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Volume 674, Week 81 - Wednesday, 10 August 2011

[Volume:674;Page:20463]

Wednesday, 10 August 2011

Mr Speaker took the Chair at 2 p.m.

Prayers.

Points of Order

Moneylenders (Licensing and Regulation) Bill and Credit Reforms (Responsible Lending) Bill—Leave for Introduction and First Reading

CAROL BEAUMONT (Labour) : I raise a point of order, Mr Speaker. I seek leave of the House to introduce the Moneylenders (Licensing and Regulation) Bill and the Credit Reforms (Responsible Lending) Bill, and that they be deemed to have been read a first time and be referred to the Commerce Committee forthwith.

Mr SPEAKER: Leave is sought for that course of action. Is there any objection? There is objection.

Questions to Ministers

Economy—Protection from Global Market Volatility

1. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Why did he flag labour market reforms as a way to protect New Zealand against global volatility, instead of flagging up-skilling New Zealanders and introducing a tax regime that does not load investment incentives in favour of property rather than the productive and export sectors?

Rt Hon JOHN KEY (Prime Minister) : Because I was asked only about labour-market reforms. In relation to those other matters, the Government has changed the tax system to more heavily tax property relative to other investments. In Budget 2010 we increased the effective tax on property around investment borrowing by $1 billion a year. We are upskilling New Zealanders: the Government will be funding around 13,000 more core tertiary places across all sectors in 2012 than we were in 2008.

Hon Phil Goff: Why is it smart to cut KiwiSaver and to introduce labour-market changes that cut wages and conditions in New Zealand, when in the last 2 months a record number of New Zealanders, the highest ever, have fled New Zealand to Australia because superannuation benefits and wages are higher in that country?

Rt Hon JOHN KEY: I think the member makes an interesting point about superannuation. In Australia the payments are actually made by companies. They are at 9 percent and on their way to 13 percent. What the Government did in Budget 2011 reflected the fact that the Government could not afford to be the major contributor to KiwiSaver on an ongoing basis, and that at that point $1 of each $2 in KiwiSaver accounts had been contributed by the Government. Quite simply, we did not want to run as much debt as that. As we know from the financial markets in the last few weeks, running a lot of debt is not a very smart thing to do. We know Labour wants to run more debt, and that is what it will do if it ever becomes the Government.

Hon Phil Goff: When youth unemployment is at record proportions and there is a looming skills shortage crisis in New Zealand, why has his Government cut $145 million from skill training in the Budget?

Rt Hon JOHN KEY: As I said, I think, in my earlier answer, we are spending nearly $300 million more in terms of tertiary education in 2012 than in 2008. Again, there is a difference between this Government—and I actually accept that difference—and the previous Labour Government. This Government, when it gives taxpayers’ money for a particular project, expects to see results. When the completion rates are so low that taxpayers’ money is effectively being wasted, then in our view changes have to be made.

Hon Phil Goff: What does he say to Major Campbell Roberts of the Salvation Army, who, in commenting on the sharp cuts that his Government has just announced in its successful training programmes, said “There’s a harsh irony when the political conversation emphasises the need to prepare beneficiaries for work, yet the training that equips these people to enter the workforce is being slowly killed off.”?

Rt Hon JOHN KEY: I think we would reject that. The Government is putting in more money. We expect results from those training programmes. The other comment I would make to Major Campbell Roberts—as I have commented on numerous occasions, actually—is to say this Government takes its responsibilities towards vulnerable New Zealanders very seriously. That is why through the depths of the global financial crisis we continued to fund all sorts of payments, not the least of them being Working for Families.

Hon Phil Goff: Why has he cut the funding for the Salvation Army job training programmes, when its work outcome and training outcome from those programmes is at a very high level—over 65 percent?

Rt Hon JOHN KEY: I do not have the details of the specific Salvation Army programmes, but if the member wants to put that question down to the appropriate Minister or as a written question, he will be given an answer.

Hon John Boscawen: Given that he has just told the House that it is smart not to run too much debt at a time of financial crisis, why did his Government wait until this year’s Budget to make the changes to KiwiSaver, when they could have been made in two previous Budgets?

Rt Hon JOHN KEY: Because the Government addresses different themes in different Budgets. If we look at Budget 2010, we see that its particular theme was about rebalancing the tax system. Personally, I think we made some good changes there. We also came in with Budget 2009, and I may be wrong, but from memory that would have reflected the changes to KiwiSaver that we had campaigned on in 2008. So in that regard, in two of the three Budgets we have made changes. I personally think that we now have KiwiSaver on to a platform where it is enduring, where it is affordable, and where New Zealanders will participate.

Hon Phil Goff: Given the Prime Minister’s statement of commitment to skills training, why has his Government in the last couple of weeks, without consultation, imposed sharp cuts on the YMCA’s successful job training programme, which its chief executive officer, Ric Odom, says puts the future viability of its programmes at risk?

Rt Hon JOHN KEY: Again, I would say the same thing about that programme as about the Salvation Army programme: I do not have those details to hand. If the member wants to put that question down as a written question or as a primary question, then I am sure we can answer it, or he could give it to the appropriate Minister. But I go back to the earlier point I made, which is that the Government is spending more money in this area and it expects to see value for money.

Hon Phil Goff: When upskilling New Zealanders is core to creating a stronger and more resilient New Zealand economy, why has his Government in the last 2 years cut industry trainee numbers by nearly 31,000 and cut building and construction trainees by over 5,000, or by almost a third, when there is a shortage in the building trades?

Rt Hon JOHN KEY: Because some of those programmes just simply were not delivering results. There were a variety of reasons for that, and, again, if the member wants to direct that question to the Minister for Tertiary Education, I am he could give an answer to him, chapter and verse. But I think it is worth making one point, which is that, yes, of course skills training is critically important, just as education is. That is why the Government has been committed to everything from national standards to improving the quality of the teaching that we have in this country. But that is just one factor. I tell members that the other thing that makes a difference to delivering jobs and growth in the economy is having a competitive tax system, not one that would have a top personal rate with a yawning great big gap within it, and not one that would apply a capital gains tax—

Mr SPEAKER: I think we are departing a little now from the question.

Hon Phil Goff: When 77,000 young New Zealanders are not in work, education, or training—which is not funny—and there is a desperate skills shortage in New Zealand, why has he not introduced new programmes to provide skills training for young people, particularly in the trades area, instead of simply relying on bringing people in from overseas while New Zealanders stay out of work?

Rt Hon JOHN KEY: Well, the member is just plain wrong. I mean, the Youth Guarantee is one good example of that. I myself was in Christchurch some months ago, announcing the increase in skills training there specific to the rebuild of Christchurch. What the Government has done is to say that New Zealand taxpayers deserve to see value for money, and we will deliver them value for money by focusing on courses that actually have good outcomes.

Hon Phil Goff: You’ve just cut the skills training, and not replaced it.

Rt Hon JOHN KEY: Well, you see, Labour wants to run more debt; Labour wants to waste taxpayers’ dollars. That is what Labour does. Labour has a PhD when it comes to education. Labour has a PhD when it comes to waste. On this side of the House, we deliver results. That is the difference.

Hon Phil Goff: I seek leave of the House to table a document prepared by the Parliamentary Library, showing that $145.885 million has been cut out of skills training.

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.

Hon Phil Goff: I seek leave of the House to table from the Tertiary Education Commission website performance information dated August 2011 on the number of industry trainees, which shows there has been a reduction of 31,000 in the last 2 years.

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.

Hon Jim Anderton: Can the Prime Minister tell the House how it reduces New Zealand’s long-term national debt to sell assets that earn hundreds of millions of dollars a year in perpetuity, for a one-off asset sale that realises only a limited amount of cash for the short term?

Rt Hon JOHN KEY: I think the member raises a good point. Firstly, let us understand the facts. The Government intends, if it is re-elected as the Government, to purchase about $33 billion worth of assets over the next 5 years, and it will be releasing capital in the order of $5 billion to $7 billion. So, actually, the Crown balance sheet will rise. Secondly, if one looks at the dividend stream one gets from the current State-owned enterprises, one sees it is about equal, actually, to the funding cost of those State-owned enterprises. Thirdly, the Government intends to retain majority control. By retaining majority control but having outside investors, the Government will, in our view, deliver State-owned enterprises that actually expand their economic activities. If one was to look at the dividend stream from assets that is greater than the normalised dividend, one sees that is when special dividends are paid, and special dividends are paid only when those State-owned enterprises have embarked on, generally, overseas activities, as in the case of Meridian Energy with Southern Hydro, and when the sale of those assets has taken place. As we have seen with Air New Zealand, that is the very reason why that company has operated in the way that it has: because it has had a mixture of ownership. To be honest, the member was a member of a Government that sat around forever and, despite the fact that it had lots of surpluses, never ever got up one morning and said “Let’s buy back Air New Zealand.” If it was such a failed model, maybe the member should have done that, rather than become engaged in a failed and hopeless project down on the Hobsonville base, which has just been wound up.

Economy—Minister’s Statement

2. Hon JOHN BOSCAWEN (Leader—ACT) to the Minister of Finance: Does he stand by his statement that “this Government is resolved to running responsible fiscal policy and building an internationally competitive economy”?

Hon BILL ENGLISH (Minister of Finance) : Yes.

Hon John Boscawen: How does he reconcile his stated intention to run responsible fiscal policy and build an internationally competitive economy with the comments of the New Zealand Institute of Economic Research chief executive that New Zealand has a “rotting fiscal core” and that unless New Zealand changes its fiscal strategy, it will have to “borrow and push public debt levels to that of the US or Greece.”?

Hon BILL ENGLISH: Well, I think the chief executive of the New Zealand Institute of Economic Research would agree that the Government has, in the last 3 years, substantially changed its fiscal strategy. We inherited never-ending deficits and never-ending rising debt, and the decisions we have made in the last couple of years have reduced future debt burdens by numbers like $50 billion to $60 billion, compared with the previous Government’s policy. I think the New Zealand Institute of Economic Research is referring to some longer-term issues around demographic change and health care costs, and we share the chief executive’s concern, but we think we are making considered and consistent decisions that will help deal with those challenges.

Hon John Boscawen: Given that his forecasts of lower debt growth are based on GDP growth of 4 percent in 2013 and 3 percent in 2014, at a time of massive global uncertainty and when the world faces a double-dip recession, how can New Zealanders have confidence in his lower-debt projections?

Hon BILL ENGLISH: The forecast could be more or less than what was in the Budget. Just a few weeks ago most people were saying they could be more; maybe by this week they are saying they could be less. The Government is not chasing round every international event and altering its forecast; it is focusing on delivering the expenditure constraint that is so important to getting our deficit down and getting our international debt to stop rising. We are reasonably confident, though, in the growth forecasts, because they are driven by reasonably good demand for our export products and the impact of the Christchurch rebuild.

Stuart Nash: Does Treasury project this country to become more or less indebted to the rest of the world in coming years, under his policy settings?

Hon BILL ENGLISH: It is projecting us to become more indebted, because the Government will continue to run deficits for the next couple of years. But by 2014-15 New Zealand is likely to be one of the few developed countries that has a surplus, so at least Government debt will stop rising at that stage. I am more optimistic than Treasury that our households will be saving and not borrowing.

Economy—Protection from Global Market Volatility

3. CHRIS AUCHINVOLE (National—West Coast - Tasman) to the Minister of Finance: What measures has the Government taken to ensure New Zealand’s financial system is better placed to minimise fallout from current global market volatility?

Hon BILL ENGLISH (Minister of Finance) : The Government has moved rapidly through a process of reregulating our financial system. This includes overhauling capital market regulations, establishing the Financial Markets Authority, and other regulations designed to give investors confidence in market rules and enforcement. We have also brought the non-bank deposit takers—that is, the finance companies—under Reserve Bank supervision, with minimum capital requirements and credit rating requirements.

Chris Auchinvole: What additional steps has the Reserve Bank taken to strengthen our financial institutions?

Hon BILL ENGLISH: In anticipation of further financial volatility, the Reserve Bank has worked closely with financial institutions and introduced several new measures. For instance, it has introduced a new core funding requirement for banks that requires them to have 70 percent of their funding from stable sources such as domestic retail deposits and long-term wholesale funding. This requirement reduces banks’ dependence on volatile short-term money markets. The Reserve Bank has ensured that if there were another financial crisis, the Reserve Bank can supply temporary liquidity to sound banks, as it did in 2008.

Chris Auchinvole: What policies will the Government adopt in future to ensure that the New Zealand economy and financial system remain sound?

Hon BILL ENGLISH: The Government will continue with its policy of rebalancing this economy away from a reliance on excessive debt and excessive Government spending and towards building our growth on investment, exports, and savings. This will allow interest rates to remain lower for longer, which will be a benefit to homeowners and businesses across New Zealand.

Chris Auchinvole: What spending restraint decisions has the Government taken since 2008 to reduce New Zealand’s vulnerability to global uncertainty?

Hon BILL ENGLISH: The Government has been preparing for more difficult times, and those times seem to be arising. Over the last 2 or 3 years we have made considered and consistent decisions, including reprioritising $4 billion of spending in our first two Budgets and $5.2 billion of spending in 2011, with a strong focus on maintaining front-line services at the same time as reducing deficits. We are requiring the public sector to find almost $1 billion in savings over the next 3 years in order to reduce our deficit and get to surplus more quickly.

Health Services—Community and Clinical Support for Changes

4. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Health: Will he approve changes to hospital and primary health services that do not enjoy community and clinical support?

Hon TONY RYALL (Minister of Health) : Virtually all changes to hospital and primary health services are made at a local level by district health boards, primary health organisations, and contracted providers within the increased funding of $1.5 billion the Government has made available over the last 3 years. For a small number of significant changes proposed by district health boards, ministerial approval may be required, and on the few occasions where ministerial approval is required I do take very serious account of clinical and community support.

Grant Robertson: Why is he saying that he will not approve changes to Hāwera Hospital that do not enjoy community support when he was happy to approve the closure of Taihape Hospital, which the community strongly opposed?

Hon TONY RYALL: I think the member would appreciate that in those cases they are two quite different situations. Certainly at Taihape there is quite a range of services that are improving in that community as a result of the changes.

Grant Robertson: Given that he does not want to approve changes that do not have community support, will he step in to ensure that Rangiora people have access to after-hours general practitioner services in their town, which have been cut, despite strong community opposition, including a petition of 8,000 people?

Hon TONY RYALL: I have been to Rangiora and had an opportunity to speak with local people about those issues. As the member will well know, the decision to withdraw from after-hours services was made by the local general practitioners themselves, under a system set up by Labour. However, I can assure the House that we are well aware of that issue in Canterbury and the district health board is now working with the community to ensure a local solution. We have increased Canterbury District Health Board funding by $143 million over the last 3 years.

Grant Robertson: Will he approve the cutting of nurses from front-line service roles in the emergency department of Wanganui Hospital, as proposed by the Whanganui District Health Board, and described by the Nurses Organisation as a danger to patients, given that he does not want to approve changes that do not have clinical support?

Hon TONY RYALL: What I am aware of, when it comes to the Whanganui District Health Board, is that it has more nurses employed there than when the Government began. It is their responsibility to see how they manage their resources. What we do know in Whanganui is that their funding has increased by about $24 million over the last 3 years, and their increase in the number of nurses is part of the extra 500 doctors and 1,000 extra nurses now employed in our public health service.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think last week you provided some useful interpretation with regard to one of the responses from the Minister of Education and said that her answer, which we could not understand, was clearly yes. I wonder whether you could provide a similar interpretation for that response, or ask the Minister to indicate whether he would approve such a change.

Mr SPEAKER: Forgive me, but it seemed to me that the Minister’s answer indicated it was a local matter. But I may be wrong there. If I am wrong I would certainly ask the Minister to correct that misapprehension. The Minister indicates that that is the case.

Grant Robertson: Will he approve the closure of Lakes District Hospital in Queenstown, in whole or in part, which has been the subject of significant community and clinical opposition, given his statement that he does not want to approve changes that do not have community support?

Hon TONY RYALL: There certainly has been a lot of uncertainty around the Lakes District Hospital over some years, and a special National Health Board panel, including clinicians, is leading a process of working through with the Queenstown community to accelerate health care improvements in that area. Decisions will be made by the Southern District Health Board, and we have increased its funding by $71 million over 3 years.

Health Services—Investment in New Technology

5. JONATHAN YOUNG (National—New Plymouth) to the Minister of Health: What reports has he received about further investment in new technology to improve productivity and patient care?

Hon TONY RYALL (Minister of Health) : The Government is committed to protecting and growing the public health service. We are investing more into technology to improve productivity and care for patients. Cancer patients in Wellington will soon get better, faster treatment with a new $5 million six-tonne Varian TrueBeam linear accelerator, the first of its kind in Australasia. Treatment is due to begin in October. It will provide more advanced treatment and reduce toxicity for patients. It will be faster, meaning even better access to radiation therapy throughout the Wellington region. This Government has approved 10 new linear accelerators over the past 2½ years.

Jonathan Young: What investment has there been in new technology at Gisborne Hospital?

Hon TONY RYALL: Gisborne Hospital is leading the way with new echocardiography technology. One of the first machines in the country, it produces 3-D heart scans, making it easier for surgeons to treat their patients. It was recently inspected on a tour of the hospital by the local member of Parliament, Mrs Tolley. This is very important for the East Coast as it has very high rates of cardiovascular disease. It is vital that these people get the care they need. We are also putting $12 million into stamping out rheumatic fever, as it can lead to heart disease, which is entirely preventable.

Chris Tremain: What recent investment has there been in new health technology for the benefit of the residents of Napier and Hawke’s Bay?

Hon TONY RYALL: It is more good news. Napier residents needing X-rays will now be seen more quickly in the new digital radiology suite at the Napier Health Centre. The suite opened last week and replaced old equipment that was not up to standard. The new state-of-the-art service will mean that patients are exposed to less radiation, faster turn-round times, and reduced discomfort. It is also easier for the staff to use. I have to say that now that the Hawke’s Bay District Health Board is out of years of deficit and in a much better financial position, it is able to invest in these sorts of important projects.

Financial Position, Government—Current Position Compared with 2008

6. STUART NASH (Labour) to the Minister of Finance: In what way is New Zealand “better placed to withstand” a financial crisis than 3 years ago given that before he came in to office the Government was running a surplus and core Crown net debt was just 1 percent of GDP and now the Government is running record deficits and net debt is 20 percent of GDP?

Hon BILL ENGLISH (Minister of Finance) : The member has a somewhat rosy view of the situation when the Government came into office. In fact, the forecasts published just before the election showed 10 years of deficits and ever-increasing public debt, based on the policies of the previous Government. At the time we had mortgage interest rates of over 10 percent, exports actually shrinking, inflation at 5.1 percent, the New Zealand economy having gone into recession well before the global financial crisis, and people losing jobs.

Stuart Nash: With that in mind, is the Crown’s credit rating now on negative outlook, and was this the case when he took office?

Hon BILL ENGLISH: I think it is on negative outlook, and that is remarkably better than the downgrade we would have faced if we had not changed the damaging and wasteful policies of the previous Labour Government.

Stuart Nash: Is it correct that GDP per capita has fallen by 2 percent since his Government came into office?

Hon BILL ENGLISH: I cannot give the member the exact figure, but I can tell him this: if the member looks at the last Budget, he will see a page of tables that show that around 2004-05 this economy went badly off the rails, well before the global financial crisis. Debt blew out, Government spending blew out, and our export sector actually started shrinking. We have had to deal with the legacy of the previous Government’s policies, as well as the global recession. In the circumstances, we have done reasonably well.

Dr Cam Calder: Which of those problems he noted the Government inherited 3 years ago that left New Zealand poorly positioned to withstand the financial crisis has the Government addressed and fixed?

Hon BILL ENGLISH: We have addressed all of them. We have fixed quite a few of them, but some of them were the result of 10 years of damaging economic policy and they will take 10 years to fix.

Stuart Nash: Has he seen the Government financial statements showing that net debt has risen by $36 billion since he came to office?

Hon BILL ENGLISH: Yes, I have, and if the Government had not imposed some tight spending constraints, that figure would be much worse. I know that the Labour Party has opposed every single decision this Government has made to restrain spending. I am not surprised.

Stuart Nash: Since the facts clearly show that the country’s economic position has deteriorated since his Government took office, when will he present a real plan for the economy like Labour’s, or is his only plan to sell State assets in a falling market?

Hon BILL ENGLISH: I can make this absolute commitment: we will never produce an economic plan like Labour’s.

Road Safety—Zero Blood-alcohol Limit for Under-20-year-olds

7. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Transport: What actions has the Government taken to help lower the road toll among young drivers?

Hon STEVEN JOYCE (Minister of Transport) : On Saturday night at midnight the Government introduced a zero blood-alcohol limit for young drivers under 20. Improving the safety of young drivers is a key priority for the Government because they are disproportionately represented in fatal and serious crash statistics. The Government took this action because 15 to 19-year-olds make up around 6 percent of all licensed drivers, but in 2010 they were involved in around 17 percent—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It is a slightly unusual thing to do, but I think the question was about what the Government did. I think the Minister started off his reply saying what Parliament has done—

Hon STEVEN JOYCE: No, I said “the Government”.

Hon Trevor Mallard: If the bill was passed, it was not by the Government, it was by Parliament, and he is not responsible for that.

Mr SPEAKER: If the bill was the result of Government policy and it was a Government bill, I do not think it is unreasonable to say the Government has done it. I have never heard that objection raised previously.

Hon STEVEN JOYCE: In pointing out that the Government introduced the zero blood-alcohol limit for young drivers under 20, I am saying that improving the safety of young drivers is a very big priority for this Government. I notice it was not a priority for the previous Government, because it never did a single thing over 9 years, so Parliament did not get the opportunity to make any changes over that period. The Government took this action because 15 to 19-year-olds make up 6 percent of licensed drivers, but in 2010 they were involved in around 17 percent of all serious injury crashes. With a lowered limit, the message to teen drivers from this Government is simple: if they plan on drinking, they should not plan on driving.

Peseta Sam Lotu-Iiga: What else has the Government done to assist in lowering the youth road toll?

Hon STEVEN JOYCE: The Government on 1 August arranged for the minimum driving age to increase from 15 to 16. We have done this because age matters in relation to driving. Drivers who are 16 are more mature and have better judgment on the road. That is reflected in the statistics, which show that a 15-year-old on a restricted licence has a significantly higher accident rate than a 16-year-old in the same circumstances. In addition, this Government is making the restricted licence test much harder, to encourage more supervised practice. Although none of the individual measures the Government is taking is a silver bullet on its own, together they will have a significant impact over time. Again, I would contrast this Government’s approach to road safety with that of the previous Government.

Education, National Standards—School Charters

8. KELVIN DAVIS (Labour) to the Minister of Education: Does she stand by her statement from Question Time of 6 July 2011 that “Initial assessments of 1,445 of this year’s charters indicate that 87 percent were compliant”?

Hon ANNE TOLLEY (Minister of Education) : Yes.

Kelvin Davis: What number of schools as at 1 July had chosen to submit their charters without national standards targets, thus making them non-compliant?

Hon ANNE TOLLEY: I do not have that information in front of me. However, I can tell the member that as of today we have received 2,044 out of 2,076 charters from English-medium schools with years 1 to 8 students. This time last year we had received only 1,274 charters. Of those 2,044 received, 1,922 have been analysed and 1,389 are compliant.

Kelvin Davis: Why would a Ministry of Education official write a letter to a school saying: “The charter meets the requirements of the legislation for charters contained in section 61 of the Education Act.” when the school had deliberately left out all reference to the national standards, including replacing the words “national standards” and “National Administration Guidelines 2A” with the words “New Zealand curriculum”?

Hon ANNE TOLLEY: Mr Speaker—

Hon Trevor Mallard: Literacy problems—literacy problems in the ministry.

Hon ANNE TOLLEY: In fact, there were some problems in the ministry. It was regrettable that a small number of schools received that letter when, in fact, they had not complied. My understanding is that the ministry has now contacted all of those schools and informed them that they were not compliant, and it is working with them to ensure that they are.

Kelvin Davis: Why did it take the principal of Valley School, Roger Goulstone, contacting the Ministry of Education, asking how his charter could be considered compliant when he had deliberately removed all reference to the national standards, before ministry officials realised they had got it wrong?

Hon ANNE TOLLEY: We are very grateful to that principal for actually drawing that to the ministry’s attention, because, in fact, we found another couple of schools where the same mistake had been made, and we were able to correct it.

Kelvin Davis: How can the Minister assure the House that her answer to my first supplementary question is accurate, when a glaring error of this sort could be so easily overlooked by her ministry?

Hon ANNE TOLLEY: If the member refers to my answer, he will see I did say: “I am advised”. We discovered a problem, we addressed the problem, and we fixed the problem.

Children, Protection—Government Actions

9. NICKY WAGNER (National) to the Minister for Social Development and Employment: What is the Government doing to improve outcomes for vulnerable children?

Hon PAULA BENNETT (Minister for Social Development and Employment) : This Government has a plan for vulnerable children, and has already taken more action on their behalf than this country has seen in decades. For example, in the last Budget we announced a comprehensive support package for children in State care, who are some of the most vulnerable children in New Zealand. And last month I released the Government’s green paper, which will be a catalyst for long-term change.

Nicky Wagner: Has the Minister had any feedback on these changes?

Hon PAULA BENNETT: Yes. There has been significant support from the public and professionals, but a deafening silence from the Opposition. There are two possible reasons why the members opposite were struck dumb last night in the estimates debate, refusing to take even a single call on Vote Social Development, which represents more than 30 percent of all Government spend. Either they completely agree with everything that was in the May Budget for social development, or—

Mr SPEAKER: Forgive me, but I am not sure that whether the Opposition chooses to speak in a debate is a matter for which the Minister is responsible. If the Minister wishes to provoke disorder, it is a pretty effective way to do it. I am not sure that it is very helpful.

Copyright (Infringing File Sharing) Amendment Act—Preparation for Enactment

10. GARETH HUGHES (Green) to the Minister of Commerce: What steps has the Government taken to prepare the public for the Copyright (Infringing File Sharing) Amendment Act coming into force?

Hon SIMON POWER (Minister of Commerce) : Quite a few. On Wednesday next week the Ministry of Economic Development intends to publish an information pack on its website that explains the regime—the wider copyright and internet safety issues. The associated regulations require that this information pack or a link to access it be included with any notices sent under the new regime. I am advised that both rights owners and non-governmental organisations such as InternetNZ have made, or are intending to make, information available to the public about the new regime. I am also advised that some internet service providers have written to their customers to outline the changes, and I welcome these organisations’ proactive stances. In addition, I note that the new measures have received a lot of coverage in the media, and I have made several press releases—actually, 10—during the course of the development of the legislation.

Gareth Hughes: Given that copyright infringements start counting from tomorrow, why is the Minister launching an information website after the law effectively comes into effect?

Hon SIMON POWER: Because that is the timeliness around the regulation-making process, which I might say has been well signalled for considerable months. There are no surprises about what will emerge on 1 September.

Gareth Hughes: Given that the law comes into effect from tomorrow, why has it been left up to InternetNZ to educate the public or internet service providers about the law and create an educational resource, because the Government’s website is coming too late?

Hon SIMON POWER: I would not say that it was left up to InternetNZ. In fact, as I said, I welcome InternetNZ’s enthusiasm and willingness to help with this public education, but, as I have explained, the Government will be taking a very active role in educating the public on the impact of the Act, not to mention the fact that it has received quite a considerable amount of media coverage in recent times.

Gareth Hughes: Has the Government provided any advice or information about the law to holders of accounts with multiple users such as schools, public libraries, or this Parliament?

Hon SIMON POWER: Other than the extensive amount of information that is already in the public domain, I am not sure exactly whether that specifically has been done. I will check it out for the member.

Gareth Hughes: Has the Minister or the Government provided schools in New Zealand with the information needed to ensure they can continue to operate within the law, given they as account holders will be liable for all the infringing on their networks?

Hon SIMON POWER: Broadly, I believe so, given that these issues have been in the public domain for some considerable period of time.

Gareth Hughes: I raise a point of order, Mr Speaker. The question was: “Has the Minister or the Government done anything”. The Minister said that it has been in the media, therefore he does not need to act. Could I ask the question again, Mr Speaker?

Mr SPEAKER: In fairness to the member I will let him ask his question again and I will listen very carefully because I cannot remember his opening words. I am not sure that they were exactly what he just said.

Gareth Hughes: Has the Government or this Minister provided schools with the information needed to ensure they can continue to operate within the law, given they as account holders will be liable for all infringing on their networks?

Hon SIMON POWER: As I said last time, because that was the question that was asked, broadly so, yes, given the information that has been in the media about this issue for some considerable months. That will be added to and refined by way of the specific initiatives that will be launched on, I believe, Wednesday of next week.

Gareth Hughes: What is the Minister’s advice to Unitec, which was quoted in yesterday’s New Zealand Herald as saying that if it was liable for student copyright breaches it might have no option but to discontinue the provision of internet access to all its library users?

Hon SIMON POWER: I do not give legal advice in any capacity, including my ministerial ones, but any organisation that has specific concerns would probably find it worthwhile to read the legislation and go to the Ministry of Economic Development’s website on Wednesday.

Gareth Hughes: What is the Government doing to encourage legal file-sharing or downloading—for example, Netflix?

Hon SIMON POWER: That is a good question, because I have no idea what the member is referring to in respect of that second initiative.

Clare Curran: Does he agree that a convergence of the information and communications technology and broadcasting sectors will be crucial in developing new business models that make content more readily available, and illegal downloading unnecessary; if so, what has the Government done to encourage new business models?

Hon SIMON POWER: The last time I looked at the primary question new business models were not exactly within its ambit. What I can say is that there is a lot more certainty in this very difficult area of lawmaking now, and from 1 September, than there has been for all of those months and years prior to that, and under the last Government. I am sure that is the sort of certainty that businesses will look to in order to develop the models that the member refers to.

Gareth Hughes: I raise a point of order, Mr Speaker. I seek your advice on an issue of importance to this House regarding the impact of the new law coming into effect tomorrow, which could leave the Speaker’s office liable for infringing by members of Parliament, by staff, by people on our Wi-Fi internet account—

Mr SPEAKER: This is not a point of order. It is not a matter to do with the order of the House. The member can seek guidance from the Parliamentary Service or the Office of the Clerk, but it is not a point of order.

Gareth Hughes: I raise a point of order, Mr Speaker. I seek your consideration on how your office, which is responsible for the running of Parliamentary Service, and therefore responsible for the running of the Parliament internet connection, will deal with this law.

Mr SPEAKER: That is not a point of order to be dealt with in this House in that manner. The member is perfectly welcome to approach me or my office to seek advice on those sorts of things, but it is not a matter for the order of the House.

