The CHAIRPERSON (H V Ross Robertson): We now move to the Appropriation (2011/12 Estimates) Bill. The Standing Orders provide for 8 hours of debate on the estimates. Each member may have no more than two speeches of 5 minutes on each vote. The estimates debate should be relevant to the Government’s current spending plans as contained in the Estimates of Appropriations. As each vote is reached, a question will be put that the vote stand part. Should it be the wish of the Committee, a question may be proposed on two or more related votes for the purpose of debating them together. At the conclusion of the 8 hours of debate, any remaining votes and the remaining provisions of the bill will be put as one question. The Government indicates which votes are available for debate. I understand all votes are available and will be called in order of seniority of Ministers, commencing with the Speaker’s votes. A compendium of the reports of select committees on the votes is available on the Table.
Hon DAVID CUNLIFFE (Labour—New Lynn)
: I am grateful for the opportunity to open this section of the debate in the Committee stage of the Appropriations (2011/12 Estimates) Bill.
It is very important at this juncture that this Committee and our country understand the crossroads presented to us by the estimates that are in this debate.
The CHAIRPERSON (H V Ross Robertson): I am sorry to interrupt the member. There may be a misunderstanding. The question is Vote Audit. This is Vote Audit. Is the member speaking to Vote Audit?
Hon DAVID CUNLIFFE: No.
Vote Office of the Clerk
Vote Parliamentary Commissioner for the Environment
Vote Parliamentary Service
Vote Communications Security and Intelligence
Vote Ministerial Services
Vote Prime Minister and Cabinet
Vote Security Intelligence
Dr RUSSEL NORMAN (Co-Leader—Green)
: I thank the Chair, Mr Ross Robertson, for that kind invitation to speak. I take a call on Vote Tourism because one of the developments of this Government was that the Prime Minister chose to take on the portfolio of tourism. There were a lot of other options he could have had. He could have chosen science and technology, or whatever, but he chose tourism. Of course, one of the reasons that he chose tourism is that it is such an important export industry for our country. In fact, over the last decade it was our biggest export earner, ahead of even dairy, even though year on year now dairy has got ahead of tourism.
The reason why tourism is such a big export earner, of course, is built on our “clean, green” brand. The brand has been “100 % Pure New Zealand”; the latest version is “100 % Pure You”, and the brand is built on the fact that New Zealand has a fantastic natural environment. In fact, if we look at the advertisements that are running currently, whether they are online or elsewhere, they show amazing pictures of New Zealand’s natural environment. In particular, they show amazing pictures of New Zealand rivers.
The truth is that this Government has not been looking after our rivers. Our rivers deteriorated very significantly under the course of the last Government due to dairying intensification—completely out of control dairying intensification. When this new Government came in, it made a commitment to do something about that. Unfortunately, it has not done anything about it. In fact, the board of inquiry that was set up by the previous Government to consider the National Policy Statement for Freshwater Management came back with a very strong proposal that would have begun the process of cleaning up our rivers. This current Government decided to water down that proposal. The National Policy Statement for Freshwater Management that this Government finally adopted had its teeth pulled out of it, so that it could not begin to clean up our rivers and lakes. This is a major problem.
At the time the Green Party made this argument very strongly and since then just recently the Cawthron Institute—a very reputable independent institute of which the Minister for the Environment is apparently a director—came out with a report that stated that the very same Minister for the Environment’s national policy statement would not clean up our rivers in the foreseeable future. The report stated that the national policy statement, as it had been weakened by the Minister for the Environment and this Government, would not clean up our rivers and would not protect the foundation of our tourism industry, which is our “clean, green” reputation, which is built on the “clean, green” reality.
Unfortunately, the majority of our lowland rivers are now polluted. Depending on which report one reads, some reports state that in the order of 90 percent of our lowland
pastoral streams are polluted. Some of the reports from the Ministry for the Environment suggest about half of our rivers that are monitored at various times are unsafe for swimming because of the amount of faeces in them. This has created a fundamental challenge to one of our most important export industries. It is a challenge that the Minister of Tourism, the Prime Minister, should have taken on and championed. Instead, the Prime Minister has stood back while our rivers have got worse and while one of the best tools we have, the National Policy Statement for Freshwater Management, got watered down.
In fact, the Minister of Tourism, the Prime Minister, is actively promoting $400 million worth of new subsidies to the irrigation industry in order to lead to hundreds of thousands of new hectares of intensive dairying. If we read every science report about this issue, we see that they are all absolutely clear that it is intensive agriculture, and particularly dairying, that has led to the degradation of our river systems. Yet this is a Minister of Tourism who is not acting to protect these rivers, which are the foundation of the tourism industry in our country, one of our most important export sectors. Although we have what I thought would be a hope for tourism when the Prime Minister took on the tourism portfolio, in practice the Minister of Tourism, the Prime Minister, has not done his job to protect the industry, which is fundamentally reliant on the natural environment.
In fact, we have a Minister of Tourism who is actively promoting the destruction of our natural environment by a dramatic expansion of the very industry that every scientific report tells us is leading to a degradation of our rivers. There will be those people who say that we can mitigate the effects. Actually, we cannot mitigate the effect of another million cows on New Zealand. If we read the science, which has to be the foundation of how we make decisions about this, we see that it is very clear: another million cows and more intensive agriculture in our country will lead to further degradation of our river systems. It was very disappointing for me to read the Minister’s statement on science.
A party vote was called for on the question,
That Vote Tourism be agreed to.
||New Zealand National 57; ACT New Zealand 4; Māori Party 4; United Future 1.
||New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.
|Vote Tourism agreed to.
Hon DAVID CUNLIFFE (Labour—New Lynn)
: Thank you once again for the opportunity to speak in the Committee stage of the Appropriation (2011/12 Estimates) Bill.
Hon Craig Foss: Give us the Audit speech, David.
Hon DAVID CUNLIFFE: Thank you, Mr Foss. It is an important debate, and I want to raise for the Committee and with the public the issue of the finance estimates. Encapsulated in those estimates is the fiscal strategy that this Government has embarked upon—one that will lead the country down a dead-end street.
The crossroads that the country faces are neatly summarised by the choice that has been put before us: on the one hand to sell down New Zealand’s precious State assets, and on the other hand to rebalance the tax system in favour of taxing capital, broadening the tax base, filling in an amazing loophole, and giving 98 percent of New Zealanders a net cut in income tax. We can do that under Labour’s plan while fully paying to keep
New Zealand’s precious assets in public hands, paying fiscal debt down to zero earlier than under the Government’s Budget, and running a fiscal surplus in the same year as the Government.
This election is a choice between Labour’s fair tax policy, which will give every New Zealand family a tax cut of $1,000 a year and will close the gaping hole in our tax system, or National’s plan to sell off our profitable assets to foreigners. Labour has a credible, responsible, and bold plan for the economy, and that is in stark contrast with National’s agenda of privatisation and stagnation.
It is a wonder to me that the Minister in the chair, the Minister of Finance, after 9 years in Opposition, when faced with one of the most serious financial crises since the Second World War, in his first Budget managed to achieve precisely nothing other than to give a tax cut to the highest-income earners and to forestall contributions to New Zealand superannuation. In the second Budget, equally lacking in imagination, the lightning strike was to give an even bigger tax cut to upper-income earners, put up GST on everybody else, and do precisely nothing to address the underlying structural problems in the economy.
In this 2011-12 Budget we have the third opportunity for the Minister of Finance to actually show New Zealanders where the economic strategy lies—and what did we get? Again, we got a vacuum of ideas other than the tried and failed recipe of selling down New Zealand’s State assets as a short-term panacea to put some cash flow in the bank while they mortgage future generations. I say mortgage future generations because the numbers do not add up. The dividend yield on the energy assets is over 7 percent. The Crown cost of capital is only 6 percent. The total shareholder return on the package is 17 percent. Yet this Government proposes to sell them, transferring the future value of those dividend streams to what will inevitably be major foreign corporate buyers.
Some people will benefit—yes, some people do benefit. The investment bankers, the accountants, and the lawyers who put the deals together stand to pocket more than a year’s worth of dividends from the assets that are being sold down. Over $350 million, according to Treasury estimates, could be lost in terms of ticket clipping and middlemen as the birthright of mums and dads is sold down the river. You know, it is not just bad because it is bad policy; it is bad because it apparently represents the sum total of National’s thinking about how to guide this economy out of the difficult situation we find ourselves in because of the global financial crisis.
Debt is a problem. All New Zealanders understand that. Most understand that it is not just fiscal debt but private debt, as well. But they want to see fiscal debt—Government debt—responsibly managed. That is one reason why Labour’s plan for a capital gains tax has been so widely hailed by the commentators—because it achieves simultaneously a number of important objectives. It pays down our fiscal debt to zero faster than under the estimates being debated today. It allows us to fully pay for the assets to replace the dividends—
Hon Bill English: That’s rubbish.
Hon DAVID CUNLIFFE: Yes, it does. I do not think that Mr English has yet seen a copy of the underlying spreadsheet, so he is in no position to tell us what is in it. I give the Committee my undertaking as an honourable member of this House that our Budget plan fully replaces the capital that will be drawn down by this Government from State-owned enterprise sales.
It does that while giving 98 percent of New Zealanders a tax cut on their income tax. Ninety-eight percent earn below $150,000, the inflation-indexed threshold for the new top tax rate of 39c, and 98 percent of New Zealanders will be net beneficiaries from the plan to make the first $5,000 of all earned income tax-free. The first $5,000 of all income will be tax-free. That is a very important measure at a time when New Zealand
families are suffering, when food prices are rocketing up 7.1 percent, I think, across general food prices the last time I looked, and when wages are up 1.9 percent. But, of course, the rich list is up 20 percent in the last year. Does that not say it all?
Today in the House Mr Key leapt to his feet and wielded a social development report that said that inequality was getting smaller. What he forgot to mention was the conclusion that it was Labour’s policies of Working for Families that had started to turn that boat round. It was very nice of the Prime Minister to hail the success of Labour’s policies when last in Government. It was very kind of him, but it would have been a trifle more honest if he had said that, in fact, our policies, not the current Government’s, had led to that result.
