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15 June 2011
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Volume 673, Week 76 - Wednesday, 15 June 2011

[Volume:673;Page:19365]

Wednesday, 15 June 2011

Mr Speaker took the Chair at 2 p.m.

Prayers.

Questions to Ministers

Budget 2011—Early Childhood Education

1. HILARY CALVERT (ACT) to the Minister of Education: Does she stand by her statement that “early childhood education is a good investment for our young New Zealanders”; if so, why?

Hon ANNE TOLLEY (Minister of Education) : Yes, I do stand by that statement; because it is correct. Secondly, I think both the report that was produced recently by the Prime Minister’s Chief Science Advisor, Sir Peter Gluckman, and the report of the Taskforce on Early Childhood Education that was released last week show that all the evidence is that good-quality early childhood education benefits children right through their lives.

Hilary Calvert: What is her best estimate of likely increases in participation rates resulting from extra spending of $550 million in early childhood education?

Hon ANNE TOLLEY: The Ministry of Education’s estimate for children taking part in early childhood education in 2012, as against 2011, is an additional 8,200 full-time equivalent children. That is made up of hours and days. It is quite complex, but we estimate it is about 8,200.

Hon John Boscawen: I raise a point of order, Mr Speaker. The question was quite specific. My colleague asked the Minister what the participation rate was—in other words, the percentage of people participating. She did not her ask her about the absolute numbers. The Minister quoted an increase of 8,200 fulltime-equivalents, but the question was about the participation rate.

Hon Simon Power: Given the primary question’s width as it was set down, I think the Minister, in having the quantitative numbers at her fingertips, did extremely well to be able to answer the supplementary question, when it followed such a broad primary question.

Hon Trevor Mallard: If the member wanted to know the percentage participation changes, she should have asked about that.

Mr SPEAKER: I think both members have made perfectly fair points. I believe that given the primary question, the Minister’s answer was reasonable when asked about the increase.

Hilary Calvert: Why does the Government call this spending “a good investment”, when the previous increase in spending from $428 million to $1.17 billion between 2004 and 2009 saw participation rates increase by less than 1 percent?

Hon ANNE TOLLEY: Yes, that is exactly what happened under the previous Government. It trebled the funding, and the number of children turning up at preschool increased by less than 1 percent. We have tried over the last couple of Budgets to actually put into the early childhood sector some more targeted funding, to lift the participation of those groups that were missing out. But we have not been satisfied with that, and that is why I appointed the Taskforce on Early Childhood Education, which reported last week and has made suggestions about substantial changes to the funding system that would allow much better targeting of that funding.

Louise Upston: How much did this Government invest in early childhood education in Budget 2011?

Hon ANNE TOLLEY: This Government is investing another $555 million over the next 4 years. This year’s increase represents 11.5 percent more than was funded in early childhood education last year. I think that is an enormous contribution, and it shows this Government’s determination to make sure all New Zealand kids get a good start.

Hilary Calvert: Why does the Government call this spending a good investment, when the previous increase in spending, from $428 million to $1.17 billion, resulted in enrolment rates among Māori children actually falling?

Hon ANNE TOLLEY: As I said to the member before, we agree that the enormous increase in the funding of early childhood education did not result in many of the target groups that we know will benefit the most from good early childhood services actually being able to participate. That is why we appointed the task force, and that is why we are seriously looking at the recommendations of that task force. We have made some changes in the last two Budgets to enable us to better target those hard-to-reach communities.

Hilary Calvert: I seek leave to table a table from Stalled, which is a state of the nation report from the Salvation Army, showing Māori participation rates in early childhood education.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. [Interruption] I beg your pardon; there is objection. I apologise. There is objection.

Sue Moroney: Will she commit to continuing to fund 20 hours’ early childhood education, including all existing subsidies and fee controls, as she did prior to the last election, or will it be gone before mat time under a future National-ACT Government?

Hon ANNE TOLLEY: This Government, in fact, has increased the 20 hours.

Hon Trevor Mallard: How can you increase 20 hours?

Hon ANNE TOLLEY: Because we made it available to parent-led services like kōhanga and playcentre, which the previous Government refused to include in the 20 hours policy. We have no plans to make changes to the 20 hours policy at this stage. However, our election policy will be announced as part of the election campaign.

Sue Moroney: What proportion of GDP is spent on early childhood education as a result of Budget 2011, and how does that proportion compare with the 1 percent of GDP that Unicef recommends be spent on early childhood education?

Hon ANNE TOLLEY: I understand that New Zealand spends about 0.78 percent of Government spending on early childhood education, which is comparable to the OECD average of 0.7 percent. The 1 percent recommendation was set by Unicef in 2008, and it is a pretty arbitrary sort of benchmark. However, the interesting thing is that to reach 1 percent would actually cost another half a billion dollars. I do not know about that member, but this Government does not have money trees sitting in its garden. I ask that member, if that is her party’s policy, to take it to the election.

Tax System Changes—Effect on New Zealanders

2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that “the vast majority of New Zealanders are now better off, even after the GST increase”; if so, which New Zealanders are worse off?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes, the Prime Minister stands by his full quote, made in October last year, which is “Most of you will have noticed a boost in your pay packets since the 1 October tax cuts. The vast majority of New Zealanders are now better off, even after the GST increase.” That was of course referring to the income tax / GST switch that happened on 1 October 2010. To answer the second part of the member’s question, there were some people not fully compensated by the tax changes. Those were people who were sheltering income in trusts, or otherwise earning income that was not fully taxed at the personal tax rates.

Hon Phil Goff: Is the Prime Minister saying that taking into account inflation and the level of tax cuts given to people on the medium or lower income, those people are now better off than they were before—taking account of both GST and inflation?

Hon BILL ENGLISH: Yes. The after-tax average wage has increased 7.1 percent over the previous year—considerably more than the increase in prices over that time. In fact, the real increase in the after-tax average wage over the last year has been 2.5 percent.

Hon Phil Goff: When he claims that the average wage has increased by 2.5 percent over the last year, what account does he take of the fact that for his income he would have got $1,000 a week extra in tax cuts, and the top 10 percent of wage earners got 40 percent of the tax cuts, thus distorting the real income earned by people across the board, and that lower-paid people, people on a median income or less, are actually worse off?

Hon BILL ENGLISH: The measure I am using is the one that has been used by this Parliament, in legislation, for 20 years to calculate the basis of New Zealand superannuation. If Labour members think that is wrong, then they should campaign among New Zealand’s pensioners to change the way that New Zealand superannuation is adjusted. The fact is that there has been a real increase of 2.5 percent in the average, ordinary-time, after-tax, weekly wage in the last 12 months.

Hon Phil Goff: Is he telling New Zealanders on the medium wage, or less than the medium wage, that they are wrong in believing that the cost of their food, their power, their rents, and their petrol have soared above any of the wage increases they have got, and that he actually knows better than them?

Hon BILL ENGLISH: I was just telling Parliament the facts about the averages. Of course, in individual circumstances many New Zealanders over the last 2 or 3 years have not had significant wage increases, or have had no significant wage increases at all. They are victims of the mismanagement of this economy by the previous Labour Government, when people thought they had sustainable jobs, but the jobs were actually based on borrowed money and excessive Government spending. We are working very hard to replace those unsustainable jobs and times of no wage increases, with the benefits of a strong, growing economy, and we are making some progress.

Rahui Katene: Is he aware that over the last month the price of fruit and vegetables has risen another 1.6 percent, and does he agree that to add $6 million to the $300 million - plus that the Government is already borrowing per week, in order to take GST off healthy food, would leave every New Zealander better off; if not, why?

Hon BILL ENGLISH: Although it is true that food prices do rise in some months, they also fall in others. For instance, over the last 6 or 7 months the price of fruit and vegetables has actually fallen in total. That is good for household budgets. I am not sure New Zealanders are any healthier as a result. The second thing is that every dollar we add to our already fast-rising debt will need to be repaid with interest.

Hon Phil Goff: Did the cut in taxes for a person on the medium wage, which was about $14 a week, adequately cover the cost of filling up their car with petrol, cover the average rental increase of $23 a week in Auckland, and cover the increase in food prices, which went up by 7.4 percent averaged over the year, just to name a few of the costs those families are facing?

Hon BILL ENGLISH: No family will be on $14 an hour, and the member should look at the family support system—

Hon Phil Goff: $14 a week.

Hon BILL ENGLISH: It is $14 a week. The fact is that New Zealand families who are on low incomes benefit from Working for Families, from the accommodation supplement where that is required, and from subsidies on early childhood education. The Government has increased all of those subsidies for those families despite the fact that we have had the biggest recession in a generation.

Hon Phil Goff: Was Statistics New Zealand right in stating that median incomes actually fell in the year to June last year although the December quarter price rise was the highest in 20 years?

Hon BILL ENGLISH: The member is always going to be able to find a measure of income and a measure of expenditure some time in the last 3 years that do not match up. The fact is that, firstly, on average real after-tax wages have increased and, secondly, the median income measure used by Statistics New Zealand is not the one we use to set New Zealand superannuation. If Labour members want to change that, they should say so. Thirdly, that measure does not take account of all the Government transfers, which have all increased because we have protected the most vulnerable through the worst recession in a generation.

Hon Phil Goff: What does the Prime Minister say to members of the Ōtāngarei branch of the Māori Women’s Welfare League who told Kelvin Davis recently that they are having an unprecedented demand for assistance, particularly food parcels, because unemployment has doubled among Māori to 19.5 percent and because costs have soared above the incomes that Māori people are earning in the north?

Hon BILL ENGLISH: We are fully aware of the impact of significant unemployment both among young people and among Māori. That is why it is so important we get this economy growing again. New Zealand is not going to create new jobs out of new Government schemes. It is going to create new jobs out of a fast-growing economy. The Prime Minister would be interested to know what Kelvin Davis said to that branch of the Māori Women’s Welfare League. No doubt, it was a large number of expensive, uncosted promises that he does not want broadcast to the rest of the country.

Hon Trevor Mallard: Does he understand today that real average wages go up when high-income earners get massive tax cuts, including over $1,000 a week in his case, and low-income workers lose their jobs?

Hon BILL ENGLISH: The Prime Minister understands that Labour has always agreed, as we have, to use the ordinary-time average weekly wage as the basis for calculating New Zealand superannuation. If Labour wants to change that, it is welcome to go and campaign. Of course, there are a lot of statistical effects on where the average wage comes out, but over time, Parliament has regarded it as the fairest measure of the overall wage picture for New Zealanders. That is why it is in the law, where it has been for the last 25 years as the way of calculating New Zealand superannuation.

Hon Trevor Mallard: Does the Prime Minister understand that real average wages go up when high-income earners like him get tax cuts of over $1,000 a week, and low-income workers lose their jobs?

Hon BILL ENGLISH: The member is wrong.

State-owned Energy Companies, Sales—Mixed-ownership Model

3. MICHAEL WOODHOUSE (National) to the Minister of Finance: What economic benefits does the Government expect from extending the mixed-ownership model to four State-owned energy companies?

Hon BILL ENGLISH (Minister of Finance) : We expect a wide range of benefits will flow from this model. First, it will deepen the local capital markets and give mum and dad investors, KiwiSaver funds, ACC, and the New Zealand Superannuation Fund better investment opportunities in New Zealand, particularly when those fund managers are investing a lot of their capital offshore. Secondly, it will give companies in New Zealand access to the capital to expand from wider sources than simply the Crown. It will place better commercial disciplines on the State-owned enterprises, it will lower Crown debt, and, finally, it will allow taxpayers’ capital to be recycled into higher-priority areas such as investment in infrastructure and the roll-out of ultra-fast broadband.

Michael Woodhouse: What dividends has the Crown received from the State-owned enterprises it is considering for mixed ownership?

Hon BILL ENGLISH: As I pointed out, the reason the Government is proposing a mixed-ownership model is for its wider benefits to the economy, not just because of the dividends of State-owned enterprises. However, over the past 5 years ordinary dividends from the energy State-owned enterprises have ranged between $135 million and $432 million a year. They have averaged $312 million a year. This represents an average dividend yield of 2.1 percent on current commercial valuations. The Crown has, in addition, received capital back through special dividends on three occasions.

Michael Woodhouse: What impact will the mixed-ownership model have on future Crown cash flows?

Hon BILL ENGLISH: It will mean the Crown will reduce its finance costs and forgo some dividends, because, of course, as an ongoing owner of at least 51 percent of these companies it will continue to receive dividends. The Budget included Treasury’s projections, showing that in the 3 years to June 2014 the four State-owned enterprises concerned are projected to pay dividends averaging $380 million a year, a significant increase on the last 5 years, because the Government is focused on better performance of these companies. However, Treasury’s assumption about finance costs shows that the holding costs of these assets are around $800 million a year—that is, the interest costs are more than twice the expected future dividends.

Hon David Cunliffe: Does the return on State-owned enterprises that he has discussed include special capital distributions worth more than a billion dollars, which take the total shareholder return on those assets to over 16 percent, and is that why Treasury has advised that to realise the economic benefits of privatisation a significant proportion of ownership by foreign investors would be essential to achieve the Government’s objectives?

Hon BILL ENGLISH: It is a bit odd that Labour is campaigning against—

Mr SPEAKER: No, the answer should not start with what Labour may or may not be doing. A question was asked and, whether or not the Minister likes it, it was more or less within the Standing Orders. There was a fact inserted that the Minister can dispute, but he should not start his answer by talking about what the Opposition or the Labour Party might be doing.

Hon BILL ENGLISH: Yes, there were capital dividends, and guess what they came from? They came from the State-owned enterprises selling assets to foreigners. That is where the billion dollars came from—the foreigners who bought the assets off the Government State-owned enterprises.

Hon David Cunliffe: Would an example of those transactions be the purchase by Meridian Energy of Southern Hydro in Australia, the building up of that asset, and the selling again of that asset, at nearly a billion dollars profit, which profit was returned to the New Zealand taxpayer?

Hon BILL ENGLISH: Yes, I can confirm exactly that. Meridian Energy invested in some energy assets in Australia, built those up, sold them to foreigners for hundreds of millions of dollars, pocketed the cash from the foreigners, and brought it back to New Zealand. That is exactly what happened. We, however, are proposing to sell to New Zealanders and put the cash back into New Zealand.

Michael Woodhouse: What other ownership models for these types of assets is he aware of?

Hon BILL ENGLISH: One of the sensible things the previous Labour Government did—one of about two, I think—was to set up Air New Zealand, when it purchased it, under the mixed-ownership model. The Government retained, I think, about 75 percent ownership, and 25 percent of it was listed on the New Zealand Exchange, which is owned by Kiwi mums and dads, KiwiSaver, ACC, and probably some foreign owners, but there are no restrictions on that, apparently—no restrictions on that. I have also seen this model being touted by the Chinese Government, which is apparently a communist Government. It is putting many of its State-owned enterprises into the mixed-ownership model in just the same way as Labour put Air New Zealand into the mixed-ownership model.

Hon David Cunliffe: Can the Minister distinguish between buying back an airline that has been bankrupted by its private sector board and management; purchasing and developing an offshore asset, which never originated in New Zealand, and selling it, which he opposed; and selling down New Zealand assets already owned by Kiwi mums and dads, when he has said he wants New Zealanders to be at the front of the queue but has no way to prevent them from onselling those assets to foreign multinationals?

Hon BILL ENGLISH: I did not actually understand the question, because I think Labour members now find themselves trying to make distinctions they did not think they would have to make, such as how to distinguish between selling large-scale Meridian Energy assets to foreigners and pocketing the cash, which was Labour policy, and New Zealand selling some of Meridian Energy to New Zealanders and pocketing the cash. That is a pretty interesting distinction.

Hon Trevor Mallard: Has the Minister of Finance read the reports of the comments of the then Leader of the Opposition when he opposed the purchase and development of Southern Hydro, which resulted in a $600 million profit for the New Zealand taxpayer?

Mr SPEAKER: The Hon Bill English—in so far as he his responsible for any of that.

Hon BILL ENGLISH: No, I do not recall that, but I do recall that Labour’s policy is, firstly, opposed to selling assets, and, secondly, to selling them to foreigners. It is just that those members did it when they were in Government.

Living Standards, Inequality—Prime Minister’s Statements

4. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by his reported statement of 30 May “Are we deeply unequal? I’m not sure that’s right. I haven’t had a really good look …”?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: The statement as reported is not a correct reflection of what the Prime Minister said. He stands by the full statement that he made.

Metiria Turei: Is the Prime Minister aware that Treasury officials have had a really good look at inequality, and their recent report on living standards in New Zealand said that New Zealand is the seventh most unequal country in the OECD?

Hon BILL ENGLISH: I am quite certain that Treasury has had a close look at inequality, because in the analysis we have done—for instance, on the tax package and on the recent changes in the 2011 Budget—we have ensured that the impact on the general sense of fairness is taken into consideration in respect of our income support system. I think it leads us all to reflect on the fact that when we had 10 years of plenty and large increases in Government transfers, it did not appear to have much impact on the extent of inequality in New Zealand incomes between 2000 and 2010.

Metiria Turei: Would it also help to answer his question “Are we deeply unequal?” to know that according to Treasury the top 10 percent of households in New Zealand own 500 times more than the bottom 10 percent?

Hon BILL ENGLISH: As the member will know, there is a whole range of measures of inequality, ranging from the raw mark of incomes and how unequal they are. That then changes when we take into account Government transfers, which a lot of international measures do not. New Zealand has quite significant Government transfers between high-income and low-income New Zealanders. Then there are inequalities in the holdings of wealth and the holdings of assets, and in that respect New Zealand reflects the reality of most developed economies, which is that when, for instance, an individual farmer owns an asset worth $10 million, he is in a much stronger wealth position than someone who is on the minimum wage and owns nothing.

Metiria Turei: Is the Prime Minister aware that his own Chief Science Advisor, Sir Peter Gluckman, has also had a really good look at the impact of inequality on children and found a number of links between inequality and poor child health and development problems?

Hon BILL ENGLISH: The chief scientist has had a look at those issues and so has the Government. In respect of an issue such as child health, I think the Government can claim two measures that are having a significant impact, and which I think most people support. One measure is higher immunisation rates, which are now the highest they have been in a generation, which is good. The second measure is the roll-out of the insulation programme, which has now reached 100,000 households, and that is biased towards lower income New Zealanders. It is often said that there are significant health benefits from it, and we will get to see just how significant they are.

Metiria Turei: Does the Prime Minister now accept the evidence from Treasury and from his own Chief Science Advisor that New Zealand is a deeply unequal country; if he does not accept that advice, whose evidence is he relying on in this matter?

Hon BILL ENGLISH: No, I do not accept the view that we are a deeply unequal country. I do not think the evidence suggests that, and people drawing that conclusion are wrong. Of course, the big issue about inequality is what we do about it. That has always been the challenge. The fact is that people who lose jobs or get stuck in welfare dependency find themselves in by far the worst position in a society, and this Government is actively moving to break some of those cycles of dependency and poverty.

Metiria Turei: In light of the evidence from Treasury and his own Chief Science Advisor, will the Prime Minister commit to rejecting any recommendations from the Welfare Working Group report that will increase, and be shown to increase, inequality?

Hon BILL ENGLISH: Having had a very good look at the Welfare Working Group report, I do not see any recommendations there that will increase inequality. What those recommendations will do is give more people access to the world of work, and that is the best way to reduce inequality. The other thing it will do is break the pattern of the previous Government, which was to leave hundreds of thousands of New Zealanders marooned on long-term benefits and do absolutely nothing about it.

State-owned Assets, Sales—Estimated Costs

5. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: What is his current best estimate of the cost of the sale of State-owned assets?

Hon BILL ENGLISH (Minister of Finance) : If the member is referring to the planned sale of a minority stake in four State-owned energy companies to New Zealand investors, subject to voters’ endorsement in an election, I do not have a firm estimate at this very early stage. However, I can say that the Government intends to use its buying power in a market where there are plenty of organisations that seem to be willing to assist in this process and not many other opportunities for them to sell their services. We expect to keep a very tight rein on costs.

Hon David Cunliffe: Has the process of selecting commercial advisers or other assistance for the sale process commenced; if so, what fees and costs are envisaged as part of this advice?

Hon BILL ENGLISH: I am advised that a process has begun to get the necessary expertise. One thing that has become clear is that the Government’s intention to sell shares to Kiwi mums and dads is a bit more expensive than a one-off sale to one buyer. But, as I said, the Government will use its buying power to keep the fees as low as possible.

Budget 2011—Children in State Care

6. JO GOODHEW (National—Rangitata) to the Minister for Social Development and Employment: How is the Government working to support and protect our most vulnerable children in care?

Hon PAULA BENNETT (Minister for Social Development and Employment) : We have announced a wave of initiatives under this Government, like the Never, Ever Shake a Baby campaign and the Auckland District Health Board shaken baby prevention programme, and the non-governmental organisation First Response programme, and we have put social workers into hospitals, amongst many others. As part of Budget 2011 we have announced $43.7 million for services for children in care, as part of this Government’s focus on children. This package aims to address a range of unmet health, mental health, and education needs for children in care. We have about 4,500 children in care at any one time, and about 2,200 who go into care in any particular year. These children are our most vulnerable. They need our help, and we can do better by them.

Jo Goodhew: What support services will these children now receive?

Hon PAULA BENNETT: We have broken it down into a number of different initiatives. The first is the extra gateway health and education assessments, which are receiving $15.3 million. That is to ensure that not only those children who are already in our care, or who enter it in a year, but also another 1,500 who go through the family group conference process will be comprehensively assessed. Once we know what is wrong with them, we then need to work out what we do with them. We have put another $14.5 million into mental health services for children in care, so that we can directly purchase the help that they need. For early childhood education for children in care, there is $11.4 million. That is for those aged between 18 months and 3 years, to make sure they can get 20 hours’ free care. I am very supportive of the parenting support that will go to foster parents and grandparents raising grandchildren. There is $2.4 million through Parents Inc. throughout the country.

Jo Goodhew: Has she seen any other policy responses to the difficult issues that face our vulnerable children?

Hon PAULA BENNETT: Yes. I keep hearing constant criticisms from the Opposition that this Government is not doing enough in the area of children, and certainly for the most vulnerable children who need our help. Yet in the 1990s, under the Labour Government, Annette King completely rubbished the idea of having a children’s Minister when a National MP suggested it. Now we have her saying nothing happened under the 9 long years of Labour. A lot has happened under this Government of 3 years, and now all that she can do is to try to recycle a very—

Mr SPEAKER: We will not use that kind of question to attack the Opposition.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It is the question, which is an ongoing one, of the front bench or Ministers currently sitting on the front bench continuing to talk while you are on your feet. The Minister did that for quite some time, even after she had seen that you were on your feet.

Mr SPEAKER: The member himself is not totally immune from such behaviour.

Hon Trevor Mallard: I sit down as quickly as I can

Mr SPEAKER: The member is not too bad; I accept that. But then again, the Minister sat down reasonably promptly. It is a judgment call when I sit a Minister down like that, but I am not too happy. I realise that these questions are perfectly in order, and it is a matter of balance about how they are answered. But I do not want to hear an overt attack on the Opposition, using that kind of question. That is why I sat the Minister down.

Question No. 7 to Minister

Hon SIMON POWER (Acting Leader of the House) : I raise a point of order, Mr Speaker. I wonder whether I could raise an issue in respect of question No. 7. The question asks the Minister of Transport: “Were all comments he made on behalf of the Prime Minister in response to Oral Question five yesterday accurate?”. This is not a criticism of the question; it is a point of clarification. I know that the Minister is very keen to answer this question, but when he made those comments yesterday he was answering on behalf of the Prime Minister, not as the Minister of Transport. To be helpful, the question could ask: “Were the comments the Prime Minister made in response to question No. 5 yesterday accurate?”, or “Does he agree with the answer that the Prime Minister gave in response to question No. 5 yesterday?”, but here I think we are confusing the role of the Minister of Transport, in his capacity as answering on behalf of the Prime Minister yesterday. I do not think it matters for the purposes of the Minister’s answer today, and I know he is keen to answer the question, but I just wondered whether the matter might be considered by you.

Mr SPEAKER: I hear the point the member makes, and he makes a good point. I want to clarify the situation for the House. Today the Minister is being questioned in his role as the Minister of Transport, so any supplementary questions relating to the primary question must relate to any transport issues or transport comments made by the Minister in answering oral question No. 5 yesterday, The Minister cannot be questioned on any other matters that he may have covered on behalf of the Prime Minister yesterday as the Minister of Transport, or at least for supplementary questions to be in order they must relate to transport issues that were commented on in answering question No. 5 yesterday.

KiwiRail—Railway Workshops

7. Hon DAVID PARKER (Labour) to the Minister of Transport: Were all comments he made on behalf of the Prime Minister in response to Oral Question five yesterday accurate?

Hon STEVEN JOYCE (Minister of Transport) : Speaking as the Minister of Transport, I believe the responses made by the Minister yesterday on behalf of the Prime Minister were indeed accurate. Indeed, as a casual observer I thought they were answered reasonably well.

Hon David Parker: When he said yesterday that the previous Government “saw fit to have an international tender for rolling stock and under its watch the Korean trains were built in Korea.”, was he aware that at that time the railways were not owned by KiwiRail but by Toll, and the tender was not from either Toll or the then Government, but rather from the Greater Wellington Regional Council?

Hon STEVEN JOYCE: The previous Labour Government provided $200 million of funding through the National Land Transport Programme to the Greater Wellington Regional Council to purchase new electric trains. It could have placed any condition it chose on Greater Wellington’s procurement, but in fact decided not to. I think that action in Government speaks louder than any words today by Mr Parker in Opposition. As usual, Labour members are lambs in Government and lions in Opposition.

Hon David Parker: That was a very long yes. Was he also aware that Hillside workers at the time were trusted by Toll, employed, and kept busy cost-effectively rebuilding rolling stock for the Auckland commuter trains, thereby keeping skilled engineering and manufacturing staff in jobs, and contributing to the New Zealand economy?

Hon STEVEN JOYCE: I am aware of some of the excellent work done by the workshops in Dunedin, but again I say to the member what I said to him yesterday, which was that we must give KiwiRail the opportunity to make its own business decisions about what it does to operate successfully. If we were to insist that KiwiRail paid higher for rolling stock and electric trains than can be purchased from other vendors, we would basically be saying to it that it will be uncompetitive, and that would put at risk far more jobs, including the 4,000 jobs of the KiwiRail operation.

Hon David Parker: Is not the real reason he misrepresented the record of the Labour Government, Toll, and Hillside that he is trying to avoid his Government being held to account?

Hon STEVEN JOYCE: I raise a point of order, Mr Speaker. I do not believe the member can say that, because that is certainly not what I said in response to the previous question.

Mr SPEAKER: There was a fine line in the question. To assert in a question that a Minister misrepresented something is certainly right on the boundaries of what might be acceptable. The member did not say that the Minister had not told the truth; he said that the Minister had misrepresented. We do not normally rule out in general debate an allegation that someone had misrepresented something, because it can be done perfectly accidentally, but one should not really build that into a question. I will not rule it out, but I caution the member that the Minister will have open slather in responding. Once that kind of assertion is made in a question, I will not pull up the Minister in terms of how he responds.

Hon David Parker: I raise a point of order, Mr Speaker. Thank you for that ruling, because neither did you pull up the Minister for his very long yes answer in response to the second supplementary question.

Mr SPEAKER: The member will resume his seat. We will not get into that sort of thing, at all. I let the member get away with his comment at the start of his last question, because I believed the Minister had made an unnecessary comment at the end of his answer. The member’s comment at the start of his question was also out of order, but I let it go, and I will not now have him use a point of order to try to give it more credibility than it had before. The member may repeat his question, and I will not rule out that claim in his question, but it does give the Minister a lot of licence in answering.

Hon David Parker: Is not the real reason he misrepresented the record of the Labour Government, Toll, and Hillside that he is trying to avoid his Government being held to account for its double standard in subsidising irrigation schemes for farmers, changing the labour and tax laws for The Hobbit and gambling laws for the casino, but refusing to even consider keeping real manufacturing jobs in New Zealand for New Zealand workers?

Hon STEVEN JOYCE: Firstly, I will say to the member for the final time that I did not misrepresent the situation. The previous Labour Government provided over $200 million of funding to the Greater Wellington Regional Council to purchase new electric trains in 2007, and I understand that the then Minister of Transport was at the signing ceremony for the purchase of the trains. That Government placed no limits on the procurement whatsoever, and Labour members are now sitting in Opposition and saying that they would have done it differently if it had been them. That is absolute rubbish.

Mr SPEAKER: I want some order in the House now, so that I can hear members.

Clare Curran: Has the Government not contravened section 4 of the State-Owned Enterprises Act, which requires KiwiRail to be operated with a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do so?

Hon STEVEN JOYCE: No. In addition I would point out that the procurement rules advised not just for Government departments but also for State-owned enterprises and other organisations state that tenderers must not give preference or weighting to local content in itself. Also, so that we are clear, those procurement guidelines were set up by the previous Government in 2001, they were refined in 2006 and in 2007, and in all cases they say that Government agencies are not to provide preference to local tenderers over foreign tenderers.

Clare Curran: Does he not believe that section 4 of the State-Owned Enterprises Act requires the shareholding Minister and the Government to protect New Zealand jobs rather than ship them offshore, or has he not read it?

Hon STEVEN JOYCE: What I do believe is that we need our State-owned enterprises to be run effectively and to do the job commercially, so that they are successful. In fact, the Act requires that they be operated commercially and successfully. The Act does not require that they make decisions that would not be sensible commercial decisions, and we do not place that requirement on any New Zealand company.

Clare Curran: I seek leave to table the State-Owned Enterprises Act—

Mr SPEAKER: We are not going to do that. The member will resume her seat.

Literature and Culture, Promotion—2012 Frankfurt Book Fair

8. NICKY WAGNER (National) to the Minister for Arts, Culture and Heritage: What reports has he received on recent developments there have been to promote New Zealand literature and culture?

Hon CHRISTOPHER FINLAYSON (Minister for Arts, Culture and Heritage) : A number concerning the announcement on 2 June by the German Foreign Minister that New Zealand will be the country of honour at the 2012 Frankfurt Book Fair. This fair is the world’s most prestigious and well-attended international book and media trade fair, with about 7,500 exhibitors from over 110 countries—

Grant Robertson: See if you can get through without saying anything nasty.