Government Procurement—Minister’s Statement

11. CLARE CURRAN (Labour—Dunedin South) to the Minister of Finance: Does he stand by his statement “we don’t actually have a procurement policy. We have a set of assumptions, prejudices, habits and an Auditor-General.”?

Hon BILL ENGLISH (Minister of Finance) : Yes. We inherited a set of procurement guidelines that are deficient in a number of areas. In particular, they make it very difficult for people with innovative ideas to do business with the public sector, at a time when we need the participation of the private sector and its good ideas. As a result, we have set about making significant improvements to Government procurement.

Clare Curran: Does he support a procurement policy that requires Government departments and agencies to consider the wider economic impact on the country of their procurement decisions, rather than a narrow financial analysis considering only the cost to themselves; if not, why not?

Hon BILL ENGLISH: We support a procurement policy that will enable us to deliver high-quality public services to New Zealanders, and do so at lower cost. That is the Government’s top priority. In respect of its impact on economic development, we share the views of the previous Government—that is, it is not a significant consideration for Government procurement.

Clare Curran: Can he name any trade agreements breached by Labour’s recently announced procurement policy and explain how it breaches those agreements, given that most of New Zealand’s trading partners have internal procurement policies themselves?

Mr SPEAKER: As much as the Minister may like to answer the question, I am not sure that he is responsible for Labour Party policy. Rather than deprive the member of a supplementary question, I invite her to reword her question.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It was a question about whether he could name any breaches. It goes to his mind, not the policy.

Mr SPEAKER: I am prepared to allow the Minister to answer the question. I am sure he will probably quite enjoy answering a question in relation to Labour Party policy.

Hon BILL ENGLISH: I have not bothered looking at the Labour procurement policy, because I have made the same assumption that everyone has—that is, it will be backward-looking and it will signal big spending, more waste, and more debt. Why would I worry about that?

Mr SPEAKER: Since I allowed the Minister to answer the question, maybe he should make just a little bit of reference to trade agreements, because the question asked whether Labour’s policy would breach any trade agreements. It does give the Minister a fair bit of licence, but some mention of trade agreements would perhaps be helpful.

Hon BILL ENGLISH: I have not bothered looking at Labour’s policy, so I cannot comment on whether it would breach trade agreements. But it is likely to breach common sense.

Clare Curran: Does he agree with Business New Zealand Executive Director, Catherine Beard, who said in Monday’s Dominion Post that agencies were tilting the field “slightly against local participation”; if not, why not?

Hon BILL ENGLISH: No. We want to tilt the field in favour of companies who have innovative and forward-looking ideas about how they can work with the Government to supply better public services. That is quite different from the approach of the previous Government, which tried to have as little as possible to do with the private sector, and which managed to kill off any innovative thinking in the Public Service with a combination of fear and bullying.

Clare Curran: I seek leave to table a written transcript of Bill English’s speech at the NetHui conference in Auckland on 30 June, and an electronic version of that speech.

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.

Overseas Investment Rules Review—Sale of Forestry Blocks

12. RAHUI KATENE (Māori Party—Te Tai Tonga) to the Minister of Finance: Does he stand by his responses to Oral Question No 6 on Overseas Investment Rules Review on 6 April 2011; if so, what regulations are in place to prevent sensitive forestry land from being sold on the open market into foreign ownership?

Hon BILL ENGLISH (Minister of Finance) : Yes, I do stand by my response. In terms of regulations for investment in forestry land, investors must obtain consent to invest in any forestry block greater than 5 hectares, as it qualifies as sensitive land under the Overseas Investment Act. Part of that test is that investors must show they are of good character and their investment must be likely to benefit New Zealand. Over the years foreign investment has played a significant role in New Zealand’s economic development, but recently the Government has introduced some extra tests into the regulations to ensure that such investments do benefit New Zealand.

Rahui Katene: What consultation was undertaken with mana whenua before approving the sale of forestry blocks in the Waiau, West Ho, Moonlight, Tolaga, and Merriwa forests for $95 million to the Tiong family of Malaysia?

Hon BILL ENGLISH: My understanding is that at least some of those transactions occurred as private transactions between an existing foreign owner and a new foreign owner, and they followed all the process. By and large, the assumption the system runs on is that if, for instance, mana whenua have an interest in particular assets, then they should approach the owners as the best way of understanding where opportunities might arise for them to purchase those assets. The Government introduced regulations last year that mean that those sales have to go through further tests to ensure their benefit to New Zealand.

Rahui Katene: Is he aware of concerns expressed by Te Rūnanga o Ngāti Porou chairman Api Mahuika that prior consultation was not undertaken with iwi about the sale of the five forestry sites in their rohe, and what process will he instigate to address the concerns and establish consultation with iwi as a matter of course?

Hon BILL ENGLISH: I am familiar with the concerns. The Crown has done business with Ngāti Porou and also any number of other iwi on the issues between the iwi and the Crown. It is not really the Crown’s role to protect or enhance the iwi’s commercial interests over and above the way it would protect the commercial interests of anyone else in New Zealand. Once iwi have their own assets and they have their own governance and commercial processes, then fundamentally it is up to them to advance those interests. The Crown does not have a particular obligation, at least in our preliminary thinking, to protect those ongoing commercial interests.

Stuart Nash: If the Minister is genuinely concerned about New Zealanders becoming tenants in our own country, why is he determined to sell shares in our publicly owned energy companies, a significant proportion of which Treasury says will be bought by foreigners?

Hon BILL ENGLISH: One reason is this: while Mr Nash might be happy to have New Zealand indebted up to its neck paying interest to foreigners, we would rather pay dividends to New Zealanders who own those companies if we get the opportunity to do so. That is the choice. I cannot understand why Labour is so worried about foreign ownership of assets and so reckless about foreign ownership of debt.

Questions to Members

Manukau City Council (Regulation of Prostitution in Specified Places) Bill—Report-back Date

1. Hon GEORGE HAWKINS (Labour—Manurewa) to the Chairperson of the Local Government and Environment Committee: When will the Manukau City Council (Regulation of Prostitution in Specified Places) Bill be reported back to the House?

CHRIS AUCHINVOLE (Chairperson of the Local Government and Environment Committee) : The bill has a reporting-back date of 8 September 2011.

Hon George Hawkins: Has the committee decided to call for further submissions on the supplementary order paper supplied by the Auckland Council?

CHRIS AUCHINVOLE: I understand the Auckland Council has developed a supplementary order paper that it will publicly advertise soon. Any decision to call for submissions on that would be a matter for the committee to consider.

General Debate

Hon RUTH DYSON (Labour—Port Hills) : I move, That the House take note of miscellaneous business. There is nothing more frustrating than watching New Zealand families go backwards in terms of their ability to pay for the things that are essential in their lives, and that is what we are seeing in New Zealand now. Day in, day out, good, hard-working New Zealand families are going backwards, and the Government is standing on the sideline as if it were a spectator in a sport, saying “It is nothing to do with us.” I have watched in this House day in, day out, Ministers wringing their hands, absolving themselves of all responsibility. I do not know why they collect their salary. If they are spectators in the sport of people’s lives, then why do they take up ministerial portfolios and accept the salary that goes with them? Their job should be to support New Zealand families, support New Zealand businesses, and present a plan that we can rely on to move New Zealand forward. But instead we have no plan. We have New Zealand families going backwards and a Government that is completely out of touch with what is happening.

That was very sadly related on the weekend in a story in the Sunday Star-Times. There are often stories that make me feel unwell in the Sunday Star-Times, I must admit, but this particular story was about families that have so many people living in the house and that are so short of money that they put padlocks on their fridge so they can ration out the food amongst the people living in that house. Who in New Zealand has heard—other than perhaps in some members’ houses, where they do it for reasons other than poverty—of a family that is forced to ration its limited food by putting padlocks on a fridge? Those are not beneficiary families; they are families of low-wage earners. They are people who go to their job every day, do their best, and work hard, and they do not have enough money at the end of the week to adequately afford to feed their family. That is a disgrace. That is why the Minister of Finance and the Prime Minister should be stepping up to the mark, instead of coming into this House and giving us smart alec and nasty answers to the good, serious questions that we are entitled to ask on behalf of New Zealand families.

We are now seeing more and more families, particularly in Auckland, living in overcrowded situations. We know what that means. We know that that will mean more Third World diseases of poverty becoming evident in our community, and tragically, we are seeing those outcomes already. Claire Mataira of the Hamilton Budgeting Advisory Trust was quoted in that article in the Sunday Star-Times. She said that with regard to the things that people have to have, like power, food, and petrol—not extras, not nice-to-haves, but the things that people have to have—the trust no longer has enough money to provide those essentials for their service.

We know that more and more of our New Zealand children are going without breakfast. The New Zealand Herald reported recently that 4,000 children every day are going to school without even having any breakfast and that maybe 85,000 to 87,000 children every day go to school without their lunch. It is not acceptable in our country to have families living in overcrowded situations that add huge risk to their health as well as additional stress and tension. That is where family violence becomes more and more obvious, that is where people’s stress levels get increased, and that is where their health is at risk. We have more and more families living in those situations and it is certainly not acceptable to have families who have so little money to share out to buy the essentials that they are forced to padlock their fridge in order to ration food.

One of the items that is really expensive for people to buy—and a lot of discussion has been generated about it in this House by Labour members—is milk. People in New Zealand cannot understand why we produce so much milk but it costs us so much to buy. I congratulate Labour leader Phil Goff and my colleague from Christchurch Lianne Dalziel on their sterling work in getting an inquiry into this essential item.

Hon BILL ENGLISH (Deputy Prime Minister) : I must acknowledge the previous speaker, Ruth Dyson. I did not used to think she was a very good health spokesperson, until Grant Robertson got on the job. I think Labour should bring back Ruth Dyson, because by comparison she was hard-working, insightful, and she had something positive to offer. But now that the Labour Party is run by student politicians, as if it was a students association, we know that Ruth Dyson was pretty good.

I share the member’s concern for those families she mentioned. I wish the Labour Party was, because we have seen in this House that there is actually only one thing the Labour Party really cares about: voluntary student membership of student unions. We are used to the Opposition being unfocused, lacking in knowledge, being irrelevant to what is going on in the world generally, and making no impact, except on student union membership. When Labour members are focused, they are insightful, they have a strategy, and they are consistent—until it all falls over when they get it wrong, even on the one thing they care about. When there are riots in London, when our financial markets are all over the place, volatile and unpredictable, and when New Zealanders are working with the biggest natural disaster in the developed world compared with the size of our economy, Labour spent all election year filibustering over the Education (Freedom of Association) Amendment Bill. That was the only positive contribution Labour made, except for the one other thing it really cared about: how Phil Goff could get out of forgetting that he had been briefed about Israeli tourists. On that issue we saw passion, we saw persistence, and we saw a media strategy. It was all because Labour still wants to act like it is in Government.

The reason Labour is not relevant to the current debates going on in New Zealand or around the world is that it has not yet apologised for getting it so wrong when it was in Government. This is a political party that thinks Helen Clark will drop out of the sky back into the Prime Minister’s seat any day, when the New Zealand electorate wakes up and realises it made a big mistake putting Labour out of office. This is a political party that is still putting out press releases as if it is the Government—for example, the spokesman on finance calmly reassured the nation that in the face of market turmoil, his decisions would keep us on a steady road back to higher spending, more debt, bigger Government, lower incomes, and fewer exports.

You see, that is what New Zealand remembers about the tail end of that Government: it was mired in controversy and scandal. It left office mired in controversy and scandal. Nothing has changed about the attitudes that gave rise to those scandals and nothing has changed about the policy. It is the 2007 Budget all over again, as if nothing has changed. The same stuff is wheeled out in the same way by the same kind of politician who does not know much about what is going on in the real world.

That is why the public supports the John Key - led Government. There is no alternative, for a start, but, actually, it is much more positive than that. Through all of that time, National has focused on the issues that matter, not the voluntary student membership bill—and for the 5 minutes we did, we tripped up Labour. The Government has delivered considered and consistent decisions that protect the vulnerable through tough times and lay the building blocks for reversing the economic decline that that party, when in Government, pushed New Zealand into. The Government is reversing the excesses of rapid credit growth, wasteful Government, and a shrinking export sector. That is why New Zealand supports the John Key Government

Hon LIANNE DALZIEL (Labour—Christchurch East) : This cartoon of Bill English and John Key looking at the New Zealand taxpayer on the tax cut blood drip as the bloodsucking cost-of-living mosquito sucks it straight out says it all. That is exactly what is going on for New Zealanders. The National Government had a choice in last year’s Budget to proceed with tax cuts that benefit the highest-paid New Zealanders and increase GST, which hits hardest those on the lowest incomes, or to accept that that would inflict too much pain on too many hard-working families and develop an economic plan to grow the economy for the benefit of the many rather than the few. But, actually, National has failed to deliver a plan, even a skerrick of a plan, since it became the Government. There is a Prime Minister who says he is all prepared to kick the tyres, but he is not prepared to switch on the ignition. We think it is time that this economy was put into power drive—overdrive—and that will happen only if there is a change of Government.

The cartoon has Bill English saying to John Key: “Apart from the initial discomfort—it all looks tickety-boo to me …” It all looks tickety-boo to him, because the bloodsucking cost-of-living mosquito is not sitting on the back of the taxpayers who got the lion’s share of the tax cuts under this Government. That is why it looks tickety-boo to Mr English and why it looks tickety-boo to Mr Key. They have no compunction. Mr English had no compunction in claiming over $40,000 a year to have his Wellington home cleaned. There are people in this country living on less than $40,000 a year as their family income. The reality is that John Key and Bill English are both completely and utterly out of touch with the real lives of people who are on a modest wage or a fixed income. They are completely and utterly out of touch.

It is not tickety-boo for the carers providing home-based support to older people to enable them to stay in their own homes—those people are on $14 to $15 an hour, if they are lucky. It is not tickety-boo for families who are struggling to feed their families when they feel the pain at the pump and the pain when they go to the supermarket till to pay. I know there are people who take items from the till and put them back on the shelves because there is not enough money in their wallet to pay the full amount.

The announcement this week that the Government will allow the National members of the Commerce Committee to vote for an inquiry into the price of milk has brought a sense of relief, but it must not be buried. We know we have only a very few weeks before the House adjourns before the general election. Our committee is up to the task. We are a very good and very efficient committee. I want the National members of the committee to commit alongside all other members of the committee to getting a report back to Parliament before it adjourns for the general election. We know it will be too late for the Government to respond, but at least the inquiry will be a debating point for the general election. I believe that people are entitled to have that. The public want the scrutiny. We are prepared to deliver that, and I hope the Government is, as well. We will not put up with a con job to just sweep the real concerns of New Zealanders under the carpet.

John Key prides himself on his financial background, but there is something about that background that is conveniently overlooked by everyone. Currency traders do not create wealth; they amass wealth. They do not create wealth; they amass wealth. They do not make anything of value. Individual traders have become millionaires without risking a cent of their own money. They speculate on sovereign currencies, and they never mind the impact that has on a nation’s economy. So is it surprising that someone with that background wants to sell our country’s assets? The price we pay, though, is much worse and much more far-reaching than speculating on the New Zealand dollar; it is the income that generation after generation after generation of New Zealanders will be deprived of when the Government sells off our State assets. This election is about a second referendum that is being conducted: a referendum on asset sales.

Paul Quinn: That’s right.

Hon LIANNE DALZIEL: The National Government says—and the member Paul Quinn says that that is right—there will be asset sales if National is re-elected. There is a commitment to no asset sales if Labour is elected. That is what this election will be all about.

Hon STEVEN JOYCE (Minister of Transport) : Remind me to tell the member Lianne Dalziel that cartoons are not real. I think that is important. If she spends half her speech on cartoons, then I think she has a wee problem with being in touch with reality. That is a little bit the issue with the New Zealand Labour Party. We had the “Comical Ali” of the New Zealand Labour Party, Stuart Nash, up here earlier this afternoon criticising the Government and asking how things have changed financially in the last 3 years and how we let that happen. Well, there was a thing called the global financial crisis, but the “Comical Ali” of the Labour Party does not know that it occurred. He sits in Napier in splendid isolation and says it did not occur. New Zealanders know that these are very challenging times around the world. There is no doubt that New Zealanders know that. Nightly on TV last week we saw the Budget stand-off in the USA—the mightiest economy in the world—and the huge debt mountain it is trying to deal with. We see the shaky finances of many European countries and friends that we know are struggling under mountains of debt. We have seen the riots of London over the last 3 nights, and we see the very turbulent nature of the world’s stock markets. We know that it is a very challenging and difficult time in the world.

New Zealanders know that. They know that it is important to have strong, conservative leadership in these times. They are aware of it; it is just a pity that the New Zealand Labour Party is not. The problem for the Labour Party is that it has no understanding of the challenges out there in the world today. The Government is very active in dealing with those challenges. The most important thing any Government can do is to get its Budget under control so it can keep interest rates lower over the cycle. We talk about the cost of living, and the cost of living is crucially important. The biggest element for most people is the cost of interest on their mortgages. That is a huge issue for New Zealanders, and making sure that Governments control their debt and keep their credit ratings as high as they possibly can is crucial to controlling the cost of living. That is what this Government is doing.

The second thing this Government is doing is that it is doing it without adding taxes. Have members noticed how often members on the other side have an idea for adding taxes? They have ideas all the time about throwing another tax on the bonfire of taxation. That means they do not understand yet another thing. They do not understand that if New Zealand is to turn itself round and if we are to pay people better, then we have to be more competitive in the world. We do not get to be more competitive in the world if we put more handbrakes on people and stop them from achieving things and competing out there in the world. The Labour Party does not understand that that is crucially important if we are going to grow New Zealand stronger in the future. We have to be more competitive. We also have to be more into savings. This Government has helped the New Zealand—

Brendon Burns: You cut KiwiSaver.

Hon STEVEN JOYCE: No, we have helped the New Zealand people by setting up a better environment for savings, and we are seeing the savings rate grow. What is more, if the public endorse a mixed-ownership model, they will have something else to invest in besides finance companies, which is pretty much what happened under the previous Government. Labour members quite like to conveniently forget that the previous Government was in charge of the biggest meltdown of financial companies in New Zealand’s history. But that is what happened and that is why New Zealanders do not trust Labour.

We have been dealing with waste, and we are putting in huge efforts. We had the Minister for Social Development and Employment getting up yesterday and saying that testing people on the unemployment benefit after 12 months to see whether they are still entitled is saving taxpayers considerable money. Then we have the situation in industry training. I do not want to give the Leader of the Opposition political advice, but he really should let that one go. Thousands upon thousands—100,000-odd—of phantom trainees in the failing years of the Labour Government, in 2008, were not achieving anything. They were not achieving anything. They were not getting any credits. Labour was just doling out the money, flat out, and there was no accountability. Mr Goff should get off that one, because this year, 2011, we have increased the number of credits that people are achieving through industry training, by spending less taxpayers’ money on it. It is called accountability.

Here we have it. Labour members oppose all spending cuts during National’s time in Government. They oppose all attempts to get better value for money. They criticised the Government—lest we forget—for failing to spend more money during the global financial crisis, and now all the countries that did are having to save money and repay debt. They are out of touch; they are out of reality.

SU’A WILLIAM SIO (Labour—Māngere) : If I were to ask the previous speaker, Steven Joyce, how much it costs to buy a 2-litre bottle of milk, I doubt that he would have any idea. If I asked him how much it costs to buy a block of cheese, to buy a loaf of bread, to buy a school uniform, or to send a young child to an early childhood education centre, he would have no idea whatsoever.

Every time National is in Government we always get cuts to social spending, high debt, high unemployment, high cost of living, and tax cuts for the rich. Who ends up paying for that? It is the working-class population of New Zealand. Low to middle income families that are struggling to make ends meet suffer as a consequence of the failure of that Government to get this economy moving, to create jobs, and to get people to earn high incomes. The failure of that Government is the reason why many, many people in this country are struggling to make ends meet. It is the sad experience of Pacific communities up and down this country, and of working-class communities in Māngere. Every time there is a National Government, our communities end up suffering the most.

High unemployment is what we get from this Government. When Labour was in Government we had a minimal unemployment rate of 3 percent. What is it now? It went to 6 percent in 2009 and 7 percent in 2010, and it is now hovering at 6.5 percent. What is the cost of living? The cost of milk has gone up 21 percent, petrol prices have risen 20 percent, the cost of living has gone up by 5.3 percent, and the cost of food by 7.5 percent. It all happened under National’s watch. All we get is empty promises that things will be better around the corner. Well, they will not be better around the corner, because the Government is again promising failed right-wing economic policies. Somehow, by selling off four of our asset companies and selling off Air New Zealand, the rest of us will be better off! Two weeks ago the Government released a rich list of New Zealanders. How many workers from my community were on that rich list? None. At a time when this economy is suffering under this Government, when people are hard up, rich people make quite a bit of money.

How much did the working-class community get? It got a 1.9 percent increase in overall wages. People earning the minimum wage got 25c. That is this Government’s gift. That is the only thing the Government has been able to achieve for them: a 25c wage increase. What did the rich and wealthy receive? They received the bulk of the tax cuts. Over 42 percent went to the 10 percent who are the highest income earners. People who are supporting this Government, people who have worked behind the scenes campaigning, its rich mates—those are the people who will benefit from any policy that this Government has to offer.

All that communities such as ours have heard is empty promises. We heard promises before the election in 2008 that GST would not go up to 15 percent. We got more than just GST going to 15 percent. We got a 21 percent increase on petrol, and a 21 percent increase on our fresh fruit and vegetables. That is why the only party that stands for low to middle income families throughout this country is the Labour Party.

We will increase the minimum wage to $15 an hour. That will address the issues that are facing families. We will remove GST from fresh fruit and vegetables, and that will help families to get quality food. We will not tax the first $5,000 of income. Those are the kinds of policies that resonate with communities such as ours. Every time we have National in Government, it is working communities such as ours that suffer. All we have had from this Government is smiles, waves, and empty promises. We will let it know on 26 November who should be governing this country.

NIKKI KAYE (National—Auckland Central) : There are riots in London, the financial markets are volatile, but Labour has been distracted for a very long period of time. The facts are that Trevor Mallard is doing cycle races, and Phil Goff is more concerned with remembering which notes he had at a meeting and attacking senior public servants than helping the people of New Zealand.

The reality is that this Government has implemented a strong plan of economic reform. We can talk about the cost of living, but the fact is that under Labour the price of milk rose higher than it has under National. The price of a 2-litre bottle of milk is $4.15. The best thing we can do for New Zealanders to ensure that they have a lower cost of living is to create a competitive economy, to ensure there are better jobs, and to ensure that we have lower interest rates. Under our Government we have had a strong programme of economic reform. We have had the largest tax reform in 25 years, and we have ensured that we have reduced regulations, in terms of the reform of both the Resource Management Act and the Building Act.

In my city of Auckland we have undertaken the largest reform of local government ever. I was very proud to be standing on the waterfront with the Prime Minister and Len Brown to see the Wynyard Quarter opened. Anyone on the other side of the House who claims that people are not seeing the extraordinary changes that our Government is making in order to reform and to reduce bureaucracy was not at the Wynyard Quarter last Saturday afternoon. Thousands of people flocked to our waterfront. They flocked to our waterfront because they are seeing a transformation in Auckland. They are seeing a transformation in terms of our infrastructure, and that transformation is not just down at the waterfront.

They are also seeing a transformation in terms of transport. We have invested $340 million in the Victoria Park tunnel project. That project will open early. It will reduce congestion in Auckland. It will take thousands of cars off our roads. In a couple of weeks’ time we will achieve something quite extraordinary in our city: finally, with one mayor and one plan, we will have a spatial plan for Auckland that will enable us to deliver from a cultural, social, environmental, and—more important—economic perspective right across our city. We will finally be able to deliver the transport system that Aucklanders want, but we will do it in a fiscally responsible way.

Looking across the world, we can see that in Europe, for instance, 21 out of 27 countries have centre-right administrations, because people are realising that the world has changed. The reality is that countries, Governments, and individuals that spend more than they earn cannot survive in the new world. That is why we are seeing riots in London. That is why New Zealanders understand that our plan for economic reform and the programme we have been implementing are working. They are working because we are seeing that unemployment is dropping, even if the figure is modest and dropping only slightly. We are seeing progress in major areas of infrastructure, as in Auckland. The feeling that I get on the doorstep is that people understand that we are making the hard changes because they are making them themselves in their own personal circumstances.

The alternative is very clear; the alternative is to return to the party on the opposite side of the House that is continuing to promote policies that are high-debt and that involve taxing people more. In my view that party would take the country backwards. I can tell members that when I have been doorknocking on the streets of Auckland Central, people understand that. People do not want to return to a party that will see us in debt with a decade of deficits. They want a Government that is responsible, and that ensures reduced regulation and a smart tax system that rewards those small businesses that create wealth in this country. I can tell members that people are saying on the doorstep that they do not want to return to the party now in Opposition that is distracted not by what matters for many individuals in New Zealand but by what is happening internally with themselves. People contrast that with a leader who has courage, who has undertaken significant reform, and who has ensured that we have invested in our infrastructure. I tell members that on 26 November I look forward to seeing Prime Minister John Key hopefully leading our country towards the future.

Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) : If the previous speech was a bid to retain Auckland Central all I would say to Nikki Kaye is that she has absolutely lost it. The member started her speech by commenting on the riots in London. Underpinning that issue, all political commentators, all media commentators have said that it was caused by issues of racism. Underpinning the greater tensions over there in the UK is inequality; rising unemployment, and greater inequality in that country. All media commentators have made statements on that, and political commentators have, as well. So it is very interesting that the member started her speech with that issue.

Talking about a programme of economic reform by the National Government, if that is the case then why has it not led to job growth? Why have we seen Māori and Pacific unemployment increase? Why have we seen unemployment increase under this Government’s programme of economic reform? We have simply not seen any jobs generated whatsoever, and unemployment is increasing. Although I am lowering the decibels in the House with my contribution, it is a very serious issue that we are bringing to the table in terms of the issues of the cost of living and how we need to address it. In my electorate 73 percent of people earn $40,000 or less a year. None of them and very few other people have received any benefit whatsoever from the tax cuts delivered by National. Every one of those earners in Hauraki-Waikato pay tax on every dollar they earn and they are not getting a fair shot at it from the National Government. They simply are not. There are no new jobs, and people are paying more at the checkout counter because of GST. When we see people going to the supermarket and looking at the reduced-to-clear section, we know very well that people are feeling the pressure. When we go to the markets and see those families juggling what they are going to buy with the minimal amount of money they have at the markets, we know that people are feeling the pressure. When we go to community houses and they are telling us simply that more and more families are opting to join the vege co-op because they simply cannot afford to stretch the limited amount of dollars that they have, they are feeling the pinch. National is closing its eyes to the reality that families in my electorate feel every day, which is the pressures of juggling what they can do with their dollar.

I went to a school in Paeroa. The staff told me that half of the kids in their school could afford to pay the stationery costs; the other half had to get a grant from Work and Income, which their parents paid back over time, to afford stationery for their kids to be at school. Do members know how much they were getting a grant for? It was for $30. That is a middle-of-the-road school in Paeroa—unbelievable.

The principal herself said that more and more kids are coming to school hungry. I went to the Methodist City Action community in Hamilton. They said their food banks were bare. They are making calls out to the community to pledge to donate to their food bank every week, because, quite simply, as soon as the food comes in it goes out. I visited the Anglican Action trust in Hamilton. They tell us time and time again that cost of living pressures are simply far too great. This Government needs to open its eyes and address the real issues that affect struggling families. We are talking not just about low-income families but about modest-income families and families who are working. The problem has simply shifted. Unless National understands that fact, then all the rhetoric its members say about a great savings strategy and things like that is not heard. If they talked to a family that is working, then that family would say that they simply do not have enough income to even think about saving, let alone listen to what National has to say. That is in their words; not mine. The cost of living pressures on families that have modest earners or are on low incomes are very real and should not be underestimated.

It is Labour’s intention to restore greater equality in our society, greater redistribution of wealth through a fairer taxation system, and greater effort and emphasis on investing in our kids. That will make a huge difference and it will resonate largely in the electorate. I think the speaker before me would do well to look at the issue of homelessness in Auckland City. We cannot on the one hand say that things are so great without looking on the other side of the street and saying that more must be done.

This Government simply has not opened its eyes to the real debate happening in each home and each community about the pressures of the cost of living.

CHESTER BORROWS (National—Whanganui) : It gives me pleasure to be able to stand in this general debate and draw some distinctions. There was a little comment just a few weeks ago by the Leader of the Opposition, the Hon Phil Goff, that underlined for me the difference between Labour and National.

Chris Auchinvole: What was that?

CHESTER BORROWS: What it was is this: when National put up the minimum wage to $13, with an extra 25c an hour, the Hon Phil Goff said that that was only 10 bucks a week and that that was pathetic—that was pathetic. All those people on the other side of the House said, yes, that was pathetic. Yet a few weeks ago, what did they announce? They announced a new policy that says the first $5,000 of income will be tax-free for all wage earners. It will give wage earners an extra $10 a week—$10 a week. Well, $10 a week is pathetic when we say it, but it is a great innovation when they say it, and they never—never—explain.

Just a few Thursdays ago when Labour members announced the new capital gains tax, and what a huge innovation that was going to be, and how absolutely wonderful it was, what did they announce then? They announced then, but did not explain, that right up until the Wednesday night a rich person in this country, according to the Labour definition, was someone who earned $60,000 a year. That was because Labour supported a tax rate of 39c in the dollar for everybody earning over $60,000 a year. But they woke up on Thursday morning, and what had happened? All our rich mates were suddenly those earning $150,000, and so they were going to be on the top tax rate of 39c in the dollar. There was no explanation about that whatsoever. There was no explanation, but they had changed their minds. Phil Goff, David Cunliffe, and David Parker had gone to sleep on Wednesday night knowing that everyone earning over $60,000 was a “rich prick”—in Labour parlance. But they woke up on Thursday morning and found that the rich were those earning over double that—over double that—with no explanation whatsoever.

We had my friend from Māngere, Su’a William Sio, explain about the price of milk. He said it had gone up 21 percent under this Government. That was not a lie because I cannot say it was a lie, but it was factually incorrect, because we know that under the last 2 years of the Labour Government milk went up 23 percent—23 percent—and that under the last 2½ years of this Government it has gone up 9 percent. There is no explanation of that. We never hear an explanation of that. Labour did not care enough to do anything about the price of milk when in Government, but right now, of course, the price of milk is the most terrible thing.

Su’a William Sio also said that the price of petrol had gone through the roof, but failed to announce, of course, that the price of petrol is actually coming down this week. Who knows where it will be next week, because it is fluctuating.

