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Questions and Answers - August 28


Tax System—Fairness and Enforcement

1. JONATHAN YOUNG (National—New Plymouth) to the Minister of Finance: What is the Government doing to ensure that people are paying their fair share of tax?

Hon STEVEN JOYCE (Acting Minister of Finance): The Government has made a number of policy changes that have been very effective in improving the fairness of the tax system, and I will just briefly outline a few of them. We have changed the rules so that people can no longer use investment losses, including those from rental properties, to reduce their income and so become entitled to programmes like Working for Families or student allowances, which were not intended for the wealthy. We have brought in stricter tax rules for foreign multinationals to reduce their ability to minimise tax payments in New Zealand. We have aligned the top personal and trust rates to improve the integrity and coherence of the tax system and to get rid of the incentive provided by the previous Government for people to hide their income in trusts. We have also tightened the rules for loss attributing qualifying companies and qualifying companies to ensure that property investors are taxed at the correct rate, and this year’s Budget includes measures to close loopholes around holiday home ownership and livestock valuation.

Jonathan Young: Is the Government being more vigorous in enforcing the tax rules?

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Hon STEVEN JOYCE: Yes, it is. The Government has been significantly boosting the Inland Revenue Department’s capacity to investigate and prosecute tax fraud and tax avoidance. In Budget 2010 the Inland Revenue Department was provided with $119 million in additional funding over 4 years to increase its audit and compliance activity in areas like property transactions, the hidden economy, and debt collection. That was increased by a further $78 million in this year’s Budget. As my colleague the revenue Minister, Peter Dunne, said at the time of the Budget, when people do not pay their fair share of tax, everyone else suffers, because there is less money for health, education, and other services. I would note that the Inland Revenue Department has been taking and winning a number of court cases relating to tax avoidance, which is sending a strong message that the Government takes the issue of compliance very seriously.

Jonathan Young: How successful has that extra funding for audit and compliance been?

Hon STEVEN JOYCE: I am pleased to say it has been very successful. In the first year of increased audit and compliance the Inland Revenue Department has assessed additional tax of $86.9 million—a return of $6.62 for every dollar invested—in the hidden economy and in the property sector. An additional $115 million of tax debt was recovered, which is a return of $9.50 for every dollar invested. It is estimated the extra compliance activities provided for in this year’s Budget will have a net positive impact on revenue of around $345 million over the 4 years to 2015-16. So it has been a very worthwhile investment.

Andrew Williams: Mr Speaker.

Mr SPEAKER: I call Andrew Little. [Interruption] Oh, Andrew Williams. I beg your pardon—I beg your pardon.

Andrew Williams: Thank you, Mr Speaker

Mr SPEAKER: Andrew Williams, my apologies.

Andrew Williams: Thank you, Mr Speaker. You are not the only Speaker who makes that mistake. Does he agree with the Minister of Revenue’s statement of 1 October 2010 that lowering the top tax rate to 33 percent was “a major tool in stopping tax avoidance …”; if so, how does he reconcile this with the Inland Revenue Department’s announcement in recent days that only half of wealthy individuals are paying income tax?

Hon STEVEN JOYCE: What the Inland Revenue Department actually said was that half of the small group of New Zealand’s wealthiest individuals are not paying the 33 percent rate of PAYE. However, they could, for example, be receiving income through a trust—often people arrange their affairs through trusts—in which case they will be paying the trust rate of 33 percent, which is, of course, the same rate.

Hon David Cunliffe: Does he consider it fair that less than half of high-wealth individuals are currently paying income tax at the top tax rate?

Hon STEVEN JOYCE: I think the answer to that question is the same as the answer to the previous question, which is that the point that the Inland Revenue Department was making was that roughly half of these high net worth individuals were not paying PAYE, but that does not necessarily mean they are not paying a 33 percent tax rate. For example, they could be receiving income through a trust. I thought I had explained that previously, but I am happy to do it again.

Hon David Cunliffe: I raise a point of order, Mr Speaker. The reason that I asked the supplementary question was that it went to the question of fairness, rather than to the mechanism of the tax payments, and the Minister did not address himself to the issue of fairness.

Mr SPEAKER: The member is quite correct. He asked whether the Minister thinks it is fair. He sought the Minister’s opinion. The implication was that the Minister did think that was fair, but if that is not correct the Minister should correct that.

Hon STEVEN JOYCE: I was just making the point that because somebody does not receive a certain type of income it does not mean they are not paying the tax rate on another, different type of income, and if the tax rates are the same across the different types of income that is, indeed, fair.

Hon David Cunliffe: I seek leave to table the Inland Revenue Department’s report Helping you get it right: Inland Revenue’s compliance focus 2012-13, which showed that in a survey of highwealth individuals only 49.5 percent of them were, in fact, paying income tax on the top tax rate. The survey—

Mr SPEAKER: The document is now understood. Leave is sought to table that document. Is there any objection? It is in the public domain. There is objection, I take it? There is objection.

Hon David Cunliffe: I seek leave to table a document prepared by the Council of Trade Unions that summarises Inland Revenue Department data and draws a similar conclusion that less than 50 percent of top income earners are, in fact, paying at the top tax rate, and thereby looking—

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection—[Interruption] I beg your pardon. There is objection.

Jonathan Young: Has he seen any recent reports on how the Inland Revenue Department is enforcing the tax rules?

