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Questions and Answers - March 19



1. MAGGIE BARRY (National—North Shore) to the Minister of Finance: What reports has he received on the economy?

Hon STEVEN JOYCE (Acting Minister of Finance): Today the International Monetary Fund released its preliminary concluding statement on New Zealand. The report concludes that New Zealand’s fiscal reduction path strikes the right balance between limiting debt increases while sustaining economic growth. The report says: “We regard the planned pace of … deficit reduction as striking the right balance between sustaining output growth and limiting public debt growth, and consistent with a framework where monetary policy plays a primary role in managing aggregate demand. The benefits of the plan are many.”

Maggie Barry: What does the IMF say are the benefits of the planned reduction in the Budget deficit?

Hon STEVEN JOYCE: The IMF cites four benefits: firstly, it withdraws fiscal stimulus at the right time by making room for the expected increases in private sector and earthquake-related construction spending; secondly, it reduces pressure on monetary policy—

Andrew Williams: Who wrote this?

Hon STEVEN JOYCE: —thirdly, it creates fiscal space to manage increasing age and healthrelated costs and to cope with negative shocks; and, fourthly, it helps raise national savings and reduce the current account deficit. And in answer to the member over there, it was written by the IMF.

Maggie Barry: What are the key risks the IMF identifies for the New Zealand economy, and what are the options for managing those risks?

Hon STEVEN JOYCE: The IMF identifies two main near-term risks to the New Zealand economy. These are potential weaknesses or a worsening in the financial conditions in the world economy. The IMF also identifies risk in the New Zealand housing market, noting that supply bottlenecks persist and prices remain elevated. The IMF notes that New Zealand has room to respond to shocks with its monetary policy, and the level of public debt leaves room for fiscal policy response. The floating New Zealand dollar is also seen as an effective buffer. The IMF also says that our fundamentals have improved since the global financial crisis. Household and business balance sheets have strengthened, and banks have reduced their foreign funding and been assisted by a strong growth in deposits and slower growth in credit.

Maggie Barry: What does the IMF say about the value of the New Zealand dollar?

Hon STEVEN JOYCE: The IMF shares the Government’s view that the dollar is at a high value, largely because of factors outside our control. In particular, the strength of the New Zealand dollar is determined by the relative weaknesses of other currencies and other economies, many of

which are printing money. As it says, if global monetary policy were to become less stimulatory, the exchange rate would likely depreciate over time. The IMF also notes that the Government’s return to surplus is easing pressure on the exchange rate by boosting national savings.

Hon David Parker: Does he agree with the IMF that “… New Zealand has run persistent current account deficits resulting in net external liabilities which are high by international standards. The deficit is expected to widen this year despite relatively strong terms of trade …”?

Hon STEVEN JOYCE: Yes, and I would note that those were largely due to the previous Government when the balance of payments deficit rolled out to over 8 percent of GDP. I really think the member should stop this line of questioning because all he does is point out that the Opposition are lousy economic managers.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The Minister was asked about the future projections so surely he cannot go back to a former Government from 4 years ago and think he can get away with it.

Mr SPEAKER: Order! He referred to the IMF report, which talked about persistent current account deficits over many years. I think the question was adequately addressed.

Education System—Accountability

2. BRENDAN HORAN (Independent) to the Minister of Education: Is accountability within our education system paramount?

Hon NIKKI KAYE (Acting Minister of Education): Accountability is paramount in so far as everyone in the education system needs to be accountable for achieving the best results for all New Zealand children. For example, national standards provide parents with information as to how their children are doing, which helps provide accountability. I am sure the member would support the general concept of parents knowing exactly what their children are up to.

Brendan Horan: Will the Minister show her accountability by revealing to this House the expensive reasons why staff around her are being paid to leave?

Hon NIKKI KAYE: The member will be aware that staffing matters regarding ministerial offices are the responsibility of the Department of Internal Affairs.

Dr Cam Calder: What steps is the Government taking to strengthen accountability for raising achievement?

Hon NIKKI KAYE: Our Government is doing a number of things to ensure every child in New Zealand gets a great education. We have set Better Public Services targets at early childhood education, National Certificate of Educational Achievement level 2, and New Zealand Qualifications Framework level 4. We are putting more money into education than ever before, and we are clearer about what we want as a result of it.

Rt Hon Winston Peters: Is a sound education and understanding of accountability for other people’s money and assets paramount within our education system, and why is that important?

Hon NIKKI KAYE: Yes. It is important because we are all elected by the people of New Zealand and we need to ensure we are accountable as members of Parliament.

Chris Hipkins: If we are all accountable to the people of New Zealand for the decisions we make, will the Minister of Education resign her position given the taxpayer now has to fork out $11 million to fix up the mess she has made with Novopay?

Hon NIKKI KAYE: No. When we look at the issue of Novopay, we have done a huge amount. The Minister responsible for Novopay, Steven Joyce, today announced a superb package of support for schools, and we are very proud of that package.

Brendan Horan: Will the Minister show accountability and assure the House that, as Ombudsman David McGee stated, it is unacceptable for there to be any suggestion that a Government department must bypass the Official Information Act, and can she guarantee that that will not happen with education in this term?

Hon NIKKI KAYE: The member will be aware that these matters are before the Education and Science Committee, and I think that of all the members in this House who care about due process, it would be that one.

Prime Minister—Statements

3. DAVID SHEARER (Leader of the Opposition) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes, I do stand by all my statements, and in that I include bank statements.

David Shearer: Thank you, Mr Speaker. [Interruption]

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

David Shearer: Does he stand by his statement that one of the three problems with Solid Energy was that it “added gearing to a company that historically had not had gearing”, or is Tony Ryall right when he said that debt was not the cause of Solid Energy’s problems?

