The CHAIRPERSON (Ann Hartley) Link to this
The House is in Committee for the debate on the performance in 2005-06 and current operations of Crown entities, public organisations, and State enterprises. The debate on the performance of Crown entities, public organisations, and State enterprises is a series of debates on individual financial reviews of Crown entities, public organisations, and State enterprises, as reported by select committees. The debates on the individual financial reviews should be relevant to their performance in the 2005-06 financial year and their current operations. A member may have no more than two calls on each financial review. A total of 3 hours is allowed for the debate. At the conclusion of the 3 hours, the Chairperson will report to the House. Only the financial reviews that have been reported are available for debate. A list of these is appended to the Order Paper.
I understand that members have indicated the Crown entities, public organisations, and State enterprises that they wish to debate. The first entity I understand that members wish to debate is the Government Superannuation Fund Authority.
R DOUG WOOLERTON (NZ First) Link to this
The Government Superannuation Fund Authority and the guardians to the fund have, in our view, had a remarkably good year. The fund has in excess of $12 billion within it, and it has returned, after fees, something in the region of 19.2 percent. So I think the guardians are to be congratulated, and I think the Government is to be congratulated on setting up this fund.
We in New Zealand First, of course, had advocated such a fund many, many years ago—in fact, in the days when we were in coalition with the National Government—and a referendum on that proposal was held and lost. I think that people now understand the value of what was being proposed at that time. I think that it is sad, because there have been times even before then when opportunities for a fund like this had been proposed but were always turned down. Sometimes that was because of the personalities involved, which I believe was the position in our case, and sometimes because of pure politics because it was the wrong side of the Chamber proposing such a fund. But now we have a fund and it is succeeding.
I cannot discuss the superannuation fund without mentioning the power of the Australian fund and the role it is playing in the Australian economy. We in New Zealand First would like to see that sort of fund happen here, and it is sad that we do not have it. But we are still hoping that compulsory superannuation contributions will become the norm, and we hope that the proposed KiwiSaver will turn into a compulsory scheme. We proposed that the superannuation fund be in named accounts, and we still hope that that will come to pass one day.
New Zealand First makes no bones about the fact that we believe the senior citizens of this country have had a raw deal over the years, and we have made it our mission to go out—
Thank you very much—getting there fast! We have made no bones about the fact that we want to go out there and improve conditions for the senior citizens of this country. They have put in the hard yards, they have put in the work, and they have served our country well, and we believe that it is time for us to look after them when perhaps they cannot do that for themselves as well as they might.
In speaking to that point, we have been very proud to oversee in the agreement with the Labour Government a lift in superannuation, of $20 per week for a married couple, and we are very proud of that. We will also oversee—and it was debated earlier this afternoon—the SuperGold card coming to fruition in August of this year. We think that those things are positive, and more especially positive not just for the people whom they relate to, as in the senior citizens, but they are extremely valuable for the whole of the economy. The Australian model proves that, and the New Zealand model, once it has a few more years under its belt, will prove that also.
Personally, I do not think that these things would have happened without New Zealand First. I still hope that we will get the named accounts in the superannuation fund, and we will still keep working towards that, with all of our considerable efforts in the years ahead—the next election, and beyond. Thank you.
Hon TREVOR MALLARD (Minister for State Owned Enterprises) Link to this
I thank Mr Woolerton for his contribution to the debate. I think it is fair to say that his contribution stepped slightly wide of the Government Superannuation Fund Authority and did give the Government a lot of praise and support for the work it has done and the work it is about to do—I feel like I am saying grace. But it is good to bring the focus back to the subject of the debate, which is the Government Superannuation Fund Authority, and to say that, overall, it has made very good progress in the current financial year. The total after-tax surplus of the fund was $462 million for the last year ended 30 June. The total net assets increased by $271.7 million. The total assets of the fund were $3.8 billion.
Unfortunately for the long-term future of the country, the total liabilities of the fund are about $15 billion, and clearly that is something that is being worked on. The level of the required Government contribution projected over 5 years from 30 June before the offset from employers is $577 million this year, rising to $618 million by 2010-11. So there is quite a large liability sitting there in that fund.
