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Questions and Answers - 21 Oct 2009

(uncorrected transcript—subject to correction and further editing)




Recession—Government Actions for Economic Growth

1. CRAIG FOSS (National—Tukituki) to the Minister of Finance: What have been the Government’s priorities to ensure New Zealand comes out of recession and achieves sustainable medium to long term growth?

Hon BILL ENGLISH (Minister of Finance): Our priorities through the recession have been to keep the economy ticking over and to protect the vulnerable. At the same time we have set out a long-term plan to lift New Zealand’s economic performance. In the last year we have delivered on the Government’s election commitments, removed the sharpest edges of recession, clawed back rising debt to manageable levels, and stabilised New Zealand’s credit rating.

Craig Foss: What specific measures has the Government taken to achieve its priorities?

Hon BILL ENGLISH: There has been a wide range of measures, but I will reflect on just some of them: securing the stability of the financial system; supporting thousands of jobs through a number of initiatives, including Youth Opportunities, the Job Support Scheme, and ReStart; delivering a billion dollars of tax cuts; a large insulation fund; a programme to invest $7.5 billion in infrastructure; and an extensive programme of deregulation of business.

Hon David Cunliffe: How can that Minister claim that the New Zealand economy will be better off, when the Government’s response to the recession of cancelling superannuation fund contributions and providing billions of dollars of subsidies to polluters has been to steal from our children?

Hon BILL ENGLISH: The only plans I have heard for stealing from our children are extravagant promises from Labour to borrow $6 billion more.

Craig Foss: What fiscal issues did the Government inherit?

Hon BILL ENGLISH: The first and most obvious one for the Government was when we discovered that over the next 3 years there would be a billion-dollar shortfall in accident compensation funding, and that the Government would have to pay a billion dollars into the nonearners account to fill the gap. We also inherited Government spending growing at 50 percent over the past 5 years, which means that we now have to borrow $250 million a week to fill the gap.

Hon David Cunliffe: How does that compare with the contrast between zero net debt and gross debt at half the level that Labour had inherited from the previous National Government, compared with the $30 billion - odd of funds that our children will have to find for superannuation, added to the $30 billion to fund the climate liabilities that Gerry Brownlee wants to give to polluters?

Hon BILL ENGLISH: The member may not realise that if we borrow more money now, that means our children will have to repay it, and if we borrow money to put into the Superannuation Fund, our children will have to repay the borrowings.

Rahui Katene: Does he agree with Dr Susan St John that the intended in-work tax credit reduces poverty selectively and punishes families in a recession, and how will those children, who have been consigned to live in severe and significant hardship, be supported out of poverty?

Hon BILL ENGLISH: I understand that Dr Susan St John has a strong view about the in-work tax credit, and that it has been a matter of some litigation between the Crown and the Child Poverty Action Group. We are following with interest both the debate about its effectiveness and the legal proceedings.

Rahui Katene: What is the Government doing to respond to the outcomes from the hui held 2 weeks ago at Manurewa Marae to end child poverty in Aotearoa?

Hon BILL ENGLISH: Our first step has been that in the midst of a sharp recession the Government has maintained all entitlements in order to ensure that people have a sense of security and to ensure that our most vulnerable are not those who are punished first by an economic shock.

Accident Compensation—Opening Scheme to Competition

2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: When he is reported in the New Zealand Herald as saying that National had already looked into introducing competition in the ACC work account in some detail, what work has the Government actually done in considering who would benefit from it?

Hon JOHN KEY (Prime Minister): National in Opposition undertook some work to explore the opportunities for choice in the work account. That work was not completed, which is why our policy said we would investigate introducing competition to the work account. In Government, as the Minister for ACC has said, we have not undertaken any serious analysis, because of the shambles we inherited in respect of accident compensation as a result of the hopeless management of it by the previous Labour Government. I can confirm that in recent days, though, Treasury officials have been asked for an initial précis of the advantages and disadvantages of contestability in respect of the work account.

Hon Phil Goff: Why does he support privatisation of the work account, when all of the evidence is that the big winner would be the big Australian insurance companies, and the losers would be ordinary New Zealanders, who would pay more and get less?

Hon JOHN KEY: I do not support privatisation.

Hon Members: Oh!

Hon JOHN KEY: I am intrigued by the idea of more competition in the work account. I can assure the Leader of the Opposition that the summary he has given was not the experience when competition was introduced in 1998.

Hon Phil Goff: In light of that answer, does he not accept the arguments made by PricewaterhouseCoopers and Business New Zealand that the experience was loss leading by companies to get market share, followed by a big increase in levies; and does he not accept that where the system he is recommending already runs, in Australia, employers are paying twice the level of levies that employers in this country are?

Hon JOHN KEY: For a start off, it may have eluded the member but there has been a massive increase in accident compensation levies in recent times, when there has been no competition.

Secondly, it would be worth doing some serious work on this issue, but I can tell the member that if he chose to read the initial report I have had from Treasury, which was delivered to my office at lunchtime, he would see in it an argument that there may be some advantages to competition.

Hon Phil Goff: I raise a point of order, Mr Speaker. The Prime Minister has invited me to read a paper. I therefore invite him to table it so that I can.

Mr SPEAKER: I take it that it is an official—[Interruption] A point of order was raised and it will be dealt with in silence, I say to both front benches. I take it that it is an official document from Treasury; it therefore must be tabled—that is, if the Prime Minister was quoting from it.

