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Questions and Answers - March 19


Economy—New Zealand’s International Economic Position

1. MAGGIE BARRY (National—North Shore) to the Minister of Finance: What announcements has the Government made to build on New Zealand’s international economic position?

Hon BILL ENGLISH (Minister of Finance): The Prime Minister last night joined Chinese Premier Li Keqiang in announcing the launch of direct trading of the New Zealand dollar against China’s renminbi. This is a significant agreement and concludes negotiations the Prime Minister started last year during talks with President Xi Jinping. The agreement makes it more likely that New Zealand trade with China will in the future be conducted through the renminbi alongside trade currently conducted mainly in the United States dollar. It will make New Zealand businesses more likely to do business with China and do it more easily by reducing the cost of conversion between the two currencies, and it will further stimulate our already strong trade links. The New Zealand dollar is now one of only six currencies to be directly traded with the renminbi.

Maggie Barry: How will the agreement for direct trading of the New Zealand dollar with the Chinese renminbi build on trade and investment ties between the two countries?

Hon BILL ENGLISH: It is the next logical step. The previous Labour-Green Government signed up to a free-trade agreement between New Zealand and China, and that has led to a very significant and rapid increase in two-way trade. Last year alone trade in goods between New Zealand and China increased by more than 25 percent, making China New Zealand’s top destination for goods exports, just marginally ahead of Australia. The Government will continue to work with New Zealand banks, exporters, and importers that trade with China, to raise awareness of the benefits of direct currency trading.

Maggie Barry: What other announcements has the Minister seen about New Zealand’s international economic position?

Hon BILL ENGLISH: Statistics New Zealand issued balance of payments data for the December quarter of 2013 that shows the balance of payments deficit was 3.4 percent of GDP, down from 4.1 percent—the smallest annual deficit for a couple of years. It was driven mainly by an improvement in the goods balance driven by the value of dairy product exports at record highs. There is still work to be done to improve New Zealand’s international position, but the latest deficit is a significant improvement on the very high balance of payments deficits in the mid-2000s of between 7 percent and 8 percent. Net international liabilities fell to 66.6 percent of GDP, the lowest level since 2002.

Maggie Barry: How does New Zealand’s balance of payments position compare with other developed countries as a percentage of GDP?

Hon BILL ENGLISH: The deficit is now 3.4 percent of GDP, less than half of what it was 6 years ago. It is comparable with other similar countries—for instance, Australia and Britain have balance of payments deficits of 3.2 percent of GDP, and Canada’s is slightly smaller at 2.9 percent of GDP. So there is no indication of a balance of payments crisis, just as there is no manufacturing crisis, no regional crisis, and no jobs crisis.

Roading, Bay of Plenty—Property Acquisition for Hairini Link

2. BRENDAN HORAN (Independent) to the Minister of Transport: Does he agree with the statement of the Minister of Transport in 2011 that “I am confident that the New Zealand Transport Agency engages with property acquisition processes under the Public Works Act in a fair and proper way”, and is he satisfied that is the case in the property acquisition for the Hairini Link?

Hon GERRY BROWNLEE (Minister of Transport): Yes, and that would be my continued expectation.

Brendan Horan: Is the Minister aware that at least two homeowners in Hammond Street whose homes are required for the Hairini Link are being offered at least $65,000 less than is needed for them to buy another house on a like-for-like basis, and is he prepared to ask his New Zealand Transport Agency chief executive to review the offers, taking into account the huge impact on homeowners and the relatively small sum involved, compared with the $55 million overall project cost?

Hon GERRY BROWNLEE: I became aware of the issue that the member is raising about 40 minutes ago when I got an email from him. What I have done is ask my officials to seek advice from the New Zealand Transport Agency, and once I have got that information, I will be in a better position to answer that question fully.

Brendan Horan: Would the Minister consider it—and I thank the Minister as well—fair and proper to take a mortgage-free home away from a New Zealander who is now an invalid beneficiary, and offer them a paltry $235,000, when they would need at least $300,000 to buy a similar property?

Hon GERRY BROWNLEE: As I say, without the specifics of the case in front of me—and I am not suggesting that the member is not giving us accurate information—I really cannot respond until I have had a closer look at the particular issue.

Forestry Industry—Prime Minister’s Statements

3. Hon DAVID CUNLIFFE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that the forestry industry “needs significant change”?

Hon BILL ENGLISH (Acting Prime Minister): Yes, although the member may need to be reminded that that statement was made in response to a question relating to forestry safety systems, not the economics of forestry.

Hon David Cunliffe: In relation to the economics of forestry, is he comfortable that the rate of unprocessed log exports has grown at 10 times the rate of processed logs, given that the export of raw logs is really exporting jobs?

Hon BILL ENGLISH: I would need to check the member’s figures, but he may also be interested to know that around 60 percent of all forestry production is currently value-added. It may well be that in the light of a rise in prices for export logs there are more logs being exported, but anyone who has been in the industry knows that those prices can drop as fast as they rise. I am sure that there are many people in the forestry industry taking a longer view and keeping that in mind.