As far as the investment returns are concerned, the performance of the fund has been very strong over the past 3 years. In the last year the fund achieved a 13.5 percent return on average net assets. The best-performing asset classes were property and international equities. I know that it is strictly outside the realm of the debate, but I think the Chair will be liberal and let me say that in the first two quarters of this financial year, the fund has achieved a return of 6.3 percent.
In the last financial year the authority decided to allocate up to 15 percent of the fund’s assets to alternative asset classes, in addition to the 7.5 percent allocation to property. The first step in implementing that was to shift 3 percent of the fund’s assets from New Zealand bonds, taking them down from 8 percent to 5 percent to commodities futures. I am sure my colleague Maryan Street will be pleased to know that the authority has committed itself to the United Nations Principles for Responsible Investment.
CRAIG FOSS (National—Tukituki) Link to this
I rise to speak on the Reserve Bank of New Zealand, as reported—
The CHAIRPERSON (H V Ross Robertson) Link to this
Does the member wish to speak on the Government Superannuation Fund Authority?
Reserve Bank of New Zealand
It is Groundhog Day indeed. We are back here after a 3-week adjournment. I rise to speak about the Reserve Bank report. It is very timely that we are discussing the Reserve Bank report tonight, given that there has been much publicity and discussion over recent weeks about monetary policy and about the Reserve Bank. In fact, if we cast our minds back over the last year or two, we will recall that there has been much discussion and conjecture about the role of the Reserve Bank and the results that fiscal policy have on monetary policy.
The Reserve Bank is charged with many roles—amongst them looking after our banknotes and money in circulation, etc. But it also looks after the management of monetary policy. As the report from the Reserve Bank to the Finance and Expenditure Committee states, the Reserve Bank has had a pretty tough time. Dr Bollard is not the bad guy here. Dr Bollard, the Governor of the Reserve Bank, is not the bad guy. The buck—the inflationary buck, rising interest buck, and overpriced exchange rate buck—stops with the Minister of Finance, Dr Cullen. The inflationary chickens have most certainly come home to roost. That process started probably about 6 or 7 years ago.
Monetary policy does not operate in isolation. If one had read some reports over the last year, one would think that perhaps it does, but in fact it does not. Fiscal policy virtually totally drives the forces that drive the decisions on monetary policy within New Zealand. That is what the Reserve Bank is charged with doing. Most New Zealanders may think of the Reserve Bank as just raising interest rates and the exchange rate, and as managing our banknotes, etc. But the Reserve Bank in the last year has been very, very busy. For example, in the middle of the year it took a trip to Japan. Members may recall that at about that time, the exchange rate of the New Zealand dollar was about 64c or 65c to the US dollar. At that time the Reserve Bank was trying to discourage the Japanese from investing in New Zealand, to help, perhaps, to hold our exchange rate at the level of that time. It is worth noting that at the moment the exchange rate is about 74c to the US dollar, I believe. It has gone up by another 9c—about 17 percent—over the past year.
In New Zealand the Reserve Bank prides itself on its independence and on the transparency of monetary policy. So what has changed? What has changed over the past year? What has changed over the year of the Reserve Bank report that we are talking about? Why suddenly tomorrow—as Dr Cullen alluded to today in the Chamber—will the Finance and Expenditure Committee be asked for solutions around monetary policy? What an amazing admission of failure that is! Why has the Finance and Expenditure Committee suddenly been asked for solutions around monetary policy? What is going on there? There are many conflicting reports. Just last week we heard Dr Cullen say one thing, Mr Mallard say another thing, and the Prime Minister say another thing again. Who is in charge? Is it Dr Cullen, Mr Mallard, the Prime Minister, or Dr Bollard? Who is actually in charge?
The monetary conditions we have at the moment have been 7 years in the making. There is massive resource pressure and there are massive constraints within the economy. One can trace the origins of our current problems back to about 2000-01, when the price target agreement was changed. We moved from having hard barriers to inflation—which were once 0 to 2 percent—that provided certainty to New Zealanders, New Zealand business, and, of course, the Government accounts. We moved from that to a point where we have soft targets of 1 to 3 percent over the medium term, which is defined as being about 3 years. That has given rise to the absolutely absurd situation that if yesterday’s consumer price index had come out at 10 percent, for example, as long as the Reserve Bank governor was forecasting inflation to come back to between 1 and 3 percent over the medium term, then he would be doing his job. He would be entirely within his rights, doing his job, and fulfilling the obligations between him, the board, and the Minister of Finance.
