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Questions And Answers June 8

(uncorrected transcript—subject to correction and further editing)




State-owned Assets, Sales—Treasury’s Forecasts

1. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he stand by all of Treasury’s forecasts for the planned sale of State-owned assets?

Hon BILL ENGLISH (Minister of Finance): As the member will know, Treasury prepares its forecasts independently; but the answer, I suppose, is yes.

Hon David Cunliffe: Why is he promoting a policy that he described today at the Finance and Expenditure Committee as “selling hydro dams to buy prisons”, when the return on those hydro dams averaged 17 percent in the last 5 years and he himself calls prisons a moral and fiscal failure?

Hon BILL ENGLISH: There seems to be some confusion about the return on State-owned enterprises. A figure of $700 million of dividends has been quoted, which is not, in fact, correct. That actually exceeds the Crown’s dividends from all sources—State-owned enterprises, Crown entities, and Crown research institutes. The true figure for dividends from State-owned enterprises is probably about $350 million, and the member might find that that changes his calculations.

Hon David Cunliffe: I raise a point of order, Mr Speaker. The Minister has not addressed the question, which was the comparison between selling hydro dams and purchasing prisons. That has nothing to do with the dividend flow—

Mr SPEAKER: If I remember the member’s question correctly, he did mention a figure of returns from State-owned enterprises, and the Minister disputed that figure, as the Minister is entitled to do.

Hon David Cunliffe: Why did he repeatedly claim at the select committee today that selling our public assets offshore will help reduce our international indebtedness, when his Budget—

Hon Dr Nick Smith: He never said that.

Hon David Cunliffe: —that Minister was not there—shows net international debt rising by over 8 percent of GDP in the next 4 years?

Hon BILL ENGLISH: Because it helps us avoid the need to borrow. So yes, international indebtedness is going to rise. Depending on how the mixed-ownership model turns out, we will borrow less than would otherwise be the case.

Hon David Cunliffe: Why do his forecast financial statements not fully account for reduced dividends from the assets he wants to privatise, but do fully count the revenue and interest savings from those sales?

Hon BILL ENGLISH: I am not sure the member’s interpretation of the figures is correct. As I said at the select committee, the Government’s objectives in this case are not purely fiscal. However those numbers turn out, the Government wants to provide New Zealanders with an opportunity for sound investments, we want better performance from those companies, and frankly we would rather pay dividends to New Zealanders than pay interest to foreign lenders.

Hon David Cunliffe: Will the Minister admit that his promise to return the Crown accounts to surplus by 2014-15 is not credible as it relies on rubber accounting of unmandated asset sales, $1 billion in cuts he has not even allocated, revenue predictions that are $4 billion more than Inland Revenue Department forecasts, and an economic growth track that nobody believes?

Hon BILL ENGLISH: No, but under almost any feasible assumptions for the Government’s Budget, we will be borrowing billions less and will have much smaller deficits than any feasible accounting of the Labour Party’s promises so far.

United Nations Commission on the Limits of the Continental Shelf—Consultation with

Tāngata Whenua

2. RAHUI KATENE (Māori Party—Te Tai Tonga) to the Minister of Foreign Affairs: What engagement or consultation was undertaken with tāngata whenua in preparing the Government’s submission to the United Nations Commission on the Limits of the Continental Shelf, and what was the response from tāngata whenua on the proposal to extend New Zealand’s maritime boundaries?

Hon MURRAY McCULLY (Minister of Foreign Affairs): I am advised that New Zealand’s submission to the United Nations Commission on the Limits of the Continental Shelf in 2006 was a highly technical document presenting scientific data relating to the depth of sediment and geology of underlying rock on the seabed. Its purpose was to demonstrate how the legal definition of the continental shelf in the United Nations Convention on the Law of the Sea applied to the specific geological features of the seabed beyond 200 miles from New Zealand. For that reason, no consultation with stakeholders occurred. Now that decisions have been made by the commission, the Government will ensure that the relevant Orders in Council are passed in the coming months. At that point, responsibility for administering the rights arising will pass to a range of domestic agencies. The Government would expect them to conduct appropriate stakeholder consultations at that time.

