Questions and Answers - June 20
(uncorrected transcript—subject to correction and further editing)
WEDNESDAY, 20 JUNE 2012
QUESTIONS FOR ORAL ANSWER
QUESTIONS TO MINISTERS
State-owned Assets, Sales—Loyalty Bonus Scheme for Shares
1. Dr RUSSEL NORMAN (Co-Leader—Green) to the Prime Minister: In relation to the Government’s asset sales policy, does he stand by his reported comments that he has yet to see any official advice on a so-called “bonus scheme” for people who buy shares?
Rt Hon JOHN KEY (Prime Minister): Yes, I have seen advice very generally that mentions a range of possible incentives, but bonus shares have not been the subject of any specific advice to date.
Dr Russel Norman: Does the cost of a such a loyalty scheme, which could be up to $400 million, appear in the Budget that his Government presented to Parliament less than a month ago or in his Government’s asset sales legislation?
Rt Hon JOHN KEY: It appears in the Budget insomuch that the Budget documents showed the indicative range of returns that the Government was likely to receive for the mixed-ownership model. In terms of the numbers they are making up, the member is continually demonstrating to the public of New Zealand that he knows absolutely nothing about the capital markets.
Dr Russel Norman: I raise a point of order, Mr Speaker. My question was about whether the costs of the loyalty scheme appeared in the Budget. The Prime Minister talked about the revenue in the Budget—
Mr SPEAKER: No, order! I beg the member’s pardon, but I clearly heard the Prime Minister say yes, it was included in the Budget.
Hon Clayton Cosgrove: Is his so-called bonus or loyalty scheme not simply an expensive scam designed to keep Kiwis holding on to their shares until some time after the next election?
Rt Hon JOHN KEY: No. A scam was Labour’s economic policies that we inherited.
Rt Hon Winston Peters: If these asset sales and selling shares to mum and dad New Zealanders is such a wonderful idea and a great investment for them—
Hon Dr Nick Smith: Tell us about Auckland!
Rt Hon Winston Peters: Well, what happened to the Auckland Airport—
Mr SPEAKER: Order! The member will just ask his question, please.
Rt Hon Winston Peters: I was just talking to the—
Mr SPEAKER: No, no. Order! The member will now resume his seat. Can I say to some of the National backbenchers that some interjections can be unhelpful.
Rt Hon Winston Peters: If these asset sales and the investment made by mum and dad New Zealanders—or the few of them who get it—is such a good idea, why on earth would they need a bonus scheme?
Rt Hon JOHN KEY: What we have seen around the world is that loyalty schemes have been effective in providing a reason to engage for people who might otherwise not have chosen to buy
shares. But New Zealand First does not have to worry about that, because as Andrew Williams told us last night, if it gets half a chance it will be raising $7 billion to $10 billion—
Mr SPEAKER: No, order! We do not need that last part.
Dr Russel Norman: Does the Prime Minister accept that a bonus scheme, in which those who buy shares are given extra shares for free, will be a cost on the Crown?
Rt Hon JOHN KEY: No. I think it is quite interesting that the member is now starting to talk about where the Crown might be prepared to forgo a part of the sale proceeds to ensure that New Zealanders are at the front of the queue, with the maximum distribution for the right range of New Zealanders. If the Government simply wanted to maximise its return, it would sell 100 percent of the assets to whomever came first, like Labour did with the 15 assets it sold.
Michael Woodhouse: What are the benefits of the Government selling minority shareholdings in four energy State-owned enterprises?
Rt Hon JOHN KEY: The benefits are very clear. Firstly, it helps us to control Government debt, which is a huge problem around the world. The Government will reinvest the expected proceeds of between $5 billion and $7 billion into things like modern hospitals and schools, without having to borrow more from overseas lenders. Secondly, there will be widespread New Zealand ownership, with Kiwis at the front of the queue for shares in big New Zealand infrastructure companies. Thirdly, it will help invigorate our capital markets and build stronger commercial disciplines in each of the companies involved.
Dr Russel Norman: Is the Prime Minister aware of the document by the Australian Taxation Office regarding the Queensland Rail bonus share issuing, which states very clearly that the state will transfer loyalty bonus shares to the retail investor from its retained holding of shares; and how is transferring free shares not a cost to the Crown?
Rt Hon JOHN KEY: What I said earlier was that it has an impact on the maximum return that the Government has, but the Government is not looking to get the maximum return possible, because if it was it would sell 100 percent of the assets to a trade buyer, almost certainly from overseas. That was the model set up by Labour and it did it very effectively in the late 1980s. But that is not what this Government is trying to do. It is going to have majority ownership, it is going to transfer shares to New Zealanders, who will be at the front of the queue, and it may choose to give some retail investors in New Zealand the opportunity to have a slightly better deal than others.
Hon Trevor Mallard: Further to his comment about Labour’s sales, does he accept that that occurred not this decade, not last decade, not the decade before that, but the decade before that; that as a result of that, the Hon Phil Goff, I, and the Hon Annette King all lost our seats; that Labour did not get back into power for 9 years; that we now understand—
Mr SPEAKER: Order! There will be no more interjections when I am on my feet. I think that was heading somewhat into a speech. I think the gist of the question got through, though. I call the right honourable Prime Minister.
Rt Hon JOHN KEY: Mr Speaker—
Hon Trevor Mallard: I did not ask the question at all, Mr Speaker.
Mr SPEAKER: Order! The Prime Minister will not answer it yet. I apologise, I did call the Prime Minister, but the member argues that he had not finished asking his question. But I clearly heard him at the start. I think he said at the start: “Is it correct?”—I think he said that at the start— and that is the question, then he added a whole lot more to it. I think the Prime Minister can answer at least whether part of it is correct.
