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Questions and Answers - May 20

QUESTIONS TO MINISTERS

Budget 2014—Economic Growth

1. PAUL GOLDSMITH (National) to the Minister of Finance: How will Budget 2014 continue to support a growing economy, including jobs, higher wages, and delivery of better public services?

Hon BILL ENGLISH (Minister of Finance): The 2014 Budget struck a good balance by returning the Government’s books to surplus next year—the first of a number of surpluses—and making important investments in families and public assets. The Budget signals that the Government has moved from managing recession and recovery to managing in a growing economy. This is reflected in the significant progress the economy has made, with businesses investing, wages rising faster than inflation, 84,000 new jobs in the last year, and our exporters posting record results despite a high exchange rate and frequent disruptions in international markets. As the Prime Minister has said, Budget 2014 was a confident Budget for a confident country.

Paul Goldsmith: What specific measures did the Budget include to support children and families?

Hon Ruth Dyson: Were you away on Thursday?

Brendan Horan: I raise a point of order, Mr Speaker. When I raised the point of order earlier, it was to speak to the point of order that I took offence at the Hon Winston Peters’ comments.

Mr SPEAKER: Order! We have moved well past that at this stage.

Hon BILL ENGLISH: Some people just want to hear it all over again, including that member, I am sure. A $500 million package over 4 years supports children and families. It has five parts: a boost to the paid parental leave scheme, a $42 million increase to the parental tax credit to provide free *general practitioner visits and free prescriptions for children under 13, an extra $150 million to help early childhood education centres remain accessible and affordable, and $33 million to help vulnerable children. The Government is able to provide this support in this Budget because of the hard work in previous Budgets to get spending under control, and the better tools the Government now has for deciding where to spend now for a long-term *pay-off.

Paul Goldsmith: According to Budget forecasts, what progress is the Government making in meeting its two key fiscal targets over the next few years?

Hon BILL ENGLISH: The two important targets for the Government’s books were to achieve surplus in 2014-15 and to return Crown debt back to 20 percent of *GDP by 2020. The Budget shows that we are on track to achieve both of these targets. It is important, having run up debt over the last 5 or 6 years to fill the gap between our expenditure and revenue and to pay for the earthquake, that now that times are better we take the opportunity to repay that debt so future Governments have the same tools available to them as this Government did.

Paul Goldsmith: What steps does the Budget take to help ensure that interest rates remain lower for longer and do not reach the historically higher levels seen in 2008?

Hon BILL ENGLISH: Interest rates reached over 10 percent in 2008, partly because of runaway Government expenditure and a drastically overheated housing market. The Government has confirmed that it will stick to its $1 billion operating allowance in this Budget and increase it to just $1.5 billion in Budget 2014, because we do not want to see a rapid rise in Government expenditure put pressure on interest rates for households, which on average have relatively high levels of debt. These allowances are very modest by historical* standards—in fact, a bit more than half of what the new allowances used to be in the 5 years up to 2008. This represents significant support for *homebuyers and people who have mortgages, where the Government is tightening its own belt to assist them with lower interest rates where possible.

Housing Market—Prime Minister’s Statements

2. Hon DAVID CUNLIFFE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement, “there’s no fundamental underlying reasons to believe there’s a problem in our housing market”?

Rt Hon JOHN KEY (Prime Minister): Yes, particularly when you compare the current situation with that over the 2000s, when, under Labour, house prices doubled and mortgage rates went to 10.9 percent. A house price unit was set up in the Prime Minister’s department, which said that the Government should work to increase the supply of land and lower the cost of construction. It was completely ignored. No wonder they are embarrassed—house prices doubled under their watch.

Hon David Cunliffe: Why does the Prime Minister not believe that there is a problem in the housing market when New Zealand has the highest house prices in the OECD relative to rents, the second highest compared to income, and the fastest-inflating prices in the OECD last year?

Rt Hon JOHN KEY: Depending on which part of New Zealand you are talking about, there is certainly work that can and should be done, and this Government is undertaking that work. That is why, for instance, we have the special housing areas that we have agreed on and the housing accords in Auckland and Christchurch. That is why we suspended the duties and tariffs on imported building goods. That is why we have reformed the legislation to limit development contributions. That is why we made proposed changes to the *Resource Management Act, and that is why we trebled the number of *Welcome Home Loans from 845 to 2,500, to assist *first-home buyers. That is why we increased the eligibility for *KiwiSaver first home deposits, and that is why we have been working very hard to help the *Reserve Bank keep interest rates lower for longer.

Hon David Cunliffe: I am glad the Prime Minister mentioned all that, because I wonder whether he can confirm that his building materials tariff reduction will make less than a 1 percent difference to the cost of an average home, and that his social and community housing initiative, at the current rate of funding, would mean it would take 455 years for National to meet its 20 percent social housing goal?

Rt Hon JOHN KEY: The difference on duties and tariffs is, I am advised, about $3,500, for a new home. This is a Government that is doing a series of things, some big, and some smaller, all to make a difference. I can see why Mr Cunliffe thinks there is no point in doing it, because Mr Cunliffe was part of a Government that thought there was no point in doing anything, which was why house prices doubled under Labour. They went up 96 percent, and I advise members to get using to hearing that, because they are going to hear it on every radio station and every television debate for a long time to come.