Hon CHRISTOPHER FINLAYSON: —Mr Robertson—and about 300,000 visitors over a 5-year period. The country of honour showcases its culture in a year-long programme throughout Germany, culminating in the Frankfurt Book Fair itself. New Zealand will exhibit its arts, its creative industries, and its stories to international audiences and businesses.

Nicky Wagner: What opportunities does the Frankfurt Book Fair present to New Zealand as the country of honour?

Hon CHRISTOPHER FINLAYSON: As the country of honour, New Zealand also has the opportunity to raise its profile not only in Europe but also throughout the 110 countries and among the hundreds of thousands of visitors who will go to the book fair. It represents a very special opportunity to promote New Zealand literature, culture, trade, and tourism on the world stage. In addition, New Zealand will have a higher profile in other areas, including education, film, and digital media, than it would otherwise have had given the recent success of the New Zealand film Boy, not to mention the first instalment of The Hobbit, which will be released late next year thanks to the Prime Minister, because we are Hobbit lovers on this side of the House. This will allow New Zealand to showcase its natural environment and culture.

Mr SPEAKER: The House will come to order.

Foreign Affairs, Minister—Use of RNZAF Aircraft for Travel

9. DAVID SHEARER (Labour—Mt Albert) to the Minister of Defence: Does he still agree with all of the statements made by the Minister of Foreign Affairs on that Minister’s use of RNZAF aircraft to travel to Vanuatu in February of this year?

Hon Dr WAYNE MAPP (Minister of Defence) : Yes.

David Shearer: Does he still agree with Mr McCully’s statement on the morning of 4 May that the Boeing 757 that had taken him to Vanuatu had broken down, requiring the air force to send an Orion to pick him up; if so, how does he explain his reply to written question 3353 that it did not break down?

Hon Dr WAYNE MAPP: There is dancing on the head of pin, here, I think. One of the 757s had in fact broken down, which necessitated the 757’s return to New Zealand to enable—there were two of them, you see—the other one to continue its training mission to Antarctica.

David Shearer: Did he know before Mr McCully departed for Vanuatu on the 757 on 13 February that the plane taking him there would need to return to New Zealand on the same day because of the unscheduled maintenance needed on the second 757, which was scheduled to travel to Antarctica; if so, on what date did he learn that the other plane would have been sent to pick up Mr McCully from Vanuatu?

Hon Dr WAYNE MAPP: As the questioner said, the maintenance was unscheduled; thus I did not know that at the time.

David Shearer: Did the aircraft carrying Mr McCully to Vanuatu travel via Samoa or any other Pacific nation to pick up other passengers, as was suggested by Mr McCully?

Mr SPEAKER: I apologise to the member. I ask David Shearer to repeat his question. I say to the National backbenches that I want to be able to hear these questions.

David Shearer: Did the aircraft carrying Mr McCully to Vanuatu travel via Samoa or any other Pacific nation to pick up other passengers, as was claimed by Mr McCully?

Hon Dr WAYNE MAPP: It is my understanding that the Samoan delegation was taken to Vanuatu. I understood that to be from New Zealand. I also say that the member was misinformed when he said that people were left behind in Vanuatu. That was not the case.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It was a very carefully drafted and carefully worded question as to whether the plane went via Samoa. That question was not addressed. The member did say that Samoans were taken on it.

Mr SPEAKER: The member will notice that I was on my feet for quite a while. I hear what the member said by way of point of order, but I think the Minister has answered that Samoans were taken on the flight. That does leave the question where they were picked up from, I accept that, but there are further supplementary questions that could be used to clarify that situation. I think it would be wrong of me to assume in any way anything from the Minister’s answer. The Minister appeared to answer the question, because he confirmed that in his understanding Samoans were taken on the flight. There are further supplementary questions to dig further into that. That is where I think the Speaker should leave it.

Hon Trevor Mallard: Were the Samoans who were taken on the flight picked up in Samoa?

Hon Dr WAYNE MAPP: I understand they were picked up from Auckland, but, frankly, I simply cannot understand why the Opposition—

Mr SPEAKER: No, no, it is not in order to make that kind of comment. A fair question was asked and it was answered. I thank the Minister.

Accident Compensation Corporation—Independent Disputes Tribunal

10. JAMI-LEE ROSS (National—Botany) to the Minister for ACC: What action has the Government taken to deliver on its 2008 election promise to “investigate the introduction of an independent disputes tribunal to end ACC’s dual role of judge and jury on disputed claims”?

Hon Dr NICK SMITH (Minister for ACC) : From 1 July 2011, ACC subsidiary company Dispute Resolution Services Ltd will become an independent Crown company. This was seen as the most effective way to ensure an independent process for handling complaints about ACC’s decisions. It also makes sense as Dispute Resolution Services Ltd now provides dispute resolution services in the telecommunications, health, and financial services sectors. An efficient, independent service will be essential also if the Government proceeds with introducing choice into the work account of the ACC.

Jami-Lee Ross: What reaction has there been to the announcement in May that Disputes Resolution Services Ltd will become an independent Crown company?

Hon Dr NICK SMITH: The announcement has been well received by individuals and organisations across the board in the ACC stakeholder community. Access Support Services claimant representative Tony Gibbons said the moves were sensible and workable while retaining the skills of Disputes Resolution Services Ltd staff. The National Foundation for the Deaf said that for people to have confidence in Disputes Resolution Services Ltd decisions, it is important that there is a greater separation between it and ACC, and it congratulated the Government on the move. The separation of Disputes Resolution Services Ltd from ACC is part of a progression of sensible reforms with ACC to improve its cost-effectiveness and the service for claimants.

Chris Hipkins: Why should New Zealanders believe that his Government is giving accident victims a fair deal when the number of ACC claims being sent to review has practically doubled under his watch, the number of elective surgery applications being declined doubled in his first year as a Minister, and the number of cases going to the District Court has significantly increased, or are these just more examples of Kiwis paying more to get less for ACC as he prepares it for privatisation?

Hon Dr NICK SMITH: Those are a number of incorrect claims by the member. This Government inherited ACC having incurred $7.2 billion worth of losses. Anybody in this House who pretends that no change was desirable just illustrates the financial recklessness of members opposite.

Chris Hipkins: I raise a point of order, Mr Speaker. I appreciate that my question was reasonably wide and had a number of limbs to it—

Mr SPEAKER: No, we are not going to go down that track. If the member wanted his question treated more seriously, he should not have had the last clause in it. When he makes provocative statements, he will get provocative answers. I am not sure how often I have to repeat that. I am sure the member is not a slow learner.

Schools, Children in State Care—Thurston Place College Consultation

11. Dr RAJEN PRASAD (Labour) to the Minister of Education: Is she satisfied that appropriate consultation has taken place with local residents directly affected by the proposed Thurston Place College to be built in Pakuranga?

Hon ANNE TOLLEY (Minister of Education) : To be frank, no. However, my concern has to be primarily for the educational needs of this very vulnerable group of young people. They need and deserve the best quality education we can provide, as do all students. Thurston Place College is established on the site of the former Waimakoia Residential School, which was a very different residential school. As this site was already designated as a school site, there was no requirement to consult on the school’s establishment. However, I have insisted that the Ministry of Education and the establishment board work closely with the local schools and community as they continue through the process.

Dr Rajen Prasad: Given the fact that several large meetings in Pakuranga over the last week have raised serious concerns about not being properly consulted on the proposed Thurston Place College, what further action will she now take to ensure that her ministry will properly consult local residents and staff of neighbouring schools as a matter of urgency?

Hon ANNE TOLLEY: As a matter of fact, one of those meetings was called, I understand, by the Ministry of Education, and it provided at that meeting quite a range of information about what is proposed. As I said in my answer to the primary question, I have asked the ministry to make sure that as we work through this process, it is in close consultation with the local community and the local schools.

Dr Rajen Prasad: Why will the Minister not halt all work on the building of Thurston Place College in order to complete meaningful consultation with local teachers, schools, and residents?

Hon ANNE TOLLEY: This is a very difficult position for these young, vulnerable students. The previous Government allowed them to be educated and housed in disgusting conditions for 9 years. The Education Review Office reported year after year, and the ministry put in commissioner after commissioner. These students were being educated in nothing more than sheds. This Government has said that we cannot do that to this vulnerable group of young New Zealanders. They deserve a good education, they are in the care of the State, and at this school we are looking to provide that. At the same time we have to make sure there are appropriate measures in place, and I understand that the ministry and the establishment board are now making those measures available and clear to the surrounding community. I have insisted that they keep that community in close contact with all the plans.

Dr Rajen Prasad: I raise a point of order, Mr Speaker. My question was quite specific, and it was “Why will the Minister not halt all work …”. I did not hear a clear answer to that question.

Mr SPEAKER: The member may not have heard the answer he wanted to hear, but I clearly heard the Minister say that she is not prepared to do that, because of the conditions these pupils have been taught in over recent years. That may or may not be an acceptable reason to the member, but that is the Minister’s reason why she is not prepared to halt progress on the thing. It is a perfectly reasonable answer.

Raymond Huo: Would the consultation have been better if the majority of the immediate community had not been Asian, or does this approach meet the new standards for consultation generally?

Hon ANNE TOLLEY: I find that accusation absolutely insulting. I did not know that the majority of the local community was Asian. As I have said, I find the consultation that has happened with the community less than desirable, and I am very disappointed that they have not been consulted right through the process.

Raymond Huo: I seek leave of the House to table an online petition to show that as of today 1,535 people have signed the online petition to stop Thurston Place College.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.

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

Public Service—Minister’s and Prime Minister’s Statements

12. CATHERINE DELAHUNTY (Green) to the Minister of Finance: Does he stand by his reported statement that there is “too much waffle coming from Government departments” and agree with the Prime Minister’s assertion that the public service is “bloated”; if so, why?

Hon BILL ENGLISH (Minister of Finance) : Yes, I do agree with the Prime Minister. The full quote of what I said was “The previous Government’s decision to massively ramp up spending in the 2000s left behind a large, structural budget deficit, and a bloated public sector that by 2008 was crowding out the competitive sectors of the economy.” I can reassure the member that the Government is ensuring that the public sector delivers better front-line services, better value for taxpayers, and helps us to achieve a faster path back to Budget surplus, at the same time as meeting New Zealanders’ demands for consistently improving public services.

Catherine Delahunty: What, then, is his response to the recent survey Constructing Workplace Democracy: Women’s Voice in New Zealand Public Services, which showed that 50 percent of women workers in the Public Service work many more hours than they are contracted for, but that only 14 percent receive any extra payment for this work?

Hon BILL ENGLISH: I am not aware of the particular survey, but we do have thousands of very well-motivated, professional public servants. It is incumbent, particularly on the management of our Government agencies, to engage with the people whom the member is referring to, whether women or otherwise, understand why they are working a lot more hours than they are paid for, and put better processes in place so that they can meet public expectations for service at the same time as Public Service staff can have reasonable and balanced lives.

Catherine Delahunty: Does the Minister think that receiving an average before-tax salary of $43,185, as the survey reveals women do, indicates a “bloated” approach to paying female public servants?

Hon BILL ENGLISH: No, I do not. I think the survey will express what we know fairly well—that is, there is a predominance of females in the lower-paid occupations of publicly funded services. What I think is important is that we organise those services efficiently, so that those very committed public servants can see that their efforts are leading to an efficient delivery of services. Too often I meet front-line Public Service staff who believe that their management do not always know how their services work, and whose contribution could be viewed much more constructively in the time of consistent change that we will see over the next 3 or 4 years.

Catherine Delahunty: Does he consider that the Prime Minister’s and his own recent derogatory comments regarding public sector workers will add to female workers’ stress, especially when the survey reports that 43 percent of women workers experience bullying in the workplace?

Hon BILL ENGLISH: No, I do not think the Prime Minister’s comments will have that effect. But we do know that productive and efficient workplaces are places where the staff are happy to turn up to work, and where they can thrive and fulfil their own potential. My guess, actually, is that workplaces where there is bullying of the sort that the member is referring to are probably not well run. They probably have management who do not understand how the front-line services are working, and if they have poor relationships within that workplace, they probably offer a poor and inefficient service.

Catherine Delahunty: I seek leave to table the Victoria University survey report, prepared for the Public Service Association, Constructing Workplace Democracy: Women’s Voice in New Zealand Public Services.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.

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

General Debate

Hon SIMON POWER (Minister of Justice) : I move, That the House take note of miscellaneous business. I first acknowledge the people of Christchurch, and the difficulties they are experiencing in the face of continuing aftershocks. At times like these, the public look to their leaders for assurance that these challenges are at the front of their minds. This is where I neatly segue into my next point, which is that that is why I was perplexed to hear Phil Goff on the radio this morning defending his leadership over the handling of the Darren Hughes issue. I suppose that “proactive” is one word to describe this approach. But it demonstrates two things. The first is that Opposition members do not know what is on the top of the New Zealand public’s mind, and the second is that Phil Goff does not know what sort of leader he should be. Trevor Mallard seems to me to be quietly hitting his stride in recent days—and I will come back to that shortly. He is looking just a little bit more comfortable in his skin.

Phil Goff, in the first 2 years of his leadership, struggled to get control over his caucus, and I can think of several examples of that. In June 2010 Raymond Huo blogged about China freeing Tibet from the notoriously cruel system of serfdom imposed by the Dalai Lama, despite having earlier travelled to China, with Mr Goff, where Labour’s stance on Tibet was made clear. In July 2010 Steve Chadwick proposed, without checking with the caucus, a new law to legalise abortion on request for women up to 24 weeks into a pregnancy. Winnie Laban accepted a job at Victoria University before she told Phil Goff. Ross Robertson announced in January 2011 that Labour’s new top tax rate would kick in at “less than the top rate in Australia”—the rate there is 45 percent—despite Mr Goff stating that the figure and threshold had not yet been decided.

But then there was a change. Mr Goff decided a new approach was required—after 30 years in the House he is nothing if not a quick learner. He turned the tables on his caucus by unilaterally declaring that he will not work with Hone Harawira. Why the change? It is because the leadership aspirants are already marking their run-up. Grant Robertson is being constantly compared to David Lange—mostly by himself—and it reminds me of those annoying people who invent nicknames for themselves.

But then there is the mystery of why Trevor Mallard spoke on behalf of Labour at a press conference, leaping over David Cunliffe, David Parker, Ruth Dyson, Clayton Cosgrove, and Maryan Street, who, although not as senior as Trevor Mallard, are ranked ahead of Trevor Mallard. Dare I say that he looked authoritative and authentic? I have to say that he started to look just a little bit like a future Leader of the Opposition.

In an odd way, Mr Mallard’s accident has liberated him from the important business of pushbikes so that he can focus on his hobby of politics. It seems to me that he has come back far more comfortable. While others on the front bench were starting to squirm, looking down during the Budget debate and not paying attention to what their leader was saying, Mr Mallard was busy sitting there looking content and at ease. I am sure it was not actually the bike accident that has brought about this change—

Hon Trevor Mallard: No, it was the drugs afterwards!

Hon SIMON POWER: It was not the drugs afterwards, I say to Mr Mallard. He is looking in control, energetic, authentic, not doing too much too early but playing the long game—a very long game. This man knows that if he can just wait Phil Goff out, the opportunities to take back the reins are there for him.

I think Trevor Mallard has found his mojo in recent weeks. I think Trevor Mallard knows that it is only a matter of time before that long ambition he has held will come to realisation as Mr Goff stumbles from the mistake to mistake, accident to accident, and misspeak to misspeak. We know that those around Mr Mallard—look, they are already coalescing around him in that corner—know that power is where power lies, and they know that Mr Mallard is on the rise. He is a young man at heart with a lot yet to offer. If the gossip I am hearing in the corridor is anything to go by, he is a man with quite a promising future—unlike the current Leader of the Opposition.

KEVIN HAGUE (Green) : Before I begin, I join the Hon Simon Power in expressing my deepest sympathy for the people of Christchurch in this really trying time. I was in Christchurch on Monday when the big earthquakes hit and it was a pretty unsettling experience. But today I want to speak about the follow-up from Pink Shirt Day. I notice that the Hon Simon Power is again wearing pink and it really states his commitment to stamping out bullying wherever it should occur. Members from most parties joined me in April in wearing pink shirts to take a stand against bullying wherever it should occur. But I am particularly concerned about the experience of young gay, lesbian, and transsexual people, particularly in schools. The Youth’07 survey, a major survey of the health status of young people in this country, found that that group of young people was three times more likely than their heterosexual peers to experience bullying. Recently two organisations, Rainbow Youth and Q-Youth, took the initiative of encouraging young people, especially, to write to the Prime Minister about their experience of bullying or to express their concern about the issue. As a number of them copied their letters to the Prime Minister to me, I know that that some of those letters were extremely good.

Over 3,000 letters were sent to John Key, and I express my thanks and appreciation to the Prime Minister for his subsequent action of agreeing to meet with representatives of those two organisations to hear their follow-up concerns about the issues. I have been heartened by that and was particularly pleased by the comments of those organisations that they felt that they had a good hearing from the Prime Minister.

As an adult gay man and someone who came out early in the 1970s, my observation would be that my life in these days now is immeasurably better than the life I would have led as an adult gay man in the 1970s. But recently I have been saying that for the young person, the 14-year-old boy, who is just starting to realise his difference now, that person’s experience is not greatly different from the experience I had in the 1970s. When I think about it, that young person, that 14-year-old, still lives with expectations from all around them—from their family, from their school, from wider society, from their friends—that they will, in fact, be heterosexual.

That experience is still pretty tough, and when I speak to young gay, lesbian, and transsexual people nowadays and ask them where their role models are, actually there are precious few. They can name for me Ellen DeGeneres, the TV show host. There is a character in the television programme Glee. Every now and again Shortland Street has a gay or lesbian character. Usually they are in the story for a little while and then they get killed off at the end of the season, or move away to Australia, or something like that. The role models that are accessible and available to those young people are pretty few and far between, as well.

It is simply not good enough. The reality is that the feelings of fear and isolation experienced by those young people lead in turn to damaged self-esteem, and that psychosocial risk factor itself leads to a real risk of plenty of health concerns and other consequences. It underpins, for example, drug and alcohol abuse, it underpins the risk of depression, and it underpins the risk of suicide. That same survey, Youth’07, found that the rates of suicide attempts amongst gay and bisexual young people were five times those of their peers. That is simply unacceptable, and I am certainly looking forward to the Prime Minister’s programme of change to counter those issues.

Hon CHRISTOPHER FINLAYSON (Attorney-General) : The thoughts of all of us are with the people of Christchurch. It is very frustrating that so many people’s properties have suffered further damage. Many people are back to square one and are now faced with the task of cleaning up and starting all over again. Once again we witnessed the courage of the people of Christchurch and Lyttelton. For every picture of destruction that we see on our televisions, we also see people helping neighbours, cleaning up, and getting on as best they can with their lives. Unfortunately, both cathedrals and the Arts Centre of Christchurch have sustained more damage this week, and very, very sadly the Lyttelton Timeball Station is in total ruins. Some people who were working on heritage buildings were injured on Monday, and we are all very, very grateful that no one was killed.

This Government is 100 percent committed to Christchurch. On top of the billions of dollars that we have committed to rebuilding Christchurch, it too will benefit from the plans laid out in Budget 2011 for a strong, growing economy, a return to surplus, and getting on top of national debt. The Prime Minister and the Deputy Prime Minister are tackling the serious issues of our times that face our country, and these are indeed serious times. But wherever we look, it seems that some parties are just not interested in grappling with these serious issues. Former justice Minister Annette King was last seen engaging in what young folk call a flame war with New Zealand’s top blogger, David Farrar, and the MP for Hutt South is currently training for a cycle race against another blogger. This follows a war of words last year between senior Labour and Green MPs about who unfriended whom on Facebook. They say people find their own level in life. Well, these folk have certainly found theirs.

Last month Chris Hipkins tried to smear the Prime Minister with the scoop that two separate legal entities both had the letters “BMW” in their names. Well, “NCIS Rimutaka” this was not. It seems that Pete Hodgson has bequeathed to Chris Hipkins his filing cabinet of unsolved cases, including old carpet and curtain cleaning bills, the secret of the H-Fee conspiracy, and the possible whereabouts of the “Ashburton Panther”. This is Opposition in a nutshell. Labour is the “Yahoo Party”, the “Once-Over-Lightly Party”—it is not the “Serious Party”.

The Greens recently pulled their “Gone off Phil Goff” ads from the internet. Russel Norman said they were an unauthorised experiment by one of the Greens’ campaign team. The obvious question is how one can have an unauthorised decision in a party where everything is done by sharing, caring, and consensus. But, more likely, the Greens’ focus group suggested that just like Labour voters, none of the Greens’ supporters knew who Phil Goff was.

My message to the Labour Party today, to those in Labour who are serious about politics, is to stop the rot. Take back control of the once-great party of Peter Fraser—although if Peter Fraser were alive today, he would be a member of the National Party. The truth is that they have already gone off Mr Goff in Labour. The truth is that his successors in Labour simply do not have the nerve to topple him before the election. Safe in their high places on the list, they are happy to see people like my friend Mrs Chadwick, at No. 35 on the Labour list, take the fall when the votes are counted. To paraphrase John Milton’s Paradise Lost, Mr Robertson, Mr Cunliffe, and Mr Jones have decided they would rather rule in Opposition than serve in Government.

Hon MARYAN STREET (Labour) : I too would like to add my words of concern and express the fact that my heart goes out to the people of Christchurch as they wrestle yet again with more damage and disruption. I would also like to pay a tribute to Kevin Hague for his speech a few moments ago, which I endorse completely. I thank him for bringing that subject to the House.

Today I want to talk about the fact that families are cracking under the strain of increasing prices and the increasing cost of living in New Zealand. The cost of fresh fruit and vegetables has gone up by 17 percent between May 2010 and May of this year—17 percent. It is 16.9 percent to be accurate, as I do not wish to exaggerate. People are not getting ahead under this Government. They are falling behind. I am doing a cost of living survey in Nelson at the moment. People are quick to fill it out. They want the Government to know how hard they are finding things. They want the Government to say what its plans are for relief from these incessant increases in everything that people require to provide for their families, from food to fuel. Let me give the House some of the results to date out of the returns on my cost of living survey. In Nelson 88 percent say that their household income is more stretched than it was 3 years ago, 60 percent have put off visiting a doctor because of the cost, 82 percent expect stronger action by the Government on rising power prices, 79 percent worry about whether they can save anything for their retirement, and 93 percent think the Government is out of touch on cost of living issues.

Let me quote a Nelson resident who responded to a Facebook entry of mine recently—and there is a place for Facebook, despite Mr Finlayson’s condescension. She said “I haven’t been to the doctor for over a year, as my husband has to go a lot. We cannot afford for both, and I should be going every 3 to 6 months. It’s funny because people say we must spend our money on junk and going out all time. I don’t remember the last time we went out. My hubby and I talk a lot about how things used to be before the Nats got their way. We had sort of a life. You know when the costs get bad when your kids are asking to buy the things we used to buy. Why don’t we do the things we used to do?”. The Government is certainly out of touch with this Nelson family’s situation, and there are plenty more people where they come from.

Let us look at the distribution of food parcels in Nelson, which is a place most people associate with sunshine and an abundance of good primary food products. In March of last year 168 food parcels were distributed; in March of this year 247 were distributed. In April of last year it was 148 food parcels; in April of this year it was 213. In May of last year it was 181 food parcels; in May of this year it was 223. Families are going backwards under this Government. This is nothing short of scandalous. The Government thinks Labour’s policy promise to take the full 15 percent of GST off fresh fruit and vegetables is comical. I tell this House that that will make a difference to the family I have just quoted. It will make a difference to families like them. This Government is, in fact, making no effort for hard-working families who are struggling to get by. It has given the lion’s share of the tax cuts to the wealthy, while constantly cutting away at middle and low-income Kiwis. There is no point in Government members saying they gave tax cuts to low and middle income earners, beneficiaries, and superannuitants. All of those people know that their tax cuts were gobbled up by the increase in GST.

There is no plan to contain power prices. The Government simply wants to sell off power companies so that we have no levers to use to get power prices down. There is no plan to create jobs. There is simply the repetition of a number in the Budget. There is no plan and no demonstration about which sectors of the economy will be used to provide these jobs. There is no plan to improve New Zealanders’ standards of living. There is no vision for a better New Zealand. The Government is working for its wealthy friends and for foreign interests, not for hard-working Kiwi families. That is why this Government has to go in November.

Hon JOHN BOSCAWEN (Leader—ACT) : Like other members in this debate this afternoon, I also acknowledge the pain, suffering, and loss in Christchurch. On behalf of the ACT Party, I say we should not lose sight of the fact that we have now had the third $1 billion - plus earthquake in Christchurch in the last 8 months. Tragically, another life was lost as a consequence of the most recent earthquake.

We face serious times—we face very serious times. How interesting to be reminded of that by the Hon Christopher Finlayson this afternoon. He talked about the serious times we face, and he talked about the Prime Minister and Deputy Prime Minister addressing those. Well, I am pleased they are, Mr Finlayson, because you certainly were not. All you could do—

Mr SPEAKER: Members do not refer to “you” doing this or “you” doing that.

Hon JOHN BOSCAWEN: Sorry, Mr Speaker. I say this country is in serious difficulty, and what have we had today? We had an attack on the Labour Party. What this Government should actually be doing is addressing the serious issues.

We cannot afford to overlook the fact that we have a deficit of $16.8 billion—$16.8 billion. We are borrowing over $300 million a week. I do not know how many times the ACT Party needs to remind the people of New Zealand that we are in a very serious situation. What will it take? What will it take, I ask Mr Finlayson—a fourth earthquake, a fifth earthquake, or a sixth earthquake?

Last week in question time I asked the Minister of Finance about the Government’s rosy forecasts. The Government is forecasting to get the deficit back under control by 2014, and it does that based on growth of 4 percent and 3 percent in 2013 and 2014. That is based on forecasts by Treasury that have been shown to be grossly over-optimistic over the last 6 years.

In the House this afternoon we heard Louise Upston, who has put out a press release in the last month pointing to the massive increase in early childhood education funding. She pointed out that despite massive investment—an increase from less than $500 million to $1.2 billion—we have seen an increase in the participation rate in early childhood education of less than 1 percent. When we questioned the Minister of Education in the House this afternoon, what did she say? She said she was setting up a task force. She is setting up a task force. It has taken 2½ years to set up a task force. Rome is burning while Nero fiddles. Rome is burning. New Zealand is in a serious situation while John Key and the National Government are simply painting. The reality is that we actually have to address these serious issues.

We have to address these serious issues. We have a deficit of $16.8 billion this year, which looks to be just under $10 billion the following year, and we will not be back to breaking even until 2014. We have to look at how we can better target the $1.2 billion to be spent on early childhood education. Why, for example, did it take until this year’s Budget to reduce the massive subsidies on KiwiSaver? Yes, the KiwiSaver scheme is good, but it is taxing low-income earners—the people who can least afford to contribute, and who can least afford to get those subsidies. It is a tax on low-income people to subsidise those who can afford to save.

I could say the same thing about interest-free student loans. John Key called that policy a massive bribe prior to the 2005 election. What has National done about it? Basically, it has done stuff-all. It has cut back the entitlement for trainee pilots who want to learn to fly. It has said that those who go overseas and move out of the system have to start paying interest after not 3 years but 1 year.

We need to look at how we can better target Government expenditure. How do we actually grow the economy? How do we actually grow the jobs that our party keeps referring to? We need to reduce taxes, we need to get Government expenditure under control, and we need to provide incentives. We need to provide incentives to grow the economy, for people to work, and for people to save.

We heard this afternoon from Maryan Street about the cost of living. I say good on her for raising the cost of living. She said people are concerned about the price of electricity. It is a pity she did not also tell people this afternoon that her Government passed an emissions trading scheme that will subsidise foresters to plant trees, to the extent of $350 million a year. That is not subsidising foreign investors, and that is not subsidising the wealthy, I tell Maryan Street. That is subsidising people who will plant trees, and every New Zealander pays for that in massive electricity price increases.

Hon TIM GROSER (Minister of Trade) : A number of members from various political parties have spoken very eloquently and sincerely about the aftershocks, and there is no question that everybody’s heart is with the people of Canterbury. But, of course, one also thinks about the economic consequences of these great natural disasters. I would like to make the very obvious point in regard to our No. 4 trading partner, Japan, and our No. 1 trading partner, Australia, that they too have seen the huge economic consequences of their own tragedies not just in appalling human terms but also in economic terms. In Australia we have just seen the worst GDP quarterly output figures for 20 years as a consequence of the floods and the tornadoes.

Unquestionably these great acts of God can influence the real economy, and we are very conscious of that. But at the end of the day the question remains of whether we have got ourselves on to a pathway where, structurally, we can look forward with a certain degree of optimism to our future. In my view the answer to that is unquestionably yes. The foundations, in spite of these shocks, in spite of the global financial crisis, are being laid, as Mr English has pointed out on numerous occasions, for a more sustainable growth trajectory for New Zealand: one that is not based on debt-fuelled consumption or on structural Government programmes that support unsustainable jobs and wealth creation but on a true basis of reinforcing the competitive strengths of the New Zealand traded sector and earning our way in the world. That is the basis of the policy structures we are putting in place, and that is why I believe New Zealanders should have confidence that we are on a trajectory to a sustainably more secure future.

Could we get back to surplus faster than the projections that we have on the table? Yes, of course we could, but that would require a far faster and far more brutal adjustment by firms, by farms, by households, and by the Public Service to the circumstances I have outlined. So we have taken deliberate decisions. I do not think we have taken unreasonable decisions. Some of those decisions have been quite tough but we now have a pathway to get New Zealand back on to a sustainable trajectory that I think people should have great confidence in. We have taken reasonable but balanced positions and, in the process, maintained welfare programmes to support those in difficulty, and we have fully compensated people on superannuation for the structural tax changes.

