australia has recently, to better police multinationals to require greater transparency and to collect a fair share of tax revenue from them?

Hon MICHAEL WOODHOUSE: The member is referring to laws that have been passed in both the UK and Australia on what is known as diverted profits tax, which disallow arrangements where foreign companies exploit permanent establishment rules and contrive tax advantage by having deductions that lack economic substance. I am getting some advice about that, but I am satisfied in the interim that we already have those sorts of rules in the Income Tax Act.

James Shaw: What does he have to say to New Zealanders and domestic businesses that are paying their fair share of taxes while international businesses that are operating in New Zealand can avoid them?

Hon MICHAEL WOODHOUSE: Putting aside that I do not absolutely agree with the second part of the question, I think all New Zealanders would agree that it is appropriate that everybody, regardless of their ownership, pay their fair share of tax on transactions that take place here in New Zealand. I am confident that we have good policies to enable that to occur and good resources deployed to check compliance with them, and where there are improvements that can be made, they will be.
Jobs—Actual and Forecast Job Growth

5. JACQUI DEAN (National—Waitaki) to the Minister for Tertiary Education, Skills and Employment: What recent reports has he received on actual and forecast job growth?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): Today the Ministry of Business, Innovation and Employment released its short-term employment forecast for 2016-19. It predicts 148,000 additional new jobs will be created over the next 3 years, through employment growth of an average of 2.1 percent annually over that period. This is broadly consistent with the recent forecast by the Reserve Bank of 146,000 in the same period. This strong forecast builds off the latest household labour force survey, which showed 175,000 additional jobs were created over the last 3 years. It is encouraging to see robust job growth set to continue across the country. It shows that the work the Government is doing to maintain a strong and stable macroeconomic framework, and develop the microeconomic with the Business Growth Agenda, is delivering growth that will have positive effects.

Jacqui Dean: Where is growth expected?

Hon STEVEN JOYCE: Job growth is expected to be widespread, with employment growth rates forecast to be highest in the South Island, particularly in Marlborough, the West Coast, and Otago, over the next 3-year period. In terms of net job numbers, Auckland and Canterbury will add the most workers respectively by 2019. Across industries, the strongest job growth over the 3 years is expected in construction, hospitality, wholesale and retail trade, and business services. Although much of the employment growth over the next 3 years will be in highly skilled occupations, opportunities for lower-skilled workers are forecast to account for around 30 percent of that growth.

Jacqui Dean: What reports has he seen on approaches that would halt job growth?

Hon STEVEN JOYCE: I have recently seen a number of reports that would remove incentives to work by significantly increasing personal tax rates. I have even recently seen some recommendations by various international commentators for some sort of universal basic income in New Zealand. It is a very 1970s approach that would remove the linkages between work and income and encourage people not to work. This would have a negative effect on employment growth. It is also a little ironic to note this recommendation is coming from international experts visiting New Zealand, as New Zealand has the third highest rate of employment and the third highest rate of labour market participation in the OECD, so you would think perhaps they might come here to see what we have actually been doing that could be right.
District Health Boards—Funding

6. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Health: Has the district health boards’ projected deficit for the end of this financial year increased or decreased against what was planned according to advice he received in March?

Hon Dr JONATHAN COLEMAN (Minister of Health): The projected level of deficit for district health boards for this financial year is now forecast to reduce to $46 million—that is $3 million more than the last forecast. However, do not forget that in 2008 the deficits were $155 million, last year they were $66 million, and this year they will be smaller again. Only National can deliver more services while reducing district health boards’ deficits. [Interruption]

Mr SPEAKER: Order! I have not called the member yet. I am just waiting for some silence so that the question can be heard.

Hon Annette King: Thank you, Mr Speaker.

Mr SPEAKER: My pleasure.

Hon Annette King: What is driving up district health boards’ deficits month on month, now with a predicted end-of-year deficit of $43 million, against the budgeted $19 million and against his assurances that district health boards have sufficient funding to balance their books?

Hon Dr JONATHAN COLEMAN: A lot of it is to do with personnel costs, but the wider picture is inherited deficits of $156 million, coming down by $20 million compared with last year, and they will be lower again next year.

Hon Annette King: Is he telling seven district health boards—which, according to the latest reports, have deficits driven by more patients requiring services than they are funded for—that they should be turning patients away regardless of pain and disability?


Hon Annette King: Is the reason that the Director-General of Health has been allowed to sit on the final report on the home support package since August last year that there is no funding to implement the report’s recommendations and that it would further drive up district health boards’ deficits?


