Questions And Answers - Tuesday, 1 May 2007

Questions to Ministers

Economy—OECD Ratings

1. JOHN KEY (Leader of the Opposition) to the Prime Minister: Does she stand by her statement last year, with respect to the economy, that “Our job in government has been to stop New Zealand running the race to the bottom, and to aim for the top.”?

Rt Hon HELEN CLARK (Prime Minister): Yes.

John Key: Why, then, after 8 years of a Labour Government, has New Zealand fallen from being the 20th ranked economy out of 30 in the OECD to the 22nd—that is right, New Zealand has fallen two places in 8 years under Labour—and if that is a race for the top, is she a little bit confused about what is the top and what is the bottom?

Rt Hon HELEN CLARK: The OECD report points out that New Zealand for quite some years has been around 16 percent below the GDP per capita median for the OECD. I understand there is a little volatility around those ratings, not least because a country like Greece recalculated the size of its informal economy.

Tim Barnett: How do New Zealand’s employment growth rates compare with those elsewhere in the OECD, and how has that comparison changed over time?

Rt Hon HELEN CLARK: I appreciate that this is an answer the Opposition may not like, but the OECD does set out the figures for employment growth for New Zealand in relation to the OECD average. From 1991 to 1995 the figures show that our employment growth rate was below that of the OECD average, as it was from 1996 to 2000. Between 2001 and 2005 we grew over four times as fast as the OECD average in respect of employment growth.

John Key: What does the Prime Minister have to say to the 350 workers at Fisher and Paykel, who lost their jobs because of business conditions in New Zealand, other than what she said on breakfast TV on Monday, which amounted to: “Tough luck. That’s the way of the world. It’s a shame you made only washing machines rather than being a high-value, niche, innovative manufacturer.”?

Rt Hon HELEN CLARK: Of course, one of the key factors cited by Fisher and Paykel was that when its competitor—based in Australia—ceased manufacture, the company lost its preference in that market, and that was a critical point. Of course, 2 weeks ago the New Zealand dollar reached a quarter-century high against the US dollar, but so did the Australian dollar and so did the pound sterling. That causes manufacturers across those countries—and, I suggest, across a great deal of the Western World—to be looking at lower-cost processing. Our future in manufacturing is at the higher end.

Darren Hughes: How do New Zealand’s growth rates compare with those in the OECD, and how has that comparison changed over time?

Rt Hon HELEN CLARK: Again, the OECD produces figures that the Opposition may not wish to hear, but those figures show that between 1991 and 1995 GDP growth per capita in the OECD outstripped New Zealand’s, as it did between 1996 and 2000. From 2001 to 2005 our growth rate was significantly above the OECD average. That means that if we could, on average, keep growing above the OECD growth rate, we would, of course, improve relative rankings.

Sue Bradford: Does the Prime Minister agree with Andrew Little, the Secretary of the New Zealand Amalgamated Engineering, Printing and Manufacturing Union, that manipulation of the cash rate is a “blunt tool” that is making it only harder for average New Zealanders to afford to house themselves and their families, while at the same time increasing our current account deficit and making it harder for manufacturers to export—and that means thousands of decent jobs are at risk; if she does agree with Mr Little, what other tools does she think may be useful to support New Zealand manufacturing?

Rt Hon HELEN CLARK: It is a “blunt tool”, but finding other tools that are useful has not proved easy. That is why the Government suggests that a select committee inquiry focused on monetary policy might have a role to play.

John Key: Does the Prime Minister anticipate more job losses in the months ahead, along the lines announced last week by Fisher and Paykel?

Rt Hon HELEN CLARK: Businesses will make their own choices, but I would put this issue in the context of the fact that over the past 6 years jobs in the manufacturing sector have risen by 14 percent. This is a dynamic sector.

Sue Bradford: Did the Prime Minister agree with the Real Estate Institute when it said last year that foreign investment in New Zealand real estate was on the rise; and would it not assist in the battle against inflation and take the heat out of the housing market if the Government acted to limit the sale of land and houses to New Zealand citizens and residents?

Rt Hon HELEN CLARK: The Government has, with reasonably broad support in the House and the community, put some more restraints on the kind of land that can be sold without permission through the Overseas Investment Commission and the relevant Ministers. But to put a stop on foreign investment in real estate would be going rather a lot of steps too far.

John Key: If the figures the Prime Minister quotes are all so good and New Zealand, relatively speaking, is doing so well, can she just explain one more time why New Zealand has fallen in its average per capita income from 20th place to 22nd place in the OECD, and does she still hold her goal of getting New Zealand into the top half of the OECD; if so, how long will it take to do so, given that it has taken her 8 years to take us down two places, let alone move up?

Rt Hon HELEN CLARK: I stress again that the OECD report points out that we have been about 16 percent below the median GDP per capita rates for quite a number of years. We are not falling significantly further at all, but in order to climb we need to keep growing above OECD averages consistently over time.

Keith Locke: Does the Prime Minister agree that Auckland’s public transport system won the race to the bottom when compared with other First World cities; and how will she respond to the nearly 4,000 Aucklanders who signed a petition presented to me in Parliament this morning calling for an urgent Government agreement on a passenger rail electrification timetable, and for funding to enable trains to be ordered? [Interruption]

Madam SPEAKER: Yes, the member is right. That is an extraordinarily long bow given the primary question that was asked.

Keith Locke: I raise a point of order, Madam Speaker. The question is on the economy and the race to the bottom. The passenger rail system in Auckland is very important to the Auckland economy—even the Prime Minister would recognise that.

