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Volume 673, Week 77 - Tuesday, 21 June 2011
Tuesday, 21 June 2011
Mr SPEAKER: I have much pleasure in informing the House that the Rt Hon Sir Kamuta Latasi, Speaker of the Parliament of Tuvalu, is present in the precincts of the Chamber. I am sure members would wish that he be accorded a seat on the left of the Chair, and that the delegation in the Speaker’s gallery also be welcomed.
- The Rt Hon Sir Kamuta Latasi, accompanied by the Deputy Speaker, entered the Chamber and took a seat on the left of the Chair.
Questions to Ministers
1. AMY ADAMS (National—Selwyn) to the Minister of Finance: What reports has he received on the economy?
Hon BILL ENGLISH (Minister of Finance) : Emerging evidence suggests that despite the February earthquake the economy has been on track, and perhaps a little stronger than expected, in the first part of 2011. Manufacturing volumes rose by 1.9 percent in the March quarter following a 3.7 percent increase in December. Retail sale volumes rose 0.9 percent in March, wholesale trade was up 2.8 percent, and consumer confidence has lifted. This resilience in the face of adversity highlights the many positives supporting the economy. These include high export prices, strong demand growth from Asia, lowest interest rates for 45 years, and a credible path back to surplus for the Government’s accounts.
Amy Adams: What do the latest New Zealand Institute of Economic Research consensus forecasts show?
Hon BILL ENGLISH: The consensus forecasts are a blend of forecasts from 11 different forecasting organisations. They show GDP growth over the next year to be about 2 percent, followed by 4 percent in the year following that; a large lift in residential investment, growing by 38 percent in the June 2013 year, reflecting the Christchurch rebuild; interest rates staying low; and the Government’s Budget balance improving.
Amy Adams: How do these projections compare with those in Budget 2011?
Hon BILL ENGLISH: They are fairly similar. The private sector forecast covered by the New Zealand Institute of Economic Research consensus is quite close to those prepared by Treasury. For instance, it forecasts employment rising by 3.8 percent, and Treasury picks about 3.6 percent. Its average consumer price index forecast for inflation is identical to Treasury’s.
Hon John Boscawen: Has the gap between GDP per capita in Australia and GDP per capita in New Zealand narrowed or widened since his Government came to office; or does he not know?
Hon BILL ENGLISH: I cannot give the member the precise figures, but in the first quarter of this year it has probably narrowed, because our economy looks like it has grown a bit and the Australian economy has shrunk. However, a quarter-to-quarter measure is almost irrelevant. In the long term we believe that sound policies and careful and considered decision-making will mean that over time we will close the gap with Australia, and the resilience that this economy has shown in recent times is a positive indicator of that.
Hon John Boscawen: I raise a point of order, Mr Speaker. The member started by saying that he could not give me a precise answer. I was not asking for a precise answer. I was simply asking whether the gap has narrowed or widened, or alternatively, if the Minister did not know that—
Mr SPEAKER: I heard the Minister say distinctly that although he could not give the precise figures, he believed that during the first quarter of this year the gap had probably narrowed. He gave an answer.
Hon John Boscawen: I raise a point of order, Mr Speaker. He answered in connection with the first quarter. I specifically said “since his Government came to office”. I was asking whether the gap has narrowed or widened since his Government first came to office.
Mr SPEAKER: And he said he does not have those precise figures. The primary question asked what reports he has received on the economy. The member cannot expect the Minister to have that kind of specific, detailed information.
Hon David Cunliffe: Does he recall replying to a similar question to this primary question, in September 2009: “I have received reports indicating that the economy is showing some early signs of recovery,” or the one in October 2009, to which he replied: “In recent weeks a number of reports have confirmed an early sign of pick-up in business confidence.”, or the one in March 2010, when he replied: “It is important we convert the early start to recovery into a permanent lift,” or the one in July 2010, which turned out to be a year of zero growth, when he said that the economy was “making very significant progress” and the Government was “working to get this economy on its feet”, or is it his habit—
Mr SPEAKER: I want to hear the question. It is a bit long. [Interruption] I apologise to the member. The question is a little longer than usual but there is a pattern to it, and I do want to hear the question, and I want his own colleagues to let him be heard. We will not start the question again.
Hon David Cunliffe: You anticipated my point of order. Not wanting to miss the punchline, I ask is his habit of counting his chickens before they have hatched one of the reasons why Standard and Poor’s has kept his Government’s credit rating on negative outlook?
Hon BILL ENGLISH: I do recall those answers, and I am impressed with what an upbeat and aspirational Government we have been, through some very tough times.
Amy Adams: What factors would put the forecast return to growth at risk?
Hon BILL ENGLISH: There are always risks to the future prospects of this economy—for instance, this week there are critical meetings in Europe, where they are trying to grapple with the problem of the potential default of Greece, and if that were to occur, then the markets in which we borrow significantly and regularly could be disrupted. There are also risks closer to home. We could undermine recovery if, for instance, half-baked spending promises led to soaring debt. That would be bad for the economy.
Hon David Cunliffe: Given his aspirational reply to my earlier supplementary question, is it now he who is dancing from cloud to cloud, or has he seen the new immigration report from Statistics New Zealand that shows chippies, plumbers, and other building industry professionals are leaving the country at a rate of 20 a day, and over 4,000 have left since the first Christchurch earthquake, and how will Christchurch rebuilding happen if his Government makes no effort to retain the skilled workforce we need to undertake that work?
Hon BILL ENGLISH: I have not seen those figures. In the first place, it is the responsibility of the companies that expect to rebuild Christchurch to ensure that they have skills. Of course it will be tight, because they are competing with very, very large salaries, particularly those in Western Australia where something like $250 billion worth of capital projects are in the pipeline. However, we are confident that we have the resources of both funding and skills to rebuild Christchurch.
Hon John Boscawen: Has the gap between GDP per capita in Australia and GDP per capita in New Zealand narrowed or widened since his Government came to office, or does he not know?
Hon BILL ENGLISH: I cannot give the member those precise figures, but, as the member knows, the Government wants to close the gap with Australia by 2025. In any given year or two the gap might move one way or the other, as, for instance, in the last quarter it has probably moved in favour of New Zealand. Our policies are focused on a longer-term increase in New Zealand’s growth potential, and we are putting in place policies such as investment in infrastructure, a major tax change, and a very efficient public sector, which will enable us to achieve that increase.
Hon John Boscawen: Has the Government instigated any investigation into how South Canterbury Finance was underwritten by the taxpayer to the tune of $1.7 billion, now that its president for life has been charged with over 50 counts of fraud, including theft?
Hon BILL ENGLISH: I could not comment, at all, on the matters regarding South Canterbury Finance that are now before the court, but the existence of the guarantee not of South Canterbury Finance but of its depositors, which is a different thing, came into existence in the financial crisis in late 2008. As I recall, the whole of Parliament supported that guarantee being put in place to prevent financial contagion, which could have potentially brought down much larger financial institutions, such as our banks. On reflection, New Zealand is in a much stronger position than many developed countries, because we did not have a banking collapse.
Youth Minimum Wage—Minister of Labour’s Statements
2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he agree with all the comments of his Minister of Labour regarding minimum wage rates for young people?
Hon Phil Goff: Which view best represents the position of this National Government: Kate Wilkinson’s suggestion that a return to youth rates might be a good idea, or Paula Bennett’s contradictory view that youth rates would not reduce youth unemployment?
Rt Hon JOHN KEY: I have not seen the context of the statements, and even the member himself said they were suggestions. It would be better to frame it by saying the view of the Government is that it is concerned about high levels of youth unemployment, and we will be announcing policies that will address that.
Hon Phil Goff: Why does the National Government not, in order to reduce youth unemployment, focus on upskilling young New Zealanders to meet the critical shortage of skills in this country, rather than wasting time on talking about cutting the wages of young people?
Rt Hon JOHN KEY: Because we are doing exactly that. That is why we have announced 7,500 youth places; that is why we have looked at implementing and rolling out eight trade academies in New Zealand schools this year; that is why we have a record number of young New Zealanders going to universities, polytechs, and wānangas; and that is why we are working very aggressively through the Budget to allocated $42 million to additional training places.
Hon Phil Goff: If the Prime Minister claims that he is “doing exactly that”—to use his words—how does he explain the $90 million cut in this year’s Budget to Youth Training, on top of a $55 million cut in the supplementary estimates last year, cutting skill training so that fewer people are going into skill training now than at any time over the last 5 years?
Rt Hon JOHN KEY: All I can say to the Leader of the Opposition is that he is wrong in his facts. But one thing worth looking at is that if one looks in some areas where there was a reduction of training, one sees that that was simply because the completion rates in those courses were so abysmal that no training was actually taking place.
Hon Phil Goff: If the Prime Minister claims I am wrong in my facts, does he deny that $57.7 million has been cut from industry training on the basis that the demand for trainees has reduced, $32.9 million has been cut from industry training by industry training organisations dealing with health and safety courses, and Mr Joyce took $55 million out of skill training last year through the supplementary estimates?
Rt Hon JOHN KEY: No, I cannot confirm those facts. I can confirm that the Government is very focused on having good outcomes. That is the big difference between this Government and the previous Labour Government, which simply threw money—
Grant Robertson: There’s just nothing happening.
Rt Hon JOHN KEY: I tell members what is happening: obviously the Labour Party is training people in Te Tai Tokerau, because none of them are here today—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think you are aware that there is a cross-party agreement that those people who are concerned about Christchurch are able to be there. We happened to win seats there—
Mr SPEAKER: That is enough of that sort of thing. The Prime Minister erred on two counts. The first was that there is a cross-party agreement that Canterbury members can be looking after the needs of their constituents and treated as present in the House. He also knows that it is not in order to refer to anyone’s absence from the House. The Hon Trevor Mallard erred in his point of order because he put a political statement in his point of order, and that was totally unnecessary. So I guess that is—
Rt Hon JOHN KEY: One all.
Mr SPEAKER: —one all, but let us not have the score go any higher today.
Hon Phil Goff: If the Prime Minister is worried about youth unemployment, why has he allowed a consistent decline in the intake into apprenticeships since he became the Prime Minister, and why does he not do something about that, instead of looking at cutting the wages paid to young people?
Rt Hon JOHN KEY: I think the Leader of the Opposition is confused in his facts and incorrect.
Hon Phil Goff: I raise a point of order, Mr Speaker. I could ask the permission of the House to table a series of documents from the news media, widely reporting the facts that I have just mentioned. You would not normally allow that to be done, but I ask you to consider allowing it on this occasion, as the Prime Minister’s standard answer is to reject the facts that he claims are wrong in what I have been saying to him.
Mr SPEAKER: One of the reasons why we do not do that is that the information is readily available to all members of the House. What is more, what is printed in the media may be no more “fact” than anything else. In all my 27 years’ experience in this place, I have found that it is extremely unlikely to be “fact” if it has been printed in the media. That is one reason why we do not table recent newspaper clippings. I realise that the member could be frustrated by that kind of answer, but a Minister is entitled to dispute the information provided in a supplementary question. Ministers should be careful in doing so, and I am sure the Prime Minister will have been careful in doing that.
Hon Phil Goff: I raise a point of order, Mr Speaker. Is it in order for the Prime Minister to dispute facts that are available to every member in this House in order to avoid answering a question?
Mr SPEAKER: If that was established to be correct, that would be a very serious issue, because the member is suggesting that a Minister not only gave the House incorrect information but also did so in order to impede the business of the House. That is very serious, and that is why Ministers need to be careful if they refute information contained in members’ questions. But we also acknowledge that information in supplementary questions has not been validated. As the Speaker I cannot act as a referee on any of that. Certainly, refuting the information is a valid answer, but if it was to be done simply to avoid answering a question, that would be a very serious issue.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. It goes, I think, to your original response. You were somewhat critical of news media reports and the quality thereof, but in the earlier set of supplementary questions the Leader of the Opposition asked questions of the leader of the National Party using Budget figures that had been tabled in this House, and Mr Key disputed those figures and used that to avoid answering the question.
Mr SPEAKER: The member is now getting into a debate on the issue, and I do not want to prolong that. But if Ministers refute information contained in questions, they need to be careful about doing that. I have made it very clear that were it to be established that it was done to avoid answering a question—that is, if it was not correct—and incorrect information was given that impeded the business of the House, then that would be a serious issue. Members have to be careful when making claims in their supplementary questions. I hear all sorts of claims made that even I know may not actually be factual, but I still accept the point that it may be perfectly factual information. If it is refuted, then Ministers need to be careful about doing that.
Hon Phil Goff: Does he believe that a young person doing the same job with the same skills should be paid less than an older person, simply because of the younger person’s age?
Rt Hon JOHN KEY: I do, inasmuch as that was why, no doubt, we thought it was reasonably sensible when Labour brought in the training allowance for a younger person.
Rheumatic Fever Reduction—Initiatives
3. Dr JACKIE BLUE (National) on behalf of Dr PAUL HUTCHISON (National—Hunua) to the Minister of Health: What initiatives have been undertaken to tackle rheumatic fever in New Zealand?
Hon TONY RYALL (Minister of Health) : In this year’s Budget Mrs Turia announced that we are investing $12 million over 4 years to reduce rheumatic fever in vulnerable communities around the nation. This will involve up to 22,000 children in high-risk areas. Prevention programmes focused on this Third World disease are already under way in a number of vulnerable communities. In Flaxmere, for example, there have been no more cases since its programme began last year, and at the recent programme launch at Makaurau Marae in South Auckland it was announced that it will be the first place in New Zealand where children can turn up without an appointment and be tested and diagnosed within minutes in a new rapid diagnosis test.
Dr Jackie Blue: How long has tackling rheumatic fever been a Government priority?
Hon TONY RYALL: The previous Government boasted in 2001 that rheumatic fever was a priority, but nothing happened except that more kids got it. This Government takes rheumatic fever seriously. A sore throat can lead to permanent and quite serious heart damage, and it is crucial that we tackle this preventable disease head-on. Continuing and contributing to our other prevention work in this area is the Warm Up New Zealand: Heat Smart programme, whereby 100,000 homes were retrofitted as of 1 March this year.
Grant Robertson: Does the Minister accept that overcrowded housing is one of the main issues with rheumatic fever in New Zealand, and how does the Government cutting funding for State housing help that?
Hon TONY RYALL: What I can advise is when it comes to housing as a contributing factor, certainly the temperature of houses has been found to be a contributing factor and that is one of the reasons why we have the Heat Smart campaign. On the issue of overcrowding, I think the Minister of Housing has done a superb job in the work he has done in tidying up the very poor state of public housing that he inherited from that failed party opposite.
Rahui Katene: Is he aware of the particularly high rates of rheumatic fever in Northland, and what response has he received from people in Northland to the announcement by Māori Party co-leader Tariana Turia of the $12 million invested in eliminating rheumatic fever in high-risk areas?
Hon TONY RYALL: Yes. I am aware of two particularly positive responses to the announcement by Minister Turia. Both are from Northland general practitioners who say they are delighted by the $12 million boost, and that Mrs Turia should take a bow for championing the cause for more resources. As the member knows, Northland is one of our most vulnerable and high-risk areas in terms of this particular issue, and the new funding will provide a much needed boost in their fight against rheumatic fever and complement the work that is already under way.
Dental Treatment—Hospital Admissions for Under-5-Year-Olds
4. Hon JIM ANDERTON (Leader—Progressive) to the Associate Minister of Health: Does he agree that in the year ended 30 June 2008, in excess of 2,600 children under the age of five years were admitted to public hospitals for dental health procedures, and how many of these young children were treated under a general anaesthetic?
Hon Jim Anderton: Does he believe it is acceptable that thousands of children under 5 years of age are being admitted to hospital each year for dental health procedures, including tooth extraction, under either a general or a local anaesthetic; if not, what steps is the Government taking to reduce this unacceptable situation, including an inquiry into the fluoridation of our water supplies as a nationwide health measure?
Hon PETER DUNNE: Obviously, the oral health care of all ages of young people is important, and I would rather that we had numbers presenting to public hospitals for treatment than numbers not presenting in the first place. I should tell the member that increasing preschool enrolments is a priority. In fact, in the 2008 year around 43 percent of all preschool children were enrolled, by the end of the calendar year 2009 that figure was 49 percent, and by the end of this year it is expected to be 64 percent.
Hon Jim Anderton: Does the Minister believe there is a need for a paradigm shift in the way parents are helped to look after their children’s teeth; if so, will he support the introduction of an improved education programme from preschool to primary school?
Hon PETER DUNNE: The paradigm shift the member refers to is occurring under current oral health policy, which is seeing the roll-out of a whole new network of community oral health facilities, some $116 million in capital funding, and $36 million a year in operating funding. We are now starting to see a system being put in place where more children will get access to the care they need, and we are encouraging their parents and whānau to be part of that treatment programme.
Hon Jim Anderton: Can the Minister confirm that although pregnant women can access free maternity care during pregnancy, at birth, and after their pregnancy, they cannot access free dental care, and does he support extending free dental care to this key sector of our population?
Hon PETER DUNNE: I am not in a position to confirm that particular line of argument, but I can say that the range of programmes now being rolled out will provide for much greater community involvement in the future, because we will have a much better network in place. Already, we are starting to see some positive results emerging from that.
Hon Jim Anderton: Does the Minister acknowledge that many older people cannot afford dental health care; if so, does he believe that the mobile dental clinics presently being rolled out throughout the country could be used to treat the elderly?
Hon PETER DUNNE: We have traversed the territory from preschool now to the elderly. In principle, I agree with the proposition the member advances. One of the things we have been talking to district health boards about is precisely how not only the mobile units but also the new community oral health facilities can be used more effectively not just for a particular segment of the year, as has been the case previously.
Social Services, Canterbury—Government Support
5. AARON GILMORE (National) to the Minister for Social Development and Employment: How is the Government supporting social services in Canterbury?
Hon PAULA BENNETT (Minister for Social Development and Employment) : As part of Budget 2011 we have announced a further $10 million to support Canterbury social services. This takes the Government’s social services support to a total of $20 million. It is clear there is ongoing demand for support as the response and recovery effort unfolds, particularly given the consequences of the ongoing aftershocks. This funding is going to counselling and local social services agencies in order to support Cantabrians as they deal with this disaster.
Aaron Gilmore: What social support has the Government given so far?
Hon PAULA BENNETT: To date, the Government has granted $7.3 million of the $7.5 million through the special Canterbury Community Response Fund round. The Community Response Fund has been distributed to 335 organisations—$3.2 million of that is for increased demand, $2.8 million is for coordination services, and around $1 million is for non-governmental organisation relocation.
State-owned Assets, Sales—Costs to Households
6. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he agree that, under his plan to sell $6.8 billion worth of State-owned assets, each of the 1.6 million kiwi households would have to pay over $4,000 to keep their share in these assets that they already own?
Hon David Cunliffe: As if they are not already.
Mr SPEAKER: Order!
Hon David Cunliffe: If Kiwi households cannot afford to spend more than $4,000 each on paying for assets they already own, would he sell those shares offshore instead, as Treasury foreshadowed when it said that “significant participation by foreign investors would be essential”?
Hon BILL ENGLISH: Quite a number of households will decide that they can participate if the price is right. A number of organisations will also be purchasing on their behalf. For instance, their KiwiSaver funds—and 1.7 million New Zealanders are members—are quite likely to be buying these shares on behalf of New Zealanders who have decided to save for their future.
Hon David Cunliffe: Has the Minister seen the various polls that show that New Zealanders oppose State asset sales by a majority of two to one; if so, and if he genuinely believes that the election will be the test of his mandate to sell public assets, why is he already employing staff to begin the sale process?
Hon BILL ENGLISH: If polls were a measure of policy success, then the Labour Party clearly would have some way to go. The Government has signalled its intent, it is putting its proposals to the public in an absolutely transparent way, and if it obtains a mandate in the general election, it will proceed with the partial sales of some assets.
Chris Tremain: What economic benefits does the Government expect from the mixed-ownership model?
Hon BILL ENGLISH: I expect we will get the same benefits as Air New Zealand does from the Labour Government having set Air New Zealand up under the mixed-ownership model. It will deepen local capital markets; it will give a wide range of New Zealand investors, including Kiwi mums and dads, KiwiSaver funds, the superannuation fund, ACC, and other local investors, better investment opportunities; and it will give the companies themselves wider access to capital to expand and grow, rather than simply relying on the Crown. It will also help the Crown to lower its debt, and improve cash-flow back to the shareholder, by selling assets whose holding cost is more than twice the dividends that they deliver.
Hon David Cunliffe: If the Minister is such a late convert to transparency, will his Government be adopting as a Government bill my colleague Clayton Cosgrove’s member’s bill that would ensure that Kiwi families have the opportunity to vote in a referendum before any State-owned enterprises could be put up for sale?
Hon BILL ENGLISH: Well, that bill will not be debated by this Parliament, because the Labour Party is totally obsessed with stopping voluntary student union membership. Everyone knows that is a stunt. Labour members will filibuster the student bill until the end of this term, and that bill will never be debated. That is how we know that Labour is more serious about voluntary student union membership than it is about State-owned enterprise sales.
Hon David Cunliffe: I raise a point of order, Mr Speaker. I seek your advice on whether the Minister actually answered the question, because the question asked whether he would consider adopting it as a Government bill, in which case it would have nothing to do with the order of business on members’ day.
Mr SPEAKER: From the Minister’s answer I think the answer was pretty clear. Even I could discern that.
Hon David Cunliffe: If his Government will not let New Zealanders have a referendum on his plan to sell their assets, can he confirm that the only way New Zealanders can stop asset sales is to vote his party out of office on 26 November?
Hon BILL ENGLISH: New Zealanders will get to make their choice across a range of policies on 26 November. Of course, if they do not want to own these assets, then they have the choice of simply not buying them or of instructing their KiwiSaver fund not to buy them.
Budget 2011—Alternative Education
7. JO GOODHEW (National—Rangitata) to the Minister of Education: What support was provided for alternative education in Budget 2011?
Hon ANNE TOLLEY (Minister of Education) : I am pleased to inform the House that from July of this year this Government has committed an extra $6.1 million over 4 years for alternative education. This will provide for an extra 68 places and will provide specialist professional learning and development for staff. Alternative education aims to provide a constructive alternative delivery of education for students aged 13 to 15 years for whom traditional methods have not worked. This is done while maintaining high expectations of student potential.
Jo Goodhew: What other changes has she made to alternative education?
Hon ANNE TOLLEY: In addition to giving the very first funding increase in 10 years—the first in 10 years—in September last year of $1.5 million a year, I have also ensured that there have been a number of changes to alternative education. They include ensuring that registered teachers are supported to increase the capability of providers. I have allowed for national professional development for alternative education providers. We have raised the overall funding to help providers respond to increasing costs. That is on top of increasing the number of alternative education places available for at-risk students, from July. This Government is committed to supporting all students in ways that work for them. We believe that every young person should have the opportunity to reach their full potential.
Trans-Tasman Therapeutic Products Agency—Minister’s View
8. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Health: Does he believe that a trans-Tasman therapeutic products agency will be “costly, restrictive and unnecessary for New Zealand”?
Hon TONY RYALL (Minister of Health) : No, if it was the agency that was announced yesterday by the New Zealand and Australia Prime Ministers, which is not dependent on natural health products being part of that regulatory regime. This is what National has always sought, and it is an outcome of the Prime Minister’s outstandingly successful visit to Australia, and I congratulate our Prime Minister.
Grant Robertson: Can the Minister confirm that, in fact, it was he who described the agency as being “costly, restrictive and unnecessary”, despite it achieving the same things that the agency announced yesterday, including an opt-in for natural products that his leader agreed to at the time?
Hon TONY RYALL: That quote was with regard to Labour’s proposed scheme, which included natural health products. Our Prime Minister has gone to Australia and delivered a scheme that does not include natural health products. He was the first New Zealand Prime Minister to speak to the Australian Parliament, and how proud we are as a nation of that.
Grant Robertson: Does he recall Michelle Beckett, Executive Director of Natural Products New Zealand, saying that the National Party see the natural products sector only as “a political football to be leveraged to any political advantage,” and why will he not accept that National’s flip-flop on the trans-Tasman agency only reinforces Ms Beckett’s view?
Hon TONY RYALL: Mrs Beckett was a supporter of the Labour Party’s plan to include natural health products in the joint trans-Tasman agency. The agreement between the Prime Ministers is that that does not need to be the case. This is a successful win-win for New Zealand, which has been delivered by our Prime Minister because of the close, improving, and strong relationship with Australia.
Sue Kedgley: Why on earth would we join up to an Australian agency to regulate our medicines and medical devices when it is located in Canberra, staffed by Australians, and has a reputation for being a heavy-handed regulator with a costly bureaucracy?
Hon TONY RYALL: Those details are yet to be determined. The work is about to begin very soon, but I would expect that we would see a move to centres of excellence, whereas the various parts of the two systems were able to concentrate on those parts that they do best.
Grant Robertson: Will he guarantee that natural products will not be part of the trans-Tasman joint regulatory arrangements in the future?
Hon TONY RYALL: I cannot guarantee that there might not be a Labour Government that wants to force them in. The agreement that has been designed between the two Prime Ministers is that that is a choice for New Zealand, and the scheme does not have to happen with natural health products. It is a real win-win for New Zealand. Labour was never able to achieve it.
Housing Innovation Fund—New Projects
9. TODD McCLAY (National—Rotorua) to the Minister of Housing: What recent announcement has he made about successful 2010/11 Housing Innovation Fund applications?
Hon PHIL HEATLEY (Minister of Housing) : Last week I announced a further five projects in Kaiapoi, Wellington, Auckland, and Queenstown, delivering 34 new homes, which will receive $5 million from the fund for this financial year. These include $354,000 for Habitat for Humanity, who will build three 4-bedroom homes in Kaiapoi for affordable homeownership; $1.65 million for the Salvation Army to purchase 10 new two-bedroom units for older people in Auckland; and $790,000 for the Wellington Housing Trust to build four new houses for affordable rental and homeownership.
Todd McClay: Could he tell the House what the aim of the Housing Innovation Fund is?
Hon PHIL HEATLEY: The fund encourages partnerships with community housing organisations. It is about making the taxpayer’s dollar go much further. So far this year the Government’s $11 million contribution has been met by $25.6 million from community organisations, delivering a total of 70 new houses across New Zealand. As part of this Government’s commitment to increasing the quantum of social housing in total, I recently announced the creation of a social housing unit from 1 July, as well as increased funding of $40 million for the year 2011-12 to help to grow the community housing sector.
Minimum Wage—Prime Minister’s Statements
10. DARIEN FENTON (Labour) to the Minister of Labour: Does she agree with the Prime Minister that it would not be easy to live on the minimum wage?
Darien Fenton: Does she think it would be easy to live on a youth minimum wage, given that those people who are on the current minimum wage are already struggling to survive?
Hon KATE WILKINSON: We are aware that for those people on the minimum wage, budgeting is tight. But we do want people to earn a lot more than the minimum wage by developing their skills, being given a job, and being promoted to more senior roles.
Darien Fenton: If her Government is aspirational, as her Prime Minister claims, why is she considering lowering minimum wages for young people rather than lifting wages for all workers?
Hon KATE WILKINSON: That question relies on a false premise. No decision has been made to lower the minimum wage—or the youth rates related thereto.
Jacinda Ardern: What is having a greater impact on youth employment levels, based on the advice she has received: minimum wage rates, or her Government’s lack of a plan to create jobs?
Hon KATE WILKINSON: We have a cogent plan to increase and improve our economy, which includes growing the number of jobs. We would rather see young people have a job than be priced out of getting a job.
Jacinda Ardern: Can the Minister explain to the House what the Government’s “cogent plan” on job creation is?
Hon KATE WILKINSON: Our plan is basically around building a stronger economy. I can understand that members from that party do not understand that, but we do.
Living Standards, Inequality—Statement Made on Behalf of Prime Minister
11. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by the statement made on his behalf “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”?
Metiria Turei: Are the following, who have all said inequality is a serious problem in New Zealand, all wrong: his own Treasury officials, the New Zealand Council of Christian Social Services, the OECD, and even his own Chief Science Advisor, who is one of the most trusted people in this country? Are they all wrong?
Rt Hon JOHN KEY: I think we all have to accept that there is a degree of inequality in New Zealand, as there is in every country around the world. The proposition the member is putting up is that New Zealand is more deeply unequal than other countries. That is a proposition that we reject.
Metiria Turei: I raise a point of order, Mr Speaker. The question, although it was long, was very specific. It asked whether they were wrong. The Prime Minister did not answer that question.
Mr SPEAKER: Members cannot expect a Minister to say yes or no specifically to whether someone is right or wrong. I think the Prime Minister, in answering that question, made pretty clear his view in relation to the issue. I think it was a reasonable answer.
Metiria Turei: Does he stand by a further statement made on his behalf last week: “Having had a very good look at the Welfare Working Group report, I do not see any recommendations there that will increase inequality.”?
Rt Hon JOHN KEY: Yes. The reason why the Deputy Prime Minister made that statement on my behalf was that one of the core fundamental issues and propositions put up by the Welfare Working Group is to encourage and have measures to enable people to go into paid work, if they possibly can. One of the reasons why there is tremendous inequality in countries and why there is inequality in New Zealand is that 13 percent of our working-age population are on a benefit. If as a country we can encourage people and give them the skills, the training, and the childcare needed to get them into work, then I believe we can narrow that inequality.
