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Questions And Answers - 22 July 2009

Questions of the Day

22 July 2009

Questions to Ministers

1. Prisoners—Proportion Convicted of Non-violent Offences

[Uncorrected transcript—subject to correction and further editing.]

1. DAVID GARRETT (ACT) to the Minister of Justice: What proportion of persons currently incarcerated are in prison for non-violent offences?

Hon SIMON POWER (Minister of Justice) : I am advised today that of the 6,521 sentenced prisoners in custody today, the most serious offence for 2,633, or 40.4 percent, of them was non-violent. In terms of that classification or categorisation, all sexual offences have been classified as violent offences for the purpose of that answer.

David Garrett: Does the Minister agree that for criminals guilty of serious violence, the only appropriate and safe penalty is a term of imprisonment?

Hon SIMON POWER: Prison is the only place for serious violent offenders, and that is why we are making it harder for the worst repeat violent offenders to get parole. However, violent offences can describe a very wide range of conduct, from murder to common assault, which may be as minor as a shove or the use of threatening language. I expect that judges will make the appropriate distinctions here.

Rahui Katene: What progress has been achieved in implementing Ombudsman Mel Smith’s 2007 recommendation that a royal commission of inquiry was urgently required to undertake a comprehensive review of the criminal justice system?

Hon SIMON POWER: This Government has already set itself an ambitious and comprehensive programme to reform the criminal justice system. We started by addressing public safety concerns and enhancing victims’ rights. We have then moved to a discussion, and hopefully legislation by the end of this year, in the area of simplification of the criminal justice system. We are reviewing legal aid. There is more to come.

David Garrett: Does he agree that repeat violent offenders endlessly recycled by the Department of Corrections constitute an undue risk to the safety of society; if so, will he be supporting ACT’s “three strikes” law, which targets solely that type of offender?

Hon SIMON POWER: All violent offenders pose a risk to society. As I have said to the member both in this House and privately, we will continue to have those discussions in good faith, as we have over recent weeks and months.

Rahui Katene: What work is being advanced to address the fact that criminal justice data shows that Māori are overrepresented at every stage of the criminal justice process and that they are more likely to be apprehended, prosecuted, convicted, and sentenced to imprisonment?

Hon SIMON POWER: I would also add that Māori are overrepresented as victims of crime. The overrepresentation of Māori in the criminal justice system was a specific focus of the joint ministerial meeting on the drivers of crime, and I intend to announce the first steps in addressing those drivers in the coming month or two.

2. Recession—Prime Minister’s Statement

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2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by his statement last week that “we’re starting to come out of the recession”; if so, why?

Hon JOHN KEY (Prime Minister) : Yes; Treasury predicts that the economy is in the last quarter of negative growth. In a purely technical sense, that means we are at the end of the recession. However, we are by no means out of the woods. It will be some time before GDP recovers to previous levels, and for most people the measure of a recession is whether they have a job. As I have said many times, unemployment will continue to rise over the next year before peaking and beginning to fall again. That is the consequence of a very long recession, which began under the previous Labour Government.

Hon Phil Goff: Does the Prime Minister’s plan to come out of the recession include the appointment as chair to the productivity task force of Don Brash, who says of his agenda that everything is on the table, including privatisation, notwithstanding the assurances to the contrary that the Prime Minister gave during the election campaign?

Hon JOHN KEY: The National Cabinet sets the agenda, the National Cabinet decides the policies, and for the term of this Government there will be no privatisation. Yes, I think that in leading the 2025 commission Dr Brash can play a part in helping narrow the wage gap. Goodness knows, this country needs help, because after 9 years of Labour it went in one direction and that was backwards, compared with Australia.

Hon Phil Goff: Why did the Prime Minister, as recently as on Q+A on Sunday, repeatedly refuse to rule out privatisation as part of his agenda despite his assurances that he would not be privatising before the election?

Hon JOHN KEY: I urge the member to read the transcript of Q+A. What I correctly said was that I have never said I am philosophically opposed to asset sales.

Hon Members: Oh!

Hon JOHN KEY: Well, I am not. I simply said it does not form part of the Government’s agenda for this term. If we change our policy for future terms, we will campaign on it and be up front about it.

Hon Phil Goff: Does the Prime Minister accept that for tens of thousands of New Zealanders, far from coming out of the recession, they will be thrown out of work over the next 12 months, and does he intend to do anything to alleviate the genuine hardship, including the loss of homes, that many of those people are facing?

Hon JOHN KEY: I cannot tell the member how many people will lose their jobs over the next year or so.

Hon Member: Treasury did!

Hon JOHN KEY: Treasury have lots of predictions. Some of them are right and some of them are wrong, I am afraid to tell the member. The second thing I will say is that the Government is doing as much as it possibly can, I believe, to try to help people through a recession that is a global recession, which started in the United States of America. This Government has done everything from bringing forward infrastructure spending to things like a home insulation package, the reform of the Resource Management Act, the reform of the emissions trading scheme legislation, removing regulation, working on reform of local governance in Auckland, tax cuts of $1 billion in April—and it goes on and on and on. Yes, there will be some people who lose their jobs, and this Government will do everything it can to try to help them into a new job.

Chris Tremain: What assistance does Work and Income offer, in addition to the main benefits, for people who find themselves in hardship during the recession?