Once again we have just heard in question time, as we hear every question time, attempts to find one individual or one company in hard times. Out of 4.5 million folk one can always find a case study to wave in front of people, but the reality is that we have to advance our society using measures that look at averages. What we know is that in terms of the direct impact on the pocket, in the 9 years to September 2008 for the after-tax average real wage—that means adjusted for inflation—we saw a 4 percent increase over 9 years. We have more than doubled that, as there has been a 10 percent increase since September 2008. So although there will, of course, always be folk who for their set of individual reasons get themselves into trouble, and we all feel for them, the reality is that the position of New Zealanders has, on average, advanced more than twice as much in little over 2½ years as occurred in the entire 9 years of Labour.

In the meantime we are proceeding with a structural agenda of reform that will build that sustainable economic future. We had a concerted attempt to get better value for money out of our public services. The days have gone when truckloads of money would arrive through the front door of Government agencies for which there was very little accountability—as long as it had the right label, it got a big tick. We are now starting, in a very reasonable way, to advance our agenda.

MOANA MACKEY (Labour) : I join my colleagues from around the House in paying my condolences to the people of Christchurch for what they continue to endure, to all the workers in Christchurch who are helping those families, to all the volunteers who are heading there again—I see that Federated Farmers and the student volunteers are arranging to go back—and also to our Christchurch colleagues from all around the House, who I know are working very hard to make sure that their constituents are looked after as best as they possibly can.

That contribution from the Hon Tim Groser was extraordinary.

Hon Dr Jonathan Coleman: It was great, wasn’t it? I agree.

MOANA MACKEY: Jonathan Coleman says that it was great, but I say that it was very telling. If there was ever a demonstration of just how out of touch this Government is on the cost of living and its impact on Kiwi families, it was that speech. What a load of bureaucratic gobbledygook! While he stands there talking about structural imbalances and unsustainable requirements, people cannot put food on the table, they cannot keep a roof over their heads, and they cannot buy for their children what they could have bought 3, 4, or 5 years ago. That is the reality. Maybe if National Ministers and our Prime Minister visited a food bank once in a while, we would not continue to be subjected to these offensive speeches that say that it is all the fault of the unemployed that they are unemployed, and that the Government will just bring in tougher welfare measures, because what those people need is a kick in the pants. That is what Paula Bennett and John Key have said, instead of accepting the reality that for 2½ years our Government has done nothing.

Our Government has no plan for dealing with the recession. Our Government has no plan for helping families cope with the spiralling cost of living. I thought it was very interesting when the member talked about averages and the average wage. The reason that the average income has gone up is because poor people have lost their jobs and wealthier people have become even wealthier. That is why the average has gone up, but National members continue to defy the laws of mathematics. When Labour was in Government we had, at one point, the lowest rate of unemployment in the world. That meant that a number of people came into the workforce, and a lot of them were on low incomes in lower-paid jobs. So we had more people employed. They had jobs, but, yes, the average wage was slightly lower because so many more people were employed and a lot of them were on low incomes. National members are now saying: “Let’s just get all low-income people out of work.” I think we are now seeing the plan—we are seeing the plan.

Hon Trevor Mallard: Just leave John Key with a job.

MOANA MACKEY: That is right. If the only person in New Zealand who had a job was John Key, then our average wage would be in the millions—the tens of millions. So that is National’s plan, and it worries me deeply that National members continue to stand up and say that this is a good thing whilst ignoring the fact that more and more New Zealanders are unemployed, and more and more New Zealanders cannot cope with the current cost of living.

Tim Groser said that Labour can always find a case study to wave around. I could find thousands of case studies to wave around; I actually visit my food banks and my budget advisory services. When it comes to the budget advisory service in Gisborne, I tell members that it is so overrun at the moment that staff are having to meet people in the hallway. It does not have enough space in its offices to meet people because of how difficult it is, and because of some of the changes that the Minister has made, which are just ridiculous and which have no extra funding. The Minister promised all that extra funding, but the budget advisory service has not seen any yet.

I want to tell members about one case I heard, which I thought really summed up how dire things are for so many of our families. This is the case of a solo mother in Gisborne. Work and Income made an error and put more money into her account than she was entitled to. In a rush of blood to the head—and she should not have done this—she went out and spent the money. She then came back to the budget advisory service in tears, saying that she knew she would have to pay back the money. She was upset about what she had done but it was not often that she had had money in her account, at all, and she acknowledged that she had made a mistake. The service managed to sort that out and someone went around to see her. Do members know what she had spent that extra money on? It was on non-perishable food. She had stocked her pantry. She did not spend the money on alcohol or cigarettes, as National members would have us believe, and she did not spend it on going out. She saw an opportunity, for the first time, to fill her cupboards with non-perishable food. When food becomes a luxury in New Zealand, that is a sad, sad day.

Hon Dr JONATHAN COLEMAN (Minister of Immigration) : I join with colleagues in extending my condolences to the people of Canterbury at this time. It is a very tough period that people down there in Christchurch and Canterbury are going through, and, as the Prime Minister said on Monday, the New Zealand Government and members right across the House are firmly behind them. That city has a great future and will be fully supported by this Government.

Is it not great to have New Zealand’s favourite political punching bag, Phil Goff, back in the country, fresh back from “My Big Fat Greek Wedding”, where—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I take offence to that reference to a member’s family.

Hon Dr JONATHAN COLEMAN: There was no intended reference to a member’s family, and that member knows that that was not intended.

Mr SPEAKER: My concern about this is that I do not want to be endlessly ruling out things. I did not believe that it was a nasty comment. Well, I hear plenty of—

Hon Trevor Mallard: Keep families out of it.

Mr SPEAKER: I think we must come to it. It is my fault that we have got to this stage, and I think it is good advice that families should be kept out of it. That is good advice, and I ask the member to do that.

Hon Dr JONATHAN COLEMAN: Families were never included in that comment, quite frankly. It is great to have the favourite punching bag back in the country. The first thing he had to do when he got back here was to start explaining his handling of recent political affairs. Explaining is losing, and that is what he has had to do. Phil Goff has the survival instincts of a lemming and the hunting instincts of a sheep. We had a fantastic zero Budget—the first ever—and all Phil Goff could do was leave the country. As soon as he got back, he had to start explaining. This is a man who cannot ram home a political point.

The guys on the other side of the House think they are in touch with New Zealand. I can tell the House where I think the Labour Party has gone wrong. These members are no longer representative of what they take as their core constituency. I ask the members over there to show me who has ever dug a drain, driven a bus, or worked full-time in a shop. They have not. There are teachers, union hacks, and activists. There are two business people sitting over there, but the point is that if they think they are in touch with the people in west Auckland, the Hutt Valley, or Porirua, then they are sadly mistaken. That is where the Labour Party has gone wrong. The good news is that there is absolutely no respite for Labour members. I think they will be in that situation for a long, long time. The faces are down there. I do not think the next Labour Prime Minister is even in Parliament, quite frankly.

Moana Mackey made some points before. She thinks that by going on and on and saying that there is no plan, the public of New Zealand will believe her. I can say that I do not think that list MP, a person without constituents, can understand what is happening out there in New Zealand. New Zealanders get it. They know there is a difficult financial situation that this Government has had to deal with. As my colleague Tim Groser said, we have had to make some real changes that will be better for the long-term future of New Zealand.

If members want something to sum it up, I tell them that next year we are halving the deficit, the year after that we are halving it again, and then it will be gone. By 2014 three countries in the Western World will be back in surplus. It will be us, Australia, and Korea. If Labour gets in, I can tell members that it will continue to roll out the unfunded promises and it will continue to borrow. The borrowing will be higher, the debt levels will be higher, and our children will be paying for it forever.

I hope Phil Goff learnt one thing in Greece. He might have learnt—because he is very much influenced by the last person he talks to—that borrowing and borrowing and never paying back the debt does not work. It does not work. At the end of the day, it means that countries go bankrupt.

If one looks at a financial illiterate like Trevor Mallard, who, criminally, was an Associate Minister of Finance—if that man ever gets his hand on the books again—

Mr SPEAKER: No, we are not going to have “criminally” used in relation to a member. The member needs to be more cautious than that.

Hon Dr JONATHAN COLEMAN: I think you will appreciate the subtlety of that term. I was not suggesting that despite being—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. This is the second time you have ruled against that member and he has commented on your ruling. You know that that is against the Standing Orders, and it lacks a bit of taste, as well.

Mr SPEAKER: We do not need that. The member’s point of order was fine until that last point. The member should not be commenting on a ruling. I accept that there may be different contexts of referring to another member behaving criminally, but it is simply not allowed in this House to refer to another member behaving in that way, and the member must not comment on that.

Hon Dr JONATHAN COLEMAN: Sometimes there is a point in distinguishing between the metaphorical and the literal, but what is literal in this case is that Labour does not have a plan to get New Zealand out of debt.

Hon Members: Ha, ha!

Hon Dr JONATHAN COLEMAN: It does not. If it does, let the next Labour speaker get up and lay it out. It has to be more than taking GST off fruit and vegetables. That will not cut it. I can tell members that these guys have spent way too much time in the beltway. When they do occasionally get out, they go and talk to party activists. That is where Labour members get all their information from. If they actually got out and spoke to people in real New Zealand, they would hear from those people that these are tough economic times but they can see that John Key has the plan to get New Zealand ahead.

As I tell you, we will halve the deficit next year and halve it the year after, and then it will be gone. You saw those Treasury predictions. I can tell anyone who doubts Treasury that they are the most conservative economic people you will ever meet. If you look at what we are doing and if you look at the initiatives that are happening around the convention centre, you will see that there are 1,000 permanent jobs. There is a clear plan there. New Zealand is going in the right direction. I reckon Kiwis will continue to put their trust in John Key and the National-led Government.

Mr SPEAKER: Before I call the next member I say that senior members should know they should not say “you”. Members who have been in the House for some time should know that, unless they do not know what they are saying.

JACINDA ARDERN (Labour) : I join with the other speakers who have shared their condolences and expressed their concern for the people of Christchurch at this time. Otherwise, I have heard nothing consistent coming from the Government during this debate. In fact, from the last speaker, Jonathan Coleman, the overwhelming message I just heard was that the Government does not have a plan, so “Can we hear the Opposition’s, please?”. Perhaps he is willing to poach some of our ideas. We have shared plenty of them, I tell Mr Groser. In particular, I want to highlight the absolute denial of reality that has come from the Government during the debate today not only from Minister Coleman, who stated that Labour was listening too much to the people of the beltway and not talking to real New Zealanders, but also right through to Mr Groser, who tried to claim that we were talking in anecdotes.

What is anecdotal or beltway about 10 percent unemployment in Northland? What is beltway about that, I ask the Government? What about the individual cases we have heard that are simply a representative cut of huge swathes of unemployed people in particular regions? We heard the story of two young men in Northland who have been desperately seeking work and have sought to upskill themselves, but they are still in the dole queue. Those are the people who will not be helped by welfare reforms, as the Government claimed. Those are the people who are sitting and waiting desperately for the Government’s plan, which is represented by interest rates—classic trickle-down. Can the Government tell me how long it will take for those people to benefit from its trickle-down economics? How long will that take? At the moment, it is not just 10 percent in Northland; 27 percent of young people are currently looking for work—27 percent. What is anecdotal about that? What is beltway about those figures? That Government is completely out of touch.

I listened carefully to Bill English in question time today, when the Opposition asked him about the cost of living. He continued to use the Government’s classic rhetoric: the success of the tax switch, the sharp edges of the recession, and that somehow the Government has protected the most vulnerable with its economic plan. I ask how that matches with the reality of this situation. Let us cut through the rhetoric. Let us cut through the supposed anecdote and look at the cold hard facts. Some of the people who are most vulnerable in New Zealand are those without secure housing. It is something that our spokesperson on housing talks about at great length. A large number of people in New Zealand, and increasingly young people in New Zealand, are dependent on rentals in order to put a roof over their heads. There has been a 32 percent increase in rentals since this Government has been in charge. That averages out to about $20 per week for the average person in Auckland, where a large number of families are reliant on rental properties for their housing. That is not an anecdote; that is a cold hard fact.

What about the impact on those other vulnerable people who are on fixed incomes? I include in that not only the elderly but also those people who, for instance, are trying to better themselves, particularly in a recession, by going back to university or into skills and trade training. Those individuals in tertiary education have experienced a 16.5 percent increase in the cost of study, and that is before we even look at the increase in costs for those in our compulsory sector of education. The Government’s response to that problem has been to make it more difficult to access loans in order to survive, and if someone is 55 years or older, they can kiss goodbye to their opportunity to even study at all.

What about those older people who are trying to retrain? They might have been in vulnerable job areas such as manufacturing, in particular, which is experiencing significant job losses because the Government will do nothing about the high dollar, and as a result we are losing jobs. What about the older people in the manufacturing sector who may wish to retrain? What are the opportunities for those older people? Labour has already said—we have laid out the challenge—that the consensus on monetary policy is over. It is time to acknowledge that the high dollar is causing Kiwis to suffer. We are losing jobs because of the Government’s inaction on this question. What about other fixed costs? Power prices have increased by 10 percent over the past year.

Dr JACKIE BLUE (National) : I also extend my sympathy and condolences to the people of Canterbury in the wake of the recent earthquakes. On the back of the September earthquake and the more recent ones on 22 February, which caused massive destruction, these recent earthquakes are yet another body blow to the people of Canterbury. I tell the people of Canterbury that we are all with them; they are not alone. My colleague Nicky Wagner, who is doing a wonderful job in Christchurch, told me there was huge relief when, after the earthquakes, the Prime Minister announced that he and the Government were just as determined as ever to rebuild Canterbury and get it back on its feet.

This Government has a plan to get our economy back on track, and Budget 2011 will do just that. The Budget was carefully considered and it will do just that. It is not based on borrow and hope; it was well-thought-out. It firmly sets out the next steps to build faster growth and create jobs, savings, and productive investment. It is about ensuring that the Government gets into surplus by 2014-15. It will effectively halve our deficit next year and halve it the year before—

Hon Trevor Mallard: You mean the year after.

Dr JACKIE BLUE: —the year after. Then we will be on track.

We are a Government that is focused on the issues that matter to New Zealanders. We are not focused on the little things such as paint jobs at Premier House, and we do not get distracted by the BMWs that were bought by Helen Clark. We are a Government that will not be spending up large on a lot of uncosted policies. We are about investing significantly more in health and education, while continuing to protect the most vulnerable New Zealanders.

As we promised, we will be setting this policy out very clearly so that New Zealanders can decide on 26 November. There will be no lolly scramble. It would be irresponsible to engage in a big spend-up, thereby putting our economy at risk, when New Zealanders are working so hard to pay off their own debt. Equally, the Budget is not a slash-and-burn exercise. It is about building faster economic growth around higher national savings, setting a credible path back to surplus, repaying debt, and, importantly for the people of Canterbury, rebuilding Christchurch over the next few years.

We are planning to extend the mixed-ownership model to our four State-owned energy companies and reduce the Government’s majority share in Air New Zealand. We plan to offer investors shares in Meridian Energy, Mighty River Power, Genesis, Solid Energy, and Air New Zealand. This will free up between $5 billion and $7 billion to pay for new public assets such as schools and hospitals. Importantly, we have set the bottom line that the Government must have the majority stake. That way we will keep ownership of those companies.

We asked whether New Zealanders, if they had the choice, would want a stake in failed finance companies or a stake in these rock-solid companies. I think we all know the answer to that question. We know that many New Zealanders are keen to invest in solid, productive assets that have the potential to pay good dividends. Our mixed-ownership model puts New Zealanders at the front of the queue when it comes to buying shares.

We are also determined to ensure that this mixed-ownership model will not disadvantage New Zealanders who rely on the services these companies provide. We have looked carefully at the rules governing these companies, and we are satisfied that they will protect New Zealanders from unprecedented, excessive increases in power prices. In fact, we think there is very, very strong evidence that this type of model will benefit consumers. It will be good for the business and for consumers.

The mixed-ownership model will free up billions of dollars for the Government to spend on important assets such as schools, hospitals, and public infrastructure. It will guarantee Government control over these five important companies, boost New Zealand’s sharemarket, give more Kiwi companies the opportunity to grow, and give Kiwis a fantastic opportunity to invest in this country’s future. Mixed ownerships will achieve those things while ensuring that our country does not get deeper into debt. It is a smart policy, and it will strengthen New Zealand’s economy. A stronger economy is the only way we will create jobs, boost incomes, and provide the high-quality public services we desperately need.

DARIEN FENTON (Labour) : I join with the rest of the House in expressing my sadness and condolences to the people of Christchurch. It is just unimaginable what they are going through. It is good that we can all share our condolences, work together, and stand beside the people of Christchurch. I just wish we could do it on other occasions, because New Zealand is going backwards under John Key’s National Government. National has no plan to get the economy going.

New Zealanders are hurting. I was very interested to hear some of the speakers in this debate—or at least one of them—talk about the “odd folk”, as I think he called them, who are struggling. We meet a lot of those people because, as my colleague Moana Mackey said, we go to food banks, we talk to people in their homes, and people come to talk to us in our various offices.

I will tell the story of a family I met in west Auckland in Paula Benefit—that was a genuine mistake—Bennett’s electorate of Waitakere the other day. They told me exactly how tough life is. This is a really nice couple. They are desperate to pay their way. They have always worked hard, and they want to take responsibility. They have grown-up children, so they want to be able to help their children as well, but they are really struggling. They are struggling because the wife was made redundant in 2010, with no redundancy pay, of course, because the boss said he could not afford it. This Government thinks having minimum redundancy pay and entitlements is a luxury. She searched and searched for other work. She has been to Work and Income, and she has done the job seminars over and over. She has tried to upskill on her very meagre income, but there is no job for her.

Then there is her husband. He was working and he lost his job too. There was no redundancy, and both were on the scrap heap with a mortgage to pay, and facing increases in the costs of living such as power, petrol, food, and other costs. The husband, like his wife, was very determined to find work, and he went looking. He finally found some work in South Auckland. From where he lives that is a very long way to go. The job is in a factory stacking tyres, and he is getting paid $14 an hour. Getting to work costs him $100 a week in petrol, so there is not much left in their pay each week. As is inevitable in that sort of job—an awful job—he was injured, so the Accident Compensation Corporation paid him 80 percent of $14 an hour, then said he was fit for light duties. He has gone back to that awful job, where there are no light duties. He has gone back before he should have because that is the only way they can at least pay their mortgage. His wife told me that some days they eat, and some days they do not—some days they eat, and some days they do not.

This is a tragic story. I was just appalled. I did not know what to do. I will go back and make sure they are receiving their entitlements, but I make it clear that despite all of the Government’s assurances about protecting the vulnerable from the sharp edges of the recession, this couple, and many like them, are not being protected. They are struggling. These are good people. They are good people; they have always worked when they can. They have always worked hard when they can find a job. They are not being protected. As I said, there are many like them. They are not bludgers. They are not bludgers and they do not deserve what has happened to them.

This Government is a disgrace and should be ashamed of stories like this one. I know that Jonathan Coleman does not think that these people exist, but they do. The Government has turned its back on hard-working New Zealanders in its determination to look after its mates and big-business interests. This Government has no plan for job creation. As I said, Kiwis want to work. Many of them are desperate to work, but not enough jobs are being created, and there are not enough jobs where people can make ends meet.

The price rises announced this week will not surprise struggling Kiwi families like this one. They reinforce the need for Labour’s policy of removing all GST from fresh fruit and vegetables. That will make a difference to the couple I met the other day. But it is more bad news for these low and middle income earners, these Kiwi families, under this Government. Unfortunately, John Key’s Government chose to hand out billions of dollars in tax cuts to better-off people and to the wealthiest New Zealanders, and most families are finding it harder.

NIKKI KAYE (National—Auckland Central) : One thing that we learn when we door-knock is that we will hear some of the most personal stories. We learn about what is happening on the ground. I have a conversation very regularly with people that goes like this: “Why is Labour so out of touch?”. The conversation goes like that because people understand that it has been a tough couple of years, but they also understand that they need to have a Government that will put in place policies that will secure their future. People understand what National was handed. They understand that we had a major global recession. They get it that we have had several massive events in Canterbury—we have a $5.5 billion bill there. They understand the blowout in ACC. They understand that the Opposition has unfunded policies. I understand some of the situations that have been raised by the Opposition, but I tell those members that some of the people who come through my office—and I have had 7,000 constituents do so—get it. They are smart, intelligent people, and they want to have a Government with a plan and policies that will ensure their futures are guaranteed—and they have that.

Let us talk about our plan. What we have done is massive in the time that we have been in Government. We have reformed the taxation system. We have significantly reduced regulation with the reform of the Resource Management Act. We have reduced regulation in the building legislation. We have been aggressive in terms of free trade with Hong Kong, Malaysia, and now India. We have done a significant amount in terms of the reform of governance within Auckland. We have done a whole lot of things that are all about improving the economy in New Zealand, because we know that it is not the Government that creates a whole lot of jobs; it is actually the small businesses out there that do so. We know that improving the economy is the best thing that we can do for some families.

I want to make it very clear that we on this side of the House care just as much as the members on the other side of the House. The difference is that we know that people out there are smart. They are intelligent, and they understand that our policies add up and that we have made some really hard decisions to help some of our most vulnerable people.

I will just briefly touch on Christchurch. It is really tough down there. This is huge for our country. The Labour members stand up and give speeches about Christchurch, but how can they stand up and give those speeches when Labour has not actually said how it would pay for the rebuild of our second-largest city? My biggest request to those members is that they explain that. We hear them talk about $5 billion worth of spending policies, such as taking GST off fruit and vegetables, the $5,000 tax-free policy that David Cunliffe has announced, and all sorts of other things. I say people are smart. They understand that we cannot afford those things, when we are trying to do the basics just in order to rebuild our second-largest city.

My message for the Labour Party is that the biggest thing that people say to me is that those members are stuck in a time warp. They are living in 2004; they are not in 2011. Their policies are all about spending. They are not prepared to make hard decisions in terms of reforming our economy, reforming our social welfare system, and ensuring that we have standards in our education system so that we do not have a whole lot of young people who are unemployed. But we have here a very clear contrast. We have a very intelligent electorate, partly because of social media. People can actually look at the costs of parties’ policies. People get it that the members on this side of the House are prepared to make really hard decisions in the social area, about education, and about the economy in order to ensure that we turn this country round, which we have started to do, in one of the hardest periods our country has seen. I can tell members that it does not matter whether I talk to constituents in Grey Lynn or in the central business district; they get it. They understand that we care just as much as the Opposition does, but that we have the policies to turn this country round.

  • The debate having concluded, the motion lapsed.

Westpac New Zealand Bill

Third Reading

CHRIS TREMAIN (National—Napier): I move, That the Westpac New Zealand Bill be now read a third time. This is a private bill promoted by Westpac New Zealand Ltd. To date the bill has been steered through the House by my colleague Craig Foss, and it is a privilege to be able to steer this bill through its third reading today. The bill provides the mechanism to enable certain assets and liabilities of Westpac Banking Corporation in New Zealand, being principally assets and liabilities of Westpac Banking Corporation’s New Zealand institutional banking business, to be vested in its New Zealand subsidiary, Westpac New Zealand Ltd. Westpac operates in New Zealand through both a branch, the Westpac Banking Corporation New Zealand branch, and a locally incorporated subsidiary, which is called Westpac New Zealand Ltd.

Having regard to the Reserve Bank of New Zealand’s local incorporation policy, Westpac Banking Corporation and Westpac New Zealand Ltd have agreed with the Reserve Bank that Westpac Banking Corporation will transfer certain assets and liabilities, being principally assets and liabilities of its New Zealand institutional banking business, to Westpac New Zealand Ltd. The transfer will reduce the size of the New Zealand branch and will assist in ensuring that it continues to remain below its external liabilities cap both in periods of growth and in market volatility. Importantly, the transfer is also beneficial in terms of the Reserve Bank’s local incorporation policy, as it will increase the size of Westpac New Zealand Ltd and will consequently allow the Reserve Bank to have greater control over the assets and liabilities being transferred, were there ever to be a bank failure event.

Legislation is the only means by which the designated assets and liabilities can be vested in Westpac New Zealand Ltd efficiently and economically, without disrupting the conduct and continuity of Westpac New Zealand’s banking business. The bill also ensures minimal disruption to Westpac’s customers, employees, and suppliers, and given the size of the bank, this is extremely important indeed. I wish to offer my thanks to the members of the Finance and Expenditure Committee for facilitating the smooth and timely passage of the bill through the House, and to the officials who appeared before the select committee to offer advice on the bill. My thanks also go to the House for its support for, and its detailed attention to, the bill. I commend this bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn) : I rise to take a call in the third reading of the Westpac New Zealand Bill to confirm that the Labour Opposition will be supporting this bill, because it is important to ensure that the New Zealand banking system remains strong and stable. This bill gives effect to this component of that financial security: to ensure that locally incorporated subsidiaries are of sufficient scale to provide good risk management within our system, pursuant to the regulations of the New Zealand Reserve Bank.

I will firstly draw on the submission by Westpac, in taking the House through the reasons why this bill is necessary, and I will then note several important contextual issues that surround it. Westpac, in some form or another, has operated in New Zealand for 150 years or so. Westpac New Zealand Ltd is a locally incorporated subsidiary of Westpac Banking Corporation, which is headquartered in Australia. That subsidiary has operated in New Zealand only since 2006, and it did so pursuant to regulations passed by the New Zealand Reserve Bank. Westpac New Zealand Ltd conducts Westpac Banking Incorporation’s retail operations in New Zealand, which includes consumer and business banking. The Westpac Banking Corporation branch, which is Australian owned, conducts the institutional business.

Under the regulations that institutional business is subject to a cap of $15 billion of assets and liabilities, excluding those to related parties, which is known as a liabilities cap. The Reserve Bank imposes on branches of overseas banks such as Westpac Banking New Zealand a condition of registration that restricts them from having liabilities in excess of that cap, in order to ensure that the foreign-owned entity does not become systemically important in the New Zealand system—that is, if the foreign-owned entity is too big and the market enters another period of considerable turbulence, then the risks go up for New Zealanders of too much of the asset book being held in foreign hands. That is why we have the rule and that is why a proportion of the assets and liabilities currently held by the Australian-owned parent directly are being transferred to the New Zealand incorporated subsidiary through this bill. That is a very important difference.

So what is being transferred? The answer is some institutional customer deposits, some institutional customer transactional banking, some institutional customer lending, some debt capital markets, and some corporate advisory functions. Of course, that brings to the fore the broader question of why more of Westpac Banking Corporation’s New Zealand assets and liabilities should not be transferred into the New Zealand subsidiary, and why it is in the interest of the bank to maintain a dual structure. Westpac is not the only bank that does that. ANZ, the Commonwealth Bank of Australia, and Rabobank also maintain the dual structure between a foreign-owned entity and a New Zealand - incorporated subsidiary. It may well be that in future it is an issue that a future Government might wish to turn its mind to, in consultation with the banking industry. For now, the Labour Opposition is satisfied that the provisions of this bill are in keeping with the object of the Westpac New Zealand Act and in keeping with the Reserve Bank’s policy to ensure a reasonable level of financial security and stability in New Zealand. For that reason, we support the bill.

I wish to turn briefly to the economic context within which this transfer is taking place. In doing so, it is important to acknowledge that the banking system is of huge importance to New Zealand. Approximately 93 percent, I think, of the banking system is owned by entities that are not headquartered in New Zealand—they are foreign-owned, as it were. They include, notably, the four big Australian banks. The exceptions to that rule are Kiwibank, started by the former Labour-led Government, which has about 5 percent of the market, other smaller entities like TSB Bank and PSIS, and other locally based organisations.

New Zealand is too indebted. That is a theme we have heard a lot about from the Government, before the Budget came out with the figure of $380 million of Crown borrowing a week. It turned out that it was only $280 million a week that was needed; the other hundred million was purely discretionary timing - based. That hides the larger truth, and perhaps deliberately so, that most of the international investment deficit, our net debt as a nation, is not Crown debt, is not public debt, and is not debt owed by the taxpayer. It is debt owed by individuals through the banking system, some 55 percent of which has been invested in house mortgages. I think it is common ground across the House that New Zealanders went on a bit of a house-buying binge over the previous decade.

Hon David Parker: The whole Western World did.

Hon DAVID CUNLIFFE: That is exactly right. Probably no Government in the Western World quite appreciated the size of the housing bubble while it was on. Now that bubble has come to the end of its peak, and we are dealing collectively with how best to unwind it. It is clear that if 90 percent of our total debt is private and only 10 percent is public, no amount of cost cutting in the public sector will solve the private debt problem. By logic, if the Crown’s budget was cut by 50 percent, that would save only 5 percent of the total because it is off a base of only 10 percent. That is a tremendously important idea for New Zealanders to get their heads around.

New Zealanders are borrowing too much and they are borrowing for the wrong purposes. The breakdown of that private debt, which is owned by the banking system, including Westpac, shows that to be true. As I said, about 55 percent of private debt is in house mortgages. Some 25-odd percent of it is farm debt. That debt has plateaued, not decreased, despite record prices for many commodities. I think it is a 27-year record at the current time. Some 16 percent of it, if I recall correctly, is other business debt and other various miscellaneous components. The point is that New Zealand is over-indebted and we need to think vary carefully about how to unwind that problem. Owning our future as a country means getting the debt down by changing the economic incentives that have created the problem of property speculation and the resultant over-borrowing. There are many ways to do that. The Labour Opposition will lay out for the nation the strategy we have been working on within the next several months, so that New Zealanders can get their heads around what real systemic change would look like, compared with the “steady as she goes”, shall we charitably say, option that is offered by the current Government.

On this legislation it is important to ensure that Westpac New Zealand has a sound and stable New Zealand operation while enjoying the benefits of linking to its trans-Tasman parent, such as access to capital. I acknowledge the role of Westpac and of the other major banks in standing behind New Zealand’s needs during the financial crisis. Although the immediate crisis is over, the challenges facing our economy remain.

