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Questions And Answers – Wednesday, 21 May 2008

Questions And Answers – Wednesday, 21 May 2008

1. Finance, Minister—Confidence


1. JOHN KEY (Leader of the Opposition) to the Prime Minister: Does she have confidence in the Minister of Finance; if so, why?

Rt Hon HELEN CLARK (Prime Minister) : Yes; because he is a hard-working and conscientious Minister.

John Key: Has the Prime Minister seen the migration figures released yesterday showing that 79,000 people left New Zealand permanently to live overseas in the last year, and that 44,000 of those people went to Australia; and if Michael Cullen is managing the economy so well, why are more people leaving New Zealand than at any other time since 1970?

Rt Hon HELEN CLARK: I also note that overall migration is positive in net terms, because people come to New Zealand to seek their fortune and good life, as well.

John Key: What does it say about Michael Cullen’s stewardship of the economy when, at the time he became Minister of Finance, floating interest rates were 6.7 percent, and now, after 8 years of Michael Cullen’s economic management, they are around 10.7 percent, so someone with a mortgage of $200,000 is now paying $150 a week extra in interest payments; and is she satisfied with that performance from Michael Cullen?

Rt Hon HELEN CLARK: Exacerbating interest rates is something that the Government is very mindful not to do, which is why we will not follow Mr Key in promising billions and billions of dollars in tax cuts before he has even seen the Budget fiscal update.

John Key: What does it say about the finance Minister’s performance when, under his stewardship, New Zealand has moved from being the 20th highest-taxed country in the OECD to being the 12th highest-taxed country in the OECD; and does it worry her that in terms of OECD economic rankings about the only one we are in the top half for now is for being highly taxed?

Rt Hon HELEN CLARK: That most certainly is not true. I am very proud that under the Labour Government the rate of unemployment is one of the lowest in the OECD. That matters to our people.

John Key: Does the Prime Minister remember that on the election of her Government in November 1999, Labour moved quickly to increase the top personal rate—in fact, the period from the moment the election was held to the moment the provision was in law was 125 days—and on that basis, notwithstanding that New Zealanders have had to wait 9 years for a personal tax cut, can she assure New Zealanders today that they will not have to wait any longer than 125 days to see the first of their tax cuts?

Rt Hon HELEN CLARK: When Labour was elected in 1999, it immediately legislated for its policy on taxation. At least we had one and stuck to it. On Breakfast TV this morning Mr Key would not confirm the headlines of earlier in the week that he was offering $50 a week, because Bill English has told him that the IMF report says he should not be as silly as that.

John Key: Does the Prime Minister agree with Michael Cullen when he said: “to cut taxes when the current account deficit is already above 6 percent of gross domestic product is to commit economic sabotage.”; if she does agree with Michael Cullen, is she concerned at all that the current account deficit is running at about 8 percent of GDP?

Rt Hon HELEN CLARK: I am very pleased to see that the current account deficit is coming down. I hope it continues to do so.

John Key: Well, if the Minister of Finance is doing such a stunning job and has the Prime Minister’s complete confidence, what does she say to the 1,700 people who have lost their jobs in the last 2 months?

Rt Hon HELEN CLARK: In respect of the restructuring in the meat industry, it may have escaped the Leader of the Opposition’s attention that there has been considerable conversion to dairy farming, and therefore restructuring across the pastoral industry. What I am happy to say is that under a Labour Government, with very low unemployment, we have a far better chance of seeing that our people continue to be in work.

Rt Hon Winston Peters: Has the Prime Minister considered changing her finance spokesperson once every year—so she would have had three for the last 3 years—and would that lead to economic advice stability?

Rt Hon HELEN CLARK: No macroeconomic stability can come from the gambling instincts of Mr Key being applied to the New Zealand economy.


2. Emissions Trading Scheme—Revenue Implications

[Uncorrected transcript—subject to correction and further editing.]

2. CHARLES CHAUVEL (Labour) to the Minister of Finance: What recent reports has he received on the revenue implications of the proposed emissions trading system?

Hon Dr MICHAEL CULLEN (Minister of Finance) : I have seen a range of reports, some suggesting that the scheme will be a revenue-raising machine, raising up to $80 billion. Any estimates are of course subject to assumptions, but Treasury’s latest advice to me is that on the assumption that in the second commitment period the cap will be lowered under international agreements by 5 percent from the current caps, the net revenue gain for 2013 to 2018 will be $159 million a year. If, however, the cap is lowered by 15 percent, there will be a net revenue loss of $106 million a year. In either case, these are relatively small numbers compared with total Government revenue.

Charles Chauvel: What reports has the Minister seen on support for the proposed emissions trading system?

Hon Dr MICHAEL CULLEN: I have seen many reports—in particular, a report from one member of Parliament indicating support for the scheme last year, followed by an announcement last weekend that his party will no longer support it. I am reminded, of course, that the same member previously described the Kyoto Protocol as a hoax before going on to say that he had always believed in it. It does suggest a certain inability to have a firm and fixed position on perhaps the largest challenge facing the world at the present time.

Hon Member: Who was that?

Hon Dr MICHAEL CULLEN: That, of course, was Mr John Key.

Hon Dr Nick Smith: Does the Minister agree with the statement by David Parker, the Minister responsible for Climate Change Issues: “the emissions trading scheme does not create any cost for the economy.”?

Hon Dr MICHAEL CULLEN: What Mr Parker was saying is completely correct, in that the costs are created by Kyoto. Those costs bear upon—[Interruption]The Kyoto Protocol imposes costs upon the Government.

Hon Member: That is sophistry.

Hon Dr MICHAEL CULLEN: That is not sophistry; that is a fact. The question is about how those costs are going to be shared. Are they shared entirely by the Government—that is, the taxpayers—or are they transmitted through an emissions trading scheme, which has the added advantage of sending the appropriate price signals about changing behaviour, whereas simply increasing taxes does not send that signal, at all.

Hon Dr Nick Smith: Why did the Minister responsible for Climate Change Issues say that there would be no windfall of profits to the Crown in the first commitment period, when the climate change emissions trading Cabinet paper notes “The increased revenues for government associated with increased costs of electricity could also be significant. Estimates of the windfall profits that are likely to be received by SOEs … is $70-220 million/year.”?