So here we have it. On the one hand, there is a Government that is devoid of vision and devoid of strategy. It has fallen back on the old mantra of cutting one’s way out of a hole and selling the future of our children down the river to realise some cash and to pay the piper for the next 6 months or year. New Zealanders are not that stupid. They know that selling the family silver is a recipe for disaster, and that is why the polls show that an overwhelming majority prefer Labour’s capital gains tax plan to asset sales as a means of getting through these tough times.
Hon Members: Oh!
Hon DAVID CUNLIFFE: They may not like it, but that is the truth—that is the truth. Present New Zealanders with a choice between asset sales and tax reform, and they will choose tax reform. They want to fill in the loophole that lets the rich list get a 20 percent income increase while the poor get a 1.9 percent increase. They do not think that is fair, and we do not think that is fair. We know the Government has no recipe for lifting this economy out of the doldrums.
Hon BILL ENGLISH (Minister of Finance)
: Usually the member David Cunliffe says something I can agree with because it is correct, but in almost 10 minutes he actually did not say anything that was correct. The reason we know Labour’s numbers do not add up is that we have looked at Labour’s numbers. Actually, there is no such thing as a choice between capital gains and the proceeds of asset sales, because when we look at Labour’s published table, which it put together by itself, we see that all the capital gains revenue—if we were to believe it would collect any—is used up to pay for its other extravagant promises. That is not because we say so but because the table that Labour has published says so.
When we go through the booklet, we see that it does not show an offset to asset sales, at all. It leaves a $7 billion hole. So Labour has to explain how it will pay for new schools, because a capital gains tax is not there. It is being used—if it raises any revenue, and that is a different argument altogether—as part of a silly little tax package that achieves not much in spite of a lot of pain and effort. That is what it does. There is a $7 billion hole at least. If Labour claims that it will reduce debt at the speed these estimates show, then where will it get the money from to do that? It will not get the money from the capital gains tax; it will have to borrow more. I do not know if that is what Huey and Dewey have told Labour’s caucus, but that is the case. If there is a secret spreadsheet, then we had better see it, because it is not in the published numbers. The published numbers simply do not add up, because the capital gains tax revenue would be used to pay for the other extravagant promises.
But, of course, none of that matters, because no one is taking any notice. Most New Zealanders know what we know: if we want to grow this economy, we need controlled Government spending and sensible taxes that incentivise investment and exports, and we need less debt. The other package is higher Government spending, more new taxes, and a lot more debt. Well, that will grow something; it will grow the Government. That is what it will do—it will grow the Government. That is what Labour always does. That
is what Labour did the whole time it was in Government. But, you see, the New Zealand public knows that that was the problem, not the solution. The solution to our economy is not a bigger Government taxing more, spending more, and borrowing more for the kind of useless projects that Labour specialised in. The solution is about the Government taxing less, spending less, borrowing less, and helping the rest of the country to grow the economy rather than using the rest of the country to grow the Government. Until Labour members get up and apologise to the public for those policies, and until they agree that the public was right to throw them out, no one will listen.
Peseta Sam Lotu-Iiga: Shane agrees.
Hon BILL ENGLISH: Shane agrees—of course he agrees! He is just waiting until the Labour front bench fails yet again to grasp the basic political truths that until Labour apologises, and until it figures out how to reconnect with the new, aspirational New Zealand and not an old, dependent New Zealand, then Labour will not get anywhere.
That is what is so sensible about these estimates. The Opposition might not understand what they are about, but New Zealand does. Rob Muldoon once said that New Zealanders would not understand a deficit if they tripped over it. He was wrong—and not just on that, I might say. He was wrong, because New Zealanders do understand what is needed in this economy, and they will get an opportunity in a few months to make a choice about whether to vote for the fact that they are right, or that they are wrong and the Opposition is right. I am picking that they will probably back themselves.
Hon DAVID PARKER (Labour)
: The Hon Bill English’s problem is that he has painted himself into a corner. He has ruled out a land tax and he has ruled out a capital gains tax, yet he has written a Budget that by his own projections has New Zealand returning to a current account deficit of over 6 percent, a current account deficit that grows every year from here on, and a current account deficit being funded by increasing foreign debt for New Zealand every year.
Mr English’s own Budget projection shows that if he and his allies in the National Party are re-elected for another term, then, at the end of 6 years of their Government, New Zealand gets poorer, then the next year New Zealand gets poorer, and then the next year after that New Zealanders get poorer still, because the structural problems that bedevil the New Zealand economy have not been solved by the Government’s tinkering. It has done nothing substantial. It has not pulled the levers that need to be pulled to redirect into the productive sector the precious investment capital that is currently going into the speculative sector at the expense of the productive export sector.
Craig Elliffe is a former partner of Chapman Tripp, a former tax partner of KPMG, and now an academic and a successful businessman in his own right. He says that we need a capital gains tax because “To the extent to which you have tax policies that are distortionary on the economic levers and contributors to society,” it is wrong. He asks “how sensible is it to have property investment four or five times the size of the sharemarket producing no tax revenue.” That is one of the comments.
We have had another comment from the
Herald on Sunday, criticising National at the same time as saying that we were right to be looking at a capital gains tax. The editorial states: “apart from borrowing money and talking up a questionable programme of asset sales, National is showing no signs of a plan to get us out of the mess we’re in.” It is right. The
Dominion Post has said something similar. The
National Business Review has said that there is a need to have a tax on capital.
The Manufacturers and Exporters Association says “the eradication of the capital gains tax harbour will help to lift productive investment. A more balanced tax system will see investment flow to the most intrinsically profitable areas of the economy, rather
than those that are tax advantaged.” The Productive Economy Council says something similar: “A Capital Gains Tax sends the right signals for investors and means those choosing to take the path of unproductive property investment will have to pay their fair share of tax. While fairness in tax is good the real long term benefit is the chance to get more of our limited capital invested in making New Zealand more, not less, competitive.”
We have heard others like Gareth Morgan say something similar. National is on the wrong side of this argument and it should admit it. The Government has $48 million in these estimates going towards policy advice from Treasury. What did Treasury say after the last time the Government spent $48 million? It said introduce a capital gains tax to make the economy stronger, as well as to make the tax system fairer.
I will deal with Mr English’s assertion of tax and spend. We always knew National members would come back to their original mantra. Tax and spend is the accusation they make against us. The problem is that they are wrong. It is not true. They say that our revenue projections are wrong. Well, our revenue projections are all out there, and the only one that has taken a flick at them other than Mr English is his colleague Mr Joyce, and it has not cut through because the biggest line item is the revenue from the capital gains tax.
Treasury’s estimate of the long-term revenue from a capital gains tax excluding the family home was $4.8 billion per annum. We remodelled that through our consultants, Business and Economic Research Ltd, and they cut that back by $2 billion per annum at the maturity of the scheme. So it is raising $2.8 billion per annum once it is a mature scheme, rather than $4.8 billion. The sensitivities in the Business and Economic Research Ltd analysis show that it could be $1 billion per annum more than that, but we have taken the conservative course and assumed the lower figure.
The new progressive top tax rate raises money; so does the loss ring-fencing; so do other anti-avoidance measures; so does a moderate amount of revenue from the agricultural sector from emission trading scheme revenues. This allows us to fund the tax-free zone that David Cunliffe has already indicated—the first $5,000 of income will be tax-free for every person. That is whether one is on a low income or a high income, and whether one is a superannuitant or someone in paid work. In addition, GST comes off fresh fruit and vegetables and there is a research and development tax credit that is funded.
These measures are all properly costed. The Government’s claims to the contrary are not credible. They are not credible. Over the period shown in our table—which has been publicly released, despite Mr English’s comments intended to misrepresent it—our package will reduce debt by $7.7 billion more than the Government would. In other words, our debt track is better than the Government’s debt track. Are people surprised by that? Well, they should not be. They should not be, because when we were last in Government we reduced Government debt.
When Labour was in Government we reduced net Government debt to zero. We reduced gross Government debt to 17 percent. We did it every time, with the National Opposition at the time opposing the Budget surpluses that did it. National members said: “Give tax cuts.” Well, we are now in a $16.7 billion deficit this year as a consequence, in part, of Mr English’s inability to properly cost his income tax package.
Mr English’s prior income tax cuts resulted in an increase of the New Zealand deficit of over $1 billion. Over $1 billion over that period was paid out over 4 years of tax cuts, in addition to the revenue that was collected from the switch. So he has created a fiscal hole. He has also done nothing to cure the underlying imbalances in our economy, which are caused, in part, by the signal that people get. They make additional returns from their rental investment because of the tax bias in favour of residential property.
There is $200 billion of investment and very little tax is paid from that area. That is why Treasury favours this change, that is why the IMF favours it, that is why the OECD favours it, and that is why Australia has it.
The Prime Minister has said that a capital gains tax would put a dagger through the heart of the economy. Since the Australian economy has had a capital gains tax, the value of its sharemarket has increased seventeen-fold. Over the same period New Zealand’s sharemarket has increased in value three-fold.
Far from it putting a dagger through the heart of the economy, it is one of the things that we need in order to get that precious investment capital going into the right sectors of the economy, so that we can grow our exports. Instead of the parlous future that the National Government has planned for us—where our net investment position goes to negative 85 percent of GDP by about 2015, right down there towards Greece, Portugal, Hungary, and Iceland—New Zealand would go in the opposite direction, because we would have investment in jobs and investment in the productive export sector. We would start earning our way in the world. That is why the Government is on the wrong side of this debate.
Mr English should just accept that his Treasury officials are right and that his Reserve Bank officials are right. One of the reasons that they like it is that over time it leads to lower interest rates, to the benefit of not just the export sector but everyone in New Zealand who has a mortgage. They get lower interest rates if there is a capital gains tax. The Savings Working Group, which the Government set up, told it that half of the last property bubble would have been avoided if we had had a capital gains tax. It would have meant that the Reserve Bank did not have to pull as hard on the interest rate lever to curb inflation. We would have lower rates of inflation, there would be less pressure on the exchange rate, and therefore, again, our exporters would benefit, as would the people who work in those industries.
Instead we have Mr Foss and the other Neanderthals on the economic front in National saying that Labour is on the wrong side of this debate, when we are with every OECD country other than Turkey and Switzerland—Switzerland being a tax haven.
