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Questions and Answers - May 23

(uncorrected transcript—subject to correction and further editing)





1. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he have confidence in all his Ministers?

Rt Hon JOHN KEY (Prime Minister): Yes.

David Shearer: How can he have confidence in his Minister of Finance, when he predicted in Budget 2011 that economic growth would reach 4 percent, and it actually reached only 1.1 percent?

Rt Hon JOHN KEY: I cannot be absolutely sure about the veracity of that statement, because I can never be sure about them from Mr Shearer. But what I can say is that the Minister of Finance has been guiding the country through very difficult economic times, which include the earthquakes in Christchurch, the global financial crisis, and the absolute mess we inherited from Labour. I know that on “Planet Labour” those things did not happen, but here in the real world they did.

David Shearer: How can he have confidence in his Minister of Finance, when he predicted in Budget 2011 that unemployment would be a full 1 percent below the level that it is currently at?

Rt Hon JOHN KEY: I think that one of the interesting points about employment is that New Zealand now has more jobs that it has ever had in the history of this country. I do not call that failure. New Zealand has a higher labour participation rate than Australia, New Zealand has created 60,000 jobs in the last 2 years, and that is despite the fact that we have had to deal with a global financial crisis, the earthquakes in Christchurch, and the mess we inherited from Labour.

David Shearer: Does he accept his Minister of Finance’s excuses for poor economic performance, when both the global financial crisis and the Canterbury earthquakes occurred prior to the 2011 Budget?

Rt Hon JOHN KEY: For a start off, the global financial crisis has been rolling round since about 2008-09. New Zealand was actually in recession, and had virtually a year of negative growth in 2008, before we took over. But let us put it to this test: not that long ago, we had an election, and we went to the country with Bill English’s prescription for the economy and that of one of the *muppets from over there—I cannot remember which one—and the answer was we won.

Rt Hon Winston Peters: Does the Prime Minister’s first answer, which included the statement that he—and I quote him—“cannot be sure about the veracity of that statement”, mean he does not know that the growth rate is not 4 percent, as he predicted, but, rather, 1.1 percent?

Rt Hon JOHN KEY: No. It means that when David Shearer assigns a comment to someone, I cannot be sure it is correct.

Rt Hon Winston Peters: Does the Prime Minister know or not know that the current growth rate is 1.1 percent?

Rt Hon JOHN KEY: I know that that was the historical rate, not the rate necessarily going forward.

David Shearer: Would a zero Budget have been required had his Government met its growth forecast of 4 percent?

Rt Hon JOHN KEY: In my opinion, yes. The reason for that is we inherited such a mess from Labour. We are having to pay off those debts that it basically inflicted on the New Zealand economy through some wild spending programmes and a hugely inefficient sector. And just before those members get on their high horse, let us remember what state they left the export sector of New Zealand—in recession since 2000.

David Shearer: I raise a point of order, Mr Speaker. I think that answer was well wide of the mark in terms of the question.

Mr SPEAKER: I allowed the Prime Minister to go on too long and I criticise myself for that. However, he did answer the question, because the Leader of the Opposition* had asked whether a zero Budget would have been necessary had the economy grown at 4 percent as projected, and the Prime Minister said “yes”—that he believed that a zero Budget would still have been necessary. So he answered the question. But I allowed him to go on too long, and for that I apologise.

Chris Hipkins: I raise a point of order, Mr Speaker. I have been listening very carefully to the Leader of the Opposition—[Interruption]

Mr SPEAKER: Order! The member is entitled to raise a point of order. It must be a point of order, though.

Chris Hipkins: I have been listening very carefully to the Leader of the Opposition’s questions, all of which have been in accordance with your requirement that they be straight questions with no conjecture or political attack, and yet all of the Prime Minister’s answers have attacked the Opposition. You have said to us that if we ask straight questions you will insist on straight answers, and I am asking you today to actually make sure that that ruling applies to the Prime Minister as well as to other Ministers.

Rt Hon JOHN KEY: It is a straight answer to say that we have been living through a global financial crisis, an earthquake in Christchurch, and a—

Mr SPEAKER: Order! That is not a matter of order. [Interruption] Order! I am on my feet. The Prime Minister is defending his answer, and that is not a matter of order. The member raised a fair point. The only thing I would point out is that where questions do seek an opinion they are always more risky than those seeking actual information. I have criticised myself already—I allowed the Prime Minister to go on a bit too long. But opinions were being sought, and that is the difficulty in stopping him quite as quickly as perhaps I should have. But I think the member’s point was well made, because there was no political innuendo, I think, in the questions asked, and that is why I think some of the answers went on too long.

David Shearer: How can he have confidence in any claim his Minister of Finance makes in tomorrow’s Budget, when his previous Budget forecasts have failed to come true year after year after year; or will he simply fall back on the same old excuses tomorrow, as well?