Hon Dr MICHAEL CULLEN: Those numbers probably reflect the impact of the marginal pricing arrangement of electricity, considering that an emissions trading scheme raises the marginal price and, therefore, there would be increased windfall to renewables generation in particular. However, the member forgets what the Minister, I think, outlined yesterday, and that is that the State-owned enterprises have built those profits into their assumptions around reinvestment back into renewable generation. Without that revenue stream the Crown will have to provide equity injections in order to enable that investment to occur.

Hon Dr Nick Smith: Why will the Government not release the advice on the flow of revenue to the Government under the emissions trading scheme, in which under the range of scenarios it shows that the best estimate is a $13 billion surplus from the sale of emission units, and a possible range of $6.6 billion to $21 billion of surplus?

Hon Dr MICHAEL CULLEN: The numbers the member refers to are projected out to 2030, on the latest advice that I have. Most of those so-called gains are back loaded—in other words, they occur during the latter part of the period. Of course, by then the economy is likely to be some $300 billion - plus a year. So a gain of perhaps $1 billion to $1.5 billion a year by that stage will be a relatively small part of the total economy, and will have been recycled, no doubt, either into expenditure to compensate for costs or into tax reductions. Treasury is quite clear that the direct gains to the Government in the initial period are very small, and even those in the second period from 2013 to 2018 are actually quite small. I am happy to table that advice today.

Jeanette Fitzsimons: Does the Minister agree that if he wishes to recycle some revenue into helping the most vulnerable consumers to meet the higher costs of energy, then the best way of doing so would be to invest in making their homes and transport choices more energy efficient so that their bills go down even if prices go up; the second-best way of doing so would be to raise incomes; and the absolutely worst way of doing so would be to give consumers a reduced electricity price, which would completely remove the whole incentive of the emissions trading scheme to get people to invest in more energy-efficient choices?

Hon Dr MICHAEL CULLEN: I think the last point is a fair one, and I believe compensation is best made not through a price mechanism but through other mechanisms. I think the member is quite right that considerable assistance can be given through retrofitting, in terms of insulation, and, obviously, assistance around public transport. But of course people who already have a well-insulated home and perhaps do not use public transport very much would still face a net increase in cost. So the Government will be giving a lot more consideration between now and the introduction of electricity into the scheme at the start of 2010 to how best to achieve compensation. Already there is commitment with New Zealand First to look into the issue of a rebate for superannuitants. But that of course is not a reduction in price—it will be a flat rebate.

Hon Tariana Turia: Tēnā koe, Madam Speaker, tēnātātou katoa. Does the Minister agree that the nature of Māori land tenure may result in disproportionate effects on tangata whenua from controls on deforestation; and what initiatives will the emissions trading scheme introduce to mitigate this effect?

Hon Dr MICHAEL CULLEN: No, I do not entirely agree with that position. There has already been significant discussion with iwi leadership groups about how best to allocate forest entitlements units in a way that is consistent with overall equity and addresses some issues, and an agreement has been arrived at in that regard. I think it is a perfectly fair outcome. At the end of the day, it is not possible to exempt a large part of the primary sector economy from the impact of the emissions trading scheme and expect to have a positive effect, because the cost of that would be transferred to all other parts of the primary sector economy.

Hon Tariana Turia: What response will he be making to the recommendations from the Māori reference group regarding compensation if the demands under the emissions trading scheme undermine the value of the Crown rental forest lands returned to Māori?

Hon Dr MICHAEL CULLEN: In terms of lands, certainly from at least 2002 onwards, being returned, obviously including central North Island lands, the impact of the emissions trading scheme or a similar scheme, whether it is carbon tax, or whatever, has already been factored into decisions that are being made around the price for that land. In effect, more land is available because the value of the land is less. It is the quantum that is the key factor in that regard. With respect to Ngāi Tahu in particular, which is the most affected in terms of negotiations in the past, discussions are continuing at the present time.

Jeanette Fitzsimons: Does he agree that the increased cost to the taxpayer of bringing in transport 2 years later is also a revenue implication of the emissions trading scheme and that this will amount to a revenue reduction to the Crown of over $900 million, at $30 a tonne?

Hon Dr MICHAEL CULLEN: There is certainly an operating balance and indeed a balance sheet effect of delaying by 2 years the emissions trading scheme with respect to liquid fossil fuels. If it is at $30 a tonne, it would be some $900 million, and sooner or later that deficit has to be made up. There is no free ride for anybody in the whole issue around climate change. Those who argue we should have a climate change policy where no changes have to be made are simply engaging in a totally illogical position.

Hon Dr Nick Smith: I seek leave to table the report of the Emissions Trading Group on the revenue flows from the auction of emission units.

 Leave granted.

Hon Dr MICHAEL CULLEN: I seek leave to table the latest advice I have from Treasury on the net revenue implications of the emissions trading scheme.

 Leave granted.

3. Budget Spending—Economic Implications

[Uncorrected transcript—subject to correction and further editing.]

3. Hon BILL ENGLISH (Deputy Leader—National) to the Minister of Finance: Does he recall advising Cabinet, with regard to Budget 2007, that failing to stick to Budget spending limits risked “an interest rate response from the Reserve Bank, the exchange rate staying higher for longer and a more pronounced economic slow-down”, and has he given similar advice this year?

Hon Dr MICHAEL CULLEN (Minister of Finance) : Yes, and tomorrow I will deal with the matters contained in this year’s Budget.

Hon Bill English: Can the Minister confirm that in Budget 2007 Labour did not stick to the spending limits, that the result was an interest rate response from the Reserve Bank and the exchange rate staying higher for longer—as have interest rates—and that we are now experiencing a more pronounced slow-down, partly because Labour would not stick to its own spending limits?

Hon Dr MICHAEL CULLEN: No, I cannot. The additional element in last year’s Budget was primarily the cut to business taxation, which the National Party opposed. That was not, of course, spending; that was revenue reduction. Of course the major impact, in terms of what happened subsequently, was that the economy continued to grow faster than forecast. In conjunction with international pressures, that led therefore to stronger inflationary pressures than had previously been forecast.

Dr Ashraf Choudhary: What reports has the Minister received on fiscal policy decisions made before consideration of inflationary forecasts?