AMY ADAMS (National—Selwyn)
: It is a great pleasure to take a call tonight on Vote Finance in this year’s estimates debate. I reflect on the fact that for the last couple of weeks now the world has been absolutely gripped watching what can happen when a country’s debt gets out of control. For the first time, the big-spending economy of the US has started to realise that if it just keeps spending and spending and having its cake and eating it too, eventually it has to pay the piper—eventually it has to pay the piper. The most important thing New Zealand has to do to guarantee our prosperity is to get our debt and our spending under control. We cannot afford to have the biggest chunk of hard-working New Zealand taxpayers’ money funding debt servicing to international money lenders. That would be the single biggest threat to the prosperity of every family in New Zealand. That is why this Government has spent the past 3 years getting rid of the economic chaos that the Labour Government left us.
Let us look at it. When Michael Cullen opened the books in 2008 he announced that his legacy to the people of New Zealand was never-ending deficits—never-ending deficits. The Labour Government put this country into effective recession 4 years before the rest of the world. It presided over the all but death of the manufacturing and export sector. The fact that that Government drove the real New Zealand economy to the brink of collapse means we are now in the position we are. They bloated the Public Service. The only thing they know how to do is to take money out of people’s pockets and spend it on growing Government, increasing handouts, and increasing welfare. Borrowing, spending; borrowing, spending—that is all they know. They have gone back to core principles.
But this Government understands that the best thing we can do is to get a handle on Government spending and support the real, productive tradable sector to lead New Zealand out of this mire. We are seeing that—we are seeing that. Over the last 3 years we have seen the plan of Minister English and Prime Minister Key lead this country back into growth. The economy, in the worst of times, is now showing real signs of recovery. We have growth forecasts of 3 percent per annum for the next 4 years, and 170,000 new jobs, thanks to the economic management of this Government. We are seeing that in the worst of economic times and amidst having to pay for the Christchurch earthquake—we are paying $8.8 billion for Christchurch; that money is in the bank, it is funded. We are growing the economy, we are getting better services out of our public sector, we are providing better outcomes for New Zealand, we are letting New Zealanders keep their money, and we are incentivising hard work. We are not incentivising people to sit with their hands out, and we are not incentivising the Government sector to grow. We are saying to people that if they are working, we are behind them; if they are aspirational for their future, we are backing them. We will encourage savings, we will encourage business, we will encourage growth, and we will get debt under control.
We have turned the never-ending deficits of Michael Cullen and the Labour Government into a return to surplus in 3 years—even after paying for Christchurch, and even after the worst economic conditions that the world has ever seen. Our tax changes were a significant part of that. We changed the incentive away from the debt-fuelled consumption orgy that Labour presided over and returned it to incentivising production, savings, and investment. In a very simple sense, that is why New Zealanders know that National is the party to manage the economy, that is why they are backing John Key, and that is why they do not want to hear a bar from Messrs Cunliffe, Parker, and Goff. They know that National is the party that will provide them with growth and prosperity, and that will build them a brighter future. They know that all they can expect from Labour is tax, borrow, and spend. I think Labour must be the only political party in the world that can come up with a whole new tax that puts us further in debt. How does one do that? How does one have a new tax that puts us more in debt? It is unbelievable.
The CHAIRPERSON (H V Ross Robertson): I am sorry to interrupt the honourable member. I say to members on my left that I refer to Speakers’ ruling 61/5 of Speaker Barnard and Speaker Statham. I say that Ms Adams is making a hard-hitting speech and some interjections can be expected, but not so many as to drown out a speaker. The Chairman will not allow that.
AMY ADAMS: Thank you, Mr Chairman. Of course, the facts speak for themselves. The New Zealand public knows it has a choice between sensible, prudent economic management that will grow the productive sector, provide jobs, raise incomes, and give them the brighter future they deserve, and the tax and spend policies of Labour.
Hon SHANE JONES (Labour)
: If there was ever an example of a situation where volume and mock rage were inversely related to content, we have seen it from that member from the South Island, Amy Adams. We had a contribution from someone who chaired the Finance and Expenditure Committee prior to joining the racing industry, where he has been gelded and is devoid now of intellectual content. I think that he ought to come back to the Finance and Expenditure Committee and improve the current quality of its chairperson’s skills, as revealed by what was a very tawdry speech.
What we are talking about here is an ideological tract. Come the end of the year Kiwis have a very clear choice: more poverty, more unemployment, ongoing suffering, wretched lifestyles, the urban poor and the rural poor, and a tidy, very handsome caste of economic beneficiaries, otherwise known as the confrères from overseas, the merchant banking community, who will be the primary beneficiaries of the asset
privatisation exercise. The vast bulk of young New Zealand families are trying to go to Australia, because their circumstances are worsening day after day—ask the schoolteachers. Let National members ask Fonterra why it has to provide more and more food for free breakfasts in decile 1 schools, and then come back and tell this Committee and tell Kiwis that we are on the upward slope. No, that is not what the major corporates are saying. They are digging into their own pockets, and so they should; after all, they have been handsomely rewarded by the disproportionately unfair polices of the current Government to the vast majority of Kiwis. I tell Mr English to ask those Kiwis.
At the end of the year the asset sales give-away is a brilliant public policy debate for us to have. I accept that on the other side the National members genuinely believe that by privatising part of these assets, we will open up a new array of investment opportunities. But I ask who the beneficiaries of these investment opportunities will be. Those members are trying every trick in the book. Of course, Treasury has unravelled their key argument. Treasury has said there cannot be a successful privatisation unless there is substantial investment from overseas. Yet those members are going back into their own communities and quietly telling Kiwis that this is a good idea, and that they will enjoy some sort of Thatcher-like psychic experience—that we will suddenly become a prosperous shareholding democracy. The tiny number of Kiwis who will have that opportunity—once again, the disproportionate beneficiaries of the wretched tax give-away that Mr English introduced several years ago—just shows that Kiwis, as a consequence of the paucity of our own savings, do not want to acquiesce. They do not want to see the current Government preside over the dilution of the slender wealth that we still have left in our country. That is why that is a brilliant issue to fight this election on.
There is the predictable misinformation as to our tax reform policy. The key point is that the average Kiwi will be $100 better off per week as a consequence of these policies. Kiwis will respond to that type of incentive. They will not respond to the puffery. They will not respond to the rhetoric from the Prime Minister and his friends in their increasingly expensive cars when they drive past and see the bleak, broken windows in the tangata whenua part of town and in the Pasifika part of town, and see the vast majority of Kiwis who are heading towards “Strugglers’ Gully”. Somehow that statement of accuracy is regarded as non-aspirational and non-patriotic. There are members who are in charge of their offices and are close to the communities they purport to represent, but that does not, unfortunately, include Mr Bennett. He is where he belongs, but that is another matter. We knew at the beginning of this debate that we would come under some fairly significant attacks, but the facts are clear: as a consequence of this tax reform package, $100 per week and a host of other initiatives would go into the pockets of Kiwis. I desire to ensure that there is money available in the kitty for families to deal with the issues regarding their children.
But families are telling us that this Budget has failed the thousands of—and, indeed, in my case, 16,000—young Māori. Thirty percent of Māori between the ages of 15 and 25 are unemployed, with no opportunity to go on with any meaningful training. Those are the issues that will motivate Kiwis at the end of the year, not all the hollow, empty promises that will benefit a narrow caste of economic beneficiaries.
DAVID BENNETT (National—Hamilton East)
: It is good to speak on Vote Finance. For those listening, that was Shane Jones. Shane is the Labour Party—
The CHAIRPERSON (H V Ross Robertson): The member will refer to the member by his full name or his title.
DAVID BENNETT: Mr Jones is the Labour spokesperson on finance at this point in time. When he gets into trouble he always goes on about the vulnerable people—that is
Labour Party rhetoric. It tries to build fear into people. It will not actually give them inspiration, or give them aspiration; it tries to put people down and to create fear tactics. That is Labour Party policy, that is how it has always been, and that is how it always will be. The public have moved on from that; the public have moved on. They want aspiration, and they want to know what the future is. They do not want to be put down by the Labour Party, they do not want to be seen as being vulnerable, and the last thing they need is people like Shane Jones telling them what should be done for their lives going forward.
Let us look at what Labour did for this economy when it was in Government. Labour created a recession before the rest of the world; it put New Zealand into recession at that time. It put the wrong incentives into our economy. The tradable sector was not growing and the economy was going downhill big time. What did Labour also do? It made a variety of promises just to win votes, promises that were for policies that now New Zealanders are paying for—policies that did not deliver economic results and did not deliver the social cohesion and delivery of services that New Zealanders would have wanted. All Labour did was to create a situation of more debt, more Government, and less economic growth.
Let us compare that with what has happened under the National Government in just 2½ years. In the most difficult of times, in a recession, in a time when we have had to rebuild Christchurch, what have we delivered for this country? We have delivered low interest rates. Interest rates have been some of the lowest, so that people can go out there and make investment decisions, grow businesses, buy houses, and do what they need to do to have a home for their families. There are good growth rates coming through this year—growth rates in the first quarter are beyond expectation—and we are looking at good growth rates over the next few quarters going into next year. That is a very, very strong position for an economy in these most difficult of times.
We have balanced the need to have major infrastructural investment. We can see that in the broadband investment, the roading investment, and the Transpower investment. We are building the infrastructure of New Zealand so that we can grow the economy. We have rebuilt Christchurch with a plan that will go out there and deliver a stronger, more successful city going forward. We have changed the tax incentives so people know that they need to get a good education and work hard, and that they will get some rewards for that—and then they will invest that money through their savings in the economy, further grow the economy, and produce even more economic growth.
That is the game plan, and it is a game plan that has worked in 2½ years of the toughest economic times. It is a game plan that is ready to deliver New Zealanders strong economic growth going forward, and the future prosperity that they all deserve and seek. The public understand that game plan, and they support it. They want that game plan, and they will get it at the coming election. If we compare that with Labour’s game plan we see that Labour’s game plan is to borrow more money and put the country in more debt. Labour is not worried about repaying debt within a short period of time. It is not worried about getting the New Zealand economy in a position where it can grow and deliver things. It wants to borrow more and more and more. That is what the Labour Party wants to do. What does the Labour Party also want to do? Tax you more, tax you more, and tax you more.
The CHAIRPERSON (H V Ross Robertson): Order!
DAVID BENNETT: Labour wants to borrow more and tax more. That is its plan. It is a great plan, is it not? One can see how it will work. What will it do? Interest rates will go up. What will that do to economic growth? It will kill economic growth. What happens if we tax our people more, through higher tax rates, which is what Labour is
looking at with the capital gains tax? It will kill economic growth. There is no incentive for New Zealanders to go out there and build a stronger economy.
