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Questions & Answers For Oral Answer - 15 June 2004

(UNCORRECTED TRANSCRIPT—SUBJECT TO CORRECTION AND FURTHER EDITING)

TUESDAY, 15 JUNE 2004

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

1. Immigration Service—Illegal Immigrants
2. Taxation—Flat Tax Rate
3. Budget 2004—Middle-income Families
4. Early Childhood Education—Advertising Brochures
5. National Certificate of Educational Achievement—Standards
6. Pharmac—Australia - New Zealand Joint Therapeutics Agency
7. State Sector—Employee Numbers
8. Taxation—Top Tax Rate
9. Budget 2004—Biosecurity
10. Working for Families Package—Family Assistance
11. Budget 2004—Promotion to Public
12. Working for Families Package—Promotion to Public

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

Immigration Service—Illegal Immigrants

1. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Immigration: Is he confident that the New Zealand Immigration Service is working collaboratively with other Government departments to ensure illegal immigrants are identified and subsequently removed from New Zealand?

Hon PAUL SWAIN (Minister of Immigration): Generally, yes. However, I am currently reviewing the Immigration Act in order, among other things, to improve the collaboration and the removal process generally.

Rt Hon Winston Peters: Why, then, after I told this House 4 months ago about a man well-known to the Immigration Service, Saied Ghanbari, an Iranian illegal immigrant who has had trespass orders and a protection order placed on him for violent, abusive, and threatening behaviour, who is an alleged P user, who has had a deportation order on him since June 2003, and who subsequently has had a removal order placed on him, is that man still here?

Hon PAUL SWAIN: He has all those orders out on him. The reason why he is still here is part of the review that I am going to be conducting. I am not happy with the procedure that is in place, and am looking to tighten it up.

Mark Peck: Would the Minister care to tell immigrants like myself and Peter Brown what the new initiatives are that the Immigration Service is planning to institute with other agencies?

Hon PAUL SWAIN: The New Zealand Immigration Service and the New Zealand Police are developing a memorandum of understanding that, among other things, will formalise communication between the two agencies, and give the police access to a round-the-clock facility to check the immigration status of, for example, drivers who are stopped for offending. In addition, the recent Corrections Act allows for the use of information matching to identify people in the custody of the Department of Corrections who are subject to removal, deportation, and permanent revocation. I note that New Zealand First voted against that particular legislation.

Rt Hon Winston Peters: Can the Minister try to give a specific answer to the following question: can he explain to the House how this dangerous illegal immigrant, who has a removal order placed on him and is known to both the police and the Immigration Service, has been able to start his own business, to con the Takapuna branch of the Inland Revenue Department into doing his bookkeeping for him, and to evade any child maintenance obligations to his child, who is supported by our taxpayer-funded domestic purposes benefit; is this his idea of the Immigration Service working collaboratively with other Government departments?

Hon PAUL SWAIN: No, it is not. The reality is, though, that I imagine that there are a number of potential appeals and review procedures under way. That is the point, partly, of doing this review. My view is that a clearer message has to go out that if people are due to leave the country because they have abused New Zealand law or the rules of the Immigration Service, they should go immediately.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. A Minister is required, when giving an answer, to say what he knows, and no more than that. To talk about imagining things to be the case is an extreme case of disregard for the importance of accuracy and certainty in respect of answers. I cannot find that satisfactory in this House.

Mr SPEAKER: That is not a point of order. I thought the Minister addressed the question. He gave some information. He is entitled to do so.

Rt Hon Winston Peters: How can the Minister boast that in the latest Budget more than $62 million will be spent over the next 4 years on practical measures to help migrants, refugees, and their families make a greater contribution to the economy and society, when he cannot even remove, years later, dangerous immigrant fraudsters handed to him on a platter, like Saied Ghanbari, who is still happily residing somewhere in west Auckland; and when will he start being responsible for his new portfolio?

Hon PAUL SWAIN: Firstly, I can boast because it is a good idea, and, secondly, I shall look into the matter further.

Taxation—Flat Tax Rate

2. CLAYTON COSGROVE (Labour—Waimakariri) to the Minister of Finance: What flat tax rate would be required to deliver the same gains to the family on $55,000 a year mentioned in the Budget speech, and what would be the fiscal cost of that tax break?

Hon Dr MICHAEL CULLEN (Minister of Finance): The family mentioned will get an extra $149.77 a week from the package at maturity. To get the same benefit from a flat tax would need a rate of around 9.5 percent. The cost of that on an annual basis for the current tax year would be around $15.9 billion.

Clayton Cosgrove: What spending cuts would be required to fund a tax cut of that order?

Hon Dr MICHAEL CULLEN: For the 2004-05 year this could be nearly covered by having no operating expenditure on health, law and order, defence, transport and communications, primary services, culture and heritage, recreation, and housing and community development. This would still leave a gap of a couple of hundred million dollars or so.

Dr Don Brash: Can the Minister confirm that assuming this family is in receipt of the accommodation supplement, its effective marginal tax rate is 89.2 percent—

Opposition Member: Shame!

Mr SPEAKER: There will be no interjections during questions. That is a rule, and that is the only time I am stating it this week.

Dr Don Brash: Can the Minister confirm that assuming this family is in receipt of the accommodation supplement, its effective marginal tax rate is 89.2 percent, or 99.2 percent if it has a student loan, and what impact does he think this will have on its desire to work overtime when such punitive tax rates apply?

Hon Dr MICHAEL CULLEN: The family mentioned in the Budget speech includes a primary school teacher who does not receive overtime payments.