Hon David Cunliffe: Given that the Reserve Bank Governor* said in recent weeks that house prices were overvalued* on several measures, why did he miss his last chance to do something significant for first-home buyers* in the Budget* when 76.4 percent of New Zealanders indicated

that that was what New Zealand needed, or did the printer just omit the housing chapter from the Budget document?

Rt Hon JOHN KEY: Actually, one of the most important things the Government did during the Budget was show economic leadership that would, firstly, keep interest rates lower for longer, and, secondly, ensure that New Zealanders actually got jobs. Just before, when I said that under Labour’s watch house prices doubled, Annette King said, under her breath: “Who cares?”. Well, that is exactly the point.

Hon Annette King: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! This is a point of order.

Hon Annette King: The Prime Minister’s last comment is incorrect. I did not say it—

Mr SPEAKER: Order!

Hon Annette King: —and he needs to check his hearing.

Mr SPEAKER: Order! And that is not the way to use a point of order.

Hon David Cunliffe: Given that the Government’s most far-sighted* attempt at economic leadership was the removal of cheque duty from cheque books, does he have confidence in the Minister of Finance* and the Minister of Housing* given that he has allowed house prices to rise by over 40 percent in Auckland on his watch while 46 percent of New Zealanders did not get a pay rise in the last year?

Rt Hon JOHN KEY: I reject the numbers and the assertion in the member’s question, but if we want to put a bit of realism back into the housing debate, let us go to the Roost* home loan affordability index. As I am sure the member will know, that measures someone who would have an 80 percent mortgage on the average house in that particular area, and that person earns the average income. That index, which you have got to say is, by any definition, a pretty fair index, shows that, in fact, houses were far more unaffordable—by about 30 percent, actually—under Labour. In 2007, if you went to Auckland, not only were they more unaffordable than they are today but when Maryan Street—you will remember her; she was your Minister of Labour—was asked the question: “Is this a crisis?”, she said: “No, it is not a crisis.” So when those members are in Opposition and when it is not as bad as it was when they were in Government, it is a crisis, but when they were in Government, it is: “Nothing to see here. Nothing to do.”, and that was the point. Nothing got done. As Annette would say “Who cares?”. [Interruption]

Mr SPEAKER: Order!

Hon David Cunliffe: I seek leave to table a copy of the *labour cost index, which confirms that 46 percent of New Zealanders did not get a pay rate increase last year.

Mr SPEAKER: That is a document that is freely available to all members.

Hon David Cunliffe: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! This is a further point of order?

Hon David Cunliffe: The Prime Minister has disputed the matter, and clearly does not have access—

Mr SPEAKER: Order! No. The member is now trying to use the ability to table a document to continue a political debate. That is not the appropriate thing to do with the seeking of leave to table a document.

Hon David Cunliffe: When will the Prime Minister stop playing politics with the Resource Management Act* amendment bill and split it to allow the housing affordability measures to pass through the House on a bipartisan basis?

Rt Hon JOHN KEY: I am happy to tell the member exactly the same thing that I told the press gallery* on the way in, which is if the member’s party wants to support the Resource Management Act amendment bill as the Government has been wanting to introduce it, and send it off to the select committee for every New Zealander to have their say about what they think, the Government would welcome that—and Mr Cunliffe should come up and have a nice glass of wine and we can celebrate that in my office tonight. See you at 10 o’clock.

Hon David Cunliffe: I seek leave to table a bottle of good Pinot noir* if he would like to meet to discuss the second part of the bill on housing affordability alone.

Mr SPEAKER: Order! We do not use the seeking of leave to table a bottle of wine. If he wants to share—

Hon David Cunliffe: I raise a point of order, Mr Speaker. To clarify, I would be very happy to table a bottle of PM’s Pinot*, which, apparently, is in a blind trust that the PM* does not know about.

Mr SPEAKER: Order! And the member is now also—[Interruption] The member is abusing the system for seeking to table documents.

Rt Hon JOHN KEY: Speaking to the point of order—

Mr SPEAKER: I will hear—I am hoping that it is helpful to the House—from the right honourable Prime Minister.

Rt Hon JOHN KEY: If the member is so keen to have a bottle of my *PM’s Pinot—and I can understand why he would be—I will make sure his office has one delivered to him this afternoon. [Interruption]

Mr SPEAKER: Order!

Hon David Cunliffe: I raise a point of order, Mr Speaker.

Mr SPEAKER: This will be the last one.

Hon David Cunliffe: I wonder whether you could make a considered ruling on whether it is possible for the Prime Minister to make an undertaking to the House to deliver a bottle of wine when he has no idea where it apparently comes from.

Mr SPEAKER: Order! Now that members have had their fun, we will get back to the serious business of questions for oral answer.

Prime Minister—Statements

3. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

Metiria Turei: Why did he say that homes in Auckland are more affordable than homes in London, New York, Singapore, Melbourne, Sydney, and Brisbane, when, according to the OECD, they are actually much more expensive, relative to income, than almost anywhere in the developed world?

Rt Hon JOHN KEY: I think the member is wrong in her facts.

Metiria Turei: Is the Prime Minister saying to young Aucklanders that they are not locked out of the housing market when they know too well that they are locked out by rising rents, high loanto- value ratios*, $600,000-plus median house prices, and with student loans to pay off to boot?