Hon Annette King: Why is he allowing district health boards to underemploy medical, allied health, and support staff by almost 700 full-time equivalents, according to the latest end-of-year results, and will that not affect patient safety?


Hon Annette King: I seek leave to table a report that I received under an Official Information Act request on 1 March, dated 31 January, called “District health board sector financial performance for the year ended 31 January 2016”.

Mr SPEAKER: I will put the leave. Leave is sought to table that particular document, sourced under the Official Information Act. Is there any objection? There is none.

Document, by leave, laid on the Table of the House.

Hon Dr JONATHAN COLEMAN: I seek leave to table a Ministry of Health document dated 29 March showing the district health boards’ deficit blowout under Labour.

Mr SPEAKER: No, if members want that information, it has been given in the answer that the member gave. I do not see any need to table it further.
Child Poverty—Child Hardship Package

7. ALFRED NGARO (National) to the Minister for Social Development: How will families in low-income households be better off due to the child hardship package coming into effect on 1 April?

Hon ANNE TOLLEY (Minister for Social Development): On 1 April the child hardship package comes into effect, meaning that benefit rates for families with children will increase by $25 a week per family—the first real increase in 43 years. The package will also increase Working for Families rates by $12.50 per week for low-income families and by $24.50 per week for the very lowest-income families. These changes will help more than half a million New Zealand children and will lift incomes for over 100,000 families with children in benefit-dependent homes.

Alfred Ngaro: How will the child hardship package help parents into work?

Hon ANNE TOLLEY: This Government believes that work is the best route out of poverty, and we are focused on helping those on a benefit into employment. The package will require sole parents on a benefit to be available for part-time work once their youngest child turns 3. Additionally, all sole parents and partners with part-time work obligations will be expected to find work for 20 hours a week, rather than 15 hours as before. To balance the increased work obligations, childcare assistance will also increase from $4 an hour to $5 an hour for very low-income families.
Freshwater Management—Water Quality of Rivers and Lakes

8. CATHERINE DELAHUNTY (Green) to the Minister for the Environment: Will he support the request made to Parliament today, by over 12,000 New Zealanders, to legislate “swimmable” as the minimum standard for our freshwater lakes, rivers and streams in New Zealand?

Hon Dr NICK SMITH (Minister for the Environment): It is Government policy to improve water quality and to make more areas suitable for swimming, and more often. However, a legislative requirement for all water bodies to be swimmable all of the time is not realistic, nor achievable. Most rivers breach swimming standards during high rainfall events because of pollutants introduced during high flows. Preventing this occurring both in urban and rural areas would come at an extraordinary cost when, actually, most people, sensibly, do not swim at those times. We also have water bodies that have significant bird populations, where the only way to make them swimmable would be to cull the birdlife. Communities need to make choices on each water body where they would want those bodies to be swimmable and where they would want to have birds available for birdlife. The third constraint is that, of the 425,000 kilometres of rivers and streams, only about 11 percent physically are able to be swum in, and it would cost billions and billions of dollars to make some of those streams swimmable, when nobody ever has swum there or ever would wish to swim there.

Catherine Delahunty: Why is it not possible to regulate a nationwide minimum standard of swimmable rivers by simply exempting fresh water contaminated by natural phenomena such as volcanic ash and birds, or during high flood events?

Hon Dr NICK SMITH: The first point I would make is this is the first Government in New Zealand history to set down national policy and standards for freshwater bodies across New Zealand, and I do find it a bit rich that members opposite who did nothing for decades now challenge this Government’s very comprehensive programme around fresh water. In respect of freshwater bodies, there are examples where it is birdlife and sometimes it is volcanic issues, but there is also the very practical issue in most of our urban areas where we have small streams that nobody swims in where it literally would cost billions to get the water quality up to that level, and we are not about spending billions of dollars of New Zealand ratepayers’ money in areas where people would not, practically, swim.

Catherine Delahunty: Given the millions we are spending cleaning up Aotearoa’s polluted rivers, does he concede it is cheaper in the long run to establish a minimum swimmable standard for rivers before they get polluted?

Hon Dr NICK SMITH: Absolutely we need to put standards in place to ensure that water quality is both maintained and improved, and that is exactly what the national policy statement that was introduced by my colleague Amy Adams back in 2012 did. Furthermore, what this Government is doing is actually requiring that no funding will be available from the Government unless those regional councils have put in the minimum standards to prevent ongoing pollution. I would finally note that over the last 25 years the amount of pollution from point source—factories, dairy sheds, council municipal systems—has actually reduced by about 90 percent. The more complex challenge we have is how we deal with diffuse pollution, and that is something that tools like OVERSEER, and others that the Government is developing, is where we need to go forward.