Hon David Cunliffe: In relation to the Minister’s claim that 60 percent of timber exported is value added, I seek leave to table Ministry for Primary Industries statistics that show that 55 percent is exported raw.

Mr SPEAKER: Leave is sought to table some Ministry for Primary Industries statistics. Is there any objection? There is none. They can be tabled.

Document, by leave, laid on the Table of the House.

Hon David Cunliffe: Is it appropriate to export raw logs to Asia and import the sawn timber back to Christchurch when sawmills are closing in New Zealand, for example, with 120 people having been sacked at Tachikawa Forest Products sawmill in Rotorua?

Hon BILL ENGLISH: It would be useful to public debate, I am sure, if the member could provide an actual example that that was the case. Secondly—

Hon Members: He just did.

Hon BILL ENGLISH: No, he did not—he did not. He asserted it—he just asserted it—but, of course, we need to remember who is making the decisions about this, and it is the owners of trees, the owners of sawmills, and traders in timber, all of whom, we believe, are probably better placed than David Cunliffe to make that judgment.

Hon David Cunliffe: What would the Prime Minister say to the people in the Deputy Prime Minister’s former home region who are gutted by the announcement that Southern Cross Forest Products is in receivership, threatening up to 400 jobs across its sites?

Hon BILL ENGLISH: There have been public statements made to the effect that the mill may be sold as a going concern and that, in fact, a problem is levels of debt rather than levels of log exports.

Hon Dr Nick Smith: My question to the Minister of Finance is: what reports has he seen on the—[Interruption] To the Acting Prime Minister—

Hon David Cunliffe: I raise a point of order, Mr Speaker. I seek your guidance, Mr Speaker. Is it appropriate for the member to ask a supplementary question of the Minister of Finance on a primary question that was to the Prime Minister?

Mr SPEAKER: Yes. No, it certainly is in order to do so—

Hon David Cunliffe: To a different member? The primary question was to the Prime Minister. The supplementary to that—

Mr SPEAKER: Oh, I see. I gather the point. No, it is appropriate that the member when he rises addresses the question to the Prime Minister.

Hon Dr Nick Smith: My question is to the Prime Minister and it asks what reports has he received on the recent developments in forest processing in Tasmania, where its Labour-Green Government has fallen apart over the very issues of forest processing and where there has been a huge loss of jobs and confidence in that sector because the—

Mr SPEAKER: Order! You have made the point with your question.

Hon BILL ENGLISH: I have received the same—[Interruption]

Mr SPEAKER: The question was what reports has he received.

Hon BILL ENGLISH: The Deputy Prime Minister and the Prime Minister have received the same reports, obviously, which have been to the effect that the Government in Tasmania has overseen the destruction of the forestry industry by trying to get involved in it.

Hon David Cunliffe: Would the Prime Minister support an accelerated depreciation tax including for forestry processing?

Hon BILL ENGLISH: No, we are not entertaining that. Those kinds of policies were tried consistently, I think, from the 1970s when they were a bright idea, and they lead to unsustainable industries and unsustainable jobs as a whole lot of Australian workers are now finding out, where industries that were subsidised by the Government there are now closing down.

Hon David Cunliffe: I seek leave to table a global tax alert from Ernst and Young that shows that, far from the Minister’s point, Japan—

Mr SPEAKER: Order! [Interruption] Order! The document has been described adequately. I just need the date of the document.

Hon David Cunliffe: It is 4 October 2013, not—

Mr SPEAKER: It is a recent document. Leave is sought to table that particular Ernst and Young report. Is there any objection? There is objection.

Hon David Cunliffe: I seek leave to table a research report from the Federal Republic of Germany that shows that it is investigating the use of a tax depreciation allowance for timber processing.

Mr SPEAKER: The date, please?

Hon David Cunliffe: 2014, Mr Speaker. Sorry, 2012, but not—

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

Hon David Cunliffe: Does the Prime Minister support a pro-wood Government procurement strategy to assist jobs and value added in New Zealand, including in those South Otago sawmills; if not, why not?

Hon BILL ENGLISH: No. The member should have more confidence in the forestry industry. It has evolved from the time in the late 1980s when sawmillers used to be able to get very cheap logs from Government-owned forests through to a modern processing industry that is internationally competitive and makes very sophisticated decisions about the balance of financial risk, different types of product, and exchange rate and price risk in export markets. The idea that Labour would do a better job of that is wrong, and it would end up destroying the forestry industry if it gets that involved in it.

Hon David Cunliffe: Why has the Government sat on its hands for the last 5½ years while the timber processing industry has been in decline and while dozens of workers have been killed or maimed in the forestry sector—or is that just another example of this “she’ll be right” attitude to regions and jobs?

Hon BILL ENGLISH: The answer to that, of course, is no. The industry is not shrinking; it is growing, partly because of the high prices for its product. It is a bit of an odd analysis that says that because there are higher prices for the product from an industry, the Government therefore needs to interfere with it. Of course, the Government has acted on the serious and legitimate safety issues in the forestry industry through supporting an industry-led inquiry and setting up WorkSafe New Zealand.