Hon Dr MICHAEL CULLEN: I saw a reporter promising tax cuts at the average wage of $50 north, before seeing any fiscal projections. That was then revised to $45 to $50, then revised to $45 to $50 after 3 years, and then further revised to blame the journalist for misreporting all of that. This morning it became “Oh, well. Look, you know that the answer is of course, if you know—anything is affordable but you know you have to look at all the different priorities. But I believe very strongly in personal tax cuts.”, from which one could take anything.

Hon Bill English: Has the Minister seen the comment this morning by the Public Service Association that any tax cuts can “only be funded through borrowing or cutting public services.”; can he recall making that statement every Budget up until this one, and does he still stand by it?

Hon Dr MICHAEL CULLEN: As the member will see tomorrow, the Government has reduced its forward spending allowance. To have higher tax cuts than I will announce tomorrow would require a much bigger cut in the spending allowance, and I will look forward to the member explaining when, on the campaign trail, Mr Key finally says what his tax policy is.

Hon Bill English: Can the Minister recall stating many times that any reduction in the forward expenditure allowances was a cut, and how come when he does it, it is a wise decision, but if anyone else proposes it, it is a cut in social spending that will see doctors and teachers sacked?

Hon Dr MICHAEL CULLEN: What it will mean—and let us be quite clear about this—is a slower rate of improvement in social services than would otherwise occur. If anybody believes that I am going to start arguing that tax cuts have no cost, then they do not understand me. But I should be generous: I want to congratulate the member for hauling Mr Key into line over the issue of tax cuts this week.

Hon Bill English: Would the Minister agree that the public of New Zealand see his refusal to offer any personal income tax cuts for 8 years, despite record surpluses, not as sound economic management but as an arrogant assumption that Labour knows better how to spend their money, and that they see it that way so much so that political scientist Dr Jon Johansson has described him today as “Labour’s biggest liability”?

Hon Dr MICHAEL CULLEN: For the man who took National to less than 21 percent of the vote, that is a pretty rich kind of accusation or quotation. What I do know is, firstly, we have cut taxes for families in New Zealand very substantially, and, although the member may be on an income where that does not matter, if he was on an ordinary family income, then, with his number of kids, he would be grateful for Working for Families. Secondly, I know that New Zealanders want better health, better education, better superannuation, and more investment in law and order, and they want that from a Government. A National Government cut spending in all those areas when it was last in office, and that member was the Treasurer when superannuation was cut under National.

Hon Bill English: Can the Minister tell us whether that little outburst means what we think it means—that he still hates the idea that after 8 years he has finally been pushed into offering personal tax cuts to 1.8 million wage earners in New Zealand who do not have children, which would allow them to qualify for working for families; and does he regret the fact that when conditions were pretty good for tax cuts for several years, he missed the opportunity?

Hon Dr MICHAEL CULLEN: No; I took the opportunity to lower taxes for business, to lower taxes for families, to lower taxes for savers, to increase superannuation, to introduce 20 hours’ free early childhood education, to reintroduce income-related State housing rentals, and on and on, and that member voted against every one of them. Now his leader claims he was responsible for all those policies.


4. Sea Change Strategy—Coastal Shipping

[Uncorrected transcript—subject to correction and further editing.]

4. PETER BROWN (Deputy Leader—NZ First) to the Minister of Transport: What impact does she think the final Sea Change strategy announced yesterday will have on coastal shipping?

Hon ANNETTE KING (Minister of Transport) : Can I first of all thank the member and New Zealand First for their support for the Sea Change strategy. It aims to double coastal shipping’s share of total domestic freight carried by 2040. In doing so, it will reduce greenhouse gas emissions, improve safety on the roads, better link our regions to each other, and better utilise all modes of transport, for the benefit of New Zealanders.

Peter Brown: Noting that the report states in part that “Improving access to the funding is under way …”, can the Minister assure the House that access to the fund will be straightforward and will apply to more than start-up initiatives?

Hon ANNETTE KING: Yes, I can assure the member of that. The funding that has been dedicated to the shipping strategy needs to be flexible, innovative, and help coastal shipping get moving in New Zealand. That is the aim of the strategy, and that is why it has received widespread support around New Zealand.

Lesley Soper: What other reports has she seen on coastal shipping?

Hon ANNETTE KING: I have seen a report that in 1994 Maurice Williamson, the then Minister of Transport, introduced his shipping reforms, which he assured us would lead to more choice and greater competition. Thanks to National, today just eight New Zealand companies are operating just 13 ships between them, which is about half the number we had in 1994. It is time we rebuilt this important mode of transport, and we are committed to doing that.

Rt Hon Winston Peters: What reports has she received in respect of policies advocating a New Zealand transport system that is cost competitive, that preserves added value for the New Zealand economy, and that also is environmentally sensitive in respect of this country’s ecology and climate change issues, all of which were announced years ago and are now finally being supported by the Government; and which party does she think has been advocating them in this Parliament for so long now?

Hon ANNETTE KING: Can I say to the member that I have enjoyed working with New Zealand First on this strategy. I have had no support from the National Party. The Green Party has also been very supportive—[Interruption]

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. I have asked a simple question to do with a good, sound, forward vision for our environment, and all I hear is a barrage of reports in here, including from, of all people, “Bob the Quitter”. I would have thought he would keep his mouth shut by now, but, no, he is shouting out as loudly as he can, although he does not have the guts to face me in Tauranga any more.

Madam SPEAKER: It was very difficult to hear the Minister’s response. I would also remind members that when they are making their points of order they must refer to members by their correct titles.

Hon ANNETTE KING: As I was saying to the member before I was so rudely interrupted—

Gerry Brownlee: I raise a point of order, Madam Speaker. Surely Mr Peters should be asked to withdraw and apologise for that remark; otherwise, we will be referring to him as “Winston the Bitter”.

Madam SPEAKER: If Mr Clarkson wishes Mr Peters to withdraw and apologise, then, of course, the convention is that he must do so. However, I felt it was dealt with sufficiently.