Madam SPEAKER: I just ask the member to try to narrow the questions in future.

Rt Hon HELEN CLARK: I do not disagree in substance with the general comment made by the member about the state of Auckland’s public transport system in the past. The Government has hugely increased spending on it. In respect of rail and electrification I believe that it is a matter of not if but when, and we envisage continuing to invest to improve Auckland’s public transport system.

John Key: If one of the solutions in making the economy more competitive is to cut the company tax rate, which we believe will be provided for in the Budget in a few weeks’ time, why has it taken the Government 8 years to suggest cutting the company tax rate when there has been more than an ample opportunity through large surpluses to do so in the past?

Rt Hon HELEN CLARK: It will not have gone without notice that the Government has run quite a conservative fiscal policy, and that it likes to see where money is coming from before putting it into tax cuts and other spending. The Government will be delivering on a significant business tax package this year. I note that this was not something the National Party even bothered offering voters during the last election campaign.

GST and New Zealand Superannuation—Rates and Eligibility

2. Hon MARK GOSCHE (Labour—Maungakiekie) to the Minister of Finance: Has he received any reports advocating an increase in both the GST rate and the age of eligibility for New Zealand superannuation?

Hon Dr MICHAEL CULLEN (Minister of Finance): I have seen a report from the OECD that, amongst a number of unhelpful suggestions, suggests that we should increase the rate of GST and cut New Zealand superannuation, either by raising the age of eligibility or lowering the level of indexation. Mr English subsequently endorsed that report. I can assure the House I have no plans to increase the rate of GST or to change the age of eligibility or, indeed, the indexation requirements for New Zealand superannuation. I call on all members of the House, other than Mr English, to endorse that.

Hon Mark Gosche: Has he seen any reports on when proposals such as those in the OECD report were last implemented?

Hon Dr MICHAEL CULLEN: As Mr English has just said that that was a stupid idea, I should note that in 1998-99 the New Zealand Government of the day, of which he was a member, cut national superannuation from 65 percent of the average wage for a married couple to 60 percent of the average wage for a married couple. One of the first things the incoming Labour Government did was to restore the level of New Zealand superannuation to 65 percent.

Economy—OECD Assessment

3. Hon BILL ENGLISH (Deputy Leader—National) to the Minister of Finance: Does he agree with the OECD’s assessment of his fiscal policy that “exercising greater restraint now could avoid a longer, and possibly more, painful macroeconomic adjustment process”?

Hon Dr MICHAEL CULLEN (Minister of Finance): It would, in fact, be helpful to give the full quotation: “Greater fiscal neutrality is likely to be unpopular given public pressure for tax cuts and/or additional public spending that would reduce the projected budget surplus. Nonetheless, exercising greater restraint now could avoid a longer, and possibly more, painful macroeconomic adjustment process.” As Mr Key last year said that there was room for $11 billion a year of tax cuts, perhaps Mr English, if he is so keen on the OECD report, could give a copy to Mr Key.

Hon Bill English: Has he seen the statement made by Dr Bollard, Reserve Bank governor, that the official cash rate review on 26 April this year stated: “As we noted in March, demand is being fuelled by a buoyant housing market, increases in government expenditure, a rising terms of trade, ongoing net immigration, and a robust labour market”; and does the Minister agree, or disagree, with the reference to Government expenditure in that statement?

Hon Dr MICHAEL CULLEN: I have slightly more up to date information. When that is released, very soon, it will show that Government spending is running at below the forecast level. The Government is running a substantial cash surplus in the current year. In other words, the Government is taking more demand out of the economy than it is putting into the economy. Last year I was attacked, almost daily, by the members opposite—Mr Key nods his head in agreement—for doing precisely that.

Hon Bill English: Is it now the Minister’s position that his plans for significant new spending in the next two Budgets are having no impact on inflation and thereby on interest rates; and does that mean he disagrees with a further statement made by the Governor of the Reserve Bank: “Strengthening domestic demand is being supported by a resurgence in the housing market and an expansionary fiscal policy.”; and why does the Minister believe that his spending makes no difference, when everyone else knows it does make a difference?

Hon Dr MICHAEL CULLEN: What is crucial is the balance between spending and revenue; and this Government will continue to run a tighter fiscal policy than the National Party, which the member belongs to, promised at the last election and continues to promise day by day, as every spokesperson opposite issues press statements calling for increases in Government spending in his or her area—like Mr Power, only in the last few days.

Hon Bill English: When is the Minister going to stop fighting the 2005 election and actually account to the country for his economic management, under which surges in Government spending are contributing to higher inflation, higher interest rates, and a higher exchange rate?

Hon Dr MICHAEL CULLEN: I will get over the 2005 election much sooner than that member will get over the bitterness of losing in 2002, which affects his attitude to any sensible suggestions about running this economy. That is the man who sabotaged the talks around monetary policy, because he is so bitter about 2002.

Hon Bill English: How is it that someone who is supposed to be the Minister of Finance blames the Opposition spokesman on finance for current economic conditions, and has also decided to flick off the central issue of the day—which is the way the Reserve Bank is managing inflation—to an inquiry by parliamentary backbenchers; and what is it that Doug Woolerton and Hone Harawira know that Treasury and the Reserve Bank do not?

Hon Dr MICHAEL CULLEN: I am fascinated that the member describes monetary policy as the central issue of the day, when only yesterday he said there was nothing wrong with the framework for monetary policy.

