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Questions And Answers August 3


(uncorrected transcript—subject to correction and further editing)

WEDNESDAY, 3 AUGUST 2011

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

Economy—Progress

1. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Finance: What progress has the Government made in getting its finances in order, reducing debt and returning to budget surplus sooner?

Hon BILL ENGLISH (Minister of Finance): The Government has made significant progress after inheriting ever-increasing Government debt. In fact, across three Budgets we have achieved $45 billion of savings for the period up to 2015, compared with the spending track we inherited from the previous Government. The savings we made in Budget 2011 alone mean that we will borrow about $10 billion less over the next 4 years than we otherwise would have. This is particularly important in light of the growing volatility of international financial markets.

Peseta Sam Lotu-Iiga: How will the Government’s decisions to control debt and spending keep Crown debt to manageable levels?

Hon BILL ENGLISH: The Government has made balanced decisions about this by being willing to incur some debt in supporting the economy through the recession, and in financing the Christchurch earthquake recovery. However, we do need to show a path back to surplus. Crown debt is now expected to peak at 29.6 percent of GDP and fall from about 2015 onwards. We will return to a healthy Budget surplus by 2014-15 at the latest.

Peseta Sam Lotu-Iiga: How did the latest fiscal and debt forecast compare with the forecast the Government inherited in 2008?

Hon BILL ENGLISH: The Government inherited a dismal forecast in 2008. Treasury’s December 2008 update showed permanent deficits. Net Government debt, based on Labour’s policies, was forecast to grow to 50 percent of GDP by 2023 and keep rising after that. That would be a recipe for disaster in the current global environment where financial markets are very touchy about lending to highly indebted small countries.

Peseta Sam Lotu-Iiga: What policies would put New Zealand’s relatively strong economic and fiscal position at risk?

Hon BILL ENGLISH: That is a very good question. The kinds of policies that would do that would be promises of large extra Government spending that had to be financed by increasing taxes and borrowing more money, which I gather is what our political opponents are proposing.

Hon Heather Roy: How much longer would it take New Zealand to return to surplus if New Zealand had a tax-free threshold of $5,000, removed GST from fruit and vegetables, and continued the spending track of 2005-08; or would New Zealand return to surplus ever?

Hon BILL ENGLISH: Under those assumptions, I could hazard a guess, and I think it would probably take something like another 5 or 6 years to get back to surplus. But calculations show that,

even with the package recently released by the Labour Party, that would mean it would be borrowing about an extra $18 billion as a result of that big—

Mr SPEAKER: A point of order is being called. The Hon David Cunliffe.

Hon David Cunliffe: I raise a point of order, Mr Speaker. The Minister has no responsibility for Labour Party policy, and he certainly does not have responsibility for policies—

Mr SPEAKER: The member has made his point perfectly fairly. The Minister should not continue on the line of the last part of that answer.

Hon David Parker: I seek leave to table a table of the tax switch proposed by Labour showing that we reduce debt by another $7.7 billion—

Mr SPEAKER: The source of this document, just for the House to—

Hon David Parker: It was prepared by Business and Economic Research Ltd and the Labour Party.

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

Hon Heather Roy: What steps has the Minister taken to ensure that Government spending will not absorb 97 percent of nominal GDP growth over the next 3 years as it has done over the past 3 years?

Hon BILL ENGLISH: That is a good question. We have taken two different sorts of approaches. One has been to constrain Government spending so that it grows significantly slower than expected GDP growth. The other has been to put in place policies such as significant tax change to help to encourage the growth of the economy, so that GDP rises faster.

Living Standards—Inequality

2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by the accuracy of his answers to Oral Question No 1 in the House yesterday; if not, in what respect were his answers inaccurate?

Rt Hon JOHN KEY (Prime Minister): Yes, and, in particular, I stand by my statement that the distribution of income in New Zealand is more even now than at any time under the previous Labour Government. The assertion is based on actual data, which is the very latest data available, and on very rigorous analysis of that data—something that I know is a foreign concept to Labour.

Hon Phil Goff: Why did the Prime Minister claim that the gap in incomes had widened under Labour, when the report he quoted states precisely the opposite?

Rt Hon JOHN KEY: Because the member is wrong. If one looks at the report entitled Household incomes in New Zealand and takes, for instance, the 80:20 ratio as a measure, one sees that the report shows that inequality increased from 1998 to 2001, and increased again from 2001 to 2004.

Hon Phil Goff: I seek leave to table page 2 of report entitled Household incomes in New Zealand, which states that inequality declined from 2001 to 2010, precisely—

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 Phil Goff: Did the report that he quoted from yesterday attribute the decline in inequality to Labour’s Working for Families package, which he described as “communism by stealth”, and does he regret that comment given that the report’s finding was that Working for Families had halved child poverty rates for those in working families?

Rt Hon JOHN KEY: No, I do not regret those comments, and there were a number of factors. The reason for that was that the original design of Working for Families actually showed a situation where people could lose over 100 percent of any income they earned. If that is not communism by

stealth, I do not know what is. There were a number of factors in the report that showed why inequality changed.

Chris Tremain: What was the distributional effect of the Budget 2010 tax package?

Rt Hon JOHN KEY: Good question. Treasury did some analysis of the distributional effects of the whole tax package, including the changes to property tax rules and the closing of loopholes around Working for Families and other income assistance. The analysis was again based on actual data from the household economic survey. It showed that the impact of the whole tax package was, effectively, distributionally neutral. In other words, it had almost the same impact on different household income groups. That is because although higher income earners received larger income tax reductions, they also bore most of the impact of the tax base broadening measures. In the end, the two of these cancelled out each other. If members are interested, they should look at the Treasury analysis. We do not make things up; we actually have Treasury do the work. Here it shows the effective distribution of the full tax package.

Hon Phil Goff: When he claimed credit for the reduction of inequality in New Zealand yesterday, was he aware that the figures that he was relying on in the household income survey contained all of Labour’s progressive income tax cuts in 2008 but none of the highly regressive tax changes of 2010, which gave him as Prime Minister over $1,000 a week but somebody on the median wage in my electorate just $13?

Rt Hon JOHN KEY: On so many fronts the member is factually incorrect. It would be useful if he listened to the last answer, which shows that the Treasury analysis states that the entire tax package was, effectively, distributionally neutral.

