Questions to Ministers

Primary Industries, Minister—Statements

1. RON MARK (Deputy Leader—NZ First) to the Minister for Primary Industries : Does he stand by all his statements?

Hon NATHAN GUY (Minister for Primary Industries): Yes. In particular, I stand by my statement that although dairy prices are experiencing some short-term volatility the medium to long term outlook for the sector is still very positive indeed.

Ron Mark : In respect of his statements around the Saudi farm issue, can he explain why his predecessor and the then Minister for Primary Industries, the Rt Hon David Carter, met with Mr George Assaf of Awassi New Zealand Ltd on 21 January 2009?

Hon NATHAN GUY : I am unfamiliar with the details of what discussions were had between those various parties at that time.

Ron Mark : So is the Minister telling the House that he has no idea whatsoever as to what was so important that Minister Carter had to meet with Mr George Assaf during the parliamentary recess, just following the formation of Mr Key’s Government; if not, why not?

Hon NATHAN GUY : The member should realise that Ministers meet a variety of people and they discuss things that are appropriate in their different ministries and portfolios.

Ron Mark : Why have the venue, duration, and substance of this meeting not previously been disclosed?

Hon Gerry Brownlee : I raise a point of order, Mr Speaker.

Mr SPEAKER : Point of order, the Hon Gerry Brownlee. [Interruption] Order! [Interruption] No, I have not called the member yet. I just want silence for this point of order.

Hon Gerry Brownlee : The primary question is: “Does he stand by all his statements?”. We are now getting into some sort of forensic consideration of a meeting that took place during the long 7-week parliamentary recess. There is nothing unusual in that.

Mr SPEAKER : And it will be for the Minister, in answering the question, to decide how he answers it. [Interruption]

Hon NATHAN GUY : No—can I hear that again?

Mr SPEAKER : Order! I am going to ask that the question be heard again.

Ron Mark : Why have the venue, duration, and substance of this meeting not been disclosed?

Hon NATHAN GUY : This is a ridiculous question. I cannot believe that this member is even asserting that. As I mentioned in the answer that I just gave previously, Ministers meet a variety of people. When something is appropriate in their own portfolio they should indeed meet. I do not have the specifics of what went on at that meeting with a former Minister, and neither should I carry that around. If the member wants to put a detailed question on the sheet, then I am happy to answer it.

Ron Mark : Is not the real reason taxpayers’ money is being wasted on the so-called Saudi agri-hub, which he has been supporting, that this Government is being blackmailed over what David Carter and the National Party and Michelle Boag promised in Opposition?

Hon NATHAN GUY : No. That is a pathetic question and I refute that question.

Economy—Reports

2. TIM MACINDOE (National—Hamilton West) to the Minister of Finance : What reports has he received on the outlook for the New Zealand economy?

Hon Member : Ha!

Hon BILL ENGLISH (Minister of Finance): A rather more thorough report than that. I have seen reports where Fonterra has revised down its forecast payout from $5.25 to $3.85 per kilo of milk solids. This reduction will clearly have a significant impact on the dairy industry and dairy-intensive parts of the economy, but it is not a particularly surprising downgrade, as it reflects the ongoing reduction in the international dairy price. Fonterra has at the same time announced higher earnings per share of 40c to 50c and an optional interest-free support payment of 50c per kilo of milk solids. It is clear that for dairy farmers times are turning out tougher for longer than forecasters previously expected, but the additional measures announced by Fonterra on Friday will offset that to a certain extent.

Tim Macindoe : What effect will the fall in milk prices have on the wider economy?

Hon BILL ENGLISH : It will certainly have a big effect on the dairy-intensive parts of the economy. A drop in revenue of this magnitude in the dairy sector will have flow-on effects to the wider economy because the dairy sector makes up about 20 percent of New Zealand’s exports and around 5 to 6 percent of the total economy. The automatic stabilisers, though, are providing support to the dairy industry and to the benefit of other industries. For instance, the New Zealand dollar is down 25c against the US dollar for the last 12 months, and this underpins the returns of all exporters, not just those dealing with low prices. The Reserve Bank has cut interest rates, the overnight cash rate, to 3 percent and indicated this may fall further. The Reserve Bank’s most recent forecasts of the economy show that the economy is growing around 2.5 percent a year, which is solid, sustainable growth.

Tim Macindoe : What other reports has the Minister seen on the economy?

Hon BILL ENGLISH : In its Monthly Economic Indicators released last week Treasury said that most indicators remain around their long-run averages, with the exception of dairy prices, and they are consistent with an economy growing around its trend rate of 2 to 2.5 percent. Statistics New Zealand also released the latest employment figures last week. Unemployment increased from 5.8 percent to 5.9 percent. At the same time, the average wage increased by 3.2 percent in the last year, to over $57,000, considerably faster than inflation of 0.3 percent. Of course, there are a number of risks to the economy—well-known risks, such as the uncertainty around Greece and some uncertainty about China’s growth prospects. So there is some chance that we could move away slightly from the 2 to 2.5 percent growth rate that we are seeing now.