Hon JOHN KEY: The answer to that question is that it provides assistance of well over $1 billion. I am advised that Work and Income provides a wide range of assistance to people in need, including to people who are not receiving any sort of main benefit. The assistance includes job search services, the accommodation supplement, child and out-of-school care and recreation subsidies, Transition to Work grants, temporary additional support, special-needs grants, and recoverable assistance payments. I am advised that the Government spends $1 billion alone on the accommodation supplement, and $300 million on hardship assistance. These services are available to people who do not qualify for a main benefit.

Hon Phil Goff: What does the Prime Minister say to his constituent Bruce Burgess, whose story is told in the New Zealand Herald this morning, who has saved and worked all of his life and has never asked the State for welfare assistance in his life, but now, at 63, has lost his job, risks losing his home, and is not eligible for transitional assistance, because his wife earns a very modest income?

Hon JOHN KEY: I say a number of things. Firstly, I urge Mr Burgess to go into Work and Income for an assessment. If he does that, Work and Income may be able to help him into one of the—

Hon Annette King: Why doesn’t the Prime Minister answer the question?

Hon JOHN KEY: —I tell that member to just listen for a second, because she might learn something—he might be eligible for one of the 144 engineering jobs available. Secondly, according to the facts as stated in the New Zealand Herald, Mr Burgess would be eligible for a partial benefit—

Hon Phil Goff: How much?

Hon JOHN KEY: It would be $91.20 a week. The third thing—

Hon Phil Goff: How much?

Hon JOHN KEY: It would be $91.20 a week. Thirdly, I say to Mr Goff that before he starts playing politics with a constituent of mine, I strongly, strongly suggest that he makes sure he is in receipt of all the information.

Mr SPEAKER: I have called Chris Tremain; please show the member some courtesy.

Chris Tremain: What correspondence has the Prime Minister, or other Ministers, had with Mr Burgess?

Hon JOHN KEY: A family member of Mr Burgess made contact with my office and I asked the Minister for Social Development and Employment to respond. Officials in the Minister’s office asked the family member for Mr Burgess’ details so they could see what assistance he might be entitled to. The family member did not supply any of the details needed, including Mr Burgess’ name, so it was impossible to look into the situation. Following this morning’s media coverage, Work and Income has been able to identify and make contact with Mr Burgess to receive all of the facts. I encourage him to sit down with Work and Income and have a full assessment of his individual circumstances, and I urge Mr Goff to make sure he understands all the facts when he starts dealing with a situation of an individual constituent.

Mr SPEAKER: I now ask members to show a little courtesy to the Leader of the Opposition, whom I have called.

Hon Phil Goff: Why did the Prime Minister answer in the House yesterday that a person who has been made redundant and who has a spouse earning $26,000 a year is eligible for financial support for job search or retraining when he or she is not?

Hon JOHN KEY: Because it is correct.

Hon Phil Goff: I raise a point of order, Mr Speaker. I did not hear the Prime Minister’s answer; could he please repeat it?

Hon JOHN KEY: Because it is correct.

Mr SPEAKER: I thank the honourable Prime Minister.

Hon Phil Goff: Why was it possible, at a cost of hundreds of millions of dollars, to legislate for tax cuts last December that would have given people on high incomes, including the Prime Minister, hundreds of dollars a week in tax cuts, but it is not possible to provide short-term transitional support for job search or retraining for people who are suffering genuine hardship through no fault of their own, who have been taxpayers all their lives?

Hon JOHN KEY: Firstly, because it was a much better idea than giving welfare to millionaires, as Phil Goff was suggesting on Monday—[Interruption]—I am in no rush. Secondly, we need to understand what happened here. The National Party, when in Opposition, put up a proposal to provide transitional support to those most in need in this country. It is called the ReStart package, and we did it on top of the $300 million that is available for hardship assistance, the $150 million that is available for childcare assistance, and the billion dollars that is available for accommodation supplements. We are doing what we can to help those most vulnerable in the community.

3. Public Service—Cap

[Uncorrected transcript—subject to correction and further editing.]

3. AMY ADAMS (National—Selwyn) to the Minister of Finance: Is it still the Government’s policy to cap staff numbers in the Public Service; if so, why?

Hon BILL ENGLISH (Minister of Finance) : Yes, it is the Government’s policy to cap core Government administration staff and to give priority to front-line services. In the past 5 years, the Public Service has been accustomed to spending growing at twice the rate of revenue and twice the growth of the economy. No household, business, or Government can operate like that. The reality is that Labour let the bureaucracy get out of control. The Government now faces 10 years of deficits, and, in the next few years, deficits of $10 billion to $12 billion. The Public Service cannot expect to be immune from the pressures that go with that.

Amy Adams: What measures has the Government taken to ensure that front-line public services and entitlements are maintained during the recession?

Hon BILL ENGLISH: The Government has taken a measured and considered approach to bringing about change in the public sector. Budget 2009 committed almost $3 billion of extra spending, including record amounts on front-line services in health, education, and law and order. The New Zealand taxpayer will borrow an extra $40 billion over the next 4 years in order to maintain entitlements and public services. However, at the same time, we expect the Public Service to understand that it needs to change in order to deliver faster, better, smarter, and better public services to thousands of New Zealanders who are dependent on those services.

Amy Adams: Why is it important that the Public Service delivers better, smarter services with less money?

Hon BILL ENGLISH: The main reason it is important is that so many New Zealanders depend on these services. In the context of deficits of $10 billion to $12 billion, the Government expects the Public Service to work with the politicians to get used to the idea that restraint is now permanent, and it is our obligation to the New Zealanders who depend on public services that we think about better ways of doing them. In the last 10 years there was no attempt to do that; in the next 10 years it is the core business of the Public Service.

