(uncorrected transcript—subject to correction and further editing)

THURSDAY, 14 OCTOBER 2010

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

Financial Position, Government—Reports

1. AMY ADAMS (National—Selwyn) to the Minister of Finance: What reports has he received on the Government’s financial position?

Hon BILL ENGLISH (Minister of Finance): Today Treasury released the Government’s financial statements for the year ended 30 June 2010. Compared with the previous year ended 30 June 2009, Government spending was about the same. Revenue was down, and both the operating deficit before gains and losses and the residual cash deficit were higher than in the previous year. Overall, the Government’s fiscal situation remains tight. It is important that we continue to take balanced and considered decisions to control future spending, get debt under control, and return the Budget to surplus.

Amy Adams: How has the Government helped the economy to make the necessary adjustments in the aftermath of the recession?

Hon BILL ENGLISH: The Government has provided significant support for New Zealanders, to protect people from the sharpest edges of the recession. For example, based on the latest forecast, the Government’s annual cash balance was $2.1 billion in surplus in 2007-08, and in 2010-11 there will be a cash deficit of $13 billion. That is a $15 billion turn-round. This amounts to a very considerable fiscal stimulus, whereby effectively the Government is borrowing money from overseas lenders and pumping it into the economy in order to proceed with infrastructure investment, to maintain core Government services, and to continue with transfers to households, such as Working for Families, interest-free student loans, and early childhood education subsidies.

Hon David Cunliffe: When the Government’s books have deteriorated from a $2 billion surplus under Labour to a $13 billion deficit under him, how can he possibly afford another $14 billion in tax cuts for people who do not need them, when New Zealanders do not have jobs?

Hon BILL ENGLISH: That is the opposite of what the Opposition usually argues, which is that the Government is not running big enough deficits, and that we should be running more jobs schemes and wasting more money on bureaucracy. The Government has taken a considered and balanced approach. We are running a $13 billion deficit this year, for the reasons that I outlined before. The tax package that we have implemented is intended to rebalance this economy so that we can have sustainable jobs, less debt, and more exports, savings, and investments.

Amy Adams: How are households responding to the Government’s programme to encourage work, savings, and productive investment?

Hon BILL ENGLISH: The early signs of rebalancing in the economy are encouraging when we look at the behaviour of households. This can be seen from official data showing movements in New Zealand families’ equity in their own homes. Between 2003 and 2008 households effectively borrowed about $7 billion against their houses, which was spent on consumption. This has been

called equity withdrawal. There has now been a marked turn-round. Instead of households borrowing against their houses to go on overseas trips or buy second cars and flat-screen TVs, they are now paying down their debt, to the tune of about $5 billion. New Zealanders are now saving $5 billion, whereas previously they had been overspending by $7 billion. That is a dramatic turn-round.

Amy Adams: What does this change in household savings behaviour mean for the nature of the current economic recovery?

Hon BILL ENGLISH: We need to keep in mind the state that the previous Government left this economy in, which was an economy dependent on excessive Government spending and excessive borrowing. The impact of the global recession, the New Zealand recession, and Government policy means that New Zealanders are being very careful with their spending, to the extent that the ratio of private consumption as a share of the economy is actually dropping. So we are going to see a recovery in which people are careful with their spending and pay down debt, and in which the growth in the economy is driven by strong export prices. That kind of recovery will give us sustainable jobs, instead of the ones that were dependent on excessive Government spending and excessive debt.

Hon David Cunliffe: Can he confirm that his supposed rebalancing is occurring on the back of high unemployment, low or no wage growth, increasing prices, and a stalling economy—all of which are making it harder for ordinary Kiwi families to make ends meet?

Hon BILL ENGLISH: I wish the member had cared about that when he was in Government, because the answer to the question is no. That member needs to remember that in the last year that he was in office—which was meant to be the best of times—real wage levels in New Zealand actually dropped, and that was before the global financial crisis. Inflation was 5.1 percent in 2008.

Hon David Cunliffe: When he told reporters this morning that the half-year Budget update in December is unlikely to contain positive growth, was that an admission, after telling New Zealanders for 2 years to tighten their belts and that they would get an aggressive recovery, that they will have to wait just a few years longer?

Hon BILL ENGLISH: As I have pointed out in the answers to earlier questions, New Zealanders have decided to tighten their belts because they know that the fairyland economy that the previous Labour Government was running simply could not last. They know that we could not keep borrowing against our houses in order to fund overseas trips, and that we could not afford to keep paying higher taxes than are necessary, to fund billions of dollars of wasteful Government spending under Labour. [Interruption]

Rahui Katene: Is the reason—

Mr SPEAKER: I apologise to the honourable member, but the previous issue is dealt with. I have called Rahui Katene, and a little courtesy would be appreciated.

Rahui Katene: Is the Government’s financial position the reason why Housing New Zealand’s Linwood branch is telling whānau in Christchurch that it has no more tarpaulins to give out?

Hon BILL ENGLISH: The member may be referring to an aspect of the earthquake recovery effort. If there are particular issues there where people’s obvious needs are not being met, then we are quite happy to follow up on that. I will be in Christchurch myself tomorrow and will be very happy to follow such matters up.