Hon Ken Shirley: Does the Minister accept that a cut to both the company and top personal income tax rates would boost the economy, and if he does not believe that, can he explain to the House why a 20 percent cut to both of those rates would not boost the economy?

Hon Dr MICHAEL CULLEN: The last time a Government substantially cut the top income tax rate and the company tax rate was when that member and I passed in the division lobby to vote for them in 1988. The next 5 years were the worst performing in New Zealand’s economy since the early 1930s. I rest my case.

Sue Bradford: Has the Government worked out how much of the new family assistance and support is going to families earning less than $25,000 a year, or $12 an hour, in the paid workforce, and should this measure not be renamed: “The subsidy to employers who pay low wages”?

Hon Dr MICHAEL CULLEN: I do not have the former figure available to me, but I can tell the member that something over 60 percent goes to working families, and under 40 percent to families dependent upon benefits. To the extent that the package may reduce wage demands, there may be some very small element of truth in the matter, but the member must remember that the majority of people in those income ranges do not have dependent children, so it is not likely to be a very powerful effect. At the end of the day, the Government’s package is designed to address major issues of horizontal equity—that is, how people on the same income are better able to meet their differing circumstances in terms of supporting families.

Hon Dr Nick Smith: I raise a point of order, Mr Speaker. In his answer to the question asked by the leader of the National Party, the Minister of Finance referred to a teacher mentioned in his Budget speech. I seek leave to table that Budget speech, because there is no such reference to the family on $55,000 including a teacher.

Hon Dr MICHAEL CULLEN: The example was obviously taken from the family who, up until the Budget, starred on page 1 of the Sunday Star-Times and was subsequently reduced to page 7 because it was so pleased with the Budget outcome.

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

Mr SPEAKER: I am sorry; I made a mistake. Please be seated. The member has sought leave to table the Budget speech. Is there any objection? There is no objection. Perhaps the member might like to reflect on the answer he gave, and whether he wants to change it.

Hon Dr MICHAEL CULLEN: No, I do not want to change the answer at all, Mr Speaker, but I will give further explanation. Much has been made of the marginal tax rate effect. Firstly, of course, the high marginal tax rate effect is a feature of the current family support system. All the Budget package does is push that further up the income scale, because it provides more money for low to middle income earners. If the Opposition cares to put the case to the family from Waihi as to whether it would rather have something like $7,000-odd a year less in order to have a lower effective marginal tax rate, when a primary school teacher cannot earn overtime, it would probably tell the National Party to get lost at that point.

Budget 2004—Middle-income Families

3. Dr DON BRASH (Leader of the Opposition) to the Prime Minister: Is she concerned about the impact of the Budget on work incentives for middle-income families, given her statement that “when you have, you know, targeted assistance like this you always end up with, you know, abatement levels”; if not, why not?

Rt Hon HELEN CLARK (Prime Minister): High effective marginal tax rates are a characteristic of targeted assistance systems, and have been a feature of New Zealand family assistance measures for many years. The point of the Budget measures for working families is to ensure that people who go to work are better off than those who do not—an objective the National Party has supported in the relatively recent past.

Dr Don Brash: Does she accept that the Budget makes the problem of high effective marginal tax rates much wider, with thousands of families that annually earn between $38,000 and $70,000 losing over 89c of every extra dollar they earn in 2007, after tax and abatement of family assistance is taken into account; if not, why not?

Rt Hon HELEN CLARK: What I acknowledge is that the Budget shifts the inherent issue of effective marginal tax rates further up the income scale. I note, for example, that in the 1990s the marginal rate for single parents returning to work was 90c in the dollar. What the Budget does is shift the effects further up.

Sue Bradford: Has the Prime Minister ever heard the leader of the National Party raise any concerns about the well-being of low-income families in relation to abatement levels or their level of income overall, or does she believe that only those families earning $55,000—

Mr SPEAKER: The first part is out of order because it is about something for which the Prime Minister is not responsible. However, the member can carry on with the second part, which she had just got to. That will be the question—the second part, which the member had just started.

Sue Bradford: The second part of the question would fall into the same problem.

Mr SPEAKER: Well, it still counts as a question.

Hon Peter Dunne: Where does the Prime Minister draw the line between the adverse impact of high marginal tax rates in terms of increasing the income range at which targeted assistance is made available, and the fact that a consequence of this package may well be to encourage more people back into the workforce—where is the balance between the two issues?

Rt Hon HELEN CLARK: The key thrust of these measures is to get people off benefits and back to work. Therefore, we have to ensure that people who are working for relatively low incomes are better off. That is why they get a boost. But, of course, with any of these targeted assistance measures, at some point they abate out, having the acknowledged effect of an effective marginal tax rate. We do not have any evidence to suggest that people will be dissuaded from working if they are in those upper-middle incomes that hit the higher effective marginal tax rate.

Hon Dr Michael Cullen: Can the Prime Minister confirm that the clearest alternative to such a package is the payment of universal family benefits of this kind of size; if so, is she able to inform the House of when New Zealand last had a universal family benefit?

Rt Hon HELEN CLARK: Rather a long time ago, and it was paid at rather a low level. The reality is that a National Government, I think, got rid of such a universal benefit. Of course, to pay it at a level that was meaningful in terms of raising the incomes of low-income families and taking children out of poverty would involve a huge sum of money.

Stephen Franks: Why did she not ensure that her Government’s Budget, instead of having these high abatement rates, treated husband and wife families with children as the true economic partnership units they are, with income sharing; is the reason, perhaps, that it was not suggested by anyone with sufficient political clout?

