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Questions and Answers - 25 May 2010

(uncorrected transcript—subject to correction and further editing)

TUESDAY, 25 MAY 2010



State Assets—Assessment for Sale

1. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Which State assets was he referring to yesterday when he said work would begin soon on assessing which, if any of them, would be put up for sale?

Hon JOHN KEY (Prime Minister): I was not referring to any particular State assets, but rather to the policy. But I can assure the member that they will not include Telecom, the State Insurance Office, the Tourist Hotel Corporation, New Zealand Steel, Petrocorp, the Government Printing Office, or the DFC, because the member has already sold those ones. [Interruption]

Mr SPEAKER: We will not have this go on across the House. I have called the honourable Leader of the Opposition, and he will be shown some courtesy.

Hon Phil Goff: Why even consider selling Kiwibank, when 700,000 Kiwis bank with it precisely because it is community and New Zealand - owned, retaining its profits in and for New Zealand, when the private, commercial banks take $2.6 million in private profits and send it overseas?

Hon JOHN KEY: The Government has given no consideration to selling Kiwibank. What I can say is that the Government is giving consideration to putting more capital into Kiwibank, because the board of Kiwibank wants more capital.

Hon Phil Goff: If the National Government is not considering selling Kiwibank, as the Prime Minister has just told us, why did Bill English raise it publicly the day after the Budget, and privately to the National Party conference 2 years ago?

Hon JOHN KEY: Because when the Minister of Finance goes to a post-Budget function, hundreds and hundreds of people turn up. They ask him questions and seek his advice because they can see from the quality of the Budget the man’s wisdom and knowledge, and if he is asked a straight question he gives a straight answer.

Hon Phil Goff: That was half-hearted. Why would he risk Kiwibank shares falling into the hands of overseas investors, and its profits going offshore, when Kiwi mums and dads already own it, and benefit from its profits working for them and for New Zealand?

Hon JOHN KEY: The member is well and truly ahead of himself. But if the member was so opposed to the Crown owning a majority stake, and thinks the Government should have owned a 100 percent stake, why did the member not buy the rest of Air New Zealand? It was on the stock exchange.

Hon Phil Goff: I am not sure how that is an answer, Mr Speaker—[Interruption]

Mr SPEAKER: I say to Government backbench members on this occasion that I have called the honourable Leader of the Opposition to ask a supplementary question, and the House wants to hear it.

Hon Rodney Hide: I raise a point of order, Mr Speaker. I agree with you, but the Leader of the Opposition on three occasions has stood up and before asking his question has made a snide comment into the microphone, and I think that is what upsets my colleagues behind me.

Mr SPEAKER: I think that is a fair point that the Hon Rodney Hide has made, and I ask the Leader of the Opposition to desist from doing that.

Hon Phil Goff: If the Prime Minister is considering “selling shares”, as he quaintly puts it, to mums and dads who are investors in New Zealand, how does he stop those shares being onsold overseas, given New Zealand’s obligations under the General Agreement on Trade in Services and CER, which require national treatment?

Hon JOHN KEY: That is a question the Government has not tried to answer because it has not looked at that issue yet, but I can say there are always options. One option to ensure that is of course to make sure that Kiwis have more money—that is one thing the Budget did. Other options are to encourage them to save more—that is another thing the Budget did—and to invest in New Zealand, which is another thing the Budget did.

Hon Phil Goff: In assessing which assets the Prime Minister, and the National Government, might put up for sale, has he considered past experience with privatisation, when a private sector board ran Air New Zealand into bankruptcy and private owners asset-stripped KiwiRail and ran it into the ground?

Hon JOHN KEY: The Leader of the Opposition has a fair point. If one is going to consider these matters, one should definitely seek someone who has had experience. Maybe, just maybe, the Minister of Finance and I should go and have a chat with the Leader of the Opposition, because that is the man who sold Telecom, the State Insurance Office, the Post Office Bank, Air New Zealand, the Tourist Hotel Corporation, New Zealand Steel, Petrocorp, the Government Printing Office, the DFC, the National Film Unit, the Rural Banking and Finance Corporation, the Shipping Corporation, New Zealand Liquid Fuel Investment, Maui Gas, SynFuels, forest cutting rights, Health Computing Services and Communicate New Zealand. If there is ever a man who knows something about privatisation, it is that one.

Hon Phil Goff: I raise a point of order, Mr Speaker.

Mr SPEAKER: A point of order has been called, and it will be heard in silence.

Hon Phil Goff: Although it is interesting to have a history from 20 years ago, I point out to you that the Prime Minister made no effort to answer that question.

