(uncorrected transcript—subject to correction and further editing)

WEDNESDAY, 5 OCTOBER 2011

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

Economy—Progress

1. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Finance: What progress has the Government made in building a more competitive economy and getting on top of New Zealand’s longstanding reliance on foreign debt?

Hon BILL ENGLISH (Minister of Finance): Substantial progress. Having inherited an economy in recession, we now have moderate growth. Having inherited forecasts of permanent deficits and ever-increasing Government debt, we now have a path back to surplus and to debt repayment. Having inherited current account deficits at record levels of 8 percent of GDP, these have now halved. Having inherited first mortgage rates of over 10 percent, these are now 6 percent. We inherited a situation where households were spending $1.10 for every dollar that they earned, and in the next few months we will finally have positive savings in households for the first time in a decade.

Peseta Sam Lotu-Iiga: How have these improvements been reflected in New Zealand’s net international investment position?

Hon BILL ENGLISH: Our net international investment position is an important measure—in fact, probably the most important measure—of our liabilities to the rest of the world. We inherited net international liabilities of 85 percent of GDP, with forecasts of their increasing to 100 percent. In fact, today net international liabilities have reduced to 70 percent of GDP. This is a significant improvement, but we remain a highly indebted country and we must continue to make further improvements. It is now obvious that global markets have no appetite for debt, and irresponsible policies involving more borrowing would make our foreign debt position much worse.

Peseta Sam Lotu-Iiga: Why is it important to build a competitive economy based on savings and productive investment rather than on Government borrowing and spending, which got out of control between 1999 and 2008?

Hon Trevor Mallard: I raise a point of order, Mr Speaker. That question was clearly out of order. It contained an unauthenticated alleged fact, which is clearly wrong given the fact that Government debt went—

Mr SPEAKER: The member was doing perfectly fine until the last point, when he got into debating the matter. What I am going to do is ask Peseta Sam Lotu-Iiga to repeat his question without the opinion in it. The Hon Trevor Mallard is correct. It is not consistent with the Standing Orders and it is inappropriate in a question to the member’s own Minister.

Peseta Sam Lotu-Iiga: Why is it important to build a competitive economy based on savings and productive investment rather than on Government borrowing and spending, which was out of order in the last 10 years?

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Although Government debt has got out of order in the last 3 years—

Mr SPEAKER: The member is now debating the issue. I ask the member to repeat his question without the opinion at the end of it. The question is perfectly understandable without the bit at the end that is causing the problem. If the member doubts whether he is entitled to insert opinions into the question, he should check Standing Order 371.

Peseta Sam Lotu-Iiga: Why is it important to build a competitive economy based on savings and productive investments?

Hon BILL ENGLISH: Because jobs and incomes that were based on excessive household borrowing and on excessive Government spending up to 2008 were not sustainable. If we want sustainable new jobs and higher incomes, we need to earn a living by selling more to the rest of the world. That is why the Government has changed the taxation system to encourage saving and discourage consumption and property speculation. That is why we have plans in place to stop Government borrowing rising and to start paying off debt and get the Government’s books back into surplus over the next 3 years. And in the face of a global recession and a substantial earthquake in Canterbury, that is not a bad achievement.

Hon David Cunliffe: If the Government is really in a stronger position now than it was 3 years ago, as he claims, why does the Minister think it took until now for the ratings agencies to downgrade its credit rating; could it be due to 3 years of zero growth, burgeoning debt, and muddling through?

Hon BILL ENGLISH: No; the reasons for the change in credit ratings, I think, have been discussed at some length. One reason is the product of a long-term build-up in New Zealand’s foreign liabilities, particularly under the stewardship of that Government in the mid-2000s. A second reason is the growing sense of crisis in world financial markets, which means that every country with high levels of debt is under the microscope.

Peseta Sam Lotu-Iiga: How do the current Government’s policies contrast with New Zealand’s economic direction before the 2008 election?

Hon BILL ENGLISH: The Government’s policies are focused on having a competitive economy that can deliver sustainable new jobs and sustainable higher incomes. We have had to change the direction from growth that was based on excessive borrowing and high levels of Government spending to growth that is based on earning a living from the rest of the world. And we are trying to do that at a time when the global economy is subject to a lot of uncertainty and volatility. I have to say New Zealanders have shown a great deal of resilience, and I for one am proud of what they have achieved in the face of adversity.

Finance, Minister—Confidence

2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he have confidence in his Minister of Finance?

Rt Hon JOHN KEY (Prime Minister): Yes, because despite the global financial crisis, the Canterbury earthquakes, and a very uncertain global environment, he has done a great job to put New Zealand on a credible path back to surplus.

Hon Phil Goff: Why did the Minister of Finance do nothing when he became aware that hundreds of millions of dollars in taxpayers’ money was being put at risk as depositors poured money into risky finance companies as a result of the Government guarantee?

Rt Hon JOHN KEY: The Minister of Finance took the steps he could, but, of course, he was dealing with a deposit guarantee scheme that was put in place in a rush. You see, it had to be a rush, because Labour had to have it ready for Helen Clark’s campaign launch in 2008.

Hon Phil Goff: Is the Auditor-General wrong in her conclusion that there was a capacity through 2009 to manage that risk, but the Government did not take it, causing the loss of hundreds of millions of dollars to the New Zealand taxpayer?

Rt Hon JOHN KEY: She did not say that.

Hon Phil Goff: Is the Prime Minister telling the House that the Auditor-General did not conclude that there was the capacity to manage the risk, but the Government, through its agency Treasury, did not take it?

Rt Hon JOHN KEY: No; she did not say that.

Hon Phil Goff: I seek the leave of the House to table the report of the Auditor-General, where it is very clear that she did say that.

Mr SPEAKER: All members have that report, and it has already been tabled in the House, so we are not going to do that.

Hon Phil Goff: I raise a point of order, Mr Speaker. We have another dilemma. The Auditor- General said that in the report, and was reported to say that—

Mr SPEAKER: The member will resume his seat. There are plenty of opportunities for these matters to be examined by anyone whom the member wants to examine them, but the rules of this House during question time do not permit them to be examined in that way. The Prime Minister is on record with what he has just said, and the report is available to all members. People are perfectly at liberty to see it, but we do not waste the time of the House by tabling it when it is already tabled.

