Questions & Answers – May 4

by Desk Editor on Thursday, May 5, 2016 — 1:53 PM

1. BRETT HUDSON (National) to the Minister of Finance: What reports has he received on the New Zealand economy?

Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister of Finance: This morning Statistics New Zealand released its latest data on employment and wages in New Zealand. The report showed strong employment growth in the March quarter, with 28,000 more jobs added to the New Zealand economy. Since Treasury’s latest forecasts in December we have seen 51,000 more jobs created over the 6-month period. This is 37,000 more than Treasury was expecting. This underlies the strong economic bounce-back we have seen since the slower growth period in the first half of the 2015 calendar year. Although job growth was strong in the quarter, higher labour force participation of 0.5 percent led to an increase in the unemployment rate from 5.4 to 5.7 percent.

Brett Hudson: What did the Statistics New Zealand report show about wage growth over the last year, and how does that compare to inflation of just 0.4 percent?

Hon STEVEN JOYCE: Average weekly wages are up 2.3 percent in the last year. Low inflation means that the vast majority of these increased wages goes into the pockets of New Zealand households, rather than being taken up with cost of living increases. In total, the average annual wage has increased by 24 percent since National came into office. Over the same time period inflation has been only 11 percent.

Brett Hudson: Given the high levels of labour force participation, how does New Zealand’s employment rate—the proportion of adults in work—compare with other OECD countries?

Hon STEVEN JOYCE: As I mentioned earlier, the slight increase in unemployment is being driven by more people participating in the labour force, and of course that is a good thing and retraces some of the decline we saw in the last year from the previous peak. This means that New Zealand’s employment rate—the proportion of all adults in work—continues to be the third-highest in the OECD, at 65.1 percent. That compares, by way of example, with 61 percent in Australia, 60 percent in the UK and in the US, and 52 percent across the European Union. I am also pleased to report that the participation rate of New Zealanders in the labour market is also the third-highest in the OECD.

Grant Robertson: How many more people are unemployed today, as compared with when this Government took office in 2008, according to the—

Rt Hon Winston Peters: 40,000.

Grant Robertson: —household labour force survey? Listen to him.

Hon STEVEN JOYCE: Well, I saw the member’s tweet, and he came up with a number—I do not have it exactly to hand, but I can inform him that the number of people employed in the New Zealand economy has gone up more than 200,000 since this Government came into office. That is 200,000, despite the global financial crisis, despite the Canterbury earthquakes—

Mr SPEAKER: Order! [Interruption] Order! That is not the question that was asked.

Grant Robertson: I raise a point of order, Mr Speaker. I did ask a very specific question, and I do not believe I got an answer.

Mr SPEAKER: No. The answer was given immediately, but the Minister did not have that figure to hand. But then he went on with something else.

Grant Robertson: I seek leave of the House to table the tweet that Mr Joyce referred to that I gave—

Mr SPEAKER: Order! No. Order!

Brett Hudson: How does New Zealand’s overall economic performance compare with other OECD countries?

Hon STEVEN JOYCE: We are well positioned, and our overall economic performance reflects the good performance in employment. Between December 2010 and December 2015 New Zealand’s GDP has grown 15.6 percent. During a time of significant upheaval in the global economy, 15.6 percent is solid growth and compares very well with other developed economies. In fact, across the 5-year period, it makes us the seventh-fastest growing economy in the whole OECD.

Grant Robertson: Was Radio New Zealand correct when it headlined its story today: “Unemployment rising at fastest pace in 11 years”?

Hon STEVEN JOYCE: No, I do not believe that it necessarily was. It has an interesting approach to its unemployment stories. Last quarter there were no stories saying that unemployment had dropped at the fastest rate for roughly forever, but it managed to pull it out today, which suggests that it had gone up—which only lends credence to the unfortunate perception of Radio New Zealand sometimes being known as “Radio Labour”.

Hon Members: Oh!

Mr SPEAKER: Order! [Interruption] Order! [Interruption] Mr Cunliffe, I am on my feet.

David Seymour: What has been the average growth in labour productivity over the past 5 years, and how—

Mr SPEAKER: Order! I could not hear the question because of a very loud interjection to my left. Would the member please start the question again.

David Seymour: What has been the average growth in labour productivity over the past 5 years, and how does that compare to our OECD peers?

Mr SPEAKER: Either of those two supplementary questions.

Hon STEVEN JOYCE: I do not have the exact productivity numbers to hand, but it would not surprise me if it was still slightly slower than the average. But I can report to the member that as New Zealand wages are growing significantly faster than inflation that would suggest that employers are seeing the productivity of New Zealand employees as a positive change over the last 5 years.

Prime Minister—Statements

2. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes, and I am particularly pleased to stand by my statement earlier today that this Government has increased funding for Pharmac to $850 million a year, an increase of $200 million since 2008.

Andrew Little: Does he stand by his statement that “I’m open and talk to Koru lounge members all the time.”?

Rt Hon JOHN KEY: I do not think I actually said the last part of that. I said I am in the Koru lounge and I talk to people. I did not say I talk to Koru lounge members.

Andrew Little: In his travels through Koru lounges, has he talked to Tracey Alan, a terminally ill woman who now has to choose between heating her rental house or buying food?