Rt Hon JOHN KEY: For a start off, if the member wants to take a cursory look at TradeMe* and refines her search to Auckland, there are currently over 2,000 properties listed under $400,000. Most people can go to the bank and get a loan of 80 percent, obviously subject to their mortgage, but some people can actually get more than that because loan-to-value ratio restrictions overall are not in total. But the reality is that no one is arguing that Auckland is the cheapest place to buy a house. We are just arguing that the Government is taking a lot of steps to help address that, with its special housing area, and it was more unaffordable under Labour.

Metiria Turei: Would the Prime Minister then be surprised to learn that on TradeMe yesterday, excluding those properties without their own freehold land, like removable homes and apartments, there were actually just 11—just 11—three-bedroom homes or larger in Auckland City for sale below $300,000, and just 36 for sale were below $400,000?

Rt Hon JOHN KEY: The member is putting all sorts of conditions around it, but there are over 2,000 properties under $400,000 in Auckland. That is the very point as to why the Government has worked with the Auckland Council* for there to be 39,000 sections released. What is that member

doing? I know—that member is standing in the way of the Resource Management Act*, which would help speed up the release of land. The member is doing what she always does—she is crying crocodile tears but is not actually prepared to do anything about it.

Metiria Turei: Can the Prime Minister confirm that house prices in Auckland, under National’s 5 years in Government, have risen by the same dollar amount as they did in the previous 9 years under Labour, about $187,000 per home, and when will he start taking responsibility for the housing crisis rather than denying it exists?

Rt Hon JOHN KEY: What I can confirm is that under the Roost survey*, which is, by far, the best measure, houses were more unaffordable under the previous Government than under ours. To run through it—this is the responsibility this Government is taking. We have organised the Auckland Housing Accord*; 39,000 consents will be issued over the next 3 years. We have suspended duties and tariffs on imported building materials. We have reformed legislation to limit development contributions. We have made some changes to the Resource Management Act and we would like to make more. We have increased the additions on Welcome Home Loans and KiwiSaver first-home deposit subsidies*. We have built a strong and robust economy with the support of New Zealanders and their businesses to see them in jobs. What we do know is that no one will be able to afford a house if they lose their job, which under a Labour-Greens Government many of them will.

Metiria Turei: Does the answer to the housing crisis not include a major State house building programme so that those who need a house to rent or buy can get it, and a capital gains tax to prevent investment driving up prices and ensure that those who are making money off property pay tax just like the rest of us, helping to build a sustainable economy with real jobs?

Rt Hon JOHN KEY: Given that a capital gains tax includes the majority of homes, I can only make the assumption that—and the member might want to correct this—what the member is telling the New Zealand Parliament is that under the Green Party, if it were part of the Government, every home would have a capital gains tax on it. That is an interesting assertion.

Metiria Turei: I raise a point of order, Mr Speaker. You have previously ruled that it is not necessarily appropriate for parties to talk about other political parties’ policy. That is all the Prime Minister did. He did not address the question of whether a capital gains tax excluding the family home and a major State house building programme were part of the solution to the housing crisis.

Mr SPEAKER: The difficulty is the member herself brought in, effectively, alternative politics in her supplementary question.

Metiria Turei: Is the Prime Minister basing his assumptions about home affordability on his own personal experience of owning several properties offshore, and does that not show how staggeringly out of touch he is with young Kiwi families trying to buy a modest three-bedroom home in Auckland—staggeringly out of touch?

Rt Hon JOHN KEY: No, but what it does show is the Greens, whenever they start losing an argument, get personal. I think Jan Logie is a very interesting person to reflect on her own comments in the decorum of this Parliament. Actually, the Green Party used to say under the old leadership that it stood up for decent values. That has clearly now gone, and all New Zealanders should understand that the Greens have turned into the nasty party.

Hon David Cunliffe: I seek leave to table a transcript from *Hansard of the Prime Minister—

Mr SPEAKER: Order! The member will resume his seat. We do not use the tabling of documents process to then attempt to table Hansard.

GST—Increase

4. Hon DAVID PARKER (Deputy Leader—Labour) to the Minister of Finance: Does he agree with the reported statement last Friday, from the Prime Minister, who would not rule out an increase in GST?

Hon BILL ENGLISH (Minister of Finance): I agree with the Prime Minister’s comment on radio last week when he said: “Our general view is *GST at this current level is about the right setting.” I also agree with the Prime Minister’s comment that the Government has not decided whether to undertake a tax reduction programme, let alone the design of it. However, he has also made clear the question of whether GST would rise as part of any tax programme, and the answer is no.

Hon David Parker: Why should New Zealanders believe him when he says that he will not increase GST, given that the Prime Minister promised in 2008 he would not increase GST but then did just that in 2010?

Hon BILL ENGLISH: The member misrepresents the comments in 2008. The tax package including an increase in GST was put to the test in the 2011 election, and, as I recall, the Government of the time won that election. There will not be any increases in GST.

Hon David Parker: Did John Key check with him before the Prime Minister flew his kite about GST increases and tax cuts; if so, why did he, the Minister of Finance, appear blindsided? Was it because the Prime Minister thought his budget so underwhelming he wanted to distract attention by flying his kite?