Hon JOHN KEY: I am more than happy to have it tabled.

Mr SPEAKER: That is fine.

Document laid on the Table of the House.

Hon Phil Goff: Will workers and employers be paying higher levies, or facing cutbacks in accident compensation coverage, or both, to fund the hundreds of millions of dollars of profits that the Australian insurance companies will be making if he introduces the scheme that National introduced last time? Maybe Bill English will give him the answer.

Hon JOHN KEY: I am not going to get into hypothetical situations; let us talk about the real world. In the real world New Zealanders are being asked to pay much higher levies because of the mismanagement of the previous Labour Government.

Hon Phil Goff: Will the form of privatisation that the Prime Minister is advocating benefit New Zealand and Kiwi workers, when the in-depth report by PricewaterhouseCoopers estimates that it will raise administrative costs by 10 percent, which will mean a lower proportion of levies actually going into coverage, into prevention, and into rehabilitation; how could that possibly help?

Hon JOHN KEY: I think some serious work in this area is required, not making up things as we go along.

Mr SPEAKER: Sue Bradford. Is that a point of order? I simply cannot hear. Has the member sought a point of order?

Hon Phil Goff: I seek leave to table the PricewaterhouseCoopers inquiry—some 477 pages, I think—which will give the Prime Minister the answers I have talked about that—

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.

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

Sue Bradford: Has he discussed with the Māori Party the potential impact of full or partial reprivatisation of the work account on Māori, especially given that tangata whenua are disproportionately represented among low-paid and vulnerable workers; if so, does he think that their support for the Government’s accident compensation changes will continue?

Hon JOHN KEY: I am not sure whether their support will continue. I guess it will depend on what the final shape of the bill looks like after it has been through a select committee process. In terms of discussions, I have had very, very brief discussions with Māori Party members at our annual monthly meeting. They indicated some interest in looking at that area, and we supported them in that interest.

Hon Phil Goff: Does the Prime Minister agree with the statement made by Tariana Turia on Sunday’s Q+A programme that “costs in ACC will go up exorbitantly” if the work account is privatised, and has she explained to him why, having taken such a strong stand 3 days ago, she suddenly flip-flopped on that issue?

Hon JOHN KEY: I would agree with her if the work account were privatised, but introducing competition is a vastly different issue.

Hon Phil Goff: How does the Prime Minister reconcile his statement that National has looked at privatising the work account, or “making it available for competition” as he prefers to put it, in some detail, and is now actively considering it, when Nick Smith assured the House a week ago that his stocktake would not include investigating competition in the work account; and why has National’s handling of this issue been such a shambles?

Hon JOHN KEY: Quite clearly, it was National’s policy to look at introducing competition.

That is what we campaigned on, and that is what we are proceeding to follow.

Health Care—Policy

3. Dr JACKIE BLUE (National) to the Minister of Health: Does he still stand by his policy to deliver better, sooner, and more convenient health care?

Hon TONY RYALL (Minister of Health): Despite inheriting a lot of problems, I can say that we have today announced a major shake-up in the administrative side of the public health service. It is estimated that these changes will save up to $700 million over the next 5 years, and will reduce the number of administrative staff by up to 500 over time. All the resources that are freed up will be reinvested into front-line health services.

Dr Jackie Blue: What are the major changes to the administrative core of the public health system that he has announced?

Hon TONY RYALL: The announcement covers a comprehensive range of decisions, flowing from the ministerial review group’s 170 recommendations. We are establishing a National Health Board as a unit within the Ministry of Health. It will provide a stronger, unified, and more focused approach to managing and supervising the funding of our 21 district health boards. The board will unify the planning and delivery of information technology, of the workforce, and of capital, which are currently spread across a myriad of agencies and district health boards, and it lift performance in this area. We are also devolving funding of up to $2.5 billion, currently managed by the Ministry of Health, to district health boards where that would be appropriate.

Hon Ruth Dyson: How much of his projected savings in health will be reversed by the current and projected cost-shifting from the accident compensation scheme to the health service?

Hon TONY RYALL: I am unable to give the member a specific answer to that, because on the issue of the cost shift what is important is that we have resources available in the public health service to treat patients. This administrative shake-up is all about how we can stop reinventing the wheel in the 21 district health boards and get greater consolidation of back-office functions, harness the power of bulk purchasing, and put that up to $700 million over the next 5 years into patient services.

Dr Jackie Blue: What other plans does he have to move away from 21 district health boards taking 21 different approaches to back-office functions?

Hon TONY RYALL: We are creating a shared services establishment board to consolidate back-office functions, such as payroll, information technology, human resources, and purchasing.

We do not need 21 district health boards to reinvent the wheel on back-office functions such as those. We do not need 21 district health boards to have computer systems that cannot even talk to each other. As I have made very clear to the House, these savings will be significant for the public health service. They are equivalent to delivering 16,000 heart bypasses or building two new city hospitals.

Hon Ruth Dyson: Will he guarantee that his health restructuring and two new health agencies will help Mr Jim Chalmers, whose issue of the cuts to his home help services I raised in the House last week, to get his home help services back?

Hon TONY RYALL: What it is about is freeing up back-office resources for the very purpose of providing improved front-line services. I can tell the member that the chair of Canterbury District Health Board, Mr Alister James, assures me that there will be more funding available for home help services in Christchurch.