Hon Phil Goff: With the increase over the last year in the wealth of the top 150 rich individuals in New Zealand by 20 percent, or $7 billion, and the credible reports from a whole range of social agencies indicating a very steep increase in people relying on food packages, has the gap between rich and poor widened or narrowed in New Zealand in the last year?

Rt Hon JOHN KEY: It is impossible to know that at this point, but we will know next year when the Ministry of Social Development produces its report. But if Treasury’s analysis is correct, then in terms of the income tax package it will be, effectively, distributionally neutral. There are, as the member probably knows if he has looked at the report, many factors that go into it, and at this stage it would be far too early to tell at this point.

Hon Phil Goff: Why, according to the household income report, is wealth more concentrated in a few hands in New Zealand, with 10 percent possessing 50 percent of the country’s wealth—more than in the United Kingdom or in Australia—and is it the case that the richest people benefit from the absence of a capital gains tax in this country but not in those other two countries?

Rt Hon JOHN KEY: It would be useful if the member read out what was actually in the report, so I will quote it for him. It states: “NZ’s wealth inequality is not unusual for OECD countries.” In fact, it is lower, for example—

Hon David Parker: But it’s getting worse.

Rt Hon JOHN KEY: —no, it is not—than in Sweden, where the top decile holds 58 percent.

Hon Phil Goff: I seek leave to table the section of the household income survey that shows that the top 10 percent in New Zealand owns 50 percent of the wealth, but in Australia and the United Kingdom it is only 45 percent in each case.

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.

Dr Russel Norman: Does the Prime Minister agree that when we have a significant proportion of children in our country living in poverty who struggle to get food and shoes to go to school, spending money to get those kids out of poverty should not be seen as a cost, but should be seen as a social investment?

Rt Hon JOHN KEY: Yes, and that is why the Government spends an awful lot of money in that area.

Hon Phil Goff: Were the statistics produced by Statistics New Zealand yesterday that showed that wages and salaries had gone up by 1.9 percent when inflation was running at 5.3 percent accurate?

Rt Hon JOHN KEY: The member is mixing a number of different factors. He is looking at the Labour Cost Index, which, as I said yesterday—and I am happy to take the member through it again—is a static like-for-like comparison. It does not look at all the factors that go into wages. If one looks at all of those factors—that is, the quarterly employment survey—one sees that in 2001 the then Labour Government changed the law to tell every pensioner in New Zealand—

Hon Phil Goff: I raise a point of order, Mr Speaker. The question, as you will recall, was very straightforward: were the figures produced by Statistics New Zealand yesterday accurate? There is a clear answer to that. I do not need a prolonged explanation—

Mr SPEAKER: I am on my feet, and there will be no comments from anyone. The House is too noisy altogether today. The member cannot expect the Prime Minister to answer the question exactly the way he wants it. The Prime Minister was giving a very detailed answer to the question. He was not attacking anyone politically. He was giving informative information for the House, and I believe that he was not departing from the Standing Orders at all. I invite the Prime Minister to finish his answer.

Rt Hon JOHN KEY: To just recap that point, I say that Statistics New Zealand itself says that the quarterly employment survey is the best indicator for what is taking place in terms of wage growth. If one looks at it, one sees that that was the assumption adopted by Labour when it changed the law in 2001 to say that it would be the basis under which New Zealand superannuation would be based. If the member wants to reject it, he needs to go back and apologise to the New Zealand pensioners who had their entire pension for the period of time that Labour was in office based off it. Now, if one looks at—

Hon Phil Goff: I raise a point of order, Mr Speaker. I am asking the Prime Minister whether or not figures produced by one of his departments are accurate. I have not heard an answer to that question.

Mr SPEAKER: The Prime Minister is actually explaining. It is not often that the House actually gets a detailed answer of some quality. The Prime Minister is [Interruption]—Order! Unless some members want to leave this House, they will desist immediately. I say to the honourable shadow Leader of the House that his interjections have been inept today. The member asked a question about a couple of statistics. The Prime Minister was explaining why he believed that those statistics were not accurate measurements of what he believed the member was asking about. I say to the House that I am on my feet. If someone wants to leave, then they will very soon—very soon. I believe that the House ought to value answers where there is no attempt to attack the questioner. The Prime Minister was simply giving valuable information to the House, and I think that is something that should be valued. I think the Prime Minister’s answer has been longish, and I think we should perhaps go on to the next supplementary question.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I invite you to review the tape and the comment you just made, to think about whether it is your role to comment both positively about the Government and negatively—

Mr SPEAKER: The member will resume his seat right now. The member may review the tapes as well to see how inept his interjections have been today. I should have stopped him earlier, because other members of the House asked questions, they deserved to hear answers, and that member was making it very difficult for them to hear the answers to the questions they had asked. They have a right to hear those answers. I have heard sufficient. There will be further supplementary questions.

Hon David Parker: I raise a point of order, Mr Speaker. I think, with respect, that Mr Mallard’s point is that—and I do not impute any improper motive to the Speaker—to editorialise whether an answer is valuable for the House is not the role of the Speaker.

Mr SPEAKER: I have to do this every day as members—normally Opposition members—seek my assistance to get answers from Ministers or to stop Ministers from abusing the questions asked. Every day I have to make judgments about the questions asked and the answers given, and the House has actually benefited enormously from most of those judgments. I do not pretend I get them all right. The member may recollect one of his own questions from yesterday. I stopped the Minister of Finance, because I believed the Minister was not fairly answering a very fair question that had been asked. I was listening very carefully to the answer, and I would have stopped the Prime Minister had he sought to play politics with the question. He gave what he believed was a genuine answer to the question. As Speaker, I support attempts to give genuine answers to questions. I cannot support members if they wish to turn questions into political games. I cannot support them in getting political answers, but for genuine answers I can.