Mr SPEAKER: Members will cease this interjecting while a point of order is being considered. I say to the Leader of the Opposition that the slight dilemma I have is that he asked the Prime Minister whether he had considered something, and it is that kind of language that then gives the Minister the chance to answer that way. In answer, I think the Minister said he had not considered something but he had considered something else, and that is the dilemma with that kind of question. I realise it is frustrating, but the more precise a question and the less opinion sought, the more help I can be in assisting that members get answers.

Hon Phil Goff: Should New Zealanders have as much confidence in the assurances that the Prime Minister is giving around not selling Kiwibank as they had in his promise that “National will not be raising GST.”?

Hon JOHN KEY: I did not hear that.

Mr SPEAKER: If the honourable member would not mind repeating his question—the Prime Minister did not hear it.

Hon Phil Goff: Should New Zealanders have as much confidence in the Prime Minister’s assurances about protecting their interests in Kiwibank as they had in his promise before the election that “National will not be raising GST.”?

Hon JOHN KEY: Yes, because when I was asked about GST I was asked a different question, and I answered absolutely accurately.

Emissions Trading Scheme—ACT Confidence and Supply Agreement

2. Hon RODNEY HIDE (Leader—ACT) to the Prime Minister: Has he received any reports regarding the comment attributed by the New Zealand Herald to National MP Shane Ardern that “Mr Hide could stop the ETS if he wished by reconsidering his party’s confidence and supply agreement with National”; and what is his view of the ETS and the confidence and supply arrangement?

Hon JOHN KEY (Prime Minister): I am aware of the comments. My view of the emissions trading scheme is that strikes a good balance between our economic opportunities and our environmental responsibilities. My view of the confidence and supply arrangement with the ACT Party is that it forms the basis of a very positive and healthy relationship. I thank the ACT Party for its contribution in our stable and balanced Government, and, in particular, I thank the Minister for the great work he has done in reforming Auckland.

Hon Rodney Hide: Does he share ACT’s concern that the entire net gain from tax cuts for the 550,000 households earning between $40,000 and $85,000, shown to be 0.4 percent of their income on page 9, in the Minister’s Executive Summary, in the Budget, is eaten up by the 0.4 percent extra cost of the emissions trading scheme, as shown on page 65, in the Economic and Fiscal Update— that is, that what Bill English has given back, Nick Smith has taken away for over a million middleincome New Zealanders?

Hon JOHN KEY: No, because the estimates I have are that the emissions trading scheme will cost the average household around $3 a week, and the tax cut for someone on $50,000, even if they consume the lot, net of GST, is about $14 to $15 a week.

Hon Rodney Hide: Is the Prime Minister, therefore, saying that the figures contained on page 9 in the Minister’s Executive Summary and on page 65 in the Economic and Fiscal Update, showing, respectively, the extra income for middle-income households earning between $40,000 and $85,000 and the extra costs of the emissions trading scheme are wrong?

Hon JOHN KEY: No; but the answer is that one is a measure of the CPI, and one is a measure of their general income.

Budget 2010—Results for New Zealanders

3. CRAIG FOSS (National—Tukituki) to the Minister of Finance: What reports has he received on how Budget 2010 delivered for New Zealanders?

Hon BILL ENGLISH (Minister of Finance): The reactions have been generally pretty positive—so much so that the Opposition did not even ask a question on the Budget today. Most commentators agree the Budget has struck the right balance between maintaining public services and controlling debt while making worthwhile and overdue improvements to the tax system, which will help to rebalance the economy.

Craig Foss: Has he seen any surveys of public responses to the Budget?

Hon BILL ENGLISH: A wide range of surveys have indicated a public response. I will simply refer to one from the New Zealand Business Council for Sustainable Development, where a vast majority—about 80 percent—approved the reductions in personal income tax rates, 73 percent supported the tax base broadening measures, 69 percent supported the Government’s investment in ultra-fast broadband, and around 70 or 80 percent supported the increased investment in schools and hospitals. Rounded up with all the issues, including the tax increases, approvals outnumbered disapprovals by about two to one.

Craig Foss: What conclusions does the Government draw from the reaction to the Budget?

Hon BILL ENGLISH: I think it means that New Zealanders have a pretty good grasp of what went wrong in this economy in the last decade, and what is required to put it right. It also means that when they understand the issues—and in this case, they are issues that affect every household and every small business—they will support bolder policy initiatives. Taxpayers who are interested

to know their own position can go to the website The website has had about 300,000 hits, and I encourage all New Zealanders who want to understand their position to visit it.

Craig Foss: What possible measures were considered and rejected for Budget 2010?

Hon BILL ENGLISH: We had a number of suggestions, including some that were raised in this House. We rejected an increase in personal tax. We rejected the idea of fiddling with GST to create exemptions. We rejected the idea of getting back on the treadmill of unsustainable Government spending, and we rejected the idea of significantly increasing Government debt beyond responsible levels. All those suggestions came from the Labour Opposition.