Accident Compensation—Child Sexual Abuse Victims

4. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister for ACC: What protocols and procedures, if any, are in place within ACC for children who have been sexually abused?

Hon Dr NICK SMITH (Minister for ACC): The Accident Compensation Corporation (ACC) has protocols and procedures in place to refer cases to the Department of Child, Youth and Family Services. It has a dedicated child specialist in the Sensitive Claims Unit, and the corporation endeavours to ensure that it has access to expert clinicians with the required specialist skills to deal with those who have suffered from child sex abuse.

Hon Annette King: Is he aware that since July 2009 his instructions to ACC have led to well over 420 sexual abuse cases being held up—an increase of over 500 percent—as ACC waits for the new assessment tool to come into effect, and that 24 counsellors in his own electorate say they will stop doing accident compensation counselling because the changes will actually harm their clients; and how many counsellors around New Zealand will be available to do accident compensation work?

Hon Dr NICK SMITH: There are many questions within the member’s supplementary question. I will just answer a couple of those. Firstly, I have given absolutely no instructions to ACC, except to say that this is a very sensitive area in which I have no expectations of savings, and that decisions need to be made based on what is in people’s best clinical interests. Secondly, I met with 18 of those counsellors in my own area at the weekend, and had a very constructive meeting with them.

Hon Annette King: If he believes politicians should listen to clinicians when it comes to assessment of sexual abuse claims for accident compensation, as he states, why does he not take his own advice and listen to the New Zealand Psychological Society and the New Zealand Association of Child and Adolescent Psychotherapists who have written to him saying that ACC has misinterpreted the Massey guidelines to justify reduced treatment, and the new assessment tool is clinically unsound and not best clinical practice?

Hon Dr NICK SMITH: The first point I make is that the law in this area was passed in 2001 by the members opposite, and that it makes it absolutely plain that for people to be eligible for accident compensation they need to have suffered a mental injury. The second point I will make is that the decisions made by ACC have been led by a group of very skilled clinicians, including psychiatrists and psychologists, and, in my view, the group is making decisions that are in the best interests of those who have suffered abuse.

Hon Annette King: When he said last week there had been no change to clinical guidelines to date for the counselling of people who had been sexually abused, why did he not tell the public that the new assessment tool, which starts being used next week, is the reason many cases have been deferred and declined, including the case of the two little boys in Taranaki who were injured and sexually abused, and had their counselling stopped by ACC; and can he not see that the veracity of his statements is causing concern and confusion to very vulnerable people?

Hon Dr NICK SMITH: In respect of the individual case that the member has raised, the decisions in that case were made by a clinical psychologist. I, as Minister, will not override decisions made by clinicians. As I pointed out earlier in the week, as a consequence of representations from the MP for New Plymouth, counselling is being provided for that child, quite appropriately, through Child, Youth and Family.

Youth Employment—Youth Opportunities Package

5. TIM MACINDOE (National—Hamilton West) to the Minister for Social Development

and Employment: How is the Government’s Youth Opportunities programme making a difference in New Zealand?

Hon PAULA BENNETT (Minister for Social Development and Employment): Yesterday I visited Te Mahurehure Marae for the national Women’s Refuge conference. I saw firsthand the difference that Community Max is making. When I commented on how nice the food was, I was invited into the kitchen where I met four young people who had prepared the meal. They were part of our Community Max programme, they were excited to have a job, and they were absolutely thrilled with the difference it is making in their lives.

Tim Macindoe: How many opportunities have these programmes created for young New Zealanders to date?

Hon PAULA BENNETT: Over 1,777 Job Ops positions have been created so far, and 1,085 Community Max positions, involving 1,475 New Zealand employers and 227 community groups, and the numbers are growing by the day.

Jacinda Ardern: Does she agree that more needs to be done to significantly reduce youth unemployment, when since she announced the scheme an additional 3,000 young people are now on the unemployment benefit alone, or is it a case of one step forward, three steps back?

Hon PAULA BENNETT: I would say two steps forward, because, as members have just heard, we are seeing that over 2,000 more young people would be on the unemployment benefit if it were not for the programmes that this Government has put in place.

Tim Macindoe: What further examples can the Minister give of where the Government’s Community Max and Job Ops initiatives are making a difference?

Hon PAULA BENNETT: People are coming up with such great and innovative ideas themselves. Actually, just last week the member Rahui Katene and I were discussing some of these ideas and how we could get them out to further iwi. We have put together a set of examples of Community Max programmes for Māori, and I certainly offer it to any members of this House who would like to take those examples to the iwi and the community groups in their electorates and share those ideas so that we can get more people on these programmes.

Accident Compensation—Impact on Health Budget

6. Hon RUTH DYSON (Labour—Port Hills) to the Minister for ACC: What representations, if any, did he receive from the Minister of Health in regard to any increased costs to the health budget as a result of ACC changes?

Hon Dr NICK SMITH (Minister for ACC): The Minister of Health and I have had several meetings and discussions about the implications of the Government’s accident compensation reforms. It is acknowledged that there will be some cost to health from the changes to the scheme in areas such as hearing, self-inflicted injuries, and in respect of disentitling criminals. Generally, the level of support from health for sickness is less generous than that provided from accident compensation for accidents.