James Shaw : Has the Minister of Finance received any reports that show that the New Zealand economy will face a $7 billion hole as a result of low dairy prices, and what specific measures is he putting in place to ensure that distressed dairy farmers are supported through this commodity price crash?

Hon BILL ENGLISH : Yes, I have seen those reports and I am pleased the member asked about them. In order to understand the context of this, that $7 billion reduction is a reduction on nominal GDP of over $220 billion. When you look at it that way, you can see that it is going to have a negative effect on the economy, but a containable effect, and we can continue to grow at moderate rates. In respect of dairy farmers in distress, Governments have had in place for some time measures for those families that are in severe financial distress, but generally the Government would not be looking to financially support dairy farmers because of low prices.

James Shaw : Does he regret telling Radio New Zealand in March that the concentration of capital in dairying was “not a bad thing”, and how will he now ensure that this over-allocation of resources into one sector does not now put out of work thousands of farm labourers, retailers, contractors, and suppliers who all rely on dairy farms?

Hon BILL ENGLISH : The flow of capital into the dairy industry has been based on a longer-term confidence that across the Asia-Pacific region the fast-growing class of middle-income consumers will show more demand for dairy and other protein products. That is a view of the world that is not really disputed by anyone in particular. In the short term, however, the reduction in income will of course have an impact on employment directly on dairy farms, but also in the supporting towns and services. The measures announced by Fonterra last week and the positive indications from the banks that they will finance cash flow for dairy farmers over the next 12 months mean that it will not be as bad as the straight drop in income indicates, because dairy farmers have to spend $4.50 a kilo just to get the milk on the truck.

Tim Macindoe : What implications do recent developments in the international economy have for New Zealand’s economy?

Hon BILL ENGLISH : Although there are risks in the global economy, it is evident that growth in our trading partners is holding up reasonably well—in the range of 3 percent to 4 percent. When we look back through the history of New Zealand’s growth patterns, it is reasonably clear that when our trading partners are growing at that kind of rate—3 to 4 percent—that is a positive indicator for sustainable, moderate growth in New Zealand of around 2 percent to 2.5 percent, which is our long-term trend growth rate.

James Shaw : Given his previous answer that investment in dairying was based on a long-range view of the sector, what work has he done to understand whether the dairy price collapse is actually a structural long-term change in the market rather than a cyclical short-term change?

Hon BILL ENGLISH : We try to make an assessment about that, the same as everyone else. It is pretty evident, though, that no one is quite sure. It is likely that dairy prices will not go back to $8 a kilo. In fact, it may well be not a bad thing because what is evident is that the price going that high has stimulated not just positive supply but probably excess supply. No one quite knows the answer to that question, but talking to the people whose capital investment is at stake and whose livelihoods are at stake, they maintain confidence that prices will rise from where they are—in fact, they have to, because they are below the cost of production—and they maintain a positive view about where they put their investment.

Grant Robertson : Has the Minister of Finance seen this report about the economy under his watch, which features a boat that has run aground?

Hon BILL ENGLISH : Yes, I have, and I thought how similar it is to the fate of the Labour Party. [Interruption]

Mr SPEAKER : Order! Just complete the answer.

Hon BILL ENGLISH : In the interest of assisting the vice-great helmsman, as I understand it, that is the Westpac Economic Overview, and I note that its forecasts are for between 2 percent and 2.5 percent growth over the next 3 years, despite the fact that it says there is going to be a recession.

James Shaw : Will he stop subsidising the expansion of high input - cost dairying by spending $160 million on irrigation when that money would be much better invested in capturing more of the dairy value chain to escape the boom and bust of commodity price cycles?

Hon BILL ENGLISH : I could not verify that number. What I can tell the member is that the irrigation investment fund has actually paid out around $8 million or $9 million, much as some people would wish it is $160 million—

Hon Nathan Guy : $6.5 million.

Hon BILL ENGLISH : —$6.5 million, sorry. So, look, the Government spreads its support for infrastructure around the country, whether it is roads or public transport, and in the case of irrigation schemes, dealing with some of the short-term demand issues that enable those schemes to get up and running, and we do not have any plan to change that. I do expect, though, that the low dairy prices mean that there will be less willingness among farmers to finance the overwhelming share of the development that they pay for.

James Shaw : Is he aware that organic milk powder commands up to six times the price premium of conventional milk powder on international markets, and will he turn this crisis into an opportunity by helping move more dairy farmers into organic milk production?

Hon BILL ENGLISH : If the member is correct that farmers can earn six times as much by selling their milk as they earn from organic milk, then I am quite sure they will.

James Shaw : When he says that this is not a crisis and that dairy is just 5 percent of the economy, is he saying that when the All Blacks lose it just does not matter because they are one of thousands of sports teams playing over the weekend, many of which are winning?

Mr SPEAKER : In so far as there is ministerial responsibility, the Hon Bill English.