Labour’s plan is to borrow more. That will lead to higher interest rates and less economic growth. Labour’s plan is to tax more, and that will lead to less growth and less potential for the New Zealand economy. What else does Labour want to do? It wants to have a bigger Government—a bigger Government that knows more and can spend more, and do it in a way that it agrees with.
STUART NASH (Labour)
: We have just been lectured on debt and taxation by two South Island farmers and one Waikato dairy farmer. The farming sector of the National Party is running economic policy—the farming sector of the National Party is running economic policy—and, boy, do these guys know about debt. The farming sector has $40 billion worth of debt. The farming sector has about one-third of New Zealand’s total debt, and those members are lecturing us about debt. How rich is that?
Let us not talk about taxes; let us not talk about taxes. I say to Mr English, I say to Mrs Adams, and I say to Mr Bennett: get off the farm and go and talk to some real people. I tell them to go and talk to some real New Zealanders who do not have a farm that they can go back to. Mr English talked about numbers that did not add up. That is pretty rich from this finance Minister. When the Inland Revenue Department, the Government’s tax collecting agency, came in with figures that were $4 billion less than Treasury’s figures—$4 billion less in revenue than Treasury’s figures—who did he go with? He went with Treasury’s figures. But, then again, he did not go with Treasury advice when it wanted a capital gains tax—and he has the nerve to criticise.
This year the people of New Zealand have a very clear choice: they can sell State assets—assets built over generations of sweat, toil, tears, and taxpayer money—or they can have a reform of the tax system and keep our State assets. Mr Bennett, Mrs Adams, and Mr English are all farmers and do not want a reform of our tax system. They would rather sell State assets and keep a tax system that is unfair. All and sundry agree that tax reform is necessary; a tax reform that will bring us into alignment with 90 percent of countries in the OECD. This is tax reform for the sake of fairness, to reduce inequality.
I quote from an article by Anthony Hubbard in the
He said: “The National-led government finds no great problem with inequality. If it did, its policies would be different.” A far better approach is that of Warren Buffett, the richest of them all. He asked to pay more taxes, not less. This is partly just a question of fairness—that word fairness. Warren Buffett, the second-richest man in the world, says “If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.” It is also a matter of enlightened self-interest. He knew that in the long run he and his class would benefit from living in a fairer society. The rich do better when everyone does better.
There is no doubt that borrowing $380 million a week is not sustainable. A $17 billion Government deficit is not sustainable, but selling State assets is not a plan. Selling State assets is not the way forward. It will not allow us to own our own future. The only way forward is to have fair tax reform, where everyone pays their fair share, and where all New Zealanders get to keep their State assets.
This tax will affect only about 8 percent of New Zealanders, so 92 percent of New Zealanders, who are currently paying their fair share, will not be affected. They will not be affected, so why are there cries of inequality? Only 8 percent will be affected. This tax will be paid only on income—not on the family home, not on personal assets, but only on income. That is fair. Let me give an example. If someone earns a salary of $50,000 that person pays $8,000 in tax. But if the person has a capital gain of $50,000, they pay no tax.
Vote Canterbury Earthquake Recovery
Hon CLAYTON COSGROVE (Labour—Waimakariri)
: We acknowledge in these estimates, of course, that the department Mr Brownlee heads as Minister, the Canterbury Earthquake Recovery Authority, is only some months old. Therefore, it presents some difficulties for us in attempting, if you will, to measure its performance.
Just for a moment, and given that we are almost at the 12-month anniversary of the September quake, I will review some of the issues that have arisen. I shall be generous to the Government from the kick-off, and say that I think most Cantabrians would acknowledge that the initial Government response following the September quake was pretty good. We have to acknowledge that. Resources were put into play, and the volunteer community, and the Government agencies to a large extent, I think, exceeded expectations in many cases.
Indeed, if we come forward directly to the Canterbury Earthquake Recovery Authority, I know that my colleagues in Canterbury, and all my colleagues on this side of the Chamber, supported the Minister’s appointment of Roger Sutton as the chief executive. Indeed, I think it is fair to say that had we been in the seats across the aisle we probably would have looked to appoint Mr Sutton, too. I have not seen, certainly in my days here, universal support for a Government, or even a local government, appointment in the way there was and is for Mr Sutton. We all wish him well. I do not think that any commentator, politician, or anyone else criticised the appointment.
That being said, the acid test is about the performance of the Canterbury Earthquake Recovery Authority, given, firstly, that its Minister, Mr Brownlee, has wartime powers. He has more extensive powers probably than any Minister has had in the history of our Parliament in terms of legislative capacity. Secondly, there is a $5.5 billion budget that this Parliament has provided that Minister, and, thirdly, that Minister has the Canterbury Earthquake Recovery Authority, his own dedicated department. So to quote the Minister’s words, and as he is fond of saying, we look forward to him “getting on with it”, because some critical issues are now facing our community.
There have been questions raised about home heating, but I will leave it to my colleague Brendon Burns to touch on that. There have been delays as we have moved through winter—it has been a pretty cold winter, especially last week.
There are some substantive issues of basic human relations in terms of the quality of communication that people have received. I have to say that leaks had come out before the big announcement was made, when the sort of Nuremburg-type rally was held as the zoning was announced some months ago. The media had that information days before, and a sort of uncontrolled leak materialised out of nowhere that shocked people. They were shocked even in my patch, where the council was days away from breaking ground, and where morale was high. Spirits were high, but 2 days before Mr Brownlee’s announcement many of the people of Kairaki Beach were literally sitting with their insurers with new plans confirming them for their new houses. They assumed there may well have been a delay but they had not had any advice—and that included the Mayor of Waimakariri and the chief executive of the Waimakariri District Council—apart from an hour or so beforehand, that their community would, effectively, be toast. Those are basic things, I think, on which the Minister needs to shape up. I am sure his department, with Roger Sutton at the helm, a person who has demonstrated openness and transparency, will shape up and that may well change.
The difficulty and concern we have is that now Mr Sutton is under the thumb, the constraints, of the Public Service, and that was evident when he came to Kairaki Beach. He was asked whether he would provide the geotechnical information to those local
people who were distraught. He answered that, yes, he would, and that he saw no reason why he should not. But over subsequent weeks and days, that has been wound back. Now we know of course that that information will not be provided until all the other zoning in Canterbury is confirmed in approximately—I do not know—6 months, whenever, the never-never.
So, the acid test for the performance of this department, and the acid test by which the people of Canterbury will judge Mr Brownlee, his Government, and the department, is on two promises that were made and were made repeatedly. The first was made after the September quake, and I commend the Prime Minister for it. He said that he would put a stake in the ground, and he said that no one in Canterbury would be worse off as a result of that quake. Mr Brownlee confirmed that before the select committee some weeks ago. He confirmed that. It is Mr Brownlee who, including up until I think 15 June, has repeatedly said that his priority is that equity will be preserved by those property owners. Those are the two acid tests as we move forward to unravelling and getting the details about the offer document that the Government is yet to provide to those people in the red zone. People have quoted them back to me time and time again, even at those public meetings where Ms Wilkinson—
Hon RUTH DYSON (Labour—Port Hills)
: It is a pleasure to take a call on Vote Canterbury Earthquake Recovery, but it was a bit of a tragedy to have to curtail my colleague the Hon Clayton Cosgrove, who was just warming up to the subject.
I will begin by acknowledging the three significant days of quakes we have had in Canterbury over the last 12 months, in September, February, and June. I particularly acknowledge the tragic loss that so many of our citizens have endured: loss of lives, loss of limbs, loss of homes, and loss of jobs, and sometimes all four within one family. We have a strength and resilience in Canterbury that we are very proud of, but I think that some people have had to endure a lot more than other people really understand. So, I pay tribute to the people who have gone through that, and who have started rebuilding their lives again. We have had horrendously hard times behind us, and I think we will have hard times ahead of us, as well. But, our communities are strong, our communities are passionate, and they are certainly committed to a recovery.
I think it is important to put on the record that the key to a successful recovery—and I suppose this could be taken as advice to the Minister for Canterbury Earthquake Recovery or as general comment, but I am sure he will understand it and not need reminding about it—is harnessing the strength and the passion of our communities and turning that into a genuine contribution to what our region, our city, and our suburbs will look and feel like, and what we will do in them, in the future. If people see the devastation, but feel that they have had their voices heard during the recovery of our city, particularly on what happens in our communities, they will have had an opportunity to say “We might have lost that, but actually it wasn’t as good as we would have liked it anyway. We want to do something better, and here are the sparks that will set us alight again.” Those people will remain committed to our region.
I am concerned that at the moment the only thing that is holding many people in our city is the lack of a payout from the Earthquake Commission or their insurance company. Once they get that payout they might just say “Thanks very much. I am out of here.” We do not want to lose our skilled people from our region. We need them now more than ever, so ensuring they are part of the recovery is also a very important part of keeping them there.
The critical part to harnessing that passion and strength and turning it into a contribution is to give people information. Sometimes it is really hard—I have heard the Minister explain the dilemma and I agree with him—to pick the right time for sharing information. Often we will feel, and of course it may be true, that as soon as we tell the
people what information we know, they will want to know the answer to a question for which we do not have the answer. Well, it is my strongly held view that we should do that anyway. We should tell people what we know, as we know it. If they ask a question that we do not have the answer to, we should say that we do not know the answer to that yet. They may get a little frustrated, but they will not feel as disempowered as many currently do.
Many people do not have information about what happened to their land. They do not understand the process that caused the liquefaction and the silt to destroy their suburb. They do not understand the land movement. They do not understand the rockfall risk or what happened to our cliffs. There are a whole lot of questions that are unanswered for people. We could provide that information, in my view, in a much clearer way than we have to date.
There will be questions that the Minister does not have answers for, yet. I think that is entirely acceptable. We cannot tell people what we do not know. I really urge the Minister to share as much as possible with everyone in our shared community of Canterbury the information that he does have. People feel stronger for knowing what is happening in their area. Information is empowering, but knowing that somebody else has information that is not shared with everyone is very frustrating and disempowering. We have the opportunity now to share that information with people, to give them the power that information provides. We have the opportunity to harness that passion and that commitment to our communities, which is so evident in things week in, week out.