Rahui Katene: What consideration has been accorded to New Zealand’s compliance with Te Tiriti o Waitangi in negotiating maritime boundaries with countries on which New Zealand’s continental shelf overlaps, including Australia, Fiji, Tonga, and potentially France?

Hon MURRAY McCULLY: I am advised that officials have not yet commenced boundary negotiations with Fiji, Tonga, or potentially with France. However, a maritime boundary was successfully negotiated with Australia in 2004. Updates on that negotiation were included in the list of treaties under negotiation that is always placed on the Ministry of Foreign Affairs and Trade website and circulated in hard-copy form to affected parties, including Māori groups, every 6 months. Information was also included in regular newsletters published by Land Information New Zealand. No matters were raised by interested parties with officials during the course of those negotiations with Australia.

Rahui Katene: What are the implications of the new extended continental shelf for the customary owners of the foreshore and seabed?

Hon MURRAY McCULLY: I am advised that the process I have described will not change customary rights to the foreshore and seabed.

State-owned Assets, Sales—Prime Minister’s Statements

3. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Prime Minister: Does he stand by all his answers to oral question No. 6 yesterday?

Rt Hon JOHN KEY (Prime Minister): Yes, although I want to take this opportunity to clarify one point. I said yesterday that off the top of my head the cost of the Contact Energy initial public offering as set out in the recent Official Information Act reply to the Leader of the Opposition was 1.9 percent of the total amount raised. It turns out that the cost was only 1.8 percent of the total amount raised. That compares with average initial public offering costs of 7 percent in the United States, 3 to 4 percent in Europe, and 2 to 10 percent in New Zealand. In this context the cost of the

Contact Energy initial public offering was low, and my expectation is very strongly that that will also be the case under the mixed-ownership model.

Hon Clayton Cosgrove: Has the cost of advisers’ fees in relation to floating the energy companies and Air New Zealand been factored into the Crown accounts; if so, how much?

Rt Hon JOHN KEY: I cannot be 100 percent sure, but I would imagine that they were, because we have taken ultimately into the Crown Budget the expectation of capital that we would raise, and that would be net capital, I would have thought.

Hon Clayton Cosgrove: Is it not true that Treasury has advised the Government that recent floats have cost up to 9 percent of the sale price, meaning that selling State-owned energy companies and Air New Zealand could cost up to $600 million?

Rt Hon JOHN KEY: No. What it means is that the last time an initial public offering was done by a National Government it cost 1.8 percent, and it is my expectation that any other asset sales of a mixed-ownership type would be of the same magnitude.

Hon Clayton Cosgrove: I seek leave to table a memorandum of 17 May 2011 to the Minister of Finance and the Minister for State Owned Enterprises from the Crown Ownership Monitoring Unit, which states “In New Zealand large IPOs in recent years have cost around 2 to 9 percent.”

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 Clayton Cosgrove: Will Kiwi mums and dads on the average wage and facing steadily rising costs of living be able to buy shares in State-owned companies directly?

Rt Hon JOHN KEY: Absolutely they will. They will be buying them not only through their KiwiSaver accounts, of which there are 1.7 million, but also through many other means. One of the differences between this Government and the Government that the member was part of is that this Government is delivering real wage growth to New Zealanders, and under his Government there was no real wage growth to speak of. I know that the Leader of the Opposition is in Greece at the moment, checking out its economic policies, but I suggest—

Mr SPEAKER: The right honourable Prime Minister was fine until that point, but members do not refer to the absence of any member from the House.

Hon Trevor Mallard: Why is the Government engaging international energy capital experts, if its priority is to sell to New Zealanders?

Rt Hon JOHN KEY: I do not know which Minister is asking for that advice, but I can say that we have laid out very, very clearly what our expectations are under the mixed-ownership model. We have made it absolutely explicitly clear that we expect New Zealanders to be at the front of the queue.

Grant Robertson: How?

Rt Hon JOHN KEY: Well, I say to Mr Robertson, the good news is that Treasury is working on exactly making sure that that happens, and I am absolutely confident that the 1.7 million KiwiSaver accounts, the billions of dollars invested in the New Zealand Superannuation Fund, and the billions of dollars invested in ACC will be invested, and that the many thousands of retired New Zealanders who have extra savings, and many other New Zealanders, will invest in it. I say to those New Zealanders that here is their chance: they can invest in a good New Zealand company, or continue to look to Labour, which will deliver them a failed finance company or something to invest in.