Labour hates it when things start moving positively. The crime rate has gone down, and they hate it. We have more young people accessing apprenticeship schemes now, and they hate that as well. They want to say that National has not got a plan, yet our plan, articulated in the Budget and spoken to by our members of Parliament, constantly outlines where this Government is going. This Government is going in a forward direction; it is not going to look backwards. It is going to be careful with the way it spends taxpayers’ money, because there is no such thing as Government money, in spite of Labour policy when Labour members hold the Treasury benches, and when all the money is theirs and they are happy to spend it on their mates. The previous Labour Government took up 13 hectares of public office space in this city over its period in Government. But that is all fine; that is job creation. It has nothing to do with productivity. It is job creation, and that is innovation. Labour members hate it when a Government comes in and says that it is going to be careful how it spends taxpayers’ dollars.

They hate it when we say we are going to target money towards those people who have nothing. The previous speaker, the Hon Nanaia Mahuta, talked about the 40,000 in her electorate who have a low income, and who have received, apparently, nothing from this Government. What about those people living on the pension? Those people living on the pension are earning $160 a week in the hand—more than they got when that lot was in office.

CAROL BEAUMONT (Labour) : I was very disappointed in the last speech. Generally, the Labour side thinks that the member Mr Borrows has integrity. But Mr Borrows was very selective in the figures he was quoting. I particularly note on the record that although he was talking about the $10-a-week extra income in terms of the first $5,000 of income being tax-free under the policy that Labour has announced, there will also be another $10 a week in extra income under our policy to remove GST from fruit and vegetables. That will help families. As well, there will be another $80 a week for those on the minimum wage. So let us make sure in this House that when we are talking about what other parties are doing, we are accurate in explaining their policies. Labour’s policy is for $100 a week more for those on minimum wages and immediately above the minimum wage.

I also want to talk about New Zealand going backwards, a point that a couple of my colleagues have mentioned. However, the last speaker Chester Borrows talked about the country going forwards. Maybe this is really about a person’s perspective, because from our perspective the only things that seem to be going forwards, or growing, are poverty, the gap between rich and poor, and prices. These things, we would have to say, are growing, and we can prove it. Certainly, the New Zealand economy is not growing. The economy is stagnant. Jobs are not growing, and 77,000 young people are not in education, in training, or in jobs. The Prime Minister seemed to think that was laughable in question time today. I think that is outrageous—it is absolutely outrageous. To have young people languishing on the scrap heap is something that will cost us very, very dearly socially and economically. Jobs are not growing, and investment in skills certainly is not. It is all very well for the Government to say that tertiary education funding is increasing, as was the case in question time today. That was about funding for the university sector, which is important, but what about investing in apprenticeships? What about investing in traineeships? We are going backwards in those areas.

Wages are not growing. The 25c per hour increase in the minimum wage was absolutely disgraceful. People on the streets in Auckland know that it is impossible to live on the minimum wage. I have yet to find somebody who will say to me that it is possible to live in Auckland on the minimum wage. Certainly, 25c per hour more in the face of rising prices was just a complete and utter slap in the face for those people who are struggling to make ends meet. So Labour’s policy, if elected, to lift the minimum wage immediately to $15 an hour is an important one and one that is recognised and supported by people, irrespective of their own incomes. It is supported not just by people on the minimum wage, not just by people who earn a little above the minimum wage, but by many middle and high income people, because, if they are honest, they know it is impossible to live in Auckland—and I am sure, elsewhere in New Zealand—on the minimum wage.

People are struggling to make ends meet, and the Government actually had a choice about this. It did not just happen in a sort of evolutionary way. The Government acted. It chose to make it worse. It chose to give big tax cuts to those on the highest income, and at the same time it lifted GST. Obviously, that put pressure on those people who were already struggling, and it led to price rises throughout our economy. That is exactly what has happened.

Let us talk about some real people. In the area I am working in, in the Maungakiekie electorate, I have recently had an optometrist contact my office saying that a middle-aged man had come in, trying to sell his glasses back because he needed some income. He was trying to sell his glasses back. I think that is a sad story. Recently, when I relaunched the Stop Loan Sharks campaign in Onehunga, we had a number of people there, including the Salvation Army. We heard a story of a family of five trying to feed themselves on $80 a week—$80 a week on food for a family of five. This is just not going to happen. What is happening as a result of this? We see increasing dependence on loan sharks and increasing indebtedness. The Government is cynically now acting on this issue because it knows there is public concern.

TIM MACINDOE (National—Hamilton West) : Two of my political heroes when I was a boy were “Gentleman Jack” Marshall and Brian Talboys. What great statesmen they were, and how well they served this country. I watched the way both men acquitted themselves in their demanding roles and the dignity they brought to this House, and I felt inspired to set myself the goal of trying to follow in their footsteps one day. It is in the context of the leadership they brought to New Zealand’s trade negotiations that I mention them in today’s debate. How well older New Zealanders remember the huge impact of Britain’s entry into the European common market nearly 40 years ago. Almost overnight we went from a position whereby the British took nearly all of our primary production that we could send them to having to fight for access in a crowded market against a range of fairly hostile nations applying protectionist policies to shut out New Zealand’s goods. Marshall and Talboys did a wonderful job for this country to secure that access and guide us through the transition. They were difficult days for our primary sector and for successive Governments, and it took us many years to adapt and adjust.

The work that our modern trade negotiators, such as our excellent Minister of Trade, Tim Groser, are doing is just as important, as their efforts will have, and are having, a huge impact on our economic growth. It helps that there is considerable demand for our production once more. We have diversified our trading base, with Australia now being our largest market and China at No. 2. But, as other speakers on this side of the House have noted this afternoon, New Zealand is far from immune to what is currently happening around the world. As a trading nation we are always vulnerable to global downturns, and it is hard to imagine more challenging circumstances than those we have faced during the nearly 3 years since the National-led Government took office.

It certainly did not help us that the Clark Government squandered the favourable conditions of the previous decade, irresponsibly escalating Government spending while the tradable side of our economy shrank in each of the last 5 years of that Government’s time in office. Those factors helped to push this country into recession in the first quarter of 2008, 9 months before the global recession hit us, and left Michael Cullen telling New Zealanders that we faced a decade of deficits and rapidly escalating debt. It was appalling economic mismanagement, yet nothing that the current Labour Opposition members have said since demonstrates that they have acknowledged the folly of their policies or the huge damage they did to our country.

On the contrary, this year Labour is going to the polls promising more tax, more Government spending, and more borrowing. It is an astonishing prescription, and it is clear from the fact that none of the backbenchers opposite ever talk about it—especially outside this House—that they know how irresponsible it is. The last thing New Zealanders need right now is another tax. No wonder Trevor Mallard told Labour’s dwindling band of activists to not get dragged down in the detail of their tax package. He is reported to have said that the public do not care and that Labour speakers look and sound boring when they go down that path. Well, I can assure Mr Mallard that the public do care, and they are not so much bored as gobsmacked that Labour has learnt nothing from the mistakes that saw it so unceremoniously thrown out of office. Those who fail to learn the mistakes of history, we are told, are bound to repeat them. That is why we on this side of the House are working so hard in this election campaign to ensure that Labour will not get that opportunity.

Labour’s track record and commitment is to spend money we do not have. Have those members not noticed what is happening in Europe, America, and elsewhere at the present time? Do the phrases “debt crisis” and “credit downgrade” mean nothing to them? New Zealanders have paid dearly for the fact that under the last Labour Government, baseline Budget spending increased by 45 percent between 2005 and Labour’s eviction from office just 3 years later—45 percent. That is why the incoming National-led Government had no option but to rein in Government spending. That is why the only fiscally responsible option this year was to implement a zero Budget. New Zealanders have applauded us for this approach, even though it is always difficult and uncomfortable to cut back. The evidence that this Government’s economic management is working is increasingly apparent. Under National the after-tax average wage has increased by 7.4 percent over the previous year, compared with inflation of 5.3 percent. That is a real increase of 2 percent. As a result of our efforts over the past 3 years, New Zealand is better placed than many countries.

HONE HARAWIRA (Leader—Mana) : Tēnā koe, Mr Speaker. On Saturday, 6 August 2011 the Mana movement held its inaugural AGM in Waitakere. We were privileged to host people from all around the country, including Māori, Pasifika, Pākehā, Asians, and Europeans, all with the desire to be part of a new political movement for change in this country. We had workers, we had teachers, we had mothers, we had sons, we had musicians, we had truck drivers, we had lawyers, and we had beneficiaries. We even had MPs from four different political parties, and we had a number of long-time party organisers who had walked away from Labour’s decision to abandon the poor and the working class in favour of a scrabble for the votes of middle New Zealand. On top of all that, we also had a level of energy, goodwill, and fun that we just do not normally associate with political party AGMs. It was a great day, and now we are rolling on to the general election in November as a party dedicated to being a voice for Māori, for workers, and for the poor.

Mana will represent a newer, more honest, and more principled way of doing politics. We will promote policies that highlight the Treaty as the foundation of our nation, the basis by which we can provide immediate relief to those in need, and highlight the long-term change that will take the power out of the hands of the rich and return it to ordinary New Zealanders. We will not compromise on principle, and neither will we sit politely by while Governments of either persuasion sell our assets to foreign asset-stripping thieves and price our people into poverty and starvation. We will promote candidates chosen for their unremitting fight for justice, their track record in advocating for Māori issues, and their leadership in the struggle for human rights.

Mana will contest all seven Māori seats, because Māori want us to. They have deserted the Māori Party for selling out to the parties of the rich, and they are flocking to the strong and independent leadership that Mana represents. Mana will contest the general seats, especially those in communities savaged by cuts in spending on health, education, and benefits, because even the poor deserve to have a champion in Parliament. We have already fielded calls from our Pacific cousins, beneficiary advocates, and people known and respected in their communities. We intend investing serious time and energy into pushing our policies in low-decile communities. Mana will also target the party vote through policies aimed at reducing prices, creating jobs, sharing the tax burden, increasing Government spending on health and education, and keeping the people’s assets in the people’s hands.

I am humbled by the number of very talented people who have offered their support to Mana, and declared their willingness to be candidates for Mana in both Māori and general seats. But we have accepted the request that our electorates be given more time to complete the process by which they choose their candidates in order to ensure that Mana goes into the election with the best possible team. But this I know: Mana’s list will reflect the people we represent. Some will be high-profile, and as a collective they will give Mana a real chance of attracting a good percentage of the party vote.

Mana’s message will be a simple one: party vote for Mana for real change, and party vote for Mana for an independent voice for Māori, for workers, and for the poor. We have affirmed our constitution, we have posted our draft policies on the net, and we have reaffirmed our national leadership. I am proud to say that Matt McCarten has agreed to continue in his role as party president, and that John Minto and Annette Sykes have taken on the roles of co - vice presidents and senior spokespeople for Mana.

These last few months might have been difficult ones for me, but I continue to be overwhelmed by a huge level of support from right across the country for the only party willing to openly champion Māori rights, workers’ rights, and the rights of the biggest tribe that this country has ever seen: the poor. Tēnā koe, Mr Speaker. Tēnā tātou katoa.

JAMI-LEE ROSS (National—Botany) : I think we have just heard from the tail that will be wagging the next Labour Government dog, if a miracle is pulled off at the end of the year. If that miracle is pulled off at the end of the year and Labour is in Government, then the member we have just heard from, Hone Harawira, will be the tail that is wagging the dog. It will be a very sick dog, because from what we know of the last Labour Government, as New Zealanders we will be in trouble.

Let me remind members how sick the last Labour Government dog was. We had a decade of deficits left for this Government when we came into Government. A decade of deficits was left for us. Power prices had increased by 72 percent in 9 years. We were left with an emissions trading scheme that would have doubled costs to households by about an extra $330 a year.

Floating mortgage rates peaked at 11 percent in 2008. I remember those mortgage rates. That was when I bought my first house and we took one of those higher mortgage rates that the last Labour Government left us with. The official cash rate peaked at 8.25 percent, and food prices were up 21 percent. That was a worrying time for New Zealanders. Unfortunately for members on the other side, I tell them that they have no hope of getting across the line, because New Zealanders just do not believe they will get far.

The Labour campaign manager, Trevor Mallard, is sitting over there. Let me remind members what the Labour campaign manager has spent the last week doing. He has spent it filibustering in this Chamber, trying to fight voluntary student membership. It has been an appalling display, with point of order after point of order being raised. Then there is Phil Goff. Labour has spent the last week trying to work out how to remember whether Phil Goff had a meeting with the SIS. The third thing the Labour campaign manager has spent the last week doing——and you will love this, Mr Williamson—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. It is a grievous insult to you, Mr Speaker, to suggest that you are Mr Williamson. I am sure you are offended; we are offended on your behalf.

Mr SPEAKER: I am very grateful for the member’s concern, but he should not interrupt another member’s speech.

JAMI-LEE ROSS: I know that Trevor Mallard is enjoying this very much, because the third thing I am going to mention that the Labour campaign manager has been doing in the past week is cycling around Pakuranga. The big thing in the Labour Party campaign strategy is a cycle race in Pakuranga. That is what Trevor Mallard has been doing. We saw him on Saturday cycling around Pakuranga. That is what those members are focused on.

The Labour campaign plan gets even better. It has three points to it: more tax, more debt, and higher spending. If a miracle is pulled off at the end of the year and Labour gets in as the next Government, we will have to look forward to more tax, more spending, and more debt, with Hone Harawira as the tail wagging the Labour Government dog.

I feel sorry for the Labour candidate in Botany, because we have a good story to tell and I am looking forward to telling it. I am looking forward to telling the people of Botany that we have spent $2.5 million upgrading and modernising eight schools in Botany. We have 300 police officers on the streets of Counties-Manukau, which is helping to lower crime in my electorate. Crime has dropped by 9.5 percent—

Hon Member: 9.5?

JAMI-LEE ROSS: —9.5 percent—since this Government has been in place, because we have put more police on the streets of Counties-Manukau. All Labour members want to do is cycle around the streets of Pakuranga, yet we are putting more police on the streets of Botany. I am also looking forward to telling the people of Botany about the more than 3,000 extra elective surgeries coming through the Counties Manukau District Health Board. I will be looking forward to telling them about the extra funding for early childhood education—$1.4 billion, which is the highest amount that has ever been spent on early childhood education. I will be talking to them about the 87 percent of 2-year-olds in Counties-Manukau who are now fully immunised, with dedicated staff working towards getting that percentage up to 90 percent.

Those are the good news stories that we can tell. Those are the good news stories that National candidates around the country will be telling the voters in their electorates. All that the Labour Party has to talk about is more tax, more spending, and higher debt—and that will be a worry. I am pleased to have spoken in my first general debate. I say to Trevor Mallard that I am looking forward to the cycle race, and let us look forward to the next Hone - Labour Government.

  • The debate having concluded, the motion lapsed.

Imprest Supply (Second for 2011/12) Bill

First Reading

Hon BILL ENGLISH (Minister of Finance) : I move, That the Imprest Supply (Second for 2011/12) Bill be now read a first time.

  • Bill read a first time.

Appropriation (2011/12 Estimates) Bill

Third Reading

Imprest Supply Debate

Hon BILL ENGLISH (Minister of Finance) : I move—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I thought we were also going to do the second reading of the Imprest Supply (Second for 2011/12) Bill with this bill, and that has not yet been called.

Mr SPEAKER: The Minister is about to move both of those.

Hon BILL ENGLISH: I am about to do that.

Mr SPEAKER: The Minister is about to do that.

Hon Trevor Mallard: The bill that’s on the Order Paper hasn’t been called.

Hon BILL ENGLISH: The Government order of the day has been called.

Mr SPEAKER: The Clerk has called Government order of the day No. 1 and that covers both of these bills.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. At the moment the Order Paper states that this bill may be taken with an Imprest Supply Bill. It does not have to be. I would have thought that for a bill to have a reading, it must be called.

Mr SPEAKER: I just a moment ago set the bill down for second reading forthwith. That is why the Minister is now about to move that both bills be read.

Hon BILL ENGLISH: I move, That the Appropriation (2011/12 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2011/12) Bill be now read a second time. As we get to the end of the Budget process it is probably the right time to recap just what the main features of the Budget were, although so much has happened in an economic sense, both positive and negative, since late May that one could be forgiven for thinking that because circumstances have moved on, maybe the debate should move on. But, in fact, a feature of this Budget is that it continues the considered and consistent decisions that the Government has been making since it came to office in 2008 with a couple of particular objectives in mind.

The first objective has been to protect the vulnerable through tough times, and over recent Budgets that has included the Government continuing to spend, maintain, and grow public services in order to maintain and grow income support to those who rely on it. The second objective has been to lay the platform for undoing the imbalances that built up through the first decade of the century, and to lay the platform for higher incomes and more jobs for New Zealanders through a better-performing economy over the next 10 years.

Those decisions have taken account of the way in which the world has changed, even since the middle of 2008. I just remark on that in passing, because in my view we will continue to see episodes of volatility, concern, and, occasionally, a crisis in international markets, and that is driven by the fact that there is a fundamentally simple issue underlying the pressures we are seeing. Certainly through the last decade and years previous to that many developed countries built up large amounts of debt. The crisis of 2008 shifted a lot of that debt from the private sector to Government balance sheets. But the debt continues to grow, and as long as that debt continues to grow it will continue to cause disruption. The only way to deal with debt is to write it off or pay it off, and neither of those things is happening at the moment.

Even then, as Governments get on top of this fast-rising debt, they will have to try to get it down from dangerously high levels, and that is just as politically difficult, maybe even more so, than trying to stop it rising. At least when debt is rising the public can see that, with some alarm, and can understand the need for action. So the Government is always taking a longer-term view of these risks. The fact that the crisis of 2008 receded in its immediacy into 2009, and certainly by 2010, did not mean that the fundamental imbalances had been dealt with, and that is what we have taken account of in Budget 2011.

Back in Budget 2009, the main feature of it was to clean up the loose ends from the previous Government, but in particular to initiate a longer-term and significant investment in infrastructure. The previous Government had begun that process, but the Government in Budget 2009 set out productive infrastructure as one of the fundamental building blocks of a productive economy. I am pleased to say that, 2 years on, the programme is well under way, adequately funded, and well understood. We are getting very good value for money from an infrastructure industry that can see the Government programme, that can invest appropriately, and that has 6, 7, or 8 years of work ahead of it.

In Budget 2010, the main focus was the tax switch. We took the opportunity—probably a unique opportunity—presented in 2010 to shift the balance of the longer-term incentives in this economy in a way that many advisers have advised over the years, but the opportunity had never quite arisen. It was focused on a pretty simple idea that there were aspects of imbalance in the economy that could be influenced by changes in tax rates. So we increased tax on consumption and the effective tax rate on property investment. We cut tax rates on income, and on the return on savings and investment. That was quite a considerable package, which was broadly fiscally neutral and measured in a number of different ways on equity, showing that it had really no particular impact on the distribution of income. In light of recent discussion about tax issues, I point out that a number of measures related to investment in property will collect in this financial year somewhere between $800 million and $900 million, effectively increasing the tax rate on that form of investment.

Budget 2011 focused on getting the Government’s books back in order and doing that at a time when we have to face the very significant challenge of helping to fund the rebuild of Christchurch. Alongside that, we must continue to work towards higher national savings, and I will deal with that issue first.

The most important driver of savings actually is not Government policy, although that can influence it; it is the attitude of wage and salary earners and business owners towards saving. There is no doubt that the global financial crisis sent an unambiguous signal to New Zealanders that more debt is not a good thing—it makes one’s country and household and business vulnerable—and more savings would be a good thing. In fact, one of the reasons that growth in this economy over the last year or so has been lower has been that people have taken that message to heart more than we might have expected, and they are saving more. An indication of that change is that in 2007 New Zealanders spent about $1.11 for every dollar that they earned. This year it may well reach 99c—that is, New Zealand households spend 99c for every dollar that they earn. Therefore, we will have a positive savings rate for the first time in about 20 years.

This Budget also includes essentially the pre-funding of the Christchurch rebuild. It was the Government’s view that it was vital there was no question over the Government’s willingness or ability to make its contribution to the Christchurch rebuild. As those who have been close to the process will know, there have been question marks over the willingness and ability of other payers to fund that rebuild. One case involves AMI Insurance. This Budget demonstrates that the Government has effectively borrowed its share of around $5.5 billion out of a total cost of $8.9 billion in addition to Earthquake Commission funding, and that money has been ring-fenced as the recovery fund. We will account for that money as we go, but there is no doubt of the Government’s commitment to it.

Of course, this Budget also shows the continued fiscal consolidation that the Government has gone through in a considered and consistent fashion, with a strong focus on maintaining public services but reducing the costs of providing those public services. I must compliment the Public Service on the way it has adapted to a dramatically changed world—not just a change of Government but a change in revenue expectations. The leadership of the Public Service is getting to grips with that, and some of them have done a very good job of taking a longer-term view of how to invest in their people and their technology and in new models for service, so that they can continue to do what they most want to do, which is in a professional and competent manner provide excellent public services to New Zealanders. I think over coming years we will be increasingly seen as a country where we are doing a good job of that, when others are struggling with the burdens of debt, slashing services, and experimenting on a grand scale with how a developed country can support the common good with a lot less resource. We will learn from those experiments, but the Government is not following a radical path in this respect; it is working with the Public Service to make improvements over time.

I commend Budget 2011 to the House. It has been the appropriate Budget for the times, and it has continued the process of balance and considered judgments from the John Key - led National Government, which is enabling New Zealand to build on the strengths that it has and to build on the resilience many New Zealanders have shown through these difficult recessionary times and the now unpredictable environment for economic growth. We have in that respect come through in pretty good shape, and we expect that we will be able to lift incomes and provide more jobs.

Hon TREVOR MALLARD (Labour—Hutt South) : I will deal first of all with the Imprest Supply (Second for 2011/12) Bill, and I say that there appears to be nothing unusual about this bill. It is a pretty standard arrangement for the Government to incur both capital and operational expenditure in front of appropriation, basically just to have a backstop to make sure that the laws in relation to the Public Finance Act are not broken, and this bill appears to be unexceptional.

I will focus more, though, on the Appropriation (2011/12 Estimates) Bill and the comments that the Minister of Finance has made on that. I think that he just slipped in one of the things when he was commenting on the tax changes, or the “switch” he referred to from the previous year’s Budget. He said that the switch had no particular impact on the distribution of income. Well, nothing could be further from the truth. This was a tax switch that went from the poor to the rich. It increased GST and cut the top tax rate such that people like the Prime Minister had a tax cut of $1,000 a week. While my constituents, who are struggling with their kids, and struggling to pay the costs of power, transport, and rent, had a GST increase, a number of people, like the Prime Minister, had a tax cut of $1,000 a week.

There also seemed to be an element of surprise in the comments from the Minister of Finance on the deficit. It was almost as though he could not quite work out why we have a deficit. I think the Minister could do well to study such renowned economists as Ronald Reagan to see exactly how countries get the sort of deficit that this country now has. Clearly there are some external factors in the deficit, and Christchurch is one factor in it, but the way to compound a deficit is to give enormous tax cuts to people who do not consume, the rich people; to make cuts to the income and services that are available to poorer people, and thereby increase unemployment—which was increasing anyway—to reduce the tax take from middle-income people; and to require payments to go to a new, increasingly larger group of beneficiaries. And that is what the Government has done. So we have less tax coming in from middle-income people, less tax coming in from the rich because of the tax cuts, a requirement for increased services because of poverty, and increased payments in unemployment benefits.

As we have heard over the last 24 hours, because of its activities the Government has managed to make a massive shift of people from the unemployment benefit to the domestic purposes benefit, which it has trumpeted as being some sort of major success, but the increased numbers of the unemployed and other beneficiaries means there is a massive deficit. The Minister of Finance, who has been around this place for a while, should not be surprised that if we have less tax and more spending on benefits, we will end up with a bigger deficit. It is a pretty standard arrangement, and the Minister should not be surprised.

What has surprised me has been the lack of any suggestion of any plan, whatsoever, on the part of the National Government to get out of this problem. In fact, what the Government has done is to pretty actively work against the plan. It has made massive cuts to science and research as they pertain to agriculture. Funds that were attracting massive private sector matching have been eliminated, and, overall, business after business in my own electorate now needs funds. Probably because we are close to Industrial Research Ltd, the old Department of Industrial and Scientific Research, there are a lot of businesses that, although they would not be described as spin-offs, have a lot of the people who either previously worked in the Government science area or have worked closely with people who have. Within the Hutt Valley, within Wainuiōmata, there are quite a few pockets of good research, and in particular there is probably more development. Jobs are being created, sometimes in twos and threes, but sometimes in 50s, 60s, and 100s.

That job creation was given a boost by Labour’s tax credits for research and development, which have been so cruelly whipped away by this Government, because, as one of the managing directors of a local company has said, “There appears to be no wish on the part of the Government to have development occur in New Zealand.” That company is facing a couple of choices, and one of them is to go to Australia, where the culture is closer and the Government research arrangements are much better, and the other is to keep a very small intellectual property group here and to do a lot of the development and a lot of the other work in China. That is the story of far too many of our businesses at the moment.

We can contrast that with Labour’s policy and plan that is developing and becoming clear. I was at a meeting of Grey Power relatively recently, and its members are very, very keen on the $10 a week tax cut that each of them will get under Labour’s policy. Couples will get $20 a week. They think that is fair; they think that it somewhat balances the redistribution that occurred—from them, because they pay GST, to people on the $1,000 a week tax cut, like the Prime Minister and his friends.

Grey Power members also think that moving to a capital gains tax is a fair approach too, because clearly once we get to the point where we know that it will not be retrospective, and where we know that it will not apply to the family home, people will say that essentially a buck is a buck. It does not matter how it is earned. It does not matter whether it is earned through capital gain or through income; it should be taxable. It is unfair for people like Sam Morgan—and in fact he says himself that it is unfair for his company—to sell for $700 million and not to have any taxation put on that. Of course, if he stayed in the company and drew the money out as salary or dividends, then he would have to pay the tax. But in this particular case, and in the many, many more like it, that tax is not paid.

I will now turn to reaction to the Budget, and say that Standard and Poor’s, I think, got it about right. They have put New Zealand on negative credit watch. I have to say we were not in such a flash position to start with. I think it is fair to say that some of the expected upgrades that should have occurred have not occurred, and I think we are now just about past the point of believability as far as the Minister of Finance is concerned. That massive decrease in unemployment, that increase in productivity, and that increase in wages, which for each of the last 3 years he has promoted as being just around the corner, I think most of us understand are not coming at all.

I will finish on what I think is the most dishonest part of this Budget. It is the suggestion that we can sell assets and be better off, in the way that John Key has promoted. We all know, as 90 percent of New Zealanders know, that we do not sell our house to then rent it back. That is a sign of desperation. That is a sign of people who are distressed.

Chris Tremain: You sell it to buy another one. You sell it to upgrade your house.

Hon TREVOR MALLARD: Well, if people are selling their house to upgrade it, then they are buying more assets. But that member wants to sell the most profitable assets in New Zealand—to sell the assets that my grandparents and lots of the grandparents of people here spent their lives paying for and building. What that member wants to do, and what Bill English went to China to do, is to ask who wants to buy our power companies. Bill English went to China and said “Who wants to buy our power companies?” That is a disgrace, and that is the low point of this Budget.

AMY ADAMS (National—Selwyn) : I am very happy to rise this afternoon to take a call in this debate on what is technically the third reading of the Appropriation (2011/12 Estimates) Bill and the second reading of the Imprest Supply Bill, but really, more broadly than that, I think this debate is a good chance to have a bit of health check on the company’s economic performance and the economic position we find ourselves in. I think there is no more important time to do that, given the situation that the world finds itself in. We have followed with horrified attention the growing concerns in the European Union for some months now. We have watched it spread from the disasters in Greece and Portugal into very mainstream economies like Spain and Italy now. I certainly do not claim by any stretch to be any sort of expert, but I know enough to be very concerned, as I know most thinking New Zealanders are, about the economic situation in the European Union.

Of course, more recently we have watched the old superpower America teeter on the brink of complete collapse, and we have seen its economy not only downgraded recently, but also put on further negative watch. That tells us how important it is that we can present to the world the face of a strong economy that has its books in order, its debts under control, and, most important, is being led by a Government that knows how to run a strong economy and knows how important it is to keep the accounts in good order and keep us in good shape. We have seen over the three Budgets delivered by the John Key - led Government a story of returning this country to the strong position it deserves to be in, putting us on the front foot and putting us in a position where we are economically competitive internationally and where the world and the lending markets know we are a good bet.

All of New Zealand can reflect back with some pride on the fact that although we are by no means out of the woods and we still have a difficult period ahead of us—and I certainly do not want to diminish the reality of that—New Zealand is in a very strong position right now. Compared with so much of the rest of the world, we are in a good position. We have a strong Government, we have a Government that knows how to manage the economy, and we have a Government that has acted early, from as soon as it was elected in 2008, to turn round the never-ending deficits bequeathed to us by the last Government. It wants to turn round the explosion of the bloated bureaucracy and to instead turn our focus back to the productive sector of this economy and say that our job as the Government, first and foremost, is to make sure that we keep our house in order. If we cannot control the 25 percent of the economy that is central government, then there is little hope that the rest of the country will follow suit. I think we have done that.

We have sent a very clear message that we will get Government expenditure under control. We will not sit and preside over ever-growing Government expenditure, and what is worse is that the growing expenditure under the Labour Government did not deliver any better outcomes. Time and time again, we saw more and more money being thrown into the bottomless pit of bureaucracy, with no improvement in the outcomes. What have we had under this National Government? We have had tight fiscal management. We have put pressure on the chief executives of Government departments, yet we have seen better outcomes.

Tony Ryall stands up in this House, day after day, and reports on the fact that more New Zealanders are getting elective surgery now than ever before. More New Zealanders are getting access to more medicines than ever before, and we have not done that by simply throwing more money at the problem and hoping it will go away. We have done that by imposing some pretty tough requirements and making it very clear that our expectation is that the Public Service will do more with taxpayers’ money. It will do more with the money we take from hard-working New Zealanders, and it will recognise, acknowledge, and thank, frankly, the New Zealanders who go out to work every day and pay their taxes to enable that to happen. Controlling Government expenditure has been a core part of what we are about.

The other very important part—and if anyone doubts the importance of it, recent events should certainly put them right—is presenting a credible picture of the control of national debt to the world. I acknowledge that a large part of our net investment position is made up of private debt, but the track we have now set New Zealand on with regard to Government debt is something to be proud of. The fact that we will now see core Crown debt peak at no more than 30 percent and that we are seeing a return to surplus in a little more than 3 years is an absolute endorsement of the John Key - led Government and the work it has done to put our economic house in order. We have controlled Government expenditure, we have our debt position under control, and we have put ourselves in the position where the rest of the world can look at us and know that we are still a good bet—and if we need to borrow, it is certainly ready to lend to us.