Metiria Turei: How does the fact that most beneficiaries will have less income under the Welfare Working Group recommendations impact on inequality?
Rt Hon JOHN KEY: By definition, someone who is in paid employment will earn more than if they are on a benefit.
Metiria Turei: Is it not the case that the Welfare Working Group recommendations on abatement rates would actually penalise a sole parent in part-time work, leaving her with less money to feed her kids than she has now?
Rt Hon JOHN KEY: No, because I think one needs to look at all of the factors. The member, I am sure, will be aware by now that Working for Families has an in-work tax credit. If one looks at all of the redistribution mechanisms that take place under the Government’s schemes, one will see that in totality—there is no question in my mind—someone would be better off in paid employment than on welfare. If they were not, that is a real indictment on the welfare system in New Zealand, because working New Zealanders should by definition have more income than beneficiaries.
Metiria Turei: Does the Prime Minister not realise that an estimated 65,000 invalids beneficiaries will lose 9 percent of their income under the Welfare Working Group recommendations; if so, how does this not increase inequality, particularly for the nearly 11,000 children in those families?
Rt Hon JOHN KEY: I think the member needs to wait to see the final recommendations from the Government. We have seen recommendations from the Welfare Working Group. As I have said, as a general proposition its proposition is that if one can work, one should work. It came up with 43 recommendations, only one of which the Government has said flatly it will not consider. We will go away and look at the other 42. As I said to the member, it is the Government’s view that if we can get people into paid employment, then we are making great strides for them. Not all people will be able to go into paid employment, for obvious reasons.
Metiria Turei: Will the Prime Minister now direct the ministerial group that is working on welfare reform to analyse the Welfare Working Group’s recommendations in terms of their impact on increasing inequality in Aotearoa?
Rt Hon JOHN KEY: I cannot say that that direction will be occurring exactly in the way that the member has said, but I can say that of course we will be asking the ministerial group, and also all the advisers, from Treasury down, to make sure that we get advice on the overall impact on individuals. The Government’s aim is to see people get into work if they possibly can, in order for their standard of living to increase, and for their choices to increase. We know, if we go and look at the approximately 360,000 working-age New Zealanders who are on a benefit—who are supporting, broadly, 220,000 children—that they come from, for the most part, the lowest-income homes. If that member was actually serious about trying to fix this issue, she would join the Government and celebrate the fact that we are doing something about it. But she seems to want people to be stuck on welfare for their entire lives. No wonder she will be stuck in Opposition for her career.
Hon Trevor Mallard: Is it the Prime Minister’s view that the increased number of formerly low-waged workers who are now unemployed and the disproportionately high tax cuts for wealthier people have helped or hindered inequality in New Zealand?
Rt Hon JOHN KEY: By definition, if someone goes from paid employment to a benefit, then that is negative for them. That is why the Government has worked so hard and delivered such an outstanding Budget, which will create, in our view, about 170,000 jobs. But I draw the member’s attention to this fact, and it is that the Tax Working Group, when it looked at this issue, reported that the top 10 percent of income earners pay 44 percent of all personal income tax. If the impact of Working for Families, New Zealand superannuation, and other benefits is included, the top 10 percent of taxpayers in New Zealand pay 76 percent of all net tax in New Zealand. If 10 percent of New Zealanders are paying 76 percent of all net tax, I would say that is a fair contribution from that 10 percent.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. There was a lot of very interesting information in that answer, but the question was about the growth in inequality, which was not addressed by the Prime Minister.
Mr SPEAKER: I thought he said that if more people go on to benefits, then that is negative—I think the Prime Minister used that language—for equality. It may not have been the exact answer that the member was looking for, but I think it would be unreasonable if I ruled that it was not an answer.
Broadband—Progress Compared with Other OECD Countries
12. CLARE CURRAN (Labour—Dunedin South) to the Minister for Communications and Information Technology: What progress has New Zealand made compared to other OECD countries in terms of broadband download speed, connection speed and price since November 2008?
Hon STEVEN JOYCE (Minister for Communications and Information Technology) : New Zealand has made excellent progress compared with other OECD countries since November 2008. The National Government has signed agreements with various investment partners that will dramatically improve download and connection speed while ensuring customers receive a vastly superior service for similar prices. I am certain these changes will drive economic growth, improve the competitiveness of our companies, and further improve our comparisons with other OECD countries.
Clare Curran: How will reinforcing Telecom’s market dominance by giving it $1 billion of taxpayers’ money reverse our declining international rankings on broadband performance and make us more digitally competitive, given that New Zealand’s performance has fallen sharply on several OECD indicators since 2008, including going from 12th to 21st for download speed, going from 12th to 24th for connection speed, as well as going from seventh cheapest to fourth most expensive?
Hon STEVEN JOYCE: I am not quite sure about those numbers the member mentions, but to the extent they are as she says, they could be attributed to the regulatory approach of the previous Labour Government, which, of course, has continued until now.
Mr SPEAKER: I have some difficulty with the way the Minister is answering this question. Had the Minister answered the primary question he would have had those figures in his answer. If the figures are not right, the Minister would have had the right figures in his answer. The primary question was capable of answer. I let the Minister get away with a very spongy answer to it. To then turn round and attack the Opposition in response to the supplementary question is a bit rich. If the Minister had given the actual figures for those changes in download speed, connection speed, and price since November 2008 in relation to other OECD countries, I would have had no problem with his attacking the Opposition in response to a supplementary question. But the Minister did not give those figures, and to then argue that the Opposition’s figures are not right troubles me. I would like the Minister to reflect on that in answering the question, and I invite him to answer the question.
Hon STEVEN JOYCE: I raise a point of order, Mr Speaker. There are two things. Firstly, the primary question asked what progress New Zealand has made compared with other OECD countries in terms of those particular attributes. That progress can be measured in terms of a regulatory progress, in terms of investment progress, and in terms of actual raw numbers. There was no reference to particular measures in that primary question. In terms of the numbers that are there, there are some numbers, but it is not as exact a science as the Speaker indicates the member may believe, and that is the difficulty I have with it.
Mr SPEAKER: I hear the Minister’s point, but with a primary question I expect the interpretation to be a reasonable interpretation. I accept the point the Minister is making that progress can be interpreted in many ways, but it was pretty clear to me what was intended by the primary question, and I thought the Minister’s answer was on the vague side. Given that, to then attack the questioner on information included in the supplementary question was, I felt, a bit unreasonable. I accept that my position on that may not be perfect, but time has gone on and I invite Clare Curran to repeat her supplementary question.
Clare Curran: How will reinforcing Telecom’s market dominance by giving it $1 billion of taxpayers’ money reverse our declining international rankings on broadband performance and make us more digitally competitive, given that New Zealand’s performance has fallen sharply on several OECD indicators since 2008, including going from 12th to 21st for download speed, going from 12th to 24th for connection speed, as well as going from seventh cheapest to fourth most expensive?
Hon STEVEN JOYCE: There are a couple of things there. Firstly, those figures do not correlate with my understanding of OECD measurements, and I cannot do anything other than say that. The second point is that I think it is fair to say that, obviously, changes from 2008 to 2010 will have come about as a result of regulatory settings that occurred prior to that date, given the time lags with infrastructure investment in such a thing as communications and information technology. My third point—and probably in answer to the first part of the member’s question—would be to say that by changing the regulatory environment we are likely to achieve a far better result. I think she misunderstands, if I may say so, the big change that occurs in terms of structurally separating Telecom into two companies. One is an infrastructure company and the other is a retailer that competes on the same basis with every other retailer. I think one of the difficulties with the previous operational separation situation is that it did not give the sorts of outcomes that were being sought, and I am confident that structural separation will help achieve that.
Clare Curran: Given that his Government will be signing broadband contracts with pricing and speeds that will have effect until 2019, what mechanisms are in place to ensure that New Zealand’s broadband performance does not, once again, begin to fall behind the OECD average over the next decade?
Hon STEVEN JOYCE: In terms of speed, I think it is reasonably obvious that a fibre-optic access network will achieve far greater speeds than a digital subscriber line network. That is the first bit of good news for the member. The second bit of good news is that the prices that have been negotiated by Crown Fibre Holdings are competitive with the much lower-speed copper networks, which I think is a second win for the member and for the country. The third bit of good news is that the Commerce Commission, of course, will have oversight over those prices over the period and the network will be competing against a regulated copper network. I think it is a win-win for all New Zealanders.
Clare Curran: Why does he believe using contracts to remove the regulatory risk faced by Telecom will encourage it to behave in a pro-competitive way, given Telecom’s historic abuse of free rides on the regulatory front?
Hon STEVEN JOYCE: I think the difficulty is that the member is alluding to many of the concerns that occurred as a result of the previous structures of the New Zealand telecommunications industry and the vertically integrated nature of it. Operational separation, which was from the previous Government, sought to address some of those issues, but I think what is becoming apparent to all industry players now is that unless there is a structurally separated situation we will not achieve the sorts of competitive outcomes that the member is seeking. I think we will achieve that with the legislation that is before the House, and I invite the member and her party to change their minds and support it.
Clare Curran: I seek leave to table three documents, the OECD broadband statistics from September 2010. The first document has the fastest broadband speeds advertised by the incumbent telecommunications operator—
Mr SPEAKER: That is a different document from the first one?
Clare Curran: That is the first document.
Mr SPEAKER: The first document, I thought, was an OECD document.
Clare Curran: They are all OECD documents.
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.
Clare Curran: The second document is the range of broadband prices for a monthly subscription.
Mr SPEAKER: This is also an OECD document?
Clare Curran: It is the OECD broadband statistics for September 2010.
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.
Clare Curran: The third document is an OECD broadband statistics document dated September 2010 on average advertised broadband download speeds by country.
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.
Imprest Supply (First for 2011/12) Bill
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 52||New Zealand Labour 42; Green Party 9; Progressive 1.|
|Bill read a first time.|
Imprest Supply Debate
Hon BILL ENGLISH (Minister of Finance) : I move, That the Appropriation (2010/11 Supplementary Estimates) Bill and the Imprest Supply (First for 2011/12) Bill be now read a second time. These pieces of legislation are further steps in the ongoing supply from Parliament to the Government, consistent with the Budget that passed through this House in the last couple of months.
I think we are at a stage of recovery whereby, without overstating it, there is some confidence that the events of last year will not be repeated. By that I mean both the unexpected natural disasters and the growth that started in early 2010 but faded somewhat over the second half of the year. Those events will not be repeated.
It does us some good, I think, to keep in mind the factors that are positive for the growth of the economy over the next 2 or 3 years. By the growth of the economy I mean, in pretty straightforward terms, the prospects that people who do not have a job will be able to get one, and that people who do have a job will be able to get a pay rise, and the sense that the country will be better off. Some of those positive features include the lowest interest rates in 45 years. It has been the express goal of the Government to do what it can to keep interest rates lower for longer, on the basis that that will assist with the recovery of the economy, and that it will mean less pressure on the Reserve Bank to raise interest rates, with an indirect flow through to an even higher exchange rate.
The second positive factor is the strong export prices that the country is enjoying. There is no doubt that more people appear to be willing to pay more for more of our products than at any time, probably, in the last generation. New Zealand finds itself hooked to the China-Australia train. Australia is our biggest export market, and the growth of its economy has been driven significantly by demand for its iron ore and coal. A lot of that demand is sourced from China. China is moving to become our second-biggest market, independently of Australia, and is buying from us a different range of products than Australia does. It looks as if there is reason to believe that those prices could stay at reasonably high levels. It would be a surprise to anyone, I think, if commodity prices stayed at their current very high levels. Equally, I think it would be a surprise if they returned rapidly to the levels of 2 or 3 years ago. So stronger export prices will assist the ongoing growth of the economy.
Another favourable factor is the policies that the Government has followed over the last three Budgets, which lay down the platform for stronger economic growth. I refer to two policies in particular, because they are consistent with the single plan that the Government has followed across the last three Budgets.
The first policy is a high level of investment in infrastructure. Despite the global financial crisis and New Zealand’s recession, this Government committed early to extensive investment in productive infrastructure, and it has held to those commitments, because infrastructure investment is long term; its benefits are long term. In the short term, that programme has helped to deliver thousands of jobs to New Zealanders, particularly in the construction sector, which has otherwise fared very badly through this recession. In fact, the Government order book has seen something like 80 to 90 percent of non-residential construction in New Zealand over the last 2 or 3 years. That infrastructure investment continues now with the roll-out of ultra-fast broadband, which will deliver in the next 2 or 3 years to many businesses and households, and certainly to all schools, broadband speeds equivalent to those that currently apply in Singapore. I must commend the effort made by officials and Ministers in bringing together that particularly challenging commercial transaction. The infrastructure investment programme will continue.
The other longer-term change that the Government has made that I will mention is the changes to the tax system. We have followed some pretty simple principles here. Things that are not so good for the economy are taxed more; things that are good for the economy are taxed less. So we have put up the taxes on consumption and the effective tax rate on investment property. At the same time we have closed a number of loopholes in the tax system, particularly those applying to banks and companies. Alongside that, we have dropped income tax rates, tax on savings vehicles, and the company tax rate. There has been some ill-informed media commentary that the tax changes “haven’t worked”. Well, the last step in the changes was implemented only on 1 April this year, which, as I recall, was only 10 or 12 weeks ago. It is unlikely that a change designed to bring about a shift in the incentives in the economy, with benefits over 5 to 7 years, would have had dramatic impact in just a matter of months.
We are now in a situation where we have a sound tax system, and where 73 percent of New Zealanders now have a top statutory tax rate of 17.5c, so the incentives for anyone, including people who are on lower incomes, to work another hour or to save another dollar are simply better than they were. Those tax changes are consistent with the general thrust of the Government’s rebalancing of the economy. Those are a number of positive factors, and there are others.
There are, of course, some headwinds, and I will refer to the challenges to economic recovery. Some are shorter term and some are longer term. In the shorter-term category I would put the headwind of the high exchange rate. There is no doubt that that has put pressure on particularly our import substitution industries. Our commodity exporters have been compensated through high prices for the high exchange rate, but our import substitution industries do not get that benefit, and they have been particularly affected by it. A second headwind is simply the business of reducing debt. The story of economies in the developed world for the next 10 to 15 years will be about reducing debt, which reached very high levels, including here in New Zealand. That will make people cautious. We will not see the burst of credit growth or the spurt in the housing market that has traditionally picked up this economy.
Related to that will be constrained growth of credit, or restrained growth of lending. If we look back over New Zealand’s history over the last 20 years, we will see that lending—or borrowing; whatever we want to call it—has grown significantly faster than the economy through most of the last 20 years. The world is now sending us a message that that cannot continue. It will be quite a challenge, because from here on we will have to earn our higher incomes and greater wealth; we will not be able to borrow it from the world. Borrowing has been a significant source of growth in wealth and incomes, in particular over the last decade.
Having listened to the Budget debate and toured the country through the time of the Budget, I am impressed with the resilience that many New Zealanders have shown. Gail Kelly, the chief executive of Westpac, last week here in Wellington contrasted the positive and resilient attitude of New Zealand to the economic challenges with the somewhat less positive attitudes that are now prevalent in Australia. I would expect that over the next few years we will begin to close some of that gap.
Hon DAVID CUNLIFFE (Labour—New Lynn) : I move, That the words after “That” be omitted and the following substituted: “this House has no confidence in the Government, because of the current Government’s failure to create jobs, its lack of a credible plan for economic growth, the wildly diverging revenue forecasts, the unspecified and unmandated Budget cuts, and the broken promises on privatising State assets.”
As the Minister has said, he has been running around the country talking to people about the Budget. So have I, and what is clear from that dialogue with New Zealand is that this Budget will not and cannot achieve the objectives that the Government has set for it. Several of the issues that Mr English mentioned in his preceding remarks cannot go without response. The first is that he has lauded the so-called tax switch as the most important reform that a National Government has undertaken in the last 20 years. The only thing we can conclude from that is that National has not done much in 20 years, because the tax switch has been an abject failure, for four reasons.
Firstly, the tax switch was not fiscally neutral. It results in another $1 billion of overseas borrowing in the first 4 years, according to the Budget document’s own numbers. Secondly, it was not stimulatory to the economy, because it took money out of the pockets of hard-working people who spend every cent they earn, and put it in the pockets of wealthy New Zealanders who could afford to salt some of it away and take it out of circulation. The net impact of that was further contraction in the economy, not expansion. Thirdly, it was inequitable: two-thirds of the money went to the top third of income earners, and about 40 percent went to the top 10 percent. I ask whether it is any wonder that the rest of New Zealand is feeling the pinch, in the face of rising, rising prices and wages that are growing much less quickly than the rate of inflation, meaning a real-terms cut. The fourth reason that the tax package was a failure was that it did not close loopholes. That would be a bit like the Pope saying sin did not exist and therefore there were no sinners. It simply removed the top personal tax rate of 39c in the dollar, so that everything over 33c in the dollar, by definition, was avoidance free. It is a circular argument, and it cuts no ice with ordinary Kiwis.
The second comment I wish to make relates to the Minister’s remarks about headwinds and the high New Zealand dollar. Finally he has admitted that the dollar is too high. I know it is not appropriate for either him or me to talk about what the exchange rate should be in dollar terms, but let us say we have a consensus in this House that a high New Zealand dollar is giving us the so-called Dutch disease. Every exporter, apart from those exporting a few select commodities, is being withered on the vine by the fact that our exports are less and less competitive, and that cannot continue. So why does the Minister, almost in isolation, pretend that we have the best monetary policy in the world? When everybody, from the Reserve Bank to the Bank for International Settlements to the IMF to the OECD, is moving on things like macro-prudential regulation and counter-cyclical policies that support and supplement the official cash rate, why will the Minister’s Government not review the Reserve Bank of New Zealand Act, which is the purest, one would say most conservative, construction in the entire Western World? The Minister said the exchange rate is overvalued, so why will he not guide the Reserve Bank to do something about it? New Zealand exporters are deeply, deeply worried about the situation that they face.
There is one thing that the Labour Opposition will not disagree with. It is the idea that New Zealand carries too much debt. We agree with that idea. But, of course, 90 percent of that debt is private debt, and only 10 percent is public debt. Therefore, it beggars belief to think that any credible Government strategy could aim to solve the international debt problem by nibbling around the edges at the 10 percent that is public, while cutting back on the programmes that reduce the 90 percent that is private. Two things stand out. The first is the reduction to KiwiSaver. A blind man in a darkened room could say we have to get the savings rate up. Why would the Government’s centrepiece in its Budget be a reduction to the incentives for New Zealanders to save in KiwiSaver? There are shades of Muldoon doing away with Mr Kirk’s savings scheme. If we had that scheme now, we would be much better off relative to Australia. We might have a chance of closing the gap mentioned in Mr Boscawen’s question in question time that the Minister danced on the head of a pin about to avoid answering, because he knows the gap is getting wider month by month, year by year. His policies are not working.
Second, at 40 percent of GDP, gross Government debt is too high. Labour, when elected this November, will work strenuously to reduce it. But we will do so as part and parcel of an economic growth strategy that increases the number of people in jobs; increases the revenue flows to the Crown, which means we do not rack up debt; and increases the amount of economic growth, benefiting the private sector and lifting all boats in the economy. It is not just in New Zealand that cost cutting in the middle of a recession is likely to make recessionary conditions deeper. Cost cutting is likely to contract revenue flows, and must be balanced by offsetting investments that will get growth up in a prudent and responsible way. That is what a Labour Government will do.
If a doctor was taking the pulse of this economy, he or she would be worried, because the vital signs of the New Zealand economy are deeply troubling. I see Michael Woodhouse has perked his head up—yes, a ghost of medical times past. Take the blood pressure, the pulse rate, or the temperature of the economy, and what would we find? We can look at the unemployment rate, which is up from 3.4 percent to 6.5 percent. Economic growth is down from 4 percent to 5 percent under Labour to scrapping along at close to zero under National, with its rosy-glow forecasts and a “she’ll be right next year” approach, which was said last year and the year before and the year before. In question time today I was able to recite the very same line from the Minister of Finance that he has given in response to little blips in the confidence numbers every year for the last 3 years. Nothing changes, because there is no strategy to achieve change. An economic doctor would look at the vital signs of unemployment, see 270,000 people looking for work, and say that is not healthy. Much of it will last for generations.
An economic doctor would also look at prices rising faster than wages year on year to May, with 4.5 percent price increases, 7.1 percent food price increases, and a 1.9 percent increase in wages. The reason that New Zealanders are feeling worse off is that the vast majority are worse off. Mr English counters that by saying that real disposable average incomes have risen. Ah, well, let us strip down those numbers. How would one get to that result? Firstly, one would include the tax cuts brought in by the Labour Government in 2008. Secondly, one would manipulate the time series of the data to go from the low to the peak. Thirdly, one would look at an after-tax average that has been lifted by tax cuts to fat cats, and ignore the fact that more than 70 percent of New Zealanders have slipped backwards and that their real earnings now are less than they were—less than they were—under the Labour Government.
This Budget, on which the estimates we are debating are based, is not credible. Treasury and the Reserve Bank are nearly $4 billion apart in their revenue forecasts. There is $1 billion of unspecified cuts that no responsible Minister of Finance should have signed off on without knowing where they are coming from. The capital account is propped up by $5 billion to $7 billion of unmandated asset sales—privatisation, which the Government said it would not book without a mandate. But it has written them into the forecasts and hired the consultants to carry them out. That is to happen from as early as July this year, notwithstanding the fact that November is the date of the election. The Budget has no plan for jobs and growth. The vital signs of the economy are ailing. The Budget breaks election promises. The proof of the pudding is this: no matter what this week’s or last week’s little indicators might say, the rating agencies have retained the New Zealand economy on negative watch.
AMY ADAMS (National—Selwyn) : Budget 2011 and the Appropriation (2010/11 Supplementary Estimates) Bill are a continuation of the prudent and sensible economic management that the National-led Government has been rolling out in New Zealand since the 2008 election. When we took the reins of office, the global financial crisis was at its peak. However, New Zealand had gone into recession 3 years before anyone else. Our export sector was gasping its dying breaths after 9 years of a Labour Government that thought only Governments could create jobs, that the private sector should be kept out of the way and shrunk down, and that Government spending was the panacea for all ills. Labour delivered us lollies that we could not afford, in a desperate bid to cling to power.
When this Government took the reins in 2008, we started on a track of slowly turning round the large tanker that is this economy, to a point where it is now on a growth track, is sustainable, and is in a phase of job creation, income growth, and a raise in the standard of living for all New Zealanders. That has not happened by accident. In fact, not only have we had to contend with the situation as we inherited it and with the continuation of the global financial crisis, but we have had to contend with some horrific, unforeseen, and—I am sorry to take it into fiscal terms—terribly expensive episodes in the history of New Zealand. Yet despite all of that, we have continued with our plan. We have improved the tax system to change incentives, so that New Zealanders are encouraged and rewarded for getting ahead under their own steam. They are supported if they want to make a better future for their family. The incentives are set up to discourage them from continuing in the consumption-led debt orgy that they were in during the 9 years of the previous Government.
National has ensured that the Government parts of our economy are more efficient. We view every tax dollar we spend as like spending our own money. We think New Zealanders would want us to be just as careful with their money as we would be with our own. That is why we are insisting that our public services deliver faster, better, and smarter outcomes for New Zealanders and why we are insisting that they prioritise the front-line services that New Zealanders expect when they go to the doctor, go to school, or phone the police. When they look to the core Government services, they see it is the people on the front line who matter, not people in the back office in Wellington. Those are the parts of the public sector that we are continuing to support in this Budget and through these supplementary estimates, and that we are continuing to ask our Government sector to roll out and to improve all the time.
We have continued to reduce our reliance on foreign lenders. We have cut red tape in order to help the business sector continue to grow and create the sorts of jobs we want. We are continuing to improve the education system, so that as our young New Zealanders grow up and head into the workforce, they have the skills and confidence to get ahead and create a great life for them and their families. More important, they will do it here in New Zealand and feel that it is a good place to stay and prosper in. They will feel that this is a place where they can get ahead and where they can create a safe and prosperous future for their families. That is the vision of this Government. That is what we have been continuing to roll out over the past 2½ years, and this Government is certainly now taking another step on the path towards that.
One of the things I want to focus on that has been specific to the particular legislation in front of us and to the particular time period is the rebuilding of Canterbury. As I mentioned in my opening comments, this series of events could not have been anticipated by anyone. It seems almost shameful to even talk about it in monetary terms, but of course we must. We must look at the dollar cost of rebuilding Canterbury. It is a task that cannot properly be described in this House. I think most members of the House have probably had a chance to visit the province since 4 September and to see the extent of the devastation. I remind this House and anyone listening that that devastation is an ongoing saga for us all; it is not a fixed amount. I know that when we last talked to the Reserve Bank in the Finance and Expenditure Committee about the estimates, and certainly in relation to the estimates in this Budget, there was talk of a $15 billion to $20 billion rebuild cost. Some later estimates have suggested that even that figure was conservative. Those numbers and estimates were before the latest round of pretty terrifying earthquakes on Monday, 13 June, when we had a 5.7 magnitude quake rip through the region at around 1 o’clock in the afternoon, followed by one of 6.3 magnitude at half-past 2, which was as big as the deadly February quake. Those shakes alone have caused another 94 buildings in the central business district to be scheduled for demolition. They have caused untold further damage in the suburbs. They have caused continuing heartbreak for the people in the eastern suburbs who have had to dig out their homes once more.
This Budget sets up a fund of $5.5 billion for the rebuilding of Canterbury. This Government is making a tangible statement to the people of Canterbury that no matter what the economic conditions are, we will back the rebuilding of that province. We will be behind Canterbury and we will stay with Canterbury for as long as it takes, whatever it takes, because Christchurch is our second-biggest city. It is the home of our world-beating Crusaders—well, they certainly will be soon. It is a part of New Zealand that we are indelibly committed to. On top of that $5.5 billion is the extra $3.3 billion—that is billion dollars, in case I am saying it too quickly—that will be pumped out from the Government through the Earthquake Commission, ACC, and the like. Of course, the Government contribution to the rebuild is one small part of what will happen there. That sort of spending in Canterbury will help to lift GDP. That is good news for my region and is what I want to touch on. Our region—as devastated, exhausted, and stressed as it is right now, and where at times people are at their wits’ end—can have confidence in the future, because the spending of $20 billion or more in that region over the upcoming years will create an economic boom time for that region that is rightfully deserved.
This Budget will put more money than ever before into health and education—more money than ever before. An extra $2.2 billion will go into health. The Government has made changes to the health system in these tough economic times that have seen an extra 20,000 elective surgeries, an extra 1,000 nurses, an extra 500 doctors, and $54.5 million more going into maternity support services. The funding for maternity support services is something I am very, very proud to talk about on the streets of Selwyn and in my communities. That support for the maternity services and for the well child checks is something I think we can be very proud of. We should remember that one of this Government’s first actions on taking office was to ensure that Herceptin would be funded and paid for by the Government for every New Zealand woman who needed it and that families would not have to watch their loved ones die of breast cancer through a lack of Herceptin funding. I will continue to be very proud of that.
I will also talk briefly about water, because water is very, very important to the economy in Canterbury and particularly to the region of Selwyn. I for one am not an apologist for the fact that New Zealand should make the most of its natural advantages if we do so well and sustainably. The $35 million that the Government has set aside for the investigation of irrigation projects is to be commended, but there is a rider that we have to do it well. That is why it is important that we have also set aside a further $15 million for the Fresh Start for Fresh Water Clean-up fund, taking that fund to well over $260 million. That is going into the clean-up of fresh water.
I am very excited about the future for Canterbury, I am very excited by the fact that this National-led Government is standing behind it, and we have a very, very bright future ahead of us while we have the Minister of Finance, the Hon Bill English, in charge. He has taken this economy from the cot-case that it was when we inherited it in 2008 and has put it back on a projection where we have 4 percent growth forecast for next year, and, in fact, that is conservative. The Reserve Bank—
Hon Member: More bullish.
AMY ADAMS:—is more bullish in its projections. The New Zealand Institute of Economic Research is equally bullish. These forecasts have been borne out time and time again by the leading forecasting agencies—170,000 new jobs over 4 years. That is what that sort of growth means. It means 170,000 new jobs, because this Government has delivered a strong, sustainable, trustworthy programme of economic growth that will see us build a better future for all New Zealanders, where there is more prosperity, where there are safer communities, and where people have the chance to get ahead here in New Zealand and do not have to head off overseas or be indebted to our offshore lenders. It is a Budget that I am very proud to support.
Hon DAVID PARKER (Labour) : I am surprised at the contribution from the previous speaker, Amy Adams, because it really does not ring true, given that most New Zealanders are rightly worried about whether their jobs will be there next week and whether they will be able to meet the rising costs of living. Then when I heard Amy Adams say that her Government inherited an economy that was a cot-case, I thought that I really did have to put the record straight, because there is no doubt that the last Labour Government, the fifth Labour Government, was fiscally responsible. We ran Budget surpluses for 8 years in succession, each one of which was opposed by National. It was National that opposed Budget surpluses and called for tax cuts, which would have further fuelled the asset bubbles and the debt and inflation pressures that New Zealand, along with the rest of the Western World, had at that time. So when National tries to rewrite that history and say that we were fiscally irresponsible, it is just not correct. In stark contrast, the National Government has now got us to a position where this year we have a $16.7 billion deficit; so rather than running surpluses, we are running a very large deficit. Why? Because the economy is stagnant and is not growing.