Hon Phil Goff: Then the Prime Minister should have read it.

Mr SPEAKER: Order!

Hon Phil Goff: Was the Minister aware of the growing liability to the taxpayer, with some finance companies increasing their deposits by 1,000 percent because they had the Government guarantee to fall back on, and why did the Minister not do anything about that?

Rt Hon JOHN KEY: Of course the Minister was aware of that, and that is because of the way the scheme was set up by Labour to rush it through for Helen Clark’s campaign launch—

Hon Trevor Mallard: No, no, it was renewed twice.

Rt Hon JOHN KEY: Actually, I remember it really well, I say to Trevor, because John Armstrong wrote it up in the paper the day after the launch; he said how clever Labour was. Well, Labour was not as clever as that, because it cost the country a lot of money.

Hon Phil Goff: Mr Speaker—

Chris Tremain: I raise a point of order, Mr Speaker. I rise to point out that the comments that former Minister Mallard is repeatedly shouting across the House are unacceptable, and I take issue with those comments.

Mr SPEAKER: What he actually interjected, if I heard rightly, was: “What a lie.” I am not sure that is—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I did call the Prime Minister a liar, and I withdraw and apologise.

Mr SPEAKER: I thank the member.

Hon Phil Goff: If the situation was as the Prime Minister pretended it was, why did he renew the scheme twice without changing it?

Rt Hon JOHN KEY: We did change it. If the member wants to give me some time I will pop upstairs and I will get the John Armstrong column about how clever Labour was, how it rushed it in, and how smart it was to outfox National at the campaign launch.

Hon Phil Goff: Mr Speaker—[Interruption]

Mr SPEAKER: The interjections started on my left here when I called the members’ leader to ask a further supplementary question. I ask both front benches, please, to be reasonable.

Hon Phil Goff: Why did the Prime Minister claim that the net cost to the taxpayer of the collapse of South Canterbury Finance would be $400 million, when the man sitting alongside him, the finance Minister, admitted that it would be three times that amount—$1.2 billion?

Rt Hon JOHN KEY: Because at the time I made that statement, that was the belief of the officials who were advising me. Obviously, at the time they were very concerned that Labour had

ensured that the New Zealand taxpayer had to wear such a large amount, but, as they said, it was all rushed and put together for the campaign launch of Helen Clark in the election of 2008.

Hon Phil Goff: If Treasury and the Minister of Finance had acted as the Auditor-General suggested, how many hundreds of millions of dollars of taxpayers’ money could have been saved?

Rt Hon JOHN KEY: None, and the reason for that, of course, is that the scheme was put together—[Interruption] You see, Labour members want to reinvent history, but unfortunately we all have the newspapers; we have the story from John Armstrong about how clever Labour was. I remember picking up the paper on the Monday morning and reading all about how clever Labour was and how it had outfoxed National—

Hon Trevor Mallard: No one believes you.

Rt Hon JOHN KEY: Well, I did not believe John Armstrong at the time, but that is where it was: in the paper. You see, Trevor, you rushed it through for political reasons—

Mr SPEAKER: Order!

Rt Hon JOHN KEY: —and taxpayers—

Mr SPEAKER: I just ask both front benches to take a deep breath—[Interruption] Both members will cease immediately. The right honourable Prime Minister should be reminded that the Speaker did not rush anything through prior to the last election, because “you” is referring to the Speaker. Both members will please take a deep breath and bring the House back to order.

Hon David Parker: Does the Prime Minister understand that if a bank offers a guarantee, the bank does not have to agree to an extension of lending and liability under that guarantee, and if the Prime Minister understands that, why can he not explain to the House why the Crown could not stop additional lending via the likes of South Canterbury Finance in order to stop that liability growing—where the Crown was the guarantor rather than the bank being a guarantor?

Rt Hon JOHN KEY: Because that was the way the scheme was set up by Labour as it rushed it through for its campaign launch in 2008, because the photo op counted for more than the quality of the scheme.

Hon David Parker: I raise a point of order, Mr Speaker—[Interruption]

Mr SPEAKER: The member will resume his seat for the moment, please. I say to the National backbench on this occasion that they heard a point of order called and made a lot of noise. Those members know that is out of order, and I ask them, please, to treat the House with a little more respect. I understand that the Hon David Parker has a point of order.

Hon David Parker: My point of order is that the Prime Minister did not address the germane point of that question, which was whether the liability could have been stopped growing—

Mr SPEAKER: The Leader of the House knows he should not interject on a point of order. The Prime Minister answered the question. The Prime Minister answered, rightly or wrongly—and it is not my job to judge—that the design of the scheme prevented the Government from taking that course of action.

Hon Trevor Mallard: Did the design of the scheme provide two opportunities for the Government to cease the liability to South Canterbury Finance; if so, why did the Government not take them?

Rt Hon JOHN KEY: Yes, at the time it would have been always possible to toss someone out of the scheme. That would have caused their immediate collapse.

Hon Phil Goff: Mr Speaker—[Interruption]

Mr SPEAKER: I want to hear this question.

Hon Phil Goff: Given the Prime Minister’s earlier denial that the Auditor-General had said there was capacity to manage the risk, does he deny this direct quote from the Auditor-General: “There was still some capacity to manage risk within the Government’s policy settings.”, and that the Minister’s Government failed to use that capacity?

Rt Hon JOHN KEY: I agree with that, but that is not what the member said. The member should check his Hansard. He got up and said that our actions had cost hundreds of millions of dollars. That is not right.

Hon David Cunliffe: Mr Speaker—

Mr SPEAKER: I say to members that I cannot hear. Is this a supplementary question?

Hon David Cunliffe: Yes. Does the Prime Minister disagree that the following is a quote from the Auditor-General’s report; if he does disagree, can he tell us why he thinks this might be the fault of the previous Government? “The Crisis Response Plan that was written in late 2009 should have been prepared before the first financial institution failed.”—in March 2009. “We found no evidence of formal senior management oversight, such as a steering committee, to provide senior strategic direction and to ensure that all aspects of the Scheme’s implementation were addressed.”—all matters that were the responsibility of his Government. There was no reaction, no crisis response plan over a year after the scheme was introduced. Can he deny those quotes?

