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Questions and Answers - July 17

(uncorrected transcript—subject to correction and further editing)





Hon Dr NICK SMITH (National—Nelson) to the Minister of Finance: What reports has he received on the economy?

Hon BILL ENGLISH (Minister of Finance): Statistics New Zealand today reported that inflation rose 0.3 percent in the June quarter, annual inflation fell to 1 percent, its lowest level since 1999, and the CPI is increasing at its slowest rate in more than 12 years. At the same time floating mortgage rates, at around 5.75 percent, are at their lowest level in 45 years. This is saving a family with a $200,000 mortgage about $200 a week compared with what they were paying 4 years ago. These factors are helping New Zealand families save more, pay down debt, and get ahead.

Hon Dr Nick Smith: To the Minister of Finance—

Chris Hipkins: Why doesn’t David Bennett ask these any more?

Hon Dr Nick Smith: What are the factors—they obviously do not care about the cost of living.

Mr SPEAKER: Order! I apologise to the member, but it is not helpful to have a raft of interjections before the question has even started.

Hon Dr Nick Smith: To the Minister of Finance—[Interruption]

Mr SPEAKER: Order!

Hon Dr Nick Smith: They obviously do not care about the cost of living. [Interruption]

Mr SPEAKER: Order! I apologise to the member. Interjections like that are bound to cause disorder. I now ask members to desist.

Hon Dr Nick Smith: What other factors are helping New Zealanders get ahead?

Hon BILL ENGLISH: Although inflation has been falling, the economy has continued growing moderately. This is reflected in real after-tax wages, which have increased by about 11 percent since September 2008. The components of this are that gross wages have increased 12 percent, after-tax gross wages have increased 20 percent, and inflation has been a bit over 8 percent, which leaves the 11 percent increase. This is a vast improvement on the situation in the 9 years to September 2008, when New Zealand’s real after-tax wages increased by only 4.4 percent in total.

Hon Dr Nick Smith: How does the current level of inflation, at a 13-year low, compare with what the Government inherited when it came into office in 2008?

Hon BILL ENGLISH: When the Government came into office in November 2008, annual inflation was running at 5.1 percent, rather than 1 percent, as it is today. That is because power prices had risen by 72 percent in 8 years, petrol prices were around 10 percent higher than they are now, and floating mortgage rates were at decade highs of almost 11 percent. The lower inflation we are now experiencing, combined with steady increases in after-tax wages, mean most Kiwi families are better off now than they were in 2008, and that is why they are able to reduce their debt and increase their savings.

Rt Hon Winston Peters: So, Minister, who was the Treasurer in charge of writing the two Budgets leading to that brilliant low inflation figure by mid-1999?

Hon BILL ENGLISH: I think it may have been Mr Winston Peters, and I know for sure he was under very close supervision by the then Minister of Finance.

Hon Dr Nick Smith: What is the Government doing in these very difficult global financial times to support jobs, to support higher incomes, and to support economic growth?

Hon BILL ENGLISH: We are focusing on assisting those New Zealanders who can make the decisions that help grow the economy. Among those are people who run, and work in, businesses. It is when they decide to invest more capital, employ more people, and pay more that we get economic growth. So in the past 3 years the Government has reduced the tax on work and on that sort of investment, and raised the taxes on property speculation. We have also improved the regulatory environment for businesses by reducing the direct Government cost to business, such as a significant reduction in ACC levies this year, and by investing strongly in science and research related to business. Over the last couple of years the economy has created 60,000 new jobs.

Hon David Parker: Did today’s CPI figures show a 4.5 percent pre-winter increase in electricity prices, and what proportion does he attribute to companies preparing for privatisation?


Hon David Parker: Did Mighty River Power increase its prices to cover its increased costs, including the $400,000 per annum increase in its chief executive officer’s salary to $1.7 million per annum, in advance of privatisation?

Hon BILL ENGLISH: Mighty River Power, like other power companies, has been going through cost-cutting efforts because there is more competition in the electricity market due to the reforms made by the Government. My understanding is that most of the electricity price increase recorded here reflects Transpower passing through the cost of its extensive investment programme in upgrading the grid.

Hon David Parker: Has the Minister seen JP Morgan’s response to today’s CPI figures, stating “the breadth of the softness in today’s report bears witness to the extent of accumulated slack in the economy.”?

Hon BILL ENGLISH: I think there is quite a plausible line of argument that the relatively low inflation figure today will probably be followed by other relatively low inflation figures due to the fact that the growth outlook around the world is pretty soft. In New Zealand, however, we continue to grow moderately, in line with more recent forecasts. In a world where many countries are slipping back into recession, that is not a bad achievement.

State-owned Energy Companies and Air New Zealand, Sales—Minister of Finance’s


2. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he agree with his Minister of Finance that “the mixed ownership programme will be good for Kiwi investors, the Government and the economy as a whole”?