We are supporting the productive economy, because National Governments get it. We get that Governments have money only if the productive sector is working, growing, and paying its taxes, and our job is to support it in that. It is not to get in its way, it is not to put up barriers, and it is not to smack down anyone who dares to be successful in this country. It is to say “Good on you. Thank you for being here. Thank you for working hard.” That is part of the reform of our tax system. The Minister of Finance talked in his contribution about the biggest reform of the tax system in 25 years, which this Government is overseeing. That tax switch, despite what the previous speaker, Trevor Mallard, said, was tax-neutral. It was broadly tax-neutral. The tax cuts across the board that now see over two-thirds of taxpayers—two-thirds of taxpayers—paying no more than 17.5 percent in income tax funded the increase in GST.

Labour wants to talk time and time again about the $1,000 tax cuts. Those members talk about $1,000 tax cuts. For the few people who get those cuts, let us just reflect upon the fact that to have had a $1,000-a-week tax cut, as Trevor Mallard goes on about ad nauseam, one must be paying more than a quarter of a million dollars in tax every year after the tax cuts—after them. Those people whom Trevor Mallard wants to harangue, bully, and vilify are paying, every single year, a quarter of a million dollars in income tax alone to support the families in New Zealand who need it. If we are to vilify those people and beat them up, as Trevor Mallard would have us do, I would not blame them for asking themselves why they would stay. If Mr Mallard wants to scare away and beat the golden goose, then I say good luck to him, but I ask him who will pay for his welfare and his handouts. Who will pay for his excessive government spending and lolly scrambles? I say to Mr Mallard that every time he wants to talk about $1,000-a-week tax cuts, he should just bear in mind that the people whom that member refers to are paying now—after the tax changes—more than a quarter of a million dollars in income tax every year to support this country. Frankly, I would rather that they were doing that in our economy than anywhere else around the world.

When we talk about the tax system, I think it is also worth reflecting on the fact that the lowest 43 percent of income earners in this country receive more in Government transfers than they pay in income tax. How do we give income tax cuts to people who do not pay any net income tax? Households have to earn on average more than $110,000 a year before the Government starts to make a net buck off them. That is fine, but I will not accept the suggestion that we are not being fair when people have to earn more than $110,000 before they actually start to contribute to the net performance of New Zealand.

This Government is controlling Government expenditure. It has turned round our debt position. It is supporting the productive economy. It has reformed the tax system to be fair and to be aspirational. It is building world-leading infrastructure to support our economy. It is raising skill levels across the board. It is investing in science and innovation. It is doing all of this so that we can move New Zealand forward. We will not follow the Labour plan of taking New Zealand backwards into the dark ages of more tax, more debt, and more spending. We are interested in moving this country forward and raising the outcomes for all New Zealanders, and that can happen only by fixing the economic mess that Labour left us. The three Budgets we have seen from Bill English and John Key are a step in that direction. The fact that we are in such a strong position while the rest of the world struggles under this period of global turmoil is a credit to the National-led Government. It is a credit to our economic management. It is why New Zealanders will continue to support us. They want to see us take this country forward, and that is what we are planning to deliver.

GRANT ROBERTSON (Labour—Wellington Central) : The Appropriation (2011/12 Estimates) Bill could be read as an innocuous set of figures. That is essentially what we see here. It is the estimates. There are some big numbers sitting beside things and there are some smaller numbers sitting beside others. For instance, we could look at the Department of Corrections budget. We would see that something over $800 million is being spent on prison custodial services and that a somewhat smaller amount of money—about $140 million—is being spent on reintegration and rehabilitation services, and we could say that that might indicate some of the priorities of this Government.

But this document is much more than just a set of figures. This document should represent the plan that the Government has for the country, for the future of New Zealand. It is not just numbers, but it should be the vision, the bold outline, of where a Government wants to take a country. When we look at this document, we see that it is sadly lacking in any kind of vision or any kind of plan. It does not deliver hope to New Zealanders. Where is the sunny optimism of the Prime Minister from before the last election and in the first year of his term? He is the man who said that there would be this great wealth of opportunity for New Zealanders.

Hon Member: Ambitious for New Zealand.

GRANT ROBERTSON: “Ambitious for New Zealand” was the slogan.

Hon Lianne Dalziel: Turbocharge the economy.

GRANT ROBERTSON: We were going to turbocharge. The poor Governor-General had to say “turbocharged” in his first speech when this Government came into office. Where has that all gone? It has gone—it has completely gone.

John Armstrong from the New Zealand Herald , who is someone whom I have the odd difference of opinion with—

Hon Trevor Mallard: So do I.

GRANT ROBERTSON: Mr Mallard does, as well.

Paul Quinn: I wouldn’t mention him.

GRANT ROBERTSON: John Armstrong from the New Zealand Herald —I say to Mr Quinn—described this Budget as a “fairy tale of high hopes”—a fairy tale of high hopes. Like most fairy tales, this one begins with once upon a time. Once upon a time there was a politician called John Key, who smiled and waved a lot. He was relaxed and he liked to kick the tyres with his friends, but most of all he was ambitious for New Zealand. His friend Bill said it was great to work with him, as he jumped from cloud to cloud. He liked to tell stories to his friends about catching up with Australia on wages, and he was fond of making other promises to his friends, as well, like promising not to increase GST, or promising not to sell assets. John was a happy camper, but things have not turned out so well in this fairy tale.

They certainly have not turned out well for the thousands of Kiwi families who now rely on food banks. In my own electorate, a relatively wealthy electorate, there has been a 30 percent increase in the use of food banks under this Government. Things have certainly not turned out well for those on the minimum wage, and it is important to note that the minimum wage is now worth $16 a week less than it was a year ago—$16 a week less than it was a year ago. That is one reason why I am proud of the Labour Party’s promise to increase the minimum wage to $15 per hour—$15 per hour. I am proud of that because it will put money in the pockets of working families. It will put money in the pockets of working families. This Budget does not contain anything that resembles a plan for driving this economy forward.

Amy Adams, in her speech, talked about the fears, worries, and concerns that New Zealanders have when they look at what is happening in economies around the world. Well, what is this Government’s reaction to that? It is to stand on the sidelines with its hands in its pockets, doing nothing. That is the reaction of this Government, which is hoping really hard that the Budget will deliver 170,000 new jobs. There is nothing in this appropriation document that tells me the Government has any kind of actual plan to deliver 170,000 new jobs, let alone 4 percent growth, which is in here, as well. The Government is hoping, and it has no plan to get past that hope.

The question we have to ask when we look at this is what the basis is for any kind of optimism from the Government speakers. New Zealand is on negative credit watch, 155,000 people are unemployed, and we have record high inflation. There is nothing that this Government has done, that it has brought to this House, that should give New Zealanders any hope whatsoever that the Government can deliver on the hopes that are in this Budget. It is, as John Armstrong says, a fairy tale of high hopes. We have heard, after every Budget from this Government, that good times are ahead and we just have to wait. Each time, Bill English has failed to live up to those expectations. Each time, the high hopes—the fairy tale of high hopes—has carried on. It is not good enough to have a Government that promises in the never-never and never delivers.

The tragedy is that all the policies from this Government are about the short term rather than the long term. As I said, this document should be a plan; it should be some kind of road map for New Zealanders to follow. The question I am asking, and being asked, as I move around New Zealand, is: how can we actually create a better New Zealand than this Government has? That is why the Labour Party does have a plan. We have been criticised and asked where our policy is. Our policy is out there now, and it is a plan that is based on a fair tax policy and growing a sustainable economy. My question to the members on the other side of the House is: are they actually going to release a policy at this election, or are they simply going to rely on what has failed for the last 3 years? Is there a policy? It is a genuine question.

Carol Beaumont: There is no answer.

GRANT ROBERTSON: There is no answer from the other side, because there is no plan.

What we have on this side of the House is a plan for a better New Zealand. I think New Zealand is a better place than one where money is taken out of early childhood education. I think New Zealand is a better place than that. New Zealanders are better than that. I think New Zealand is a better place than one where we sell off our assets to get some short-term money gain that means those assets are gone for ever. This is a Government that tells us that New Zealanders will be at the front of the queue for those assets. The reality is they have no way of knowing how that will happen. Time and again in this House Bill English has failed to answer the question of how New Zealanders will be at the front of the queue for assets that are going to be sold. Those assets should not be sold. They are assets built up by generations of New Zealanders, they are part of our history, and they should be part of our future. We must not let important assets like the electricity industry go offshore. We saw it with Contact Energy, and under this Government they will disappear completely.

We need a plan that is based on good monetary policy that supports our exporters, overseas investment rules that actually ensure that Kiwi land stays in Kiwi hands, a procurement policy that encourages Kiwi jobs, a capital gains tax, the first $5,000 of income tax-free, and GST off fresh fruit and vegetables. All of those things are important, but in the end they are only one aspect of what a Government should be about. A Government should be about supporting New Zealanders, investing in New Zealanders, and making sure that New Zealanders have the skills and the knowledge to develop our economy. There is nothing in this document that speaks to supporting economic development. Where is the support for new technologies? Where is the support for clean technology? Where is the way of adding value to our primary industries?

This Government is standing on the sidelines, hands in pockets, hoping the market will provide. Well, the truth is that New Zealanders need more than that. We are a better country than that. We are a country where we do look after each other. We are not a country that stands by when $800,000 is taken from Women’s Refuge, and we are not a country that stands by when money is taken away from mental health providers in our community, which are forced to close down, like the one in Marlborough recently. These are things that New Zealanders do not like. New Zealanders are people who believe that we look after each other, that we support each other, and that we invest in our people. This appropriation bill has nothing of that in it.

Labour is putting forward a coherent plan. It is a plan that is about a fair tax system, investing in skills and training, keeping our assets, and not selling New Zealanders’ future down the river. We are concerned about our economy, not somebody else’s economy. That should be the basis of this appropriation bill, but it is not. This Budget is a moral failure, a fiscal failure, and it does not invest in New Zealanders. We need at this election to ensure that the Government that is elected is led by the Labour Party, will invest in New Zealanders, will have a fair tax system, and will ensure that New Zealanders want to stay here and come back to New Zealand. We need an environment where we provide a fair basis for all New Zealanders to achieve their potential, and where we protect our environment and support those around us. That is what this Budget should have done, and it has failed to do that.

METIRIA TUREI (Co-Leader—Green) : I am pleased to stand on behalf of the Green Party and address the Government’s economic strategy through the Appropriation (2011/12 Estimates) Bill and the Imprest Supply (Second for 2011/12) Bill. In any economic debate, the values of political parties are laid bare. Politics and economics are about the allocation of resources. The decisions that politicians make, and the values that are triggered by those decisions, determine who will benefit from the country’s economy and who will not. This National Government has made decisions that shift resources from those who need the most and has given them to those who have the most. As a result, our economy has become increasingly unfair and unequal. The Government’s tax cuts, which went primarily to the top income earners, are just one example of this. They were unfair and they were poorly timed. These tax cuts have not been revenue-neutral, as Bill English likes to say—at least not in the short term.

Borrowing to grant tax relief to the wealthy is not a smart way to manage the economy. Equally, borrowing to pay for the rebuilding of Christchurch when a majority of New Zealanders are willing to pay a small levy on their income to foot this bill is similarly not a smart way to finance the rebuilding of Christchurch. The Government is also preparing to borrow to help fund its $19 billion expansion of our State highway system over the next 10 years. This is not a good time to be borrowing to build infrastructure that is vulnerable to high oil and carbon prices. The community knows this; the Government does not. Faced with a Budget deficit, in part of its own making, this Government has chosen to cut services to families and to increase debt. Despite being told that we cannot afford to have services to families, we are unnecessarily borrowing to fund tax cuts, motorways, and the Christchurch rebuild, which Kiwis have all said we should share the cost of.

This is a Government that is not afraid to borrow when it suits it. Treasury are forecasting net core Crown debt to go from $10.5 billion in 2008 to $41.5 billion this year, then to $72.9 billion in 2015. These decisions mean that as a country we will run the largest fiscal deficit in our nation’s history. The Green Party has exposed this Government’s economic decision-making as destructive to both our people and our environment, and, as a result, destructive to our economic security as a nation. This Government chooses policies that will impoverish our children, degrade our environment, and prioritise short-term wealth acquisition over long-term stability. The Green Party makes constructive, hopeful, and practical choices that will protect our environment, protect our economy, and protect our kids.

Let us consider our kids first, as 270,000 children live in poverty in New Zealand right now. That is one in four. One-quarter of all New Zealand children are growing up in poverty. International research puts the cost of not acting to address child poverty at around 3 percent of GDP per year. In this country, that means that about $6 billion every year is lost in health, justice, education, and welfare spending that could be saved if we chose to act early to prevent child poverty. Bringing kids out of poverty does not just make humanitarian sense; it makes economic sense, as well. A Unicef report, Child Poverty in Rich Countries—that includes New Zealand—states: “Variation in government policy appears to account for most of the variation in child poverty levels between OECD countries.” More important, the report also states that many OECD countries appear to have the potential to reduce child poverty to below 10 percent without—without—a significant increase in Government spending. The economic argument for investing in our kids does not require a huge amount of Government expenditure. It requires better prioritisation of existing Government spending and more compassionate decision-making—economic decisions—that looks beyond the short term and the next election.

The Green Party’s solutions for bringing 100,000 children out of poverty are affordable and practical. One of our solutions is to make Working for Families fairer. Working for Families helps low-income families make ends meet, but it does not provide the same help to kids whose parents receive a benefit. We would incorporate the in-work tax credit into the family tax credit and extend it to 140,000 of the poorest households in this country. That would give an extra $60 a week to those 140,000 families. It would be enough on its own to bring 100,000 children out of poverty. This policy would cost around $300 million a year. That is less than 0.3 of GDP. While child poverty is costing us $6 billion a year, this solution is just a fraction of that. It costs us more to do nothing than to do something. It is fiscally irresponsible to allow children in this country to continue to grow up in poverty.

But this Government has priorities other than children. Instead of addressing child poverty, National is allocating $1.4 billion in this year’s Budget to subsidise pollution under its emissions trading scheme. Instead of helping our must vulnerable children, National is spending money on an unnecessary “Holiday Highway”. For just a fraction of the cost, thousands of children could be brought out of poverty. Thousands of children could be provided with the opportunities that National members say those children are entitled to, but refuse to support.

This Government has made life tougher for those on low incomes. High rates of inflation and the increase in GST mean that the lowest incomes have less for the basics. A total of 275,000 New Zealanders work for the minimum wage. Many of them take care of dependent children. For every five children living in poverty, two are in households that work—for every five, two are living in households that work. Finding a job is not a panacea to ending child poverty, at least while wages remain so low. It is impossible to make ends meet on the minimum wage, so the Green Party would immediately raise the minimum wage to $15 an hour to help working parents provide the basics for their kids. Again, that is worth about $60 extra a week for someone working full-time on the minimum wage. Not only will raising the minimum wage help those families who are in work, but it will generate up to around $173 million a year for the Government at a time when the fiscal deficit is ballooning. That is smart economics in action: supporting families and children, raising children out of poverty, and raising money for the Government. What can anyone possibly suggest would be a more important priority than those families and those kids?

The recent NBR Rich List shows that there has been a 20 percent increase in the combined wealth of the 150 richest New Zealanders. A 20 percent increase in the minimum wage would have seen the minimum wage jump to $15.60. We know that most of those who are employed on the minimum wage work for very large corporate entities that can well afford to pay that little bit extra to enable those families to take better care of their families and their kids. When the National Government chooses to keep the minimum wage low, it chooses to keep families in poverty. When the National Government chooses to keep the minimum wage low, it chooses to keep children in poverty. The Greens have the courage to look at revenue-raising options, which this National Government has failed to consider out of weakness, to ensure that we can continue to live within our means in this country.

Economic and fiscal sustainability is an integral part of the Green vision for a sustainable economy that is fair. We would reprioritise Government spending towards those who need it the most, while reducing debt. We would raise a comprehensive tax on capital gains—excluding the family home—that in time would raise some $4.5 billion a year and close the single-biggest remaining tax loophole in our tax system. We would put a fair price on carbon and water, dismantling some of the last Government subsidies paid out to polluters and industrial farmers. A clean, green economy that works for everyone, including our most vulnerable, is a better and fairer alternative than this Government’s irresponsible fiscal approach. Thank you.

CHRIS TREMAIN (National—Napier) : I rise to speak on the Appropriations (2011/12 Estimates) Bill, as we move this bill and the Budget through the House today. I will commence my speech by replying to, or rebutting, Mr Robertson, who used a number of quotes by Mr John Armstrong about the Budget and projections for its future. At the same time, Mr Robertson forgot to mention that a number of economists throughout New Zealand—more than a number—believe that the Budget was relatively conservative, and that it was infinitely achievable.

What brings a lot of impetus and merit to these other projections and other comments is the growth rates for the January through March period, the first quarter of this year. The forecasts were for about 0.4 percent growth for the economy, but what did we achieve? We achieved 0.8 percent growth for that 3-month period. It was double the forecast. What is more, officials went back and had a look at the growth figures for the period of October through to December, and they bumped those up as well. On any measure, that would indicate that the projections we had for this Budget were pretty conservative and on the mark. In fact, those projections are being supported now by data—actual data—in our economy. Actual people and businesses are getting out there, starting and growing new businesses, employing more people, and paying more tax in this economy. That is a fantastic way to continue with this Budget debate.

Those projections and data deliver upon some of the key focuses of this Budget, one of which was to get New Zealand back into surplus by 2014-15. What happens when we get back into surplus? We will not have to draw down the debt that we need when we are operating in deficit. It is a key function of the Government to operate in surplus as we get back into better times. I think that that, underpinned by the data that has been shown in the economy, means we are definitely moving in the right direction.

The second thing about the Budget was that we based it on some pretty sound principles of home economics. The first principle is to spend less than we earn, over the long term.

Simon Bridges: Radical.

CHRIS TREMAIN: I know. That is quite radical, is it not? Yes. Secondly, we should borrow only what we can afford to pay back. That is another quite radical policy, but one that we put at the centre of the Budget. Ultimately we put ourselves into a position where we can save and repay debt.

These basic economic principles have been sharpened as we have watched Portugal, Ireland, Greece, and Spain struggle with debt mountains that seem—to them, I am sure—insurmountable. Just in the last few weeks we have watched as the mighty United States has battled with its debt—trillions—and has been forced to curb its Government spending. It is simple economics once again. If we spend more than we earn over the long term, eventually we get ourselves into a pile of muck. That is what these countries are doing.

We, on the other hand, took a very conservative approach when we came into office in 2008. We had a look at where we needed to be. We were presented with forecasts, and those were in the pre-election fiscal update before the election, and then in the half-yearly fiscal update following the election. The previous Labour Government left us with projections for deficits over the following 10 years—deficit after deficit after deficit. That meant, if we went back to our simple home economics example, that we had a projection of debt continuing to rise and never coming down. That is what we were left with.

I am proud to be part of this Government, proud to be part of a John Key - led Government, which has been realistic about the issues that we have faced, and which has put the policies in place to make sure we can go forward as a nation and be, quite frankly, in the position we are now, while other nations around the world are faced with huge cuts to their budgets—

Simon Bridges: Riots.

CHRIS TREMAIN: —and have riots in the streets—as citizens come to the realisation that they have to make a profit in the long term, and as they face the reality that they have to live within their means. I mean, this is pretty basic stuff, but that is what is happening. I ask members of the House, even members of the Opposition, whether we are seeing riots in the streets in New Zealand. No, we are not. It is because we are in a great position going forward, and in excellent shape.

New Zealand is in a different position from many of these other nations. Our total debt is comparable, but where we differ is in the proportion that is owed by the Government, versus the amount owed by private citizens. Net Government debt in New Zealand is about a quarter of our total national debt. That is fantastic. We are in a great position. I go back to the 1970s when Muldoon was in Government, and we had a debt to GDP ratio of about 70 percent. That was high. But over successive Governments, including the National Government through the 1990s—that was where the biggest dip in the debt curve came back—and the 9 years of the previous Labour Government, the debt to GDP ratio has come back. Where the smoke and mirrors are is that the Labour Government claimed that it repaid debt. The reality is that the economy grew significantly. The Labour Government did not pay down a cent but the debt to GDP ratio fell as the economy grew. Those are the facts of the matter.

Iain Lees-Galloway: You’re making it up.

CHRIS TREMAIN: I tell the financial whizzes on the other side of the House to go and have a look at the debt position they inherited, and at what it was when they left office. It did not change, at all. The economy grew, and the debt to GDP ratio fell. That is the reality, so those members should stop trying to tell the New Zealand public that the Labour Government repaid debt. That is bollocks.

Iain Lees-Galloway: I raise a point of order, Mr Speaker. I think the speaker on his feet has made a lot of accusations—

The ASSISTANT SPEAKER (Eric Roy): No. That is not a point of order. The member will sit down. That is not a point of order.

CHRIS TREMAIN: Thank you, Mr Assistant Speaker Roy. Going forward, this Budget reinforces the six-point plan that we have been driving, right from the start of being in Government. That six-point plan is totally a focus on taxation and changes to taxation. Members have seen us make a big difference there by changing the incentives so that people who want to get out there and work will pay, if they are earning under $48,000 a year, tax of no more than 17.5c in the dollar. Under any tax level, compared with when Labour was in Government, people pay less tax in this country when they go out and work. We have delivered a fantastic situation.

The second part of the plan has been in infrastructure. We have invested significantly in infrastructure. I am proud to see the roll-out of high-speed internet through fibre being laid in the ground. In fact, I was at a meeting in Hawke’s Bay on Monday, along with Unison, which did not actually get the contract with the Government, but which is out there as a competitive fibre-network. We will end up with a wonderful fibre-network in Hawke’s Bay, which is absolutely magic.

Trade and innovation is the third part of our plan. We are out there organising a new free-trade agreement with India. That will be a wonderful opportunity to give more markets to our traders. Particularly locally in Hawke’s Bay it is fantastic to see that move. We have worked on getting apples into Australia, and I think that within a very short space of time we will see the first shipment of apples into Australia.

Skills in education have been a major focus for us, and that is the fourth part of our plan. That has been a huge focus for us, particularly with national standards and delivering upon those. This Budget delivers an additional focus on those particular standards, in making sure that we deliver those going forward, and in lifting the competence of children within our school system.

The fifth area of the plan is Government spending in services, where we have had a major focus. We are keeping the lid on Government spending, and we are keeping a real focus on driving efficiencies in our Government departments. Earlier this afternoon Bill English complimented many of the chief executive officers of those Government departments on making a real difference in delivering better services for the same amount of money.

Hon Steve Chadwick: Gutting the regions.

CHRIS TREMAIN: To say that we have gutted Government services is absolutely ridiculous. I mean, we can take health—and education, where there had been budget education—we are now delivering more operations than at any time under the previous Government. What those Labour members struggle to understand is that Governments can be efficient, can be more productive, and can deliver more services with the same budget. I think that is a talent and a focus that Bill English has brought, which is making a huge difference in this country.

I will finish my speech there. We have a strong focus on building an excellent economy, and National is delivering upon that with this Budget. Thank you.

RAHUI KATENE (Māori Party—Te Tai Tonga) : I found it very interesting listening to the previous speaker talking about the household economy. He said that the first rule is that one does not spend more than one earns, and the second rule is that one does not borrow more than one can pay back. Does that member not realise that those are mutually exclusive? If someone is living within their means, then they should not need to borrow.

In May of this year, in the first flush of post-Budget analysis Kerry McDonald, chair of the Savings Working Group, bemoaned the continued lack of robust strategic economic thinking in New Zealand. In his view the real extent of the problems facing the New Zealand economy are fundamental structural issues that have to be dealt with. There is no clear statement of where the Government wants to take the country, and there is little attention to the structure of our economic system. Instead, we seem to always be responding to symptoms, and there is little appetite for long-term thinking in the national interest. Add to these the persistent concerns around our high debt level, a comprehensive lack of savings, and the fact that the household income for most households has not been growing, and I think we start to get some sense of the dimensions of the problem.

It is a no-brainer that we are operating within fiscal constraints, so there is even more incentive for bringing a heightened level of transparency and accountability to Government expenditure. Within the Māori Party our demand for excellence pushes us even further to demand whole-of-Government effectiveness for Māori. The rights and responsibilities of tangata whenua embodied in the concept of tūrangawaewae bring with it the highest standards of citizenship, yet in the current economy citizenship is consistently exchanged for economic access. In effect, this reduces the mana of citizenship and increases the mana of economic roles. The idea that each person is equal in value is being increasingly replaced by the idea that each dollar is equal and people with more dollars are therefore deemed more important and meaningful.

The Māori Party has great concerns about the nature of such thinking. We seek to lead the conversation for all New Zealanders that economic policies must be built upon social and cultural structures. Economic success involves more than monetary profit and consumption as solely economic factors. We believe firmly in the proposition that what is good for Māori is good for New Zealand, so our interest therefore is in establishing initiatives that replace the current policy emphasis on matching external economic indices with a policy of matching or exceeding external quality-of-life indices. Such bold thinking by the Māori Party is in line with the United Nations General Assembly, which just 3 weeks ago called on member States to undertake steps that give more importance to happiness and well-being and determining how to achieve and measure social and economic development. The assembly invited countries “to pursue the elaboration of additional measures that better capture the importance of the pursuit of happiness and well-being in development with a view to guiding their public policies.” It noted that “the pursuit of happiness is a fundamental human goal,”. The General Assembly resolution says that happiness is critical in advancing economic growth and social progress. The resolution called on a balanced approach to economic growth that can lead to sustainable development, poverty eradication, happiness, and the well-being of the planet.

The Māori Party is really pleased with the progress being promoted internationally. We see that as being very much of the same line of thinking that we have been progressing through the genuine progress indicator. Our interest in the genuine progress indicator came about in recognising that the GDP indicator was never designed to and cannot adequately reflect the happiness and well-being of people in a country. In short, it brings about an approach in which unsustainable patterns of production and consumption work against sustainable development.

I will demonstrate how we have tried to promote new ways of thinking in some of the portfolios in which Māori Party Ministers have provided leadership. In the focus on Māori economic development, we expressed our support for economic systems to be aligned with, or driven by, social and cultural systems. The Minister of Māori Affairs has pioneered key initiatives in Māori tourism, Māori productivity and export growth, Māori innovation, and Māori skills acquisition, including cadetships and the relationship with InfraTrain. His strategy has promoted the use of whanaungatanga as a Māori-led approach to international trade, commercial relationships with Māori living overseas, and Māori enterprise initiatives in the domestic economy. We have seen evidence of this strategy in both the Māori Economic Taskforce, from the Māori economic summit, and the delegation to China. What we are doing is building on both the cultural strength and entrepreneurial acumen of Māori to also lead to social and economic outcomes.

Another aspect of a kaupapa-driven approach to economic development comes through the development of a language strategy. In the Māori Affairs Committee report there was coverage of the revitalisation of te reo Māori. I noted with disappointment the comments around the inability of institutions to deliver the desired increase in the number of speakers and the depth of te reo comprehension. When we look at balancing the accounts, we see that although we know that te reo rangatira can contribute to wealth generation both nationally and internationally, the value of the language asset is not being realised if we have poor institutional commitment.

This is a complex and fascinating process, which will bring New Zealanders into close relationship with our very foundations as a nation. As a proud uri of Ngāi Tahu, I have to say how delighted I am that we have a distinguished statesman in Tā Tīpene O’Regan leading the way, along with the very impressive membership, including Emeritus Professor Ranginui Walker, Professor Linda Smith, Dr Leonie Pīhama, and Hinurewa Poutu.

The second major platform of our policy transformation is Whānau Ora. The 2011-12 Budget invested another $30 million in Whānau Ora, which was a key source of interest at the select committee—and rightly so. Whānau Ora is an incredible initiative, which I think has received universal support around the House, and indeed around the country. It absolutely reflects the efforts we have made to model a new approach for a kaupapa-driven economy. Whānau Ora seeks to reflect the aspirations of whānau and support them in self-managing and taking responsibility for their own social, cultural, and economic development.

I have been meeting with whānau around the country who have been involved in Whānau Ora already, and even though they have not yet managed to access any of the funding from Whānau Ora those who are readying themselves for that transformation have made a transformation in themselves. They have realised that Whānau Ora means that they can make a difference in their own lives.

I have to say that as the Māori Party moves on and starts to make sure that our policy is included within that of the bigger parties, we are making a difference. We are making a difference and we are proud of making that difference. The Māori Party is pleased to support this Budget. We will be even more pleased when this Budget reflects the economic reality of what we need to be doing in New Zealand: a kaupapa-driven economy. Kia ora.

DAVID BENNETT (National—Hamilton East) : It gives me great pleasure to follow on from the last two speakers, Chris Tremain and Rahui Katene. I thought both of them indicated two fundamental points of view that I think the New Zealand public and the world are waking up to at the moment. This imprest supply debate is crucial for that, because it reflects the vision of this Government and how we deal with our economy and build a stronger future for New Zealand.

The two things I thought were important were, first, a thing that Chris Tremain talked about, which was the need to get our economic fundamentals right. The days of living—

Simon Bridges: You’re losing Steve, David.

DAVID BENNETT: No, I think Steve Chadwick needs to listen and learn. The thing we need to do is get our economic fundamentals right. As Chris Tremain said, it is like with a household: we can do only what we can afford, we have to be careful in how much we borrow, and we cannot live beyond our means. Those are some really basic economic fundamentals that Labour can never support.

The second issue was one the Māori Party raised—it is a very important issue—which is that we need to look long term. We need to look at Governments and economic management that deliver long-term solutions. We are looking at a world that has changed. The economic environment has changed in the last 5 years, and it is changing by the day. If we look at what has happened—[Interruption] No, it has changed. We have seen the Asian economies rise to become much more dominant, and the European, Western model that America and Europe have engaged in falling apart, in the sense that it is not the economic fundamentals of the future. We have gone back to a situation in which we had to earn our way in the world, work, save, invest, and sell things to the rest of the world in order to survive and progress. Those are the things the Asian economies are doing so well. Those are the fundamentals of economic management that we did so well many years ago, but due to the Labour Party - type mentality, the West lost that. The West is having a wake-up call now that it needs to get back into the game.

The other thing the Asian economies are showing is what the Māori Party has indicated: that we need to have a long-term view, and that Governments cannot just make promises any more on what will be necessary to win elections. The Labour Party is crucially defunct in this area, because it always makes promises to win elections. Its members never look at the long-term impact of what they are promising; it is all about them and their power base—that is all they ever want. The reality is coming to hit home. They are having riots in England now because people are not working and they are not getting good education, so they are not doing the economic fundamentals. We have had Government after Government promising these promises that are unaffordable and will not lead to long-term strong economies.