Chris Hipkins: How can the Minister continue to claim that the Government’s policy is to cap, not cut, the Public Service, when over 1,500 jobs have already been cut from the Public Service, and only yesterday he himself was talking about significant and lasting change to the Public Service? How does he reconcile that with the Prime Minister’s commitment to the Public Service Association conference only last year that the Government would not embark on wholesale restructuring of the Public Service?

Hon BILL ENGLISH: The Government has not embarked on wholesale restructuring of the Public Service. It is interesting to listen to the Labour Party and the Public Service Association, because neither of them refers to two pretty important facts. The first is that public services are for the people who use them, not for the people who provide them, and the second is that we have deficits of $10 billion to $12 billion, and 10 years until we get back to surpluses. Everyone has to get used to the idea that there will be less money, and the need for more service.

Amy Adams: What feedback has he received from the Public Service leadership about the Government’s demands for better performance?

Hon BILL ENGLISH: The Government has received overwhelmingly positive feedback from the leadership of the Public Service. Many of those leaders find it a relief that they are actually asked for their opinions. Many of them welcome the opportunity to get rid of the ineffective services and waste of public money that they had to put up with under the previous Government. I am confident that the leaders of the Public Service are up to the challenge we have set them, and I am confident that they believe that this is the right Government to lead them through that challenge.

4. Climate Change—Threat to Pacific Region

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4. Dr KENNEDY GRAHAM (Green) to the Prime Minister: Did Pacific Island leaders with whom he met during his recent trip convey any concerns over the threat climate change poses to vulnerable Pacific Island countries, and what expectations, if any, did they raise with him regarding New Zealand’s policy in response to that regional threat?

Hon JOHN KEY (Prime Minister) : The issue of climate change is regularly discussed at bilateral and regional meetings with Pacific Island countries. Specifically at my meeting with Prime Minister Dr Fred Sevele and his Ministers on 7 July I referred to climate change in a discussion of energy options for Tonga. The question of New Zealand’s climate change policies was not raised. In meeting the Ulu of Tokelau in Apia on 7 July the Tokelau leadership talked about the situation of the three atolls of Tokelau and said they wished to develop climate change policy responses with New Zealand, including in respect of renewable energy. It is worth noting that in each of the Pacific countries I visited earlier this month the key concerns conveyed to me related to economic development, the ability of countries to withstand the negative effects of the global recession, and the role New Zealand could play in helping address those issues.

Dr Kennedy Graham: In light of that comment and the peripheral discussion pertaining to climate change in the Pacific during the Prime Minister’s visit, was he comfortable offering Pacific leaders the toss of a coin for their physical survival when he conveyed his Cabinet’s target of 450 parts per million carbon concentration, given that that concentration is expected to result in a fifty-fifty chance of physical survival for several Pacific Island countries?

Hon JOHN KEY: The points I raised were that New Zealand takes the issue of climate change seriously, that we are committed to making sure we address that issue in this country, and that the Emissions Trading Scheme Review Committee is going through a process of reviewing our emissions trading scheme legislation. Also I took on the trip with me Tim Lusk, the chief executive officer of Meridian Energy, so that we could look at a situation where, potentially, the Pacific countries could substitute their current electricity generation, which takes place by burning diesel, with solar energy.

Dr Kennedy Graham: What views in support of Pacific regional survival will the Prime Minister’s Government convey to the Secretary-General in the forthcoming UN report on the security implications of climate change, as called for in a UN resolution adopted last month by the United Nations General Assembly, which is the first ever resolution to be tabled by Pacific Island states?

Hon JOHN KEY: New Zealand will convey in its correspondence that it takes the issue of climate change seriously, that we are trying to tackle a number of issues—particularly the fact that the structure of our emissions profile resembles much more that of a developing country, with 50 percent of our emissions coming from agriculture—that we are working hard and want to achieve changes in relation to further Kyoto policy around forestry so that it can play a more important part in helping offset some of our emissions, and that we will have some form of price system that will enable New Zealand to better cope with its rising emissions profile.

Dr Kennedy Graham: Given that the Government will convey to the United Nations the fact that New Zealand takes seriously climate change in the Pacific, will the Prime Minister give an indication of his Government’s plans to receive environmental refugees from low-lying Pacific Island states in response to the statement by the president of Kiribati 2 years ago: “If we are talking about our island states submerging in 10 years’ time, we simply have to find somewhere to go.”?

Hon JOHN KEY: If one was to look at the Pacific one would see that the three countries that have the largest potential exposure to climate change are Kiribati, Tuvalu, and Tokelau. From New Zealand’s perspective it has a strong relationship with those countries. Although we will not be setting out exactly what support we would provide those countries if a situation of climate change threatened their long-term survival, I think those countries could rely on the fact that New Zealand has a long history with them, would support them, and already has quite a number of residents from those countries calling New Zealand home. If that situation occurred—which, it is important to understand, is likely to be a long way in the future—it would be my expectation that future New Zealand Governments would look very sympathetically on that position.

Charles Chauvel: Is the Prime Minister aware that tiny, at-risk nations like Tuvalu and Niue have now set targets of 100 percent renewable energy generation by 2020, and might this not prompt his Government into once and for all saying whether it is committed to a 90 percent renewable energy generation target by 2025, as set out in the New Zealand Energy Strategy?

Hon JOHN KEY: The member would know that we have not changed our target of 90 percent renewable—

Hon Annette King: Our target!