At about the time of that change, we saw consumer price index inflationary expectations start to rise. As those expectations started to rise, interest rates started to rise, and, funnily enough, the exchange rate started to rise. We now have inflation expectations based around 3 percent. I ask someone to show me a wage claim, salary claim, or price increase that is less than 3 percent. That is now the base, and it is absolutely cancerous to our economy. Just as an aside, though, members should imagine where the consumers price index would be if our exchange rate was actually 20 or 30 percent lower than it is.
What is broken? What is broken in our monetary policy framework? It is actually working.
Hon TREVOR MALLARD (Associate Minister of Finance) Link to this
I acknowledge and put it on the record that the previous speaker was Mr Craig Foss from Tukituki. I think that everyone who was listening to this debate should know who it was. I had to ask just in order to check that, but it was Mr Craig Foss from Tukituki. People who were listening to him should know that, because, frankly, although he actually has more experience than the Leader of the Opposition in the finance markets and has done better than him, he should know a lot more than he showed he did.
Mr Craig Foss should know that one of the reasons the Finance and Expenditure Committee is, I understand, contemplating an inquiry is that we cannot trust Bill English on this matter.
Hon TREVOR MALLARD Link to this
On the question of monetary policy, as the member was indicating, going before the committee, he asked the reason for that, Mr Chairman, so I think I am allowed to give a response. The response is that Mr Bill English, when involved in confidential discussions—
Hon TREVOR MALLARD Link to this
—pulled the pin, made them public, and undermined his own leader, who was supportive of a particular mechanism. So this Government has decided that if the committee decides to do so, it will be good to have something that is clear and transparent and to have open discussion about it.
The member makes points about fiscal policy. He is one of the worst members in terms of demanding more Government spending. He wants tax cuts and more spending, and then he complains about fiscal policy.
Hon TREVOR MALLARD Link to this
Well, some productivity from that member would be good. Some productivity from that member would be a change.
Hon TREVOR MALLARD Link to this
It is very, very hard to measure productivity like that—very hard to measure stuff that does not happen.
The next point I want to make goes to the contrast between the parties on the fiscal approach. The National Party has announced today that it will strip money from working families, and give it to National’s mates by way of tax cuts.
Hon TREVOR MALLARD Link to this
That is exactly the point. He wants to strip money from working families. He has indicated that he wants a tighter fiscal policy. At the same time, he wants a looser fiscal policy. But on the way there, he wants to have a transfer of money from people with kids to his rich mates. That is not on. That is the sort of election we want to have. We will have an election on that—on the National Party stripping money from working families and giving it to its rich mates. This Government will be keen to have that sort of debate, albeit it will be one more about fiscal policy and the approaches to that than about monetary policy. But given that the member brought that into this discussion, I thank him very much and ask him to bring it on.
Hon CLAYTON COSGROVE (Associate Minister of Finance) Link to this
I am delighted, as a colleague and as an Associate Minister of Finance along with my colleague the other Associate Minister, to follow Trevor Mallard. I have to say that when we talk about monetary policy I recall, when I was chair of the Finance and Expenditure Committee, the Governor of the Reserve Bank coming to a meeting. He always provided us with excellent information.
But we are debating monetary policy and Mr Foss talked about conflicts and contradictions. Well, I have to say that before Bill English appeared on Close Up with me a couple of weeks ago to debate the dollar, he had just put out a statement that said it was all the Government’s fault and that we should cut expenditure. Then he went on and was asked what he would cut. Would he cut the 1,000 extra police? Would he cut the public service? Would he cut the number of teachers? He responded to Mark Sainsbury when challenged by saying: “You don’t need to cut expenditure.” So Mr English put out a press release saying we should cut it—we are talking about monetary policy here, because the fiscal situation that National proposes has an effect on monetary policy, as we know—then he said we do not need to cut it. Then, when questioned again, he said we are doing too well and we need to cut growth. So that member can talk about contradictions in fiscal policy!