That is what is happening in America and Europe at the moment, but that will not happen in New Zealand, because this Government takes a long-term view, like the Māori Party. We understand the economic fundamentals that Chris Tremain talked about, and we can get it right so that New Zealand can deliver that strong economy and take advantage of the modern economic environment that will be based in this region going forward.

That will be a big lesson for Labour members to understand, because they cannot even fathom what it means at the moment. They do not even know what economic management is. Labour put this country into recession when the rest of the world was booming. How could it do that? Labour has a plan for New Zealand—the plan that Stuart Nash forgot about at question time today. Labour’s plan is to make New Zealand have deficits for the next 10 years, and to borrow billions of dollars to pay for its election promises—short-term election promises just to win votes, not to look long term at building the productive and economic base of this country—

Iain Lees-Galloway: By selling off our assets.

DAVID BENNETT: Look at that; we have them coming in with their comments about asset sales. That is all they can talk about. They cannot actually deal with the economic issues we face as a country going forward.

What the Labour plan would deliver is more debt. Is more debt a good thing to have at this time? Labour should ask the Americans what more debt means. More debt means we get downgraded. When we get downgraded, what does that mean? That means we are going to be in a situation where we have higher interest rates for our people. The people in New Zealand do not want higher interest rates. The biggest thing we can do for households is not to drop the price of milk by changing the laws around what somebody can sell a product for but to keep interest rates low, because they are the biggest bill that households face. Interest rates need to be low. And what did Labour do when it was in Government? It had some of the highest interest rates of the last decade. Do members remember those 9 percent interest rates we had when the world was growing well and Labour was in Government? What are the interest rates now? Households are saving a lot of money because we have lower interest rates and are delivering for ordinary Kiwis. That is the reality of the situation.

One speaker who spoke a bit earlier—I think in the general debate—was saying that his people have not been looked after and are not delivered for by this Government. Maybe it is not a question of this Government delivering for people; maybe it is a question of people making their futures in this country and in this region, of looking forward and not expecting the Government to deliver the answers, and of looking at themselves to get those answers. In this world you will not be given a free ride by anybody. That is the message you are getting out of the debt crisis in America at the moment. There is no free ride; you have to earn your way. You have to actually save.

Mr DEPUTY SPEAKER: In every second sentence the member brings me into the debate.

DAVID BENNETT: I am sorry, Mr Deputy Speaker. As a country—

Mr DEPUTY SPEAKER: I am standing. There are a lot of things you are saying that I agree with, but you cannot include me.

DAVID BENNETT: When we look at that we see that the country needs to earn its way in the future, and individuals need to earn their way in the future. What are the secrets of that? It is getting a good education, and National is delivering on providing standards in education and a future for New Zealanders where they get that good education to go forward. What do you also need? You need jobs.

Mr DEPUTY SPEAKER: Order!

DAVID BENNETT: Yes, I am sorry. What we also need are jobs for our people once they have been educated, and those jobs will be delivered. The jobs cannot be delivered when there is a high tax rate, which the Opposition is seeking to impose. That would be destructive to growth and to the promotion of people taking advantage of opportunities, making choices, taking some risks, and building more industry and more jobs for people going forward. National is providing that economic environment that will provide more jobs for people who are well educated, so they can take advantage of the jobs.

The next thing National is doing is providing the infrastructure so that those businesses can grow and provide even more jobs going forward. That infrastructure is crucial for this country going forward. Labour does not want to see that infrastructure going forward. It wants to cut that infrastructure spending and use the money it will borrow from overseas just for handouts for day-to-day living rather than looking long term.

The crucial thing about this economic situation the world has found itself in is that we need to look long term, we need to have that infrastructure, we need to invest in education, and we need to have a financial system that engages people, lets them take risks, and builds that economic growth. That is what National is delivering. If we compare that with the Opposition, which thinks in the short term about what it needs to win an election—which it has no chance of doing if it carries on with its current economic policy—we see that it does not look at economic policy that will actually grow an economy; it looks at economic policy that will pay for its short-term promises. It does not want New Zealand individuals to be the best they can.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I have listened to members opposite talk about the household and I consider that some of their comments have been somewhat patronising: “Don’t live beyond your means.”, and: “You’ve got to make sure that you don’t borrow more than you can afford to service in terms of your mortgage.” But they do not take their analogy that one step further. And what is that analogy that they have not managed to bring into the debate thus far? The advice they would give the ordinary householder in New Zealand is to sell their house and rent it back from whomever they sold it to. That is exactly the advice they would give: sell the house and rent it back. Does that leave the ordinary householder with an asset? No, that actually divests them of the one asset they will have in their lifetime that they can guarantee they are able to pass on to their children. They cannot pass on their rent situation to their children; they can pass on their asset. That is what National Government members never say when they are talking about this.

Let us have a little unpacking of the asset-sale argument. National members are not telling the public that the asset-sale argument is fundamentally flawed in terms of the essential asset or dividend-stripping that it bequeaths to generation after generation after generation. This is not something that happens just overnight. The return is something that happens just overnight, but the long-term effects are paid for not by us but by our children and our grandchildren and their children beyond. It is economically illogical to sell our country’s energy State-owned enterprises in order to pay down debt. The dividend yield of the four companies was 7.6 percent last year, which exceeds the 10-year bond rate of 6 percent, so the Government will be a net loser by selling half of each energy company to avoid raising new debt.

John Key says he wants to give Kiwi mums and dads the opportunity to own a stake of the State-owned enterprises. But they already own State-owned enterprises; that is what public ownership means. I have a very old poster on my wall from the 1980s, and it has a wonderful picture of these private sector vultures sitting on the sideline, eyeing up the hospitals and the various other State assets. The subtext is public they’re ours; private they’re theirs, and that is exactly what is going on here. The Government is willing to sell off this country’s future for the short-term gain it would provide to our balance sheet.

Foreign investors—not mum and dad investors—are the true winners from privatisation. Since Contact Energy was sold offshore by National in 1999, it has paid $1.5 billion in dividends to its private, mainly Australian, shareholders. I do not think the people of New Zealand will fall for it. They know this election is a referendum on asset sales, and I know on which side of that argument they want to fall.

This bill represents a Budget that does not treat New Zealanders in an even-handed fashion. I think New Zealanders have that kind of fairness in the way they think about things, the way we think about things. The fair suck of the sav, I think is a Kiwiism if there ever was one. When everyone pays their fair share, that is what it is about—people paying their fair share. What this Budget does, however, is reinforce the advantage this Government gave to the highest-income earners, with massive, unaffordable tax cuts. They were massive and they were unaffordable. They certainly advantaged those at the very highest rung of income earners in this country. The Budget has also exposed the impact that the GST increase has had on the economy as a whole, but particularly on lower-wage earners, and those on fixed incomes like superannuation.

This Budget also reinforces the stark reality of a Government that simply does not have a plan. I cannot believe it. After 2½ years in Government—and National had 9 years in Opposition—those members still do not have a plan. They do not have a plan. I have developed a particular interest this year in something called disaster recovery, because, for obvious reasons, in representing the eastern suburbs of Christchurch it is quite plain that disaster recovery is an important feature of our lives going forward. Everything I have read about disaster recovery starts with the planning process. It is so fundamental that it is an engaged process, and one that really identifies any pre-existing vulnerabilities, in order to ensure that when we build back, we build back better and stronger, and in order to ensure that we are better prepared to withstand future disasters.

It seems to me that the situation we face in New Zealand, in light of the impact of the global financial crisis, is exactly the same as the one we face in Christchurch. I think we should take some of the lessons from the disaster-planning model and apply it to our own economy. I have to say, though, that international best practice on disaster-recovery planning is not happening in Christchurch at the moment, but it should be. The principles that underpin it are what should guide our response to the recession. As in Christchurch, there is no plan, and despite all of the smiling and waving, there is no one in charge. The Prime Minister said he would turbocharge the economy, but he has not managed to get beyond kicking the tyres, as we all know.

If we look at our pre-existing vulnerabilities—and I think this is the most serious point—we see New Zealand’s love affair with property speculation, gaming the absence of a capital gains tax to ensure that the income a sale generates is not taxed at all. That has been part of our problem. That is a pre-existing vulnerability, and if we are going to withstand future crises—because they will come, as sure as eggs are eggs; we are in a cyclical environment—we have to be better prepared, and we have to deal with that anomaly. The reality is that not all income earned in this country is taxed, and somebody has to have the courage to face up to that and to address it. Not only does that mean that people are not paying their fair share—and that is a huge issue, but it is not the only issue—but it means that first-home buyers have no hope of owning their first home, as property attracts investment dollars that are guaranteed a tax-free return. That is a fundamental problem, and if we really want to take this country forward, that is a problem we must address.

National members have said in their contributions to this debate that Labour is wrong for promising to introduce a capital gains tax. I think possibly there are two reasons for that. One is that the increase National made to GST was not signalled ahead of the election. In fact, it specifically said it would not increase GST, so maybe members think it is a bad idea to tell people what they will do before they do it. We on this side of the House think it is better that we are upfront with people and tell people that we will introduce a capital gains tax. Let us not allow National’s approach of being not completely upfront about what it will do after an election to stand in the way of what needs to be done.

The bottom line is this country needs to have a tax plan that does not skew investment towards unproductive speculation and away from the real economy. That is why Labour’s tax package has been welcomed by those who recognise that it is time for what is essentially a level playing field to attract investment dollars. We want to attract investment to our productive sectors, to the real economy, to the economy that generates real income: the well-paid jobs, the ones that will not have to rely on Labour’s policy of increasing the minimum wage to $15 an hour. We are not ambitious for every New Zealander to be paid the minimum wage. We want people to have well-paid jobs, and highly skilled jobs. We want to have an economy that is able to produce real jobs that take New Zealand’s small economy to the big wide world, as it were, and enable those companies with those big ideas to invest in those international markets.

That is why the research and development tax credit is another critical component of our policy. It enables our companies to undertake the innovative work they need to, in order to ensure that New Zealand secures its place in the world. That is the sort of Budget we should be debating at this time, but, tragically, we are not.

AARON GILMORE (National) : It is an absolute pleasure to stand and speak after that prior speaker, because that woman previously was the Minister of Commerce in a Labour Government that oversaw the loss of $2 billion of finance companies. That woman over there, only a few months ago, publicly said in the Dominion Post

Hon Lianne Dalziel: I raise a point of order, Mr Speaker.

Mr DEPUTY SPEAKER: I think I can anticipate the member. There is a courtesy to refer to members by their name or their title. What the member said is not acceptable. It is unparliamentary, and I ask the member to withdraw that comment, and to apologise for it.

AARON GILMORE: I withdraw and apologise, Mr Speaker. I was not quite sure what the bit was. I will carry on—

Mr DEPUTY SPEAKER: Carry on, and make no comment on my ruling.

AARON GILMORE: Thank you, Mr Deputy Speaker. Labour members have either no idea or no plan. They keep talking about us and saying we have no plan. But I look across the House, at those members over there who are trying to create jobs for themselves, because in a few months’ time they may need one. The Budget put forward by the Government is one that will create 170,000 jobs for the people of New Zealand. They say look at those people over there, and they turn round and say we need to create more jobs for the people of New Zealand. That is what our Budget does. It creates 170,000 new jobs.

Stuart Nash: Where from, Aaron?

AARON GILMORE: I say to the member Mr Nash that he should look in the Christchurch Press. In the Christchurch Press this Saturday prior there were 17 pages of jobs, there were 15 pages the week before, and 22 pages the week before that, I tell Mr Nash. I say for the member over there that if Labour keeps polling at 27 percent or 26 percent he will need a job. He can come down to Christchurch, because we employ people in Christchurch. We understand real businesses. It is our party that understands the real nature of wealth creation.

I look across to the members on the other side of the House and I wonder how many of them have created a business, have put their own capital at risk, and have thought about the nature of how to do that. Mr Burns has, to his credit. Mr Burns has created a vineyard. Things are not doing so well in the vineyard sector right now, but that is not his fault. He has put his capital at risk, and he has created a business. I congratulate the member on doing that. But most Labour members have not done that.

To be frank, their numbers at best are illogical. Labour members talk about our tax switch and say that we put up taxes on the poor by putting up GST, and when we reduce income tax they say that is a bad thing. They forget the whole full story. We put up taxes on the rich foreign corporations like Shell, BP, and the banks by changing the thin capitalisation rules, but they do not talk about that. We are collecting more money from those rich foreign corporates than at any other time. They do not talk about the changes we made in the property sector to stop the rort that was occurring in that sector. If members do not believe me they should talk to any property investor or developer in Wānaka and Queenstown about the breakdown that has occurred as a result of the Inland Revenue Department stopping the rorts on property speculation down there. Members opposite have gone quiet, because they do not like it.

If we look at the numbers and the impact of the change in GST, the reality is that it impacts on the rich more than it does on the poor. Rich people spend more money, and because they spend more money they pay more in GST than people on low incomes. The vast majority of people who earn under $45,000 a year do not pay income tax. [Interruption] Labour members do not like it, because they know it is true.

I want to touch on the issue of assets. Opposition members are of the belief that selling an asset is bad, it does not matter what kind of asset it is. We believe that if we have a better thing to put our money into, then selling our assets makes perfect sense. It is like an entrepreneurial tradesman who decides he wants to sell some of his assets to put money into his business because the return from his business will be better. That is what we are doing. We are going to build more Government assets than ever before.

Stuart Nash: What, prisons?

AARON GILMORE: No, I tell Mr Robertson that we are going to build schools, new hospitals, and roads—all those things that create wealth, not public sector jobs—

Grant Robertson: I don’t care what you’re saying. It was Stuart.

AARON GILMORE: —for Mr Robertson and his friends. We believe that in relation to creating wealth, we have to put it in the right productive sense. We believe that if we can sell some of the things we have, get some cash, and put that cash into things that create more wealth, then that is a good thing. We believe that creates jobs. And, in turn, we believe that creates opportunities for the mums and dads out there to put their money into things that are sensible. The alternative is that we either do not invest in schools, hospitals, and roads, or we borrow the money, which is what Labour members would do. They would borrow more money, put our credit rating at risk, and put up the mortgage rates for the mums and dads and businesses out there, and what will they do?

Stuart Nash: That makes no sense.

AARON GILMORE: I can tell Mr Nash that they will leave their businesses.

Stuart Nash: You’re not speaking any sense.

AARON GILMORE: The only person speaking sense at the moment is me. When we look at it, the Labour Party put up this idea of a capital gains tax. It put up this idea of a tax-free threshold. It also put up the idea of putting up tax on the so-called wealthy. What they forget to tell us is that that funds only those particular switches. It does not fund all the other promises it has put forward. Labour has promised hundreds of millions for early childhood education and all its other promises. We have not heard about those. If we ask Mr Cunliffe, he turns round and says: “Don’t you worry, we have a plan.” So we would incur even more taxes some time in the future. Labour has a lolly bag of promises and a big empty bag to try to fund them.

We heard the last speaker talk about research and development tax credits. We had a research and development tax credit under the last Government and it did not work. The only people who made money out of that were my friends in the accounting sector. Every single one of my friends who are partners in New Zealand accounting firms thought that the last Government’s research and development tax credit was fantastic for their bank balances and terrible for the bank balances of companies up and down New Zealand. It was an absolute economic voodoo that was put forward.

The Budget that has been put forward here has some wonderful things for my community in Christchurch. It has $5.5 billion of Government money that will go to rebuild those things in my community that are broken. I think that is a good thing, whether it is the road outside my parents’ house, the sewer down the road from my own house, the high school that I went to, or the shops that are further down the road. We need to rebuild our communities in Christchurch, because it is our country’s second-biggest city. In fact, my region of Canterbury creates more economic wealth than any other region in New Zealand relative to population bar one, and that is the good people of Southland.

I have a theory, just returning to the issue of State assets, that members opposite believe that if there is a dividend return that is more than the after-tax return of the cost of debt, then it make sense to keep doing that for ever. There is a thing called risk, and many Nobel Prize winners throughout the world have won many awards for putting forward the point that that is absolute bunkum. The reality is that we have to take into account the equity risk cost of capital, not the debt risk of capital. I know that Mr Cunliffe is not here right now, and that is a bit of a shame.

Mr DEPUTY SPEAKER: Order!

AARON GILMORE: I am sorry, Mr Deputy Speaker, I understand—

Mr DEPUTY SPEAKER: The member cannot refer to the absence of a member. I ask the member to withdraw that comment.

AARON GILMORE: I withdraw that comment. The issue is that very, very few members on the other side of the House actually understand the reality. Those members would have us believe that they could go out and borrow a billion dollars, put it in some productive investment, and pay the bank at a 6, 7, or 8 percent cost on that debt, and that the returns they will get back on that equity investment make sense. If they truly believed that, Stuart Nash would not have taken money from his own superannuation scheme and bought a property. He would have put it into a productive enterprise.

The reality is that the Labour Party believes that the most productive enterprise in New Zealand, which is our ability to produce food and protein up and down the country, is a golden goose that should be taxed to death. Labour wants to put up the emissions trading scheme and bring it forward sooner. Those members also want to put in place a situation whereby we have a capital gains tax on farms. They want to take the only enterprises that have a long-term ability for us to create massive wealth by feeding the people of the world the protein they want and need, and, basically, tax it to death. They believe that is the best thing to do. We say to them that they should keep putting those policies forward because our supporters love the alternative that National has.

I want to finish with a couple of comments in relation to the comments we heard from some members opposite about aspects of the nature of business creation we have seen from this side of the House. The people on this side of the House have had plenty of experience in running and operating businesses on their own. They understand the issues and risks when one takes money from one side and puts it somewhere else and there is an economic return on it, which creates wealth from those productive enterprises. Unlike when one talks to those members opposite, these people create wealth, whether it is selling sweets door to door, as Mr Bridges pointed out, the real business in terms of real estate that Mr Tremain has done, or working as a shearer as Mr King has done. It is that real honest hard work that creates the wealth that pays the taxes, that creates the situation that makes New Zealand rich, and that pays our way in the world, and that is what New Zealanders will vote for on 26 November.

SU’A WILLIAM SIO (Labour—Māngere) : When my colleague asked the member who has just spoken, Aaron Gilmore, what his list placing would be, he did not respond. He continued speaking, but I saw his colleagues sitting on the backbench all smiling and laughing. After listening to his speech, I now realise that we will never see that member again after the election, if we can gauge that by his colleagues who are sitting on the backbench there laughing and smiling at him He had no idea what ordinary, hard-working, middle and low income people are experiencing under this Government—no idea whatsoever. [Interruption] The big mouth shouting from that side of the House has no idea whatsoever, either.

Simon Bridges: Point of order—

Peseta Sam Lotu-Iiga: Point of order—

Simon Bridges: I got to my feet first.

Mr DEPUTY SPEAKER: I will decide who has the point of order. I call Simon Bridges on a point of order.

Simon Bridges: I raise a point of order, Mr Speaker. I take personal offence at those remarks. My mouth is not as big as that.

Mr DEPUTY SPEAKER: That is not a point of order. I have to say to Government members that continual barraging is unacceptable. Some interjection is fine, but continual barraging, especially when the member started his speech, meant it was difficult to hear what the member had to say to start with.

Peseta Sam Lotu-Iiga: I raise a point of order, Mr Speaker. Earlier on in this debate you asked one of our Government members to apologise and withdraw for not calling someone by their appropriate name. Calling someone “big mouth” as opposed to—

Mr DEPUTY SPEAKER: I will deal with that, thank you. The matter is that that was a generalisation as opposed to a specific direction at a particular member. But I do say be careful about how you refer to members. We are all honourable members and we should respect the positions that people hold. It would be good if we actually refer to people by their name or their title.

Peseta Sam Lotu-Iiga: Point of order.

Mr DEPUTY SPEAKER: I have ruled on this matter and I ask the member to resume his seat.

SU’A WILLIAM SIO: Thank you, Mr Deputy Speaker. You are absolutely right. I was describing and I did not name anybody personally.

I want to say to the member for Hamilton East that I totally agree with his comments when he says that we need people to have a good education. That is absolutely right. But then I have to ask him and his Government why they put a cap on tertiary education opportunities. Why did they increase costs for early childhood education? Why is the Minister of Education forcing bilingual kids to speak only one language by removing Pacific bilingual language from the Pacific education plan? Why is the Minister dumbing down bilingual kids by forcing them to speak only English in this country, when that Government knows better and should know that Pacific kids are bilingual? Pacific kids are bilingual.

Grant Robertson: I raise a point of order, Mr Speaker. I regret to interrupt the member who was speaking, but there was an interjection from the Minister of Education when she accused the member of lying. That is completely unacceptable in this House.

Mr DEPUTY SPEAKER: Speaker’s ruling 42/5 states that members cannot use the world “lie”. I ask the member to withdraw that comment.

Hon Anne Tolley: I withdraw.

SU’A WILLIAM SIO: Thank you, Mr Deputy Speaker. When—

Hon Anne Tolley: But start telling the truth!

Mr DEPUTY SPEAKER: I refer to Speaker’s ruling 43/1. I ask the member once again to withdraw and this time also to apologise.

Hon Anne Tolley: Do you want me to withdraw “telling the truth”?

Mr DEPUTY SPEAKER: There is a Speaker’s ruling that is very clear. Speaker’s ruling 43/1 states: “ ‘Tell the truth!’ Obviously, it is a phrase that creates disorder in this House, so from now on it will be considered an unparliamentary term.” I ask the member to withdraw and apologise.

Hon Anne Tolley: I withdraw and apologise.

SU’A WILLIAM SIO: I accept her apology, because she is the member responsible for cutting the funding to the Tupu language series. She is the member responsible for cutting the funding to the Folauga journal series. They are all resources for the promotion of Pacific bilingual language in schools. Instead of saying that she has cut that funding, she uses the word “pause”. So I ask that Minister who is telling the truth.

Mr DEPUTY SPEAKER: I have just asked the Minister to withdraw the comment and to apologise for saying exactly what the member has just said. I ask the member also to withdraw that comment and apologise for it.

SU’A WILLIAM SIO: I apologise and withdraw, but it does not take away the fact that that Minister, at whom I am pointing my finger, is responsible for the protests of people who would normally never protest. Those protesters turned up last Thursday. They normally never protest but turned up last Thursday because that Minister and her policy are attacking the rights of Pacific children to be able to speak their languages. That is right: $320,000 has been cut from this budget. A measly $320,000 has been cut and that will have rippling effects now and into the future for Pacific bilingual children.

Just because the Minister cannot speak any other language but English, she wants to force—

Hon Anne Tolley: I raise a point of order, Mr Speaker. I know the debate is robust, but actually I can speak more than one language. That member is making disparaging comments, which you called my colleagues up for making.

Mr DEPUTY SPEAKER: I hear what the member is saying. I ask the member who has just resumed his seat to be very careful about comments that other members can take offence from. Standing Order 116 is very clear. It is about personal reflections. When one member antagonises another member by way of a speech, it invites a reaction. I ask the member from now on to be very careful. Otherwise, I will terminate the speech.

SU’A WILLIAM SIO: I do apologise if I have offended that member, but it is a robust debate and I hope she can take what she has tried to dish it out to me.

We began with this Government saying at the beginning of its term that it was after value for money. But this is its last Budget and the mantra is now “more for less”. More for whom? More for the Government’s mates. Less for whom? Less for the rest of the population of New Zealand. Let me reflect to the House on a meeting we held on Friday of last week with the Salvation Army. I am hopeful that by reflecting to Government members on the meeting we held with the Salvation Army and on what it is experiencing on the ground, they might be able to feel what working communities are feeling under this Government’s governance. There is a general feeling that children’s well-being is at risk because of the cuts to early childhood education, because of the cuts to Pacific bilingual education, and because of the general cuts right across the board to the kinds of social services that give a helping hand to communities in need. There are so many people who are unemployed, without jobs, that—I have been told—the Salvation Army, as well as many other community organisations, has been asked to do more but with fewer resources. This Government is doing that instead of taking responsibility for the high cost of living, which is the experience of many families, for the high rate of unemployment, for those who are standing in line who are no longer able to receive housing support, and for the many families who have to try to fit into a garage shared by six other families in a three-bedroom home.

Those are the kinds of social problems that have increased.

Peseta Sam Lotu-Iiga: Where’s that?

SU’A WILLIAM SIO: That member, Peseta Sam Lotu-Iiga, has no idea whatsoever. By hanging around Mr Key he thinks he will earn his $50 million, which Mr Key has. He has no idea of what the communities out in Maungakiekie are experiencing. That is why Carol Beaumont is doing work—that member should sit down—on loan sharks and clothes factories. The only reason Government members have decided to raise that issue now is that it is election year.

All that we ever hear from Mr Key and his band of jolly fellows on that side of the House is slogans. There is nothing substantial. There is no in-depth plan for this country. I will say this: if we allow that party to return and have a second term in Government, my goodness, help us! We are going to the dogs under that Government. It makes promises that it is not able to keep. It said it was going to cut the gap between the wages of Australian workers and the wages here. What has happened to that? It said it would never raise GST to 15 percent. What has happened now?

David Bennett: All lies!

Mr DEPUTY SPEAKER: I ask the member to withdraw and apologise for those comments. He cannot say it is all lies.

David Bennett: I withdraw and apologise.

SU’A WILLIAM SIO: There is an African saying: “The dogs will bark when their master is not around.” Kia kaha.

Hon JOHN BOSCAWEN (Leader—ACT) : This debate on the Appropriation (2011/12 Estimates) Bill and the Imprest Supply Bill has developed into a form of general debate over the Budget. I think it is very timely to look back on the last 2½ years of this John Key - led National Government. Let us acknowledge that National inherited a very difficult situation. It inherited an economy that was already in recession—it was in recession long before the rest of the world joined in—and it inherited a situation of rapidly growing increases in Government expenditure that had occurred since the 2005 election.

The tragedy of the 2005 general election is that the result looked as though it was going to be very close, so the Helen Clark - led Government went on a massive spending spree. It tried to buy the votes of ordinary New Zealanders, and we are still paying for it to this very day. I suspect we will be paying for it for many years yet. The Labour Government extended the interest-free student loan scheme. It made it so generous that any student studying at a tertiary institution would be absolutely crazy not to borrow the absolute maximum amount of money they could. Why would a parent contribute to their own child’s education if they could put that money into a bank and earn interest over the many years that their child would be studying, when under the interest-free student loan scheme that money can be paid back in debased dollars many years into the future?

The extension of the interest-free student loan scheme, just like the substantial extension to the Working for Families package was an indication of the massive increase in Government expenditure that National inherited. However, one has to query and look very critically at how National has dealt with that situation. National did not cause that situation, but it was the National Government’s responsibility to address that issue. Earlier in this debate the Minister of Finance said that the 2009 Budget focused on infrastructure. The National Government went about putting in place the building blocks for infrastructure—very important—and there was investment in roading, particularly in Auckland, in schools, and in hospitals.

The 2010 Budget was the tax switch Budget. The rate of GST went up, so the cost of consuming went up, and additional controls were put on the deductibility of depreciation so that property investment was not such a profitable business, but in return we had reductions in income tax, which rewarded people who went out and worked, and it provided an incentive to work. It also rewarded people who wanted to save. The Minister referred this afternoon to the 2010 Budget being the tax switch Budget. Finally, he went on to 2011. That was the Budget where we actually tried to get the Government books back into balance.

I believe that the last 2½ years have seen many lost opportunities. There is no doubt that the National Government inherited a very difficult situation—the world was going into recession. In fact, just this week we saw the debt crisis escalating in Europe, and we saw brinkmanship in the United States just last week. If we actually look at what the Government said back in 2010, we will see that it budgeted to spend $1.1 billion on new initiatives last year, and $1.1 billion on new initiatives this year. However, what happened was that we had an earthquake. We had a very serious earthquake, which reinforced to New Zealanders the difficult situation New Zealand was in and caused a re-examination by the National Government of its spending priorities.

The Government very proudly told us during the Budget that it had identified $5.2 billion of expenditure over 4 years that could be reprioritised, and of that $5.2 billion it allocated $4 million back into front-line services, whether that be in education, health, justice, or whatever area, with a net saving of $1.2 billion. What I am trying to say is that the Government went from anticipating spending an extra billion dollars to a net saving of $1.2 billion over 4 years. That is a turn-round of about $1.5 billion a year.

It actually took the Christchurch earthquake for this Government to have a serious examination of expenses, so when push came to shove, we saw a $1.5 billion turn-round. We know some of the areas where cuts in expenditure were made: in KiwiSaver, by trifling around the edges of student loans, and in other areas of Government expenditure. The ACT Party says that the Government has been far too lackadaisical about it. It has not identified the real issue.

We heard the Minister of Finance speak this afternoon about the need to get our debt under control, yet what do we see? We see a Budget with a $16.8 billion deficit. We know that that has been accentuated by the Christchurch earthquake. We know that of that $16.8 billion, $5.5 billion relates to Christchurch. But if we take that out, we would still see a Budget with an $11 billion deficit. If it had not been for the Christchurch earthquake, the Government would not have taken that critical look at its expenditure. The ACT Party says that has been a lost opportunity, but worse, the Government has not done a good enough job of it.

There are so many areas of wasted expenditure. One need only look at the issue of student loans. Yes, the Government has made changes around the edges; yes, it has said that people over 55 cannot borrow for their living costs; yes, it has said that people studying to become pilots cannot borrow as generously; and yes, it has said that people overseas may have to start paying interest on their loans sooner than they otherwise might. But the Government has essentially left the interest-free student loan scheme in place. A parent or student would be absolutely crazy not to borrow the maximum amount of money they possibly could. The Government is essentially telling students and their parents to borrow money for living costs and course fees, and it is telling them it will not charge any interest and they can pay it back in several years’ time.

Our country faces a crisis where we are forecasting to spend $16.8 billion more than we take in from income tax this year and just under $10 billion next year. We are facing a crisis. The Minister of Finance claims he has got the books back in order. He claims that the deficit will be back into surplus by 2015. But those claims are based on the assumption that the New Zealand economy will grow at a rate of 4 percent in 2013, and 3 percent in 2014. But if we look at the last year, we see that growth was only 1 percent. This year it is forecast to be 1.8 percent, but to make the books balance, Treasury is forecasting growth of 4 percent. Is that realistic?

I ask National members to ask themselves whether it is realistic to expect growth of 4 percent at a time of global financial meltdown. We do not know what is happening to our major trading partners in Europe and the United States. Yes, we know that a lot of our export revenues come from Asia, but we are enjoying record high commodity prices right now, and we cannot be certain that we will retain those.