Rt Hon JOHN KEY: No, I have not. But what I would say to her is that this Government is supporting her and a great many people like her in so many different ways, including insulating 320,000 homes and ensuring another 180,000 homes will be insulated in the next 3 years. If she is on any sort of benefit then she may well have benefited from the increases this Government has made. She certainly benefited, I would have said, from the extra money going into health under this Government, and she may well benefit from new drugs that are being supported by Pharmac today.

Andrew Little: Putting aside the fact that drugs are not normally a source of heat in households, how many of the 42,000 kids hospitalised each year because of cold, damp, mouldy homes has he met in Koru lounges, or elsewhere, recently?

Rt Hon JOHN KEY: I do not have that number. The member, if he wants an answer, would actually have to ask the Minister for Building and Housing, and, I suggest, put that down in writing. But what I would say is “A lot less.” because of the 320,000 homes that have been insulated under my Government’s watch.

Andrew Little: What is his response to Children’s Commissioner Russell Wills, who says that his Government’s rental standards are “shameful” and “a wasted opportunity and a broken promise to our children that will do little for children living in cold, damp, mouldy housing.”?

Rt Hon JOHN KEY: What I would say is, firstly, this Government has insulated 320,000 homes, and it has a further 180,000 that will be insulated. I would say this Government has increased benefits for the first time in 43 years, which will assist people to pay for the heating that they have. This Government has created 200,000 jobs in the last 8 years, which will allow more people to have employment to pay for their heating. What I will say is I will not do what that member is suggesting, which is put up the very rents of the people he claims he is trying to support.

Andrew Little: What is his response to Dr Kimberley O’Sullivan, whose new study shows that requiring 2008 insulation standards, rather than the 1978 standards promoted by his Minister for Building and Housing, would keep thousands of kids out of hospital each year?

Rt Hon JOHN KEY: Again, it is a very technical question, which the member really needs to ask of the Minister for Building and Housing, because I have not made a statement in that area. But the Minister for Building and Housing advises me that the costs outweighed the benefits.

Andrew Little: Does he agree with Nick Smith that the costs of modern insulation and heating standards are not worth the benefits—[Interruption] Listen, Nick—[Interruption]

Mr SPEAKER: Order! If the member the Hon Dr Nick Smith continues to interject and cause disruption when the question is being asked, I will be asking him to leave. Would the member please start the question again.

Andrew Little: Does he agree with Nick Smith that the costs of modern insulation and heating standards are not worth the benefits, given that the benefits are preventing Kiwi kids from getting sick and from dying?

Rt Hon JOHN KEY: I agree with Nick Smith in the context of the statements he would have been making. But I say this: the member gets up as if his previous Government had any kind of track record when it came to insulating and warming up homes; it was a disgrace. There were 50,000 homes that would have been insulated in the entire 9 years. In fact, that number is being generous. And, actually, it will be 500,000 on our Government’s watch.

Darroch Ball: Does he still stand by his recent statement in regard to employment that “We have strong results for young people.”, given this Government has now produced an increase of 8,500 unemployed young people and a “neets” rate that includes the highest quarterly increase of unemployed young men since records began?

Rt Hon JOHN KEY: I do stand by that statement. I stand by that statement because under my Government’s watch 200,000 jobs have been increased. You have seen that with migration numbers of how many people are coming back. The overall “neets” rate has been increasing dramatically under this Government, because people are either in work, in training, or in education.

Rt Hon Winston Peters: On his statement regarding following the OED on corporate tax, why will his Government not take real action on international corporates, such as Facebook paying a lousy $43,000 in tax, Tegel a lousy 0.38 percent in tax, and Lockheed Martin a lousy $155,000 on revenue of $27 million; that is, Prime Minister, real action like the Australians took yesterday?

Rt Hon JOHN KEY: A couple of things: “On” is not the way to start a question and the “OED” is no longer a multilateral organisation; it is the OECD—

Rt Hon Winston Peters: Point of order.

Mr SPEAKER: Order! [Interruption] Order! [Interruption]

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. You are the judge of how a question should be put. You have the authority to make that decision, not some illiterate like the Prime Minister.

Mr SPEAKER: I am pleased that the member acknowledges that I am the judge of such issues, and on this occasion I am generously allowing the question, and now the Prime Minister can answer it.

Rt Hon JOHN KEY: I say to the member that if he hangs around long enough in question time today, he will be able to see just how good the Speaker is.

Mr SPEAKER: Order! [Interruption] Order! Would the Prime Minister please—[Interruption] Order! Would the Prime Minister now ask the question that was originally asked.

Rt Hon JOHN KEY: OK. OK, I will ask myself a question, then I will answer it. Are multinationals paying enough—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. With the greatest respect, question time goes like this: a member asks the question of a Minister. He does not start asking himself questions; otherwise, he should be sent off to the loony bin.

Mr SPEAKER: I could oblige, but it might not necessarily be the way the member wants. Does the Prime Minister want to complete his answer? Otherwise we are moving on to another question.

Rt Hon JOHN KEY: It is so far back that I am trying to remember. The Government’s view is that we are working with the OECD to make sure that multinationals pay their fair share of tax. I do not think there is too much debate they are paying what is legally required of them today, but because of a range of arrangements available to them our view is that there may well be better opportunities for New Zealand from a tax perspective, and we are working with the OECD on base minimisation for that reason.

Tax System—Multinational Corporations

3. JAMES SHAW (Co-Leader—Green) to the Minister of Revenue: Will he follow the lead of the Australian Government and introduce new measures in the upcoming Budget to ensure multinational corporations pay their fair share of tax?