Hon BILL ENGLISH: In answer to the second question, the Prime Minister has been of the view that the Budget has been an overwhelming success, and I too am expecting the donation of a bottle of wine to appear in my office, to indicate a bit more gratitude.

Hon David Parker: Is John Key the person he said bounces from cloud to cloud; if so, is it time to remind him that 40 percent of his 2010 income tax cuts went to the top 10 percent of income earners, which everyone paid for through an increase in GST?

Hon BILL ENGLISH: Any comment I have made about the Prime Minister is much more flattering and supportive than almost anything the Labour caucus is saying about its leader. I am sure that pattern will persist through to the election. Secondly, the member is simply wrong about the 2010 tax cuts. Analysis produced at the time showed they were distributionally neutral—that is, they had a similar impact on taxpayers of all income levels.

Hon David Parker: In terms of distributional effects, will he advise the Prime Minister that recent analysis by Westpac on the effect of Labour’s policy of 15 percent tax on capital gains for investment property shows it would take significant pressure off house prices?

Mr SPEAKER: In so far as the Minister has responsibility, the Hon Bill English.

Hon BILL ENGLISH: As the member may be aware, there is already a capital gains tax on anyone who trades property. I have not seen Westpac’s analysis that indicates that that has had the impact of a 15 percent reduction in prices. In Australia they have a capital gains tax on all commercial and investment property, and they have house prices rising almost as fast as, if not faster than, they are in New Zealand.

Tim Macindoe: How is the National-led Government’s 2010 tax package, which reduced taxes on income and savings and increased GST, helping families on *low and middle incomes to get ahead?

Hon BILL ENGLISH: Low and middle income families are still enjoying the benefits of the reduction in tax rates that were brought in then. The tax changes meant that someone on the average annual wage, which was around $50,000 in 2010, was immediately $15 a week better off, and they still are. A family with two children, on the average household income of $76,000, was $25 a week better off. The tax system has become more progressive since 2010. Households earning less than $60,000 a year are generally expected to pay less in percentage terms towards net tax in 2013-14 than they were paying 5 years ago. The income tax changes, combined with the growth of the economy, mean that higher-income New Zealanders are paying a greater share of the income tax burden.

Justice, Minister—Confidence

5. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Does he have confidence in the Minister of Justice; if so, why?

Rt Hon JOHN KEY (Prime Minister): Yes; because the Minister has made a significant contribution to the Government and to the people of New Zealand in the portfolios she either has held or holds.

Rt Hon Winston Peters: Does he believe the Minister of Justice has provided him with all the information required to make his decision that she should remain as a Minister?

Rt Hon JOHN KEY: I believe she has advised me of all the pertinent information.

Rt Hon Winston Peters: Has the Minister of Justice given him all the details and information, including the name of the Chinese border official who was at the *Oravida dinner?

Rt Hon JOHN KEY: I cannot remember who gave me the name of the official, but I certainly have the name. That was the very name, the agency, and the role that I took to the *Cabinet Office. Question time interrupted.

POINTS OF ORDER

Tabling of Document—New Zealand Racing Document

BRENDAN HORAN (Independent): I raise a point of order, Mr Speaker. I seek leave to table a document from New Zealand Racing that shows the ownership of the racehorse—

Mr SPEAKER: Order! The member has described the document. This is information from the New Zealand Racing Conference. Leave is sought to table it. Is there any objection? There is objection.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. Is this one of these documents that is available online? The question is why that member was not asked that. My understanding is that it is.

Mr SPEAKER: I am not sure whether it is available. Possibly it might have been better to do that.

Rt Hon WINSTON PETERS (Leader—NZ First): I raise a point of order, Mr Speaker. I think if the member had properly explained what he was trying to table, there would not have been opposition. He referred to the word “ownership”, and **Jimmy Savile—

Mr SPEAKER: Order!

Brendan Horan: Point of order, Mr Speaker.

Mr SPEAKER: Order! The member will resume his seat at the back. I have put the leave. The House has decided. That is the end of the matter.

BRENDAN HORAN (Independent): I raise a point of order, Mr Speaker. I draw your attention to Standing Order 116*, and I take offence at the disgusting comments from—

Mr SPEAKER: Order! Can I refer the member to Speaker’s ruling *20/8: *“Constantly raising trifling points of order is itself disorderly.”

Hon ANNE TOLLEY (Deputy Leader of the House): I raise a point of order, Mr Speaker. There is a protocol in this House, which is in the* Standing Orders, that if a member takes offence at an offensive remark aimed at them, the House upholds it. That was a really offensive remark.

Mr SPEAKER: Sorry. Then I apologise to the House. I never heard anything that I considered—

Hon Anne Tolley: He referred to him as Jimmy Savile.

Mr SPEAKER: Order! [Interruption] Order! I never heard anything that I thought was offensive. But, as is the practice of this House, if the member did make a remark at which offence has been taken, then the member should stand, withdraw, and apologise.

Rt Hon WINSTON PETERS (Leader—NZ First): Yes, I did make that reference, it is true, and I apologise.

Mr SPEAKER: Order! The member will stand, withdraw, and apologise according to the rules, without adding—

Rt Hon WINSTON PETERS (Leader—NZ First): I withdraw and apologise.

Mr SPEAKER: Thank you. Question time resumed.