Rt Hon JOHN KEY: Both are correct. In the case of Solid Energy, debt did not cause the collapse of the company, but if there was not debt, the Government would not have to be in the restructuring process that we are in.

David Shearer: Did his Minister of Finance approve the sending of a letter to Solid Energy indicating his expectation that it would “increase their gearing from current levels,”?

Rt Hon JOHN KEY: My understanding is that Simon Power as the Associate Minister of Finance actually sent it, not the Minister of Finance—yes. That looks pretty consistent, from what I can see, with the letter that Mr Mallard sent where he said that the indications were that the gearing should be around about 35 percent, and, in fact, that the dividends should be around about 65 percent of profits.

Hon John Banks: When the Prime Minister said it was unfortunate that Mr Shearer forgot to disclose—

Mr SPEAKER: Order! [Interruption] Order!

Hon Trevor Mallard: Point of order.

Mr SPEAKER: I do not believe I need assistance. The Prime Minister certainly has no responsibility for that matter.

Hon John Banks: Supplementary question, Mr Speaker.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Does the ACT Party have two supplementary questions today?

Mr SPEAKER: Well, I have ruled that one out.

Hon Trevor Mallard: No, no. You have ruled it out. You let him ask it and you ruled it out. At that point, it is gone. You did not invite him to rephrase it.

Mr SPEAKER: The ACT Party has one question. The member can seek leave if he so wishes. [Interruption] Order! There is one supplementary question. It has been used up. It was ruled out of order. If the member wishes to have another supplementary question, he will have to seek leave to do so.

Hon John Banks: I seek leave to do so. [Interruption]

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. Although it was pretty clear from the few words that the Hon John Banks got out—

Mr SPEAKER: No, I have ruled.

Hon Gerry Brownlee: I realise you have ruled. I just want to get a clarification about where we are going from here. Although it was clear that Mr Banks was going to raise a matter that has been of interest in the news recently—and you were quick to then suggest and, in fact, rule it out, assuming that there was no link to anything the Prime Minister had said. On other occasions, notably over the last few weeks, you have given Opposition members an opportunity to rephrase

their questions up to three times. I wonder whether it would be possible for Mr Banks to get similar treatment.

Mr SPEAKER: I thank the member for his assistance. On this occasion I have ruled; we will move on. The questioner, an experienced member, raised a question that clearly was not going to be in order, so he has lost that opportunity. He has sought leave. The House has the opportunity to so decide, and has done so.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. This is not to challenge your ruling, because I want to discuss the fact that Mr Banks sought leave. If he had gone on to explain that he wanted to talk about the Kim Dotcom affair—

Mr SPEAKER: Order! That is not a point of order.

David Shearer: Can he confirm that the financial performance measures for State-owned enterprises, including Solid Energy, announced in June 2010 explicitly tell boards that they would be judged according to their gearing ratio and that the Crown expected a gearing ratio of around 40 percent?

Rt Hon JOHN KEY: From memory that reflects—though I do not have the letter—the letter that was sent. I think it is also worth recalling that Mr Palmer, the chairman of Solid Energy, actually wrote back to Mr Power and made it quite clear that gearing ratios and matters of the balance sheet were the sole preserve of the company and not the Government.

David Shearer: Does he agree with the December 2008 Treasury report that the appointments to State-owned enterprise boards are the single most important lever that Ministers have for influencing State-owned enterprise performance?

Rt Hon JOHN KEY: I am not sure I would say it is the single most important lever; I think it is a very important lever, and that is one of the ones that this Government has followed by making, I think, pretty sound appointments where possible. But there are other levers, of course, that the Government can pull.

David Shearer: If his Government is so dissatisfied with the board’s approach, as he is suggesting, why did it reappoint five of the members after 2008 and reappoint the chair, John Palmer, not once but twice?

Rt Hon JOHN KEY: The member is giving different time-scales on what has taken place— [Interruption] Well, he gets confused with numbers—I will tell you that for nothing. But anyway—

Mr SPEAKER: Order!

Rt Hon JOHN KEY: There are different time-scales, but what is quite clear—[Interruption]

Mr SPEAKER: Order! Would you allow the Prime Minister to please answer the question.

Rt Hon JOHN KEY: What is clear is that during a period of time the company—in this case, Solid Energy—had aspirations to change the fabric of that company into something far greater and far more audacious than was the case of the Government. In the case of the Government, we pushed back on those issues. That did not mean that we did not have faith in the board, but what it did say was that we did not agree with the plan it was under. When we ultimately went through the mixedownership model and had the scoping study, it was at that point that we absolutely determined that there were bigger issues in terms of that company if we were going to go through the mixedownership model with that company.

David Shearer: Does he seriously expect New Zealanders to believe that the Government demands that the company increase its debts, promises to judge the company on that debt, and then, when the company’s debt increases by $178 million in a single year, says that these are all somehow unrelated events?

Rt Hon JOHN KEY: What is true with Solid Energy is that the board and management have sole responsibility for the quality of decision making that they do in terms of investments. What is also true is that we did not demand an increase in gearing; we followed exactly the same process that Trevor Mallard did, which was the recommendations from Treasury, and the company made it clear that it would make its own decisions. In the end, if the member is wanting—[Interruption]

Well, the member has been running around the country saying that the problem is that we want dividends, when for months beforehand he was saying that the great thing about State-owned enterprises is they pay dividends. I mean, you cannot have it both ways, Mr Shearer. You cannot have an account in New York and an account—

Mr SPEAKER: Order!