The Government has also made cuts to KiwiSaver. I have said to this Parliament before that the people who gain from those cuts are the low-income earners. It is the low-income earners, who cannot afford to be in KiwiSaver, who are paying taxes so that the middle class gets those subsidies. It always fascinates me when Labour criticises tax cuts to the subsidies on KiwiSaver, because those subsidies are being paid for by the very people Labour purports to represent.

National inherited a crisis that was not of its own making, but it could have done a lot more, and still can do a lot more, and the ACT Party intends, if it possibly can, to put a lot more backbone into the National Party’s spine following November 26.

  • Sitting suspended from 6 p.m. to 7.30 p.m.

JONATHAN YOUNG (National—New Plymouth) : I am very pleased to speak on the third reading of the Appropriation (2011/12 Estimates) Bill and the second reading of the Imprest Supply (Second for 2011/12) Bill. I will start by congratulating, first, Bill English on his good, firm, steady, long-sighted stewardship of the New Zealand economy. I think that this is what this debate is about. It is about recognising the stability that the National-led Government has brought to this country. The second person whom I will congratulate tonight is Colin Cooper, the coach of Tenderlink Taranaki, who last night led our team to a great win: after trailing 26 at half-time, it came through to a 39-33 win. I raise that because Taranaki is typical of what the National Government can do: we can come from behind to win against the odds. That is what we have done with the economy. Labour left us in a losing position. We turned that round and we have brought stability during a time when we would say that the world is still experiencing the ramifications and reverberations of the debt crisis.

The Budget that we are speaking about addresses the issue of reducing debt. It is very important to see that this Government is led by sound and sensible people, who have presented what I believe the New Zealand public are acknowledging as sound and sensible policies. Because of global uncertainty, New Zealand needs more than ever to have these sound and sensible policies, led by solid leaders. New Zealand is not immune to what is happening around the world. We trade with the rest of the world, and if the world slows down, then yes, it will have an impact on us. So being able to foresee those movements and make adjustments, and being able to continue to trade with countries overseas such as Australia, which is our largest market, and China, which is now our second-largest market, are very important for the future prosperity and security of this country, and for the jobs that we are seeing come into the market place more and more.

We still have flexibility in our economy, which a lot of other countries do not have. In theory, there is room for the Reserve Bank to cut interest rates if necessary. Our exchange rate is still relatively high, so again there is the opportunity for that to ease back if we see global commodity prices coming back. We have some headroom, and all of that is because of the result of our efforts over the last 3 years to see New Zealand placed in a far better position than many other countries to manage what will remain an uncertain global environment for a number of years ahead.

The comments that I have made are not what people might think—just biased comments from a member of the National-led Government and the National Party—because media reports and companies like, for example, Fairfax, which pride themselves on being unbiased, say that New Zealanders are recognising the solid leadership that this Government has brought in such difficult global times. Eighty-five percent of voters view the state of the economy as being either important or very important in deciding their vote. We understand that; we know that. Furthermore, Fairfax Media - Research International polls show that 49 percent of voters think that National has the best plan to fix the economy. That is well ahead of Labour, which is on 17 percent. Fewer than two voters out of 10 have any confidence in Labour’s plans. What is really astounding is that only 48 percent of Labour’s supporters back its plan to fix the economy.

Michael Woodhouse: We didn’t know it had supporters.

JONATHAN YOUNG: We did not know that Labour had supporters. That is a crisis in the can, without a doubt. Among National voters—

Hon Steve Chadwick: Tell us the plan.

JONATHAN YOUNG: No, this is the plan that Fairfax Media are perceiving or are hearing from you, and it says half of your voters—half of your supporters—do not have confidence.

Stuart Nash: Mr Speaker’s supporters?

JONATHAN YOUNG: Among National voters, on the other hand—thank you, I say to Mr Nash—81 percent support our party’s economic plan.

Hon Steve Chadwick: Well, that’s not surprising. They’re National voters.

JONATHAN YOUNG: As a comparison, 48 percent of the member’s voters do not have confidence in her party’s plan. Do the maths.

I was brought up to believe that one should borrow only for assets and never for consumption. We have come through a decade when many people have borrowed for consumption. The balance to that is that when our country goes into recession, this Government has continued to borrow in order to take off the sharp edges of the recession for New Zealand families as they go through very difficult times. But whatever we borrow, we have to pay back and with interest on it, so we know that that level of borrowing is simply a ticking time bomb.

The reason why we went into recession was poor management and excessive spending in unproductive areas of our economy. Budget papers of the previous Labour Government, released under the Official Information Act and available on Treasury’s website, show that in 2007 Labour Government Ministers were well aware that their spending was contributing to higher interest rates and higher exchange rates. Treasury warned them that they needed to stay as closely as possible to their previously agreed spending limit in the Budget; otherwise they would risk an interest rate response from the Reserve Bank, the exchange rate would stay higher for longer, and there would be a more pronounced economic slowdown. Those same papers show that Dr Cullen and his Cabinet colleagues signed off on an overspend of some 50 percent more—almost $4 billion in total—than the limit they had agreed on among themselves only a few months earlier. They did so in the full knowledge that this would place pressure on householders and exporters. I think it is very rich that those members would stand there and criticise us, when they made such a poor effort of managing the economy.

When National became the Government in November 2008, we knew that we had inherited a decade of deficits. We had falling economic growth, unemployment was already rising, and we had high inflation, which was caused by high Government spending, as I have just noted. We had a rising current account deficit, annual productivity growth of 1.1 percent between 2000 and 2008, deteriorating fiscal deficits, sharply rising Crown debt, floating mortgage interest rates at almost 11 percent in June 2008—currently, they are at less than 6 percent—finance companies collapsing left, right, and centre, and the economy was on two negative credit watches. Per capita GDP had stalled since 2004. That is what we inherited; that is what happened. The tradable side of the economy had peaked in 2004, and it had been shrinking ever since. Growth in exports was at just one-third of previous levels—and those members are the people who want to run the economy again!

I think that New Zealanders are very, very happy with the leadership of John Key, and with Bill English as the Minister of Finance. They are doing a fantastic job of bringing stability in difficult times and of bringing growth. We are seeing that jobs are beginning to be created in this environment. I believe that we have the right principles in place and that we will continue to see our economy grow and prosper. New Zealanders have good jobs and earn good money. Thank you.

STUART NASH (Labour) : This election, the people of New Zealand have a very clear choice. They can choose between a Government that wants to sell State assets and a Labour Party that has delivered a clear, bold economic plan that will allow every single New Zealander to retain ownership of the assets they currently own, and we will plug a hole in our tax system that at the current time is inherently unfair. There is a choice between a party that will give a hard-working New Zealand family $1,000 extra a year—every single New Zealand family $1,000 extra a year—and a Government that gave someone who earned $1 million a year $1,000 a week. The top 700 people, who earn over $1 million a year, got $1,000 a week in the hand when the good, hard-working, struggling people of Napier received about $11 dollars a week. The price of petrol ate away that, let alone everything else.

I would just like to run over some of the comments a couple of the previous speakers made. I tell Jonathan Young there is an expression, and it goes “lies, damn lies, and statistics”. One can use statistics for anything one wants, but we know there is only one poll that matters. To quote a former Prime Minister of New Zealand Jim Bolger, there is only one poll that matters and it is the poll on 26 November. Jonathan Young told us what he thought. Well, I do not believe that many people in New Zealand really care what Jonathan Young thinks. I do not think he has anything. But Jonathan Young did say that his Government took off the sharp edges of the recession for hard-working New Zealand families. Well, I do not know about that, because when the Government gave $11 a week back to the hard-working people of Napier, the price of petrol went up by $15 a week. Yet those who earned $1 million a year got $1,000 a week. That is not particularly fair as far as I am concerned.

Aaron Gilmore stood up and said that the Government should not be in the business of owning businesses, because of the risk. Well, that is a tired old argument—it is a tired old argument. What I say to Mr Gilmore is: what about the risk of not owning our key infrastructure? What about the risk of foreigners owning our key infrastructure? There are many examples of foreigners who have come in, bought our assets, stripped them, and raised up the price. Do members know who suffered? It was the good, hard-working people of New Zealand.

The last major piece of infrastructure that was sold was Contact Energy, by Mr Bill English. Now what we have is $100 million—

Hon Member: How much?

STUART NASH: One hundred million dollars every single year flows across the Tasman to Australian shareholders. Personally, I do not think that is a way forward. I do not think that is a great plan for growing New Zealand, at all. Polling, I say to Mr Young, tells us that not many New Zealanders think that is a great plan either.

There is the political risk, which Mr Gilmore did not go on about. I think the current Government did not calculate the odds on the political risk of selling assets, because polling tells us this is not a very popular policy—not a very popular policy, at all.

Michael Woodhouse: You don’t believe it.

STUART NASH: I know Michael Woodhouse is sitting over there, and I know that he has been told by many of his would-be constituents that this is not a good policy.

I suppose the one who really does make me smile—and no doubt he would make Rodney Hide smile, as well—is John Boscawen. John Boscawen stood up and for 10 minutes railed against the Government’s economic policy. He said how poorly it had managed the fiscal perimeters, how badly it was managing the debt problems, and what a shoddy job it was doing. Mr Boscawen wants to lead a coalition with the National Government. He is the same Mr Boscawen who stood up in a split vote and said that the ACT Party was voting for the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill because it was No. 2 on National’s pledge card. Well, I do not think Mr Boscawen can have it both ways. He can either support the Government, or not. What the House heard was the parliamentary leader of the ACT Party—which should be Rodney Hide—stand up and give a damning speech against the economic management of the National Government. I suspect Mr Key will be taking Mr Boscawen into his office and giving him a good hard smack around the ears.

As I said, there is a very clear choice at this election. Mr Key actually said himself that this election would be a mandate on asset sales—Mr Key said that: it is a mandate on asset sales. So the people of New Zealand can choose whether they want a Government whose only plan for economic growth is to sell State assets. That is the choice: sell State assets, or do what the Labour Party has said needs to be done, which is to retain our State assets in New Zealand ownership. We all own them anyway. These are assets that have been built on the blood, the sweat, and the taxes of the New Zealand taxpayer over generations, and they will be sold on a declining market in the blink of an eye. They will be gone by lunchtime—gone by lunchtime. Do members know what? Once we sell those State assets, we can never get them back. That is the travesty of it.

What Labour did was to come up with an alternative, because the Labour Party does not believe that the sale of State assets is a plan. We said there needs to be another option. So what we did was to present to the people of New Zealand a fair option. It is an option that allows New Zealanders to retain ownership of our State assets, pay down debt just as fast as the National Government, get into surplus just as quickly as the National Government would do if it sold State assets, and plug a hole in our tax system. This is a capital gains tax. It is a capital gains tax that will affect only 8 percent of New Zealanders—only 8 percent of New Zealanders. Ninety-two percent of New Zealanders pay their fair share—they pay their fair share. Eight percent of New Zealanders will be affected by a capital gains tax; that is all. It is not an imposition on the vast majority of New Zealanders.

The figures are not Labour’s—the figures are not Labour’s—they are from Business and Economic Research. In fact, when Business and Economic Research came back to us with the figures for our capital gains tax, we said “Goodness me, this is a much more pessimistic outcome; a much more pessimistic forecast than National used in its Budget.” But Business and Economic Research said “No, we stand by only these figures.” Of the money that will be raised from Labour’s capital gains tax, 50 percent will go back in taxes to New Zealanders. Thirty-eight percent will go to pay off debt, and only 12 percent of that money will go into programmes to help New Zealand families, to help New Zealand children, and to bring back programmes that have been decimated by that Government. We made sure that we came up with a fiscally prudent economic policy that would stand scrutiny by any independent commentator who chose to cast his or her eye over it. Do members know what happened? Many have, and many have said that this works—this works.

I would just like to reiterate one more time that the voters of New Zealand have a very clear choice: sell State assets and retain a tax system that favours the very wealthy, or keep State assets, modify and reform the tax system, and have a plan for real economic growth. That is the plan of the New Zealand Labour Party, and it is the only plan that can work for all New Zealanders in a sustainable way going forward. Thank you very much.

MICHAEL WOODHOUSE (National) : It is often said that imitation is the sincerest form of flattery, and I must say that Labour members have flattered the Government with their imitation of what they say is now important to grow the New Zealand economy, after 2½ years of railing against Government policy. They have had something of a road to Damascus experience. Do members remember in the 2009 Budget debate when Messrs Cunliffe and Goff both decried the Budget because it was pandering to the ratings agencies? They did not think that maintaining New Zealand’s credit rating was important. Well, they are not saying that now. I think there is some mimicry in their campaigning on a fairer tax system, the controlling of Government expenditure, and reducing debt. I will come back to Labour’s policies and the merits of some of its policies soon, but I want to touch on some of the highlights of National’s 2011 Budget.

It is quite remarkable—certainly to my friends on the other side of the Chamber—that in an election year the Government would campaign on a zero Budget. But what is less remarkable is the fact that there has been such little negative feedback on it from members of the public. Fundamentally, they understand the need to have spending discipline, given the very challenging economic conditions we face and the need to rebuild Canterbury after the earthquakes. That spending discipline will ensure that the country returns to meaningful surplus by 2013-14.

Stuart Nash: Exactly the same as Labour’s plan.

MICHAEL WOODHOUSE: Well, we will come to a comparison with Labour’s plan in a minute. Notwithstanding that zero Budget, I am particularly pleased with a couple of the spending initiatives and Budget initiatives where we have managed to maintain what, by the standards of this Budget, is an extremely generous increase.

The first one is in Vote Health, which reflects the importance the Government and the public place on this area of spending. Not only is that the case but the messages of productivity are certainly getting through to those working in the health sector, and there have been excellent improvements in throughput and reductions in waiting times. It is worth comparing that response with other jurisdictions around the world and what they are doing in their health budgets. In Britain they are planning a reduction of 50,000 staff in the National Health Service. In Ireland they are slashing 5 percent off their health budget. The Italians are planning health budget cuts of between €2.5 billion and €5 billion over the next couple of years. In Ontario, Canada they are reporting that 2,500 nurses will lose their jobs in the next couple of years. So I am very proud of the fact that we have maintained spending in Vote Health.

The other area in the Budget that I think is very good is Vote ACC, and that is for a couple of reasons. Obviously, Vote ACC funds the non-earners account, but the scheme generally is such an important part of the Crown accounts because even small movements in rehabilitation performance can have quite dramatic impacts on the Government’s balance sheet. One of the most disappointing aspects of Labour is that after 2½ years in opposition, Labour members simply cannot bring themselves to apologise for the mess they left ACC in. Not only is that the case but they are now accusing the Government of somehow cooking the books to create a crisis. I think that insults the hard-working members of ACC, its auditors, its actuaries, and the Office of the Auditor-General.

It was not Nick Smith’s signature on the 2008 ACC financial report, which oversaw a $2.4 billion deficit. And it was not Nick Smith who presided over half of the following year. When National came to power 5 minutes later, ACC had its hands out for $305 million in the non-earners account. The Labour Cabinet brushed that crisis under the carpet, which was in breach of the Public Finance Act. Labour can certainly not take the credit for the half a billion dollars of cash that this Government is putting back into the pockets of hard-working New Zealanders, thanks to the turn-round efforts of ACC.

It is worth reflecting on the comments made by members on the other side of the House about the health of the economy when Labour left office and the impression that everything was well in the economy at the end of 2008. Here is what Labour left behind.

Hon Steve Chadwick: The lines. Feed them out.

MICHAEL WOODHOUSE: Well, it is worth repeating them, because they are very important context to this Budget. Labour left behind dramatically falling economic growth, a country in recession 9 months earlier than the rest of the world, a rising current account deficit, annual productivity growth in the 8 or 9 years of the Labour Government of just 1.1 percent, sharply rising Crown debt, business-based lending rates that were through the roof, an economy on negative credit watch, and—here is the kicker—10 years of projected deficits. So far Labour’s plan for the economy is to take $800 million out of the pockets of hard-working farmers and pay it to tax accountants in the form of research and development tax credits. It does not work. It did not work then; it will not work in the future.

Labour’s plan to reintroduce a punitive top tax rate of 39c in the dollar would completely undo the good work this Government has done following the recommendations of the Tax Working Group, which said we had gone from the least distortionary tax framework in the OECD to the most distortionary. Labour’s plan is to remove GST from fruit and vegetables, leaving people better off by probably a maximum of a dollar a week. I was absolutely amazed at the audacity of the member Lianne Dalziel criticising the Government for an apparent turn-round on GST—a criticism I certainly do not agree with—when her party spent $30,000 worth of taxpayers’ money jumping on a bus that said “Axe the Tax” but it is not prepared to campaign on axing the tax. Labour members talk big, but they are not prepared to go out and say they would want to take the money that was put in the pockets of low and middle income New Zealanders in order to return GST to 12.5 percent. There is lots of noise but no action.

It is certainly well known that Labour wants to return to what it calls a fairer tax system, and that it says higher-income earners need to pay more. Mr Goff talks about them paying their fair share, but I questioned the Minister of Finance a couple of weeks ago about the fairness of our tax system, and the answer revealed some interesting facts. When the redistributive policies of Working for Families and accommodation supplements are taken into account, 44 percent of New Zealand households—the lowest-income New Zealand households—pay no tax. In fact, they are net tax recipients. But 17 percent of the highest-income households after redistribution pay net 97 percent of New Zealand’s tax base. Mr English said in answer to my question that the system is highly redistributive and that it was believed to be fair. I agree with him, but I do not believe it is fair to continue to punish hard-working and high-income New Zealanders by taking more than net 97 percent of the tax base out of the pockets of 17 percent of households.

Labour members talk about the policies of fairer tax, spending control, and debt reduction, but what Labour would deliver is more punitive income and capital gains taxes, more Government spending, and higher debt—that is right; actually billions of dollars worth of extra debt in the first couple of years, on Labour’s numbers. Even if the capital gains tax policy is as effective as Labour claims it will be, it would require Labour to borrow to fund the spending policies that will kick in straight away, because the capital gains tax will take several years to take effect, if at all.

Labour members talk about spending control, but they cannot bring themselves to deliver it. Mr Grant Robertson talks about big increases in health spending, and Miss Moroney wants to spend another half a billion dollars on early childhood education. It will go on and on.

Hon Tony Ryall: Ruth Dyson has promised half a billion dollars to the—

MICHAEL WOODHOUSE: Let us add another half a billion dollars, thanks to Miss Dyson. Mr Cunliffe wants to borrow in the name of the taxpayer on a financial crapshoot that would have investment in equity markets around the world through the New Zealand Superannuation Fund and more debt. If he was really good at picking the markets, he would have been telling this House what was going to happen. In fact, 3 years ago he would have strolled down the corridor to Mr Cullen’s office and said: “You know what? I think these equity markets are going to tank. The New Zealand Superannuation Fund and ACC should put their money into fixed interest.” He did not do that. He is no better at picking the markets now than he was then. It would be a complete financial crapshoot.

And with a capital gains tax the distortionary effect on the capital markets would be huge, because many of our largest companies that are listed on the stock exchange fund their capital growth through tax-paid retained earnings. If Labour was in Government, it would tax capital gains twice.

Hon Steve Chadwick: It’s very flattering; the whole speech has been about Labour. That’s lovely.

MICHAEL WOODHOUSE: Well, it is worth talking about, is it not? We have talked about spending constraints. We have had 3 months of talking about a zero Budget, which is very prudent in the circumstances. We will return this country to surplus within 2 or 3 years, and it will leave our debt at below 30 percent and then drop to zero by 2024. I challenge Labour members—

Hon Steve Chadwick: A pity about the figures; they’re all wrong.

MICHAEL WOODHOUSE: Ah, they are all wrong. OK. Well, I challenge Labour members to go out on to the hustings and put their numbers against ours, and we will see whose party is to be believed.

BRENDON BURNS (Labour—Christchurch Central) : I am pleased to follow the member opposite, Michael Woodhouse, who had the temerity to talk about tax and fairness, when he is a member of a party that introduced two rounds of tax cuts that favoured the top end of town, the “Tea Party” of New Zealand. He had the temerity to also talk about opposing the inclusion of agriculture in the emissions trading scheme, when agriculture makes up 48 percent of our emissions profile. The equivalent of our continuing to exclude agriculture is like Australia saying it will not tax the emissions that come from its coal industry. There has to be fairness across the globe.

That member also wanted to talk against the capital gains tax, yet we want to emulate Australia. It has had a capital gains tax for 20 years, and it has done nothing to constrain its growth. If we do not adopt a capital gains tax, we will be the only turkey of the Western World that does not have one, other than the tax haven of Switzerland. There is the international comparison.

We are considering the Appropriation (2011/12 Estimates) Bill and the Imprest Supply (Second for 2011/12) Bill at a very dark and worrying time, and I speak both of the international horizon and for my city of Christchurch. At the moment riots are occurring in the city of London and in other parts of England. Why is that happening? It is happening because of inequality. The world financial markets are in turmoil, and the fears are that we could be heading back to the dark days of 2007 and 2008.

Where is the National Government’s plan to deal with these issues? In the House today Bill English said that we need to save as a nation. He is the very Minister who took away one of the pegs underneath the KiwiSaver scheme in 2008 so he could fund the first round of his tax cuts. Why is he saying today that we need to save, when 3 years ago he cut one of the very schemes encouraging New Zealanders to save? Where is the consistency and coherence in policy when he does things like that?

Bill English also said in the House today that we should not be talking about the need to keep assets here, and away from the hands of foreigners, when we are prepared to borrow from foreigners. The point is that when we keep assets in New Zealand hands we retain an income stream and we are able to repay our debts. Once those assets are sold, they are gone, and there is no income stream to repay our debts. Labour has a plan around asset sales. We say to keep assets in New Zealand hands and not sell them off. Labour has a plan around the capital gains tax, which everyone knows in their heart of hearts is the right policy because it has been adopted by virtually every other nation in the Western World. We have a real commitment to training and skills, not like this Government, which has taken $130 million off training schemes over the last 2 years.

Here is where we are as a nation at the moment—here is where we are. We are a tiny cork on an ocean of international debt. We cannot influence international markets, but we can and must have a sound financial management policy and a plan for the future. When those members opposite stand and talk about financial management, they always forget how sound the economy that they inherited was. I asked the Parliamentary Library today to tell me what the situation was with Crown debt under the last Labour Government. Here is what it was: when Labour came into office in 1999, following a National Government, net Crown debt was nearly $26 billion—$26 billion—which is equivalent to 24.4 percent of GDP. What was it when we went out of office? It was down to $2.6 billion—$2.6 billion—which is equivalent to 1.5 percent of GDP. That was our proud record in office. We paid down the debt. We resisted the urges of National in 1999, in 2002, and in 2005 to cut taxes at the time of surplus, at the time of boom, which would have been absolutely the wrong thing to do by any orthodox economic measure—absolutely the wrong thing to do. Instead, we paid down the debt and left this nation in a very sound state to go through the difficult times that we are going through today.

There is one other figure from the Parliamentary Library about the payment of debt: the percentage change in general Government financial liabilities as a percentage of GDP between 1999 and 2008. One country did better than New Zealand, and it was Norway. It had oil revenue. It paid down more debt than we did, but we were the second-highest nation in the world in terms of paying down debt through that period of boom. That is the financial record of the Labour Government, that is the record that National inherited, and that is what has helped this country through its difficult times to date.

But we still need a plan, and we still need a sense of coherence and direction. We do not get this at all from this Budget. The Budget, of course, includes money for the Canterbury earthquake recovery, and I acknowledge tonight that the Government—through the Budget and, indeed, through this Imprest Supply Bill—has put up funding towards the recovery of Christchurch. We need that funding. I acknowledge that the Government has done the right thing in that respect. Around $5.5 billion of funding has been provided.

But let me also tell members about one of the other sources of funding that I believe is a prospect. I am pleased that the member for Rangitata, a Canterbury MP, is in the House tonight. I again issue my challenge, as I do every time I speak on this issue, to a Canterbury member to stand and take a call and tell me that I am wrong when I say that this Government, if it is re-elected, is very likely—is on course—to force the Christchurch City Council to sell its asset base to fund its share of the recovery. It is the same philosophy this Government adopts in terms of national debt. Why would it not do it locally in Christchurch?

More than that, here is the record of the Finance and Expenditure Committee report on the estimates for Vote Finance 2011. The commentary states: “As the Canterbury Earthquake Recovery Act 2011 allows the sale of Christchurch City Council assets to fund the rebuilding of the city, we asked the Minister of Finance whether he would guarantee that this would not happen. The Minister said that this was a matter for the city council to decide. He added that the Government would discuss cost-sharing with the city council, but that it was important that the council have a stake in the process … discussions are just beginning,”. They are beginning, all right. They are starting to begin. Again, I invite a Government member from Canterbury to stand, take a call, and put it as a matter of record in this House that this is not being steered by this Government for delivery. After the election the assets of $2.2 billion held by the Christchurch City Council through its holding companies—including the Orion network, the port, the airport, Enable Networks, and Red Bus Ltd—will deliver an enormous stream of dividends to ratepayers. In the case of Orion alone, $1 billion has been paid back over the last 20 years to the ratepayers of Christchurch, which is $1 million a week.

I again challenge members opposite, especially from Canterbury, to stand, take a call, and put it on the public record that under the fearful prospect of a re-elected National Government we will not see the assets of Christchurch sold down, and we will not see an enormous increase in rates in Christchurch as a result. Those assets prop up our city and contribute to the repayments that we are able to make for the recovery. We are prepared to pay our share, but we are not prepared to see our assets sold down the river by this Government with its economic philosophy that it is all right to sell assets: that we pay down the debt, forget the dividends, and get the money in the bank as quickly as possible—that we forget about tomorrow and make the balance sheet look good today. That is the basic premise of this Government: selling State assets. National will do the same, I believe, if it is re-elected.

I again challenge members opposite to stand, take a call, and deny that this is a prospect, because it is on the record of the Finance and Expenditure Committee that it is actually allowed by the Canterbury Earthquake Recovery Act. The Minister of Finance told the Finance and Expenditure Committee that it is there. Again I challenge members opposite to deny that that is a prospect under a re-elected National Government, following on from this Budget appropriation for 2011.

Hon JUDITH COLLINS (Minister of Police) : There is one thing that the member who has just resumed his seat, Brendon Burns, said that I agreed with, which is that this Budget has delivered funding of $5.5 billion to the people of Christchurch and the Canterbury region at a time of great global difficulties, in terms of the economy, and a time when many people would have thought it would be impossible for a country of this size to deliver that funding during these tough economic times. The fact is that this Government inherited a recession. This country was in recession at the start of 2008—8 or 9 months before the rest of the world went into recession. We inherited a recession.

After this Budget what did we hear from the Opposition when the Minister of Finance said we wanted to have a Budget that would protect our country’s credit rating? We heard from the Opposition that that was nonsense and rubbish, and that we were just giving in to people like Standard and Poor’s and not standing up to them. Well, we have seen this week in the United States what happens when a nation’s credit rating goes down. We have seen what happens. What happens is that interest rates go up—interest rates for the job creators, interest rates for mum and dad investors, interest rates for homeowners, interest rates for people with mortgages, and interest rates that translate through to everybody’s pocket.

Hon Tony Ryall: People with credit cards.

Hon JUDITH COLLINS: Interest rates go up for people with credit cards. Everything gets affected.

There is not a word from the Opposition about how this Budget prevented a downgrade of our credit rating, which would have affected every New Zealander in some way. Instead, we heard some nonsense about taking GST off fruit and vegetables, and food, generally. We do not know whether that is for fresh food or for cooked food. Is that for a cooked chicken or a fresh chicken? What about a hamburger? I thought that was one of the best things when they talked about fruit and vegetables. Well, what about a hamburger? Would the tomato have GST on it? The lettuce? Probably not. The meat patty? Yes. What about the bread? That is made out of flour, which is made out of wheat. That would probably be covered. What a load of nonsense. The administrative costs alone for every small business in this country would kill them—just the business costs. Labour has suddenly promoted this. Why did it not do it in its 9 years of Government? Because its members know it is a nonsense. Michael Cullen knew what a nonsense that would be, and he was right.

Instead, we have seen with this Government in the last 3 years that we have got on top of Government debt by keeping it below 30 percent of GDP. We will be back in surplus by 2014-15 at the latest. We have had a very responsible attitude towards government. Labour’s answer to everything is a capital gains tax. Some of the quotes Labour members have used from people who support that idea are amazing. They have talked about a comprehensive capital gains tax. Anybody who owns their own home should realise that that means them. “Comprehensive” means everything. If, for instance, someone’s parent dies and he or she inherits a property along with his or her three or four brothers and sisters, what then? That would be a capital gain, too. Yes, that is absolutely included as well.

Then there is every other little thing, like shares and any extra properties. Of course, this country already has a capital gains tax on investment properties—properties that are purchased for a business purpose. It already has that. So what is Labour after? By the way, has anyone noticed that there has been a recession over the last few years? How many capital gains does Labour think there are in this country at the moment? Not an awful lot, but Labour members have said they will go after people who have something. How many people in this country get to be 50, 55, or 60 and purchase a second home for an investment? The reason they do that is that they do not want to put their money into failed finance companies, which were allowed to go absolutely crazy during Labour’s 9 years of power. No, they want to put it into something they can see every day.

Do they want to put it in the sharemarket? That is a good idea. How about the sharemarket? Let us have a look at some of the companies: Air New Zealand. Oh, that is right; it is partially owned by the New Zealand Government, and it is also partially owned by people who bought into it as shareholders. What is wrong with that model? It seems to work really well, but Labour does not want that model now.

Hon Tony Ryall: Port of Tauranga.

Hon JUDITH COLLINS: Port of Tauranga is an example. It is an extremely successful port. In fact, I would say it is the most successful port.

Hon Tony Ryall: 55 percent owned by ratepayers.

Hon JUDITH COLLINS: It is 55 percent owned by ratepayers, and yet it is owned by other shareholders as well. Mixed ownership works. The fact is that Labour knows it works, but Labour members just cannot bring themselves to use those terms. They keep talking about selling off the silver. The only person I remember in this place who sold off a lot of silver is the Hon Phil Goff when he had the chance back in the 1980s. He just sold everything roughshod.

We are seeing a party in opposition that cannot bring itself to admit that this world is going through very difficult economic times. The last thing this country needed in this Budget was to have a Government that came in and decided to tax and spend, as the previous Government had done for 9 long years. This Budget, like the Budget before it, needed to have a very steady eye, a very careful consideration, as to what was needed.