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

Budget 2014—Impact on Tertiary Education

6. Dr CAM CALDER (National) to the Minister for Tertiary Education, Skills and

Employment: How will Budget 2014 advance the Government’s work to strengthen the New Zealand tertiary education system?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): Budget 2014 contains an additional nearly $200 million over the next 4 years from new spending and reprioritisations for tertiary initiatives that will further improve the quality of our universities and help maintain their international competitiveness. It continues the Government’s focus on increasing funding for science, technology, engineering, and maths—areas that are critical to innovation and to New Zealand’s economic future, and where there has been long-term underfunding relative to other subjects. The funding lift provides a lift in tuition subsidies for science, agriculture, and selective health sciences. This comes on top of funding increases for engineering and science in previous Budgets. Since 2008 we have increased the average funding rate for science by 23 percent and engineering by 20 percent.

Dr Cam Calder: How does Budget 2014 support excellent research?

Hon STEVEN JOYCE: Budget 2014 boosts operating funding for the *centres of research excellence by $53 million over 4 years. This means that the Government will be now funding 10 centres of research excellence from 2016-17, up from the six that were recently selected through the competitive process run by the *Royal Society. The Government has decided that one of the four additional centres of research excellence shall be dedicated to Māori developmental research. I want to thank the Māori Party for its strong advocacy for this approach. Centres of research excellence are research networks that produce world-class research and make an important contribution to our society and economy, and we are very pleased to support the programme.

Dr Cam Calder: What investments has the Government made in tertiary education since 2008?

Hon STEVEN JOYCE: The Government invested $2.25 billion in publicly owned tertiary institutions in 2013. That is an increase of 14 percent since 2008. This has been a significant increase in tough economic times. Funding of universities has increased greater by 19 percent from 2008 to 2013. We have significantly increased the size of the Performance-based Research Fund*. That will hit $300 million a year in 2 years’ time. We have also seen increases in the *Marsden Fund. Our reforms and increased investment is paying off. The tertiary system produced more qualifications than ever before in 2012. The number of domestic students who completed a *Bachelor’s degree in 2012 was the highest ever, at 25,400—up by nearly a quarter since 2010.

Budget 2014—Parental Tax Credit

7. JACINDA ARDERN (Labour) to the Minister of Finance: How will the changes to the Parental Tax Credit he announced in the 2014 Budget help those who, as he states, are at “the hard end of poverty”?

Hon BILL ENGLISH (Minister of Finance): The extension of the *parental tax credit, which applies to 15,000 families, will assist those who are at the hard end of poverty if and when they are able to get into work. The parental tax credit extension is part of a package that has five elements, and three of those are available to all children and all families, regardless of parental income—for

example, free doctors’ visits and prescriptions for under-13s, as well as significant investment in protection for vulnerable children. As it happens, the member, I know, has a view that a lot of the families covered by the parental tax credit still have children who are “in poverty”, even though they do have some work income.

Jacinda Ardern: Why do those at the hard end of poverty in work deserve help, but the up to 14,000 who are at the hard end of poverty and who have not been able to find work not deserve support from this Government?

Hon BILL ENGLISH: In fact, this Government has devoted more new spending over the last 2 or 3 years to those families than any previous Government has, through practical support and the welfare system. For example, every sole parent under the age of 20 has a supervising adult in their life funded wholly by the Government. That person or organisation has the purpose of ensuring that that family gets their power bills paid, that they have some kind of stable housing, that they are protected from violence, and that their social issues have some opportunity to be dealt with, at the cost of $7,000 per head per year, for each of the now around 3,000 sole parents under the age of 20. Their children are among the most vulnerable in our community, and they now have extensive support from the Government.

Jacinda Ardern: What additional income support have the 14,000 families at the hard end of poverty received from his Government in this Budget or, indeed, in any Budget?

Hon BILL ENGLISH: They have received an increase in their benefits consistent with the increase in the *CPI over the last 4 or 5 years, despite the fact that we have had a pretty tight Budget. They benefit from increased early childcare subsidies, which, I think, have doubled in the last 5 years in cost to the Government. If the simple transmission of cash was the answer to all these problems, we would have no poverty, because for 30 years Governments have been increasing the payments per child and benefit payments for these families. That is why this Government has taken a much more targeted and individually supportive approach to helping people out of persistent deprivation.

Jacinda Ardern: Does he agree with *Dr Nikki Turner that free doctors’ visits and prescriptions will do little to reduce child poverty without also improving the incomes and the housing conditions of the very poor; if not, why not?

Hon BILL ENGLISH: The Government has had a very strong focus on improving particularly the housing conditions for the most disadvantaged, through the insulation programme, which has meant that every single State house that can be insulated is now insulated, and through a 5-year programme of discussion with the community housing sector about how we can help more people in serious housing need more efficiently, and we continue to make changes in that respect.

Jacinda Ardern: Does he agree with the **Justice and Peace Commission of the **Catholic Diocese of Auckland, a group that deals with people struggling to make ends meet, that the Budget does not address the root causes of poverty, or does he consider a CPI adjustment for those at the hard end of poverty to be sufficient?