Hon Rick Barker: I raise a point of order, Mr Speaker. I realise this is a difficult area, and I do not want to challenge you as the Chair of this meeting, or your authority. But, I do want to raise a point that was referred to by the Hon Trevor Mallard, and that was the reference you made to his interjections. I have sat here and listened, and I concur with you on this: for a number of interjections that he made, you could have, with good grounds, challenged and called him to account immediately at the time. I would have supported you 100 percent on that, but, in the interests of the flow of the House, you let them go, and I thought that that was your call. The point I make to you is that once you have decided to let the matter go, I do not think it is appropriate for you to come back and make reference to it again later. The decision was made; you let it go. It is a little bit like the referee on the football field. If there is a penalty and you have not blown the whistle, then you cannot come back some time later, blow the whistle, and say: “I am sorry, I should have penalised you back here.” I think your role is to ping him at the time, but if you do not, then I think he has got a free run at that point. That is my point. I do not think it is right for you to then come back and make some other comments about it. When you made your judgment, you let it go, and that is the end of it. I think that is the point Mr Mallard was making about the review of the tape. I just want you to think about that again.

Mr SPEAKER: I accept the member’s point is made in good faith. The dilemma I have as Speaker is that were I to intervene all the time, I would disrupt the House too much, yet if I let it go totally, it can lead to an unfair situation. That is why at times I do intervene. Today I thought the provocation, though, was pretty extreme. Otherwise I would not have mentioned it.

Dr Russel Norman: I raise a point of order, Mr Speaker. I actually thought you were playing the advantage rule for the Prime Minister there. On the question, you said that during the answer, the Prime Minister was not attacking the Opposition. In fact, he was saying that the member should apologise, so he was actually directly criticising the Leader of the Opposition, who was asking the question. It was a pretty straight question. You were right; he was giving a good answer, but then he did start to attack the Leader of the Opposition during his answer.

Mr SPEAKER: The member makes a perfectly fair point. At that point, I probably should have stopped the Prime Minister.

Question No. 3 to Minister

Dr RUSSEL NORMAN (Co-Leader—Green): I raise a point of order, Mr Speaker. This question was originally lodged to the Prime Minister. There has been some discussion between my office and the Clerk today. The question I have, and which I would ask your direction on, is that this question is directly about the activities of the Prime Minister’s staff—the staff working in the Prime Minister’s department. Of course, the Government has the right to move questions around, but is there any limit to the moving around of questions, when this question directly relates to the

activities of the Prime Minister’s staff, and the Government has moved it away from the Prime Minister?

Mr SPEAKER: The staff are the responsibility of Ministerial Services, and the Minister responsible for Ministerial Services is the appropriate Minister to answer this question. I think it is not unreasonable for that to be shifted. I invite the member to ask his question.

Election Debate—Correspondence Between Ministerial Services and Leader of the Opposition

3. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister responsible for Ministerial

Services: Have any of his staff corresponded with the Leader of the Opposition or his staff regarding a 3 News election debate involving all the minor party leaders?

Rt Hon JOHN KEY (Minister responsible for Ministerial Services): Yes, one staff member provided the Labour leader’s office with copies of letters sent to media organisations about campaign debates.

Dr Russel Norman: Were there other verbal communications between his staff—in particular, the Prime Minister’s office staff, but any ministerial staff—and the Leader of the Opposition’s staff regarding this debate; if so, what was the content of those communications?

Mr SPEAKER: The Rt Hon Prime Minister.

Hon Simon Power: No, the Rt Hon Minister of Ministerial Services.

Mr SPEAKER: It is just a courtesy. I could say the Rt Hon John Key.

Rt Hon JOHN KEY: I am not aware of all of the communications between my staff, but in terms of ministerial staff acting in a ministerial capacity, to the best of my knowledge there were none.

Dr Russel Norman: Does he consider it acceptable that his staff—that is, ministerial staff— were involved in working to essentially jack up a presidential-style political debate that suits the big parties in Parliament, which is at the expense of our democracy and our MMP system?

Rt Hon JOHN KEY: I do not believe that to be an accurate description.

Dr Russel Norman: Given that there was always going to be a head-to-head debate on TV3 between the Prime Minister and Phil Goff, why is the Government so scared of a debate that would involve—

Hon Simon Power: I raise a point of order, Mr Speaker.

Mr SPEAKER: I do not believe I need the Acting Leader of the House’s assistance on this. That question is quite out of order. This question relates to the only grounds that the Minister responsible for Ministerial Services can be questioned on and the actions of the staff. The leader of a political party cannot be questioned during question time in the House on why the leader of a political party may or may not have a view about leaders debates. I will give Dr Russel Norman a further opportunity to reword the question. I do not want to deprive him of his supplementary question.

Dr Russel Norman: Has he received any advice from his staff as to the fact that there was always going to be a TV3 debate that involved Mr Key and Mr Goff; and why did the staff provide him with advice that he should not engage in a debate that involved all political party leaders?

Rt Hon JOHN KEY: In terms of the first bit, yes, I am aware there will be head-to-head debate with the Leader of the Opposition; in terms of the latter point, the member’s assertion is incorrect.

Dr Russel Norman: Does he get advice from his staff that it is better to appear on lightweight shows like those of Letterman or Tony Veitch, rather than—

Hon Simon Power: I raise a point of order, Mr Speaker. As I understand it, this matter is a question to the Minister responsible for Ministerial Services. The question that has just been put by the leader of the Green Party would not fit within the ambit of that Minister’s responsibilities.

Dr Russel Norman: It is a question on advice that the Minister receives and the nature of that advice. That could apply equally to the Minister—

Mr SPEAKER: I believe that the point made by the Acting Leader of the House is valid. The Minister responsible for Ministerial Services did not appear on any of those shows, as far as I am

aware, so the member cannot pose a question that way. He is not questioning the Prime Minister; he is questioning the Minister responsible for Ministerial Services.

Hon Trevor Mallard: I think if the question were rephrased as “Did the ministerial staff give any Minister—”.

Mr SPEAKER: I am on my feet. The member gave me a probably deserved lecture about me perhaps making commentary that I should not be making, and now under a point of order the shadow Leader of the House has made commentary that perhaps he should not be making, either. Maybe we should score it one all, but we will not carry on down that track. I will give Dr Russel Norman a further chance to reword that supplementary question.

Dr Russel Norman: Did ministerial staff provide any Ministers with advice that it is better to appear on lightweight shows like the Letterman show and the Tony Veitch show, rather than on Morning Report, Campbell Live, and an all-party leaders debate where they may face tough questions?