Rt Hon JOHN KEY: Firstly, I do not accept that claim as being correct. In fact, the Leader of the Opposition yesterday directly, in his primary question, asked me questions about the forecasted growth rates in the 2009 Budget, and, as my answer proved, the actual rates were fairly close to those. But, secondly, and most important, we on this side of the House live in the real world, and in the real world things change and you adapt to them. Whether they are the Christchurch earthquakes, or the global financial crisis, or the mess we inherited from Labour, all of those things are things that have changed as time has gone on. We did not realise the enormous mess that Labour had left, until we—

Mr SPEAKER: Order! I think that is sufficient. [Interruption] Order! I cannot help but smile, because I accepted that I had been a bit remiss in not pulling the Prime Minister up on earlier questions, and I immediately got a supplementary question that was highly politically loaded. But I guess that is the way the cookie crumbles.

Rt Hon Winston Peters: How can he have confidence in the Minister of Finance, when his projections have debt continuing to grow under his National Government for the next 5 years to at least $75 billion? It was $6 billion when National came to power, and was up to $50 billion by 2011, an increase already of over 700 percent. What gives him confidence in that sort of tutelage and management?

Rt Hon JOHN KEY: Could you ask the member to repeat the question? He was mumbling a wee bit and I could not hear it.

Mr SPEAKER: Order! I would like the Rt Hon Winston Peters to repeat his question.

Rt Hon Winston Peters: This is the man famous for his diction, is he not? How can he have confidence in the Minister of Finance, when he has allowed debt to increase from $6 billion in 2008 to $50 billion at the end of 2011—an increase of over 700 percent—and, by his projections, debt will continue to grow under his National Government for the next 5 years to at least $75 billion?

Rt Hon JOHN KEY: I reckon that is a fascinating question, actually, from Winston Peters. This is the answer: in that period of time the Government has insulated New Zealanders from the worst of the recessions and applied about $13 billion in total to the Christchurch earthquake. So what New Zealand First and Winston Peters have just told New Zealanders is that if he was the Treasurer, he would not be supporting *Working for Families, the pension age would be going up, entitlements would be going, the health system would be slashed, education would be slashed—

Todd McClay: And nothing for Christchurch.

Rt Hon JOHN KEY: —and there would be nothing for Christchurch. I bet you that next time he is down in Christchurch he will not be looking the people of Christchurch in the eye—

Mr SPEAKER: Order!

Dr Russel Norman: Supplementary—

Mr SPEAKER: I apologise to the member. [Interruption] Order! Before I call Dr Russel Norman, I say to the National Party on this occasion, right round the House, to please show a little more courtesy to the House.

Dr Russel Norman: Does he recall the Minister of Finance saying in his Budget speech 2010 that New Zealand’s largest single vulnerability is now its large and growing net external liabilities, and does he still stand by that statement?

Rt Hon JOHN KEY: I cannot tell you whether the Minister of Finance stands by that statement, because that is a statement assigned to him—or are you saying I said it?

Dr Russel Norman: Do you agree with that statement?

Rt Hon JOHN KEY: Well, that is a different question, is it not?

Mr SPEAKER: Could the—[Interruption] Order! It seems that the Prime Minister has answered the question, because the question got somewhat confused. I call Dr Russel Norman for a supplementary question. [Interruption] Order! Please, I say to National Party members, give Dr Russel Norman the chance to ask his supplementary question.

Dr Russel Norman: On what basis does he have confidence in his Minister of Finance, given that the Minister of Finance said in his Budget speech 2010 that New Zealand’s largest single vulnerability is now its large and growing net external liabilities, and that international debt is projected to grow every year under his policies?

Rt Hon JOHN KEY: I think if one was to look at the policies of the Minister of Finance and see what they are doing for New Zealand in very difficult conditions, and contrast that with the rest of the world, one would have enormous confidence in Bill English as Minister of Finance. New Zealand is a country that is growing; many other countries are simply not. New Zealand is a country that will be back in surplus; many other countries will never be back in surplus. New Zealand is a country that actually provides support for New Zealanders, whether it is through Working for Families or through increasing the minimum wage, under a Bill English - led finance team. If you go and have a look at the other policies we have had—making sure we get better value for money, a tax system that works, reform of accident compensation, reform of the *Resource Management Act,

reform of employment legislation—if you look at all those things and put them in the context of a world that is suffering from a global financial crisis, I will bet you that many people in the world would rather have New Zealand than the problems in their own countries.

Mr SPEAKER: Just before I call Dr Russel Norman, can I remind all members that when they refer to “you” they are referring to the Speaker. If the Prime Minister is intending to refer to the Speaker, that is fine.

Dr Russel Norman: Given that Treasury’s projections show that for every year going forward the current account deficit increases and the net international investment position gets worse, how can he have confidence that he is achieving his own goal of rebalancing the economy? When Treasury’s own projections show that the economy is becoming more imbalanced, why would he have confidence in his Minister of Finance?