We look forward as a Labour Opposition and as an incoming Government to working closely with the banking system to find the win-wins to work out how we can, to the profit of the financial sector as well as the real economy, grow the pie for all New Zealanders to ensure healthy growth and more New Zealanders in jobs. It might mean as a result more tax revenue in the Crown’s coffers, fewer people on benefits, and a rising tide lifting all boats. We know that to successfully do that we need a real plan for growth. We know that rising inequality will not, and should not, be part of that plan. We know that simply selling the family silver is not a substitute for a real plan. We know that a real plan must incorporate progress in the real economy, the export sector in particular, as well as improving our savings picture and the health of our financial system. If the Government is trying to improve our savings system, why is it cutting incentives to KiwiSaver? Why is it forgoing contributions to the largest single accumulator of savings, which is the New Zealand Superannuation Fund? Is it not about time that we had a Government that was more committed to a strong savings policy? The Labour Opposition will release its savings package before the election. I think it is fair to say that it will be significantly bolder than that announced by the Government in the current Budget.

The Opposition supports this bill. It is important that we have a substantial part of the assets of the banking systems locally incorporated in New Zealand. This bill effects that for Westpac New Zealand. We support its passage in this third reading.

AMY ADAMS (National—Selwyn) : I rise to take a call in the third reading debate on the Westpac New Zealand Bill. I believe I have spoken in every debate on the bill as it has passed through the House, so I have already said a lot of what I wanted to cover and I do not propose making a long contribution. I will, though, take the opportunity at the beginning of the third reading debate to acknowledge the previous sponsor of the bill, who is also the previous chair of the Finance and Expenditure Committee, Craig Foss. I have not had a chance yet in the House to congratulate Mr Foss on his promotion to Minister, so I will make a comment as we complete the passage of this bill that Mr Foss has sponsored and shepherded though the House. I think he has done an outstanding job in his previous roles in this Parliament. I have every confidence that he will make an equally outstanding contribution in his new role as a Minister. In fact, I should refer to him as the Hon Craig Foss; it takes a while to get used to that.

The Westpac New Zealand Bill, oddly enough given its name, is not really about Westpac in the most holistic sense. The bill is really about the need—and both previous speakers have certainly touched on this—to ensure that New Zealand has a strong, stable banking environment. Certainly, the last few years have shown us the importance of that. As the previous speaker has said, I think we can all be very grateful, actually, for the way our banking sector has responded in these very challenging times. Although the banks have responded extremely well through the global economic crisis, and have to date responded very well through Canterbury’s own crises, I add what is my plea, I guess, to those “big four” banks, and to all the banks in New Zealand, that they continue to support Cantabrians as we carry on through our own regional crisis.

The bill is driven by the Reserve Bank’s local incorporation policy, which in this sense is really about ensuring that the systemically important banks, the banks that are so big that we need them to be strong and stable, are controlled and incorporated locally, so that if there is ever any sort of banking crisis, the Reserve Bank is able to wrap around those banking organisations and ensure that they are protected for the good of all New Zealanders, and continue to provide the service to New Zealand that we expect of them. A part of that local incorporation policy says there is a liabilities cap of $15 billion, and if banks are to exceed that cap they need to be based and owned locally by a locally incorporated company.

The situation with Westpac, as Mr Cunliffe has commented, is that it is one of the four banks that currently have dual banking registration. The bank has operated to date, and will continue to do so, as a combination of a branch of the Westpac Banking Corporation, which is Australian, and Westpac New Zealand, which is a locally incorporated body. In 2006 the New Zealand branch of the Westpac Banking Corporation, in a bill very similar to the one we have before us, had the consumer and retail business banking transferred over to Westpac New Zealand. This bill mirrors that process, and adds the institutional banking and financial markets operations to that locally incorporated pool.

The important thing to get on record—I have said this in previous debates but it is worth repeating—is that this bill in no way will affect anyone who might be listening or reading these debates and who banks with Westpac in New Zealand. It is entirely limited to the institutional banks, and even for those organisations the benefit of passing the bill through this House is that there can be a seamless transition that really does not affect customers in any way. I just reiterate to all Westpac customers that the bill will have no effect on them, except in the wider sense, which is that all New Zealand consumers, banking customers, and residents can have confidence that because of this bill, and bills like it, we will continue to have a strong and stable banking environment that the Reserve Bank can step up to, can wrap around, and can have good prudential oversight of in years to come.

The bill, as I said, mirrors what happened in 2006. It is a necessary step forward to ensure that Westpac continues to operate within the liabilities cap of the local incorporation policy. It is a necessary bill; it is the best way to achieve the objectives that the Reserve Bank requires of Westpac. I commend it to the House.

Hon DAVID PARKER (Labour) : At times like this listeners will get an appreciation that a lot of what we do in this Parliament we actually agree on. I do not quite agree with the way in which it was expressed by the prior speaker, Amy Adams, who said that the Westpac New Zealand Bill does not affect depositors. Actually, it does have effects for depositors that are positive.

The background to this bill is that under the last Government the Reserve Bank came to the Government and said it was concerned that the dependence of New Zealand on overseas-based banking institutions could be detrimental to the interests of New Zealand depositors if we came to a tight squeeze, because there were fewer instruments the Reserve Bank would use to control the ranking of unsecured depositors if there was a big clean-out in the banking system. The Reserve Bank wanted to make sure that the interests of New Zealanders could be secured against the assets of New Zealand - domiciled branches of banks, rather than those banks being run as a branch of an Australian entity. As a consequence, the last Government and the Reserve Bank—and now the current Government and the Reserve Bank—have taken steps to ensure that large New Zealand - based banking operations have a New Zealand - based branch that has New Zealand - based assets that would be available to depositors in the event of a failure of the bank. Otherwise there would be a contest between New Zealand - based depositors and Australian-based depositors over what would effectively be Australian-based assets, even if some of those assets were physically based in New Zealand. That is the underlying reason why we have this change. As a consequence of this change, we will have improvement in the banking system for New Zealand.

The other point I will develop was raised by my colleague the Hon David Cunliffe, which is the position that the National Government is taking with regard to savings and the economy. Effectively, it is saying—I think the phrase Mr Cunliffe used was “steady as she goes”. I do not think he was referring to the track by The Raconteurs; he was referring to the economic vision that the National Party has for the country, which is really that we do not have to change much. In its view, New Zealand’s lot will improve despite the settings of the New Zealand economy being largely unchanged.

I challenge that view. I think this bill is an illustration of why that view ought to be challenged. Australia owns not just its own banks but ours. That situation points to a fundamental problem that we have in savings: we do not save enough and we spend too much.

David Bennett: It’s nothing to do with savings.

Hon DAVID PARKER: The National member for Hamilton East says it is nothing to do with savings. Of course, it has everything to do with savings. If New Zealand does not save enough as a country, then we get poorer year by year, because we actually have a current account deficit and we import more and more money into the country via banks like Westpac. An expression of how poor we are as a country is the fact that we do not have enough money in New Zealand to own our own banks. They have become Australian owned.

Hon Member: This is rubbish.

Hon DAVID PARKER: The National Government still does not get it. It came into Parliament a little while ago, about a year ago, and said that the big difference between New Zealand and Australia is mining. That is how it was going to catch up with Australia—through mining. We on this side of the House have known that a fundamental problem with the New Zealand economy is that we spend too much and we do not save enough, and that is why we do not own enough of our own country.

David Bennett: That is rubbish.

Hon DAVID PARKER: We hear that again from National. The member is just completely wrong. That lack of understanding from the member from Hamilton is underlined by the projections in this year’s Budget. The Government has not fixed New Zealand’s structural economic problems, as evidenced by the fact that in the Budget projection the current account deficit grows in 4 years to 6.9 percent of GDP. So when we get back eventually to some economic growth, after the prolonged recession that we are suffering in this country, we go straight back into current account deficit and we get poorer again, I say to Mr Bennett, and not richer. That shows up in the net investment position projected in this Budget. This is the statistic that Mr English has said is indicative of New Zealand’s greatest problem, and I think Sir Roger Douglas would agree. The net investment position in New Zealand is the net balance of New Zealand’s assets in the world—what we own in the world less what we owe to the world—and for New Zealand it is negative. At the moment it is negative 76 percent of GDP—negative 76 percent of GDP—and it goes to negative 86 percent of GDP or thereabouts. It is negative 80-something percent; I will check the number and then put it in my Hansard accurately.

New Zealand’s net international investment position goes backwards because, despite the changes in this bill, brought about by the need to have reliance on Australian banks because we do not save enough in our country to own our own financial institutions, we have a problem. The point I am making to the National members, who plainly do not get it for themselves, is that those problems will get worse under this Budget because in the projections under this Budget, New Zealand’s net investment position will get worse from every year after this current year. Year on year, to the end of the projection period, New Zealand will continue to get poorer every year, as our net investment position gets worse as a percentage of GDP and in nominal terms.

If those projections are right, and they are the best projections of the Government and Treasury, and if the Government is re-elected, if it gets its way and sells off all State-owned enterprises, or half of the State-owned enterprises it has on the block at the moment, and if it is on the Treasury benches for a further 3 years, then by the end of that 3-year period, a total of 6 years after it was first elected—this is assuming it is re-elected for a second term, which of course we are fighting against and do not accept will be the case—under the Government’s economic prescription New Zealand’s net international position will get worse year on year on year.

Those Government members are quiet now—they are quiet now. That is the reality of the Budget. It shows that the underlying structural problems of the New Zealand economy are not fixed. That is why members on this side of the House have said that the issue is not mining in national parks; the issue is New Zealand’s spending compared with how much we save. It mainly concerns the private sector. There is a Government deficit that is significant at the moment, and that is made worse by some of the Government’s policies. But the greater problem in New Zealand is our private indebtedness. We are still dissaving, as a nation, and the Government’s own projections in this Budget show that at the end of 6 years in Government—if the Government were to be re-elected for another 3-year term—New Zealand’s net international position will get worse, year by year by year.

New Zealand will still be reliant, indeed more reliant, on Westpac and on the other major Australian banks, because New Zealanders will not be saving enough. Of course, the Government’s own policy in that regard to destabilise and undermine KiwiSaver will be one of the reasons why that position will continue to get worse. The bigger problem, of course, is that the Government’s Minister for Economic Development at the select committee last week said that agriculture was the only game in town. He paid due regard to the importance of agriculture, and I have no problem with that, but he does not see the importance of exports in other sectors that we need to grow if we are to increase our earnings in the world, turn round our current account deficit, and start getting wealthier as a nation rather than poorer, as is projected by the Government’s own Budget.

Dr RUSSEL NORMAN (Co-Leader—Green) : I rise to speak on the Westpac New Zealand Bill, a private bill first promoted by the Hon Craig Foss. The Green Party will be supporting this bill, which is the final instalment of the process of forcing Australian-owned banks to be locally incorporated. Getting Westpac to move its back office to New Zealand has been a protracted process that has involved a lot of kicking and screaming, but finally it seems we have managed to get Westpac to incorporate in New Zealand and actually go through the necessary hoops so that one of our major banks is incorporated in New Zealand and is able to be controlled, to some degree, by the Reserve Bank, our regulator.

This bill has a number of ironies about it. One of the ironies is that the bill is structured in such a way as to be tax-neutral for Westpac. The irony of this, of course, is that Westpac itself is a massive tax avoider, and was convicted of tax avoidance in the High Court. Westpac was found by Justice Harrison to have illegally avoided $586 million of tax, in a case that was settled a year or so ago. The case was finally settled in an out-of-court settlement that was released on 23 December 2009. Many of the listeners to this debate may not have noticed or heard about this particular massive tax avoidance case that Westpac was involved in, because, of course, it was settled just before Christmas and announced at that time. This bill has special provisions in order to ensure tax-neutrality.

The thing about Westpac and the other Australian-owned banks is that they operate in their own interests, which is perfectly understandable, and we should expect nothing else. For example, during that period, according to the judgment about the activities of Westpac in that tax-avoidance case, Westpac had invested about $4.3 billion in its tax-avoidance transactions by August 2002. At the time that was 18 percent of the bank’s total assets, which I think is a very interesting insight into Westpac’s approach to the New Zealand economy. The bank had 18 percent of its total assets invested in tax-avoidance activity. We know that this economy is desperately short of capital, and has been for many years—capital invested into the productive sector—yet we find that one of our major banks had invested nearly one dollar in five in its tax-avoidance transactions rather than in the productive economy of New Zealand. Here we are in this Parliament passing a law that ensures that in the process of transferring these assets there will be tax-neutrality for Westpac. It will not get more tax liabilities—which is perfectly fine—in the process of incorporation in New Zealand. But Westpac itself has a history of illegal tax-avoidance, and it was caught out in that regard.

The way this works is, I think, an interesting insight into the way that Westpac approaches New Zealand. It is why we need to be pretty cynical about the big banks in order to regulate them very closely to make sure they work in New Zealand’s best interests. The way this particular tax-avoidance scheme worked was that the cost of loans was claimed as a tax deduction. Westpac made loans to overseas companies, effectively. The cost of those loans was a tax deduction against the New Zealand tax system, but the interest received on those loans was not taxable. It was a fantastic arrangement for Westpac. That is how it made a huge amount of money and avoided half a billion dollars worth of tax at the time. The bank said that the cost of making those loans was a business cost, so it claimed it as a tax deduction, and then it said that the interest it had received on those loans was not taxable. It did that by getting the interest through an overseas entity and then transferring it back.

So on the one hand we are quite reasonably ensuring that this bill is tax-neutral for the certain vesting operations that we are supporting, but on the other hand Westpac itself has a long history of snubbing its nose at the New Zealand taxpayer—in particular, in this transaction, when Westpac and the other Australian-owned banks were caught unlawfully and illegally avoiding tax. They owed $2.5 billion worth of back taxes, including interest payments. In the end, even though Westpac owed $961 million all up, it ended up getting a cut-price deal and paying only $760 million to the taxpayer of New Zealand, although with interest payments it owed us $960 million. As the judge said at the time, these transactions made no commercial sense. They were purely transactions to unlawfully avoid tax.

That tells us something about the way in which Westpac views New Zealand. It tells us something about the way in which the bigger Australian banks view New Zealand. They do not see us as a base that they want to invest in and support; they see us as a profit centre for sending money back to the Australian owners. It does not surprise me, and it should not surprise anyone, in our attitude towards the big Australian banks, that they would behave in this particular way.

A number of other aspects of the operation of Westpac have been a cause for concern. We have heard about some of the issues around the asset bubbles that have occurred in New Zealand over the last decade. These have primarily been in the housing sector and also in rural land. There have been asset bubbles in both those sectors, and the big Australian banks have been promoting and inflating those asset bubbles in an incredibly irresponsible way. For example, front-line staff were encouraged to push loans on to people who could not afford them, because Westpac and other banks wanted to increase their loan book to increase their profits. So we have had this huge bubble in the housing market and elsewhere, which we are still trying to get ourselves out of. In that respect, Westpac was not acting in our national interests.

Of course, the $5 million pay packet for the chief executive of Westpac has become an issue as well. It is a most incredible and ridiculous pay, which all Westpac customers end up paying for. Then there is the issue of the tender for the master banking contract. Westpac is the Government banker, and the master banking contract has not been tendered since David Lange was Prime Minister. But thanks to pressure from the Green Party it appears that finally we will go through a tender process for the Government’s banking contract, and I congratulate the Government on seeing the light in that respect.

We need a strategy in New Zealand, both to increase savings—the banks will obviously be part of that—and to find a way to move capital into the productive sectors of the economy. The banking system—in particular, the system of the big Australian banks like Westpac—has been a profound failure in moving capital into the useful part of the economy. Instead, it has pushed it into the not-useful part of the economy, which has been the housing asset bubble. As Mr English has said many times, it was a debt-fuelled asset bubble. Mr English is absolutely right to call it a debt-fuelled asset bubble. I see Mr Bennett over there shaking his head; he does not agree with Mr English. Well, I agree with Mr English. He is right. It was a debt-fuelled asset bubble in which the banks were shoving capital into the non-productive sectors of the New Zealand economy.

We need an alternative strategy. One of the strategies on the table is to invest in the existing clean-technology sector in New Zealand. We have a number of clean-technology energy companies in New Zealand that are very successful and have already started exporting. They could be the core and foundation of a clean-technology sector exporting to the world. These are, of course, the State-owned energy companies, which the Government proposes to privatise. These State-owned energy companies already have a lot of expertise and experience in clean technology and could provide the foundation for a clean-technology export sector to the world.

The great thing about those companies is they will not fall into overseas ownership and move overseas. They also have access to a lot of capital. They can do that through their own resources or by issuing green energy bonds. Instead of using banks like Westpac as a way to very ineffectively mobilise capital—because the banks tend to put it into the wrong sectors—we can actually mobilise capital directly by getting the energy companies to issue green energy bonds, the capital of which is directed into the clean-technology sector. The sector is then a platform to export to the rest of the world and also to partner with the private sector.

The Green Party supports keeping the companies in public ownership, but they should partner with green energy entrepreneurs so that they can actually export to the rest of the world. They can mobilise capital using green energy bonds rather than having to rely on the banks, which have a very conservative strategy of simply investing in what they think are safe returns: primarily land, particularly the housing market, but also the rural land market. Those markets, and making bubbles in those markets, are fine for the banks, at least in the short term. However, that is not in the national interest of New Zealand, where we want to promote capital being moved into the productive sector.

We will be supporting this bill. We think it is important that Westpac and the other banks be incorporated in New Zealand and be under the regulatory control of the Reserve Bank. This bill is part of that step but it is far from the solution to the challenge we have in our capital markets in New Zealand. Although it is an important step, it is just the beginning of the reforms we need to make.

RAHUI KATENE (Māori Party—Te Tai Tonga) : Over the last few months when I have stood in this Chamber to debate a bill, like the Westpac New Zealand Bill, I have had several déjà vu moments—those experiences of having been here before. It is a bit like what we in Christchurch have started to call Groundhog Day—been there, done that, ready to move on. Debating these bills is an experience akin to being on the set of a rolling movie called The Emperor’s New Clothes.

Some members in the House might remember that story. It is a story in which two weavers promise the emperor a new set of clothes, clothes that are invisible to those unfit for their position, stupid, or incompetent. When the emperor parades before his subjects, however, a voice rings out: “He isn’t wearing anything at all.”

Of course, no one in this House could be said to be unfit for their position, or stupid, or incompetent, so I am very pleased to stand here today and see that we are all clothed. But what may be invisible is the cloak of steel that every Christchurch MP wears when he or she comes back to this House. It is a cloak that reflects the courage, the grit, and the sheer determination of each one of our constituents as they will themselves to face another day in the wake of ongoing tremors of the earth.

The point of the story is just to point out the utter contrast that Christchurch MPs encounter as we try to reconcile the reality of our lives at home with our business in the House. It is such a constant challenge to focus on the events of the legislative day when back in Christchurch my Aranui office is unusable again—or was until late this morning. The water is out, the roof has partially fallen in, and what is even worse for my staff is that the TV is munted.

Following the double whammy of aftershocks on Monday, my constituents in the eastern suburbs are once again confronting the challenge of cleaning up the liquefaction. We have people staying in Cowles Stadium Welfare Centre again. The water tankers are out on the roads and the Farmy Army and the student army are getting themselves prepared to get out on the streets again. Throughout it all, fatigue and tension overwhelm us all.

It is not just the nerves and the buildings that have taken a hit. Our economic position is once again threatened by as much as an estimated $6 billion in new damage. I lay all this before the House as part of the context in which we consider the Westpac New Zealand Bill. The entire economy, and, in particular, the Canterbury economy, is in such a state of uncertainty as we reel from the impacts of earthquakes and related damage. We must ensure we respond to such uncertainty by acting in decisive ways to improve efficiencies and to do whatever is necessary in any quarter to achieve the stability we all desire.

So in that sense we turn to this bill knowing that it is part of a move to improve compliance and accountability in the banking sector to ensure the efficient conduct of Westpac New Zealand’s core business. The Māori Party supports the intention of this bill to vest certain assets and liabilities of Westpac Banking Corporation into Westpac New Zealand rather than their remaining incorporated in Australia. It is consistent with the Reserve Bank’s local incorporation policy, and it complies with the overall direction to bring such banks home.

We understand also that legislation is the only means by which the vesting of these assets and liabilities in Westpac can be effected efficiently and economically. As such, we will, of course, support this move. As I understand it, both Westpac Banking Corporation in Australia and Westpac New Zealand will be able to continue to share information and intellectual property. These are all factors we can support in the third reading of the bill. In particular, we support the basic principles of a local incorporation policy as it is consistent with Māori Party policy of keeping things local, of investing in our own sovereignty.

Six months ago Ngāi Tahu leader Mark Solomon, along with Tuku Morgan, Naida Glavish, and Ngāhihi O Te Rā Bidois, attended a meeting on public-private partnerships hosted by Sir Ron Carter, with all the major banks and 40 major companies. At that meeting there was a big banner asking: “Are iwi ready to invest?”. Mark Solomon faced the gathering and told them that their question was back to front. He suggested that the question should read: “Are you ready to invest with iwi, as we have stood in front of you all for 150 years and been absolutely invisible.” There is something in his comment, I think, to consider as we reflect on the direction outlined in this bill—trusting in our own domestic market.

Finally, although we support this bill at its third and final reading, I just note that at some point in this House we need a full discussion about the leadership of the banking and the finance industry in terms of putting in place measures to prevent or mitigate the damaging effects of a global recession.

DAVID BENNETT (National—Hamilton East) : I will take just a short call with regard to the Westpac New Zealand Bill, a bill that many of us have spoken about a number of times in this House. I congratulate Craig Foss—the Hon Craig Foss now—who shepherded this bill through the House. His position as chair of the Finance and Expenditure Committee has been ably taken over by Amy Adams.

When we look at this bill we see that there is a fairly simple reason and explanation behind why it came before this House. Basically, it is to enable Westpac to meet its obligations with regard to its capital requirements under the Reserve Bank of New Zealand Act. The changes proposed in the bill enable Westpac to meet its obligations and are in the best interests of Westpac itself. It is in the best interests of the New Zealand Government and the New Zealand economy to have Westpac operating under the rules and regulations of the country. It is also in the best interests of the many people who invest, whether by putting their savings into Westpac or by drawing funds from Westpac as borrowers, in the sense that they have a bank that is stable, large, and part of the economic framework of New Zealand.

However, the Labour Party and the Green Party have tended to use this bill as bank-bashing legislation for their purposes. They try their rhetoric around the devil they see in the Australian banks and the New Zealand economy, they perpetuate a lot of myths that create a lot of distraction in our economic environment, and they create a perception that is simply not the case. The Labour Party says that we can have banks only if we have large savings, and the Greens talk about banks that have invested in the wrong things. Well, they cannot blame the Australian banks for those situations. That is the typical Labour and Green guilt and jealousy trip that they put everybody under. The reality is that banks deal with the issues that an economy grants them.

The real problem in New Zealand has been the economic framework that the previous Government set up with regard to property investment, which led to the issues that have been resolved by this Government in our tax changes. This bill is very important in the sense that it is not about Australian banks being dominant in our market, or anything like that. It is about providing the economic framework so that these banks can perform their functions.

I think we need to pay tribute and thank those big banks that have provided stability in the New Zealand economy, which most other economies in the Western World have not had. If we look at places like America and Britain, they would have given their teeth to have had stability in their banking sector over the last 4 or 5 years—stability that New Zealand has through having the big Australian banks in this country.

In essence this bill is partly procedural, in the sense of enabling Westpac to meet its requirements, but also it is very important for our economy in the sense that we need to have a strong Westpac bank that is able to perform its functions as it desires as a big bank in this country and as part of the Australian banking network as well, through its parent company. We look forward to this bill passing through the House.

STUART NASH (Labour) : I would like to clarify one point that the last speaker, David Bennett, made. He said that the Labour and Green members had used the Westpac New Zealand Bill for bank bashing. Well, I can clarify that the Labour Party is supporting this bill. We have always supported this bill. In the Finance and Expenditure Committee we were very proactive in making sure that this bill went through without any interruption whatsoever. It might have been 3 weeks that the select committee spent deliberating on this bill. There were a couple of small changes, but not once in the select committee process did we mention anything that was bank bashing.

What the member may have been referring to—and I would not want to put words in his mouth—is that occasionally in our speeches we have highlighted some of the inequities in the banking system as it relates to ordinary, good hard-working New Zealanders. But we certainly do not think this bill is bad banking legislation. This is good banking legislation. The Labour Party, of all parties, understands that a good, solid, sound banking system is absolutely important to the economic well-being of an economy. In fact, once Parliament had risen for the 2008 election, Michael Cullen came back here to do a considerable amount of work at the height of the economic crisis to ensure that our banking system was stable and to ensure that the deposits of all New Zealanders were secure. That is how much we believe that a secure, sound, robust banking system is vital to this economy.

Before I talk about the bill, there is one thing I would like to correct. I was deeply offended by something that “Mr Nasty”—Chris Finlayson—said. He said that if Peter Fraser were alive today, he would be a member of the National Party. I think that comment shows Chris Finlayson’s complete lack of knowledge of history and culture. The vast majority of members on both sides of the House and from all parties will be aware, I am sure, that Peter Fraser fought his whole life for the working men and the working women of New Zealand. He fought his whole life to ensure social equity, and he would be disgusted at the way that the Government is dumping on those hard-working New Zealanders who are really struggling at the moment. Peter Fraser was a man with a vision. He led this country and his Government through a war, and he led them through the Depression. He was one of New Zealand’s most visionary Prime Ministers, and that is acknowledged by the vast majority of historians. He is acknowledged as one of the greatest Prime Ministers this country has had. John Key and this Government—there was a full stop there—are not worthy of being mentioned in the same sentence as the great first Labour Government of Peter Fraser. I wanted to get that out. I was going to stand up at the time and say that I took personal offence at Peter Fraser’s name and legacy being demeaned, but I decided I would wait till my speech and give it a little more effort.

Let me talk about the bill. This bill will allow the vesting of certain assets and liabilities of the Westpac Banking Corporation, which is incorporated in Australia, in Westpac New Zealand. This is to enable Westpac New Zealand to comply with the Reserve Bank of New Zealand’s local incorporation policy for systemically important banks, and to conduct its business efficiently. Legislation is, in fact, the only way that we can do this. There is the Westpac New Zealand Act 2006, and we did have a look at it, I understand, but it could not be done under it. The only way it can be done is through this Westpac New Zealand Bill. The bill was brought to the select committee by Craig Foss—the Hon Craig Foss now—when he was chair of that committee, and it was supported by all members of the select committee. As was mentioned, we understand the necessity for this sort of thing.

Westpac is one of New Zealand’s oldest financial institutions. In fact, I understand that next year Westpac will celebrate its 150th anniversary. If we look at the New Zealand banking sector at the moment, we will find there is only one New Zealand - owned bank, and that is Kiwibank. Who set up Kiwibank?

Carmel Sepuloni: I think it was us.

STUART NASH: Actually, that is right. I think the Labour Government set up Kiwibank. I think it was the Labour-led Government that set up Kiwibank. In fact, if I am right, it was opposed by John Key and Bill English. They were opposed to the setting up of Kiwibank. We had the chief executive officer of Kiwibank stand up and say that Kiwibank has saved New Zealanders over a billion dollars in interest—over $1 billion in interest.

David Bennett: Oh rubbish.

STUART NASH: That member over there denies the fact that the chief executive officer of Kiwibank at the time, Sam Knowles, stood up and said that Kiwibank has saved New Zealanders a billion dollars in interest. Do members know what I am fearful of? Mighty River and the other power companies are gone. What is next on that list? Kiwibank. Once one starts the sale of State assets, where does it stop? BNZ? Gone. I think something like $15 billion in dividends since that bank was sold for $1.5 billion has gone to Australia. Imagine if we had $15 billion more liquidity in our economy. Imagine how different it would be. I am incredibly concerned that, with the sale of State assets, next on the list is Kiwibank. Instead of going one way and investing money in Kiwibank, the Government will go the other way and sell it. Once Kiwibank is sold, it is gone for ever. We can never get these things back.

Let me talk about Westpac New Zealand. It was incorporated and became a registered bank in 2006, in order to comply with the Reserve Bank’s local incorporation policy. Mr Russel Norman said that it was part of the New Zealand Government forcing banks to comply. I do not think they were being forced to comply. They did not have to be here. If they were not interested in complying, they could have left this market, but, anyway, that is how it works.

David Shearer: Too profitable.

STUART NASH: Yes, exactly—too profitable. That incorporation policy provides that systemically important banks should be incorporated in New Zealand. What does “systemically important” mean? A bank is regarded as systemically important if it has liabilities to related parties in excess of $15 billion, which is obviously what Westpac had. I understand that during the financial crisis Westpac very briefly breached that covenant—not in a bad way; it was not in danger of falling over. But that necessitated this bill. We need to make sure that liquidity requirements are at a level to meet the prudential requirements of the Reserve Bank. Branches of New Zealand - registered banks, such as Westpac Banking Corporation, have a condition of registration that their external liabilities cannot exceed that amount.

When we talk about $15 billion worth of liabilities we cannot help but talk about how much money New Zealand owes. New Zealand is too indebted, and most of that debt is in the form of mortgages on residential properties and farmland owned by overseas banks, which ultimately borrow money from offshore. Let me give an example. About $42 billion is lent against the farming sector. This is at such a level that the Reserve Bank is concerned about it. The Reserve Bank has actually instigated some capital adequacy requirements to ensure that the banks that hold these rural mortgages have enough money to cover them, just in case things turn to custard and the bottom drops out of the farming sector. I hope that does not happen at all, but I am just pointing out that the Reserve Bank is concerned about that $42 billion worth of debt.

We are borrowing too much. As a nation we are borrowing too much and for the wrong purposes. Businesses are starved of affordable credit while the mortgage markets are flooded with cheap money. For example, according to the IMF, New Zealand has one of the highest business lending rates in the OECD. I have heard members of the Government say it is wonderful that mortgage rates are at an all-time low. Well, they may be at an all-time low for residents who want to invest in the unproductive economy, but for businesses and companies that want to invest in the productive economy, that want to grow their business, and that want to employ Kiwis, we have the highest lending rates in the OECD. What is the Government doing about that? Absolutely nothing. It is one of those things that those members conveniently forget. But, anyway, owning our future means getting that debt down by changing the economic incentives that have created the problem of property speculation and over-borrowing.