I think the thing that disturbs me most about the Budget and the supplementary estimates is that every time the Government comes back to this House and asks for more money to spend, it has to open up and say that it is not collecting as much revenue as it thought it would, because the economy is not going as well as it had previously predicted; and, secondly, it is having to spend more money than it was previously predicting. Every time it comes back and the deficit grows.
After 2½ years of this current Government it is fair for the people of New Zealand to ask whether the Government is succeeding. When we ask whether it is succeeding, we have to ask which measure we should use. I think we should be generous. I think we should use the measures that National was elected upon—the promises that it made.
Moana Mackey: What were they?
Hon DAVID PARKER: Moana Mackey asks what they were. The first promise was that National would close the wage gap with Australia, and of course it has not. It has not. Despite record commodity prices in our major trading partners, Australia and China, the difference in income levels between New Zealand and Australia has widened. The gap has grown. National’s second promise was that it would cause a step change in the economy. Well, that has not happened. That phrase has even dropped out of those members’ language.
The more concerning thing for me is the underlying trend. In the documents that the Minister of Finance is required to produce as part of the Budget, two statistics really worry me. The first is our current account deficit. The current account deficit does blip into positive figures for this year, in substantial part because we get the reinsurance proceeds from the Canterbury earthquake coming into New Zealand. Therefore, that is new money coming into the economy, which, together with the money we get from our exports overseas, means that for this 1 year, we have a current account surplus—a very small one.
From every year here on until the end of the projection period, New Zealand’s current account deficit gets worse as we spend more as a country than we earn. Every year New Zealand’s current account deficit grows so that by the end of the forecast period it is back to 6.9 percent of GDP, which is a very substantial current account deficit. That flows through to New Zealand’s net asset position in the world, or, more correctly in our case, our net debt position in the world, because New Zealand increasingly owes more and more money overseas. I am not talking just about the gross debt, or the total amount of debt, but about the total indebtedness that New Zealand has to the rest of the world, and what the rest of the world owns in New Zealand, less what we own overseas. That is the measure that the Hon Bill English used repeatedly in this House earlier in the year as being what he said was the major indicator of New Zealand’s failing economy—that our net indebtedness position in the world was getting worse.
Then, what does this Budget show? It shows that in every year hereafter it gets worse still, so that by the end of the projection period, if National is re-elected and is in Government for 6 years, New Zealand’s net indebtedness, or its net international debt position, will get worse. It rises from minus 78.6 percent of GDP this year to minus 85.3 percent of GDP by 2015. This is all predicated on the National Government being re-elected at the end of the year, which we of course do not accept, but if National has its way and is re-elected, it is effectively saying that this great aspirational Government for New Zealand makes us poorer every year.
When Bill English goes home in the evening, he says: “Honey, I shrank the economy.” That is his key line: “Honey, I shrank the economy.”, or “Honey, I grew the debt.”, because New Zealand’s net international position gets worse every year from here on, according to the Budget projections.
The difference between what the Government is proposing and what the Labour Opposition proposes is that we really do think there is a need for material, structural change in the economy. Material, structural change in the economy is necessary if we are to avoid the trend that the current Government has for us of getting poorer as a country.
The economic settings of the country have been largely unchanged in the last couple of decades. There has been a little bit of a tweak made by the Government in terms of its income tax policy—which, in our view, disproportionately favoured those who are already best off; the top 10 percent of income earners garnered 42 percent of the income tax cuts—but the basic shape of the economy will not change, as is evidenced by the fact that our current account deficit goes up and our net debt goes up, as well. The only way that we will change that is if we change the breadth of our exports. We cannot catch up with the rest of the world and do better just by selling more primary produce.
Primary produce will continue to be important and Labour will support those traditional export industries, but where we differ from the Government is that we do not think that continued success in primary produce plus some more of what are generally low-value jobs in tourism will be enough to make the difference that needs to be made in New Zealand so that, once again, we start getting wealthier as a country, rather than poorer.
Mr English, in his contribution a few minutes ago, said we needed to get over borrowing for consumption, yet that is what this Budget shows. We have a return to a current account deficit and more borrowing, much of which will be consumed, leading to higher levels of debt long term. The only way out of that is to have broader exports, not just more exports from the pastoral sector.
The Hon David Carter came to the Commerce Committee on the estimates. In response to questioning by me as to why the Government was favouring subsidies for new irrigation schemes in the agricultural sector over support for other sectors of the export economy, Mr Carter, after denying for a start that it was a subsidy, in the end turned round and attacked me and said: “Well, the Labour Party might not support the agricultural sector but National does. It’s the only game in town.” Those were his words: “It’s the only game in town.” It is that narrow vision from National that has New Zealand destined to continue down this route of getting poorer every year.
We must broaden our exports. To do that, we need to favour our export sector with policy. We need changes to monetary policy. We need improvements to savings, rather than undermining KiwiSaver. We need changes to our tax system to make it fairer to exporters and less advantageous to the speculative sector. We need a range of microeconomic changes, including things like a research and development tax credit the likes of which the Labour Party has recently announced. We need a lot of additional sectoral-based initiatives in new areas of our economy that can produce export jobs. Without it the trend will continue: rising debt and more people moving to Australia. We are fast becoming a training ground for people who do not have a good job in which to utilise those skills, so they move to Australia. That is so much so that Julia Gillard, on a recent visit, said that Australia views New Zealand as a good country for the source of well-trained immigrants to Australia, who build that economy stronger, at a loss to ours. That is no more evident at the moment than it is in respect of the building trades where, despite the need for skilled trades to rebuild Christchurch and build in Auckland, we are losing them to Australia too.
Dr RUSSEL NORMAN (Co-Leader—Green) : The next economic wave of innovation is the smart, green economic revolution. It is a revolution in renewable energy, sustainable food, sustainable transport, green chemistry, cradle-to-cradle design, low-carbon buildings, and so much more. The green economic revolution presents an opportunity for New Zealand to create thousands of green jobs. It is a great opportunity. It is an opportunity to build from the platform of our “clean, green” reputation in order to sell high-value food to a world that is hungry for natural, safe food—a world that is willing to pay a premium for it. It is an opportunity to leverage our experience in clean energy generation to sell clean energy technologies to a world that is desperate for ways to cut carbon emissions. It is an opportunity to harness our smartest minds and our brightest entrepreneurs to embrace a $1.3 trillion global greentech market—a market that is not only the next big thing but also part of the solution to the survival of our very civilisation. The Green Party says that for the sake of our children, for the sake of our planet, and for the sake of our economy, let us ride that green economic wave.
Today I want to talk about one particular part of the green strategy to catch that global green wave, that global green economic revolution. If we want to catch the global green economic wave, we need to build on the success of our existing publicly owned energy companies. They are the launching platform for the smart, green New Zealand economy. Let me explain. These companies are the nucleus of the growing clean energy sector in New Zealand. All of them have some renewal generation experience. Even Solid Energy now has a biofuel operation, although it is otherwise involved in coal. These companies have the size and critical mass to compete internationally, unlike many other New Zealand companies. These energy companies have the kind of intellectual property and hands-on practical experience that is desperately sought after in a world that is hungry for clean energy and low-carbon energy. These publicly owned energy companies are worth more today than they were yesterday, and they will be worth much more tomorrow. That is why selling them is a huge mistake. They can form the nucleus of the clean energy sector in New Zealand—a sector with truly massive export potential. They have already started to look for export opportunities—for example, some of them are building geothermal generation in California right now, but in fact the sky is the limit for the export of clean energy technology. The clean energy sector is booming internationally right now. The solar, wind, and biofuels sector is worth $190 billion in sales this year, and it is projected to grow to $350 billion annually within the next decade. New Zealand can get a piece of that global action by being focused and strategic in building on our existing strengths.
We can also tap into the creative sectors in the private sector, beyond the public energy companies. The public energy companies are only the start. I believe that we have a fantastic entrepreneurial spirit in New Zealand. I believe that we have the imagination and the drive to patent new ideas and new technologies that will be part of the global green economic revolution.
We need to back ourselves, instead of relying on other people. Every year at the sustainable business awards there are dozens of new start-ups bubbling with great green ideas. An Investment New Zealand report identified 250 companies and organisations involved in researching, developing, and commercialising clean technologies in New Zealand right now. These cleantech entrepreneurs need a partner. They need a partner with expertise and capital in order to do the research, development testing, and marketing to launch their products into the world. That is where the publicly owned energy companies come in. The public energy companies can step up to form alliances with cleantech private partners. They can form partnerships with greentech bright sparks who have new ideas but need a strong partner. Supercharged public energy companies can form the hub of a network of clean-technology joint ventures. Some of them have already started—for example, Meridian owns 93 percent of Whisper Tech, but we can do so much more. Supercharged energy companies can launch our green entrepreneurs into the world together, at the same time as building a safer future for our kids. New Zealand would be renowned for its creative solutions to global problems and global challenges if we did that. Instead of us paying to use other people’s ideas, why not invent our own ideas, and they can buy ours for a change?
However, a small country like New Zealand will always face the risk that successful companies will be bought up by overseas owners and have their intellectual property, their headquarters, and their research moved offshore. What happens is we get left with a branch office that sends the profits offshore and has no focus on exporting from New Zealand. It is an all-too-familiar story, and it happened to Contact Energy. But we can do something about it: we can keep it Kiwi, we can keep the public energy companies in public ownership so that they stay here and form the launching platform for a clean energy export sector. We should keep the energy companies in public ownership so that they stay in New Zealand, but we should let them partner with private sector cleantech entrepreneurs. Those partnerships then have an anchor in New Zealand so that we get the ongoing benefits of jobs and research, and we do not lose critical mass overseas. Now that is what I call a mixed economy.
The Government’s so-called mixed-ownership model actually loses the public element of the mix, and ultimately leads to the loss of these companies to overseas owners as the anchor of public ownership diminishes. We miss the opportunity as a country to catch the green energy wave. That is not an economic strategy; that is a white flag. That is not a vision for New Zealand; that is a plane ticket for our best and our brightest. Why does this Government want to be a second-rate follower instead of a first-rate leader? National says that energy companies need access to capital. Well, fair enough, but we do not need to privatise them in order to give them that access. There is an alternative way to get access to capital, and that is for the publicly owned energy companies to issue green energy bonds directly to the people of New Zealand. It is a win-win solution.
After the debacle of the finance companies collapse, many New Zealanders are looking for a safe place for their retirement nest egg. Green energy bonds would provide such a safe place while giving public energy companies access to the capital that they need so that they can take advantage of global green energy opportunities. It keeps companies in public ownership and in New Zealand. Supercharged public energy companies partnered with bright, green Kiwi entrepreneurs, funded by Kiwi mums and dads with safe, green energy bonds—
The ASSISTANT SPEAKER (H V Ross Robertson): I am not signalling to the member; there is too much chatter going on.
Dr RUSSEL NORMAN: Supercharged public energy companies partnered with bright, green Kiwi entrepreneurs, funded by Kiwi mums and dads with safe, green energy bonds, exporting clean technology—now that is a vision for a bright future for our country. I say to National that we tried the old recipe of privatisation and foreign takeover in the 1980s and 1990s, and it did not work. We can have supercharged public energy companies partnered with cleantech entrepreneurs, funded by Kiwi mums and dads. We can have a clean, green economy that works for everyone.
It is our collective destiny to live at a time of extraordinary opportunity and extraordinary danger. There is a giant wave of economic opportunity headed in our direction. It is a green economic revolution. It is time to put up our heads, look forward, and start paddling for all we are worth, because our very children’s lives depend on it.
Hon JOHN BOSCAWEN (Leader—ACT) : It has been interesting sitting in the House this afternoon listening to the debate on the Imprest Supply (First for 2011/12) Bill and on the Appropriation (2010/11 Supplementary Estimates) Bill. I will go back and comment on some of the contributions made earlier this afternoon. If I was to summarise the speech made by the Hon Bill English I would say that it is the Government’s argument that the economy is improving, that there is a more positive atmosphere out there, and that New Zealanders are optimistic. Having gone through 2 or 3 years of recession, New Zealanders are optimistic. They are benefiting from the lowest interest rates in 45 years, albeit higher interest rates than in the euro countries, the United Kingdom, and the United States, but, nevertheless, the lowest interest rates New Zealanders have enjoyed for the last 45 years. They are also benefiting from very high export prices.
The Government’s economic magic—if we want to call it that; the ACT Party would not—or its economic prescription has been to invest in infrastructure and to rework the tax system to create an incentive for New Zealanders to work and to save. All tax rates have been reduced to a point where approximately three-quarters of New Zealanders pay no more than 17.5 percent in the dollar as a tax on their income. So, yes, that is a positive story to tell. Yes, there are signs that the economy is turning. But ACT has grave concerns about the assumptions in the Budget. The Budget’s prediction of a surplus in 2015 is based on a growth rate of 4 percent in 2014 and 3 percent in 2015. We think that those figures could be wildly optimistic, but for the moment those are the figures in the Budget.
It was interesting to listen also to the contribution of Amy Adams, a contribution that David Parker took great umbrage at. David Parker said that, on the contrary, the economy was not a cot-case when the National Government took it over; in actual fact it had 8 years of surpluses. Well, I have to say that the Labour Government probably did a good job during its first 6 years in Government. I see the smiles and the laughter from Mr Sam Lotu-Iiga. [Interruption] I say to Mr Lotu-Iiga, in response to his comments, that in 2004 Government spending under the Labour Government was 29 percent of GDP—29 percent of GDP. There was very tight fiscal restraint in the first 5 years of the last Labour Government. It got Government spending down to 29 percent of GDP. That compares with 36 percent today—36 percent. What followed those first 5 years of a Labour Government? It went on a huge orgy of spending. It blew all the good work it had previously done.
Hon Tau Henare: That’s right; orgy.
Hon JOHN BOSCAWEN: Absolutely; an orgy of spending. That Government tried to buy the 2005 election. That was exactly what it did. It bought the 2005 election and the people of New Zealand have been paying for it ever since. It commenced a whole series of programmes to try to buy support. Let us look simply at interest-free student loans. Sir, if you were a parent sending your child—
The ASSISTANT SPEAKER (H V Ross Robertson): No, no.
Hon JOHN BOSCAWEN: The parents of New Zealand who send their children to tertiary education would be absolutely foolish not to advise their children to borrow the absolute maximum amount they could. The student loan scheme we have had in this country since 2005 has encouraged students to go out and borrow everything they can, because they know they will have to pay it back in devalued dollars, if they pay it back at all. Mr Parker is right to feel umbrage at the fact that his Government’s economic management had been criticised in respect of the first 5 years. But after that the thing did turn into a cot-case, and National did take over a disaster.
Interestingly, Mr Parker highlighted the fact that this year will be the first year we run a current account surplus. This year will be the first time we have more money than we borrow from overseas. We will run a current account surplus. As he said, that is the measure that National uses to judge the change in wealth of our country. Interestingly, what Mr Parker did not say is that this year is the first year in 40 years—the first year in 40 years—that we have a current account surplus. Tragically, it is because of the earthquakes in Christchurch. Tragically, the current account surplus has happened only because billions of dollars have flowed into the New Zealand economy from foreign reinsurers and are forecasted to continue to flow. That is the reason we have a current account surplus. We have not had one since 1973—since 1973—nigh on 40 years.
So in the 9 years of the Labour Government that Mr Parker was so very proud of we ran a current account deficit. That was a current account deficit—the same sort of current account deficit that Mr Parker would castigate the National Government for forecasting that it will run until 2015. Let us look at the impact of a current account deficit. When New Zealand consumes more from overseas than what it exports overseas we run a current account deficit. We have to borrow from the rest of the world. The impact of that is to increase the value of our currency. Foreigners, if they are going to lend us their foreign dollars, need to buy New Zealand dollars, and that bids up the price of our currency. Nothing does more to undermine the viability of our exporters and our farming industries than an overvalued dollar.
Interestingly, Mr Parker talked about putting in place structural reforms, the reforms that would encourage exporters and the import substitution industries. One of the ways we can do that is to reduce New Zealand’s current account deficit but we can also do it by reducing our own internal deficit. We are forecast to run a deficit of $16.8 billion this year. We have to fund that from overseas. That is the equivalent of $300 million a week. It is not particularly relevant whether we borrow $380 billion this year and we over-borrow, and we under-borrow next year. The blunt reality is that we are spending as a country about $300 million per week more than what we are taking in in income. That money is being borrowed and it adds to our current account deficit.
If we are serious about putting in place the policies that will help our exporters and that will actually rebalance our economy in the way that both the Labour Party and the National Party say they want to do, we can do nothing more successful and nothing better than cut back, reduce our expenditure, and reduce waste. It is the shame of the Labour Government that in a desperate effort to buy the 2005 election, to get re-elected, it committed to extending the interest-free student loan scheme so that any person studying tertiary education at an institution would be absolutely foolish not to borrow the maximum. It also doubled—in fact, almost tripled—the cost of Working for Families. Working for Families is social welfare for people on, in some cases, over $100,000 a year, and the cost of Working for Families has gone from about $1 billion in 2005 before the election to just under $2.8 billion today.
If we actually want to restructure the economy, we have to make tough decisions. Yes, National has done a lot, and yes, it has made moves. It could have moved a lot faster, and it could have moved a lot earlier. It could have made some of the changes it has made in this year’s Budget 2 years ago. That is a lost opportunity. That opportunity is gone. If we really want to restructure this economy, if we really want to raise our living standards, and if we really want to reduce the income gap between Australia and New Zealand, we need to make those tough decisions. At question time I asked the Minister of Finance whether the gap between GDP per capita in Australia and New Zealand had widened or narrowed. He was not prepared to acknowledge that it had widened. We need to stop that. We need to turn it round. This country can be an awful lot more prosperous than it is, and the ACT Party has the policies to ensure that that happens.
RAHUI KATENE (Māori Party—Te Tai Tonga) : Coming to the Appropriation (2010/11 Supplementary Estimates) Bill today, I am reminded of a phrase used by Dr Martin Luther King: “the fierce urgency of now”. The fierce urgency of now is about all of us considering what is in the best interests of our iwi, hapū, whānau, and mokopuna. The Appropriation Bill provides us with a perfect opportunity to assess the progress the Māori Party has made in putting in place policy to make a better future for us all. In this term the Māori Party has secured more than $600 million for our people, and has convinced Government to recognise indigenous rights. No other party in the history of Parliament has achieved that.
Although plenty can be said from the sidelines, the real action is alongside Government. Evidence of that is very clearly outlined in this bill. In schedule 1 we see ample evidence in agriculture and forestry of our achievements as a result of our negotiations with the Government in respect of the emissions trading scheme. In Vote Agriculture and Forestry we see reference to implementation of the emissions trading scheme and indigenous forestry, climate change research, and the Afforestation Grants Scheme. I will just update the House on the progress achieved because of the Māori Party’s negotiations in this area. The Agriculture Emissions Trading Scheme Advisory Committee was formed to provide independent advice on bringing agriculture into the emissions trading scheme. It included the strategic advice of Roger Pikia, the Chief Executive of Te Arawa Group Holdings, as well as Edward Ellison, a sheep and beef farmer of Ngāi Tahu and Te Ātiawa whakapapa.
In afforestation, the Government has made a commitment to the Iwi Leadership Group to investigate land that could be made available for carbon farming. It has also agreed that officials will work with the Māori reference group executive to develop a standardised contract structure. In this respect, agriculture and forestry provide an excellent example of the type of progress Māori can expect when there is a strong and independent Māori voice sitting alongside Government. As constituents in Te Tai Tokerau have been telling us, it is better to be in the House, immersed in the action, than to be sitting on the outside, washing windows and waiting.
The emissions trading scheme reaped far more benefits for Māori as a result of our negotiations than in these two areas alone. Under our emissions trading scheme negotiations the Māori Party halved the petrol and power levy increase. Electricity prices would have increased by 10 percent; we got that reduced to 5 percent. Petrol and diesel prices would have increased by 7c per litre, and we got that down to 3.5c. In terms of dollars and cents, it would have cost the average whānau about $165 more per year if the Māori Party did not intervene. On top of that, approximately 6,000 low-income Māori whānau have had their homes insulated as a result of the Māori Party negotiating a 100 percent subsidy for housing insulation for those with a community services card. I will repeat that: 6,000 whānau have directly benefited from Warm Up New Zealand.
The next vote I come to is Vote Communications, and in particular broadband investment in rural supply and schools. The Māori Party has been delighted with the progress we have made in establishing Ngā Pū Waea, the Māori broadband working group. This work has three immediate impacts: first, the potential to monitor the price of mobile charges for the householder; second, the opportunity to increase digital accessibility for marae; and, third, it will lead to employment and training opportunities in information technology. All the statistics show us that an estimated 20 to 30 percent of New Zealanders do not have access to digital technology. This includes people living in rural and isolated areas; Māori, Pacific peoples, and other ethnic groups; people on lower incomes; people with disabilities; and older New Zealanders.
The broadband deal that the Māori Party has negotiated enables Māori to have access to cutting-edge technology while also providing opportunities for trade training and employment. The extended powers of Ngā Pū Waea mean that marae, kōhanga, kura, wānanga, iwi rūnanga, and Māori providers will also benefit from the roll-out of ultra-fast broadband.
The next vote I refer to is Vote Education. I am interested in the $5 million set aside as interventions for target student groups, the $3.5 million for support and resources for teachers, and the $2.6 million for strategic leadership in the sector. The Māori Party, in responding to calls from our people, has been adamant that we need to lift the performance of key educational institutions if we want to achieve the outcomes we so desperately need to see. In the 2011 Budget we have been able to make the gains that Māori have been calling for for so long. There is $9 million to support iwi to develop school community language initiatives; $3 million to Te Rūnanganui o ngā Kura Kaupapa Māori o Aotearoa for curriculum and resources based on the philosophy of Te Aho Matua; $8 million to realign kura transport assistance, which has been capped since 1995; $60 million to build new kura kaupapa Māori; $17 million to allow an additional 20 schools to participate in the Te Kotahitanga teacher training programme, which is training in cultural competencies; and $6.5 million for family-based literacy programmes in all decile 1, 2, and 3 schools.
I have heard various reports over the last few weeks from Labour list MP Mr Davis, who wants to promote education as part of a successful Māori future, and from former MP Mr Harawira, who speaks of his dream that every child will be able to read, write, and count. The Māori Party has far greater aspirations for all our tamariki. We are not just talking about wanting them to be successful; we are putting in place interventions so that they are. We are working with teachers to improve cultural competency. We are addressing transport barriers. We are supporting whānau to upskill in literacy. We are actively engaging with iwi. We are placing emphasis on te reo Māori. We are developing priorities that are designed to make education meaningful and relevant to all Māori children and young people. And we are doing those things by working with the Government, by exercising our leverage to ensure progress.
Finally, I commend the Hon Dr Pita Sharples, the Minister of Māori Affairs, for the investments outlined in the Māori affairs appropriation to provide integrated whānau social assistance. This appropriation has been responsible for the provision of Kaitoko Whānau. There are 50 workers nationwide who work with all members of the whānau to support them to access proper support, to advocate for their needs, and to ensure that as a whānau they are all moving forward together. Ōranga Whānau involves placing kuia into communities to work with new parents to give them support and guidance on being good parents and to raise happy, healthy tamariki. We have developed a very successful Māra Kai programme. We have funded over 450 māra kai nationwide to support whānau to grow their own kai and rebuild community connections at a time when money is tight. This is about community resilience. And, of course, there is Whānau Ora.
There is so much that could be described that emerges from having a relationship with Government. If anything, this update reminds us just how important it is to place the issues before the decision makers and the funders if we really want our aspirations to be achieved.
PESETA SAM LOTU-IIGA (National—Maungakiekie) : Thank you for the opportunity to speak on the Imprest Supply (First for 2011/12) Bill as well as the Appropriation (2010/11 Supplementary Estimates) Bill for this financial year. It is an honour to speak in this Parliament. Before I begin, I congratulate the Prime Minister on his address to the Australian Parliament yesterday. It was a historic speech: the first time the leader of this country has addressed the Australian Parliament, and the eighth time a foreign leader has spoken to the Australian Parliament.
One of the reasons why this National Government is delivering on its promises is because of its leadership. It is leadership not just from the Prime Minister but also from the Minister of Finance. It is about the economic plan that this National Government set out when it first took office in November 2008. It is an economic plan that relies on the tax system being streamlined and made more effective in order to allow New Zealanders who are out there working and saving to keep more of their real income. Real income after tax has never been better for New Zealanders than since this Government took office 2½ years ago.
Some of the other points made this afternoon are ones I would certainly like to reinforce in my speech. There was one about regulations. Under the Clark Labour Government regulations, red tape, and bureaucracy increased dramatically. I attended and spoke to the small-business conference last year with the honourable member Ross Robertson, and the one thing that small-business owners tell me in my electorate of Maungakiekie, and they also told me at this conference, was that red tape and regulations had got out of control for small businesses. That is what this Government has addressed in its 2½ years. It has addressed and cut red tape, and the Hon Rodney Hide has introduced legislation to deal with regulations, which is currently before the Commerce Committee. That is the type of regulation-cutting exercise that this Government is becoming more and more well known for.
In these financial hard times the Government has been committed to infrastructure spending. This Budget has demonstrated that commitment not just to build roads but also to build on our plan in relation to broadband delivery, the building of schools, the building of roads, and the building of hospitals. We all know—even the Labour Opposition would concede—that infrastructure spend is the type of spending long term that will increase our economic growth rates, increase productivity in this country, and provide better jobs and opportunities for our communities. So infrastructure is one of the key cornerstones that this National Government has put in place around its economic plan.
It is also about innovation and trade. We know that the Minister of Trade, the Hon Tim Groser, has been one of the hardest-working Ministers, negotiating free-trade agreements throughout the world. That has resulted in increased exports, and we heard this afternoon that the current account is in surplus for the first time in many years.
Hon Maryan Street: He hasn’t done one of his own yet.
PESETA SAM LOTU-IIGA: I ask the member Maryan Street what happened under the Labour Government when we had 5 consecutive years of export contraction. I will repeat that for the member: we had 5 consecutive years of export contraction. That was because under Labour, Government spending and growth in the Government sector crowded out private sector investment, crowded out exports, and crowded out this economy, which had been travelling so well throughout the 1990s under the National Government.
This Budget is also about Government services and making more effective savings in Government bureaucracy. We estimate that in the next 3 or 4 years we will get savings of just under a billion dollars. Let me emphasise that: savings of just under a billion dollars in Government services that had become so bloated under the Labour Government that they had expanded threefold. This Budget is not only about making Government services more effective but also about delivering more services to the front line. Let me just elaborate on how we are delivering those services to the front line. In 2008 we campaigned on bringing about more effective services in the front line, so it was about more nurses and it was about more police. We have seen that in South Auckland. We have seen what more police on the streets in South Auckland has done to crime rates in that area. We have seen the impact on our communities in South Auckland. People feel safer, and people feel more secure in their living environments and in their working environments. That is what front-line services and an increase in Government spending on the front line deliver to our communities.
It is also about education. In the last 2½ years this Government has stood for national standards. It has stood for standards in education whereby children and their parents understand what standards are required. If children do not achieve those standards, then the types of learning environments and resources that will be required to meet the standards expected of our children throughout this country—national standards, skills, training, and the like—will be very much part of this Government’s agenda in order to not only expand our economy but also to provide for our children going forward.
In terms of infrastructure spend, this Government, as I have already said, has put a vast amount of money into ultra-fast broadband: $942 million will complete the Government’s funding commitment, and $28 million will connect fibre to schools across the country. We have also seen in health and education the type of spending that will be more effective on the front line. We are looking at $18 million for 40 extra medical training places. We also have a bonding system whereby our young, our bright, and those who have recently graduated in nursing and medicine are better able to stay within the country rather than go overseas. That is the sort of bonding where they can realise their potential within our work environment in New Zealand.
Schools have had an increase in operational and capital expenditure over the last 3 years. I am particularly proud of our National Government for spending $550 million for early childhood education, particularly focused on those children who do not access early childhood education. We are talking specifically here about Māori, we are talking specifically here about Pasifika children, and we are talking specifically about those high-needs children who do not have that chance in life, that start to life that is so important in early childhood education. This Government is supporting the construction of many early childhood centres in those high-needs areas. I attended one such opening with the Minister of Pacific Island Affairs, the Hon Georgina te Heuheu. It was in Māngere, the place where I grew up in South Auckland. We saw the delight and the joy in the children’s eyes and in their parents’ eyes when they felt that their needs were being met through funding for their early childhood centres not just to get early childhood education but also language education in their respective Pacific languages, and that is a victory for this Government. It is a victory for those who are in high-needs areas.
I reiterate that this Government has a plan, and it is a plan that is about promoting jobs and opportunities. It is about promoting our front-line services. It is about having education and skills training in place in order for our youth to be better promoted into jobs and opportunities. It is about infrastructure spend and the long-term goals around economic prosperity and economic growth, which the Labour Party sadly does not understand. I support, obviously, this Budget. It is one that in these straitened, difficult times is prudent but which also invests in the future.