Bob Clarkson: I raise a point of order, Madam Speaker. I would just like to mention that, under Speaker’s ruling 36/6, I have been misrepresented. I am not a quitter. I am holding a letter here, which Winston Peters has signed, that talks about my outstanding contribution to Tauranga, New Zealand. I would just like to bring that to members’ attention.

Madam SPEAKER: It is all very interesting, but that point applies only in debate.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. We have people in all our communities who suffer from the condition of recognition hunger. I thought I would help him, but I did not really mean it.

Madam SPEAKER: I know that it is members’ day, but perhaps we could now have the Minister’s answer—if she can remember the question.

Hon ANNETTE KING: I conclude by saying that I believe that the policy now in place is the right one for New Zealand, and that is obvious from the support we have received for it, including from New Zealand First.

Peter Brown: Is the Minister able to assure the House and, more particularly the industry that such funding will continue on a long-term basis and not be at the whim of future Governments or individual politicians?

Hon ANNETTE KING: The only thing I can assure the House and the people of New Zealand of is that the commitment given by Labour, New Zealand First, and the Greens in particular will ensure that the funding continues. We have had no such assurance from the National Party. I could not say whether it would support it if it were in Government, but its record is not good on this matter.

5. Immigration Service—Oughton Report

[Uncorrected transcript—subject to correction and further editing.]

5. Dr the Hon LOCKWOOD SMITH (National—Rodney) to the Minister of Immigration: When, if at all, did the then Minister of Immigration, the Hon David Cunliffe, brief the Prime Minister and Cabinet colleagues on the Oughton inquiry following his April and August 2007 briefings, and what did he tell them?

Hon CLAYTON COSGROVE (Minister of Immigration) : I am advised by the previous Minister of Immigration that he did not raise the matter with the Prime Minister or Cabinet because he was briefed in only very general terms by the chief executives at the relevant times, and was advised that the reports pertained to individual employment matters, which are the responsibility of the chief executive. As I have told the member on a number of occasions, neither the previous nor the current Minister received a copy of the Oughton report or the covering letter until they became publicly available; nor were we briefed on issues outside of the residency approval issues involving 8Mary Anne Thompson’s family members. The member may like to keep repeating it and repeating it, but the fact that he repeats it does not make it an accurate statement of the facts.

Dr the Hon Lockwood Smith: Does the Minister stand by the statement made on his behalf yesterday that the then Minister of Immigration was not briefed on the residency issues within the Oughton report, given that the opening sentence of the Oughton report states: “I can confirm that the residency permits granted to the particular family from Kiribati did not qualify in terms of then current policies.”?

Hon CLAYTON COSGROVE: I stand by my previous answer and yesterday’s.

Dr the Hon Lockwood Smith: Does the Minister stand by the statement made on his behalf yesterday that the then Minister of Immigration, David Cunliffe, was not briefed on the residency issues relating to the Oughton report during his April and August briefings, given that the first of the four objectives in the terms of reference for the Oughton inquiry was to “determine whether the residence decision was made within or outside Government residence policy”; if so, does he expect Parliament to believe that James Buwalda and Graham Fortune would both ignore the first term of reference, covering residency policy issues, when they briefed the then Minister, David Cunliffe?

Hon CLAYTON COSGROVE: I stand by my statements, and I reiterate to the member that the Minister was briefed in general terms by those chief executives on an employment matter.

Dr the Hon Lockwood Smith: Does the Minister expect Parliament to believe that a highly respected senior public servant of over 30 years’ experience, Graham Fortune, who is a former Secretary of Defence, would receive an inquiry report into illegal decision-making within his department that found clear evidence of Government policy outcomes being deliberately circumvented, and not brief his Minister, David Cunliffe, on the inquiry’s recommendations, one of which required ministerial action?

Hon CLAYTON COSGROVE: I stand by my previous answer.

Dr the Hon Lockwood Smith: Was that Minister aware of serious misconduct and corruption issues within his department prior to his 14 December 2007 briefing on the Oughton inquiry?

Hon CLAYTON COSGROVE: As I have told the member, I was briefed on 14 December in respect of Mary Anne Thompson and the issues surrounding that employment matter. As I have told the member, I was advised that the chief executive had contacted the State Services Commission and taken further legal advice that he could not proceed. When the Oughton report was made public, along with the letter—neither of which I had seen until they were made public—other matters were then brought into the public arena.

Rt Hon Winston Peters: Can I ask the Minister, on the issue of inquiries within the Immigration Service, whether they intend to follow the formula followed back in 1996 in the investigation by the department into Bangladeshi immigration, which, after the evidence was adduced, was covered up and hushed up, with defamation fees being paid out, because of allegations that National had made?

Hon CLAYTON COSGROVE: That is a matter from before my time as Minister of Immigration, but I can say to the member that the Auditor-General, on my recommendation and on the recommendation of the Prime Minister, has been called in. The Auditor-General has absolute, unfettered rights to pursue matters in his own time frame, and to pursue matters anywhere he sees fit, and is completely independent of Ministers, reports to Parliament, and may question Ministers and others. That process—along with the review of the Pacific branch by the chief executive of the department, along with the inquiries by the State Services Commission, and along with the police inquiry—is, I believe, the way to proceed.

Dr the Hon Lockwood Smith: How can the Minister claim that he was unaware of the extent of the problem prior to that December briefing, and therefore could not brief the Prime Minister and Cabinet on the issues, when he and his predecessor, David Cunliffe, together signed off over 40 written parliamentary questions last year that clearly listed the number of substantiated cases of misconduct, fraud, bribery, theft, corruption, and other serious offences within the Immigration Service?

Hon CLAYTON COSGROVE: I became the Minister of Immigration in, I think, the Cabinet reshuffle in October. I think that where the member is going pertains to the press statement that he put out today. He is referring, I suspect, to the Buddle Findlay report of 2007. I suspect that his next question will be the same one that he poses in the press statement, which is about our awareness of that. I am advised that that report was placed on the departmental website well before I became Minister. Indeed, it pertained to allegations levelled by one the Hon Tuariki Delamere, and I am advised that that report, which was publicly available for a long time before I became the Minister, has no connection with other allegations that became public when the Oughton report became public, and that those allegations made by Mr Delamere were proved to be incorrect.