Hon BILL ENGLISH : Clearly, the Greens like New Zealanders being able to watch the All Blacks lose, but they do not them to be able to watch them win in the Rugby World Cup. I mean, when people use the word “crisis”, well, the Opposition should explain what that means. If those members think it means that dairy farmers are sitting around with their heads in their hands, paralysed by low prices, then they are wrong. Actually, they are getting up every morning, going out into the cold, wet weather, doing the calving, milking the cows, and spending the money they need to get their production moving and get their product to world markets. Calling it a crisis seems to me to be particularly useless. In fact, it downgrades the resilience and the responsiveness of not just the dairy sector but households right across New Zealand to a bit of economic pressure, which they can handle.

Prime Minister—Unemployment and Dairy Prices

3. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister : Does he stand by his statement that New Zealand is on the “cusp of something special”; if so, was that “something special” rising unemployment along with plummeting dairy prices?

Rt Hon JOHN KEY (Prime Minister): Yes, I stand by that statement, for two reasons. The first is that I am positive and aspirational for New Zealand—

Hon Members : Ha, ha!

Rt Hon JOHN KEY : —unlike some people who are always talking the country down. But, actually, the second reason I stand by that statement is that I made that statement on a couple of occasions during debates in the 2014 general election, and we were on the cusp of something special: the worst pounding the Labour Party had ever had—

Mr SPEAKER : Order!

Andrew Little : Given that the number of people who are unemployed has risen by 13,000 and that unemployment in Taranaki alone is now at 7 percent, and there are hundreds set to join them due to major job cuts announced recently, is it not the truth of it that he is sending more and more families to the cusp of poverty?

Rt Hon JOHN KEY : Firstly, the Government has created—along with the people of New Zealand, of course—148,000 jobs over the last 2 years. But I note that the Labour Party has an interest all of a sudden, apparently, in farming. So when prices go up, it is nothing to do with the Government; when prices go down, it is everything to do with the Government! Those members are not asking: “Why are beef prices high? Is that the responsibility of the Government?”. But I make this simple point: the Labour Party wanted to put a huge number of costs on farmers. That was its policy during the election.

Andrew Little : Given that Westpac says that there will be no more job growth this year, and the economy has grown at just a quarter of the expected rate, has he not driven the economy to the cusp of a recession?

Rt Hon JOHN KEY : If the member goes and reads the Westpac report, the glimpse that I had a look through, it showed that growth will be between 2 percent and 2.5 percent over the next 3 years.

Andrew Little : Why has he failed to invest in diversifying the economy, neglected regional infrastructure, and turned a blind eye to the 35,000 jobs lost in manufacturing since 2008?

Rt Hon JOHN KEY : The member needs to get out a bit more—it is as simple as that. If you go around New Zealand and have a look at what is happening around New Zealand, you will see just how diversified the economy is. Tourism spending alone is up over 20 percent from last year, at over $8 billion. The information and communications technology sector is doing well. Kiwifruit growing is back from the lows of Psa. Beef farming is doing extremely well. Horticulture is doing well around New Zealand. Manufacturing—for 33 months in a row the performance of manufacturing index has been expanding. The services sector, export education—the only people who think the economy is solely dairy are in the Labour Party, and it wanted to tax those people—

Mr SPEAKER : Order!

Andrew Little : Did he receive any official advice to back up his claim that a new flag would add billions to the economy, or was he making it up, just like usual?

Rt Hon JOHN KEY : I do think that changing the flag has, over time, very significant economic benefits for New Zealand. The reason for that is that if you go and have a look on the New Zealand Herald website today, you will see New Zealanders voting, and I notice Mike Hosking’s column today actually talking about genuine debate about the flag—[Interruption] Oh, that is right. Just remind me: it is Labour Party policy to change the flag, but it does not want it. Oh, and Andrew Little was on his live chat 10 months ago supporting change, but today he does not want to do it. When we have a flag that is of the ilk that we see today, actually, it will be on our goods that are sent around the world, and that will have huge economic benefit. But the bottom line is this: if the Labour Party is telling New Zealanders, it simply misleads them with its policies—

Mr SPEAKER : Order! The answer is long enough.

Ron Mark : To the Prime Minister, in terms of helping the economy—

Mr SPEAKER : Order! Just ask the supplementary question.

Ron Mark : Thank you, Mr Speaker. Given that the Prime Minister knows about trading halts, why does he not agree with the Rt Hon Winston Peters and Federated Farmers Waikato’s Chris Lewis that Fonterra should temporarily suspend participation on global dairy trade?

Rt Hon JOHN KEY : Firstly, that is a matter for Fonterra. It is a private organisation, and it makes up its own mind. But that is akin to saying: “When things are going well, we’ll have a global dairy auction. When they’re going badly in the world market, we won’t.” In other words, when the poll results are high we will listen to them, and when the poll results for New Zealand First are bad, we will turn our eyes away. It is a ridiculous way to operate.

Ron Mark : When dairy stock and land values fall in line with the falling commodity price and pay-out, as they always do, and dairy farming couples are forced into negative equity, and the foreign banks move in to foreclose—

Mr SPEAKER : Order! Can I have the question, please.