Rt Hon JOHN KEY: Yes, I accept that it happened quite a long time ago. Yes, I accept that Trevor Mallard was in Parliament then. All that process shows is that for Labour it is a hell of a lot easier to get rid of assets than it is Trevor Mallard.
Rt Hon Winston Peters: Was the Prime Minister’s statement that Dr Russel Norman did not understand capital markets made because Dr Norman fails to grasp the shonky, corrupt practices of
Merrill Lynch, which brought the American economy and the Western World’s economy to their very knees?
Rt Hon JOHN KEY: I have absolutely no responsibility as Prime Minister of New Zealand for Merrill Lynch. But all I can say is it was a bloody good company when I was there.
Hon Trevor Mallard: Has the Prime Minister briefed his backbenchers on the fact that New Zealanders like asset sales less now than they did in the 1980s, and that they are likely to lose their seats and will not be back for 9 years?
Rt Hon JOHN KEY: And, yes, they like Trevor Mallard less now than they did in the 1980s.
Dr Russel Norman: What right does his Government have to give away up to $400 million of taxpayer wealth in the form of free share giveaways without parliamentary authority, and has he not read the Constitution Act, which states: “It shall not be lawful for the Crown, except by or under an Act of Parliament, … to spend any public money.”?
Rt Hon JOHN KEY: For a start-off, there is legislation going through Parliament that gives the National-led Government, with the support of its partners, the right to go through the mixedownership model. Secondly, if it comes to giving away money, maybe the member should go and talk to his caucus. All I ever hear it wanting to do is give away taxpayers’ money to other New Zealanders.
Dr Russel Norman: Can the Prime Minister—[Interruption]
Mr SPEAKER: Order! I want to hear Dr Russel Norman’s question.
Dr Russel Norman: Can the Prime Minister point to any clauses in the Mixed Ownership Model Bill or any lines within Budget 2012 that authorise the Government to spend up to $400 million on giving away free shares in the mixed-ownership model companies?
Rt Hon JOHN KEY: The Government is not giving away $400 million and it is not giving away free shares of the order of magnitude that the member has claimed. We may or may not have a loyalty bonus; we will see. But the Government, all the way through, has said it will not be maximising its return. If we were to do that, we would follow the Labour model of selling 100 percent and selling it to foreigners.
Dr Russel Norman: When will he be seeking legal authority from Parliament to spend money in the form of a share giveaway?
Rt Hon JOHN KEY: If the member wants to go to the Budget, he will see quite clearly laid out the Government’s programme, the anticipated return that the Crown will get, and the costs likely to be associated. That gives the Government, from everything that I can see, the authority.
Dr Russel Norman: I seek leave to table the document from the Australian Taxation Office that indicates that the state will be giving away shares, as far as the Australian Taxation Office is concerned, in the Queensland model.
Mr SPEAKER: Leave is sought to—[Interruption] Order! This is a point of order. Leave is sought to table that document. Is there any objection? There is objection.
Economic Programme—Sustainable Growth and Higher Incomes
2. PAUL GOLDSMITH (National) to the Minister of Finance: How is the Government’s economic programme helping to build sustainable growth and higher incomes?
Hon BILL ENGLISH (Minister of Finance): The Government is taking a number of measures to support sustainable growth. In particular, it is continuing with a very large-scale infrastructure investment programme, despite the fact that money is tight, because we believe that is important for our future growth prospects. Another example is the extensive work that the Government is doing in tidying up the skills and training system to make it more effective and actually train people in real skills needed for the economy, because we believe that is a substantial investment in our future growth prospects.
Paul Goldsmith: What measures is the Government taking to support jobs and grow the economy?
Hon BILL ENGLISH: The important thing about jobs is that they happen only when businesses have the confidence to invest a bit more money to employ another person and to pay them a better wage. The Government has worked on reducing the tax on work, at the same time as raising taxes on property speculation. We have also worked hard to reduce the kinds of regulations that prevent businesses having the confidence to get started and to grow. In particular, the 90-day trial period has been a very successful innovation—opposed by the Opposition but supported by everyone else in New Zealand—in enabling people on the margins of the workforce to get their foot in the door and actually get a job.
Paul Goldsmith: How did the Budget last month contribute to the Government’s long-term programme to build a more competitive economy?
Hon BILL ENGLISH: The Budget contributed by allocating significant resources to just those areas I have already mentioned. For instance, there is a continued commitment to the infrastructure process, including the $4.5 billion turn-round of KiwiRail and the $1.5 billion roll-out of broadband. In the Budget we also committed significant further investment to science and innovation, because we believe that is a long-term investment that will help to grow our economy.
Hon David Parker: Has the Minister seen a commentary from the ANZ today that says the economy is “moving into the danger zone”, and what is it about reduced growth projections, ballooning debt, and a current account deficit approaching 5 percent of GDP at a time of an economic slow-down that encourages him to come into this House and claim his policies are working?
Hon BILL ENGLISH: The Government has to take a view of the economy that enables it to support the economy in the shorter term. The deficit that the member referred to is, in fact, the Government borrowing money to support New Zealand households through difficult times. As we have said in this House many times, although we are borrowing now, we plan to close that gap up and reach surplus in 2 or 3 years’ time. At the same time we are acting—as I just outlined in the last set of questions—on long-term undertakings to lift the growth potential of this economy. The member, like others, may find that the news of the day makes him a bit more pessimistic. However, we have fundamental confidence in the longer term in New Zealand’s capacity to grow.