Hon LIANNE DALZIEL (Labour—Christchurch East)
: I believe that the Government had a laudable aim when it committed to preserving homeowners’ equity in our badly damaged suburbs, but given that that has not been possible with the offer the Government has made, I really want the Minister in the chair, the Minister for Canterbury Earthquake Recovery, to say that that is the case—that the Government tried to preserve equity but has not been able to do so for a large number of people.
The reason it is important for the Government to actually say that is that opinion polls have been run on the status of the Government’s offer. I know that Government members are all circulating little questionnaires in our Christchurch electorates at the moment to see what people think of the Government’s offer. I am worried about that because, of course, the constituents that I am dealing with, who are in the red zone and who are having to face up to the reality of what that offer may mean for them, are concerned that people are commenting on an offer, believing it to be one thing when, in fact, they know it to be something quite different.
The majority of homeowners, certainly the ones whom I have spoken to in the red zone and who will be receiving the offer, do not believe that this preserves equity for them at all. The ones who have expressed anxiety about what they will do in the face of the offer that they are soon to receive are virtually being told by the Government that they are ungrateful for feeling the way they do about what is generally perceived to be a fair, balanced, and reasonable offer—which is the language the Government members have used in the House.
For some people, that is the case. Members on this side absolutely accept that, on average, property prices fell by 5 percent from 2007 to 2010 and that therefore the property valuations as established in 2007 as a general rule should be more than people could have sold their property for on 3 September 2010. But, unfortunately, when one talks about averages across a country, that does not always produce a very good result for individuals.
Let me just talk about the four groups of people who are in this category. The first group are people who bought their homes when the market value exceeded the 2007 rating valuation. We have a number of constituents, I know, in our electorates who now
will end up in a situation, if they accept the Government offer, of negative equity. They will owe the bank more than they will get from the Government offer.
The second group are homeowners who cannot buy property without borrowing, and who cannot afford to service a mortgage or who do not meet lending criteria. I could buy another house with the Government offer, and I am probably in a position to accept the whole of the Government offer. Obviously, I will wait till I see it in writing, but I will probably do that. I have put on record my conflict of interest in that regard. I do fit within this category. But imagine if I were an 85-year-old widow in a freehold home that I had lived in all my life and raised my kids in, and the property is worth only $250,000. What can I buy for $250,000? Not much, I am afraid. That person will not be able to get a mortgage. So that is the second group.
The third group are homeowners whose land component of their 2007 rating valuation does not represent the market value of an unimproved section and/or is insufficient to buy an equivalent-sized section in the current market. I think that in some suburbs more than others—and Bexley is obviously one of those—the land values are very low, even though the overall 2007 capital value may be better than the 2010 market value would have been for the home. I think that is because the land value calculation is not an exact science. It is worked out in the context of the capital value—the capital value, of course, looking at that general market value—but the land had a property built on it at the time. I think it is very hard to identify it.
I have had put to me wildly different land values within my electorate. There was a $60,000 difference between three properties that front on to the River Avon in the Avondale suburb. They have quite different valuations; $60,000 is the difference in the three properties across that range.
The fourth category are homeowners whose properties have not been so damaged as to warrant a rebuild and whose insurers are willing to fund only the cost of repairs. Those people are left in a situation where they will find themselves out of a home at the end of this arrangement, and not in a position to restore anything like the equity that they had in their property before.
AARON GILMORE (National)
: Vote Canterbury Earthquake Recovery has been put forward by this Government in response to the worst-ever natural disaster this country has seen in our history, and I hope in all of the history of this House. The Minister in the chair, the Minister for Canterbury Earthquake Recovery, has done a wonderful job in the work done to date. We have heard from members on the other side of the Chamber some of the compliments that have been given to Mr Brownlee as the Minister in charge of the Canterbury earthquake recovery; I will reiterate some of those. If there has been a time for a wonderful man to step forward, it is now, and if we wanted a person to stand in front of the people of Canterbury and deliver as a Canterbury son, then it is Mr Brownlee. He is a former builder, and someone who understands the issues that the people of Canterbury are dealing with. One of the wonderful things we have seen after the three major disasters that we have experienced—not just one but three—is that Mr Brownlee has stood steadfast on every single one of them.
We have seen the Prime Minister come down to Christchurch and stand shoulder to shoulder with the people of Canterbury, including Mayor Bob Parker, and outline to them that the Government will step in behind them and that we will rebuild our great, wonderful city in the South Island. I think that is a wonderful thing. We have a fund that has been put aside, in this estimates debate, that talks about $5.5 billion. That is a drop in the bucket, but we need a lot of support and help from the good people of New Zealand to rebuild our city. The Minister in the chair has steadfastly stood up for the people of Canterbury, whether they come from the eastern suburbs or the western
suburbs, from the rich houses or the poor houses. That man has stood behind them and put forward many, many options for them.
We saw just today how some of this money will be spent. Today we have had to put in place a situation where half of people’s legal fees will be paid for, and that is worth up to $750 for those people in the affected red zone. That is a good step forward. We have seen the issue put forward of allowing upfront deposits for those people who take up the option of the Government offer they will see in a few weeks. Those are the sorts of things, when we go out and talk to the community, that we hear that people want. This Government listens to what the people want, and it is using some of that $5.5 billion wisely to deliver some of the things that people really want and think are important. This is not about side issues. It is not about media hype and the rubbish that some Opposition members have put forward. It is about someone who is solid and reliable, like the Minister, Mr Brownlee, putting forward those measures that people need to get back on their feet and get our city into recovery again.
The people of Canterbury are showing that themselves: 76 percent of people in a recent Christchurch
Press poll stated that the Government was doing a good job.
Hon Clayton Cosgrove: How many are in the red zone?
AARON GILMORE: I say to Mr Cosgrove over there that the Opposition would love to have those sorts of numbers supporting their party, because 76 percent of the public are happy with what the Government is doing. We think that is a good step forward.
I will talk in terms of what is actually happening in Canterbury. There was a comment from the Opposition that 20,000, 30,000, or even 50,000 people in Christchurch would be unemployed. What have we seen? Nothing like that! We heard from the Opposition that something like 50,000 to 100,000 people would leave our city. What have we seen? Nothing like that, because we have leaders in John Key and Gerry Brownlee who are willing to put forward options for those people to move ahead and commit to their lives in Canterbury for the next 1, 2, 10, or 20 years. Christchurch has had more jobs in the last 3 months than have Auckland and Wellington combined. Members opposite sat there and told people in this Chamber that Canterbury would have a massive increase in unemployment. We have seen absolutely the reverse. In the Christchurch
Press in the weekend there were 17 pages of job advertisements. The member opposite who is smirking might be looking at some of those pages, because he might need a job in a couple of months’ time. I think that on the latest polling about half a dozen of the people on the other side of the Chamber might need a job in Christchurch. We will give it to them: there are 17 pages of jobs in the Christchurch
Press, and plenty of work. I say to Mr Cosgrove that he might have to work a bit harder. He might not be used to hard work and getting his hands a bit dirty, but who knows? There are plenty of things he can do. Mr Brownlee needs a lot of help in the Canterbury Earthquake Recovery Authority, and so does Roger Sutton, who is doing a good job. Mr Cosgrove might be gainfully employed in some way.
This Parliament has put forward its confidence in Mr Brownlee and the Prime Minister, in this vote, to rebuild our fair city—the city that I was born in, as were many generations of my family. I think that one day in 10 or 20 years’ time, when those members opposite probably will not be here, we will stand back and say what a great job Gerry Brownlee and Prime Minister John Key did at the time of the worst natural disaster in New Zealand’s history. They will build statues to this man, recognising how great and wonderful it is to have the heritage, grandeur, and greatness of Canterbury restored. We will sit back and say what a wonderful time that was. Thank you.
Hon CLAYTON COSGROVE (Labour—Waimakariri)
: I raise a point of order, Mr Chairperson. I know this is an unusual situation, and I know that Mr Brownlee is too modest to do it himself, but I seek leave for an extension of time of that speech.
The CHAIRPERSON (Lindsay Tisch): The member can take a call if he wishes.
Hon CLAYTON COSGROVE: It is a point of order, Mr Chairperson. I have sought leave.
The CHAIRPERSON (Lindsay Tisch): You cannot seek leave for somebody else.
BRENDON BURNS (Labour—Christchurch Central)
: I caution the member opposite, Aaron Gilmore, about talking up the benefits of recovery too much, because the experience internationally is that we should take a little time to see just how things do pan out. One example of that came yesterday with the Electoral Commission figures for my seat of Christchurch Central, which suggested—and we are still trying to absolutely verify these figures—that 11,800 people had left Christchurch Central and relocated and re-enrolled in other seats. Although 9,700 people have come into the electorate, we can see the enormous impact that the earthquakes, which started about 11 months ago this week, have had on life in our city. When we talk about jobs in our city, let us not forget that as of 3 September last year 56,000 people were employed within the four avenues of Christchurch; I would be surprised if we have as many as half that number at this point.
We, of course, want the rebuild to happen, we want the jobs to come back, and we know that the Canterbury Earthquake Recovery Authority is the entity that is charged with that work. We unanimously supported the appointment of Roger Sutton as the chief executive. It is pretty unusual for anybody to take a $200,000 salary cut to take on a job in New Zealand—or anywhere in the world, I suspect—but we believe that he is the best man for the job. I think it is perhaps the hardest job in New Zealand at the moment, and probably in a long, long time.
I will comment on a few things that are still popping up for me as an electorate MP, and one of them comes back to heating, as my colleague Clayton Cosgrove mentioned. I would like to ask the Minister to give us some reassurance about the heating programme continuing, because there have been signals that there was a first phase to get heating installed prior to the real onset of winter in May but that things may have been buttoning back since. As recently as Sunday I was doorknocking in the Avonside area, and I came across a man who had lost two chimneys and was still waiting for a heater. I would like some assurance from the Minister that in fact the heating programme is continuing at the speed, scale, and pace that it was before, because many thousands of people in Christchurch are still in the grip of what is still a pretty severe winter, and they do not have proper, appropriate heating.