Rt Hon JOHN KEY (Prime Minister): Yes. The mixed-ownership programme is good for New Zealand savers because it opens up a whole new opportunity to invest in large local companies. It is good for the Government on behalf of taxpayers because the proceeds will be invested in new assets like modern schools and hospitals. The money would otherwise have to be borrowed from overseas lenders.

David Shearer: How are New Zealanders going to be better off if the Government sells the assets when they are under threat of court action and possibly reduced in value because of uncertainty in sharemarkets that are currently unstable?

Rt Hon JOHN KEY: I would not agree with the assertions of the member on a number of those points. In terms of the latter point, well, equity markets go through various phases, but that has not

stopped plenty of other companies embarking on the mixed-ownership model, including Fairfax recently with its sell-down of 49 percent of TradeMe.

David Shearer: What does he consider the dollar value reduction in the value of Mighty River Power is as a result of the uncertainty over the court action?

Rt Hon JOHN KEY: I do not think it is possible to speculate that the member is even right in making the assumption.

Rt Hon Winston Peters: If, as the Prime Minister says, “Nobody owns the water.”, then on what basis does he purport to sell it?

Rt Hon JOHN KEY: If I understand the question correctly, we are proposing to sell 49 percent of the shares in Mighty River Power. We are not proposing to sell water.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. There is no power company in this country that is doing hydro power that does not have to have the most vital ingredient—

Mr SPEAKER: Order! Is this a point of order?

Rt Hon Winston Peters: —yes, it is—which is, namely, water.

Mr SPEAKER: Order!

Rt Hon Winston Peters: No water, no power company.

Mr SPEAKER: Order! Members may have—I am on my feet and there will be silence. The Prime Minister gave a perfectly legitimate answer to the member’s question, and there is nothing more I can do about that. Certainly, the point of order is not a point of order. To debate whether or not selling Mighty River Power is to sell water is not a point of order at all. It is a debating point.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. Are you saying it is a debating point that a hydro-power company—

Mr SPEAKER: Order! The member will resume his seat. He is now debating further. I invite the member to reflect that that is not remotely a point of order. It is not remotely a point order. Not under the longest stretch of imagination is it a point of order.

David Shearer: When he said yesterday that it is possible that a court action could “have a cost for Mighty River Power … for every business and every household in New Zealand”, did he mean that New Zealanders may have to pay for the liability while private shareholders are able to get the profit?

Rt Hon JOHN KEY: No, I was making an assumption that if one day a court assumed that Māori owned water—and that is the assumption that was put forward by the Māori Council, if you look at the statement made by Maanu Paul the other night when he said—

Hon Trevor Mallard: Give him a hand.

Rt Hon JOHN KEY: I will tell you what you need: you need a few people to vote for you and you can become the leader, because the Labour Party has now changed the way that it elects its leader. It is no wonder that David Cunliffe is not here; he is out with the unions.

Mr SPEAKER: Order! If members interject they may well have their interjections responded to, and it will tend to lead to disorder.

Hon Trevor Mallard: I raise a point of order, Mr Speaker.

Rt Hon JOHN KEY: Here we go.

Hon Trevor Mallard: I am waiting for you to sit down. He sometimes dips occasionally, Mr Speaker. I do not—

Mr SPEAKER: The Hon Trevor Mallard, point of order.

Hon Trevor Mallard: The point I was making is I thought that you were going to reprimand the Prime Minister for suggesting that you may be elected the leader of the Labour Party. That is most unlikely. You have not taken out your membership—yet.

Mr SPEAKER: I have heard sufficient. I know that it is the first day back after a break, but I think we have had our fun. The right honourable Prime Minister, in reply to the question.

Rt Hon JOHN KEY: In reply to the question, the point I was simply making was that some in the Māori Council—for instance, the chairman, Maanu Paul, and I will quote what he said on TV3

the other night: “Māori own the freshwater. … We need to sit down and work out how much you are going to pay us to use our water.” That is an example where if that was the case, then all businesses and consumers in New Zealand would theoretically have to pay for that right.

Rt Hon Winston Peters: Does the Prime Minister accept that Mighty River Power cannot operate without water, which he has said nobody owns; that being the case, on what basis does he purport to sell a share of it?

Rt Hon JOHN KEY: Mighty River Power does not own water. Mighty River Power has longterm water rights, and the sale would be the sale of the earning stream, effectively, of Mighty River Power.

David Shearer: Is the Government considering listing some of the State-owned enterprise’s shares on the Australian stock exchange; if so, how does that fit with his commitment to have 85 to 90 percent of the company owned by New Zealanders?