Hon Trevor Mallard: In light of his acceptance yesterday that some of the shares will be sold offshore, are Chinese or Australian investors his priority?

Rt Hon JOHN KEY: That is not what I said yesterday, and the member should go back to Hansard. I refer the member to, actually, Treasury’s advice to the Government that widespread and substantial New Zealand ownership of assets is achievable.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. No, I will leave it, Mr Speaker, but I will remind you of our discussion yesterday—

Mr SPEAKER: I will listen to the member’s point of order, but it needs to be a point of order.

Hon Trevor Mallard: Can I request that you refer to the Standing Orders Committee that answer of the Prime Minister, with reference to finding a midpoint between a breach of privilege, which involves deliberately misleading—

Mr SPEAKER: I am not happy with that at all, because that was a technical way of alleging that the Prime Minister, in the member’s view, misled the House, and that is unacceptable. It is not the way to handle that matter. The only conclusion I can draw is that the member was attempting to score a political point through doing that. The point of order process should not be used for that purpose. When the member asked his question, the Prime Minister claimed that his Hansard would show that he did not say what the member alleged in his question. The Prime Minister is entitled to do that, so I think that is where the matter should end.

Hon David Cunliffe: I seek leave to table a statement of specific fiscal risk from the Budget Economic and Financial Update—

Mr SPEAKER: Is that a document members already have, from the Budget documentation?

Hon David Cunliffe: They may or may not, but it relates—

Mr SPEAKER: We are not going to seek leave to table it, then. The member will resume his seat.

Hon David Cunliffe: I seek leave to table a compilation of data from the company accounts of Meridian Energy, Mighty River Power, Genesis Energy, and Solid Energy, which shows they—

Mr SPEAKER: What is the source of this document?

Hon David Cunliffe: The source is the annual company reports pulled together in a composite document.

Mr SPEAKER: Leave is sought to table that document.

Hon Members: Who by?

Mr SPEAKER: I must ascertain who brought the information together. Members deserve to know.

Hon David Cunliffe: The Labour research unit.

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

Hon David Cunliffe: I seek leave to table a table of dividends supplied by the Parliamentary Library taken from the annual statements of accounts of State-owned enterprises from 1993 to 2010, which shows that the combined dividends of the State-owned enterprises tagged for sale was over $700 million last year.

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.

Budget 2011—Economic Growth

4. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Finance: What steps did the Budget take last month to achieve faster economic growth based on higher savings, exports, and productive investment?

Hon BILL ENGLISH (Minister of Finance): The Budget set out several more balanced steps. In the Government’s programme we tilted the economy towards exports, savings, and investment. In particular, the Budget mapped out a faster path to a healthy Budget surplus by 2014-15, while continuing to protect the most vulnerable New Zealanders but encouraging the shift of people and capital from the domestic sector and the Government-funded sector to the export sector.

Peseta Sam Lotu-Iiga: How will Budget measures that reduce future Government borrowing help to support jobs and faster growth?

Hon BILL ENGLISH: The Government has been willing to grow its borrowing through the recession to help to protect New Zealanders from the sharpest edges of that recession and maintain consistent investment in infrastructure and public services. However, too much debt can be a bad thing. In the future, reducing the need for Government borrowing will support jobs and growth by keeping interest rates lower for longer. For instance, floating mortgage interest rates are at their lowest levels for more than four decades. This has put hundreds of dollars a month extra into the pockets of hard-working New Zealanders. Of course, in the economic cycle interest rates are likely to rise, but good Government fiscal policy could keep them lower for longer.

Peseta Sam Lotu-Iiga: Following the Budget, what reasons are there to be optimistic about the outlook for the New Zealand economy?

Hon BILL ENGLISH: There are many reasons to be optimistic, in addition to the achievements of the Government. Our terms of trade are at 50-year highs. Our exchange rate with Australia is at a 20-year low. Households are increasing their savings. Because of significant tax reform, we now have a highly competitive taxation system. We have been promoting a continuous improvement in our regulatory systems. The public sector is becoming more efficient. We have almost completed the reregulation of our financial system, so that investors can have confidence in it. All of those factors will help to underpin a growing economy.