Rt Hon JOHN KEY: No. Of the four, he is doing the best so far, but I am sure there will be more to come by the time we are finished. It is a little bit like the All Black backline: there are lots of options with Dan Carter, but there is no Dan Carter right at the moment. The answer is that the Minister of Finance has said that Treasury could have done one or two things better. But let us go back and understand the history. Labour put together the scheme. Labour rushed the scheme for Helen Clark’s speech. Labour told the finance companies they were in, and that if they were not in, they would have gone broke if Labour had not done all that. We had to go and backfill everything. The facts of life are that for political reasons Labour decided to do something at its campaign launch, and it is now trying to rewrite history. I suggest that when Trevor Mallard leaves the House he gets a copy of the New Zealand Herald, reads what John Armstrong said, and realises that he is starring front and centre stage.

Mine Safety—Prime Minister’s Statements

3. KEVIN HAGUE (Green) to the Prime Minister: Does he stand by all his statements regarding the safety of mining in New Zealand; and does he consider his Government has met all its responsibilities arising out of the Pike River mine disaster?

Rt Hon JOHN KEY (Prime Minister): Yes; and yes.

Kevin Hague: When was he first shown, or told about, the image recorded in the Pike River mine on 24 November, before the second explosion, showing an opened box likely to have been one containing self-rescuers?

Rt Hon JOHN KEY: To the best of my knowledge, I have not seen that picture.

Kevin Hague: Is the Prime Minister seriously suggesting that the police and mine management did not take him into their confidence over what the image from the mine had shown?

Rt Hon JOHN KEY: I do not have a memory of the image that the member is talking about. If he wants to show it to me afterwards, I am more than happy to look at it. Between the time of the first explosion and the second explosion I did not see any footage other than the video footage that was immediately released, once I saw it, into the public domain—and that was the image of the first explosion taking place.

Kevin Hague: How does he reconcile his statements to the miners’ families that no expense would be spared to recover the miners’ remains with evidence given to the royal commission by Doug White, the mine manager at Pike River, that he was told not to use the word “recovery” because it was politically unacceptable, and that insufficient money was allocated for the recovery operation?

Rt Hon JOHN KEY: I have no knowledge of what Doug White has been told, but he certainly has not been told anything by the Government or by our office. The member knows, I think, full well what the situation is at Pike River, which is that there is a plan to get in. It is a ventilated plan—going up the main shaft. The families have met both Steve Ellis, as the mine’s statutory

manager, and the liquidators about this issue. The Government is working alongside them as best we can. I have always said that when there is a credible plan and a safe plan, we will go into the mine. It is not a decision for politicians to make; it is a decision for those who have expertise in this area. With all due respect, 29 people lost their lives. If that member thinks that I will have political interference and send another 10 blokes down there to get killed, he is dreaming.

Kevin Hague: Does he stand by his statement on 22 November 2010 that “I have no reason to believe that New Zealand’s safety standards are any less than Australia’s, and in fact our safety record for the most part has been very good.”?

Rt Hon JOHN KEY: Yes, at the time that I made the statement.

Kevin Hague: If the emergency exit from a mine can meet minimum standards yet be impossible to use, does it not suggest to the Prime Minister, as it does to every other New Zealander, that those standards are in urgent need of reform?

Rt Hon JOHN KEY: That is ultimately a matter for the royal commission. The Government has given the royal commission very wide terms of reference. It is allowing the royal commission to come up with a set of recommendations, which I have no doubt it will do, at which point the Government of the day, whoever that Government is, will clearly go and consider that. The second thing I can say is that the Government has acted in other areas where it can, while it waits for the findings of the royal commission. They include an immediate safety audit of all operating underground mines in New Zealand, and the establishment of the High Hazards Unit. As the member will be aware, the Minister of Labour has been working on those issues. She has been more than happy to keep the member up to date with those issues. I understand that the member met with the Minister this morning and will continue to be updated if he so desires.

Kevin Hague: Given that the establishment of the High Hazards Unit has demonstrated that it is possible, in fact, to take steps to increase safety prior to the royal commission reporting, how can it be morally acceptable to allow men to go underground every day until such time as the royal commission reports, when we know that the regulations governing their activity underground are inadequate for the task?

Rt Hon JOHN KEY: Following the Pike River mine disaster there was an immediate safety audit of all operating underground mines in New Zealand. That audit, as I understand it, did not come back with any significant recommendations, which is why we continue to have people working underground. That does not mean that no recommendations will come out of the royal commission. I think the second thing that it is important to note—and it has been one of the challenges of Pike River—is that every single mine is bespoke and unique. What took place in terms of design of Pike River can be completely different from the design that took place at Spring Creek Mine, or at any other underground mine in New Zealand. One should not necessarily draw the dots between one mine and another.

Hon Damien O’Connor: Has the Prime Minister spoken to the receiver personally; if so, did he place a time line on the sale of the Pike River assets, including the mine licence?

Rt Hon JOHN KEY: I have spoken to John Fisk personally. I did that the day that I met with the families, as I promised them that I would. I also wrote to the families’ representative, Bernie Monk, with a list of all of the commitments and my understanding of what took place at that meeting. I did not discuss the sale at any great length with John Fisk. What I was ringing him about was the frustration and concerns that the families expressed to me about Steve Ellis, the statutory mine manager. I wanted to make sure that the receiver was well and truly aware of that. What did happen was that John Fisk gave me an absolute commitment that they would continue to work on the credible plan; he detailed the plan at some length to me. As I said to Mr Hague, my understanding is that they have met with the families, including Harry Bell, and my understanding is that that was deemed to be a constructive meeting with the families.

Hon Damien O’Connor: Did the Prime Minister give an assurance to families that the sale of Pike River assets would not be delayed by an Overseas Investment Office process, such as that

which continues on the sale of the Crafar farms, and which would further prolong the delays and anguish for the families of the 29 men whose remains lie within the mine?