Rt Hon Winston Peters: Could I ask the Minister again as to why he is not prepared to follow the Bangladeshi immigration investigation formula, which found that the then Government had brought into this country hundreds and hundreds of people claiming to have degrees from Dhaka University, even though those degrees had been printed using technology that, at the time of their supposed graduation, was not available anywhere in the world, and those people were then able to exit to Australia to avoid justice in this country, particularly because National had shut the inquiry down and done nothing about it, and National members who were then in Government but are now sitting in the Opposition front row called anyone who said anything about the department at that point in time “racist”?

Hon CLAYTON COSGROVE: I am reluctant to comment on matters that pre-date my time as Minister of Immigration, but I reiterate that when I was first briefed on the matters, on 14 December, my chief executive briefed me that he had already engaged the State Services Commission. Subsequently, he briefed me that he had gone to the length of seeking legal advice as to whether he could reopen matters if he was of a mind to. He was on to the matter. I suspect that my chief executive, having been in his post for just 2 weeks, I think, in advance of my being in mine, was wading through an abundance of information, and was making what judgments he could as he came to grips with that information. Subsequent to that, he engaged a review of, and inquiry into, the Pacific branch; subsequent to that, I engaged the State Services Commission; and, subsequent to that, the Audit Office has been engaged. I think that stands in stark contrast with the history of a different time that the member is alluding to.

Dr the Hon Lockwood Smith: I seek leave to table the terms of reference for the Review of Apparently Unlawful Immigration Decision—commonly known as the Oughton inquiry.

 Leave granted.

Dr the Hon Lockwood Smith: I seek leave to table the 27 answers to written questions on fraud and corruption within the Immigration New Zealand that were signed off by the previous Minister of Immigration, David Cunliffe.

Madam SPEAKER: Leave is sought to table those documents. Is there any objection? Yes, there is objection.

Dr the Hon Lockwood Smith: I seek leave to table the 16 answers to written questions on fraud and corruption within the Immigration New Zealand that were signed off by the current Minister of Immigration, Clayton Cosgrove.

Madam SPEAKER: Leave is sought to table those documents. Is there any objection? Yes, there is objection.

6. Biofuels—Price Impact

[Uncorrected transcript—subject to correction and further editing.]

6. SU’A WILLIAM SIO (Labour) to the Minister of Energy: What reports has he received on the price impact of biofuels in New Zealand?

Hon DAVID PARKER (Minister of Energy) : I have seen a report from Gull Petroleum celebrating that it has already sold enough biofuels to meet the New Zealand sales obligation if it was in place right now. As to the cost, its biofuel blend of petrol, which comes from sustainable New Zealand sources, is priced at less than the cost of the petrol sold by its competitor oil companies. I am further advised that bio-diesel blends from New Zealand tallow are expected to retail at less than 2c a litre more than traditional diesel. If traditional diesel prices increase in price, bio-diesel blends could be cheaper than traditional diesel.

Su’a William Sio: What misconceptions has the Minister seen about the cost of biofuels?

Hon DAVID PARKER: I have heard John Key say that paying an extra 7c a litre for biofuels is not the way to go, and that National will be opposing the Biofuel Bill. He is way off the mark; it is now clear that New Zealand biofuels will be both sustainable and affordable. I, along with officials and biofuel producers, can show National members that their concerns are unfounded. However they are clearly determined to oppose climate change initiatives in order to try to score political points.

Gerry Brownlee: Has the Minister seen the United Nations World Food Programme report that described biofuel as “a crime against humanity” because of its effect on world food production and prices; if so, why is he pressing ahead with the bill, which will, as he admits himself, require New Zealand to import biofuels from unsustainable sources overseas, or has he now changed his mind and is telling us that the biofuel obligation can be met from biofuel grown and produced in New Zealand?

Hon DAVID PARKER: The member continues to make the mistake that some other people in this debate do. Just because some biofuels come from unsustainable sources, that does not mean all biofuels will come from unsustainable sources.

Gerry Brownlee: I raise a point of order, Madam Speaker. That was an interesting contribution from the Minister but was hardly an answer. The simple question was: has he changed his mind about the capacity of the New Zealand industry to deliver sustainable biofuels, or is he still saying it is OK to import biofuels that are grown on land where rainforests have been cleared?

Hon Dr Michael Cullen: Part of the problem there is that what the member just said is not the question he actually asked. The Minister certainly addressed the question that was asked.

Madam SPEAKER: My recollection of the question and the answer is that the answer did address the question. That may not have been in the terms that the member expected, but the answer did actually address the substance of the question, and that is all that is required.


7. Electricity—Thermal Generation

[Uncorrected transcript—subject to correction and further editing.]

7. GERRY BROWNLEE (National—Ilam) to the Minister of Energy: How much of the electricity generated in New Zealand in the week ending 18 May 2008 was generated from thermal sources?

Hon DAVID PARKER (Minister of Energy) : Three hundred and twenty-three gigawatt hours.

Gerry Brownlee: Does the Minister accept that lake levels are now at 61 percent of average, that thermal generation is running at full capacity, and that the system has little or no room for even minor malfunction; if so, when will he order the start of the public conservation programme planned by Dr Strange and the national winter power committee?

Hon DAVID PARKER: I certainly accept that hydro storage is less than the average for this time of the year because of drought, but we are not at the stage where we propose to call for public conservation campaigns.

Dave Hereora: How much generation has to be built each year in order to reach the Labour-led Government’s target of having 90 percent renewable electricity by 2025, and how much is being built this year?

Hon DAVID PARKER: The 90 percent renewable target is achievable. It requires only 175 megawatts of new renewables to be built each year. Renewable projects now under construction this year have increased to 400 megawatts, of which 300 megawatts are scheduled for completion by the end of this year. There are also exciting developments to tap our marine energy and biomass resource. These advances occur when we have a forward-looking Government that is committed to having sustainable energy.

Gerry Brownlee: Can the Minister confirm that under his Government so far 75 percent of the new generation that has been commissioned has been thermal, and that although this year may see 300 megawatts being commissioned, his year-on-year average has been well below that; and why should we believe that he has any capacity to lead the delivery of the 90 percent renewable target?