Peseta Sam Lotu-Iiga: What reports has he seen that support the Budget’s direction?

Hon BILL ENGLISH: Just more good news on that front. Probably the most impressive reports were mentioned in this House last night, when the Hon Nathan Guy read out the vox pops from the Kapiti Observer, which were without exception positive about the direction of the Budget. This backs up the business confidence surveys, which have become quite positive in the last few weeks. I have to say I am more cautious than the bounce in business confidence is, but it is promising.

Budget 2011—Increase in District Health Board Costs

5. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Health: How much did Vote Health need to increase in Budget 2011-12 over Budget 2010-11 to meet the best estimate he received for growth in costs being faced by district health boards?

Hon TONY RYALL (Minister of Health): I am advised by the ministry that its estimate for the demographic and population growth calculation—

Grant Robertson: I raise a point of order, Mr Speaker. I am sorry; I could not hear the Minister.

Mr SPEAKER: I fully understand. Are members finding the volume on the sound system low today? I think the reaction from members is that it was too loud yesterday and it is too low today. I could not hear the Minister’s answer, either. Until we get the sound adjusted correctly, I urge Ministers just speak into the microphone a little.

Hon TONY RYALL: I am advised by the ministry that its estimate for the demographic and population growth calculation for district health boards for 2011-12 was $459 million. For the total Vote Health it was estimated to be $576 million, and $585 million was made available in the Budget.

Grant Robertson: Can he confirm that of that $585 million, $165 million, in fact, comes from cuts in other parts of the health budget?

Hon TONY RYALL: I refer the member to the press statement that the Government put out at the time, which stated that $165 million has come from reprioritisation and the use of unallocated and unspent money.

Grant Robertson: What reasons, then, can he have to disagree with New Zealand Council of Trade Unions economist Bill Rosenberg that funding for the health sector fell $127 million short of what is needed to keep up with growth in health costs in the Budget overall, and $108 million short for district health boards?

Mr SPEAKER: Before I call the Minister, I must say that despite the member sitting only 6 feet from me, or a bit more, I struggled to hear the question. Did the Minister hear the question?

Hon TONY RYALL: I got the gist.

Mr SPEAKER: The Minister believes he heard the question.

Hon TONY RYALL: My response to Dr Rosenberg would be that he said the health service needed something like $570 million to match demographic and population growth, and the Budget makes $585 million available.

Dr Paul Hutchison: How much new additional resource has the Government added to Vote Health over the course of its three Budgets from 2009 to 2011?

Hon TONY RYALL: I can inform the House that despite the world’s most serious economic recession in 80 years, and the additional costs of the Christchurch earthquake, this Government has been determined to protect and grow the public health service. In these times, when many other countries have been forced to reduce health staff and budgets, this Government has invested a huge extra $1.5 billion of new money into health over those years. This has helped pay for front-line services such as the extra 500 doctors and 1,000 nurses now working in our district health boards.

Grant Robertson: Further to his answer to my earlier supplementary question, can he confirm that his media release on the day of the Budget indicated that there was $420 million worth of new spending rather than the $575 million his own ministry advised was needed to keep up with cost growth?

Hon TONY RYALL: I confirmed quite clearly that the Government has made available $585 million for the health budget. This has been an extraordinary part of the $1.5 billion extra of new money that has gone into health over 3 years. It is simply unmatched.

Hon Trevor Mallard: Was the Minister counting the $165 million of recycled money as new money?


Grant Robertson: Can the Minister confirm that his press release on the day of the Budget indicated that $165 million of the $585 million he is claiming was recycled money from other savings in the health sector?

Hon TONY RYALL: The health budget press release made it absolutely clear that a contribution to the funding of this year’s available budget was coming from reprioritisation and the use of underspends and unallocated money. That is the reason why we have been able to put $1.5 billion of new money into health, over 3 years, plus reprioritise low-value spending.

Hon Trevor Mallard: In light of his latest answer does he want to correct his original answer, which indicated that there was $580 million – odd of extra money?