I also ask the Minister, the Hon Gerry Brownlee, to comment on the temporary accommodation assistance that is available to people in the red zone. We need some clarity here. I was approached by a constituent, Sue Skeet, who is now living in Timaru. Her accommodation, as provided by her insurance policy, runs out this Friday, I say to the Minister, and she has been anxiously emailing the Canterbury Earthquake Recovery Authority and trying to get some assurance. The indications are that there may be an interim measure for her, but I think that many other people in the red zone would like to know whether they are eligible for temporary accommodation. Support seems to be precluded by the initial wording of what was stated when the package was announced on 18 February, because it was then envisaged that it would be for people who were returning to their homes. Of course, people in the red zone are not returning to their homes, and they need some clarity as to what accommodation support will be available to them.
I also raise with the Minister the issue about the future of any remaining heritage buildings in the central business district of Christchurch. The Minister’s initial comments back in February that we might end up with only four heritage sites in Christchurch Central’s central city area sparked me and some others to form a group called Interests in Conserving the Identity of Christchurch, or ICONIC, which put together a list of 40 “must keep” heritage buildings, the crème de la crème of the heritage sites across the central business district. The Minister acknowledged that it was a reasonable list when it was put to him in April, but it would appear that now just about 12 of the crème de la crème, the very best of the heritage buildings, are still standing. I would like the Minister to indicate what can be done—what support and what signal the Government can provide to building owners—to say that we must keep some of these buildings for the future. The generations that follow us will look back and judge us on this issue, and, if the Christchurch of the latter 21st century is reduced to four heritage sites, I think we will be judged to have failed the generations who follow us. There is not a case to retain very many buildings; most of them have already gone, and many of them had to go. Buildings that were truly unsafe had to come down, but I think we need some signal to say that some will be retained as a reminder of the Christchurch that proudly stood before the quakes.
Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery)
: I will make a few brief comments in response to those who have spoken already. Occasionally in this Chamber we hear outstanding speeches delivered by members, and I congratulate Aaron Gilmore on his contribution this evening. I note that it will be something that is referred to in
Hansard for years to come. It was very, very insightful and incredibly accurate.
The difficulties that Canterbury has experienced over the last 12 months have been considerable; there is no doubt about that. I do not know any people living in the greater Christchurch area at the moment who are not making some change or concession in their lives towards getting the communities they live in back in operation, whether it is in the way they travel around the city, conduct their work activities in the city, or have to make alternative arrangements for their children to get to sport and other things; we could go on and on. An enormous amount of extra effort is being made by many, many people to get things going.
Earlier this year after the 22 February event we established the Canterbury Earthquake Recovery Authority. It was a follow-on from the Canterbury Earthquake Recovery Commission, which had much lesser powers, and which was set up after the September event. In setting up the new Government department the Public Service in New Zealand was very much to the fore, and was showing itself to be the best that it is. I congratulate John Ombler on his initial work in setting up the authority, and reaffirm the comments made in this Chamber about the delight we have in Roger Sutton taking on the chief executive role for that organisation. I should mention the names of other people—there are many of them—who are working very, very hard in a very, very focused and collaborative way with all of the districts—Selwyn, Waimakariri, and Christchurch—to get a good result in the long term.
I will also mention the Order in Council process, and the wartime powers that Mr Cosgrove regularly suggests that I hold. Those powers are very, very muted by the processes that we have in place, not the least of which are those relating to Orders in Council. I acknowledge the work that the Opposition parties are doing, in collaboration with Government parties, to make sure that that process works well.
There are a couple of things I will cover in the brief few minutes I have left. Firstly, we think the offer made to the 5,000 households so far, which would see them being given the option of leaving those properties at their 2007 valuation, is a fair one. There
is no question about that. If we look at all of the valuation data for real estate sales, etc., over a period, we see that that offer stacks up very, very well.
On the issue of temporary accommodation an announcement is imminent, which is of an addition, effectively, to the arrangements that have been put in place so far. I need to make it clear that only about 80 families so far have accessed that additional accommodation support, because the private insurers have stepped up in the first instance to make sure that people get those entitlements.
On the issue of emergency heating, I can tell members that under the winter heating programme there has so far been over 9,000 installations of heat devices in houses in the greater Christchurch areas of Selwyn, Waimakariri, and Christchurch—over 9,000. The bulk of that has been of heat pumps, with a smaller number of pellet fires and wood burners. The programme continues, but when we have put that much heating in, and it is on an emergency basis, there will naturally be a time when it starts to slow down.
I think there are good things we can look forward to in Canterbury, because there has been no significant depopulation and no outright collapse of our local economy. Our Paymark data and electricity usage confirm both of those things, which I think points to a community that wants to recover, and that has a very strong will to get things back to being as good as they can be, and better.
When it comes to those heritage buildings, all I can say is that if there is an ongoing economic value in those buildings as well as heritage value, the owners of those buildings are bound to recognise that and find a solution for their continued survival. One of the things we must make sure of in the future is that both our residences and our places of work are safe, and that our commercial and industrial activities are conducted in safe buildings.
JONATHAN YOUNG (National—New Plymouth)
: The Government’s overall economic goal is to build the foundations for a stronger economy that will provide New Zealanders with jobs, higher incomes, and improved living standards. Work under Vote Commerce directly contributes to this priority by helping to create dynamic and trusted markets, increase the ease of doing business, improve international linkages, and develop enterprising and innovative businesses. It does this by ensuring that effective policy and regulatory frameworks are in place to promote competition, support efficient business transactions, lower compliance costs, improve business confidence to make investments, and give firms access to other markets.
Improving confidence in capital markets is essential. Priority under Vote Commerce has been given to several areas of work designed to improve investors’ confidence and participation in New Zealand’s capital markets, following the global financial crisis and the collapse of many financial companies here in New Zealand.
Today in the House the Minister of Finance reported to us that New Zealanders have lost approximately $8.5 billion in collapsed finance companies. That is why investing in a minority shareholding in an energy company must look attractive, sensible, and sustainable for many New Zealanders who want a return but are gun-shy about taking a risk.
We often refer to the “mum and dad investor”. This is essentially the investor who has a bit of spare cash being saved for retirement and who does not see investment as something that they are highly specialised in. Of course, of equal importance has been the work of improving international linkages so that investment and financial activity can easily flow to and fro across the Tasman.
The total appropriation for Vote Commerce has increased by 12 percent—$15.5 million—to a total of $141.43 million in 2011-12. The main change in the appropriation was due to the establishment of the Financial Markets Authority on 1 May 2011. I know that the Minister of Commerce is particularly pleased about the creation and the work of the Financial Markets Authority. It is clear that New Zealand needs a single market regulator with a visible, proactive culture of timely enforcement. On too many occasions in finance company collapses we heard of investors’ money falling to the floor through gaps between regulators.
The Financial Markets Authority—the FMA—is an independent Crown entity funded by Vote Commerce. It was established in 2011, replacing the Securities Commission. It commenced on 1 May. The Financial Markets Authority enforces securities, financial reporting, and company law as they apply to financial services and securities markets. The Financial Markets Authority also regulates securities, exchanges, financial advisers and brokers, trustees, and issuers, including issuers of KiwiSaver and superannuation schemes.
The Financial Markets Authority is playing a more proactive monitoring role than its forerunner, the Securities Commission. The Financial Markets Authority is larger than the Securities Commission, with more staff and resources in a new office in Auckland. The Financial Markets Authority is able to publicly enforce duties of issuers, directors, auditors, trustees, and others involved in financial markets when it is in the public interest to do so. This is a significant new provision that the Securities Commission did not have. The new powers were specifically requested by the Financial Markets Authority establishment board, because of the gap it saw in the Financial Markets Authority’s ability to effectively enforce and supervise our financial markets.
Coming out of the global financial crisis, having improved protection for such investors, it is imperative for such investors to have confidence investing in New Plymouth—sorry, New Zealand, as well as New Plymouth, of course! We certainly need investment, with many great opportunities there. Investment in New Zealand is very important, and it is an incredibly important component to our financial recovery and growth. A substantial incentive for people to shift from a borrowing-based way of thinking to an investment-based way of thinking is that they have confidence in a regulatory framework that ensures professional, effective, ethical, and accountable oversight to protect the interests of the investor. Thank you.
PESETA SAM LOTU-IIGA (National—Maungakiekie)
: It is my privilege to speak on the Vote Commerce estimates for this 2011 year. The Vote Commerce estimates were increased by 12 percent this financial year, and one of the key reasons for that increase, as my colleague Jonathan Young pointed out, is the establishment of the Financial Markets Authority.
That authority will, in its first year, have tabbed for it $31.7 million for its establishment and also its functioning. It replaces the Securities Commission. We are informed that it will provide for a more active, more well-resourced, and more streamlined regulator of financial markets. The purpose of it is, again as Mr Young pointed out, to improve investors’ confidence and participation in our capital markets, particularly after the recent spate of finance company failures that occurred in the last 3 to 5 years.
One of the key provisions of the Financial Markets Authority’s statute, which we put in place, was to give it the right of action, on behalf of either a company or an individual, to take on rogue companies, particularly finance companies. That will provide for those people who cannot take on the action themselves and for the Financial Markets Authority to at least enforce that statute. It will create a new market intelligence unit, which issuers will be able to consult as they develop new products in
order to avoid the need for corrective measures later on in the process. That is about working with the industry to provide for more effective and more efficient markets. We have seen recently with the spate of low-ball offers that the Financial Markets Authority will be able to take on such inequitable low-ball offers provided by those people who prey on vulnerable investors. So, we can see that the Financial Markets Authority will be an all-powerful regulator, unlike the Securities Commission, which was its predecessor.
The commerce portfolio has been a busy one under the current Minister of Commerce. He departs Parliament in the next few months, so we salute his work in the portfolio. The Commerce Committee has been a rather industrious committee. We have pushed through legislation on financial service providers and financial advisers, auditors and insolvency practitioners, and securities trustees. We have also dealt with patents and copyright law, which was quite difficult. But the mother of all financial markets legislation is still to be done, and that is the reform of the Securities Act, which is well overdue. We expect a draft exposure paper to be out in the next few weeks.
In terms of the financial advisers legislation, the financial advisers I speak to, particularly in my own electorate of Maungakiekie, say it adds compliance and it adds regulation. But compliance and regulation also allow for the industry to be more credible, and for the people who practise financial advisory services in the markets to have more integrity. The practitioners have said that that is OK. To date, to 1 July, 1,300 authorised financial advisers have been registered, with 700 still to complete that process.