Hon David Parker: If he will not accept the ANZ’s advice that we are moving into the danger zone, does he accept the BNZ’s summation of today’s announcement that the surging deficit threatens New Zealand’s interests, with the current account deficit rising to a 3-year high, much worse to come, and they say it threatens New Zealand’s sovereign rating?
Hon BILL ENGLISH: I do not think the BNZ is nearly as alarmed as it was at the 8 percent current account deficit—almost double today’s current account deficit—that we inherited from the Labour Government, and it incurred that in 10 of the best years the global economy has ever seen.
Hon David Parker: Is the Minister so out of touch that even after this appalling news and those dire predictions from our two largest banks he really thinks he is still sticking with a plan that is working?
Hon BILL ENGLISH: Well, look, banks and officials are going to make forecasts, and some of them are going to be pessimistic and some of them are going to be optimistic. We live in very uncertain times. If the member looks at the detail of the current account figures, it shows him things that are not unexpected. For instance, the high dollar means that there are more New Zealanders going overseas, because it is cheaper, and fewer tourists coming here, because it is more expensive, and that our exporters have struggled a bit with an 80c-plus dollar. We are taking the kinds of actions that will take some pressure off that exchange rate in the long run and will help correct those imbalances. But if the member has any bright ideas that can have immediate impacts, then we would be more than happy to look at them.
Hon David Parker: I seek leave to table the ANZ research report today entitled “Moving into the danger zone”.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.
State-owned Assets, Sales—Prime Minister’s Statements
3. DAVID SHEARER (Leader of the Opposition) on behalf of GRANT ROBERTSON
(Deputy Leader—Labour) to the Prime Minister: Does he stand by all his statements on asset sales?
Rt Hon JOHN KEY (Prime Minister): My answer to the incoming leader is yes.
David Shearer: Does he stand by his response when, asked to guarantee that no more than 10 to 15 percent of shares would end up in foreign hands, he said: “Yes. I spent my life starting in investment banking. I know how these things work.”; and why cannot he guarantee this level of foreign ownership in the legislation?
Rt Hon JOHN KEY: Yes, I stand by that statement. I think it is important to understand, actually, when Labour was looking at hocking off subsidiary companies, interestingly enough, Trevor Mallard made this statement: “I hope that you can, although you’ve got to realise”—
Mr SPEAKER: Order! I do not think, in response to that question, that is quite fair.
David Shearer: Has he now reconsidered this level of foreign ownership that he spoke about, given Treasury advice that “significant participation by foreign investors will be essential to achieve the Government’s overall objectives”?
Rt Hon JOHN KEY: No, because that advice was based on the sorts of issues that we were debating with the co-leader of the Greens, which was that Treasury’s advice would be to maximise the price, but the Government has made clear that it is going to put New Zealanders at the front of the queue. I am confident, as a result of that basis, that 85 to 90 percent of the shares will be owned by New Zealanders.
David Shearer: Given the uncertainty in the global market, has Treasury revised its sale figure; if not, how bad would global markets have to get before he decided it was not a good time to sell?
Rt Hon JOHN KEY: Well, firstly, no, I am not aware of any revision that it has had. Nor would it probably be in any position to do that, because it would need to assess the capital markets at the time that the particular companies were being bought to the exchange. I would make the same point that I made again to Russel Norman yesterday, that if you have a look at the state of the financial markets around the world, in fact growth has been anaemic or very weak, and in many countries in recession. That has not actually stopped very successful floats over the last 4 years.
David Shearer: Has he seen any Ministry of Economic Development figures that show private power prices are, on a weighted average basis, 13 percent higher than State-owned enterprises; and how long will it take State-owned enterprises after he sells them to increase their prices to those levels?
Rt Hon JOHN KEY: Firstly, we would reject that proposition. Secondly, we would like to remind the Leader of the Opposition that under Labour, power prices went up 72 percent; under National they have gone up 14 percent. I also refer the member to the Powerswitch website, which shows a couple of things. Firstly, of the 21 companies that are listed, the 14 cheapest are actually privately held companies, and the 15th is a council-owned company. The advice I have had is that from May 2011 to April 2012, 422,256 customers have changed electricity retailers, which shows that under a National Government there has been a great desire to see choice and efficiency in the market.
Budgeting Services—Additional Funding
4. Peseta SAM LOTU-IIGA (National—Maungakiekie) to the Minister for Social
Development: What announcements has she recently made that will support the work of budgeting services around New Zealand?
Hon PAULA BENNETT (Minister for Social Development): We have announced a one-off funding boost of $589,000 for community groups providing budgeting services. This grant will benefit 155 organisations currently funded by the Ministry of Social Development to deliver budgeting services, recognising the great job that these services do.
Peseta Sam Lotu-Iiga: Given there has been an increased demand for budgeting services as a result of the economic climate, how has the Government supported these organisations?
Hon PAULA BENNETT: This year these budgeting service organisations will receive a total of $13 million. This could be compared with 2008, when they received only $4.3 million. This is an $8.7 million increase.
Peseta Sam Lotu-Iiga: How have the Government’s welfare reforms under Future Focus supported people requiring additional hardship assistance?
Hon PAULA BENNETT: Future Focus introduced a new hardship model, which has placed greater obligations on repeat applicants for hardship assistance. Those who apply for additional hardship assistance three or more times in a 12-month period are now required to complete budgeting services.
Jacinda Ardern: Is this announcement enough to plug the gap for budgeting advice when there are organisations such as Māngere Budgeting Services Trust, which received $100,000 to meet growing demand and is now looking to lay off two staff as a consequence of this funding ending because she canned the Community Response Fund?
Hon PAULA BENNETT: I am not responsible for making decisions within the Māngere Budgeting Services Trust. What I would say is that since 2008—
Hon Members: You cut the funding.