Hon TONY RYALL: The member needs to check the question he asked. The sum of $585 million is made available for Vote Health in this year’s Budget.

Grant Robertson: I seek the leave of the House to table the New Zealand Council of Trade Unions’ working paper on health, which shows that the Budget was an estimated $127 million short of allowing a standstill in health expenditure.

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

Unemployment Benefit—Number of Beneficiaries

6. CHESTER BORROWS (National—Whanganui) to the Minister for Social Development

and Employment: What was the number of individuals on the unemployment benefit in May 2011?

Hon PAULA BENNETT (Minister for Social Development and Employment): The May benefit numbers show that 57,058 people were on an unemployment benefit—a fall of 1,723. Overall, there were 328,043 people on all main benefits in May; main benefit numbers decreased by

2,295. Future Focus changes and increasing business confidence are making a difference. These May figures are encouraging, but are slow and modest as well.

Chester Borrows: How many more people were on the unemployment benefit in Canterbury in May, compared with the number before the February earthquake?

Hon PAULA BENNETT: Seven hundred and seventeen more people were on that benefit at the end of May, which is a lower figure than the many doom and gloom predictions we heard from the other side of the House. Although we anticipate that this figure may well increase as people return to Canterbury and with the Government’s wage support finishing, the job market does appear to be holding up better than was expected.

Budget 2011—Prime Minister’s Statements

7. JACINDA ARDERN (Labour) to the Prime Minister: Does he stand by all his answers to oral question No. 12 yesterday?

Rt Hon JOHN KEY (Prime Minister): Yes.

Jacinda Ardern: Which of the three initiatives he listed yesterday as contributing to the creation of 170,000 jobs will have the biggest impact: interest rates, national standards in primary schools, or early childhood education?

Rt Hon JOHN KEY: I would not want to make a prediction as to which one of them, but all of them will make a difference.

Hon Members: Ha, ha!

Rt Hon JOHN KEY: Well, you see, what is really, really fascinating about this is that Labour members are laughing about delivering good economic conditions for the private sector to grow jobs. That says it all, does it not? In their world the Government creates jobs; in our world the private sector does.

Jacinda Ardern: Is the job growth number of 170,000 based solely upon the job growth trend of the past 20 years, as he stated yesterday; if so, is that an acknowledgment that his Government has provided no new initiatives to support business, or anyone else, to contribute to job creation?

Rt Hon JOHN KEY: No. Treasury put together the job-growth prediction numbers. As quite a number of commentators have said, they are very much the middle of the pack, if not lower down. As I said yesterday in the House, the number is not overly unachievable, given that the 20-year trend has been an average of 35,000 per year, so it is slightly above that. But the first question from Jacinda Ardern makes it quite clear, does it not, that Labour does not care about the level of interest rates in our businesses—they do not care whether interest rates go up.

Mr SPEAKER: I think we have had equals sitting on both sides, on this occasion.

Jacinda Ardern: Does he acknowledge that despite his claim that 39,000 jobs were created last year, the number of people unemployed still increased overall by over 13,000; does not this indicate that his job-growth predictions will not necessarily provide enough jobs to bring unemployment down?

Rt Hon JOHN KEY: No. And it is a shame the member was not listening to the very informative question before this one, which pointed out, as the Minister of Social Development and Employment has today, that there are now 57,000 people on an unemployment benefit. The number is falling dramatically; 9,000 New Zealanders went off a benefit in May. This Government inherited a mess from Labour, a global financial crisis, a country that was in recession, and this Government is turning that situation round.

Jacinda Ardern: What assurance can he give New Zealanders that his bold prediction of 170,000 new jobs is more accurate than his claim that the cycleway would create 3,900 jobs when it has made only 5 percent of that?

Rt Hon JOHN KEY: Treasury advice is that we will create about 170,000. This Government will deliver interest rates that are lower than a Labour Government would produce. We are not going to continue to borrow and put the country into hock. I know that Jacinda Ardern’s message to

businesses today is that she does not care about the rate of interest. We do, on this side of the House; that is why we are going to deliver lower interest rates for longer, under a National Government.