Economic Recovery—Governor of the Reserve Bank’s Statement

2. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Finance: Does he agree with Alan Bollard, who said that the economic recovery is proving “brittle, uncertain, and full of surprises”?

Hon BILL ENGLISH (Minister of Finance): Yes, generally I do. That is a description of recovery around the world, but, as I have pointed out in answers to previous questions, the reason our recovery is not taking off is that New Zealanders are saving instead of spending. In the short term that means a slightly slower recovery; in the long term it is the right kind of adjustment, and it

means that we will get sustainable jobs and sustainable growth in incomes instead of some kind of sugar shock.

Mr SPEAKER: Before I call the honourable member for her first supplementary question, I encourage members not to start interjecting before the Minister has even opened his mouth. It is a little difficult when there is such a barrage of interjections before he has even uttered a word.

Hon Annette King: Was he surprised to learn yesterday that grocery prices rose 2.6 percent, and fruit and vegetable prices rose 6.8 percent in the last year, just after he had claimed that food and vegetable prices had actually dropped by 6.5 percent in the last 2 years; and could that be why householders are not spending their money on frivolous things like flat-screen televisions?

Hon BILL ENGLISH: The member was referring to figures that we have used in the House because Labour had overlooked its own track record. In respect of vegetable prices, in the 2 years to September 2008—[Interruption] They are so much better when Phil is away and David is in charge. In the 2 years to September 2008, vegetable prices went up 21 percent. In the 2 years from 2008 to 2010 they had dropped by 6 percent.

Mr SPEAKER: I think the House has had its fun. A little decorum would be helpful.

Hon David Cunliffe: I raise a point of order, Mr Speaker. Just briefly, you have previously ruled that it is inappropriate for Ministers to spend most of their answers talking about Opposition policy, and I would argue that we have had yet another reminder that they cannot drop the habit.

Mr SPEAKER: The member has raised a valid point of order; Ministers should not spend most of their answer talking about Opposition policy, although on this occasion the Minister was talking about past record, which is a little different. I draw a distinction between referring to past record and some policies of another party that should not be.

Hon Annette King: Was it another surprise for the Minister when the president of Federated Farmers said that the Government can propose cycleways but they will not get us far, and that the situation they now face is like rearranging the deckchairs on the Titanic?

Hon BILL ENGLISH: No. I was not surprised at the president of Federated Farmers making those remarks. The Government is focusing on the competitiveness that our export sector will need, and that is why we have a comprehensive programme of regulatory reform, infrastructure investment, investing in skills, and changing the tax system, as we did on 1 October to make sure that this country can earn before it spends. Over the next 10 years that is what we will have to do. Under that member’s Government the country consumed and borrowed, and spent before it earned.

David Bennett: What was the economy like when the Government came into office in late 2008?

Hon BILL ENGLISH: Well, what a good question! In short, it was a mess. The economy went into recession at the start of 2008 when the rest of the world was still growing. In 2008 inflation was rampant at 5.1 percent, and that was without a GST increase, that was just purely the product of the efforts of the previous Labour Government. Real wages were dropping in 2008. It will take some years to undo the damage.

Hon David Cunliffe: Which of the following is true: that under the previous Labour Government the economy went through the best of times and ran a $2 billion surplus, or that under the previous Labour Government the economy was mismanaged, as he now alleges; if so, did that have anything to do with a world record low unemployment rate, cutting net debt to zero and gross debt in half, and running growth for the longest expansion since World War II?

Hon BILL ENGLISH: I do not think any of those things are actually correct. But the member needs to ask, if he did such a fantastic job, why he lost the election so badly.

Hon Annette King: Was it a surprise when he heard that the number of people receiving the unemployment benefit had increased again, and is now at 65,281, when he previously stated, just a few days before, that “there’s no doubt that unemployment has peaked,”?

Hon BILL ENGLISH: As the member knows, the figure that is used in the forecast is the household labour force survey figure, which is the same one that the previous Labour Government

always used. But I remind the member that the number of people on the unemployment benefit was higher than it currently is, in 2004, 2003, 2002, 2001, and 2000. That is, for over half of Labour’s term the number of people on the unemployment benefit was higher than it is now, and I do not remember her kicking up a fuss then.

Hon Annette King: Was he surprised to learn that, despite his belief that many supermarkets would be putting up their prices by less than the GST increase, the cost of items such as onions has risen by 81 percent, pasta has risen by 22 percent, toilet paper has risen by 41 percent, apples have risen by 5.9 percent, and potatoes have risen by 2.8 percent; and will he now apologise for not knowing the price of anything, or the value of anything, either?

Hon BILL ENGLISH: The answer to that is no. In fact, I know that it is very disappointing for the Opposition, but all the recent forecasts of inflation and the cost of living are moderating, not going up. Despite the fact that the Government has increased GST as part of a $4 billion income tax cut, we will not see high and increasing inflation.

Hon Annette King: Was he surprised to learn, in light of that answer, of the flurry of complaints to the Commerce Commission of excess pricing, regarding the increase of GST by 2.5 percent, being attributed to the increase of 2.5 percent in GST, and was he surprised to learn that Meridian Energy chose to impose 15 percent GST on people in Christchurch in September, which was the coldest month they had and which included a force 7.1 earthquake?