Hon Ruth Dyson: How will the current cost-shifting from accident compensation to health improve the return-to-work rates for the 5,019 people who have been added to the health surgery waiting list by the accident compensation scheme?

Hon Dr NICK SMITH: The first point I make is that the accident compensation scheme has provided a higher level of elective surgery this year than it did last year. I also point out that the current Minister of Health has overseen a record increase in the number of New Zealanders who are getting operations under our public health system, on which he should be congratulated.

Michael Woodhouse: Has the Minister seen any examples of poor public policy decisions over health services that have given rise to financial problems for the accident compensation scheme?

Hon Dr NICK SMITH: Yes, I have. It was a decision in 2004 to provide free physiotherapy went against the advice of officials and the submissions from the New Zealand Society of Physiotherapists. It was estimated to cost $9 million, and actually cost over $100 million per year.

The member that was responsible for that decision was Ruth Dyson. I note that David Parker has said it was a mistake; I am looking forward to Ruth Dyson apologising to the levy payers that are now having to pay for her mistake.

Hon Ruth Dyson: How will the cost-shifting from accident compensation to health help improve health services, when district health boards have had $60 million cut by the Accident Compensation Corporation (ACC) from their elective surgery budget?

Hon Dr NICK SMITH: Again, I make the point that more people are being funded for elective surgery through the accident compensation scheme this year than last year. What is more, the increase in the number of operations that are being provided by the Minister of Health through our

public health service is higher than at any time. It is a huge increase on which he and this Government should be congratulated.

Hon Ruth Dyson: Why did he do nothing when Treasury expressed grave concerns about the massive unfunded cost-shifting from accident compensation to health in his bill?

Hon Dr NICK SMITH: Quite the opposite. Costs in accident compensation have been growing at five times the rate of inflation for the last 5 years—five times the rate of inflation. The consistent advice I have had from Treasury is that reform is required if the accident compensation scheme is to be affordable and sustainable for the long haul.

Street Racing—Deterrents

7. ALLAN PEACHEY (National—Tāmaki) to the Minister of Transport: What progress has the Government made in tackling illegal street racing?

Hon STEVEN JOYCE (Minister of Transport): I am very pleased to report that the House unanimously agreed last night to the passage of the Land Transport (Enforcement Powers) Amendment Bill. Although legislation alone is never the whole answer, this bill, in conjunction with the Vehicle Confiscation and Seizure Bill, which is now divided into three separate bills, will introduce a number of measures to tackle illegal street racing and close loopholes in the existing law. These measures include giving councils powers to prohibit cruising on key roads; increasing police powers for dealing with illegally modified, noisy vehicles; and promoting the greater use of demerit points and vehicle impoundment in order to deter offenders. The new legislation will send a clear message that New Zealanders will not tolerate dangerous and antisocial behaviour on their roads.

Allan Peachey: What other actions has the Government taken to curb this problem?

Hon STEVEN JOYCE: In addition to passing this legislation, my colleague the Hon Judith Collins has worked with the police on ensuring the most effective operational strategies are used nationwide. Also, the National Land Transport Programme is to provide the New Zealand Police with an extra $121 million over the next 3 years for road policing, and the Government is currently working through the feedback from consultation on the next road safety strategy. I am sure that many New Zealanders who have been intimidated or have had their businesses or home life disrupted by illegal street racers will welcome all of these developments.

Accident Compensation—Opening Scheme to Competition

8. Hon DAVID PARKER (Labour) to the Minister for ACC: Does he agree with the Employers and Manufacturers Association, which says employers are wary about any move to reintroduce an open competitive market for ACC because the last time there was a private market for ACC it turned into a “bunfight” between insurers?

Hon Dr NICK SMITH (Minister for ACC): There is a range of views amongst employers in business. I note, for instance, that Business New Zealand takes a different view and favours competition. The member also selectively quotes what the Employers and Manufacturers Association (Northern) statement said. It proposes competition in workplace accident treatment and rehabilitation, it criticises unfunded extensions to the scheme by the previous Government, and it supports the reform proposals in the Government’s bill.

Hon David Parker: Does the Minister agree with PricewaterhouseCoopers, which says that New Zealanders at present pay less and get more, and why does he think it is clever to privatise parts of the accident compensation scheme so that New Zealanders pay more and get less?

Hon Dr NICK SMITH: The first point I make in response is that when making comparisons with Australia, members need to be quite careful. For instance, if someone has an accident in a motor vehicle in Australia, it is considered to be a work accident. In New Zealand, it is managed in a different account. I further point out to the member that PricewaterhouseCoopers is the very

organisation that he has been constantly criticising for the actuary assessments of the liabilities of the scheme.

Michael Woodhouse: Does the Minister agree with the strong statement by the Employers and Manufacturers Association (Northern) about the importance of reintroducing experience rating to the scheme to provide stronger incentives for workplaces?

Hon Dr NICK SMITH: Yes, I do. I was interested that Labour members opposite are very supportive of the Employers and Manufacturers Association (Northern), and they make very plain their strong support for experience rating to be introduced. I hope Labour will take the advice of the Employers and Manufacturers Association (Northern), and support the Government’s bill so that we can have stronger incentives for safe workplaces.