Budget 2010—Effect on New Zealanders

4. Hon ANNETTE KING (Deputy Leader—Labour) to the Prime Minister: When he said the vast bulk of New Zealanders would not be worse off after this Budget, which New Zealanders did he expect would be worse off?

Hon JOHN KEY (Prime Minister): What I actually said was that I expected the vast bulk of New Zealanders to be better off under a tax system that increases GST to 15 percent, reduces personal income taxes across the board, and compensates people receiving income support. That is demonstrably the case.

Hon Annette King: Does he expect life to be better for the 60,000 New Zealanders his Government is budgeting to be still on the unemployment benefit in 4 years’ time, which is double the number of unemployed he inherited when National became the Government, and how will gradually creating only 10,000 jobs through this Budget help them?

Hon JOHN KEY: I remind the member that less than a month ago unemployment in this country was reduced from 7.1 percent on an adjusted basis to 6 percent. The Budget indicates that the unemployment rate will continue to fall from that rate. I think this Government is doing a lot to create jobs. As the Budget quite clearly pointed out, supported by Treasury, this Budget will create more than 170,000 jobs.

Hon Annette King: I raise a point of order, Mr Speaker. My question asked whether he expected the 60,000 people who will be on the unemployment benefit in 4 years’ time to be better off. He did not address the question.

Mr SPEAKER: I will allow the honourable member to repeat her question, without loss of her supplementary question.

Hon Annette King: Does he expect life to be better for the 60,000 New Zealanders his Government is budgeting to be still on the unemployment benefit in 4 years’ time, which is double the number of unemployed he inherited when National became the Government, and how will gradually creating only 10,000 jobs through this Budget help them?

Hon JOHN KEY: Firstly, it is a hypothetical question, because no one knows who will be on the unemployment benefit. What I can say to those who are on the unemployment benefit and coming off that benefit, is that they are far better off under a National Government, because they will almost certainly face a tax rate of no more than 17.5 percent, which is half what they used to face under a Labour Government.

Hon Annette King: If he is correct that the vast bulk of New Zealanders will not be worse off, does this Budget include sufficient funding to reverse the cuts to home help for thousands of older New Zealanders who have paid taxes all their lives, and who now face daily risks to their health, unnecessary costs, and misery?

Hon JOHN KEY: The answer is that this Budget provided more money for health than has ever been provided for it in New Zealand’s history—$14 billion. Those matters are operational and are being taken up by the district health boards.

Hon Annette King: I raise a point of order, Mr Speaker. I did not talk about the health budget. I asked whether there was sufficient funding to reverse the cuts to services for thousands of older New Zealanders.

Mr SPEAKER: The member asked about sufficient funding in the Budget, and the answer referred to the amount of funding in the Budget for health. I think the Prime Minister in his answer, on this occasion, basically rejected part of the member’s question. I think he was rejecting the part of the question about cuts; that is his right in answering the question.

Hon Annette King: Does he believe this Budget will reduce the underclass in New Zealand—as he has previously described some New Zealanders, and which he said was to the shame of us all— in light of the fact that thousands of New Zealand children will get little or no benefit from this Budget and cannot even see the first rung of the opportunity ladder that he likes to talk about?

Hon JOHN KEY: I think there are a number of things in the Budget that will help. One of those is the funding that goes into education to provide national standards to make sure that this is a Government that takes it seriously that young New Zealanders can read and write properly. The Budget will virtually halve the tax rate on low-income New Zealanders, it provides tax cuts for the bulk of New Zealanders, and in my view it puts the right incentives into the economy to help those who are least well-off to improve in life. As a short answer, yes.

Hon Annette King: Does he agree with the New Zealand Council of Christian Social Services, an organisation that works with the most vulnerable in society, and his own Minister of Finance, Bill English, that the gap between rich and poor in this Budget is about the same, and when will he match his rhetoric about an underclass with some action?

Hon JOHN KEY: Yes, numerically, but the Budget has tremendous incentives in it to allow people to progress, and that is what will happen.

Budget 2010—Tax Package Objectives

5. AMY ADAMS (National—Selwyn) to the Minister of Finance: What are the objectives of the Budget 2010 tax package?

Hon BILL ENGLISH (Minister of Finance): The main objective of the Budget 2010 tax changes is to foster faster economic growth. It does this in several ways. Across-the-board cuts to personal tax rates will help families by giving them the incentives to get ahead under their own steam. It will also attract and retain skilled New Zealanders in this country. The tax package, including the measures taken around cutting the company and savings tax rates, extending the tax base, and lifting the rate of GST will make the tax system fairer as well as close loopholes.

Amy Adams: How will the tax package help hard-working New Zealand families to get ahead?