Hon BILL ENGLISH: In respect of the issue regarding Meridian Energy, I understand that some discussion is going on now that amounts to an argument over the interpretation of the transitional provisions. What the member can be reassured about is that the Government anticipated that the transition could be complex and made provision for businesses such as Meridian Energy to choose the lower GST option.

Dr Russel Norman: Is New Zealand’s economic recovery vulnerable to oil price shocks; if so, how?

Hon BILL ENGLISH: Yes, the New Zealand economic recovery is vulnerable to any kinds of price shocks, including oil price shocks. At the moment there is evidence of increases in commodity prices that would suggest that there could be risks in the future. That is why we have to manage the Government’s books very tightly in case things go wrong. That is why we need to get on with a programme of structural reform, investment in infrastructure and in skills, and changes in the tax system. Those are some of the things we can influence that will improve our outlook. Other things like the oil prices we cannot influence, but we could be badly affected by them.

Dr Russel Norman: In reference to the infrastructure investment, does he think that future high oil prices should be considered in the business cases for new infrastructure, such as roads of national significance?

Hon BILL ENGLISH: That factor is taken into account indirectly through traffic forecasts, and it is possible that if oil prices got very high and stayed that way, there would be less traffic. I do not think that is likely. The record in New Zealand is that with economic growth, traffic volumes tend to grow. But, fundamentally, we leave those decisions to New Zealanders to decide whether they want to face that cost and have the related benefits, or get on their bikes or take public transport.

Dr Russel Norman: Does he believe that the kinds of infrastructure investments that the Government makes have a profound effect on behaviour, by providing opportunities to use public transport or opportunities to use motorways, so given the length of time that these infrastructure investments last for, he needs to take into account the future price of oil because these infrastructure investments will last for many decades?

Hon BILL ENGLISH: The Government, in the first place, is not any better placed than anyone else to guess prices in 10 or 20 years’ time; but, secondly, we have spread our investment on infrastructure. For instance, in the Auckland area we are spending about $3.5 billion on motorways, but $1.5 billion on trains. I hope that in 20 years’ time both of those investments have proven to be

useful, and it will need a sharp increase in the patronage of people using public transport to make those investments viable. At the moment, they are pretty marginal.

Dr Russel Norman: Is the Minister aware of the comments made by the chief economist from the International Energy Agency just last year in which he said “oil … is running out far faster than previously predicted and that global production is likely to peak in about 10 years—at least a decade earlier than most governments had estimated.”, and if global oil production peaks in 10 years, does he think that will result in an increase in the price of oil?

Hon BILL ENGLISH: I think that is anticipated, to a significant extent, because we are seeing any number of energy companies looking at investing in alternative sorts of energy. We are seeing significant investment in solar energy, for instance, which is bringing the price down, and investment in electric cars on a pretty large scale. I think most people expect oil prices will be pretty high, and they are looking for alternatives. In our view that is best left to the market, which has stronger incentives to get it right than Governments trying to follow political fashions.

Dr Russel Norman: Does he believe that it is possible, if oil peaks within 10 years, for the entire New Zealand transport fleet to turn over to electric cars?

Hon BILL ENGLISH: No, I do not think it is possible that the whole fleet will, but Cabinet has made a start with Minister Nick Smith’s electric car parked at Nelson Airport. I am sure others will follow his example. These things never happen in one big swing; they will happen over time. But I do not think there is any doubt that electric cars will become more common, and that will be a good thing if the economics of it are right.

Law Commission—Referral of Projects

3. PAUL QUINN (National) to the Minister of Justice: Has he recently referred any projects to the Law Commission; if so, what?

Hon SIMON POWER (Minister of Justice): Yes; earlier today I asked the Law Commission to undertake a review regarding interaction between the Internet and the justice system. It is my view that the law must keep pace with technology, and that we must have one set of rules and ethical standards for all news media. It is my view that that may not be the case at present.

Paul Quinn: Why has the Minister referred this review to the Law Commission?

Hon SIMON POWER: I am concerned that the lack of regulation or professional or ethical standards for bloggers and online publishers has created a bit of a Wild West in cyberspace. The specific issues I am concerned about include how trials can be potentially prejudiced by information posted on websites and seen by jurors, real-time online streaming of court cases, breaches of court suppression orders, and republication of a libel.

Economic Performance—Minister’s Statement

4. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he stand by his statement: “this Government came into office with a plan to lift New Zealand’s economic performance”?

Hon BILL ENGLISH (Minister of Finance): Yes, I do. In fact, I think it was an understatement. I now say we came into office with a very sound plan to lift New Zealand’s economic performance. Everything I have read about what other Governments are doing in recent times has indicated to me that we are right to focus on longer-term structural performance in the economy, not just on the quarter-to-quarter numbers around recovery.

Hon David Cunliffe: Which of the following elements would he rank as the most important to his self-confessed “very sound plan”: high unemployment, no wage growth, increasing prices, stalling the economy, or doubling the deficit by continuing upper-income tax cuts that a primary school child could tell him that he and the country can no longer afford?