Rt Hon JOHN KEY: The Government has not made a decision on that, although it is taking advice from Treasury. I would simply point out that eight of the top 10 companies on the NZX are also listed on the ASX, including Air New Zealand, which was put on the ASX by the then—I assume—Labour Government. The reason why the advice in one instance has been that it is a good idea to do that is that the mandates of Australian funds that invest on behalf of New Zealanders often require them to be listed on the ASX. The reality is that in terms of New Zealand companies that are dual-listed on the exchange—if one looks at those—the vast, overwhelming bulk actually trade their shares in New Zealand. So Auckland Airport is 98 percent traded in New Zealand, and 2 percent on the ASX; Chorus is 88 percent traded in New Zealand, and 12 percent on the NZX; Infratil is 96 percent on the New Zealand exchange, 4 percent on the NZX; Sky TV is 90 percent and 10 percent; and it goes on. So it is possible that it would simply be for liquidity reasons.

David Shearer: In light of his answer, can he guarantee, then, that his commitment that he gave at the election last year that 85 to 90 percent of the company will be owned by New Zealanders will stand?

Rt Hon JOHN KEY: Yes. Interestingly enough, actually—

Hon Members: How?

Rt Hon JOHN KEY: Well, because the Government controls the build bill. But interestingly enough, actually, when I was in Australia the week before last I actually met with Origin, which, of course, has a substantial ownership in Contact Energy. One of the interesting things that the Origin board told me was that, in fact, the 80,000-plus retail shareholders that it has had in New Zealand have stayed consistent for a long period of time. They have not wanted to sell. In spite of all the fearmongering from the Labour Party that there would be sales to overseas people, it has not taken place.

David Shearer: Can the Prime Minister give us an undertaking that Mighty River Power will not be delayed in its sale, or will that sale have to continue next year?

Rt Hon JOHN KEY: Well, I can understand that the member is anxious to get his allocation, and in due course he will, But, in reality, it is certainly the Government’s intention that the shares are brought to the market in the third quarter of this year. It is not impossible that a court could delay the process, but we would hope that was unlikely.

Business Research and Development—Advanced Technology Institute

3. COLIN KING (National—Kaikōura) to the Minister of Science and Innovation: How will the new Advanced Technology Institute help businesses get competitive products to market?

Hon STEVEN JOYCE (Minister of Science and Innovation): Good news. Last Thursday the Prime Minister and I announced the high-level structure for the new Advanced Technology Institute. It will become a high tech HQ for innovative New Zealand businesses. It will help high tech firms become more competitive by better connecting them with innovation expertise and facilities both within the Advanced Technology Institute, around the country, and also

internationally. The Advanced Technology Institute will make it easier for firms to access business assistance and our best researchers, engineers, and industrial designers, including by organising and part-funding secondments and internships. Also, those businesses can compete and succeed in the global market place.

Colin King: What industries will the Advanced Technology Institute be active in?

Hon STEVEN JOYCE: We expect the Advanced Technology Institute to focus on a range of technology-intensive industries with significant growth potential, such as food and beverage manufacturing, agritechnologies, digital technologies, health technologies, therapeutics manufacturing, and high-value wood products. This will encourage innovation, competition—

Andrew Little: This was Labour’s strategy 10 years ago! This is 10 years old.

Hon STEVEN JOYCE: —and greater commercialisation in these sectors, which in turn will help boost our exports. The manufacturing and services sector already accounts for around 29 percent of our GDP, but we have the potential to increase this in New Zealand if we have more firms carrying out research and development, and encourage those already doing so to do more. And Mr Little, it may be Labour policy from 10 years ago, but we implemented it.

Colin King: How is the Government helping the Advanced Technology Institute achieve these goals?

Hon STEVEN JOYCE: Mr Speaker—

Andrew Little: Reheat it and serve it up again.

Hon STEVEN JOYCE: I think the member is just pointing out that the Labour Party members are great talkers and not very good doers. The Advanced Technology Institute will have a range of resources at its disposal. It will absorb much of Industrial Research’s operations in Auckland, the Hutt Valley, and Christchurch, and a number of other capabilities from across Government to provide a one-stop shop for technology support. The Government provided additional funding for the Advanced Technology Institute in Budget 2012 of $166 million over 4 years. We will seek to develop skills relevant to business through greater mobility of researchers, graduates, and academics between institutions and industry, and by organising co-appointments and secondments. The new Advanced Technology Institute will help ensure that innovative Kiwi firms have access to the skills, facilities, infrastructure—

Rt Hon Winston Peters: Oh, yeah, yeah, yeah!

Hon STEVEN JOYCE: —you hate it, Winston—and new technologies they need to lift their competitiveness and in turn boost New Zealand’s economic growth.

Rt Hon Winston Peters: Who wrote that rubbish?

Hon STEVEN JOYCE: That, Mr Peters, is a business growth agenda.