Rt Hon JOHN KEY: No, to the best of my knowledge. However, if one were to look at the appearance on the Letterman show, one would see that I did that in my capacity as Minister of Tourism, given that there were millions of people watching that show. In my opinion, that was a good thing to do.

Children, Welfare—Multiparty Approach

4. Hon ANNETTE KING (Deputy Leader—Labour) to the Prime Minister: Does he stand by his statement regarding a bipartisan approach to children’s welfare in New Zealand that “It’s tricky because ultimately it’s about spending decisions across a whole lot of different areas you need to consider”?

Rt Hon JOHN KEY (Prime Minister): Yes.

Hon Annette King: Is he again ruling out a cross-party approach to children’s policy in New Zealand, as he did in November 2009?

Rt Hon JOHN KEY: It depends on what the member means by that. If the member is asking whether different political parties in Parliament can work together to try to tackle issues like child abuse and the like, then I think Parliament has a role for that, and political parties should try to work together. If I were to characterise the mood of Parliament I would say there is a universal view that all parliamentarians in all political parties want to work to address that issue. But I think we also need to be realistic and say that political parties have a different approach to different issues. There would be many areas where Labour would simply not agree with National in terms of its approach to this area, and vice versa, and to pretend otherwise would actually be an inaccurate way of portraying that. We are far better to have what will happen on 26 November—it is called a general election—and put our policies to the people of New Zealand.

Hon Annette King: Is he aware that a significant number of major organisations working with children in New Zealand are asking for a cross-party approach to children’s policy—that is, that the parties in this House sit down and work together on what we ought to be doing for children in New Zealand; if so, would he not at least sit down with other parties in this House to see what agreement there could be on a future pathway and what could be achieved?

Rt Hon JOHN KEY: Yes, I am aware of other organisations calling for that. Secondly, I think the green paper process actually allows different stakeholders and interested parties to come together to debate those issues. Thirdly, I refer the member to the letter that she wrote to me on 28 July. In paragraph three of the letter it goes on to say, in relation to cross-party support, “It would require genuine involvement—shared decision-making.” We are the Government, and by definition we are held to account as being the Government, and I think that makes that very difficult.

Hon Annette King: Does he agree with Sir Peter Gluckman and Lord Robert Winston, speaking on Q+A last weekend, that investing in the early years of a child’s life will have long-term benefits;

if so, why is his starting point to talk about short-term spending decisions rather than seeking an agreement on what needs to be done?

Rt Hon JOHN KEY: Yes; and we are not: we have a green paper to do exactly that.

Hon Annette King: So why, then, did the Prime Minister rule out talking to other parties and say it was tricky because we have to talk about spending priorities? Why not talk about what we need to do for children—and there are commitments from parties all around this House—rather than being so arrogant as to say he will not sit down and talk?

Rt Hon JOHN KEY: I am happy to talk to parties, and I am sure the Minister who has responsibility in this area will be more than happy to engage with the Labour Party and other political parties that are interested in this area. But the reality is that, in the end, there will be a variety of decisions that will need to be made as a result of that, and it is very unlikely that there will be bipartisan support on all of those.

Maternity Services—Improvements

NICKY WAGNER (National): My question is to the Minister of Health: what action is the Government taking to improve maternity services?

Mr SPEAKER: I apologise to the member. Could both front benches please desist. I want to hear Nicky Wagner’s question.

5. NICKY WAGNER (National) to the Minister of Health: What action is the Government taking to improve maternity services?

Hon TONY RYALL (Minister of Health): The latest report of the Perinatal and Maternal Mortality Review Committee for 2009 confirms that maternity services are performing well but that improvements are needed, and the Government is doing that. This year we have committed an extra $54 million for our maternity quality and safety programme, and for extra Plunket and Tāmariki Ora visits, particularly focused on new mothers who need additional support. That extra funding comes on top of additional funding for improving maternity services in our first year. This year $33 million extra has gone into new national maternity standards, revised referral guidelines for midwives and doctors, and the building of a comprehensive maternity database that went live last weekend.

Nicky Wagner: What support has there been from the health sector for the Government’s maternity quality and safety programme?

Hon TONY RYALL: The medical colleges representing obstetricians, general practitioners, midwives, and anaesthetists say that this programme is a big step forward in providing women and their babies with a safer, more streamlined maternity service. The Government’s maternity quality and safety programme is the result of 2 years of collaborative effort by all of these groups, and I must say that getting all of them on the same page is a significant achievement that shows a new era of cooperation and commitment by maternity professionals, and the Government thanks them for that.

Capital Gains Tax—Government Position

6. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Which of the following statements by the Prime Minister accurately reflects the Government’s position: that a capital gains tax would send New Zealand “screaming backwards” or that “we actually have a capital gains tax in New Zealand”?

Hon BILL ENGLISH (Minister of Finance): Both statements are correct. Tax is paid on some capital gains in New Zealand, and the member’s package of big spending, more taxes, and more debt would send New Zealand screaming backwards.

Hon David Cunliffe: Did the introduction of a capital gains tax in Australia in 1985 send Australia screaming backwards, or did Australia’s GDP per capita begin to grow much faster than New Zealand’s from that point?

Hon BILL ENGLISH: That is probably stretching the bow a bit, even for the member. I am not familiar with what happened when it was introduced in Australia. What I do know is that one of the reasons the Australian economy performed better over the last 10 years is that it had better spending restraint, better tax reform, and better microeconomic policy—and that was when that member was in Government.

Hon David Cunliffe: Does the Minister support Labour’s $5,000 tax-free zone that delivers a net income tax reduction for 98 percent of income earners; if not, why not?

Hon BILL ENGLISH: No. I understand that that is part of a package that Labour is proposing that involves a big increase in Government spending, new taxes, and more borrowing, when the economy needs exactly the opposite to get on its feet, to grow, and to lift incomes.

Michael Woodhouse: Who would be the losers from a partial and poorly designed capital gains tax?

Hon BILL ENGLISH: There is quite a long list of them, actually—pretty well anyone who benefits from productive investment. So 1.6 million KiwiSavers would face increased taxes on gains on their investment; 500,000 businesses would have to have their operations valued for tax purposes, then keep track of the value through their lifetimes; and, interestingly, property traders would get a cut in capital gains tax, because they currently pay 33c in the dollar and, under the Labour package, people who trade in property would pay only 15c on their capital gains.