Hon BILL ENGLISH: Listening to that list sounded like a description of the last couple of years that the previous Labour Government was in power, actually, when there was zero wage growth, 5 percent inflation—

Hon David Cunliffe: I raise a point of order, Mr Speaker. It would be a refreshing change if the Minister talked about this Government rather—

Mr SPEAKER: Order.

Hon David Cunliffe: —than the previous one, as you have previously ruled.

Mr SPEAKER: The member, when making a point of order, will not make that kind of comment. The member should reflect on the question that he asked. He asked which of the following facts that he inserted in his question was—I cannot remember the last part of the question. When a member asks a question like that, the Minister is at liberty to latch on to some of those facts, and to talk about them in a manner that the member may not have expected when asking the question. Discipline when asking questions is the secret in this place, if members want there to be accountability.

Hon BILL ENGLISH: As I said, that sounds like a description of the last couple of years of the economy under the previous Labour Government, when it did stall, real wage growth was zero at the end, there was 5 percent inflation, unemployment was growing, and the 2008 Budget—Labour’s last Budget—projected a decade of deficits. I would like to say to the member that if those are his concerns he should look in the mirror, but he has never needed much encouragement to do that.

Chris Tremain: What steps has the Government taken to lift New Zealand’s economic growth?

Hon BILL ENGLISH: The most recent step has been the tax changes, which came into place on 1 October. They reduced income taxes across the board, reduced company taxes and therefore reduced the tax on work, savings, investment, and exports, and increased GST and the effective tax rate on property. However, there have been other aspects of the Government’s programme. We have a very large programme of investment in infrastructure, we are reducing the number of Public Service bureaucrats, and we are making sure that we have efficient front-line services. We have an extensive programme of changes to the excessive regulation of this economy and have invested in lifting business innovation and research.

Hon David Cunliffe: How can he maintain that he has lifted New Zealand’s economic performance, when the June GDP figures were less than one-quarter of what was expected and had declined for the third quarter in a row, and when the New Zealand Institute of Economic Research estimates that growth actually went backwards in the latest quarter?

Hon BILL ENGLISH: As I said to the member earlier, the Government is focusing on the longer-term structural strength of this economy. That is where it is focusing its policy. In the shorter term, the reason that the economy is not growing rapidly is that New Zealanders have made up their own minds to save more and spend less. They need to do that because the excesses of the economy under the previous Government simply could not last, so households have made the decisions that are slowing down the recovery of retail spending and of the housing market.

Hon Rodney Hide: To the Minister of Finance, when—

Hon Pete Hodgson: When will he catch Australia?

Hon Rodney Hide: I’m sorry?

Mr SPEAKER: The member will just ask his question.

Hon Rodney Hide: I am sorry, Mr Speaker; they are so rude.

Mr SPEAKER: Oh, no. I say to Government Ministers that I have let them get away with a bit much today. We will not have any more of that.

Hon Rodney Hide: Does the Minister agree that one of the central planks of lifting New Zealand’s economic performance is reversing the incredible flood of red tape that tangled up this country under the 9 years of the previous Labour Government, and that this Government is making good progress in establishing the proper principles of good lawmaking, to reverse the trend that it inherited?

Hon BILL ENGLISH: Yes, and I am pleased the member asked that question, because sorting out the regulatory mess that was left by the previous Government is not a glamorous job. It is a very difficult job and it requires persistence. The member, in his capacity as Minister for Regulatory Reform, has, in my view, done an excellent job. I am sure the economy will benefit from those efforts, through long-term higher growth rates.

Prisoners—Employment Training

5. Dr CAM CALDER (National) to the Minister of Corrections: What advice has she received about the level of employment training in New Zealand prisons?

Hon JUDITH COLLINS (Minister of Corrections): I am very pleased to report that a record number of prisoners are undertaking job training in literacy and numeracy education. In the 10 months ended July 2010 the number of prisoners in employment and job training increased by 9 percent to 4,791. This means that nearly 70 percent of all sentenced prisoners are now engaged in some form of prisoner employment or job training. In addition, over the past financial year the number of prisoners undertaking literacy and numeracy education has increased by 15 percent. These results are very impressive, and I commend the department for its commitment towards rehabilitating offenders.

Dr Cam Calder: Why is the Government placing such a high priority on increasing prisoner employment training?

Hon JUDITH COLLINS: This Government is determined to reduce reoffending and to help offenders turn their lives round. Prisoners who have work skills and good literacy and numeracy skills are more likely to gain jobs and less likely to go back to jail. International studies have shown that participation in education can reduce the risk of reoffending by 9 percent, and having a job can reduce the risk of reoffending by 6 percent. The goal of the Prisoner Skills and Employment Strategy is to have at least a thousand extra prisoners gaining skills and work experience on any given day, by the end of 2012. This Government is committed to achievement of that goal.

Rahui Katene: What progress has she been advised of about the level of Māori participation in prisoner employment, and what information, if any, is there about the longer-term outcomes associated with such participation?

Hon JUDITH COLLINS: Since the Prisoner Skills and Employment Strategy was launched, the number of Māori participating in Department of Corrections’ inmate employment has increased from 42 percent to 46 percent of all prisoners employed. Māori prisoners also make up 56 percent of prisoners in polytech-run trade and technical training courses. As I mentioned earlier, international studies have shown that prisoners with work skills and good literacy and numeracy skills are far less likely to go back to jail. This is particularly encouraging when taking into account that Māori make up half of the prisoner population.