Hon MICHAEL WOODHOUSE (Minister of Revenue): While the details of Australia’s measures are still being analysed, New Zealand does not need to wait for Budget 2016 to implement multinational tax avoidance initiatives, because we already have an ongoing base erosion and profit shifting programme. We have implemented a number of initiatives such as strengthening the thin capitalisation and non-resident withholding tax rules and introducing GST on cross-border services and intangibles. Our tax policy work programme includes a number of measures that are actively being developed and should be implemented within the next 12 months.

James Shaw: How many additional staff will the Inland Revenue Department (IRD) get to work on tax avoidance in this year’s Budget given that they currently do not have enough resources to work on reforming foreign trust regulation?

Hon MICHAEL WOODHOUSE: As to the second part of that question, it is not a matter of having enough resources. Tax policy is like drinking from a firehose: there is always more than we can do. Last year, in Budget 2015, we put a significant amount of resource into the IRD to do just this work and other domestic tax avoidance measures, and they are paying very strong dividends.

James Shaw: Does he stand by his statement on TV yesterday that when his office went to the IRD and said “Of your current programme of work, which projects would you drop in order to fit in a review of foreign trust regulation?”, it came back and said “None.”?

Hon MICHAEL WOODHOUSE: Yes, and in particular the prefacing comment to that, which was that the IRD has an obligation to make sure that its focus in on things that maintain and increase the New Zealand tax base. The foreign trust review would not have done that, and it was in that context that the previous Minister asked what it would be prepared to drop—those things that would enhance the New Zealand tax base—and it said “None.”

James Shaw: Does he stand by his statement “if you’re asking me if New Zealand is missing out somehow, I have seen no information to suggest that that is the case.” given that tax expert Professor Craig Elliffe estimates that New Zealand is losing a billion dollars a year from multinational tax avoidance?

Hon MICHAEL WOODHOUSE: Yes, I do, because I also then went on to say that we will be continuing to turn over every stone to ensure that anti-avoidance provisions are being followed, and working in concert with the OECD, they will be enhanced. As for Mr Elliffe’s estimate, it was simply that: a finger in the air with no foundation in reality.

James Shaw: I seek leave to table the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations report first published in 1979.

Mr SPEAKER: On the basis that it was some time ago, I will put the leave. Leave is sought to table that OECD report. Is there any objection to it being tabled? There is none. It can be tabled.

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

James Shaw: Given that the OECD has been working on addressing multinational tax avoidance since 1979, in what year does he expect it to complete its work and for New Zealand to start taking action?

Hon MICHAEL WOODHOUSE: I reject the implication in the question that New Zealand is not taking any action. As I say, tax policy work is an ongoing stream of work that we will continue to do. We are working very closely with the OECD, and I expect there to be much more to be done over the next 12 months.

James Shaw: Why is tax avoidance the one area where we are not trying to harmonise our regulations with Australia?

Hon MICHAEL WOODHOUSE: Well, the issue of harmony—I would reverse the comment. It is Australia that is now potentially out of step with the rest of the world by its announcement on the diverted profits tax regime. I have not seen any comments on Australia’s announcement, but when the United Kingdom did the same thing late last year, the OECD sent a directive for the Centre for Tax Policy and Administration saying that unilateral actions are not exactly in the sense of what the OECD is trying to do. Unilateral measures are not that great when you are negotiating a multilateral package.

James Shaw: What does he have to say to New Zealand businesses that will continue to pay their fair share of tax after Budget 2016 while multinational companies that are operating here will continue to be allowed to avoid it?

Hon MICHAEL WOODHOUSE: No taxpayer is allowed to illegally avoid the payment of their tax obligations. We are continuing to make sure that the transfer pricing rules, the thin cap rules, and other measures to avoid multilateral tax avoidance are being followed. But as the Minister of Finance repeatedly says, to the extent that these companies are not paying tax in New Zealand, they are not paying tax anywhere in the world. This is a global problem that requires a global solution.

Budget 2016—Vote Health

4. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Health: How many times has he met with the Minister of Finance, if any, over the past two months, for the purpose of discussing Vote Health funding for Budget 2016?

Hon Dr JONATHAN COLEMAN (Minister of Health): Many times, and those meetings today have resulted in it being a great day for New Zealand, with the pre-Budget announcement of a $39 million funding boost for Pharmac—the single biggest lift in medicines funding in our history. I would like to thank my Cabinet colleagues, particularly the Prime Minister and the Minister of Finance, for their strong support of this tremendously positive investment. Thank you for the question.

Hon Annette King: During those—

Rt Hon John Key: Take your best shot.

Hon Annette King: Who was that?

Rt Hon John Key: Me.

Mr SPEAKER: Order! [Interruption] Order! Even the Prime Minister should stop interjecting during question time.

Hon Annette King: During those meetings, did he try to convince the Minister of Finance to increase the Pharmac budget by $103 million a year, not the $39 million he announced today, in order to reverse the funding cuts in real terms to Pharmac’s budget based on Treasury’s model of calculation from 2011-12?


Hon Annette King: Why does he inflate the amount of funding for Pharmac’s budget by adding an $11 million that district health boards have to find in their 2016-17 budget, when district health boards have just published a deficit blowout of $46 million, and growing, against the $19 million he planned?