I will just touch on another piece of legislation that the Minister has signalled should be reformed, which is in the area of moneylenders. The Minister has signalled there will be a financial summit next week, on 11 August, where stakeholders in the whole moneylender industry will come together to share ideas and to exchange their thoughts on the way forward in terms of regulation. We should see some response on that from the Minister and from this Government in the coming months. It is an area I encounter every day in my electorate office and it is one that needs reform. I see people who have been affected by loan sharks or moneylenders.
Hon SIMON POWER (Minister of Commerce)
: I thought I might take just a quick call on the estimates for commerce. It was a spectacularly constructive estimates hearing that we had with the Commerce Committee this year, and one I was happy to make a small contribution to. We—or the committee, I should say—were interested in a range of issues, with some of them traversed in Vote Commerce and others traversed in Vote Consumer Affairs. We kind of married the votes together to some extent, over about an hour and a half, from memory.
One of the things covered off, to some degree, was how well the Financial Markets Authority had begun its functions since it came into effect on 1 May. Interestingly, I think that the culture that has taken root at the Financial Markets Authority is a very strong one. A proactive sense of enforcement and supervision has become part of that organisation’s ethos. In particular—literally from memory—within about 48 hours of the Financial Markets Authority being formed it took a view on low-ball share offers being made by one individual, and a warning notice, from memory a new power under the Financial Markets Authority legislation, was exercised very early in the piece. I think it is fair to say that the Financial Markets Authority has come out of the box pretty quickly, with a fair degree of focus.
Colleague Sam Lotu-Iiga talked a little bit about what was happening in the financial markets. As I have said many times, one thing we cannot do is regulate for certainty; nor can we regulate for risk. I have said it many times but I will say it again now: nor should we try to regulate for risk. That is the nature of getting a return on an investment.
But of course what we know about the type of product that was offered in the financial markets is that the Financial Markets Authority desperately needed a power to be able to deem a particular product to be a security for the purposes of security legislation—in particular, for the Financial Markets Authority to be able to do that in order to avoid a situation where product was being specifically designed to fall outside of securities legislation. Fundamentally, this type of product came about as a result of a property syndication - type product that was put on the market. Of course, over the last 5 or 6 years we have seen about $8.3 billion worth of investors’ money lost or, as they say, put at risk. About $6 billion of that was prior to 2008 and about $2 billion - odd since 2008.
One of the things about this story—it is not a story, actually; it is a fact—is something that all members who are constituency MPs have experienced, and even the odd list MP might have experienced it, as well. An elderly gentleman came to my office in Feilding many months ago now. He was explaining to me that he had left school at about 15 years old, and had managed to save the equivalent of between $75 and $100 a week from all of his wages over the period of his life. At about 73 or 74 years old he had managed to collect about $250,000 in cash—I am pretty sure that is what he told me—and at that point he decided it was a reasonably substantial amount of cash for an elderly gentleman to have just sitting in a bank account so he went and saw a so-called financial adviser to find out how best to invest that money.
The advice he got was to diversify the investments, which, on the face of it, seemed reasonable in order to spread risk. That is indeed what he was told to do, except that that risk was spread across four finance companies so he ended up losing the whole lot. It was clear to me at that point—and I know that the Hon Lianne Dalziel shares this view—that a product designed to avoid securities legislation is always going to be in the proximity of clever issuers, lawyers, and the like, which is why the new powers attached to the Financial Markets Authority relating to the capacity to deem those products to be securities for the purpose of securities legislation are so important.
I regret I seem to have run out of time to address patents and other matters, but I am sure Ms Curran will raise those matters.
Vote Consumer Affairs
CHESTER BORROWS (National—Whanganui)
: As chair of the Justice and Electoral Committee I say that the committee was pleased to review the estimates in this sector and engage with the Minister of Justice.
I note that the work programme covers four specific areas: improving the function and the efficiency of courts, addressing the drivers of crime across a number of portfolios in a wide spectrum following on from the very successful Drivers of Crime seminar at the beginning of this term, and achieving electoral and constitutional reform. It was noted that there had been some movement in amalgamating the various electoral agencies since the beginning of this term, with the last piece of legislation in respect of that having been completed recently. Also I note the preparation for electoral reform, after cross-party negotiations in terms of the electoral finance legislation. Finally, the fourth area of the work programme was to improve the response of the sector to the victims of crime.
It was interesting to note a number of gains that the Government has had over this term, which it hopes to complete within the next year. We were pleased to note, for instance, that the offender levy programme had collected $3.4 million since it was introduced in July 2010. That has launched 13 new support initiatives for victims. Many
of those initiatives are for victims of sexual violence. The Minister told us that the new police safety order initiative was working well, with 3,600 police safety orders issued since March 2011, and only 244 breaches. That puts a lie to criticisms that these safety orders would not be abided by and would result in many more appearances before the court.
We are interested to note, too, the changes to legal aid. We note that the change in folding legal aid into the Ministry of Justice is already effected, but there are also legal aid initiatives within the Criminal Procedure (Reform and Modernisation) Bill, which the committee recently processed. We note the changes that bill will have to legal aid in respect of some things that are contentious but are widely approved across the broader sector of legal aid providers—albeit there are some who are complaining about it. We note the expansion of the Public Defence Service, which is allowing high-quality lawyers to be made available to people appearing before the court in major centres around New Zealand. We look forward to the further expansion of that.
The committee was very pleased to hear of work that was being done in respect of child victims or witnesses. We note with some concern that there is on average a 15-month gap between an incident occurring and a child having to testify before the court. The Minister is taking initiatives to lessen that time. Some new ground is being covered in terms of the way that that evidence is taken, to lessen the stress on a young child who has to give evidence before the court. Thank you.
Hon SIMON POWER (Minister of Justice)
: I am happy to take a call on the law and order debate, and the justice system, if no one else from the Opposition has a view on that. I am certainly happy to take a call and just outline how the estimates process before the Justice and Electoral Committee went. I know this is not strictly within the Standing Orders, but I remember this vote being a very volatile debate under the last Government during the estimates debate. Obviously the Opposition is reasonably happy with where we are heading, so perhaps I could just highlight some of the matters that have gone OK up until now.
Actually, one of the most interesting things that we will be heading into at the general election this year is the MMP referendum. Recently I was asked to appear at a public meeting in Auckland to explain the referendum and the various systems available for the public of New Zealand to choose from at the time of this year’s general election. I decided that the only thing I could do was to use the information the Electoral Commission was using to explain the different systems, in order to avoid any perception that I might somehow be influencing or leading the debate in a particular direction at that meeting. As I said the other day, I am probably the only member of Parliament who really should not have a view about which electoral system we should have in New Zealand, because I have to make sure that the process is as untainted as possible. I tell members that the information provided by the Electoral Commission, and the way that its television ads explained the four systems and MMP, was actually really good. It was a really good piece of work.
Sue Moroney: You have to say so yourself.
Hon SIMON POWER: Well, no. It was the Electoral Commission, I just said, that did it, not me. That was the whole point of the speech. I was talking about the fact that I was using information from the Electoral Commission, because otherwise I would be seen to be tainting the process.
Sue Moroney: You’ve run out of things to say now.
Hon SIMON POWER: Well, I just got offended, actually, that the member Grant Robertson turned his back on me, contrary to the Standing Orders. But, anyway, as I was saying, the point of this particular yarn was that members of the public at the end said to me that the systems as explained by the Electoral Commission were not as
complex as many of them had thought. We ended up in a reasonably lengthy discussion about which system did what to Parliament. The only advice I really gave the public meeting was to think about what shape voters would like to see Parliament and work backwards from there. In other words, they should not pick a system and then try to determine what Parliament would look like. Voters should perhaps decide what they would like Parliament to look like, and then pick a system that would deliver that type of Parliament. It was quite an interesting process to work through.
One of the figures on police safety orders that we used at the estimates hearings was in the late 3,000s. I am happy to update the member on that number now that we are in the Chamber. As I understand it from numbers that were put in front of me prior to appearing on
The Nation in the weekend, the number of police safety orders is now 4,660, which is a remarkable thing, for two reasons. The first is not so good; the second is quite good. The first reason, which is not so good, is that it tells us we still have much work to do in the area of domestic violence. In other words, the fact that these orders are being so well used is problematic. But the second point is that they are available. The police safety order is a mechanism for the police to de-stress an environment without having to bring charges. It allows women and children in particular to carry on in the home they are in, in a reasonably safe environment, having had the alleged perpetrator removed without arrests being made. It avoids the hassles of the court process, and allows a cooling-off period for the alleged perpetrator. Actually, I think the process has worked extremely well.
One of the things that interest me continues to be the issue of how the court system interacts with the people in it—in particular, with children. We talked at the select committee about an inquisitorial model in this part of our justice system; in Austria it is called an accusatorial model. On that basis, I think that Parliament could expect some announcements in this area relatively shortly, meaning that more decision-making on legislation is likely to make its way to this House prior to a date that is creeping up pretty quickly.
GRANT ROBERTSON (Labour—Wellington Central)
: It is a pleasure to rise and take a call on the estimates for Vote Health. The estimates for Vote Health did not get off to a great start for the Minister of Health. The Minister’s press statement from 19 May, after the Budget came out, told us that Budget 2011 was delivering an extra $2.2 billion to public health services over the next 4 years, including an additional $585 million in initiatives in 2011-12. Well, that turned out to not be true. In this House—over a period of days, admittedly—we were able to draw out from the Minister that in actual fact the $585 million additional in this Budget was not so; it was $420 million additional and $165 million worth of money that has been cut from elsewhere in the health sector. Sadly, this is typical of this particular Minister’s approach—the smoke and mirrors and the manufactured targets. No, the reality is that $165 million of the so-called $585 million additional is, in fact, money taken from other parts of the health sector. It was a bad start for the Minister when it came to these estimates.
When the Minister arrived at the Health Committee to go through the estimates, we had to ask him to give us a little bit more information on where some of these cuts were coming from. In fact, in particular, there was the question of the $61 million of unspecified cuts to the public health budget. The Minister was asked to provide some information on that, and in the transcript from the hearing the Minister was, peculiarly, unable to tell us what those $61 million worth of cuts were. He could not actually define them. He had a bit of paper in front of him, but he really did not know what it meant.
Basically, he had no idea of what he was cutting. There was $61 million going from public health, and he had no idea what he was cutting.
Hon Member: He thinks it’s funny.