Hon JOHN KEY: The target. I think it is important to understand that New Zealand already has a lot of its energy coming from renewable sources. If we are to develop more renewable sources in terms of the development of energy, then we will need to change the Resource Management Act to allow those renewable sources to be harvested. I am looking forward to the member leading the charge in his caucus when it has the opportunity to change its vote and support us on our Resource Management Act reform bill, which will be coming back to the House very soon. I thank the member for that support.

Keith Locke: What specific proposals for regional action on climate change will the Prime Minister be taking into next month’s Pacific Island Forum leaders meeting beyond the proposal he has talked about so far of helping individual island states replace some fossil fuel generation with renewables?

Hon JOHN KEY: I think that in relation to those specific countries probably the single most important thing we can do is help them change their reliance on electricity generation from diesel to a form of renewable energy, whether that be wind or solar; most likely it will be solar. There are other things we can work on, but, as the member will be aware, they do not have a large industrial base that is emitting a lot of emissions.

5. Beneficiaries—Upskilling for Employment

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5. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister for Social Development and Employment: What measures is she taking to provide beneficiaries with an opportunity to gain better work skills and increase their prospects of obtaining full or part-time employment, gaining independence from the benefit?

Hon PAULA BENNETT (Minister for Social Development and Employment) : This Government is offering a range of support, such as on-the-job training, industry partnerships, job preparation, funding for the self-employed, enterprise allowances—more than I would probably be permitted time to mention in my answer. That assistance amounts to an investment of over $250 million.

Hon Annette King: Why did the Minister make cuts to the training incentive allowance when an evaluation of the scheme showed that clients who receive training incentive allowance assisted training were significantly more likely to move into either full or part-time employment than those who do not, and were proven to achieve positive outcomes such as increased self-esteem and well-being?

Hon PAULA BENNETT: We simply have had to make tough decisions. We decided to look especially at areas funded in several different ways. So it has not been cut; some funding has been restricted to level 3 or under. Let me give members an example. Someone studying and on the domestic purposes benefit could get over $1,000 a week in Work and Income assistance. By the time we add up the domestic purposes benefit of around $272, an accommodation supplement of $225, tax credits of $200, childcare assistance of up to $181 for one child, and out-of-school care and recreation assistance of $72 a week, that person could potentially be getting well over $1,000 a week.

Hon Annette King: Does the Minister stand by her letter to Mr Greg Soar who wrote to her about cuts she has made to his training incentive allowance, and is she aware that she advised Mr Soar to seek a student loan or a scholarship, but because he is on an invalids benefit he is not entitled to the full benefits of a student loan and would get only a third of what he was previously getting through the training incentive allowance payment, and that the scholarship she told him he may be entitled to, like the Step Up scholarships, she actually cut in her last budget?

Hon PAULA BENNETT: There are tough decisions being made. We did suggest to that gentleman, as we are suggesting to other people, that there are other ranges where he can get that level of assistance. Quite simply, there are other ways that people can get the sort of assistance they need so that they can go on to that tertiary study. It is about having an even playing field, and this decision is one of those we have made.

Todd McClay: Has the Minister seen any reports or articles on how people may gain independence from welfare dependency?

Mr SPEAKER: Did the Minister hear the question?

Hon PAULA BENNETT: I did not actually hear the question.

Mr SPEAKER: There was just an unacceptable level of interjection while Todd McClay was asking his question. It was most discourteous to the House. I ask Todd McClay to repeat his question, please.

Todd McClay: Has the Minister seen any reports or articles on how people may gain independence from welfare dependency?

Hon PAULA BENNETT: I find it pretty rich for the Opposition spokesperson to talk about getting independence from welfare when her party’s policy, which I heard recently, would do exactly the opposite and create hundreds of thousands of new beneficiaries. The same policy was described this morning by a media commentator as the “biggest blunder” Mr Goff has made since becoming the Labour leader.

Hon Annette King: What does the Minister say to training incentive allowance recipient Greg Soar, who said: “I feel damned let down by the unthinking Minister, who used the TIA herself to improve her life.”; and why is the Minister denying those people who are struggling on the domestic purposes benefit and invalids benefit the real opportunity to gain education and a real job, contrary to the advice her own department has given her?

Hon PAULA BENNETT: The Opposition leader has been sitting there yelling out: “You got this.”, and “You got this payment.” I think it should be quite clear that, quite frankly, it would be a pretty pathetic decision-making process we were going through if politicians started making decisions based on what happened with them—in my case 15 years ago, and in his case, I imagine, what, about 40 years ago? The new face of Labour!

Mr SPEAKER: I ask members to be a little more reasonable. I heard interjections that were totally unacceptable then. I ask members please to desist from that.

Darien Fenton: What does the Minister say to sole parent Natasha Fuller, who says her dreams of becoming an early childhood teacher have been squashed by the Government’s decision, and who feels that all the efforts she has put into training so far have been for nothing, because she cannot afford to further her studies without the assistance of the training incentive allowance?

Hon PAULA BENNETT: It is pretty hard for me to comment on individual circumstances. But let me give an example, perhaps, of a domestic purposes benefit recipient who has three children—two school-aged and one preschool. They could get up to $1,030 worth of assistance during term time each week—over $1,000 in assistance each week—to help them with those childcare costs, with some accommodation costs, and with everything else. There is the availability to get—

Hon Member : How much did you get?