Hon Trevor Mallard: I raise a point of order, Mr Speaker. You earlier ruled out one area of questioning. The Prime Minister started off out of order, you brought him back into line, and he finished up out of order. I wonder whether, Mr Speaker, this is an indication of new standards; if so—

Mr SPEAKER: Order! The last part of the Prime Minister’s answer was certainly not helpful to the order of the House. Further supplementary questions?

Metiria Turei: Supplementary—[Interruption]

Mr SPEAKER: Order! [Interruption] Order! Supplementary question, Metiria Turei.

Metiria Turei: Tēnā koe, Mr Speaker. Tēnā koutou e te Whare. Given the Prime Minister said yesterday that today was not D-Day for Novopay, when can New Zealanders expect a decision on Novopay such that they will have confidence that schools will no longer be burdened with this failed system?

Rt Hon JOHN KEY: Can the member please give the date when I actually said that statement? I do not recall saying it.

Mr SPEAKER: Well, in the question she said it was yesterday, as I understood. Does the member want to repeat the question for the benefit of the Prime Minister?

Rt Hon JOHN KEY: I raise a point of order, Mr Speaker. It is not a question of repeating it. I do not believe I ever said it. If the member can tell me when I said it I will respond to it.

Mr SPEAKER: That is a satisfactory answer.

Hon John Banks: I raise a point of order, Mr Speaker. You have just asked whether the member wants to rephrase the question—

Mr SPEAKER: No, I thought the Prime Minister needed it rephrased. He has said he disagrees with the question. We are moving on. He has satisfactorily answered it.

Metiria Turei: When can principals, teachers, and families expect from his Government either a thumbs up or a thumbs down on Novopay? It is not too much to ask for some certainty for families.

Rt Hon JOHN KEY: We are working our way through those issues. As the Minister announced today, the Government is coming to the party with a significant cash offering to schools to try to help them through the process.

Hon David Parker: What a botch-up.

Rt Hon JOHN KEY: Well, that was the botch-up that you guys started, actually; we will just tidy it up. But you do not want to hear about that, do you, “Chippy”? Anyway—

Mr SPEAKER: Order!

Metiria Turei: I raise a point of order, Mr Speaker. The Prime Minister did not address my question, which was when—

Mr SPEAKER: The Prime Minister very adequately addressed the question.

Climate Change Policy—Minister’s Statements

4. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: Does he stand by his response that human-induced climate change “may well be” real?

Hon STEVEN JOYCE (Acting Minister of Finance): Yes, the Minister stands by his full statement, in which he also said: “The fact is that the Government is assisting farmers with shortterm emergency-type assistance through a drought. If there is a succession of droughts farmers would need to change their farming practice; Government assistance will not protect them from the consequences of it.”

Dr Russel Norman: Why cannot he simply say yes, that he accepts the basic fact that humaninduced climate change is happening, and that it is causing more frequent and more intense droughts?

Hon STEVEN JOYCE: I think the second part of that member’s question is open to debate, actually, by a whole range of experts. The point that the Minister was making last week in response to the member’s previous question is that in terms of the current drought the contribution by climate change is not as material as dealing with the drought. I think that is a very fair response.

Dr Russel Norman: Well, then, in relation to his answer to that question, does he disagree with the National Institute of Water and Atmospheric Research when it states: “Droughts are projected to become more frequent and more intense under climate change.”?

Hon STEVEN JOYCE: No. The point that he was making is that the climate has many changes: firstly, year-to-year variability, and longer-term climate change. These are things that farmers have dealt with since time immemorial. Also, farmers deal with other things including economic change and technology change. They no longer, for example, use horses to pull ploughs, which may come as news to the member. But the reality is all these things change, and farmers are capable of coping with those changes.

Dr Russel Norman: Does he think that 97.4 percent of climate scientists in an international survey who think that human-induced climate change is real were being far too definite and maybe they should have said it just “may well be” happening?

Hon STEVEN JOYCE: I am not sure which rabbit hole the member is trying to chase the Minister down at this point. There is no issue in terms of the work that is being done by climate scientists around the world. The only questions are, firstly, whether this particular drought is caused by climate-change, and, secondly, whether the actual cause of it is as relevant at this point as the mitigation measures that are taken to help farmers through it. I think the Minister made the point that it was the mitigation measures that he was focused on.

Dr Russel Norman: Well, does he understand—to help the Minister—that the particular hole that I am trying to chase this rabbit down is the hole that says climate change causes more droughts and more intense droughts, so the drought that we have just seen is more likely to occur in the future, so the Government needs an adaptation plan? Does he have an adaptation plan?

Hon STEVEN JOYCE: The reality is that I do not think anybody yet knows whether this drought is a consequence of anthropomorphic climate change or not. The reality is that there is a drought this year. If there were a succession of droughts, then obviously there would be further need to adjust. The Government has a number of adjustment measures, including a huge amount of work going on in the water-quality space with the farming community—

Hon Member: Irrigation.

Hon STEVEN JOYCE: There are irrigation proposals that are being advanced as we speak, and, more generally, there are also adaptation proposals. The Minister makes the other point that, actually, people—individuals and businesses—are very good at doing adaptation as well.

Dr Russel Norman: Well, then, was US President Obama right when he said in relation to this issue: “We can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science—and act before it’s too late.”? When will he act?

Hon STEVEN JOYCE: I am not qualified to comment on the President’s view of the Sandy storm, but what I would point out is that, actually, in terms of individual weather events, whether it is a drought or whether it is a flood, I would very much doubt that many scientists would link those to climate change. What they would link it to is climate change over a period, and there is no argument with that. Again, I cannot think why the member is wasting all his supplementary questions on it.

Christchurch Hospital—Redevelopment

5. NICKY WAGNER (National—Christchurch Central) to the Minister of Health: What progress can he report on the Christchurch Hospital redevelopment project?