Rt Hon JOHN KEY: I would need to go and check the file note, but I do not have any recollection of that. What I did say to the families was the same thing that I said publicly, which is that the expectation of the Acting Minister of Energy and Resources is that in the case of a sale, what is required is a transfer of the mining licence, and in order for that transfer of the mining licence to take place, the purchasers would have to demonstrate that they had a credible plan to undertake body recovery. We would expect that to happen as soon as they practically could, but, as we all know, this is very, very complex.

Economy—Current Account Balance and Net International Investment Forecasts

4. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: What are the latest official forecasts for the current account balance and the net international investment position over the next four years under his Government’s policies?

Hon BILL ENGLISH (Minister of Finance): Probably the most recent official forecasts are the Reserve Bank forecasts released 3 weeks ago, which show the current account deficit for the next 3 years as minus 3.5, minus 4.6, and minus 5.4 percent, which means an average of about minus 4 percent over the next 3 years—less than half of the average between 2005 and 2008. The bank did not include projections of the net international investment position. However, that has improved from being 85 percent of GDP down to 70 percent of GDP over the past 2 years. It may move out again beyond 70 percent but—

Hon David Cunliffe: I raise a point of order, Mr Speaker. This was a perfectly straight question on notice. It was clearly about the next 4 years. The data is set out in the Government’s Budget and economic and financial update, and the Minister is not addressing the forward-looking question.

Mr SPEAKER: I think the question needs to be reasonable. I must confess that I was reasonably impressed with the amount of detail the Minister was seeking to give, because the question asked for the latest official forecasts, and the Minister of Finance was referring to some forecasts more recent—in other words, later—than the Budget data. That is what the question asked for, and it seems to me that the Minister of Finance was being pretty good in answering the question. I think he probably got out all the information he had. Does the member have a supplementary question?

Hon David Cunliffe: Is the Minister aware that the Government’s net international debt has tripled under his watch, and how does he relate that to Standard and Poor’s statement that it downgraded the Government’s rating because of “the sovereign’s weakening fiscal and external positions”?

Hon BILL ENGLISH: Well, the Government inherited forecasts, given to this Government in, I think, November or December 2008, that showed ever-rising deficits—or 10 years of deficits, a decade of deficits, as outlined in the 2008 pre-election update—and ever-rising debt, reaching 60 percent of GDP and continuing to rise. We have managed, in the circumstances of a global recession and the earthquakes, to put a plan in place whereby Government debt peaks at 30 percent of GDP, because we will reach a surplus by 2014-15. So the outlook now is significantly better than it was back in 2008, despite the challenges we have had to face in between.

Hon David Cunliffe: In respect of his continual excuse about the international situation, is the Minister aware that less than one quarter of OECD countries have been downgraded in the last 3 years, and that New Zealand is in the company now of Greece, Ireland, Iceland, Spain, Portugal, Italy, and the United States; if so, why does he continue to try to blame international factors for the double downgrade?

Hon BILL ENGLISH: I know there is a funny little world where Labour should still be in Government and the global recession never happened. But in the real world it is different— fortunately.

Hon David Cunliffe: I raise a point of order, Mr Speaker. Given that the question asked how he could reconcile his continual—

Mr SPEAKER: I want to spare the House the pain. I ask the member to please sit down. The member should go back and read his supplementary question. If he wants to get simple, straight answers, he should not ask questions like that. Does the member have a further supplementary question?

Hon David Cunliffe: When a—

Mr SPEAKER: Is this a point of order?

Hon David Cunliffe: Absolutely.

Mr SPEAKER: I have ruled on the matter and there is nothing further. The member asked, if I remember correctly, as to when the Minister will stop using excuses about something. That is an opinion being inserted into a question. It is actually out of order, but I will not interfere all the time. If the member wants to raise points of order about Minister’s answers, for goodness’ sake, ask straight questions. Then I will help him. When he asks that sort of question, which is actually technically out of order, I cannot help him.

Hon David Cunliffe: When the straight—

Mr SPEAKER: Is this a new point of order?

Hon David Cunliffe: Yes.

Mr SPEAKER: Because I have dealt with that one. OK

Hon David Cunliffe: I seek your guidance. When a straight question is asked about forwardlooking data, the Minister quotes history and makes excuses.

Mr SPEAKER: The member will resume his seat straight away. If he is referring back to the primary question, I pointed out to him that he asked, in his question, for the latest official forecasts. The Reserve Bank is an official forecasting body of the Crown. So the Minister referred to the latest forecasts he had. I thought that was a pretty decent answer to the question. But the member has to curb his desire to inject political comment into his questions if I am to help him with answers.

Amy Adams: What have been the trends in New Zealand’s net international investment position over the past decade?

Hon BILL ENGLISH: Between 2001 and 2008 in dollar terms our net international investment position almost doubled—that is, the amount of dollars we owed to the rest of the world went from $79 billion to $153 billion, and relative to GDP from 64 percent to 85 percent. Since then we have been working hard on the difficult job, I must say, of trying to influence household behaviour and change Government behaviour so that those international liabilities will stop rising. Actually, we have had some success. Having peaked at 85 percent of GDP, our net international liabilities have now reduced to 70 percent of GDP, which is still far too high by global standards, but at least we are headed in the right direction.

Child Witnesses—Alternative Court Processes

5. JONATHAN YOUNG (National—New Plymouth) to the Minister of Justice: What progress has been made on the development of alternative court processes for child witnesses?

Hon SIMON POWER (Minister of Justice): Very good progress. Earlier today I announced a comprehensive package of inquisitorial-style reforms to dramatically improve the way the criminal justice system treats child witnesses. The reforms, which include the introduction of specialist intermediaries and pre-recording a child’s entire evidence before trial, will ensure children are not rebrutalised by their contact with the system, and that their cases are dealt with in a much timelier fashion.

Jonathan Young: What are the main features of the reform package?

Hon SIMON POWER: The key reforms include two new legislative presumptions for child witnesses under the age of 12. These two presumptions will make it standard for children of that age to give their evidential interview by video, recorded on closed circuit television, and to have their

entire evidence, including cross-examination and re-examination evidence, pre-recorded at a hearing significantly earlier than the trial. There is an expectation that the judiciary will take a much more active role in determining whether questions put to child witnesses are appropriate, and ensuring all child witnesses have an automatic right to a support person when giving evidence in court.