Hon David Cunliffe: I raise a point of order, Mr Speaker. I hesitate to interrupt my own flow of supplementary questions, but the misrepresentation in that reply was just so extraordinary—

Mr SPEAKER: No, no. The more valid point of order would have been that the Minister should not be commenting on Labour Party policies, for the risk of—

Hon David Cunliffe: Misrepresentation.

Mr SPEAKER: —misrepresentation, indeed. It is an extraordinarily difficult thing to try to referee, because the question was not out of order and the Minister was being very careful until the last minute. Members can see how the House gets into disorder and how difficult it gets when members encourage Ministers to comment on other parties’ policies, because Ministers have no responsibility for them.

Hon David Parker: I seek leave to table the question and answer produced at the time of the release of our capital gains tax, which shows that the tax treatment of traders in property would not result in a reduction in taxes for them.

Mr SPEAKER: I take it this is a document prepared by the Labour Party?

Hon David Parker: Yes. It was our policy.

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

Hon David Cunliffe: Does he agree with Labour that the tax system should be designed to minimise harmful impacts on growth; if so, has he seen this graph from Treasury showing that a capital gains tax is better for the economy than income tax?

Hon BILL ENGLISH: I do agree with the member that tax systems should be designed so that they do not have a detrimental impact on growth. That is why I find it hard to understand why he has just released a package that will have exactly a detrimental impact on growth.

Hon David Cunliffe: Given his belief that a comprehensive capital gains tax is the right thing to do, will he be proposing a capital gains tax that includes the family home, or will he stick with his current tax settings, which the Tax Working Group he set up calls “deeply flawed”, “inequitable”, and “inefficient”?

Hon BILL ENGLISH: That is not correct. The Tax Working Group followed the same logic as a lot of people do, and that is the experts start out saying a comprehensive capital gains tax is a good idea, then they have to come up with exemptions, like people over the age of 55, the family home, some classes of shares, property speculators, and so on, and they end up with a tax so

complicated that they do not implement it. That member has produced a package that is about bigger Government spending, higher taxes, and more debt, and that is bad for the economy.

Hon David Cunliffe: I seek leave to table the Tax Working Group report that described current tax settings as “deeply flawed”—

Mr SPEAKER: All members have had that report available to them. The Tax Working Group report is available to all members.

Hon David Cunliffe: I seek leave to table this graph from IMF data, which shows the percentage gap between Australian and New Zealand GDP per capita increasing—

Mr SPEAKER: Would the member tell the House who has prepared the graph.

Hon David Cunliffe: The source is the IMF and the data was graphed by the Labour research unit.

Mr SPEAKER: Leave is sought to table that document prepared by the Labour research unit. Is there any objection? There is objection.

Hon David Cunliffe: I seek leave to table this graph prepared by the New Zealand Treasury, which shows the growth effects of taxes and public expenditures, showing that an income tax is generally worse for the economy than a capital gains tax.

Mr SPEAKER: Would the member identify the document it came from.

Hon David Cunliffe: It is sourced from Treasury. It is part of the Tax Working Group’s background papers on its website. [Interruption]

Mr SPEAKER: A point of order is being considered—both sides, please. Leave is sought to table that document from a paper prepared for the Tax Working Group. Is there any objection? There is objection.

Hon Trevor Mallard: In light of the Prime Minister’s statement that we actually have a capital gains tax in New Zealand, what is the current list of exemptions from that tax?

Hon BILL ENGLISH: The member can look up the tax Act if he wants to see exactly how it applies. What I can tell members is that the package of measures that involve bigger Government spending—

Mr SPEAKER: Order!

Hon BILL ENGLISH: —new taxes—

Mr SPEAKER: Order!

Hon BILL ENGLISH: —and more debt is bad for the economy.

Mr SPEAKER: I ask the Minister why I should not ask him to leave the House, because he clearly saw me on my feet and was determined to continue. The question asked was a fair question, in fact, asking the Minister of Finance what the exemptions from the existing capital gains tax were. That is actually a fair question, and the House could perhaps expect the Minister of Finance to know that. To answer it by way of talking about the Labour Party’s policy when I am on my feet is unacceptable—totally. There are not any other questions to the Minister. I will ask the Minister of Finance to leave the House. Hon Bill English withdrew from the Chamber.

Mr SPEAKER: Ministers will learn that they must not continue when I am on my feet to stop an abuse of question time. I do not mind Ministers climbing into some questions because they contain political assertions and the questioners deserve anything they get, but that was a straight question. It asked the Minister of Finance what the exemptions to the current capital gains tax were. For it to be answered in that way is not acceptable. I warn all members of the House that we are heading towards a difficult time of the year—I know that; I am not stupid—but we have to keep this House operating effectively.

Hon Trevor Mallard: Supplementary question, Mr Speaker.

Mr SPEAKER: The Minister is no longer in the House.

Hon Trevor Mallard: Well, there has to be a Minister responsible—

Mr SPEAKER: In considering the matter I looked at whether there were any more questions to the Minister, and determined that there were not any, and no one indicated to me that that was wrong. Had there been any indication that there were further questions, I would not have asked him to leave the House. So the member cannot win twice.

Hon Tau Henare: I raise a point of order, Mr Speaker. I do not want to challenge your ruling on the Hon Bill English, but day in and day out Trevor Mallard continually—

Mr SPEAKER: Order!

Hon Tau Henare: I would like to have the opportunity to—

Mr SPEAKER: The member will resume his seat. I am aware of what he is trying to say, but it is not helpful. I am fully aware of what goes on, and the member saw me express my displeasure to the Hon Trevor Mallard today for some of his interjections. I did it in not very complimentary language. I have to be totally impartial in this House. When Ministers refuse to acknowledge the Speaker on his feet, and continue—the member will stop interjecting—to get a political point across when I am on my feet, that cannot continue.

Air Quality—Clean Heating

7. CHRIS AUCHINVOLE (National—West Coast - Tasman) to the Minister for the

Environment: What steps has the Government taken to improve air quality and what reports has he received on what progress is being achieved?