Mr Bennett said these problems have been solved by his Government. I do not think so, I tell Mr Bennett. I do not think so at all, in fact. It has done a bit of tinkering around the edges. The problems have not been solved whatsoever.

Carmel Sepuloni: Aaron Gilmore says we’re going to borrow billions more.

STUART NASH: That is right. Aaron Gilmore says we should borrow more and invest in housing. No, we on this side of the House think we should invest in the productive economy, not in the unproductive economy, I tell Mr Gilmore.

As mentioned, the transfer will mean that Westpac New Zealand will increase in size. But the one thing that I think has been reiterated by most speakers is that those who bank with Westpac will not notice any difference. If you have a mortgage with Westpac, or if you have a bank account—

The ASSISTANT SPEAKER (H V Ross Robertson): No, I have not.

STUART NASH: —well, if you do, Mr Assistant Speaker Robertson—if any New Zealander or any member of Parliament has a bank account with Westpac, they will not see any difference whatsoever. This legislation will only protect their interests. I commend this bill to the House. Thank you very much.

AARON GILMORE (National) : I start off by pointing out some of the economic voodoo we always hear from the previous speaker, Mr Nash. He is a good man on the footy field, but he sometimes gets his facts a bit mixed up. I think he pointed out that there is only one bank that is Kiwi-owned in New Zealand, and that is Kiwibank. But there are a number. There is TSB bank, which some of the people I know pretty well bank with. There is the Southland Building Society down in the South Island. It is a fine institution, registered in New Zealand. There are a number of other banks, such as the Heartland bank, which we saw in the paper today is forming itself as another New Zealand - owned bank. So there are actually a number of choices of Kiwi-owned banks out there for the people of New Zealand to invest in, put their money in, or borrow from. That has to be a good thing. We also heard that there is a shortage of people wanting to lend to businesses. Well, I was walking down Lambton Quay at lunchtime to buy my sushi, as I do every Wednesday, and outside the Westpac branch on Lambton Quay I read: “If you are a business and you want to borrow money, come in and talk to your local bank manager.” Just down Lambton Quay, the Westpac bank—which this Westpac New Zealand Bill is all about—is willing to lend money to new businesses. I ask Mr Nash to go and talk to them, learn a bit, and find out what is actually happening in the real world.

Westpac has been a wonderful bank, and it has done some great things in my community in Christchurch. I will talk about one thing in particular, which shows us what a great corporate citizen Westpac really is. Westpac has established something called the Westpac Business Hub, which is a place for people to operate businesses whose premises were destroyed in the tragic earthquakes we have had in Christchurch. Businesses can operate from a conjoint area where people can share ideas. Westpac has done that almost free of charge. That just shows us what a wonderful corporate citizen Westpac has been, following the earthquakes. It is not the only bank to do so; many other banks have done other, similar very good things. But Westpac has gone out of its way to provide some extra resources.

I will touch on the earlier speech by Rahui Katene, and some of the issues she pointed out that her people and my people have encountered down in Christchurch. She pointed out some of the issues that have been encountered, and she is right: many people have many issues at the moment down in Canterbury. Westpac itself has encountered many issues, as well. Many people may not know, but the Westpac Building down in Christchurch is one of the buildings that has been condemned and has to come down. It is one of the largest buildings in Christchurch, and it is of architectural note. It has a very well-known, long history in Canterbury. It used to be the headquarters for what was called Trust Bank Canterbury, which was taken over by Westpac a number of years ago. It ended up moving its headquarters into what became the Westpac Building. It was a miracle that nobody was badly hurt in that building in the February earthquake.

We heard from the Greens about the idea that we have to control and regulate banks to death. I think, really, the issue is that if we turn round and try to control monetary policy to the extent that the Greens want to undertake, and put in place a regime they seem to talk about for a bank such as Westpac, no one would be able to borrow, because no one would be willing to lend. I just do not think that makes a lot of sense. We heard from Mr Parker earlier on about the great perils of monetary policy, issues in relation to the dollar, the monetary issues of banks, and how evil banks are in this part of the world. I do not think that that is really appropriate, because this bill is actually about something positive that we all support across this House.

We heard from Mr Nash earlier about the idea that National will borrow large amounts of money. We are borrowing money. We are borrowing money, there is no doubt, to be able to keep people OK, to take the sharpest edge off the recession, and to be able to pay for what we are doing in Christchurch. This year we face a record deficit, there is no doubt about it, because we have had a series of disasters. Next year the deficit will be halved. The year after that the deficit will be halved again, and the year after that we will be in surplus. That is due to good, strong economic policy undertaken under this Government. The banking sector and banks like Westpac have a big part to play in that process, in what they are lending. But Labour would borrow billions and billions more. We heard that Miss Moroney wants to spend another $500 million on early childhood education. That is fine. People over here want to spend more money on foreign missions. That is fine, but there is no big money tree. We need to save more money. Westpac is one of the good banks that people can invest their money in.

I will touch on one final point. One of the issues we seem to hear ad infinitum from the Opposition is in relation to investing more money into the productive sector. I sit in this House and hear Labour say that the rural sector, in particular, is not a productive part of New Zealand. Those members should go and tell that to the dairy farmers, who work 70-hour weeks so that they can produce real foreign exchange to put into their bank accounts. They pay taxes to give benefits to the people of New Zealand. I say to members that that is a productive use of New Zealand savers’ capital. It is a productive business enterprise. We are lucky in New Zealand. We are Saudi Arabia in terms of milk. We produce more milk than any other place in the world. [Interruption] It is white gold. We produce more milk than the rest of the world, and it is a wonderful thing for us to be able to sell and make money—foreign exchange—to pay for the things we need to have. Many of those banking put their money in Westpac accounts, which will not be touched or harmed by this bill. That has to be a good thing. I commend this bill to the House.

DAVID SHEARER (Labour—Mt Albert) : It is a pleasure to speak on the Westpac New Zealand Bill. I say that touting this bill as part of the Government’s economic plan is a bit rich, really. I mean, this is a largely technical bill that effectively helps to shore up and stabilise our banking system, but I fail to see how it is a part of any great plan. Mind you, I fail to see where the plan is anyway; I am not actually sure what the plan is. Maybe this bill is a central plank in the Government’s economic plan to grow New Zealand. But I see it, and Labour sees it, as something along a more technical line, which helps to stabilise our banking system and to ensure that Westpac is fully incorporated in New Zealand. For that reason Labour supports this bill.

Many of the people who are watching the proceedings of Parliament at the moment may actually reflect on the fact that a lot of the time Parliament agrees on much of the legislation before it. In fact, from memory I think about 80 percent of the legislation that comes through the House is agreed upon by both sides, and that is because it is largely uncontroversial legislation designed to help New Zealand to go forward in a common-sense way. It is only in relation to some of the critical issues, which most people hear about, that we disagree. This bill is one of those pieces of legislation that we do agree on.

The purpose of this legislation is to provide for the vesting of the assets and liabilities of Westpac Banking Corporation’s New Zealand institutional business in Westpac New Zealand. Effectively the bill makes sure that Westpac is fully incorporated as a New Zealand bank. The third reading debate this evening has brought up the matter of the foreign ownership of New Zealand banks. Aaron Gilmore raised the point that yes, we do have the Taranaki savings bank and the Southland bank that he talked about, but overwhelmingly bank transactions in liabilities and assets in New Zealand are undertaken by banks that are owned outside New Zealand, not within it. I think it is a very disappointing feature of our banking system that a lot of the dividends and profits made in New Zealand are made by those banks, which in many ways purport to be local. Let us face it, if we look at the advertising by Westpac, in particular—and by the ASB and other banks—we see they purport to be local. But, in fact, their ownership is offshore.

One of the few major banks actually owned in New Zealand is Kiwibank. It was brought in with a great deal of opposition from the National Party, yet it has proved to be a resounding success. People have got behind it, and they feel that it is their bank because it is owned and controlled here in New Zealand. I worry—and Stuart Nash mentioned this earlier—that Kiwibank, one of the assets that we New Zealanders own, will be next in the firing line for sale once the power companies, Air New Zealand, and a number of the other assets that are in the firing line at the moment have gone.

I come back to this bill, which, as I said, is uncontroversial. The background is that the Reserve Bank’s local incorporation policy assists the regulator by providing it with greater control over the assets of a bank in the event of a bank failure under New Zealand law. This control can help to prevent a bank failure from spilling over into the wider financial system, and causing a wider, more systematic meltdown. Because of that policy, Westpac Banking Corporation and Westpac New Zealand Ltd have agreed with the Reserve Bank that the Westpac Banking Corporation will transfer some assets and liabilities to Westpac New Zealand. Those are principally the assets and liabilities of Westpac Banking Corporation’s New Zealand branch—its institutional banking business. What this really does is to ensure that the assets and liabilities of the Westpac Banking Corporation’s New Zealand business are transferred across to Westpac New Zealand. For that reason Labour will support this bill, as we did right throughout the discussions that took place at the Finance and Expenditure Committee during the select committee process.

I want to touch on a couple of other points with regard to Westpac. I admit that I have a Westpac account; I bank with Westpac. However, as an account owner and a member of Parliament I have a lot of issues with regard to the salary that the Westpac chief executive officer has awarded himself of $5.5 million.

Michael Woodhouse: He didn’t award it to himself.

DAVID SHEARER: The bank awarded that salary to the chief executive officer, or the shareholders did. I understand that it is still the highest chief executive officer’s salary in New Zealand, although someone may be able to correct me on that. If we look at what the chief executive officer gained from the tax switch—or swindle—in the last few months, we see he now earns $5,000 a week extra as a result of the tax cuts. The tax switch was supposed to be about lowering income tax, and, with the increased GST rate, collecting more from GST. But I challenge the Government to say somehow this man will have so much additional expenditure that we will collect that $5,000 back through the GST increase. That shows the nonsense of that particular policy.

The other issue that is worth noting with regard to the banking sector—and Russel Norman brought it up—is that the banking sector, and Westpac in particular, has assiduously tried to avoid taxes. The banks have been caught out in the last few months, and have had to pay more than $2 billion back to the New Zealand Government for avoiding taxes. Westpac was not alone in that; $500 million was Westpac’s share of that tax avoidance. It brings home the point I was making earlier that one of the issues around our banks is that they expropriate their profits offshore, back to their home banking corporations, which are the owners of the banks.

With regard to the chief executive officer’s salary, I note that the employees of Westpac had a 3 percent salary increase in the last year or so. The difference between $5.59 million and a 3 percent increase for the average teller, or for the person who is responsible for helping to run the bank, is extraordinarily high.

The point has been made, and I think it is a good one, that a lot of the woes that we face in the economy are related to the fact that we have invested too much in property. We are not alone in having done that as a country. We have, like other places throughout the world, suffered as a result of people in the United States, in particular, investing in property, and being encouraged to do so by the banking sector. Part of the reason for the global financial crisis is the American banking system. We have been very lucky here that our banks have been robust and strong enough to resist that. On the one hand we are pleased that we have secure, solid banks—and this legislation will help with that—but on the other hand I think we need to point out that the banking system itself could do with a lot more New Zealand ownership. Thank you.

MICHAEL WOODHOUSE (National) : For the third reading of the rather uncontroversial Westpac New Zealand Bill, which includes fairly straightforward amendments, we have had a very wide-ranging debate on a number of issues in relation to our banking system, some of which was literally from cloud-cuckoo-land. I did notice also a bit of a rewrite of history, so I feel compelled to clear up a couple of misapprehensions that Stuart Nash had about why we have Kiwibank. The rewrite of history is that Kiwibank is a Labour invention and now that it is here we should protect it with every fibre we have. Well, that was not really the case, was it, because from 1999 to 2002 the Labour Government relied very heavily on the Alliance Party and the Deputy Prime Minister, Jim Anderton. Were it not for that reliance—the reluctant Dr Michael Cullen was led kicking and screaming—the formation of Kiwibank would not have taken place. Let the Labour Party take the credit for Kiwibank, but were it not for Mr Anderton and members long since gone from this House, Kiwibank would not exist.

I note the track record on the asset sales of financial institutions. I should say that in 1984 or so, when Westpac was formed, it was formed out of two other Australian banks, the Bank of New South Wales and the Commercial Bank of Australia. I have vague recollections of that. I worked across the road from a couple of those branches in Dunedin, at the National Bank. The National Bank was then owned by Lloyds Bank plc, which was a UK-based bank, as were a number of other banks in New Zealand. Those committed Labour people in that term in the 1980s not only sold the Development Finance Corporation, the Post Office Savings Bank, and the Rural Banking and Finance Corporation but also had—wait for it—a mixed-ownership model with the partial float of that iconic then New Zealand - owned institution, the Bank of New Zealand. In 1986 the fourth Labour Government floated the Bank of New Zealand. Those members over there should own the history.

I suggest that the crocodile tears being shed for the New Zealand banking system are just that. I think Mr Finlayson put it very accurately in his general debate speech when he called Labour lions in Opposition and lambs in Government. They are fairly inarticulate lambs, if Jacinda Ardern’s call in the general debate is anything to go by.

It has been nearly a year since Mr Goff announced that Labour would no longer support the monetary policy accord. Who knows where Labour is on its alternative monetary policy. Will it print money? Will it go back to fixing the dollar against an international currency? It is so concerned that the dollar is so high, but it is a pity Labour was not that concerned when interest rates were so high and the dollar remained stubbornly high, because that was killing our export markets. At least now the New Zealand dollar against the trade-weighted index is lower than it has been since 2007. Were it not for the fact that the United States has twice printed money, in that magical thing it calls quantitative easing, we would probably be in a better position. But it is not for this economy to control what that economy does.

I acknowledge that Mr Cunliffe recognises and takes very seriously the issue of New Zealand’s debt position. He also acknowledged in his call, with big nods from Mr Parker, that the private debt situation is particularly concerning. We on this side of the House do not distinguish as much, because the international financers of that debt do not distinguish so much, between private and public debt. Nevertheless, it was pleasing to hear Mr Cunliffe’s concern about debt levels. So it is really quite perplexing that Labour would go about and campaign on increasing New Zealand’s total debt by billions and billions of dollars not only in its reckless spending but also in a return to the funding of the Government Superannuation Fund and borrowing to put money into KiwiSaver.

David Shearer: What does this have to do with the bill?

MICHAEL WOODHOUSE: Well, this is a broad-ranging debate, and I am just addressing the issues that were raised by Labour members earlier in this debate. Here we have Mr Cunliffe still insisting, being the great financial soothsayer that he is, that he is so confident that the markets will go up that he would go to the international debt markets and borrow billions and billions of dollars on a financial crapshoot by putting it into the Government Superannuation Fund. Here is my question: if Mr Cunliffe is such a great soothsayer when it comes to picking financial markets, why in early 2008 did he not trot along to the office of the good Dr Cullen, who was then the Minister of Finance, and say: “Doc, I think the international financial markets are in trouble. I think we should be moving these equities in the Government’s Superannuation Fund into fixed interest. Let’s preserve the country’s assets.”? If he is really that good at picking the markets, he would have done that nearly 4 years ago. He did not. It is rhetoric, and if he gets hold of the Treasury benches, goodness knows what the debt levels will be and where that money will go.

Having addressed some of the many broad-based arguments that were raised in the third reading of this bill, which makes an otherwise uncontroversial, straightforward, and structural change to Westpac, I commend it to the House.

  • Bill read a third time.

Royal Society of New Zealand Amendment Bill

In Committee

  • Debate resumed from 18 May.

Clause 5 Interpretation (continued)

Hon MARYAN STREET (Labour) : It gives me great pleasure to contribute to this debate on the Royal Society of New Zealand Amendment Bill. It was some time ago when we were last debating this bill, on a members’ day. We have had a 2-week adjournment in between and the usual passage of time between members’ days. I would like to do a little bit of a recap, particularly to address the clause at hand, which is the interpretation clause.

First of all, the Royal Society of New Zealand Amendment Bill is supported by Labour, and we look forward to its passage in due course. The interpretation clause is the clause that defines particular references in the bill. I will talk particularly about subclause (2) in clause 5. This refers to section 2 of the Royal Society of New Zealand Act being amended by adding the following definition in its appropriate alphabetical order. It is the definition of “humanities”. This is one of the substantial points about this bill. It is the addition of the humanities to the scope of the research and the reach of the Royal Society of New Zealand. No longer will it be simply about science and technology, although they are not simple; no longer will it be solely about science and technology, but it will have an expanded brief to include the humanities.

This is absolutely critical at this point in the debate, because we are seeing the definition of “humanities” in clause 5(2). The original clause in the bill stated: “ ‘humanities’ includes English and other languages, history, religion, philosophy, law, classics, linguistics, literature, cultural studies, media studies, art history, film, drama, and American studies.”

The Education and Science Committee quite rightly amended that definition, because the inclusion of American studies seems a little bit odd in a definition of humanities. I have nothing against American studies, but I do not think it needs to find its way into legislation that defines the scope of, and brief for, the Royal Society of New Zealand. The select committee saw fit not only to delete “and American studies” and insert “and” between “film” and “drama” but also to delete “English and other” from in front of “languages”. So the legislation came back from the select committee with the following definition: “ ‘humanities’ includes languages, history,”—all of those other things I listed—“art history, film, and drama”, and it stops at that point. That amendment deletes the reference to American studies and deletes “English and other” from in front of “languages”.

I will now pick up on the Supplementary Order Paper in the name of Te Ururoa Flavell, which I am quite keen to support. Te Ururoa Flavell, on behalf of the Māori Party, one assumes, has amended the definition of “humanities” further. Instead of the bill stating that “ ‘humanities’ includes languages”, the Māori Party is putting up an amendment to the bill that “ ‘humanities’: includes languages, and in particular, te reo,”. After the reference to cultural studies, the Māori Party has inserted “Māori studies”.

What are we to make of the select committee’s amendment to the definition of “humanities” to delete the reference to English and the reference to American studies and to insert a reference to te reo and Māori studies? Well, this is significant because this bill is not the “Royal Society of Canada Amendment Bill”, the “Royal Society of Australia Amendment Bill”, or even the “Royal Society Amendment Bill”—referring to the original Royal Society—this is the Royal Society of New Zealand Amendment Bill.

Hon Simon Power: The member is so much better than this.

Hon MARYAN STREET: I beg your pardon? I missed that. I really want it in Hansard. The insertion of the reference to te reo and Māori studies by the Māori Party has our support, and I think it enhances the definition of “humanities”.

To be clear, the definition of “humanities” with the amendment by the select committee and the Māori Party’s Supplementary Order Paper in the name of Te Ururoa Flavell would read: “ ‘humanities’: includes languages, and in particular, te reo, history, religion, philosophy, law, classics, linguistics, cultural studies, Māori studies, media studies, art history, film, and drama.”

The inclusion of the two additional subjects, te reo and Māori studies, provides a uniqueness that reflects the uniqueness of the Royal Society of New Zealand Amendment Bill, of the Royal Society of New Zealand’s governing legislation, and of New Zealand. Nowhere else in the world are speakers of te reo indigenously located. In no other place in the world can Māori studies be undertaken legitimately in situ where Māori people reside. This is our uniqueness. This legislation, and the fact that it extends the brief of the Royal Society of New Zealand to include humanities, is rightly amended by the inclusion of te reo and Māori studies.

In clause 5(2), which is what we are debating at the moment, we have a significant enhancement, not only from the select committee’s amendment but also from the Supplementary Order Paper from the Māori Party, which will improve and illustrate the uniqueness of the brief of the Royal Society of New Zealand. To that end I commend both the Supplementary Order Paper and the amendment bill to the House.

RAHUI KATENE (Māori Party—Te Tai Tonga) : I am really pleased to take this call on the Royal Society of New Zealand Amendment Bill following the call of the member who has just resumed her seat, Maryan Street, because it was—

Hon Maryan Street: Very erudite.

RAHUI KATENE: It really was; it was great. To be able to follow her comments about the Supplementary Order Paper put up by Te Ururoa Flavell is very important, because it is so important that we have these issues considered by the Royal Society and in the Royal Society Amendment Bill. There is a really big problem with the teaching of history in our New Zealand schools. In the curriculum it states that schools are supposed to be teaching New Zealand history, and as part of that New Zealand history we would expect those schools to be talking about Māori history, but in fact we find that so many schools do not. We hope that by having the amendment that is moved on this Supplementary Order Paper included in this bill the Royal Society of New Zealand will take that provision very seriously, and put pressure on the schools to take the teaching of New Zealand history very seriously.

It is also entirely appropriate to discuss at this time a new development that has occurred in the month since the time this bill was last discussed, and that is the discussion that has occurred about cultural competencies. The Minister of Māori Affairs has made mention of Tataiako, a school-based cultural competency programme that is expected to be formally launched this year. It is a professional development programme to help teachers relate to Māori students. I refer to a release put out by Ngā Kura-ā-Iwi o Aotearoa in the name of its chairman, Pem Bird. In that release he states: “Research and experience clearly demonstrates the connection between culturally aware and attuned teachers and Māori learner achievement … The pivotal issue is about the authenticity and relevance of our cultural landscape which ought to permeate our thinking and practice. We have now been presented with a golden opportunity to make the difference that counts.”

The Royal Society of New Zealand Amendment Bill, and specifically the amendment from my colleague Te Ururoa Flavell, incorporates the humanities into the objects and functions of the society. In essence the substance of humanities is also about the expression of cultural competency. As Mr Flavell’s explanatory note to the Supplementary Order Paper states: “The Supplementary Order Paper amends the Royal Society of New Zealand Amendment Bill to include in the definition of humanities Māori studies, te reo, and the recognition, application, and advancement of te Tiriti o Waitangi.”

This is a simple but effective strategy to remember that, for Māori, this is our natural home. Māori are here for ever. This is about marking our cultural landscape. But it is also about adding balance to the bill, to identify and distinguish it as home-grown, a truly New Zealand bill. The definition of humanities would include: “languages, and in particular, te reo, history, religion, philosophy, law, classics, linguistics, cultural studies, Māori studies, media studies, art history, film, drama, and the recognition, application, and advancement of te Tiriti o Waitangi.” That is a comprehensive, robust, and, one would think, thoroughly practical suggestion, and I hope that all of the Committee will be able to support the Supplementary Order Paper.

Over the last fortnight the education sector has been responding enthusiastically and responsibly to the proposed new direction of cultural competency. New Zealand Educational Institute president Ian Leckie promoted the need for solid resourcing and ongoing professional development. His view was that it is important that any training in te reo and tikanga Māori is backed up by regular opportunities for teachers to enhance their knowledge and skills in the classroom. In this bill, the Royal Society of New Zealand Amendment Bill, we now have explicit proposals that encompass the cultural landscape of Aotearoa through respect for and acknowledgment of the significance of the Treaty, of te reo Māori, of tangata whenua.

I acknowledge the Minister of Science and Innovation, Dr Mapp, for his willingness to work with Mr Flavell to consider this amendment to this bill, and I welcome the acknowledgment from the Labour Party. I hope that in the spirit of a maturing nationhood, we will enjoy unanimous and enthusiastic support for this amendment right across the Committee. Kia ora.

SUE MORONEY (Labour) : It is a pleasure to rise and speak to the Royal Society of New Zealand Amendment Bill, and to clause 5 in particular. I had the honour last evening of co-hosting the Speaker’s Science Forum with the Royal Society of New Zealand, so it seems very fitting to be speaking on this organisation’s bill today. At last evening’s forum we talked about the Square Kilometre Array and discovered that New Zealand is working with Australia to lead a bid for winning that particular contract, which would be very, very exciting for New Zealand, indeed. Certainly, all of our fingers and toes are crossed for gaining that contract, which we will learn about in the course of next year.

I really wanted to speak about clause 5, “Interpretation”. I am a member of the Education and Science Committee, which considered this bill. The committee decided to amend clause 5. It was interesting to look at the definition of the word “humanities”, which is, of course, central to what the bill is doing. I remind those listening to this debate that fundamentally this bill is bringing the humanities in and having them officially recognised for the first time. Even though the Royal Society of New Zealand has operated in such a way that it has recognised the humanities for some time now, this bill is officially bringing the humanities within the recognition of the Royal Society of New Zealand, so getting the definition right is pretty important and central to the purpose of the bill.

The select committee moved to take out some of the particular subjects that had been noted in the definition, because they seemed to be a little out of kilter. Originally, the definition of “humanities” started off by recognising “English and other languages”, and as a select committee we thought that that seemed a bit out of place. We asked why we did not talk about just “languages”, because that does not give preference to any particular language, and I think that was the right thing to do.

But in reading the definition subsequently, I wonder about the other things we have left out that I think come into the humanities. Putting all personal interests aside, I have been reflecting on the only tertiary qualification I hold, which is the Certificate in Labour and Trade Union Studies. It is a bit of a collector’s item. I imagine that not many people listening to this debate will have that certificate on their wall. I really do hold it very proudly, because it is a collector’s item. Labour and Trade Union Studies was a course that was in existence for only about 3 or 4 years, so it is quite an elite qualification. Not too many people in New Zealand hold this qualification, and I am really proud that I am one of those people.

During the 1990s Labour and Trade Union Studies unfortunately fell victim to the ideology of the National Government at the time, and the University of Waikato felt that it could no longer continue to offer the Certificate in Labour and Trade Union Studies. Such was the ideology of the Government of the day that it really needed to drum out any notion or idea that workers’ rights and labour studies, or the study of workplace relationships, had any legitimacy in a university scenario.

It caused me to reflect on why in this definition we give recognition that the humanities include media studies, for example, but not trade union studies and not women’s studies. I would have thought that if media studies rates a mention in the definition of “humanities”, then perhaps some of these other studies would rate a mention, as well.

I certainly think, in terms of my personal experience with gaining the Certificate in Labour and Trade Union Studies, that it would fit under the banner of “humanities”, because that is exactly what we were studying. We were studying the impact of workplace relationships. We were also writing. In fact, the course I was on published a book of oral histories about workers’ rights and workers’ issues in the workplace, so we were published as a group of students. I think that improved the status of that particular period of study and of that certificate, which, as I say, proudly hangs on my wall.

I know that other recipients of that particular certificate cashed it in, so to speak, as credits to put towards other qualifications and degrees, but even at that stage I recognised that this certificate would be a collector’s item. I did not cash it in for further study. I very proudly kept my Certificate in Labour and Trade Union Studies on the wall. But it has not made it into the definition of “humanities”, and I think that is a great shame.

However, I do support the amendment put forward by Te Ururoa Flavell, because, of course, if we are to recognise cultural studies, law, classics, philosophy, history, and religion, then it makes a lot of sense to recognise Māori studies as coming within the humanities. I support what my colleague Maryan Street had to say about this amendment, and also what Rahui Katene said. This amendment really locates, in a way that having American studies did not locate, this particular definition as being a New Zealand definition—a definition for Aotearoa.

I feel a little embarrassed now, having been part of the select committee, that we did not spot that earlier, because we certainly spotted the anomaly of talking particularly about American studies and singling that out as being somehow elevated and somehow more important than any other study of any other nation or any other continent. That should have caused us to think—and I ask why it did not cause us to think—about Māori studies being the obvious thing that was missing from the definition of “humanities”. It could have been a very, very long definition, and I think it was important that the select committee chose not to list every single one of our own personal qualifications under “humanities”, because that would have caused some concern when we came to debate this definition in the Committee of the whole House.

I imagine that if we had sat down as a select committee and listed our own personal qualifications that would come under the humanities banner, we could have made clause 5 into a much longer clause. However, clause 5 in its current state, with the amendment from Te Ururoa Flavell, gives enough of a roll call—and if not a full roll call, then an idea of what the definition of “humanities” means when it comes to this clause of the Royal Society of New Zealand Amendment Bill.

I look forward to having a National member of Parliament get to his or her feet and debate this bill, particularly this clause, in order to let us know how National members will be voting, because—

Louise Upston: You’re doing a fine job. We’re quite happy to leave this to you.

SUE MORONEY: I am sure that even the Māori Party would be interested to learn whether the National Government will support the amendment put forward by Te Ururoa Flavell. In fact, I wonder whether Rahui Katene would be so good as to give us an indication about whether such a discussion has been had between National and the Māori Party. She is indicating that it has been held, and National members are indicating that they are—supporting?

Rahui Katene: It’s ongoing.

SUE MORONEY: Well, National MPs might want to take some calls to ensure that the debate continues for a good measure of time so that they can come to a conclusion on the question, which is clearly vexing them, of whether to support the amendment put forward by Te Ururoa Flavell. I would hate us to get to the position of voting on clause 5 before National had the opportunity to reach its conclusion.

I am sure there will be a vigorous debate within the National caucus on whether to support this amendment. I have given Rahui Katene the opportunity, and I really thank her for her frankness and honesty, but can we have an indication from, perhaps, National’s senior whip about whether the Government will support the amendment?

Hon Sir ROGER DOUGLAS (ACT) : I move, That the question be now put.

JACINDA ARDERN (Labour) : I would have been devastated had I not had the opportunity to speak on clause 5, for which I have prepared quite a bit of material and done quite a bit of background research. I think it is quite upsetting that Mr Douglas wanted to bring this debate to a close before it has run its full course. What I have not heard, and what I ask the member in the chair, Grant Robertson, to elaborate on, is why American studies was originally included in the interpretation. There has been a very interesting discussion on why it has been removed, but I am interested in the background as to why it was originally in there.

Hon Simon Power: Why is it interesting?

JACINDA ARDERN: I think it is interesting because it demonstrates that the Royal Society of New Zealand perceived that New Zealand could benefit in its future research and discussion from an analysis of American studies. For Parliament to have decided that it should be removed is I think absolutely correct, but I would like to have a little discussion on the origins of its inclusion.

In order to better prepare the Committee for that discussion, I thought it might be interesting to look at what American studies includes. What is it that we have removed from this bill? I have to admit that I did not truly understand the great depth and reach that American studies is as an interdisciplinary field. I did a little bit of, admittedly, web-based research. I employed the favoured technique of the Minister of Finance and I googled. I went on to probably his No. 1 research website, Wikipedia, and discovered that the interdisciplinary field of American studies—which also includes American civilisation—incorporates quite a wide range of subsets. I think that perhaps on breaking that down into a full analysis we could have benefited from it. Whether we would then isolate it to one nation State or say that across nations some of these areas would be of use is a debatable point, and I encourage my colleagues to debate that.