State-owned Assets, Sales—Foreign Ownership of Shares

6. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Minister of Finance: In light of his statement yesterday regarding foreign-owned assets that “we need to generate the kind of savings that will help New Zealand buy back those assets”, is it still the Government’s policy to sell State assets if it is re-elected, given that up to 30 percent of the shares he proposes selling could go to overseas buyers?

Hon BILL ENGLISH (Minister of Finance): If re-elected in November, it is the Government’s policy to extend the mixed ownership model, retaining 51 percent Government ownership in four energy State-owned assets, and to allow investors to buy a greater share of Air New Zealand. Under the model, the same one Labour put in place for Air New Zealand, the Government will retain 51 percent, and Kiwi investors will be in the front of the queue. It is a win-win; New Zealand savers get to invest in good Kiwi companies—and we expect 85 to 90 percent local ownership—and the Government gets to free up $5 billion to $7 billion over 3 years to pay for new assets like schools, hospitals, and ultra-fast broadband, without having to borrow more debt from overseas lenders and pay them interest, rather than pay dividends to Kiwis.

Hon Clayton Cosgrove: Has the Government formulated any policy to ensure that shares sold under his privatisation plan are not purchased by foreign buyers, either at the initial float or subsequently; if not, when will he be releasing such a policy?

Hon BILL ENGLISH: The policy is pretty clear: Kiwis will be at the front of the queue. We would expect 85 to 90 percent local ownership, and we are pleased to see that on the New Zealand Exchange, local ownership has tended to increase in recent years, and we would expect that under the mixed-ownership model State-owned assets would benefit from that trend.

Hon Clayton Cosgrove: Given that by his own estimate, confirmed today, up to 15 percent of the companies he proposes selling would be bought by foreign investors, would the subsequent loss in dividends to those foreign investors worsen or improve New Zealand’s current account deficit and overseas debt?

Hon BILL ENGLISH: No, and that party will have to explain how it will pay for schools, prisons, and hospitals without borrowing an extra $5 billion or $6 billion from foreign lenders.

Michael Woodhouse: By how much are Government assets projected to grow over the next 4 years?

Hon BILL ENGLISH: In a well-run and moderately growing economy, we expect that Government assets will grow by about $34 billion over the next 4 years. That is, the total value of Government assets will rise to $258 billion. However, rather than borrow all of the extra $34 billion, the Government will recycle the proceeds of the part-sale of some of its current assets, so we can put that money into high-priority, future investments, like schools, hospitals, and broadband. Parties that campaign not to sell the assets will have to borrow an extra $6 billion or $7 billion from foreign lenders and pay interest to foreign banks rather than dividends to Kiwi savers.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I just want to reflect on the answer to my question, and I ask for your ruling—

Hon Dr Nick Smith: What’s your point of order?

Hon Clayton Cosgrove: Well, if you shut up I will raise it.

Mr SPEAKER: I think I can deal with this. The problem the member got into when raising his point of order was that he wanted to reflect on a supplementary question from a whole question ago. Points of order are not about reflecting on matters, they are meant to be to do with the procedure of

the House; they are meant to be expressed tersely. As for reflecting on an answer, if the member had a problem with the answer, he should have raised it straight after the question. It is most unusual to go back to a supplementary question. I do not want to deny the member the chance to be heard, especially since there was an unfortunate interjection during a point of order on the other side of the House, so I will hear him, but it had better be a real point of order.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. In answer to my question, which was whether the subsequent loss of dividends to those foreign investors would worsen or improve New Zealand’s current account deficit or overseas debt, the answer the Minister gave was “No”. He then proceeded to attack the Opposition. No to what? How can the Minister address a question with an answer that is “No”?

Mr SPEAKER: If the member wanted to make sure there was an answer that could not be misinterpreted in any way, there should have been only one part to the supplementary question.

Hon Clayton Cosgrove: There was one part.

Mr SPEAKER: If there was only one part to the supplementary question, then “No” therefore applied to it and was a perfectly reasonable answer.

Hon Clayton Cosgrove: In light of Standard and Poor’s comments that “Downward pressure on New Zealand’s ratings could re-emerge if New Zealand’s external position continued to deteriorate”, why will he not reverse his asset sales policy, given that it will inevitably worsen our external position when dividends begin to flow offshore?

Hon BILL ENGLISH: From the point of view of the rating agencies, the alternative is significantly worse—that is, having to go to international financial markets and borrow an extra $7 billion, paying interest to foreigners, rather than the partial sale of 49 percent of current Stateowned enterprises, which will mean the Government will get the money off Kiwis and be able to pay them dividends.

Credit Rating Downgrade—2025 Taskforce Report Recommendations

7. Hon JOHN BOSCAWEN (Leader—ACT) to the Minister of Finance: Does he think that implementing the 2025 Taskforce’s recommendations in November 2009 would have avoided New Zealand’s double credit downgrade; if not, why not?

Hon BILL ENGLISH (Minister of Finance): No; because the reasons for the change in ratings are, first, the long-term accumulation of external liabilities, particularly the fast build-up under the previous Government; and, second, the very depressing mood—if not semi-crisis mood—that is currently enveloping world financial markets. Fulfilling the recommendations of the 2025 Taskforce report would not have made any difference to either of those factors.

Hon John Boscawen: In light of Fitch Ratings’ statement that one of the reasons for the downgrade was that public finances have “deteriorated in the past 3 years”, does he accept that his failure to come anywhere near meeting the task force’s goal of reducing spending to 29 percent of GDP is, in part, responsible for the downgrade?

Hon BILL ENGLISH: We believe that the Government has made balanced and considered decisions about how to handle a pretty severe recession. There are some, such as the authors of the 2025 Taskforce report, who felt that we should have slashed Government expenditure in the face of that recession, which would, of course, have stalled the economy, cost lots of jobs, and hurt our country’s most vulnerable people. There are others on the left who advocated very high levels of stimulus, which would have been irresponsible. The Government has charted a balanced and considered course between those alternatives.