Dr Russel Norman: Is the Minister aware that the forest industry and timber industry itself is calling for a partnership with the Government to help the industry value-add more, rather than simply exporting raw logs, or will the Government continue with its attitude of “whatever”?

Hon BILL ENGLISH: It may come as news to that member, but sometimes businesses do ask Government for tax breaks and other concessions. In fact, it goes on all the time. The forestry industry does not have any particularly special role in that respect. The Government is working with the forestry industry on better infrastructure, a more competitive energy market, better regulation, and a better flow of skilled young New Zealanders into the industry, all of which are proven ways in which Government can support this industry.

Hon David Cunliffe: I seek leave to table a report from the Southland Times about the Government subsidy—

Mr SPEAKER: Order! That information is easily available to members.

Hon David Cunliffe: I seek leave to table the Auditor-General’s report on the Government—

Mr SPEAKER: Order! That is also freely available to members.

Overseas Investment Rules—Farmland and Residential Land in Foreign Ownership

4. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: Will the Government propose any measures to restrict the sale of New Zealand farmland or residential land to foreign companies or persons?

Hon BILL ENGLISH (Minister of Finance): We are certainly not going to restrict Australians from buying homes after they migrate to New Zealand. The Government has already restricted overseas investment in sensitive land and residential land. We made changes to the regulations in 2010, which were reflected in a directive letter to the Overseas Investment Office. We believe these

changes struck the appropriate balance between ministerial flexibility to consider a wider range of issues when assessing overseas investment and, at the same time, providing clarity and certainty for potential investors. I would note that under this Government the amount of sensitive land approved for sale to overseas buyers has been less than half what it was in the last 5 years of the previous Labour-Greens Government. I would also note that the OECD assesses our overseas investment regime as now one of the more restrictive in the developed world.

Dr Russel Norman: Does he consider that China has any lessons to teach New Zealand regarding foreign ownership, given that China protects its economic interests through restricting land sales to foreign buyers?

Hon BILL ENGLISH: The member may be more familiar than I am with the tenets of communism, but in China private individuals did not own land until recently, only the Government did, so even the Chinese could not buy land in China. But I am a bit surprised to find that the Greens only ever get this excited about foreign ownership when it involves the Chinese, who happen to have a much lower number of consents than Australia, the UK, Germany, Switzerland, and, I think, Sweden.

Dr Russel Norman: Does he have any concern that more than one in 10 homes in Auckland is purchased offshore and that, according to BNZ economist Tony Alexander, this figure is set to only increase?

Hon BILL ENGLISH: I know that the member has been conducting his own investigation into these issues by visiting the home of Kim Dotcom, a well-known foreign investor in Auckland real estate. I cannot confirm the member’s one in 10 number. The BNZ survey that I saw said that about six houses in every 100 are foreign-purchased and about a quarter of those are being purchased by the Chinese, which means that 1.5 houses in every 100 might be being purchased by people whom real estate agents think are residents of China.

Dr Russel Norman: When will he and his Government consider there is a problem—will it be when one in five homes is purchased by offshore buyers, or will it be when one in four homes is purchased by offshore buyers? At what point will he acknowledge that there is a problem?

Hon BILL ENGLISH: We do not have the same problem about buyers being foreign as the Greens do. What we have a problem with is the very high cost of housing in New Zealand for New Zealanders. And all the analysis shows that the fundamental driver of the high cost of housing is not the Greens’ friends from China; it is the Greens’ friends in the planning departments of our city councils who insist on blocking new development of new housing. So the Greens are a much bigger enemy of the affordability of housing in New Zealand than the Chinese have ever been.

Dr Russel Norman: Does he consider that an increase in interest from offshore buyers in purchasing residential property in Auckland is increasing the price of housing for New Zealand homebuyers, or does he think that this big increase in demand from offshore is having no effect— that it is a special kind of market where a big increase in demand has no effect on prices?

Hon BILL ENGLISH: It is not obvious that there is a big increase in demand from offshore buyers. There is some anecdotal evidence that that is the case, and I know that that is certainly believed by some people, but it is yet to be established. The fundamental driver of the increase in housing is restrictive planning policy, which means that when there is more demand—whether it is foreign or, in this case, New Zealanders who have stopped migrating and are staying home and more people who are arriving in New Zealand as migrants—and those factors of demand are rising, the supply cannot react to it. All around the world restrictive planning laws mean higher prices and more volatile prices, and the Greens back that kind of policy. They should be backing the Government on getting rid of that sort of policy if they are really concerned about locking low and middle income New Zealanders out of the housing market.

Dr Russel Norman: Does he agree with Auckland house auctioneer Adam Wang that our ambiguous laws around capital gains tax are assisting the boom in the foreign buy-up of our

housing stock, and does he have any plans to deal with the fact that the capital gains tax exemption in New Zealand is part of the problem driving up house prices?