Hon Dr JONATHAN COLEMAN: Quite simply because last year the budget for Pharmac was $800 million. This year it will be $850 million. In regard to deficits, we were left with deficits of $160 million, and now they are at about $60 million and decreasing.

Hon Annette King: I raise a point of order, Mr Speaker. I asked about him inflating the budget from the district health boards’ $11 million.

Mr SPEAKER: Order! No, the question, in my mind—it is quite a lengthy question. It was addressed as to how he justified the increase in funding, and then there was a comment about district health board deficits, as well. The question has no doubt been addressed.

Hon Annette King: Why has he provided enough funding for seven of the 20 top-tier medicines, which, according to the chief executive of Pharmac, would have higher priority than any advanced melanoma drug?

Hon Dr JONATHAN COLEMAN: Sorry, just say that again? Sorry.

Mr SPEAKER: Order! I am going to get the member to repeat the question.

Hon Annette King: Why has he provided enough funding for only seven of the 20 top-tier priority drugs identified by Pharmac that, according to the chief executive, would have higher priority than an advanced melanoma drug?

Hon Dr JONATHAN COLEMAN: The reality is that at any one time Pharmac is considering about 50 different drugs, vaccines, and medical devices. This is the single biggest injection of funding into Pharmac ever—a lot better than that member ever managed—and I think this is a day when she should be joining in the celebrations, because, actually, a lot of people are very, very happy. We have just had a text through here from oncologist Dr Chris Jackson of Dunedin—it came through to Michael Woodhouse: “Congratulations to you and your Cabinet on allocating Pharmac extra dollars. Huge numbers of patients will benefit. A great move and a fantastic result.” So cheer up, Mrs King—everyone else is.

Hon Annette King: Is the—[Interruption]—come on Paula, give us a go here. This is my turn.

Mr SPEAKER: Order![Interruption] Order! And it is, so please proceed.

Hon Annette King: Is the $10 million a year for the next 4 years that he redirected from the district health boards to cover the blowout in costs in the Ministry of Health now to be given back to the district health boards to fund the $11 million that he wants them to stump up with to add to the pharmaceutical budget, or is it just a merry-go-round of money and a lot of jiggery-pokery?

Mr SPEAKER: Order! Two questions there; one can be answered.

Hon Dr JONATHAN COLEMAN: I think the member needs to take some advice from her leader, who says—and this is a report from Radio New Zealand: “I think we have a bit of an issue. Things about housing, health and education, we are just not getting cut-through on those sorts of issues.” So Mrs King, I suggest that you stop promising everything—

Mr SPEAKER: Order! [Interruption] Order! The answer is not going to help the order of the House.


5. SIMON O’CONNOR (National—Tāmaki) to the Minister of Health: Can he confirm that the Government is providing more New Zealanders with access to new medicines?

Hon Dr JONATHAN COLEMAN (Minister of Health): Yes. Widening access to medicines is a key priority for this Government, and today the Prime Minister and I announced that Pharmac would receive an extra $39 million in 2016-17 as part of this year’s Budget. This funding boost of $124 million over 4 years is in addition to the annual increase of $11 million to Pharmac from district health boards. Overall, we have increased Pharmac’s budget by $200 million since 2008, bringing it to a record $850 million for this Budget.

Simon O’Connor: What benefits will this increase in funding deliver?

Hon Dr JONATHAN COLEMAN: Pharmac has indicated that the $39 million announced today will allow it to fund seven new drugs, including an advanced melanoma drug, two hepatitis C treatments, a treatment for bronchiectasis in children, patches for menopausal women, a treatment for brain and neuroendocrine tumours, and a treatment for renal disease in children. Although a lot of the focus is on melanoma drugs, these are all important treatments. For example, 50,000 New Zealanders have hepatitis C, a serious disease that ends in liver cancer and liver failure for many. These drugs have a 90 percent cure rate with as little as 12 weeks’ treatment, and will add many, many years of productive living for these people.

Simon O’Connor: How does Pharmac deliver the best-possible health gains to New Zealanders?

Hon Dr JONATHAN COLEMAN: The Pharmac model is a world-class one and the Government stands by it. The model has come under pressure in the last few months as a range of people have called for direct funding of a particular pharmaceutical. However, what Pharmac has done is deliver a result with the highest efficacy, at the best price, for the greatest number of New Zealanders. Inevitably, the pipeline of new treatments will continue to grow, and there will be further decisions to be made. The current Pharmac model will deliver that.

Hon Annette King: Is the Minister guaranteeing that a melanoma drug will be funded as one of the seven drugs that can be funded from the $39 million?

Hon Dr JONATHAN COLEMAN: I am guaranteeing that the money is there to do that, and Pharmac has given a pretty good indication, as you well know.

Housing Affordability and Availability—Measurement

6. DAVID SEYMOUR (Leader—ACT) to the Minister for Building and Housing: Does he stand by his statement, “If you look at the Massey University Housing Affordability Index, independently produced by that university, actually housing affordability in Auckland and every other market in New Zealand is actually more affordable now than when National came to Government”; if so, what would the Massey University Housing Affordability Index rating be if interest rates returned to the same level as they were in 2008?

Denis O’Rourke: I raise a point of order, Mr Speaker. Standing Order 381 requires that questions must be concise. This question is 69 words long and is hardly concise. It should be ruled out of order.