Hon John Boscawen: If the Government had had the courage to scrap interest-free student loans, overhaul Working for Families, scrap doctor and pharmacy subsidies for high-income earners, and radically reform the Resource Management Act, as recommended by both the 2025 Taskforce and ACT on many occasions, would the credit downgrade have been more or less likely to occur?

Hon BILL ENGLISH: It is not a matter of courage; it is a matter of judgment, and the Government stands by the judgments it made. I think most New Zealanders would stand by those judgments. It is not at all obvious that taking the measures the report advocates would have avoided the downgrade. For instance, if we had followed that path, we may well have stalled economic growth, and we could have ended up with our external liabilities as a higher proportion of GDP than they are. On that basis, the ratings agencies may have been more likely to downgrade us.

Hon John Boscawen: Does the double downgrade and the deteriorating state of New Zealand’s public finances not confirm what the 2025 Taskforce and ACT have been saying all along: if the Government is serious about turning round the economy, its better judgment would have been to stop tinkering and start being bold?

Hon BILL ENGLISH: The Government has taken a number of bold measures, including a very substantial tax switch back in 2010, and in the last Budget it set out a very tight path to surplus— one of the faster fiscal adjustments among developed economies. In fact, our public finances have stopped deteriorating. The peak of that deterioration was the last financial year. In the current financial year we would expect the deficit to almost halve, then halve again in the subsequent financial year, and by 2014-15 reach surplus.

Health Services, Wellington—Home Support

8. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Health: Has he been advised of a reduction in funding for home-based health support services in the Wellington region?

Hon PETER DUNNE (Associate Minister of Health) on behalf of the Minister of Health: I have been advised by Capital and Coast District Health Board, as part of ensuring it gets the best home-based health services for its investments, that after a competitive tender process it is changing providers. I have also been advised that the chief executive has said: “There will be no reduction in services people currently receive. All clients will continue to be regularly assessed and their health needs met,”. I understand from the board that the purpose of the change is to seek some savings in management and administration costs by reducing duplication of activities while maintaining services to clients.

Grant Robertson: How does he reconcile that answer with a reduction since 2010 of $4 million, or 30 percent of the budget for home-based services?

Hon PETER DUNNE: I was replying on behalf of the Minister of Health. The member will appreciate that as a Wellington member of Parliament I have also been briefed by Healthcare New Zealand and will be meeting shortly with the board. I am aware that there is some debate about the figures that have been applied, but I do note that funding to the district health board has increased significantly, some $86 million over the last 3 years, during the term of this Government.

Hon Steve Chadwick: Does he agree with Ken Douglas, the former deputy chair of Capital and Coast District Health Board, that quite simply the budget being proposed for this service and the expected service volumes do not match and that this will have the inevitable result of significantly reducing the quality and quantity of care available for elderly people or forcing the contracted organisation to subsidise the care itself; if not, what assurances can the Minister give to patients in the Capital and Coast District Health Board region that they will receive the same level of services based on a comprehensive health-needs assessment?

Hon PETER DUNNE: I note that Healthcare New Zealand, the unsuccessful tenderer, has just filed papers in the Wellington High Court seeking interim orders prohibiting the district health board from proceeding at this point. It would therefore be inappropriate for me to provide ministerial comment on the matters the member has raised. As I indicated in response to Mr Robertson, in a non-ministerial capacity I have met with Mr Douglas and I am very aware of his views.

Hon Steve Chadwick: Can the Minister confirm that as part of the re-tendering of home-based services Capital and Coast District Health Board has reduced client volumes from 3,482 to 2,500, which is a reduction of almost 1,000 people receiving the services?

Hon PETER DUNNE: I am not in a position to confirm that information.

Kris Faafoi: What message does the Minister have for Christine Miller, Shirley Stanway, and Barbara Bruce—[Interruption]

Mr SPEAKER: Order!

Kris Faafoi: We know about wanting to sound like Paul Quinn.

Mr SPEAKER: The House will settle down. The member should just ask his question. I ask the members on the front bench to please cease the cross-interjection because I could not hear the member at all.

Kris Faafoi: What message does the Minister have for Christine Miller, Shirley Stanway, and Barbara Bruce, who all work as home-support workers and who contacted my office worried about their jobs and the fact that there will now be no help for over 400 elderly people who are unable to shower or go to the toilet without assistance?

Hon PETER DUNNE: I have actually had the same contact as the local member of Parliament. I have met at least one of the people concerned, and I have discussed the situation with them. As I say, given that the matter is subject to court action at the present time, it is inappropriate for me to comment on a matter that might influence the court in its determination.

Prisoners, Employment Training—Prisoner Skills and Employment Strategy

9. TIM MACINDOE (National—Hamilton West) to the Minister of Corrections: Has she received any progress reports on the implementation of the Government’s Prisoner Skills and Employment Strategy?

Hon JUDITH COLLINS (Minister of Corrections): The goal of the Prisoner Skills and Employment Strategy launched by this Government in 2009 was to increase the number of prisoners engaged in work training and skills development by 1,000 over 3 years. We have achieved this goal a full year ahead of schedule. After 2 years of this strategy 1,028 additional prisoners are engaged in skill gaining and employment. This achievement means that there are now record numbers of prisoners engaged in employment and education. We have also seen much better Māori participation rates across the board, with more Māori prisoners undertaking employment and educational activities and achieving New Zealand Qualifications Authority credits. Hundreds more prisoners are receiving literacy and numeracy training as part of other employment and training activities. There has been a 46 percent increase in credits achieved under the New Zealand Qualifications Authority framework and a 44 percent increase in the number of national certificates achieved—extremely good results.

Tim Macindoe: Has the Minister been advised of the results of any research on the impact that employment training in prisons has on the rate of recidivism?

Hon JUDITH COLLINS: Yes. Recent research carried out by the Department of Corrections shows that prisoner employment is resulting in reduced rates of reoffending. The research found that the rate of reconviction within 12 months of a prisoner’s release reduced by 8 percent for those who took part in inmate employment and by 16.7 percent for those who participated in the Release to Work programme. Over the next year the Department of Corrections will double the number of prisoners participating in the Release to Work programme and deliver a range of trade training opportunities to prepare prisoners for the rebuilding of Christchurch. It will also work closely with other agencies and employers to find stable employment for prisoners on their release.