He is from a crew who criticises quality Government expenditure, like the biggest roading programme we have seen in 30 years, fairer wages for nurses, a free 20 hours of early childhood education, and 1,000 extra police. And then that member has the audacity to go on about inadequacies and a lack of quality in expenditure. If he had got into Government, he was going to drop on us a $7.4 billion tax cut, half of it borrowed, and inject it directly into the economy. I ask that financial genius over there to tell me what that would have done to the inflation rate and the Reserve Bank governor’s ability to control monetary policy.
Mr English would have given his mates, the then leader of National, Dr Brash, and himself a hundred bucks a week, but most of my constituents and low and middle-income constituents around $20 or $30. And he goes on about the need to contract expenditure! This, of course, is after all his colleagues for months have called for more money in corrections, youth justice, roading, and police. Mr English went on national television and thought he could hoodwink the public by saying we should cut expenditure, then said that we did not need to and that the answer to our problems in respect of inflation and the dollar was to cut growth.
Apparently, according to Mr English, we are all doing too well. The economy is doing just too well. It is over capacity—going gangbusters. We have the fourth lowest unemployment rate in the OECD and the longest stretch of economic growth since the war. So what is the National Party prescription to deal to it all? National members say: “Let’s cut economic growth.” Well, I say to them that there is an easy way to achieve that task. If they were ever to win an election, they would cut growth, and the dollar, and inflation overnight, just through the lack of confidence they would engender in the financial community through speeches like the one that financial genius Mr Foss made tonight. I say to Mr Foss—
Hon CLAYTON COSGROVE Link to this
My colleague is known for his judgment, but on this one he may be out.
I say to National members that they cannot have it both ways. They cannot say to people at one end of the pub: “We should spend more on roads, police, and prisons.”, and then say to the guys at the other end: “Isn’t the Government awful! We should be cutting expenditure.” Silly members like Mr Foss do not realise that the boys from both ends of the public house tend to get together, have a wee chat, and realise that that member speaks with a forked tongue, out of both sides of his trap.
I say that this is a debate about monetary policy. It is a serious debate. It is not a debate about political posturing and going on television to say that all we need to do is cut expenditure, cut growth, or whatever. This is a serious issue that most of the economies in the world are grappling with. Our problem, which is sort of like trying to nail a jelly to a wall—
Hon CLAYTON COSGROVE Link to this
That member exhibits every facet of a jelly. He is all over the place. But when we have an economy going gangbusters, when we have people in jobs, when people have confidence in the economy because we no longer have boom-and-bust cycles, and when people are investing in property and other assets because they feel confident, then we do get pressures on the dollar and pressures on inflation. Consumption is up because people have money in their pockets. So I say to that member that he should go back to Economics 101, read a textbook, and get it right.
Dr JONATHAN COLEMAN (National—Northcote) Link to this
There is more bad news. This 2005-06 financial review is more bad news for this beleaguered, sorry Minister, whose broadcasting policy is completely in tatters along with his career. On the second to last day of the last sitting, Minister Maharey, the self-styled future Labour Party leader and future Prime Minister of New Zealand, made a career-ending blunder from the front bench over there. We are not hearing anything from his colleagues because, quite frankly, they were quite happy about that. The Labour right, over there, including Mr Cosgrove and the man who lost the seat of Tukituki, were quite secretly delighted. Mr Mallard, the Minister for State Owned Enterprises, was taking a bit of relish in the situation as well, because he knows that has moved him, in his own mind, one place further up the rankings. This is the end for Mr Maharey. It must have been absolutely devastating for him. If members think the language was blue here in the Chamber, they can imagine what it was like when he went back to his office—the hair tearing; the head in the hands. The career was over; it was all gone.
But that would have been nothing compared with the language coming down from the ninth floor, as “H2” and “H1” got on the phone and told Maharey he had blown it—
The CHAIRPERSON (H V Ross Robertson) Link to this
The member must be seated while I am on my feet. The member will use the Minister’s correct name and his title, not a nickname.