Health Services—Minister’s Statement

6. Hon RUTH DYSON (Labour—Port Hills) to the Minister of Health: Does he still stand by his statement in relation to health funding that “the important thing is not how much extra money they’re getting—it’s what extra services you are getting as a taxpayer”?

Hon Dr JONATHAN COLEMAN (Associate Minister of Health) on behalf of the Minister

of Health: As the Minister replied to the same question yesterday—

Hon Darren Hughes: Are you running the Mana by-election?

Hon Dr JONATHAN COLEMAN: I tell you what; if you want to go on like that, we are waiting for Chris Carter to start telling the truth about you, “Dazza”. All right, so I would get—

Mr SPEAKER: I have to confess that I have no idea what all that was about—

Hon Dr JONATHAN COLEMAN: Would you like the answer, Mr Speaker?

Mr SPEAKER: —and the Minister does not need to inform me. No one needs to inform me; I would rather ignore what that was all about. I was on my feet and the Minister continued talking. He will not do that again.

Hon Dr JONATHAN COLEMAN: As the Minister replied to the same question yesterday, every district health board provides several hundred different services each year to meet the changing needs of their population. Under this Government, front-line services overall are increasing, as has the budget by $512 million this year. So he stands by that statement.

Hon Ruth Dyson: Are the people of Masterton who are being turned away by their general practitioner super-clinic getting extra services; if so, where from?

Hon Dr JONATHAN COLEMAN: I cannot confirm the situation there, because the question put on notice made no reference to what was happening in Masterton. But I can say that the people of Wairarapa have had an increase in funding from their district health board of $7 million over the past 2 years. So there is more money going into health in the Wairarapa.

Nicky Wagner: What reports has he received recently on increased front-line services, particularly for older New Zealanders?

Hon Dr JONATHAN COLEMAN: Yesterday the Minister advised the House that the number of patients receiving elective and acute surgery in the past financial year increased by over 12,000 over the previous year—more than four times the average achieved by the previous Government. Today I can inform the House that in relation to surgical services for older New Zealanders, in the last 2 years the number of patients aged over 65 benefiting from urgent and elective surgery increased by over 10,500 people. A record total of 93,000 patients aged 65-plus benefited from acute or elective surgery in the last year. That is yet another example of increased front-line services under this Government.

Hon Ruth Dyson: Why has the Capital and Coast District Health Board lost its chief executive, who left saying he would not oversee further cuts, and has now lost both the acting chief executive and the chair, Sir John Anderson; is it because the Wellington region is awash with extra services or awash with health cuts?

Hon Dr JONATHAN COLEMAN: I can tell the member that we were left with a massive problem by the previous Government—[Interruption]

Mr SPEAKER: I am on my feet. An answer should not start with a lecture about the previous Government. An answer should start with an attempt to say something about the question. I invite the Hon Ruth Dyson to repeat her question.

Hon Ruth Dyson: Why has the Capital and Coast District Health Board lost its chief executive, who left saying he would not oversee further cuts, and has now lost both the acting chief executive and the chair, Sir John Anderson; is it because the Wellington region is awash with extra services or awash with health cuts?

Hon Dr JONATHAN COLEMAN: I can tell the member again that the Capital and Coast District Health Board received an extra $24 million last year from this Government, and an extra $33 million from this Government the year before. Under the previous Government, the chief executive was dealing with turning round a district health board in terminal decline and a massive deficit that it had been lumbered with by that Government.

Hon Ruth Dyson: Is the clinical director who described Christchurch Hospital’s intensive care unit as “in crisis” and said that the staff at the intensive care unit were turning a blind eye to care levels lower than expected a result of the extra services he was describing?

Hon Dr JONATHAN COLEMAN: I have read the same newspaper as that member has, and I have the same article. The fact is that the Canterbury District Health Board has had an extra $102 million under this Government and it is spending that money as it sees fit. The Minister of Health has been in touch with the Canterbury District Health Board and, as is quoted in the article the member refers to, there will be a Christchurch Hospital redevelopment, which will include a significant increase in beds. I can tell members that its intensive care unit has had an increase of 16

extra nurses, seven extra junior doctors, and an extra one and a half full-time equivalent specialist this year.

Hon Ruth Dyson: What extra services will the residents of IDEA Services and Timata Hou Services be getting as a result of the Minister’s refusal to comply with the Employment Court determinations of last year and this year in relation to payment of the minimum wage for night-time support staff?

Hon Dr JONATHAN COLEMAN: As the Minister of Health said yesterday in the House, that is a matter for the provider.

Hon Heather Roy: What does it cost to select and run the 20 district health boards, and what extra health services do they provide?

Hon Dr JONATHAN COLEMAN: As members know, $1.2 billion is going into health. It is a very expensive—

Hon Darren Hughes: $1.2 billion?

Hon Dr JONATHAN COLEMAN: Sorry, $1.2 billion of extra funding has gone into health this year—$512 million over 4 years, and $174 million for mental health. So there is more money, more operations, and more cancer treatment, and more people are being seen in accident and emergency. The public are getting better service under this Government than they got under the last one.