Hon STEVEN JOYCE: Yes, as a matter of fact I have. Just this weekend I saw an article in the news media written by Greg Harris, a specialist tax partner in the Hamilton office of Deloitte, commenting on the Inland Revenue Department’s latest annual compliance focus document, which sets out its priorities for the next year. Mr Harris wrote: “An overarching theme in this year’s document is the importance of self-assessment—in particular, taxpayers understanding their obligations and meeting them … IRD provides guidance on the appropriate actions to take when taxpayers get it wrong.” He goes on to say: “For taxpayers who don’t comply, Inland Revenue has

increasingly sophisticated methods of detection. It will not hesitate to use the full force of the law against those who do not comply.”

Living Standards, Inequality—Prime Minister’s Statements

2. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Was he correct when he said the gap between the rich and poor “has been reducing”; if not, why not?

Rt Hon JOHN KEY (Prime Minister): Yes, it was. I made that comment in August last year, based on the household incomes in New Zealand report that showed that income inequality had slightly reduced between 2008-09 and 2009-10. This year’s report shows that between 2009-10 and 2010-11 it came back up again. According to the report, this pattern reflects the impact and timing of the recession and the global financial crisis on various forms of income and on different groups of people. It also says that the increase over the last years does not necessarily indicate an upward trend; it could come down again next year.

David Shearer: Did the household incomes in New Zealand report confirm that the gap is the widest it has ever been, that inequality has risen significantly over the last year, and that the number of children living in hardship has increased to 21 percent?

Rt Hon JOHN KEY: There were a number of things noted in the report, and they were quite wide ranging. What it does show, and as the report says, is that the global financial crisis is hardest felt—

David Shearer: I raise a point of order, Mr Speaker. That was a pretty straight question that asked whether that household incomes in New Zealand report actually did say those things.

Mr SPEAKER: The member is correct. His question was pretty straight to those points.

Rt Hon JOHN KEY: From memory, yes, but what the report shows is a number of things, and the most important point it actually showed was that the global financial crisis, as it is everywhere in the world, is hardest felt by lower-income people, and it also showed that there has been a bounce back in investment income.

David Shearer: Does he agree with the figures produced by the Expert Advisory Group on Solutions to Child Poverty that showed that the number of children living in poverty declined from 2004 to 2007 as a result of Working for Families and that it began to rise again after he became the Prime Minister; if so, does he still think that Working for Families is communism by stealth?

Rt Hon JOHN KEY: Yes, I do think it is communism by stealth—

Hon Members: Oh!

Rt Hon JOHN KEY: Well, when it has an abatement rate that sees over 100 percent taken away from someone, I call that communism by stealth. Secondly, the member is being quite selective about that report, because he happens to be quoting from 2004 to 2007. If he does not want to embarrass himself, why does he not get up and talk about the period from 1999 to 2004?

David Shearer: Given that he does consider—

Mr SPEAKER: Order! I want to hear the question.

David Shearer: —it to be communism by stealth, is he planning to amend or change Working for Families?

Rt Hon JOHN KEY: That is not necessary because this Government has done that. This Government has done that by lowering tax rates and, therefore, essentially, increasing the amount that people get to spend. But if that member thinks someone going out there and getting to keep about 5c in the dollar is an incentive, it is no wonder he does not want the unions in the lobbying bill.

Mr SPEAKER: Order! I think that is sufficient.

David Shearer: Given that two in five children in poverty are in households with working parents, will he agree to lift the minimum wage?

Rt Hon JOHN KEY: Every year this Government has been in office we have lifted the minimum wage, so that is a 100 percent record. Yes, it is highly likely that the minimum wage will

go up again, but, of course, that has to be balanced against people’s capacity to get jobs. If the member wants to continue to quote that report, let me also quote this from the report: “Parents should be assisted to increase their hours of work by up to 30 hours per week where practical by the time their child starts school.” That is in line with the Welfare Working Group’s recommendation, and it is a harder approach than the one taken by this Government.

David Shearer: Will the Prime Minister agree to lift the minimum wage to $15 an hour rather than the paltry amount that he was talking about before—this year, that is?

Rt Hon JOHN KEY: Eventually, but if the—

Hon Members: Ha, ha!

Rt Hon JOHN KEY: Well, the interesting thing about David Shearer is that he has just indicated why he is under so much pressure these days from not only David Cunliffe but also Phil Goff, I might add.

David Shearer: I raise a point of order, Mr Speaker. That was a pretty straight question that asked whether he was going to lift the minimum wage to $15 an hour.

Mr SPEAKER: The member is correct, but, of course, the Prime Minister in his answer said eventually he would. Then there were a range of interjections from the Opposition that the Prime Minister then latched on to. That is my difficulty. When a Minister is responding to interjections, it is a bit hard for me to intervene. The question was answered. I think the Prime Minister has had sufficient answer.

Living Standards, Inequality—Prime Minister’s Statements

3. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by his statement that “the most comprehensive study of inequality in New Zealand is Household incomes in New Zealand: Trends in indicators of inequality and hardship”?

Rt Hon JOHN KEY (Prime Minister): Yes.

Metiria Turei: Does he agree with the 2012 update to this “most comprehensive study of inequality” that under his leadership as Prime Minister inequality in New Zealand has increased to the highest it has ever been in New Zealand’s history?

Rt Hon JOHN KEY: That graph looks like the National Party’s poll ratings while in Government, so I appreciate the member showing it to the House.

Metiria Turei: I raise a point of order, Mr Speaker—[Interruption]

Mr SPEAKER: Order! Come on. [Interruption] Order! What is wrong with members? I am on my feet. On both sides of the House, this will cease. I think I can anticipate the member’s point of order. Really, the question deserved better than that. I think that was unfair, and the Prime Minister can do better than that. [Interruption] Order! I am on my feet. I mean, the member asked a question. She held up a graph, which, on the face of it, appeared to indicate whatever the graph was indicating at a fairly high level in recent years. Her question, given the visual aid that the member had, did not seem a totally unreasonable question, at all.