Hon PAULA BENNETT: No, let us be clear: since 2008 there has been an $8.7 million increase of Government money going into budgeting services.
Exports, Growth—Prime Minister’s Statement to Parliament
5. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Does he stand by his statement to Parliament of 8 February 2011; in particular that “The Government is building the foundations that will encourage growth in exports”?
Rt Hon JOHN KEY (Prime Minister): Yes, and that is why, for example, the Government is running a tight fiscal policy to take the pressure off interest rates and the exchange rate.
Rt Hon Winston Peters: Has the Prime Minister read a report from the International Monetary Fund that states: “the New Zealand dollar would need to be about 15 percent weaker than its current level.” to grow exports; if so, does he agree with the New Zealand Manufacturers and Exporters Association chief executive that reducing the New Zealand dollar by this amount should be an aim for the Government, Treasury, and the Reserve Bank?
Rt Hon JOHN KEY: The member will, I am sure, be aware of my public comments that as a general rule the Government would like to see a more competitive exchange rate against the US dollar. Against the Australian dollar it has been pretty competitive. Secondly, the Government does not believe that it can influence that through intervention, if that is what the member is suggesting. History would indicate that is very unsuccessful. Thirdly, over time probably the most likely way to achieve a more realistic exchange rate is one where we see an example of good monetary policy where interest rates are lower, and that is why taking pressure off that is important. But I would reject the view that it is not possible for New Zealand to succeed in export markets, even with a high exchange rate, because if one looks at the 13 quarters that National has been in Government, one sees that 12 of those have shown an annual trade surplus. The only one where we have been negative was actually the quarter to March 2009. So we have been selling more to the world than we have been buying from it.
Rt Hon Winston Peters: Has the Prime Minister read a submission to the Finance and Expenditure Committee from Treasury deputy secretary Girol Karacaoglu, which states— [Interruption] Well, you would not know who he is, but that is his name—
Mr SPEAKER: Order! Please just ask the question.
Rt Hon Winston Peters: Well, they are all shouting out “Who?”.
Mr SPEAKER: No. Order!
Rt Hon Winston Peters: They are in Government, these people. Anyway, this is what this man said: “delivering a realistic”—[Interruption] This cacophony of clowns should not be allowed to go on.
Mr SPEAKER: No. Order! I invite the member to take a deep breath and start again, and I ask the National Party backbenchers please not to provoke the right honourable gentleman.
Rt Hon Winston Peters: A very wise warning. Thank you very much, Mr Speaker. Has the Prime Minister read a submission to the Finance and Expenditure Committee of Treasury deputy secretary Girol Karacaoglu, which states: “delivering a realistic and stable exchange rate, will yield far superior overall economic outcomes than an interest-rate-centered monetary policy implementation of the sort used by NZ and most industrialised economies— provided it is complemented by appropriate monetary and non-monetary tools.”; if so, what on earth is he doing about it?
Rt Hon JOHN KEY: No. And I am reliably informed that is it “Kara-goo-loo”, so it is more “loo” than “goo”.
Rt Hon Winston Peters: A bit like you—I get it!
Mr SPEAKER: Order!
Rt Hon Winston Peters: So how many more freezing works, processing plants, and manufacturers will have to be laid off and to be foreclosed upon before his Government does something to address the high New Zealand dollar?
Rt Hon JOHN KEY: As I said, one of the reasons why the exchange rate has been appreciating is the very weak US dollar. It is not unique to New Zealand. If you go and have a look at Australia, you will see the position where the exchange rate is very high. If you go and have a look at Brazil, that situation is the same. If you have a look at Switzerland, that position is the same. If you go and have a look at South Africa, that position is the same. So what the Government can do is control the things that are within its reach, and they are labour market reform, making sure the planning reform takes place, making sure that we are building infrastructure, making sure that we are lifting education standards—all of those things that the member is generally opposed to.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I asked him a question about the rising dollar, and he sent us on a trip around the world and then talked about everything else but the issue at hand.
Mr SPEAKER: Order! The Prime Minister’s answer was, in my humble view, perfectly reasonable. He emphasised that in fact the situation is one of not so much a high New Zealand dollar as a low US dollar, and explained why that is the case, because he referred to other currencies that are also quite high against the US dollar, and pointed out that New Zealand’s ability to make much difference to the US dollar is somewhat limited, and the Government is focused on what it can have influence over. I think that was a perfectly reasonable answer to the question.
Question No. 6 to Minister
Hon CLAYTON COSGROVE (Labour): I seek leave to have this question held over until the actual Minister of Energy and Resources, Phil Heatley, is present to answer it.
Mr SPEAKER: Leave is sought for that course of action. Is there any objection? [Interruption] Order! Any member is entitled to seek leave.
Hon Gerry Brownlee: He’s not entitled to talk about someone’s absence.
Mr SPEAKER: The member should not be interjecting while I am dealing with a point of order. It is not uncommon for members to seek leave for questions to be held over when a Minister is not present. I accept the point the Leader of the House makes that we do not normally refer to the absence of members, but it is not uncommon for members to seek leave to have a questioned deferred for that reason. Is there any objection to that course of action? There is objection.
Power Prices—Comparison of State-owned Energy Companies with Private Companies
6. Hon CLAYTON COSGROVE (Labour) to the Minister of Energy and Resources: Does he agree with Molly Melhuish’s calculation that the amount charged by SOEs for electricity for an average consumer is $265 per annum less than is charged by non-SOE retailers, and if not, what was the weighted average of the annual total retail price charged by SOEs and their subsidiaries to a residential consumer using 8,000 kilowatt hours of electricity compared with the weighted average of the price charged by non-SOE suppliers, according to the most recent data?