Hon Dr NICK SMITH (Minister for the Environment): The major source of air pollution is old home fires, so this Government has ramped up the investment in converting them to clean heating, from the $2.2 million that was spent in the last Parliament to the over $20 million spent this term. This has enabled more than 20,000 homes to be converted to heat pumps, compliant log burners, and pellet fires. We have also tightened up the rules on vehicles and fuel, and the regional councils have taken steps to reduce industrial particulate pollution through tighter resource consent conditions. Yesterday I was pleased to release the 2010 air quality figures for New Zealand, showing the best results ever in terms of New Zealand’s air quality.

Chris Auchinvole: What additional steps is the Government taking to help New Zealand achieve the 2016 and 2020 targets?

Hon Dr NICK SMITH: The Government is merging the Clean Heat and Warm Up New Zealand: Heat Smart programmes, which are separately funded by Vote Environment and Vote Energy, so as to reduce compliance costs and administrative costs. This will enable another 1,250 homes per year to be converted, and will reduce the amount of particulate pollution by an additional 35 tonnes per year. I also announced yesterday a new compliance strategy, setting out clear expectations of the regional councils in terms of the role they need to play in making sure we meet those clean air targets.

Earthquakes, Canterbury—Royal Commission of Inquiry

8. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Attorney-General: Why has he refused to provide funding to the earthquake victims’ families who want legal representation at the Royal Commission of Inquiry?

Hon CHRISTOPHER FINLAYSON (Attorney-General): The Government has decided not to fund legal representation because the royal commission is taking a very comprehensive approach to ensure that families are engaged with the inquiry. The royal commission has been resourced appropriately for that engagement. Counsel assisting the royal commission are ensuring that the families’ interests are fairly represented and are taken into account. The commission has engaged a families’ liaison person, who is doing very good work. In addition, commission chair Justice Mark Cooper has met personally with victims’ families at their request. The Government is determined to find the cause of the building failures that caused this tragedy in Canterbury, and that is why it has

constituted a royal commission of inquiry—the highest level, independent, fact-finding body that there is.

Hon Clayton Cosgrove: Given that the Government did the right thing in providing legal representation to the Pike River families, can the Minister confirm that the circumstances that confront both the Pike River families and the Christchurch quake families are precisely the same in that, first, each group lost loved ones in tragic circumstances; second, each has—

Hon Dr Nick Smith: One’s a natural disaster.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. With respect, I know interjections are allowed but this is a rather serious issue, and I would have thought it should be dealt with in that way.

Mr SPEAKER: The initial interjections were not actually very intrusive, and the member chose to stop. I ask members, though, to be reasonable. This is a serious question. The member may start his question again.

Hon Clayton Cosgrove: Given that—[Interruption]

Mr SPEAKER: I ask the member to carry on, please.

Hon Clayton Cosgrove: Given that the Government did the right thing in providing legal representation to the Pike River families, can the Minister confirm that the circumstances that confronted both the Pike River families and the Christchurch quake families are precisely the same, in that, first, each group lost loved ones in tragic circumstances; second, each has a strong desire to find out how and why this occurred; third, each wants a robust inquiry directed at establishing effective and meaningful preventative measures; and, fourth, each wants direct involvement in the inquiry, with the aid of independent counsel of their choosing? If he argues that the circumstances are not the same, could he advise the House precisely what the distinction is in respect of each tragedy that compelled the Government to treat the respective family groups differently?

Hon CHRISTOPHER FINLAYSON: Let me make it clear that I fully understand the way and accept that this tragedy has affected the lives of those who were unfortunate enough to experience the death of friends and loved ones. Each royal commission deals, however, with particular circumstances. I think, for the member’s benefit, I could say this: a closer analogy to the kind of commission of inquiry we are engaged with in the case of the Canterbury earthquakes is the 2009 royal commission into the Victorian bushfires, in which the kinds of arrangements for engagement with the royal commission were the same there as are proposed here. But I certainly do not seek to diminish the extent of the tragedy and its effects on those poor families.

Hon Clayton Cosgrove: If the victims’ families do not require independent legal representation because royal commissions of inquiry are “inquisitorial in nature” and “engaged in fact-finding”, as he said in a letter to the quake families, why then has he provided legal representation to Pike River victims’ families for their royal commission?

Hon CHRISTOPHER FINLAYSON: Because, as I have said in both answers already given, it depends on the particular circumstances. The better analogy here is not with Pike River; it is with the Victorian royal commission, in which counsel assisting the commission liaised with families in order to assist those families through that particular process.

Hon Clayton Cosgrove: Given he said last year: “We recognise the importance of the families of the Pike River victims being represented and participating in the Royal Commission of Inquiry, and will move to see that happens.”, does that mean he does not recognise the importance of earthquake victims’ families being independently—not with counsel assisting the commission, but independently—represented in this royal commission inquiry?

Hon CHRISTOPHER FINLAYSON: I certainly recognise the need for those families to be heard by the royal commission. That is exactly why Justice Mark Cooper and the other commissioners have personally met with them, and why there is that liaison person, who, as I said, is doing very good work, and who is keeping in constant contact with them. Counsel assisting the

commission will be representing them, and I believe that it is that combination of matters that will ensure these poor people do have the chance to make their submissions to the royal commission.

Prisoners—Rehabilitation and Rate of Reoffending

9. Dr CAM CALDER (National) to the Minister of Corrections: What is the Department of Corrections doing to improve the rehabilitation of prisoners and to reduce the rate of reoffending?

Hon JUDITH COLLINS (Minister of Corrections): The Department of Corrections’ commitment to cut reoffending rates is being demonstrated by the roll-out of a case management model across all sentenced prisoners. This new approach will involve specialised case managers providing a wraparound service to individual prisoners by working closely with them from the beginning to the end of their sentence. To support this initiative the department has employed 177 case managers and will shortly start recruiting for another 50. This will enable 227 case managers to work directly with prisoners to reduce their risk of reoffending. This is a major investment in the management of prisoners in New Zealand. Along with alcohol and drug treatment a range of intensive rehabilitation programmes, work training, and education it should result in a meaningful reduction in reoffending rates.

Dr Cam Calder: What does the new case management approach mean for individual prisoners?