Dr JONATHAN COLEMAN Link to this
I am sorry. The Prime Minister, Helen Clark, and her sidekick Heather Simpson would have been ringing down from the ninth floor, saying to Steven Maharey, Minister of Broadcasting, that he had blown his future in the Labour Party.
I can imagine the emails pouring in by the thousands to Mr Maharey, telling him exactly what the public thought of the Minister of Broadcasting and the Minister of Education totally losing his rag in the House. It was absolutely disgraceful. We were hoping that maybe he might front up the next day to take his punishment, to take his medicine, but no. Where did he go? Well, we do not know, but he certainly was not here in the Chamber.
We can talk about Mr Maharey and the end of his career all that we like, but the reality is, as the academics have said, that Mr Maharey’s broadcasting policy is in tatters. The reality, when we are talking about Television New Zealand (TVNZ), is that the executives there are playing with the cards that Mr Maharey has dealt them. They are doing the best they can do. It is the Government broadcasting policy that has got TVNZ into the situation it is in. Mr Maharey was very, very keen on the TVNZ charter, and he is very, very keen to use TVNZ as a cash cow. So he is putting stringent demands on it at the top end, and then he is pulling the cash out at the bottom. Last year TVNZ had to pay an extraordinary dividend of $70 million, and it had to go into debt by $60 million in order to pay that. All the Minister can say, when he is asked about that on Radio New Zealand, is that that is the business model, and it is good for businesses to carry debt. Well, it needs a bit more of a sophisticated explanation than that.
Frankly, what is this Minister’s charter delivering? It is delivering the destruction of 160 jobs. It is delivering the end of current affairs analysis in New Zealand. I put it to the Minister—and maybe he will get up and explain this—that if he has deteriorating advertising revenues at TVNZ, and if he has a charter that asks TVNZ to produce a certain type of content but he also has commercial impositions that he is placing on it, something has to give. What will give is the quality of broadcasting. We went through that in 2001, with project regeneration under Marian Hobbs over there. That was meant to be the new dawn. Everything was meant to be great, and charter television was going to deliver. Mr Maharey said he was looking forward to seeing an improved standard and a greater quality in broadcasting under the charter. And what has he delivered? One hundred and sixty job cuts.
But it is even worse than that. The Government is trying to launch 24-hour television—a 24-hour news channel. I would be very interested, if the Minister takes a call—which I hope he will do—to see whether he can get up and explain to me how, when he has cut $10 million from the news budget and cut 160 jobs, he will deliver on a 24-hour news channel. How will TVNZ be able to pull the Television One ratings back up? The reality is that the people at TVNZ are doing the best they can do, but this Minister has got them by the proverbials and they have nowhere left to go. The Minister has totally lost his grasp on policy. If we look at digital television, we see that he said it would cost $300 to get a set top box. It will cost double that. It is clear that the policy is in tatters, and the Minister needs to explain that situation.
HONE HARAWIRA (Māori Party—Te Tai Tokerau) Link to this
Tēnā koe e te Hēamana, tēnātātou katoa e te Whare.
[Greetings to you, the Chairperson, and to all of us in the House.]
One of Television New Zealand (TVNZ)’s top 10 charter objectives was supposed to be to ensure in its programmes and programme planning the participation of Māori and the presence of a significant Māori voice. Well, excuse me if I choke on that piece of garbage. Apart from Te Karere, , and , which are paid for out of ring-fenced funding, the only new Māori programme on Television New Zealand seems to be a 5-minute drama slotted into that prime 4.30 in the afternoon time slot, the one right next to . I want to give no offence to my mate Willie Jackson, but once a week hardly qualifies as the significant Māori voice. That is a pity, because some outstanding talent out there is being hidden away in some really poor time slots—like that for a doco produced by Tere Harrison, an independent radio, television, and film producer.
Framing Maori gave us an insider’s look into the analysis that tells us that the television coverage of Māori issues is unbalanced—as if we did not already know that. It exploded the myth of journalistic objectivity and called for more culturally informed news reporting. It was an excellent programme that nobody saw, of course, because it was on at 9.30 a.m. on a Saturday morning. In fact, independent studies confirm that there is a lot more bad news than good news about Māori on television, and that the so-called presence of a significant Māori voice tends to be on programmes like , , or the 6 o’clock news. That view was backed up by the visit of the United Nations special rapporteur last year, when he noted the “systematic negative description of Māori in media coverage” as being of special concern. When Television One is brave enough to put forward a significant Māori voice, it is at the crack of dawn, late at night, or on mornings at the weekends, when whānau have other responsibilities.