Ron Mark : —what will he do?

Rt Hon JOHN KEY : Well, I will just pick one basic point, and that is that there is no great evidence, actually, that when pay-outs go down, as they have, that you will see a massive amount of foreign investment in dairy farms. They are far more likely, actually, to come in when they can make an economic return. At the current returns, as the member will know, most dairy farmers are either breaking even or not making money, and on that basis it is very unlikely that foreign investors are going to come in and buy those farms.

Ron Mark : I raise a point of order, Mr Speaker. Could I ask through you, Mr Speaker, whether the Prime Minister can comment on the particular part of my question that says—

Mr SPEAKER : Order! No. [Interruption] No. Order! The member will resume his seat. If he can make his questions concise and to the point, then I can help him, but when it is a question as long as that one—to the extent that I have got to intervene to ask for the question—then, in my mind, the Prime Minister addressed it.

Economy—Diversification

4. ANDREW BAYLY (National—Hunua) to the Minister for Economic Development : What progress is the Government making in diversifying the New Zealand economy?

Hon STEVEN JOYCE (Minister for Economic Development): Very good progress. There has been very significant diversification in the economy since 2008, and many sectors of the economy are growing significantly in proportion. In fact, there are 199,000 more people employed now than there were 4½ years ago, with 24,500 more employed in manufacturing in the past year alone. Sectors as diverse as the information and communications technology sector, which has grown at a rate of 9 percent per annum since 2008, now contribute 1.7 percent of GDP. International education is now worth nearly $2.85 billion and supports more than 30,000 Kiwi jobs. The wine industry’s exports were $1.37 billion last year, up 8.2 percent in 1 year. High-tech manufacturing has grown from a $139 million industry a few years ago to a $1.4 billion one now. The tourism industry is, of course, worth 7 percent of GDP now. Although the dairy industry is struggling at the moment—and that will certainly have an impact on the New Zealand economy—other parts of the economy are growing strongly and are helping to counteract that.

Andrew Bayly : What is the Government doing to further diversify the New Zealand economy?

Hon STEVEN JOYCE : Encouraging the economy to diversify and grow in different sectors is a very important part of the Government’s comprehensive Business Growth Agenda. Initiatives contained in the Business Growth Agenda include Callaghan Innovation, and we are investing more and more in research and development for New Zealand’s high-tech companies in order to develop new products and services. As part of Budget 2015 we invested an additional $80 million, bringing our total contribution to science and innovation to around $1.5 billion a year—70 percent more than 8 years ago. We are establishing information and communications technology grad schools to train more young people for this industry. We are lifting greatly the number of people in engineering disciplines; we are investing more in critical infrastructure like the roads of national significance and ultra-fast broadband; and, through New Zealand Trade and Enterprise, we are encouraging more New Zealand companies to grow offshore.

Andrew Bayly : How is the Government encouraging New Zealand companies to grow their offshore businesses and to expand into new and developing markets?

Hon STEVEN JOYCE : That is a very important part of the task, and that is why we have increased the number of companies that New Zealand Trade and Enterprise works closely with by an additional 200 companies, to 700, helping more companies to boost their global reach and to open doors in new markets. We have added new New Zealand Trade and Enterprise positions in countries as diverse as Columbia, Saudi Arabia, Papua New Guinea, and Abu Dhabi; we have increased our presence in the Philippines, Indonesia, Australia, the UK, Germany, the US, Spain, Chile, and China; and we are further growing our international footprint. New Zealand Trade and Enterprise is working with more New Zealand companies up and down New Zealand in order to make the most of the free-trade agreements with Korea and also the new World Trade Organization government procurement agreement.

Dr David Clark : Why is export growth going backwards?

Hon STEVEN JOYCE : I appreciate that the Opposition members do not like it, because it does not fit with their lines, but their lines are rubbish.

Dairy Industry—Milk Price Forecast

5. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister : Does he stand by his statement that dairy prices are likely to be low for “a little bit longer”, given the latest auction was a record low?

Rt Hon JOHN KEY (Prime Minister): Yes.

Andrew Little : Given that dairy farm prices have already fallen by 18 percent since peaking last October, what preparations has his Government undertaken for dealing with increased sell-offs by insolvent farmers who cannot make ends meet with dairy prices so low?

Rt Hon JOHN KEY : What we have done over the course of the last 7 years, after straightening out the mess we inherited from Labour and with our very strong economic management, is to make the economy more efficient and more productive. Here is a bunch of things that we have not done: we have not brought the emissions trading scheme in straight away, we have not put a large tax on water irrigation, we have not put a capital gains tax on every farm, we have not increased the minimum wage to two-thirds of the average wage, and we have not taken money out of the Primary Growth Partnership. We are in favour of the Trans-Pacific Partnership. The Labour Party—

Mr SPEAKER : Order!

Rt Hon JOHN KEY : —is claiming it is the farmers’ friend. They were the policies it took to the election.

Andrew Little : What is the Government’s response to the reports that, contrary to Bill English’s claims, the banks are already forcing mortgagee sales on indebted farmers, and what is to stop more of these farms being bought by overseas investors?