Economic Programme—New Zealand - owned Financial Institutions

4. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Finance: Does the Government’s economic strategy support the development of New Zealand-owned financial institutions?

Hon BILL ENGLISH (Minister of Finance): Yes, it does, and New Zealanders can support the development of New Zealand - owned financial institutions such as banks by switching from larger, foreign, overseas-owned banks to New Zealand - owned banks.

Rt Hon Winston Peters: Does he agree that if one outcome of the review of KiwiSaver default providers is that the number of default providers should be expanded, then Kiwibank should have preference over foreign-owned banks?

Hon BILL ENGLISH: Well, the member is a bit ahead of the review of default providers. Kiwibank has just recently bought a large KiwiSaver provider and I would expect that it will be able to build on that success. But I certainly could not prejudge the outcome of a review that has not begun yet.

Hon Trevor Mallard: In light of the Minister of Finance’s recommendation as to switching to New Zealand - owned banks, will he provide leadership by switching the Government accounts in that way?

Hon BILL ENGLISH: I think, as the member may know, currently the Government is going through a process of looking at the 20 year – plus banking arrangement it has had with Westpac to see if it can get further improvement in service and value for money, and I would not want to prejudge the outcome of that.

Rt Hon Winston Peters: Given his primary answer, will he therefore assure the public that Australian-owned Westpac’s intensive lobbying campaign to become a KiwiSaver default provider will not be influenced by the fact that former National Minister Simon Power holds a senior role with Westpac, and Mr English’s press secretary, Grant Fleming, is set to become Westpac’s government relations manager?

Hon BILL ENGLISH: I am not aware of any such lobbying campaign. The Government— [Interruption] Well, I am not. The Government is committed to—and, I think, required by statute to have—a review of KiwiSaver default providers by 2013, and that will be going ahead.

Drugs, Control—Regulation of Psychoactive Drugs

5. MIKE SABIN (National—Northland) to the Associate Minister of Health: What recent announcements has he made regarding the regulation of psychoactive substances?

Hon PETER DUNNE (Associate Minister of Health): Yesterday I announced Cabinet’s approval to proceed with a new regime regulating the availability and distribution of psychoactive substances. This regime reverses the onus of proof, meaning that if it cannot be demonstrated that a product is safe or of minimal risk, then it is not going anywhere near the market place. New legislation will be introduced to allow the sale of only those substances that have gone through a robust testing process to be proven to be of low risk. Psychoactive substances pose a risk to consumers as they have unknown health effects, and are currently marketed without any control over their ingredients, their potency, or their quality, and without a minimum purchase age. And I note with some pleasure that the steps we announced yesterday have been recognised positively in a range of media articles today, including comments from the New Zealand Police, the National Poisons Centre, and the New Zealand Drug Foundation.

Mike Sabin: What are the implications of shifting the onus of proof regarding safety of these substances to the manufacturer or distributor?

Hon PETER DUNNE: Let me put it this way: last week I announced that four new substances were being banned under the current temporary drug-class notice regime. That brought the total number of substances dealt with under that regime since last August to 28—around 50 different products. But we are always catching up with products that become available on the market. Under the new regime only those substances that have met testing requirements broadly similar to those required for new medicines will be permitted, and those products that do meet that criteria may well then be subject to further restrictions around the place of sale, the purchase age, advertising, and labelling.

Mike Sabin: When does the new regulatory regime come into effect?

Hon PETER DUNNE: It is my intention to have legislation before the House in the last part of this year. I hope that would be passed by the middle of next year. We can roll over the existing 12- month bans that have already been issued until that time. I invite the support of all parties in this House for this worthwhile legislation.

Roading, Wellington—Ōtaki to Levin Expressway

6. JULIE ANNE GENTER (Green) to the Minister of Transport: How much was spent on investigation, design, and other preparatory work for the now cancelled Otaki to Levin expressway?

Hon GERRY BROWNLEE (Minister of Transport): To date a total of $1.1 million has been spent on investigation, design, and preparatory work, which has led the New Zealand Transport Agency to a decision to improve safety on the road and delay expenditure on the four-lane expressway into the future. And I think that is money well spent.

Julie Anne Genter: Was it fiscally prudent for the National Government to commit to building the roads of so-called national significance before business cases had been undertaken, only to now start cancelling some of them after spending over $216 million on planning work alone?

Hon GERRY BROWNLEE: No roads of national significance have been cancelled. What I would say is that I have had a look at some of the expenditure that the New Zealand Transport Agency has committed to over recent times, and there are a number of reports that I think do represent a questionable value. They are on, for example, the impact of urban form on economic performance, Valuing Urban Design, and Business case for walking and cycling. I think they are jaw droppingly expensive and, quite frankly, a total waste of time.