STUART NASH (Labour) : I must admit, the last speaker, Peseta Sam Lotu-Iiga, made some points that demand a reply. Firstly, that speaker talked about a spend in infrastructure. I can inform him that $71 million was allocated by the Labour Government to the Hawke’s Bay infrastructure build. What happened there? Mr Joyce summoned the chair of the regional council, Alan Dick, a past mayor and a very good man, to Wellington and told him that $71 million was being sucked out of Hawke’s Bay. This money was raised in the Bay, raised by the people of Napier, and raised by Mr Foss’ constituents in Hastings, only to be taken away—$71 million. How is that a spend in infrastructure?
The last speaker also talked about the spend in early childhood education. I would like that speaker to come with me and visit the Napier Kindergarten Association. I would like him to explain to the chief executive officer of that association that cutting $570,000 a year out of the budget of the Napier Kindergarten Association is a good move. If that is progress, then I will be damned. If that is good for the young people of New Zealand, then goodness me! Cutting $570,000 a year from the Napier Kindergarten Association budget is an absolute disgrace—it is a disgrace.
The other thing I will say is that the Māori Party member Rahui Katene has an absolute nerve standing up and saying that being aligned with National is good for Māori. How does that member justify an increase in GST to 15 percent, which all the statistics have proven hurt the most vulnerable in society—the most vulnerable? We all know that the shame of this country is that Māori are overrepresented in a lot of those statistics. The Māori Party member stands up and says they have done a lot of good stuff for Māori. I ask her to come to Maraenui in the Napier electorate and tell the people there what a wonderful thing the emissions trading scheme has been for them. They will shake their heads. They do not give a damn about the emissions trading scheme. They give a damn about the 20 percent increase in the price of fresh fruit and vegetables. They give a damn about the guts being ripped out of early childhood education in the Bay.
The Māori Party’s aligning with National has been an absolute disgrace, and that is one of the reasons why Hone, the “Mad Bugger”, left that party. Kelvin Davis knows, and that is why on Saturday he will be returned as the member of Parliament for Te Tai Tokerau. He is up there speaking the truth and representing Māori interests. Māori will finally realise that the only party that works hard for Māori is the New Zealand Labour Party. The New Zealand Labour Party has always been the party that works hard for Māori, and it will continue to be. On 27 November, when the Labour Government gathers, we will hold all the Māori seats, and that member knows it. I hope that member has her CV prepared, because she will need it.
I will make only three other points. This is a Government without an economic plan. The previous speaker stood up and said that there is a plan, but everything that Government has put forward either is destructive or rips wealth out of the guts of New Zealand. The first plan was to mine national parks. Gerry Brownlee stood up and said the Government was going to mine national parks. What happened? The people of New Zealand marched. There were no ads; they just marched. Through Twitter and Facebook they got together, and Gerry sat there looking more red-faced than normal because he was hugely embarrassed by such a gaffe: the mining of one of New Zealand’s true global competitive advantages—digging it up and destroying it. They call that a plan!
What was the next plan? The next plan was to give massive tax cuts to the very wealthy. Someone earning $1 million a year got $1,000 a week. Yet someone on the median wage in Napier got about five bucks a week. Let us remember that the cost of fresh fruit and veges has gone up by 20 percent. Someone on the median wage in Napier got five bucks a week. Someone on the average wage is struggling to pay the bills, and 75 percent of New Zealanders earn below the average wage. Yet someone who earns $1 million a year gets $1,000 a week. How is that fair at all? It is simply not fair.
The massive tax cuts have increased inequality in this country to levels that I thought, and certainly our forebears thought, could never exist. With inequality comes poverty, and poverty steals dreams. This Government talks about aspiration, but delivers the complete opposite. The thing that surprises me is that Economics 101, Keynesian economics—and Sam would have studied this at Cambridge University—says that in times of recession we give money to those who really need it and will spend it, because that stimulates demand. If we give money to those at the top end, all they do is retire debt or save it. When the economy is booming, that is not a bad outcome. But when it is in recession, it is the last thing we want. The Government needs to stimulate demand, yet it has done the complete opposite. I ask Sam whether they taught him that at Cambridge University. They must have. And John Boscawen knows that.
Peseta Sam Lotu-Iiga: Milton Friedman.
STUART NASH: That says it all. He has finally admitted it. Milton Friedman—the economic theories of the 1990s, of Thatcher and Reagan. The last time I heard that was when Jami-Lee Ross mentioned Thatcher and Reagan in the same sentence as his heroes. That is what National represents. Goodness me! That was a scary speech.
The next plan was to sell it: if it is not screwed down, let us screw it anyway and sell it! All we ask for is just a little honesty. When the Government talks about the mixed-ownership model, it should just call it what John Key called it: State asset sales. That is what he said: State asset sales. Let us be honest about this. Do not tell people that the shares will go to ma and pa investors, because we know that is not the truth. Members opposite know that is not the truth. We have one precedent: Contact Energy shares. Eighty percent of Contact Energy shares are owned by 0.1 percent of investors, and that is what will happen when that Government sells State assets. But the Government will not do that. It will not be around. Mr English and Mr Key say we should take that policy out to the public, and we are. The people of New Zealand cannot stand it; they hate it.
Another policy is to rip the guts out of KiwiSaver. Politicians told New Zealanders to save. We said that they needed to save. But these politicians say that people do not need to save, so they will take it away from them. No wonder the people of New Zealand are disillusioned with that Government. It is unbelievable.
What about research and development? The Government talks about innovation but the first thing it did was to go against the advice of Treasury and advice from its own Minister of Revenue and cut research and development. Then it cut Labour’s Fast Forward Fund, which was $1 billion set aside for innovation, and set up the Primary Growth Partnership. If we look in the supplementary estimates, we see that the Government did not spend anything. There was a $35 million underspend. Mr Joyce talks about broadband. The Māori Party talks about broadband. Well, if we look in the estimates we see that they underspent by $115 million. They have not delivered anything. This Government talks but does not walk. It talks but it does not walk that talk, and it is a shame and a disgrace; there is no doubt about that.
But people of New Zealand do not need to worry, because Labour has a plan. We will invest in innovation, we will bring back our research and development tax credit, and we will provide relief for the families of New Zealand who are struggling to pay their bills. We will have a tax system that is fair and that will ensure that everyone pays their fair share. Do members know what we will do? We will remove the GST from fresh fruit and vegetables, because we know that healthy lifestyle options are vital if we are to grow as a nation.
I reiterate only three things. Firstly, that is a Government without a solid, positive plan to grow this nation. Secondly, Labour has a plan. We will roll it out for the people of New Zealand to see, and there will be only one choice for every voter.
The ASSISTANT SPEAKER (Eric Roy): The member’s time has expired.
Hon TAU HENARE (National) : The previous speaker, Stuart Nash, is the brains trust of Labour. He is the new leadership of Labour. We are less than 6 months away from a general election, and Labour puts him up. We are less than 6 months away from the most important election that Labour members will ever fight in their lives, and they put him up.
He talked about the plan. I will read out to that member what the plan has been, and will be, going into and going past 26 November: “For the past three years the National-led Government has provided the responsible economic management that New Zealand was in such need of after nine years of Labour. When we took the reins of office the financial crisis had reached its peak and the New Zealand economy, which had gone into recession before anyone else, had shrunk three percent in a year, topping off five years of historically low growth. Exports had flattened out completely, government spending was out of control and the Treasury books showed never-ending budget deficits and Government debt spiralling out to 60 percent of GDP and beyond.”
I can go on and on about what we were faced with when we took over, but I want to read what the media and the people of this great land have been talking about.
Phil Twyford: Talk about the rates.
Hon TAU HENARE: Let us talk about the rates. That is right: let us talk about the west Auckland rates that Mr Twyford’s mates Bob Harvey and Penny Hulse have ratcheted up over the last 15 years. They made it impossible for businesses to work in west Auckland. In fact, they raised rates so high that they were subsidising everybody else. But I digress.
Here is what the Gisborne Herald editorial said on 20 May about the Budget: “The majority will appreciate the belt-tightening in a response to tough economic times and the scale of the Christchurch earthquakes—and the fact a government is not trying to bribe us with our own money in election year.” That refers to the complete bribe from the last Government on student loans. Just weeks out from the election, it came up with that doozy of a bribe. “National has delivered a reasonable Budget for the times,” said the Gisborne Herald.
The Waikato Times editorial of 25 May 2011 stated: “Labour Party leader Phil Goff is on the wrong track when he says he hopes to create up to $22 billion a year in new business by restoring tax credits to reward R&D.” When Phil Goff was asked about the detail, what did he say? He said to go and ask somebody else, to go and ask the policy guys, because they knew more about it than he did.
The Nelson Mail opinion article on 24 May said: “the Department of Labour estimates the $2 an hour hike to the lowest adult pay rate would carry the significant cost of 6,000 jobs. At a time when the economy is in desperate need of greater productivity, the apparent downside in a lift of this magnitude—no matter how just it might be—are obvious.” Labour members love to pin their election promises on raising the minimum wage to $15 an hour. They took a bus around the country to talk about GST. I asked the Leader of the Opposition whether he would cut back GST. He did not have an answer. He said we would have to wait and see.
Michael Woodhouse: What did the bus say? “Axe the Tax”.
Hon TAU HENARE: Labour was trying to dupe the rest of the nation into believing that Labour would axe the tax. But now we do not know whether it will.
It is pretty plain from all of the Treasury documents about the Budget that we are going to enter into a period of good times for this country. As I have said on many occasions in this House in the last couple of weeks—
Phil Twyford: Hope and pray.
Hon TAU HENARE: It is not about hoping and praying; it is actually about being back in black in 2014.
I just want to say something to Mr Twyford. It was pouring with rain on a wee Sunday afternoon, and most west Aucklanders were taking their rubbish out. But Mr Twyford was trying to figure out into which letterbox in our street he should put the only Labour paraphernalia that he had. I went out there, said hello to Mr Twyford, and checked my letterbox. There was nothing in it—there was nothing in it. I thought I would go next door to check that letterbox. This is not illegal, because it is my mother-in-law’s letterbox. There was no Labour paraphernalia in that letterbox either. So as it poured down with rain, I went to check the other neighbour’s letterbox; it just happens to be my brother-in-law’s. There was nothing in the letterbox. I saw that out of 50-odd letterboxes Mr Twyford put only one pamphlet in one letterbox, and even then he had trouble finding the number. Again I digress, because it was so much fun watching Mr Twyford in his little raincoat, running around hopefully, trying to get some more votes. Not in my street, he will not—not in my street, he will not. They are a class act out in west Auckland.
I say that by 2014 we will be back in black. Not only will we have already won the Rugby World Cup but we will be back in black—so much so that over that period 170,000 jobs will be created. Who can turn their heads and pooh-pooh the idea of 170,000 extra jobs in our country at a time when we really need our economy to go ahead? Quite frankly—and I do not want to sound arrogant—the planets are all aligning. The stars are there—
Hon Maryan Street: Back to Destiny Church for you.
Hon TAU HENARE: I must admit that I enjoyed my time at Destiny Church, and I am just waiting for the blessing to kick in, hopefully before 26 November. But I tell members that we do not rely on the blessings of anybody. We rely on good, hard, honest work by good, hard, honest Kiwis who want to see our country go ahead. Given what we have had to put up with over the last 2½ years in terms of natural disasters and the worldwide economic downturn, I think we have done pretty damned good—pretty damned good. We are looking at some good times just round the corner. That is why we have had to make some hard calls, which the Opposition will never ever get. Thank you, Mr Assistant Speaker Roy, for listening so diligently.
Hon MARYAN STREET (Labour) : National had 9 years in Opposition to come up with a decent plan for lifting our economy and driving it ahead into the future. It had 9 years to come up with a prescription that might have been innovative and might have given members opposite something to talk about. As it is, National members have nothing to say, so we are getting cliché upon cliché. Peseta Sam Lotu-Iiga gave a speech that was so full of clichés and so lacking in substance that it was an embarrassment. What we have from this Government is a vacuum where its economic policy ought to be—a complete vacuum. After 9 years of sitting around with nothing better to do except think up how National might run the country if it was given the opportunity to do so, it cannot come up with anything other than the same old prescription—the same old failed policies—of the 1990s: sell State assets, drive wages down, provide tax cuts for the wealthy, then hope and pray. We have had nothing new in this Budget or in the supplementary estimates, which is, after all, the thing under discussion at the moment.
We have not had one new idea out of this Government on which we could base some hope for the future. A cycleway does not count. It does not cut it, especially if people live in Nelson and the cycleway is designed to go round the latest open-cast mine on Dun Mountain, which is excavating more fossil fuels. Are people meant to be attracted to cycling round such a thing? In the time National has been in power, and even for the 9 years before that when it had time to think up policies, it has not come up with anything remotely credible or usable to underpin the future direction for our economy and for New Zealanders.
I will now talk about asset sales. This is one of those poverty-stricken ideas that this Government has put up, pretending to go to the country on 26 November seeking a mandate for asset sales, when in fact all the apparatus for the selling off of State-owned enterprises is being put in place now. Regardless of the fact that the Government does not yet have a mandate from New Zealanders for that purpose, it is going ahead. But it is a major con. Every family knows that if we hock off the family silver, we can do it only once.
Hon Members: Oh!
Hon MARYAN STREET: This may be a source of ennui to members opposite, but everybody in New Zealand understands it, which is why the policy is disapproved of two to one by New Zealanders. This Government would have people believe that mums and dads will be able to buy a share in State-owned enterprises that they already own. When those assets are sold, there will be no more dividends.
Let us have a look at some of the figures relating to these assets. For example, the four State-owned energy companies returned $732 million to the Crown last year. Those were the dividends to the Crown: $732 million from the four State-owned energy companies that this Government intends to sell. What could we get for that sum of money? We could get over 10,000 teachers, 12,000 police officers, 33,000 hip replacements, or nearly 70,000 university placements. We could get a lot with that money, so why would we sell lucrative State-owned assets, when they will inevitably go into foreign ownership? Why would we sell those assets when they are good earners, and when those dividends can be placed into interests that benefit New Zealanders?
The Acting Secretary to the Treasury said that the growth forecasts in the Budget are too optimistic. It is part of the con of this Government to say that good times are just round the corner. We just heard the previous speaker, Tau Henare, say that.
On top of that, National says that a way to get there is for every New Zealand family to come up with $4,000 in order to buy some shares in State-owned assets, which they already own as taxpayers. Where will people get that money from? When I look at the families who are struggling to get by in Nelson, and there are many of them—Nick Smith does not talk to them, but I do—I see that they are not the mums and dads who can afford to buy shares in a State-owned enterprise. They cannot afford to buy those shares.
Hon Dr Wayne Mapp: Their KiwiSaver. What do you think they’re saving into their KiwiSaver?
Hon MARYAN STREET: If they are contributing to KiwiSaver, as the member opposite interjects, that is as much as they can do, and it would be better if they were saving into that scheme. Why should they have to pay twice for an asset that they already own as taxpayers? Those assets are already earning money for them and for the Government to put into things that benefit Kiwi families more.
The other area where there is clearly a lack of a plan and a lack of anything substantial from this Government is in the area of jobs: job creation, job security, and higher wages. In fact the latest idea that the Government has come up with is to lower wages for young people. That is not a plan for economic recovery; that is a plan to displace older people from a very tight labour market. That is not a plan to increase skills, or to put young people on a firm footing for training, higher skills, and, inevitably, higher wages over time. This idea to lower wages instead of increase them beggars belief. How can it possibly be useful to the New Zealand economy? Has National given up on the idea of matching Australia? This takes us way backwards. It takes us backwards. It does not promote growth; it promotes displacing one older worker with a younger worker, when, in fact, the answer lies in more training and more apprenticeships in the first instance.
When Labour left office, we had 14,500 young people either having gone through or in the middle of Modern Apprenticeships—14,500. What did National do, as usual, when it came into Government? It cut Modern Apprenticeships. Employers did not appreciate it. Young people did not appreciate it. We have an escalation in youth unemployment as a result. Now this Government wants to trumpet the fact that it has more people in tertiary institutions. I am sorry, but they are not new places that this Government is paying for. They are places that the institutions were already carrying anyway, so let us not have any skiting on that score.
Having had 9 years to work out a prescription for pulling this economy through a difficult time, the Government has come up with nothing of any consequence or value. Thank you.
AARON GILMORE (National) : It is an absolute pleasure to stand and speak on the imprest supply debate and Appropriation Bill. We heard from the previous speaker, Maryan Street, and her speech just points out the problems that the Labour Party has. That prior speaker sits on the front bench of the Labour Party, and one would think those members would know something about basic economics. What we heard from that speaker was that in Nelson, apparently no one likes bikes and no one wants to use the cycleway. What we heard from that speaker is that those members do not understand that the coal that is mined on the West Coast is actually used to make steel overseas. It is not burned in power stations. As a former spokesperson, I understand, on the environment, one would think that member would know that.
You see, the problem we have with the Labour Party is that it does not know what it really wants. We heard from Stuart Nash earlier. Mr Nash is the inventor of the so-called great revenue tax—not the extra tax on profits but the revenue tax that the Labour Party came up with. He said we do not have a plan. I can tell that member that we have a wonderful plan. It is about getting our debt under control, about investing in our future, about investing in Canterbury, which has been broken, as my colleagues Amy Adams and Rahui Katene pointed out, and about jobs and putting in place 170,000 new jobs across the country. I can tell members that I was in Christchurch on Saturday and I picked up the Press. In the jobs section of the Press there were 22 pages of jobs—22 pages. Do members know how many pages of jobs there were in the Dominion Post? There were 4 pages. The reason is that we are about growing the economy in the real park, not in the public sector bureaucracy here in Wellington. We are about getting jobs where it matters, and those are the jobs that create sustainable growth and incomes for people. We actually looked—
Phil Twyford: Where are they, then?
AARON GILMORE: I tell Mr Twyford that he might need a job in a few months. There are plenty of jobs in Christchurch, so he should come down and we will give him a job. I could even give him a job working the back of a shovel. Maybe that member might learn a bit from that once or twice.
We have a situation where, yes, we will have a record deficit this year. We will have the biggest deficit New Zealand has ever seen, but it will halve next year and it will halve again the year after. The year after that, we will be in surplus. Under Labour we would have another $5 billion a year being borrowed—the borrow-and-hope strategy. Labour members do not understand even basic economics. They seem to be in Stuart Nash’s world, stuck in the 1920s. If we can borrow a huge amount of money and spend it on stuff, it will all come right. That seems to me absolute lunacy.
We have talked a bit about Canterbury. My area of Christchurch in particular in the north and east of the city has been terribly affected by coming up to 9,000 earthquakes in recent times. I was horrified by what we saw last Monday, standing there and going through some of the processes, and seeing the damage. I spent most of Friday and Saturday up to my knees in muck, digging out my parents’ house for the third time. That was quite devastating to go through.
This Government has committed $8.8 billion of Government money to the rebuild of Canterbury. It is important that it is a Canterbury rebuild, not a Christchurch rebuild.
There has been a lot of information discussed about where that money will be spent. I want to talk a little bit about the $5.5 billion that will be spent—not the $3.3 billion from ACC and the Earthquake Commission, but the $5.5 billion. It is quite critical. Of that $5.5 billion, $1.1 billion will be spent on rebuilding all the local body infrastructure—the roads, the power supply, and the water supply—which provides the infrastructure to everybody’s homes. I was very happy yesterday when the water supply in Christchurch became drinkable again for the first time in over a week. That was a very good step forward. The fact that we could not drink our water for a week was actually a hard and difficult thing for us to go through. The water supply is back on, but it is critically damaged and needs a lot of work.
Our sewer systems are critically damaged and they need millions spent on them—maybe hundreds of millions, I do not know. From the last count, there are about 20,000 homes in Christchurch that still cannot flush their toilets. The Government is putting significant amounts of money in the Budget to allow that to be fixed, and I think that is a good thing.
In addition, there are many broken schools in Christchurch. Many of the schools on my side of town, including the schools my children go to, had raw sewage flowing through them for 3 days following the earthquake we had on Monday. Fixing that costs money, and that money has been allocated in this Budget. We have high schools on my side of town that have been ruined beyond repair. One of them in particular is a high school called Avonside Girls’ High School, which has 1,200 girls who used to attend that school. That school is in very serious danger of never operating again on that site. There is $85 million allocated in the Budget to repair the schools that exist in Canterbury, and I think that is an admirable step forward.
There is also an additional about $500 million of contingency funding that has been put forward in the Budget for the recapitalisation or the potential recapitalisation of AMI Insurance. That might not mean anything for those people who have insurance with other companies, but the about 40 percent of Cantabrians, of whom I am one, who have their insurance with AMI are very concerned about the stability of the payouts they may receive following the earthquakes. This Government has put forward $500 million in its Budget to make sure that AMI is covered, and I think that is a good step forward.
We are quite concerned about some of the issues at some of the insurance companies and their behaviour. I personally have had some issues with local insurance companies. I will not name them here today, but many of the insurance companies in New Zealand need to pull up their socks and be a bit smarter, at best—and words I cannot use in this House, at worst—about how they should operate with the claims they are dealing with in Canterbury. We have somewhere in the region of 300,000 insurance claims that need to be dealt with, and $5.5 billion to be spent on that. But there is about $3.2 billion that has not yet been allocated in the Budget. One thing I have been surprised about is why, with all the hoo-ha we hear from Labour members, they have not asked where that $3.2 billion will be spent. It looks like a giant slush fund. Some people will say, well, maybe it is, because it is unallocated expenditure. I have never seen in this House anyone find out how a $3.2 billion unallocated slush fund will be spent. It is not exactly a slush fund; it is to be spent on things we do not yet know about. There is $3.2 billion to be spent on things we do not yet know about. Some of that is to be spent on remediating buildings and properties over and above the requirements of the Earthquake Commission. The Earthquake Commission has $3.3 billion, but there is another $3.2 billion that exists in the Budget numbers to spend on remediating land over and above the Earthquake Commission’s requirements. So I say to people who might be listening today in Christchurch that there is plenty of money there to make sure their homes and properties are repaired. The Government has allocated sufficient funds to make sure those people and their loved ones are safe and their homes are properly repaired and brought back to where they were.
I now want to talk a little bit about something else, something a bit different. That is the incompetence of the Labour Party. You see, in the last week we have had voodoo economics with those members talking about how they will fund things. They have talked about our tax cuts and how outrageous they are. Well, those members do not seem to remember that it was not just a drop in income taxes that resulted; we also put up the taxes on those dodgy property developers and speculators who exist in the place. Labour seems to forget that. Those property speculators are now paying hundreds of millions of dollars extra when under Labour they were getting away scot free. We care about making sure there is a balance in the tax system, and that is why we are making sure those property speculators and developers are paying their fair share. That is why we put up a change to make sure the international, multinational corporates are paying their fair share. It is not quite as simple as the Labour Party seems to think. Yes, income taxes have dropped, but many others are paying more and more. The Labour Party seems to be remiss in understanding those differences that exist.
I want to finally finish with a couple of extra comments that my colleague Tau Henare mentioned. Following the Budget, we had some interesting comments from two groups that I want to touch on. One was from the Salvation Army. It is not necessarily a good friend of the National Party all the time, but Major Campbell Roberts of the Salvation Army said: “we are relieved the Government hasn’t taken the opportunity … to prune social welfare. It shows that a centre-right Government can be fiscally prudent without gutting welfare.” That is the nature of a National Government. Age Concern’s National President, Liz Baxendine, said: “Older people are especially concerned about health care and this sector appears to have done well in this year’s Budget … Minister Tony Ryall says he’s committed to protecting and growing our public health services and we welcome that assurance.” This Government is investing more in those things that matter, not in those things that do not. That has to be welcomed and, given the polls we are seeing, the people of New Zealand up and down the country are wholly welcoming it. That has to be a good thing. Thank you very much.
MICHAEL WOODHOUSE (National) : As some members know, I am the head of a parliamentary liaison friendship group with Arthritis New Zealand. Last week at a breakfast meeting of that organisation there was the release of a document entitled New treatments for arthritis: Assessing their values in human terms. I sat through some amazing stories that patients had shared about how some of the new drugs that are now available have changed their lives. It was really, really appropriate that those drugs, which were initially funded under Labour but for which access has been significantly widened under this Government, have absolutely transformed their lives. So I was delighted by recent announcements by the Minister of Health that access to those drugs will be widened even further. Not only that; thanks to this Budget and the last two Budgets, Pharmac has been able to fund 52 new medicines—52 new medicines—and increase access to another 51 medicines. All of this has been possible because the combined pharmaceutical budget for 2011-12 is now $770 million, which is more than 9 percent up on last year. That is really consistent with the approach that this Government has taken to funding Vote Health and to funding what is important to New Zealanders.
What is important to New Zealanders is not policy analysts, not funding and planning managers, and not the plethora of back-office staff that grew like mushrooms under the previous Government in the health sector alone; what is important is more medicine, more surgery, faster radiation treatment, shorter stays in the emergency department, and better vaccination rates. All of those things are already having a marked impact on the health of New Zealanders.
But warmer homes are also important. To all the members on the other side who accuse this Government of not doing enough for public health and health promotion, I say they should go and talk to the residents of the 180,000 houses that have been insulated under the Warm Up New Zealand: Heat Smart initiative. Several hundred million dollars—
Hon Steve Chadwick: We know; we started insulation programmes.
MICHAEL WOODHOUSE: The member says she started it. Labour talked a good game, and I want to compare that with Labour’s promise during the 2008 election campaign with the Greens to invest a billion dollars in home insulation. That billion dollars was invested over 15 years, which is less than $40 million per annum in real terms. In just over 2 years this Government has invested over $400 million in real terms. So I am very happy to debate with Miss Chadwick or any other member on the other side about the quality and the quantity of the programme. That party talks; this Government delivers, and it delivers exponentially greater numbers of insulated houses. The public of New Zealand know that, because that is compassionate conservatism. That is what a responsible Government does in straightened times.
I shall talk about another area of significantly increased funding, because I think this area holds the key to the difference between theleft and the right. It is in respect of our rail infrastructure. It is true that on a point of principle National did not support the buy-back of our rail network, and it certainly did not support the previous Government paying a price that was between a quarter of a billion and half a billion dollars more than the fair value of that organisation, but we have it, and the National Government has committed billions of dollars of taxpayer funds, both operational and capital, as part of the turn-round plan for KiwiRail. Regardless of whether the taxpayers support that investment, they expect every ounce of value to be extracted from the investment, which is not something that can historically be said has been done with our rail services.
Some of that investment was for the electrification of Auckland rail and some of it was for rolling stock. Two weeks ago KiwiRail made some announcements about reductions in staff at the Hillside railway workshops and the Hutt Railway Workshops. Of course, that was met with quite a bit of disappointment and anger, and the member Ms Curran last week challenged me to say where I was on this issue. I am very happy to do that, because she knows where I am on this issue. She and I have been part of a working-group that was set up in Dunedin some 18 months ago to look at the opportunities that might be presented by the amount of money that the Government was investing in rail—in particular, in the electrification and the electric multiple units, the electric trains, that were being tendered for.
It quickly became apparent that Hillside did not have the necessary skills to build those carriages as a lead tenderer, and the focus of that group was to try to negotiate with, and present Dunedin in its best light to, the potential tenderers, which happened not to come from China, I have to say. The other big option was for the several thousand flat-deck wagons that are required to increase the rolling stock. Hillside did tender for them and it came third. That was extremely disappointing. We heard from members on the other side that the Government should immediately leap to rail’s aid and do something about it. Those members were not specific about how we should do that, whether it would be by a subsidy or by a tariff. Regardless of that, it would be a return to the bad old days when price, quality, and timeliness were not of paramount importance.
I am not so full of doom and gloom as Ms Curran is about the future for Hillside railway workshops, because I think they very much have a part to play in the future manufacturing infrastructure for Dunedin. If Ms Curran continues to walk around with the dark cloud over her head as she has over the last couple of years, much less couple of weeks, then one would perceive that the Hillside railway workshops do not have a future. I certainly do not believe that, and I certainly do not believe that a free-trade agreement that was put in place by the previous Labour Government and signed off by this Government with a country with which we now have bilateral trade of several billion dollars should be put at risk by the sorts of protectionism that some in this House would have the Government wrap around those industries. This is about quality and value for money. I am very encouraged to see that the members on the other side are agreeing with me, because plenty of other colleagues in that party do not.
Phil Twyford: Modern procurement policies.
MICHAEL WOODHOUSE: Let us talk about procurement policies, because we do have a comparison with the previous Labour Government in so far as the loan that was extended to the Wellington Regional Council for the Matangi tender, the electric trains for Wellington. I am really interested in the expectations on that purchaser, the Wellington Regional Council, when it was lent money by the Labour Government. Do members know what those expectations were? Nothing. Not a single expectation was placed. But there was the then Labour Minister of Transport at the signing ceremony saying what a fantastic thing this was. No one from the unions was complaining. No one from the unions at that time was asking where the jobs for Kiwis were and why the then Government did not pay a bit more to get the jobs. The Hutt Railway Workshops was only a stone’s throw away.