Rt Hon JOHN KEY: The first thing is I am not entirely sure they show that. Secondly, when he says “my own goal”, it is actually the Minister of Finance’s goal, although I am prepared to accept that. Thirdly, in terms of the position of the net external liabilities, part of that reflects the fact that New Zealand is a good operating environment. We are actually seeing capital coming in, to invest in New Zealand. But the current account deficit has been a problem for New Zealand for over 30 years. The last person who campaigned on fixing that problem was Michael Cullen. He campaigned to halve it, and he doubled it.

Budget 2012—Sustainable Growth

2. TODD McCLAY (National—Rotorua) to the Minister of Finance: How will Budget 2012 support sustainable growth?

Hon BILL ENGLISH (Minister of Finance): The Budget will invest significantly in priority areas such as infrastructure, skills, innovation, and research, as well as health, education, and welfare. These measures show confidence in New Zealand in uncertain times and help build a growing, more competitive economy, with more jobs and higher incomes.

Todd McClay: What measures is the Government taking to support jobs and grow the economy?

Hon BILL ENGLISH: Sustainable jobs, sustainable and new jobs, are created only when businesses have the confidence to invest and grow, and make the decision to employ people. In the past 3 years the Government has worked to reduce the tax on work, raised taxes on property speculation, and approved regulations to reduce costs for businesses. I will give one example. On 1 April this year ACC levies were reduced. That reduction leaves $600 million in the pockets of New Zealanders and around $250 million in the pockets of businesses, which then have the choice to employ another person or raise wages.

Todd McClay: How do New Zealand’s public finances compare with those of countries in Europe?

Hon BILL ENGLISH: Compared with a number of countries in Europe, New Zealand’s public finances are in a great deal better shape. In Greece and in Ireland, for instance, there are very substantial cuts in public servants’ pay, and substantial cuts in entitlements and in the size of the Public Service. Even closer to home, Australia has just announced its largest fiscal contraction ever in its last Budget. The *state of Victoria announced just last week 4,000 redundancies in its Public Service.

Todd McClay: What alternative approaches to managing public finances has he seen?

Hon BILL ENGLISH: There are a number of confusing alternatives, some of which say that the Government should be stimulating the economy more by, perhaps, not taking control of its spending. In fact, in the last *year or two the Government has run quite large deficits to support the economy through a difficult patch. The same people are telling us to stimulate more, then criticising the Government for borrowing money. This is a bit confusing.

New Zealand - Australia Migration—Fiscal Policies

3. HONE HARAWIRA (Leader—Mana) to the Minister of Finance: What are the Government’s fiscal policies doing to stop the loss of New Zealanders to Australia, which has now hit an 11-year high?

Hon BILL ENGLISH (Minister of Finance): The Government’s policies are taking the appropriate longer-term view of turning round the 30-year problem of a wage gap with Australia. Current migration patterns reflect significantly different growth rates over the last few years, where the Australian economy has been sustained by a *one-in-100-year minerals boom, with record high coal and iron ore prices. As Australian growth flattens out and New Zealand growth picks up, we would expect the growth gap in the shorter term will close, while we continue to focus on the kinds of high-quality policy decisions that are needed for the next 20 years to close the historical wage gap.

Hone Harawira: Does the Minister recall asking the question in 2008: “Does the Prime Minister agree that the fact that thousands of people are leaving for Australia—in fact, in record numbers— means that she failed to do what she said the 1999 election was about, which was to ‘build an economy that can retain our talented and skilled people’?”, and what would be his answer to exactly the same question being asked of him, only 4 years later?

Hon BILL ENGLISH: If the member says I asked that question, I almost certainly did. I think it is a lesson in that period from 1999 to 2008 that despite the best global economic conditions in a generation, New Zealand actually went backwards relative to Australia. The damage done by those policies is the damage that we have to get on and fix.

Hone Harawira: Does the Minister accept that his Government’s record of having 160,000 people unemployed, 107,000 people who cannot get enough work, 500,000 people on less than $16 an hour, and 200,000 kids and their families living in poverty has anything to do with the fact that nearly 1,000 Kiwis are leaving for Australia every single week, or does he think it is because in Australia the wages are higher, there are heaps more jobs, and the first $18,000 a person earns is tax-free*?

Hon BILL ENGLISH: As my colleagues are pointing out, that member’s party is totally opposed to the kind of mining activity from which New Zealand could benefit, and which almost alone is sustaining growth rates in Australia. Given his interest in higher wages and more jobs, we look forward to the support of the Mana party* for the offshore drilling programmes and the coal and *goldmining operations that want to expand in New Zealand.

Economic Growth—Budget 2011 Forecasts

4. Hon DAVID PARKER (Labour) to the Minister of Finance: Does he stand by his statement on page 1 of the Budget 2011 Executive Summary, where he states that growth is “forecast to reach 4 percent next year and the economy forecast to create 170,000 new jobs over the next four years”?