Within this interdisciplinary field we have subsets, and I would like to go through them individually if the Committee will bear with me on that front. I know that Grant Robertson will and Labour members will—

Hon Simon Power: Do we have a choice?

JACINDA ARDERN: This is a democracy after all, I say to Mr Power. I encourage Minister Power to join the debate on this bill, given that it is a democracy, but the Government does not want to currently involve itself with it.

The first subset of the interdisciplinary field that is American studies is economics. I wonder what New Zealand could benefit from currently from a study of the American economy. I think, clearly, the debt issue is one area. Unemployment is another. The United States’ unemployment level is hovering at about the 10 percent mark. That is certainly nothing we would aspire to, but we are currently on a trajectory to follow it. The significant level of debt, the deficit, in the United States is incredible right now. The level of foreign dependency, particularly on the nation of China, is a very vexed question for the United States at the moment.

I heard a groan from Mr Douglas. I think he must agree with me that this is a very interesting area of discussion. Perhaps New Zealand would have benefited from some analysis of where the American economy is going. That obviously affects us.

The second subset—we not only have the economy—is of course history. I am not sure that we can learn too much for ourselves in terms of which paths to follow from American history. It has always been an interesting course of study; I will probably leave it at that.

The third subset is literature. I personally think that the good people of America could learn quite a bit from our literature. I think we are bastions in the field.

Law is another area. This area is interesting. New Zealand has always tried to ensure that we have learnt from the mistakes in the structure of the legal system in the United States. The first thing I say is that the US is perceived to be an overly litigious society; something that New Zealand has always tried very hard to avoid. The accident compensation scheme is the perfect example of that. It is a no-fault scheme that is structured on the idea of trying to provide coverage for all New Zealanders.

Hon SIMON POWER (Minister of Justice) : I move, That the question be now put.

GRANT ROBERTSON (Labour—Wellington Central) : I am sorry to have interrupted the member Jacinda Ardern in the midst of her explanation of American studies, but she asked me a question when she first got up. I think it was a good question and it is one that I am very happy to answer. The definition of humanities that appears in the original draft of the Royal Society of New Zealand Amendment Bill was provided by the Royal Society and the Council for the Humanities. Its exact origin is something I have been searching for. I have not been able to exactly identify it, but what I have been able to identify is that the selection of subjects there relates to the activities of the Council for the Humanities. So it was never meant to be an exclusive list. Obviously, members will note that clause 5(2) begins by stating: “ ‘humanities’ includes languages,” and so on. It was never meant to be an exclusive list. It was more that those subjects represented the areas that the Council for the Humanities, Te Whāinga Aronui, has as its work areas and focus. The council was very relaxed, as was the Royal Society, about the amendment that Te Ururoa Flavell put forward.

The Education and Science Committee made the decision that highlighting American studies in that way did not seem to reflect the broad nature of the work that the Royal Society undertakes.

Jacinda Ardern: Can they operate outside the definition?

GRANT ROBERTSON: Absolutely. The answer to that question is yes, they can. That is the great beauty of the humanities. Those of us who have studied the humanities know that it is not a definition or a broad grouping of subjects that is in any way restricted.

I think it is important to clarify that the Royal Society and the Council for the Humanities are both comfortable with where we are reaching with this definition. I hope that National will support the amendment in Te Ururoa Flavell’s name, because I agree with both Rahui Katene and Maryan Street. In their speeches earlier they said that the amendment really does “New Zealandise”, or “Aotearoaise”, this part of the bill. It is very consistent, may I say, with the Council for the Humanities approach. Te Whāinga Aronui is a very inclusive organisation that thinks a lot about its responsibilities under the Treaty and its responsibilities to develop a New Zealand and an indigenous form of the humanities. There is no surprise that they are very comfortable with the idea of this definition.

One other matter that was raised by a speaker the last time we were here was the question of the role of the social sciences. I clarify that in the current Royal Society of New Zealand Act, science and technology includes the applied, biological, earth, engineering, information, mathematical, medical, physical, social, and technological sciences. So the current definition includes the notion of social sciences.

  • Sitting suspended from 6 p.m. to 7 p.m.

Hon PETE HODGSON (Labour—Dunedin North) : I stand in the stead of Grant Robertson, in whose name the Royal Society of New Zealand Amendment Bill is before the Committee. He is the member—and, I would say, a mighty fine member—for Wellington Central, which is where the Royal Society of New Zealand is to be found, just up the road in Thorndon.

We are debating clause 5, which is an interpretation clause. The Committee is seized with the issue of how best to define “humanities”: whether to add American studies, whether to specify English as a language, whether to have te Tiriti in the definition, and whether to have te reo as a specified part of humanities. Someone will get up and say: “What about sociology?”, and someone else will get up and say that that is a social science, not a humanity. We will, I suppose, explore where the boundary line is between the arts and the sciences.

I will make my contribution by referring to an earlier decision of this House, made 20 years ago, that I think will interest the Hon Wayne Mapp. That was when the House, in the dying days of the Lange-Douglas Government—or the Lange-Palmer-Moore-Douglas Government, I suppose, to be truthful—and the early days of the Bolger Government, was going through reforms of science. Out of those reforms emerged the Ministry of Research, Science and Technology; the Foundation for Research, Science and Technology; the Crown research institutes; the idea of a public-good science fund; and much besides.

It so happens that the current Minister of Science and Innovation, the Hon Wayne Mapp, has heralded—and, in fact, overseen—a recent amalgamation of the ministry and the foundation, so the words “research”, “science”, and “technology” have been removed from our public nomenclature. The question is how they got there in the first place. If one thinks about research, science, and technology, one can easily argue that science and technology are separate and distinct, and that both have a place, but what is research doing in there? Surely research is simply a way of conducting a bit of science. Why did we have the word “research” as well as “science” and “technology”? We had them for 20 years until the Hon Wayne Mapp acted in recent months, oblivious, I am sure, of the importance of what he had done.

Why did we have “research” as well as “science” and “technology”? I first came to Parliament at about that time, and I did not know either, so I asked the Hon Simon Upton. His answer was that we are interested not just in science and technology, but also in a thing called scholarship. If scholarship was to be included and recognised, then we needed a word. It could have been “scholarship, science and technology”. That would have looked a bit strange, so they went for the word “research”, where the scholar might research something that is not science. The scholar might, in fact, research the humanities. The point I am making is that way back then—when we were reinventing science, developing Crown research institutes, and on you go—there was a nod and a wink towards the humanities in the thinking of the Minister of that day.

I think it is kind of cute, even if it is slightly accidental, that the very year that the Hon Wayne Mapp takes the lexicon of “research, science and technology” out of the New Zealand public space, along comes this legislation in the name of the honourable Grant Robertson to recognise humanities in statute as part of the Royal Society and its functions a lot more explicitly than the word “research” ever did. But I suggest that there is kind of a nice little segue there, and we should be pleased about that happening even if, as I say, it were accidental.

I shall not partake in the debate—not now, anyway—about what words should be put into the definition of “humanities” and what words should not. I think I am beholden to listen carefully to the advice of my parliamentary colleagues. But I think we are close to a definition, and some parliamentary colleague may well wish to rise to his or her feet and offer his or her advice about what the definition should be: whether te reo should be left in or taken out, whether te Tiriti should be left in or taken out, etc.

CHRIS HIPKINS (Labour—Rimutaka) : I am happy to take my first call for the night on the Royal Society of New Zealand Amendment Bill. I think this might be the first opportunity I have had to speak on any of the guts of the bill—the main parts of the bill. I had an opportunity to speak on the commencement clause previously.

Just as a slight aside, when I was on my way here this evening I mentioned to somebody that I was going to the Chamber to debate the Royal Society of New Zealand Amendment Bill. They wondered whether I would be spending the evening talking about the wedding and Pippa Middleton. I had to explain that it was, in fact, an entirely different topic.

Clause 5 deals with the interpretation of, in particular, the word “humanities”. Subclause (2) lists what is covered by “humanities”. As a social scientist, I am quite interested in the idea that we are incorporating the humanities into the mandate of the Royal Society, which has dealt with just science. I am interested also in the change made by the Education and Science Committee. The first part of this definition was to read: “ ‘humanities’ includes English and other languages,”. The select committee has made the decision to shorten that part of the definition to simply “languages,”. Of course, English is a language and therefore will be covered by that definition.

But the ambit of the Royal Society, under the definition provided here, will also extend to “history, religion, philosophy, law, classics, linguistics, literature, cultural studies, media studies, art history, film, and drama”. The term “American studies” has been crossed out. I would be interested to hear from somebody who was involved in the deliberations on this bill why the select committee decided that American studies should be taken out, whether American studies could be regarded as coming under one of those other definitions, and if so, which one they believe it would come under.

Dr Rajen Prasad: History.

CHRIS HIPKINS: It could well come under history, but it could come under a number of other areas as well. I guess it depends which part of American studies we were referring to. It could come under any number of these other areas.

The reason I went through the list is I am a passionate believer in the value of science but I also believe that science can lend an awful lot to the humanities. There will always be issues around the definition of “humanities” and around the definition of “science”. I myself am a political scientist. Within Victoria University, of course, there was heated debate about whether politics was, in fact, a science. For a period of time the department dropped the term “science” and it was simply the school of politics. Many years later it reinstated the term “science”. One could argue that politics fits within the definition of “humanities” rather than the definition of “science”, and there are a number of areas like that. Criminology is my other area of academic study. Does criminology come under humanities? Is it a social science? Is it a science? It depends on which aspect we are talking about. I think everybody’s view of criminology is defined by watching TV shows like CSI, but the forensic part of criminology is actually only a very small part of the study of criminology; it is the scientific end of the study of criminology. There is a huge social aspect to the study of criminology, as well, and each lends itself to the other. So extending the ambit of the Royal Society to cover these wider issues will, I think, be incredibly beneficial. The Royal Society has a very important role to play in New Zealand in the pursuit of ideas, in research, and in the dissemination of ideas. I do not think it should be limited to purely a narrow definition of science.

Adding the study of law into the ambit of the Royal Society is an interesting one. Of course, there are many, many other bodies that study our laws and our statute book. I am not convinced, actually, that we should include law in the definition of “humanities”—whether we want the Royal Society to be focusing on law. Yes, it should focus on law in relation to some of the other issues that come under the definition, like history, languages, or literature, but not necessarily on the law in itself. I am not sure that that would fall within what I think the ambit of the Royal Society should be.

I will run through the issues that are now being added to the ambit of the Royal Society. The Royal Society’s ambit is being extended to include the humanities. I will run through those again in a little more detail. First is languages, and not specifically the English language, as the former Minister Pete Hodgson just mentioned; it covers any number of languages. A very legitimate question has been raised as to whether te reo Māori should be specifically mentioned. As a New Zealander, I would like to see te reo added in so that it is specifically mentioned.

History is now to be covered by the Royal Society, as well. In discussing this definition and the extension of the Royal Society’s functions to include history, I want to say that I would be very reluctant to see the Royal Society picking up a much wider role that would replicate what a number of other agencies and entities do very, very well. I think it is really important that the society continues to focus on the areas to which it can lend significant expertise. My hope is that the Royal Society in extending its coverage to include the humanities will do so in a way that builds on its strengths and expertise in science. I hope that it contributes the knowledge and the expertise that it has in that field to the humanities, where it might add some additional value.

I will continue to run through the issues. The study of religion is there, which is quite fascinating. The role of science in religion is a very contentious issue, and will continue always to be a contentious issue.

David Shearer: Historically.

CHRIS HIPKINS: Historically, it has been. History is in there, as well, I tell David Shearer. The role of science in religion is critically important, so I am really pleased to see the Royal Society picking up that particular function. What of linguistics? There is a certain science to language, and one could argue that linguistics by definition is the science of language, so extending the Royal Society’s ambit to cover linguistics seems a very sensible thing to do. Also listed is cultural studies; of course, there is a significant aspect of science within cultural studies, as well. I guess the point I am making by going through the definition is that it makes sense to extend the remit of the Royal Society to cover the humanities, because it is very difficult to draw clear distinctions and to create arbitrary barriers.

David Shearer: That’s the way the world is going.

CHRIS HIPKINS: The world is definitely moving much more in this direction, so it is a very sensible move. I congratulate my colleague Grant Robertson on bringing this very excellent piece of legislation to the House.

I will run through the other parts of the interpretation clause that I have not addressed in any great detail—and I suspect that time will be against me. Clause 5 also deals with the definitions of “Academy bylaws” and “Academy Council”. The term “Academy Executive Committee” refers to the executive committee that is constituted under section 37 of the principal Act, which we will come to later on as we debate the bill. It deals with the ability of the academy to establish by-laws, which is very sensible and practical.

Overall, I think the extension of the Royal Society’s coverage to include the humanities is a very welcome move. I am looking forward to the debate on the remaining clauses of the bill as we proceed through the rest of the evening. I have uncovered some other thorny issues as I have read through this quite extensive bill that I am sure we will be debating as the evening progresses. Thank you.

CHESTER BORROWS (National—Whanganui) : I move, That the question be now put.

DAVID SHEARER (Labour—Mt Albert) : I am pleased to take a call on the purpose clause of the Royal Society of New Zealand Amendment Bill. The bill, as Chris Hipkins said, is an important one. It is welcome, and it has been in the offing now for quite a long period of time, although the major decisions on where the Royal Society is going and on what it is going to be doing have already been taken. In many ways this bill is a kind of confirmation and determination of where the society would like to go.

In relation to the interpretation clause, we talked at length about the definition of science and bringing the humanities into science. This is something that has occurred across the world, but perhaps not in the more—

Jo Goodhew: I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Eric Roy): I think I can anticipate what that might be. If the member Pete Hodgson will return to his seat, we will move on.

DAVID SHEARER: I think I can guess what the point of order was about, but I thought I was on a particularly interesting train of thought there that unfortunately was cut short. I will go on to the “Academy bylaws” in the bill and the Royal Society of New Zealand Council. The Royal Society of New Zealand Council is mentioned in the interpretation clause, clause 5, in this bill. The council is sort of the guts of the decision-making body that decides how science progresses.

We talked about the idea of the humanities coming into the Royal Society, and as I said it is a welcome step. It is happening throughout the world; it is not happening just in New Zealand. It is generally seen as a welcome step. Many of the larger scientific organisations have resisted this step, because they have a weight behind them—a mass of scientists, I guess, and we have a lot of scientists involved in our Royal Society, as well—but the blurring of these boundaries in bringing in the humanities is seen as a step in the direction of moving science forward into the modern age. The Royal Society of New Zealand Council and the by-laws will play a particularly important role in this regard.

The submission by the Royal Society on this legislation looks at the council. The council is looking at changing its name, and “Academy Executive Committee” is proposed in the bill, to avoid confusion with the society. That change is also provided for in this legislation.

The Royal Society of New Zealand Council is made up of fellows who are elected to the council in accordance with the by-laws. In a sense the fellows are the intellectual firepower of the Royal Society. In a sense they are the elite of the scientists who are involved in the Royal Society, essentially to promote the society itself and the way it pushes forward into the community and engages with so many scientists throughout New Zealand. The Royal Society of New Zealand Council is the guts of that.

The council is made up of fellows, as I have said, and is empowered by the Royal Society of New Zealand Amendment Act to make by-laws for the regulation, management, and advancement of the council and to govern the procedure for the election of fellows to the council. In a sense, the Royal Society of New Zealand Council is at the heart of what the Royal Society is all about and the way it progresses.

A number of changes were made to the Royal Society of New Zealand Council in 2008. Under sections 20 to 24 of the Act, the council has some discretion in relation to the composition of the council. For example, the council must determine how many councillors may be appointed by regional constituent organisations, may co-opt up to three members to be councillors, and may alter the names and composition of electoral colleges.

JAMI-LEE ROSS (National—Botany) : I move, That the question be now put.

  • Motion agreed to.
  • The question was put that the following amendment in the name of the Hon Pete Hodgson to the proposed amendment in the name of Te Ururoa Flavell to clause 5 be agreed to:

to insert “literature” after “linguistics”.

  • A party vote was called for on the question, That the amendment to the amendment be agreed to.
  • The Chairperson declared that the outcome of the vote was unanimous.
  • Amendment to the amendment agreed to.

Hon RODNEY HIDE (Minister of Local Government) : I raise a point of order, Mr Chairperson. I am sure I misheard you, but I understood you from the Chair to direct a party’s vote. I want you to assure the Committee that that did not happen.

The CHAIRPERSON (Eric Roy): I think what I did was explain an omission to the whip for National, saying that if they want “linguistics” in they should vote for it. It is a reinsertion of something that was dropped. If that is seen as directing the outcome, then I apologise.

JO GOODHEW (Junior Whip—National) : I want to reassure the Committee that I had a quiet word with the member in the chair, the Hon Pete Hodgson, and took my guidance from the words that he actually explained to me. I accept the concern.

Hon RODNEY HIDE (Minister of Local Government) : I accept that, Mr Chairman, but you will understand that it is not the Chairman’s job to be suggesting how an entire party votes.

The CHAIRPERSON (Eric Roy): That is correct and I have apologised that it was interpreted in that way.

  • The question was put that the following amendment as amended in the name of Te Ururoa Flavell to clause 5 be agreed to:

to omit the definition of humanities and substitute the following definition:

(2)humanities includes languages, and in particular, te reo, history, religion, philosophy, law, classics, linguistics, cultural studies, Māori studies, media studies, art history, film, and drama.

  • Amendment as amended agreed to.
  • Clause 5 as amended agreed to.

Clause 6 New section 5 substituted

Hon PETE HODGSON (Labour—Dunedin North) : I am sorry to take a call ahead of the member Rajen Prasad, but I want to offer the Committee a couple of explanations. The first is that clause 6 is simply the object clause. The fact that it is simply the object clause does not make it unimportant; it is actually the heart of the Royal Society of New Zealand Amendment Bill. It is a straightforward clause but it is at the heart of the bill. In it, substituted section 5, “Object”, states: “The object of the Society is the advancement and promotion in New Zealand of science, technology, and the humanities.”

I will say some things in a minute about the Royal Society and its role in the advancement and promotion in New Zealand of science, technology, and the humanities. But for the Hon Rodney Hide’s benefit, if indeed this is necessary, I should take just a minute to explain to him that the Clerk at the Table, who has sharper eyes than the rest of us, found that one of the words in the amendment in the name of Te Ururoa Flavell to clause 5 of the bill—we have dealt with that clause, so I will be quick—was left out. That word was “literature”; it was left out by error. Having had it drawn to my attention, I decided to put it in again. That was the amendment to the amendment. “Mr Take-No-Prisoners, Speedy As She Goes Chairman” did not give me the opportunity to explain that amendment to the Committee, and that is how the earlier situation arose. I understand that the Chairman wishes to make progress and I am not at all critical of it, but I thought I would let the honourable member know how that situation arose.

How does the Royal Society meet its object of the advancement and promotion of science, technology, and, now, the humanities? I will give just one example. It is a programme that was begun—I am sorry to go back in history—by the aforementioned Hon Simon Upton. It concerns schoolteachers who teach science and maths, but not, at the moment, those who teach humanities. Those schoolteachers can apply to the Royal Society for a scholarship to give themselves 6 months’ break to go and do some science. They might want to advance their own studies in this, that, or the other area of science. It needs to be of a practical, hands-on nature. It could be referred to, I suppose, as a bit of a mini-thesis, a mini-masterate, or a mini - postgraduate qualification, though no qualification flows from it. At the conclusion of that 6-month period the hope is that the teachers will return to the classroom renewed and re-energised to progress their teaching of science to the young people in front of them.

That scholarship programme is intensely popular. I am sure many members in the Chamber would acknowledge that they have run up against this or that schoolteacher who has headed off to improve their ability to measure and manage water quality, or any other thing in the area of science. Some of the things people get up to can be rather interesting, even to the point of being off-the-wall.

That scholarship is run by the Royal Society. When I was the Minister of Research, Science and Technology I became anxious that the scholarship was being used as an exit strategy by teachers. I was anxious that we had somehow made it a bit easy for teachers to leave the classroom, and maybe head away from teaching for ever. I arranged for a bit of a review to be done. A whole lot of people were interviewed, and the review came back straightforwardly with what we would, in retrospect, say was the pretty obvious finding. It found that if teachers were going to go, not giving them a scholarship was not going to hold them any longer. Some of them went from the scholarship to leaving teaching altogether, but the fact is that that number was well outweighed by the number of teachers who came back into the classroom after their 6-month scholarship.

It is pretty much equivalent to what happens in the tertiary sector, where people get a sabbatical for 6 or 12 months. It is not as regular by any means; it is done only by a competitive process. It does not happen as of right. It is managed by the Royal Society. In fact, the person who managed it for years and years died, as a young man, only about 3 years ago. A whole lot of teachers came together to mourn the passing of this fellow and to heap praise on the Royal Society for its handling of this particular scholarship.

That is one thing that the Royal Society does to meet its object. An interesting question is before the Royal Society if this Committee decides to pass clause 6: whether that scholarship programme changes and whether a person who teaches English or media studies will now be eligible to apply for a scholarship. My hope is that they will. Already mathematicians can apply, and we could say that maths is not a science but an art. If members do not agree on either of those words, they could call it a philosophy. Mathematicians are already eligible, so why not the others? At that point the Royal Society would be managing this competitive sabbatical leave for pretty much all secondary teachers around the country—maybe not for physical education; I am not sure.

The Minister of Education, to my right, may know about this scholarship programme. If she does not, I urge her and anyone else who has an interest in education to find out a bit about it. It is an astonishingly good programme. It is the brainchild of Simon Upton and it has been continued by successive Governments. It works to instil another round of excitement in those teachers, whom we all consider to be so important in our society. It is a cost-effective programme. It is run by the Royal Society, and it is one of many, many things that it does.

I will resume my seat in the hope that colleagues will be able to indicate to the Committee how they think the object of the Royal Society might now be best discharged.

  • Debate interrupted.

Points of Order

Amended Answers to Oral Questions—Question No. 11 to Minister

Hon ANNE TOLLEY (Minister of Education) : I raise a point of order, Mr Chairperson. I seek leave to correct an answer that I gave earlier today.

The CHAIRPERSON (Eric Roy): I think the member should do that after we have reported progress. We cannot actually do that in the Committee of the whole House. The member will have to be quite sharp in that 5-minute period to do that.

Royal Society of New Zealand Amendment Bill

In Committee

  • Debate resumed.

Clause 6 New section 5 substituted (continued)

Dr ASHRAF CHOUDHARY (Labour) : I think the Hon Pete Hodgson, the member in the chair, explained the objective of the Royal Society very well. When I look at the objective as it now is in the Royal Society of New Zealand Amendment Bill, I see that it includes science, technology, and the humanities. I have been thinking about that. There is one word that is missing, and it is something that perhaps Pete Hodgson can put some light on. It is the word “research”. We have science and technology in the definition, and now we have the humanities. But what about research? I hope that Pete Hodgson will have some answer to that. Traditionally as scientists we have done the research and developed the science, and then we have had the role of technology and engineering in the advancement we have made through research, but that word is somehow missing from the objective in clause 6.

Historically, in the over 144 years since the existence of the Royal Society, the emphasis has been always on science and technology but not really on the humanities. I always thought that this was incomplete. The objective of the Royal Society has always been incomplete, because once we do the science and we do the technology, these technologies are actually used for humans. We use them for our environment, and we use them in our surroundings, so they have to have some impact on the environment that we live in. Clearly, we should have had the humanities in the functions of the Royal Society a long time ago.

We have spent a lot of money, particularly in blue-sky research and—rightly so—in biofuels. We have gone into genetically modified food and genetic engineering. We have put money into research and development. But in the humanities area there are linguistics and various languages, and there are the social sciences. I know that my colleague there, the former Associate Professor Rajen Prasad, has done a lot of work in the area of the social sciences, and in the child and family area. A lot of research has been done, and all of that work has been done on a scientific basis. It is not something that has just happened; it has been done on a scientific basis. Whether we take the humanities in totality or just in part, as in linguistics, languages, and culture—and religion, for that matter—I am very strongly of the view that the humanities should all have been a part of the objective of the Royal Society a long time ago. I am delighted, even at this time, that we are including the humanities as part of the objective of the Royal Society.

But I still want to know, from Pete Hodgson perhaps, or from somebody else who can enlighten me, why we do not have the word “research” in the objective, because technology and the sciences are developed on the basis of research done. If we do not have that, we cannot have the technologies and engineering that we have, and those of course impact on humans and the environment that we live in.

In the history of the Royal Society it is a significant milestone, if you like, that we are including the third leg of the three—science, technology, and now the humanities—as part of the objective of the Royal Society as we go forward. More and more we are becoming conscious of the impact of technology and the impact of new innovations on humans. Thank you.

LYNNE PILLAY (Labour) : It is a pleasure to stand along with my colleagues and speak in support of the Royal Society of New Zealand Amendment Bill. In doing so I firstly acknowledge the role that the Royal Society plays. I myself, along with all of my colleagues—certainly those on this side of the Chamber—have enjoyed the lectures that the Royal Society provides for people who may not be at the highest level of the sciences. Indeed, the Royal Society does lecture in the humanities, I think it would be fair to say. Many of us have enjoyed going to those lectures within Parliament, and we have certainly been enlightened.

I congratulate the Royal Society, which has operated since 1867, on all the good work it does. We are celebrating the research, and I will speak very briefly to what Dr Choudhary said in terms of whether research should be included in the objective. I know that Dr Choudhary is a scientist at heart, but also by occupation. Research, whether it be in science or in the humanities, is so important. It has made an improvement in this country and, indeed, everywhere. It has improved everything. It has improved quality, whether it be in any form of health care, any form of understanding of where we come from, any form of culture, or anything to do with the humanities. That research is absolutely vital. This is the time to acknowledge the importance of the research. However, I think that extending the work that the Royal Society does in promoting science and technology to include the humanities is a very worthwhile cause.

I will talk about my daughter. She went to university, whereas I did my training on the job, as my partner would say, because I trained as a nurse. I did not go to university. I have had some influence in the past over my daughter, and she has often asked me for advice, but I left her to her own devices to go to university and talk about what she wanted to do. When she came home she told me she was going to do a conjoint commerce and arts degree, which seemed quite strange to me because she had never shown any interest in commerce, but there we go. But it was not until afterwards that she said she had been persuaded by the fellow who was talking to her on the day, who just happened to be the head of the commerce department, that it would be a good thing to do. At the eleventh hour she changed to a psychology degree, which of course encompassed the humanities and, indeed, some mathematics and other things that went along with it.

She came home a few months afterwards quite flattened. Someone had said to her that her degree was a BA, which meant—and I do not know whether I am allowed to say this in the Committee, but I will give it a go anyway—bugger all. That was the description of an arts degree. This was some time ago. I quite eloquently reassured her. She went on to have some very interesting career choices at her very young age, and I think that is wonderful.

I think, certainly, attitudes have changed, and with them the ability of everybody, really, to recognise the strengths that come from whatever dimension of education. It enriches people’s lives, and it enriches what people are able to contribute to their communities and to society; it is very, very worthwhile. I think this move to include the humanities in the Royal Society is really just another acknowledgment—the icing on the cake—of how important this issue is.

Dr RAJEN PRASAD (Labour) : I am pleased to take a call on clause 6 of the Royal Society of New Zealand Amendment Bill. It is a source of great pride that a social scientist like me, who has spent a long period of time as a social scientist, will see the day when the Royal Society—this eminent organisation, which is historical, and has all the bells and whistles any scientist would seek to achieve—includes his or her particular discipline in the object of that particular august body. As a social scientist I am really pleased that we are here, although perhaps 30 years too late, because, indeed, the humanities and social sciences have been around a long time. It has taken some time to convince that august body that it was time to include this major area of study.

To now know that it will be the object of the Royal Society to enhance and promote this particular area is, indeed, a genuine source of great pleasure. But, of course, if I had it my way—and I invite the member in the chair, Pete Hodgson, to make some comments about this, if he could—I would ask why we do not fix the problem properly, and really signal that by using the nomenclature that is used outside; that is, the humanities and the social sciences. At the moment, the social sciences are not mentioned in the objects of the Royal Society. What is used out there, and it has been used for the years in which I have been to university and practised, is the composite term of the humanities and the social sciences.

We have invited the Royal Society to contemplate that matter, and I hope it will give us its thoughts on that, so that we may move a little bit further. The member in the chair may want to comment on that, and whether he has any thoughts about the reasons for not using the convention in this particular clause, so that, for once, we would have it complete. We would know it would be the object of the society to advance and promote in New Zealand science, technology, the humanities, and the social sciences. I think that would also give a great deal of comfort and confidence, and help people a great deal to identify with the Royal Society and its objectives. I look forward to hearing some comments from the member in the chair.

What will the Royal Society advance by including the humanities? What will it be advancing and promoting? Without wanting to go into the definition, there is something particular about the discipline of the humanities, and the subjects within that discipline, that is brought to human thinking, human endeavour, human activities generally, and human development, as well. The humanities, as one authority puts it, introduce us to the people we have never met, places we have never visited, and ideas that may never have crossed our minds. This is a whole new area of thinking. To promote that area through the work of the Royal Society is, indeed, quite an important addition to the society’s work and to the particular professions that arise out of those disciplines.

This move also does something else. It signals to any field of professional or other activity that there is a wide area of knowledge and information that can be utilised to enhance our professions, how we think, and how we operate. If I had my way I would use the American experience, so that everybody would need to include the humanities and the social sciences. It does that as well. Later on, when we talk about the functions of the Royal Society, we will be in a much better place to talk a little bit more about what it is, and how the functions will make this relationship come alive. Thank you.

Hon PETE HODGSON (Labour—Dunedin North) : I have had a couple of questions put to me by successive members, and I will quite quickly address them. The first question was from Ashraf Choudhary, who pointed out that clause 6 of the Royal Society of New Zealand Amendment Bill does not include the word “research”, and he wanted to know why not. This issue refers, I think, to some earlier remarks I made about the nomenclature of the phrase “research, science, and technology” that has been in our public lexicon for 20 years or so. Mr Choudhary asked why we have lost it now. I can understand why he asked that. I think it is a legitimate and valid question, and I think it has a legitimate and valid answer. Put simply, it is because the word “humanities” has been added. The word “research” can come out because the word “humanities” has been added.