Hon Heather Roy: I raise a point of order, Mr Speaker. I think the Minister misunderstood my question. I was not asking about Vote Health; I was asking about the cost to select and run the district health boards themselves. I am happy to repeat my question.

Mr SPEAKER: I invite the member to repeat her question, because it may well be it was not heard correctly.

Hon Heather Roy: What does it cost to select and run the district health boards, and what extra health services do they provide?

Hon Dr JONATHAN COLEMAN: If the member likes to submit that as a written question, I would be happy to supply the figure.

Accident Compensation—Measures to Address Financial Losses

7. MELISSA LEE (National) to the Minister for ACC: What progress has the Government made in addressing the financial losses reported by ACC of $2.4 billion in 2007-08 and $4.8 billion in 2008-09?

Hon Dr NICK SMITH (Minister for ACC): ACC’s annual report, tabled today, shows a marked turn-round, enabling the corporation to reduce its net liability by $2.5 billion, or to $10.3 billion. This has been possible because ACC has contained the scheme’s liabilities and grown its assets. This has been achieved by the corporation delivering a marked improvement in rehabilitation rates. I note that just a 1 percent improvement in rehabilitation rates reduces those liabilities by $500 million. The strong recovery in investment markets has also contributed to this positive result.

Melissa Lee: What impact will this much improved result by the corporation have on levies?

Hon Dr NICK SMITH: The result is good news. It means we have the scheme back on a sustainable financial footing, enabling New Zealanders to have confidence that they will receive proper care and rehabilitation if they have an accident, and that this can be provided without significant levy increases. I stress that ACC still has a long way to go to get out of the woods and reduce its net debt. The advice I have from the board is that, noting that a big part of the turn-round is a bounce back in investments, ACC is still not fully on track to meet the balance of assets and liabilities that is required by the Accident Compensation Act by 2019. This Government is very aware of the cost pressures on families, and that is why we have said to ACC that our preference is to contain costs rather than look at significant levy increases.

Hon David Parker: Is the reason the Minister has publicly said he is not recommending levy increases for ACC next year that he exaggerated ACC’s problems last year and so put up levies by more than was necessary?

Hon Dr NICK SMITH: The accounts of ACC signed by Maryan Street in 2008 showed a $2.4 billion loss. In the following year, under exactly the same reporting standards, ACC made a loss of $4.8 billion. No amount of exaggeration is required; those figures speak for themselves on the level of mess that that member left ACC in.

Melissa Lee: What is the significance of the turn-round in ACC’s financial position to the Government’s broader finances?

Hon Dr NICK SMITH: ACC as a Crown entity directly impacts on the Government’s accounts. The $4.8 billion loss in the 2008-09 year made up 46 percent, or nearly half, of the Government’s $10.4 billion deficit. That this has been reversed significantly strengthens the Government accounts and helps New Zealand’s broader economic credibility in the difficult current global financial environment.

Hon David Parker: Which is more cynical: his exaggeration to justify last year’s levy increases, or his statement that he will have no increases next year because those increases would come into effect in an election year?

Hon Dr NICK SMITH: Members opposite were able to achieve significant increases in 2008 when Maryan Street put up the levies, and, at the same time, massive deficits—the worst of all worlds. What we have from this Government is a very responsible approach to ACC. I simply draw members’ attention to the audited accounts from Ernst and Young that show the scale of the deficits left by his Government.

Melissa Lee: Is the Minister aware that ACC’s administration costs went up $28 million in 2006, $44 million in 2007, and another $42 million in 2008, which is a total increase of 30 percent in just 3 years; if so, what steps have been taken to get these administration costs under control?

Hon Dr NICK SMITH: Yes, I can confirm that the administration costs of ACC blew out by 30 percent in the last 3 years of the previous Government, albeit that bureaucratic cost increase was typical across a whole number of Government agencies. Not only have we stopped this ongoing growth but ACC in the last year has trimmed $38 million off its administrative costs: $5 million has been trimmed off marketing and promotions—a bit excessive for a monopoly provider—$6 million has been saved in information technology; there has been a 52 percent reduction in travel costs—

Hon Maryan Street: How do people know what their entitlements are if they are not allowed to be marketed?

Hon Dr NICK SMITH: —I remind the member that there has been a 52 percent reduction in domestic travel costs; and a 45 percent reduction in international travel costs.

Hon Maryan Street: You’re just cutting entitlements.

Hon Dr NICK SMITH: I ask the member who is piping up why she does not apologise for the ACC mess she left the people of New Zealand.

Overseas Investment Rules—Purchases of Farmland Declined

8. Hon DAVID PARKER (Labour) to the Minister for Land Information: How many farm sales to overseas purchasers has he declined since he became the Minister?

Hon MAURICE WILLIAMSON (Minister for Land Information): When approving or declining applications from foreigners to buy land, I am bound by the criteria set out in the Overseas Investment Act 2005, which was passed by the previous Labour Government. Since that Act came into effect very few applications at all have been declined. For example, in 2005 just one was declined; in 2006, just one—

Hon David Parker: I raise a point of order, Mr Speaker. I asked this question yesterday. I put it down on notice today. It is a very direct question. We have had a lot of avoiding answering the question; I just want to be given the numbers.