Hon BILL ENGLISH (Minister of Finance): Yes. That was Treasury’s best professional judgment at the time, as it is required by *statute to give to the Government of the day. Subsequent to those forecasts a number of things happened: New Zealand’s savings rate increased faster than expected, world growth was lower, and a major earthquake occurred in Canterbury on 23 December, delaying the recovery. However, the Government still aims to reach surplus a year earlier, as was stated at that time.

Hon David Parker: Is he standing by his promise in last year’s pre-election Budget that growth will be 4 percent in 2012-13—a promise that he made after the two major Canterbury earthquakes, and 3 years after the global financial crisis hit?

Hon BILL ENGLISH: I think the member misunderstands how the process works. The fact is that under the *Public Finance Act, Treasury is required to give its best professional judgment in its forecasts. The forecasts are not made up by the politicians, nor do they amount to promises. They

are forecasts of what is expected to happen at that time. This Government has shown that when circumstances change, it is able to adapt its policy, and right through the global recession and a slower recovery we have protected the most vulnerable, maintained public services, and worked on policy to build our longer-term economic prospects.

Hon David Parker: Well, if they are not promises, when he wrote on page 2 of the 2011 Budget “Achieving Higher and More Sustainable Growth” was he trying to be funny, and will tomorrow’s headline accurately reflect that his Government has, in fact, delivered the lowest growth of any Government in 50 years?

Hon BILL ENGLISH: The Budget tomorrow will include Treasury’s best professional judgment about the economic forecasts for what will happen over the next couple of years. The member can look at the OECD* forecasts that were produced this morning and compare those with the forecasts that Treasury will put in as the basis for the Budget. But, as I think we have said before, on **“Planet Labour” nothing else happened in the rest of the world in the last 3 or 4 years. In the real world there have been a few challenges.

Hon David Parker: Has he seen the National Bank’s regional GDP series, which shows that despite its terrible problems, the Canterbury economy has grown at a faster rate than the rest of the country since the February 2011 earthquake, and why then does he continue to use Canterbury as the excuse for not meeting his own growth forecasts?

Hon BILL ENGLISH: The Labour Party is getting to the position where it would use gravity as an excuse for why people cannot fly. The fact is, in Canterbury, the rebuild will mean much faster than average growth rates—not 2 or 3 percent but 7, 8, 9, or 10 percent growth rates, as the rebuild picks up. I know the members believe that the Prime Minister is *all-powerful but, actually, if he could have stopped the earthquake on Christmas *Eve—which that party trivialises—then I am sure he would have.

Hon David Parker: Does he stand by his statement on page 35 of the Budget that New Zealand’s growth rate is accelerating; and if so, was the growth rate he was referring to not GDP growth but the rate at which his management is driving New Zealanders to Australia?

Hon BILL ENGLISH: No; I was referring there to the rate of growth in GDP. The Government is pursuing policies that it believes will lift our long-term prospects. As the member knows, GDP growth rates are affected by a lot of shorter-term pressures, positive and negative, but we are focusing on the *long term—on building infrastructure, lifting our skills capacity, increasing innovation to support businesses, and improving our regulations so that businesses will make active decisions to invest and employ. We are not going to rely, as the previous Labour Government did, on excessive consumption and Government spending, funded by debt. That is not sustainable growth.

Hon David Parker: If it is all going so well, why are we having a near-zero Budget?

Hon BILL ENGLISH: Even in year *4 we are still winkling out of the system the waste and extravagance of the previous Labour Government. And that is why we can afford billions of dollars of new initiatives and fund them from savings.

Universities—Financial Performance

5. COLIN KING (National—Kaikōura) to the Minister for Tertiary Education, Skills and

Employment: What evidence has he received of the financial performance of New Zealand universities?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): The latest figures released by the Tertiary Education Commission today show that the overall income of New Zealand universities has increased by 2.9 percent in 2011, to $3.22 billion, up from $3.12 billion in the last year. This has been driven by a 3.6 percent increase in the Government’s investment from 2002 to 2011, which has now gone up by 13.5 percent over the past 4 years. These numbers do not include additional funding paid for research from other budgets, like *Vote

*Science and Innovation and the *Primary Growth Partnership. Our increased investment in universities has been achieved in very tight fiscal circumstances and has resulted in strong fiscal and educational performances by our universities in the last 4 years.

Colin King: What surpluses have been recorded by New Zealand universities in 2011?

Hon STEVEN JOYCE: The strong income growth in universities has resulted in New Zealand’s eight universities recording combined net surpluses of $132.2 million in 2011. That is up slightly, from $128.6 million in 2010. These surpluses include some abnormal earnings from both *Canterbury University and *Lincoln University as a result of earthquake insurance payouts. When those are netted out, the surplus across all eight universities remains a very healthy $108 million. Overall, the eight universities’ net assets have remained steady, at $5.9 billion. Strong universities play a crucial part in lifting innovation and high-level skills across our economy, and the Government is working hard to assist them in making an even greater contribution to our country’s future.