Nobody predicted the Christchurch earthquake in February. Nobody predicted that would happen. Nobody predicted Pike River. Nobody predicted some of the tragedies that have occurred. Yet for a country of this size, which is an exporting nation that exports, fortunately, to Australia and China as our main trading partners, we have done extraordinarily well. We have not seen some of the behaviours in New Zealand that we have seen overseas. We have not seen our credit rating downgraded, which has meant, for instance, that we have the lowest interest rates now for around 45 years. That means for mums and dads and families with a $200,000 mortgage—which, frankly, in the Auckland region is a pretty modest mortgage—that they are now paying around $200 a week less in interest payments than they were in 2008. They now have $200 a week in the hand that they did not have before. That is why it is so important that we do not just spend, spend, spend and then turn round and say “Never mind; we’ll catch up later.”

The fact is that as a small economy, ours is one of the first that slows down when the world goes into recession or into a downturn. As a small economy it is also one of the last to come up again.

Brendon Burns: Like in 2008?

Hon JUDITH COLLINS: Except in 2008, of course, when there was appalling spending by Labour, so we ended up in recession 8 or 9 months before everybody else. That is what happened.

Hon Trevor Mallard: It’s called a drought.

Hon JUDITH COLLINS: Mr Mallard says it is called a drought. Well, we have droughts almost every few years in this country, I say to Mr Mallard. That is simply not good enough. The only thing that was in drought under Labour was some common sense in those last 3 years, when it decided to tax and spend everybody to the hilt.

In these tough times we have seen, for instance, a drop in unemployment. At a time when everybody was predicting an increase in unemployment, there was a drop in unemployment in the last few months. Minister Bennett has done a great job, along with her team. We have also seen a drop in the crime rate, despite Labour members saying that if people are poor then they commit crimes. We on this side do not believe that.

I noticed that the previous speaker spoke about the UK situation and what is happening in London and other parts of England at the moment. He said it was all because of social inequality. What a load of rubbish. It is all because criminals think they can act in a criminal manner. Nobody went looting for food; they went looting for plasma TVs, gold, and people’s property. They burnt down people’s property not because they did not have bread on their table but because they thought they could get away with it. That is what happens. It has nothing to do with social inequality. Most of the world has social inequality in some form or other, but, unfortunately, that sums up exactly why crime rates went up so much under Labour. Its members are always looking to blame society for the acts of criminals. It is never the criminals’ fault; it is always society’s fault and because society did something wrong.

This Budget is an excellent Budget. It is just what this country needs. I congratulate all my colleagues on the work they have done on it. This is one of the best Budgets we have had.

The ASSISTANT SPEAKER (Eric Roy): Just before I call the last member, I say that this is a 3-hour debate and there are about 8 minutes remaining. Jami-Lee Ross, I will ring the bell with 2 minutes of your speech remaining.

JAMI-LEE ROSS (National—Botany) : It is always a pleasure to follow the honourable Minister of Police and Minister of Corrections, because she is a Minister who knows the value of investing in the important areas, as this Government is doing. It is not something that previous Ministers in the last Government understood very much, but it is something that Ministers in the National-led Government understand, and something that the Hon Judith Collins, especially, understands. The people in Botany say thank you for the extra police who are now on our streets in Counties-Manukau, and for the reduced crime rate. That is something we never saw under a Labour Government, but it is something we are seeing under a National Government.

I enjoy listening to these debates. I enjoy listening to these debates because it is so clear when listening to Labour members that they just do not get it. They just do not get it, and do not understand that the people outside this Chamber, who are looking in at the way we are debating matters of importance to this country, can see right through them. They can see right through all the rhetoric. They can see right through everything Labour members have been saying about this Government’s plan to get the economy back.

I think it is a bit uncharitable when some people say that Labour members do not have a plan. I think they do have a plan. They have a plan for more spending, they have a plan for more debt, and they have a plan for more taxes. That is the grand plan. The grand plan is for all of that: more spending, more debt, and more tax. They do not understand that out there in the real world people are watching. The markets at the moment are in turmoil around the world, European countries are struggling with their debt, and the US has just had a credit rating downgrade, but Labour members just do not get it, though. They think that more spending will solve all those issues. Well, it will not. They think that more debt will solve all those issues. Well, it will not. It will put us in a situation where we would have a credit rating downgrade if we continued along the debt projection that the last Labour Government left us with. It would be a shambles.

Labour’s grand plan, its grand plan to win the election, its grand plan that it thinks it can convince voters to sign up to, is just to have more tax—as if the people in New Zealand really think they want more money taken out of their pockets by the long hand of a Government led by somebody like Phil Goff. Phil Goff cannot really remember anything he did in the 1980s. I had to laugh when I heard Stuart Nash talking about State asset sales and the vast concerns Labour has about asset sales. Well, let me remind everyone here tonight that it was the Labour Government in the 1980s that sold a heck of a lot more in assets than the National Government in the 1990s ever did: $9.5 billion worth of assets was sold by the Labour Government.

Hon Rodney Hide: What was wrong with that?

JAMI-LEE ROSS: I am not saying anything is wrong with that, I say to Rodney Hide. I am just pointing out the sheer forgetfulness of the Phil Goff - led Labour Opposition. Its members cannot remember meetings they had even a few months ago, so I do not expect them to remember the assets they sold in the 1980s: $9.5 billion worth, versus $9.3 billion worth sold in the 1990s. So when we hear people like Stuart Nash complaining about asset sales, we should remember what the record of those members is. They do not remember it. They do not remember meetings held a few months ago, and they do not remember their record either.

This Government has done well over the last 2½ years. This Government was left with a decade of deficits planned by the last Labour Government.

Hon Steve Chadwick: Just a young kid.

JAMI-LEE ROSS: What is that noise I can hear? I can hear an alarm clock going off. I can hear a screaming banshee over on the other side. What was that?

This Government has done well. We are seeing a plan to reduce debt. We are seeing a plan to get the Government books back to surplus by 2014. I know it is hard to hear that, but it is the truth. It is the truth, and the people out there in the country understand. People out there in New Zealand do not understand the Labour plan. Well, actually they do, but only 49 percent of Labour’s own supporters support its plan.

Jonathan Young: 48.

JAMI-LEE ROSS: Forty-eight percent, is it? I am sorry; I am being uncharitable. I had given them 49 percent. Is it 48 percent? I thank Mr Young. Even Labour supporters do not agree with its plan.

Eighty-one percent of National supporters agree with our plan. They agree with National’s plan to reduce debt. They agree with National’s plan to get us back to surplus. They agree with the fact that National wants to keep Government debt below 30 percent of GDP. Members should have seen the projection of debt we were left with. It saw the figures going up and up in a never-ending increase. Well, this Government, after the Budget that we have just passed, will see that debt come back down. It will stay below 30 percent of GDP—a sensible level to keep it at. European countries, as I mentioned before, are struggling with their debt. But if we were to have Labour in power, we would probably end up going towards a similar situation where we would struggle with high debt levels. High debt levels would lead to a credit rating downgrade, and that would lead us back to the area of high interest rates for New Zealand homeowners.

I was one of those people who had to buy a house during the high interest rates of the last Labour Government. Interest rates under the last Labour Government peaked at about 11 percent. I was one of those homeowners who had to buy a first house with interest rates at that high level. Now, interest rates under National are at some of the lowest levels they have ever been, and we are leaving more money in people’s pockets as well. Labour members just do not understand that. They do not understand that people like having their own money in their own pockets. We have a tax system that rewards work, we have a tax system that rewards savings, and we do not have a tax system that hurts the people who are investing in core assets, which they want to increase in order to look out for their own futures.

I am proud to be part of this National-led Government, and I am proud to be the last speaker in this debate. We have a very good story that we are out there selling. We have a good story that people understand—a good story in which people can see John Key, as the leader of National, leading us. He is one of the most popular Prime Ministers this country has ever had, and, despite what we hear from members on the other side, people like moderation, people like pragmatism, and they like a carefully managed economy. They do not want to see more debt, they do not want to see more taxation, and they do not want to see more spending.

Hon Steve Chadwick: That’s what happens. For the next 6 years it goes like that.

JAMI-LEE ROSS: No, no. I say to Steve Chadwick that she should really look at the figures. The debt will be kept below 30 percent of GDP. We have completely reversed the situation Labour left us with. We have completely reversed it, and we now have a sensible situation where debt will be reduced and we will be back in surplus by 2014.

I am pleased to speak in this debate on the Appropriation (2011/12 Estimates) Bill and the Imprest Supply (Second for 2011/12) Bill. The people out there understand the plan that the National-led Government has. We do not want more debt, we do not want more taxation, and we do not want higher spending. That is what we would get with Labour.

A party vote was called for on the question, That the Appropriation (2011/12 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2011/12) Bill be now read a second time.

Ayes 67 New Zealand National 57; ACT New Zealand 5; Māori Party 4; United Future 1.
Noes 53 New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.
Appropriation (2011/12 Estimates) Bill read a third time and Imprest Supply (Second for 2011/12) Bill read a second time.

Imprest Supply (Second for 2011/12) Bill

Third Reading

Hon TONY RYALL (Minister of Health) on behalf of the Minister of Finance: I move, That the Imprest Supply (Second for 2011/12) Bill be now read a third time.

A party vote was called for on the question, That the Imprest Supply (Second for 2011/12) Bill be now read a third time.

Ayes 67 New Zealand National 57; ACT New Zealand 5; Māori Party 4; United Future 1.
Noes 53 New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.
Bill read a third time.

Non-bank Deposit Takers Bill

First Reading

Hon TONY RYALL (Minister of Health) on behalf of the Minister of Finance: I move, That the Non-bank Deposit Takers Bill be now read a first time. At the appropriate time I intend to move that this bill be referred to the Finance and Expenditure Committee for its consideration. This bill completes the implementation of the regulatory regime for non-bank deposit takers, which mostly comprise finance companies, building societies, and credit unions.

By way of background, the need for the prudential regulation of this sector was identified in the review of financial products and providers that was conducted back in 2005-06, as members will recall. Suffice to say, the collapse of a number of finance companies gave added impetus and importance to these reforms. The decision was made at the time of the review of financial products and providers to implement the prudential regime in two stages. The first stage was in effect by 1 December 2010, following the passage of Part 5D of the Reserve Bank of New Zealand Act, which covers credit ratings, governance, risk management, capital, related party exposures, liquidity, and the making of regulations under that part of the Act. This bill is the second stage and is intended to be effected by 1 June 2013. In addition to the substantive changes it makes, which I will outline in a minute, it transfers the provisions of Part 5D of the Reserve Bank of New Zealand Act—which is the first part I talked about—into this bill, so that there will be a stand-alone framework for the prudential regulation of non-bank deposit takers.

The core legal definition of a non-bank deposit taker currently is a person who offers debt securities to the public in New Zealand, and carries on the business of borrowing and lending or providing financial services. This definition is unchanged from what it was before. However, the situation of building societies and credit unions has, in fact, been altered. Previously, they were automatically non-bank deposit takers by virtue of being registered in New Zealand as a building society or a credit union. This was irrespective of whether they actually carried out any business here in New Zealand. In practice we have seen a number of building societies register here, only to carry on business offshore. There is a risk that these businesses become registered in New Zealand only to promote themselves as operating under the guise of a well-regulated and reputable jurisdiction, when, in fact, such entities would not be operating as such. So these entities will no longer be classified as non-bank deposit takers under the new law, which removes the automatic status that operates under existing legislation.

Licensing is at the heart of the bill, with the establishment of a licensing regime for non-bank deposit takers and a requirement for all of these to be licensed by the Reserve Bank. An important part of this is the suitability requirements for directors and senior officers of non-bank deposit takers. The regime will provide an opportunity for the Reserve Bank to evaluate the probity and integrity of the people operating in the industry, and to weed out those who are clearly not suitable. In particular, persons who trigger certain specified concerns will need to have their suitability reviewed by the Reserve Bank. In that event, the Reserve Bank would indicate that it has no objection to the person’s appointment as a director or senior officer, or would respond by not issuing a non-bank deposit taker licence or by objecting to the appointment. The matters giving rise to a review by the Reserve Bank will include such things as prior criminal offending—which seems pretty sensible—having been the subject of professional or regulatory action, and the existence of conflicts of interest.

Otherwise, the Reserve Bank must satisfy itself that an applicant for a licence has the ability to meet all of the other prudential requirements under the legislation. It must also have regard to certain matters including the ownership structure, the method of incorporation of the applicant, and the applicant’s compliance with anti - money-laundering obligations. The remaining aspects of the licensing regime include the Reserve Bank being able to impose conditions at the time of an application for licence, which I think is quite significant, and being able to vary those conditions subsequently. There is also a power to cancel a licence when, for example, the licensee has been licensed on the basis of false or misleading information.

The bill does a number of other things. It introduces controls on changes to ownership of licensed non-bank deposit takers. Ownership will, of course, be a matter of interest to the Reserve Bank at the time of licensing—in particular, for establishing who has actual control. This is something that investors will regard as important in light of what has happened to the sector and the failures that have occurred in the hands of certain individuals, whereby shareholders and depositors have been unaware of the full consequence of shareholding changes. Equally, it is important that the risk profile of a non-bank deposit taker is not dramatically altered during the term of a deposit. This, again, was a failure under the previous regime, whereby people invested in these non-bank deposit takers only to discover that the very nature of the business changed during the term of their investment. Hence, the Reserve Bank’s prior consent to significant changes of control will be required, and this is the ability to control 20 percent or more of the voting securities or to appoint 25 percent of the governing body.

The opportunity is being taken to bolster the Reserve Bank’s powers of intervention to bring them more into line with banking and insurance regimes. These powers will have relevance in terms of detecting and responding to problems of distress and failure. They will contribute to the integrity of the proposed licensing regime, and the whole prudential regime, by strengthening the array of tools at the Reserve Bank’s disposal and the incentive to behave on the part of regulated entities. These were weaknesses that we have seen in the finance company crisis that we have had in this nation in the past few years.

The various new powers include the following: firstly, to require the supply of information from an associated person of a non-bank deposit taker, which is on the basis that we have seen many such takers have a number of associate persons whose conduct and activities have had a material impact on the non-bank deposit taker and its creditors; secondly, to require any information provided by a non-bank deposit taker or an associated person to be reviewed and audited; thirdly, to enable the Reserve Bank to give directions to a non-bank deposit taker, an associated person, or a trustee—directions are a standard prudential tool that the Reserve Bank already has in relation to banks and insurers, and it is logical to extend this provision to this part of the scope of its prudential supervision—and, fourthly, to remove or appoint directors of non-bank deposit takers. The powers are confirmed on the Reserve Bank to also obtain information for wider prudential purposes—in particular, to monitor the soundness of the sector and the appropriateness of the regulatory settings.

Hon Trevor Mallard: Is this a filibuster?

Hon TONY RYALL: Well, actually, this is very important, because it will address a number of the problems that we have all had to deal with in our electorates as a result of the previous poor regime.

Decisions by the Reserve Bank to remove a director and a senior officer as a result of a direction may be appealed to the High Court, and there is a further right of appeal to the Court of Appeal on questions of law. The bill makes a number of minor or technical amendments to the existing provisions of Part 5D, and the regulations already made under Part 5D will continue in force, even though they are being incorporated in this legislation.

In conclusion, the Non-bank Deposit Takers Bill will enhance the Reserve Bank’s ability to promote the maintenance of a sound and efficient financial system, and it represents a milestone in putting in place the final components of the prudential measures applicable to the non-bank deposit taking sector. It certainly provides an added level of prudential supervision and assurance to the many depositors who have found the previous scheme sadly wanting, to their great cost.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I am delighted to tell the Minister that the Labour Opposition will support the first reading of the Non-bank Deposit Takers Bill. We are absolutely delighted to see it introduced into the House. The decisions that underlie the introduction of this bill were taken under a Labour Government a number of years ago and were designed as part of a package of measures, one of which was passed under the previous Government, and this bill now adds the final stage to the implementation of the Review of Financial Products and Providers as it relates to non-bank deposit takers.

Having been the Minister responsible for the commerce portfolio in the last Labour Government, I have always been fascinated with the way in which the media commentated on the flow of events as they occurred. The Review of Financial Products and Providers, which the Minister referred to, was a series of nine discussion documents that were put out to the market at the same time in 2006. It was a substantial amount of information to put out at once and expect all of those engaged in the different components of our financial products and providers market to be able to contribute to the design of what we are seeing part of here today. What amazed me was that just after the original nine documents were put out into the market place, the first three of the finance companies that were to fail actually failed. That was in 2006. Those three companies failed, and as Minister of Commerce I thought that we would see the domino effect flowing on from that. I must admit to several sleepless nights at the time, thinking that was the beginning of the end, but it actually stopped at that point. However, I had completely forgotten the reality that people who had invested in finance companies had done so for a fixed period of time as part of the promised return on their investment, most of which was grossly underpriced, which I will come to in a minute. The bottom line was that for a lot of people they were just holding their money in finance companies until the very moment they could pull out their money and get it into safe territory as quickly as possible.

When the Government received the Cabinet paper that I presented to it in 2007 as Minister of Commerce, with a series of recommendations about how we might proceed with the Review of Financial Products and Providers, Cabinet agreed to all of those decisions in mid-June. Then, at the beginning of July, Bridgecorp fell. Bridgecorp was the beginning of the series of dominoes that became something that will never leave my mind, because all of those companies that failed took money from the hands of ordinary New Zealanders who had no idea of the level of risk they were taking with their hard-earned money. For a lot of them it was more than money that they had saved up for a rainy day, it was money that they had set aside to support their retirement in a fashion to which they wanted to aspire. It was just tragic. There is nothing that will ever make up for me how I felt as a Minister of Commerce completely powerless to do anything about something that had been set in train a long time before the Review of Financial Products and Providers had reported.

Unfortunately when matters shift from the specialist business pages of our newspapers through to the front-page headlines, things get lost in translation. I think a lot of investors could be forgiven for believing that there was no regulatory framework in place at all before the finance companies fell. They could also be forgiven for believing that the Government acted only because the finance companies fell. In actual fact a lot of hard work had gone into the fact that we inherited a regulatory wasteland when we became the Government in 1999 and we had to do a lot of work to get things up to speed. I accept that it did take too long, and that the price that ordinary New Zealanders paid for that—the price that unsophisticated investors paid—was too high. I totally accept that. I also think that the media probably did the public a disservice by implying that no attention was being paid to this important matter before the finance companies fell. In fact, we had made the decisions on the Review of Financial Products and Providers several weeks before Bridgecorp fell.

The purpose of the Review of Financial Products and Providers and the process that we adopted were all aimed at strengthening the regulatory environment in order to promote confidence, and therefore to increase participation in sound and efficient financial markets. I think that what the Government has done here is leverage off the work that we commenced and ensure that it is able to deliver on those ambitions, as it were.

I have used what occurred to remind people—and I want to remind them again—that Governments cannot regulate to eliminate risk. Risk is what drives our financial markets, but it has to be risk that is real and it has to have a degree of reality for those who will be investing their hard-earned money. What happened in the earlier part of this century was that we had finance companies that deliberately mispriced the risk and used well-known figures to stand in front of their product and basically say to unsophisticated investors: “You are essentially putting your money in something that is the equivalent of a bank deposit.” In fact, because the rate of return was very similar to a bank rate of return, it actually underplayed the degree of risk that people were facing. It is really important that people realise that the problem we suffered from a few years ago with the collapse of the finance companies cannot be sheeted home to a former Government that did not regulate at all, or to the Government that started the regulatory process. But I do think that the lack of a strong regulatory framework was part of the problem. I do not think we should ever get away from the fact that there were people who knew perfectly well what they were doing, who took advantage of the naivety of those who were prepared to put their money into something that would give them a little bit more of a return than a bank deposit. I do not think we should ever lose sight of the fact that there were other people out there in the market place, insufficiently regulated, who took advantage of that situation and people lost a lot of money.

This Labour Opposition will very much support this legislation. It strengthens the arm of the Reserve Bank, and I congratulate the Government on the quality of the regulatory impact statement that accompanies this particular bill. It makes a nice change to be able to read a regulatory impact statement of such high quality—probably because it has come from Treasury rather than from some of the other departments that have been responsible for such statements. The reality is that it has defined the status quo. It has defined the problem and looked at a variety of options. One of the options is to look at the banking regime, one is to look at the insurance regime, and another is to look at a hybrid regime. Other options look at whether we recalibrate the banking regime. What they have come up with is a very sensible solution that I think we will have no problem supporting as it proceeds through this House. We will certainly support the bill’s referral to a select committee and we look forward to its report back to the House.

DAVID BENNETT (National—Hamilton East) : That was a very interesting speech from the previous Minister of Commerce, Lianne Dalziel, about the history and some of the more private, I guess, natures of Government in terms of what went on at that time in the history of the Labour Government, which would have had some idea of the issue. But, as the previous Minister said, there may not have been a full comprehension of the effects or an understanding of how to deal with the situation at that time. So I thank that member for her contribution.

A lot of New Zealanders did lose a lot of money, and they were ordinary New Zealanders who had put a lot of their life-savings into those deposits. To hear the history of what the previous Government was looking at was very interesting, I am sure, for those individuals and families as they take stock of what has happened to their personal financial situations.

The Non-bank Deposit Takers Bill is the last in a series of bills to deal with the very issue that both the Minister and the previous speaker mentioned. It aims to create an environment where we have to a certain extent more rules and regulations on the nature of non-bank deposits. It does also mean that all risk will be taken away from investors. As the previous speaker said, the risk-return element will always be part of any investment decision. But the rules and regulations that we can use to tighten up that area of the finance market is something that is long overdue.

When we look at this bill, we see that it has a number of impacts in regard to the financial sector, and especially towards non-bank deposit takers. First of all, it completes that regulation process and it gives the Reserve Bank the power to remove directors and issue directions in certain circumstances. It can require non-bank deposit taker directors to notify the Reserve Bank if a director or senior officer triggers new prescribed suitability criteria. The Reserve Bank will have the power to remove those individuals, which is quite an important power in the sense that there would be a notification, there is suitability criteria, and there is the power to deal with that situation should it be required.

The Non-bank Deposit Takers Bill is expected to become effective in June 2013, which is 1 year after a transition period to enable non-bank deposit takers to meet the new licensing rules. There is certainly enough scope in there, one would expect, for those in the financial sector to meet the obligations and to be in a situation where they can adjust to the new regulations.

The bill also introduces penalties for failing to comply with regulatory requirements. Offences will be graded according to their severity, up to a maximum fine of $2 million for an entity, and for an individual a fine up to $200,000 and/or 18 months’ imprisonment. Those are quite substantial fines and penalties, but this is a situation where we are dealing with individuals’ savings, so in some cases where large sums of money are involved, those fines and penalties may be seen as justifiably large.

The actual detail in the bill is something I am sure we will go through further in this House, as the bill will go through the select committee process and then through the Committee of the whole House. But I will go through some of the key things again. The ability to remove directors is a major part of the bill. The ability to issue directions to non-bank deposit takers, associated persons, and trustees is another very important part of it. Requiring the suitability of directors to be vetted by the Reserve Bank is also important. The Reserve Bank has the power to delicense non-bank deposit takers in certain circumstances, and the bill requires the consent of the Reserve Bank to be obtained for changes in ownership of non-bank deposit takers in certain circumstances.

So it is bill that will have a number of implications. It is there as a response to an issue that many New Zealanders have faced in recent years, and we look forward to this House debating and passing this bill in a spirit that will enable all New Zealanders to have a little bit more security going forward.

STUART NASH (Labour) : I will not take a long call on the Non-bank Deposit Takers Bill, for the main reason that I am very keen to see this bill rushed through the House and turned into law.

I suppose one of the things that underpin any financial system is investor confidence. As Lianne Dalziel talked about earlier, there is risk in every investment—of that there is no doubt—and reward is often a function of risk. However, there is one type of risk that New Zealand investors should not be party to, and that is the risk of negligence or incompetence by the directors who are there to maintain the integrity of these investments.

We all know that the integrity of a lot of the directors of the finance companies that fell over was called into question, to the point where some of those characters have been dragged through the courts. I hope that a lot of those characters will be made examples of and that they will be sent down, because they ripped about $6 billion out of the pockets of New Zealanders who trusted them, who saved hard, and who put money away for a whole raft of reasons, of which every one was good. As Lianne said, perhaps those investors did not price risk as well as they could have, and they certainly did not know—and could never have known—about the risk of incompetence and negligence.

I will give the House a quote. In the first reading debate on the Reserve Bank of New Zealand Amendment Bill (No 3), Dr Michael Cullen noted: “The amendments in this bill implement the first phase of the new non-bank deposit taker framework. A second bill, to be introduced next year, will cover the remaining amendments required to implement the registered non-bank deposit taker regime, including licensing and fit and proper requirements.” I suppose the point of reading out that quote is to remind the House that it has been 3 years since Dr Cullen made that speech. I wonder whether—and this is a question; I am not casting aspersions—the Government has taken its eye off the ball and has been a little bit negligent. “Negligent” is probably too hard.

My personal view is that this sort of bill should probably have come before the House 18 to 24 months ago. In fact, this bill probably should have been on the first Order Paper put out by the current Government. The reason I say that, going back to my initial point, is that confidence is what determines the robustness of financial markets. Without this sort of legislation, ordinary New Zealanders do not necessarily have confidence in this sector, which absolutely collapsed around their ears. The Non-bank Deposit Takers Bill is the sort of bill that restores the confidence in markets, and—goodness me—if we need anything in this country at the moment it is investor confidence.

I ask what the Government has been doing with regard to this. I know Simon Power has put through a lot of bills. We have also seen a lot of bills come through the House over the last 2½ years that are important to certain sectors—of that there is no doubt—but this bill is important to the whole country. As Lianne Dalziel outlined, this whole process started about 5 or 6 years ago. Maybe it should have started earlier; it does not matter. But it could have been finished within the first 6 months of this Government taking office.

I will talk very briefly about two of the most important provisions. The first provision is that this bill will give the Reserve Bank the power to vet and remove directors of non-bank deposit holders in certain circumstances. As I mentioned, there are too many shady characters out there, and we have to do whatever we can to make sure that these guys never hijack a sector like they did with the finance sector.

The other most important element in this bill—well, I think it is the most important element—is that it requires non-bank deposit takers to be licensed by the Reserve Bank, subject to analysis by the Reserve Bank of the applicant’s ability to meet the prudential requirements and other legislation. This basically gives the Reserve Bank the power to grant a licence, but also the power to delicense non-bank deposit takers who do not meet acceptable standards.

As I sum up I come back to the first point I made and the most important point, which is that the finance sector in our country absolutely needs confidence restored in it. This Parliament can do that, and it is my personal belief that this should have been done earlier. It was not, but let us get this bill through. Thank you very much.

DAVID CLENDON (Green) : Kia ora koutou. I am pleased to take a brief call primarily to advise the House that the Greens are very happy to support the Non-bank Deposit Takers Bill going through to the Finance and Expenditure Committee. Arguably, the bill is overdue, as was commented on by the previous speaker—but better late than never. It is fair to say that in the New Zealand economy the finance sector at one time was probably over-regulated. There was far too much regulation, which was constraining and was something of a damp blanket on business, enterprise, and innovation. But, clearly, when deregulation came—when the change occurred—it came too quickly and for the wrong reasons, and the pendulum swung far too far in the direction of deregulation. Many decent and honest New Zealanders paid the price quite recently, with the collapse of finance companies.

Clearly, this bill sets out to put some oversight and some prudential regulation on the non-bank deposit takers, and that has to be a good thing. It is also good that not only are we talking about regulating the institutions, of course, but also there will be some individual responsibility applied to this. For me personally, some of the most galling commentary post the collapse of the finance companies was the proposition from lots of people that it was all some terrible accident; some terrible mistakes had been made, and what a shame that was. In fact, we know very well that a significant part of the collapse was due to good old-fashioned greed, to people taking advantage, and to sharp practice and outright dishonest, fraudulent practice. It is good to see that the courts are slowly catching up with some of the folk responsible for it. Sadly, some of them will no doubt escape legal process, but nevertheless this new legislation will empower the Reserve Bank to accredit directors, and, if necessary, to remove them to get people out of the sector who really ought not to be there. I am not for a moment suggesting that there are not a great number of people of considerable integrity in the sector, but we need to aspire to that as a minimum standard and get rid of the cowboys, essentially. We need to regain the confidence of people who have money to invest, and to give people a safe haven for their funds and for their investments. People need to be able to put money into those organisations knowing that there is a level of risk that they understand clearly, that everything is transparent, and that they have a reasonable expectation that the reward will be appropriate to the risk they are taking.

It is fair to say that the Greens’ only initial misgiving around this bill was the inevitable danger with legislation—that a sledgehammer would be used to crack a nut. There was some concern about the potential for compliance costs not being appropriate for the size and scale of some smaller institutions and organisations, not least for the credit unions, which have a very long and honourable history in terms of managing people’s money in this country. I think that concern has been recognised. It is shared by other parties, so although it is something we will be keeping an eye on through the course of the select committee process, we do not see any major concerns within it. We are particularly reassured that the Association of Credit Unions, for example, which is a key player in that sector of the market, if you like, is reasonably supportive of this bill.

To reiterate, we welcome this bill, we would like to see it pass in a timely fashion, and we will support it through the House. Kia ora.

RAHUI KATENE (Māori Party—Te Tai Tonga) : Tēnā koe. I am really pleased to stand on behalf of the Māori Party to take a brief call on the Non-bank Deposit Takers Bill. This bill is all about applying scrutiny to the non-bank deposit taker sector within the context of the review of financial providers.

A non-bank deposit taker is a rather clumsy mouthful, so I had to look up what it actually means. It is any person engaged in the business of borrowing and lending money or providing financial services. I do not know about the rest of the parents in the House, but this sounds very much like what I do at home anyway. Perhaps it is easier to explain what a non-bank deposit taker is by the negative—that is, what it is not. It is not a bank, a building society, or a credit union. This is the key issue that I bring to this first reading of the bill: the fact that it does not expressly include building societies and credit unions. The bill states that only credit unions and building societies that issue, or that have issued, debt securities to the public in New Zealand will be classed as non-bank deposit takers.

Under Part 5D of the previous legislation, the Reserve Bank of New Zealand Act 1989, credit unions and building societies were classed as deposit takers, even if they had never issued debt securities to the public in New Zealand. Credit unions have played a big role in the lives of many whānau. They have given vital support to keep families afloat, and to make it easier for people to pay day-to-day bills and stay out of debt. I think the other key fact about credit unions that appeals to Māori is that they are member-owned organisations, so they place priority on what is important to members.