Hon Bill English: Given the emphasis by the Governor of the Reserve Bank on the impact of Government spending plans on inflation and, therefore, on interest rates paid by New Zealand families, will the Minister support an inquiry by the Finance and Expenditure Committee into the effect of the Government’s spending plans on inflation and interest rates and into the difficulty that the Governor of the Reserve Bank has in managing that?

Hon Dr MICHAEL CULLEN: I have already written to the chairperson of the Finance and Expenditure Committee suggesting that an inquiry would be a good idea, but the member, of course, keeps citing potential cuts in the corporate tax rate as being a large part of the increase in Government spending. If there are any such cuts in the Budget, I look forward to Mr English leading his troops into voting “No” for tax rate cuts.

Hon Bill English: Why should New Zealand families and businesses listen to Dr Alan Bollard’s message to tighten their belts or else he will raise interest rates, and to the Minister’s own message to them telling them to save more and consume less, when the Minister has no plans to tighten the Government’s belt; and why should the Government not carry its share of the burden in the fight against inflation?

Hon Dr MICHAEL CULLEN: The Government, for the last 3 years, has been running very, very large surpluses. I have lost count of the number of press statements from members opposite attacking that Government fiscal policy. The Government will continue to run a fiscal policy that meets our long-term fiscal objectives of reducing Government debt to no more than about 20 percent of GDP. This is one of the tightest fiscal policies in the world.

Hon Bill English: Can the Minister confirm that he is just telling Parliament and New Zealand that he has no intention whatsoever of adapting the Government’s plans to the reality of the current economic circumstances, which are putting people out of jobs in the export sector and pushing families into 15 percent and 20 percent increases in their interest rate outgoings, because he has decided that what he does makes no difference to the economy and that he is right and everyone else is wrong?

Hon Dr MICHAEL CULLEN: The member seems not to read his own press statements. Mr English, over the last 2 or 3 weeks, has said that the only thing wrong with monetary policy was that Dr Bollard did not increase interest rates earlier and higher than he has done. That is what Mr English said, and that is why he just confirmed in the House a minute ago that if there are tax rate cuts in the Budget, he will vote against them.

Hon Bill English: When will the Minister take the responsibility that goes with his job, exercise some judgment about the current economic circumstances, and pull those levers that he can, including a cut in Government spending, and stop trying to play games over monetary policy—over which he has no influence, at all?

Hon Dr MICHAEL CULLEN: When the member sees the Budget, he will realise that I have pulled a number of levers. One of them will open up a trapdoor, down which he will fall.

Pensions and Retirement Savings—Reports

4. R DOUG WOOLERTON (NZ First) to the Minister of Finance: Has he received any recent reports regarding New Zealand’s public pension system and retirement savings?

Hon Dr MICHAEL CULLEN (Minister of Finance): As I mentioned earlier, I have received a report from the OECD calling for an increase in the age of eligibility for New Zealand superannuation. I have ruled this out, but the report was endorsed by Mr English, the Opposition spokesperson on finance. I have also received reports showing that in 1998-99 the floor for New Zealand superannuation was cut from 65 percent of the average wage to 60 percent by the then National Government, of which Mr English and Mr Ryall and others were a part, and restored to 65 percent in 2000 by the incoming Labour Government.

R Doug Woolerton: Has he seen any reports suggesting New Zealand should completely cede its economic sovereignty to Australia, and unnecessarily expose our exporting and agriculture sectors to fluctuations in world mineral prices, among other things beyond our control?

Hon Dr MICHAEL CULLEN: Indeed I have. I have seen a suggestion from Mr Key that we should adopt a common currency with Australia. Actually, that has never been on offer. What is on offer is adopting the Australian currency. This would mean that we would be highly influenced by the very much larger increase in minerals prices than has occurred in New Zealand’s agricultural prices over recent times.

Darren Hughes: Can he tell the House what successive Labour-led Governments have done to protect New Zealand superannuation into the future?

Hon Dr MICHAEL CULLEN: In 2000 we restored the level of New Zealand superannuation. We also established a superannuation fund that, along with our prudent fiscal strategy, has made us one of the best-placed nations in the world to tackle the challenges of an ageing population. On 1 July this year the KiwiSaver scheme comes into force, which will make it easier for New Zealanders to save to supplement their retirement income.

Health Services—Ratings

5. Hon TONY RYALL (National—Bay of Plenty) to the Minister of Health: Does he stand by his earlier statement rating the health system 5½ out of 10; if not, what mark would he give the health system now?

Hon PETE HODGSON (Minister of Health): I mark the health system as “continually improving and expanding”, because this Labour-led Government has always made health investment a high priority and will continue to do so.

Hon Tony Ryall: Will he assure the people of New Zealand that if they are admitted to hospital today, they will not face the series of systemic mistakes that cost an 82-year-old man his life in Auckland; if not, why not?

Hon PETE HODGSON: Of course I can offer no such assurance, but I do note that the Auckland District Health Board has improved its systems remarkably in the 2½ years since that unfortunate and tragic mistake occurred. I would say to the member that errors occur in all hospitals throughout all the health systems in the world. This Government is intent on reducing those errors.

Maryan Street: On what basis does the Minister claim that the health system is continually improving and expanding, and would he like to give some examples?

Hon PETE HODGSON: There are many such examples, so I will need to be brief. Immunisation rates are up, infant mortality is down, smoking is down, breast screening is up, mental health services are way better, there are more nurses, there are more doctors, there is more transparency, there is better primary health care, there are lower doctors’ fees, more elective surgery, and longer life expectancy.