Hon PAULA BENNETT: I raise a point of order, Mr Speaker. I am quite happy to answer questions, but I do not think that you should be brought into the debate with comments flying across like “What did you get?”. I am not sure what you got, actually, when you were studying, but I do not need to know.

Mr SPEAKER: I think that it is a timely reminder for members that every time they yell out “What did you do?”, they are bringing the Speaker into the debate, and that is totally outside the Standing Orders. So I ask members to take a bit of a breath and just be a little careful on those matters.

Carmel Sepuloni: Does the Minister stand by her statement: “I was definitely living day to day and struggling financially and emotionally, and I worked out that the only way I was going to get out of that trap was to get into meaningful paid employment.”; if so, why in Budget 2009 has she stripped solo parents of their ability to apply for the training incentive allowance, which provided financial support towards transport, childcare, and/or fees associated with training, and directly helped many get into paid employment?

Hon PAULA BENNETT: Yes, I do. I will back those women into work and meaningful employment every time.

Hon Maryan Street: What does the Minister say to mother of three, Jennifer Johnston, whose marriage broke up 2 years ago and who says that, despite whatever else she may receive, without the training incentive allowance she may be unable to continue her studies to become a nurse despite a significant nursing shortage and her A average grade?

Hon PAULA BENNETT: I note that the member said “continue her studies to become a nurse”. Actually, the training incentive allowance will continue until 2011 for those who are currently receiving it. It will be grandparented through, so if she is receiving it now, she can continue to receive it.

6. Cardiac Services—Reports

[Uncorrected transcript—subject to correction and further editing.]

6. NICKY WAGNER (National) to the Minister of Health: What reports has he received concerning the delivery of cardiac services in New Zealand?

Hon TONY RYALL (Minister of Health) : I have seen several reports, particularly one on cardiac surgery in New Zealand from 2002 to 2008 that was prepared for the previous Government. Over that 5-year period total cardiac operations in New Zealand fell by 9 percent despite population growth of around 6 percent. At the same time Auckland cardiac discharges fell by 14 percent despite population growth in Auckland of around 10 percent. These reports reveal how seriously inadequate the delivery of cardiac surgery had become, delivering 25 to 45 percent fewer cardiac operations than other comparable countries.

Nicky Wagner: What steps has the new Government taken to help turn round this decline in the number of patients who got heart surgery under Labour?

Hon TONY RYALL: The new Government has recently announced two decisions, both of which will have positive impacts on cardiac surgery. Firstly, it has been announced that around $5 million extra will be paid to the Auckland District Health Board to provide cardiac operations for over 100 heart patients who were waiting beyond the clinically safe time. Many of these patients have now received their surgery. Secondly, we have announced the creation of our first clinical network, the National Cardiac Clinical Network. We need better planning to improve the rates and availability of heart surgery in New Zealand, and the best people to do that are the experts in this area: the cardiac surgeons and nurses, and their teams.

Nicky Wagner: What other reports has he seen in relation to addressing the fall in rates of cardiac surgery?

Hon TONY RYALL: Four weeks before last year’s election the then Minister of Health, Mr Cunliffe, announced a plan to put in an extra $50 million to lift cardiac performance in New Zealand over 4 years. The $50 million came from a range of cuts to other programmes in the health budget. Would members opposite when in Government cut money from cardiovascular disease programmes? Surely not! But over $3 million was cut. Would they cut the mobile surgical bus budget? Surely not! But $2 million was cut. And would they cut the funding pool for people with disabling chronic medical conditions? Surely not! But $10 million was cut.

7. Banking Practices—Interest Rates

[Uncorrected transcript—subject to correction and further editing.]

7. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he agree with the statement of the Prime Minister that, with respect to bank interest rates, “We have an impasse now. If there is something that should be done, let’s act.”; if not, why not?

Hon BILL ENGLISH (Minister of Finance) : Yes, I do agree with the Prime Minister. He quite correctly was saying that we have a range of mechanisms that monitor the financial system. When one of those mechanisms alerts the Government to the need for policy action, we will act. In this case, in respect of bank interest rates, the Reserve Bank has made a careful study of the issue. It has published its findings, but has not recommended any particular action to the Government, probably because it is not obvious what action the Government could take to deal with bank margins on interest rates.

Hon David Cunliffe: If the Prime Minister believes that further action is required, does he agree with the New Zealand Manufacturers and Exporters Association that “a proper debate on bank margins will be helpful, because, as Alan Bollard has already noted, short-term margins are too high and generally margins have increased since the financial crisis.”; if he does, why has his Government not taken seriously the concerns of New Zealand’s hard-working exporters?

Hon BILL ENGLISH: The Government does take seriously the concerns of hard-working exporters, and they are all very glad that we are acting on their concerns, which were built up under 9 years of mismanagement by the previous Government. That member should also advise the House that when he was a Minister in a Government, banks made record profits, they had record interest rate margins, and interest rates were at much higher levels than they are now—a set of facts pointed out by the Hon Jim Anderton in the media yesterday and today. So how will he explain his expertise in getting bank profits down, when, under him, they were at record levels?

Aaron Gilmore: What independent assessments of the need for further investigation has the Minister seen?

Hon BILL ENGLISH: There are any number of people who have contributed to the debate about interest rate margins—in particular, the independent assessment of the Reserve Bank. It has published its finding. I think it is important that those who are invited to some meeting of the Opposition caucus know that what they are being invited to is not an inquiry. The progress of it is utterly predictable: people will turn up; they will complain about the banks, as we all do; the Opposition will issue some report using extravagant rhetoric; and we will be exactly where we started.