Rt Hon HELEN CLARK: No, that is not the reason. My advice is that income splitting would not have delivered anything like the gains for working families with children that this package delivers.

Dr Don Brash: Is it true that, in contrast to the Budget’s “making work pay” slogan, these extraordinarily high marginal tax rates do not make it pay for these families to work more, do overtime, or take a promotion; and what does she make of the indifference of her Minister for Social Development and Employment, who dismissed this information with the comment “So what?”

Rt Hon HELEN CLARK: As I said earlier, there is no evidence whatsoever that high effective marginal tax rates would cause middle-income families not to want to go to work. I can say that, with unemployment at 4.3 percent, any such person turning up to register for a benefit will be told where the job down the road is.

Rt Hon Winston Peters: Can the Prime Minister tell the House whether she has received any reports in respect of a potential ACT - National Party Government and its policy towards the ordinary and lowly paid New Zealanders, given that one of the provisos would have to be that we have a general flat rate of tax of 20 percent?

Rt Hon HELEN CLARK: The advice I have received is that, say, the family in Waihî with four dependent children and one income of $55,000 a year—which is going to be better off by $149 a week under our package—would be delivered $39 under the 20c flat tax policy of ACT, which presumably is supported by National, at a cost to the taxpayer, overall, of $5.5 billion. Our very effective measures, which take children out of poverty, cost $1.1 billion a year.

Dr Muriel Newman: In light of the advice that she has received about abatement levels, what is the highest rate of effective marginal tax that a New Zealand working family might pay under Labour’s 2004 Budget?

Rt Hon HELEN CLARK: I do not have that precise information in front of me, but I would be surprised if it were much higher than the 90 percent it reached under Bill Birch.

Sue Bradford: If the Government is concerned about taking children out of poverty, why must we wait another 3 years for the spending of the full pot of $1.1 billion?

Rt Hon HELEN CLARK: Because this Government runs a strong Government fiscal position, and we would not do any poor family a favour if we spent at an unsustainable level. What I am finding rather amusing at the present time is the National Party joining up with some in the merchant banking community to claim that we should be borrowing a whole lot more so that we can cut taxes for their rich friends.

Dr Don Brash: If high effective marginal tax rates are of so little consequence, why has she spent so much time lauding the Government’s success in lowering effective marginal tax rates at the lower end of the income scale?

Rt Hon HELEN CLARK: Precisely because I think both the member and I would agree that it is a very good thing to get people off benefits and into a job.

John Key: Can the Prime Minister confirm for the House that even Labour, under its own Budget plans, will be borrowing in the years ahead?

Rt Hon HELEN CLARK: It would be nothing like the borrowing that would come with the tax slashing for the rich that would come from those parties opposite!

Early Childhood Education—Advertising Brochures

4. BERNIE OGILVY (United Future) to the Minister of Education: Why were the brochures promoting the Government’s plan to provide 20 hours of free early childhood education at community-based centres sent to privately owned early childhood education providers for distribution?

Hon TREVOR MALLARD (Minister of Education): Because the brochures explain how the funding for private centres is being increased for quality improvements, and how parents access the substantial increases in childcare subsidies available to families with children in private centres.

Bernie Ogilvy: Does the Minister think it a bit rich to ask early childhood providers to promote policy that is biased against them but benefits their competitors; if not, will he agree to allow all Labour electorate offices to stock United Future brochures?

Hon TREVOR MALLARD: In reply to the second question first, I think it is important that we have a sense of reality when we are dealing with material, and, therefore, the answer to that question is no. In reply to the first question, in relation to proportion, I am advised that the 3,261 community centres will together get approximately $164 million—an average of $50,000 each over the 4-year period—and that the 1,019 private centres will get an average of $140,000 each. I can understand why private centres, which are getting nearly three times as much as community centres, are a little embarrassed about getting that information out there.

Lynne Pillay: Why is the Government making such a significant investment in quality early childhood education?

Hon TREVOR MALLARD: Quality early childhood education provides the foundation for future learning. Research has shown that children who participate in quality early childhood education are more likely to succeed at school. They are more likely to read earlier, and they are less likely to become truants. They are less likely to be suspended, and they are more likely to transition better into secondary school and to have good results in those later assessments.

Simon Power: Is the Minister aware that a survey conducted by the Early Childhood Council found that 31 percent of its centres had binned his brochures and 23 percent had sent them back to the Minister’s office, and does he agree that rubbing the faces of private providers in the fact that they would not receive funding for his new policy may have been a bad idea?

Hon TREVOR MALLARD: I think I explained to the House a minute ago, and I will repeat it for the member, that the average funding for a private centre is approximately $140,000. For a community centre, it is $50,000. To say that this Government is biased against private centres is just nonsense.

Hon Brian Donnelly: Why were the brochures, which claimed that the only way for children to experience quality early childhood education is to pay for more and better qualified teachers, sent out to all playcentres, implying to the parents who run that service that they are not able to deliver quality early childhood education; and does the Minister really believe what the brochure states?

Hon TREVOR MALLARD: A lot of work is going on in the area of playcentres and in quality improvements in parent-led centres. I think that is in that brochure, and it is certainly in the regulatory review documents, which focus not only on the extra funding, which is part of the original decisions, but also on the extra regulatory work that will involve improvements right across the sector.

Bernie Ogilvy: Would the Minister consider extending the 20 hours of free education to privately owned providers and others in areas where no community providers exist; if not, what does that say about the Government’s level of commitment to ensuring access to early childhood education?

Hon TREVOR MALLARD: This Government is very committed to the provision of high-quality early childhood education. There are approximately three times as many community-based centres as there are private centres. They are quite well spread, but we are working on increasing the number of them.