Julie Anne Genter: Given his statement on 3 April that he would not review the prioritisation of the roads of national significance in light of officials’ repeated warnings that there is a multibilliondollar funding gap, and his statement on 9 May that the roads of national significance will cost what they will cost, were New Zealand Transport Agency officials correct to say that cost was a reason that the Ōtaki to Levin expressway was cancelled?

Hon GERRY BROWNLEE: The Ōtaki to Levin expressway is not one of the roads of national significance.

Julie Anne Genter: Will he admit that spending most of the transport budget on building a few expensive motorways is not the best, most cost-effective way to improve safety and move more people and freight around the country, as we have seen with Ōtaki to Levin?

Hon GERRY BROWNLEE: No. Of course I will not.

Julie Anne Genter: Will further low-value roads of national significance projects be cancelled, such as the $1.7 billion Pūhoi to Wellsford project, which has lower traffic volumes and a worse benefit-cost ratio than the now cancelled Ōtaki to Levin expressway; and if not, why not?

Hon GERRY BROWNLEE: No, because we think it does have the potential to carry a lot more traffic in the future—far more, in fact, than the tunnel through Auckland for the train with nobody on it.

Julie Anne Genter: I seek leave to table the traffic volumes from Ōtaki to Levin and from Warkworth to Wellsford, which show that Warkworth to Wellsford has lower traffic volumes and a significantly declining rate of traffic volumes, as did Ōtaki to Levin.

Mr SPEAKER: Leave is sought to table those documents. I beg your pardon, the source of the documents?

Julie Anne Genter: The New Zealand Transport Agency, but they have been compiled by the Parliamentary Library.

Mr SPEAKER: Leave is sought to table that document, compiled by the Parliamentary Library. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Julie Anne Genter: I seek leave to table this data from Auckland Transport, which shows that the entire—

Mr SPEAKER: Order! The document itself is prepared by?

Julie Anne Genter: The Parliamentary Library, which had to contact Auckland Transport to get the numbers that show that the rail system in Auckland is carrying over 30,000 people a day, which is four times more than the number of people being carried on Pūhoi to Wellsford.

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

Rt Hon Winston Peters: I seek leave to table a list of the National Party MPs who have represented the north for the last four decades, hence describing and explaining the very poor roads up there.

Mr SPEAKER: The source of the document?

Rt Hon Winston Peters: The 89 from the last election, for the last four decades.

Mr SPEAKER: That document is readily available to members of the House, if I heard the member correctly.

Julie Anne Genter: Will the Minister now subject the remaining roads of national significance to Treasury’s Better Business Cases for Capital Proposals guidelines, just as the city rail link has been subjected to, so that New Zealanders can be sure we are getting the best value for money from the $14 billion worth of taxpayers’ investment?

Hon GERRY BROWNLEE: The member’s assertion about the rule being run over the Auckland proposal for the rail tunnel is simply wrong. What I will instruct the New Zealand Transport Agency to do is to stop paying for reports like that on the impact of urban form on economic performance, Valuing Urban Design, and Business cases for walking and cycling, all compiled for the New Zealand Transport Agency by the member, at a huge cost—a jaw-dropping cost, in fact.

State-owned Energy Companies, Sales—Water Rights

7. Hon CLAYTON COSGROVE (Labour) to the Minister for State Owned Enterprises: Is he concerned about the potential loss of revenue from the float of Mighty River Power due to market uncertainty around water rights?

Hon TONY RYALL (Minister for State Owned Enterprises): Securities regulations prevent me from commenting directly on the likely proceeds from any individual float. What I can say is that the Government is neither concerned nor surprised by the discussions around water. We have always expected a claim to the Waitangi Tribunal, and have always acknowledged the likelihood of court action. The Government has prepared for, and is working through, these expected issues, step by step, and we will continue to do this as we work towards the float, which will help us control debt and allow us to keep investing in the New Zealand economy.

Hon Clayton Cosgrove: Has he received or sought any advice from Treasury on the effects of market uncertainty on potential revenue from the sale of Mighty River Power, potential costs to the taxpayer from compensation for water claims, and potential losses for the taxpayer from withholding or buying back shares for settlement; if so, what is that advice?

Hon TONY RYALL: Certainly there is a long list of things there, but no, we have not sought any advice from Treasury in respect of the issues that the member describes as market uncertainty. But I would have to say that if there was this issue of market uncertainty that the member talked about, then that would have impacted on the already listed energy companies. I am advised there has been no material impact on the share prices of the existing listed energy companies over the course of the Waitangi Tribunal hearing. For example, Contact Energy shares were priced at $4.70 on 7 February when the claim was lodged, and traded at $4.81 at the close of trading yesterday, and Tauranga-based TrustPower was trading at $7.05 on 7 February when the claim was lodged, and traded at the close of trading yesterday at $7.72.