Rt Hon JOHN KEY : Firstly, I am sure that the banks will work closely with farmers, as they typically do, because there is approximately $35 billion worth of debt, I think, sitting on dairy farms. One of the things the bankers will be sitting there and looking at is they will be looking at the policies of the National-led Government, which has supported the farmers; they will be looking at the proposed policies of Labour, which is anti-farmers; and they will be saying “Thank goodness National is in Government.”

Andrew Little : Given his Government has rubber-stamped 296 sales of sensitive land to foreign buyers since the start of 2012, how much more land is he prepared to sell overseas?

Rt Hon JOHN KEY : I think it is important to note that the Government, for the most part, does not actually sell land; land goes through the Overseas Investment Act and the Overseas Investment Office. As we know, the percentage of sales overseas is relatively small, and, actually, New Zealand is not seen as necessarily the easiest place to buy land. If you look around the OECD, we have as many restrictions as most other countries; in some cases, more.

Andrew Little : As a lot of his Government voted down a Labour bill that would have protected farms against being bought up by foreign investors, what steps is he prepared to take to ensure farms that are sold during this downturn will not end up in offshore ownership?

Rt Hon JOHN KEY : This is what would have driven farmers off the land: going into an emissions trading scheme straight away, whacking a massive new tax on irrigation, putting a capital gains tax on every farm, increasing the costs of wages on every farm, having less money in science and innovation, and being opposed to trade. It is pretty simple. Farmers in the dairy sector are subject to an international commodity price, which is clearly on a bit of a downturn at the moment. Last year it was in quite a big upswing. In fact, if you look between 2002 and 2006, the on-farm forecast was about the same as what it currently is today. It is not new. Apparently, in all those years when Labour was in office, it was fine.

Mr SPEAKER : Order!

Rt Hon JOHN KEY : Today it is not.

Andrew Little : Can he confirm that there is a late entry in the flag referendum: a map of New Zealand with a “For Sale” sign over it?

Rt Hon JOHN KEY : The member really needs to sort his game out, because either he wants to go on to his website and change his policy, which is to change the flag with a referendum, or he should realise that he is playing stupid politics with something that could actually seriously benefit New Zealand. That is why Labour continues to poll very poorly, because, in the end, it is just opposed to everything that the Government is in favour of, not because it is a good idea or a bad idea. Otherwise, Labour members must be misleading New Zealanders, because this is their policy. And when you were on your little chatroom a wee while ago, you were telling people you were in favour of it. Were you misleading them deliberately? I do not think so.

Primary Sector—Exports

6. IAN McKELVIE (National—Rangitīkei) to the Minister for Primary Industries : What reports has he received on the outlook for primary sector exports?

Hon NATHAN GUY (Minister for Primary Industries): The Situation and Outlook for Primary Industries for 2015 highlights that the medium to long term outlook for our primary sectors is indeed positive. Although the outlook forecasts that some sectors, like dairying, will experience short-term volatility, overall primary sector exports should increase by 17 percent to $41 billion by 2019. Importantly, the outlook highlights the long-term trend of global income and population growth, particularly on our Asian doorstep. This will provide an opportunity for New Zealand to continue growing its customer base with sustainable economic growth—indeed boosting the regions.

Ian McKelvie : What does the Situation and Outlook for Primary Industries2015 highlight about the short-term volatility in the dairy sector?

Hon NATHAN GUY : The outlook highlights that large price peaks are often followed by price falls and then recoveries. At the moment the world is pretty much awash with milk. China has taken longer than expected to come back into the market. The removal of the European milk quotas is expected to increase the world supply of milk. The Russian sanctions are also having an impact on some of our traditional markets. However, as this report highlights, the medium to long term outlook for the dairy sector is very positive. Just one example: a 1 percent increase in income is estimated to increase the demand for dairy products by 0.8 percent. As the incomes of developing countries increase, so will the demand for New Zealand dairy products.

Ian McKelvie : What is the outlook for our other primary sectors?

Hon NATHAN GUY : That is a very good question. Strong growth in the meat, horticulture, and seafood sectors has helped to partially offset any decrease in the dairy sector, and these sectors have very strong outlooks. In the meat sector, beef export revenue is up by 30 percent, and we are likely to fill our US quota for the first time ever. Total meat and wool exports are expected to increase by almost 11 percent to $9 billion by 2019. Strong growth in kiwifruit and wine exports is driving horticulture export revenue past $4 billion, and it is forecast to reach $4.6 billion by 2019. Seafood export earnings are forecast to reach $1.8 billion by 2019, driven primarily by aquaculture planned expansion growth.

Economy—Impact of Milk Price Forecast

7. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance : Does he agree with the Prime Minister that “Dairy is 5% of our economy. So yes dairy prices are down and it’s tough on those dairy farmers who are resilient people, but 95% of our economy is not involved in that”?

Hon BILL ENGLISH (Minister of Finance): Yes.