Hon TONY RYALL (Minister of Health): The first site work on Christchurch’s $600 million - plus hospitals redevelopment project will start before the middle of this year. Cabinet has agreed to set aside around $500 million for the largest and most complex building project in the history of the New Zealand public health service. The rebuild will certainly go a long way to setting Canterbury health services back on their feet after the 2010 and 2011 earthquakes.

Nicky Wagner: What will the Christchurch redevelopment project involve?

Hon TONY RYALL: The work will include 159 new beds for Burwood and Christchurch Hospitals and eight extra operating theatres. Construction of a new facility for older people’s health is being fast tracked at Burwood Hospital, with site clearing beginning mid-year and completion in 2015. Christchurch Hospital’s development, or redevelopment, includes a new, expanded intensive care unit and emergency department, purpose-designed space for paediatrics, eight new operating theatres, in-patient wards, and new outpatient facilities; and is due for completion in 2018.

Hon Annette King: Will the rebuild of Ashburton Hospital be funded from the $600 million announced yesterday; if not, what funding, if any, has been allocated by the Government for Ashburton Hospital?

Hon TONY RYALL: Ashburton Hospital will be rebuilt. It is my expectation that the funding will be a combination of district health board and Ministry of Health funding, as that member has known. She has put out a statement saying the services were not going to be rebuilt—

Hon Annette King: I raise a point of order, Mr Speaker. That was a pretty straight question, I think you will find, and there was no need for the political cant that followed.

Mr SPEAKER: That is true, and it was adequately answered. The last part was not necessary.

KiwiRail—Health and Safety Standards

6. DARIEN FENTON (Labour) to the Minister of Transport: Does he have confidence in KiwiRail’s health and safety standards; if not, why not?

Hon GERRY BROWNLEE (Minister of Transport): Yes, but there is always room for improvement.

Darien Fenton: Has he seen reports that 10 workers could have died of carbon monoxide poisoning during work for KiwiRail on the Kaimai tunnel last year; if so, is he satisfied that KiwiRail followed proper safety procedure in this case?

Hon GERRY BROWNLEE: I have seen a report on the incident that occurred in the Kaimai tunnel. I have seen a press release from the Labour Party suggesting that death could have occurred. I think the press release is somewhat alarmist. The people who were in that situation had been given instruction in gas awareness for tunnel work, and adequate safety equipment was issued to all persons who were in the tunnel at that time.

Darien Fenton: Is he aware that KiwiRail’s own investigation found some of the group were not trained in tunnel gas awareness, as they were supposed to be, and there was no KiwiRail staff member in charge to issue safety gear and train the workers, as per KiwiRail’s own instructions?

Hon GERRY BROWNLEE: What I am aware of is that the person in charge of the contracted group had just completed tunnel gas awareness training and been certified as competent. The second group of concrete resin injection specialists, although not specifically trained in tunnel awareness, were under the direct supervision of the trained contractor and they did comply with the rules. At the time of the incident they were trained, as was the requirement at the time. KiwiRail has conducted significant investigations into this, and all of the recommendations from those considerations are being implemented.

Darien Fenton: Is he aware that the workers were exposed to high levels of gas because they exited the tunnel in the wrong direction, and that KiwiRail’s own investigation found this was because the evacuation plan was not created appropriately?

Hon GERRY BROWNLEE: I am aware that there was a section of the track in the middle of the tunnel that was not available to be used, and therefore exits had to be at either end of the tunnel, and that the KiwiRail investigation does not specifically find that, but rather that there could be better plans for the future and those most certainly will be enacted.

Darien Fenton: Given his findings, does he believe KiwiRail’s approach to health and safety is adequate; if not, what action will he take as shareholding Minister to make sure another incident like this, or worse, does not occur?

Hon GERRY BROWNLEE: I not only believe that their approach to health and safety is adequate, I think it is excellent. You will note, or the House can note, that on the two measures— time injury frequency rate, and medical treatment injury frequency rate—KiwiRail’s statistics have been improving consistently over the past few years.


7. PAUL GOLDSMITH (National) to the Minister of Transport: What progress has the Government made on improving roading infrastructure?

Hon GERRY BROWNLEE (Minister of Transport): Last Friday the Prime Minister opened the Newmarket Viaduct. The $244 million Newmarket project marks the southern end of the central motorway junction, the busiest section of motorway in New Zealand. At its northern end is the Victoria Park Tunnel, which was opened in late 2011. The Government’s roads of national significance programme is progressing, and these two roads were part of that programme. In between both are a host of other motorway improvements, and combined they provide much better transport connections around and through Auckland, improving traffic flows between State Highway 1 and State Highway 16, and ensuring freight can move a lot more efficiently in and out of Auckland’s container port. Removing the old viaduct at Newmarket and constructing the new one, with only a minimum of disruption to traffic on the southern motorway, is a remarkable achievement in engineering and innovation. It also has very good environmental outcomes.

Paul Goldsmith: What benefits can motorists expect from improvements to roading infrastructure?

Hon GERRY BROWNLEE: Although it will take some time to measure completely the improvements that Newmarket’s viaduct will provide, significant time savings are being reported, thanks to the Government’s opening of the motorways for Victoria Park and indeed in Christchurch, as well. Also, there is about 3.5 minutes being saved on the Te Rapa bypass, and motorists are experiencing that time saving also in the cost of fuel. This is a focus that we think is very, very good for the economy. It certainly makes travelling on our roads much safer also.

Paul Goldsmith: Did any other roading improvements report a time saving to motorists?