Hon Christopher Finlayson: Point of order—

Mr SPEAKER: I will hear from the Hon Chris Finlayson.

Hon Christopher Finlayson: As acting Acting Leader of the House, I can advise you that it is the primary question. It draws on a quote, rather than a rambling supplementary question. [Interruption]

Mr SPEAKER: No, I do not need any assistance from either member. It is a primary question and, therefore—[Interruption] Order! Therefore, it is often longer than a permitted supplementary question. In this case the question contained a very long quote that the member obviously thought was necessary to make his point as he was asking the question. The question has been allowed and it has been accepted, and now it can be answered.

Hon Dr NICK SMITH (Minister for Building and Housing): Yes, it does show houses are more affordable now, both nationally and in Auckland, than they were in 2008. If interest rates return to 2008 levels of over 9 percent, it would put families with a mortgage under extreme pressure. That is why good economic management that keeps interest rates low for longer is absolutely critical for families and homeownership.

David Seymour: What control does the Minister for Building and Housing have over interest rates in New Zealand?

Hon Dr NICK SMITH: The Minister for Building and Housing does not have that much influence, but I do say that overall economic management has a huge impact. If Governments were to adopt the big-spending policies—every time that has occurred in history it has pushed interest rates up, it has made houses unaffordable, and it has impacted on things like inflation, and that is why there is a very real connection between good economic policy and good housing policy.

David Seymour: What control does the Minister for Building and Housing have over land supply and ultimately house prices in New Zealand?

Hon Dr NICK SMITH: The predominant Act that regulates land supply is the Resource Management Act, and there is no question that at the core of New Zealand’s housing affordability problems has been both the Resource Management Act and the way in which councils have narrowly restricted land supply. That is why we have seen the price of sections go up much more than the price of the built house and that is why parties that are committed to improving housing affordability will support reform of the Resource Management Act.

Phil Twyford: Does he agree with the author of the Massey Home Affordability Report, Dr Susan Flint-Hartle, who said that Auckland is one of the least affordable cities in the world, that the Government has not done nearly enough, and that the Minister’s comments about her report were “obscuring the real situation.”?

Hon Dr NICK SMITH: The member chooses to only partially quote what she said. [Interruption] She also said—

Mr SPEAKER: Order! If the member wants the question answered, he is going to have to get a little more cooperation from a couple of his colleagues.

Hon Dr NICK SMITH: The very same researcher said that I was factually accurate and that according to Massey University’s index housing in both Auckland and New Zealand is more affordable than when the members and colleagues of his party were in Government.

Alfred Ngaro: Are there other independent housing affordability indexes than that of Massey University; if so, what do they show?

Hon Dr NICK SMITH: The AMP360 index, which was previously known as the Roost index, has measured housing affordability since 2002. It measures the proportion of a person’s median income that would be required to service a mortgage for an average home. Nationally that index was at its very worst in 2008 at 83.4 percent. It is currently 59 percent—i.e. houses nationally are 24 percent more affordable than what they were in 2008. In terms of 2008—and for the record, I asked them to check it—the index was 101 percent in Auckland during 2008, and that is the worst it ever was after 9 years of a Labour Government.

David Seymour: Why was the Minister prepared to take the credit for falling interest rates, which he has conceded he cannot control, when the factors, such as supply, which he says he can control, have deteriorated over the period referred to in his quote?

Hon Dr NICK SMITH: I do accept the key element of housing that I do have responsibility for is supply. I note in the period that I have been the Minister house construction has gone from 13,000 a year to 27,000 a year. In fact, the housing build rate has increased more in the last 3 years than it has at any time in New Zealand history.

Student Achievement—Reports

7. DAVID BENNETT (National—Hamilton East) to the Minister of Education: What reports has she received that celebrate exceptional NCEA achievement?

Hon HEKIA PARATA (Minister of Education): Today I was pleased to join with the Prime Minister in presenting the top National Certificate of Educational Achievement (NCEA) scholars with their well-deserved awards. These awards recognise achievement at the highest overall level of academic excellence. Only about 3 percent of year 13 students studying each subject at level 3 are awarded scholarships. In particular, I would like to congratulate former Rutherford College student Oxana Repina on being awarded the Prime Minister’s Award for Academic Excellence. Oxana received eight New Zealand scholarships, including five Outstanding Scholarship awards and two Top Subject Scholar awards. Also, my colleague David Bennett MP has two outstanding scholars from his electorate: Te Paea Ngapo, who is a Top Subject Scholar award winner at Te Reo Rangatira; and Soumil Singh, who receives a Premier Award. I am sure the House would like to join in congratulating those outstanding young New Zealanders.

David Bennett: What is the progress of educational achievement under this Government?

Hon HEKIA PARATA: Provisional data show students are on track to surpass challenging educational targets almost 2 years ahead of schedule. It suggests that the number of 18-year-olds with NCEA level 2 or an equivalent qualification increased by 3.2 percentage points to 84.4 percent last year. When we took office in 2008 just 68 percent of 18-year-olds had NCEA level 2. The 24 percent increase in achievement means 7,600 more young New Zealanders are equipped to succeed this year than 7 years ago. These figures show more young New Zealanders than ever before are entering adulthood with the skills and qualifications they need to succeed.

Tracey Martin: What actions, if any, is she taking to ensure that the integrity of standards-based assessment is maintained while schools seek to attain her Government’s arbitrary achievement target of 85 percent passing NCEA level 2, particularly in those schools recording 100 percent pass rates?