Hon David Cunliffe: If the Minister does not believe that the public deserves the right to look into this issue and see the facts, has he heard reports that Kiwibank will “willingly participate with the banking inquiry”, and does he not agree with Rob Oram that banks have not so far made an entirely transparent case as to what the funding pressures on them actually are?

Hon BILL ENGLISH: The facts that can be ascertained on this issue are already public. The Reserve Bank did a thorough job of looking at the margins. Some of the major banks, like Westpac, have already published their analysis. Members of the general public can look at the interest rate picture by going to and looking at the updated rates—they are updated every 6 minutes—and can make up their own minds about it. An MPs’ inquiry will make no difference. The member should be talking about the real issue, which is what combination of regulatory supervision will ensure that the banks do not make excessive profits. I welcome any contribution that the Opposition caucus would like to make to that debate, rather than these stunts and grandstanding.

Hon David Cunliffe: If the Minister would, as he says, welcome a reasoned contribution, why does he say there is no need to act on calls from the New Zealand Manufacturers and Exporters Association, Federated Farmers, the Productive Economy Council, unions like the financial services union and the Council of Trade Unions, banks like Kiwibank, and a range of economic commentators, who all believe there is real merit in questioning the pass-through of the official cash rate into short-term interest rates?

Hon BILL ENGLISH: If those organisations thought that member’s meeting with Jim Anderton was the answer to our economic problems, they would have voted for him, but they did not, rather decisively. We know what can be known about the pass-through. We think bank margins might be too high. The simple question is what can be done about them, and I am open to the member’s propositions. The Reserve Bank has not been able to come up with a solution; perhaps that member will.

8. Greenhouse Gas Emissions—Transport, Electricity, and Manufacturing Sectors

[Uncorrected transcript—subject to correction and further editing.]

8. HEKIA PARATA (National) to the Minister for Climate Change Issues: What does yesterday’s New Zealand Energy Greenhouse Gas Emissions report tell us about trends in emissions from the transport, electricity, and manufacturing industries?

Hon Dr NICK SMITH (Minister for Climate Change Issues) : New Zealand’s 2008 overall energy emissions are up 44 percent on 1990 baselines, and up 3.6 percent on 2007. Electricity emissions have increased the most, by 123 percent since 1990. Transport emissions in 2008 were down 4 percent in response to the spike in fuel prices, but they are up 63 percent on 1990 levels. Emissions in the manufacturing sector were up 26 percent on 1990 levels, and up 7 percent on 2007. These figures well illustrate that New Zealand has made little progress in constraining emissions, and highlight the huge challenge we face in reversing these trends.

Hekia Parata: How does the level of emissions in 2008 from coal-generated electricity compare with those in 2000 and 1990?

Hon Dr NICK SMITH: The report shows emissions of nearly 4 million tonnes from Huntly in 2008. This compares with 1 million tonnes in 2000, and half a million tonnes in 1990. This highlights an eightfold increase in our emissions from coal-generated electricity from the 1990 Kyoto Protocol baseline, and is New Zealand’s worst area of emissions growth. Although this can be partly excused by 2008 being a dry year, the 2008 figure of about 4 million tonnes has been the level in 4 of the last 5 years. It highlights New Zealand’s need for developing its renewable energy resources.

Hekia Parata: How does this increase in emissions compare with other developed countries, and how will this latest information input into New Zealand’s post-Kyoto 2020 emissions target?

Hon Dr NICK SMITH: New Zealand’s emissions increases overall since 1990 are 24 percent. That compares with other countries, for instance the United States, where emissions are up about 16 percent; Japan, where emissions are up 8 percent; and the European Union, where emissions are down 10 percent. This increase in emissions means that we need to be realistic about setting a 2020 target relative to 1990 baselines. When representatives of European countries talk of a 20 percent reduction, they are already halfway there, whereas New Zealand would need to reverse the 24 percent increase first, and then meet any target on top of that, within the comparatively short period of just 10 years.

Charles Chauvel: Given the upward trend in emissions to which the Minister has referred, how can he not now accept that it was extremely unwise to have repealed measures to reduce emissions, such as the moratorium on new baseload thermal generation, the biofuels obligation, and the phase-out of inefficient incandescent light bulbs?

Hon Dr NICK SMITH: The new Government takes a different approach, because, quite frankly, the approach of the previous Government did not work, as is highlighted by these figures. In respect of the biofuels approach, we have implemented a financial incentive for biofuels, rather than the compulsory nanny State approach of the previous Government. In respect of the thermal ban, it is this Government’s view that a price on the big increase in coal emissions is a more effective way than a thermal ban. Of course, a thermal ban will have absolutely no effect on the huge increase in emissions we have seen from Huntly, where a price instrument is a more effective way to do that.

9. Folic Acid in Bread—Consultation with Ministers

[Uncorrected transcript—subject to correction and further editing.]

9. Hon RUTH DYSON (Labour—Port Hills) to the Minister for Food Safety: What consultation did she undertake with her ministerial colleagues before she announced a proposal to defer the mandatory addition of folic acid to bread?

Hon KATE WILKINSON (Minister for Food Safety) : The proposal to put out a discussion paper including the option of deferral was discussed with ministerial colleagues last week and was considered at Cabinet on Monday.

Hon Ruth Dyson: Did the Minister consult the Minister of Finance; if so, what did he say about the $400,000 per year per person currently spent on health care supporting a person with spina bifida—money that could be saved or spent elsewhere if bread were fortified?