Rt Hon JOHN KEY: The reason the member got that answer is she has taken a very tiny piece of that graph—not the entire graph that is actually in the report, and not many other graphs in the report that actually contradict that. That is the reason why the member got the answer.

Metiria Turei: I raise a point of order, Mr Speaker. My question asked whether he agreed with the report as to its conclusion on the state of inequality in New Zealand. I did not ask for his view about the graph; I asked about his view on the report about inequality, and he has not even addressed—

Mr SPEAKER: Order! I apologise to the member. I say to the House that it is not reasonable to be interjecting. A member is entitled to raise a point of order if they believe that a question has not been answered. However, on this occasion—I think the Prime Minister’s first response was unfair, and that was why I pulled the Prime Minister up—in his second response, he pointed out, in response to the substance of the member’s question, that the graph the member was referring to

covered only a limited period of the material presented in the report. I understood from the Prime Minister’s answer that if one took the entire period of the report, different conclusions might be reached, and I think that is not an unreasonable answer for the Prime Minister to come to.

Metiria Turei: Does the Prime Minister agree with the “most comprehensive study of inequality in New Zealand” that under his leadership the percentage of children who are living in actual hardship in this country has grown from 15 percent to 21 percent—that is, one in every five New Zealand children—while the rich, under his watch, keep getting richer?

Rt Hon JOHN KEY: No, I do not agree with the way that the member has phrased that. I draw the member’s attention to the report, because what it actually shows is that income inequality, on a number of measures in the report, still remains lower today than it was over the mid-1990s and 2000s. The report also says that OECD figures show that we are not a deeply unequal country. On standard measures, we are about the same as Australia and Canada, and nowhere near as unequal as countries like Mexico and the United States. If the member wants to selectively pick one or two pieces out of the report, she is free to do so, but in my opinion she is misrepresenting it.

Jacinda Ardern: Is inequality at the level it is now acceptable to his Government?

Rt Hon JOHN KEY: We would prefer that we were a more equal society with less inequality, but what the report actually goes on to quite clearly demonstrate is that the vast bulk of the changes that have taken place is due to the global financial crisis. Fortunately, this Government has an economic plan that is seeing the economy grow and enabling people to get into work. This Government is focused on welfare reforms to get people into work. This Government has been quite prepared to put up over $350 million to insulate homes in New Zealand. This Government has supported under-6-year-olds to get free doctors’ visits. This Government has supported making sure we reduce rheumatic fever. This Government is increasing vaccination rates for young kids. This Government is making sure that more young children have early childhood education. This Government is making sure that national standards—

Mr SPEAKER: Order! I call Metiria Turei. [Interruption] Order! I apologise to Metiria Turei. Look, I say again to both sides of the House that it is just discourteous to not allow a member at the back of the House to have their question heard.

Metiria Turei: Does the Prime Minister agree with this comment from the report, in section 4: “From the 2010 to the 2011 HES both the 80:20 ratio and the Gini rose significantly. This reflects the rise in incomes in the top third and the fall in incomes in the bottom two thirds of the income distribution …”—that is, the gap between the rich and the poor is growing significantly because the rich are getting richer and everyone else is getting poorer?

Rt Hon JOHN KEY: By definition, they are not getting poorer. But what I can say is that the report quite clearly says that there have been the effects of the global financial crisis—some people have got less work, less overtime; there are things bouncing around. The report also says the following: that research indicates that parents obtaining full-time paid employment is the most important event to lift children out of poverty. That is why this Government is focusing on areas like welfare reform—to make sure that those youngsters actually have a better opportunity. We know from some of the research that we see that 60 percent of all children living in poverty do so because they are in benefit-based households.

Metiria Turei: Will the Prime Minister act on the call from the Expert Advisory Group on Solutions to Child Poverty, which reported today, for a universal payment to alleviate child poverty, and therefore support the Green Party bill to replace the in-work tax credit with a child payment for all children who are in the worst poverty?

Rt Hon JOHN KEY: No. And let us run through the logic of what that member has just said. She has got up in the House and she has told New Zealanders that we are an unequal society in New Zealand, in her view, because the rich are getting richer, and now she is on her feet telling me to give the rich families even more for their kids. What a dopey idea that is!

Mr SPEAKER: Supplementary question, Metiria Turei. [Interruption] Order! Can I say again to members that it is just not fair to a member at the back of the House to keep this noise level up. Metiria Turei.

Metiria Turei: Does—

Hon Simon Bridges: Been smoking too much of the dope again.

Metiria Turei: I raise a point of order, Mr Speaker. I take personal offence at the comment made by Simon, and I ask that he be asked to withdraw and apologise.

Mr SPEAKER: Order! [Interruption] Order! I just do not understand why members are carrying on like this. A point of order was raised and the member took offence at a comment that was made. The member should have used the member’s full name in referring to the member whose comment she took offence at. Can I check with the member. I did not hear the comment. Whose comment was it that she took offence at?

Metiria Turei: The Minister Simon—that guy over there. [Interruption]

Mr SPEAKER: Order! Look, I think, honestly, if the Speaker is to take—[Interruption] No, I am on my feet now. Look, if the Speaker is to take this seriously, the member knows who the Minister is, and that is not good enough. I think we should go on to the next question.