Hon BILL ENGLISH: All of those issues have been looked at by various inquiries, by the Productivity Commission, and by policy advisers, and it is possible that any one of them has some influence on the price. This Government, though, has focused on the biggest influence, and the most pervasive one, and that is restriction of supply. It is hard to understand why the Greens support housing planning policies that have the effect of driving up the wealth of the leafy suburbs at the expense of middle-income and low-income New Zealanders. I think that if the Greens were really concerned about equity in New Zealand and affordability of housing, they would be supporting the Government’s policies, not the Labour Party’s policies.

Marine Protected Areas—Kaikōura

5. COLIN KING (National—Kaikōura) to the Minister of Conservation: What support has he received for the Prime Minister’s recent announcement to create a new marine reserve and whale and seal sanctuary in Kaikōura?

Hon Dr NICK SMITH (Minister of Conservation): This package of measures has been welcomed by Ngāi Tahu, by the Kaikōura branch of the Royal Forest and Bird Protection Society, by Kaikōura recreational and commercial fishers, and by the important Whale Watch business, who all played an important role in the Te Korowai o Te Tai o Marokura process. It is also being supported by the local mayor and council and by organisations like the World Wide Fund for Nature. I have also received a strong message of support from the New Zealand Marine Sciences Society, which notes that this deep canyon so close to shore is very unusual and has the richest marine life anywhere in the world at depths of over 500 metres. And I particularly want to acknowledge that member’s long advocacy for these measures.

Colin King: Has the Minister seen the public statements by Opposition parties that our new marine reserves were pathetic and an international embarrassment; if so,—

Mr SPEAKER: Order! I am going to ask the member to rephrase that question. The Minister has no responsibility for other political parties’ comments.

Colin King: Has the Minister seen any reports around comments with regards to the negative approach that the Opposition has taken towards the positive aspects of this reserve?

Mr SPEAKER: Order! That is still a very marginal question. If the Minister can address any reports he has seen.

Hon Dr NICK SMITH: I have seen criticism that the marine reserve is too small. I would note that this new Kaikōura reserve, at over 10,000 hectares, is going to be the largest reserve adjacent to any of New Zealand’s main islands. It actually covers an area that is more than all of those nine Fiordland reserves that had previously been created. I have also seen criticism that New Zealand’s record on marine protection is poor, but I would note the fact that New Zealand has a greater portion of its territorial sea in no-take reserves than any country. I also take note of the Marine Policy journal, which rated New Zealand against 69 countries with significant resources and found New Zealand to be the very best of those 69 in terms of its marine management. I have no problem with criticism, but I do have difficulty with those who run down New Zealand’s good name for their narrow political purposes.

Te Kōhanga Reo National Trust Board—Audit

6. Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) to the Associate Minister of

Education: Does he accept all the findings of the Independent Audit Report into Te Kōhanga Reo National Trust?

Hon Dr PITA SHARPLES (Associate Minister of Education): Yes.

Hon Nanaia Mahuta: How can he be confident in the outcomes of an inquiry that did not actually investigate the allegations surrounding spending by Te Pātaka Ōhanga that led to the inquiry in the first place?

Hon Dr PITA SHARPLES: The terms of the inquiry were to look at the financial controls at Te Kōhanga Reo National Trust for the public money that the Government gives for the funding of kōhanga reo.

Hon Nanaia Mahuta: Does he not think he owes it to taxpayers, whānau, and kaiako to fully investigate the expenditure by Te Pātaka Ōhanga, given that it gets its funding from Te Kōhanga Reo National Trust, which is publicly funded?

Hon Dr PITA SHARPLES: Te Pātaka Ōhanga is, like many subsidiaries of many companies the Government funds, an organisation to provide particular special services. In this case, Te Pātaka Ōhanga provides insurance, computers, a health scheme, the internet, fuel cards, and things like that.

Hon Nanaia Mahuta: Is the Minister satisfied that all aspects of Te Pātaka Ōhanga governance and financial obligations meet acceptable standards of transparency?

Hon Dr PITA SHARPLES: Absolutely not. That is different from the review that we commissioned, which was about the money the Government spends for the running of kōhanga. In terms of Te Pātaka Ōhanga, we have made the trust aware several times that there are allegations floating around about impropriety, misuse, and so on, and we have asked it to attend to these things formally.

Hon Nanaia Mahuta: Can the Minister explain what changed this morning to lead the Government to hurriedly announce that it was now referring matters relating to Te Pātaka Ōhanga from the Charities Commission to the Serious Fraud Office?

Hon Dr PITA SHARPLES: It is part of us being responsible, particularly with regard to treasure like kōhanga, which some of you—and some of us too—had a role in starting and keeping going, and we still do. So what we have done instead is we received some information last night, which we acted upon and referred to the Serious Fraud Office.

Teachers—Legislative Reform of Profession

7. SIMON O’CONNOR (National—Tāmaki) to the Minister of Education: What recent announcements has she made on legislation to strengthen the teaching profession?

Hon HEKIA PARATA (Minister of Education): Last week the Minister for Tertiary Education, Skills and Employment, Steven Joyce, and I welcomed the first reading of the Education Amendment Bill (No 2), which will make a number of legislative changes to strengthen the education profession. The changes proposed in the bill will help the profession meet the challenges and opportunities of modern learning, and promote high standards of safety and accountability for teachers. This Government recognises the powerful contribution that high-quality teaching makes to raising student achievement.