Hon David Parker: Does the Minister agree with the Māori Party that Māori are overrepresented in primary industry, where work is often casual, seasonal, or part-time, and therefore that proposed changes will disproportionately affect Māori workers?

Hon Dr NICK SMITH: I have had very constructive discussions with the Māori Party about a number of provisions, including that, but I think there is broad agreement that it does not make sense for a person receiving accident compensation to be receiving more income per year than they were in work. That was never what Sir Owen Woodhouse proposed, yet that is what the changes—

Hon Maryan Street: That’s nonsense!

Hon Dr NICK SMITH: The member says that it is not true. Let me explain it very simply. If a person receives 80 percent of his or her earnings for the last 4 weeks for ever, and works only for 3 months of the year, we have created an incentive for that person to stay on the scheme, which I accept is consistent with Labour’s overall philosophy of keeping people dependent on the State.

Carol Beaumont: Does he stand by comments made to me in the Transport and Industrial Relations Committee on 2 July that “it is not intended that that stocktake group will do investigation into introducing competition into the work account because, quite frankly, it’s not a priority. It’s not the area where the scheme needs attention.”?

Hon Dr NICK SMITH: The terms of reference for the stocktake that have been approved by Cabinet do not include, at this stage, competition on the work account. Just as members opposite would know, when one is a minority Government there are agreements that are reached with support parties, and priorities change.

John Boscawen: Has he had representations from any insurance companies indicating that they look forward to the introduction of a competitive model that will offer choice and allow the development of innovative ways of reducing injuries and managing claims?

Hon Dr NICK SMITH: I have only had a couple of discussions and I think a letter or two from members of the insurance industry. Some have advocated the position that the member has raised. I have also had a position from some insurance companies that have noted that with the state of the global financial markets, there is some resistance to it at this time simply because of not having the strength in their balance sheets to make the investment to enter into a competitive market.

Tax Working Group—Membership

9. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: Does he have any concerns regarding the membership of the Tax Working Group?

Hon BILL ENGLISH (Minister of Finance): No, I do not. The members of the Tax Working Group were appointed by Victoria University, and where they have need for a wider range of expertise, they invite people in, including experts on poverty and economists who may have views that do not correspond with those of the group.

Dr Russel Norman: Does he have any concerns about PricewaterhouseCoopers’ chairman, John Shewan, being on the Tax Working Group, in light of Mr Shewan’s advice to Westpac to use tax reduction measures that the High Court subsequently found to be unlawful and that cost taxpayers hundreds of millions of dollars in lost revenue?

Hon BILL ENGLISH: No, I do not. As I said, Victoria University appointed a group of acknowledged tax experts, and, regardless of who their clients are, their advice to the Government will stand or fall on its merits.

Stuart Nash: Why did the Government lend its support to the formation of the Tax Working Group, when the Minister appears to have ruled out the vast majority of its recommended options as presented to date?

Hon BILL ENGLISH: In fact, we have made it clear throughout the year that we have ruled out almost nothing.

Dr Russel Norman: Is he concerned that, according to the Auckland High Court, Mr John Shewan advised Westpac to use tax reduction measures in order to pay a tax rate of only 6.5 percent instead of the corporate rate of 30 percent, and that those tax reduction measures were subsequently found to be unlawful tax avoidance?

Hon BILL ENGLISH: I do not intend to make comment on the case in any way that might compromise the Crown’s position. As I said before, from the Government’s point of view the advice of the Tax Working Group will stand or fall on its merits, regardless of who offered that advice.

Dr Russel Norman: How does he think the recommendations from the Tax Working Group will look in the eyes of ordinary New Zealanders if, for example, the Tax Working Group suggests increasing GST on ordinary New Zealanders, when one of the experts on the group has been advising overseas banks on how to avoid tax to the tune of hundreds of millions of dollars?

Hon BILL ENGLISH: I think the public will judge the outcome of this exercise by the wisdom of the Government’s decisions. The Government will have a look at the advice, it will decide whether there is a strong enough case for change, and any case for change will have to balance equity with positive economic effect.

Dr Russel Norman: So far as he knows, are any other members of his Tax Working Group involved in court cases involving tax avoidance?

Hon BILL ENGLISH: Not to my knowledge.

Emissions Trading Scheme—Effective Amendments

10. CHARLES CHAUVEL (Labour) to the Minister for Climate Change Issues: Does he stand by his statement that the changes to the emissions trading scheme make the scheme “workable and affordable”?

Hon Dr NICK SMITH (Minister for Climate Change Issues): Yes. The bill makes 34 technical changes to fix faults in the previous Government’s legislation, including issues like tree weeds, to make it more workable. The bill halves the price increases for electricity and petrol during the transitional phase, which makes the scheme more affordable for families and businesses—

Hon David Cunliffe: Face your kids and tell them they’re going to pay!

Hon Dr NICK SMITH: Oh, Mr Cunliffe is in favour of higher power bills and higher petrol bills; why does he not tell the public that?

Charles Chauvel: Has the Minister seen the analysis from Dr Christina Hood, who manages climate change issues for the Kapiti Coast District Council, that shows that his changes to the emission trading scheme represent a Government subsidy of $105 billion to polluters by 2050, and how does he reconcile this with his claims that his changes to the emissions trading scheme make it more affordable?