I find it remarkably inconsistent that Labour members are now lions in Opposition. They are roaring about the benefit of Kiwi jobs and protecting their union mates. I know those union people and I know that the Hutt Railway Workshops deliver a damn good product and would be horrified to think that it would need Government assistance to prop it up in the future. There is a future for the Hillside railway workshops and for the Hutt Railway Workshops, and I am very, very encouraged by the sorts of noises that are being made, except perhaps by the member for Dunedin South. It is job growth, is it not? I do not know how many times I have heard members on the other side of the House ask where the jobs are—170,000 jobs. I will tell those members—
Clare Curran: Go and tell them what you really think.
MICHAEL WOODHOUSE: I have just explained what I think, which is that this is about value for money.
Clare Curran: Go down to the meeting tomorrow night and tell them face to face.
MICHAEL WOODHOUSE: Actually, members on this side of the House do not keep running to their union mates when things go bad. We have laws to pass and a Government to be part of. I am sorry I will not be there. I would be very happy to do that, but I will not leave this House to go and say what I have already said. I am sure Ms Curran will be able to articulate that—as well as she has over the last couple of weeks, at least. There are jobs to be had, there are opportunities to be taken—
Clare Curran: Where?
MICHAEL WOODHOUSE: See, there it is. The member asks: “Where?”. Well, there has been a little matter of an earthquake and there is about $9 billion to be spent in that city alone over the next 2 years.
Mr DEPUTY SPEAKER: That is a very unparliamentary comment to make. I ask the member to withdraw and apologise for that.
CLARE CURRAN: I withdraw and apologise. What we would like to hear from the member Michael Woodhouse, a National list member who lives in Dunedin, is that he will go to Dunedin and tell the people who work at the Hillside railway workshops what he thinks.
Michael Woodhouse has sat around the table for 18 months, telling the workers, the union, the Dunedin City Council, and the chamber of commerce how much he supports Hillside, but now we hear basically a story of collusion. It is about how to construct a story—that was what we hear from that side of the House—that would paint the work that is done by the workers at the Hillside and Woburn workshops in rail engineering as being somehow unaffordable. Michael Woodhouse said they could not meet the requirements in terms of price, quality, and timeliness. Yet I have heard him say, face to face at those meetings, how much he believes that that workforce and the rail engineering business can deliver. Now we hear today that he does not believe they can deliver.
Well, that is the fraud of this, and that—
Michael Woodhouse: I raise a point of order, Mr Speaker. The member may not have said it, but it is very clear from her earlier comments at whom that comment was directed. I would again ask that she withdraw and apologise.
Mr DEPUTY SPEAKER: I just caution the member who is speaking that these terms can cause concern to members of the House. I ask that in future she bears that in mind.
CLARE CURRAN: Forty-one skilled jobs are being lost at Hillside right now, because of the Government’s lack of investment in its own workforce and in its own nation. Instead, it wants to purchase rail from outside New Zealand for the lowest cost and of doubtful quality and doubtful timeliness. I spoke of collusion, because a story is being developed to make out that the workers at Hillside cannot produce the product, when we know that they can. And that member, a National list member who happens to live in Dunedin, knows that, too. Those 41 jobs, 41 families, and 41 incomes will be lost to Dunedin.
We heard again in question time today from the Prime Minister that 170,000 jobs will miraculously be produced in this country in the next 4 years. He cannot say where they are coming from. None of the Ministers whom I have seen come before the Commerce Committee, which I sit on, have been able to say where the jobs are coming from. They include David Carter, who is the Acting Minister for Economic Development. He was asked specifically what analysis had been done of the sectors that those jobs will come from, and he said there had been none. No analysis has been done, because it is a mirage—it is making stuff up. This Government and the member Michael Woodhouse are making stuff up. They are making a case so that the skilled workforce in New Zealand that has produced trains and has the skills to do that will not be able to do so any more, and the industry will close down as a result. The member will be accountable on that issue. I dare him to come to another one of those meetings, and I dare him to go to Cargill Enterprises tomorrow night at 7 o’clock and, face to face, tell the people there what he really thinks. Over the last few months he has been talking out of both sides of his mouth on this issue. Yes, that makes me angry, and so it should. It should make the people of Dunedin angry, and it should make the workers at Hillside angry.
What Kiwis want is to have security. They want to have jobs, and they want them to be skilled jobs. As members have heard, John Key and his Ministers cannot give people a credible answer. The Associate Minister of Tourism, Jonathan Coleman, came before the select committee last week. He was asked where the jobs would come from and what analysis there had been. He hummed and ha’ed for a few minutes, and then said maybe there would be about 5,000 jobs. Most of them will be in low-skilled, low-wage areas, and the ones that are created probably will not last very long. They will not be permanent jobs.
Then there is the Minister for Communications and Information Technology, who is handing over $1 billion of New Zealand taxpayers’ money to Telecom, a monopoly. That was brought forward in this year’s Budget. Concerns were raised in the last few days about the level of the skilled workforce needed in order to roll out his ultra-fast broadband scheme, and he breezily replied that we should not worry about that. He said there was no issue with skills, and if there was, the industry would fix that itself. Instead, the training standards body questioned in the last couple of days whether there will be enough skilled workers to service and maintain the Government’s $1 billion fibre internet network. That body sets the standards for telecommunications workers. It said the sector needs to think about training staff now, rather than waiting until they are needed. It warned that the industry may have to rely on overseas workers if needed, because the skills were not being developed now. What did the Minister for Communications and Information Technology say? He breezily said there was no immediate skills shortage, and that if funding was required, then it would be made available. He is not interested in actually looking at the facts.
The Minister for Communications and Information Technology has been asked to come clean on whether Telecom will employ a low-wage, foreign workforce through a company such as Visionstream, which started this practice 2 years ago. That move was fought tooth and nail by the workers and the union. He has been asked whether that is the plan—whether Telecom, in order to roll out ultra-fast broadband at the price that it is doing it for, needs to bring in a foreign workforce that is not as skilled as Kiwi workers are and that is prepared to work for less money than Kiwi workers are. We have asked whether he can confirm that the Government will actually commit to providing jobs for Kiwis, because this Government does not commit to that. Where is this Government committing to provide Kiwi jobs? Perhaps it is on a cycleway, with about a couple of hundred jobs. That is over 2½ years.
Where are the hundreds of thousands of jobs that are supposed to be produced miraculously in this economy? Where are they? That is what I would like to hear from the members across the way, rather than hear them running down the skills of our workforce and running down the skills of our rail engineering workforce at Hillside, and rather than hear the member opposite talking out of both sides of his mouth on the issue. Michael Woodhouse is supportive of Hillside when he is in Dunedin, but he then comes to this House and says, basically, we cannot deliver on price, we cannot deliver on quality, and we cannot deliver on timeliness. He should go to Dunedin and tell the people of Dunedin what he really thinks.
There is no plan for the creation of skilled jobs. This Government has no plan and there will be no plan, but 170,000 jobs are supposed to somehow miraculously appear in the next 4 years. I would like to know which sectors those jobs are coming from, who is driving them, what sorts of jobs they will be, what kinds of pay levels they will offer, and what kind of investment in skills is happening right now in respect of them. The Minister for Communications and Information Technology does not believe that we have an issue with regard to skills, despite the organisation that licenses those skills and trains people having said there is a problem. Somebody has got it wrong, and I would like to hear what members opposite think about that.
There is no plan, but in the meantime 41 skilled workers in Dunedin, with families and good incomes, are losing their jobs right now. Those jobs will not be replaced. What will those people do? They will either leave Dunedin or go offshore, because Australia is recruiting rail engineering workers. Australian firms, as the member across the way knows, have been in Dunedin to recruit workers, because they are building trains.
CHESTER BORROWS (National—Whanganui) : It is a pleasure to take a call in this debate, and I think what we have seen from the last speaker is that as long as the other side want to bang on about there being no jobs or there being no plan, it shows the rest of the world exactly where the Labour Party is coming from. It reminds me of a little quote that we have heard a number of times:
Two men look out through the same bars:
One sees the mud, and the other the stars.
What we have seen in that speech is a reflection of the aspiration that the Labour Party has for this country, which is absolutely zero. When this Government talks about the creation of 170,000 jobs it knows it can create an environment in this country where those people who have the ideas and who have the wherewithal to be able to create work for those who need work will do exactly that, because they have an environment created for them that is not punitive on aspiration, that is not punitive on good ideas, and that rewards success by the terms of trade that they can engage in not only within New Zealand but also around the world.
Yesterday I went to the Hāwera Training Centre Trust and I spoke to young people who are involved in trades training and alternative education. Those people are wanting to gain qualifications they had not previously obtained through the education system so they can get a job—not so they can just get any job but so they can get a job that will take them somewhere. I spoke to a young man there, a 14-year-old, who had been asked to draw a picture of the things that meant something to him. He drew a picture of an urupā, and he drew a picture of the Hāwera Training Centre, and he drew a picture of a prison, and he drew a picture of a Black Power glove in front of Taranaki. Those were the things that were important to him, and his aspiration was pretty much zilch as to where he was going. His father was in prison and was going to be there for a long time. This young man had almost zero aspiration for where he was going to. Can any member of this House give any indication of how the message of that last speaker’s speech would give any hope at all to that kid? There was nothing in that speech that would give somebody with the life expectations of that young 14-year-old boy any hope that life under a Government led by Phil Goff and the Labour Party would take them anywhere.
Last Friday night I met a man from Eltham. Eltham is a depressed area in terms of employment and in a number of different deciles, but this man, who 15 years ago was illiterate, had been running a motor cycle business. It went belly up, he had to get rid of everything and he started working on trailer couplings in his garage. He marketed those trailer couplings. His wife taught him to read. Then he started selling these things. He started employing people, and over the last 10 years he has built up a business where he was employing 33 people. He got a contract to make window winders in Toyota cars with a laser-cutting machine. He got another contract to make hinges for boot lids on Nissan and Holden vehicles. He got another contract to make power poles for BHP in Australia. He is an inventor. He is an entrepreneur. He has a workshop that has more robotic welders operating out of this business in Eltham than in any other single business in New Zealand of its size. He has recently invented some bars that clip on to bulldozer and digger tracks that stop sideways movement. Last month he went to Caterpillar in America. They have ordered containers for next year. Next year he will sell $12 million worth of these gadgets to America, and he now employs 70 people in businesses run out of his engineering shop in the back of the premises in Eltham. He has been employing one person a week for the last 10 weeks.
He is doing that in an environment that was created by this Government, which has some aspiration and some goals of where it wants to take this country, and has set about preparing this country for that. That is where those jobs will come from. Whenever National members have stood up on this side of the House and talked in that way, what have we heard from the other side? All we have ever heard is: “Where are the jobs, where are the jobs, where are the jobs?”. Those members have not a single plan or a single direction to show where they would take this country.
I want to talk about items in the Budget around youth and youth skills. We have seen money set aside in previous Budgets and in this Budget for the continuation of programmes like the Job Ops scheme, which gives $5,000 subsidies to employers to hire low-skilled young people and give them real work and experience. We have seen the intervention of the Community Max programme and Skills for Growth, which in Budget 2011 pays $5,000 to employers for employing and training young people in high-demand industries and setting them up for the future. We have seen the expansion of the Limited Service Volunteer courses. These are 6-week residential programmes run by the New Zealand Defence Force for those people who are unemployed and cannot find work. Recently I went to a graduation of six young people from Wanganui who attended a Limited Service Volunteer course in Canterbury, and the changes in their lives were phenomenal. A number of those young people had been sacked from the AFFCO works in Wanganui for various reasons. The chief executive officer of AFFCO was there and offered every one of them their job back, because—
Su’a William Sio: Did they get them back?
CHESTER BORROWS: Yes, they are all working at AFFCO now, because it works. It amazes me that just a few weeks ago I heard members on that side of the House complaining about the Limited Service Volunteer course and the expansion of it, because they felt that there was a resignation in young people that this was all they could hope for. The fact is that those Limited Service Volunteer courses turn the lights on for young people. They teach them about tipping out of bed first thing in the morning, having some breakfast, going to work, and doing something productive with their day. Members on that side of the House would rather those people stayed at home and did nothing, because as long as they never have to look at themselves for the wherewithal to get on in this life they will vote Labour, if they bother to vote at all. They have no aspiration for where they are going.
The trades academies incentive that has started under National is replacing back into high schools those old courses of woodwork and metalwork, which recognises that not every child in our schools will make a living from staring at a computer screen. Some kids do not learn from being folded into desks and chairs and being talked at for 10 years of their life. It is an absolute disaster that these young people can go to school for years and years and years, and under the previous Government 20 percent of them left high school with no qualifications and unable to read, write, and count functionally in order to operate in the modern world. But all we hear from members opposite are excuses about why that is OK. Well, this Government says that it is not OK.
I am also pleased to note that in the Budget $43 million has been set aside for assessment of young people in care. Young people in the care of the State in this country have a dumb deal, and that is a disaster. Thankfully, we will assess those young people’s health and education needs. We will make sure that during the time they spend in the care of the State they are looked after and nurtured in the way they deserve to be. We know some tragic statistics. We know that a young child growing up in a house where one parent went to jail is seven times more likely to go to jail than someone who did not have a parent in jail. If both parents went to jail that goes up to 15 times more likely. If they are living in the care of the state that rate is an atrocious 17 times more likely. One would think that with the intervention of the State their chances of success would be even better. The other statistic released in recent times is this: half of the young people who commit suicide in this country are in the care of the State.
Thank God for John Key as the Prime Minister of this country and for his Government. They are going to address those horrible statistics. We will be better for that. We look forward to hearing what Labour’s plan is, if it ever comes up with one. It had better hurry, because it will not be too long and the country is going to be distracted.
PHIL TWYFORD (Labour) : I am very happy to take a call in the debate on the Appropriation (2010/11 Supplementary Estimates) Bill and the Imprest Supply (First for 2011/12) Bill. It is good to follow Chester Borrows, one of the more moderate and open-minded members of the National caucus. He often makes an interesting contribution to these debates.
I would like to respond to some of the comments made a little earlier this afternoon by the Hon Tau Henare. He said—well, it is a little bit hard to know exactly what he said, but I feel it deserves a response. He is my neighbour in Te Atatū peninsular. I feel the need to set straight the record, because he painted a picture that was not entirely conversant with the facts of what happened on Sunday afternoon as the rain pelted down in Te Atatū peninsular.
I was there, in my raincoat, delivering leaflets for Kelvin Davis’ by-election campaign for Te Tai Tokerau. Kelvin Davis is a candidate who has clearly got the momentum now. The Prime Minister thinks he will win. I saw in the news that even Mrs Turia thinks that Kelvin Davis will win. His support is growing by the hour.
So there I was delivering Kelvin’s leaflets in Tawa Road in Te Atatū peninsular, and who should emerge from out of his house but the Hon Tau Henare, wearing his pyjamas at 4 o’clock in the afternoon. The hard-working National list member based in Te Atatū had, I think, just been watching the league on television, still wearing his pyjamas. But there we are—that is life in Te Atatū.
The Hon Tau Henare did say something that deserves a serious response. He was speaking about the rates that are being levied on West Auckland businesses. He said that this was very unfair. He said in the House a few days ago that it was a constitutional outrage that West Auckland businesses are paying 40 percent more than businesses in other parts of Auckland. He laid the blame at the door of Labour and of the Mayor of Auckland, Len Brown.
This is a prime example of the kind of convoluted, confused, and woolly thinking that we have come to expect from the National benches. This member, Tau Henare, voted for the National Government’s legislation that established the super-city last year and explicitly prohibited the Auckland Council from bringing in a unified rates regime, which could have been in place for the financial year we are just about to enter. That would have tackled the rates differential and would have put in place a level playing field so that West Auckland businesses would not be paying more than their fair share.
West Auckland businesses should not be paying more than businesses in other parts of the super-city, but because of the silly law that Tau Henare and National members voted for they are forced to pay more. It was put in place so that Aucklanders would not face a rates increase on the eve of the general election. Tau Henare does not seem to have comprehended that. He is on the rampage—he is out there now—campaigning up and down West Auckland against this terribly unfair rates rise.
That is not the only example of confused thinking. If there is one issue that is on the minds of the nation right now that illustrates, as my colleague Maryan Street put it earlier in this debate, the poverty of thinking of this National Government, it is asset sales. As we get closer to the election we are starting to see the elements of the National Government’s agenda emerge. What do we see? We see a punitive approach to welfare reform that seeks to drive mothers with young children back to work at a time of record unemployment.
What else do we see? In the last few days there have been pretty clear signals from the Prime Minister of a further undermining of the rights of workers in this country to bargain collectively for a fair share of the wealth they produce. It is not enough to sell our labour laws to a Hollywood corporation when it comes asking for law changes, and it is not enough to impose on New Zealand workers a situation where they can be fired at will in the first 90 days of their employment. No; there is more to come. It may be youth rates—who knows what else—but there is something that, the Prime Minister tells us, the unions will not like.
What else have we got? Well, we have cutting—cutting KiwiSaver, cutting research and development, and cutting Working for Families. Members on that side of the House deny it, but up to $50 a week will be taken out of the household budget of a two-parent family with four children earning up to $80,000 a year—$50 a week will taken out of their household budgets.
We can have a proper debate about Government spending. We can have a debate about what the right priorities are for our nation. That is a perfectly legitimate thing to do. But these cuts are not a plan. They do not offer any kind of rational strategy. They do not give people any hope that this Government has a plan to grow the economy, to get the New Zealand economy moving again, and to build our prosperity.
What else have we seen? Tax cuts were weighted to the top bracket of income earners. That is just another example of trickle-down economics. The country is borrowing $2.5 billion this year to fund the share of John Key’s tax cuts that went to the top 10 percent of earners. That is $2.5 billion put on the tab for future generations of New Zealanders to pay so that John Key could deliver to the National Party base his promised tax cuts. This is the tired old hack thinking we have come to expect from National.
The Government has nothing say about growth and nothing to say about building this country. Where is the thinking? Where are the ideas about innovation? How will we as a country grow a dozen more LanzaTechs? How will we make sure that the brilliant ideas coming out of our universities are captured and developed by New Zealand firms so that New Zealand shareholders get the long-term benefits?
What is this Government doing, having gone to all the trouble to amalgamate eight councils into one in Auckland, to ensure that our nation’s largest city becomes a hub of high-value, high-tech export firms generating value for our economy? We have seen nothing—no ideas, no policy, no strategy—in that area. How should we address the skills deficit and put the 70,000 unemployed young people into work and into training to make sure they have the skills and the qualifications to drive forward our firms and so that they can have secure, high-value, well-paid jobs for the future?
The Government’s plan to import Irish builders and tradespeople to rebuild Christchurch and its intention to import skilled labour from overseas to do the fibre rollout for ultra-fast broadband are two examples of an utter indictment of this Government’s failure to plan properly and to invest in our own people. Instead of wittering on for the last 2 years about cycleways and taking the sharper edges off the recession they should have increased skills training rather than cutting it.
The Government should have taken the cap off polytech funding and encouraged polytechs to open their doors and bring more students in. It is better to have our young people in training rather than sitting at home on the dole. New Zealanders know this; I hear this every week on the doorstep in Te Atatū. But for some reason this Government has no idea about the practical steps it could take to actually get this economy moving.
The problem lies not only in what the Government will not do—it is not going to invest in skills training, increase research and development, or seriously address the savings crisis—but in what it will do. The Government’s big idea is to sell off our most valuable and our best-performing State assets: the energy companies and Air New Zealand. It is sad but true that this kind of thinking is emanating out of National’s brains trust. One can imagine Steven Joyce and Gerry Brownlee sitting around the table with the boys from Crosby/Textor and trying to think up how they will sell one of the most unpopular policies the New Zealand public has ever had foisted upon it. How will they sell that to the voting public? How about mixed-ownership models? How about partial sell-downs? This is the best they can do. They want to sell the family silver. That is the only plan they have, and New Zealanders have seen it coming a mile away.
TIM MACINDOE (National—Hamilton West) : I begin by paying a compliment to my good friend and colleague Michael Woodhouse, the next member for Dunedin North, for his scholarly but well-grounded discourse. I also compliment my great friend the member for Whanganui, Chester Borrows, for his intelligent, compassionate analysis of this Government’s practical and effective measures to help young New Zealanders, and especially young New Zealanders who are at risk of going well and truly off the rails and having a life of no hope and no worthwhile future. Mr Borrows gave us a very clear indication of what this Government is doing and of this Prime Minister’s determination to assist those young people, ably supported by the Minister for Social Development and Employment and all members on this side of the House. It is a very comprehensive, effective programme.
Hon Steve Chadwick: What?
TIM MACINDOE: Ms Chadwick asked me: “What?”. I am delighted she has done that. I am happy to tell her again. Members on the other side of the House are incredibly slow learners. They think that if they keep saying often enough that the Government has no plan, a few people will start to believe it, yet I have lost count of the number of times they have been told what the plan is. In fact, those members were told what the plan was in the election campaign in 2008, because we campaigned on it. There are no surprises. We said what we needed to do and what we would do. Since 2008 we have been getting on and doing it, and we continue to do it. We are rolling out new initiatives and it is a very effective working plan—
Clare Curran: No, it’s not.
TIM MACINDOE: It is very effective. Ms Curran’s party left this nation in dire straits and in 2½ years—despite the most challenging conditions and some of the most appalling natural disasters, which were well out of our control—we have turned things round. The future is now looking better for this country than it has for a long time. Labour members really do not like acknowledging it, but they squandered the best decade in my lifetime—in my lifetime—of economic conditions and opportunities. They bequeathed to us a decade of deficits—a decade of deficits—at the end of the best economic conditions we have had.
We have heard this afternoon some very good speeches on this side of the House. How do the Opposition members reply? They chant: “Where’s the plan? Where are the jobs?” even though they have been told many, many times. The previous speaker, Phil Twyford, was the best they have been able to put up so far. At least at the outset he acknowledged what a fine speech Mr Borrows had delivered, and he acknowledged the fact that Mr Borrows had focused on some really important things that matter to New Zealand. But sadly Mr Twyford then took us on his “Twyford’s Tour of Te Tai Tokerau via Te Atatū”, where clearly he was royally entertained by the incomparable Tau Henare. I am glad he enjoyed that, because the rest of the tour obviously was not up to much. The best he could do was deliver a few leaflets and realise that the future is not very great for him in Te Atatū. But he demonstrated, as did the speakers before him, the complete lack of detail in the Labour members’ contributions and the fact that they rely solely on their catalogue of claptrap and clichés. That is all it has been.
I tell Ms Curran, Ms Chadwick, and Mr Twyford that I thought this year’s Budget was an outstanding achievement by an excellent Minister of Finance in a focused and very effective Government. Not only was this an outstanding Budget and an entirely appropriate one for our times but also I am very proud to support it. I am very proud to defend it and explain it in my electorate, and up in Hamilton, along with my good friend Mr Bennett, we are proud to campaign on it. On both sides of the river in the mighty city of Hamilton we are getting a fantastic reaction to a wonderful Budget. People up there say over and over again: “Thank goodness it is you lot in there running the country at the moment! What an absolute pickle we would be in if we had the other lot back.”
Hon Steve Chadwick: That’s not what we got at the Ag Fieldays.
TIM MACINDOE: That is exactly what they say, I say to Ms Chadwick. When she enjoys her early retirement in Rotorua after the election, she will find that people will say to her that Labour should have listened to them. People tried to tell those members; they would not get the message, and people had to tell them the hard way.
As I have said, Labour members hope that if they keep saying often enough that there is no plan, the public will believe it. But I tell the House that members of the public do not believe it at all, because they can see what we are doing. I remind members opposite about the Job Ops programme, the Community Max programme that we introduced, the industry partnership places that we have promoted, the Youth Guarantee, and the service academies. I wonder whether the members opposite, who have interjected constantly and asked where the jobs are and where the plan is, would like to stop chirping and chanting for just a moment, because I am giving them exactly what they have asked for. I am just a short way into a good list.
There is the Limited Service Volunteers scheme, and the places that Mr Borrows talked about. It is hugely important to people in my electorate and right around the country for those young people who really need some intensive and compassionate intervention, and a little bit of real belief in them. The Labour Opposition never believes in those people. It has this appalling mentality that about 20 to 25 percent of the New Zealand public, particularly young people, will never amount to much. Those members just put them in the too-hard basket, they patronise them, and they demean them with a lifetime on welfare and say that that will do. They do not worry about the fact that these people cannot ever seem to get ahead. They do not worry about the fact that there is actually great potential in each and every one of those people. They have for all their time in this House believed in this mentality that welfare is good, education is not so good, and job opportunities are not so good. They just condemn a growing number of New Zealanders to that pitiful future.
I will never do that. It is such an appalling way of thinking, and I am absolutely determined to do everything I can in the time I have as a member of this House to defeat that mentality and to promote the best interests of those who most need the active intervention of a caring Government.
Those are some of the things we are doing on the jobs front. In this year’s Budget there was the new Skills for Growth scheme with 4,000 places. It gives employers a $5,000 subsidy to employ and train young people in high-demand industries. That is a significant initiative. Suddenly the Labour members have gone quiet; I wonder why. It is important.
As I have said, this Budget is widely supported throughout the country, but just for a moment I will focus on the reaction of my own region. The Waikato Times is a paper that is certainly not in the bed of the National Party; it takes quite an independent stance. But in an editorial following the Budget, we were told the following: “Labour Party leader Phil Goff is on the wrong track, … when he says he hopes to create up to $22 billion a year in new business by restoring tax credits to reward R&D. The snag is his intention to pay for this assistance by requiring farmers to pick up the formidable costs of their greenhouse gas emissions over five years.”
I was up at the Fieldays just outside my electorate last week and I can tell members that the reaction to the Government was outstanding. The mood was fantastic, and the one thing that came through time and time again was farmers saying: “Imagine if we had that Labour Government back and they brought us into the emissions trading scheme before the rest of our international trading partners—those we have to compete with on the international economy.” They said that they would keep that party out of Government for as long as they possibly can because it just does not understand.
I will come back to the Waikato Times, which further stated: “Mr Goff’s plan would lift farm production costs and risk blunting the world competitiveness of our dairy and meat industries in an uncertain bid to sharpen the innovative edge of businesses generally. That amounts to an unacceptable economic gamble.” We are living in times where the last thing we should do is to indulge in unacceptable economic gambles.
Budget 2011 sets out our next steps to build faster growth, to increase our national savings, and to create sustainable jobs built on savings, exports, and productive investments. That is a summary of what this Budget is all about, and over 3 years we have achieved a huge amount to turn things round. Labour members do not like to admit the position they left us in, but it was dire. At the end of the best decade of economic conditions they left us in the worst of conditions. I am proud to be part of a Government that is turning the situation round, and I will be proud to be part of a Government that continues to take us forward in the years ahead.
DAVID BENNETT (National—Hamilton East) : I will follow on from that great speech by my colleague from Hamilton West, Mr Tim Macindoe. He will deliver a stunning electorate victory in that seat for National at the next election, because he has worked hard and he has delivered for the people of Hamilton. He has shown them the vision and the strategy that will deliver a strong future for all New Zealanders, and particularly the people of Hamilton, who deserve it and need it after many years of having to listen to Labour rhetoric.
Today in this debate we see the true colours of Labour members. They do not care about New Zealand’s growth prospects. They do not care about New Zealanders. They do not care about jobs. They do not care about wages. All Labour members care about is themselves. Being in power is all that Labour members ever wanted, ever will want, and ever can hope for, because that is how they argue their case. Labour members say that they know best and know how to do these things, and that they do not actually need to look to our people for inspiration or give our people the tools to make their own future. That is the difference between the two political parties, and this Budget has shown that.
In this Budget New Zealanders are given the tools to build their economic future. We are giving the New Zealand public the tools they want and that many Governments around the world cannot deliver. This country has some of the lowest interest rates in the world, which means that hard-working Kiwi families have low interest rates for their biggest expense: their mortgage. The second thing low interest rates mean is that people can invest in productive industries knowing that they are paying low interest rates, so they can deliver that productive growth to the economy.
Having low interest rates is a key and fundamental result of this Budget—something that Labour did not deliver when it was in Government and that it would not be able to deliver at this time, because its economic policy would lead to high interest rates. Labour’s spend in its Budgets would lead to a situation where New Zealand families have to pay more for their mortgage interest rates. It would lead to a situation where New Zealand businesses could not invest, because they would be paying higher interest rates. That is the difference between this Budget and what a Labour Budget would have given us. It would have stifled the economy and contracted the economy in some of the most difficult times. Labour has no plan to pay for Christchurch. It has no way of delivering a plan that will help pay for Christchurch and grow this economy.
I actually take offence when I hear members on the Labour side of the House go on about the assets of this country. They say that all New Zealanders own them and that the investment programme National has promoted through the Budget is a bad idea. I will give them a local example from Hamilton and I want them to think about it. In Hamilton we have Tainui Group Holdings. Tainui Group Holdings has a policy of investing locally. It has used the Treaty settlement very wisely, and is now the biggest commercial player in the Waikato region. Together with other iwi around the country it will become one of the biggest investment players in this country. Tainui Group Holdings has used local money locally and has invested successfully.