Simon O’Connor: How will the Education Council of Aotearoa New Zealand (EDUCANZ) ensure consistently high conduct and educational standards for the teaching profession?

Hon HEKIA PARATA: The proposed changes will improve teacher registration and issuing of practising certificates. To obtain and maintain a practising certificate, registered teachers will need to meet standards and criteria set out by EDUCANZ. The proposals will enhance reporting requirements to maintain public confidence in the conduct of the profession. The disciplinary framework for teachers will be strengthened by developing a code of conduct, ensuring automatic referral to the disciplinary tribunal for cases of serious misconduct, and making disciplinary proceedings open where possible. EDUCANZ will be a strong professional body that speaks, acts, and leads with authority and integrity on professional matters.

Simon O’Connor: What other steps is the Government taking to strengthen the teaching profession and raise student achievement?

Hon HEKIA PARATA: EDUCANZ is a key part of a comprehensive, successful, and sustainable plan to raise achievement for all children and young people. That plan includes the $359 million investment in professional career pathways over the next 4 years; the inaugural Prime Minister’s Education Excellence Awards in June; the education festivals that open in Auckland next week, which I hope the member will take advantage of, and in Wellington and Christchurch; hosting nearly 20 education Ministers of the top-performing systems from around the world here in Parliament next week; new postgraduate qualifications; and a sector review of professional learning and development. This Government is backing our teaching profession to win—in law, in policy, in practice, and in funding.

Chris Hipkins: Why should the teaching profession have any confidence in EDUCANZ as a supposedly independent professional body, given that she does not have enough trust in it to allow it to have any say in who gets appointed to the board?

Hon HEKIA PARATA: The member is quite wrong. When the bill is considered in the select committee the member will become aware that it is proposed that there be nine members of the new council, five of whom must be registered teachers and all of whom can come from a pool nominated by the profession. The Minister will pick from that pool, as well as have the opportunity to make some independent appointments, and all of those will be made against a transparent, public set of competencies criteria for that board as a whole. I very much look forward to it working to raise the status and value of the profession, and I am sure that the member joins me in that aspiration.

Justice, Minister—Statements

8. Rt Hon WINSTON PETERS (Leader—NZ First) to the Minister of Justice: Does she stand by all her statements regarding Oravida Ltd because she asserts they are true?

Hon JUDITH COLLINS (Minister of Justice): Yes, to the best of my knowledge. If I make an error, I face up to it. I correct it, and I apologise.

Rt Hon Winston Peters: If her explanation yesterday for the circuitous route to the airport—that is, she did not know where she was—is true, then why did she say on 4 March that she just popped into Oravida to have a cup of tea on the way to the airport; which statement is true and which one is false?

Hon JUDITH COLLINS: Of course, they are both correct. To use the term “pop in” is not a statement of fact; it is an opinion. But I can tell that member—

Hon Member: It’s called a colloquialism.

Hon JUDITH COLLINS: It is a colloquialism. But I can tell that member that not only did I speak with the China Executive Leadership Academy in Pudong for about 2 hours, I also had a meeting with the Shanghai Municipal Discipline Inspection Commission, plus there was a lunch, attended by many guests. Then there was a call on the Director-General of the Shanghai Justice Bureau. The only other choice was either to go to the airport, or to go to Oravida and then to the airport. It was always planned that if there was not time, we would not bother going to Oravida.

Rt Hon Winston Peters: How can she stand by her statement about Oravida “They were not affected by the whey powder. They’re the first exporters of fresh milk from New Zealand to China and this was not affected by Fonterra.”, when close friend and Oravida director Julia Xu said, just before the Minister’s trip to China, that “It was having a very negative impact on Oravida, and that the way to fix it was the Government perhaps could do a little more to engage in more bilateral talks to remove some of the tests on measures the Chinese Government have put on.”; which of these two statements is true and which is false?

Hon JUDITH COLLINS: Of course, what it does show is that I had very little knowledge of Oravida’s business, and I should have had more.

Rt Hon Winston Peters: Why did she not inform the Prime Minister in her letter requesting permission to travel to China that she would visit Oravida and meet with the directors of Oravida on three separate occasions?

Hon JUDITH COLLINS: Well, when I sought permission to travel I did not know that I would be popping in to see Oravida or meeting with it on any occasion.

Rt Hon Winston Peters: Well, that being the case, why did she, following her trip to China, neglect to report to Cabinet and the Prime Minister in her Cabinet travel report that she had visited Oravida, met on more than one occasion with its directors, and that she had had dinner in Beijing with, amongst others, a senior Government border and customs official?

Hon JUDITH COLLINS: I accept that what I should have done is not rely on the precedent set by the right honourable member Winston Peters on his travel reports, and I should have put down everything single little thing.

Rt Hon Winston Peters: How can she expect New Zealanders to believe her when she has made so many demonstrably contradictory statements and behaved like this—Oravida’s milkmaid? [Interruption]

Mr SPEAKER: Order! If the Minister could address the first part of the question, which is relevant.