Grant Robertson : In light of that answer, if 95 percent of people are not affected how does he explain retailers in Taranaki who say that the downturn in the dairy market is seeing sales decline between 10 and 20 percent, including one retailer who said that the situation was as bad as it was at the height of the global financial crisis?

Hon BILL ENGLISH : Because that seems to be a natural consequence of the fact that dairy farmers in Taranaki are earning less, so they are spending less.

Grant Robertson : What explanation does he have for the following reports on economic confidence: the July Colmar Brunton survey that shows economic pessimism outweighing optimism for the first time in 6 years, the Reid Research Services poll that says that 64 percent of people think we are heading for a downturn, the ANZ business confidence survey that reports a 6-year low in business confidence, or today’s Westpac quarterly economic survey, which features a boat that has run aground—symbolising his management of the economy?

Hon BILL ENGLISH : I think the reason for that is pretty obvious. People have been adjusting to a stream of what they regard as pretty negative news: first, about Greece, then about China, then more recently about a steadily dropping dairy price, and a few other indications that the economy, which was growing at 3 to 3½ percent, looks like it is growing at 2 to 2½ percent. So given how high the levels of confidence were, it is not surprising that they dropped somewhat.

Grant Robertson : Does he expect to meet forecasts in his Budget for reducing unemployment to below 5 percent, or after three quarters of increasing unemployment is he prepared to admit that Westpac is right and unemployment is heading back to over 6 percent?

Hon BILL ENGLISH : There will always be differences between forecasts. What has been positive about the labour market has been the continued growth in new jobs and the continuation of a record high participation rate—that is, a bigger proportion of the working-age population available for work than has ever been the case. So in light of those positive trends it is still possible that unemployment could rise. We have yet to see. What we do know is that we have an economy that is producing a lot of new jobs and has slightly more New Zealanders showing up for them than there is growth in jobs.

Grant Robertson : Why was he so keen to take credit for the state of the economy when it was going well, but at the first sign of a downturn it is everyone else’s fault?

Hon BILL ENGLISH : The member should go back and have a look, because, actually, this Government has always given credit for the stronger economy to New Zealand households and businesses, which, in the face of a recession and an earthquake, rearranged the way they operated, became more efficient and leaner, and got themselves through a very difficult period. We have always attributed the strength of the economy to the people who are the economy.

Waste Management—Plastic Bag Recycling Scheme

8. DENISE ROCHE (Green) to the Minister for the Environment : Why has he announced a plastics recycling initiative rather than a levy when recycling will only maintain the volume of plastic in the waste stream, whereas a levy will reduce the number of plastic bags in circulation?

Hon Dr NICK SMITH (Minister for the Environment): Plastic shopping bags actually make up only about 2 percent of plastic waste. Focusing only on these ignores the large volume of waste from plastic bread bags, plastic frozen food bags, plastic vegetable and fruit bags, and actually dozens of other types of plastic packaging. The strength of the Government’s approach is that it enables recycling of all soft plastic packaging. The Government has introduced a levy on waste going to landfall.

Denise Roche : Given that there are less harmful alternatives for the 1.6 billion plastic bags used in New Zealand every year, why will he not introduce a levy to reduce their use?

Hon Dr NICK SMITH : Plastic shopping bags make up only 0.2 percent of waste that goes to landfill. I would also point out that in the scientific surveys of amounts of litter, these plastic bags are actually only about 1 percent of New Zealand’s litter problem. So they are such a small proportion that it seems somewhat unusual to target all our waste efforts on this single product. I note that some supermarkets are tempted to introduce a levy. It was not at all popular with consumers.

Denise Roche : Why, then, is he spending $1.2 million from the Waste Minimisation Fund on a scheme that does not actually minimise waste?

Hon Dr NICK SMITH : I am somewhat surprised to see the Greens criticising recycling. What the Government is doing is saying that by recycling those plastics, whether they are plastic shopping bags or frozen food bags—all those soft plastics that are often collected by New Zealanders and currently end up just going to landfill—as in Australia, if we can recycle them, this enables us to reduce the amount of petrochemicals that we are importing from overseas to make new plastic bags.

Denise Roche : Will the Minister listen to the 89 percent of Local Government New Zealand delegates who are calling for a levy on plastic bags because a levy would lead to fewer plastic bags being used and ending up in the environment?

Hon Dr NICK SMITH : I noticed that in 2009 a number of supermarkets took the Green Party’s advice and did introduce a levy on shopping bags. It went down very badly with consumers, and, actually, this Government is more focused on the general public than we are on what general councils or others want to think people want to do. There are also large numbers of perfectly responsible New Zealanders who use those plastic shopping bags to dispose responsibly of their other wastes. My advice is that that poses little harm to the environment.

Denise Roche : I raise a point of order, Mr Speaker. My question was specifically—

Mr SPEAKER : Order! No, your question has been addressed by the Minister.

Health Services—Access to Elective Surgery

9. BARBARA KURIGER (National—Taranaki - King Country) to the Minister of Health : Can he confirm that the number of patients benefiting from elective surgery has increased by 5,030 in the last financial year, and that 49,234 more patients are having surgery now compared to 2007/2008?