Hon HEKIA PARATA: A number of reports, including from the Auditor-General, from the New Zealand Council for Educational Research, and from universities across New Zealand have been convened to look at the very points that the member is asking questions about, and I can make available a list of those reports for the member’s perusal. But in addition to that, the New Zealand Qualifications Authority every year moderates 100 assessment items to ensure that the very integrity that the member and I are concerned about is maintained.

Housing Affordability and Availability—Commentary

8. PHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and Housing: Does he stand by his reported statement that the housing crisis is a media beat-up?

Hon Dr NICK SMITH (Minister for Building and Housing): No, because the reports were inaccurate.

Phil Twyford: Which of the following ministerial descriptions of the housing crisis does he prefer: “over hyped by the media”, as he said this week; “a challenge”, as the Prime Minister has said; or “a top-tier issue”, as Simon Bridges called it?

Hon Dr NICK SMITH: The Government’s position is that it is not a crisis but that there is a challenge. New Zealand is doing so well that it is attracting New Zealanders home and an increasing number of people want to live in New Zealand, and as a consequence of that good-news story, we need to make sure that we build more houses. That is a key priority for the Government.

Phil Twyford: When the IMF said that New Zealand had the world’s second-fastest growth in house prices at the end of last year and Fitch Ratings said that New Zealand has the most unaffordable housing in the world, was that media hype?

Hon Dr NICK SMITH: I would note on the IMF chart—if that was to be the test—that the most affordable houses and the best places to live are Syria, Greece, and Spain. Actually, this Government’s ambition is not to be like any of those three countries.

Phil Twyford: When the Bay of Plenty Times reported that a 60-year-old woman faced living in her car because the caravan park where she has been living for the past 7 months is closing down, was that media hype?

Hon Dr NICK SMITH: I would remind that member that when we applied the special housing areas to the Bay of Plenty, he said that it was a waste of time and that I should focus on Auckland. Actually, that was a member who was not in favour of the measures that this Government is taking in regional New Zealand with programmes like HomeStart and the special housing areas, which actually recognise that this issue is about more than Auckland.

Phil Twyford: When the New Zealand Herald said that housing solutions “cannot be expected from a government that has been in office long enough to have considered them.” and that “The housing problem has reached the proportions that require fresh thinking from a government elected to do something about it.”, was that media hype?

Hon Dr NICK SMITH: I agree that there is more that the Government wishes to do in the housing area. That is why, on 1 April last year, we introduced the most generous support in a generation for first-home buyers.

Grant Robertson: It’s not working.

Hon Dr NICK SMITH: Well, actually, 12,000 Kiwis in the last 12 months have had a grant from this Government to support them into a house. If we look at the labour force figures out today, they show the biggest increase in the labour market of people working in house construction ever, with that number more than doubling, and, actually, this Government is making enormous progress in getting more houses built for Kiwi families.

Rt Hon John Key: Can the Minister give the House some idea of the initiatives undertaken by this Government in relation to housing and contrast it with those undertaken in the period from 1999 to 2008, when house prices doubled in Auckland?

Mr SPEAKER: The first part of the question is in order, around the housing initiatives.

Hon Dr NICK SMITH: I must notify the Speaker in advance that this will be a long answer. The first step this Government took was to remove depreciation for buildings, which affects the demand side of investment housing. The second step the Government took was the first phase of Resource Management Act reforms. The Government then introduced the HomeStart scheme—that is a $420 million investment. The Government has provided for increased housing standards, with 290,000 houses insulated. There is the ongoing work around—

Mr SPEAKER: Order! [Interruption] Order! The member will sit down.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. That answer is far too long and far too wrong. [Interruption]

Mr SPEAKER: I just need to deal with that point of order. On this occasion, the member is right. It was far too long, and I was moving to curtail it, but I will be the judge of the length of answers.

Rt Hon John Key: Notwithstanding the Minister’s inability to get all of the new initiatives out in one answer, would he describe that as fresh thinking?

Mr SPEAKER: Very quickly.

Hon Dr NICK SMITH: Yes, there is fresh thinking. It is interesting, Prime Minister, that when we introduced the housing accords and special housing areas, parties opposite, who today grizzle about Housing, vigorously opposed each of those measures to grow housing supply, and whether it is increasing apprenticeship numbers, whether it is in terms—

Mr SPEAKER: Order! [Interruption] Order! The member can take a slot in the general debate very, very shortly.

Irrigation—Impacts on Water Quality

9. EUGENIE SAGE (Green) to the Minister for Primary Industries: How does increasing the amount of irrigated land by 400,000 hectares in the next 15 years, as the Ministry for Primary Industries is considering, fit with the ministry’s goal of “sustainable resource use”, when irrigation and agricultural intensification cause declining water quality?

Hon NATHAN GUY (Minister for Primary Industries): Because any discharge from agricultural production must be consented by a regional council within the framework of national freshwater management that was established by this Government. Ultimately, the Ministry for Primary Industries and the Government believe that growing the economy and protecting the environment are not mutually exclusive. Not only does water storage offer farmers, growers, and some towns a reliable source of water; it also has environmental benefits such as more consistent river flows in the summer, and reduced pressure on ground water sources.