Metiria Turei: I raise a point of order, Mr Speaker. I want to just express my apology that, in my frustration over this question, I was not thinking straight. I do know the Minister’s name. My apologies for that.

Mr SPEAKER: Supplementary question, Metiria Turei. [Interruption] Order! I want to hear just the supplementary question.

Metiria Turei: Does the Prime Minister agree with the Expert Advisory Group on Solutions to Child Poverty that children should be guaranteed a warm, dry home to live in through a warrant of fitness - type programme for rental housing, like that proposed by the Green Party in our Energy Efficiency and Conservation (Warm Healthy Rentals) Amendment Bill; if so, will he support our legislation in the House?

Rt Hon JOHN KEY: To the latter point, I have not seen the Greens’ legislation, so I cannot comment on whether we would support it. Secondly, in terms of the former point, yes, of course it makes sense for New Zealand homes to be warm. The health benefits of that are self-explanatory, and the member knows that, because the Greens worked with National for a $358 million programme for housing insulation. Whether more can be done to encourage private sector landlords to increase the quality of the accommodation they are providing is yet to be seen, but that would be a very positive step if this Government could encourage them to do it. From our own perspective, we are certainly getting our own house or, as the case may be, houses in order, because the Government has agreed that we will be insulating every State home in New Zealand.

Metiria Turei: Is the Prime Minister not ashamed that the only group whose incomes have risen under his leadership is the very wealthy, leaving hundreds of thousands of New Zealand children living in poverty and hardship? Prime Minister, who are you choosing with your policy?

Rt Hon JOHN KEY: The member is quite incorrect. Median income in New Zealand has risen. Real after-tax incomes have risen across the board for New Zealanders.

Metiria Turei: Not according to this, it hasn’t!

Rt Hon JOHN KEY: Well, you can wave any bit of paper you want at me. Frankly, if you want to selectively take bits out you are welcome to, but if you want to be honest about characterising what the report actually says, it says that, on a number of measures, it is better today than it was back in the 1990s and 2000s. So, quite frankly, yes, median income has been rising, and what we are choosing is hard-working New Zealanders who go out there day after day to try to support their families. That is why we have been reducing taxes and the like for them.

Child Pornography—Increased Penalties and Legislative Reform

4. ALFRED NGARO (National) to the Minister of Justice: What steps is she taking to get tough on child pornography?

Hon JUDITH COLLINS (Minister of Justice): We are delivering on our promise to increase maximum penalties for child pornography offences, and futureproofing our laws against advances in technology to help prevent this despicable crime. We will increase the maximum prison sentence for possession, importation, or exporting of an objectionable publication from 5 years to 10 years, and we will increase the maximum sentence for distributing or making an objectionable publication from 10 years to 14 years. To update the law to take account of new technology, we are creating a new offence of indecent communication with a child. This includes texting online and verbal communication, and intentionally viewing objectionable material on the internet will be an offence, even if it is not downloaded on to a computer.

Alfred Ngaro: Why are these changes necessary?

Hon JUDITH COLLINS: Child pornography involves the sexual abuse and exploitation of children. By increasing the maximum penalties for offences, we are showing how seriously we view this type of offence. The internet, social networking, and mobile technology have made children more vulnerable to people involved in the production, distribution, and possession of child pornography. Our laws to protect children from these predators have not kept up with technology and there is currently a gap in the law.

Alfred Ngaro: What other steps is she taking to help protect children?

Hon JUDITH COLLINS: We are also considering the Law Commission’s recommendations on minimising the harm of cyber-bullying of our children and young people. Their lives are increasingly enmeshed in social media and they are particularly at risk of cyber-bullying. In the coming weeks the Government will also make final decisions about public protection orders and legislation will be introduced to the House soon after.

Incomes, Household—Minister’s Statements

5. JACINDA ARDERN (Labour) to the Minister for Social Development: Does she stand by her statement in relation to the report on household incomes released last week that “I tell you what New Zealanders say: ‘Thank goodness for a National Government that has managed its way through it and is now seeing real progress’ ”?

Hon PAULA BENNETT (Minister for Social Development): Certainly, and that is because under National’s responsible management in tough economic times benefit numbers, for example, have reduced by 27,000 in the last 2 years, since their peak in 2010. We have also seen some of the lowest interest rates, which are making a difference for a lot of New Zealanders. And three-quarters of income earners now pay no more than 17.5 percent in tax. I do not think that any of those things would have happened under Labour.

Jacinda Ardern: Does the increase in the number of children living in material hardship from 15 to 21 percent, and in the number living in workless homes from 16 to 25 percent, constitute real progress; if so, how?

Hon PAULA BENNETT: I think the point I was making last week, and the point I make again today, is that we have had some of the toughest economic global times and they have affected some of our lowest incomes and our children. We have to work our way out of that over a period of time, but with targeting and concerted effort in that area. This Government is making that effort. I think New Zealand is better off because of a National Government, and it would be worse off under a Labour one.

Jacinda Ardern: Is the global financial crisis the sole cause of an increase in hardship, decreases in real incomes, job losses, higher housing costs, higher outgoing-to-income ratios, and those on higher incomes doing better than they were 3 years ago; if so, how?

Hon PAULA BENNETT: I think there are a number of factors, and we also can equate into that the Christchurch earthquakes, which have taken up a lot of resource and caused a lot of hardship to a lot of New Zealanders. But, equally, what we saw for 9 long years was no real attention put on those one in five children who were not achieving at school. A lot of those who were teenagers then are parents now, actually, and do not have the education behind them to get the right jobs to move ahead. They were ignored under Labour for all of that time. We are picking up the slack now, but there is a lot of work to be done.