Hon Dr JONATHAN COLEMAN (Minister of Health): Yes, I can. When National was elected in 2008, increasing the number of elective surgeries every year was a top Government priority. These new figures show that a record 167,188 New Zealanders received elective surgery in 2014-15, a remarkable increase of 42 percent on 2007-08.

Barbara Kuriger : What is the spread of these increased numbers across the types of elective surgery, and what is his expectation for the future?

Hon Dr JONATHAN COLEMAN : This continued growth in elective surgeries—over 5,000 in the last year—has been spread across the specialities. It includes more than 690 orthopaedic operations, 1,300 general surgeries, and 150 more cardiothoracic surgeries. It is my expectation that the district health boards will continue to deliver increases averaging 4,000 more surgeries a year over the next 3 years, which is why the Government invested an extra $92 million into elective surgery in the last Budget. This Government is committed to protecting and growing public health services, and the extra 50,000 surgeries over the last 7 years is evidence of that commitment.

Hon Annette King : What impact will the prediction of deficits by 11 of the 20 district health boards have on their ability to provide services in a timely manner?

Hon Dr JONATHAN COLEMAN : The member does not need to worry about that because we have reduced those deficits from $150 million under the last Government to around $50 million and dropping over the longer term under this Government. In actual fact, there is nothing to worry about. It will not be like when Mrs King was Minister and the Budget doubled, but there were 2,000—

Mr SPEAKER : Order!

Hon Annette King : I raise a point of order, Mr Speaker. My question was a straight question. It had no political inference in it. I asked what the impact of deficits was—

Mr SPEAKER : Order! And the Minister was—[Interruption] Order! The question was answered in order. It was describing what impacts—which, in the Minister’s mind, were relatively minimal.

Free-trade Agreements—Saudi Arabia Negotiations

10. Hon DAVID PARKER (Labour) to the Prime Minister : Did he chair the Cabinet on 18 February 2013 when Cabinet noted the initial $4m payment to a “Saudi investor”, and did he ask why Cabinet approval was not being sought?

Rt Hon JOHN KEY (Prime Minister): Yes, I did chair Cabinet. In answer to the second part of the question, no. Cabinet was asked to note the payment. It was within the Ministry of Foreign Affairs and Trade’s appropriation and did not require Cabinet approval.

Hon David Parker : When he was chairing that Cabinet meeting was he aware that Minister McCully had told the Saudi investor and Ministry of Foreign Affairs and Trade officials that he would “not want any financial contributions to be treated as compensation as this would involve a plethora of lawyers and bureaucrats.”?

Rt Hon JOHN KEY : I have been aware the whole way through that Mr McCully has never viewed this as compensation because it is not.

Hon David Parker : I raise a point of order, Mr Speaker. That was not my question.

Mr SPEAKER : Yes, it was your question, and it has been answered.

Hon David Parker : No—

Mr SPEAKER : Order! Does the member have a further supplementary question?

Hon David Parker : Why did the contract for the $4 million payment make no reference to the settlement of the long-running dispute, when Cabinet noted this as part of the payment’s purpose?

Rt Hon JOHN KEY : You really have to refer that to the Minister of Foreign Affairs because the Ministry of Foreign Affairs and Trade put the contract together. But everyone is aware, in reading the papers, just where the responsibility started. It was with the Labour Government, and yes, National cleaned it up.

Hon David Parker : Did Minister McCully tell him and his Cabinet that the Auditor-General had made a written complaint to the Ministry of Foreign Affairs and Trade about the ministry misrepresenting its advice about the Saudi sheep deal?

Rt Hon JOHN KEY : I cannot recall discussions about the Auditor-General, but I think it has been quite clear that there was some early dialogue. Ultimately, actually, the officials are very happy with the way the process went.

Hon David Parker : What can his Government show for this dodgy deal other than a sullied international reputation; a failed farm in the desert, where the lambs died in a sandstorm, according to his own Minister; and the waste of over 11 million of taxpayers’ hard-earned dollars—and still no free-trade agreement?

Rt Hon JOHN KEY : I know that the truth is inconvenient, but it is worth actually having a look at the papers because it was Labour that imposed the ban. It was the Labour Government that said it would reverse the ban, and it was Labour that dispatched the Minister of Foreign Affairs and Trade at the time, Phil Goff, who told the Saudi Minister that they would restart, and it was the Labour Government that actually did not tell the Saudis until it had publicly made the decision. It is very inconvenient but this all started with Labour. That is what I call dodgy dealings—it is the Labour Party’s actions.

Andrew Little : In light of the dump of 900 pages of documents last week that failed to prove a single word of the claims made by the Prime Minister about the Labour Government and the fact that it is the National Government that twice continued the ban on live sheep exports, is it not time that he finally cut through all that crap and was straight with New Zealand? What is the real reason he paid off Al-Khalaf?

Rt Hon JOHN KEY : Being “Angry Andrew” worked the first time he was in Parliament. Now it just looks like bad language and the inability to actually front up and be honest. Phil Goff went to Saudi Arabia and misled them. The rest is history.