Barbara Stewart: Have the ongoing disruptive and costly strikes in the health workforce, and the recent deaths at Christchurch, Wellington, and Auckland hospitals resulting from deficient care, affected the Minister’s rating of his system; if not, why not?

Hon PETE HODGSON: I do recognise there has been a recent spate of reports into deaths—some of them recent, and some of them not. As some of the deaths and misadventures within the New Zealand health system, including the one reported in the New Zealand Herald this morning, occurred 2½ years ago, I think assuming some link between that and industrial activity is drawing a pretty long bow, indeed.

Hon Tony Ryall: Would he tell the wife of a 25-year-old man who turned up at the Christchurch Hospital emergency department in agony, only to be sent home to die 12 hours later, that the New Zealand health system is improving all the time?

Hon PETE HODGSON: That was the tragic incident of a 25-year-old man from Coalgate in Canterbury. However, the member will be aware that the circumstances surrounding that incident are themselves the subject of an inquiry by the Canterbury District Health Board. That inquiry, I hope, will be forthcoming with ways to try to prevent a situation such as that from arising in the future.

Judy Turner: Does the Minister agree that the health system could benefit from contracting out more elective operations to private hospitals; if so, is he prepared to encourage district health boards to do so?

Hon PETE HODGSON: District health boards are already utterly free to do so—and many do. The fact is that most of the capacity for elective surgical services in New Zealand resides within our public health system. To the extent that the private health system can assist, it does so—as long as the price is right.

Judy Turner: Does the Minister agree that if district health boards negotiated operations with private hospitals for the mid to long term, the cost to the public purse would be dramatically lower than it is at present, when district health boards demand surgery for the following week and must then pay the high spot cost; if not, why not?

Hon PETE HODGSON: The fact of the matter is that district health boards contract with the private sector across a variety of terms. If they have a short-term need, there is a short-term contract. Some of the contracts are sufficiently long that there will be a price advantage to be secured.

Hon Tony Ryall: Can the Minister explain how the Government is spending an extra $4 billion a year on health, yet the quality of our public health services is under continual question, with report after report showing that patients are dying because they cannot get even a basic standard of care under his Government?

Hon PETE HODGSON: The member chooses to abandon perspective. The Health and Disability Commissioner—the person who reliably brings these errors and tragedies to public notice in this more and more transparent health system—has certainly not lost his perspective. Let me quote the Health and Disability Commissioner from last week: “Many, many thousands of people every week who are involved in health care will in the end base their confidence by their personal experience. And so if that personal experience is positive—and it probably is in the overwhelming majority of cases—I guess that is the crux of public confidence.”

Hon Tony Ryall: Why should New Zealanders listen to the Minister’s message that New Zealand’s health system is improving all the time, when he and his Government are spending an extra $4 billion a year on the public health system and there is hardly any improvement at all in the quality of standards of service for patients in this country?

Hon PETE HODGSON: Immunisation rates are up, infant mortality is down, smoking is down, breast screening is up, mental health services are way better, there are 5,000 more nurses, there are 1,000 more doctors, there is a lot more transparency, there is better primary health, there are lower doctors’ fees, there are lower prescription fees, there is more elective surgery, and there is longer life expectancy. That is what the member gets for his $4 billion investment.

Jo Goodhew: What would the Minister say to the family of the Wanganui woman who died after being referred by her general practitioner to the hospital three times and after being discharged three times in 11 days—each time without the hospital informing her general practitioner—and how, after spending an extra $4 billion a year on health, can the system not manage basic communication between a hospital and a general practitioner?

Hon PETE HODGSON: I acknowledge that there has been a particular spate of instances at the Whanganui District Health Board. As a result, there are a bunch of ministerial appointees helping the Whanganui District Health Board to look at its system. That work continues, and there will be continual improvements in that district health board because I am demanding it.

Pacific Island Families—Living Standards

6. TAITO PHILLIP FIELD (Independent—Mangere) to the Associate Minister for Social Development and Employment: Has she received any recent reports relating to the living standards of Pacific Island families?

Hon LUAMANUVAO WINNIE LABAN (Associate Minister for Social Development and Employment): I receive a range of reports on a number of topics relating to Pacific Island people in New Zealand. I often hear from Pacific people themselves on how this Labour-led Government’s Working for Families package is making a real difference to their families and communities. I also receive reports on how many more Pacific people are in paid work; for example, as at the end of March this year there are now 2,568 Pacific people on an unemployment benefit in the whole of New Zealand. That is an outstanding 78 percent reduction from 12,300 in 1999 when National was in Government.

Taito Phillip Field: How does she reconcile her claims that living standards have improved, given that the Social Report 2006 indicates that the proportion of families with any Pacific members with low living standards increased from 49 percent to 54 percent?

Hon LUAMANUVAO WINNIE LABAN: The figures the member refers to are from 2004, before the Working for Families package was introduced. The Working for Families package is increasing the incomes of hundreds of thousands of our Pacific Island families and lifting tens of thousands of our children out of poverty. We have made big progress. We saw an issue and we dealt with it. Yes, there is still more work to be done and we are getting on with it.

Charles Chauvel: How is this Labour-led Government raising the living standards of Pacific Island families?

Hon LUAMANUVAO WINNIE LABAN: Since the mid-1990s Pacific peoples have improved in nine out of the 10 outcomes that the Social Report 2006 measured. These outcomes are: more school-leavers with higher qualifications, less cigarette smoking, more attainment of tertiary education qualifications, less unemployment, more employment, higher median hourly incomes, fewer populations with low incomes, greater housing affordability, and less household crowding.