Le’aufa’amulia Asenati Lole-Taylor: What action, if any, is the Government considering to reduce the cost of living for households?

Hon PAULA BENNETT: I am sure that the Minister of Finance could do a better job than I can at this. But there has been a huge amount of effort put into those families who need it. We have seen lower tax rates. We have seen GST changes and them being compensated. We have seen lower interest rates for those families, which is actually making a genuine difference in their household income each week. I think that is making a fundamental difference.

Jacinda Ardern: Does she agree with the Prime Minister that Working for Families was communism by stealth, when, according to the household incomes report, it was one of the only things to cushion families from the sharpest edges of the recession?

Hon PAULA BENNETT: I always agree with the Prime Minister.

Jacinda Ardern: Will she adopt a target to reduce child poverty rates by 30 percent and to halve severe and persistent child poverty within 10 years?

Hon PAULA BENNETT: The Government is looking at the draft report that has been put out by the experts group today. It will have a full report out in December. I have also asked it whether it will work with us alongside the white paper, which is due out in the middle of October. We have already been working alongside that group. So I am not prepared to make a call at this stage on what we will and will not be accepting.

Welfare Reforms—Pre-employment Drug Testing for Job Seekers

6. MIKE SABIN (National—Northland) to the Minister for Social Development: What recent announcements has she made to require those on benefits with work-test obligations to be ready and work available?

Hon PAULA BENNETT (Minister for Social Development): Today we have announced that—[Interruption]

Mr SPEAKER: Order! That is not reasonable. There is no way I could hear the Minister’s answer with that noise.

Hon PAULA BENNETT: Today we announced that from July 2013 beneficiaries with full or part-time work obligations will be sanctioned if they refuse job opportunities that require a drug test, or if they fail a drug test. Labour members can cry out, but for 9 long years they let beneficiaries sit on welfare with no tests whatsoever, and it is acceptable to them for those people to sit there and have recreational drug-use and not actually have any obligations under that.

Mike Sabin: What evidence is there to point to the fact that drug use is a barrier for those on benefits seeking work?

Hon PAULA BENNETT: There is no doubt that we have a problem with recreational drug-use in New Zealand. Ministry of Health research shows that around 20 percent of beneficiaries use drugs at least once a week, and that those receiving an unemployment benefit were around three times more likely to be regular cannabis users than those not on welfare, yet over 40 percent of the jobs we are asking beneficiaries to apply for require a drug test. At the end of the day, I believe that the majority of the New Zealand public shares the very reasonable expectation that people do not let their illegal recreational drug-use get in the way of a job.

Mike Sabin: How will this policy change support greater employment opportunities for those on benefit?

Hon PAULA BENNETT: Requiring beneficiaries to be work-ready, available, and drug-free will certainly improve employment opportunities, giving greater confidence to employers to take them on. Many employers have publicly stated that they have problems recruiting people off benefits and into work because of their recreational drug-use. This is particularly prevalent in industries like forestry and construction, and, unfortunately, particularly in regions like the member’s own—in Northland, the East Coast, and the central North Island.

State-owned Energy Companies, Sales—Water Rights and Potential Delay

7. TE URUROA FLAVELL (Māori Party—Waiariki) to the Minister for State Owned

Enterprises: Has he seen the advice from Tower Investments Chief Executive Sam Stubbs that a delay in a float of Mighty River Power until early next year could increase demand for the shares; if so, what harm would be done by delaying the sales while the Treaty partners negotiate a solution to recognise Māori rights and interests in water?

Hon TONY RYALL (Minister for State Owned Enterprises): Yes, I have seen those comments; there are three implications from delaying a sale, I would respond to the member. The first is that we have only so many market windows to float these companies each year, and it has been the Government’s preferred option to have the first float in the second window of 2012. Secondly, we could very well end up having to borrow more. Thirdly, the Crown will have to incur substantial expenditure a second time, in the event that the sale is delayed and some of the complex work has to be repeated.

Te Ururoa Flavell: What advice has he received regarding the Waitangi Tribunal’s view that if the Crown proceeds with its shares sale without first preserving its ability to recognise Māori rights, the Crown will be in breach of the Treaty, and how will this impact on the share sales process?

Hon TONY RYALL: The Government has received the 300-page report from the tribunal, we are receiving a large amount of advice on the tribunal’s views, and those views are going to be considered by the Government.

Te Ururoa Flavell: What advice has he received about the concept of “shares plus”—the additional rights sought in electricity-generating companies?

Hon TONY RYALL: The Waitangi Tribunal has set out its views on the possibility of a “shares plus” arrangement. The Government is getting advice from both its legal and its commercial advisers on that proposal. But, as I said, we are taking an open mind as we consider the report of the Waitangi Tribunal.

Maternity Services—Enrolment in Midwifery First Year of Practice Programme

8. BARBARA STEWART (NZ First) to the Minister of Health: What reports, if any, has he received regarding the enrolment into the Midwifery First Year of Practice Programme?

Hon TONY RYALL (Minister of Health): I have received a number of reports, all of which showed that virtually all midwifery graduates enter the Midwifery First Year of Practice programme. Those who do not are either on maternity leave themselves, or travelling overseas after their studies. The member will be interested to know that, for the first time, last year the Government fully funded the Midwifery First Year of Practice programme for every graduate.

Barbara Stewart: Does he believe that the voluntary Midwifery First Year of Practice programme, with only 32 hours of supervision over 1 year, is sufficient for all midwives to feel confident during all births and to recognise all birthing complications in a time frame that will prevent serious birthing incidents?