Hon BILL ENGLISH: It will leave more cash in the hands of those hard-working New Zealanders in order to give them more choices and better incentives. Under the changes 73 percent of income earners, those earning less than $48,000 a year, will now face a top statutory income tax rate, excluding tax credits, of 17.5 percent or less. For those near the top of this income range the tax rate is almost halved, from 33c in the dollar just 2 years ago to 17.5c today.

Amy Adams: How will the tax package make New Zealand’s tax system more internationally competitive?

Hon BILL ENGLISH: The shift in the tax system will help to attract and retain the skilled workers this economy needs. Before this tax package, on a straight dollar for dollar basis, all Australians earning up to $228,000 a year were paying less tax than New Zealanders on comparable incomes. This package reduces that figure to about $55,000 a year. In other words, all New Zealanders earning more than $55,000 a year will be paying less tax than Australians who are on the same income. The cut in the company tax rate, from 30 percent to 28 percent, means that our headline rate reaches 28c sooner than in Australia. This will help lift investment and create jobs.

Amy Adams: Has the Minister seen any reports of support for dropping the top personal tax rate to 33 percent and dropping the company rate to 28 percent?

Hon BILL ENGLISH: I have seen a number of reports, including one that states: “This allows New Zealanders to keep more of their own money.” I have seen another report about dropping the company rate, which states that it will “create an environment in which enterprises can succeed—

both New Zealand enterprises and those that are attracted from overseas.” Those statements were both made in 1988 by Phil Goff when he implemented those tax measures.

Budget 2010—Gap Between Rich and Poor

6. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he stand by his statement that the gap between rich and poor is “about the same” after Budget 2010?

Hon BILL ENGLISH (Minister of Finance): Yes. The tax base broadening measures, particularly those that close loopholes and change the effect of taxation on property, mostly impact on wealthier taxpayers. The GST compensation measures are concentrated among low-income earners. The end result is that low, middle, and high-income groups all receive about the same percentage increase in real after-tax incomes.

Hon David Cunliffe: How does he reconcile his statement that he is concerned about the gap between the rich and poor with his admission that the Budget tax cuts have actually done nothing to close that gap?

Hon BILL ENGLISH: Very easily. The Government has created a tax system with stronger incentives in the direction the economy needs to go in—that is, there are more incentives towards work, savings, and investment, and less incentives towards consumption, borrowing, and property speculation. That means we will have an economy with more opportunities for New Zealanders to get ahead, whatever their income.

Hon David Cunliffe: When the Minister said that the Government is creating stronger incentives, could he be referring to the fact that, according to this graph, an average wage earner takes until year 5—2014—to break even after the effects of the rampant inflation that will take place next year?

Hon BILL ENGLISH: No, I do not. That member should recall the time when he was, I think, an Associate Minister of Finance, when there was 5 percent inflation in this economy. I do not remember him protesting about its effect on average wage earners then.

Hon David Cunliffe: When he said that incentives had been strengthened, was he referring to the net position after tax of average and minimum wage earners, which—by the time we take out GST, inflation, and accident compensation levies—does not recover, in the case of average wage earners, even by 2014?

Hon BILL ENGLISH: The member has been doing some magic with the inflation numbers. The fact is that the inflationary effect of GST is more than offset by the reduction in income taxes. The rest of the inflationary effect is dealt with in the usual way: low-income people on income support get an annual adjustment, and wage earners do their best to claw back increases in the cost of living through wage increases. That is no different from how it has ever been.

Peseta Sam Lotu-Iiga: How does the Budget improve the position of lower-income taxpayers?

Hon BILL ENGLISH: As I have pointed out, the Budget lowers tax rates for all taxpayers and improves their incentives to work, save, and invest, because in this economy we need a bit less incentive towards borrowing, consumption, and property speculation. Over 70 percent of all income earners now face a marginal income tax rate of 17.5 percent or less, and a family with two children that receives Working for Families will now pay no net tax on income up to $50,000.

Hon David Cunliffe: If the Minister is so concerned about lower-wage earners, then why did he use this “once-in-a-generation” tax cut to give himself a double-dip tax cut of $240 a week instead of focusing that money and other sums like it on closing the income gap between rich and poor New Zealanders?

Hon BILL ENGLISH: I point the member to a graph that I used in, I think, the Budget lock-up; it is readily available to him. It will show him that over the last 15 years people on incomes of $30,000 to $50,000 have had about a 40 percent reduction in the income tax that they pay. Our tax system has become more progressive over the last 15 years, not less progressive.

Peseta Sam Lotu-Iiga: How is the cost of lowering personal income taxes distributed across taxpayers?