Joanne Hayes: How does this Government’s investment in freshwater improvements compare with those of previous Governments, and what specific progress has been achieved in improving water quality?

Hon Dr NICK SMITH: This Government has spent $115 million specifically on water quality improvements over the last 7 years. Over the previous 7 years $20 million was spent,i.e., we are spending more than five times as much on improving freshwater quality. Some of the results that I would make would be Lake Rotoiti in the North Island. It was so toxic last decade that you could not swim there. You literally had to wear gloves to go fishing in Lake Rotoiti. Water quality in Lake Rotoiti is now better than it has been for decades and it is swimmable. Another example—

Mr SPEAKER: Order! The answers are just far too long.

Catherine Delahunty: When will he set a national standard for water quality that will make it safe for our mokopuna to put their heads under the water again?

Hon Dr NICK SMITH: I would point out an example like the Manawatū River, which is actually one of our rivers that has real water quality problems, where we have invested over $5 million, where next month I will be opening a new wastewater treatment system that has been partly funded by the Government, and where my colleagues Jono Naylor and Ian McKelvie went for a dip—in an area where for the last 30 years you could not safely swim. It shows the progress that we are making on improving freshwater quality.

Hon David Parker: Does his national policy statement on freshwater quality allow rivers that are currently clean enough to swim in at normal flows to be made dirtier so that New Zealanders cannot swim in them safely, so long as they are still wadeable and boatable?

Hon Dr NICK SMITH: No, because the national policy statement requires all freshwater bodies to be at least maintained or improved. What it further requires is that every regional council engage with its community on improving freshwater quality. I challenge Mr Parker and say, actually, that the issue of water quality deteriorating was far worse in the 9 years in which he was a Minister and did nothing, rather than the progress that this Government is positively making.
Income Levels—Disposable Income

9. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Has real gross national disposable income per capita dropped in percentage terms over the last year?

Hon BILL ENGLISH (Minister of Finance): No.

Grant Robertson: Why, then, did Mr English, the Minister, admit on Radio New Zealand last week that incomes are dropping despite GDP growth?

Hon BILL ENGLISH: The member is misrepresenting that discussion. The fact is that in a year where dairy income has dropped a long way, so incomes in a certain portion of the population—that is, dairy farming—dropped a long way, it is possible that across the country, on average, income has dropped a little bit. But that is not wages, and it turns out that if that is what I said, I was wrong.

Grant Robertson: I will give you an easier one, Bill. Is it correct that GDP per capita over the last year has grown at less than half of 1 percent?

Hon BILL ENGLISH: I do not have that information with me. But if the member is trying to imply that households are not getting ahead, he is wrong, because wages and salaries income is rising substantially faster than inflation at 2 to 3 percent when inflation is about 0.1 percent. In the farming community incomes are down sharply.

Grant Robertson: See whether a picture helps, Bill.

Mr SPEAKER: Order! We do not need the introduction. When the member rises to his feet to ask the supplementary question, just ask it.

Grant Robertson: Thank you, Mr Speaker. Why is he satisfied with per person growth that is far weaker than Australia, the UK, the US, Japan, and many other countries?

Hon BILL ENGLISH: Part of the key to this Government’s success is relentless dissatisfaction. But the member needs to bear in mind that he has picked the year that has had the biggest drop in national income for decades and the sharpest rise in population. So it is not surprising that per capita incomes in that year may not have risen as fast as in other years.

Grant Robertson: So why is he claiming success for the economy when, actually, the growth comes from just increasing the number of people in New Zealand rather than increasing productivity?

Hon BILL ENGLISH: There he goes again. The member is back on the notion that if you take out all the things that are growing, then the economy is not growing. That is true; that would be correct. If you take out the fast growth in immigration—

Hon Steven Joyce: Tourism.

Hon BILL ENGLISH: —the fast growth in tourism—

Hon Steven Joyce: Education.

Hon BILL ENGLISH: —the fast growth in education—

Hon Steven Joyce: The wine industry.

Hon BILL ENGLISH: —the fast growth in the wine industry—

Hon Steven Joyce: ICT.

Hon BILL ENGLISH: —the fast growth in ICT—

Hon Steven Joyce: Immigration—

Hon BILL ENGLISH: —well, no, that is enough—then the economy is not growing.

Grant Robertson: Is he aware that per capita growth over the last year was actually 0.3 percent—less than half of 1 percent—and how can he be satisfied with an economy that is not showing substantial productivity growth and is only growing because of population increase?