Hon Dr NICK SMITH: I do not take my climate change advice from the Porirua City Council; I take it from sources that are far more reliable. But if the member wants to argue that there are tens of billions of dollars of subsidies under the modified scheme, he must put his hand up and say that there are tens of billions of dollars of subsidies under the previous Labour Government scheme.

Jonathan Young: What advice has the Minister received from officials on the workability of the timetable for implementing the existing legislation by 1 January if the legislation is not amended?

Hon Dr NICK SMITH: I was advised that even if the new Government had pushed the go button on the very day that we took office, the time frames for implementing the existing legislation could not be achieved. The stationary energy and industrial processes regulations come into effect on 1 January 2010. It simply would not have been possible to develop allocation plans by that date with the consultative processes that were added in during the late stages of the bill. That is why it is important that Parliament pass amendments so that we do not have the mess that was left to us by the previous Government with its emissions trading scheme.

Charles Chauvel: Mr Speaker—[Interruption] Mr SPEAKER: The Hon David Cunliffe and the Hon Gerry Brownlee will cease their exchange. I have called Charles Chauvel for a supplementary question.

Charles Chauvel: Has the Minister seen comments made by the Parliamentary Commissioner for the Environment that the provisions of the emissions trading scheme amendment legislation are incompatible with achieving a 50 percent by 2050 pollution reduction target, and will allow carbon credits to be freely allocated for ever; and are these examples of how he thinks the changes he is making to the scheme will make it workable?

Hon Dr NICK SMITH: The interesting feature is that in aligning the New Zealand emissions trading scheme quite closely with that of Australia, all the criticisms that the member makes of the New Zealand emissions trading scheme are criticisms that he could make of the Australian Labor Government’s Carbon Pollution Reduction Scheme. I think the key fault in the analysis is that those parties are not considering the fact that the phase-out rate under the legislation is reviewed every 5 years.

Charles Chauvel: How does the Minister respond to comments from the Business Roundtable that the New Zealand Institute of Economic Research - Infometrics modelling is not a satisfactory basis for analysing the complex effect of climate change policies, and to comments from Treasury that the regulatory impact analysis on his emissions trading scheme changes “do not provide an adequate basis for informed decision making”, and what do these statements say about his claim that his changes will make the scheme workable and affordable?

Hon Dr NICK SMITH: I could list over a dozen bills that the previous Government passed with exactly the same note in respect of—

Charles Chauvel: I raise a point of order, Mr Speaker. I asked the Minister a very straightforward question. This is the first bill about which Treasury has made this sort of criticism in its regulatory impact statement. I simply ask that rather than talking about other legislation, he address the question.

Mr SPEAKER: A point of order is being heard. If I recollect the member’s question correctly, though, I believe that he started with “How does the Minister respond” to certain statements. With a question like that, how the Minister responds is not something the Speaker can have a lot of control over. If the member wants a more precise answer, he needs to ask a more precise question.

Hon Dr NICK SMITH: I think the New Zealand Institute of Economic Research’s - Infometrics report is a very fair analysis, and it provides a good framework for a balanced climate change policy. The last point I would make is that what the Government is doing with the emissions trading scheme is exactly what National members said when they campaigned at the last election. We are simply delivering on our election promises.

Jonathan Young: What further example can the Minister provide of making the Climate Change Response Act more workable by addressing errors in the existing legislation?

Hon Dr NICK SMITH: Companies such as Olex New Zealand in New Plymouth, which produces cable during a nitrogen cure process, are captured under the existing legislation and face considerable costs from 1 January next year. No other competitor internationally is facing this cost, and it was an error by the previous Government to include its activities in the emissions trading scheme. Quite frankly, that error is putting jobs at risk. The process does not generate greenhouse

gas emissions; that is why it should not be included. That is one of the reasons members of this House should support the bill, which fixes that mistake.

David Garrett: Has any other country included pre-1990 forests in an emissions trading scheme, and does Australia plan to include pre-1990 forests in any such scheme it may implement?

Hon Dr NICK SMITH: Two points. The first is that we are the first country in the world to include forestry in an emissions trading scheme, because, unlike most developed countries, forestry actually has a very significant impact on New Zealand. The second point is that, in respect of Australia, there is a complete ban on any deforestation of pre-1990 forests.

Mr SPEAKER: Question No. 11. [Interruption] My apologies.

Metiria Turei: Tēnā koe, Mr Speaker. Does the Minister support the international 350 campaign to return climate-changing gases to a concentration of below 350 parts per million in the atmosphere—

Charles Chauvel: I raise a point of order, Mr Speaker. I could not hear the member’s question, because there was so much shouting and barracking going on.

Mr SPEAKER: I accept that it was difficult to hear the member’s question, and I apologise for not calling her immediately. I invite her to start her question again.

Metiria Turei: Thank you, Mr Speaker. Does the Minister support the international 350 campaign to return climate-changing gases to a concentration of below 350 parts per million in the atmosphere; if so, how will his changes to the emissions trading scheme help to achieve that goal?

Hon Dr NICK SMITH: I commend the 350 campaign organisers on their efforts, both in New Zealand and internationally, to raise the profile of the problem of greenhouse gas emissions and climate change. I do not believe that the 350 parts per million target is realistic. The target that the New Zealand Government has adopted is a limit of a 2 degree temperature rise, and, for carbon dioxide equivalent gases in the atmosphere, a concentration not exceeding 450 parts per million.