Hon TONY RYALL (Minister of Health) on behalf of the Minister of Energy and
Resources: No. As I am advised, a number of errors were included. For example, the calculations assumed Mercury Energy has 19,188 customers when, in fact, it has 364,600 customers. This is a surprising 18-fold underestimation, and this makes a material difference to the weighted result. I have today received two pieces of advice from the Ministry of Economic Development. Results can vary because of the assumptions used, such as payment method, payment time, and location, and whether or not you count, for example, the significant rebate paid to TrustPower customers in the Tauranga region. So members should accept the information with that in mind, remembering that no one gets this weighted average price; it is competition in your town or suburb that matters the most. Using the assumptions made by Mrs Melhuish, and correcting the errors, the latest available data, I am advised, has the two figures as $2,113.60 and $2,332.00. However, I have been advised that with a more comprehensive set of assumptions, including taking into account the full range of payment method and payment time discounts—and, frankly, in the real world that is what you do— officials advised a different result. Those figures are $2,113.60 and $2,101.60. The private electricity companies are cheaper by $12 a year.
Hon Clayton Cosgrove: Does—
Mr SPEAKER: Order! I apologise to the member. I must be able to hear the supplementary question.
Hon Clayton Cosgrove: Does the Ministry of Economic Development quarterly survey of electricity prices for a customer using 8,000 kilowatts a year show—
Hon Gerry Brownlee: Hours.
Hon Clayton Cosgrove: —kilowatt-hours a year; thank you, Gerry—that, averaged across all the State-owned enterprises, across all private companies, across all regions, all seasons, all lake levels, and all types of generations, State-owned enterprises charge on average less than private energy companies?
Hon TONY RYALL: I have just answered that question. Depending on the assumptions that you use you get a different result. What I would direct the member to do is look at the latest Powerswitch website because, as I said, it is price competition in your town, in your street, and in your road that matters. What we are aware of is that in 14 of the 21 regions listed on the Consumer Institute’s Powerswitch website the cheapest electricity company is privately owned, one of them is council owned, and the other six are State-owned enterprises. The important thing here is not the ownership of the companies; it is the level of competition in your community, and 425,000 New Zealanders have switched power companies in recent times.
Hon Clayton Cosgrove: Does he stand by his statement to the House yesterday that he is aware of the Ministry of Economic Development website: “I am aware of the prices on that website” and “private companies are currently the cheapest in Auckland Central”?
Hon TONY RYALL: I am sure the Minister would stand by whatever he says in the House, and I would certainly agree with him. If you do look at the Consumer Powerswitch website the cheapest companies, we have been advised, in central Auckland and Manukau, Hamilton, Christchurch, and Dunedin are private companies.
Hon Clayton Cosgrove: Does the Ministry of Economic Development website say that the lowest price charged in the Vector central Auckland area is offered by Genesis’s subsidiary Energy Online, and that the lowest price charged in the Waitematā area is offered by Meridian Energy?
Hon TONY RYALL: That could very well be the case when that information was put on the ministry’s website, and I think it is based on May. Looking at that information, as I did earlier today, those rankings change all the time, and what prices are being offered. If members look at the latest Consumer Powerswitch website—which is quite easy to understand; it has charts of what the offered prices are—that will demonstrate to you that of the 21 power regions identified, in 14 the cheapest company is private. But I must remind the member that it is not the ownership of the company that matters; it is the level of competition to drive down prices. That is why over 420,000 New Zealanders have switched their suppliers. If they had had the ability to switch when Labour put up the power prices by 72 percent over 9 years, I think we would have seen millions switching.
Hon Clayton Cosgrove: I seek leave to table data from the Ministry of Economic Development—
Mr SPEAKER: Is this off the website?
Hon Clayton Cosgrove: No, this is data from the domestic electricity prices—
Mr SPEAKER: I apologise to the member.
Hon Clayton Cosgrove: It is dated 15 May 2012 and shows that the lowest prices in central Auckland are charged by Genesis’ subsidiary Energy Online and Meridian Energy.
Mr SPEAKER: Leave is sought to table this document that I am told is not off the website. Leave is sought to table it. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.
Te Ururoa Flavell: Kia ora tātou katoa. What work has been done following the report into the death of Mrs Folole Muliaga to address the issue of security of supply to people on very low incomes, and will he agree to consider the relevance of the UK experience, where there have long been subsidies and assistance to avoid people falling in the fuel poverty trap?
Hon TONY RYALL: Yes, I am aware of the very tragic circumstances around Mrs Muliaga, who was a customer of Mercury Energy, which is owned by Mighty River Power—very sad circumstances that led to a new protocol being put across the electricity sector, both public and private, particularly in dealing with those customers in vulnerable positions, and particularly around their health.
Hon Clayton Cosgrove: When he declined to answer yesterday’s question about the average price charged by private providers and the average price charged by State-owned enterprises, had his officials provided him with draft average figures, or did he even ask for those average figures?
Hon TONY RYALL: As I am answering on behalf of the Minister in the House, I am unable to give an answer to that question. What I would say is that it is quite clear in the work that I have done this morning that there are a lot of assumptions that need to be made behind these various modellings. What has become very, very clear to me in looking at all this evidence is that it is not the ownership that matters, it is the level of local competition. Four hundred and twenty-five thousand New Zealanders have switched power companies as a result of that website and of the greater competition that has been brought in.
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. With respect, Mr Speaker, you have been a former Minister, and you will be aware of the basic briefing processes. One would have assumed that—
Mr SPEAKER: Order! The member asked his question and the Minister said he did not have that information to answer that question. As Speaker I cannot second-guess an answer like that. That is a perfectly proper answer to a question, and if the member happens to disagree with it, he can ask further questions about it, but I cannot enter into a dispute about whether the answer is right or wrong.
Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I seek your advice. Given that fair point that you make, one wonders why those members denied leave for that question to be put.
Mr SPEAKER: Order! The member cannot dispute this kind of thing by way of a point of order. It is absolutely any member’s right in the House to deny leave for any course of action where leave is sought.
Power Prices—Links to Health Concerns
7. JAN LOGIE (Green) to the Minister for Social Development: Will she consider reviewing benefit levels in light of recent University of Otago research that shows that the 40 percent increase in real power prices since 2002 is now a health issue?
Hon PAULA BENNETT (Minister for Social Development): No. However, we do review benefit levels every year. In fact, this Government legislated for CPI adjustments, and in the period the member refers to benefit rates have increased by 30 percent.
Jan Logie: Will the Minister accept that if power, rent, and basic healthy food alone now cost more than many benefits, and the only option most people have is to get hardship grants, which force many of them into debt, budgeting advice is an inadequate response and that really she needs to review the benefit funding formulas?
Hon PAULA BENNETT: In general, actually, rent, power, and food do not exceed the benefit, particularly when you take into consideration accommodation supplements and add-ons that people can get, depending on their circumstances. I am quite proud that we have not just held benefit levels where they are, in some of the toughest economic situations, but we have actually CPI-legislated for them to be increased. There is hardship assistance, as the member has identified, and in many cases that is not repayable. It is a grant, not a loan.
Jan Logie: I seek leave of the House to table the Regional Public Health 2011 report Food Costs for Families, which demonstrates the amount of income being spent on rent and food.
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.
Jan Logie: I seek leave of the House to table a Ministry of Social Development report from 2008 entitled Hardship Assistance Available as Lump Sums, which demonstrates that over half of the hardship grants are recoverable.
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.
Jan Logie: Will the Minister accept that our high rates of rheumatic fever, skin conditions, and asthma are connected to the poverty created by insufficient benefit payments, which do not enable families to provide the very basics of food, warmth, and shelter for themselves and their children?
Hon PAULA BENNETT: No, I will not. But what I would say is that we do take into consideration how incredibly important that is. In fact, the Minister of Health has announced new initiatives and increases in funding going into work with rheumatic fever. Where I also think the member could make a point is that in partnership with this Government the Green Party—
Mr SPEAKER: Order! That is not necessary.
Hon PAULA BENNETT: I was going to be positive.
Mr SPEAKER: The member may wish to make a speech, but this is question time.
Jan Logie: I seek leave of the House to table the National Heart Foundation’s New Zealand Guidelines for Rheumatic Fever, which establishes the link between poverty and rheumatic fever.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.
Jan Logie: Will the Minister, as the Green Party has recommended, make Working for Families available to families in receipt of an income-tested benefit to help protect the health of these families as their parents look for work?
Hon PAULA BENNETT: No, but what we will do is celebrate the 189,000 homes that have been insulated through the Warm Up New Zealand initiative, in conjunction with the Green Party.
Veterans—Assistance for Attending Commemorations
8. KATRINA SHANKS (National) to the Minister of Veterans’ Affairs: What is the Government doing to meet its commitment to allow fit and able New Zealand World War II veterans to attend key 70th Anniversary commemorations overseas?
Hon NATHAN GUY (Minister of Veterans’ Affairs): The Government has an obligation to do what it can to allow New Zealand veterans to attend significant commemorations of their service while they are still able to do so. Thirty-two veterans who served in the Royal New Zealand Air Force with Bomber Command are scheduled to depart tomorrow to attend the dedication and unveiling of the Bomber Command memorial in London. The veterans will travel to London by the Royal New Zealand Air Force 757, with the cost being funded by Veterans Affairs New Zealand. Sending all fit and able New Zealand veterans to the memorial dedication is an appropriate way to commemorate the 1,851 New Zealand servicemen who lost their lives serving with the Bomber Command, and acknowledge the service of the 6,000 New Zealanders who fought for the command. For those unable to attend the London event, a ceremony will be held in New Zealand soon to acknowledge their service.
Katrina Shanks: What other significant overseas 70th anniversary commemorations will New Zealand World War II veterans be able to attend?
Hon NATHAN GUY: In addition to the Bomber Command memorial dedication in London next week, upcoming 70th anniversary commemorations include the Battle of El Alamein in October 2012 for those who served in North Africa, New Caledonia in April 2013 for those who served in the Pacific, and the Battle of Monte Cassino in May 2014 for those who served in Italy. Local events for veterans will also be held for those unable to travel overseas.
Economy—Treasury Forecasts for International Liabilities
9. Hon DAVID PARKER (Labour) to the Minister of Finance: What are the Treasury projections for New Zealand’s net international liabilities in 2016 as a percentage of GDP and in dollars, and what is the increase in dollars from the end of the year ended 30 June 2011?
Hon BILL ENGLISH (Minister of Finance): New Zealand’s net international investment position has been a longstanding vulnerability for New Zealand. It has improved from the forecasts in 2009 that it would reach around 100 percent of GDP, to stand at 70.9 percent of GDP at 31 March 2012—still high by world standards. Looking ahead, Treasury forecasts that our position will reach 80.8 percent of GDP by 31 March 2016, just below the level it was in 2009. That amounts to a $204.2 billion liability, and is an increase of $67 billion from 30 June 2011.
Hon David Parker: Given that Treasury’s projections show New Zealand’s net international liabilities growing—according to your figures—by $67 billion, does he agree with the ANZ commentary today that “our external debt levels remain high and the current account deficit is moving back towards the 5 percent plus danger zone.”?