Grant Robertson: Has the increase in Government funding that he mentioned in his primary answer kept pace with inflation?

Hon STEVEN JOYCE: I think you will find that it is ahead of inflation, which is actually a pretty amazing achievement, given the tight fiscal circumstances.

National Infrastructure Plan—Value for Money

6. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: Have all the projects identified in the National Infrastructure Plan been assessed against Treasury’s Better Business Cases for Capital Proposals guidelines to ensure they represent good value for money; if not, why not?

Hon BILL ENGLISH (Minister of Finance): First of all the *National Infrastructure Plan provides a snapshot of strategic opportunities that will help achieve goals for each major sector: transport, telecommunications, energy, water, and social services. It does not provide a complete list of current or potential infrastructure investments. But to answer the member’s question, the Government’s policy around the quality of capital investment cases was clarified in July 2010. It was not retrospective, so it applies to all *departments and *Crown entities from 2010 onwards, but it does not apply to projects where decisions were made before that.

Dr Russel Norman: Can the *Minister tell the *House what is the purpose of the *Treasury guidelines Better Business Cases for Capital Proposals?

Hon BILL ENGLISH: The purpose is to try to* break the attitude in the public sector that capital is free stuff that drops out of the sky and has no particular cost attached to it, when actually it is scarce these days; you have to borrow it or take it off *taxpayers. And it is also to get the public sector to understand that although* it may be able to access it cheaply—say, through Government borrowing—the projects to which it is applying it are just as risky as if private capital was invested in a building that, for instance, has got to be earthquake-proofed or cannot be a leaky building. So it is to raise the awareness across the public sector of the importance of getting capital investment right. The Government invests billions of capital every year—billions and billions—and needs better processes to do it.

Dr Russel Norman: Given that the purpose of the guidelines is to ensure good-quality spending on capital infrastructure projects, has the $14 billion programme of *roads of national significance been assessed according to Treasury’s Better Business Cases for Capital Proposals guidelines?

Hon BILL ENGLISH: They will not have been assessed strictly according to the better business case guidelines, but I would hope that in the future that will be the case. What I can tell you, though, is that the assessment that has been done on the roads of national significance shows that they have significantly better economic benefits than, for instance, the *central business district rail tunnel and other public transport projects, some of which are advocated by the *Greens; others

of which are put forward by city councils that cannot afford them and want the Government to pay for them.

Dr Russel Norman: Given the scale of the spending on the *roads of national significance—$14 billion—and that many of the roads of national significance projects have not yet been initiated, will the Minister begin the process of assessing the roads of national significance against Treasury guidelines, given that he himself has said that he wants to eliminate low-quality spending and make sure that we have efficiency in capital spending by the Government and that these projects have not been assessed?

Hon BILL ENGLISH: The Government has made commitments to the roads of national significance, so they will be going ahead. But I might say to the member that in the transport area there is generally a more thorough approach to these issues than across the rest of the public sector, and the focus of the better capital guidelines is particularly on the large-scale social assets in housing, education, and health, where we believe there is scope for very significant improvements in capital decisions. Transport has been regarded as an area with stronger disciplines than most others.

Dr Russel Norman: Given that the roads of national significance projects have not been assessed against these guidelines, and the Minister’s statement that the transport sector takes a thorough approach to assessing the benefit-cost ratios in this issue, why was it that a number of the roads of national significance projects were approved before the business cases were actually completed?

Hon BILL ENGLISH: Well, the member will be aware that in 2008, and again in 2011, the National Party campaigning committed itself to a range of projects that it believes are in the longterm interests of improved infrastructure, getting it in place to accommodate the economic growth that New Zealand can achieve, and we intend to continue with that. As it happens, the *benefit-cost ratios on those projects are all pretty good.

Dr Russel Norman: So is the Minister saying that these *roads of national significance projects—$14 billion worth of spending—are being supported by the Government because they made political decisions in Opposition that these were good ideas, long before the business cases were ever completed and before Treasury’s better business cases for capital proposal guidelines were used to assess them, so they are political roads of national significance, whether they make any economic sense at all?

Hon BILL ENGLISH: I can tell the member that we were not willing to let the traffic in Auckland park up until the middle of 2010 while we figured out a new set of business case guidelines. So the member is correct. The decisions about those projects were made before July 2010. We believe that they are sound projects. But I would suggest to the member that it would be helpful if he would apply the same rigour of analysis that he applies to roads, to rail projects, which on the face of it do not look to meet too many—if any—economic criteria.

Dr Russel Norman: Is it not the truth of the matter that the Government could maintain important public services and still return to a surplus if it was not digging a hole for itself by wasting billions on motorways that do not have a business case, and were not tested against the Treasury guidelines, and by wasting billions on not fiscally neutral tax cuts and subsidies for polluters?