Hon Rodney Hide: Speaking to the point of order—

Mr SPEAKER: No, I do not need further assistance on this one. The question is a very simple, straightforward question, and material that is not necessary to answer a question should not be included in an answer. Mind you, if I applied that to the questions that are asked, there would not be many questions accepted to be asked, either. But this was a commendably straightforward question. I want to hear the answer.

Hon MAURICE WILLIAMSON: Well, to summarise—

Mr SPEAKER: No, the member will just give the answer.

Hon MAURICE WILLIAMSON: Historically it has been one; this year it has been none.

Hon David Parker: Given that the Minister has now confirmed that he has not declined even one farm sale under his existing discretions since he has been the Minister, why could he not say yesterday whether he would decline more sales under his new, so-called tighter rules?

Hon MAURICE WILLIAMSON: Because the member’s question yesterday required me to be a clairvoyant and work out how many applications we would get, which class they would be in, and whether they would conform to the criteria that are in the Act that Labour put in place. I cannot tell, nor can that member know, what will unfold next year or in the following year.

Hon David Parker: When the Minister did not answer my question yesterday about how many farm sales he had declined, was that because he was embarrassed that it showed the Government saying one thing but doing another?

Hon MAURICE WILLIAMSON: No.

Hon David Parker: Given that the Minister said yesterday he would not confirm that he would decline more than zero farm purchases, does this not make a mockery of John Key’s hand-wringing about the sale of farmland to overseas interests?

Hon MAURICE WILLIAMSON: No.

Hon David Parker: Will the Minister decline applications by overseas purchasers interested in buying farms and defaults under mortgages owed to South Canterbury Finance, given that those mortgages are effectively owned by the Crown?

Hon MAURICE WILLIAMSON: What I will do as the Minister is comply with the law that was passed by the previous Labour Government. I will take advice from the Overseas Investment Office as to whether applications meet the criteria in the Act. If they do, they will get through, and if they do not, they will not.

Hon David Parker: I seek leave to table the overseas investment rules, which show it is the Minister’s discretion, not his department’s.

Mr SPEAKER: The Overseas Investment Act can be—[Interruption] Both the Hon Ruth Dyson and the Hon Maurice Williamson will not interject while a point of order is being heard. I think those rules are available to all members; we do not need to table them.

Civil Defence—Get Ready Week

9. SHANE ARDERN (National—Taranaki - King Country) to the Minister of Civil

Defence: What is happening over Get Ready Week?

Hon JOHN CARTER (Minister of Civil Defence): Mr Speaker—

Hon Annette King: Here’s the other class clown.

Hon JOHN CARTER: It is a real shame, given the events in Christchurch, that the Opposition cannot take this seriously.

Mr SPEAKER: Members interject, and if they interject they are likely to get a response. But let us get on with answering the question.

Hon JOHN CARTER: Mr Speaker—

Chris Hipkins: They’re not very happy over there today.

Mr SPEAKER: Did Chris Hipkins not hear what I just said? I ask for a bit of common sense and common courtesy, please.

Hon JOHN CARTER: For Get Ready Week, there will be an increase in radio and television advertisements—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. If you are to name members on this side of the House for interjecting before the Minister has started, can you do that for the member who interjected just then from the Government side?

Mr SPEAKER: Forgive me; I can only react to what I see and hear. Sadly for the member’s colleague, I happened to see him making a very loud interjection. I did not hear or see the other one. I apologise for that, but I cannot deal with what I do not see or hear.

Hon JOHN CARTER: For Get Ready Week, there will be an increase in radio and television advertisements, the film Eruption made its debut last night, and, very important, civil defence volunteers will be recognised. For example, long-service civilian civil defence volunteers in Manukau will be presented with awards. It is important that New Zealanders are ready to get through.

Shane Ardern: What message would he like new mayors to know, so they can help their communities to get ready?

Hon JOHN CARTER: Firstly, I would like to congratulate all the mayors who have been elected or re-elected, especially Bob Parker, who has done so much and a wonderful job in assisting earthquake recovery, along with Kelvin Coe. I also thank Ron Keating for his work. Emergencies will happen in our communities, and we will all want our communities to be as resilient as they can be. We do that through the four Rs of reduction, readiness, response, and recovery. The importance of focusing on this cannot be underestimated. Mayors have a critical role to play in providing leadership and advocacy for their community in difficult times, working with their local civil defence management controller, and preparing their communities for emergencies that we know will happen sooner or later.

Early Childhood Education Centres—Effect of Funding Reductions

10. SUE MORONEY (Labour) to the Minister of Education: Does she stand by her statement about possible responses by early childhood education providers to the funding shortfall they are facing that “I would be really disappointed if the first thing they did was increase their charges”?

Hon ANNE TOLLEY (Minister of Education): Yes, I would be disappointed.

Sue Moroney: Has she seen, then, the results of a New Zealand Educational Institute survey showing that 92.3 percent of Christchurch early childhood education services will be forced to pass on cost increases to parents as a result of her funding cuts, and will she ask the Minister for Canterbury Earthquake Recovery to delay the impact of funding cuts on Christchurch providers so that families do not face further cost increases?