Hon BILL ENGLISH: I certainly agree that our net international liabilities remain high. The primary driver of those has been high household debt—that is, New Zealanders paying high prices
for houses, and borrowing most of the money offshore, ultimately, to pay for those houses. That problem has built up over 15 years, and it is going to take quite a lengthy period where New Zealand earns more—
Dr David Clark: And a change of Government.
Hon BILL ENGLISH: —than it spends in order to reduce that liability. Actually, changing the Government will certainly make it worse, because it is still lower than it was in 2009 when we inherited a very bad external liability problem generated by Labour in the best decade the globe had seen in a long time.
Hon David Parker: Given that the BNZ’s summation of this is that the surging deficit threatens New Zealand’s credit rating, and given that it forecasts that the current account deficit is going to rise to 8.3 percent of GDP, does the Minister have any other plans, other than those that he has already implemented, to curb this problem?
Hon BILL ENGLISH: We are implementing a pretty comprehensive plan to influence the balance in the New Zealand economy—
Hon David Parker: No to universal KiwiSaver.
Hon BILL ENGLISH: —and influence the decisions made by lots of New Zealanders.
Hon David Parker: No to tax reforms.
Hon BILL ENGLISH: The member mentions tax reform and savings. Back in 2010 we put in place a comprehensive tax package that reduced the tax on savings and work, and increased the tax on property and consumption. In respect of savings, the KiwiSaver contributions will rise on 1 April next year. The good news is that New Zealanders are now saving a much greater proportion of their income than they ever did under the previous Government. In fact, under the previous Labour Government, New Zealand had the worse savings rates it has ever had, at a time when the economy was meant to be as good as it had ever been.
Louise Upston: How does New Zealand’s current net international liabilities position compare with that of recent years?
Hon BILL ENGLISH: First of all, we need to acknowledge that New Zealand’s net international liabilities remain high by world standards. They are the product of, particularly, around 10 years of overconsumption and excessive borrowing to buy houses. Statistics New Zealand announced today that our net international liabilities were 70.9 percent of GDP at 31 March 2012. During the 2000s these liabilities increased significantly, from around 64 percent of GDP in 2001 up to 80 percent by the end of 2008. There is certainly much more work to do. We are making some progress, and I would have to say that I am slightly more optimistic than the forecasts that the member is referring to.
Gambling—Unlicensed Gaming Venues
10. HONE HARAWIRA (Leader—Mana) to the Minister of Internal Affairs: What is the Government doing about pokie venues operating without a licence in poor communities like Ōtara, Porirua and Flaxmere?
Hon CHRIS TREMAIN (Minister of Internal Affairs): The Department of Internal Affairs welcomes information from the public about any class 4 gaming-machine venue operating without a licence from any community, including Ōtara, Porirua, and Flaxmere. Any person operating a class 4 venue without a licence can be prosecuted for illegal gambling.
Hone Harawira: Why is the Minister allowing the illegal pokie venue at Galaxy, 120 East Tāmaki Road in Ōtara to continue to operate 18 pokie machines, even though his department has cancelled its licence; and does letting it continue to operate illegally and without a licence while the decision is being appealed strike him as being fair to the residents of Ōtara, who have already been ripped off to the tune of half a million dollars by this illegal pokie venue since October last year?
Hon CHRIS TREMAIN: My department and I must operate within the law. That is the first point. In the case the member is referring to, I am advised that the venue has not been allowed to
retain its licence. The licence has in fact been cancelled by the Department of Internal Affairs. However, the venue has appealed the decision to the Gambling Commission, and while it is under appeal, the department is unable to take further action, and the licence continues. That is made quite clear in sections 77 and 78 of the Gambling Act 2003, and I recommend that the member consult that Act. The member may believe that I should ignore the law, but that is not my intention.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. The Minister has recited the facts, I think, very well, but the question did not go to the facts. It went to his opinion about the fairness of that situation.
Mr SPEAKER: I think that in answering, the Minister pointed out that the fundamental thing he has to consider is the law. He cannot have a view that is contrary to the law. I think that was not an unreasonable answer.
Hone Harawira: What steps does the Minister suggest the people of Ōtara take to protect themselves against illegal pokie venues, given that his department not only failed to monitor this venue’s establishment but actually allowed it to continue operating after the licence had been cancelled?
Hon CHRIS TREMAIN: I recommend that the residents of Ōtara follow the law, unlike the suggestion that the member across the House is suggesting.
Te Ururoa Flavell: Does the Minister agree that legislative change, such as the Māori Party’s Gambling (Gambling Harm Reduction) Amendment Bill, is the most effective way to cut down problem gambling and tackle addiction, or are there are other solutions that he has in mind that he would wish to share with the House?
Hon CHRIS TREMAIN: I appreciate what the member is trying to achieve with his bill. The bill is still being considered by the Commerce Committee and the Government is paying close attention to the submissions, which are still being made. I believe the final date for submissions is this Friday. The Government is yet to make a decision about whether we will support the bill further. In any case, I intend to continue working in partnership with the Māori Party on issues relating to class 4 gambling and pokie machines.
Roading, Manawatū—Reopening of Manawatū Gorge
11. IAN McKELVIE (National—Rangitīkei) to the Minister of Transport: What updates has he received on the state of repairs of the Manawatu Gorge?
Hon GERRY BROWNLEE (Minister of Transport): I am pleased to advise the House that work on the repair of the Manawatū Gorge is progressing well. The road is now open and the residents who are using it have welcomed that decision. Work has been at full pace to replace the bridges that were lost in the slip, and I would like to take this opportunity to thank the contractors and all those working for them, who have worked so very hard over the last few months to make this happen.