Hon BILL ENGLISH: The way the transport funding now works is essentially user-pays*. That is, people who use the roads pay through their petrol tax and their road-user charges*. That money goes into the dedicated transport fund. If we build more roads, they would have to pay more. If we build fewer roads, then conceivably they would pay less. In the long run, New Zealand needs this kind of infrastructure. Actually, I think there was general agreement across the parties by the mid- 2000s that we were under-invested in roads, and, despite where the Greens would like to go, most Kiwis still have cars and most of them are going to insist on using those cars, and therefore we probably need roads.

Schools, Class Sizes—Number of Additional Primary Teachers by 2016

7. Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) to the Minister of Education: Does she stand by her statement “Under current settings, we could have expected 1,000 more teachers to be added by 2016”; if so, what proportion of those teachers would have been employed in primary schools?

Hon HEKIA PARATA (Minister of Education): Yes, I stand by that statement. It is important to note that it is a net figure. The schooling system and the placement of teachers is a dynamic of roll growth, location, and the school that parents choose to send their children to over the next 4 years. Had we continued growing teacher numbers with no corresponding lift in student achievement, we could have added about a further 1,350 primary school teachers, offset by a reduction in secondary school teachers of 320, being about the 1,000 teachers we have decided not to grow the current workforce of 50,000 teachers by. Instead, we are investing in quality teaching, because we are focused on raising student achievement. It is worth noting that under the new ratios we still expect that there will be an additional 250 primary school teachers.

Grant Robertson: I raise a point of order, Mr Speaker. It was a primary question with two parts. The first part I did get some indication of an answer to. It was a very long answer, and I really do not know that we got—

Mr SPEAKER: Order! I think the member should have listened a little more carefully. The Minister said the 1,000 figure was a net figure derived from 1,320, from memory, fewer primary teachers and 320 more secondary teachers, which produced a net of 1,000. She has answered exactly the question asked.

Hon Nanaia Mahuta: I raise a point of order, Mr Speaker. The second part of the question, which she did not address at all, was what proportion of that 1,000 figure was primary teachers—

Mr SPEAKER: Order! Mathematically, what the Minister was saying was the lot. You do not need the Speaker to do the maths.

Hon Nanaia Mahuta: Has she read the 2005 study from the **State University of New York, which states that after 4 years of learning in small classes the likelihood of a student from a low *socio-economic background graduating from high school is doubled, and if so, did she just choose to ignore this evidence?

Hon HEKIA PARATA: What I have read is that over the past 10 years we have raised teacher numbers by 12.76 percent, at the same time—

Grant Robertson: I raise a point of order, Mr Speaker. The question asked whether she had read it, and she began her answer by saying “What I have read”, and that is not enough. It was a very simple question.

Hon Gerry Brownlee: I think if we are going to accept that point of order being made by Grant Robertson, we would insist that you go back to the hard Standing Orders with regard to the way in which questions can be asked. That question sought a matter of fact, and if you look through the Standing Orders, it sat outside the strict criteria for the asking of questions. It was an obscure piece of reading that the Minister was asked about. Frankly, the Minister answered appropriately by saying what she did know. Clearly, the question is about her management of the portfolio, not her professional reading.

Mr SPEAKER: No, I am not sure it is fair to say what the member’s view was of what the question was about, at all. The question was the question. I understand what the member is saying: that some members of the Opposition preface their questions by a whole lot of political opinions before they ask a question at all. When members do that, I allow Ministers a lot of licence in answering. But on this occasion I do not think that was the case. To make the matter more clear, I invite the Hon Nanaia Mahuta to repeat her question. I just remind Ministers that it is not helpful to start out an answer by saying “What I do know is this” or “What I can tell the member is this”, because it usually means they are not going to answer the question. I do not mind them doing that if

the question asked has a lot of political opinion prior to the question, but I do not think that was the case on this occasion.

Hon Nanaia Mahuta: Has she read the 2005 study from the State University of New York, which states that after 4 years of learning in small classes the likelihood of a student from a low socio-economic background graduating from high school is doubled, and if so, did she just choose to ignore this evidence?

Hon HEKIA PARATA: No, I have not read that selective, small academic piece, but what I have read is all the evidence, which tells me that despite a five-fold increase in teachers, student achievement has *plateaued or declined. That is why we are investing instead in quality teaching to raise student achievement.

Hon Nanaia Mahuta: How will she explain to the parents of children who end up in larger classes that their learning will not be negatively impacted by less time with their teacher?

Hon HEKIA PARATA: I think it is important to know that although we provide ratios that are the basis for funding formulas, of the 13 years that have funding formulas, four have gone up, seven have gone down, and two have remained about the same. Therefore class size in any particular school is determined by the principal, who is conscious of the community in which she or he works.