Hon DAVID PARKER: In addition to the statistics that I have just quoted in terms of the renewables that will be built, I can show the member this graph, which shows the trend from March 2000 to November 2007 of greenhouse gas emissions from thermal electricity in New Zealand. The trend is clearly downwards. There will, of course, be a blip upwards this year, because we are having a drought.

Gerry Brownlee: Can the Minister confirm that last week less than 1 percent of New Zealand’s electricity was generated from wind and less than 8 percent from geothermal heat, which means we are very, very dependent on thermal generation at the current time to keep the lights on; if so, how soon does he predict that the renewable sector will grow enough to offset these very, very frequent one-in-60-year events?

Hon DAVID PARKER: I can confirm that in the week ended 18 May referred to in the primary question, even after a prolonged drought in New Zealand more than half of our electricity came from renewable sources.

Gerry Brownlee: Has the Minister worked out yet that in order to meet his 90 percent renewable target, geothermal generation would need to grow by over 400 percent, or energy from wind would need to grow by over 3,000 percent, or some combination of the two in the high thousand percent would be needed; if so, how soon does he think that will happen?

Hon Dr Michael Cullen: In the sixth term!

Hon DAVID PARKER: We will probably be there by then. But it is absolutely clear from the New Zealand Energy Strategy and these publicly available documents that New Zealand has an abundant source of affordable renewables. That they are affordable is absolutely proven by the current investment patterns by generators who are already investing in current technologies like wind and geothermal generation, which are economic and available in abundant quantities.

Gerry Brownlee: Has the Minister heard the criticisms offered today by the Parliamentary Commissioner for the Environment, who has said that the thermal ban is “unworkable and should not proceed.”; if so, what is his response to the Parliamentary Commissioner for the Environment?

Hon DAVID PARKER: I am sure that minor aspects of the restrictions on thermal generation will need to be addressed by the select committee—that is the normal select committee process. But I am absolutely sure that the transition towards 90 percent renewables in New Zealand is achievable, and I think history will show that achieving it is probably one of the easiest parts of the transition towards sustainable energy in New Zealand.

Gerry Brownlee: I seek leave to table documents that show the very precarious state of inflows into the hydro lakes storage system.

 Leave granted.

Gerry Brownlee: I seek leave to table a document that shows that New Zealand would have had the lights put out last week had it not been for our thermal generation capacity.

 Leave granted.

Hon DAVID PARKER: I seek leave to table this graph, which shows the decrease in emissions from thermal electricity over time.

 Leave granted.

8. Housing Affordability—Government Actions

[Uncorrected transcript—subject to correction and further editing.]

8. LYNNE PILLAY (Labour—Waitakere) to the Minister of Housing: What further steps has the Government taken to address housing affordability?

Hon MARYAN STREET (Minister of Housing) : From 1 July, under the shared equity pilot, eligible households can apply for an interest-free loan on a house of between 5 and 30 percent of its value. This is another Labour-led Government initiative that, like Welcome Home Loans and KiwiSaver, will help New Zealanders into their first homes.

Lynne Pillay: What recent reports has she seen regarding the Labour-led Government’s shared equity scheme?

Hon MARYAN STREET: I have seen various reports from real estate agents describing the scheme as “a fantastic initiative” and “very encouraging” for first-home buyers, while a spokesperson for the Salvation Army has said: “I think there is such a demand for this that it will prove a huge success.”

Sue Bradford: Does the Minister have any plans at all to increase the number of State houses available in the Gisborne area, given that there are absolutely desperate people on the waiting list who are being told that there will be no appropriate houses available in the foreseeable future?

Hon MARYAN STREET: We are constantly looking to increase the numbers of State houses, particularly those in areas where there is the greatest need.

Sue Bradford: Does the Government have any plans at all for dealing with the problem of people living in very poor accommodation that is often totally unsanitary and at a standard no one in this House could, in some cases, even imagine, and in houses that are comparable to slums in the Third World, particularly in rural and provincial New Zealand where there does not seem to be any great attempt to increase the supply of Housing New Zealand Corporation houses or third sector community-based housing?

Hon MARYAN STREET: There is an ongoing work stream in Housing New Zealand Corporation to address issues of rural housing provision. It is true that there is some sub-standard housing in rural areas, and we are working to address that.

Phil Heatley: Why should Nelson be pleased when its shared equity criteria means that its population formula will help only 19 Nelson people—that is, 19 people over 2 years—that it allows only homes under $240,000, and one cannot find one of those in Nelson, and that people still have to stump up with 90 percent of the house cost as Nelson’s limit helps with only 10 percent of the cost?

Hon MARYAN STREET: First of all, because Nelson is an expensive place to live. Again, if that member wanted to do some homework, he might look at the most recent Nelson real estate magazines and find that there is something in the order of 60 properties within the range of the shared equity pilot available in Nelson.

Phil Heatley: Why has the shared equity scheme so stunningly under-delivered, when, with 12 rehashed announcements since 2004, it was so stunningly over-promised?

Hon MARYAN STREET: The scheme has not under-delivered, because it has not started yet.

Phil Heatley: I seek leave to table Nelson’s population—[Interruption]

Madam SPEAKER: Please be seated. There is a convention that points of order come at the end of supplementary questions. However, the member did start his point of order, so we will finish it and then take the supplementary question.

Phil Heatley: I seek leave to table the population of Nelson, which has been given 19 houses over 2 years.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is.

Rt Hon Winston Peters: In the interests of parliamentary question time resembling in quality something akin to a First World democracy, would the Minister insist, when she hears that question from that Minister, on receiving some evidence of what he predicates his question on, because he has a habit of getting up and saying a whole lot of mindless things of the nature of what he just said—that is, that not one house conformed to Housing New Zealand Corporation’s criteria, even though property real estate is full of that—and then, in the next question, he repeated another falsehood, which is frankly a waste of Parliament’s time?

Madam SPEAKER: Well, this—

Rt Hon Winston Peters: That is a fair question, and the Minister should be allowed to answer it.

Madam SPEAKER: Please be seated. I rule the question out of order because it is not within ministerial responsibility; it is more of a matter of debate.

Gerry Brownlee: I raise a point of order, Madam Speaker. My point of order was going to deal with that. But while I am on my feet I would, perhaps, ask you to seek—[Interruption]

Madam SPEAKER: There will be no interruptions during points of order.