Charles Chauvel: I seek leave to table pages 1 and 5 of the submission of the climate change issues manager of the Kapiti Coast District Council to the Finance and Expenditure Committee, which state that the changes to the emissions trading scheme represent a $105 billion subsidy from the Government to polluters.

Mr SPEAKER: Leave is sought to table those pages from that document. Is there any objection? There is no objection.

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

Hon Dr NICK SMITH: I noted that Mr Cunliffe objected to my statement that the Government was committed to a 450 parts per million target—

Mr SPEAKER: Order!

Hon Dr NICK SMITH: I seek leave of the House to table a Cabinet minute from the previous Government where it agreed to 450 parts per million as New Zealand’s negotiating position on climate change.

Mr SPEAKER: I take it that leave is being sought to table a Cabinet minute?


Mr SPEAKER: Leave is sought for that purpose. Is there any objection? There is objection.

Hon David Cunliffe: I raise a point of order, Mr Speaker. When one is misrepresented it is always difficult to know whether to object before or after the question is put, but, of course, I asked the Minister the question—

Mr SPEAKER: No, no. [Interruption] I am on my feet and there will not be interjection. I cannot allow the member to debate this. I do apologise to him; I should have stopped the Minister earlier. He should have come straight to his point of order, rather than introducing debating matter, and I can see that he acknowledges that he did not quite follow the correct procedure. I invite members to leave it at that, considering that the main purpose was the seeking of leave to table a document, which leave was refused by the House.

Charles Chauvel: I seek leave to table page 8 of the submission of the Parliamentary Commissioner for the Environment to the Finance and Expenditure Committee, which states that carbon credits will be freely allocated for ever, and that the changes to the emissions trading scheme are incompatible with the Government’s target of 50 percent—

Mr SPEAKER: Leave is sought to table that page from that document. Is there any objection?

There is no objection.

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

Charles Chauvel: I seek leave to table page 1 of the submission from the Business Roundtable, which states that the New Zealand Institute of Economic Research - Infometrics modelling is not a satisfactory basis for analysing the complex effect of climate change policies; and also page 12 of the explanatory note of the amendment bill, which states that Treasury does not believe that the regulatory impact statement provides “an adequate basis for informed decision making”.

Mr SPEAKER: Leave is sought to table those two pages from those two documents. Is there any objection? There is objection.

Charles Chauvel: I seek leave to table page 16 of the Cabinet paper from the Minister for Climate Change Issues entitled Moderated Emissions Trading Scheme—proposed amendments to the Climate Change Response Act 2002, which states that proposed policy settings for intensitybased allocation indicate a cumulative increase in Government debt of around 6 to 8 percent of GDP by 2050.

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

Craig Foss: I raise a point of order, Mr Speaker. Just to assist members, I point out that all the submissions regarding the emissions trading scheme are on the parliamentary website under “Committee documents”.

Prisoners—Employment Training Skills

11. MELISSA LEE (National) to the Minister of Corrections: What recent announcements has she made on employment training skills for prisoners?

Hon JUDITH COLLINS (Minister of Corrections): Recently I launched the Prisoner Skills and Employment Strategy 2009-2012. This strategy will ensure that more prisoners leave prison with essential work skills and habits. Research shows that prisoners who find work after their release are less likely to reoffend.

Melissa Lee: How will the Prisoner Skills and Employment Strategy 2009-2012 assist prisoners to be more employable?

Hon JUDITH COLLINS: The strategy details the plan to boost the number of prisoners learning industry-based skills by 1,000 by 2011. That was an election promise, and it will assist prisoners to leave prison with better skills than when they entered. There is also a much stronger focus on education and skills development in the strategy, and it targets offenders who are serving sentences of 6 months who currently have fewer opportunities to access the training and employment opportunities provided by the Department of Corrections.

Accident Compensation—Counselling

12. LYNNE PILLAY (Labour) to the Minister for ACC: Does he stand by his statement last Thursday that “In respect of the member’s claims that people in Wellington are making decisions about such counselling, I assure the member that those decisions are being made by properly qualified psychiatrists and others who have the clinical skills to make them”?

Hon Dr NICK SMITH (Minister for ACC): Yes, I do. The Accident Compensation Corporation (ACC) has registered health professionals, including psychiatrists and clinical psychologists, and that includes a wide range of health disciplines, including counsellors,

psychotherapists, and psychologists who are on contracted peer review. All those clinicians are supported by the clinical directorate at the ACC.

Lynne Pillay: Is it still the case that the victims of sexual abuse are suffering from extensive delays in having their claims processed by the ACC, and how is this clinically acceptable?

Hon Dr NICK SMITH: The system by which people make claims is that they receive four counselling sessions, without any questions being asked. The counsellor then lodges an application with the ACC. It is reviewed by proper clinical specialists, and decisions are made from there. I think that the major difficulty, and where this issue has caused controversy, is that the legislation requires that in order for a person’s ACC claim to be valid, he or she has to meet the provision passed into law in 2001 by the previous Government that requires a mental injury to have been sustained.

Lynne Pillay: I raise a point of order, Mr Speaker. I do not think that the Minister has addressed the question. The question was quite specific. It was about the extensive delays that victims of sexual assault are suffering at the moment. He has not addressed that question.