Hon JUDITH COLLINS: Well, I just say to that member that I have never lost $100,000 put into my lawyer’s trust account like—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. First of all, the Minister’s answer is not on the question. The second thing is that it is going to lead to disorder, because that member now knows, and so does that whole party over there, that the original allegations were deceitful and dishonest in the extreme.

Mr SPEAKER: The difficulty I have in assisting the member on this occasion is the way he framed the question, particularly with his visual aid at the end. He was already leading the House into disorder.

Rt Hon Winston Peters: Can I have an answer to the question?

Mr SPEAKER: I will allow the Minister, if she wants to add more to the answer, to do so; otherwise, I will consider that the Minister has answered.

Hon JUDITH COLLINS: How can you get past $100,000?

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! This is a point of order and it will be heard in silence.

Rt Hon Winston Peters: I raised with you a point of order on the first answer to that fifth question. Now she has directly offended again. The offence is no more improved by the repetition, and I want you to order against her doing that.

Mr SPEAKER: And I have no intention of doing so. As I said to the member—[Interruption] Order! If the member wishes to stay for the balance of question time—[Interruption] Order!

Question No. 6 to Minister

Hon Dr PITA SHARPLES (Associate Minister of Education): I seek leave to table a copy of a letter to Te Kōhanga Reo National Trust Board from Minister Parata and me, sent this afternoon.

Mr SPEAKER: Leave is sought to table a copy of that letter. Is there any objection? There is no objection. It can be tabled. Document, by leave, laid on the Table of the House.

Housing, Affordable—Homeownership

9. HOLLY WALKER (Green) to the Minister of Housing: When was the last time that the homeownership rate was as low or lower than it is now?

Hon Dr NICK SMITH (Minister of Housing): The long-term history of homeownership rates is that they improved during the 1950s, the 1960s, and 1970s, and that the decline began in the mid- 1980s. The homeownership rate is currently at the lowest point since the 1950s, and that is why this Government is putting so much work into freeing up land supply, reducing infrastructure costs,

getting greater competition in the building materials market, and reducing compliance costs, as well as the new programmes that we have announced in respect of Welcome Home Loans and the KiwiSaver first-home deposit subsidy scheme, which we have expanded.

Holly Walker: Does he agree that the reason homeownership rates were so high in the past was that families had access to low-interest mortgages through State advances and that it was the end of this policy and the rapid rise in house prices that have made homeownership an unaffordable dream for many young families?

Hon Dr NICK SMITH: The part where I would agree with the member is that if you look at those long-term trends on homeownership, homeownership went down in periods where interest rates were high and went up in periods when interest rates were low. So the periods where homeownership rates deteriorated the most were between 1984 and 1990, when interest rates went over 20 percent, and when they sharply declined last decade, when the previous Government had very high interest rates. That is why this Government puts huge importance on keeping interest rates low for longer.

Holly Walker: Given that answer, what realistic hope does a young family on a modest income have of owning their own home in 2014 when, under his Government, house prices have surged by 26 percent—and by 50 percent in Auckland—new loan-to-value ratio restrictions have made it impossible for many to get mortgages, and now interest rates are rising?

Hon Dr NICK SMITH: It is true that interest rates increased last week by 0.25 percent above 40-year lows. All of the data shows that the sort of big-spending, big-borrowing policies that the party that the member represents advocates would push interest rates up higher; as well as that, its restrictive land policies would make homeownership harder. I am proud of this Government’s record because, according to the independent Roost housing affordability study, over the last 5 years since we have been the Government housing affordability has actually improved by 32 percent.

Holly Walker: Would a rent-to-own policy for Government-built homes make it easier for young families to own their own homes, and if so, will he support such a plan to stabilise house prices and give families an affordable pathway to homeownership once again?

Hon Dr NICK SMITH: This Government is supporting some well-finessed rent-to-buy schemes, and I give the example of South Auckland, where we have partnered with community housing organisations to do so. But the idea that if the Government embarks on a massive State housing building programme it can somehow do that more efficiently than the private sector—that is dreamer country. We know from the record of other countries that have gone down that path that it involves massive Government spending—tens of billions of dollars. That spending of tens of billions of dollars is exactly what will drive interest rates up and make homeownership further from the reach of average Kiwi families.

Phil Twyford: Is he comfortable that the Government’s loan-to-value ratio policy signed off with the Reserve Bank is now, according to the BNZ, seeing 6.4 percent of houses being sold to offshore speculators, and how does he think ordinary Kiwi first-home buyers facing a 20 percent minimum deposit and interest rates heading north of 8 percent will be able to compete with cashedup overseas buyers, or is building a generation of renters part of his failed housing policy?

Hon Dr NICK SMITH: The first point I would make is that when we came to Government, interest rates were 11 percent. They have actually consistently come down. If you look at the longterm history of interest rates, they have been consistently lower under National Governments, which constrain fiscal spending and make sure there are well-balanced economic policies, than Governments of the left. In respect of house building rates, I would point out that in the Productivity Commission study there was not any mention in terms of improving housing affordability that foreign buyers played any significant part. I point to the fact that across the Tasman in Australia housing affordability has deteriorated by a greater amount despite such

restrictions, showing that such restrictions are just political mirrors and will make no real difference to housing affordability.