National Certificate of Educational Achievement—Standards

5. DONNA AWATERE HUATA (Independent) to the Minister of Education: What assurance can he give that NCEA levels 1 to 3, as delivered in every school, meets standards set down by the New Zealand Qualifications Authority?

Hon TREVOR MALLARD (Minister of Education): Every school is required to have a system in place to ensure that assessment occurs at the national standard. New Zealand Qualifications Authority school relationship managers check the systems and require evidence that the system has been successfully implemented. Every school has been reviewed in the last 2 years. On top of this, New Zealand Qualifications Authority - contracted moderators check marked student work in every subject from every school, every year.

Donna Awatere Huata: Can the Minister explain how it escaped the attention of the New Zealand Qualifications Authority, in the first place, that at one school unit standards had been simplified to the point where 35 unit standards could be completed in 3 hours, two terms’ work could be collapsed into 2 hours, and copying a letter from a blackboard could earn five credits, all events that he assured us could not happen with moderation; and how can he be absolutely sure the New Zealand Qualifications Authority has not overlooked similar practices at other schools?

Hon TREVOR MALLARD: Under the National Certificate of Educational Achievement a lower proportion of work is internally assessed. Therefore, the risk of that sort of problem occurring across the total assessment of a student over a 3-year period is lower than it was under the previous system.

Deborah Coddington: That’s not true.

Hon TREVOR MALLARD: I repeat, the proportion of work that is internally assessed, across the 3 years, is lower under the National Certificate of Educational Achievement than it was under the previous systems of Sixth Form Certificate, which was totally internally assessed; School Certificate, of which a high proportion was internally assessed; and bursary, which was partially internally assessed. If members do not understand that, I suggest they get the booklets out and read them.

Donna Awatere Huata: I raise a point of order, Mr Speaker. I asked the Minister how it had escaped the attention of the New Zealand Qualifications Authority, and he did not answer the question, at all. He did not even come close. He did not even attempt it.

Hon TREVOR MALLARD: I am happy to supplement the answer. Currently, there is an investigation by the New Zealand Qualifications Authority, the Auditor-General, and the Education Review Authority into a particular school. I think it would be most unwise of me to comment on the details at this point, before the review has occurred.

Dr Ashraf Choudhary: What reports has he seen on the value of achievement data provided by the New Zealand Qualifications Authority?

Hon TREVOR MALLARD: I have seen reports that parents, employers, and tertiary institutions think the more specific information available under the National Certificate of Educational Achievement is more useful than former systems of student assessment. For example, staff from the University of Auckland recently stated that the National Certificate of Educational Achievement enhanced that sector’s ability to make informed decisions about student admissions because it provided a richer profile of student achievement, and that assessment was on a broader base.

Bernie Ogilvy: What assurance can the Minister give that for each National Certificate of Educational Achievement subject, students sat identical exams when they were externally assessed at the end of last year?

Hon TREVOR MALLARD: Given there are levels of subjects and that people had options for achievement standards within it, I just cannot give that assurance.

Pharmac—Australia - New Zealand Joint Therapeutics Agency

6. SUE KEDGLEY (Green) to the Minister of Health: Has she seen the 2004 Pharmac submission to the Health Committee that states that the cost to the New Zealand taxpayer of joining with Australia in a joint therapeutics agency could be $85 million to $135 million over three years due to a de facto patent term extension, and how will such a cost increase benefit New Zealand?

Hon ANNETTE KING (Minister of Health): The member misquotes the Pharmac submission. The submission actually states: “Unless the rules are carefully drafted, the creating of the JTA could lead to a de facto patent term extension in New Zealand at significant cost to the taxpayers.” The Government has no policy to change the patent term for New Zealand, and the rules should reflect that.

Sue Kedgley: Has the Minister seen the report to the Australian Senate by Peter Drahos, professor of law at the Australian National University, that points out that new intellectual property provisions contained in the Australia - United States free-trade agreement will add about a third to the annual cost of drugs in Australia; and will a joint agency set up under Australian law not mean that those increased costs will flow on to New Zealand as well, and we could end up with an increased drug bill of about $200 million a year; if not, why not?

Hon ANNETTE KING: No, I have not seen the report that the member mentions. But I was recently at the ministerial conference in Australia, where an assurance was given that the Australia-US free-trade agreement would not affect the proposed agency.

Steve Chadwick: Does Pharmac support the establishment of a joint therapeutic regulatory framework?

Hon ANNETTE KING: Yes. I will quote accurately from the Pharmac submission: “Pharmac support the establishment of a joint therapeutic regulatory framework that maintains the standards currently enjoyed in New Zealand while minimising the cost of such regulation.”

Dr Paul Hutchison: Does the Minister accept that it will be almost unprecedented to have the Health Committee vote against the Government’s legislative plans for a treaty it has already signed, and can she reassure the House that the advantages that are already identified for Australian businesses over New Zealand businesses will be corrected?

Hon ANNETTE KING: I will be interested to see what the select committee does, and I will be interested to hear what the National Party is saying to the Liberal Government in private. There does appear to be some confusion in the National Party. After all, Lockwood Smith, along with Maurice Williamson and others, is saying how important it is for us to get closer to Australia and support it—the joint regulator—in Government, whilst we have Gerry Brownlee insulting the Australians in public. What the Australians like about this Government is that we are reliable and we consistently keep our word.

Mr SPEAKER: I remind members that what goes on in select committees before they have reported back to the House has to be kept inside the select committees. So far I have not ruled anything out.