Gerry Brownlee: The member really should have gone for that—others have, at various times, I would note.

Madam SPEAKER: But not today, I have noticed. So from now on I ask members to please observe silence during points of order.

Gerry Brownlee: Madam Speaker, I wonder whether you might seek from Mr Peters clarification of the information that Phil Heatley has been made a Minister, and whether, in fact, he knows something that we do not.

Madam SPEAKER: That is not a point of order; it is a point of debate.

Phil Heatley: I seek leave to table Nelson’s average house cost of $325,000—almost $100,000 more than the Minister’s top price of $240,000.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is.

Phil Heatley: I seek leave to table the cap of 10 percent help on buying a house in Nelson.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is.


9. Emmissions Trading Scheme—Climate Change Leadership Forum Recommendations

[Uncorrected transcript—subject to correction and further editing.]

9. Hon Dr NICK SMITH (National—Nelson) to the Minister responsible for Climate Change Issues: Did the Climate Change Leadership Forum recommend deferring the introduction of liquid transport fuels into the emissions trading scheme and the postponement of the industry allocation phase-out?

Hon DAVID PARKER (Minister responsible for Climate Change Issues) : The timing of phase-out of free allocation was raised by the Climate Change Leadership Forum, as it has been by many others.

Hon Dr Nick Smith: Why did the Prime Minister, when she deferred the implementation of the emissions trading scheme, say that this was on the advice of the leadership forum, when that was not true?

Hon DAVID PARKER: Issues relating to phase-out are clearly one of the central issues to be determined, and have been under consideration by the leadership forum. But this should come as no surprise to the member, because in the explanatory note to the bill that is being considered by him and others through the Finance and Expenditure Committee, it is noted that “The engagement also included the establishment of a Climate Change Leadership Forum, … The Forum will continue until mid-2008 and its considerations will be taken into account … Issues that are likely to be discussed include … phase-out of free allocation,”. I am surprised that the member is surprised.

Hon Marian Hobbs: In addition to the select committee process, what other engagement has there been with the public on climate change policy over the last 2 years?

Hon DAVID PARKER: Last year’s consultation included over 50 public meetings attended by more than 4,000 people, and resulted in over 3,000 written submissions. Subsequently, we held other meetings throughout New Zealand. In addition, over 100 consultations between officials and individual stakeholders throughout New Zealand occurred, plus the select committee process. Consideration of a price-based measure has been happening since National, under Simon Upton, promoted an emissions trading scheme back in 1999, but still National says we need to delay.

Hon Dr Nick Smith: Is the Minister aware that the chair of the Finance and Expenditure Committee, Charles Chauvel, advised the committee that both deferrals were recommended by the Climate Change Leadership Forum, when it did not do so; and that the forum was advised of the change only after it was publicly announced?

Hon DAVID PARKER: I was present at that select committee this morning when a similar question was put to both me and Mr Chauvel. Mr Chauvel made the point that the first he learnt of the proposed Government announcements was in a telephone call from me just prior to those announcements being made. He said he thought I said that it was being done because the leadership forum had recommended it. My recollection is that I had said that it was one of the issues that had been raised by the leadership forum. But I actually do not think that anything great turns on that point, so I am not sure of the reason for the member’s interest.

Hon Dr Nick Smith: Why did the Government not consult with the Climate Change Leadership Forum on the deferral of the introduction of liquid fuels, yet publicly and privately use the forum to justify this change; and does this not show that the leadership forum is being used politically rather than as providing a serious dialogue with community leaders on trying to get New Zealand the very best emissions trading scheme?

Hon DAVID PARKER: What I am aware of is that National will try to undermine the probity and the effectiveness of the leadership forum. The forum has proven to be a very useful mechanism to engage with business, scientists, and environmental groups as we work through these complex issues.


10. Budgets, Labour Government—Douglas Initiatives

[Uncorrected transcript—subject to correction and further editing.]

10. RODNEY HIDE (Leader—ACT) to the Minister of Finance: In his last eight Budgets as Minister of Finance, which of Sir Roger Douglas’ initiatives, if any, has he reversed and which ones has he kept?

Hon Dr MICHAEL CULLEN (Minister of Finance) : I could give a long answer, but I will try to just cover the highlights. The Labour Government has continued the policies of enhancing support for families through the taxation system. It has continued to increase spending on health and education, and has continued to reject National Party fiscal profligacy. We have rejected policies of State asset sales, a flat-tax regime, and an uncritical belief in the power of the market. Finally, I have never presented proposals with major fiscal implications to Cabinet without a Treasury report, as Sir Roger did.

Rodney Hide: Why, if Sir Roger Douglas’ policies were so bad, has the Minister not reintroduced a wage and price freeze, fixed the New Zealand dollar, brought back supplementary minimum prices, abolished GST, raised income tax back to 66c in the dollar, re-established import licensing, repealed the State-Owned Enterprises Act, or abolished the Reserve Bank’s independence—or are those policies OK now, although they were not in the 1980s?

Hon Dr MICHAEL CULLEN: I think that perhaps the member was the one who fell on his head while dancing. The wage and price freeze was introduced by National, not Labour. Labour abolished the wage and price freeze, and I never supported it. Supplementary minimum prices were introduced by National and abolished by Labour, but I have noticed today that Mr English and Mr Key were arguing that we should have had increased sheep numbers in order to keep the number of meatworks open. The only way that could be done would be by subsidising farmers to have more sheep than they have at the present time. And it is not the policy of this Government to abolish GST. GST was introduced by the Labour Government, and I have supported GST since its introduction, though I had doubts about it before it was introduced.

Hon Mark Gosche: Does the Government plan to follow the advice of Sir Roger Douglas to sell off the remaining assets?

Hon Dr MICHAEL CULLEN: No. Unlike the National Party, we are very clear on that issue. We have halted the fire sale of the family silver, and indeed we have bought back some of the assets that were sold. We are certainly not planning, as Sir Roger is now proposing, to sell off the prisons, sell off the schools, and sell off the hospitals, and to follow Sir Roger’s famous motto, which I tried to coin for him: “So little time, so much to sell”.