Forestry—Government Support

10. Hon DAVID PARKER (Deputy Leader—Labour) to the Minister of Finance: Does he agree with the forestry industry that Government incentives to encourage further wood processing in New Zealand, such as accelerated depreciation rates on machinery, are necessary to maximise New Zealand’s share of the global value chain?

Hon BILL ENGLISH (Minister of Finance): No. A few figures might help to assist the discussion. New Zealand exported $4.4 billion of forestry products in 2013, and 60 percent of that was value-added product. New Zealand processes around 50 percent of our production onshore. Employment in first-stage processing has been steady at around 17,000 over the last 5 years, and mill productivity is up—quite a different picture from Labour’s tired use of the word “crisis”. Just last month the chief executive of the New Zealand Timber Industry Federation called for rationalisation in the sector to deliver a stronger sawmilling sector.

Hon David Cunliffe: I raise a point of order, Mr Speaker. I seek your guidance. Earlier in this question time I was allowed, with the good will of the Government, to table a document from the Ministry for Primary Industries that showed that the twice-repeated assertion by the Acting Prime Minister, the Minister of Finance, that 60 percent of New Zealand’s timber exports were value added was incorrect. The Ministry for Primary Industries document for 2012-13 entitled “Facts and Figures” shows that 55 percent are actually—

Mr SPEAKER: Order! I have heard enough. The member is now using points of order to debate. The Minister who is answering the question is responsible for his answer. If in any way he had misled the House, then he is certainly responsible for that.

Hon David Parker: How can he claim that his current policies are working, given that raw log exports have rocketed while processed exports have stagnated?

Hon BILL ENGLISH: Raw log exports have not just randomly increased because bad people want to export them; they have increased because the prices have gone up sharply, which has increased New Zealand’s national income. Labour has been saying it wants high-value export industries. When the prices go up, people tend to export more. It happens that right now exporting logs is higher value than further processing, but, as people who have watched this industry for 20 years will know, those prices can drop as sharply as they can rise, and it could be a matter of months or a matter of a few years before the situation is significantly reversed.

Hon David Parker: Why is he sticking with policies that see millions and millions of raw, unprocessed logs exported each year with no value added?

Hon BILL ENGLISH: I simply disagree with that. We are sticking with people in the forestry industry who, through quite a long period of time, have learnt how to manage the risks of being a grower of raw material and supplier of processed goods to the world when we are a small market a long way away, dealing with exchange rate risk, product risk, and market risk. We back those people to make the decisions that will align best with New Zealand’s national interest, and right now exporting logs when the price is so high is good for the New Zealand economy. We certainly do not back a bunch of Labour politicians, whose best ideas come from the 1970s, to run our forestry industry.

Hon David Parker: Does he accept that higher tax allowances will cause more capital investment and thereby improve productivity and create more jobs by helping the wood processing industry to extract more value from the global value chain?

Hon BILL ENGLISH: No. What will promote more investment is continuing the Government’s sensible programme of better roading and rail infrastructure, into which we poured billions of dollars; better-skilled New Zealanders available to the industry to hire them; a stable and competitive energy market, to get the benefits of competition for one of their biggest single costs;

and keeping the interest rate cycle low. One thing that will kill the forestry industry is 10 percent first mortgage rates such as were reached under the last Labour Government.

Hon David Parker: Does he agree with the Associate Minister for Primary Industries, who told the ForestWood 2014 conference this morning that the Primary Growth Partnership “is absolutely about picking winners”; if so, why does he criticise the Labour Government for trying to support the wood processing industry?

Hon BILL ENGLISH: Well, I do agree with the Associate Minister about the Primary Growth Partnership, because it is based on science and research, and that is the proper role of the Government. But I agree that Labour is good at picking winners. It picked the manufacturing sector as a crisis; it is winning. It picked the regions as a crisis; the regions are winning. It has picked forestry as a crisis, and it is winning.

Hon Member: And David Cunliffe.

Hon BILL ENGLISH: It picked David Cunliffe as a winner, and he is a crisis.

Mr SPEAKER: Order! That will not help the order of this House.

Hon David Parker: Does his $600 million irrigation fund for multimillion-dollar dairy farms or his corporate cronyism for Rio Tinto or Skycity come within his definition of picking winners, and what is the difference between his cronyism and an industry-wide support for better forest processing?

Hon BILL ENGLISH: No. What it does show is that this is a Government that is willing to be pragmatic when it makes the judgment that it is in the best interests of New Zealand. I know it annoys Labour that we are not rigidly ideological, but actually we have made occasional interventions where we have believed that that is in the national interest, and we are ready, willing, and able to draw the line around those. What we are not going to do is try to run whole industries, particularly, in this case, the forestry industry, which is doing well. The last thing it needs is to be run by a bunch of Labour politicians whose best ideas come from the 1970s.