Hon JUDITH COLLINS: The new model’s end-to-end approach means that one person will proactively work with and motivate a prisoner throughout their sentence. This is a big improvement on the earlier approach to sentence management, which was limited to identifying the programmes the prisoner was eligible for and scheduling these into a sentence plan. It meant numerous people could be involved in different aspects of an individual’s rehabilitation. The case managers will work particularly closely with high-risk offenders, because this is where they can have the biggest impact. All sentenced prisoners are now being moved across to their new case managers, who will work with them to develop their rehabilitation plans.

Early Childhood Education Task Force Report—Government Response

10. SUE MORONEY (Labour) to the Minister of Education: What is her proposed timeframe for delivering the Government response to the ECE Taskforce recommendations?

Hon ANNE TOLLEY (Minister of Education): Consultation on the report’s recommendations closes next week, on Monday, 8 August. The Government will then carefully consider the feedback from consultation before making any decisions.

Sue Moroney: I raise a point of order, Mr Speaker. The question was on notice and asked for a time frame for the delivery of the Government’s response. I did not hear an answer to that.

Mr SPEAKER: The dilemma I have is that I do not know—the Minister may have been indicating that actually a time frame has not been fixed yet. I invite the Minister to clarify her answer, with respect, because it is a question on notice.

Hon ANNE TOLLEY: We are in the middle of consultation. Once the consultation finishes, then, I am saying, the Government will have a look at that consultation, will carefully consider it, and then will make its decisions.

Mr SPEAKER: It appears there is no time frame at present.

Sue Moroney: I had figured that, thank you, Mr Speaker. Will she, then, immediately rule out accepting the funding cuts proposed by her task force to Playcentre of up to 70 percent in order to give certainty to the families of the 15,000 children who attend playcentres throughout New Zealand?

Hon ANNE TOLLEY: The task force was independent from the Government, and, as I said, the Government has not even considered any decisions from its recommendations. However, this Government has made it very clear that it values parent-led services like Playcentre. This Government expanded the 20 hours’ early childhood education services to Playcentre. This Government has made sure that the regulations that guide early childhood services have been

amended to lessen the costs and burden on Playcentre. So this Government certainly supports parent-led playcentres.

Sue Moroney: I raise a point of order, Mr Speaker. I asked a specific question about whether the Minister would rule out accepting the funding cuts proposed by the task force. She gave all sorts of interesting information but did not answer that question.

Mr SPEAKER: In fairness, I supported the member to get a further answer from the Minister on the primary question, but the Minister, if I heard correctly, in answer to that supplementary question, said the Government is in the process of considering the task force report. Ministers are perfectly at liberty not to rule out any aspects until they finish considering a report. I think that is what the Minister was indicating to the House. That is not unreasonable.

Sue Moroney: Will she rule out the funding cuts proposed by her task force to home-based early childhood education of up to 80 percent in order to give certainty to the families of the 17,000 children who attend home-based early childhood education throughout New Zealand, and also the funding cuts of up to 78 percent for the 9,000 children and their families who attend kōhanga reo?

Hon ANNE TOLLEY: I repeat: the Government has made no decisions about the task force recommendations. It is currently out for consultation with the sector, and we will listen to what the sector has to say about the very thorough report from the Taskforce on Early Childhood Education.

Sue Moroney: Will she commit, then, to keeping the same subsidies and fee controls in place for 20 hours’ early childhood education in order to give certainty to the families of 140,000 children who attend centre-based early childhood education services given that her Taskforce on Early Childhood Education recommends dropping the universal 20 hours’ early childhood education subsidy from the current $11.25 per child per hour down to just $8.80 per child per hour?

Hon ANNE TOLLEY: This Government has made no decisions on any recommendations from the Taskforce on Early Childhood Education. But this Government has put $1.4 billion into early childhood education, which is the most any Government has ever spent and is an increase of 38 percent since we came into Government.

Sue Moroney: I raise a point of order, Mr Speaker. I asked for a commitment about 20 hours’ early childhood education in terms of the subsidies and the fee controls.

Mr SPEAKER: The member has to be reasonable in the answers she expects to questions. If the Government is considering, as the Minister has explained to the House, this task force report—and we have to accept that the Minister has said that—how can the Minister then rule out this and rule out that? The member has to be reasonable in that when the Government is still considering a task force report, I cannot insist the Minister pre-empt its decisions by giving answers to the House ahead of the Government making decisions on those issues. I just cannot do that.

Te Ururoa Flavell: Kia ora tātou. What progress has the Minister achieved in responding to the concerns raised by kōhanga reo about any changes to their funding or governance, and does the Minister believe that because of the key role kōhanga reo plays in the survival of te reo Māori there are special reasons why the kōhanga reo movement must be supported?

Hon ANNE TOLLEY: Yes, we absolutely do believe that kōhanga reo has a very special place, and that is why we extended the 20 hours policy to include them. That is why the Education Review Office has developed a special review methodology to recognise their very special tikanga.

Housing New Zealand Corporation—Tenants’ Behaviour

11. TODD McCLAY (National—Rotorua) to the Minister of Housing: What is Housing New Zealand doing to identify and address fraudulent behaviour by some tenants?

Hon PHIL HEATLEY (Minister of Housing): The overwhelming majority of Housing New Zealand Corporation tenants appreciate their homes and abide by the rules. However, there are a small minority who access homes and subsidies they do not need. Over the past 2½ years the Housing New Zealand Corporation has built a highly effective team of expert investigators. Since July 2010, 241 tenancies have been ended following investigations, and 119 tenants have been

successfully prosecuted for fraud. I commend the Housing New Zealand Corporation for taking action against those people who are locking out families genuinely in need of State houses.

Todd McClay: What kind of activities have tenants been undertaking that have led to action being taken against them?

Hon PHIL HEATLEY: Examples include a South Auckland tenant who obtained a State house in 1998 and who was found not to have declared his wife’s true income. The tenant also forged and falsified his own employer income statements in order to obtain a lower rent. Twenty one fraud charges were laid, the tenancy was terminated, a debt of $55,000 was established, and the tenant was sentenced to 5 months’ home detention. Another tenant had a company under an assumed name, received undeclared income under another name, and did not report it to the Housing New Zealand Corporation or the Ministry of Social Development. The tenant pled guilty to 10 charges of fraud—$91,000 worth of debt was against the tenant—and was sentenced to a term of imprisonment. But what is important is that the two houses in these two cases were freed up for those who were genuinely in need.