Hon GERRY BROWNLEE: Yes. Earlier this year, I opened stage one of the Christchurch Southern Motorway, another one of the Government’s roads of national significance, and already truck drivers are reporting time savings of up to 15 minutes between Rolleston and the Port of Lyttelton. This would represent a saving of nearly 10 litres of fuel. The Government is committed to improving our infrastructure and this is demonstrated in the savings and benefits to New Zealanders, which are quite obvious.

Iran Hostage Crisis, 1979—Fictional Representation of Role of New Zealand Diplomats

8. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Does he stand by his reported statement in relation to the film Argo that “I think it’s disappointing, but I don’t think we want to go too far on these things”?

Rt Hon JOHN KEY (Prime Minister): Yes.

Rt Hon Winston Peters: Does his statement “… I think we’ve made our point and we should probably move on.” mean that truth does not matter for the Prime Minister when New Zealand’s international reputation and standing are at stake and that his close ties to Hollywood outweigh his responsibilities to uphold New Zealand’s international reputation?

Rt Hon JOHN KEY: No, as I said when I made the actual, original statement that the member is quoting from, the next bit that I went on to say was: “New Zealanders know the role that our diplomats played.” etc., etc. trying to help. But let us be honest, this was a fictionalised movie; it was not a documentary. Having now had this debate raging for a while, the only tragedy of the movie is that it did not have subtitles, because if it did, then when the bit came up about New Zealand, Winston Peters could have stood up in the movie and held up his sign—

Mr SPEAKER: Order! Order!

Rt Hon Winston Peters: Given that the Prime Minister saw fit to give Hollywood $67 million of taxpayers’ money from New Zealand—

Hon Members: Argh!

Rt Hon Winston Peters: They are not too happy now, are they? Just groans now.

Mr SPEAKER: Order! Would the member please ask the supplementary question.

Rt Hon Winston Peters: Well, given that the Prime Minister saw fit to give $67 million of hardearned taxpayers’ money to Hollywood and his mates, what measures will the Government take to restore New Zealand’s international reputation of courage not cowardice, in the light of the Argo misrepresentation?

Rt Hon JOHN KEY: I, as Prime Minister of New Zealand, am on the record as saying that it is disappointing that this was portrayed in this way. Ben Affleck himself has basically said that he acknowledges those things. But this is a Hollywood movie, and I hate to say to the member, but if he wants to apply the same rigour to his own statements as he expects Hollywood does to fictionalised movies—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The last thing we want is a lesson on truth coming from that man—

Mr SPEAKER: Order! Order! That is not a point of order. The member asked a very political question and he got quite a political answer back.

Rt Hon Winston Peters: Will he consider making a posthumous acknowledgment of the New Zealand diplomats who at great risk to their lives aided Americans in the 1979 Tehran hostage crisis; if not why not?

Rt Hon JOHN KEY: No. It is a Hollywood movie. The member is being a bit precious. I do not know whether he has ever spent a good Christmas holiday reading a book and then—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. That question was not about a movie. It was about the brave actions of New Zealand diplomats in 1979 and whether they will be given an award—nothing to do with the movie at all. Now, please ask him to address the question.

Mr SPEAKER: The right honourable Hon Prime Minister.

Rt Hon JOHN KEY: As I said, no. It was a fictionalised movie not a documentary.

Mr SPEAKER: Thank you.

Regional Planning, Auckland—Prime Minister’s Statements

METIRIA TUREI (Co-Leader—Green): Thank you, Mr Speaker—[Interruption]

Mr SPEAKER: Order! Order! Metiria Turei has a right to have her question heard.

9. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by his statement that “our plan will allow Auckland’s civic leaders to think regionally, plan strategically and act decisively in a way that has not happened for the past six decades”?

Rt Hon JOHN KEY (Prime Minister): I stand by my April 2009 statement that changes to Auckland governance will allow Auckland civic leaders to think regionally, plan strategically, and act decisively in a way that was not occurring previously.

Metiria Turei: How does his statement that he wants Auckland Council to plan strategically and act decisively stand if when it does, his Government makes threats to its housing plans, attacks its transport plans, and refuses to listen to the will of Auckland people?

Rt Hon JOHN KEY: I do not actually agree with the statement the member is making. We are not attacking the council; we certainly as a Government engage with it. We will engage with it because the truth is that the Auckland Council would expect the Government to be a large contributor to many of its plans, and therefore it is the responsibility of the Government, which is doling out those funds, to make sure that they are right.

Metiria Turei: Does the Prime Minister support the threats made by Nick Smith and Amy Adams against the Auckland Council because the Government intends to override local communities whenever they make decisions that he does not like?

Rt Hon JOHN KEY: Neither Minister Adams nor Minister Smith have made threats. They have engaged in dialogue with Auckland Council. Actually, interestingly enough—and this, of course, is the interesting point, is it not—it is the Auckland Council that wants the Government to pass legislation to enact the unitary plan straight away, with no input and no opportunity for Aucklanders to express a view, yet the member, who seems normally to dine out on consultation, wants Aucklanders to have no consultation at all. If anything, it is the Government that is standing up for consultation with Aucklanders, and the Green Party and Labour that are silent as little Lamb Chops.

Metiria Turei: When the Prime Minister said that he believed that Auckland Council and central government could work together, did he actually mean that he expected Auckland to do as Wellington told it and that if it will not, his Government is quite happy to steamroll over the democratic rights of Aucklanders from their plan?

Rt Hon JOHN KEY: No, we work together with Auckland Council. As I said before, steamrolling over Aucklanders would give them no opportunity to express their views, which is actually what the Auckland Council is at one level asking for—no opportunity at all for Aucklanders to express their views on their unitary plan. That is what the Government is doing. We work quite collaboratively with the council on many issues.