Barbara Stewart: If the Health Committee recommends against proceeding with the ratification of this treaty, will the Minister follow the committee’s advice?

Hon ANNETTE KING: The decision to ratify the treaty will be one made by the Government. We will certainly listen to the advice that comes from the select committee, and I will be interested in what its recommendations are.

Rod Donald: What evidence does the Minister have to back up her claim that the proposed free-trade agreement between Australia and the United States will not apply to the joint therapeutics agency, when it will be established under Australian law; and can she point to a single provision of the free-trade agreement that would exempt the regulation of therapeutic products in New Zealand from the provisions of that free-trade deal?

Hon ANNETTE KING: The joint agency will be set up under Australian and New Zealand law. If one looks at the rules one sees there are many that will cover both the Australian jurisdiction and the New Zealand jurisdiction. What I can point to, as I said in my answer to the member’s colleague, is that I was recently at the ministerial council, where I asked the question about the free-trade deal between Australia and the United States and assurance was given that it will not affect the joint agency. Obviously, we watch that carefully every step of the way.

Judy Turner: Can the Minister assure the New Zealand public that the current rate of subsidies on pharmaceuticals will not be reduced, nor will the programme for introducing additional products be downsized, as a result of harmonisation?

Hon ANNETTE KING: The decisions on what drugs are subsidised are carried out separately from the joint therapeutic agency. The decision on what drugs we will subsidise is a role of Pharmac, and that does not change under a joint regulator. What the joint regulator does is to decide on which drugs will be registered for the Australian and New Zealand market. Australia may well subsidise some drugs that we do not, or vice versa.

Sue Kedgley: Does the Minister agree with the researched medicines industry assessment that the cost of registering drugs will increase tenfold under the joint agency, which may make it uneconomic for generic drugs to enter the New Zealand market; if not, why not?

Hon ANNETTE KING: No, I do not agree with the drug companies’ organisation. After all, at the moment drug companies have to pay to register drugs in two countries. Under a joint regulator, they will pay to register their drugs across both countries with one fee.

Sue Kedgley: Were the assurances the Minister was given in Australia about the implications of the free-trade agreement for the joint agency given in writing, and will she guarantee to New Zealanders in the House today that joining the agency will not result in higher costs for drugs and dietary supplements or in a reduction in the number of generic drugs available; if not, why not?

Hon ANNETTE KING: No. I did not ask for them to be given in writing. Many discussions take place with our neighbours across the Tasman. We work in a very harmonious way with them, and I have to say that we do not hold the same conspiracy theories the Greens often do, when it comes to dealing with other Governments.

Sue Kedgley: I raise a point of order, Mr Speaker. I specifically asked the Minister to make a guarantee to New Zealanders that joining the agency would not result in higher prices for drugs—

Mr SPEAKER: The Minister was asked two or three questions. She certainly answered one of them. That is all she is required to do.

State Sector—Employee Numbers

7. DIANNE YATES (Labour—Hamilton East) to the Minister of State Services: Has the number of State sector employees increased since 1999; if so, why?

Hon TREVOR MALLARD (Minister of State Services): Yes. I am pleased to say that this Government has invested heavily in building a strong public service infrastructure. For example, in the recent Budget we have invested in boosting the capability of the Department of Child, Youth and Family Services, Corrections, and the Ministry of Defence. I am advised that during the term of this Labour-led Government we have employed nearly 3,000 extra nurses, and 2,000 more teachers than would be required by roll growth—ensuring that public services like health and education can be delivered to a high standard. Further, there has been a trend away from using consultants back towards employing staff, which is something the National Party does not like, because there are fewer jobs for its mates.

Dianne Yates: What reports has he seen on potential risks to the future capacity of the public service?

Hon TREVOR MALLARD: I have seen reports that suggest that the public service is becoming bloated. It appears that some people—[Interruption] No, I do not think it was Gerry Brownlee. It appears that some people do not like the idea that there should be more social workers in the Department of Child, Youth and Family Services, or more nurses or teachers—

Mr SPEAKER: The comment about Mr Brownlee was not in order. It was an interjection made by one of his own colleagues. The Minister will withdraw that comment, and then proceed with his answer.

Hon TREVOR MALLARD: I withdraw. I raise a point of order, Mr Speaker. That does leave us in a slightly invidious position.

Mr SPEAKER: Oh no, it does not. I can see where it leaves the Minister. It leaves him in a position where I am telling him to answer the question or—

Hon TREVOR MALLARD: I am happy to report that some people are opposed to there being more social workers in the Department of Child, Youth and Family Services, or more nurses and teachers. John Key’s approach would result in a cut to all of those numbers.

John Key: Can the Minister confirm that even using the very narrowest definition of public servants, an increase of 19,000 employees earning the average wage has cost taxpayers in excess of $800 million a year; and how does he justify the Budget’s estimate of an additional $1.2 billion of personnel costs in the years ahead?

Hon TREVOR MALLARD: There have not been 19,000 extra—even using the most narrow definition of public service. Therefore, I think the member should check his facts, get the divisions done, and then tell Don Brash about it—all right?

Rt Hon Winston Peters: Is the percentage increase the Minister has outlined lesser or greater than the percentage increase in the staff of Don Brash since he has been the leader of the National Party; if so, what does that say?

Mr SPEAKER: That is a good try, but it is not a question. The Minister has no responsibility for that.

Rt Hon Winston Peters: Can I rephrase it? I will rephrase it in a way that will make it acceptable.

Mr SPEAKER: I will be generous—yes.