By that I mean that science and research are synonymous, and technology and development are synonymous—or near enough. Synonymous is probably too strong a term, but those words have at least a very similar meaning. But science and technology do not describe, or begin to describe, that thing called “the humanities”. So the concept of the humanities has to find expression one way or another. In clause 6 it finds expression directly. The word “humanities” has been put in, in black letter law. So we now have the words “science, technology, and the humanities”.

In earlier times, 20 years ago, when we were talking about why the Ministry of Research, Science and Technology had that name, we examined those words and wondered why both “research” and “science” were needed. The answer was that it was a nod to the humanities, because the humanities were not explicitly mentioned. Certainly, the Ministry of Research, Science, and Technology, as an agency, did not concern itself with the humanities. The Ministry for Arts, Culture and Heritage did that. We had divided our State in such a way that the humanities could not be a part of the Ministry of Research, Science and Technology. But it is also the case that because the humanities are a part of scholarship, and because the Ministry of Research, Science and Technology was seriously involved with scholarship, we needed to put the word “Research” in there to give a nod to the humanities.

I suggest to Dr Ashraf Choudhary that we are entitled to give ground here. We are entitled to say that the word “research” is no longer needed in the legislation as it is. If “the humanities” by itself, in conjunction with the words “science and technology”, covers the patch, then we have no yawning gaps. This leads to another question in the name of another doctor. We are surrounded by doctors in the Chamber, especially on the Labour side. Dr Rajen Prasad, who is himself a social scientist, is asking whether, given that we now have the words “science, technology, and the humanities” sitting there, we have ambiguity about where social science finishes and the humanities start. This is evidenced, for example, by the ordinary Mr Chris Hipkins, who said that criminology is both an art and a science. Many things are both arts and sciences, including something that I am familiar with, called anaesthesiology. It is absolutely an art and a science.

Chris Hipkins: Is that what he’s doing now?

Hon PETE HODGSON: It is what I am doing now.

Jo Goodhew: Oh, that’s very rude.

Hon PETE HODGSON: No, I did not think so. I resemble that remark. I think the member is absolutely on the button here.

But can I just say to Dr Rajen Prasad that I think he is guilty of special pleading. That is what I think. I think that if Dr Rajen Prasad were to succeed in having the words “social sciences” put into black-letter law, then soon enough along would come Dr Ashraf Choudhary to ask what about the natural sciences, biological sciences, agricultural sciences, or whatever took his fancy. Someone else said physical sciences. I say that we should leave it alone, that we should let the word “science” be the broad church we all want it to be. Let the social scientists find their place in that broad church of science. Indeed, the member himself has made social science a much more relevant contributor to the public debate with his work in the Families Commission. I applaud him for that. But there is no need, in addition to that, to plead for a special mention because the social sciences are feeling on the outer or not quite as important.

GARETH HUGHES (Green) : Kia ora, Mr Chairperson. Ngā mihi nui ki a koutou. Kia ora. It is great to take a call tonight on the Royal Society of New Zealand Amendment Bill, and, in particular, on clause 6.

Before I begin, I say it is good to see this bill in the Committee. The Green Party will support it. Only the member for Mana has been in the House for a shorter time than me, and he might agree that the debate tonight on the Royal Society of New Zealand Amendment Bill is probably the most intellectual debate that I have seen in my 1 year in this Chamber, particularly because of the calls taken by the member in the chair, the former Minister, Pete Hodgson.

It is good to be having this debate. I think it is crucial to talk about the humanities. In New Zealand in the last couple of decades the humanities have often been seen as a valueless part of academia or of our society. There has been a focus on research, science, and technology, yet the emphasis, from our universities to our schools, has been away from the humanities. So it is good to have this debate on this bill.

Clause 6 is the crucial clause; it is the clause that changes the object of the Royal Society. I have a whole bunch of questions, and they might be addressed in Supplementary Order Papers or in further calls tonight. First, I will look at the wording. My question is to the member in the chair, or to the members who were on the Education and Science Committee. I note that clause 6 is the only part of this albeit small bill that calls it only the “Society”, not the “Royal Society”. I am an avowed republican and I would like to see the Royal Society’s name changed, and maybe we will get to that part of the debate later on tonight. But I ask why the word “Royal” is not in this clause. Maybe another member can explain it. Maybe there is a common-sense explanation, but as a new member I am not sure what it is.

I have not particularly followed this bill through the House or the Education and Science Committee, but I thought I would take a call tonight, as I have a humanities academic background. At Victoria University of Wellington I studied religious studies and history, which are two of the areas listed in the definition in clause 5 of this bill. I have a postgraduate degree in political science, which is one of those topics on the cusp of definition: is it a science, is it humanities—

Hon Judith Collins: You’re very unemployable apart from here, but really only here.

GARETH HUGHES: I thank the member very much for that contribution, which I could not quite hear. Anyway, I have a background in the humanities, which is why I thought I would take a call on this crucial clause. It is the only call I will be taking. Clause 6 amends the object of the society, which currently is “the advancement and promotion of science and technology in New Zealand”. We are adding the humanities to that object.

I was not able to take a call on clause 5, which dealt with the definitions, so I will raise a couple of questions corresponding to the decisions made on clause 5. Clause 5 defines the humanities subjects by listing them. They are languages—not specifically including English or te reo—history, religion, philosophy, and law. History and religion were the two degrees that I studied at university in Wellington. What is missing, of course, is a whole bunch of others, such as music, dance, visual arts, and sociology. I think the problem is—and I am not sure whether this was raised at the select committee, but it would be great if a member of the committee could take a call on it—that the humanities have been defined as a list of topics. An equally valid way to define the humanities is as an approach. One good quote I have found that shows the difference between the humanities and the sciences is that the humanities are not defined by a list of topics; they are defined by an approach to the question. It is all about the question one asks. That definition defines the humanities as an interpretive method of finding truth, rather than explaining the causality of events or uncovering the truth of the natural world.

I think we will find, when using clause 5 and defining the humanities as a list of topics—some of which we agree with, some of which we disagree with, and some of which are not included, such as te reo or indigenous studies—we will see, in an increasingly technological world, a whole bunch of potential new humanities subjects coming in that will not be defined in this legislation. In the future we may find ourselves in this Chamber adding more topics, as our society is enriched and we find new fields of study for the advancement of approaching the question that is the humanities.

I think we might rightfully see that this clause amends the work of the Royal Society. People will challenge the Royal Society because it is not adequately advocating for, promoting, or advancing their particular topic. A hypothetical example is astrology. Maybe astrology is a humanities subject or maybe it is a science. I personally disagree with it. There is the science of studying mysterious animals like the Sasquatch or Bigfoot. Someone could legitimately go the Royal Society and say: “This is what I define a humanities subject as. Why aren’t you advancing or promoting my humanities subject?”. I think that possibly the problem in clause 5 is that we have defined the humanities as a list of subjects when, in fact, maybe we should not have listed—

JAMI-LEE ROSS (National—Botany) : I move, That the question be now put.

KRIS FAAFOI (Labour—Mana) : Thank you very much for the opportunity to speak on the Royal Society of New Zealand Amendment Bill. It is my first call tonight, and one of a couple, I hope. Before I talk on the bill, as this is the first opportunity I have had to address the Chamber since the aftershocks in Christchurch, I send my sympathies to the men, women, and children of Canterbury, and also to the members of Parliament from across the Committee who hail from Canterbury. Our sympathies and support go out to them, too.

We are talking on clause 6 of the Royal Society of New Zealand Amendment Bill, which substitutes the new object clause. New section 5 in clause 6 states: “The object of the Society is the advancement and promotion in New Zealand of science, technology, and the humanities.” As the member in the chair, Pete Hodgson, said earlier in this debate, this clause is really at the heart of the bill. It changes the focus of the Royal Society from focusing strictly on science and technology, as it has since 1867, and future-proofs the society by bringing the humanities into the realm of the Royal Society.

Just in case people have just switched off Coronation Street and do not know what the definition of “humanities” is under this bill, I say that it includes languages, which obviously are very important here in New Zealand, with our own official language of te reo. It is good that languages have entered the realm of the Royal Society. It is interesting that there was a debate at the Education and Science Committee as to whether English or te reo should be specifically included in the bill, but at this stage they are not. The humanities also include history. For a young nation it is promising to see that subject enter the realm of the Royal Society. They also include religion, philosophy, law, classics, linguistics, literature, cultural studies, media studies—I think that in this age of new media that is an advance for the Royal Society—art history, film, and drama.

As I said, this bill moves the focus of the Royal Society towards the humanities, but I hope the Royal Society does not lose its focus on research, science, and technology. Since 1867 it really has been a champion to make sure that our scientists, our research, and our technology have been cutting edge. Through awards like the Rutherford Medal and scholarships, it has ensured that New Zealand research, science, and technology stay world class.

Since late 2008 there has been a debate on making sure that the focus of the society changes. This is an advancement, but I think it is very important that we have a champion in science to make sure that we are pushing it. Although we welcome the humanities coming into the realm of the Royal Society, it is very important that we have a focus on science and innovation to ensure that our economy remains highly skilled, and that we have a workforce that ensures economic success for our country. It is very important that the Royal Society makes sure that that continues and that we have a champion in this area. It is obviously very important for that function of the Royal Society to continue, because research and development are essential for our productivity to grow and for our economic success. So I really hope that although the humanities have come into its realm, the Royal Society will continue its focus and its heritage around science.

It is also very important that the focus of the society remains on science and technology because New Zealand’s private business research and development spend is one of the lowest in the OECD. We need to make sure we have a separate body that ensures that although our spend on research and development in comparison with other OECD nations is low, someone outside the realm of business and the Government is pushing to make sure that we are doing the best that we can, and that we are continuing to make sure we have scientists and technicians in crucial areas for our businesses, to ensure our technology is cutting edge.

It is also very important that the Royal Society continues its focus on science and technology, as it has since 1867, because compared with other countries we are still lagging behind. We continue to stagnate, in terms of our growth, because of a lack of investment in science and technology. It is very important. Although we welcome this change of focus and this change of object for the Royal Society, I would hate to see the voice it has had since 1867 on science and technology get drowned out, because that voice is very important.

Hon RODNEY HIDE (Minister of Local Government) : I move, That the question be now put.

  • Motion agreed to.
  • Clause 6 agreed to.

Clause 7 New section 6 substituted

Hon PETE HODGSON (Labour—Dunedin North) : Clause 7 is a long clause. It details the functions of the Royal Society in part by, in many cases, just adding the words “and humanities”. But it means that the work of the Royal Society now increases significantly, because the humanities are a significant addition to what is already going on. Let me give the Committee a couple of examples.

The first would be the management of various awards. The Rutherford Medal, the Pickering Medal, the Thomson Medal, and many other awards are sought and given under the aegis of the Royal Society on an annual basis. These are highly contested awards, and they are prestigious in the world of science. One needs to be a scientist or understand a bit about scientists to understand why the awards are so prestigious. They are often the thing that either drives a scientist or makes a scientist feel well-respected in the eyes of his or her peers. That peer review, that peer acceptance, and that peer acknowledgment is often much, much more important to a scientist than anything to do with money, status, title, or whatever. It is what drives many scientists; it just is. So it is reasonable that the Royal Society should be responsible for managing the allocation of those various medals.

There is another thing the Royal Society does, or at least it does indirectly, and that is manage the Marsden Fund. Actually, there is a council appointed by the Minister of Science and Innovation that manages the Marsden Fund, but the link between the Marsden Fund and the Royal Society is so close that it is best to not bother distinguishing one from the other. The Marsden Fund is a pot of money that everyone says is too small and everyone does not want to get any bigger, or at least not too much bigger too quickly. The reason for that sort of dichotomous approach—it is too little but do not make it too big—is that the Marsden Fund is itself a prestigious fund and a Marsden Award is a prestigious award. People put them on their CVs. If Marsden Awards were freely available, then everyone would be able to put them on their CVs and that would lower the currency a bit.

But there is another reason why the Marsden Fund should not get hugely big. I guess some people are listening to this and saying “Oh, that’s why that guy Hodgson, when he was Minister of Research, Science and Technology, never did make it that much bigger when we wanted him to.” Actually, it went up by 90 percent while I was Minister, but not 190 percent. The success rate is still only about 10 or 12 percent—

David Shearer: Five to 10.

Hon PETE HODGSON: If that is what the member’s notes say, it has dropped away even more. That means that the vast majority of the folk who apply for a Marsden Fund grant do not get one. In a way, we need to remember that because the Marsden Fund is not based on relevance to New Zealand society but only on excellence, that means that an irrelevant topic can be studied so long as the proposal is excellent and so long as the researcher is excellent. That means that every year some journalist says there will be, for example, $300,000 given over to a particular topic—the last one I remember reading was into the study of moth genitals—and we are all supposed to laugh like drains. Chris Hipkins is away already. He has got it. He is going to crack a joke about moth balls before long. Let us see how long it takes him. The point is that that sort of weird and wonderful research enables excellent researchers to follow their dream, not to follow what someone else says is relevant. Out of that sometimes come serendipitous results that are of value, and the Marsden Fund is alive and well with examples of that. But there also come scientists who become committed to a research career, especially scientists who are in their late 20s or early 30s. If they pick up a Marsden Fund grant, they feel as if they have reached a bit of quality and they are often away on their career.

The Royal Society oversees that stuff, and it is really interesting because the Royal Society is itself made up of excellent researchers This could be a den of iniquity. This could be a den of backhanding. This could make FIFA look like something amateurish, but it does not happen.

Hon Members: Ha, ha!

Hon PETE HODGSON: Well, think about it. The only people who are qualified to decide who is an excellent researcher are excellent researchers. If they are not conflicted, they are no good to us. That is the truth of it. I do not think that is funny. That is honestly how I see it. The question is how one maintains the integrity of a situation under those circumstances without the word getting around that someone’s brother-in-law got what he should not have got. All I can say is that that has never come across my desk. I think when the Hon Steve Maharey was Minister for Research, Science and Technology for a couple of years he ran into a bit of that—an allegation that others said had absolutely no substance—but the allegations themselves are rare. So how will very clever people decide which of those very clever people or other very clever people will get a bunch of money, because they do, without it becoming an issue of conflict of interest?

One other thing is that the Marsden Fund has for years supported humanities. It might have decided to fund research into moth balls, but it will also fund research, if it wants to, into ancient Icelandic. The only criterion is one of excellence. So for years, long before this Royal Society of New Zealand Amendment Bill came into the hands of Grant Robertson and long before it came before the House, the humanities part of the Royal Society’s function has been, in a way, manifest through its very close neighbour, the Marsden Fund and that funding process. The Royal Society is generally responsible for housing the Marsden Council—you know, the tea and the coffee. Generally, it is responsible for putting up the names to the Minister of the day as to who should go on this or that committee. It just circulates them around.

All the while that I can remember being a Minister, there were some monies there for humanities, so there is a bit of a track record of money coming from Vote Science and ending up in the hands of humanities researchers. Humanities scholars would say “not enough”—they would say serially and seriously not enough—but that does not alter the fact that we have been doing this a little bit for some time. It may now mean that the emphasis on the Marsden Fund distribution heads a little more towards humanities. I do not want to dictate that to the folk who will be appointed to that body, or offer any advice to any present or future Minister; I am just saying that it seems possible. So those are a couple of the functions of the Royal Society. There are many other functions listed. They are listed in the legislation and I am sure that other colleagues will want to explore them.

I say in conclusion that in respect of the Government’s interaction with the Royal Society, 20 years ago when Simon Upton was looking at what to do with the Royal Society, and trying to work out how to carve out its niche, which he finally did in the legislation called the Royal Society of New Zealand Act 1997, way back then it was unclear what its role would be. Since that time it has developed a series of roles including advisory roles to the Government, which I am sure other members will speak about. That means we cannot easily do without those functions—and not only do we want them; we now need them. That, I think, is something that needs to be said in the Royal Society’s favour. For those who think the society is a bunch of people who are fuddy-duddy and sandal wearing, that is no longer the truth and has not been the truth for at least the time I have been in Parliament.

LOUISA WALL (Labour) : Kia ora, Mr Chairperson. Ngā mihi nui ki a koutou. Thank you very much for the opportunity to support my colleague Grant Robertson’s Royal Society of New Zealand Amendment Bill. At this point in the debate we are focusing on clause 7, and the aspect of clause 7 that I will be talking about also relates to new section 5, inserted by clause 6, which states: “The object of the Society is the advancement and promotion in New Zealand of science, technology, and the humanities.” Of course, all of those are underpinned by research or evidence-based action.

I acknowledge the Hon Pete Hodgson, who was the Minister of Research, Science and Technology when I was Māori research manager at the Health Research Council. The research, science, and technology sector has been, historically for me, one that I have known quite a bit about. Obviously I know quite a bit about what the Hon Pete Hodgson was talking about in terms of conflict of interest, but also in terms of scientists themselves being able to select and be involved in processes of allocating our public-good science, research, and technology money.

What I really want to focus on is the definition of humanities that we have in this amendment bill. The definition includes languages—and I hope there is an opportunity to ensure that our indigenous languages are part of that definition—as well as history, religion, philosophy, law, classics, linguistics, literature, cultural studies, media studies, art history, film, and drama. It was very interesting for me to look at the definition of humanities that I could find on the internet, as one does. For me it is very much an academic discipline that is about studying the human condition using disciplines that are analytical, critical, and speculative.

What does this bill mean for me in terms of humanities outputs in the future? I think it is very exciting, and I just highlight the fact that the Royal Society, having been around since 1867, has mirrored situations that many countries across the world, and many leading academies, such as those in Scotland and Canada, have followed in ensuring that the humanities are integrated into the work of the Royal Society. It is very exciting that the breadth of the Royal Society now includes the humanities.

Let us look at some of the historical work that the Royal Society has been involved with, and I particularly highlight Dr Steve Thompson, who was involved with the Royal Society when I was working at the Health Research Council. I will also look at some of the evidence that the society has come out with in respect of the humanities and decided to share with the New Zealand public. For example, the Royal Society signed a petition in favour of genetic modification testing in 2008. It was really interesting to note that a report was released by the energy panel of the Royal Society of New Zealand in 2006 recommending that the Government set aggressive but achievable targets for renewable transport fuels, that it phase out the use of fossil fuels unless carbon emissions could be contained, and that it put in place policies to ensure that fossil fuel - free targets are met by 2020.

As we can see, the Royal Society has historically engaged in the pursuit of the humanities, but I guess that with this formal mandate there will now be a greater opportunity for our humanities leaders and academics to apply to the Royal Society. Also of note in 2006 was the comment by chief executive Steve Thompson that the Government’s research and development investment of about 0.52 percent of GDP was well below its goal of reaching the OECD average, then 0.68 percent and rising. He said that scientists were chasing a moving target, and the gap was getting bigger. It will be very interesting to monitor in the future what this definition will mean to the Royal Society. I commend my colleague Grant Robertson for prioritising this member’s bill.

DAVID SHEARER (Labour—Mt Albert) : As Gareth Hughes said earlier in the debate, we are having an extremely good discussion on the Royal Society of New Zealand Amendment Bill, one that is perhaps on a slightly higher plane than the debates on most of the legislation that comes through the House.

Three words of clause 7 run right through the various parts of the clause, and those words are “science”, “technology”, and “humanities”. Pete Hodgson touched on and answered the questions of some of the other members who had asked about research. We have a Ministry of Research, Science and Technology and a Foundation for Research, Science and Technology, and now we have a Ministry of Science and Innovation. The word “research” has been removed from the title of that ministry. As Pete Hodgson quite rightly argued, it has been taken out because research is an inherent part of science; we cannot have science unless we have research. We can discuss the types of scientific research we can have, but nevertheless research is part of science. The really interesting point is that the word “humanities” has been brought into the three words I mentioned.

I will make a couple of points, and first I will again go back to what Pete Hodgson was talking about in terms of the Marsden Fund. In some ways the Marsden Fund, which is to recognise and reward excellence in New Zealand, has for some time provided awards in both the science and the humanities areas. There has been no problem in terms of that happening. In many ways, what we are trying to do with this legislation is bring the humanities into the Royal Society.

Mr Hodgson mentioned in his contribution that the Marsden Fund is for excellence, regardless of what end the research might be put towards in the future, and of what it might be able to produce. It is about the best research that can possibly be done, and we can have extreme examples of that. It is something that is held up as being about the best science in New Zealand.

My only issue with the Marsden Fund—and I will diverge on this for just a short period of time—is that often the work is done and we already have the conclusions before we can actually put forward an application for the Marsden Fund. So in a sense the 2 years’ funding from the Marsden Fund in many ways is confirming what we have already found out. In a sense the Marsden Fund does not do exactly what we would like it to do, which is to take forward an area of science at the most excellent level. Often, in order to get the Marsden Fund, applicants must already know almost the conclusions of their research.

The other thing I will point out about the fund is that only 5 percent of the applications are rewarded in this regard. Just about everybody whom I have spoken to has said it could easily be 10 percent. Making that cut-off point between 5 percent and 10 percent, or even 15 percent, is extraordinarily difficult. Would it not be great if we in New Zealand had more money to provide that extra 5 percent or 10 percent to those other researchers who are there and who are just as excellent but who perhaps, for whatever reason, have not been chosen?

I come back to the key point I started with. The key point is that the humanities have been part of the Marsden Fund, which has been seen as the highest point of endeavour in our scientific community amongst the universities, Crown research institutes, etc. In doing that there has been no problem about dumbing down science or making science less relevant, but it has in fact been holding up the humanities and science together. That is a very important point.

The other thing I will say is that about nine or maybe 10 out of the 13 submissions made on this bill on the humanities—I do not have the exact figure—were against bringing the humanities into the Royal Society. It seemed to me that many of those branches believed and felt that bringing in the humanities would undermine the tenets of the Royal Society and what the Royal Society stood for—that is, excellence in science. In fact, the more I look at this, the more I think that what will happen is that it will be the other way round. It is the humanities that need to worry about what will happen by bringing the humanities into an august scientific organisation like the Royal Society, and the humanities will perhaps face the greater risk of being submerged by broader science within the society.

I think the movement forward is a healthy one on both sides. Both sides, both the pure scientists and those who are involved in the humanities—again, as Pete Hodgson pointed out to my colleague Dr Rajen Prasad, this involves the social sciences, as well—will have to work together for the benefit of excellence and for the benefit of New Zealand. No one side will be threatened, as many of the submissioners seemed to suggest when they came before the select committee.

As has been pointed out, the movement forward of bringing in the humanities and of looking at science, technology, and the humanities covers that broad range of endeavours that we believe belong together. As other speakers have said, in this much more complex world, where we are looking at global warming and at some of the other areas that we are trying to apply science to, there is a natural fit. They naturally fit together, and we need to have that broad conversation across the whole of the Royal Society.

I will make just one comment about something that Gareth Hughes mentioned before about the Royal Society and about why it is called the Royal Society. He mentioned the fact that he is an avid republican—as am I, I say to Mr Hughes. There is an element of the Royal Society being traditional. This organisation was first established in 1867. Therefore, the word “Royal” in those years perhaps had a much more relevant connotation than it does today. But I still believe that we can be cognisant and respectful of the history of this organisation by maintaining its title, the “Royal Society of New Zealand”. I would hate to see it being called the “Republican Society of Science”. I do not think that has quite the same ring to it as the “Royal Society”. Therefore, I believe that the Royal Society and what it stands for—and, in particular, where it is going—is what clause 7 really establishes in its six subclauses, which is to bring the humanities into the Royal Society.

I will particularly point out that proposed new section 6(e), which is to be substituted in the Royal Society of New Zealand Act by clause 7 of the bill, states that the Royal Society’s function is “to provide expert advice on important public issues to the Government and the community:”. That can involve pure science, but by definition of what it is anticipating doing, it must bring in society and the way society works, as well. That means that it is to incorporate what we have been talking about, which is bringing in the humanities.

In conclusion, I say that I believe that the Royal Society is taking the right track in bringing in the humanities. I think that the three words that pervade clause 7 of this legislation—“science”, “technology”, and “humanities”—are reflective of where we want to see the Royal Society going in the future.

TIM MACINDOE (National—Hamilton West) : I move, That the question be now put.

CAROL BEAUMONT (Labour) : It is a great pleasure to rise to speak again on the Royal Society of New Zealand Amendment Bill—my first time this evening—and I am speaking on clause 7, which substitutes a new section 6, “Functions”, into the Royal Society of New Zealand Act. Clearly, new section 6, “Functions”, is almost the “how to”. So how will the Royal Society advance and promote these matters? The obvious change has been that instead of just science and technology, the humanities have now been included. The functions are quite broad-ranging, and if members look at them as outlined in clause 7, they will see that all the way through we now have the addition of the humanities.

Many of my colleagues have, I think, eloquently explained why it is so important that we include the humanities, and throughout the functions listed in section 6(a) to (f), the humanities are now included. Part of those functions, as stated in paragraph (a), is “to foster in the New Zealand community a culture that supports science, technology, and the humanities,”. I think that is very important for a whole range of reasons.

The pursuit of knowledge for the end goal, if you like, of acquiring that knowledge and then using it, and the processes by which one acquires knowledge, are very, very important. It is, in some ways, what goes to heart of us being human—the way that we learn and the way that we use what we learn. Clause 7 looks at how the society will promote or “foster in the New Zealand community a culture that supports science, technology, and the humanities,”. That will be done by promoting public awareness and through the advancement of education.

It is interesting to look at section 6(a)(ii), in clause 7, because it talks about the advancement of “science and technology education:”, as opposed to science, humanities, and technology education. I wonder whether that is deliberate. Perhaps my colleague Grant Robertson, the fine member sponsoring this bill, could explain to me why the humanities are left out of that particular subparagraph.

Importantly, in the functions there is the issue of excellence. I think that excellence and promoting excellence in everything we do, including science, technology, and the humanities, is important. New section 6, in clause 7, looks at other things, such as providing infrastructure and support for the professional needs of scholars who are part of the Royal Society, and, importantly, it looks at establishing a code of professional standards and ethics.

I am interested in paragraph (e) of new section 6, which states: “to provide expert advice on important public issues to the Government and the community:”. I am unclear as to how frequently the Royal Society would fulfil that role. Perhaps my colleague Grant Robertson might stand and explain to me, as probably our foremost expert on the Royal Society, how frequently it does provide expert advice on important public issues to the Government and the community. That will certainly be strengthened by the addition of the humanities.

Paragraph (f) is very interesting, because in it the council of the Royal Society is given the opportunity to do “all other lawful things …”. I put my mind to what that might look like and whether it would change with the addition of the humanities in those functions. Would the all other lawful things look somewhat different? I wondered whether that could include specifically the promotion of what is called by some people “integrative education”. A number of speakers tonight have stood up and made a very compelling case that the distinctions are somewhat arbitrary between science, the humanities, and technology and that there are many subject areas where, in fact, all three components are at play at once.

There is, I think, an important role for the promotion of integrative education and understanding. Michael Roth, the president of Wesleyan University in Connecticut is a strong advocate for integrative education that mixes science and the arts. He uses the example of neuroscience and behaviour as one of its fastest-growing majors, which links those things. He talked about it as a kind of intellectual cross-training, which I thought was a very striking description.

So I think that with the addition of the humanities it may be that these functions should specifically include a point of promoting integrative education. Again, perhaps my colleague Grant Robertson might be able to explain whether any consideration was given by the Royal Society or the select committee to this idea.

Hon STEVE CHADWICK (Labour) : I am delighted to take a call on clause 7 of the Royal Society of New Zealand Amendment Bill. I commend the Royal Society of New Zealand for putting up this bill. [Interruption] And for putting up with this debate! It put up this bill, which is very important for us to consider in Parliament. I like the functions of new section 6, which is inserted by clause 7, about the integration and promotion of science, technology, and the humanities.

I did a little bit of research—along with my colleagues, I am sure—into what we have historically funded in science. I hear that my colleague who was previously in the chair, Pete Hodgson, was very interested in the science of the moth. I am sure that would be appropriate coming from Pete Hodgson. I have looked at funding that is related to the arts, which is part of my field as the spokesperson on arts, culture, and heritage.

It is particularly interesting that some funding is now being distributed and made available for researchers who look at the computer games industry. When we look at the digital platform and arts, we need to be guided by some of the potential economic opportunities, if they are well researched, for the computer games industry and the country. At the moment it is a section of the creative industries that is not funded by, and cannot make applications to, Vote Arts, Culture and Heritage. Yet I think those funding applications that come before the film industry and the Film Commission may be better looked upon if research accompanied them. I am really pleased about the animation diploma course here in Wellington that Tony St George is running. He says that it is a pretty tough course and he puts students rigorously through it. They look at the impact of gaming and the gaming industry. I think that that research is certainly needed. It relates a little to a portfolio interest I have.

Another interest, much closer to home—and I think we are finding this at the moment with uncertainty in the environment—is the pure science on volcanic eruptions. Much more research is needed. I went up to look at the lahar on Tongariro. I was amazed. I looked at the need for research about when there may be another big blow in the country and also how we could predict super-eruptions into the future. That scientific research is absolutely critical. It guides us as to whether, in a big blow, we would break into the lahar crust to let it flow down the mountain, and potentially take out a motorway, or leave the crust and let nature take its course. It is absolutely imperative for the Minister of Conservation, the Minister of Transport, and the Minister of Local Government to be informed of that research and science. It is great to see science supporting us with the big decisions we make in Government.

We are also seeing some science go into other important decisions made by this Government. One example is research about the unconscious mind of the violent criminal. This issue hardly fits with the humanities, but when we look at restorative justice and law and order we must not make decisions without being informed by good research and good science. This is exactly the sort of information that Ministers and legislators will get to decide where they will take policy in the future. I was particularly interested in Victoria University funding, which came from the Marsden Fund, administered by the Royal Society, for a forensic psychologist to look at the unconscious mind of a violent criminal. What a great slice of research that funding has promulgated; it got a response from Government.