Hon Nanaia Mahuta: Will she support parents whose children end up in larger classes to hire after-school tutors for their children if they are not achieving in larger classes?

Hon HEKIA PARATA: We have made a conscious decision to have one or two extra students in a class in order that we can invest in quality teaching. If we do more of what we have done, we will get more of what we have, and what we want to do is raise student achievement.

Welfare Reforms—Work and Income Board

8. Peseta SAM LOTU-IIGA (National—Maungakiekie) to the Minister for Social

Development: What role will the Work and Income Board have in the Government’s recently announced welfare reforms?

Hon PAULA BENNETT (Minister for Social Development): The Work and Income Board** will provide oversight of the design, implementation, and ongoing delivery of the Government’s investment approach to welfare. We know that its oversight and expertise, combined with the right interventions, will see fewer people on welfare for long periods.

Peseta Sam Lotu-Iiga: What will be different under the investment approach?

Hon PAULA BENNETT: Currently we do very little to identify those most at risk of long-term welfare dependency, let alone provide the right support and interventions to get off welfare and into work. Under the investment approach, the board will help identify target groups of beneficiaries at risk of long-term dependency and how best to invest in getting them into work.

Peseta Sam Lotu-Iiga: How will these changes be evaluated and monitored?

Hon PAULA BENNETT: The Work and Income Board will be responsible for monitoring and evaluating the investment approach. Work and Income will trial a number of services and interventions for individual groups. As the evaluations are completed, it will build on a knowledge base for the board to draw on. So yes we will be trialling it and evaluating it. That which is successful, we will go on and grow. That which is not, we will move on to another trial to see how it works best.

Jacinda Ardern: Is the real agenda of this board to establish the forward liability of the welfare system, which we already know; to oversee the implementation of her reforms, which we already have a Government department for; or is it to implement the *Welfare Working Group’s recommendation that the role of Work and Income be transferred to the private sector?

Hon PAULA BENNETT: No. As I have quite rightly pointed out, the role of the board will be to assist the department and the Minister in how we actually implement the investment approach. So we are currently working with actuaries on what that long-term liability is, how that is broken up into groups, and actually to the point where it gets to individuals. That is the role of the board.

Housing—Minister’s Statements

9. Hon ANNETTE KING (Labour—Rongotai) to the Minister of Housing: Does he stand by all his statements on housing?

Hon MAURICE WILLIAMSON (Minister for Building and Construction) on behalf of the

Minister of Housing: Yes, as long as they have been taken in context.

Hon Annette King: Does he still stand by his statement that Housing New Zealand Corporation clients receive a good service that is getting better *“week after week after week”, and, if so, how does he account for the fact that people are now waiting 48 minutes before someone answers his 0800 smarter faster phone service—up from 25 minutes just 2 weeks ago, according to his own staff?

Hon MAURICE WILLIAMSON: It does become very difficult to answer supplementary questions* when the primary question is as broad as whether he stands by all his statements. But I can say—[Interruption] Unlike what Phil Goff is calling out, I do have an answer. The Minister has made it clear to the Housing New Zealand Corporation that its current performance on the 0800 number is unsatisfactory. He has clearly communicated to it that he expects the service to be dramatically improved. The Housing New Zealand Corporation has responded by making it its top priority to fix.

Hon Annette King: Well, in light of that answer, how can it be consistent with getting better?

Hon MAURICE WILLIAMSON: I think I just made it clear it is going to be made better, because a very clear direction has been given to the Housing New Zealand Corporation to improve the performance of the 0800 number.

Hon Annette King: If the service is getting better “week after week after week”, why is Ms Hayes from Dunedin, mother of three children under 5, still waiting for her fireplace to be put back in—a month after it was ripped out, leaving a gaping hole in her lounge and leading to her 6-monthold baby being admitted to hospital with bronchiolitis—and does that sound to him like a better service?

Hon MAURICE WILLIAMSON: I have to say that nothing in all the combinatorics or permutations of answers that I have got, refers to Mrs Hayes of Dunedin.

Hon Annette King: Does he think the Minister is on top of his portfolio, bearing in mind he forgot that he had promised 100 *Gateway houses at Hobsonville in 2009, 30 such houses in 2010, and delivered 17 in 2012; forgot that he said that 600 houses in Christchurch that were damaged were in the red zone when they were not; and announced the same funding for social policy housing in five different ways over a 6-day period?

Hon MAURICE WILLIAMSON: No matter how many times the member says something, it does not make it right. The Minister of Housing never committed to 100 Gateway houses. There is nothing on record as ever committing to 100. What he did say in a number of interviews at the time was that he believed that up to 100 houses may be built under the scheme.

Hon Annette King: I seek leave to table a letter from Clare Curran, member of Parliament from Dunedin South—[Interruption]

Mr SPEAKER: Order! A point of order is being heard.