GDP Per Capita—Gap Between Australia and New Zealand

10. STUART NASH (Labour) to the Minister of Finance: By how many percent has the GDP per capita gap between Australia and New Zealand widened since his Government took office?

Hon BILL ENGLISH (Minister of Finance): In September 2008 Australian GDP per capita was 37 percent higher than in New Zealand. In June 2011 the gap was still 37 percent, so it has not widened. In fact, if we adjust the figures to reflect changes in purchasing power parity, as the OECD does, we see there has been a narrowing of the gap over that time, from 40 percent to 36 percent. Thank goodness this Government is starting to turn things round after 9 years of economic mismanagement under Labour.

Stuart Nash: Is he aware that the $37 billion he has borrowed in less than 3 years is the fastest run-up in Government debt, in percentage terms, since the New Zealand Wars, and that the financing cost of the mountain of debt he has built up is now $10 million a day, with no growth to show for it?

Mr SPEAKER: In so far as the primary question was about GDP per capita, I guess if the Minister has the information he may answer that question.

Hon BILL ENGLISH: I am aware that it is one of the more rapid debt build-ups and I am very pleased we did not take any of the advice of Labour to borrow a whole lot more money. Labour members need to understand that policy that is going to continue to increase—

Mr SPEAKER: A point of order has been called.

Stuart Nash: I raise a point of order, Mr Speaker. The Minister was talking about Labour policy—

Mr SPEAKER: There will be silence. The dilemma I have is that the primary question asked “By how many percent has the GDP per capita gap between Australia and New Zealand widened since his Government took office?”. The Minister gave some comprehensive information in answering that question. The supplementary question the member then asked was about borrowing or debt levels, which is significantly away from the primary question. In allowing the Minister of Finance to answer it, it is very difficult for me then to pull him back to a supplementary question that, really, was well away from the primary question. Just because a question is asked about an economic issue does not mean any economic issue is available for supplementary questions. The supplementary questions should relate to GDP issues and the relationship between Australia and New Zealand. That is why I am loath to pull up the Minister of Finance because his answer might not have been quite what the member wanted. I can be much more stringent on answers when questions are more disciplined.

Hon Annette King: But his first one was.

Mr SPEAKER: There has been an interjection while the Speaker has been on his feet that the first question was, and I will deal with it. The answer to the question was actually a very comprehensive answer. I heard all of the interjections come in when the Minister introduced the issue of purchasing power parity, but he was perfectly entitled to do that, because that is the way that the OECD looks at GDP per capita relationships. So there was nothing wrong with the answer. The Minister gave two sets of information. It was very comprehensive.

Hon David Cunliffe: I raise a point of order, Mr Speaker. You have previously ruled it out of order for Ministers opposite to discuss Labour policy, or attribute matters to Labour in answer to questions about the Government’s performance, or, in particular, forward-looking questions where data is available that could answer them. There have been several occasions today where straight, factual primary questions have been asked, and the response from Ministers has been to talk about Labour policy, which leaves us in a dilemma. Firstly—

Mr SPEAKER: I have heard sufficient from the member. It does not need me to explain to the member why he has to think more clearly about the questions being asked. The member is the finance spokesperson for the Opposition. If he asks questions to do with debt, there is no way I can stop a Minister. Debt does not just happen overnight. There is invariably—and I should not be giving a lecture to the finance spokesperson—a history associated with it. I cannot stop a Minister from reporting on that history. But I promise the member that when he asks a straight question that is clearly related to the primary question, I will try to pin Ministers down for him. I regret if I have

given the member the impression that I am not doing that, because I feel it is my responsibility to do that. I apologise if he feels that I have not done that, but I do ask that he just think about the questions. Where questions related to debt, it is very difficult to stop a Minister going back over the years where debt accumulates.

Stuart Nash: Has he considered resigning due to his failure to keep his promise to close the gap with Australia, his failure to keep his Budget promises on growth, or for being the first finance Minister in 13 years to lead New Zealand—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I was not going to interrupt, but the suggestion from the Prime Minister that “you don’t need to resign” I think was a bit outrageous on the second to last day. He has been here for a while and I think he—

Mr SPEAKER: I accept that at the moment the Standing Orders do not prevent members from raising points of order about the use of the word “you”, but we are heading to a situation where that should be a matter for the Speaker to determine, so that it cannot be used to interrupt questioners. But I would just remind members that the member is right, and I would remind the Prime Minister that every time he refers to “you” he is referring to the Speaker. I hope the Speaker is not responsible for some of the things that the Prime Minister has just been alleging, or about to do what the Prime Minister has been suggesting! Could Stuart Nash start his question again, please.

Stuart Nash: Has he considered resigning due to his failure to keep his promise to close the gap with Australia, his failure to keep his Budget promises on growth, or for being the first finance Minister in 13 years to lead New Zealand into a credit downgrade?

Hon BILL ENGLISH: No. And that member may be saved the trouble of resigning, because despite what he thought was a secure place on the Labour list, he may well not be here in the next Parliament.

Aaron Gilmore: How has the GDP per capita gap between Australia and New Zealand changed over a longer-term period?

Hon BILL ENGLISH: In September—[Interruption]

Mr SPEAKER: I ask the House to please come back to order. I do want to hear the answer.

Hon BILL ENGLISH: Mr Speaker, that is because it is an interesting answer. In September 1999 Australian GDP per capita was 18 percent higher than New Zealand’s. By 2008 that gap had blown out to 37 percent. Again, if we adjust the figures in the way that the OECD does to reflect changes in purchasing power parity, there is still clear evidence of a blowout from 30 percent in 1999 to 40 percent in 2008. That is just one more measure of how far New Zealand’s economy went backwards under the stewardship of Labour.

Mr SPEAKER: Question No. 11, Nikki Kaye. [Interruption] Jabs like that invariably are going to get interjections, and that is not very helpful to the order of the House.

Schools—Ultra-fast Broadband

11. NIKKI KAYE (National—Auckland Central) to the Minister for Communications and

Information Technology: How many schools will benefit from ultra-fast broadband in the first year of the roll-out?