Hon Clayton Cosgrove: Why did he not heed the warnings from numerous submitters during the consultative hui process in February, the hundreds of submissions during the select committee hearings, and public warnings by Treaty experts, lawyers, and economists that stated the issues around water needed to be resolved prior to the planned share offer?

Hon TONY RYALL: Those comments were to be expected, and the Government has planned for them. The fact is we are working through the issues step by step. These were to be expected, and the Government is prepared for them.

Hon Clayton Cosgrove: Given that his Government has been aware of the uncertainty around water rights for months, why did his Government book the proceeds from selling the assets before they were sold?

Hon TONY RYALL: I am sure the Government did what was appropriate for the rules at the time. I think what they certainly indicate is that this Government did receive a mandate from the people of New Zealand for this programme, which is about controlling debt and continuing to invest in our economy.

Hon Clayton Cosgrove: Why does he not delay the selling off of Mighty River Power until the water issues have been resolved, so that the value of that asset can be clarified?

Hon TONY RYALL: I think I have indicated to the House previously that the current issues before the Waitangi Tribunal are having no impact on the already existing hydroelectricity and energy companies on the New Zealand Exchange. But the member needs to be very clear that the Government has prepared for and has expected the various issues that are coming up at this time. The important thing is that the Government does want to move apace to make sure that we have those funds to help control debt and to invest in important things like schools, roads, and hospitals.

Welfare Reforms—Social Security (Youth Support and Work Focus) Amendment Bill

8. TIM MACINDOE (National—Hamilton West) to the Minister for Social Development: How will the Social Security (Youth Support and Work Focus) Amendment Bill provide greater support for young people at risk of long-term welfare dependency?

Hon PAULA BENNETT (Minister for Social Development): The bill makes changes to put in place total wraparound support for young people—those who are on benefit and those who are not on benefit—including young teen parents. Currently, we just pay these young people who are on a benefit and leave them to it, with very little follow-up and very little support around them. We are putting a youth provider alongside each young person to support them, manage their benefit, and provide parenting and budgeting assistance, as well as ensuring they are in education, training, or work-based learning.

Tim Macindoe: How will the changes ensure that young people are incentivised to make the right choices?

Hon PAULA BENNETT: When looking at the kinds of behaviours that we wanted from these young people, we looked at whether or not we incentivise or whether or not we penalise. I am pleased that we are putting in incentive payments. We will pay a young person on a benefit an extra payment—for example, if they are 6 months in education, training, or work-based learning; if they complete a budgeting programme; and if young parents complete a parenting programme, enrol their children with a primary health organisation, and have done their Well Child checks. They can actually get up to $30 extra a week.

Tim Macindoe: When will the changes under the youth package take effect?

Hon PAULA BENNETT: As there are a number of bills that are being progressed through the House currently, this bill’s current implementation date requires amendment. We are seeking to change the current implementation date for the bill to 20 August 2012. This will give more time, following enactment, for several procedural steps, which include developing the necessary regulations for Order in Council to accompany the legislation, as well as consultation with relevant parties. Particularly, though, we were concerned about giving the right kind of notice to those young people, and wanted to give at least 2 weeks for that to happen.

Welfare Reforms—Savings

9. JACINDA ARDERN (Labour) to the Minister for Social Development: Does she stand by her statements that “the billion dollars is not just about the young people. Those savings are also coming from those on other benefits … we certainly have got projections that we believe we will be making savings over the next four years”?

Hon PAULA BENNETT (Minister for Social Development): Yes.

Jacinda Ardern: How much will her first round of welfare reform cost over 4 years, as per the Budget documents?

Hon PAULA BENNETT: At this stage we are projecting $287 million in costs over 4 years for bill No. 1 on the youth and the changes to the DPB.

Jacinda Ardern: How much will her first round of welfare reforms save over 4 years, and what evidence is there to support these projected savings?

Hon PAULA BENNETT: There have been a number of forecasts that have been done. The most recent ones are from Treasury, which has taken a very conservative approach and also is not looking at behavioural changes, which are quite significant, we believe. So Treasury at the moment is projecting $135 million. I actually do not believe that is true. I think it will be a bit more than that, but Treasury is taking a very conservative approach.

Jacinda Ardern: Does she concede that her welfare reforms will cost more than they will save based on Treasury’s projections?

Hon PAULA BENNETT: No, we have always said that bill No. 2 is the one that has the most substantial savings and the biggest changes. The member will see that coming along later this year. That is going to be a lot of work, which is actually going to see the significant changes in savings coming through.

Jacinda Ardern: Does she have any capacity to fund phase two of her welfare reforms, given Budget documents show that the Ministry for Social Development struggled to fill a $700 million budget shortfall this year, and stated that “the estimated costs of phase two are [even] more uncertain than phase one.”?