Hon BILL ENGLISH: I respect the voice of the **Justice and Peace Commission of the *Catholic Church, and I expect it to be better informed than a lot of other spokespeople, for pretty obvious reasons. In fact, when I put money on the plate each Sunday, I know that some of it is going to our critics, and that is what you expect in a robust democracy. But I think it would be interesting to have a discussion about what we believe the root cause of poverty to be, because if it was just a lack of cash, then we would have solved the problem years ago. In fact, this Government is focusing in on those things that lock people into poverty, which are welfare dependency, no educational achievement, and victimisation and regular revictimisation through crime. We are digging into those *long-term causes. Of course, where we do have the capacity to provide more cash support, we have, such as $500 million for families in this last Budget.

Accident Compensation—Levies

8. JOANNE HAYES (National) to the Minister for ACC: What reports has she received which show New Zealanders could pay lower ACC levies in 2015?

Hon JUDITH COLLINS (Minister for ACC): As I announced last week, Budget 2014 indicates the *Accident Compensation Corporation is on track to provide further levy cuts for New Zealanders of around $480 million in 2015-16, following more pleasing results over the past year. Today *ACC announced it will go out for public consultation on the 2015-16 levy rates. ACC continues to improve its financial situation, transforming the way it supports injured New Zealanders back to independence and building on its investment returns. As a result, it is proposing reductions in the workers and *earners accounts and the *motor vehicle account. New Zealanders can take part by submitting to the ACC by 5 p.m. on Tuesday, 17 June 2014. Consultation papers are available on ACC’s website. The Government will make its final decision after ACC’s public consultation, but we anticipate the bulk of these cuts will be for motor vehicle levies, along with the possibility of a levy reduction for employers and the self-employed.

Joanne Hayes: What factors are taken into account when determining levies?

Hon JUDITH COLLINS: Each year ACC assesses the levy rates required for future levy years. The assessment is based on a number of factors, including actual and projected claims costs, returns on investment, interest rates, and the number of registered motor vehicles. Due to changing patterns of these and other elements, the amount that ACC must collect may change each year. ACC is successfully managing these factors in order to provide a scheme that is fair for levy payers and for clients. Following the consultation process and receiving ACC’s recommendations, the Government will make a decision on levy rates, also taking into account public interest considerations such as the economic environment. It is also important that any decrease in ACC levies is sustainable and provides consistency for households and businesses in the long term. Nobody wants to be the Government that has to put up levies, as we had to do after Labour left ACC in such a mess.

Joanne Hayes: How is ACC addressing car safety in the consultation process?

Hon JUDITH COLLINS: What an excellent question. As well as reducing average motor vehicle levies, ACC is also proposing the introduction of risk rating for cars in 2015. Risk rating would mean the cost of levies would more closely reflect the level of risk associated with a car. All car owners would pay lower levies under ACC’s proposed changes. Owners of the safest cars would receive the largest levy cut. The proposal is for the implementation of four bands for light passenger vehicles, based on how vehicle design affects injury outcomes. Each band would have a different levy rate, based on the combined risk of injury to the vehicle occupants—

Grant Robertson: I raise a point of order, Mr Speaker. I think there are rulings about tabling press releases, but I would encourage the Minister to table that press release she was reading out there.

Mr SPEAKER: Order! And that is not a point of order, but I think the point the member was attempting to make is that the answer was certainly going on for a long, long time.

Housing, Affordable—OECD Ranking

9. PHIL TWYFORD (Labour—Te Atatū) to the Minister of Housing: Is he concerned that New Zealand has gone from the 10th highest rate of house price growth in the OECD from 2004- 2011 to the highest in 2013?

Hon Dr NICK SMITH (Minister of Housing): I am concerned that house prices rose by 9 percent in 2013. That is why the Government initiated a whole batch of reforms on land supply, development costs, and materials, and expanded support for *first-home buyers. The member is being very selective, though, in his choice of years in the study, because in the preceding 5 years house prices rose by only 1.8 percent—*i.e., 11 percent over the last 6 years. In the preceding 6 years, house prices rose by over 10 percent every year for 6 years—i.e., 83 percent. The difference

in what the previous Government did was that for 6 consecutive years with house prices over 10 percent a year, it did nothing; we have 1 year at 9 percent, and we have got a big package of reform.

Phil Twyford: Does he agree that there is market failure when house prices increase so much faster than rents and wages; and when will he stop whining about historical data and get on with helping young Kiwi first-home buyers into their own homes?

Hon Dr NICK SMITH: Yes, there was serious market failure in Auckland, with a metropolitan urban limit that drove land prices through the roof. The interesting part is that Mr Twyford was one of the architects of the metropolitan urban limit. We have broken it, and we have got 33,500 new sections coming *on stream.

Jami-Lee Ross: Which countries in the *OECD study showed the most favourable house price data, and what elements of those countries’ economic policies is the Government considering adopting?

Hon Dr NICK SMITH: In respect of the table quoted in the original question, the countries that had the lowest house price rises were Greece and Spain. These countries have unemployment rates of over 25 percent. They have massive debt problems and huge deficits. People are leaving those countries in droves. It might be the economic prescription that members opposite have for New Zealand; we have a very different vision.

Phil Twyford: Does he agree with the Prime Minister that falling rates of *homeownership, Kiwi first-home buyers being locked out of the market by *loan-to-value ratios, and Government agencies referring people to live in campgrounds are all symptoms of an economy that is successful?