Look at what else happens in our region. We have a number of community trusts that do not invest locally. They put their money on the US stock exchange. Does that money deliver benefits for the people of Hamilton and the Waikato? Not to the same extent it would if it was delivered through the Tainui Group Holdings model: not only do the returns go to the Waikato people, but the actual capital investment is used in the best interests of creating a stronger and more vibrant region.
What is happening with our superannuation funds in New Zealand? Are we investing those funds locally? No, we are not. Where are we sending that money? It is going offshore. Labour wants to send New Zealand money overseas. That is what it has always set up in its investment programme. Do members know why it wants to do that? Labour wants to send New Zealand money overseas because then it is not accountable for it. If the investment does not go well, if the right decisions are not made about it, or if no decisions are made about it, Labour is not accountable. It can say that some investment adviser who is looking after that money overseas is accountable. That is the folly in the Labour argument. It is not backing New Zealanders.
Hon David Cunliffe: The member doesn’t even believe it himself.
DAVID BENNETT: No, I do. The member should go to Hamilton. Mr Cunliffe says he does not believe it. He is sitting there realising the folly of his ways because the Hamilton example, where they invest locally, pays greater dividends in capital returns. Labour would want to see that money go offshore so that the assets of other countries can be built up. New Zealanders would be confined to a situation where they have to look across the Ditch to see the benefits they want, rather than having those here.
Today we are living in a situation where there is not enough food around the world. There will be not enough food for the next 100 years. What do Waikato and New Zealand have as a strategic advantage? We make food. We make food competitively and it is the best quality in the world. New Zealand has the chance to be one of the most successful countries in the world. People will need what we make for the next generation. The question is whether we will invest in our country and make profits here, or send our money overseas thinking that it is safer to let someone else have control of it so that we can sit in our pretty little world and say we never had to make any choices.
That is what Labour members would do. They would sit back, redistribute money, and say it is not their fault; it is someone else’s fault. National is not taking that approach. We are going to invest in our country. We know that we have the people here to deliver the returns. We know that we have the future in the sense that we are a food-producing country. The stars are in alignment, because people need our products. We know that if we invest and create a stable economic environment where there are low interest rates and a well-educated and successful workforce, we can take advantage of those opportunities. That is the plan. It is such a hard plan that Labour members cannot work it out. They cannot see as far into the future as that, because a Labour plan is something that is given to them on a platter. They do not have to think about it and they do not have to work for it; it is merely a redistribution plan. That is the difference and that is why this Budget is so important. Thank you.
Mr DEPUTY SPEAKER: This debate has concluded. We have an amendment in the name of the Hon David Cunliffe.
|Ayes 53||New Zealand Labour 42; Green Party 9; Progressive 1, Independent: Carter C.|
|Noes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Amendment not agreed to.|
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Bills read a second time.|
Appropriation (2010/11 Supplementary Estimates) Bill
The CHAIRPERSON (H V Ross Robertson): We are to consider at this stage two amendments only, set out on Supplementary Order Paper 246. The question is that the amendment to clause 5(1) set out on Supplementary Order Paper 246 be agreed to.
Hon DAVID CUNLIFFE (Labour—New Lynn) : I rise in this Committee stage to address the amendments set out on Supplementary Order Paper 246, in the context of the broader bill. The debate that preceded the dinner hour continued the themes, in part, of the Budget debate that preceded this Appropriation (2010/11 Supplementary Estimates) Bill. The broad themes of that debate were that the country is in a difficult situation. Most New Zealanders understand that total debt is too high, although only some realise that it is nearly all private debt, not public debt. This is an important context to the debate and to these amendments.
Most people are worried about the security of their jobs and the rising cost of living. What is important for us as a Labour Opposition to get across—
The CHAIRPERSON (H V Ross Robertson): I am sorry to interrupt the member but can I just point out that the debate needs to be to clause 5(1)(a). It specifically states “The Supplementary Estimates of Appropriations” and goes on to state “Addition to the Supplementary Estimates” as well. The member needs to speak directly to these in order to facilitate the debate.
Hon DAVID CUNLIFFE: The definitional issue that is contained in Supplementary Order Paper 246 is around replacing part of the definition of “Supplementary Estimates”, to substitute the following: firstly, “(a) The Supplementary Estimates of Appropriations for the Government of New Zealand and Supporting Information …”, which is document B.7. In addition, there is “(b) Addition to the Supplementary Estimates of Appropriations for the Government of New Zealand and Supporting Information for the year ending 30 June 2011”; B.7, Volume 2. There is the consequent insertion of an item, schedule 1, in respect of Vote Canterbury Earthquake Recovery, which is a matter that the Finance and Expenditure Committee will be discussing tomorrow at its hearings. That covers some non-departmental output expenses of—I assume this is in thousands—$27 million for Canterbury earthquake property demolitions and another $3 million for non-departmental capital expenditure.
Mr Chairperson, this brings me back to where I was before you inserted your ruling, which is that the country recognises it is in a difficult state. One of the reasons for that, but by no means the only reason, is the series of tragic earthquakes in Canterbury. They have taken their toll of human life, tragically. They have taken their toll of material and financial resources, to the tune of some $15 billion, and the departmental output expense that we see before us is a small proportion of the total cost to New Zealand. But those Canterbury earthquakes have, more than that, taken their toll of our spirit, of New Zealanders’ spirit. It is funny the conversations one has on an aeroplane. I was sitting next to a gentleman recently who said: “You know, it almost feels like the country is in a wartime situation.” I thought there was great wisdom in that remark. It presents both challenge and opportunity—challenge because in wartime people tend to hunker down, and opportunity because they think in the end about what it means to be a citizen of their country, to be a New Zealander. We learn to pull together, to rise to face the challenge before us.
The Canterbury earthquake reflection in this Supplementary Order Paper is part of that, but it goes deeper and broader. In order to get out of the rut we are in, which only partially is created by the cost of the earthquake, New Zealanders are hungering and thirsting to see a plan—a responsible, non-partisan, fair, data-driven plan that will get people back to work and get our economy moving. Mr Chairperson, I see your signals and I submit to you that this is absolutely within scope. We cannot discuss the addition to the supplementary estimates from the Canterbury earthquake unless we understand the context—
Chris Tremain: $27,000 for demolitions and related costs.
Hon DAVID CUNLIFFE: I assume that that is in thousands, and it would be $27 million. That would be the normal convention. The chief Government whip would know that I have already covered that in these remarks. If we are in a wartime circumstance, if New Zealanders are to move together, out of this rut, if we are to cover the expenses of the Canterbury earthquake represented in this Supplementary Order Paper, then we will have to have a plan for growth and for jobs; not a plan to sell off assets. Selling off assets is the antithesis of rebuilding. It is stripping down.
New Zealanders do not want a response to the tragedies of Canterbury to be simply more retrenchment and more hardship. They are looking, if I turn a little more specifically to the situation facing Christchurch, for leadership from this Government, which since September last year has created not one new position of trade training in Christchurch, and which has not yet brought forward to the people of Christchurch a clear plan for those whose streets need to be bulldozed and whose streets will be rebuilt. We all know of, because we have seen the pictures and many of us have visited the area, families living with silt and liquefaction up to their ankles, broken floorboards, and houses that are whistling cold in the Canterbury winter, and that is not good enough. People also want to know not only whether their streets can be rebuilt, or where and when they might be assisted to move, but whether the insurance policy will cover the loss of their, in many cases, only asset—their family home. Of course, if they are insured the Earthquake Commission will cover a portion and private insurance will cover a portion, but it will not cover the lot, and for that gap there is huge anxiety. Every day that now passes is a day closer to the public of Christchurch saying that Mr Brownlee is not serving them well as the Minister for Canterbury Earthquake Recovery.
Hon Dr Jonathan Coleman: Oh, don’t undermine him.
Hon DAVID CUNLIFFE: I say to Mr Coleman that it is taking just too long. People’s patience is wearing thin. With every passing day they get aftershocks—
Hon Dr Jonathan Coleman: It’s not something to play politics on.
Hon DAVID CUNLIFFE: I am not playing politics. I am reflecting the sentiments expressed to me and my colleagues by the people of Christchurch.
The CHAIRPERSON (H V Ross Robertson): This is about process.
Hon DAVID CUNLIFFE: This Supplementary Order Paper is a supplementary appropriation for additional funds for the Canterbury earthquake recovery demolitions and associated costs and non-departmental expenditure in relation to the Canterbury Earthquake Recovery Authority. That is germane because the process in Canterbury is taking too long. Labour will be voting against the broad supplementary estimates, of course, but we would not stand in the way of additional funding for needed demolitions in Christchurch.
Canterbury has been suffering. Canterbury wants to rebuild, but I guess the broader point is that is an emblem for the whole of our country. New Zealand wants to rebuild. New Zealand did not elect the current Government just to cut costs on the Government Budget. Cost cutting has its uses, but it is nobody’s idea of a real plan. It is not a vision for the future, not a way of making New Zealand great, not a statement of the values that bind us together, and not a statement of how we will progress out of this rut and to a better place. But if the Minister in the chair, the Minister of Finance, thinks it is, perhaps he could take a call and explain to us how cost cutting takes New Zealand forward, why the Government does not currently appear to have a plan for jobs and growth, and why it is planning to sell off State assets as a substitute for a plan that creates value and creates jobs, getting people back into work and off benefits, thereby helping the fiscal balance. Why are we selling assets if instead we could have a real plan that created growth?
The CHAIRPERSON (H V Ross Robertson): Can I just say to the member that the first part of the debate is about the definition of “Supplementary Estimates”. What the member is getting into is the second part, schedule 1, where those things can be debated. But here it is more about process, about definition. It is a very narrow debate.
Hon DAVID CUNLIFFE: I raise a point of order, Mr Chairperson. My understanding was that in the introduction to this part of the Committee stage you were referring to both the clause 5(1) and the schedule 1 amendments, which are both contained on the Supplementary Order Paper.
The CHAIRPERSON (H V Ross Robertson): No, just clause 5(1).
Hon DAVID CUNLIFFE: All right. That would explain the disjuncture in our views.
Chris Tremain: I raise a point of order, Mr Chairperson. I would like to bring your attention to Standing Order 107(2), which points to the fact that if the Chair brings the member speaking to account on more than one occasion—or in this case, on three or four occasions—with regard to relevance, the Chair may terminate the member’s speech. That is something that this side of the Committee would be pleased to see.
The CHAIRPERSON (H V Ross Robertson): The Chair will make that decision, thank you, Mr Tremain.
Stuart Nash: I raise a point of order, Mr Chairperson.
The CHAIRPERSON (H V Ross Robertson): Have I dealt with the issue?
Stuart Nash: No, no; it is different. Are we dealing with Supplementary Order Paper 246, or just clause 5(1) on that Supplementary Order Paper? In that case, are we not allowed to talk about schedule 1 on Supplementary Order Paper 246?
The CHAIRPERSON (H V Ross Robertson): Schedule 1 is the next question. The amendment we are debating here is purely clause 5(1). There are two questions. We are just debating clause 5(1), which is about process and definition. Then we will get into schedule 1.
Stuart Nash: Of Supplementary Order Paper 246?
The CHAIRPERSON (H V Ross Robertson): Of Supplementary Order Paper 246, yes.
Hon DAVID CUNLIFFE: Mr Chairperson, I gratefully accept your ruling, but I venture to say that if you reflect on the Hansard, I think you will find that you appeared to introduce the two questions, not just the two sub-questions of the first question—hence the approach that the Opposition has taken in this Committee stage.
If we are therefore not to talk about the substantive schedule, which relates to Canterbury, and if we are limited to clause 5(1), then that clause is obviously a simple procedural swap of certain documents in relation to the supplementary estimates. Key to that is that there is a great lack of transparency in some of the Budget documents that relate to the supplementary estimates. Our spokespeople have found when trawling through the Budget that it is sometimes very difficult and very opaque to find where the money has gone, with reference to the previous year’s spending and current output classes. The Government seems to have a habit of aggregating to a level where it is difficult for the public to follow what is being done. That has been made worse by several—I think grossly unprecedented—acts in this Budget, such as having a $980 million unspecified Budget reduction.
AMY ADAMS (National—Selwyn) : I will take just a brief call on the first question on Supplementary Order Paper 246, to come back to my understanding of this aspect and where we have come to on this matter. Clause 5(1) of the Appropriation (2010/11 Supplementary Estimates) Bill is amended, as we see in the Supplementary Order Paper. That amendment, in a substantive sense, adds paragraph (b) as it appears on the Supplementary Order Paper. It makes it very clear that the supplementary estimates include not only the usual realm of information, which is that in the supplementary estimates documents, but also the addition to the supplementary estimates.
We accept—and it was very clearly set out in the Finance and Expenditure Committee review of this issue—that that is an unusual situation. Normally, of course, all the supplementary estimates have to be presented to the House at the same time. But the point that is worth getting on record very early in this debate is simply to say that obviously an exceptional set of circumstances led to the need for this Supplementary Order Paper and therefore the need for this debate. It goes without saying, of course, that that was not only the Canterbury earthquakes in general but the specific earthquake of 22 February. The earthquake of 22 February was—and my maths is not exact—about only 6 weeks before the cut-off date for the completion and presentation of the supplementary estimates. In that time it was simply impossible to have any sense of the fiscal implications and what supplementary estimates would be required as a consequence of that event.
When we get to the second question we obviously can debate where those numbers have got to, but I thought it was worth just getting on record that process point—that the need for this Supplementary Order Paper, the need for the insertion of paragraph (b) in clause 5(1) simply reflects the time frame and the very small and insufficient window between the date of that deadly earthquake and the final cut-off date for the completion of the supplementary estimates. That is all I wanted to say on this clause. I just thought it was worth getting it on record, so that it was very clear from the outset why this unusual process was adopted in this case.
STUART NASH (Labour) : It was good to have clarification from Amy Adams, but as a first-term MP I would like to seek clarification from the Minister in the chair, the Minister of Finance, on this matter. As Ms Adams highlighted—
Aaron Gilmore: Mrs Adams.
STUART NASH: —Mrs Adams—it was 6 weeks between the February earthquake and the presentation of the estimates to Parliament. When we look at the figures in schedule 1 of the Appropriation (2010/11 Supplementary Estimates) Bill, which we will talk about soon, we see that they are very general. I was wondering whether, in fact, there is precedent for this. Did the Minister simply not have enough time? Or did he have an idea of how much money would be needed, but had determined that it was not ballpark enough, or was not robust enough, to actually put in the initial estimates? We are talking about a significant amount of money. We are talking about $28 million. We are talking about one specific event. Is there precedent around this process? What sort of decision-making process did the Minister, Cabinet, or the officials go through when they made the decision that they would hold back from putting those costs into the supplementary estimates?
It is not proper process. The whole of the supplementary estimates, as we know, has to go through a very good, very robust, very transparent process. But at some point there has to be a line in the sand that says we have to put that estimate in, because at some point we will be debating it next year, whether it is in or out.
Although it is a lot of money, in the scheme of things it is not a huge amount. I think, potentially, the Minister could have given an indication that it would cost us $20 million, or maybe $30 million. He could have put a figure in there and tightened it up a little bit later. Or did the amount range between $3 million and $300 million? I suppose I am asking the Minister of Finance whether the figure was so unknown or so wide that he really felt justified in taking it out, and then bringing a Supplementary Order Paper to Parliament for further debate.
I know that when a lot of my colleagues who are Christchurch MPs were reading through the supplementary estimates, they would have liked to know that this amendment would be here. I do not think it was signalled, even though we are talking about a natural disaster that occurred 6 weeks or 2 months before these estimates were presented to the House. It had actually occurred; it is not as if we are dealing with something that occurred after the estimates went to the printing press.
Amy Adams: We were still in a rescue phase. There were still people being pulled out of buildings at that stage.
STUART NASH: I understand that. We are not talking about search and rescue here.
Amy Adams: No, I’m talking about the time frame.
STUART NASH: Yes, and I understand that. I am not making a judgment, at all.
Amy Adams: Just as well, because you weren’t there.
STUART NASH: I am not making a judgment, I tell Ms Adams. I am asking questions in relation to how this process arose. I am not drawing any judgment on the Minister; I am not saying this is right or this is wrong. But I think it is important for the Minister to stand up and explain the sort of process that he and the officials went through when they determined that this was the best route to travel.
As I mentioned, I am not making any judgment whatsoever, but Mrs Adams stood up and said: “Obviously, this is what happened.” There is no “obviously” from Amy Adams, because she was not sitting around the Cabinet table. I could be wrong here, but I doubt that Mr English said that before he made a decision he had better go and check with Amy Adams, because she knows. He might have done that—he might have done that.
I am just curious, as I am sure some of my colleagues are, to know how this process arose, just so that if future precedent arises we can say that back in 2011 this is how the Minister did it, these are the tests he put in place, these are the people he consulted, and this is how it arose. That is all. It is just a simple process. As I mentioned, I am not making any judgments. I know that the Minister has been in the House for a long time, and, as a consequence, he will understand that it is often good to take a call just to clarify for a new member like me. I have not sat around the Cabinet table, so I do not know how this process works.
In a way, I suppose this is a selfish call, because I am just keen to know the process that the Minister used. That is all it is. Like I said, I am not passing judgment in any way, shape, or form, but ask whether the Minister could just stand up and explain it to the Committee, to the new members, and perhaps to a new member such as Amy Adams. She said it was obvious, but it is not obvious to me. Maybe Ms Adams is a lot more intelligent than I am, so it is obvious to her. I have no doubt that the Minister consulted Aaron Gilmore.
Hon BILL ENGLISH (Minister of Finance) : I thank the member who has just resumed his seat, Stuart Nash, for his kind invitation to help clarify these matters. I think the first question he raised was about who had been consulted before decisions were made by the Minister of Finance and Cabinet. Of course, we do consult Mrs Adams and the other knowledgable members of the caucus, which means all of them. It is a very democratic caucus, and a very democratic process. I have to admit that not every member of the Government or Cabinet will have their head around just how the supplementary estimates, or changes to them, work, so I will explain it. Mrs Adams and the chief Government whip made a good point, which was that these matters were all dealt with while we were in recovery mode following the earthquake.
The sequence, as I recall it, was that there was a strong push to set up the Canterbury Earthquake Recovery Authority, and the House, including the Opposition, was notably cooperative in getting that entity set up. Because it was a new Government department, the focus at the time was particularly on its powers, rather than on some extensively thought-through budgeting process about exactly what activities it would have. Certainly it was not a process that we would replicate in Government; we would not usually set up a new entity without a lot more clarity about exactly what funding it would require, at least for the next 12 months.
In this case the authority was set up and there was a big focus on making sure it could pick up civil defence emergency management powers so that it could get on with the job of getting the recovery under way. At the time, it was set up with a budget of about $4 million, which was intended to be an administrative budget, and enough to put in place the authority’s people and its capacity to work with the council and exercise some of those powers.
Within a fairly short time it became apparent that it had to get on quite quickly with some practical tasks, particularly to do with demolition. It has been surprising to those of us who have spent a bit of time on it just how complicated these issues can get, quite quickly. So the authority was set up, but the deadline for finalising the details of the supplementary estimates passed in early April. The authority was set up on 29 March, and within about 10 days the supplementary estimates deadline of 10 or 14 days had passed. At the same time, a discussion was going on about what the authority could or could not do, bearing in mind that at this time it had no chief executive, staff, or premises. But because of the urgency of the situation the Government was already aware, particularly under the decisive supervision of the Minister for Canterbury Earthquake Recovery, my colleague the Hon Gerry Brownlee, that there was work to be done.
The money that was then required to allow the authority to get on with the demolitions could not be obtained through the supplementary estimates. In other circumstances and with other departments we might have been able to shift money around, perhaps, but even then it would have been after the supplementary estimates deadline. We did not really have the choice of waiting around to be able to appropriate the money later on in the process that necessarily has to go on between Parliament and the executive. The ideal choice would have been that we would know enough about the activities of the authority within a week of its being set up—and I have to say that that would have been a bit difficult. On the other hand, we could not really have waited around for the next phase, because a big part of the commitment that I think we have all made to the rebuilding of Canterbury is that we should make those decisions that can practicably be made as quickly as possible, in order to build confidence in the face of what are fairly difficult circumstances.
So that is how we have ended up here with this Supplementary Order Paper, which covers about $27 million for property demolition and related costs and compensation, allowing some money for demolition-related property purchases. That all applies to the central business district, where significant progress has been made, with the latest estimate I saw showing that several hundred buildings have been demolished. That progress is not visible to many people, but part of recent progress has been the capacity of the authority to exercise the powers that this Parliament has given it to encourage and occasionally compel building owners to get on with the job. At the same time, it has needed the funds to exercise those powers.
I know that the Committee is approaching this particular issue with goodwill, and it is really the demanding circumstances of getting the authority up and running that have put us in an unusual set of circumstances. The member asked whether there is some kind of precedent. In a procedural sense there is no particular difficulty with carrying out this procedure, but I do not think it has been done for some time. I would expect that in the normal process of good Government it would happen very rarely.
Hon MARYAN STREET (Labour) : I thank the Minister in the chair, the Minister of Finance, for his clarification of the process, because it is an unusual one, and we are grateful for that clarification. We on this side of the Chamber absolutely understand the need for these measures, and the exigencies of the events in Christchurch that have led to the process that is outlined in clause 5(1) on Supplementary Order Paper 246.
Clearly, the Government has been confronted with an extraordinary set of circumstances, and mother Nature has no regard for the timing of processes of Parliament and Budget appropriations, but there is one further question I would like to ask about clause 5(1) on the Supplementary Order Paper, and I wonder whether the Minister could answer this question, as well. I do not wish to be pedantic, and I absolutely understand the need for additional supplementary estimates in these circumstances, so I am not contesting that need, at all, but I wonder whether the paragraphs of the amendment are numbered correctly. This question goes to the haste with which we make laws, and the question of whether they are sufficiently scrutinised. Of course, Supplementary Order Papers generally do not get the chance for any other scrutiny except on the floor of this Chamber in the course of this kind of Committee stage.
This first part of Supplementary Order Paper 246 seeks to omit the definition of “Supplementary Estimates” that is stated in clause 5 of the Appropriation (2011/12 Supplementary Estimates) Bill. I am seeking clarification, because the existing clause 5(1) already has paragraphs (a), (b), and (c). It also includes, without a number, a definition of “Supplementary Estimates” that this Supplementary Order Paper is seeking to replace by the addition of a further sentence. My question concerns the numbering of those provisions. When we already have paragraphs (a), (b), and (c), should not these new paragraphs be paragraphs (d) and (e) of clause 5(1)? That would make it clearer that the provisions are still part of clause 5(1) in the bill that is under discussion at the moment. I am not sure whether that is an error, or whether it is obvious to everybody else, but it would seem to me that instead of the new paragraphs being (a) and (b), as they are currently on the Supplementary Order Paper, they ought to be (d) and (e), in order to fit with the bill that is currently under discussion.
Paragraph (a), as it reads on the Supplementary Order Paper, is already in the bill, so that is not being altered, at all. The words are the same, except for the addition of “and”. Paragraph (b) concerns the addition to the supplementary estimates, which is the money that is wanted to go towards some part of the repair in Christchurch.
So I ask the Minister whether that is deliberate—or ask the officials advising the Minister whether that is deliberate—and accurate, or whether it is simply something that has been done in haste and would result in there being a clause 5(1)(a), (b), and (c), then further paragraphs (a) and (b). I think, in order to get it right, it would be good if the Supplementary Order Paper were amended to read paragraphs (d) and (e).
Having said that, I also tell the Committee that I have not furnished a handwritten or hastily scrawled amendment to the Supplementary Order Paper because I am seeking the Minister’s advice on this matter. If that clause can be aligned without further complication in this Committee of the whole House stage, and aligned with the original bill that is under discussion, then I think that it would help everybody’s understanding of this matter. Thank you.
- The question was put that the amendment set out on Supplementary Order Paper 246 in the name of the Hon Bill English to clause 5(1) be agreed to.
- Amendment agreed to.
- Clause 5(1) as amended agreed to.
The CHAIRPERSON (H V Ross Robertson): We now move to the amendment to schedule 1. The question is that the amendment to schedule 1 to the item relating to Vote Canterbury Earthquake Recovery set out on Supplementary Order Paper 246 be agreed to.
STUART NASH (Labour) : Again, I have just a few questions. As the Minister in the chair, the Minister of Finance, alluded to, we are all acting in good faith with regard to the Canterbury earthquakes and there is no query around the process. I want to take a few seconds to say that it is very good to see the Minister in the chair standing up and taking a call when there are genuine questions. I mentioned this earlier. I was talking to an older, since retired MP about the process in the Chamber. He said he was a little dismayed that Ministers did not take the call during the Committee stage when genuine questions were put up by the Opposition. Old hands like Peter Dunne often stand up, and it was good to see the Minister Bill English, who has been in this House for a long time and obviously respects tradition, stand up and answer some of the questions that the Opposition put his way. I thank the Minister for that.
I have a couple of questions. As I said, I am not passing judgment at all, but I would like to talk about the non-departmental capital expenditure of $3 million for Canterbury earthquake demolition-related property purchases. Where does this come from? In terms of property purchases, what is the process for—I assume it relates to the Canterbury Earthquake Recovery Authority or the Government— purchasing a property? Is this perhaps the process if the property is not insured or cannot ever be built on again? How will these properties be identified? As we well know, a significant portion of the central business district—and, again, we are not even necessarily talking about the central business district here—and residential properties have been demolished and can never be built ever again.
Amy Adams: We’re talking about the central business district.
STUART NASH: OK, we are talking about the central business district here, and $3 million is not a lot of money at all. In fact, it barely buys a decent piece of commercial real estate now. So I wonder what that $3 million is about and why it is there. How will the property be identified? Will they be identified by Gerry—
The CHAIRPERSON (H V Ross Robertson): The member referred to an honourable member by his first name.
STUART NASH: I apologise. Will the properties be identified by the Hon Gerry Brownlee or by the insurance companies? Again, it is a question of process, but $3 million is not a lot of money at all.
I could be wrong here, but I understand that about 95 percent of buildings in the central business district are covered by insurance anyway. I am assuming—and, again, correct me if I am wrong here—that insurance companies will pay out whether a building is demolished, it is rebuilt, or the land can never be built on again, or whatever the circumstances. I could be wrong. Maybe this $3 million is to just top up insurance costs, or maybe it is to buy buildings that are owned by the Government. Maybe the Government owns a building in Christchurch and this is part of that. Again, I have absolutely no idea, so it would be great if the Minister could clarify that.
In terms of page 929, we are talking about $27 million worth of Canterbury earthquake property demolitions, related costs, and compensation. I think the Minister alluded to this. I do not think anyone really knows what the cost of demolishing a significant part of the Christchurch central business district will be. It would take a very brave person to stand up and say that it will cost X million dollars. It could be $37 million or it may be $17 million. Again, I am just curious to know how this figure was arrived at. The Minister outlined the process for bringing this to the House, which was hugely appreciated. But I know that when one is estimating work, even for a refurbishment of a standard commercial building, one has to bring in a quantity surveyor and one goes through that whole process, let alone assessing the cost of demolishing the central business district of one of New Zealand’s largest cities. So I just wonder whether, for example, Fletcher Challenge came up with this, or a firm of quantity surveyors—maybe Quotable Value, which is online—or experts came to the Minister and said: “Look, Minister, we have absolutely no idea whatsoever. We think it could be $30 million. We don’t know, but we know you have to put a figure in here so it is recognised.”
The classic case is Rolls-Royce, which never valued its brand but put a dollar on the books just to show that it did have a value, because it had absolutely no idea. But a sign of value meant it was worth something. Is this the case where the Minister has said that we need to have something in the estimates because we have no idea how much it will cost, so we put in $27 million? As the Minister said, we all agree. We are not going to quibble about this. Hell, if it ends up being $37 million, that is tough, but I do not think there will be any New Zealand demolition company that will rip off the Government or the taxpayers of Canterbury. So this will be done—I am assuming and I know—in a good, sound commercial way, but I ask whether there was a process around that $27 million. Thank you very much.
Hon DAVID CUNLIFFE (Labour—New Lynn) : I thank the Minister in the chair, the Minister of Finance, for his intervention in a previous question. We are on schedule 1 of the Appropriation (2010/11 Supplementary Estimates) Bill, and we are touching on the amendment that includes the substantive part of Supplementary Order Paper 246, which is the addition of $27 million for non-departmental output expenses for the demolition efforts in Christchurch, and another $3 million for associated demolition-related property purchases. I will not take a long call, but I want to underline a couple of important points. The first is that obviously the whole Committee is unanimous in its support for this provision. It reflects that the whole country is unanimous in its support for the people of Christchurch. We all stand shoulder to shoulder with them, even though we are not living day to day through the aftershocks, the disruption, the lack of water, the lack of sewerage services, and, in some cases, the lack of electricity and heating. Any of us who have families or relatives there or elsewhere understand how terribly disruptive and morale sapping that must be.
On the subject of morale, I think it is fair to say that there has been a perceptible shift in mood since the last major aftershocks. People have, if you like, shifted the questions they are asking from how they will get through the immediacy of this, to what is the longer-term game plan for recovery and rebuilding. There are many streets in the low-lying areas of Avonside, Bexley, and other areas, where those living there are living through terrible, terrible disruption. They are living in broken homes and they are unclear whether they will be able to rebuild, whether their insurance costs will cover it, or whether they will be forced to move—
Amy Adams: This is not the SOP, though.