Metiria Turei: If the Prime Minister is committed to working collaboratively with the council, as he has just said, why will he not sit down with Len Brown and Deputy Mayor Penny Hulse, after their open letters to him, to work out a process that better reflects the requirements of Aucklanders, who want to be decision makers over their own city?

Rt Hon JOHN KEY: I sit down with Len Brown at a formalised meeting every, I think—it is either every month or every 6 weeks. I happen to be having dinner with him in Parnell. If the member wants to join us, I will let her know what table we are going to.

Tax System—Proposed Changes to Fringe Benefit Tax

10. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Revenue: Why has the Government decided not to change the fringe benefit taxation of employer-provided car parks in Auckland and Wellington, but to leave in place proposals to tax cell phones and laptops?

Hon PETER DUNNE (Minister of Revenue): The reason for the car-park decision was made clear in yesterday’s joint press release with the Minister of Finance. The proposals to review the tax treatment of the use of cellphones or laptops were included in an official issues paper reviewing the wider treatment of employee allowances and other expenditure payments. The Government has made no decisions on any of these issues, but is currently undertaking consultation on whether the existing law needs to be updated. With regard to cellphones and laptops, I will not be recommending any change to their current treatment unless the consultation process highlights anomalies or inconsistencies that need to be resolved in the interests of fairness and equity.

Hon David Cunliffe: What due diligence was done on the compliance costs of the car-park tax prior to Cabinet approval and his lodging Supplementary Order Paper 167 on the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Bill, and did this concur with

independent analysis that showed the compliance costs would be far higher than the revenue gained from the tax?

Hon PETER DUNNE: Consistent with the generic tax policy process that has been in place since the mid-1990s, the announcement was made early last year that we were considering such a proposal. An issues paper was released and submissions were invited upon that issues paper. As a result of that issues paper, recommendations were made to Cabinet, which were included in legislation. The groups that led the campaign that became prominent last week did not make any submissions to any of those documents at any earlier stage.

Hon David Cunliffe: I seek leave to table a letter from the New Zealand Institute of Economic Research, where it has identified gaps in the Government’s analysis, which prevents the paper from being “required, reasonable, or robust”, and concludes that it is not clear at all from the regulatory impact statement that the proposed solutions are superior to the status quo.

Mr SPEAKER: What is the date of the New Zealand Institute of Economic Research’s letter?

Hon David Cunliffe: The date of that letter is 7 March 2013.

Mr SPEAKER: Leave is sought to table that. Are there any objections? Yes, there is.

Hon David Cunliffe: I seek leave to table a document from accounting firm Lock and Partners, estimating that the compliance cost of the car-park tax is roughly double the revenue that it would bring in.

Mr SPEAKER: Leave is sought to table an opinion from Lock and Partners. There is objection.

Hon David Cunliffe: What due diligence has therefore been conducted on his next proposal to tax cellphones, tablets, and laptops, and does he expect “even stronger” opposition to this, such as the more than 90 percent of Stuff poll respondents who oppose the iPad tax and the proposed campaign by the Employers and Manufacturers Association?

Hon PETER DUNNE: I will answer two of the three questions contained in that. Firstly, the quote that the member referred to was mine, so, of course, I stand by it. Secondly, with regard to the development of the proposals relating to iPads, cellphones, etc., they are more to do with the consistency of the application of the tax rules than any revenue gain. The member may not have noticed but technology has moved substantially in recent years, and there are anomalies within existing tax law in terms of their treatment. That was what the consultation process was seeking to resolve. As I said in my primary answer, if I cannot be satisfied that there will be fair and equitable outcomes as a result of that, I will not be recommending any change to the existing arrangements.

Hon David Cunliffe: I seek leave to table an email from the Employers and Manufacturers Association, dated 18 March—yesterday—which notes the start of a new campaign against the taxation of work cellphones and laptops.

Mr SPEAKER: Who is the email to?

Hon David Cunliffe: Sorry?

Mr SPEAKER: Who is the email to?

Hon David Cunliffe: The email is a circular email to the membership of the Employers and Manufacturers Association.

Mr SPEAKER: Leave is sought to table such an email. Is there any objection? Yes, there is.

Hon David Cunliffe: This one is internet-based but not generally available. I seek leave to table a snapshot of the Stuff online poll that shows 90.5 percent of respondents opposed to cellphone tax—

Mr SPEAKER: Order! That is available if members so want it.

Hon David Cunliffe: Does he agree with Prime Minister John Key’s statements immediately before the House today that “There is virtually no chance of [laptop and cellphone tax] going ahead.”; if he does agree with that, will he now commit to withdrawing this bizarre tax proposal?

Hon PETER DUNNE: The member should listen before reverting to invective. What I said in my primary answer was that I would not be recommending that this tax proceed unless there were significant issues of fairness and equity that could be resolved as a result of the change. That

remains the position, I think it is entirely consistent with what the Prime Minister said, and it is a proper and responsible way to approach these issues.

Hon David Cunliffe: Did the Prime Minister consult him before ruling out the cellphone tax at 1.55 p.m. today; if so, and he was consulted, why did he not withdraw the barking-mad tax himself, rather than wait for the Prime Minister to do it?

Hon PETER DUNNE: I have had a number of discussions in recent days with the Prime Minister on these matters, but I want to make the point clear to the member who seems unwilling or incapable of understanding it. This is not a Government proposal; it is a suggestion by the Inland Revenue Department, out there for consultation. When that member was the Associate Minister of Revenue in a previous Labour Government, I recall him issuing an issues paper relating to a capital gains tax on people’s offshore savings, which I had to tidy up when I became the Minister.

Hon David Cunliffe: I raise a point of order, Mr Speaker. I seek leave to table—[Interruption]

Mr SPEAKER: Order! A point of order has been raised and I want to hear what it is.