Rt Hon Winston Peters: Has he received any reports of the comparative percentage increase between the 1999 figures—that he uses—and 2004, as opposed to the percentage increases in staff of the office of Don Brash, the leader of the National Party, since he acquired that office?

Mr SPEAKER: Please be seated. Unfortunately, the member does not have responsibility for that particular area of Government; I think I do.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I know the staff here are employed by the Parliamentary Service, and the public would regard them as all being part of the State sector; therefore, surely, it is part of the State sector. I am talking about a segment of the State sector, and I am trying to elicit for my own curiosity, without making any assertions, whether there has been an increase by this office that adds to the overall figure about which the Minister speaks.

Mr SPEAKER: No, and I am responsible for that, not the Minister of State Services.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. While you are responsible for employment in that office, I am responsible for matters dealing with the broader State sector, of which the Parliamentary Service is a part. It is not part of the core State sector, but it is part of the broader State sector, and those numbers are certainly included in the Budget figures that were referred to in the original question resulting from Mr Key’s press statement.

Mr SPEAKER: That is an interesting try, but it fails.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. As you have been apprised of the facts with respect to the Minister’s answer, I seek leave to ask you the question then.

Mr SPEAKER: Leave is sought to ask me the question. Is there any objection? [Interruption] There is.

Rt Hon Winston Peters: Was there an objection?

Mr SPEAKER: Yes. [Interruption] I heard an objection. I have to listen, and if someone says, “yes, there is objection,” that is it.

Taxation—Top Tax Rate

8. RODNEY HIDE (Leader—ACT) to the Prime Minister: How big would the operating balance need to be for her to recommend to her Minister of Finance that he drop the top tax rate of 39c?

Rt Hon HELEN CLARK (Prime Minister): Dropping the 39c rate is not on the Government agenda at this time, regardless of the operating balance. We prefer to invest in economic development and infrastructure, better health and education, reducing child poverty, and in many other economically and socially useful endeavours.

Rodney Hide: Does she still believe that New Zealanders earning over $60,000 are rich; if so, why is her Government’s Future Directions package propping up the income of working families earning $60,000, when they have as few as two children?

Rt Hon HELEN CLARK: The Working for Families package is about ensuring that families with dependent children on low and middle incomes get a fair shake, and that is what it does. Those people on $60,000 do run into the 39c tax rate, but many of those families will still be materially assisted by this package.

John Key: Is the Prime Minister aware that last year, Treasury provided written advice to the Minister of Finance indicating that the operating surplus was large enough to allow tax cuts to encourage growth for the benefit of all New Zealanders; if so, why was that advice rejected?

Rt Hon HELEN CLARK: What Working for Families does is target tax cuts into where they are most needed—which is into our working families, so that we take kids out of poverty.

Sue Bradford: Can the Prime Minister advise how big the operating balance would need to be for her to recommend to the Minister of Finance that benefits be restored to the levels they were at in 1991, before National cut them, and adjusted in line with theconsumer price index?

Rt Hon HELEN CLARK: The benefits are adjusted each year in line with the consumer price index, but the Government has attended to the needs of beneficiary families through some of the measures in the Working for Families package. Of course, what this Government will not do is ensure that the gap required between benefits and wages is achieved by slashing benefits. That is what the “mother of all Budgets” by the National Party did in 1991, but it is not a path we will take.

Gordon Copeland: Has the Prime Minister received any reports as to which parties in the House would support a cut in the top tax rate from 39c to 33c or 20c, and has she received any reports about any changes in these views over, say, the last 8 months or so?

Rt Hon HELEN CLARK: No, I am not sure that I have received any reports, but what I think most members of the House are rather confused about is exactly what the National Party’s tax policy and tax rate proposals are at the present time. We are all ears waiting for the tax discussion document referred to in Ms Rich’s—an appropriate name—welfare dependency document of a little while ago, which said that a discussion about abatement rates would be dealt with in that paper.

Mr SPEAKER: The member must not make any comment in the House about a member’s name. The Prime Minister will withdraw that comment.

Rt Hon HELEN CLARK: I withdraw.

Mr SPEAKER: And apologise.

Rt Hon HELEN CLARK: And apologise.

Rodney Hide: How does the Prime Minister explain putting low to middle income earners on an effective tax rate twice that of taxpayers earning over $60,000 per year, and are the disincentive effects of her high tax, high income top-up policy the reason that she has dropped any pretence that her goal is to return New Zealand to the top half of the OECD—a goal that she promised as Prime Minister?

Rt Hon HELEN CLARK: I am advised that most of those families would be already on such high effective marginal tax rates. With respect to the OECD, it is worth pointing out that, I understand, there is only one country in the OECD that has a lower top tax rate than New Zealand, and that is Mexico.

Budget 2004—Biosecurity

9. DAVID PARKER (Labour—Otago) to the Minister for Biosecurity: What reports has he received analysing recent Budget allocations in biosecurity?

Hon JIM SUTTON (Minister for Biosecurity): The rural media analysed the Budget extensively. Even Rural News, a newspaper not traditionally a supporter of this Government, has commented that the Budget is good. I quote: “One area the Government has power to make life better for farmers is in biosecurity and the recent Budget included a massive increase in spending in this area.”

David Parker: Have farmers missed out in the Budget then?

Hon JIM SUTTON: Not at all. To quote a spokesman for the export industries, which earned $5.7 billion in exports last year: “This Budget was a comprehensive one that gives agricultural industry something to smile about.” The measures taken in biosecurity and trade negotiations, in particular, are good for rural people, as are measures in health, education, and Working for Families.