Hon STEVEN JOYCE (Minister for Communications and Information Technology): Good news. The roll-out of ultra-fast broadband, enabling fibre to schools, is progressing well, and will see 221 schools around the country connected by the end of June next year by Crown Fibre Holdings partner Chorus. In addition, four schools in Tauranga, four in Whanganui, and one in Hamilton will be connected by Ultrafast Broadband Ltd, and a further 12 schools will be connected in Whangarei by Northpower. All up, this will see nearly 100,000 school students benefiting from ultra-fast broadband in just the first year of the roll-out.

Nikki Kaye: What has been the reaction of schools that have already been connected to fibre?

Hon STEVEN JOYCE: They are absolutely delighted with the high-tech service and the opportunities it is bringing to their children. The technology means their students can instantly

access the best teachers and the best online resources from anywhere in the world. Manaia View School principal, Leanne Ōtene, said that she was delighted with the possibilities of the new fibre service. I quote: “UFB is making a significant difference already. We’re uploading and downloading video incredibly quickly and the iPod Touches in use in our classrooms are humming. We now have an innovative broadband service to max the way we teach.” However, I have to point out that kids could miss out on accessing one of the most wired education systems in the world if the project were to be unilaterally changed, as promised by Labour’s information and communications technology spokeswoman, Clare Curran.

Te Ururoa Flavell: Kia ora, Mr Speaker. Kia ora tātou. Can he advise the House on the input of Ngā Pū Waea in the roll-out of ultra-fast broadband to ensure that kōhanga reo, kura, and wānanga will benefit from it?

Hon STEVEN JOYCE: Yes, I was actually with the Minister of Māori Affairs the other day and we signed the final terms of reference with Ngā Pū Waea and the contractors that are involved in rolling out the broadband programme. I am pleased to report that they are working well together and that one of the areas they are focused on is ensuring that the wānanga, the kura, and the kōhanga reo get the opportunity to be signed up as soon as possible for the benefits of ultra-fast broadband.

Earthquakes, Canterbury—Minister’s Statements

12. BRENDON BURNS (Labour—Christchurch Central) to the Minister for Canterbury

Earthquake Recovery: Does he stand by all of his statements on Canterbury’s earthquake recovery?

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery): Yes, but as the member will note, I have had to reconsider my position on several occasions as the seismic events of the last 13 months have unfolded.

Brendon Burns: Having told the Press that the Government saw no need to install commissioners into the Christchurch City Council “at this time”, will he now confirm that the Government is in fact discussing such an option for implementation after the 26 November election?

Hon GERRY BROWNLEE: I cannot speak for what the Government after 26 November will be doing.

Brendon Burns: Will the Minister confirm—

Mr SPEAKER: I want to hear Brendon Burns.

Brendon Burns: Will the Minister confirm that among the reasons the Government is ruling out commissioners only “at this time” is that he knows that Christchurch City councillors will fight tooth and nail against the Government’s agenda to force the council, as the Canterbury Earthquake Recovery Authority legislation allows, to sell Christchurch’s $2 billion - plus in public assets to help pay for Christchurch’s earthquake recovery?

Hon GERRY BROWNLEE: I have responsibility neither for the next Government nor for the Christchurch City Council.

Brendon Burns: Is the Minister aware of comments made to the Timaru Herald recently by his colleague Dr Nick Smith, who “stopped short of saying ECan would eventually return to having an elected council”, and can the Minister identify a democratically elected council in Canterbury that is not under threat from this Government if re-elected?

Hon GERRY BROWNLEE: I have not read any quotes in the Timaru Herald.

Brendon Burns: I seek to table research conducted for me by the Parliamentary Library that shows that Orion New Zealand, owned mostly by the ratepayers of Christchurch, has returned to those ratepayers since 1993 some $976 million in dividends and other payments.

Mr SPEAKER: Leave is sought to table that document prepared by the Parliamentary Library. Is there any objection? There is no objection.

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

Inquiry into the Identification, Rehabilitation, and Care and Prevention of Child Offenders—

Consideration

1. SU’A WILLIAM SIO (Labour—Māngere) to the Chairperson of the Social Services

Committee: Will she call a meeting to consider the Inquiry into the identification, rehabilitation, and care and protection of child offenders; if not, why not?

KATRINA SHANKS (Chairperson of the Social Services Committee): I do not intend to call a meeting.

Su’a William Sio: I raise a point of order, Mr Speaker. I wonder whether I can prevail upon you. This is the third time that I have had this question—the same question—on the Order Paper. She has answered the first part. I wonder whether you could require her to answer the second part: “why not?”.

Mr SPEAKER: The member raises a fair point of order, actually. It is a primary question and did ask “if not, why not?”. I ask Katrina Shanks to please answer that part of the question.

KATRINA SHANKS: I cannot answer that question, as the answer would reveal a confidential decision of the committee.

Su’a William Sio: Has she been advised that a notice of motion to deliberate on the inquiry has been given; if so, what further advice does she need to assist her to make a decision about calling a meeting before the House is dissolved on 20 October?

KATRINA SHANKS: I do not intend to call another meeting of the committee at this stage to discuss any business.

Mr SPEAKER: The questioner did not actually ask that. I ask Su’a William Sio to repeat his question, in case it was not heard—repeat it as closely as he can. He asked about a notice of motion to deliberate and what further information the chair felt she needed to act, or something along those lines. Will the member repeat his question, please.

Su’a William Sio: That is right. Has she been advised that a notice of motion to deliberate on the inquiry has been given; if so, what further advice does she need to assist her to make a decision about calling a meeting before the House is dissolved on 20 October?

KATRINA SHANKS: With regard to that business before the committee, a resolution has been recorded in the minutes as to when we would sit again. Therefore, it is a confidential committee proceeding.

Hon Trevor Mallard: It still didn’t answer the question.

Mr SPEAKER: It seems to me that an answer to the question has been given. The supplementary question asked whether the chair was aware of a notice of motion, and the chair has confirmed that she is aware of that notice of motion. That is all that she is required to answer in that supplementary question.

ENDS

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