One credit union that I am particularly familiar with is New Zealand Credit Union South. It has to be said that its focus is as comprehensive as one would expect from any service operating out of Te Wai Pounamu and needing to encompass such a huge geographical space. Its focus extends far and wide to areas like the first-home buyers’ grant, car accident insurance claims, child support, statutory holiday pay, and anything else that one can think of. I acknowledge, in particular, the way that New Zealand Credit Union South responded after the disastrous events of 22 February in Ōtautahi. It, in cooperation with the Colin Smith Memorial Fund, established the Christchurch Earthquake Relief Fund, with the support of the New Zealand Association of Credit Unions. The funds were to be distributed to any credit union members affected by the February 2011 Christchurch earthquake. A recent statement by the chief executive of New Zealand Credit Union South says it all: “We realised our only purpose was helping individuals and families in our communities to become financially stronger—full stop.”

I bring this up as an example, because the issue of finding financial support in a way that supports whānau is crucial to whānau well-being. I am also conscious of a report that the Māori Affairs Committee received in 2009 on fringe lending and Māori, which I think offers some fascinating reasons for why we need to ensure any review of financial providers is comprehensive in its scope. In that report it is suggested that Peak Learning, a service contracted by Work and Income to deliver management support to beneficiaries, had commented that most of its referrals were Māori. The clients cited shame, embarrassment, shyness, and a fear of rejection from banks and credit unions as the main reasons they used beneficiary-friendly lenders.

The Māori Party will support this bill at its first reading, because we support the broad goal of establishing and maintaining a sound and efficient financial system. We will be keen to hear what the punters think at the select committee process about the range of institutions that are currently out there that supplement the mainstream banking system and that should be considered in this bill. Kia ora.

AARON GILMORE (National) : It is a privilege to talk on the first reading of the Non-bank Deposit Takers Bill. It is sponsored by the Government and will go to the Finance and Expenditure Committee. As mentioned by earlier speakers, this bill is a continuation of the movement towards central regulation of the wider finance and investment sector, and it is one that we wholeheartedly support.

There are a couple of interesting analogies that I will quickly touch on. One is the comparison between this bill and the Insurance (Prudential Supervision) Act, which came before this House last year and has now been in place for about 12 months. That was shown to be very, very useful, particularly in the recent earthquakes that hit Christchurch, and in relation to the underlying prudential security of the insurance companies in Christchurch. Prior to that bill being put in place, there was no prudential security for the insurance sector. This bill is a bit like that but for finance companies.

There have been some holes in the finance company prudential regime, and this bill will be the last plank to resolve those. One of the measures that I quite potentially like relates to increasing the information disclosure powers that the Reserve Bank has in respect of non-bank deposit takers, particularly on the directors and officers of those entities. There is a really interesting little hook here in relation to requiring consent from the Reserve Bank to purchase equity in underlying entities. The Reserve Bank will have to give consent for more than 20 percent of the equity to change hands. That is very similar to what applies under the Takeovers Code to a code company, to a normal entity that is a non-bank deposit taking business. I think that is a good step forward. It strengthens things. If one is a non-bank deposit taker, one is treated very similarly to the way one is treated under a Takeovers Code - type entity, and that is a sensible step forward, given that many finance companies rely on the investments of mums and dads out there, who, generally speaking, need a bit of help from the Government. They need the Government to put in place a prudential regime because there have been a number of instances of people who have committed fraud in some cases. That has been outrageous, and we need to strengthen that sector.

This week, in particular, we have seen some of the results of financial turmoil around the world. We have had riots in London, which are still occurring today. The financial markets have been very volatile and have been going both up and down. In those situations, with regard to the issue of finance companies that are second and third tier - type lenders and non-bank deposit takers, people need the comfort in knowing that the entities that they are giving their money to have a regime that puts in place some security for the funds that they are lending, particularly given that most of those entities lend to fringe commercial operators. We have seen that in terms of commercial property development. There has been a number of very high-profile cases of property development failure, particularly in the South Island. Around Queenstown some very big white elephants were funded, and in Auckland, as well, where property developers had money lent to them in many cases from finance companies, and the funds were lost because of a lack of transparency and the lack of knowledge that lenders to those businesses and the borrowers had. This bill will allow more information to go back to the Reserve Bank in order to give it back to those punters, so that they are clearer that their funds are actually being invested in the way that they intended them to be.

The bill does not put in place a regime that is as strict as some would like it to be, and we will have an interesting debate on that in the select committee, I am sure. Some people will want to tighten up the prudential regime even further, and that will be an interesting situation to see when we receive the submissions. I suspect that others will think that this is too tight a regime in a sector that has historically had a lot of laissez-faire - type rules around it. But we have seen that we do need to do something, and this bill is the right step forward.

Finally, a number of other prudential security bills are coming through, particularly on security reform and things like that. There is a financial summit on tomorrow, which has been mentioned previously. It will be interesting to see what comes out of that and to see whether any other forms of legislation or rules may be required. We all support those who want to go to that summit and put forward any further ideas on financial sector reform, so that we can protect those funds and the mums and dads out there. Thank you.

BRENDON BURNS (Labour—Christchurch Central) : Like all members of this House, I am pleased to support the Non-bank Deposit Takers Bill. It is another leg in the reform process to end some of the rorts that have gone on across the financial services sector over the last few years. It has been a very sorry toll for many New Zealanders—an $8.6 billion toll—which has seen a lot of people lose their life-savings because of the lack of regulation around some of the people operating in the less-regulated part, if you like, of the financial market.

It is a roll-call of shame when we consider companies like Blue Chip and Lombard Finance. Hanover Finance is one that particularly resonated for me, because I always had some distaste about the way it advertised on our State-owned television channel. “Hanover Finance—the name you can trust” traded, I thought, upon the reputation of Television New Zealand, and of course that turned out to be absolutely the opposite of what the case was. It was not a company one could trust. There was no real regulation of it. It was taking the deposits of mum and dad investors and simply siphoning them into the speculative investments and ventures of the two principals of that company, Mark Hotchin and Eric Watson, two men who I believe stand condemned for what they have done to many thousands of New Zealanders. Therefore, I am very pleased to see this bill, which is another step in the right direction and is hopefully another nail in the coffin of those who fleeced many thousands of New Zealanders of their life-savings.

We can consider that there is sometimes debate in this House over the costs of regulation. Looking through the excellent regulatory impact statement that was prepared for the House tonight, I noted that it states that “the cost of licensing all the expected applicants [under this bill] will be approximately $160,000.” That is $160,000 to regulate a portion of an industry. Those non-bank deposit takers make up a large portion of those who have taken $8.6 billion from sometimes naive New Zealanders, and also from New Zealanders who put their faith and trust into flash advertisements—style over substance—and who have paid a very, very high price for doing that. It is good to see that we as a Parliament agree that those charlatans and rogues deserve to be subject to regulation.

That is what this bill is about: licensing those non-bank deposit takers, requiring their directors and senior officers to be vetted by the Reserve Bank, empowering the Reserve Bank to delicense the non-bank deposit takers in prescribed situations, requiring the consent of the Reserve Bank where there are changes in the ownership of these organisations, bolstering the powers of the Reserve Bank to obtain information about these non-bank deposit takers—or “NBDTs”, as the acronym goes—and empowering the Reserve Bank to remove directors of non-bank deposit takers in the appropriate circumstances. It is great to see the Reserve Bank getting these powers. Like most members, if not all members, of this House, I commend this bill to the House.

MICHAEL WOODHOUSE (National) : Like one or two of the members of this House, I spent a small portion of my pre-parliamentary career in banking. In fact, I joined a trading bank, as they were then known, after leaving school. I spent about 5 years in reasonably low-level roles, but I ended up at the end of that time in the role of retail—

Hon Trevor Mallard: He makes very good tea.

MICHAEL WOODHOUSE: Well, I started as the banking junior. I stamped the cheques, folded the bank statements, and made tea for the manager of the branch, so it is—

Aaron Gilmore: Look how far you’ve come.

MICHAEL WOODHOUSE: That is right—from those humble beginnings. I ended up in the role of retail lending in the Lower Hutt branch of the National Bank in the 1980s, lending mostly to small to medium sized enterprises and arranging mortgages for homeowners. As members may recall, the interest rates in the period of about 1986-87 got up to 20.5 percent, so it was pretty important to get the lending decisions right.

I was trained in what would now be described as the old-school financial disciplines, which I recall as the canons of lending. The acronyms are various, but we referred to them as the five Cs, which were cause, cost, collateral, character, and capacity: what did the people want the loan for, how much would it cost, how much are they putting in, were they good people to lend to, and what was their capacity to repay. If the applicant fell outside some fairly tight financial constraints, then the lending application would have to be referred to head office.

My, how times have changed, and they have changed in a couple of ways. Firstly, the approach of lenders has moved away from that cautious approach to very much a sort of a sales approach, with reports now of bank staff being awarded bonuses for the quantum of the lending that they do. That is in marked contrast to the old banking joke “Were it not for the fact that you needed the loan quite so badly, we might be able to give it to you.”

I think the second change is in the complexity of some of the lending products that are offered. They are not the sort of straightforward lending to borrowers for bricks and mortar, subject to a mortgage. We have seen a lot of speculative products on developments that are still on the drawing board being purchased, often by naive investors, in anticipation of a rental income or a capital gain—a capital gain, I might add, that under the current tax framework would be taxable. That came as a bit of a surprise to investors in Central Otago when the Inland Revenue Department descended on that area and started issuing assessments.

I mention all of that because although this bill is called the Non-bank Deposit Takers Bill, it is really not about the taking of deposits, at all, but about what then happens to them in the on-lending. We are replete, and many members have already spoken about the many—

Hon Trevor Mallard: We’re convinced.

MICHAEL WOODHOUSE: Very good. Well, that never stopped the member over there from carrying on his speech, however unconvincing or convincing he might have been. But there are many tragic examples—

Hon Trevor Mallard: I’m slain through the heart.

MICHAEL WOODHOUSE: That is withering. That is withering. He is absolutely a cutting wit. I have never been called inept, I have to say—certainly not in this place—but the member can wear it like a badge of honour, I am sure.

Clare Curran: I’m sure it’ll come.

MICHAEL WOODHOUSE: Thank you for the vote of confidence and a Nostradamus-like prediction. But it is a serious issue, is it not, because a lot of people were very badly burnt. Mr Nash talked about more than $8 billion of deposits being lost by people whom I consider to be naive investors. Although Ms Dalziel talked about what she believes is the lack of a regulatory framework, I am not quite sure I agree with that, because there have been very sound regulatory frameworks in place.

It has to be said that there is a lot of human nature in this equation. I was advised by a financial adviser that the majority of investments in the finance companies that failed were not made through financial advisers but by people clipping the coupons out of newspapers and posting away their cheques. Although we put in place all these frameworks to regulate financial advisers, which is a very appropriate response to the situation we find ourselves in, I think the lack of financial knowledge and financial literacy in this country is very, very low and needs to be improved. So I really strongly support the bill. I look forward to people submitting on it in the Finance and Expenditure Committee. I do think we need to improve our general financial literacy and our risk approach to borrowing and lending, so I support the bill.

CLARE CURRAN (Labour—Dunedin South) : Labour supports the Non-bank Deposit Takers Bill. It is, as my colleagues have said before me, about the confidence in and the robustness of the financial markets. It is important to put the bill into context, but it is important also to get it enacted, which is why a short speech is a good speech. I will make just a couple of points.

During the collapse of the numerous finance companies and the financial crisis, there was considerable uncertainty and fear about the finance sector and the wider economy. The then Labour Government passed a number of pieces of legislation that helped to bring certainty. It is important to keep on reiterating that, because that was the context of this bill, and it is a pity it has taken so long for it to get to this House.

In 2005 and 2006 the Labour Government carried out a Review of Financial Products and Providers, and that review found that it was necessary to reform the regulatory regime for non-bank deposit takers. The then finance Minister, Michael Cullen, oversaw the introduction of the Reserve Bank of New Zealand Amendment Act in 2008, which introduced requirements in relation to credit ratings, governance, risk management, capital-related exposures, and liquidity. But since this Government has been in office, investors in New Zealand have been left vulnerable, because National has not regarded it as an important issue. It is an important issue. International markets are in turmoil. People need to have confidence in the companies they invest in, and confidence that the appropriate regulator has the power to protect them from negligent or plain dishonest individuals.

If this bill had been introduced and passed as per the previous Labour Government’s time line, then Kiwi investors would have been protected. It would have encouraged investment in non-property assets, and it would have spurred on economic growth. The previous Labour Government had a long-term plan that would have protected investors and grown the economy, and Labour still has that plan through our considerable economic strategy and our capital gains tax policy.

Carol Beaumont’s Credit Reforms (Responsible Lending) Bill, which I am sure has been spoken about in the House tonight, was an attempted member’s bill that would have clamped down on loan sharks and protected vulnerable investors from outrageous interest rate charges. Our savings and monetary policies—which, obviously, will be announced—would have gone a long way to making a difference in this area, but that bill has been blocked, as we have seen in the House today.

Labour does support this bill. We will be listening closely to all of the submissions to the Finance and Expenditure Committee. We want to hear from the finance sector directly, so that any final reforms are actually practical and will positively affect the industry. That is why we are supporting this bill going to the Finance and Expenditure Committee.

TIM MACINDOE (National—Hamilton West) : It is pretty disappointing to hear some of the extraordinary rewrites of history that are going on in one or two of the contributions on the Non-bank Deposit Takers Bill, but I do not want to get too bogged down by some of the more dubious contributions of the newer members who have been speaking tonight, because, in fact, this debate has until now been mostly characterised by thoughtful contributions, and it is really good to detect—

Simon Bridges: But I haven’t spoken.

TIM MACINDOE: But you do not make thoughtful contributions, so if you could just keep quiet for the next few minutes, that would be really helpful.

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

TIM MACINDOE: I beg your pardon, Mr Assistant Speaker Robertson. I thank my friend. As I say, it has been good to hear that there is cross-party support for this important measure, because of course, as we all know, it will obviously be warmly welcomed the length and breadth of the country, although sadly it comes too late for the literally tens of thousands of New Zealanders who collectively lost a large fortune as one finance company after another failed in the middle of the last decade.

The bill is the important culmination of several years of work to tighten up supervision of the non-bank deposit taking sector. So I thought it was a bit disappointing and disingenuous of Stuart Nash to suggest that the bill should have been on the Order Paper straight after National came to office less than 3 years ago. He knows that the legislative system requires several stages. For Mr Nash’s timetable to be achieved, all the work would need to have been done and all the details would need to have been in place as the outgoing Government left office. So it really is extraordinary to hear the pot calling the kettle black in suggesting that somehow National is at fault for the fact that the bill was not all ready to go at the end of 2008. As I say, those comments are just a bit disappointing.

For the record, I particularly hope Ms Curran will take notice of this, as I want to reassure her that the current Government has been firmly focused on restoring investor confidence in our capital markets after the global financial crisis and the collapse of finance companies, and there is a huge amount of work that has been done and has been achieved. There is no question that serious changes were needed to rebuild investor confidence, which took such a hammering as a result of the finance company sector collapses.

We have been absolutely determined to ensure that investors have the confidence to invest, and that capital markets are able to broaden and deepen their base and appeal and to be free to innovate where appropriate. We continue to look for ways to do this through the policies we will be campaigning on in the coming election. People need to realise that in New Zealand we have to broaden the areas of industry and so forth that New Zealanders can invest in safely. That will help our economic growth, but also it will keep them on a safe pattern of investment.

We moved very quickly to start the process of reform. Within 3 months of becoming the Government, I say to Ms Curran, we introduced the Securities Disclosure and Financial Advisers Amendment Bill, which was aimed at making it easier for businesses to raise capital while ensuring the timely and accurate disclosure of information to prospective investors. Five months later it was the law of the land. That was not sitting on our hands; that was getting on with the job. By the end of 2009 Cabinet had signed off proposals requiring debt issuers, including finance companies dealing with moratoria, to give investors tailored disclosure documents and requiring companies already in moratorium to report their progress to investors.

Then the final Capital Market Development Taskforce report, which was led by Rob Cameron, was released. That report helped provide the Government with a framework for our work on financial sector regulation. That work included implementing the financial adviser regime, which had been passed in 2008.

The point that I am making is that these are just a few of many steps that we have taken, and they have been important, they are making a difference, and they show a Government absolutely determined to get on with the job and take the important steps that were necessary.

As an electorate MP, one of the more distressing experiences I have had—and I am sure that probably all members of this House could relate similar tales—has been to hear the very sad stories of hard-working, law-abiding New Zealanders, many of them nearing retirement age, who have suffered in this way. We are determined to put things right.

  • Bill read a first time.
  • Bill referred to the Finance and Expenditure Committee.

Child and Family Protection Bill

In Committee

  • Debate resumed from 14 July.

Clauses 1 and 2 and Parts 1 to 3 (continued)

Hon TREVOR MALLARD (Labour—Hutt South) : There has already been considerable debate on the Child and Family Protection Bill at the Committee stage. The Opposition has not found any reason to oppose the bill in the period that it has not been before the Committee. Therefore, we are not proposing to spend any more time on it.

  • The question was put that the amendments set out on Supplementary Order Paper 179 in the name of Jacinda Ardern be agreed to.

A party vote was called for on the question, That the amendments be agreed to.

Ayes 52 New Zealand Labour 42; Green Party 9; Progressive 1.
Noes 67 New Zealand National 57; ACT New Zealand 5; Māori Party 4; United Future 1.
Amendments not agreed to.
  • The question was put that the amendment set out on Supplementary Order Paper 178 in the name of Lynne Pillay be agreed to.
  • Amendment not agreed to.
  • The question was put that the amendments set out on Supplementary Order Paper 172 in the name of the Hon Simon Power be agreed to.
  • Amendments agreed to.
  • Clauses 1 and 2 and Parts 1 to 3 as amended agreed to.
  • The Committee divided the bill into the Domestic Violence Amendment Bill (No 2), the Care of Children Amendment Bill, and the Adoption Amendment Bill, pursuant to Supplementary Order Paper171.
  • Bill reported with amendment.
  • Report adopted.

Electoral (Administration) Amendment Bill (No 2)

Third Reading

Hon DAVID CARTER (Minister of Agriculture) on behalf of the Minister of Justice: I move, That the Electoral (Administration) Amendment Bill (No 2) be now read a third time. In transferring the functions of the Chief Registrar of Electors to the Electoral Commission, this bill implements the final stage of a two-stage reform to amalgamate the electoral agencies. The first stage transferred the functions of the Chief Electoral Officer and the former Electoral Commission into a new Electoral Commission on 1 October last year. This second stage is designed to come into effect on 1 July 2012.

Previously, electoral administration was carried out by three separate agencies. Several reviews have identified benefits in having one agency that has overarching responsibility for electoral administration. The fragmentation of electoral agencies also arose as an issue during initial cross-party consultation on the reform of electoral finance. The Government decided to deal with the reform of electoral agencies separately from electoral finance reform, to enable the first stage to be completed in advance of the new finance rules. This amalgamation will allow for more consistent and coherent oversight of electoral administration, and will create a one-stop shop for all electoral matters.

The bill also implements the Government’s response to three recommendations made by the Justice and Electoral Committee’s inquiry into the 2008 general election. First, it allows an elector’s immigration status to be checked at the time of application, rather than after enrolment; second, paper enrolment records may be destroyed once secure electronic images are stored; and, third, information on applicants for new and renewed New Zealand passports will be provided to the Chief Registrar of Electors for enrolment purposes. Together, these improvements will bring administrative benefits and enhance the integrity of the electoral roll.

Finally, the bill allows electors who are already enrolled to update their enrolment details using the internet, without needing to return a signed enrolment form. It is the first stage in a process that will eventually allow full online enrolment.

I take this opportunity to thank the Justice and Electoral Committee for its work on this bill. The bill was unanimously reported back by the committee, which is consistent with the Government’s approach of achieving broad support for electoral reform. New Zealand enjoys a fair, transparent, and effective electoral system, and this bill seeks to enhance these features. The bill will improve the efficiency of electoral administration, and enhance public confidence in our elections. I commend the bill to the House.

CHARLES CHAUVEL (Labour) : The Electoral (Administration) Amendment Bill (No 2) is a very good bill that enjoys the support of the Labour Opposition. I join the Minister of Agriculture in commending the bill to the House.

CHESTER BORROWS (National—Whanganui) : I agree with the two previous speakers in respect of the Electoral (Administration) Amendment Bill (No 2). I thank the Minister of Agriculture for his acknowledgment of the work of the Justice and Electoral Committee, which has had a very full workload over the nearly 3 years that its members have been working together. It is a committee in which the members have worked very collegially together. It is interesting to note that when we complete the Alcohol Reform Bill, which we should within a couple of weeks, there will be nothing left on the Order Paper for the Justice and Electoral Committee to consider. I am pleased to note that in the course of the consideration of the Electoral (Administration) Amendment Bill (No 2) members of the committee have worked particularly well together and have seen the need for the reforms.

The aims of the amendments made through the course of this bill are to improve and simplify enrolment processes, maximise enrolment, and achieve cost efficiencies. The people recognise that we are a Government interested in gaining the best bang for the taxpayers’ buck, and we recognise the privilege of living in a democratic country. Encouraging people to vote and to take part in this democratic process is something we should all be promoting, and I am pleased that across the House we are doing that through the support we have for this bill.

The changes under this bill to the enrolment system will improve the accuracy of the roll and encourage enrolment, and thereby improve the validity of the vote. Some people, unfortunately, live in countries where the outcome of elections is significantly challenged, because the elections are corrupt. In this country we do not see those things, we do not witness them, so it is important to us that we preserve the integrity of our voting system and the enrolment system, and that we maximise participation, as we have previously said.

This bill will see the Electoral Commission become a one-stop shop for all electoral matters. It is the completion of the folding together of the three different entities involved in the electoral process into one commission. It is pointless to have to go to different agencies for advice in respect of different matters when they could be housed under the one roof. Voters will be able to update their enrolment details online, and this is the first step in a process that will eventually allow people to enrol via the internet.

Over the course of the submissions made and reports given, we saw the willingness of people to participate online nowadays, as we do for so many other things through the day-to-day living we enjoy in this wonderful country, under this magnificent Government. All submitters were promoting it. They wanted to be able to enrol with their details and change their addresses online, and eventually, of course, they will want to be able to vote online. I look forward to the day when they will be able to do that. When the committee was considering, for instance, its report on the last local body elections held just last October, it made a point in its recommendations to the Government that there be a trial of internet voting for the next local body election, if that is at all possible. Using the internet will make it as easy as possible for people to participate in elections, while ensuring that the integrity of the electoral system is maintained.

The key message of the bill is that it will ensure that the new Electoral Commission is a simple, effective, and pragmatic approach, and it will enhance the electoral system we all enjoy in this country, which has led us to serve our communities in this way as members of Parliament, and to enjoy the privileges of being MPs in this House. I commend the bill to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I will take a brief call for a couple of purposes. First of all, I reiterate the support members on this side of the House have for the Electoral (Administration) Amendment Bill (No 2). It is important that we get right the administrative arrangements around our electoral system, and the fact that we have been consulted in a very open way by the Minister of Justice is greatly appreciated on this side of the House.

The only thing I asked the Minister to do in the context of the Committee stage was to confirm that the Amalgamated Engineering, Printing and Manufacturing Union had supported the addition of Supplementary Order Paper 262, which resolved an issue around adjoining electorates in respect of the appointment of registrars in relation to a particular court case that is still in progress, as I understand it. We had that reassurance from the Minister, and that was a good thing.

The other thing I will say is about Cantabrians and their right to enrol, and where they enrol for this particular election coming up, because it is an issue. There are a number of people who will, obviously, be moving before the general election occurs, and they need to understand where they should enrol, so I thought I could use a brief moment in this debate to make it very clear where people are to enrol. The first thing is to define what people understand to be their home. The Registrar of Electors is asking people in Canterbury to consider which of two statements applies to them. The first is: “I am temporarily staying somewhere other than my home—but I hope to move back home one day.” For those who live in the red zone, I think that hope will never be realised, and, therefore, if people have moved, they have to change their registration. The second—and I think it really confirms it—is: “I am unable to move back to my home and have moved permanently somewhere else.” Basically, the advice under that statement says that people need to re-enrol to vote at their new address after they have lived there for a month, even if they will be moving to another address in the future.

I wanted to put that on the record because a lot of people have a lot of confusion about where they are going to vote. Most people are actually totally uninterested in voting this year, because they have way too much to be thinking about in terms of their own futures, and the election seems to be an irrelevancy compared with all the other things they have to cope with. But I think it is important that people are on the electoral roll on a correct basis, and that they can then take the option to exercise not only their democratic right but, in my view, their civic duty on 26 November.

I commend the bill to the House.

KEVIN HAGUE (Green) : I rise briefly to indicate that the Green Party will continue to support the Electoral (Administration) Amendment Bill (No 2) at the third reading. Thank you.

PAUL QUINN (National) : Tēnā koe, Mr Speaker. Tēnā koe. I will start my contribution to this debate on the Electoral (Administration) Amendment Bill (No 2) by reminding us of what a third reading presentation to the House entails. Speaker’s ruling 116/7—

Hon Trevor Mallard: Oh, no pockets.

PAUL QUINN: That member had better speak to his leader; I am following him. Speaker’s ruling 116/7 states: “Members must confine themselves to the general principles of the bill as it emerged from the committee.” Speaker’s ruling 117/1 states: “the third reading debate should be in the nature of a summing up.”

I wanted to refer to those Speakers’ rulings because in our process, when the bill came to the Justice and Electoral Committee, we had the Hon David Parker, Lynne Pillay, and Jacinda Ardern contributing to the discussion on the bill. When the bill left our select committee our presence was graced on the Labour side by Charles Chauvel, Carol Beaumont, and Carmel Sepuloni. The National members were ably chaired by that outstanding member for Wanganui, Chester Borrows. The other members were “steady as you go”, providing a steady performance. So, as has already been alluded to, this bill has received wide support.

But there is one aspect I particularly want to speak on and place on the record. During the select committee process we provided the avenue for the Tūhono Trust to receive information from the Electoral Commission and to pass on names to Māori organisations and iwi organisations. This is an excellent service because it enables rūnanga and other iwi groups to make contact with their members, and it enables individuals to connect with their trust boards. In terms of the service it will provide, it will be able to supply iwi and other Māori organisations with this electoral information and affiliations so that they can be assisted in connecting back to their whānau, hapū, and iwi.

That aside, the bill, of course, falls into line with this Government’s criterion of improved efficiency in providing Government services, and it does that by bringing together a number of organisations that are providing similar services under the one umbrella. It has been a hallmark of the sorts of efficiencies that this Government has driven in providing front-line services to the people and reducing back-office expenses. So it gives me great pleasure to be able to join with all sides of the House in supporting this third reading of the bill.

CAROL BEAUMONT (Labour) : It is a pleasure to rise and speak in support of the third reading of the Electoral (Administration) Amendment Bill (No 2). As the previous speaker, Paul Quinn, said, I am a member of the Justice and Electoral Committee that this bill emerged from.

I listened closely to what the chair of our select committee, Chester Borrows, said. Interestingly enough, I probably could give exactly the same speech word for word, because this is not a controversial bill. We all support it. One might argue that if it is not controversial, maybe there is nothing significant in here, but that could not be further from the truth. The reality is that this legislation is about improving and strengthening our electoral system, and it has done that by establishing the Electoral Commission and bringing together a number of agencies into one format to streamline and strengthen our electoral system. As others have said, this is of fundamental importance. Across the House something we can agree on is that we want to have an effective democracy, that we are a stronger country for having an effective democracy, and that our electoral processes are robust, transparent, and corruption-free—or generally speaking they are—and compared with many countries around the world that is certainly the case. So anything that improves our electoral system should be something that members from all parts of the House agree on—as is the case with this legislation.

I do not want to go into detail on the bill but I will make just a couple of points, given the proximity of this debate to our election on 26 November. We have a responsibility as members of Parliament to ensure that our enrolment processes are something we actively support and in which we ourselves are actively out there participating. We should be ensuring that New Zealanders are on the electoral roll—as they are required to be, but are too often not—so that they can have their say in the election, and so that that say is counted. Although it is true that we have achieved an enrolment rate of about 95 percent under our current system, it is often, I think, an overstatement. People who are doorknocking and talking to people will see that often many people are enrolled at a house but no longer live there. Of course, our continuous enrolment system means that often they do not come off the electoral roll for that address unless the agency is directly notified.

Just to conclude, I say, as others have, that we support this bill wholeheartedly and look forward to the further development of our online processes of enrolment. Thank you.

RAHUI KATENE (Māori Party—Te Tai Tonga) : Tēnā koe. I am very pleased to speak on the Electoral (Administration) Amendment Bill (No 2), which has the aim of amending the Electoral Act 1993 to implement further electoral reform, with amendments arising from the Government’s response to the report from the Justice and Electoral Committee on its inquiry into the 2008 general election, and amendments relating to online enrolment.

I think it is very important that we have this legislation, and that we have a very robust and transparent electoral system. Last year I was one of the members of the delegation from New Zealand that went to the Solomon Islands as official observers of the Solomon Islands elections. While we were there one of the things we observed was the fact that the enrolments there were not very clear; they were not very transparent. In fact, it was very obvious that many people were enrolled several times over, and many people who were no longer living were enrolled several times over. There were real problems with the electoral system there, and it meant that when it came to voting time, people there were not in a position to actually use their democratic right to vote very fairly. We observed instances in which people were actually living in one area and were voting in another, because they preferred to vote in their home villages rather than in the area in which they were working. So they were filling up the boats going home to their home villages. There were horrific photos, actually, of people in these rust buckets, sitting crammed on to the boats to go home. There were instances of candidates picking up and actually paying for people to go home to vote for them. It was altogether a real problem for the people of the Solomon Islands, and particularly for the Government of the Solomon Islands, to be able to put in place a system that actually was fair to all people.

Here in New Zealand we have a system that we can rightly be very proud of. But we still need to keep working on it all the time to make sure it is improved. One of the things we need to work on and make sure is improved is the ability of people to vote. We heard earlier about the fact that people who are leaving Christchurch and moving to other areas may not actually realise that they have the ability and the right to still vote in Christchurch, so we need to get that information out to them. There is also the fact that Māori have the lowest proportion of people who engage in the electoral system. We need to get information out to Māori to encourage them not only to enrol but also to vote. I think the ability for the Tūhono Trust to be able to get this information on Māori voters and get it to their iwi will be helpful, because I think if people are voting through their iwi structures, they will get into the habit. They will realise that they can have a say in the system, and that one voice is very powerful, because once people start to put all of those voices together, they can actually vote in the people who will make a change and will make a difference in their lives. I am very pleased on behalf of the Māori Party to support this bill, and I commend it to the House.

KANWALJIT SINGH BAKSHI (National) : Sat sri akaal, Mr Assistant Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): I am sorry to interrupt the honourable member, but the time has come for me to leave the Chair.

  • The House adjourned at 10 p.m.