Shane Ardern: Is the Minister aware of other reports from leading biosecurity experts, including Professor Morris from Massey University, that have described the Minister’s Biosecurity Act as “the Act of bio-insecurity”; and when will the Minister stop heralding several new incursions a week as a success story?

Hon JIM SUTTON: There is always one expert who thinks he knows more than all the others. I would say that the way in which this Government has treated biosecurity since it came into office in 1999 has been a great relief to the farming community of New Zealand.

Larry Baldock: Does the Minister acknowledge that the reduction of the biosecurity threat is a public good, and can he assure the House that any costs such as screening sea containers for biosecurity threats are not passed on to business, as is the case with the Border Security Bill, but rather are funded by general taxation?

Hon JIM SUTTON: The Government’s approach is to fund the public good elements of biosecurity from public resources. That is why Government expenditure in that area has been dramatically increased. However, costs driven by users to pursue their own businesses, are, quite correctly, passed on to those users.

Rt Hon Winston Peters: How can the Minister make that claim, given that in 1999 the Labour Party promised to ensure that every used car that came on to our waterfront was decontaminated offshore at the place of embarkation; why will it not fulfil that promise, and what sort of security does New Zealand have unless that is done?

Hon JIM SUTTON: That issue is serious and is under further review as we speak. However, I point out to the member that the expert advice the Government has consistently received is that the course of action taken in 1999, which we believed was the right way to go, was not the most effective way to achieve effective biosecurity in relation to vehicles. In any event, vehicles will always have to be reinspected when they arrive in New Zealand, as they can be contaminated after being cleared at the port of despatch.

Hon David Carter: I seek leave to table the farmers’ weekly referred to by Mr Sutton, showing that the headlines on the front page state: “Budget Bad for Agriculture”.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is.

Working for Families Package—Family Assistance

10. JOHN KEY (National—Helensville) to the Minister of Finance: Can he confirm that 14,900 fewer families are expected to receive family assistance when the “Working for Families” package is fully implemented in 2007 than received family assistance in 1999?

Hon Dr MICHAEL CULLEN (Minister of Finance): Yes, which makes it very hard to understand why the member keeps claiming that the Budget package will put tens of thousands more families into welfare dependency.

John Key: Can the Minister confirm that Labour’s refusal during the last 5 years to adjust tax or family assistance rates to account for inflation, means that roughly half of the extra family assistance that has been promised to the average, one-income, two-child family in 2007 is needed just to restore their real disposal income back to the 1999 level?

Hon Dr MICHAEL CULLEN: No. What I can confirm is that the main reason why there has been a decline in the number of families on family support since 1999 is partly due to inflation, but substantially due to the large increases in household income that have lifted people beyond the target level. That, of course, is primarily due both to wage growth and to the big decline in unemployment.

Jill Pettis: How much will families in receipt of the package gain on average?

Hon Dr MICHAEL CULLEN: By 2007 an estimated 61 percent of all families with dependent children will benefit by an average of $66 a week.

Heather Roy: Why does the Government not do what the majority of New Zealanders want—that is, provide a tax cut for hard-working families instead of making them welfare beneficiaries through the Government’s system of income top-ups?

Hon Dr MICHAEL CULLEN: The question that has been put to people in polls is whether they would rather have the package delivered by way of tax cuts. The answer of course from many people is yes. The problem is that it cannot be delivered via tax cuts. I remind the member that for the Waihi family on $55,000 a year it would require a flat tax rate of 9.5 percent—costing $15.9 billion. That would mean that within 2 years Government debt would double.

John Key: Does the Minister agree with the Prime Minister and fellow Cabinet Minister Steve Maharey that the very high effective marginal tax rates now facing working New Zealand families will have little impact on their workplace behavioural patterns; if so, why?

Hon Dr MICHAEL CULLEN: The Prime Minister certainly did not say that. I make it clear to the member that there is no change in the maximum effective marginal tax rates as a consequence of this package. Because there is an increase in the levels of family support, which the member’s previous question seemed to imply he wanted to see, it pushes the range further up the income scale. In life, one cannot have it all ways.

John Key: I seek leave to table the Prime Minister’s interview with Michael Laws when she said that working families who face very high effective marginal tax rates in excess of 90c in the dollar will act irrationally.

Mr SPEAKER: Leave is sought to table that interview. Is there any objection? There is.

Budget 2004—Promotion to Public

11. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Finance: Why is the Government spending $21 million to promote and sell the 2004 Budget to the public?

Hon Dr MICHAEL CULLEN (Minister of Finance): The Government is not spending $21 million to promote and sell the Budget to the public. The Government, through the Inland Revenue Department, and the Ministry of Social Development, will run publicity campaigns over the next 4 years to inform families of their new entitlements, as each component of the package comes on stream. The Government is determined to ensure that New Zealand families have the resources to give their children a decent start in life, but of course, they need to apply for that support.

Rt Hon Winston Peters: Can the Minister of Finance confirm that the Labour Party pamphlet titled The 2004 Budget: What’s in it for my Family and Me is purely aimed at promoting Labour’s fortunes at the next election and was funded out of the Labour Party’s Parliamentary Service budget; if so, why are New Zealand taxpayers being ripped off for a further $21 million for Labour’s propaganda on that issue?

Hon Dr MICHAEL CULLEN: The pamphlet was certainly paid for out of the Parliamentary Service Budget, as were the member’s own billboards, the National Party billboards, and various other billboards I have seen around from all sorts of parties over the last few years. The publicity campaign around the Budget will be to ensure that people actually know what they are entitlements are so they can apply for them. Unfortunately, I do not think any member of the House will qualify.