GRANT ROBERTSON (Labour—Wellington Central) : I will take a call on clause 7 of the Royal Society Amendment Bill, which I have not done so far. I will respond to the questions that my colleague Carol Beaumont asked me—

Hon Rodney Hide: What questions?

GRANT ROBERTSON:—and any other interjections that Mr Hide or Mr Williamson might have. I am happy to respond to those, as well.

Carol Beaumont raised in relation to new section 6(a)(ii), inserted by clause 7, that this currently states only: “the advancement of science and technology education:”. To look back at the historical roles of the Royal Society in science and technology education gives us a clue as to why the humanities is not included in that subparagraph. That relates to the Royal Society’s role in helping to set the science curriculum, which is a role that it has traditionally played. It is not one that would have been associated, I suspect, with the Council for the Humanities, which has previously guided that particular area. The other area will be a historical, and even more recent, requirement for more science and technology teachers. Obviously that is an area where we have had a significant shortage as well.

I can see that some colleagues—Dr Prasad, for instance, who is a passionate defender of the social sciences and the humanities—look at this subparagraph and wonder why the change has not been made to include the word “humanities”. I was not on the Education and Science Committee so I am not aware that it was raised. But I believe it relates to the Royal Society’s role in developing the science curriculum, which the Council for the Humanities has not had. I do not think that Dr Prasad should be too upset about this new subparagraph. When we look at the overall functions that are now within this new section we see that it gives the humanities the role alongside science and technology. The particular new subparagraph notwithstanding, when we look at the total of this new section we see that the humanities are right up there beside science and technology.

The comments I specifically wanted to make on these functions note something. The bill does not add just the word “humanities”. The bill repeals the whole of section 6 in the Act and substitutes a new section 6. So this is an opportunity to reflect on whether we think these are the functions we believe the Royal Society should have. So although it is a conversation about the inclusion of humanities, we are not doing just that; we are actually as a Committee repealing a whole section of the Act and replacing it with a new section. This is the opportunity to assess whether these are, in fact, the functions that the Royal Society should have.

I will focus on two of those functions. One is in new section 6(b), which states “to encourage, promote, and recognise excellence in science, technology, and the humanities:”. I believe that the Royal Society is now doing this more and more. A quick look at the Royal Society’s website would tell members that the range of awards, prizes, and medals now given out by the Royal Society is vast. We have the Charles Fleming Award for Environmental Achievement, the Cooper Medal for physics and engineering, the CREST Awards for creative and innovative science, the Dame Joan Metge Medal for social science research, and now a new award to be given out for the first time this year: the Humanities Aronui Award.

The humanities, as we have noted previously in this debate, are already functioning within the Royal Society. Our job here is simply to give the final legislative tick-off to that; the actual work is ongoing. So there is now a humanities award in there. The award that people will perhaps know the most about is the Rutherford Medal. I hope members know about it; if they do not, I am happy to enlighten them. The Rutherford Medal recognises excellence in science. When we look down the history of the people who have received the Rutherford Medal, we see that it really is a tribute to the scientists of New Zealand. Members of this Committee will be quite familiar with them: the likes of Paul Callaghan; Alan MacDiarmid, obviously; and Peter Gluckman. Peter Gluckman is now the Prime Minister’s Chief Science Advisor; some years ago he won the Rutherford Medal. To me, his latest publication is an exact example of why the bringing together of the humanities and the sciences under this bill is so important.

Peter Gluckman’s topic, I guess, was adolescent morbidity, but when we talk about what adolescent morbidity is, we see that it is a combination of physical health—the things that people need to enable them to, as Sir Peter says, survive adolescence—and also the whole way in which we support people to achieve their potential in whatever field they are interested in. That involves moving into areas like psychology; it also goes into areas of social development and social science. They are important areas. The Rutherford Medal is an important example of a high-quality excellence award. Sir Peter Gluckman is now showing us that the kind of work he is doing takes on issues of physical science and brings in social sciences and the humanities in a very, very important report that we hope the Government takes notice of. Paragraph (b) is important. We are re-putting these paragraphs and we are re-establishing the functions of the Royal Society; we should be very proud.

The other function I will particularly highlight, and it has been mentioned by a couple of colleagues, is the question of expert advice on important issues to the Government and the community. The Royal Society needs to be congratulated, because across New Zealand branches of the Royal Society play the role in their communities of highlighting issues that it is important the public be able to debate. I know that during the debate on genetic modification, when the royal commission was meeting and then in the wake of the royal commission’s report, we saw the Royal Society playing an important role. I happen to know that when the Local Government and Environment Committee did its inquiry into matters surrounding the possible accidental release of genetically modified organisms into New Zealand—[Interruption] Yes, it was indeed; that is quite some memory for Mr Hodgson. It took in the Royal Society’s advice. In fact, there was one fascinating occasion when two scientists assessed the information that was related to the so-called “corngate” situation and came up with quite different conclusions. They were both fellows of the Royal Society and they were both brought in by the select committee. To me that is the essence of the role that the Royal Society can play. We will be able to say that science is not an absolute thing but we will bring together the best minds in the country to advise, in this case, a parliamentary select committee. Frankly, with due respect, the then members of the Local Government and Environment Committee were probably not able to bring that advice to the table themselves. That kind of community and parliamentary advice role is very important and I am very pleased that we are restating that particular function tonight.

I also mention just a couple of other things. The Marie Curie Lecture Series is a year-long tour of talks by female New Zealand chemists in honour of Curie’s Nobel Prize in chemistry. Here is an example of both supporting scientists and acknowledging the role of women in science. Were Moana Mackey—I am not allowed to mention the absence of members. But Moana Mackey has contributed significantly to this debate, and I know that she is very keen on encouraging the role of women in science. It has often been seen as a male-dominated profession, so that lecture series is a good example of the way in which the Royal Society fulfils the function within this section.

The point I am really trying to make here is that there are important roles within this section and we should not gloss over them too quickly, because they are the essence of why we have the Royal Society. We as a Committee are being asked tonight whether we want to put those objects and those functions back into place; we are making that judgment. I think those objects and functions have served the Royal Society extremely well. They have been altered at times over the years, and earlier in this debate we talked about the different Acts that have been put in place. The most recent one was the 1997 Act, which brought the social sciences to more prominence within the legislation. That is what these particular sections do.

I also note that there is always the “get out of jail” function, which is the final paragraph: “to do all other lawful things that the Council considers conducive to the advancement and promotion in New Zealand of science, technology, and the humanities.” That is the paragraph that people familiar with constitutions will recognise. I do not know why, but students associations come to mind on this particular evening. There is always one of these clauses in the constitutions of incorporated societies. There is a clause that allows the organisation to perform things that are within its remit but perhaps have not been considered within the exact language above. Again, that could assure Dr Prasad that the humanities are not being left out, in that particular paragraph.

I wanted to make those comments. I had not spoken on this particular clause, which is one of the most significant clauses of the bill. It is the restatement of the very things that we expect the Royal Society to do, and it is important that we are taking some time to work through them. They are, in a sense, listed in order of importance, from the overall role of fostering the culture of supporting science, technology, and the humanities, all the way through to the “get out of jail” function. They are all important, and I am very pleased that we are able to re-include them in our legislative framework.

Hon RODNEY HIDE (Minister of Local Government) : I move, That the question be now put.

Dr RAJEN PRASAD (Labour) : I thank the member in the chair, the member for Wellington Central, for inviting us to reflect on clause 7 as a whole, and to reflect on the fact that there, for the first time, we are being invited to think about the inclusion of the humanities alongside everything else. I appreciate the member in the chair reminding us that we are not just bolting something else on to an existing structure; it actually means something quite different. I will take up his invitation to reflect on the functions of the Royal Society in that particular light. I mention in passing that it is good to hear the members in the chair beginning to sound like professors—“Professor Robertson”. I thought “Professor Hodgson” did a sterling job even though I did not agree with all of his explanations, particularly those about social sciences and the humanities.

It is important to look at the functions of the Royal Society and contemplate what the humanities will get out of entering this pool of scientists as a whole, through the Royal Society, and achieving that kind of elevation, which I want to reflect on. All interests are elevated: the interests of science and technology as well as those of the humanities. All boats are lifted by the way in which the member in the chair has encouraged us to think about the functions of the society.

Look at new section 6(a): “to foster in the New Zealand community a culture that supports science, technology, and the humanities,”. I think section 6(a)(i) adds to the bill something very important, which is “the promotion of public awareness”. I can sincerely say that, as a social scientist, an academic at a university, and a person belonging to a profession that calls on the humanities to develop its own graduates, at times the level of public awareness of what the humanities can contribute to any profession one cares to name is often missing. We went around recruiting students in their last year of high school to go to university, and we encouraged them, in addition to the specialities they wanted to develop, to build into their degrees those subjects and disciplines that would help them to think, to develop their minds, to think about our society, and to think about those disciplines and subjects that take us somewhere we do not normally go. That is what the humanities do. This function of promoting public awareness of what now also includes the humanities, if looked at it in a composite kind of way—and this is a sincere comment—is quite amazing. Promoting public awareness is already included in the way the American academic system thinks about the role of a university. It makes it possible for everybody to have a broad social science or liberal arts education that includes the humanities, so that graduates grow up with the ability to think for themselves and articulate their points of view.

However, with respect, I do disagree with the member in the chair. I rather suspect that new section 6(a)(ii) actually includes a typographical error. I would like to receive another explanation the next time a different “professor” is in the chair about why the humanities are not included in it. I sincerely believe that is an omission. If we read the provision, we see that it states: “(a) to foster in the New Zealand community a culture that supports science, technology, and the humanities, including (without limitation)—”. Subparagraph (i) includes the humanities, but subparagraph (ii) states “the advancement of science and technology education:”. That almost assumes that the humanities require no educational preparation. In fact, they do. Think about ethics and philosophy; there is a huge amount there that really does touch this particular function. I invite the Royal Society, through the member, to come back with another explanation, or maybe members of the Education and Science Committee will have one. Of course, as other members have already talked about, the other functions of the Royal Society now include the humanities.

Other members have talked about recognising excellence. Those who are functioning at the highest level in any discipline always look to see which courts they need to be part of so that their discipline is seen as standing alongside any other science and technology discipline. When we recognise excellence we actually recognise our high achievers, and a function of the Royal Society is to recognise high achievers in the humanities alongside everybody else. This is not about a pecking order; that is now long gone. This addition might be the final piece of the jigsaw. It actually says that when we recognise excellence, no one discipline plays second fiddle. The provision is there, right at the beginning; new section 6(b) has that very, very important function.

I am talking about what the humanities will get out of being included in the Royal Society in the way that this bill includes them. The benefits are embedded in its functions, and we can talk about them. In new section 6(c), the Royal Society will have a role in providing “infrastructure and other support for the professional needs and development of … humanities scholars:”. So there we are. That is an investment in the humanities of the future. The humanities will take any profession to new heights by building alongside the basic knowledge of that particular discipline something else that is not ordinarily available to particular scientists. Here we are providing an infrastructure to do that. To support the professional needs of those who are humanities scholars really is an investment. That investment is made in that particular way by the Royal Society, and it is something that I am particularly pleased to see.

Then there is that little question that needs to be asked of any profession or discipline that actually adds to the advancement of our society: how will it function, and what are the rules that will guide it? Here the Royal Society is saying to the humanities that they also have ethical requirements to meet. A function of the Royal Society is to administer for members a code of professional standards and ethics. The humanities are now beholden to that code, as well, in addition to any code of their own they might have. A set of principles, a code of professional standards, is embedded in the functions of the Royal Society that the humanities will now have to meet.

Hon Christopher Finlayson: A hopeless lightweight.

Dr RAJEN PRASAD: I ask the member to take a call and explain to us his view about the inclusion of the humanities in the social sciences, as a jurist and a lawyer. I am sure that that particular profession could learn a lot, as well, from the humanities—including an ability to stop, think, and add. I know that that member is very capable of doing that, rather than taking cheap shots.

Another cornerstone of the Royal Society is now available to the humanities, and I am particularly pleased to see it.

The other aspect of the role of the Royal Society is its contribution in bringing expertise together in some kind of composite way to be made available to our society for the advancement of our society. Therefore it is a day of celebration for me personally, from my background, to know that the humanities will stand alongside each of those other disciplines—the sciences, technology, etc. We know that they will have the space to make that kind of contribution. I am pleased that I have been able to take this call today to explain that fact from my and my students’ point of view. Thank you.

CATHERINE DELAHUNTY (Green) : I will take a pretty short call, but I was on the Education and Science Committee and had the privilege of hearing a number of the submitters. They were really fascinating people, and the hearing was very different from hearings on other bills that I have participated in. There was a fierce eccentricity about the submitters that I found really interesting. I think that it was the science community debating the issue of humanities that made it such a fascinating experience.

In terms of clause 7 of the Royal Society of New Zealand Amendment Bill, even the issue of the functions of the society was controversial. It was very difficult to find out from the various submitters what they thought the society was, and their idea of who was included and who was not. I had an overwhelming desire to get out a whiteboard and do a flow chart, because it was really difficult to understand how the members, the branches, and the governing body defined themselves. I think that other parts of the bill are controversial, and we will talk about that, but even in talking about functions these people confused the select committee, and vigorously debated—passionately debated—who the society was, before we even got to the question of the function. Maybe the nature of academia and intellectual life is that every single word will be debated—a bit like parliamentarians do, only the scientists were more interesting than we are, somehow.

I will just look at the functions of the society, in terms of what came up at the select committee. It was a bit of a concern at the select committee—although the Greens support the bill—that there was such a dispute about whether consultation on these issues had been thoroughly carried out. Part of that was because nobody could really understand how the process worked—no one could really work out who was supposed to consult with whom on the functions of the Royal Society. So it was difficult for us to make an intelligent assessment of whether that had happened in a fair way. Of course, the leading people submitting on behalf of the society’s governing body said it had been a fantastically rigorous consultation, although some of the submitters on this issue said that it had not been. It was really difficult to know the truth. In the end we went back to the bill and the principles in it, and that is why we supported it.

If we look at clause 7, in terms of new section 6(a)(ii) “the advancement of science and technology education:”, we see the omission of the word “humanities”. That is an issue, but if we are talking about schools and the curriculum in primary schools, I think we have to be even more concerned that since the introduction of national standards there has been a deliberate attack on the idea that science is actually a crucial part of the curriculum. I have had science teachers who might want to be guided by the Royal Society and have its input into the curriculum telling me they are losing professional development, and they are losing opportunities to teach the curriculum in primary school, because there is only literacy and numeracy. There is a narrow and very, very limited way of looking at what learning is.

On the one hand we have the Royal Society promoting the advancement of science, technology, and the humanities; on the other hand we have the Government saying that at primary school level science is not important. It seems to be conceptually beyond its grasp that young people will come to literacy and numeracy via science, via the arts, via the humanities, and via a whole range of learnings. If the Government understood how education actually works—and clearly the Royal Society does, because it is making this change—it would understand that people come to a basic understanding about literacy and numeracy through their passion for a particular discipline. Many children will come to literacy through science, and through their absolute wonder and passion for how the physics of the world works, rather than from actually doing maths on the board. It would be terrible if the capacity of the Royal Society to advise on the curriculum for science and technology was not applied in primary schools, and it is a real concern that these are being narrowed and the whole area has been shut out.

In terms of new section 6(a)(i) I am fascinated by the debate about science and technology versus the humanities, because originally the science community and the Royal Society in Europe had a very elitist view of what was knowledge. It was a very patriarchal view of what was knowledge, it was a very materially defined view of what was knowledge, and it did not include the view that the essence of all knowledge is holism, that knowledge is about the connections between disciplines, and that a true knowledge of science requires an ability to understand what it is to be human.

I would like to continue a little further on my dissertation on this, because I am interested in the idea of humanity and science being connected and I am encouraged by this. I also would like to say that, as someone touched on earlier, the Rutherford Medal is part of recognising excellence. Tonight I was privileged to hear one of the medallists, Paul Callaghan, talking. He was talking about that very connection between science, entrepreneurship, and humanity in this country. His bottom line was that this must be a place where talented people would want to live. He is repeating this around the place, and it is interesting when a Royal Society medallist talks like this because it actually manifests what this change in the law is all about: that we need a society that will attract the best minds, hold the best minds, and create the best business and scientific ideas. It must also have the capacity to maintain human relationships and human values, including environmental values. He was very lucid on that subject. I think that is a good example of the Rutherford Medal, and why we need to encourage and promote excellence. People like Paul Callaghan get those medals because of that absolutely deep and articulate capacity to make connections. That is what makes other people come with them when they are trying to promote science, or business, or an understanding of how society works. So it is good to see that in the bill.

One of the other issues, which I think Grant Robertson has already touched upon, is the issue of expert advice on public issues. I lived for many years on the East Coast, in Tai Rāwhiti, and even there members of the Royal Society and people working for the Royal Society were active on issues that affected our community, mainly in terms of environmental science. But for those of us who did not know anything about the Royal Society, it was heartening to see its members play a role in issues like GE and issues like water quality not only on the national stage but also on the local stage. In the long debates that we had over things like sewerage and water quality, our community benefited from having people connected to the Royal Society participate and provide expert advice on important public issues. There is a real need in the public domain for debate around science and technology issues and around humanities issues to have some expert advice and to ensure our citizens actually know what they are talking about because that debate is accessible—and the Royal Society has shown its ability to be accessible.

I would have liked to be here for the entire process of the Royal Society bill. I thought it was really interesting being at the Education and Science Committee. I would have liked to be at more of its deliberation, although my primary responsibility is education and I believe that David Clendon was there for most of the Royal Society bill. But I will not forget those people and their passion. I think we owe them a debt as a society because they provide us with both understanding and public awareness of not only science and technology but also the humanities. As a former social science teacher myself, I do not see a separation between these things. As a person committed to environmental issues, I cannot see a separation between human values and the environment and the science that informs them. I commend these parts of the bill because this is interesting, but I will never forget the debate at the select committee about who the members of the Royal Society actually were as well as what they actually stood for. Thank you.

HILARY CALVERT (Whip—ACT) : I move, That the question be now put.

A party vote was called for on the question, That the question be now put.

Ayes 67 New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.
Noes 49 New Zealand Labour 38; Green Party 9; Progressive 1; Independent: Carter C.
Motion agreed to.
  • Clause 7 agreed to.

Clause 8 No dividend or profit to members

GRANT ROBERTSON (Labour—Wellington Central) : Clause 8 is smaller than the clause we were considering previously, but within it lie some interesting matters that need to be discussed.

Clause 8 is headed “No dividend or profit to members”, and makes some additions to the current section 8 within the Royal Society of New Zealand Act. For the benefit of members, I think it is worth reading out what this clause is about. It cuts to the heart of some of the issues that make up the Royal Society and why it operates in the way that it does. The current section 8 in the Act states: “The income and property of the Society must be applied solely towards the object of the Society, and (except as otherwise provided in this Act) no portion of the income and property of the Society may be paid directly or indirectly by way of dividend, bonus, or otherwise to members.” That section is saying that membership of the Royal Society is about science, it is about the humanities, and it is about the society’s reason for being there; it is not about any kind of pecuniary gain.

But quite obviously there are limitations to that proposal. There is a certain purity in that statement; it certainly sheets home the fact that the Royal Society is about the importance of science—and now the humanities—beyond all things. But there will always be exceptions, and the current section 8 goes on to say what those exceptions are. It says that the previous paragraph “does not prevent the payment of remuneration to employees of the Society or members in return for services rendered or goods supplied;”. There are certainly members of the society who work within the Royal Society framework. They work on projects in relation to particular issues, and they work on the panels and funds that Mr Hodgson talked about earlier in the debate, so they are in a position where they will receive some money. Clearly an exception is required for that situation, and it is covered in this section of in the Act.

Section 8 further states that the Act does not prevent: “(b) the repayment of money borrowed or the payment of interest on money borrowed; or (c) the payment of expenses incurred in the performance of office;”. Certainly there are office holders within the Royal Society of New Zealand Council and the Academy Executive Committee who will receive payment for expenses incurred when attending Royal Society of New Zealand Council meetings or Academy Executive Committee meetings.

This bill moves to make some amendments to the final exception to remuneration, which relates to the granting of awards and prizes. As we have discussed at some length in different parts of the debate, the Royal Society gives out a range of prizes and awards. Quite clearly, members of the society will receive those awards, so an exception needs to be made. Section 8 provides an exception for “the grant of awards or prizes for—(i) achievement in scientific or technological research; or (ii) the advancement or promotion of science and technology in New Zealand.” For those final two subparagraphs I mentioned, the bill is omitting the reference to “science and technological research” and substituting “research in science, technology, or the humanities”. Section 8(2)(d)(ii) is amended to omit “science and technology” and substitute “science, technology, and the humanities”. Those amendments make sure that those exceptions for prizes and awards will include the humanities.

Although this is a technical change at one level, it is also very significant. It says that those who work in the humanities will be eligible for those awards. The list of Rutherford Medal winners I read out earlier does not, at this time, include anybody whose field of study was in the humanities. I mentioned Sir Peter Gluckman, and Catherine Delahunty has just mentioned Paul Callaghan. Some of their work subsequent to winning the Rutherford Medal has verged into the social sciences, particularly, but until this point in time the Rutherford Medal has not been awarded to anyone from the humanities. This clause makes that possible, and that is quite a significant change.

The range of awards and prizes given out by the Royal Society is recognition of the importance of those disciplines, and tonight we are making a change that will enable the humanities to be a part of the provision of those prizes. That is a very significant thing to be doing. As Dr Prasad said earlier, it is elevating the humanities to the same level as the sciences. It will be a very proud day for New Zealand when someone from the humanities or the social sciences wins the Rutherford Medal.

It is dangerous to name-drop a scientist at this time, but I think of scientists like Richard Bedford, who studies populations at Waikato University and has done some remarkable things. I also think of Richie Poulton, who runs the multidisciplinary study in Dunedin. These are people whose work transcends those boundaries of the traditional sciences, and they could potentially be a recipient of something like the Rutherford Medal in the future. Clause 8 makes a change to allow those who work in those areas to receive prizes for achievement, or for the advancement and promotion of the humanities. I think we should be very proud of the fact that as a Committee we are overseeing what will be quite a significant change.

I wanted to make those comments just by way of introduction. I will be interested to hear views from any other members in relation to the importance of this clause, and whether there are matters that perhaps we have not considered. I wanted to highlight the fact that although it seems like a minor technical clause, it is, in fact, making a significant change. In years to come I hope we will see people from the humanities represented in the awards and prizes that the Royal Society so proudly gives out.

Hon PETE HODGSON (Labour—Dunedin North) : I want to speak straightforwardly and uncomplicatedly in favour of clause 8 of the Royal Society of New Zealand Amendment Bill, and I will say why that is so shortly. But before I do that I just want to refer, with your permission, Mr Chairman Tisch, to some remarks made by Catherine Delahunty on the previous clause. She said of the people who had come to the Education and Science Committee on this legislation that she had found them to be—and I think I have her words correct—fiercely eccentric. That is a lovely, poetic description of scientists when they are being scientists. I commend the member for that description; it seems to me to be a cracker.

As long as this clause makes its way into law, as the member in the chair, Grant Robertson, pointed out, we now have the opportunity for a person who is primarily interested in the humanities to be involved in picking up prizes that are big in the range of prizes that exist for scholarship in general. Those prizes are inevitably administered by the Royal Society. Who else would administer them? The member in the chair pointed out that we might see a person picking up the Rutherford Medal, for example, who has a humanities background. Here is the thing: it is entirely possible—actually, I would assert it is likely—that a person who picks up the Rutherford Medal for the humanities may well also be a scientist. In my experience, which is not vast or anything, people who have brains way bigger than mine will move quickly and easily across endless disciplines. They just get comfortable with themselves, and comfortable with their ability to think. They do not see boundaries; they do not see limitations.

I do not want to name-drop particularly, but I went offshore with Dr Alan MacDiarmid in about 2000-and-something. We went to China, Korea, and Japan. His job was to open scientists’ doors, and to get into the Chinese and Japanese academies of science, or whatever they are called. My job was to open Government doors, and we had 20 or 30 science managers with us. I think it was a successful trip. I hope it was; it was certainly well planned. Dr MacDiarmid was nearing the end of his life, and he put in a huge amount of energy. He was an amazingly energetic man. But he was also, in a way, fiercely eccentric, and he would just wander off, almost into hyperspace. I could not keep up with him. He had certainly moved away from all of the chemistry that he received his Nobel Prize for many years ago. He was miles away from that; he was entirely philosophical about any issue that came to mind. So it seems within the bounds of possibility that such a person might receive the medal that the member in the chair spoke of, and might in fact be moving freely across from one discipline into another, and back again.

Actually, that point raises another matter, which is the link between the sciences on the one hand and the humanities on the other. We have some classic examples in which we know that science and the humanities interact. The interaction with the humanities in the Antarctic is an example of that. Writers and poets, as well as photographers, give us an insight into that environment, given that most of us will never be allowed to go there, because scientists are allowed to go and non-scientists are not, unless they are the occasional writer, poet, or photographer. That is an example.

When I first because the Minister of Research, Science and Technology, the Ministry of Science, Research and Technology ran something called the Smash Palace Fund, in which it put scientists and artists together for the day, or for 2 days, or whatever it was. They had to do problem solving, and they had to then explore how each other’s mind worked. Solving the problem was the given issue, but in actually working out the difference between the way that the left brain and right brain worked, the link between the two voids, the two big lumps of science and arts, was explored.

Then, of course—and I think other people have made mention of this—we now have some sciences that need the arts. Everybody’s really favourite science these days is neuroscience. It used not to be; 10 years ago the favourite was forensic science. But, hey, we have a new fashion: it is neuroscience. Neuroscience does not make good progress unless the arts are involved. It does not make a lot of sense unless we take a bit of behaviourism and fold it in, and behaviour, is, of course, very often an expression of culture. We would love for economics to be a science—

David Shearer: Dismal science.

Hon PETE HODGSON: —well, some people call it a dismal science—but I do not think it has enough of a body of knowledge to be a science yet. Certainly there is enough in microeconomics, but there is not in macroeconomics, in my view. The behavioural economics developments that are occurring now as a result of neuroscience are pretty interesting. I have had the opportunity to study them in the last year or two. I understand that some members of the Committee may not want to do so, but I have done that, and I have enjoyed it and found it to be reasonably interesting. Those developments have come about because science and the humanities have been required to collide, and the collision is reasonably productive.

So I do not think that the Royal Society legislation that we have in front of us, and the clause 8 contribution that means that someone who has a humanities background might be involved in picking up a prize, is the limit of what we are about to get up to tonight. I think that we are offering a sort of legislative can-do to the idea of the collision between the arts and science. I do hope that especially in economics it makes progress, because economics as a discipline needs to make some progress.

If you will indulge me, Mr Chairperson, I have just finished reading this book by a guy called Lloyd Geering. The title is Christianity without God.

Hon Christopher Finlayson: Heretic!

Hon PETE HODGSON: I thought he was found not to be such. I could be wrong. I thought that the decision in 1966 was that he was not a heretic, but if the member wants to correct my history, he is welcome to do so. I was not about to get into that issue. I was about to draw this thread: the good professor says “We are encouraged by no less an authority than the Bible to believe that we have dominion over the fish of the sea, over the birds of the air, and over the cattle and over all of the Earth.” Lloyd Geering asserts, in other words, that biblical theism encouraged us to exploit the Earth. He then goes on to say that in earlier times, when we were not being monotheist, when we were dealing with many Gods, we were much more aware than we are now, and I quote again “that their continued existence on Earth was dependent on the forces of nature. That is why they, our ancestors, personified and deified these forces and tried to placate them. That is why they believed their own destiny to be in the lap of the Gods, the most important of whom was mother Earth.”

All I am saying there is that the humanities collided with environmentalism, and therefore with environmental science. Am I right? I do not want to make a big deal of that, but that is what a big brain can do. I cannot do that, but a big brain such as Lloyd Geering’s can. It seems to me to be not a bad example, in a book that I finished reading a couple of days ago, of where that collision between the humanities and science might lead us.

There is another thing to be said, and then I will stop saying anything. The other thing to say is that the opposite of that, ignoring the role of humanities as a scientist, or of science as a humanities student, is just a form of chauvinism. It is not tolerable, it is not useful, it is something we should not put up with, and it is the reason why we should, I hope rapidly, pass into law clause 8, which puts science, technology, and the humanities on an equal footing for the first time in our legislative history.

KRIS FAAFOI (Labour—Mana) : It is an honour and a pleasure to be here at 7 minutes to 10 to take a call on the Royal Society of New Zealand Amendment Bill, in my second call of the night. I acknowledge what the member sponsoring the bill, Grant Robertson, said about clause 8: that although it is a small, technical clause, it is a very important part of the bill. Although it is technical, it keeps the single focus of the Royal Society on excellence as we introduce the humanities into the realm of the Royal Society of New Zealand. Earlier in the debate I think my colleague David Shearer said the single focus of the Royal Society, when we introduce the humanities into its sphere, should be to ensure that the best work and the best research it can possibly do is maintained. Although we are introducing the humanities to it—and I spoke in an earlier contribution about the importance of science and technology to our economic growth—bringing in the humanities and making sure that we keep a single focus on excellence—

Hon Christopher Finlayson: Shearer’s clearly a soft vote.

KRIS FAAFOI: I welcome the contribution from the member across the Chamber, whose legal prowess is equal to his anger tonight. I will not call him nasty, because I think that is unfair; it is 10 to 10. We maintain a focus on excellence—

  • Progress reported.
  • Report adopted.

Amended Answers to Oral Questions

Question No. 11 to Minister

Hon ANNE TOLLEY (Minister of Education) : I seek leave to correct an answer I gave to question No. 11 earlier today.

The ASSISTANT SPEAKER (Eric Roy): Leave is sought for that purpose. Is there anyone opposed to that course of action? There appears not. Leave is granted.

Hon ANNE TOLLEY: In answer to a supplementary question, I indicated that I understood that the Ministry of Education had called one of the meetings in the neighbourhood. I have now found that that is not correct. Ministry officials attended one of the meetings. The meeting they called was with just the principals of the neighbouring schools and the chairmen of the boards of trustees.

  • The House adjourned at 9.56 p.m.