Hon BILL ENGLISH: The cost of lowering personal tax rates is estimated at just over $4 billion per year by 2014. About two-thirds of this cost was used to reduce tax rates in the lowest two tax brackets—that is, people earning up to $14,000 on the lowest tax rate, and people earning up to $48,000 on the next lowest tax rate. This distribution demonstrates the Government’s commitment to making tax cuts across the board. The reason for that is we believe that the incentives matter for people who are on the minimum wage as much as they do for people who are above the average wage.

Health Services—Minister’s Statements

7. Dr PAUL HUTCHISON (National—Hunua) to the Minister of Health: Does he stand by all his statements in relation to health services?

Hon TONY RYALL (Minister of Health): Yes, including the statement that despite the world’s worst economic crisis since the 1930s, this Government is determined to protect and grow the New Zealand public health service.

Dr Paul Hutchison: What additional resources are being invested in public health services this year, and how does this investment compare on a GDP basis with previous years?

Hon TONY RYALL: This year the Government is funding Vote Health an additional operating budget of $512 million, bringing it to a total of over $13.5 billion every year. Members will know that the Budget projects an increase in GDP next year. I can advise the member that the health budget for next year—and, indeed, for the current financial year—is the largest percentage of GDP ever spent on health in New Zealand. That is to say—and members opposite will want to note—that this Government is investing a greater share of the economy in the public health service than any previous Government has in the history of this country.

Hon Ruth Dyson: How will thousands of older New Zealanders who are already struggling with cuts to their home help view his Budget, when district health boards received $200 million less in additional funds under his watch? All those older people want is $30 a week worth of home help, which is being cut.

Hon TONY RYALL: I say to those old people that the Government is putting $512 million extra into the health budget, whereas that member opposite projected $330 million. District health boards will spend a record amount on home care in the next year; 65,000 to 70,000 people receive home support services each year. Each year around 15,000 people either start or finish receiving support services in their homes. Some receive it for short periods to recover from an operation or illness; others may cease receiving home care and go into a rest home. District health boards are planning to spend a record amount on home care next year.

Dr Paul Hutchison: What does the Government expect to see as a result of this Budget’s commitment to protecting and growing the public health service?

Hon TONY RYALL: The Government is determined to get the best possible value for every dollar put into the New Zealand public health service. The Government expects to see more elective surgery for New Zealanders, faster emergency departments in our hospitals, and better cancer treatment for New Zealand men and women. In addition, district health boards are putting more money into home support both this year and next year.

Hon Ruth Dyson: How can he justify his statements boasting about his health budget when Nelson and Marlborough residents have just been told that $1.51 million will be slashed from their front-line mental health services in a move described by locals as “a mass dumping” of the most vulnerable?

Hon TONY RYALL: The budget for mental heath will be increasing by $174 million over the next 4 years. In this House, we have learnt that the claims that member opposite makes have to be checked.

Prime Minister—Conflicts of Interest

8. Hon PETE HODGSON (Labour—Dunedin North) to the Prime Minister: On how many occasions has he as Prime Minister dealt with actual or perceived conflicts of interest involving himself since the election?

Hon JOHN KEY (Prime Minister): I cannot recall exactly on how many occasions I have considered actual or perceived conflicts of interest matters involving me, but I do know that there have been at least two.

Hon Pete Hodgson: Does he believe that he has avoided, or might avoid, conflicts of interest issues arising, because he has taken the precaution of putting his relevant domestic assets into a blind trust?

Hon JOHN KEY: Well, that would be my hope.

Hon Pete Hodgson: Will he recommend to all his Cabinet Ministers that they establish a blind trust for relevant assets so as to reduce the growing list of conflicted Ministers who have come to public attention for real or perceived conflict of interest issues, such as Dr Worth, the Hon Dr Nick Smith, the Hon Chris Finlayson, or himself with Jackson Mining and Tranz Rail?

Hon JOHN KEY: There are two aspects. Firstly, I refute that the members listed have conflicts of interest; just because that member says they have one does not mean they do have one. Secondly, it is up to individual Ministers to seek advice from the Cabinet Office on that matter.

Hon Pete Hodgson: Has the Cabinet Office confirmed that his blind trust has been established in a manner that means he cannot know what he owns from one day to the next, and is, therefore, fully compliant with the relevant sections of the Cabinet Manual; if so, why will he not require that other Ministers do the same?

Hon JOHN KEY: To the best of my knowledge, yes. I am not aware of the blind trusts arrangements that Ministers have. They take them up with the Cabinet Office.

Budget 2010—Schools Operational Funding

9. ALLAN PEACHEY (National—Tāmaki) to the Minister of Education: What increase did Budget 2010 give to school operational funding?