Hon Brian Donnelly: Can the Minister provide some details on how the Working for Families policy has impacted on the living standards of Pasifika families?

Hon LUAMANUVAO WINNIE LABAN: Through our Working for Families policy we have invested heavily in families, including many of our Pacific families. The package targets tax relief where it is needed most—families with young children. A Pacific family with two young children earning the median income—$58,000 a year—will now be better off by $136 per week thanks to the Working for Families package. This improvement in household incomes lifts an estimated 70,000 children over the income-poverty threshold.

Taito Phillip Field: How does she reconcile claims that living standards have improved, given that the analysis of a new Ministry of Health survey of children’s nutrition has found that an astonishing 40.8 percent of Pacific children, 22.9 percent of Māori children, and 7.7 percent of European children aged between 5 and 14 sometimes or always ate nothing before school; and, given these reports of escalating proportions of Pacific school-age children going hungry to school each day, what is the Government doing to alleviate this problem?

Hon LUAMANUVAO WINNIE LABAN: As I said in my previous answers, Working for Families has made an enormous difference, and certainly the Fruit in Schools programme has made a terrific difference for Pacific families.

Early Childhood Education—Free Hours Participation

7. KATHERINE RICH (National) to the Minister of Education: How many 3 and 4-year-olds will “definitely get” 20 free hours of early childhood education on 1 July 2007?

Hon STEVE MAHAREY (Minister of Education): It is good news. From 1 July this year up to 90,000 3 to 4-year-olds in teacher-led centres will be eligible for Labour’s 20 free hours policy.

Katherine Rich: As it is clear from that answer that the Minister has no idea how many kids will actually receive 20 free hours’ early childhood education from 1 July, what is his response to the Montessori Association of New Zealand calling the policy “morally wrong and something that will undermine the quality of early childhood education in this country”?

Hon STEVE MAHAREY: Puzzlement, because I met with the Montessori group just last week—along with 12 other parts of the early childhood sector—and members of the group at that time advised me that they have one particular issue with the policy: that unlike most centres they retain children who are aged 5. Most other centres pass them on to a primary school at that time. They said they want to come into the system, but it would take them a little bit longer to work out how to handle it, given that they retain those 5-year-olds.

Sue Moroney: What evidence does the Minister have that 20 hours’ free early childhood education is well supported?

Hon STEVE MAHAREY: I have seen a great deal of support from parents and from the sector. For example, the New Zealand Childcare Association said last week that “free 20 hours’ gives parents more choices,” and that they are confident that “the quality of the service will not be compromised”. Over 160,000 parent attestation forms have been ordered by early childhood centres up till now. That goes alongside the enthusiasm of parent John Key, who said: “We want our young kids to have the 20 hours’ free.”, but, of course, the policy is not supported by people like Paula Bennett, who has asked for it to be scrapped because she wants to make room for tax cuts.

Hon Brian Donnelly: Can the Minister explain to the House whether, having gained approval from parents of all current students that they will pay for additional provisions over and above 20-hours-free provisions, a centre will be able to refuse enrolment of a child whose parent at a later date refuses to pay such additional costs?

Hon STEVE MAHAREY: The way the rules work—as the member will know and is wanting to confirm—is that 20 hours’ free is free; that a centre can establish an optional charge with a parent, and that once that charge has been established and agreed to by the parent it is enforceable.

Katherine Rich: Does the Minister concede that it looks bad for his policy when the Early Childhood Council says it is dangerous, that it is “the biggest threat to quality of early childhood education in a generation”, and that “if this policy goes ahead as it is, the quality of early childhood education in New Zealand is set to fall. Teachers will be laid off. Educational programmes will be cut.”?

Hon STEVE MAHAREY: Once again I have to say I am curious, given that I met last week with members of the early childhood sector, including the Early Childhood Council. I also know that 70 percent of its members have already decided that they are in, or that they intend to come in. So I assume that what the member is reading is a memo about an internal debate going on within the Early Childhood Council.

Paula Bennett: Does the Minister accept that even if he does not think 20 hours’ free was an election promise, parents obviously do when they now have to start a group called 20hoursfree.please and a petition asking Labour to deliver on that promise?

Hon STEVE MAHAREY: I understand that the parents who are involved—the eight to 10 of them who are currently running the petition—are parents who do not currently have children involved in early childhood education. The 92,000 who currently do are the ones who are currently being talked about. As the 10-year strategy unfolds for early childhood education—we are 5 years through it—we have more registered teachers and we open more centres. All parents who are eligible will be able to get their children in.

Paula Bennett: Why, when a number of early childhood associations and councils keep telling the Minister this policy is flawed, and when parents have to start a petition to explain to the Minister that this policy is flawed, does he not just admit that parents will not get 20 hours’ free for their 3 and 4-year-olds as promised by this Government?

Hon STEVE MAHAREY: I am determined to implement this policy because I want to prevent the National Party members from ever having a chance to scrap it.

Defence—Policy Assessment

8. DIANNE YATES (Labour) to the Minister of Defence: What reports has he received assessing New Zealand’s defence policy and the New Zealand Defence Force?

Hon PHIL GOFF (Minister of Defence): Yesterday the Australian Strategic Policy Institute released a report on New Zealand’s defence capabilities and relationships. The report was overwhelmingly positive about what had been achieved under the Labour-led Government’s building up of our defence forces after the massive rundown of armed forces under National during the 1990s. The report concludes—[Interruption]

Madam SPEAKER: Please be seated. It is becoming very difficult to hear the Minister, who is, in fact, addressing the question.