Hon PAULA BENNETT: I am delighted that the member is waking up to the fact that these are tough times. Yes, the department has struggled to find $700 million in projected costs from within the department, but we did—but we did—and that has been hard work. We will find the savings that are needed for bill No. 2, because we fundamentally believe that they will make a difference for New Zealanders and their lives and their outcomes. That is what we are working towards.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. You have been coaching members in this House to attempt to ask straight questions, and the deal has always been that the initial parts of the answer, at least, would also be straight. I ask you to reflect on what happened, when you look at this question time later on, as to whether that sort of approach from that Minister should be allowed.

Mr SPEAKER: Order! I listened very carefully, and the first three supplementary questions were very straight and very directly answered. The fourth supplementary question implied a criticism—unless I misheard, it implied a criticism—and the Minister’s response was not totally out of order. But I accept that it was on the margins. But there has to be a bit of give and take during question time. Earlier on in question time—if the member reflects back—the Opposition was making a lot of noise and making a lot of interjections that were causing disruption. I cannot be too hard on one side of the House and not hard on the other side of the House, and I believe, on balance, that that question was reasonably answered.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. My memory was that the question was essentially: does she have the capacity to fund, or how does she propose to fund, given the document showed that her ministry struggled to find $700 million. I think that is a straight question, not one which implies a criticism of the Minister.

Mr SPEAKER: Order! I will undertake to look at it, because that was not my recollection of the exact wording, and I will undertake to look at it.

Child Abuse—Child, Youth and Family Care

10. HOLLY WALKER (Green) to the Minister for Social Development: Can she confirm that in the year from 1 July 2010 to 30 June 2011, 71 children and young people were abused while in CYFS care?

Hon PAULA BENNETT (Minister for Social Development): In 2010 I asked Child, Youth and Family to review cases where children placed in Child, Youth and Family care had been further abused or neglected. It, quite frankly, horrified me that we did not know how many children and young people in our care were abused and re-abused, as it was not recorded, as the member will know from the written answer that I gave her. Subsequently, the review showed that in 2010-11 there were 71 children and young people in Child, Youth and Family care who were abused. Of these, 30 cases were by the child’s Child, Youth and Family - approved whānau or non-whānau caregiver, and 41 cases were by third parties. That is less than 1 percent of all caregivers. International comparisons are 0.5 percent to as high as 7 percent. No abuse, though, and certainly no re-abuse, is tolerable.

Holly Walker: What has she done to ensure the safety of those 71 children, 30 of whom, as she said, were abused by their Child, Youth and Family - approved caregiver, and can she assure the House that not one of them has suffered further abuse in care since?

Hon PAULA BENNETT: What happened was that it took 7 weeks for a social worker to work through all of the review of all of those cases. Since then we have seen, from memory, 13 of them be prosecuted by the police. The others were not—even though there was substantiated abuse, it was not at a level that the police could actually prosecute. I am assured by the department that all of those children are now being cared for, are safe. We have no caregivers who have substantiated cases of abuse against them still in a place of looking after children.

Holly Walker: Can she confirm that the cases of those 71 children were discovered only by a one-off, manual count of data at individual Child, Youth and Family sites, because Child, Youth and Family keeps no central records of reports of abuse of children in its care?

Hon PAULA BENNETT: Yes, the member is right. It keeps the information at a local level and supposedly goes through it. As I say, I was concerned about that, particularly when I first became Minister. I then got an experts group together. At that point we had reports that the figure was as high as 1,800 children being re-abused. They are our most vulnerable, as I always say. That is not just a statement; it is actually the reality. They really are in a position of being the most vulnerable children in this country. Once we started looking into the details of it, it was not as high as first projected—not that it was acceptable, but it was better than what it was going to be. Some of them were caught prior to the review being done, so it was not just because of that manual review that they were found; some were found well before that. What it did, though, was give a snapshot of actual numbers.

Holly Walker: Will she, then, commit to a full manual review of all Child, Youth and Family sites for the years 2001 to 2009 in order to find out how many other children and young people have been abused in Child, Youth and Family care in recent years, and put the appropriate support in place for these people?

Hon PAULA BENNETT: No, because what we are saying is that it is not that we do not know who they are or where they are; it is just that the information is not collected at a national level. So actually the regional sites do know, and are getting to those cases and are going through them. What they did not do was actually collect them for national data, and what we are now doing is seeking to do that. It was not because we did the manual review that we found them. They had already been found; they just had not been collected nationally.

Holly Walker: So can she confirm that Child, Youth and Family will now collect all of this data nationally on abuse in care, and does she agree that the abuse of these children and young people while in care raises serious questions about the vetting process for Child, Youth and Family approved caregivers and the ongoing safety of children in care?