Eugenie Sage: When he said yesterday that irrigation storage is good for the environment, does he believe that the toxic algal mats in the Ōpihi River, downstream of the Ōpoua dam, and in other Canterbury rivers, are good environmental outcomes?

Hon NATHAN GUY: What I did say in the House last night is that we do not collect and store enough water. We store only about 2 percent of the water that falls in this country. In particular, in respect of the example that the member is referring to, the Ōpuha scheme, what she may not realise is that about 18 months ago, when that area was in a very prolonged drought, Fish and Game was actually out there rescuing fish from nearby rivers and releasing them in the Ōpihi River, which is fed by this significant water storage project.

Eugenie Sage: What is the Minister’s strategy for dealing with more frequent droughts expected in future when irrigation storage reservoirs, such as the Ōpuha Dam, are already running dry?

Hon NATHAN GUY: What a stupid question that is.

Mr SPEAKER: Order! [Interruption] Order! The Minister will stand and withdraw that remark, and then he will start the answer correctly.

Hon NATHAN GUY: I stand and withdraw that remark.

Mr SPEAKER: Now can we have the answer.

Hon NATHAN GUY: I am unsure whether the member has recently read the comments of the Environment Canterbury deputy chair, David Caygill. He had a very interesting op-ed in the local paper down there last week. I think it is worthwhile mentioning it, because what Mr Caygill said was irrigation is part of our overall strategy. It builds resilience to droughts and to climate change. It is even gradually improving soil quality. It is relieving pressure on groundwater—for example, the Selwyn-Waihora catchment. I thought you actually could not put it better than Mr Caygill has put it.

Eugenie Sage: Does the fact that the Sustainable Farming Fund has a budget of only $8.3 million this year compared with the hundreds of millions of dollars of Government funding available to irrigators show that his Government’s priorities are to promote more irrigation and more water use rather than encouraging sustainable farming?

Hon NATHAN GUY: We encourage both. The Ministry for Primary Industry’s view and my view is that we want to grow and we want to protect. Actually, we are investing in research and development so that our farmers and growers have the tools to address some of the environmental factors that they are having to address. So, actually, the member is saying on the one hand that we should not be investing in research and development, and on the other hand that we should not have any irrigation. Actually, in my view, we can have irrigation and grow the economy and our exports and jobs in the regions, and we can do more in the environmental space as well. That is why we are investing in research and development projects.

Education—Funding for Primary and Secondary Schools

10. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education: Does she stand by her statement that “schools have never been more well-funded than under this Government”; if so, why is the cost of primary and secondary education rising at almost 10 times the rate of inflation?

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. Yes, in the context it was made, which was: “Schools have never been more well-funded than under this Government at $10.8 billion.” The cost of primary and secondary education is not rising at almost 10 times the rate of inflation. The assertion made in the question relates to voluntary donations and the rise in private school fees. To provide accurate information for the member, Vote Education has increased by more than 31 percent since National came into Government.

Chris Hipkins: Why does she deny that funding for schools is dropping when the Ministry of Education’s own data on its website shows on the bottom line of this chart that I am holding up—that is that one down there—that the funding per student has dropped by $149 per student in the past year?

Hon HEKIA PARATA: We have dug out the particular table. I am very familiar with it, and the member will also know that below that bottom line it has eight caveats, but let me just go through it. Since last year the number of students has increased by 1 percent; Vote Education has increased over the year by approximately 5.5 percent. Some education funding is allocated on a per student basis; some is allocated on other bases. The table that the member is referring to tracks changes in spending that is allocated on a per student basis. It does not show what is happening with education expenditure overall. In addition, the table tracks changes in per student spending, not per student funding. That is an important distinction, because schools control the timing of some of that expenditure. That means the numbers show what schools are spending at a particular time of year, but not what they are funded to spend. When major building projects are involved, for instance, that can have quite an impact on the numbers, because the spending is not even. The picture is further complicated—

Mr SPEAKER: Order! I am going to have to get the answer brought to an end.

Hon HEKIA PARATA: Well, I just want to solve all the problems at once. The picture is further complicated by the fact that the table reports—[Interruption]—the member’s problems; the member’s problems—expenditure on a calendar year, while Government funding is allocated on a financial year, and it does not include all of the programmes we invest in that are not for every child but for different ones.

Chris Hipkins: So is she confirming, at the end of all of that, that the funding schools receive per student has declined?

Hon HEKIA PARATA: Well, absolutely not, because if student numbers have gone up by 1 percent but funding has gone up by 5.5 percent, then how can it be a drop? Emphatically, unassailably, no, there has been no drop.

Chris Hipkins: If the spending per student has dropped while the Government claims that the funding has been going up, then where are schools putting the money? Are they shoving it under the mattress for another day?

Hon HEKIA PARATA: That is why, with the House’s indulgence, I went through what the table—which the member is basing his concerns on—related to. So that particular table—at a particular point in time, dealing with three variables of funding, with 10 caveats—gave those particular sums. But, actually, the overall funding for education has gone up 31 percent since we came into Government, while student numbers, overall, have gone up 4 percent.

Chris Hipkins: Why did she claim that funding for school property had declined due to a drop-off in demand, as her office claimed yesterday; or is she denying that there are hundreds of schools around the country waiting for funding for property projects, some of which are urgent?

Hon HEKIA PARATA: Our investment in property has gone up 11.5 percent.