Hon PHIL GOFF: The report concludes that the armed forces are “becoming modern, fully capable operational forces” that are “adopting appropriate levels of modern technology”. On key relationships with Australia and the United States, the report states that New Zealand’s defence relationships with both countries are “strong and becoming stronger”.

Dianne Yates: What does the report say about investment in the New Zealand Defence Force and its current capability?

Hon PHIL GOFF: The report acknowledges the impact of the $3.5 billion investment in capital equipment in the long-term development plan, and the additional $4.6 billion through the Defence Sustainability Initiative. The report states that the current Government’s policies, if they continue, mean that the armed forces are fiscally sustainable compared with the previous situation in the 1990s. The report concludes that, as a result of this Government’s policies and strategy, “Overall, the New Zealand Defence Force is as capable today as it has been in the past 30 years, and as capable as it needs to be.” That is a ringing endorsement of this Labour-led Government’s defence policy.

Dr Wayne Mapp: Will the Government guarantee that the frigate that is to be deployed to the Gulf next year will be able to protect its crew, given that the ministry itself says that one of the frigate’s major self-defence capabilities, the torpedoes, will be unsupportable in 2008, and are not scheduled to be replaced until 2015, and the ministry has actually said there will be very serious risks in the Gulf if they are not replaced?

Hon PHIL GOFF: I think the member will find that by the time the capability of those torpedoes expires the Navy will have replaced them. Not only that; if the member cares to look at the 2006 long-term development programme, he will see a range of other things that are being done to enhance the self-protection of the Navy. While I am commenting on the Navy, can I say I am sure the member will be very proud of the fact that this Government is commissioning seven new ships under Project Protector over the next year—more than National did in the entire 9 years of its failed Government.

Ron Mark: Does the Minister not accept that the best evidence one can rely on for making an assessment as to defence capabilities is the actual performance of Defence Force personnel on the ground, and could he share with the House some of his observations, and my observations, from our recent visit to Afghanistan?

Hon PHIL GOFF: I agree entirely with what the member has said. I had the privilege last week, along with Mr Mark, of visiting the New Zealand provincial reconstruction team in Bamian, and talking to the local people and to the local governor about the team’s performance. Every member in this House ought to be proud of the capability of the team’s members and of the professionalism of what they do and the way that they do it in building up a strong partnership with the local people. The team is much admired, with a great deal of gratitude being expressed by the local governor, by Hamid Karzai, the President of Afghanistan, who mentioned it specifically, and by the local people whom those New Zealand troops serve.

Dianne Yates: Has any progress been made in respect of the question of attrition in the armed forces, which is raised in the report?

Hon PHIL GOFF: Yes. The figures that Associate Professor Rolfe, the author of this report, quotes in the report in fact are from 2004. Since then, attrition in the Army has dropped from 18 percent to 14.83 percent, and in the Air Force from 11.9 to 8.22 percent, while the Navy figures have held steady at 13.6. Overall, in the last year the strength of the New Zealand Defence Force has been increased by over 420 men and women. That is an increase of 3.7 percent in our Defence Force numbers in just the last year.

Ron Mark: Madam Speaker—

Gerry Brownlee: How many photos are you in, Ron?

Ron Mark: If you shut up, Gerry, you will hear.

Madam SPEAKER: Will the member please be seated. I ask the member to withdraw and apologise for that comment. I would also say that members who chip across the House provoke a response. I did not hear the comment that provoked that response; the response, however, was inappropriate.

Ron Mark: I withdraw and apologise. I raise a point of order, Madam Speaker. It seems it is becoming a pattern in this House that certain members of the National Party can chip in on a member’s question. I asked a question of the Minister before, and you allowed Mr Brownlee continually to bellow. You did not censure him, at all. I barely had had an opportunity to start my next question before he started again. In return, I responded, and I am the one who ends up—again—being rebuked by you, while Mr Brownlee gets away scot-free every time. I just want to know where the fairness is.

Madam SPEAKER: Please be seated! As I pointed out, the member—and I did not hear whether it was Mr Brownlee who made the interjection that prompted your response—was not bellowing. A member had obviously made a comment. I did not hear what it specifically was. As far as I am concerned, the matter has been dealt with. Would the member please ask his supplementary question.

Ron Mark: Has the Minister noted the comment made in the Australian Strategic Policy Institute report that the Army is stretched by deployments and cannot meet its requirement to produce a battalion group without significant risk; and when will he, and the Government, approve an increase in baseline funding for the Army to allow it to bring both its infantry battalions up to full strength, with four rifle companies—one of those companies being a ranger company—as recommended by the Labour Party and the New Zealand First Party in the Inquiry into Defence Beyond 2000 report back in 2000?

Hon PHIL GOFF: It is fair to say that, with the high operational tempo of the New Zealand Defence Force, at times our infantry regiments have been stretched. We have had, on average, at least 400 people deployed overseas through most of the last 7 years. Sometimes the number has been as high as 800. In the 1990s, or the 1980s before that, the numbers were much smaller. That is precisely why we introduced the Defence Sustainability Initiative, which will add $4.6 billion in expenditure to personnel and other areas. That is why we have increased—as the member will have learnt from my answer to the previous question—our Defence Force personnel by over 420 in just the last year alone.

Corrections, Department—Confidence

9. SIMON POWER (National—Rangitikei) to the Minister of Corrections: Does he have confidence in his department; if so, why?