Hon Dr NICK SMITH: The long track record of homeownership post-World War II is very clear. That is, homeownership rates declined in periods when interest rates were high, and improved in years when interest rates were low. It is also interesting, in looking at that *long-term study, that interest rates were always higher under Labour Governments and lower under National Governments. That is why people who want to enhance homeownership will vote for a John Key - led Government.

Jami-Lee Ross: Has he received any reports of proposals for managing migration pressure on housing; if so, what feedback has he seen on those proposals?

Hon Dr NICK SMITH: New Zealand’s migration issue is that Kiwis are voting with their feet and not leaving. That should be celebrated. But I have heard a proposal on *Morning Report yesterday that we should cut immigration numbers by between 20,000 and 30,000. But when I listened to Morning Report this morning, I heard a person from the same organisation saying that that was not true. The first report was from Mr Twyford; the second from Mr Cunliffe. I do not think they have got any idea what they stand for.

Phil Twyford: How many of the 22,000 offshore landlords he cited in the House last week own more than one house, and how many of the 185,000 empty houses are owned by offshore owners or syndicates?

Hon Dr NICK SMITH: What we know from the *Inland Revenue Department data is that there are 22,000 taxpayers who live offshore and own a home in New Zealand, and are receiving rent. We further know that that number has been constant over the last 5 years. There was some increase in that number under the previous Government which, like most things on housing, it did absolutely nothing about. That number is 1.2 percent of our housing stock. We want to focus on the main game in housing. The *Productivity Commission said that it was a non-issue, and that is why we are focusing on things like land supply, infrastructure costs, materials—those things that will make a difference.

Rt Hon Winston Peters: Why is the Government so against keeping records of sales to offshore buyers, and how can the Government possibly explain its policy on the housing crisis when it has no idea how much housing stock is in foreign hands?

Hon Dr NICK SMITH: The advice the Government has received from Treasury, from the *Productivity Commission, and from my own ministry is that foreign buyers are having no substantive effect on the New Zealand housing market. If we had some registry where every time you wanted to buy a house you had to show your passport or evidence of your residency, that would not answer the question either, because the advice is that the bulk of people who are buying houses from overseas are actually then coming to New Zealand to live and gaining residency and citizenship. So if you really wanted to get accurate data, you would have to fill out a whole lot more forms to then trace that further. Having an argument as to whether the number is 1.3 percent or 1.4 percent takes our housing debate nowhere.

Rt Hon Winston Peters: Why on earth is he trying to maintain that argument for—

Hon Steven Joyce: Winston’s arguing for more pen-pushers.

Rt Hon Winston Peters: —New Zealand offshore housing in the country, and especially in Auckland, when the OECD, the Reserve Bank—and “Big Ears”, when he is awake—and Treasury are claiming that it is adversely affecting both inflation and high interest rates?

Hon Dr NICK SMITH: The member is wrong. The reality is that the advice from Treasury, the advice from the Productivity Commission, and the advice from my own ministry is that foreign buyers are having no substantive effect. It is the oldest trick in the book, whether it is crime, whether it is unemployment, or whether it is a challenge like housing, for Mr Peters to jump on the bandwagon and say that it is all the foreigners’ fault. That will get us nowhere. We should address the real issues.

Hon Tau Henare: Where’s the smoking gun?

Rt Hon Winston Peters: It is coming, son. Why is the Government trying to defend the recent record of thousands of houses bought by offshore buyers ahead of the right of New Zealanders to be able to afford a house in their own country?

Hon Dr NICK SMITH: The data from the *Inland Revenue Department is that 22,000 overseas persons own property in New Zealand and rent it. The bulk of those are actually expat New Zealanders who are living overseas, doing their OE, and who own a house, whom members opposite now want to ban from being able to own a home in this country. We say that that is a nonsense.

Phil Twyford: Does he agree with the New Zealand Herald, which said yesterday in an editorial that his refusal to seek comprehensive data “raises the implication that the Government does not want accurate data for fear of what may be revealed.”?

Hon Dr NICK SMITH: My correct comment was that I rejected a register, and I maintain the position that it would be a waste of money. I am happy to receive further information, but I have to say that an argument over whether it is 1.3 percent or 1.4 percent does not make a dime of difference to the major arguments that we need to address if Kiwis are going to be able to afford their own homes.

Drone Strikes—Information Received

10. Dr KENNEDY GRAHAM (Green) to the Prime Minister: Has he received information that any other New Zealander, apart from Daryl Jones, has been killed in United States drone strikes; if so, what was that information?

Rt Hon JOHN KEY (Prime Minister): I have previously said that a New Zealander was killed in a counter-terrorism operation in Yemen. I am advised that I have not received information that other New Zealanders have been killed in drone strikes. However, I am not going to rule that out, for the following reasons. As I have said, there are sometimes New Zealanders who put themselves in harm’s way, the Government does not know where they are and what they are doing, and a number of people are registered as dual citizens.

Dr Kennedy Graham: Can he affirm that information supplied to US intelligence during his time as Prime Minister has never led to the death of any civilian?

Rt Hon JOHN KEY: I cannot be sure of that information. As I said yesterday in my press conference, New Zealand intelligence agencies have gathered information—in Afghanistan, for instance—and have passed that to our *International Security Assistance Force partners. Our International Security Assistance Force partners have used that information, I suspect, and I cannot confirm exactly the results of that.