Wine Industry—Changes to Excise Tax Rules

8. COLIN KING (National—Kaikōura) to the Acting Minister for Economic Development: What steps has the Government recently taken to support New Zealand’s billion dollar - plus wine industry?

Hon DAVID CARTER (Acting Minister for Economic Development): Last week in conjunction with the Minister of Customs I was pleased to announce a significant simplification of the wine excise rules. These changes to the thresholds for payment will benefit more than half of New Zealand wineries, and they are a common-sense solution to reducing the regulatory burden on our small wine producers. This is just another example of the National Government’s support for the vital export sector.

Colin King: Why has the Government made these changes to the wine excise tax rules?

Hon DAVID CARTER: Our wine industry is a $1.1 billion export earner for New Zealand. It should not be hobbled by unnecessary red tape and regulations. These changes to the thresholds are the first in 14 years. They are not about reducing the wineries’ tax obligation; they are about aligning their excise payments with their revenue flows. It is a common-sense move that will cut administration costs and in a number of cases will enable some small wineries to actually stay in business.

Budget 2011—Changes to Department of Labour

9. DARIEN FENTON (Labour) to the Minister of Labour: Do Budget changes to the Department of Labour reflect the Government’s commitment to health and safety?

Hon STEVEN JOYCE (Minister of Transport) on behalf of the Minister of Labour: The Budget included no significant net changes to the funding for health and safety, and the Government remains firmly committed to health and safety.

Darien Fenton: Can she rule out cuts to the Department of Labour health and safety inspector and front-line positions in the next 12 months; if not, how does she plan to protect New Zealand workers from unsafe work practices and accidents like the two that have tragically claimed lives in the last week?

Hon STEVEN JOYCE: Yes. There are currently 142 health and safety inspector positions, and there is no plan for those to change. The department is currently undertaking a review of the labour group management and support positions, which may be affected by the outcome of that, but the 142 health and safety front-line inspector positions will not change.

Darien Fenton: Is she concerned that the number of workers completing health and safety representative training has dropped by two-thirds in the last 2 years, and what effect does she think this will have on workplace safety?

Hon STEVEN JOYCE: I do not have that information to hand. What I can do is to confirm once again that the budget remains unchanged and the number of inspector positions remains unchanged. If the member would like to put that question in writing to the Minister, I am sure it will be answered.

Darien Fenton: How will the cuts to the funding for workplace health and safety training, a 40 percent cut in this year’s Budget to the Employment Relations Education Contestable Fund, and the scrapping of $39 million worth of worker health and safety education through the industry training organisations help to prevent more tragic workplace accidents, like the 85 accidents that have occurred in the last 12 months?

Hon STEVEN JOYCE: I reject two of the subparts of that question, including the suggestion that the health and safety training in industry training organisations is not taking place. I think it is

important to point out that in the industry training area it is devoted to obtaining qualifications and skills for workers, and that is an important refocusing that the Government has undertaken.

United Nations Special Rapporteur’s Report—Termination of Internet Access

10. GARETH HUGHES (Green) to the Minister of Commerce: What is his response to the United Nations special rapporteur’s report that criticises terminating people’s internet access because it is a violation of human rights?

Hon SIMON POWER (Minister of Commerce): It was an interesting read. The Government does not have a response to the report, because at no point that I could see does it mention New Zealand. That may be because New Zealand’s law does not currently permit internet service providers to suspend or terminate internet access for repeated copyright infringements.

Gareth Hughes: Given that the report talks about internet termination, which is on our law books currently in New Zealand, and given that the Copyright (Infringing File Sharing) Amendment Act 2011 violates the International Covenant on Civil and Political Rights, to which New Zealand is a signatory, will the Minister now heed the call of the special rapporteur for all States to repeal or amend existing copyright laws that permit users to be disconnected from internet access?

Hon SIMON POWER: I am not sure that I agree with the assertion in terms of the breach of the international covenant the member refers to, but putting that to one side for a moment, I do not have any intention of revisiting an issue that has taken the best part of maybe 3 years, if we include the last Government’s attempt at it. No, I do not intend to look at it again at this point.

Gareth Hughes: Given the United Nations special rapporteur’s objection, can the Minister explain to the House how our copyright law is compliant with international human rights?