Hon DAMIEN O'CONNOR (Minister of Corrections): Yes, but there is always room for improvement.

Simon Power: Why has another inmate been beaten in a prison van, when the Minister told this House last year that he did not offer to resign after Liam Ashley’s death because “I have a clear responsibility to oversee changes to the corrections system to prevent such a tragedy from occurring ever again in the future.”?

Hon DAMIEN O'CONNOR: Thankfully, such a tragedy has not occurred again. I instructed that changes be made at that time; they were made. I am currently awaiting the outcome of an independent ombudsman’s report into prisoner transportation, and we are looking at other ways of improving the situation, including the use of restraints.

Simon Power: Can the Minister confirm his response to written questions that the project team he set up to review prisoner transport after Liam Ashley’s death has yet to report back after 8 months, and has yet to meet with the Corrections Association to seek its input; and how can the Ashley family, to use his own words, “be reassured that we are doing everything we can to prevent similar tragedies occurring in the future.”?

Hon DAMIEN O'CONNOR: I expected that project team to look thoroughly at this very important area. I expect that its report will be before me within the next week. I will take a look at the recommendations. We will discuss those with the union and with senior management, and make the changes as necessary.

Simon Power: Does the Minister agree with the Prime Minister’s view that it is “odd” that prisoners who ask to be segregated are grouped together when being transported, or do he and his department have a different understanding of the word “segregation” from the rest of the country—including the Prime Minister?

Hon DAMIEN O'CONNOR: The prisoners were separated according to policy. It was odd that we had a mix of prisoners in that one compartment. That is why we are making changes—to ensure that such a situation does not occur again.

Simon Power: Does the Minister know that “segregated” means to be kept apart?

Hon DAMIEN O'CONNOR: Segregation does not mean isolation. Prisoners are managed within the prison system according to policies related to segregation. Those policies are consistent, both in the prisons and in the transportation system.

Simon Power: How can the Minister have confidence in his department when it spends $100,000 a month transferring prisoners around the country—including spending almost a half a million dollars a year on chartered air flights—and paid $190 a night to keep inmates in police cells 57,000 times in the last year, at a total cost of just under $11 million; and how much time do these inmates actually spend in their own cells?

Hon DAMIEN O'CONNOR: No one would deny that running the corrections system in this country is a very expensive exercise. We will do whatever is necessary to ensure the safety of the community, and as we transport prisoners around this country we will spend the money necessary to ensure that safety.

Water—HydroTrader

10. TARIANA TURIA (Co-Leader—Māori Party) to the Minister for the Environment: Does he stand by his repeated statements to the House that “The Government regards the water resource as a resource that local authorities … will continue to manage on behalf of all New Zealanders.”, given that a private company, HydroTrader, has been set up to make the trading of water permits easy, anywhere in the country?

Hon DAVID BENSON-POPE (Minister for the Environment): Yes. The Government has been very clear on its position and approach to water management—that is, that water is a public resource that the Government and local authorities will continue to manage on behalf of all New Zealanders.

Tariana Turia: What protection will be given to Māori and other river users to ensure that companies are not seeking more water than they can use, which they can then sell on as a tradable resource?

Hon DAVID BENSON-POPE: Although there may be mechanisms such as HydroTrader—and I will come back to that issue in a moment, and to the correspondence that has gone to the regional council on that matter, which in that company’s words is aimed at facilitating the transfer of permits—I tell the House that the important thing is to recognise that the HydroTrader website, or any other similar website or mechanism, cannot guarantee a water permit. It may put parties in contact with each other, but transfers of water permits are controlled under the Resource Management Act and everyone has proper access to that process.

Steve Chadwick: How has the idea of water markets been received?

Hon DAVID BENSON-POPE: I can advise the House that the National Party appears to have endorsed the concept of water markets. I am advised that both Nicky Wagner and Jo Goodhew’s Aoraki electorate chair, Mark Oldfield, are elected members of the Canterbury Regional Council, and appear to be pushing for the privatisation of water. I can advise that the Government has no intention of establishing markets for the trading of water.

Te Ururoa Flavell: Kia ora tātou. Is the Government supportive of the trading of water as suggested on the HydroTrader website; if so, whose water is being traded by HydroTrader, and are companies specifically set up to buy, sell, or lease water ?

Hon DAVID BENSON-POPE: No. From the beginning of the Sustainable Water Programme of Action, as is evidenced in the discussion documents for that process that the member is in possession of, the Government has made it quite clear that the process will facilitate the transfer of permits but not trading or market development.

Nandor Tanczos: Why does the Government not introduce a resource rental for the commercial use of water, in order to recognise that it is a part of our common wealth and to fund environmental management and co-management, rather than allowing private commercial operators, as at present, a rent-free, pre-emptive, and exclusive right to use and pollute water, usually expecting ratepayers and taxpayers to pick up the tab for the clean-up?

Hon DAVID BENSON-POPE: If the member or the party he belongs to would like to advocate policy change in that direction, they have the capacity to do so as part of the Sustainable Water Programme of Action.

Tariana Turia: What action, then, will the Minister take over statements made on the HydroTrader website that the Government is supportive of the trading of water as being consistent with the Sustainable Water Programme of Action?

Hon DAVID BENSON-POPE: On this whole matter, my colleagues the Ministers of Agriculture and of Forestry and I will shortly be reporting to Cabinet on the progress that has been made on the Sustainable Water Programme of Action to date. That progress includes the proposed national environmental standard on water measuring devices, and the development of a national environmental standard on environmental flows—the work on that is progressing well. Cabinet decisions have not yet been made, however, on the national policy statement on freshwater management. That will take place once initial consultation on the proposed national policy has been undertaken with stakeholders and Māori.