Hon David Cunliffe: How does the Minister’s “pragmatic” approach to “healthy competition” square with today’s finding by the Commerce Commission of price fixing in the Auckland timber products market by Carter Holt Harvey and Fletcher Building, or is that just another example of the Government’s approach to crony capitalism?

Hon BILL ENGLISH: The member could not have picked a worse example, because in our push to improve housing affordability we identified the pricing of building products as a potential problem and did the first ever market study under the Commerce Act to investigate those issues. We are currently considering the policy issues that flow from that study, and the member can expect to see action following on from it. It is exactly the opposite of cronyism; in fact, at least one of those firms is vigorously campaigning against the Government’s policy direction.

Hon David Cunliffe: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! This is a point of order.

Hon David Cunliffe: I seek to table this publication—[Interruption]

Mr SPEAKER: Order! Can I just have—[Interruption] I am going to ask the member to start again because there were still interjections. This is a point of order and it will be heard in silence.

Hon David Cunliffe: I seek leave to table this charming cover on The Economist magazine and ask the Minister—

Mr SPEAKER: Order! That is a magazine that is available to members if they want it.

Prisoners, Rehabilitation and Rate of Reoffending—Education Programmes

11. JACQUI DEAN (National—Waitaki) to the Minister of Corrections: What recent reports has she received on the provision of education programmes in prison?

Hon ANNE TOLLEY (Minister of Corrections) More good news. I am pleased to advise the House that there has been a huge increase in the number of education programmes in our prisons. Almost 3,000 prisoners—3,000 prisoners—are scheduled to start a numeracy and literacy

programme this financial year, which is an increase of 155 percent since 2007-08. There has also been a massive increase in the number of prisoners receiving qualifications, up from just 197 in 2008-09 to 1,833 in 2012-13. Increasing the number of education programmes in prison is a key part of our plan to reduce reoffending by 25 percent by 2017—

Le’aufa’amulia Asenati Lole-Taylor: They’ve been doing the same for the last 10 years, Minister.

Hon ANNE TOLLEY: —and, for that member, we will continue to focus in this area, as well as providing more drug and alcohol rehabilitation and skills training.

Jacqui Dean: What role does education play in reducing reoffending?

Hon ANNE TOLLEY: Lack of a basic education is a major driver of crime. Most prisoners, we find, have difficulty reading and writing properly. If this is not addressed, prisoners will not only have difficulty finding work on release but they will find it harder to make full use of support and social services. Too often this leads them back to a life of crime. So that is why this Government has introduced education screening and individual learning plans for all prisoners, so that corrections can accurately assess the level of support required. By increasing access to literacy and numeracy programmes we give prisoners the skills they need to participate fully in other rehabilitation programmes and study towards qualifications.

Justice, Minister—Visit to China and Potential Conflict of Interest

12. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Justice: On what date was she invited to dinner in Beijing with the founder and Managing Director of Oravida Ltd, and when was she informed as to who else would be attending the dinner?

Hon JUDITH COLLINS (Minister of Justice): Some time prior to my trip to China my friend Ms Xu suggested that she and Mr Shi would like to take me to dinner when I was in Beijing. It was an oral invitation. I said I would be accompanied by Margaret Malcolm. I do not recall the exact date. Some time in the week prior to my trip, Ms Xu advised me that they would be inviting another friend of theirs. She advised me of his name and position.

Grant Robertson: Given that answer, at the point at which she was advised of the name and position of the other person attending the dinner, was she not concerned that that person was a senior Chinese border control official?

Hon JUDITH COLLINS: My understanding is that he is a close personal friend of Mr Shi, and at the same time I was also advised that the ambassador was invited, if he and his wife wanted to attend.

Grant Robertson: Why did she not advise the Prime Minister that she would be attending a dinner with a senior Chinese border control official when she knew that that would be the case before she left New Zealand?

Hon JUDITH COLLINS: I have already apologised to the Prime Minister.

Grant Robertson: I raise a point of order, Mr Speaker. I do not believe that that did address the question that I asked.

Mr SPEAKER: I invite the member to ask his question again.

Grant Robertson: In doing so, it was not a question that was written down. So I will do my best.

Mr SPEAKER: Well, I can help if the member needs some help.

Grant Robertson: Oh, would you like to?

Mr SPEAKER: No, I would rather not. I would rather the member could handle it himself.

Grant Robertson: Why did she not advise the Prime Minister before she left New Zealand that she would be meeting with a senior Chinese border control official, given that that information was available to her well before she left New Zealand?

Hon JUDITH COLLINS: Having already advised the ambassador, I really should have given far more information to the Prime Minister. I regret that and that is why I have apologised.

Grant Robertson: Does the Minister not believe that, given her long experience as a Minister, she should have known before she left to go to China that there was a serious conflict of interest issue in her meeting a senior Chinese border control official, given Oravida’s difficulty getting products into China?

Hon JUDITH COLLINS: The Cabinet Office has already advised the Prime Minister that I do not have a conflict of interest situation. It is not as though I was a Minister getting the Prime Minister Helen Clark to open up my wife’s law firm, like David Cunliffe did.

Grant Robertson: Did the founder and managing director of Oravida Ltd travel with her to Beijing?



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