Hon Annette King: —who wrote to me regarding Ms Hayes, and sets out that she waited over 30 minutes for Housing New Zealand Corporation to answer her phone call on Friday, and was still waiting on Monday for it to take any action for this woman.

Mr SPEAKER: Leave is sought—[Interruption] Order! It is a point of order. Leave is sought to table that document. Is there any objection? There is objection. Question No. 10, Brendan Horan. [Interruption] Order! I have called Brendan Horan. [Interruption] Order! I say to both front benches: please, respect for a colleague at the back of the House.

Transport, Napier-Gisborne—Funding for Repair of Rail Network

10. BRENDAN HORAN (NZ First) to the Minister of Transport: Has he made a decision to fund the repair of the Napier-Gisborne rail network; if not, why not?

Hon GERRY BROWNLEE (Minister of Transport): No; because it is still under active consideration.

Brendan Horan: What, then, does he have to say to the many families throughout the wider Napier-Gisborne region whose livelihoods hang in the balance and who suffer more hardship as each day of indecision rolls on by?

Hon GERRY BROWNLEE: The question would suggest that transport routes into Gisborne are completely closed; they are not. It is important that there is proper consideration given to this decision, so that there can be certainty about freight transport exports from the area in the years ahead.

Brendan Horan: Is he aware that the closure of the rail link will cause the loss of many jobs in the area, or is this the Government’s idea of regional development?

Hon GERRY BROWNLEE: I think there is a supposition behind that question that I disagree with.

Child Pornography—Government Initiatives to Combat

11. Dr JACKIE BLUE (National) to the Minister of Internal Affairs: What recent progress has the Government made in combating the trade of objectionable images of children?

Hon CHRIS TREMAIN (Minister of Internal Affairs): The trading of objectionable images of children is an appalling crime that requires an international response. The Department of Internal Affairs *censorship compliance unit has been working with international agencies as part of **Operation Laminar to target and apprehend people involved in distributing these images. As a result, yesterday 55 of the worst offenders were caught worldwide for trading in images of child sexual abuse.

Dr Jackie Blue: What was the role of the Department of Internal Affairs in the operation?

Hon CHRIS TREMAIN: The Department of Internal Affairs censorship compliance unit initiated the operation, which was then coordinated by *Interpol. The Department of Internal Affairs unit uncovered abuse occurring on social network sites, and provided evidence to the 20 countries involved. This small team of highly regarded investigators has proven integral to the worldwide effort in this area. They are to be highly commended for their dedication and commitment to this very difficult area of work.

Dr Jackie Blue: How many children have been protected from harm as a result of this work?

Hon CHRIS TREMAIN: Just from the results of this one operation, 12 children have been identified and removed from abusive environments. One of these children was in New Zealand. Many other children have also, undoubtedly, been protected from harm, due to the apprehension of some of the world’s worst offenders. I want to take this opportunity to thank the team at the Department of Internal Affairs for its success in this operation.

Budget 2012—Police Resourcing

12. KRIS FAAFOI (Labour—Mana) to the Minister of Police: What is the basis for her assertion that there will be no negative effect on Police front-line services despite no new money for Vote Police in tomorrow’s Budget and given that Police face potential cost increases of $470 million over the next four years in wages alone?

Hon ANNE TOLLEY (Minister of Police): The Commissioner of Police has assured me that there will be no negative effect on *front-line services, and I have absolute confidence in him. The figure that the member has used in the primary question is simply conjecture, as the police are currently in negotiations with the *Police Association.

Kris Faafoi: Given her earlier statement that savings would be made in human resources and accounting, and the fact that last year the police spent $28.5 million in those areas, where else will she be looking to make over $100 million of savings in the next year?

Hon ANNE TOLLEY: Firstly, I repeat that the figures that the member is using are Labour Party figures, and Labour is making assumptions about the results of negotiations that have not yet been concluded, and that is always very dangerous. However, I would also like to point out in answer to the question that actually the police operate under the Policing Act*—which is independently—and all operational decisions are made by the commissioner*. He has given me his assurance that front-line services will not suffer; in fact, they will be enhanced.

Kris Faafoi: Does she agree with the Police Association* President, Greg O’Connor*, who in this month’s Police Association magazine wrote: “the Government will end up wearing the blame from unhappy voters once our own equivalent of a production crisis—service reduction—starts to affect them.”

Hon ANNE TOLLEY: No. As I say, we are in the middle of industrial negotiations, and that is a very political positioning statement.

Kris Faafoi: I seek leave to table Greg O’Connor’s column from the Police Association magazine of this month.

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

Kris Faafoi: Does the zero Budget for the Police reflect the Prime Minister’s statement last year that our police officers had a little bit of spare time?

Hon ANNE TOLLEY: In fact, the Budget for the Police this year and in outgoing years reflects the fact that we are getting much better value from our Public Service* spend than the Labour Government managed in 9 years.


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