Hon ANNE TOLLEY (Minister of Education): Budget 2010 invested an additional $155.9 million into school operational funding over the next 4 years. This means that despite the Government facing very tight fiscal conditions, we have delivered a 4 percent increase in funding to schools.

Allan Peachey: What does this increase in school operational funding mean for an average-sized school?

Hon ANNE TOLLEY: I am advised that the 4 percent increase in school operational funding means that for an average primary school there will be an additional $10,700 next year, and for an average secondary school there will be an additional $26,700 next year. That is a substantial cash increase to schools in a very tight fiscal environment.

Hon Trevor Mallard: In light of the figures she has just given the House on the basis of a 4 percent increase, does she accept with a 5.9 percent inflation that the average secondary school will be $13,000 a year worse off next year?

Hon ANNE TOLLEY: I understand that part of the 5.9 percent is the one-off spike from the rise in GST, and the underlying inflation is closer to 3 percent. I am also advised that the Ministry of Education receives a cash disbursement for the GST component of operational funding that is passed on to schools. That means when the rate of GST increases, cash payments to schools increase by the same amount as the GST increase, so schools are compensated for the GST rise and they get a 4 percent increase in their operational funding. I am surprised that Mr Mallard does not know that, because he was Minister of Education.

Mr SPEAKER: Order!

Hon Trevor Mallard: Why then did she announce them as GST inclusive?

Hon ANNE TOLLEY: The Budget was announced as GST exclusive.

Allan Peachey: What response has the Minister received from the education sector to the increase in operational funding?

Hon ANNE TOLLEY: I have received a number of responses welcoming the increase. One response from a chairman of a school principals’ association said that the Government is showing that education is a priority. Another response from a member of the national executive of the New Zealand Educational Institute said that the increase in operations grants was a “biggie” for primary schools in the Budget.

State Housing—Number of People on Waiting List

10. METIRIA TUREI (Co-Leader—Green) to the Minister of Housing: How many people are currently on the State housing waiting list?

Hon PHIL HEATLEY (Minister of Housing): I am advised that there 10,749 people on the waiting list, of whom about 380 are categorised as being in severe housing need. Their waiting time is about 10 days.

Metiria Turei: Will providing no money for building new State houses in this year’s Budget reduce the number of people—10,749—who are waiting for a home?

Hon PHIL HEATLEY: Actually, the Government provides about $650 million on incomerelated rents, which goes into the Housing New Zealand Corporation and which the corporation is free to use on accumulating houses. We are encouraging it to do so.

Metiria Turei: Will providing no new money for the building of new State houses increase or decrease the growing inequality in Aotearoa New Zealand?

Hon PHIL HEATLEY: I assure the House that the net number of State houses has increased since National has been in Government, and it will continue to increase while we are in Government.

Metiria Turei: How will the effect of slashing funding for State housing in this year’s Budget impact on the 30 percent of at-risk and vulnerable young people who are living in unsafe and insecure housing and the 10 percent of New Zealanders who live in overcrowded housing?

Hon PHIL HEATLEY: The member may not be aware, but last year’s Budget contained part of the $120 million stimulus package, which was a one-off payment, for 18 months, to repair State houses that were in serious disrepair and to add new State houses. That $120 million capital injection finishes on 30 June. That is not a cut in State housing; it is a stimulus boost during the recession, which has now ended.

Metiria Turei: Is the Minister saying that the marginally higher spending last year justifies the gutting of the Budget this year, leaving, still, 10,749 people and their families on the State house waiting list waiting for a home?

Hon PHIL HEATLEY: I direct the member to the Budget of 3 years ago, which was the Budget of the last Government, and to Bill English’s most recent Budget. She will find that operating appropriations have increased by about $30 million and capital receipts by about $65 million. If one takes the in-between Budget, which was a National Budget, one will see that, yes, there has been a drop, but only because of the $120 million stimulus package.

Metiria Turei: What Budget does the Minister expect that Housing New Zealand Corporation will need to slash in order to, as he has said, find the hundreds of millions of dollars for the promised 1,550 State houses that he said will be built?

METIRIA TUREI: I am not sure how the member came up with “hundreds of millions of dollars” for X number of houses. I do not know what she pays for her houses. We occasionally buy houses, we sometimes build houses, and Housing New Zealand Corporation leases houses. I can tell that member that we are asking Housing New Zealand Corporation to make savings, like every Government department, even though it is a State-owned entity, and we are continuing to make significant appropriations to Housing New Zealand Corporation.

Metiria Turei: When will this Minister fight just as hard for the 10,749 people and their little families on the State house waiting list as he did for his own little family?

Hon PHIL HEATLEY: I am quite concerned for those on the waiting list, particularly the close-to 400 people in significant and serious housing need. But, equally, John Key and I and this team were concerned about the 69,000 current tenants, many of whom were living in squalor because the State housing stock had fallen into such disrepair. Most of our capital has gone into that, because we care about those who are currently in State houses as well as those who are on the waiting list.