Hon TONY RYALL: The Midwifery First Year of Practice programme should be viewed in the context of the changes that have been made in midwifery in the last few years. The member will be aware that some of those changes include that their time of training under supervision while studying has gone from 1,500 hours over the course of the programme, to 2,400 hours over the

course of the programme. In their third year, trainee midwives have to spend 1,280 hours of clinical training under the supervision of an independent mentor.

Barbara Stewart: Does he have any plans to ensure that a midwife’s first year out of graduation is completed in a level two or three hospital environment to ensure “significant post-graduate monitoring, supervision, and education updates, before going into private practice.”, as recommended by the Health Committee, recommendation nine, following petition 2008/23 of Jennifer Maree Hooper?

Hon TONY RYALL: Quite a lot of work is going into providing confidence to New Zealanders around maternity services. Indeed, we have released the maternity quality and safety programme, which is a very important part of that. What I would say specifically to the member with her question is that she should not have a view that midwifery graduates do not get some hospital-based experience during their undergraduate years. The Government is determined to work positively with the profession, to provide that confidence that mothers, fathers, and their families would want.

Student Achievement—Minister’s Statements

9. CATHERINE DELAHUNTY (Green) to the Minister of Education: Does she stand by her statement made in a speech to the New Zealand Educational Institute principals’ conference that “This idea that students have to be labelled as failures is offensive to me”; if so, why?

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. Yes, I do stand by my statement, which in full actually reads: “this idea that students have to be labelled as failures is offensive to me … because no professional would be using that language if what they were aiming to do was raise achievement.” So yes, because those who advance their opposition to national standards by exploiting the trust of learners and their families, asserting that national standards require them to do so, are failing those very learners, their families, and, indeed, their profession.

Catherine Delahunty: Why, then, is she setting up a system that labels children as “below standard”, and therefore a failure?

Hon HEKIA PARATA: National standards do not label children as failures. National standards help identify those kids who are falling behind so they can be provided with the support they need to improve. National standards help parents to know how well their child is doing. The only labelling that would be going on would be if someone was actively choosing to use national standards in that way, rather than to inform their practice to improve achievement for those learners.

Catherine Delahunty: I raise a point of order, Mr Speaker. My question asked why she was setting up a system that labels children as “below standard”, and I did not hear an answer to that term.

Mr SPEAKER: I think the member is being a little pedantic. The Minister explained why “below standard” or “failure”—why she disagreed with the statement that national standards led to that automatically. I think that was not unreasonable.

Catherine Delahunty: What is she doing to help children who are labelled as “below standard”, a term often used in reports, or as a failure by her national standards reporting system?

Hon HEKIA PARATA: About 3 weeks ago I released a 5-year plan, called the Public Achievement Information plan, which sets out over the next 5 years the outcomes that need to be achieved at learner, parent, teacher, principal, board chair, and agency levels on what we need to be doing. That is an explicated 5-year plan, in detail, by participants. Everybody can see it and can participate in this combined commitment to raise learner achievement for five out of five students.

Catherine Delahunty: I raise a point of order, Mr Speaker. My question related to the concept of labelling, and I did not hear anything. I asked the Minister what she is doing to help children who are being labelled as below standard. I did not hear a reply to that.

Mr SPEAKER: Order! Members should not be interjecting—both sides of the House. The Minister, in my view, answered the question. What she interpreted the member’s question as meaning is that if someone is being labelled as not meeting the standards, it means, according to the

Minister’s answer, that they need help, and the Minister explained what the Government is doing to help those children. The member asked what she is doing about it, and I think the Minister gave a reasonably comprehensive answer.

Catherine Delahunty: What effect does it have on children’s confidence as learners to be labelled from age 6 as below standard?

Hon HEKIA PARATA: Once and for all, the system that is being implemented does not label students. People using the system may unprofessionally choose to do that, but the system itself does not label learners as failures. No labelling is required under national standards at all—none whatsoever.

Catherine Delahunty: I raise a point of order, Mr Speaker. I asked about the effect on children’s confidence of being labelled. I did not ask whether the Minister thinks—

Mr SPEAKER: Order! There is obviously a lot of disagreement around the House on this, but that is no excuse for interjecting during a point of order. The Minister simply disagreed with the proposition that the system labels students, and pointed out that in her view it is not the fault of the system—this is her view; I am just repeating what she said—if other people refer to students as failing to meet the standards. I think to refute the assertion in the member’s question is a perfectly reasonable thing for a Minister to do.

Hon Nanaia Mahuta: Is she concerned that the labelling of some students as failures and some schools as bad schools will result from the publication of national standards data; if so, what steps will she take to avoid such a damaging perception?

Hon HEKIA PARATA: The steps that are being taken to help in every one of our schools how they raise learner achievement are set out in the 5-year Public Achievement Information plan. They are set out in the investment we are making in the progression and consistency tool, which will help teachers to not only capture the absolute information about a learner in respect of their cohort but also capture progression over time, all of which is related to overall teacher judgment. The OECD has commented in its New Zealand report on how well New Zealand’s assessment and evaluation procedure works, and this will further embed that.

Hon Nanaia Mahuta: Is she offended that children with moderate special education needs could be labelled as falling below national standards, without consideration of their complex learning needs; if so, what action will she take to rectify this?

Hon HEKIA PARATA: By providing $304 million of professional learning and development over the next 4 years. There is no need for any child to be labelled in that way at all.

Catherine Delahunty: I seek leave to table the report The Use of Evidence to Improve Education and Serve the Public Good by the Ministry of Education, from April 2012, which shows that parents of children who are labelled as below standard by national standards could react negatively.