Hon SIMON POWER: It would not be appropriate for me to give a legal opinion as to whether those particular international covenants are complied with in the way the member seeks, but what I can say is that my reading of the rapporteur’s report indicated primarily that his concern was around termination. I accept there were other matters in the report, but of course the legislation as it currently exists does not have those provisions in an operational state although they remain on the books, to be brought in by Order in Council if other matters contained in that legislation are not fully utilised for the benefit of rights-holders.

Gareth Hughes: On what basis would the Minister enact internet termination, a power he has under an Order in Council with the law recently passed under urgency?

Hon SIMON POWER: As I have repeatedly made clear, the Government will not bring the Order in Council into effect unless the notice process and remedies in the Copyright Tribunal are ineffective. Officials are keeping in close contact, and will continue to keep in close contact, with internet service providers and rights-holders to determine whether a further deterrent is needed, but at this stage the Government has no intention of bringing that provision into operation.

Gareth Hughes: Will the Minister consider the International Covenant on Civil and Political Rights as a criterion before deciding to enact internet termination?

Hon SIMON POWER: What I can say from my reading of the rapporteur’s report today is that it was quite a wide interpretation, in my opinion, of the provisions relating to article 19. I am yet to be persuaded that the assertion in that report, that because of that provision this is a human right, is actually the case. I have to say I would take some convincing, is the answer to the member’s question.

Gareth Hughes: Is the Minister aware of recent research from Germany, in Europe, which shows that making content available online is more effective at combating internet piracy without infringing basic rights, and what is the Minister doing to encourage increasing content online?


Gareth Hughes: When will the Minister comply with the International Covenant on Civil and Political Rights and remove—or terminate—internet termination from our law books, given that it

is disproportionate, there is no evidence it works, and it takes away a fundament modern human right?

Hon SIMON POWER: As I said earlier, I am not persuaded that the assertion the member makes in terms of the applicability of article 19 carries the weight that he asserts it does.

Clare Curran: Given the findings of the United Nations special rapporteur and its criticism of the “three strikes” copyright laws, which can result in disconnection from the internet, will the Minister support a complete review of our intellectual property or copyright laws in New Zealand?

Hon SIMON POWER: My reading of the report was that the “three strikes” provisions the member referred to were created in the context of a description of the laws as they exist—I think, from memory—in the UK and France, in the particular paragraph that was referred to. The last Government in 2008 indicated that a review of copyright legislation as it related to digital matters would go ahead in 2013, from memory. The Government is continuing with that plan, and I expect copyright in respect of digital matters to be reviewed in 2013, as the member knows from when my office answered her query.

Gareth Hughes: I seek leave to table the report of the special rapporteur on the promotion and protection of the right to freedom of opinion and expression.

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.

Accident Compensation—Opening Scheme to Competition

11. CHRIS HIPKINS (Labour—Rimutaka) to the Minister for ACC: Does he believe that the Government’s recent decision to introduce competition into the ACC work account will result in cost savings for employers; if so, why?

Hon Dr NICK SMITH (Minister for ACC): Yes; and that is the official advice from the Department of Labour. To quote the advice directly: “Over time, overall prices are expected to be lower in a competitive environment, due to the incentives on employers to improve workplace health and safety (thereby reducing the incidence and severity of injuries) and the incentives on both private insurers and ACC for efficient claims management (improving rehabilitation outcomes and reducing costs).” That is the official advice of the Department of Labour.

Chris Hipkins: Why does he believe that New Zealand employers will pay less for accident cover if competition is introduced, given that in Australia, where a competitive model exists, employers pay on average twice what New Zealand employers pay?

Hon Dr NICK SMITH: I am not sure where the member got those figures from. I suspect the figures are from the PricewaterhouseCoopers report commissioned by Labour in 2008. There was a fundamental problem there. ACC made a loss that year of $2.4 billion, which was not included in the analysis. There is a second difficulty with the member’s comparison with Australia, which is that motor vehicle accidents in Australia that occur when people are working are included as workplace accidents in Australia. In New Zealand those accidents are not included; they are included in the motor vehicle account. Given the number of people injured and killed on the road, that variation makes a substantive difference to the comparison.