Moana Mackey: What advice has he requested about the impact of rises in GST and inflation, as well as predicted rent increases of up to 8 percent in the private sector, on demand for State housing?

Hon PHIL HEATLEY: My understanding is that Treasury expects a 1.5 percent increase in rentals over the next 3 to 5 years, so I challenge that figure. I can say that Housing New Zealand Corporation has come under increased pressure to house people during the recession, as one would expect. That may continue, although our Options and Advice Service is seeing a lot more people housed privately or buying their own homes.

Moana Mackey: Does he think he has his priorities straight when Housing New Zealand Corporation is being asked to “find savings in baselines for much of their operations” while he has sat idly by while the corporation has paid consultants $600 an hour to develop an $11 million business case for a computer upgrade that its own reports say it does not need?

Hon PHIL HEATLEY: The member ought to know that the stock of State houses is worth $14 billion, and Housing New Zealand Corporation receives over $1 billion a year either in rents or Government subsidies. So spending a few million dollars on a computer information technology system and the support that goes around it will keep track of those houses and those tenants. That way we can upgrade the stock instead of leaving it to get into serious disrepair.

Budget 2010—Fee Increases for Early Childhood Education Centres

11. SUE MORONEY (Labour) to the Minister of Education: What advice, if any, did she receive on the range of possible fee increases in early childhood education centres as a result of the changes announced in last week’s Budget; if so, what was that range?

Hon ANNE TOLLEY (Minister of Education): I was advised that the funding of over half of early childhood education services is unaffected. I have also received advice suggesting that funding reductions to affected centres are likely to be between $8 and $30 for children attending for around 20 hours a week, and around $15 to $40 for a child attending full-time. Fee increases are impossible to predict, because early childhood centres are independent bodies, which set their own fees.

Sue Moroney: Has she seen the estimates from early childhood education providers that show that the cost to parents could be as high as $60 per child per week?

Hon ANNE TOLLEY: No, but I have seen estimates from that member predicting the cost to be $60. It is pretty poor maths to multiply the figure for 20 hours by two to make the figure for 40 hours. As I have explained, the subsidy for 40 hours is different from the one the member is quoting. But those services have almost 9 months in which to make the changes they need to make in order to absorb the changes.

Sue Moroney: Does she agree with the statement made by the Minister of Finance, Bill English, about the funding cuts on Television One’s Q+A programme on Sunday, when he said: “Personally, I think providers are unlikely to have to pass it on.”; if so, is she telling kindies and childcare centres to reduce the quality of the education they deliver to children by sacking staff and cutting wages?

Hon ANNE TOLLEY: Yes, I heard what the Minister of Finance said. This is a particularly well funded sector. It has received treble the amount of funding in the last 5 years. It has received

three times the amount of funding for an increase in participation of less than 1 percent—in other words, almost three times more funding for the same amount of children. I think it is unlikely that most centres will pass on those costs, because they are able to change their staffing, they are able to change their services—they are able to do a number of things in order to make those changes.

Louise Upston: What provision was there in last week’s Budget for increasing participation in early childhood education?

Hon ANNE TOLLEY: Last week’s Budget allocated an addition $91.8 million over 4 years for a package to boost participation of Māori and Pasifika children and children from lower socioeconomic backgrounds. This Government recognises that we have to spend our money differently to get better results. This package will build on the very successful intensive, community-focused projects currently under way in Counties-Manukau.

Sue Moroney: Can she confirm that the top two subsidy rates for 20 hours’ early childhood education will be cut from 1 February 2011, dropping the top 20 hours’ early childhood education subsidy rate from $12.45 per child per hour down to $10.88 per child per hour—a broken promise?

Hon ANNE TOLLEY: I challenge the member’s figures and I challenge the assumption she is making. This Government has made it very clear that we have set early childhood centres an 80 percent target for qualified teachers. In Budget 2010 we are now removing the incentives for centres to go above that 80 percent.

Hon Trevor Mallard: If she is challenging the figures given by Sue Moroney, why did she publish them in her documentation with the Budget?

Hon ANNE TOLLEY: Because I challenge the context in which those figures were given. Budget 2010 changed the two top rates for subsidies to centres, not the 20 hours.

Sue Moroney: I seek leave to table a document from the Ministry of Education outlining the early childhood education funding changes that shows the top two subsidy levels for 20 hours’ early childhood education being dropped on 1 February 2011.

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.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. We now have a problem, and it is one on which we have corresponded and on which I have got into some trouble in the past for challenging answers. But I ask you, Mr Speaker, what an Opposition can do when a Minister challenges figures that she has published and that members are relying on for supplementary questions. We are in a very hard position in trying to hold Ministers to account.