Tariana Turia: I raise a point of order, Madam Speaker. My question was on what action the Minister will then take over statements made on the HydroTrader website that the Government is supportive of trading water. He has not answered my question.

Hon DAVID BENSON-POPE: I have not seen those statements. When I have done so, I will consider them.

Question No. 11 to Minister

GERRY BROWNLEE (National—Ilam): I raise a point of order, Madam Speaker. This question was originally set down to the Prime Minister. Although National members appreciate that the Government can transfer questions, the reality in this case is that it deals very directly with a statement made by the Prime Minister. It is very difficult for any other Minister to say whether the Prime Minister stands by her statements. We realise there is a degree of sensitivity from the Government around the issue of copyright in artworks, but, notwithstanding that, we seek leave for this question to be held over until such time as the Prime Minister may be able to answer it.

Madam SPEAKER: Leave is sought. Is there any objection? There is objection.

Royalties—Artists

11. CHRISTOPHER FINLAYSON (National) to the Associate Minister for Arts, Culture and Heritage: Does she stand by the Prime Minister’s statement that the Government “is honouring another election promise to examine international developments relating to resale royalties for artists and their possible application to New Zealand”?

Hon JUDITH TIZARD (Associate Minister for Arts, Culture and Heritage): As the joint issuer of that statement and on behalf of the Minister for Arts, Culture and Heritage, yes, in 2005 the Labour Party, as part of its arts, culture, and heritage election manifesto, stated that it would examine developments internationally relating to resale royalties for visual artists and their possible application to New Zealand. Two weeks ago, on 16 April, the Government released a discussion paper inviting feedback on options for a resale royalty right. Submissions on this discussion paper close on 22 June and these submissions will assist the Government’s consideration of a possible resale royalty right scheme for visual artists.

Christopher Finlayson: Can the Minister tell the House whether royalties will be paid to the person who painted the artwork or the person who signed the artwork?

Hon JUDITH TIZARD: I suggest to all members interested in this issue that they look at the discussion paper and have a submission in by 22 June, when the Government will consider the matter.

Peter Brown: On a little bit more serious note, is the Minister aware that many New Zealanders are of the belief that when a homeowner sells a painting to another homeowner a royalty will have to be paid; and, if this is the case, will the Minister explain how it will be policed and by whom?

Hon JUDITH TIZARD: I suggest to all members that they read the discussion paper. The issue about whether private sales are dealt with is covered there. The issue remains that when a painting is sold commercially, the dealer gallery gets a cut, the auctioneer gets a cut, and there is a practice in over 50 countries around the world that the artist’s copyright is also recognised. It is more a royalty and intellectual property right than a commission.

Christopher Finlayson: Has the Minister received any advice from Crown Law on what criminal offence would be committed by someone obtaining monetary reward from resale royalties in circumstances where that person had signed an artwork she did not create?

Madam SPEAKER: I think that is fairly broad of the general question, but I call the Minister.

Hon JUDITH TIZARD: No, and particularly when no money was sought by anyone signing a particular work, of course no royalty would apply.

Christopher Finlayson: If it transpires that an artist’s works are devoid of any artistic merit so that they end up being resold for a pittance—or indeed are valueless—would the artist be required to pay compensation under a resale royalty scheme?

Hon JUDITH TIZARD: I am very concerned that a speaker who claims to be interested in the arts is trivialising an important intellectual property debate. All I would say is that I would rather trust the Prime Minister’s artistic taste than that of most members of the National Party.

Christopher Finlayson: If the Minister is so very concerned about payments to artists, why does she not do something about the appalling royalties paid to writers by Radio New Zealand and Learning Media Ltd, and the shambolic administration of the Authors’ Fund by Creative New Zealand?

Hon JUDITH TIZARD: I disagree with the last assertion, and representations have been passed on to the Minister of Broadcasting and the head of Radio New Zealand. I will continue to assert the rights of all creative workers in New Zealand to be properly paid for what they do.

Working For Families—Tax Credit Review

12. RUSSELL FAIRBROTHER (Labour) to the Minister for Social Development and Employment: Has he received any reports on proposed changes to Working for Families tax credits?

Hon DAVID BENSON-POPE (Minister for Social Development and Employment): I have seen a surprising report in today’s Christchurch Press, which proposes that the Working for Families tax credits, which currently go to middle and low income families, should be redistributed to the wealthy. Under the proposed roll-back an estimated 160,000 families would lose about $50 per week, and an estimated 60,000 families would lose tax credits. For a Kiwi family with three kids and a mortgage, and earning around $52,000 a year and currently receiving $246 per week under the Working for Families package, the proposals would see that family lose some $80 per week. That proposal, of course, comes from the leader of the National Party, John Key, whose main interest appears to be putting as much money as he can into the pockets of his wealthy mates.

Russell Fairbrother: What would be the effect of taking tax credits away from middle and low income families?

Hon DAVID BENSON-POPE: I can advise the member that Working for Families tax credits have, among other things, lifted an estimated 70,000 children over the income poverty threshold. New Zealand is expected to move from 18th place on the Unicef Innocenti report card into the top half, and possibly into the top quartile in terms of the reduction in child poverty. The effect of Mr Key’s proposals announced today would be to reverse that trend. I seek the leave of the House to table a document entitled It Works Just Fine, which refers to the effect of the Working for Families package.

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

ENDS