Hon DAVID CUNLIFFE: The Supplementary Order Paper is around demolition costs, and I am talking about demolition.
Amy Adams: No it isn’t. It’s around CBD costs, not Bexley.
Hon DAVID CUNLIFFE: Yes, and it includes central business district costs, of course. But as the mood is around the central business district, so the mood is around where people live. It is the need for certainty and the need for a plan, and at the moment people do not have that. They are now turning to the Government and they are asking how long it will be before they will know what the plan is.
I was in Christchurch not long ago and I had a look at the central business district. It is an extraordinary sight, as we all know. The scale of the devastation on a brick-by-brick basis is so much more than is captured on our TV screens. It was even more eerie at night, frankly, when one would expect the central business district to be lit up, but in the centre of Christchurch there is nothing. There is only darkness because there is no power, there are no people, and there is nothing going on. It is just walled off.
It is clear that much of that central business district will have to be demolished. The latest aftershocks only increased the concentration of sites where that will be required. What is not clear is what will be rebuilt, where it will be rebuilt, whether it is actually tenable to build a central business district on the same spot, or whether it will need to be shifted. What design would proof us from future earthquakes? On the upside, what design would give us the world’s best small city to live in? That is the opportunity that is before Christchurch.
We will sense the shift in the mood from getting through the days, weeks, and months of hardship caused by an earthquake, to asking the positive questions about this new place that we will get to. If it is not simply the rebuilding of what we had—and sadly it cannot be—then what is the new place that we will get to? It is for that reason that in my earlier remarks I drew the connection between the rebuilding of Christchurch and the rebuilding of New Zealand more broadly, because all New Zealanders are feeling—
Amy Adams: I raise a point of order, Mr Chairperson. Has this debate now become one of a general discussion about the rebuilding of Canterbury? My understanding was that it was reasonably tightly constrained to the two specific changes on the Supplementary Order Paper that are around demolition costs, and property acquisition costs related to demolition. If it is in fact a wider debate around the rebuilding of Christchurch, then I would be grateful for your advice on that, because it seems to me that the member is straying well off the matters in the Supplementary Order Paper.
The CHAIRPERSON (H V Ross Robertson): The member is correct in saying that it should be around the non-departmental output expenses and capital expenditure, but I have given the member a little bit of latitude, given that there was some confusion at the start of the debate. The member’s time is almost completed.
Hon DAVID CUNLIFFE: I think that for the people of Christchurch and Canterbury, although they appreciate that there is important work to be done in the central business district around the direct demolition costs, any discussion of that legitimately touches on the broader concerns and feelings about the need for a clear plan for a rebuilding of the whole city and of the Canterbury economy. The same mood exists around the broader country about the need to rebuild our shattered economy.
The Committee joins together in supporting these amendments because the Committee joins together in supporting the people of Christchurch. I want the people of New Zealand to understand that Labour Opposition members—who are citizens of New Zealand, like National members and members from every other party in this House—care deeply about Christchurch and its people and about New Zealand. That is why we are here and why we support these amendments. Thank you.
Dr KENNEDY GRAHAM (Green) : I will make just a few comments about schedule 1 of the Appropriation (2010/11 Supplementary Estimates) Bill. I will pick up on one or two of the points that have been made earlier and perhaps explore them a little further. We understand well that the intent of Supplementary Order Paper 246 is to provide supplementary money to the tune of $27 million for property output expenses and demolition and $3 million essentially for demolition-related property purchases. We understand that the reason for the Supplementary Order Paper is that the Budget moratorium period, from 11 April to 19 May, covered the period of Cabinet decision-making that spanned 22 February. I make it clear from the beginning that the Green Party has no difficulty in voting for this Supplementary Order Paper.
Perhaps the Committee could advise, with respect, the Hon David Cunliffe to resist the temptation to speak on behalf of the Committee when he is in full knowledge of the fact that the Green Party opposed the original Canterbury Earthquake Recovery Bill at the time, and that we did so for good reason. I will not rehearse the reasons; we conveyed them at the time. We supported the recovery purpose of the Canterbury Earthquake Recovery Authority but we judged the powers granted under the bill to be excessive for that purpose. That said, it is history and we do not oppose—we never did—an appropriate amount of funding for the rebuilding of Christchurch.
I believe that we are all cooperating across party lines to that end. I for one have held three public forums entitled Vision Christchurch since April through to June with the aim of engaging experts and the public together to embrace a vision of a future eco-city that would reflect 21st century values and technology. There was one forum in central Christchurch at the end of April, one in New Brighton a few weeks ago, and one just 2 days ago in Lyttelton. They have been very well attended, with about 100 to 200 people at each meeting, and there have been superb presentations and animated discussion. Geotechnical consultants, landscape planners, architects, civil engineers, transport specialists, community sociologists, and iwi leaders have attended. I plan to get all that information from those meetings and before very long channel it into the cross-party forum under the chairmanship of the Minister for Canterbury Earthquake Recovery. We are all collectively combining our strengths to rebuild the city in good faith, but I point out that it would be presumptuous to assume on behalf of the whole Committee that we are all in favour of everything that has gone before.
I will make a couple of specific points about schedule 1 and also just touch on an issue that attends it: mainly, that the psychology has changed. I think Mr Cunliffe was correct when he said that after 13 June the psychology in Christchurch has changed—indeed, it has. The psychology has changed from 4 September to 13 June, with all the trauma of 22 February. In the first two meetings I spoke about there was an upbeat mood about rebuilding Christchurch. After 13 June, at the most recent meeting I convened in Lyttelton, there was this new psychology. I would not call it a malaise but a deep trauma on the part of the residents. It has bifurcated the city into those who basically are making a definitive decision to leave—anything up to perhaps one-fifth of the city; we will find out—and those who will remain.
I was apprehensive about that mood as we went into this forum on Sunday, but I found that from those 60 to 80 percent of the residents who are still resolved to remain in Christchurch, the determination to rebuild the city after 13 June came through. Just last Sunday afternoon in this meeting, with about 115 people present, the determination came through loud and clear. It was arguably the most inspiring experience I have had in the whole of the earthquake experience to date. I think we can take consolation from that determination, and a certain amount of confidence that we are actually going to get there.
I will pick up on the figures from where Mr Nash left off and address these questions to the Minister in the chair, the Minister of Finance. I want a bit more specificity. We are talking about $27 million for demolition; I have no query of that. I just query whether $3 million for property purchases will prove to be enough in the fullness of time.
I have been down to the central business district. I come and go from Christchurch. I live there most of the time. I left at 8 o’clock this morning. I went in for a Radio New Zealand interview in downtown Christchurch this morning at 7.15. I have been into the red zone a couple of times. Mr Cunliffe’s description is correct: it is an eerie experience. Most likely now 1,000 buildings will come down. A couple of months ago it was 242, then it was 300, and then it was 900. Over 1,000 buildings will come down. Anything from 50 to 60 percent of the buildings are coming down. There will be $3 million for property purchase.
As I understand it, we are talking about $3 million for just the central business district. With a broad operating assumption of 1,000 buildings coming down, I ask the Minister what percentage of those buildings that $3 million pertains to. Under the Canterbury Earthquake Recovery Authority powers the Minister for Canterbury Earthquake Recovery has the powers of requisition. What percentage of those buildings—if it is possible to answer this question—does that $3 million pertain to, and does it pertain in any way to requisition? Mr Nash talked about purchasing private property if it is being sold, and about insured property.
My question is—and in all three meetings I have found this the most excruciating challenge of all, I think, for the rebuild—about the relationship and the cooperation between the private sector and the public sector. I sat through a business meeting last night in Christchurch of about 30 business people and people interested in heritage. I know the agony that those business owners are going through, and there is a risk of capital flight out of Christchurch sooner rather than later. They are on the verge of moving.
On the other hand, there will also be private owners who will refuse necessarily to act in the public interest. With my three meetings I am trying to generate a public mood where the public interest in a re-envisaged city becomes palpable, and the public interest can be expressed by the Minister for Canterbury Earthquake Recovery and Roger Sutton. Even with the 40 percent or 50 percent of buildings left standing, there may be intransigent private owners.
I think the single biggest challenge to the Government—and it is a challenge to all of us as a society—whether or not there is a cross-party forum, is how we deal with that situation. If we have a vision, and I have seen architects’ PowerPoint presentations with a vision of a new eco-city, some buildings could be in the road. Does the $3 million pertain to requisition? I would not necessarily critique it. I was critical of excessive powers, but I understand the powers exist and they can be used in the public interest. I would be intrigued to hear the answer on that point.
Hon BILL ENGLISH (Minister of Finance) : I acknowledge the perceptive and considered approach of the previous speaker, Dr Kennedy Graham, to the earthquake issues. I have listened to his media comments and I have found them to be helpful. When I think of the non-Government parties in relation to Christchurch, I say that the Greens are again marking out a more considered approach to the issues than perhaps some other parties are.
To deal with the member’s question, which was raised initially by Stuart Nash with regard to the dollar amounts, the numbers are basically a guess. We needed to get some cash to enable the Canterbury Earthquake Recovery Authority to get on with the job, but in acknowledgment of the process of getting supply from Parliament, we did not want to exploit that opportunity by trying to appropriate a large amount of money for which we could not provide a strong rationale. The number is a guess at the amount that might be required simply to tide over the operation until the full budget process is completed.
Dr Graham has put his finger on an absolutely central issue in the progress of the rebuild. On the one hand, it is trying to get the right balance between the need to build confidence by getting things going—which is a role that initially has fallen largely to the Government, working alongside the council—and, on the other hand, it is ensuring that taxpayers do not take on all the responsibilities. So it is conceivable that some owners of buildings in the middle of Christchurch with a complex situation may prefer the Government to pay for the demolition of their building, either because they are just not in a psychological state to make decisions or because they cannot get their bank, their insurer, their tenants, and their next-door neighbours all lined up, because it is a bit of a complicated process. There is a risk that owners will simply hand over all those responsibilities to the Government, and that would not be appropriate. They have to take the risks that go with the ownership of property, including what happens when events that they are insured against actually occur.
There is an easy and obvious answer to it, but I think that we will work out, in the pragmatic Kiwi way, through the planning process just what that balance might be. In the end, I think the member is quite right that the purpose of getting on with the demolition that is financed by these appropriations is to build the kind of confidence that will encourage and enable private investors to put in their capital, because ultimately that is what will decide the fate of Christchurch. The vision of the community is a necessary step, the competence of the council is another necessary step, and then someone has to actually put up the capital to build the buildings according to both their objectives and the objectives that are set out by the plan. Will this appropriation be enough? I would be very surprised if it is, but it is certainly enough to tide us over.
- The question was put that the amendment set out on Supplementary Order Paper 246 in the name of the Hon Bill English to schedule 1 be agreed to.
- Amendment agreed to.
- Schedule 1 as amended agreed to.
- Bill reported with amendment.
- Report adopted.
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Bill read a third time.|
Imprest Supply (First for 2011/12) Bill
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Bill read a third time.|
Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill
- Debate resumed from 16 June.
Part 2 Telecommunications networks involving Crown funding
CLARE CURRAN (Labour—Dunedin South) : I am pleased to take a call on Part 2 of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. I will address an issue that lies at the very heart of the Act within which this bill resides and the principle upon which it should rest, which is the principle of competition for the long-term benefit of the end users, or consumers, who are the people of New Zealand.
I will make some remarks on Part 2 before I get into the substance of it and talk about the amendments that Labour is putting forward on this part in respect of competition and the concept of investment. First of all, when investors come to this country they should know a couple of things. The first is that their investment is welcome and that the environment they are investing in is sound and stable, because the regulatory and legislative environment is based on the sound principle of competition for the long-term benefit of end users. Secondly, investors should know that in this country there is an expectation that corporate interests are not put higher than consumers, service, and affordability, and they should know that they are not put lower, either. They should also know that competition is critical, because in the telecommunications market we need rigorous competition in order for it to be successful. I hope that during this debate a reference is made to the importance placed on this principle by the previous Labour Government. The Digital Strategy sat within that principle and the Telecommunications Act arose out of it.
One thing is missing from this whole debate, and that is the other side of the equation. If the Minister in the chair, the Minister for Communications and Information Technology, takes a call at some point during this part, I would like to hear his views on the reasons why people connect to high-speed broadband. Although I suppose some voicing has been given to this issue, not a great deal of substance has been given to it during the whole of the 2½ years of discussion about ultra-fast broadband and about this network’s roll-out. We have to ask why people will connect to it and what will drive them to make that decision. It is called content, which is the important issue; the demand is what people can use the high-speech broadband connections for, and what will motivate them to move to make that switch from copper to fibre. The Minister, as I said, has not seriously addressed this issue. He does not appear to be hugely interested in that bigger vision, and he is strangely silent on any consideration of how the content industry might fit into it and what the regulatory environment might look like in that content industry, unless, as could be feared, it is about cementing the way for further monopolies in the content sector as well.
New Zealand can realise its potential as a nation of technological innovation only if our population is digitally literate and has clear pathways into future education and high-wage, high-skilled jobs. The traditional broadcasting sector is transforming and merging with what has been called a telecommunications and information and communications technology sector. We do not have a new term for that sector yet; it is known around the world as convergence. It still has not really been named, other than being described as the digital environment. The fact is that the two sectors are coming together. Increasingly, content in that digital environment is crossing the technological platforms. Traditional broadcasting as we know it is now rapidly becoming obsolete, and the digital environment is the future.
“Content” describes the creative material that New Zealanders produce—not just in New Zealand, obviously—and it is delivered in that digital environment across all mediums. It includes films, programmes, news, current affairs, music, games, etc. It is delivered via all those platforms, whether the platform is television, radio, the internet, or print, and it will be successful only if people choose to access it and see its potential for the future. To do that, people will need access to quality of content, diversity of content, and adequate competition. That goes to Part 2, and to the importance of providing and making sure that real competition is involved.
Before I carry on, I will mention one of the important amendments to Part 2 that Labour has put forward. It will amend new section 156AD in clause 24 by substituting subsection (2), and it goes to the importance of what is called the equivalence of inputs. I will talk about that in a minute, but essentially it will allow that competition to occur on the network itself, on the platforms on which the content resides. We say that competition should be allowed to occur from the outset, rather than from 1 January 2020. That is a long way away, and in this environment, where the technology is changing so rapidly, the ability to have that competition both at the network level, on the delivery of the platforms on which the content resides, and also in the content industry—traditionally known as the broadcasting industry—is so important. Therefore, the industries should be looked at as one, rather than as two. The discussion that we are having about broadband and the roll-out of broadband should also include the content industry. That is what is missing from the discussion in this debate.
I will go specifically to the open access regime, about which Labour had a number of comments to make in its minority report on the bill before us. We consider that the open access undertaking provisions for ultra-fast broadband are severely flawed, as they explicitly exclude price and non-price terms for bottleneck services. The limited form of Commerce Commission oversight was discussed at great length at the Finance and Expenditure Committee. We believe that what has been provided for in this bill is not a true substitute for a real open access regime. The undertaking provisions do not require service providers to achieve equivalence of inputs, which is the standard that is currently applied to Telecom. As a result, there is a real risk that a service provider could provide itself or individual access seekers with better ultra-fast broadband services and more attractive prices compared with others. That is one of the reasons why Labour is opposing this bill.
Open access is a core issue. It goes to competition, it goes to the ability of real competition to occur, and it goes to the fear that lies at the heart of Labour’s opposition, which is that there will be monopolistic practices and the ability for price gouging to occur, and there is history. There is history in this area, which we can outline in detail for the Committee, and I hope to do so later on. As a result, as I said, there is a real risk that the service provider could provide itself or individual access seekers with better ultra-fast broadband services and more attractive prices compared with others. That behaviour would be anti-competitive, and under this law there is not any remedy to challenge it until 30 December 2019.
That is why we have put this amendment before the Committee today. We think there must be sufficient incentives for service providers to comply with undertakings. That is why we put forward an earlier amendment, which was voted down in the previous part of this bill, on the penalties that can be made.
Hon DAVID PARKER (Labour) : The history of Part 2 of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill is illustrative of the poor process that the Government has been running. The Finance and Expenditure Committee considered the legislation. Various parties, including the Labour Party, were concerned at the suggestion that the Commerce Commission would have no jurisdiction following the passage of Part 2, which inserts new Part 4AA into the primary legislation, the Telecommunications Act. Considerable pressure was brought to bear through the media, which said that it was quite unwise of the Minister for Communications and Information Technology to contemplate an absence of regulatory oversight of this new area of undertaking.
Labour wrote to the Minister and said that we needed to talk about this matter. We wrote a very reasonable letter, I thought, expressing our concern and asking for a response from the Minister, which we never got. We then wrote again to say that it was time we got a response. It was by then too late, by the design of the Minister, to make amendments at the select committee, so the bill was reported back with these inappropriate provisions that said there should be no regulatory oversight. The Commerce Commission was precluded from doing things that it could otherwise do.
The Minister then said publicly that he would back away from those provisions, I suspect partly because there was doubt as to whether he could pass them in this House because concerns were being expressed not just by Labour and the Greens but also by the ACT Party and the Māori Party as to whether what was being proposed by the Minister was wise. We then thought we would get to a reasonable place where we would have some regulatory oversight, post these new arrangements.
I have no problem with long-term contracts being entered into with Telecom. What I have a problem with is, effectively, the ouster of any jurisdiction that could look at whether what will then be the dominant player is abusing its position in a way that is not in the interests of competitors or consumers. So I was then surprised to hear that the amendments set out on the Minister’s Supplementary Order Paper 247, would remove some of those offensive provisions relating to the ouster of the jurisdiction of the Commerce Commission. But then we were told—and we have yet to see—that similar-effect provisions are being inserted into the contracts themselves.
I ask the Minister in the chair, the Minister for Communications and Information Technology, to take a call on whether, as we have seen in news reports, an indemnity is proposed to be given in the contracts with Telecom that indemnifies Telecom for all losses that might be occasioned to it as a consequence of future regulatory action. These things may have been misreported in the newspapers, but I am not in a position to judge whether that is the case; I have not seen those contracts. But if there is an undertaking that the Crown will indemnify Telecom in respect of all of those risks, then I ask the Minister to justify that.
If the Minister cannot convince this House to pass legislation to oust the jurisdiction of the Commerce Commission—and some jurisdiction is left with the Commerce Commission—then why does he think it is right that in the contract he can effectively override what would be the statutory provisions by providing for a contractual term to the same effect? If that is the effect of what is being proposed, then I expect some of the competitors of Telecom are considering whether the Minister actually has the power to do that. It would be very surprising to me that Parliament would not agree to effectively oust the jurisdiction of the Commerce Commission but that the Minister could have such broad powers that he could do just that by contract. Even if that is right as a matter of law, then I ask how that could be right as a matter of principle—that the Minister could by contract give an indemnity in respect of those matters.
There has been some misrepresentation of Labour’s position on this bill. It has been suggested that Labour would break contracts. We have not said that. What we have said is that we would review the regulatory regime to make it clear that the regulator has the right to assess according to sound and standard regulatory practice whether the conduct of Telecom—and, indeed, the conduct of the Minister, given that the Minister has said he will try to take these contracts beyond the law—breaches fair regulatory standards, and that if it did, then the consequences would flow according to that legislation. That is not the same thing as Labour saying that we would break the contract. We are not saying that. We are saying that the regulator should have the power to regulate monopoly excess. If there is no monopoly excess in the future, no one has anything to fear.
I again stress that this is not to say that long-term contracts are inappropriate. Long-term contracts are necessary in order to give contractual certainty to the parties in respect of these important capital investments that they are making. Indeed, the long-term interests of consumers already pay regard to the fact that one can have long-term contracts that are in the long-term interests of consumers. So I want to hear from the Minister why he does not think it is now appropriate to have legislation that ousts the jurisdiction of the Commerce Commission to give a remedy to consumers who might be abused by uncompetitive monopoly practice. If he is of that view—presumably that is why he has removed these provisions from the bill—then how can it be appropriate for him to do the same thing, in effect, by contract?
Hon DAVID CUNLIFFE (Labour—New Lynn) : In the Committee stage of the debate on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill we are looking at Part 2. I will do that, firstly, by recalling very briefly the structural context of the policy, the focus on the ultra-fast broadband connections. I will then go through the key issues that are raised in the new Part 2A and in Part 2 and then look at Supplementary Order Paper 247. I hope members will bear with me as, hopefully, I go through that in a reasonable, logical way.
The first level is the strategic context of what is trying to be achieved in this bill. The Government was elected with a mandate to roll out fibre to the homes of 75 percent of the population using a promise of $1.5 billion of Crown subsidy, or so it seemed. It turned out that it was not a subsidy; it was an investment at a commercial rate of return. That caused some issues, because the industry responded that it was not possible to roll out that much fibre to that many people for the amount of money the Government was offering, given that it wanted to make a profit on it through Crown Fibre Holdings. The Government then took nearly 3 years to go through contortions to work out a way of watering down the regulatory framework to the point where the market, or at least one player in the market, would find that it could make enough out of the regulatory change to supplement the meagre offering from the Crown.
The Crown in this case, as in other cases, was essentially selling the framework—selling the law—in favour of whoever won the contract to enable it to make higher levels of profit. I forgot, although I have done before, to give some credit to Sir Roger Douglas, who at the Finance and Expenditure Committee got the officials to put a number on that. It was $400 million to $600 million of additional subsidy through regulatory dilution.
The select committee debate turned on a number of issues, which we will not rehearse in this part of the Committee stage. Principal amongst those issues, one of probably half a dozen key issues, was the so-called regulatory forbearance period—the regulatory holiday—which meant that the Crown’s regulator, the Commerce Commission, would simply be unable to look at unbundled fibre contracts, ultra-fast broadband contracts, for a period of 8½ years from the implementation of this bill. This, of course, got the whole industry up in arms, and the Minister for Communications and Information Technology, Steven Joyce, was standing in a very lonely minority of two, with the other one being the incumbent telecommunications company, Telecom.
The industry was deeply worried that the whole regulatory framework would be set backwards. So, indeed, it has proven to be. Data released just recently showed that New Zealand is cascading down the international broadband ratings. Having clawed its way up in the preceding 5 years, it is collapsing again, really tumbling down the rankings. It is no surprise that in the 3 years it took Steven Joyce to make up his mind as to which way was up and to get a bill to the House, New Zealand has been on a broadband plummet. It has been USB—“ultra-slow broadband”, or at least an ultra-slow bill—coming to this House.
Then, of course, there was a bit of sleight of hand on the regulatory forbearance period. The Māori Party members, either by waking up after the select committee process was over, because they did not often turn up and did not say boo to a goose when they were there—
The CHAIRPERSON (Lindsay Tisch): I remind the member that we are on Part 2. This is not a critique of what has happened in other parts. Part 2 is very specific: it inserts new Part 4AA. That is what we are on, and that is what I ask the member to come back to.
Hon DAVID CUNLIFFE: My information is that Part 2 covers the regulatory forbearance period, and that is exactly what I am talking about. In discussions between the Māori Party and the Minister it was apparently struck out.
The CHAIRPERSON (Lindsay Tisch): I have mentioned that Part 2 has nothing to do with the Māori Party, and I ask the member to come back to Part 2.
Hon DAVID CUNLIFFE: The regulatory forbearance period, which was at the heart of Part 2—
Hon Christopher Finlayson: He’s not nearly as smart as he thinks he is.
Hon DAVID CUNLIFFE: I am not nearly as nasty as that little Minister on the far side. What a nasty little man he is. He cannot get through a debate on an unrelated bill without making nasty little comments in the Chamber. Shame!
The regulatory forbearance period was at the heart of Part 2, and it is intriguing that it was struck out of the bill after discussions between the Minister of Communications and Information Technology and the Māori Party. What is intriguing is that the Māori Party did not appear to take a position on that issue at all during the select committee process, and it voted with the Government at every point. It is intriguing that it should have changed its position subsequently. The question has been asked publicly whether the Māori Party was, in fact, invited to change its position by a Minister who realised that he was isolated in public opinion and wanted a way off the lonely branch that he was on. Whether or not that is the case, I guess we will never know for sure. The public will never know for sure, and that is precisely the point: this has not been a good legislative process.
This has not been a good process. This has been a process of inadequate transparency, with last-minute legislation having been rushed into the House and rushed through a select committee process, and then a very substantive Supplementary Order Paper—we are looking today at Supplementary Order Paper 247—was brought to the Committee of the whole House to make late amendments that the select committee did not consider. The industry and the public were not invited to submit upon these amendments, and this Committee is now being asked to give a judgment on such matters without the benefit of hearing submissions from the industry. The issue is that these changes are very long-lasting changes. They go to the heart of the intelligent infrastructure of this country; they will last a generation of human time, and five to 10 generations of information and communications technology, yet we are being asked to do this job without having had an adequate select committee consideration.
I will just take a dive down to several of the related issues. As my colleague Clare Curran has said, the open access regime is at the heart of this. I will cover two parts of it. Firstly, what replaced the regulatory holiday? The regulatory holiday was obviously outrageous. To take the Commerce Commission off the job for a decade was never, in common-sense terms, going to be a starter. But to replace it with an indemnity by taxpayers’ funds, to the profit of the incumbent entity, has to be adding insult to injury. Not only is the competitive framework of the industry done grievous bodily harm by this legislation but also the incumbent gets a taxpayer-funded “get out of jail free” card. Labour’s position is that we will restore regulatory oversight, and it will then be a matter between the Commerce Commission and all players in the industry as to how they fare under the appropriate regulatory purview. If they have to have compliance measures, or if they face penalties, then that is a matter for them.
On the open access regime, it means that service providers would allow retailers non-discriminatory access on what should be, as my colleague Clare Curran has said, an equivalence of inputs basis. That means the same stuff is produced at the same price in the same way so that there is zero possibility of vertical integration and discrimination between the component parts of Chorus2. Why have I said Chorus2? Because I agree with the Minister and the Government that those issues between the retail business—what is called Telco2 or “Newco”—and Chorus2 are now less important. The problem now exists in Chorus2 between the wholesale and network access layers—the main backbone of the system—because we do not have equivalence of inputs at all layers. We do not have it at layer zero or layer one on fibre, and that means discrimination is possible between internal parts of Chorus2.
The Supplementary Order Paper talks about the discontinuance of accounting separation in the proposed new clause 23GDC. We had accounting and functional separation between the two key boxes that now reside within Chorus2: the access layer and the wholesale layer. Those bits have been brought together without appropriate transparency, regulatory oversight, or arm’s-length provisions, and that puts the wholesale end of the industry at risk.
I will put that in really simple terms for the public. If they are buying telecommunications services from a provider other than Chorus, that provider will have to have bought those services wholesale from Chorus at a price that we now have no guarantee will be a fair and equitable price between other parts of Chorus and the rest of the market. In other words, the citizen—the punter, if you like; the account holder—whether purchasing at that wholesale level or passed on down to retail, may well be paying too much. The dominant wholesaler, now cross-subsidised by this Crown investment, may well find itself able to make super-normal profits at the expense of the consumer.
In other words, within Chorus, it will be a return to the darker days. There is a very, very great deal of concern in the industry.
Hon STEVEN JOYCE (Minister for Communications and Information Technology) : I take a call to answer a few of the issues raised in the debate so far on the Telecommunications (TSO, Broadband, and Other Matters) Bill. Firstly, the equivalence of inputs issue that was just raised by the member David Cunliffe is important, but it is important to note that in terms of the two layers he talked about, there is a non-discrimination requirement within Chorus between layer 1 and layer 2, which is being monitored and enforced by the Commerce Commission. It is a good story, I say to Mr Cunliffe, but it does not actually hold any water.
The full equivalence of inputs is not required until 2019, for a number of reasons. I will run through them for the member’s benefit. Firstly, there is a lot of debate internationally in this new environment—and I stress that it is a new environment—in relation to the technical methods for unbundling of point-to-multipoint fibre. It is still being worked through internationally, and implementing it currently would add very significant costs to the build.
It is fair to say also that the demand for unbundled residential services is uncertain. In fact, if we unbundle layer 1 at this point, we may end up creating another monopoly, because of the way the electronics work. I had quite a discussion with the former UK telecommunications Minister Lord Stephen Carter, whose view was that layer 2 was probably the appropriate approach at this point to get the best competition outcome. That approach has been followed a lot internationally. Requiring unbundling at 2020 will give local fibre companies and industry sufficient time to develop an appropriate unbundling solution for this part of the network.
The member missed a number of other points. Firstly, I find it difficult to be brought up by Labour members on this matter, because it took them about 7 or 8 years to get to the same point with operational separation. We will not even talk about mobile termination rates, which they went on about at great length before they eventually handed the issue over to another Government to do something about.
In terms of rewriting history, I also listened to Mr Parker’s discussions about regulatory forbearance, which I think is important. He said Labour had sent a letter to the Minister, got no response, sent another letter, but it was too late. That is not correct, as Mr Cunliffe and Ms Curran know, because there were a number of discussions. The regulatory forbearance issue was very difficult for everybody, and the reason I know it was difficult for Labour members was that I actually asked them to come up with a solution that would help to solve the problem. They borrowed from one of the industry lobby groups a solution called special access undertakings, and they said that was the answer. But when we had a look through it, we saw that it either achieved nothing or achieved exactly the same outcome as regulatory forbearance.