Hon PAULA BENNETT: What we do need to do is keep it in perspective. I want to say that no abuse of children is tolerable or acceptable in this country, but it is less than 1 percent. I would like it to be 0 percent, but, unfortunately, in today’s world that is not possible. It is 0.75 percent of those caregivers. They are actually processed, but, unfortunately, we are not in every home and able to

make sure that every child is cared for at the level that we would like. What I can promise the member is that, first, they are followed up, there are processes in place, they are prosecuted whenever possible, and those children are not left in unsafe circumstances.

Holly Walker: I raise a point of order, Mr Speaker. I listened carefully to the Minister’s answer. I appreciate that there were several parts to the question, but I do not believe she actually addressed the question about whether the data will now be collected nationally by Child, Youth and Family.

Mr SPEAKER: I think it was a fair supplementary question. The Minister may have overlooked that and she may be prepared to answer it.

Hon PAULA BENNETT: I am. We are collecting it the best we can, but it is going to take a complete IT change for us to collect it at a national level on a continued basis. So I am looking at ways that we can do that as we are upgrading the system.

Holly Walker: I seek leave to table the Minister’s answer to written question No. 4968—

Mr SPEAKER: Order! No, written questions are available to all—

Holly Walker: It has not yet been publicly released.

Mr SPEAKER: It will be released imminently.

Holly Walker: I was advised by the Table Office that—

Mr SPEAKER: We do not table answers to questions. There is a process for that being available to members in the House here.

Prisoners, Employment Training—Progress

11. JACQUI DEAN (National—Waitaki) to the Minister of Corrections: What progress has been made on the Government’s goal of getting more prisoners into employment and education?

Hon ANNE TOLLEY (Minister of Corrections): I am pleased to advise the House that the average number of prisoners in formal, on-the-job training and trade training activities has increased to 3,144 during June, exceeding the target numbers. This is the highest-ever level of prisoner involvement in employment activities. In addition, prisoners engaged in employment activities have also achieved 140,599 New Zealand qualifications framework credits through 2011-12, exceeding all targets and significantly ahead of last year’s achievement of 108,000 credits.

Jacqui Dean: Has the Minister seen any research on what impact employment training in prisons has on reoffending rates?

Hon ANNE TOLLEY: Yes; research undertaken last year by the Department of Corrections shows that prisoner employment leads to reduced reoffending. Research found that reoffending within 12 months of a prisoner’s release reduced by 8 percentage points for those who worked in a corrections inmate employment, and 16.7 percentage points for those who participated on the Release to Work programme. It also found that longer periods in employment while in prison were associated with even lower rates of reconviction, and that is why this Government is committed to increasing prisoner employment and skills training significantly over the next 5 years as a key strategy to reducing offending by 25 percent by 2017.

Transport Funding—Roads of National Significance

12. PHIL TWYFORD (Labour—Te Atatū) to the Minister of Transport: How much money is budgeted for spending on investigation and design on the roads of national significance in the next three financial years, over and above the $216 million that has been spent since 2009?

Hon GERRY BROWNLEE (Minister of Transport): Based on current forecasted funding, the New Zealand Transport Agency has budgeted for $138 million over the years 2012 to 2015 for investigation and design of roads of national significance. After 2015 there remains some $90 million to complete the investigation and design of current projects in the roads of national significance programme. This expenditure to date represents less than 3 percent of project costs of around $8.7 billion.

Phil Twyford: Will spending on consultants continue to make up 90 percent of expenditure on investigation and design work for the roads of national significance?

Hon GERRY BROWNLEE: Unfortunately, I missed the figure that the member—

Mr SPEAKER: It would help if the honourable member would repeat his question.

Phil Twyford: Will spending on consultants continue to make up 90 percent of expenditure on investigation and design work for the roads of national significance?

Hon GERRY BROWNLEE: The national Land Transport Management Act was amended in 2008, and section 97 requires that the New Zealand Transport Agency farm out as much of the work that it does as possible. That amendment was supported by both the Labour and Green parties.

Phil Twyford: How much of the $16 million spent on investigation and design for the Pūhoi to Wellsford road of national significance was spent on the Warkworth to Wellsford section, and will this project be subject to the same value-for-money analysis as the Ōtaki to Levin project?

Hon GERRY BROWNLEE: I do not have that information to hand. I am happy to provide it for the member at another occasion.

Phil Twyford: Does he agree with Ken Shirley of the Road Transport Forum when he said that some of the roads of national significance are gold-plated and appear “to be absorbing all the investment funding in the land transport fund leading to inadequate money for renewal and upgrading of other state highways and local roads.”, and is he concerned that even the staunchest defenders of the roads of national significance are now deserting him?

Hon GERRY BROWNLEE: No, and I am quite sure that most of Mr Shirley’s members would not agree with him either.


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