Chris Hipkins: Can the Minister name any other country in the world that provides cover for work-related accidents as cheaply as ACC does in New Zealand and at an equivalent level; if so, could he name it?

Hon Dr NICK SMITH: Each jurisdiction is quite different, but the stocktake report led by the Hon David Caygill noted that the most common model internationally was for both State and private insurer provision alongside each other. That is the option the Government is going through.

Hon David Parker: They cost more.

Hon Dr NICK SMITH: Members interject that it will cost more. I think they underestimate that when employers have a choice of ACC or a private insurer, if members opposite are correct, why would an employer change?

Chris Hipkins: Will he guarantee that the Government will not prevent ACC from competing for the work account in the future; if not, why not?

Hon Dr NICK SMITH: The Government has made quite clear—both in the announcement last December and in the release of the discussion paper—that our policy intent is for private insurers to operate alongside ACC. We believe that will improve the performance of ACC. Given the mess we inherited from Labour of humungous losses, we as a Parliament should be focused on ensuring ongoing pressure on ACC to perform well.

Dr Jackie Blue: How many workplace fatalities were there in 1999 and 2000, when there was competition, and how does this compare with the numbers of deaths in the years before and after?

Hon Dr NICK SMITH: There were 52—[Interruption] Members opposite should listen to this, because it is important. There were 52 workplace fatalities in 1999 and 2000—the lowest of any period on record. The average in the years preceding the introduction of competition was 73 per year, and in the subsequent 8 years, when Labour was in Government, the average was 86 fatalities per year.

Budget 2011—Operating Balance Forecasts to 2015

12. Hon Sir ROGER DOUGLAS (ACT) to the Minister of Finance: What would the operating balance (before gains and losses) be in each of the next 4 years if real GDP growth averaged 1 percentage point less than forecast in Budget 2011 for each of those years?

Hon BILL ENGLISH (Minister of Finance): The precise amount would depend on which components of GDP were lower, but a good indication is provided by Treasury’s downside scenario set out on page 108 of the Budget. This shows that 1 percent lower GDP growth in each of the next 4 years would lower tax revenue by $3.4 billion in 2015. There will probably be additional costs through higher income entitlements. These figures are roughly symmetric—that is, a 1 percent higher growth rate would have about the same benefit.

Hon Sir Roger Douglas: Given that Treasury’s growth forecasts have been, on average, 1.8 percentage points higher than reality over each of the last 6 years, what confidence can New Zealanders have in the Government’s growth estimate for 2013 and 2014 when the Government’s main estimates for growth are the same as its downside estimate?

Hon BILL ENGLISH: I think most people will pay perhaps passing attention to Treasury forecasts, but they are more likely to make their own assessment of future prospects. The good news is that those assessments are increasingly positive. After all, it is the decisions that people make in their households and businesses that create economic growth, not Treasury forecast use.

Hon Sir Roger Douglas: Could the Minister explain to the House how he intends to hold expenditure on primary school education constant despite significant increases in roll numbers over the next 3 years, when in the previous 4 years roll numbers were static but he deemed it necessary to increase expenditure by over $500 million, or 20 percent?

Hon BILL ENGLISH: That is a matter that would need to be clarified by looking through different bits of the Budget. Generally, the expenditure on primary schools continues to increase from two sources. One is the increase in the operational grant, which is about $22 million or $25 million, and the other is a contingency that allows for salary increases. The Government is focused on the same issues as the member. One of the reasons we want to bring in national standards, given that we have almost doubled expenditure on primary schools in the last 10 years, is that we need to get better results for twice as much money, not just the same results for twice as much money.

Hon Sir Roger Douglas: I would like to repeat my question a slightly different way. Over the last 4 years, roll numbers in primary education remained static—in other words, they did not increase—yet the Minister saw fit to increase Government expenditure by $500 million. Over the

next 3 years roll numbers will go up by 17,000, yet he will hold expenditure where it is today. How will he do that?

Hon BILL ENGLISH: I do not think that is quite what will happen. I will put the answer in a different way. We could no doubt go through the Budget with the member. Some of the increase in expenditure—in fact, most of the increase in expenditure—will be held in a contingency, because it applies to salary settlements that have not yet been negotiated.


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