Hon KATE WILKINSON: The member outlines the benefits of folic acid for women before they become pregnant and in relation to neural tube defects; I think those benefits are known. But I remind the member, as I did yesterday, that Ireland has a voluntary fortification scheme, which has resulted in a 30 percent increase in folate in that population. It was voluntary; it did not have to be mandatory.

Hon Darren Hughes: I raise a point of order, Mr Speaker. The Hon Ruth Dyson asked a question that started by asking what consultation the Minister had undertaken with the Minister of Finance. The Minister, in her reply, went nowhere near answering the question about the consultation she had undertaken.

Mr SPEAKER: I think there was more than just that pure question in the honourable member’s question to the Minister. If it had just asked what consultation the Minister had with the Minister of Finance on this matter, then it would have been a different matter. I believe I heard the member go on to raise further issues. If I am mistaken, I will invite the honourable member to correct me.

Hon Ruth Dyson: The end of the question asked about the cost of health care, and the beginning of the question asked what consultation she had with the Minister of Finance on that issue. It was even more specific than the senior whip indicated.

Mr SPEAKER: The Minister can choose to answer either part of the question, and I believe she answered the second part of the question by talking about the kinds of costs involved in this issue. The member has further supplementary questions.

Michael Woodhouse: Why is the Government putting out a discussion document on the addition of folic acid to bread?

Hon KATE WILKINSON: We are giving New Zealanders a chance to put forward their views on this important matter. Labour did not listen to New Zealanders 2 years ago, and today it seems it is still refusing to do so. We understand that New Zealanders want choice, and we are providing this opportunity for them to have their say.

Dr Ashraf Choudhary: Why did the Minister tell the House yesterday that no decision had been made, when the Prime Minister said that it was 99.9 percent certain that the fortification was not going ahead and that the Government was “just working through the legal niceties”? Does not this statement show the consultation is a sham? Who is telling the truth: the Prime Minister or the Minister?

Hon KATE WILKINSON: We have always maintained that deferral of the commencement date of the standard is our preferred option. We have also made it clear that we have made no predetermination. Following consultation an appropriate decision will be made.

Hon Ruth Dyson: Did the Minister consult the Minister of Justice on the number of abortions that would be prevented if bread was fortified, estimated to be between 20 and 30 babies every year—babies who would be saved if her decision was different?

Hon KATE WILKINSON: There will be proper consultation at the end of the submission period, and no doubt the figures that have been put forward by that member will be included in those submissions. Following the closing day of the discussion paper we will give full and proper consideration to the submissions.

10. Recession—Government Assistance for Affected Workers

[Uncorrected transcript—subject to correction and further editing.]

10. KATRINA SHANKS (National) to the Minister for Social Development and Employment: What is the Government doing to help people who lose their jobs because of the global recession?

Hon PAULA BENNETT (Minister for Social Development and Employment) : I am pleased to announce a pilot employability enhancement service that is being run by the Auckland Regional Chamber of Commerce and Industry. Michael Barnett and I got together a couple of weeks ago and discussed how we were going to help people who do not come into Work and Income but who need some assistance to get themselves back into a job because they have been made redundant. This service is about responding quickly to get skilled people back into the workforce as soon as possible.

Katrina Shanks: Who does the Minister expect this pilot programme to help?

Hon PAULA BENNETT: This pilot programme with the chamber of commerce will especially help those highly skilled people who may not be eligible for a benefit, although some of them may be. It is about helping those people in gaining skills transfer and in understanding how to use their networks. Currently, of the over 50,000 people on the unemployment benefit, about 35 percent have never received an unemployment benefit before. These are the people that this pilot programme can help, as well as others that may need that assistance.

Dr Rajen Prasad: Is the Minister aware that the Government’s policy initiative to cap, not cut, the Public Service numbers has so far resulted in around 1,500 job losses; that cuts to the Enterprising Communities scheme has seen 3,000 job losses; that 4,500 Kiwis had their educational opportunities scrapped as a result of the cuts she has made to the training incentive allowance; and that a further 6,000 students will be shut out of polytechnics and led to join the dole queue because her Government will not remove the student cap on polytechnics? Will what she is proposing assist these 15,000 people during the global recession?

Hon PAULA BENNETT: I am sure that we can make up numbers as we like, and it certainly sounds to me like that is what has been happening over on the Opposition’s side of the House. What I can say is there are more people working on the front line of Work and Income and Child, Youth and Family than there were at this time last year. That is my commitment to the people who need that help. We expect those numbers of front-line staff to continue to grow.

Katrina Shanks: Can the Minister give us some more details of the employability enhancement service?

Hon PAULA BENNETT: This service is about helping people prepare CVs, and it is about seminars to help with interview skills. It is about using the network of contacts that people might know. It is intended for some of those people who may not have found themselves unemployed for many, many years, and do not know how to use those networks. The Prime Minister’s own constituent Mr Burgess could benefit from something like this, which can help him get into that market and understand how to do it. We are keen to help people in different ways, and this is a great initiative. I am pleased to say that I think it will work really well.

11. State-owned Enterprises—Privatisation

[Uncorrected transcript—subject to correction and further editing.]

11. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Minister for State Owned Enterprises: Does he agree with NZX Chief Executive Mark Weldon that State-owned enterprises should act as if they face part-privatisation in 2 to 5 years?