Hon BILL ENGLISH: The Government’s view about productivity is pretty straightforward: in the long run, that is what matters the most. The aspect of productivity growth in the economy that we have the most control over is Government services: 70 percent of all modern economies are services. Government is over half of that, and that is why we are working so hard to improve the productivity of Government services. We are getting better results for the same or less money, and in the long run that will certainly boost productivity in the New Zealand economy.

10. DARROCH BALL (NZ First) to the Prime Minister: Does he have confidence in all his Ministers?

Hon BILL ENGLISH (Acting Prime Minister): Yes.

Darroch Ball: How can he have confidence in his Ministers when, in this term alone so far, there have been more than 100 answers to written questions from just Ministry of Social Development and Housing New Zealand Ministers stating that they do not centrally collate the data asked for, when, in those cases, responsible ministerial management would clearly be impossible without doing so?

Hon BILL ENGLISH: The Ministers answer the questions asked. In my experience, the quality of those questions is variable, although I must say that the New Zealand First questions are much better than the Labour Party questions.

Darroch Ball: How can he have confidence in the Minister Responsible for HNZC when his replies to written questions revealed, for example, that Housing New Zealand does not centrally collate data on areas such as the number of State homes needing insulation or the number of police checks requested by Housing New Zealand?

Hon BILL ENGLISH: The Prime Minister maintains his confidence in the Minister in charge of Housing New Zealand, which is me. I am not surprised that there are some things the member has asked from Housing New Zealand that it does not have. It has been a longstanding Government monopoly, which did not really have to do anything in particular that well. As we found as we have come to sell some of those State houses to other buyers, they are slightly surprised at how little the Government knows about the state of its own assets.

Darroch Ball: How can he have confidence in the Minister for Social Housing when her replies to multiple written questions revealed, for example, that Housing New Zealand does not centrally record data on areas such as the availability of emergency housing or how many expensive tests have been conducted on State houses?

Hon BILL ENGLISH: The member can address his question to the Minister for Social Housing, but emergency housing is a much broader issue than the obligation of Housing New Zealand these days. The Ministry of Social Development has fundamentally had responsibility for it. It is, for the first time in decades, having a comprehensive discussion with all the players in emergency housing, with a view to sharply lifting performance in dealing with those with the most serious housing needs.

Darroch Ball: How can he have confidence in the Minister for Social Development when her replies to multiple written questions revealed, for example, that the Ministry of Social Development does not centrally record data on areas such as Work and Income New Zealand office closures, the number of fraud investigations on employment programmes, outcomes of employment programmes, back payments made to beneficiaries, the amount of success fees paid to providers, or even the number of beneficiaries securing employment facilitated by Work and Income New Zealand?

Hon BILL ENGLISH: The Minister for Social Development is doing an excellent job of filling the gaps, some of which the member has accurately pointed to. That is, when Government agencies provide a service we now expect them to know whom they provided that service to and what impact it had on the life of the recipient of the service. I would have to say that it is still regarded as a relatively novel concept in public services, but the Minister for Social Development and the Minister for Social Housing are doing an excellent job of filling in these longstanding gaps.

Darroch Ball: I seek leave to table a document prepared by the Parliamentary Library that lists just a few—or a small proportion—of those questions that are answered with: “We do not centrally collate that data.”

Mr SPEAKER: Order! For all written questions the answers are then published if the members want them.

Darroch Ball: I raise a point of order, Mr Speaker. This is a document that is collated by the library; it is not those answers—

Mr SPEAKER: Order! I have pointed out to the House on numerous occasions that the point of tabling a document is to give further information to members; it is not about making political—[Interruption]. Order! Darroch Ball has a very bad habit when anybody is giving an answer to the member—and now when I am on my feet—of continuing to interject. The point of putting leave is to further inform members. If members want to go and look up that information, it is fully published and available.
Housing, Auckland—Affordability

11. PHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and Housing: Does he think home ownership in Auckland is affordable given it now reportedly takes nearly half the income of a typical first home buyer to buy a lower-end home?

Hon Dr NICK SMITH (Minister for Building and Housing): I think the member has made a mistake with the question, because the median household income in Auckland is currently $82,000, and I do not think anybody expects to be able to buy a house for $41,000. House prices have never been half of people’s incomes—at no time in New Zealand history—and are never likely to be. Perhaps it is just one of those others, like a universal guaranteed income, on “Planet Labour”.

Phil Twyford: Is rapidly declining home affordability the reason that Barfoot and Thompson recently reported that more than one-third of young Aucklanders think that they have no chance of owning their own home; if not, why does he think they are losing hope after 8 years of his Government?