Mr SPEAKER: I accept that the member has raised an issue of real concern. I appreciate his letter to me on the matter, and I am giving it quite a lot of consideration. I think that what the member did today is exactly what members can do. The member believed that the Minister may have, in his view, challenged figures that he believed to be correct. The member asked a very blunt question, and I think he included the fact that the figures had been included in the Minister’s own statements. That is a pretty powerful thing to put on the record of the House. Members are not allowed to use points of order to litigate answers, but when a member believes that an answer is incorrect, the member can ask point-blank, in the way that the member did just now, for the Minister to justify the answer or repeat the answer. I want Ministers to listen to this carefully, because concern about the accuracy of answers is an issue that comes up frequently. When a Minister, while answering a supplementary question, gives an answer that may be disputed, it is very hard to argue that the Minister has misled the House, because the circumstance may be one in which the Minister is talking about one issue but throws in a matter that is peripheral to it and may include information that another member believes is wrong. But when a member—and I want notice to be taken of this—questions a Minister particularly over information given, and in

reply to a very clear question gets a repeat of the same information, which can later be shown to be false, then that is a rather different situation. That is starting to get close to where the bar is set around issues of privilege. I am concerned that information should not be used recklessly in this House. I am not saying that that is what has occurred today. I am just using the point the member has raised to make the point that it is very difficult, when members disagree with an answer, to expect me to do something about it when it has been given as part of an answer to a supplementary question. The remedy, in my view, lies in the hands of the questioner to ask very specific questions about the information the member believes is incorrect. If a Minister then repeats what can be demonstrated to be incorrect information, and therefore may mislead the House, and if that can be shown, that is a rather different situation. To me, that is a better way to handle it. Rather than try to litigate answers by way of points of order, members should use supplementary questions to pin a Minister down. When Ministers repeat what can be demonstrated to be false information, that is a very serious situation.

Tairāwhiti District Health Board—Contracts for Mental Health Services

12. RAHUI KATENE (Māori Party—Te Tai Tonga) to the Associate Minister of Health: Is he aware of the decision by Tairāwhiti District Health Board to award contracts for mental health services to the Challenge Trust based in Auckland rather than the existing provider Turanga Health; and how does this decision comply with the Government’s policy for providing more personalised health care closer to home?

Hon Dr JONATHAN COLEMAN (Associate Minister of Health): Yes, I am aware that the Tairāwhiti District Health Board has awarded the Challenge Trust the contract for mental health services. I have been advised that the Challenge Trust will be offering a wide range of services, some of which have never been offered before, and that this contract represented better value for money than the previous contracts. It is my understanding that the Challenge Trust will employ local people to deliver the services, and that the contract is in keeping with the Government’s desire to deliver more personalised care closer to home. I also note that the Tairāwhiti District Health Board will get its fair share of the $174 million of new mental health spending that was recently announced in the Budget.

Rahui Katene: What justification does he have for the mental health funding cuts in Christchurch that led to the closure of the 198 Youth Health Centre and the Newell House Trust—a respite for women who are severely affected by mental illness—which will close at the end of the week?

Hon Dr JONATHAN COLEMAN: I inform the House that there have not been funding cuts for mental health services in Christchurch. With regard to the closure of the 198 Youth Health Centre, 198 chose to close its doors because the district health board contract was no longer enough for 198 to remain viable in its current form. I understand that it had faced cost increases related to the lease of its premises, and lost a non - district health board research contract. It is also my understanding that equivalent services are now provided by other organisations and funded by the district health board. The Canterbury District Health Board has maintained its funding for the Newell House Trust, and it is the cessation of various past funders that the trustees said was the major reason for the closure of Newell House. The Canterbury District Health Board received $125 million for mental health services in the year to June 2010. It will get more this year as part of the $174 million of new money going into mental health. In short, there is much more money going into mental health services but there has to be some reprioritisation of funding.

Rahui Katene: Has the Minister heard the claim from Platform, an umbrella group of mental health providers, that $2 million will be trimmed from mental health spending in Wellington and

Hutt Valley district health boards, and how will the whānau of mentally unwell people continue to have access to quality support?

Hon Dr JONATHAN COLEMAN: Yes, they have raised those concerns with me and I have asked the Ministry of Health to discuss that with the relevant district health boards. But there are two points to note. The first is that the mental health ring-fence remains in place, and that protects expenditure in mental health. Secondly, $174 million of new money is going into mental health, of which these two district health boards will get their fair share. Of course, it should be noticed that the last Government handed over the Capital and Coast District Health Board with a massive deficit of $65 million, which really did a major disservice to the people of that region. This Government has been striving hard to right the situation.


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