Education—Asian Language Learning in Schools Fund

11. MELISSA LEE (National) to the Minister of Education : What recent announcement has she made that supports the learning of Asian languages in schools?

Hon HEKIA PARATA (Minister of Education): I am delighted to announce that 22 programmes, involving 129 schools, will receive a total of $3.3 million over the next 3 years in order to establish new Mandarin, Japanese, or Korean language programmes and to expand existing ones. This signals the first phase of the Government’s commitment to spending a total of $10 million over 5 years to increase the provision of Asian languages in schools. The first round generated such enthusiasm for Asian languages in classrooms that for the second round we are extending funding eligibility to include all Asian languages. Applications for that round open today, and schools have until 25 September to register their interest.

Tracey Martin : Does the Minister believe that New Zealand students learning an Asian language is more useful or has more value than New Zealand students learning Te Reo Māori?

Hon HEKIA PARATA : The decision as to which languages a school wishes to provide to its students is a discussion between that school and its board of trustees. What this Government does is fund and support the availability of Te Reo Māori, English, and sign language, and, in addition, this wonderful announcement that I am making today about Asian languages.

Melissa Lee : What benefit will the Asian Language Learning in Schools (ALLiS) fund bring to New Zealand children?

Hon HEKIA PARATA : International evidence shows that learning a second language can also contribute to the development of a student’s literacy skills in their first language. Also, in addition to supporting our official languages—English, Te Reo Māori, and sign language—and Pasifika languages, we need to provide young New Zealanders with opportunities to learn the languages of countries that we have strong cultural, economic, and trade relationships with. As our international and trading links grow, particularly with Asian countries, future generations of kids will need to be able to work in different cultural environments and to communicate in different languages. Easy access to learning an Asian language is a real benefit to the young people of New Zealand.

Tracey Martin : Will the Minister be making a similar announcement that her Government will also provide the additional funding required in order to increase the number of resource teachers of Māori, thereby supporting the delivery of Te Reo Māori in both English and Māori-medium schools; if not, why not?

Hon HEKIA PARATA : I can refer that member to successive Budgets within which we have made those commitments already. There are scholarships available for kaiako—that was announced in Budget 2013.

Tracey Martin : I raise a point of order, Mr Speaker. My question was specifically about an increase in the number of resource teachers of Māori.

Mr SPEAKER : Order! No, no—the question started with “Will the Minister be making similar announcements’. The Minister was talking about previous announcements that she has made. Does the Minister wish to complete the answer? Then the question has been answered.

Point of Order—Leave to Ask Question

CHRIS HIPKINS (Senior Whip—Labour): I raise a point of order, Mr Speaker. The Standing Orders allow for 12 oral questions each day. I understand that the Māori Party was unable to lodge a question by the deadline this morning. I therefore seek leave for it to be able to ask its oral question—

Mr SPEAKER : Order! You cannot. The member knows the rules of this House very well. He cannot seek leave on behalf of another member.

CHRIS HIPKINS (Senior Whip—Labour): In that case, I seek leave to ask a question myself, seeing as there is not an additional question—

Mr SPEAKER : Order! [Interruption] No, I just need to deal with this first. That is certainly within the Standing Orders. Leave is sought by Chris Hipkins to ask one additional question. Is there any objection? There is.

MARAMA FOX (Co-Leader—Māori Party): Kia ora, Mr Speaker. I seek leave to ask a question on behalf of the Māori Party.

Mr SPEAKER : Leave is sought for that particular course of action. Is there any objection? There is none. It is very unusual. I need to know—I think you also need to describe whom you are asking the question to.

MARAMA FOX (Co-Leader—Māori Party): I would like to ask the question to the Minister for Social Development. [Interruption]

Mr SPEAKER : Order! [Interruption] Order! I am going to allow the member to put the leave, in view of the fact that we have done it before. If the House decides it is in order, so be it. If the House—[Interruption] Order! The leave was put without us knowing where the question was going. I am going to put the leave again. It will then be over to the House to decide. Leave is sought by Marama Fox to ask a question of the Minister for Social Development. Is there any objection? There is none.

Marama Fox : Thank you, Mr Speaker, and apologies to the House for the administrative error.

Mr SPEAKER : Order! Just ask the question.

Child, Youth and Family—Review

12. MARAMA FOX (Co-Leader—Māori Party) to the Minister for Social Development : Has the Minister provided, through the Child, Youth and Family review, opportunity to ensure that children are not being alienated from their whānau throughout the process of the modernisation in the review?

Hon ANNE TOLLEY (Minister for Social Development): The Child, Youth and Family review, of course, is still ongoing, and I have only just received the first report from the panel. But we have, throughout the review to date, taken great lengths to ensure that the voices of children are heard, and I have set up an advisory committee consisting of eight young people who have experienced care under the current Child, Youth and Family system. I have also made two appointments to the review panel who have extensive experience in Māori, as Māori make up more than 50 percent of the numbers of children in care.

ENDS

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