I accept that we made the change at a late stage, but the reality was that nobody had the answer until we came up with it in consultation with the Māori Party. It is an answer that will keep the Commerce Commission on top of those price issues, notwithstanding the fact that it is not likely to have any impact, given the very competitive prices. It will also provide a mechanism that will allow investors to invest and offer lower prices than they would otherwise be able to offer. I thank Māori Party members for their support on that. They had a singular focus on keeping prices down for consumers. That was also our focus. It was about balancing those objectives.
It is a public-private partnership. I remember that members of the previous Government had a view that they would like to have public-private partnerships, but never actually got around to one because they could not understand how the partnerships worked. One has to provide some certainty to investors to enable them to offer good prices and good conditions so that consumers get the benefit, and that works very well.
I go back to address a couple of the issues raised by Ms Curran. Firstly, I would love to talk all day about content and demand, but I note for her reference that it is out of scope for this section of the bill. It is also important to note that the open access regime is very much in place and, perhaps for her benefit, I note that forbearance has been removed, which should save some time later on in the debate.
It is very important we get the regulatory framework right. I believe we have done so. I always think it is amusing that Labour members want to take more time over everything but then criticise us for how long it has taken. It is a very good deal, it is supported by a large majority of New Zealanders, and I think it is very exciting. The parties in the Chamber who are supporting this bill understand the importance of ultra-fast broadband for New Zealand. Thank you.
Hon MARYAN STREET (Labour) : I understand we are debating Part 2 of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, and that is what I will address. It is not particularly my forte, but I want to talk about the international obligations of telecommunications regulatory frameworks, which I do know something about—at least, I understand the international obligations. I will talk about those with reference to two things in particular, but I will come to those in due course.
I acknowledge that I was not on the Finance and Expenditure Committee, which dealt with this legislation, so I come to it perhaps with the advantage of fresh eyes, but when I look at the bill in front of us now I see that it is clearly a dog’s breakfast. Most of its text has been struck out and replaced by other things in the course of the select committee process. There is more striking out and more underlining—which indicates new insertions in this bill—than one can shake a stick at. I am not persuaded that even with all of these amendments that have come through the select committee process, we have made this bill the best it can be.
I will pick up the comments my colleague the Hon David Cunliffe made a moment ago in respect of the regulatory forbearance period, which was struck out—and rightly so. It was rightly struck out after considerable effort on the part of Labour members on that select committee, who fought alongside industry representatives to ensure that that forbearance period, that regulatory holiday, was removed from the legislation. But I am not persuaded that what we have is a vast improvement.
The two areas I will address in particular are New Zealand’s international obligations under GATS, which of course is the General Agreement on Trade in Services, and under our free-trade agreement with Australia and ASEAN, known as the ASEAN-Australia-New Zealand Free Trade Agreement, because international obligations exist for a regulatory framework to apply in the rolling-out of ultra-fast broadband. This may come as a surprise, and perhaps it came as a surprise to the Minister for Communications and Information Technology, which is why, under Labour’s pressure, he realised that the forbearance period was not tolerable and not sustainable. But I come to the fact that some advice that was available to the Minister, members of the select committee, and officials has been set aside. APEC has developed a document called APEC Best Practices for Implementing the WTO Telecoms Reference Paper. This, as it describes, sets out best practice. It essentially reflects the General Agreement on Trade in Services communications commitments. The document is not binding in international law, and I readily concede that. It is not binding, but it is about best practice.
A number of questions the select committee had were referred to the Ministry of Foreign Affairs and Trade, particularly to the trade law unit that is part of the legal division of the ministry, which does the close analysis of legislation to ensure that New Zealand meets its international obligations. My question to the Minister, given the dog’s breakfast of a process surrounding this legislation, asks whether he can guarantee to this Committee and to consumers of telecommunications services—
The CHAIRPERSON (Lindsay Tisch): I will call the member again, but I must ask you to come back to the part—Part 2. It is quite narrow. I ask you to come back to Part 2.
Hon MARYAN STREET: Thank you, Mr Chair; I am of the view that I am discussing things that come out of the insertion of new Part 4AA in Part 2. It is that part that triggers these concerns about international obligations, because the part goes to the obligation, the rights, and the responsibilities of the Commerce Commission to be the independent regulatory body that our World Trade Organization (WTO) obligations require. There should be an independent regulatory body—no, I might have to correct that: the obligations may not require it but they certainly recommend it.
I go back to my question, which asks whether the Minister can guarantee that New Zealand is implementing best practice in this regard. There are parts in this Part 2 that the Commerce Commission has regulatory oversight over after a period of 8½ years, but is this in fact best practice? Why has the Ministry of Foreign Affairs and Trade, in its advice, said to the committee that as the APEC document on best practice “only concerns consistency with New Zealand’s international obligations, it is not considered further here.”? I am not sure that the Minister is able to reassure the Committee that this legislation not only complies with the detail of our obligations, both under GATT and under the ASEAN-Australia-New Zealand Free Trade Agreement, but also represents best practice for the regulatory framework surrounding the roll-out of ultra-fast broadband services to New Zealand consumers. I would like the Minister to take a call and respond to these concerns, because it is not plain from Part 2 either that our obligations are being met or, even better than that, that we are doing the best we possibly can, considering that we do like to pride ourselves on being at the forefront of the recognition and implementation of international obligations.
The regulatory holiday was struck out in a secretive and cloaked manner, and I am not persuaded that the process in relation to that was the best it could be. I consider that too many either unanswered or inadequately answered questions still surround this legislation, particularly as it relates to those areas with which I am familiar, which are the World Trade Organization and free-trade agreement obligations.
Finally, I speak in support of my colleague Clare Curran’s amendment to new Part 4AA, inserted by clause 24, to add new paragraph (c) to section 156AD(3), which has the effect of ensuring that the Crown alone will bear the costs of any significant changes made to pricing. Here we come back to the potential for the Commerce Commission to have adequate oversight of, and to operate as an independent regulatory body for, the best possible delivery of what are becoming increasingly essential services for all New Zealand consumers. Thank you.
Hon DAVID CUNLIFFE (Labour—New Lynn) : Firstly, I would like to come back and thank the Minister for Communications and Information Technology for taking an earlier call on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, and to pick up on some of the key points that he made about non-discrimination, regulatory forbearance, and point-to-multipoint services. I then wish to take up a couple of matters in relation to the Kiwi share replacement by the telecommunications service obligation covered on Supplementary Order Paper 247 in the name of Steven Joyce.
On non-discrimination, the Minister rose to his feet to say the Opposition failed to understand the matter, because non-discrimination applied at both layer 0, which is the ducting, and layer 1, which is the dark fibre. The Minister is strictly correct, but he is telling only half the story. Non-discrimination applies at those layers, but equivalence of inputs, the gold standard in the industry, does not—at least it does not to ultra-fast broadband fibre within the first 10-year period. I hope that the public can now be very clear about what is and is not covered. In other words, the gold standard applies only to the downstream services, not to the ultra-fast broadband fibre, and the lower standard, which is simple non-discrimination, applies across the lot, which is what the Opposition has said from the outset.
Secondly, on the regulatory forbearance period, it is quite clear now that the Supplementary Order Paper repeals only part of it, not all of it as the Government had initially said it would. This proves again what an opaque and difficult, shadowy process there is. As we said earlier, this matter was not reported to the Finance and Expenditure Committee; it was not put out for public scrutiny. What is interesting, of course, is that this emerged from a discussion between the Government and the Māori Party, behind closed doors.
Sandra Goudie: What’s shadowy about it?
Hon DAVID CUNLIFFE: One of the shadowy things is that it is not clear whether the Māori Party got what it was asking for, which was the removal of regulatory forbearance, apparently. This Supplementary Order Paper, which I doubt the member has even read, does not actually remove all the regulatory forbearance provisions, only part of them.
The bill as introduced contained certain undertakings. To quote from the explanatory note on Supplementary Order Paper 247, “This Supplementary Order Paper removes regulatory forbearance from the Bill as introduced but retains an explicit restriction on the Telecommunications Commissioner recommending unbundling of point-to-multipoint layer 1 services.” The Minister, to his credit, did amplify that in his remarks. He amplified it by underlining that he was moving at an ultra-fast pace and these things would last until 2020. Good Lord! Until 2020? It is 2011 now, and that is another 9 years of restriction, the reason for which has never been made clear. The Minister might say he has had a private conversation with a former British Minister. I do not know whether that former Minister was speaking in an official capacity, in a private capacity, or in the capacity of someone hired by an industry participant or lobbying firm—I do not know what capacity it was in. It is quite common for former Ministers or MPs to be hired by well-heeled telecommunications companies to persuade other Ministers of the merits of the companies’ cases. But, again, this has emerged only in the debate on the Supplementary Order Paper, which has been rushed to the Committee and has not had select committee consideration. It is part of a dismal legislative process.
The next issue, of course, that has emerged only in the Supplementary Order Paper is the Kiwi share obligation. To the public out there, the Kiwi share obligation was the golden share left in Telecom to guarantee the public’s rights when Telecom was privatised 20-odd years ago. It was changed, in part, to a set of contracts or deeds, the minimum service standard, which we called the TSO, or telecommunications service obligation. But several critical aspects were left in the law, not in the deed. The first was that a minimum amount of Telecom had to remain in New Zealand ownership: that only 49 percent of it, I think, could be owned—
The CHAIRPERSON (Lindsay Tisch): I am looking very closely at the bill. The member is referring to the Supplementary Order Paper. The Kiwi share obligation is not in Part 2. I ask the member to come back to discussing Part 2. If he wishes to speak about the Supplementary Order Paper, it must relate to Part 2.
Clare Curran: I raise a point of order, Mr Chairperson. With respect, the point of Part 2 is to address the replacement of the regulatory forbearance period with a new regulatory arrangement—
The CHAIRPERSON (Lindsay Tisch): It has nothing to do with the Kiwi share obligation—absolutely nothing. Stick to Part 2.
Hon DAVID CUNLIFFE: Mr Chairman, you are quite correct that the substantive provisions appear in a different part of the bill. But the point I was making, on behalf of the Opposition, was that the process around the introduction of the change to the Kiwi share obligation was by tabling Supplementary Order Paper 247, which was not referred to a select committee. That was identical to the process around the point-to-multipoint services and the amendments to the regulatory forbearance period.
STUART NASH (Labour) : I will speak on Part 2 of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. We are talking about the undertaking relating to networks developed with Crown funding as part of the Ultra-fast Broadband Initiative. There are many concerns with regard to this bill. My colleagues David Cunliffe, Clare Curran, and Maryan Street have talked about them, but I will narrow it down a little bit.
First, I want to say that—and we are talking about section 156AD(2)(ab) and (b)(iii), as inserted by clause 24—we are talking about 1 January 2020. We are talking about 8½ years away. Kids in kindy today will be in high school when this is rolled out. Labour will be preparing for its election to a fourth term. Steven Joyce, who will have been leader, will have been rolled by Amy Adams, who will then have been displaced by Aaron Gilmore. We are talking about a time so far into the future that it is hard to take this matter seriously. This was one of the Government’s major election promises, but we are talking about 2020.
Sandra Goudie: What’s that got to do with this part? Is that member talking about the bill?
STUART NASH: I will miss Sandra Goudie when she retires next year, because she asked what this has got to do with the bill. Well, if we look at section 156AD(2)—perhaps Mr Joyce would like to go and talk to her—we see the words “provide for the LFC to supply unbundled layer 1 services on all parts of its fibre-to-the-premises access network on and after 1 January 2020;”. This goes to the heart of the bill, I tell Ms Goudie. I think she should stay on. She should tell Scott Simpson that no, she wants to come back, because we would love to have her back. She is great for the Labour Party, so please stay.
There is something else I would like to talk about as well. We are talking about 156AD(2)(c), which states: “provide for the LFC”—this bill is full of these acronyms; an LFC is a local fibre company—“to deal with the UFB partner on arm’s-length terms”. But then it says, in brackets: “(unless the UFB partner and the LFC are not separate entities);”. I would have thought that that provides a bit of a conflict of interest, and I would have thought that there is a real risk that a service provider could provide itself or individual access seekers with better ultra-fast broadband services and more attractive prices compared with others. There is a slight conflict of interest, I would have thought, if the ultra-fast broadband service provider and the local fibre company are, in fact, the same entity. The bill provides that they can be the same entity. There is not enough information here.
Let us talk about paragraph (d) of this section, which states: “provide for disclosure of relevant information to the Commission, to support the Commission’s assessment of compliance”. Again, what does “relevant information” mean? It is quite a broad term; it is often used in bills in Parliament. I normally would not ask about this, but the Minister and the Commerce Commission have been at such loggerheads all the way through the this bill, and all the way through this whole process, that I am slightly sceptical that the Commerce Commission and the Minister will actually be able to work in a constructive way to deliver on this part of the bill. That is what I have grave concerns about, because the Commerce Commission has actually come out and said numerous times that it did not agree with very fundamental parts of this bill. In fact, that is one of the reasons why, once upon a time, the major part of Part 2 was withdrawn. Mr Joyce understands that; he finally listened to reason. I suspect that Mr Key said to him: “Steven Joyce, you’ve got to get rid of this. This is so inequitable that it has to go.” He probably got a lot of pressure at those cocktail parties with his telecommunications company mates. That is just conjecture, of course.
I come to section 156AF. Again, this legislation is quite prescriptive. This is quite a large bill. We are talking about section 156AF, which sets out what the Minister must and must not do, and what everyone has to do. It is headed: “Minister may determine further requirements for undertakings”. After being incredibly prescriptive, the bill then says that if the Minister wants to add anything else, he can. Why do we have the rest of it if it is up to the Minister’s discretion? Why did we not just get a small bill, about 5 pages long, which says the Minister can do whatever he wants? In essence, this bill allows the Minister to do pretty much what he wants. “The Minister may determine further requirements with which an undertaking must comply.” I wonder whether the Minister actually has in mind any further requirements and undertakings that he thinks he may want to throw into this. Is this provision just in case he has not got it down pat, or is it because there is a cunning plan here to sneak something in under the radar? That would not be the first time with this bill.
We come to section 156AG, “Minister may issue and consult on draft determination”. But in that section, “may” was changed to “must”. I think the drafters actually picked this up, and they have changed “may” to “must”. It cuts to the heart of the argument in relation to this bill. There are so many “mays”. A “must”, in my view, signifies a legislative requirement. Here we go: “Before making a determination under section 156AF, the Minister must prepare a draft determination and consult on that draft”. It used to read “may”; it used to read “the Minister may prepare a draft”, but someone, in their wisdom—no doubt it was Clare Curran or David Cunliffe, both of whom went through this bill with a fine-tooth comb—finally said we should hold on a second, because there was too much discretion for the Minister. Let us be honest about this: by the time this comes in, Steven Joyce will have come and gone as a Minister. Who knows who the Minister will be? It will probably be Clare Curran, actually. There are so many “mays”; there is so much ambiguity here, and it is so wide that we could drive a double-decker bus through it.
Section 156AG goes on to state: “must prepare a draft determination and consult on that draft with those persons that the Minister considers have a material interest in the determination.” Again, we have to ask how the Minister will consider those who have a material interest in this matter. On a lot of this bill the Minister actually did not consult those who our team and I would have thought actually had material considerations. In fact, the Minister totally ignored Commerce Commission advice on this. It says here he must consult, but it does not say he must listen. I suppose the Minister can write a letter, send it out to whomever, and say that as part of the conditions of this bill he has to send a letter, and if there is anything the recipients want to talk about, they should send it in.
When we look at section 156AJ, which is under the subheading “Process for submission and consideration of undertakings”, we see a whole lot about the fact that local fibre companies “may” submit undertakings for approval by the Minister, and, in section 156AK, the fact that the Minister “may” approve or decline undertakings. Again, the wording around “may” or “must” is quite significant. Let us not underestimate this point. As mentioned, if the provision said the Minister must approve or decline undertakings, then he has a legislative requirement to do that. I am talking about section 156AK, “Minister may approve or decline undertakings”. I ask the Minister whether he sees any conditions, or any sort of obligations, under which he may have to approve or decline undertakings, or whether this provision was just thrown in as open-ended legislation in order to do whatever he wants when anything arises.
When we come—I am jumping all over the place here—to section 156AD(2A), we are talking about resolution: “An undertaking may specify a mechanism for resolution,”. I would have thought, at least when it comes to conflict resolution, that the legislation would say “An undertaking must specify a mechanism for resolution,”. It goes on: “by a suitably qualified and experienced independent person, of any disputes that arise between the LFC and access seekers after the undertaking is approved.” Why would the House not want to specify that if there is a dispute between a local fibre company and an access seeker, a disputes resolution must be set up? The bill just says “may”, which just leaves it completely open. Dr Wayne Mapp, as someone with a PhD in law, must look at this legislation and think: “Goodness me. Thank God that’s not my bill, because I wouldn’t have drafted something as open-ended and ambiguous as that.” I tell Dr Mapp not to worry.
Chris Hipkins: I wouldn’t count on that.
STUART NASH: That is true. Maybe that is why he is leaving. Maybe he did draft this bill; I am not too sure. I tell members that it really is a bit of a dog’s breakfast.
We are not just talking about any legislation here. We are talking about legislation that will split up the State monopoly. I would have liked to see this legislation be a lot tighter, and for it to have legislative intent to require the Minister to set up these entities.
Hon DAVID CUNLIFFE (Labour—New Lynn) : I will take a quick call to summarise several of the issues that have been raised in respect of Part 2 of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, and to look at the consequences of the change that has been proposed and the delay that has occurred. The two key issues relate to the regulatory forbearance period, and the question of how it was removed and the extent to which it was removed; and the effect of the so-called open access regime, and whether it is, indeed, open access at all layers and all places, which it is not. I will also look at several of the other clauses in this part. I particularly want to note the effect of undertakings and the application of the pecuniary penalties.
Starting from the top, I say the regulatory forbearance period has not been fully repealed. It went to the Finance and Expenditure Committee and had universal condemnation from the industry. The Māori Party was silent and voted for it, but after the bill went back to the Minister, the Māori Party either changed its mind or had its mind changed for it. The Minister needed a way out of being a minority of one, so the regulatory forbearance period was changed in Supplementary Order Paper 247. That amendment has not been to the Finance and Expenditure Committee, and has not been discussed by the industry or the public. But it was not, as the Government said, a full repeal of regulatory forbearance. The Commerce Commission is unable to adjudicate certain aspects until 2018—
Clare Curran: 2019.
Hon DAVID CUNLIFFE: —until 2019; my colleague corrects me. That just reflects the shadowy, opaque nature of this process, where deals have been done in the back room and show up in the fine print. The public of New Zealand know to their bones that that means their interests are put at risk by the corporate sharpies cutting deals behind closed doors, and in the fine print that nobody can understand. People have been there before. They saw Maurice Williamson give the industry the wet bus ticket for 10 years as the “Minister for Telecom”, and it looks like the son of Maurice Williamson is sitting in the chair as the Minister for Communications and Information Technology. He has aged prematurely, but the son of Maurice Williamson is sitting in the chair, presiding over—in fact, designing—a new wet bus ticket for the fibre age. Here in this bill is the wet bus ticket. It is half of a wet bus ticket on regulatory forbearance.
On the open access regime there is a lovely sense of irony—
Hon Christopher Finlayson: 9 years and you did nothing.
Hon DAVID CUNLIFFE: I hear the Attorney-General squeaking in the back row. What a lovely sense of irony. I am sure he would not have put that title on this measure, because it is not an open access regime at all. It is somewhat open in respect of Telecom retail, but it is anything but open in respect of the crucial dark fibre layer of the network. Right here in the bill are the provisions stating that for some part of the open access network, equivalence of input—the gold standard—applies, but we do not get the gold standard for the crucial dark fibre layer until 2018, 2019, and 2020. Instead we get the watered down version called non-discrimination. What are the consequences of that? Firstly, the undertakings that are already in place for the functional separation between the three boxes of retail, wholesale, and access go. That does not, I agree with the Minister, matter very much at the retail end, because it is replaced by structural separation, but there is no structural separation between access and wholesale. There is no structural separation on the core of the network, and that is where the public’s interests are put at risk.
What is the cumulative result of, firstly, the Government’s ultra-slow process, and, secondly, this ultra-risky bill? Since 2008, when the Government changed, New Zealand has slipped on the download speed scales from 12th to 21st in the OECD, on connection speed from 12th to 24th out of 30, and on subscriptions from the seventh cheapest to the fourth-most expensive in the Western World. That is the real, tangible price of the ultra-slow broadband processes that are vested in this bill by this Minister. Now, on the eve of the next election, the Minister brings to the Chamber Supplementary Order Paper 247, which he could not get organised in time to put to the select committee. He tries to squeak it through before the election so he can say he has done something. New Zealanders have been waiting 2½ years for the Minister to come up with a policy, and he has come up with something that, in crucial respects, is about as strong as dishwater.
CLARE CURRAN (Labour—Dunedin South) : I thank the Minister in the chair, the Minister for Communications and Information Technology, for taking a call on the Telecommunications (TSO, Broadband, and Other Matters) Bill. I am very pleased that he got to his feet and talked to us about some of the issues that have been raised, and in particular about the importance of equivalence of input as a concept. It is a pity that that concept is not reflected in the bill we have before us tonight in a real open access regime.
I will address the amendment that the Labour Party has put up to amend new section 156AD(3), inserted by clause 24, by inserting a new paragraph. That amendment basically addresses the issue of the indemnity of Telecom in the contract. Essentially, it prevents, and puts restrictions in the way of, the Crown indemnifying Telecom and placing the risk on itself. I will give some very good reasons for this amendment, which some of my colleagues have touched on today. They go to the heart of this bill, and they are to do with true competition, and with putting the long-term benefits of end-users at the heart of the legislation.
This bill is the biggest telecommunications change that has happened in this country for a long time, and perhaps ever. It involves, as my colleague Stuart Nash said, the split-up of the State monopoly. It is yet to be determined how that split will occur. The said company, Telecom, is very silent at the moment. It cannot speak, because of the separation that is under way.
I will address that issue briefly in respect of the amendment that I will put forward today, which relates to the Crown taking the risk. When we look at how that split takes place, we do not yet know how a three-box model will turn into a two-box model, and which bits will end up in the new Chorus2. There are also questions about what the impact on the Crown will be if the pricing situation does not work, and if the Commerce Commission decides that the pricing is not right and that it needs to intervene. If the Minister of the day is forced into a situation of agreeing with that decision, the Crown then takes the risk. The Minister has freely said in this Chamber and at the Finance and Expenditure Committee that no analysis has been done of what that risk might be. There has been no ability for the public to scrutinise it.
I will read to the Committee some figures from Telecom’s annual report for the year ended 30 June 2010. It talks about Chorus’ earnings before interest, tax, depreciation, and amortisation, which was $754 million. That is Chorus; that is the infrastructure level. Then there is wholesale and international, which is $226 million, and Telecom’s retail arm, which is $396 million. If a good swag of the wholesale and international end up going into—
The CHAIRPERSON (Lindsay Tisch): The points the member is making are out of scope. The member must come back to Part 2.
CLARE CURRAN: This matter goes to Part 2 and the amendment that Labour is putting up around the indemnity to the Crown and just what that indemnity will involve. If we end up with a separated Telecom that is almost, at least, two-thirds of Telecom, which is what it looks like it will be, then that separated company does not have sufficient scrutiny by the independent regulator. First, how will that separation occur, and, second, how will the open access regime operate in that environment? That is why, when we look at clause 24 and the amendment that Labour is putting up, we see that the risk to the Crown is even greater.
Why is there indemnity to Telecom in this area? Telecom is a company that has a track record of price gouging and anti-competitive behaviour. I have gone to the trouble of finding out and listing some of those breaches that I think are relevant and important to this debate. The public of New Zealand need to know that the Crown will give indemnity to the new monopoly that is being created in case of future price issues for which there might need to be regulation. Any costs of those price changes will be borne by the Crown in some form or another. That form is yet to be determined because there has been no public scrutiny of that provision. It was introduced at a very late stage, after this bill was brought back to the House.
That is why I think this Committee needs to know what it is up for, what this new monopoly will look like, and just how much of a free ride that monopoly will get under this legislation. The Committee needs to know why investor certainty is being put up as the most important thing to consider, before the interests of consumers or taxpayers, when we are talking about the Ultra-fast Broadband Initiative and the bill that is before the Committee.
Let us remember that $1.5 billion is tied up in this scheme overall, and it is taxpayers’ money. It is taxpayers’ money, and the taxpayers of New Zealand need to feel that it is accountable. We know that it is being looked at. It is being looked at quite hard from outside. There are serious concerns around the impact of the anti-competitiveness of the arrangement. In just the last week we have seen more admissions of errors with Telecom and with how people are being charged. I put on the record that it is not unusual in the telecommunications sector anywhere in the world for there to be errors, blunders, and breaches, for those breaches to be taken into a civil court, and for fines to be made. But I look at the history in this country of the monopoly incumbent: it has breached the system and it has been found guilty. The sheer number of them—and I will mention just a couple of them, because there have been some very significant cases in recent years. I have a list of cases where it has been fined for failure to disclose costs—
The CHAIRPERSON (Lindsay Tisch): Order!
CLARE CURRAN: This goes to the heart of the amendment that Labour is putting up around the need for the indemnity of Telecom to be rescinded and for there to be a requirement that the Crown not indemnify Telecom in this legislation. Investor certainty is not the only consideration. Consumer confidence, fairness, and competition are other values that need to be taken into consideration. I see the Minister is shaking his head, and I would be very happy if he wants to leap to his feet and share with the Committee why Telecom needs to be indemnified and how he came to the decision that that was going to happen.
As I understand it, a clause—and he might like to enlighten me and the Committee on this—has also been inserted into the Rural Broadband Initiative that indemnifies Telecom and Vodafone against their non-ability in case they are not able to perform the requirements. They will not incur costs. Explanation of that clause would be useful as well, because the indemnity of the companies involved in the broadband environment is not the paramount issue. Somehow it has ended up that that is the case.
I will mention a couple of these breaches. They go to the heart of why we need to put up this amendment to clause 24. It ensures that the Crown alone does not bear the costs of the ability of Telecom to change its pricing structure if the Commerce Commission decides to intervene in the future between now and the end of 2019. In 2003 Telecom pleaded guilty to fair trading breaches.
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Motion agreed to.|
- The question was put that the following amendment in the name of Clare Curran to clause 24 be agreed to:
to omit section 156AD(2) and substitute the following subsection:
“(2)The undertaking must—
“(a)be executed by the service provider LFC; and
“(ab)provide for the LFC to supply unbundled layer 1 services on all parts of its fibre-to-the-premises access network from the outset; and
“(b)provide for the LFC to—
“(i)achieve non-discrimination in relation to the supply of relevant services; and
“(ii)design and build the LFC fibre network in a way that enables equivalence in relation to the supply of unbundled layer 1 services to be achieved from the outset; and
“(iii)achieve equivalence in relation to the supply of unbundled layer 1 services from the outset.
|Ayes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Noes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Amendment not agreed to.|
- The question was put that the following amendment in the name of Clare Curran to clause 24 be agreed to:
to add the following paragraph to section 156AD(3):
“(c)specify that the Crown alone bear the costs (including, but not limited to, any additional deferred repayments to the Crown) of any significant changes made to prices or other key features UFB initiative.
|Ayes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Noes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Amendment not agreed to.|
- The question was put that the amendments set out on Supplementary Order Paper 247 in the name of the Hon Steven Joyce to Part 2 be agreed to.
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Amendments agreed to.|
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Part 2 as amended agreed to.|
|Ayes 65||New Zealand National 58; ACT New Zealand 3 (Boscawen, Calvert, Hide); Māori Party 3; United Future 1.|
|Noes 55||New Zealand Labour 42; Green Party 9; ACT New Zealand 2 (Douglas, Roy H); Progressive 1; Independent: Carter C.|
|Schedule 1 agreed to.|
|Ayes 65||New Zealand National 58; ACT New Zealand 3 (Boscawen, Calvert, Hide); Māori Party 3; United Future 1.|
|Noes 55||New Zealand Labour 42; Green Party 9; ACT New Zealand 2 (Douglas, Roy H); Progressive 1; Independent: Carter C.|
|Schedule 2 agreed to.|
- The question was put that the amendments set out on Supplementary Order Paper 247 in the name of the Hon Steven Joyce to schedule 2A be agreed to.
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Amendments agreed to.|
|Ayes 65||New Zealand National 58; ACT New Zealand 3 (Boscawen, Calvert, Hide); Māori Party 3; United Future 1.|
|Noes 55||New Zealand Labour 42; Green Party 9; ACT New Zealand 2 (Douglas, Roy H); Progressive 1; Independent: Carter C.|
|Schedule 2A as amended agreed to.|
- The question was put that the amendments set out on Supplementary Order Paper 247 in the name of the Hon Steven Joyce to schedule 3 be agreed to.
|Ayes 67||New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.|
|Noes 53||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.|
|Amendments agreed to.|
|Schedule 3 as amended agreed to.|
- Progress reported.
- Report adopted.
- The House adjourned at 10 p.m.