Ian McKelvie: What further work is being done to improve roading infrastructure around the Manawatū Gorge?
Hon GERRY BROWNLEE: The Government is committed to providing roading infrastructure around the Manawatū Gorge. The New Zealand Transport Agency has spent around $4.6 million on upgrading the alternative routes and making them safer and better able to deal with the increased loads and levels of traffic. A further $4.5 million is proposed for a safer, more resilient alternative available to motorists long term in that region.
Iain Lees-Galloway: Can the Minister confirm that heavy vehicles are still diverted through Ashhurst, and that his decision to rely on the saddle road, as he pointed out in his last answer, every time the Manawatū Gorge road closes means that Ashhurst residents will have to contend with trucks thundering past their school, their houses, and their sports grounds, making life miserable and endangering their kids’ lives?
Hon GERRY BROWNLEE: I note that the member had a lot to say about this, without ever having gone up to see the gorge in the first place. What I would say is this: the gorge is being repaired and that will allow traffic to go through the gorge in a better fashion, and it is only prudent to make sure that there are alternative routes. It is a dangerous and vulnerable road.
Recession—Community Response Fund
12. JACINDA ARDERN (Labour) to the Minister for Social Development: Does she stand by her statement with regard to the Community Response Fund that “We listened to concerns that the fund was due to finish. The effects of the recession were still being felt, so we’re putting more funding in for 2011/12.”?
Hon PAULA BENNETT (Minister for Social Development): Yes, and that is why for 2011- 12, under Budget 2011, we invested funding for a further three rounds—631 grants totalling over $23.9 million.
Jacinda Ardern: Is she aware that for the final round of the Community Response Fund there were almost 500 applications, the second highest of all nine rounds, and almost 200 more than the first; if so, what evidence has she received to indicate that the effects of the recession and the need for the Community Response Fund no longer exist?
Hon PAULA BENNETT: Yes, I am aware of the number of applications that were made for the final round, and I think that it was because people knew that it was the final round.
Jacinda Ardern: Does she believe that the need caused by the recession when she brought the Community Response Fund into place still exists?
Hon PAULA BENNETT: I think that things have improved. I think that I have been incredibly clear with the community organisations about that fund. We always said that it was time-limited, and that it was established by the Government in recognition of the additional pressures. I think the fund could have gone on for ever. As a consequence, we said that it was time-limited, and we are now progressing with the next stage of our work, working with NGOs and contracting.
Jacinda Ardern: Does she acknowledge that the Community Response Fund was not her coming to the rescue of community organisations in a recession with a discretionary pot of money, but a bridge to deal with the fact that she had canned Labour’s Pathways to Partnership?
Hon PAULA BENNETT: I think if we look at the more than 2,700 applications for the Community Response Fund, and if we acknowledge that nearly $79 million was paid out to those organisations, we see that it has been very successful. It has covered a gap. However, we have been incredibly clear and transparent that it is a time-limited fund to get people through the worst of it.
Jacinda Ardern: What does she intend to do to address the gap faced by hundreds of groups like Women’s Refuge, which after spending a year working with the Ministry of Social Development on a resolution over future funding received notice that contracts would be arbitrarily rolled over, leaving 16 refuges without any Community Response Fund or family-centred services funding?
Hon PAULA BENNETT: It is not me who has responsibility for funding for the Women’s Refuge, as the member should know by now; it is my Associate Minister Turia. What I will say, though—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think the Minister is trying to divert responsibility. She as the primary Minister gives the delegations and actually retains the overall responsibility.
Mr SPEAKER: It is not up to us to dispute with Ministers who is responsible for certain matters. I have to take the Minister’s word on who is responsible. [Interruption] Order! The Minister was still going to answer the question, I think. She just pointed out that she was not primarily responsible for that aspect, but I did not think she was going to avoid answering the question as a consequence.
Rt Hon Winston Peters: I raise a point of order, Mr Speaker. It was very clear from this end of the House that the Hon Tariana Turia takes the same view that it is a joke that this Minister is passing it back to her.
Mr SPEAKER: Order! That is definitely not a point order, and that is perfectly clear from this end of the House.
Hon PAULA BENNETT: I shall continue. As the member would have seen in the estimates, we are in quite a major transform of how we contract with NGOs. I am investing in services for outcomes. There are going to be more details on that in the upcoming weeks. In the Budget the member would have seen the Capability Investment Resource, which is a fund of about $31.6 million that is going to be going to those organisations. It is under the responsibility of the deputy chief executive for family and community services.
Question No. 6 to Minister
Hon CLAYTON COSGROVE (Labour): I seek leave to correct a description of a tabled document.
Mr SPEAKER: Leave is sought for that course of action. Is there any objection? There is no objection.
Hon CLAYTON COSGROVE: The Ministry of Economic Development document that I sought leave to table in question No. 6 is authoritative and authentic, but it was emailed to me as a discrete PDF individual document. However, I am now advised that its originating source was, indeed, the ministry’s website. I feel I am duty-bound to correct that. It is authoritative and it is accurate.
Mr SPEAKER: I thank the member for correcting that, because I did ask the member directly whether it was from the website and the member said it was not. I appreciate that being corrected. I might just check—did the House grant leave for that document to be tabled? It did. If the House granted leave for it to be tabled, that is fine.
Hon Maurice Williamson: Well, on the basis that it wasn’t on the web.
Mr SPEAKER: No, order! The House granted leave for it to be tabled. I do not think it is the end of the world. The member has corrected an error that he made in describing the document. All I would ask members is to be careful in the future when they describe documents to make sure that the description is correct.