Hon SIMON POWER (Minister for State Owned Enterprises) : No. This Government campaigned on a policy of not privatising State assets this term. If the member wants to accuse the Government of preparing State-owned enterprises for sale, he should cast his mind back to 1 April 1987, when Labour corporatised nine State agencies in a single day. That was when the “fresh face of Labour”, the Hon Phil Goff, was in Cabinet, and Miami Vice was on TV.

Hon Clayton Cosgrove: Does the Minister really expect New Zealanders to believe that such comments from Mark Weldon, the Minister’s own demands on State-owned enterprises to increase profits, Treasury’s call for privatisation, the Prime Minister’s admission that privatisation may well be on the agenda after the election, and the appointment of Don Brash to head a productivity task force are all a coincidence, or does the Minister agree that New Zealanders are smart enough to know that if it looks like privatisation, sounds like privatisation, and smells like privatisation, then it probably is privatisation?

Hon SIMON POWER: In answer to the first question, yes, because public ownership is not a reason to accept poor financial performance from our State-owned enterprises.

Hon Clayton Cosgrove: Will the Minister now categorically deny that State-owned enterprises like Meridian Energy are being prepared for privatisation should the National Party was to win a second term?

Hon SIMON POWER: Firstly, no State-owned enterprise is being prepared for privatisation. Secondly, I am surprised the member is so quick to concede the next election.

Hon Clayton Cosgrove: Has he or any other shareholding Minister written to Crown research institutes or State-owned enterprises to ask them to explain why their functions could not be better performed by the private sector, and to detail areas that could be contracted to the private sector?

Hon SIMON POWER: I have no responsibility for Crown research institutes, but I certainly do not recall penning a letter to State-owned enterprises along the lines that the member has outlined.

12. Children with Special Needs—Funding for Therapists

[Uncorrected transcript—subject to correction and further editing.]

12. CATHERINE DELAHUNTY (Green) to the Minister of Education: Why has she cut funding for therapists working with children with impairments in schools?

Hon ANNE TOLLEY (Minister of Education) : Funding for additional therapy was never built into the baseline by the previous Government; it has only ever been funded on a year-by-year basis. That particular support was provided to only 23 schools around the country, and other schools with students with the same or greater need have never received that funding for additional therapy. Students who have high or very high needs will continue to receive support through the Ongoing and Reviewable Resourcing Scheme.

Catherine Delahunty: What is the logic behind increasing some special education funding but cutting programmes that work for the most vulnerable, people like Christian Kumitau, a 13-year-old student from Māngere, who is confined to a wheelchair and faces losing funding for his physiotherapy?

Hon ANNE TOLLEY: I am advised that a student in that case with high needs in the Ongoing and Reviewable Resourcing Scheme would, at a minimum, continue to receive $9,910 per year to provide therapy and teacher aide support and an additional 0.1 of an additional teacher at the average cost of $6,500. There could also be support for assistive technology as well as funding for transport assistance of about $3,000 per year, plus whatever else their school might contribute from their operational grant or their staffing entitlement.

Jo Goodhew: What reports has the Minister received on funding for special education?

Hon ANNE TOLLEY: I received a report that quotes the previous Minister of Education, Chris Carter, as saying: “Not enough of the money earmarked for special education is actually getting to the school level and more importantly to the individual pupil with special needs.” That is an appalling admission from the previous Minister of Education after Labour had had 9 years in power. We are committed to special education, and in our very first Budget we increased the funding for high and very high needs students by $51 million over 4 years. That is the biggest increase that the Ongoing and Reviewable Resourcing Scheme has received for a number of years.

Hon Phil Goff: What does it say about the Minister’s priorities that she has cut $2.5 million from the most vulnerable and disadvantaged kids in disabled units while finding $35 million to support the most advantaged kids in the country in private schools?

Hon ANNE TOLLEY: I say to that member that again he needs to get his facts correct, because his assertion is not true.

Catherine Delahunty: Can the Minister explain what is fair about spending $35 million subsidising private schools while vulnerable children in public schools, such as Wiki Tamihana of the Wairarapa, lose funding and while her school’s special needs helper loses her job?

Hon ANNE TOLLEY: Again, I say to that member that children who have high health needs will continue to be funded under the Ongoing and Reviewable Resourcing Scheme. In fact, this Government is increasing the scheme’s funding by $51 million over the next 4 years.

Hon Phil Goff: Does the Minister read her correspondence, for example, the letter from the principal of the Carlson School for Cerebral Palsy indicating that half of that school’s therapists will be cut and that there is no compensatory funding, and the letter from the principal of Mt Roskill Intermediate School saying that the rights of severely disabled kids will be compromised and some may well become sufficiently ill that they will not be able to attend school at all if the therapy is cut?

Hon ANNE TOLLEY: I say to that member that in 9 years of a Labour Government, it did not put this particular funding into its baseline; it was only ever provided on a year-to-year basis. It only ever went to a small number of schools. Other schools throughout the country with children with similar levels of disability and need were never funded by that Government. This Government has put an extra $51 million into the Ongoing and Reviewable Resourcing Scheme, which funds high health needs and very high health needs children.

Hon Phil Goff: I seek leave to table two letters. They are from two highly disabled students at Mt Roskill Intermediate School seeking to explain to the Minister how they will be hurt by the cut in their therapy services.

* Documents, by leave, laid on the Table of the House.

Catherine Delahunty: I seek leave to table a list on independent schools that will receive $35 million in public money, including King’s College, Wanganui Collegiate School, and Christ’s College.

Mr SPEAKER: What is the source of that document?

Catherine Delahunty: It is from the website of Independent Schools New Zealand.

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


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