Hon David Cunliffe: Thank you, Mr Speaker. I seek leave to table a statement by the Hon Dr Michael Cullen that shows that he considered but rejected the same tax the Hon Peter Dunne has just floated, on the grounds of excessive compliance costs.

Mr SPEAKER: What date is the statement?

Hon David Cunliffe: The date is 2005.

Mr SPEAKER: No, that is not necessary.

Hon David Parker: I raise a point of order, Mr Speaker. I do not understand why that was not in order to be tabled.

Mr SPEAKER: Because it was a press release done many, many years ago.

Hon David Parker: It wasn’t a press release, was it?

Mr SPEAKER: Yes, it was.

Hon Trevor Mallard: Point of order, Mr Speaker.

Hon David Cunliffe: Point of order, Mr Speaker.

Mr SPEAKER: No. Look, I can deal with only one point of order at a time.

Hon David Cunliffe: In answer to the Speaker’s question, it was an excerpt from a speech given by the then Minister in approximately August 2005.

Mr SPEAKER: Was it a speech given in the House?

Hon David Cunliffe: By the then Minister of Finance and Revenue the Hon Dr Michael Cullen.

Mr SPEAKER: In the House?

Hon David Cunliffe: No, in public.

Mr SPEAKER: Listen, the easiest way to resolve this is. Leave has been sought to table a speech from Dr Michael Cullen. Is there any objection? Yes, there is.

Mr SPEAKER: Question No. 11, Melissa Lee.

Hon Dr Nick Smith: Supplementary, Mr Speaker.

Mr SPEAKER: Sorry. Supplementary question, the Hon Dr Nick Smith.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. You cannot call a supplementary question when you have called the next question.

Mr SPEAKER: I did not see it.

Hon Trevor Mallard: He wasn’t standing; she was. You called her, and once you’ve called her you can’t go back.

Mr SPEAKER: I am going back and I have given the call to the Hon Dr Nick Smith for a supplementary question.

Hon Trevor Mallard: Can we go back to question No. 1, Mr Speaker?

Mr SPEAKER: No, but if the member carries on like that, he will not be here for question No. 12, I can assure him of that. Right, we—[Interruption] Order! We have a supplementary question from the Hon Dr Nick Smith.

Hon Dr Nick Smith: What reports has he received on proposals for taxing offshore bank accounts, and would they require the disclosure of those bank accounts for those to take effect?

Hon PETER DUNNE: I have not received reports in recent days, but I do recall advice at the time I first became the Minister of Revenue regarding a Government discussion paper issued under the previous Government that was in vogue at that stage, in the name of the primary questioner, which proposed putting in place what would effectively be a capital gains tax on people’s offshore savings. It is interesting to note—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. Two points: first of all, I am going to ask you to review on tape your decision to allow that supplementary question to progress, and, second, I invite you to look at whether you should have cut it off when the area the Minister was responsible for had finished.

Mr SPEAKER: I thank the member for his assistance.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I would never want to stop you from having the joy of watching yourself on tape in the late hours of the evening, but I think you should rule on the second part of that question now. It was not out of order. The Minister was asked a fair question related to the primary—

Mr SPEAKER: I thank the member. I have said I will have a look at the transcript tonight and I will.

Hon David Cunliffe: I seek leave to table a copy of the National - United Future coalition agreement, a matter now of some—

Mr SPEAKER: No, that is available to all members.

Child Protection—Social Workers in Hospitals Initiative

11. MELISSA LEE (National) to the Minister for Social Development: How is the Government’s Social Workers in Hospitals initiative making a difference for vulnerable children?

Hon PAULA BENNETT (Minister for Social Development): The social workers in hospitals initiative was introduced by National in 2009. We now have a Child, Youth and Family social worker based in every district health board in the country. When hospitals admit children, if staff have care and protection concerns, the social worker engages with the family and hospital staff. In the last 6 months of 2012, 7,386 consultations took place about families they were worried about. As a result, 1,059 reports of concern were made to Child, Youth and Family.

Melissa Lee: What feedback has she received about front-line staff working together to better protect vulnerable children?

Hon PAULA BENNETT: Feedback from health professionals shows that there is a growing confidence about how they can report concerns, and Child, Youth and Family social workers are a welcome part of the team. Last week I visited Palmerston North Hospital and met with one of our social workers and with health professionals there. You could see—and it was really evident in the relationships they have together—the fact that they can get in earlier when that concern is there, make a difference, and get the right support in place so that that, in many cases, very young baby is safe when they go home.

Melissa Lee: What lessons can we learn from this initiative to support the work of the Government’s Children’s Action Plan?

Hon PAULA BENNETT: The Children’s Action Plan, which is part of the White Paper for Vulnerable Children, is clearly focused on front-line staff—front-line people—and how we get them together with much better coordination earlier in the lives of the children who need our support and help. That is why the Government has also told the chief executives and their equivalents of social development, health, education, justice, police, housing, and Te Puni Kōkiri that they must work together to have a coordinated response to those vulnerable children who so desperately need them.

Jacinda Ardern: What is the caseload for her social workers in hospitals, and does she believe that this number represents a fair workload for these social workers?

Hon PAULA BENNETT: It is different for different district health boards because it depends on how big it is with the Child, Youth and Family workers who they have had recently. They do not work long term with families though; they are very much about getting the support longer term. They might refer to an NGO, or, as I said, on to Child, Youth and Family, and get them better attached there if they have to.

Teachers and Support Staff, Payroll—Measures to Address Problems with Novopay System

12. CHRIS HIPKINS (Labour—Rimutaka) to the Minister responsible for Novopay: Is he confident that teachers will now be receiving the correct pay in future pay rounds; if not, why not?