Hon Mark Gosche: Has the Audit Office been consulted on the publicity campaigns?

Hon Dr MICHAEL CULLEN: Yes, and it will continue to be so consulted to ensure that the campaign meets the guidelines the Auditor-General has laid down.

Sue Bradford: Will the Government consider providing more financial support to community-based advocacy groups whose main task is to help people to get their full benefit and tax entitlements, given the tens of thousands of families who are still missing out and this new $21 million evidently available for promoting the Budget measures?

Hon Dr MICHAEL CULLEN: Obviously, I considered that, and, indeed, I would see that as a much better condition for coalition terms than ensuring that we remain totally GE free.

Gerry Brownlee: If the Budget is as good and as widely popular as he claims, how could it possibly be necessary to spend four times the total amount spent by all political parties on the last election campaign, and more than New Zealand’s biggest advertising client Coca-Cola spends in a year on promoting this package, and how does he expect New Zealanders to believe that this is anything other than simply a taxpayer-funded attempt to shore up an ailing Labour Party?

Hon Dr MICHAEL CULLEN: As long as the campaign makes sure that people are aware of their entitlements it will be much better for the people, and certainly for their teeth, than the Coca-Cola campaign on most of the spending by political parties at the last election.

Rt Hon Winston Peters: Does the Minister of Finance remember, in contrast to this issue today, Helen Clark complaining bitterly in 1993 about the $2.5 million campaign to promote health reforms saying: “The use of advocacy advertising paid for with $2.52 million of taxpayers’ money is a matter of major public concern and is an orgy of advertising that has hit the public 5 months before a general election.”, or is there one standard for Labour when it is in Opposition and a different standard when it is in Government?

Hon Dr MICHAEL CULLEN: No, that was certainly a purely propaganda campaign. For example, it included—[Interruption] If the younger members who cannot remember it would care to remain silent—Amanda Millar wandering around an empty surgical ward that was built purely as the result of a National Party pump-priming exercise to support George Gair. Those health reforms did nothing for the nation’s health. This campaign is about ensuring that people apply for what they are entitled to. What really worries the Opposition is that people might realise how good the Budget is for them and actually apply and get it.

Rt Hon Winston Peters: I seek leave to table this unwarranted propaganda, and I request that the rest of the country do not send it to me in the future.

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

Working for Families Package—Promotion to Public

12. GERRY BROWNLEE (Deputy Leader—National) to the Prime Minister: Does she stand by her statement with regard to the Government’s Working for Families Budget package that “a certain amount of money has to go into promoting it”; if so, how much money does the Government plan to spend over the next 4 years promoting the package?

Rt Hon HELEN CLARK (Prime Minister): Yes, departments will be running information campaigns to inform families about their new entitlements as components of the package come on stream in the period through to April 2007. Departments have budgeted for up to $21 million for those information campaigns.

Gerry Brownlee: Does the Prime Minister still hold the view she expressed in 1993 when she expressly criticised the promotional campaign around health reforms, which cost only $2.5 million, stating then that it was a matter of major public concern; and if this $21 million of Government spending on its own programmes is not an orgy of advertising, what is it?

Rt Hon HELEN CLARK: I most certainly do. I have a very clear recollection of the Amanda Millar advertisements, which the Deputy Prime Minister has already entertained the House with some of the aspects of. Those advertisements were about promoting a disastrous Americanisation of the New Zealand health-care system when people were actually being asked to pay each time they entered a public hospital for treatment.

Deborah Coddington: Is this a campaign where the Prime Minister spends more than $160,000 out of the taxpayer-supplied leader’s fund to produce and to deliver this pamphlet to New Zealand households to actually top up the $21 million spend of taxpayers’ money supposedly to explain the Budget—a spend that, incidentally, puts the Labour Government up on AdMedia’s top 40 spending list—and will she explain to the House the difference between these two hits of taxpayer-funded propaganda?

Rt Hon HELEN CLARK: As I have explained, there is a $21 million departmental programme, and departments will advise families what their entitlements are. There is, of course, the expenditure through the Parliamentary Service Budget, just as I have seen all parties in this House advertise their policies in exactly such a way, whether through billboards, car stickers, leaflets, Pipitea Street, or whatever.

Hon Dr Michael Cullen: Did I understand the Prime Minister correctly when she said that the spending in 1993 was actually to promote changes that would make people pay to go to public hospitals?

Rt Hon HELEN CLARK: Those advertisements were about the disastrous Americanisation of the New Zealand public health system that involved the National Party asking Kiwis to pay for going to a public hospital. It is, of course, also fair to report that the ”mother of all Budgets” was promoted with only $895,000 worth of publicity because the National Government did not want to advertise the cuts in the pension, the benefits, and the State house rental rises. That is what a National Party Budget delivered.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. During the answer to the last question, a Labour member made a very, very serious comment, which is purely and clearly an insinuation about someone not paying his or her taxes, when he shouted across the House: “Pay your GST.” That Labour member knows who he is, and if he is not prepared to withdraw and apologise, he should exonerate the other 119 members of this House of such an allegation, and front up to what he said.

Mr SPEAKER: If that comment was made I require the member who made it to stand, withdraw, and apologise.

Mark Peck: I withdraw and apologise.

Gerry Brownlee: Can the Prime Minister confirm that the $21 million for the advertising campaign has been accumulated from cuts to teacher-aide hours for special education; if not, why have those hours been cut?

Rt Hon HELEN CLARK: No. The money has been accumulated by a very successful Government running a strong economy.

(UNCORRECTED TRANSCRIPT—SUBJECT TO CORRECTION AND FURTHER EDITING)


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