Rt Hon Winston Peters: Does the Minister regard his major initiative—to not allow a return to the domination of politics in this country, and particularly of economic policy, by someone who ushered in a collapse in 1987 in the sharemarket that saw six of the 10 worst crashes and the four worst in the world occur in New Zealand—as some sort of record of his tutelage in running the finances of New Zealand?

Hon Dr MICHAEL CULLEN: Fairness overcomes me. I do not think it is fair to blame Sir Roger for the 1987 sharemarket crash, which was an international phenomenon. However, it is true that the level of speculation in the New Zealand economy before 1987 meant that the crash was more severe in New Zealand than in many other countries, and that the effects of it lasted longer than in most other developed countries.

Rodney Hide: Given that the Minister has stuck by the policies of the 1980s, why is he now against having a scholarship for every child, as every party bar the communists in Sweden now supports; against welfare reform like that introduced by President Clinton; against health vouchers, as introduced by the British Labour Government; against a flat-tax system like that in the ex-Soviet states; and against privatisation, which occurs everywhere except in Cuba, North Korea, Burma, and New Zealand under National or Labour?

Hon Dr MICHAEL CULLEN: Most of those policies have been very poorly described by the member, but let me just take one. He seems to believe that Sir Roger still supports a flat-tax policy. I have news for him: Sir Roger’s latest version—no doubt with yet another whiteboard covered in indecipherable numbers, as was his wont— now is to have a tax-free income of $20,000 a year and then a progressive taxation system after that. That is not a flat-tax system.

Rodney Hide: For the Minister’s benefit, I seek leave to table ACT’s policies that explain exactly how a flat tax operates.

Hon Dr MICHAEL CULLEN: I ask whether this is ACT’s policies or Sir Roger’s policies. I am well aware of the differences from the past.

Madam SPEAKER: Leave is sought to table ACT’s policies, as I heard the member.

 Leave granted.


11. Housing New Zealand Corporation—Confidence

[Uncorrected transcript—subject to correction and further editing.]

11. PHIL HEATLEY (National—Whangarei) to the Minister of Housing: Does she have confidence in Housing New Zealand Corporation; if so, why?

Hon MARYAN STREET (Minister of Housing) : Yes; because it works hard to house some of New Zealand’s most vulnerable families.

Phil Heatley: Has she seen reports of increasing numbers of struggling families on the waiting list right across New Zealand living in overcrowded and seriously unhealthy conditions; if so, what is the Housing New Zealand Corporation doing to alleviate such overcrowding?

Hon MARYAN STREET: The Housing New Zealand Corporation is working to alleviate those situations by increasing the numbers of housing stock, year on year.

Hon Steve Maharey: What is the Housing New Zealand Corporation doing to ensure that its tenants have warm, insulated houses?

Hon MARYAN STREET: The energy-efficient retrofit programme announced by the Green Party last week will be boosted by $53.4 million in Budget 2008, effectively doubling the pace of the programme, and that means that the remaining 21,000 State houses will now be insulated within 5 years. That contributes to those families’ costs.

Phil Heatley: Why are hundreds of waiting list families living in unhealthy, overcrowded conditions, when the Housing New Zealand Corporation has 1,108 State houses with 1,108 tenants living in big properties with two or more spare bedrooms?

Hon MARYAN STREET: There is a short answer to that, and it is to do with the history of the 1990s and where we would have been, had we not had the culling of the State house stock. However, the particular issue the member raises is being addressed on a regular basis, day in, day out, by Housing New Zealand Corporation.

Phil Heatley: Why, after 9 years, are vulnerable families forced to live in the overcrowded and squalid Māngere boarding facilities where “flea bites, fungal sores and ringworm etch into children’s skin”, when there are 38 State houses in Māngere and Manurewa with 38 tenants who live in big houses with two or more spare bedrooms?

Hon MARYAN STREET: I simply refer that member to my previous answer.

Jill Pettis: Has the Minister seen any reports of mass sell-offs of State houses; if so, when did that occur and who was responsible?

Hon MARYAN STREET: As I have said in this House before, it is an old song and although the National Party does not like us to sing it, it remains true. If we were 13,500 houses better off, we would not have the kind of overcrowding the member pretends to be concerned about.

Phil Heatley: How did we ever get to the point, under 9 years of a Labour Government, that on the one hand we have hundreds of struggling families on the waiting list who are living in crowded squalor, while on the other hand we have over 1,000 tenants banging around in large State houses with two or more spare bedrooms?

Hon MARYAN STREET: I do not know how many times I have to repeat the previous answer. Let me try it from a different tack. Had we had more State houses than we did at the end of the 1990s, these problems might not have arisen. Further to that, Housing New Zealand Corporation works constantly to fit appropriate houses to appropriate family sizes, and will continue to do so.

Phil Heatley: I seek leave to table reports of families living in crowded conditions while on the waiting list.

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

Phil Heatley: I seek leave to table a parliamentary question detailing the 1,108 State houses with two or more spare bedrooms.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is.

Phil Heatley: I seek leave to table figures showing 38 State houses in Māngere and Manurewa that are half empty.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is.


12. Business Reporting Standards—Government Action

[Uncorrected transcript—subject to correction and further editing.]

12. H V ROSS ROBERTSON (Labour—Manukau East) to the Minister of Commerce: What action is the Government taking to simplify reporting standards for business?

Hon LIANNE DALZIEL (Minister of Commerce) : During the Quality Regulation Review it became apparent that businesses were facing compliance costs associated with providing the same or similar information to different Government departments. The Government has decided to fund a cross-Government investigation into introducing and implementing a system of standard business reporting, and the implementation of a single business number. This means that businesses will have to submit information once only, in a standard form, which will allow the information then to be passed on to the relevant Government agencies. It will further reduce business compliance costs, which have been on a downward trend under this Labour-led Government.

H V Ross Robertson: Will the Minister tell the House whether she has been advised of the level of potential savings to New Zealand business from the reduced compliance costs that such a system would deliver?

Hon LIANNE DALZIEL: Yes. The advice I have received is that, based on comparative data from other countries that have adopted standard business reporting, the estimated benefit to New Zealand business could be, on low projections, $55 million per year, and, on high projections, $75 million per year. These savings would be a major contributor to productivity improvement across industry, and, in particular, within the small to medium sized enterprise sector.


ENDS

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