Hon STEVEN JOYCE (Minister responsible for Novopay): No, not in the case of all teachers. Can I suggest that the member read some of the 10 media releases I have put out over the last 8 weeks that explain some of the issues with Novopay, which are very complex. There will be no quick fix for it, and the Government is working quickly on a range of fronts to address those issues. For the member’s benefit, I will say that today I released the technical review into this school payroll system. It makes a number of conclusions: that the core software platforms are not currently stable, that the system can be made stable with greater effort and capability from both the ministry and Talent2, and that inadequate quality assurance processes have contributed to the issues experienced. The report lays out a number of key milestones that the remediation plan currently under way is targeted to meet—that is, dropping the number of complaints and notifications from 2.2 percent in a pay to less than 1 percent, and we are making good progress in that respect. There is also a backlog clearing unit that has been set up and is gearing up now with the goal of reducing the backlog workload to business-as-usual levels by the end of June.

Chris Hipkins: Can he give an assurance that no teacher who has been overpaid in one pay cycle and then underpaid in a subsequent pay cycle will be pursued for repayments before they have received all of the money they were due in the first place; if not, why not?

Hon STEVEN JOYCE: In terms of overpayments and underpayments, the member will be aware that, in relation to the Novopay system, we have stopped any debt collection processes in regard to that. The debt collection that is going on now is for the 200 or so that were outstanding from the previous system. The whole purpose of the backlog clearance unit is to do exactly what the member talks about, which is to progressively clear through those issues and ensure that they are put right for each staff member who is affected.

Chris Hipkins: I raise a point of order, Mr Speaker. I asked about people being pursued for repayments. I was not asking about debt collection; I was asking about whether they were being pursued for repayments, which is a slightly different take. I wonder whether the Minister could address that.

Mr SPEAKER: Order! The member has further supplementary questions. I think the Minister very adequately addressed your question. You have further supplementary questions.

Chris Hipkins: Is the Minister indicating in his answer that somebody who has experienced a series of pay problems will not be pursued for overpayments—not necessarily by debt collectors; they just will not be pursed for overpayments—until it is known exactly what the outcome of that is going to be?

Hon STEVEN JOYCE: What is happening is that these issues are progressively getting solved. I cannot give the member a particular assurance on a particular method around a particular issue, but what I can say is that if the member has anybody in that category, or if anybody is in that category, then they should contact the ministry and their issues will be addressed.

Chris Hipkins: Did he ask how Talent2 was intending to recover overpayments when he was put in charge of Novopay; if not, why not?

Hon STEVEN JOYCE: I asked a whole range of questions—not that particular one, but could I point out to the member that, in relation to that, the system for recovering payments is exactly the same system that has been in place for many years, with the same subcontractor and with the same process as has applied the entire time, and, in fact, with the same people doing it. So there has been no change in that process for the last many years.

Chris Hipkins: Given the massive backlog of problems with Novopay that were already evident when he became the Minister responsible for it, why did he not think to ask what process was in place for recovering the overpayments, and instruct Talent2 that sending debt collectors on to people who were still not being paid correctly perhaps was not such a good idea?

Hon STEVEN JOYCE: I would say that one of the things that was not a good idea was where we started in this whole place in the first place, in terms of setting the contract up. Because one of the issues raised by the technical review—

Chris Hipkins: I raise a point of order, Mr Speaker. I did not ask—

Mr SPEAKER: Order! The Minister is attempting to answer your question.

Chris Hipkins: No, he is not. I did not ask him anything about the contract in the first place.

Mr SPEAKER: If we have a chance to listen to the answer—but if you are going to interrupt the answer, we are not going to know whether the Minister has addressed it.

Hon STEVEN JOYCE: The point I was making was that I inherited a situation that has created a whole range of issues that go back very many years, including back to when that member was a ministerial adviser recommending in favour of the Novopay deal in Trevor Mallard’s office. The point is that in the 8 weeks that I have had the role, I have chased down a whole—[Interruption]

Mr SPEAKER: Order! If the member continues with that, I will have to ask him to leave the House.

Hon Trevor Mallard: Well, tell him to tell the truth.

Mr SPEAKER: Order! It is completely unparliamentary to call anyone a liar in this House. The member will stand and withdraw those comments, please.

Hon Trevor Mallard: I withdraw.

Mr SPEAKER: Supplementary question—

Chris Hipkins: I raise a point of order, Mr Speaker. The Minister had not finished his answer. He has not actually addressed the question that I asked him in the first place.

Mr SPEAKER: I am going to ask the member to ask the question again.

Chris Hipkins: I do not think I can actually remember completely what the question was. Maybe the Minister could just address it.

Mr SPEAKER: No, if the member wants to repeat his question, I have given him the opportunity. [Interruption] OK. Has the member got further supplementary questions?

Chris Hipkins: Why did he not give Talent2 a clear instruction before last week not to use debt collectors?

Hon STEVEN JOYCE: In fact, I did not have to, because as soon as the matter came to light, while I was still on a plane, the Secretary for Education made his own decision that that would not proceed. The fact of the matter is that at that point, I think, seven people had been approached by debt collectors in relation to the Talent2 system, and there were currently 200 people being approached by the previous system. The point is that the secretary acted as soon as it was brought to his attention.

Rt Hon John Key: I raise a point of order, Mr Speaker. I just noticed today that the sound system has been very quiet. It has been quite hard to hear the questioners, and I wonder whether you could ask the technicians to have a look at it.

Mr SPEAKER: I will certainly do so. There have been some problems with the sound system. I was informed that it was operating, but we will certainly have a look at it. I thank the Prime Minister for that.


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