GRANT ROBERTSON: He thinks it is hilarious. Well, that is good, because the other thing that the Minister said in the exchange that we had with him was that he would provide us with the detail and the explanation behind each of those cuts. Well, here is a question for the Minister in the chair, the Minister of Health: why has he not provided that information? He told the select committee he would provide the information. He has not done that. The select committee was forced to write to the Minister last week to ask him to do what he said he would do at the select committee, which was to tell the committee where $61 million worth of funding cuts have been taken from in public health.
It is simply not on for a Minister of the Crown to not know where $61 million worth of funding cuts are coming from, and then compound that by refusing to tell the select committee where the cuts are coming from and not providing the information. Now the select committee has written to the Minister, and as of today we still do not have a reply. That is how little this Minister cares about the accountability in this portfolio to say where this money is coming from.
To take that much money out of public health has an impact. The Minister gets up at conferences around New Zealand and tells people that he believes in prevention and he thinks we need to take a preventive approach, and we must invest in making sure that people do not get sick. Yet his budget and these estimates take money out of public health. The Minister was at the same seminar I was at, when Sir Michael Marmot came from the UK, and we sat there all day—well, some of us stayed for the whole day. We listened to, and heard from, all the experts within New Zealand in this area and from Sir Michael himself about the importance of investing in early intervention, in prevention, and in making sure people stay healthy. But, that is not what this Government is doing.
What this Government is doing is focusing on the Minister’s manufactured targets within things like elective services. This Minister is saying—
Dr Paul Hutchison: Immunisation.
GRANT ROBERTSON: The member on the other side of the Chamber says “Immunisation”. That is absolutely great. That is excellent. That is carrying on the good work that was started under the last Labour Government, and we can all be pleased about that. But district health boards focusing more and more on trying to meet the Minister’s manufactured elective services targets means that funding disappears from other areas. The Minister might say “Oh, well, these are the nanny State health promotion ideas”. Well, that is not true. Not only are they the preventive measures that keep people healthy, but also the services that are being cut on this Minister’s watch are front-line services.
Dr JACKIE BLUE (National)
: I am very pleased to be taking part in this estimates debate on Vote Health, and I would like to congratulate the Minister of Health on his leadership in this portfolio. Vote Health was the biggest recipient of Budget 2011. It was one of the few areas to receive a modest funding increase, which will be paid for by making efficiencies in other Government departments. This continues the Government’s election pledge to continue the growth of funding to the public health system. Budget 2011 is delivering an extra $2.2 billion to public health services over the next 4 years, including an additional $585 million in initiatives in the coming year.
I would like to particularly focus on three areas: medicines, rheumatic fever, and maternity services. The Budget included $80 million for wider access to medicines, and it is expected that around 32,000 patients in the first year will benefit from this extra
funding. Together with the extra $100 million for medicines in the last 2 years, this means that this Government has invested an additional $180 million in total.
Despite the serious economic environment, the Government has continued to invest new resources into health to meet our commitment to a strong and enduring public health service. This is in contrast to the approach taken by several Governments around the world that have slashed the funding of their public health services in response to the global financial crisis. In 2008 we made an election commitment to lift the pharmaceutical spending per head of population, and the extra $180 million will bring us up from $163 in 2008-09 to $174 per head of population in 2011-12. This means more patients are benefiting from community medicines and cancer treatments. In terms of the number of medicines funded, under this National Government we have seen the most intensive programme of medicine investment since Pharmac was created in 1993.
This Government has acted on rheumatic fever. In the 2011 Budget $12 million has been allocated towards this debilitating disease. Māori and Pacific people, most of them children, living in cold, overcrowded homes are most likely to get rheumatic fever. They are 20 times and 37 times, respectively, more likely to be admitted to hospital for the first time for acute rheumatic fever than anyone else. It is a Third World disease and we need to eradicate it from our country. It has been a health priority since 2001, but nothing has ever happened except that more children contracted this disease. This $12 million investment in the Budget this year is aimed right at rheumatic fever and will support a massive campaign across high-prevalence communities, involving school-based sore throat clinics for over 22,000 children.
It has been a long time since I practised as a general practitioner, but the Minister of Health showed us in the Health Committee the throat swabs that will be used for these programmes. I had not appreciated that they are actually on-the-spot throat swabs that are taken of children with sore throats, and they show whether they have strep throat. If they have strep throat, they have an antibiotic and that is it. If they do not have strep throat, they do not need to have an antibiotic. I had not realised that technology had advanced in the time since I left general practice. I am delighted that we have this programme, which will make a real difference to children in those communities.
Rheumatic fever is a terrible disease. It can lead to heart problems. Basically, it is a crippling, chronic illness with a terrible outcome for children, who need to have monthly, painful injections of penicillin, and they have a terrible outlook. This is a fantastic programme. It is long awaited—it has been waiting since 2001—and this Government is doing something about it.
Budget 2011 has new initiatives for maternity services and to help new mothers and babies. The Budget provides an extra $33.2 million for maternity services over 4 years to improve safety and quality. A further amount of $21.3 million will boost Well Child services, with particular focus on first-time mothers. The additional funding is expected to deliver an extra 54,000 visits to about 18,000 mothers who need this additional support. For these mothers, this will mean, on average, three additional Well Child visits up to the first 2 months of a baby’s life. The extra $33 million announced for maternity services includes $18 million to improve the safety and quality of services for mothers and babies.
GRANT ROBERTSON (Labour—Wellington Central)
: To carry on from where we were, I say that front-line health services have in fact been attacked under this Government. The Minister of Health likes to stand up in this Chamber on a regular basis and tell members that it is all about moving services to the front line. Well, I ask the Minister, what could be more front-line than a mental health clinic—an addiction clinic for young people? What could be more front-line than that in addressing services? Yet that is exactly what has just closed in the Nelson-Marlborough region. That is exactly
what has just closed in the Nelson-Marlborough region. It is right here for the information of the Minister, if he would like to read it. That clinic has closed because of the pressure that this Minister has put on district health board budgets.
Although the money that has gone into district health board budgets has increased slightly, the increase is nowhere near enough to keep up with inflation. The chair of the Whanganui District Health Board told us in the
Wanganui Chronicle that there was no way the board could keep providing the services that it was expected to provide, with the money that was coming from the Government. It has simply not been enough to keep up with inflation, and the cuts are coming. They are coming in front-line health services, they are coming in youth health services, and they are coming in sexual health services. They are coming in all the areas where New Zealanders rightly expect that there would be front-line public health services. The pressure is now going on district health board budgets, and non-governmental organisations that are providing the services are having to cut back their services. That is all happening on the watch of a Minister who likes to pretend that more money is going into health and that more money is going into front-line health services, when the tragic reality is that it is not.
When we go around regional New Zealand, we see the impact of this. If we go to a place like Taihape, we see that the hospital is gone—closed. The hospital in Hāwera is under threat. But, no, the Minister comes in like a white knight there and says he will not cut a service if the community does not go along with that. I tell Mr Ryall to go to Rangiora. That community did not want its after-hours services to be cut, but they are gone. But, no, the Minister did not ride in like a white knight there; the after-hours services have gone. [Interruption] The Minister says that is the doctors’ fault. That is the problem with this Minister: he wants to wash his hands when the services are cut, but it is his Government’s underfunding that means that things like that happen in Rangiora.
In Hāwera the Minister said he would ride in there. But he will not do so around the rest of the country, because this Minister is underfunding the entire sector.
Aaron Gilmore: If this member was the leader of the Labour Party, it wouldn’t be at 27 percent in the polls.
GRANT ROBERTSON: The member on the other side of the House could do with going to Rangiora, talking to the people there, and seeing what they feel about the cuts to after-hours services. He could do with going to the Kapiti coast, talking to Linley Williams, and seeing how she felt about paying $41 for her 2-year-old to go to an after-hours clinic. He could go and see the community services card holders in Ashburton who were charged $73 for an after-hours visit.
New Zealanders deserve to have access to affordable primary health care. New Zealanders deserve to have preventive health services that will help to keep them healthy, and they deserve some honesty from the Minister. They deserve the Minister not to get up and say he was delivering $585 million extra for health, when the truth is that that is not what has happened. Money has been recycled around, the pressure is going on key programmes, and this Minister is not being upfront with the New Zealand public about the impact that this will have on health services.
There is another thing in the estimates that the Minister may care to respond to. Why is it that when we look out to the capital budget for the next 2 or 3 years, we see that it almost disappears? The Auditor-General’s office wanted to know why that money just about disappears. Is all the building over? There is an urgent need to build hospital buildings around New Zealand in the next few years, and the money for that is simply not in these estimates.
Once again, the numbers are smoke and mirrors in these estimates. This Minister is trying to mislead the New Zealand public about the investment that is going into health.
We need to have investment at the primary health care end. We need to ensure that there are quality secondary services available, and we need to ensure that health gets the investment that it deserves; not what the Minister wants to pretend to us. For a Minister to come to a select committee, to come to an estimates hearing, and not be able to tell the committee even where the cuts are coming from is disgraceful. But, what is more, a Minister who then refuses to respond to the committee when it asks to get that detail is a Minister who is not giving the New Zealand public what they deserve in the area of Vote Health. In Vote Health, New Zealanders know that there is not a bottomless pit.
Dr PAUL HUTCHISON (National—Hunua)
: It is an absolute pleasure to take a call in this estimates debate regarding Vote Health. What a shame it is that Grant Robertson has turned into a shroud waver, when in these estimates we signalled that $585 million extra will be put into health—
Grant Robertson: No, there weren’t.
Dr PAUL HUTCHISON:—absolutely; $585 million extra will be available for health. This is a great credit to the Minister of Health, Tony Ryall, who since 2008 has managed to get $1.2 billion extra put into health. [Interruption] The Minister tells me it is $1.5 billion. That is an absolute indication of how the National Government is prioritising health as being very important for New Zealanders and is delivering. What we remember over the last 9 years was a total lack of productivity in health, but a total increase in bureaucracy. That is what happened under Labour. Now we are starting to get results.
It was very rich to hear Grant Robertson talk about health prevention, because under this Government there have been some outstanding achievements. One just has to go to the immunisation rate. In 2007 only 75 percent of 2-year-olds were fully immunised. Now the figure is 90 percent.
- Progress to be reported presently.
- The Chairperson reported the Misuse of Drugs Amendment Bill with amendment and progress on the Appropriation (2011/12 Estimates) Bill.