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

Chris Hipkins: How can the Minister claim that no children are being labelled as failures when the Prime Minister has been saying that one in five children is failing to meet standards?

Hon HEKIA PARATA: I did not engage the conversation as to whether it was occurring or not. What I said was that the system itself does not require that to occur.

Hon Trevor Mallard: The Prime Minister labelled them as failures. The Prime Minister labelled them as failures.

Hon HEKIA PARATA: Ah, ah—no, no. Your proposition is that nobody is labelling. You are the ones making that argument—

Mr SPEAKER: Order! I am not sure the Speaker is making any proposition on this at all. When the member is saying “Your proposition” she is referring to the Speaker. [Interruption] Order! It has happened a couple of times today in questions and answers, where members asking questions

inserted “you are doing this” and Ministers answering them referred to “your” and “you”. Members should remember they are referring to the Speaker under those circumstances.

State-owned Assets, Sales—Minister’s Statements

10. Hon CLAYTON COSGROVE (Labour) to the Minister for State Owned Enterprises: Does he stand by his answer to Oral Question No 10 on 1 August 2012 regarding asset sales and water rights that “it is not to say that it is not expected”?

Hon TONY RYALL (Minister for State Owned Enterprises): Within context, yes. Putting my answer to the member’s question in full context, I said: “Certainly it is not part of the plan, but it is not to say that it is not expected. I think what is more important for New Zealanders is to find out whether the Labour Party supports the Māori Council claim on the water or not.”

Mr SPEAKER: Order! That was not actually necessary to answer that question.

Hon Clayton Cosgrove: Given that the Prime Minister has stated that “The Government recognises that Māori have always had rights and interests in water.”, why were these rights and interests not negotiated before the sale proceeds were booked by his Government last year, before the legislation was rushed through the House in June, and well in advance of the proposed float of Mighty River Power planned by his Government for the third quarter of this year?

Hon TONY RYALL: Because it is the Government’s view that the sale of a minority stake in the State-owned enterprises does not interfere with the rights and interests of Māori. This should be seen within the wider plan that the Government has to help control debt in the New Zealand economy.

Hon Clayton Cosgrove: Does he stand by his statement of 5 March 2012 that the deal negotiated with the Māori Party over section 9 “ensures we can proceed with the mixed ownership programme without prejudicing the rights of Maori or the Crown’s ability to settle future Treaty claims.”; if so, in light of the Waitangi Tribunal’s finding, will he now admit that, one, he was wrong and, two, the section 9 deal with the Māori Party is now worthless?

Hon TONY RYALL: I would have to check the quote that the member has provided in respect of that question; I do not have it with me. But what I would say is that after the many weeks of consultation we had with Māori as a result of the section 29 issue, it was transferred into the new section of the Public Finance Act. But as I said earlier in question time today, the Government is considering with an open mind the almost 300 pages of Waitangi Tribunal recommendations that came out last week.

Hon Clayton Cosgrove: Does he agree with the investment expert Brian Gaynor, who said in regard to the Government’s mixed-ownership model that if it tried to float off a company with a huge amount of uncertainties, the uptake by investors will be very poor, particularly by experienced investors; if he does not, why does he not?

Hon TONY RYALL: Quite clearly, these companies are going to be owned 85 percent to 90 percent by New Zealanders, once floated—if that is the Government’s decision. Of course, New Zealanders fully understand how the Treaty negotiation process works and the interests and rights of Māori in respect of that.

Hon Clayton Cosgrove: Given that last week his colleague Bill English, on his behalf, stated that “We have been working with Māori over water rights and interests for 3 years.”, does he as Minister take any responsibility for the last-minute decision-making and uncertainty around the asset sales programme, given that it was all planned for, according to him and his Government; if not, why not?

Hon TONY RYALL: There has not been last-minute decision-making by the Government. We have a path that we have been following and we have identified that there will be a number of challenges along the way. We are currently considering the almost 300 pages from the Waitangi Tribunal, and the Prime Minister indicated yesterday a likely time line for that consideration

Public Services—Reports

11. JACQUI DEAN (National—Waitaki) to the Minister of State Services: What reports has he received on New Zealanders’ satisfaction with public services?

Hon Dr JONATHAN COLEMAN (Minister of State Services): Later today I will be releasing the State Services Commission’s Kiwis Count update, which measures New Zealanders’ satisfaction with 42 frequently used public services across 10 service groups. I am delighted to advise the House that New Zealanders’ satisfaction with their public services has improved across the board. Each and every service group measured in 2009 and 2012 saw a satisfaction increase. The results indicate that New Zealanders are more satisfied with the Government’s provision of health, education, justice, environment, and recreation services, to name just a few.

Jacqui Dean: What does the survey indicate about the public’s experience of front-line services?

Hon Dr JONATHAN COLEMAN: Public satisfaction—[Interruption]

Mr SPEAKER: Order! I apologise to the Minister. On both questions so far he has not even opened his mouth before there was unnecessary interjection. It is not reasonable.

Hon Dr JONATHAN COLEMAN: Public satisfaction with front-line services is improving— for example, the survey shows that the public is more satisfied with the provision of superannuation, the quality of hospital emergency services, receiving outpatient care, and the quality of services at the border. New Zealanders reported high levels of satisfaction even in their interactions with the Inland Revenue Department.

Jacqui Dean: What else does this survey indicate about what Kiwis value in their public services?