Hon ANNE TOLLEY: Yes, I have seen that survey and, yes, I am disappointed that that is the reaction from those centres, because they had 8 months in which to make changes to the way in which they deliver their services. They have a number of ways they can address those changes to their funding. The early childhood services in Christchurch have had tremendous support from the Ministry of Education to help them through the earthquake and the recovery period. In fact, I was visiting one yesterday, which was so grateful for all the work that the Ministry of Education has done on its behalf.

Louise Upston: How is the Government supporting early childhood centres to manage the change to early childhood education funding bands?

Hon ANNE TOLLEY: Budget 2010 provided an additional $46 million over the next 4 years for a 2.4 percent increase to early childhood education funding rates. Centres have also been given 8 months to adjust their business model to fit within those new funding rates.

Sue Moroney: When Prime Minister John Key said on 31 May “I am not at all convinced that you will see large cost increases passed on to families.”, had the Minister advised him that she had

already received advice from officials in February that the Government’s decision to cut subsidies would mean that fees would rise by $40 to $80 per week?

Hon ANNE TOLLEY: There was a lot in that question. First of all, the Prime Minister does read his Cabinet papers, and I believe that the member was quoting from a Cabinet paper that was released under the Official Information Act so, yes, he was aware of the advice. We were all aware of the advice, but at the end of the day, as I have said in this House many times, these are individual businesses. They can make the decisions according to their own business. They have been given 8 months’ notice, and they have a range of options available to them in order to meet the changed funding rates. However, this Government was forced to take this sort of action because of the irresponsible actions of the previous Labour Government, which saw the costs of early childhood education treble in 5 years whilst participation rose by less than 1 percent.

Sue Moroney: Does she agree with TV3’s John Campbell that the Government broke its election promise to keep existing subsidies in place for 20 free hours of early childhood education, because the Government will cut the top two subsidy rates for 20 hours of early childhood education in February?

Hon ANNE TOLLEY: No, and I did not agree with John Campbell when he put that to me. In fact, he had a pretty selective sort of quote. But I have already said in this House that we have maintained the subsidies and the special rates that 20 hours of early childhood education delivered. We have kept our promise.

Oil Prices—Government Support for Inquiry

11. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Transport: Will he support an inquiry into the impacts of oil price shocks on the economy, including the transport sector; if not, why not?

Hon SIMON POWER (Minister of Justice) on behalf of the Minister of Transport: No, because Government policy already recognises the potential for alternative transportation. The Government will also continue to invest in all modes of transport, including public transport.

Dr Russel Norman: Was the risk of an oil price shock considered in the development of the business case for the Pūhoi to Wellsford four-laning motorway project?

Hon SIMON POWER: I am sorry but I do not have that level of specific information in front of me. But I am sure that if the member puts down a written question to the Minister of Transport, the Minister will be happy to answer it.

Dr Russel Norman: I seek leave to table the business case for the Pūhoi to Wellsford fourlaning project, which shows that the oil price shock was not considered by the Government in the business case.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Employment Relations Amendment Bill (No 2)—Statement Made on Behalf of Minister

12. DARIEN FENTON (Labour) to the Minister of Labour: Does she stand by the statement made on her behalf on 22 September 2010 in relation to the Employment Relations Amendment Bill (No 2): “the Government made sure there were adequate protections in the bill in a number of areas in terms of the trial period”?

Hon KATE WILKINSON (Minister of Labour): Yes.

Darien Fenton: Is the requirement for the 90-day trial period to be voluntary, as she claims, one of the so-called protections that she was referring to; if so, will she rule out making the 90-day trial period a default provision for all employers?

Hon KATE WILKINSON: Yes, and no.

Darien Fenton: What are the requirements for good-faith negotiations in relation to reaching agreement for a 90-day trial period, and what protections are there in the bill for a prospective employee if genuine good-faith negotiations do not occur?

Hon KATE WILKINSON: There are several protections in the legislation, and I refer the member to section 4A, section 134, and section 103(1)(b), (c), (d), (e), (f), and (g).

Darien Fenton: Goodness! It is good to know the Minister can count. What protections— [Interruption]

Mr SPEAKER: I want to hear the question.

Darien Fenton: What protections or remedies are available to an employee—

Mr SPEAKER: I apologise to the member. Members, the noise level is unreasonable. I want to hear what is possibly the last supplementary question today.

Darien Fenton: What projections or remedies are available to an employee who is dismissed under the 90-day scheme and given no reason, given that section 113(1) of the Employment Relations Act states that “If an employee who has been dismissed wishes to challenge that dismissal or any aspect of it, for any reason, in any court, that challenge may be brought only in the Authority under this Part as a personal grievance.”, yet section 67(1)(b) states that a person dismissed under the 90-day scheme may not bring a personal grievance or legal proceedings in respect of the dismissal?

Hon KATE WILKINSON: There are many other grounds upon which a personal grievance may be pursued. The member, as I explained, can find them in the Employment Relations Act, in section 103(1)(b) through to (g), as well as breach of good faith conditions, which are in section 4A, and breach of employment grievance conditions, which are in section 134. If the member would like line-by-line advice or a lecture on how to read a statute, we are happy to oblige.

ENDS

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