Dr Kennedy Graham: Does he then consider the New Zealand Government to be an accomplice to an extrajudicial killing of a New Zealand citizen if our intelligence agency supplies information to its US counterpart about a New Zealander and that New Zealander is killed by a US drone strike?

Rt Hon JOHN KEY: The member is talking about a hypothetical situation that has not occurred, to the best of my knowledge.

Dr Kennedy Graham: I raise a point of order, Mr Speaker. My previous question was not a hypothetical, because, in fact, it has been acknowledged and accepted by the House that a New Zealander has been killed.

Rt Hon JOHN KEY: The member was quite clear. He made the comment in his question that New Zealand intelligence services have provided information that had been used in the killing of a New Zealander in Yemen. As I have made quite clear in public statements, New Zealand did not supply information to the US authorities when it came to the New Zealander who was killed in counter-terrorism operations in Yemen.

Mr SPEAKER: The point is that the question was asked, and it has been addressed in the answer of the Prime Minister.

Dr Kennedy Graham: Will the Prime Minister instruct our intelligence agency to adopt a policy similar to that of its German counterpart, which rules out the possibility of shared information being directly used in a US drone strike against one’s own citizens?

Rt Hon JOHN KEY: No.

Hon David Cunliffe: As a matter of policy, and not of operational detail, what caveats, limits, or policies of any kind does New Zealand place on the use of New Zealand - sourced signals intelligence provided to its *Five Eyes partner countries in operations such as drone strikes?

Rt Hon JOHN KEY: That is a very detailed question and I simply do not have the answer to that with me in the House.

Hon David Cunliffe: I raise a point of order, Mr Speaker. It may be legitimate for the Prime Minister to say that he does not have all the detail, but given that the question was carefully phrased to say “of any kind”, could the Prime Minister please—

Mr SPEAKER: Could the member come to the point of order? What is the point of order?

Hon David Cunliffe: —say whether there is some detail that he may be in a position to provide.

Mr SPEAKER: That is not a point of order; that is, effectively, the member asking another supplementary question, which he may well be entitled to do. The Prime Minister has answered the question. If the member wants to continue with further supplementaries, he has every opportunity to do so, but not by a point of order.

Justice, Minister—Statements

11. Hon MARYAN STREET (Labour) to the Minister of Justice: Does she stand by all her statements?

Hon JUDITH COLLINS (Minister of Justice): Yes, especially my statement that this Government is focused on the big issues.

Hon Maryan Street: Did she express any concern to the chief executive of the Ministry of Justice after the release of the Paula Rebstock* report into the *Ministry of Foreign Affairs and Trade leak regarding the employment of *Nigel Fyfe?

Hon JUDITH COLLINS: No, and it would be most inappropriate for me to do so.

Hon Maryan Street: Was she or any of her staff involved in any discussions with the chief executive of the Ministry of Justice about Nigel Fyfe being put on gardening leave before or after the Rebstock report was made public?

Hon JUDITH COLLINS: No—in fact, Mr Andrew Bridgman*, the secretary, advised me of the situation based on the *no-surprises policy. I note that that member has previously put out a press release saying that I “could have moved to reinstate Mr Fyfe much earlier except that Paula Rebstock is a close friend and trusted ally of Ms Collins.”, as in me. I completely reject that allegation. I think it would be most improper for me to have taken her advice.

Hon Maryan Street: Has she ever referred to Nigel Fyfe as a “bad egg”?

Hon JUDITH COLLINS: Certainly not.

Hon Maryan Street: Did she discuss the Rebstock report with the chief executive of the Ministry of Justice prior or subsequently to its release in December 2013?

Hon JUDITH COLLINS: I think I have already made it very clear that the chief executive, on the no-surprises policy, as he should do, advised me of the situation. I was advised of the—

Grant Robertson: You said nothing. You were mute at that point.

Hon JUDITH COLLINS: Well, actually, I never make comments about employees. I am not a Labour Government Minister; I am a National Government Minister.

Budget 2014—Kauri Dieback Disease

12. SCOTT SIMPSON (National—Coromandel) to the Minister of Conservation: What new measures will the Government be able to take to contain and control the kauri dieback disease as a consequence of the $26.5 million committed in the Budget?

Hon Dr NICK SMITH (Minister of Conservation): The funding will enable us to put over 100 kilometres of new track and 5 kilometres of new boardwalk in particularly sensitive areas, and also to install a further 300 additional hygiene stations in the kauri forests of Northland, Auckland and the Waikato. It also includes increased pig control and investment in critical research. The funding is complementary to that also being contributed by our partners in regional councils as part of the **Keep Kauri Standing programme.

Scott Simpson: When was funding for kauri dieback first sought from the Government and what was the process for securing that funding?

Hon Dr NICK SMITH: Funding for kauri dieback was first sought from the Government in 2007, and again in 2008, but on both occasions was declined by the previous Government. The first Government funding that was provided for kauri dieback was in the 2009 Budget, and was provided for a period of 5 years. We did a review last year and the *Minister for Primary Industries and I agreed on a Budget bid in November for this $26.5 million, which is supported by science and will ensure that kauri is maintained for future generations.

ENDS

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