Hon Dr JONATHAN COLEMAN: The survey specifically indicates that the public places a high premium on value for taxpayer spend. The improvements in this area demonstrate that the Government is delivering on its election commitment to provide better public services. This means a happy public, a happy Government, and an unhappy Opposition.

Schools—Proposed Closure of Nelson and Christchurch Residential Schools

12. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education: Why is she proposing to close Salisbury Residential School in Nelson and McKenzie Residential School in Christchurch?

Hon HEKIA PARATA (Minister of Education): My focus is on developing the new intensive wraparound service contributing to Success for All—Every School, Every Child, which is this Government’s vision for a fully inclusive education system. As a result of consultation and in light of all the considerations, the best option is to retain a mix of both residential places and extended use of the wraparound service. I have written to McKenzie Residential School in Christchurch and Salisbury School in Nelson advising them of my preliminary decision to close them and giving them 28 days to make submissions. If I do decide, after this further consultation, to close the schools, the statutory process to close them will then begin. The two residential schools proposed to be retained will be located in Christchurch and Auckland and they will be national schools.

Chris Hipkins: What evidence base is she relying on when she says that the wraparound service she is proposing will work better for these vulnerable students than the current model of care and support that they receive?

Hon HEKIA PARATA: It is not, as the member has framed it, an either/or; it is a both/and. We are proposing to provide both residential placements and an intensive wraparound system. The Ministry of Education developed this in 2010. The service was extended during the temporary closure of Halswell Residential College following the Christchurch earthquakes. It provides support for learners with the same needs as those enrolled in residential special schools. Professor David Mitchell provided the report Joined-Up: A Comprehensive, Ecological Model for Working with Children with Complex Needs and their Families/Whānau, which showed that an intensive package

of support for students with complex needs in their local schools and home communities resulted in better outcomes for students.

Tracey Martin: Can the Minister confirm that the suggested reduction in the State’s financial investment in these specific students’ educational needs from $84,200 per year to approximately $29,000 per year for the wraparound service, or to the level of approximately $7,700 per year for average mainstream students, has not been based on advice from Treasury?

Hon HEKIA PARATA: No. I can confirm it is not based on that, and yes, I can confirm that it does not include Treasury’s advice.

Chris Hipkins: Will the wraparound service for students with special needs in local schools provide any form of assistance and support to students in their homes outside of school hours; if so, what will the nature of that support be?

Hon HEKIA PARATA: The intensive wraparound service is personalised to each learner. Whatever is required to assist them will be defined in association with a psychologist, the learner, and the family, or any other specialist who might need to be involved in order to have a personalised plan for each learner.

Chris Hipkins: I raise a point of order, Mr Speaker. My question was actually relatively specific. It was about the level of support that they will be provided in their home environment, and the Minister has not addressed that part of the question—well, she has not addressed the substance of the question.

Mr SPEAKER: Indeed, the member did ask exactly that question. I am assuming from the Minister’s answer that the support was individualised and would meet students’ individual needs— that if they needed support beyond school, that would be provided. But if I am wrong there, the Minister had better correct that impression.

Chris Hipkins: I raise a point of order, Mr Speaker. That is a very helpful interpretation from you, but that is not actually the answer that the Minister gave to a very specific question.

Mr SPEAKER: She has indicated what she meant.

Chris Hipkins: I raise a point of order, Mr Speaker. You have indicated that where the Opposition asks very specific questions you will require Ministers to give specific answers or answers that address that question. It is not unreasonable for us to expect the Minister will deliver that.

Mr SPEAKER: To save time, I am sure the Minister is happy to clarify the matter.

Hon HEKIA PARATA: I will repeat my answer. The answer is that the intensive wraparound service is personalised to the particular learner in their home environment—yes.

Chris Hipkins: Which parts of the feedback from parents, teachers, and students on residential special schools convinced her that it would be a good idea to close two of them: was it the 93 percent of respondents who asked that their schools remain open, or the universally positive feedback from former students about their experience at the schools?

Hon HEKIA PARATA: I did read through over 300 submissions that were received from parents, from families, and from the schools themselves, 224 of which were submitted through SurveyMonkey. I read through those, and I was persuaded that residential placements should be retained as part of the continuum of provisions for special education needs, and that all of the money committed to special education would allow us to add a further 110 learners to get a service that they do not currently get.

Hon Maryan Street: Has she considered the risks attaching to moving students from the allgirls facility at Salisbury School in Nelson to a coed facility in Christchurch; if so, what assurances has she been given that these most vulnerable girls will be safe?

Hon HEKIA PARATA: Yes, consideration has been given to that in terms of this preliminary decision. Halswell Residential College already does have separate villas and electronic monitoring, and those provisions that are well-regarded in all the submissions that members have been talking about, about the quality of provision, will be maintained in both residential schools.


Climate Change Response (Emissions Trading and Other Matters) Amendment Bill—Closing

Date for Submissions

1. MOANA MACKEY (Labour) to the Chairperson of the Finance and Expenditure

Committee: On what date will submissions on the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill close?

TODD McCLAY (Chairperson of the Finance and Expenditure Committee): I thank the member for her interest in this bill. Subject to confirmation of the committee, submissions on the bill will close on 10 September 2012.

Moana Mackey: Did he consult with the committee before setting the closing date; if not, why not?

TODD McCLAY: Traditionally, committee chairs have made a call for public submissions where there is a delay between the referral of legislation and the committee meeting, or where a committee has a more focused time period for consideration of the bill. This is done under Standing Order 192. It was my view that, given the report-back date that was set by Parliament, the public should be given every opportunity to comment on this bill in the time available, and therefore submissions were called for.


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