Mr SPEAKER: I think, in fairness to the Minister, that the way that the Minister answered the question was by giving a very full answer, explaining how the process worked. In doing so I believe that he was actually disputing the assertion that the member made.

Lynne Pillay: Why is the Minister ignoring clinical advice that the guidelines that his Government is introducing next week are not clinical best practice and may potentially harm those who need counselling?

Hon Dr NICK SMITH: Far from ignoring clinical advice, the new guidelines for treatment arise from a study that was done at Massey University, and they have been approved by the clinical directorate of the ACC. I have no intention of overriding the ACC’s clinicians in making decisions about what is appropriate for these very sensitive claims.

Lynne Pillay: Will the Minister instruct the ACC to reconsider imposing these guidelines, which have been described as clinically unsafe by the New Zealand Association of Psychotherapists, the Association of Counsellors, the Christian Counsellors Association, and the Association of Social Workers, or are the clinical skills of those people irrelevant?

Hon Dr NICK SMITH: I think that at the core of this issue there is a professional tension between counsellors, psychotherapists and psychologists, and psychiatrists. If we read the Massey University study, we see that the changes that the ACC has made in this area are strongly supported by the research done at Massey University by some of the most highly skilled clinicians in this area.


Climate Change Response (Moderated Emissions Trading) Amendment Bill—Submissions

1. CHARLES CHAUVEL (Labour) to the Chairperson of the Finance and Expenditure

Committee: How many submissions were received by the committee on the Climate Change Response (Moderated Emissions Trading) Amendment Bill?

CRAIG FOSS (Chairperson of the Finance and Expenditure Committee): As at this afternoon, 374 submissions had been received.

Charles Chauvel: Did he, as the chair of the committee, initially ask the clerk of the committee to invite only 27 submitters to attend and give evidence to the committee?

CRAIG FOSS: Pursuant to the committee’s instructions, I asked the clerk to get the process of hearing submissions under way after our meeting, which finished, I think, at about 7 p.m. on Wednesday of last week.

Hon Dr Nick Smith: Did Labour members of the committee make the suggestion to him that no submissions be held, as was suggested to me by Mr Charles Chauvel in discussions on an amendment bill when Labour and National were—

Mr SPEAKER: Order!

Hon Member: That’s terrible.

Hon Dr Nick Smith: That’s what they suggested.

Mr SPEAKER: Order!

Hon Dr Nick Smith: That’s what Charles said.

Mr SPEAKER: I say to the Hon Dr Nick Smith that he must stop interjecting when I am on my feet. I also apologise, because the Minister has caught me unawares, as normally only one supplementary question is allowed in questions to members. What is more, the supplementary question that the Minister was seeking to ask was not strictly within the Standing Orders.

Charles Chauvel: I seek leave to table an email exchange between the chairperson and me, containing the initial suggestion for hearing only 30 submitters, and the response.

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

Climate Change Response (Moderated Emissions Trading) Amendment Bill—Submissions

2. CHARLES CHAUVEL (Labour) to the Chairperson of the Finance and Expenditure

Committee: When did the committee begin hearing oral submissions on the Climate Change Response (Moderated Emissions Trading) Amendment Bill?

CRAIG FOSS (Chairperson of the Finance and Expenditure Committee): The committee began hearing evidence on the bill on Thursday, 15 October 2009, at around 4 p.m.

Charles Chauvel: Did he ask, as chair of the committee, for the clerk to plan for a total of only 5 hours of evidence from submitters over the course of 1 day on the Climate Change Response (Moderated Emissions Trading) Amendment Bill?

CRAIG FOSS: On that Thursday there was about 5 hours available to the committee to hear evidence, so that is what was asked. Of course, there were other days available.

Climate Change Response (Moderated Emissions Trading) Amendment Bill—Submissions

3. CHARLES CHAUVEL (Labour) to the Chairperson of the Finance and Expenditure

Committee: What, respectively, are the most and the least amounts of notice given to a submitter for an invitation to appear before the committee on 15 October to speak to their submission on the Climate Change Response (Moderated Emissions Trading) Amendment Bill?

CRAIG FOSS (Chairperson of the Finance and Expenditure Committee): The first submitters offered hearing times on 15 October 2009 were contacted on the evening of 14 October 2009, straight after the meeting at which the committee made its decision, as a whole committee, to hear from submitters. Submitters heard on the 15th were also contacted that morning and in the afternoon for bookings that evening.

Charles Chauvel: Did he, during public submissions to the committee, receive any complaints from submitters giving evidence about the short notice of their invitation to appear and give evidence before the committee?

Mr SPEAKER: I do not believe that the chair of the committee is responsible for what submitters to the committee might say. He has no responsibility for that whatsoever.

Charles Chauvel: I raise a point of order, Mr Speaker. I just wanted to make sure that you heard my question. I asked the member whether, as chair of the committee, during the public submissions he received complaints from submitters.

Mr SPEAKER: I heard the member’s question very clearly. It is not in order to ask the chair of the committee that.

Charles Chauvel: I raise a point of order, Mr Speaker. May I understand the reasons for that ruling? I had a look at—

Mr SPEAKER: The member will resume his seat. I am very happy to explain to him that the chair of the committee is not in any way responsible for what those making submissions at the committee might say, be it about the time of the warning they have been given in terms of when they might make their submission, or the contents of their submission. The chair has no responsibility whatsoever, and he cannot be questioned on that.


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