Moana Mackey: Why does he not hold his own department, the Housing New Zealand Corporation, to the same level of accountability and compliance with the law as its tenants, given this political letter, drafted for National MPs by Housing New Zealand Corporation communication staff, and intended to “manage public perception of National Party policy”, in clear breach of the requirement for impartiality under the State Sector Act?

Hon PHIL HEATLEY: I would be interested in seeing the letter.

Moana Mackey: I seek leave to table a letter from the Housing New Zealand Corporation drafted for National MPs in an attempt to manage—

Mr SPEAKER: The last bit is totally out of order. We have seen enough abuse of the Standing Orders today. 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. The quote “in order to manager public perception” comes from the cover letter from the department concerned. It is not something that Moana Mackey was making up; it was a quote from the cover document.

Chris Tremain: We allowed it.

Hon Trevor Mallard: No, she targeted the—

Mr SPEAKER: No. The member has made his point well. I apologise to the honourable member but leave was granted for the document to be tabled.

Transport Usage—Auckland Public Transport Compared with State Highways

12. Hon SHANE JONES (Labour) to the Minister of Transport: By how many percentage points has public transport patronage in Auckland increased over the past three years, and how does this compare to the percentage increase in state highway volumes over the same period?

Hon STEVEN JOYCE (Minister of Transport): Good news! The Government has made excellent progress. Public transport trips have increased 20 percent in Auckland over the last 3 years, mostly due to an 18 percent increase in bus patronage. That means that about 6 percent of all journeys to work in Auckland now use public transport. This compares with State highway volumes, which increased just under 1 percent in the last 3 years. However, they still, of course, make up around 90 percent of all journeys to work. Finally, I congratulate the member on asking his second oral question since he took over—

Mr SPEAKER: No, no—order! Supplementary question, the Hon. Shane Jones. [Interruption] I want to hear the Hon Shane Jones’ supplementary question.

Hon Shane Jones: It is good to see that the Minister knows how to count to two, rather than one, which always looks like “I”. Why does the draft—

Mr SPEAKER: The House will come to order. The Minister can see what happens when the Standing Orders are not complied with. The Standing Orders are written for good reason: if they are complied with, they keep order in this House. The Minister should not have added the last part to his answer. I realise it was done in reasonably good humour, but then the member’s start to his question was in reasonably good humour. But let us call it, again, one all at this stage, but not continue the match.

Hon Shane Jones: Why does the draft 2012 Government policy statement propose to slash funding for public transport infrastructure from $100 million in the 2010 financial year to a range between $20 million and $60 million for the next 3 years; and, given the significant increase in public transport patronage in Auckland, why is he gutting the funding?

Hon STEVEN JOYCE: The member is incorrect. It actually points out in the Government policy statement that the reason that has changed is that we have shifted most of the public transport infrastructure funding outside the Government policy statement, with the help of my Cabinet colleagues investing more in it by investing more directly in the rail system. In Auckland, as the member may or may not be aware, we are currently investing around $1.6 billion in improving the Auckland commuter rail infrastructure without using a regional fuel tax, and we are also investing several hundred million dollars in the Wellington commuter rail infrastructure, none of which is included in the National Land Transport Fund. It is actually the biggest investment in public transport in this country since the Hungarian trains were bought by the Rt Hon Sir Robert Muldoon back in the late 1970s.

Jacinda Ardern: Does he acknowledge the significant distance between him and the Auckland Council’s transport priorities through his moves to reduce the funding assistance rates for rail operators, disregarding the regional land transport strategy through his Land Transport Management Act reforms, and continuing to prefer the Pūhoi to Wellsford “Holiday Highway” over the council’s number one priority, which is the city rail link?

Hon STEVEN JOYCE: I am a great believer in testing every project to ensure that it provides the best value for money. The member needs to be aware that measured on the same basis currently, between the Pūhoi to Wellsford road and the Auckland central city rail loop, the Pūhoi to Wellsford road has a benefit-cost ratio in excess of 1 and the central city rail loop is between 0.3 and 0.4, which was, of course, significantly less than 1 the last time I looked. Yes, we do need to make significant investment in public transport in our biggest city, and we are doing so. We are just being very careful to make sure that all the investments are actually worthwhile.

David Shearer: Is he aware that the Ministry of Transport’s review of the city rail link and the benefit-cost ratio relies on 200 to 300 buses per hour through the streets of Auckland’s central business district, which is a premise that the Auckland Council deems nonsensical; if so, does he agree with the council, or his ministry?

Hon STEVEN JOYCE: I think the difficulty we are in with the central business district rail loop is that quite obviously the council has gone to that solution without looking at all the other options that are possible to improve public transport access in Auckland. I point out to the member that all the independent analysis by the Ministry of Transport and Treasury on the central business district rail loop says it will do very little to improve congestion. I am prepared to say that it is possible that the central business district rail link is the next project in Auckland, but, rather than bolting towards it without any consideration of the costs, as the Labour Party is doing, I think we have to ask some tough questions.

David Shearer: Given the Minister’s answer to written question No. 1515 that the calculation of the wider economic benefits on the holiday highway is not consistent with New Zealand Transport Agency’s own economic evaluation manual, has he asked for the business case to be re-evaluated; if not, why not?

Hon STEVEN JOYCE: What I can confirm for the member is that the two projects—the central business district rail loop and the Pūhoi to Wellsford road—have been measured using the same ruler and have been found to be very, very significantly—

Hon Shane Jones: Oh, rubbish.

Hon STEVEN JOYCE: Well, it happens to be true. I know it is sometimes difficult to face the truth when one is in the Labour Party, but it is actually true that it is over 1 versus 0.3 to 0.4.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Did you hear what he just said?

Mr SPEAKER: I heard what he just said, but I also heard interjections from the Labour Party that provoked him. If members do not want other members who have the floor—and the member may resume his seat—to comment, they should not make loud interjections. I think the interjection related to something about the truth, and [Interruption]—we are not going to take that matter further. If members do not want Ministers to pick up on interjections, they should not interject.

ENDS

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