Tertiary Education—Confidence

11. TRACEY MARTIN (NZ First) to the Minister for Tertiary Education, Skills and Employment: Does he have confidence in the tertiary education sector?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): Overall yes, particularly as the over 730 tertiary education providers in this sector delivered something like 163,000 qualifications in 2014, up 31,000 on 2008, including 29,000 Bachelor’s degrees, up 4,500 on 2008. I am also confident that the monitoring agencies for the sector are now more robustly investigating any concerns than at any time in its history.

Tracey Martin: What action, if any, has his Government taken to remove fraudulent and corrupt education agents in countries such as India since this issue was raised in oral questions by New Zealand First in December 2015?

Hon STEVEN JOYCE: I cannot recall the details of that discussion in December 2015, but I am likely to have told the member that there have been a number of changes over the last few years. The most recent one has been the requirements for the International English Language Testing System in India. There has been significant work done to monitor the issues that are periodically raised in some of the countries that international students come from. That is an ongoing job, because there are always issues and there are always occasional education agents who do not behave themselves in dealing with New Zealand providers.

Tracey Martin: How confident is he, in light of the increase in tier one providers able to process visas, that all of the 85,000-plus international students granted residency since 2008 did so with legal documentation?

Hon STEVEN JOYCE: I am not sure that the member is correct. They do not get—

Ron Mark: Absolutely correct.

Hon STEVEN JOYCE: —granted residency. No, there is simply not a case where people get a student visa and it automatically gives them residency. In terms of processing applications, applications are processed under the close supervision of Immigration New Zealand. In terms of any details around those visas, she might like to put the question down to the Minister of Immigration.

Tracey Martin: How he can be confident in the tertiary education sector, when his office knows of at least one tertiary institution that had a list entitled “Need to upgrade to pass”, resulting in 18 international students being scaled from 32 percent fail to a 50 percent pass?

Hon STEVEN JOYCE: If the member would like to put that down in writing to me, I would be more than happy to take it up with—[Interruption]

Mr SPEAKER: Order! If you want to hear the answer, allow the Minister to do so. It was a very general first question that was asked. The Minister is attempting to address it and if he does not have that information, I think that on this occasion that is acceptable. Allow the Minister to complete his answer.

Hon STEVEN JOYCE: So, again, for the member, if she would like to put down that specific query to me in writing, I would be more than happy to address it. The New Zealand Qualifications Authority has, for example, at any time, around 30 to 40 investigations under way. If that is not one of them, if she supplies me with the information, then I would be more than happy to follow it up.

Tracey Martin: How can he have confidence in the tertiary education sector when some providers have instructed teaching staff to not officially record ongoing achievement data for international students, so that any changes needed to enable a final pass grade are not evident?

Hon STEVEN JOYCE: Again, the member is making some fairly gross generalisations and accusations. If she has specific concerns, then I invite her to provide the details of those concerns, so that they can be properly investigated. That is the process.

Tracey Martin: I seek leave to table an email to the Hon Steven Joyce’s office outlining this situation, with regard to a tertiary institution.

Mr SPEAKER: Order! [Interruption] Order! I just need to inform the House of the author of the email and the date.

Tracey Martin: The author of the email is a gentleman inside those tertiary providers—I would redact that. The date was the 12th of last month.

Mr SPEAKER: Leave is sought to table that particular email. Is there any objection? There is none, it can be tabled.

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

Tracey Martin: Does the Minister understand that any perception of fraud, corruption, and exploitation of international students will have long-term negative consequences for both those students and our country, and what is he doing about it?

Hon STEVEN JOYCE: Yes, I am probably acutely aware, as I have been the Minister in this area for some time. Although we have been developing and growing that industry, we have made a number of changes to the industry over that time. We have introduced, for example, education performance indicators; performance linked funding; audits by the Tertiary Education Commission; changes made to the Education Amendment Act, including the requirement that private training establishments that enrol international students must be signatories to a code of practice; the development of the external evaluation and review system; bringing the Institutes of Technology and Polytechnics of New Zealand under the monitoring of the New Zealand Qualifications Authority—a whole range of things. Those things result in a very robust process. If the member has particular concerns, I invite her to provide them.

Community Development—Funding for Leadership Groups

12. MAUREEN PUGH (National) to the Minister for the Community and Voluntary Sector: What recent announcements has she made regarding support for social enterprise and community leadership groups?

Hon JO GOODHEW (Minister for the Community and Voluntary Sector): Yesterday I announced the launch of the Community Leadership Fund – Hapori Whakatipu, which, translated, means “growing community capability”.

Rt Hon Winston Peters: Say that again.

Hon JO GOODHEW: This fund provides $500,000—that is $500,000—of contestable funding on an annual basis to community organisations with a nationwide focus whose role is to provide leadership and capability building across the social enterprise and community sectors. This new type of funding has support for social enterprise and community leadership organisations at its heart.

Maureen Pugh: How will the Community Leadership Fund assist our communities, in particular through social enterprise?

Hon JO GOODHEW: The new fund will bring sector leadership to the fore and give opportunities both to the national-level community organisations and also, for the first time, to social enterprise—a new but rapidly expanding sector in New Zealand. Social enterprise brings a commercial model to projects that would traditionally rely on Government funding or private donations. Social enterprise seeks to create a commercially viable business with an environmental or social goal as its driving force, growing jobs and opportunities for the communities it operates in. Applications for this fund will open later this month.

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