Hon Dr NICK SMITH: There are two independent measures of housing affordability. The first of those is the AMP360 Home Loan Affordability Report index and the other is produced by Massey University. Both of those indexes actually show that housing affordability not just in Auckland but in New Zealand is more affordable now than it was in 2008—[Interruption] Absolutely true. Let me give the numbers. In 2008 it took 101 percent of a person’s average income in Auckland to service a mortgage. Today that figure is 87 percent. I would also point out that, in respect of Auckland, the increase in housing supply and the reduction in interest rates have actually been improving the issue over the last 6 months.

Phil Twyford: How can he claim that Auckland housing is more affordable now when it takes 47.9 percent of the average first-home buyers income to service a mortgage—Dr Smith—up nearly 10 percent of their income on the 38.9 percent that it took when his Government took office?

Hon Dr NICK SMITH: I have the exact figures from the index and they show that in 2008—when, remember, interest rates were 101 percent, and let us remember we had house price increases—

Iain Lees-Galloway: 101 percent!

Hon Dr NICK SMITH: —when the index was 101 percent and interest rates were double what they are now, and remember when Labour was in office we had Auckland house prices increase by 27 percent in 1 year, such that both the Massey University index and the AMP360 index show that housing affordability in Auckland is actually more affordable now than what it was in 2008.

David Seymour: What would the Massey index show if interest rates returned to 2008 levels?

Hon Dr NICK SMITH: Interest rates were an average of 10.6 percent in 2008. They are currently at the lowest levels in 50 years, and as a consequence the cost for the average Auckland household of interest rates returning to the level they were under the Labour administration would be a doubling of the housing costs for every one of those households. That is why interest rates and keeping them low for longer are pivotal to improving New Zealanders’ chances of being able to own and buy their own home.

Phil Twyford: What will he do to address the housing crisis given that his Crown land policy has come up with less than 100 hectares of land, and still has not built any homes; the Auckland Unitary Plan is in strife; his housing accord targets are failing to meet their targets and are about to expire; and Auckland house prices are already rebounding only a few months after the Reserve Bank loan-to-value ratio changes and the brightline test?

Hon Dr NICK SMITH: I remember this member in this House saying a year ago that house prices by March 2016 would be over a million dollars. Well, he is out by a quarter of a million—[Interruption] He is out by a quarter of a million. The member says that there have been no houses that have been built though the Crown land programme. I would love to take him to some of those gorgeous homes that I opened last week on that programme that have been successful. I could take the member to Weymouth, I could take the member to Hobsonville, because the truth is that more new houses are being built in Auckland for 10 years and more of them are in an affordable price range because of the initiatives of this Government.

Phil Twyford: Does he agree with the Prime Minister, who, according to the New Zealand Herald is “frankly unapologetic about the massive increase in Auckland residential property values, which has resulted in many established Aucklanders becoming relatively rich, but younger people being locked out of the market.”?

Hon Dr NICK SMITH: I do agree with the Prime Minister that we do not want to be at the top of the table that Phil Twyford buys up to, because the table that he refers to, comparing international housing affordability, has Greece house prices being the most affordable—and house prices in Spain have actually come down quite a lot. I accept that if we had some of the loopy policies that members opposite suggest, our economy would be like Greece and our house prices would be like Greece’s. This Government is about actually having a successful economy, having a growing number of houses—

Mr SPEAKER: Order! I have heard plenty.

12. STUART SMITH (National—Kaikōura) to the Minister for Primary Industries: What recent announcements has he made regarding irrigation funding in Marlborough?

Hon NATHAN GUY (Minister for Primary Industries): Recently I announced new funding of $895,000 from the Irrigation Acceleration Fund for the Flaxbourne Community Irrigation Scheme in Marlborough. Water from this project is likely to be used for viticulture and arable crops, demonstrating that irrigation is about much more than just dairy farming. Providing a reliable water supply for growers is especially important in Marlborough, given the serious drought the region has suffered over the last 18 months. The scheme will source river water at peak-flow times for storage, and irrigate 2,200 hectares initially.

Stuart Smith: How will the scheme help generate economic growth for the region?

Hon NATHAN GUY: A very good question. A reliable water supply for growers has major potential to boost regional growth, creating jobs and growing our overall exports. As the local member knows, this project has the potential to boost Marlborough’s economy by around $15 million per year. We know that viticulture is a big employer and has significantly higher annual turnover than current dryland pasture uses. Illustrating the potential of this scheme is one grower who said he has just 3 percent of his land currently under irrigation, but with this land accounting for 40 percent of his revenue.

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