It is timely to raise these points in this debate because just a month ago the national hui of Māori film and television broadcasters, Ngā Aho Whakaari, again challenged TVNZ for not fulfilling its charter obligations to Māori, citing an age-old joke about Te Karere being a programme that one sees only in the winter, because when the cricket is on gets shunted to midnight.
The TVNZ programming that does have the presence of a significant Māori voice is impressive. It is professional, high quality, and reflects the integrity and talents of some of our finest broadcasters, but it is just hidden away in all of the wrong places. Over the years we have seen the likes of Ernie Leonard, Whai Ngata, Derek Wooster, KīngiĪhaka, Hone Ka,Julian Wilcox, Wena Harawira, and heaps of others who have recorded our stories, captured priceless memories, and contributed to an immense archive of knowledge and an enviable resource that has a legacy well outside of its monetary value. In fact, the presence of a significant Māori voice can even be something as simple as seeing Carol Hirschfeld and Mike McRoberts on TV3, which raises the obvious question of where the equivalent significant Māori faces are in TVNZ.
Pita ParaoneIt is TVNZ that we are talking about here. Those faces are gone. The issue is not just about the charter; it is also about seeing the faces and hearing the voices in order to know it to be true.
It is hard to stomach lies about the presence of a significant Māori voice, when the flagship stories of the Māori world that feature on the State broadcaster receive inferior programming slots, meagre resources, and little screen time for top Māori broadcasters. We also note, too, that it is not just Māori programmes that are suffering from the constant haemorrhaging of viewers to the competition. TVNZ blew it big time when it decided to dump its stars: Paul Holmes, Judy Bailey, Susan Wood, Mike Hosking, Richard Long, and the list goes on. When the stars went, so did the audience. The ratings dropped, the advertising revenue slumped, and now TVNZ seems to be caught up in a vicious spiral of its own making. It now looks—
Hon STEVE MAHAREY Link to this
I was trying to be quiet, because it was a good speech. I think Mr Harawira has raised issues that go to the heart of what we are trying to do with broadcasting, and of course that is to make sure Television New Zealand, the major public broadcaster in the country, does represent audiences right across the whole of the country. I thank him for his speech and hope he carries on raising those kinds of points about Māori broadcasting, because although we do have, as Mr Paraone pointed out, a Māori broadcaster 24/7 each week—and it is doing a fantastic job; it is publicly funded, part of the public service organisations of this country—Television New Zealand is still responsible for ensuring that it represents the wide spectrum of viewers and we want to see that it does serve Māori interests.
Can I go back to Mr Coleman, who made, I think, his first foray into broadcasting this evening. I have not heard him speak on broadcasting before, and I thought for the first 2 minutes—
Hon STEVE MAHAREY Link to this
Mr Coleman is the one who spoke before. I thought for the first 2 minutes of his speech that we were not going to hear about broadcasting, because he talked largely about his incident with a cigar, as far as I could tell, and the fact that his career had come to an end after he blundered around the corporate boxes in Auckland. He made a huge mistake for a new member, and of course ruined his career. I thought that was what he was going to talk about the whole time.
One of the things we all know is that when people come into the House they do not necessarily come in with a background that fits the portfolio they get into. Mr Carter had no background in housing, for example, but he got the housing portfolio. People come in with different backgrounds and they have to go into portfolios they are not necessarily familiar with. Mr Coleman, I understand, is a medical doctor and therefore has no expertise in broadcasting at all apart from sitting watching it, no doubt, now and again. Unfortunately, he did not follow the golden rule for people who are moving in from a background where they do not understand the portfolio, and that is to spend some time finding out about it—spend a bit of time finding out about how the portfolio works. So half of his inaugural speech this evening was spent on his own blunders and his ruining his career, and what followed on was a disjointed discussion that showed nothing but complete ignorance about the portfolio.
I want to tell people who are listening this evening that this debate is an opportunity for Opposition members to get up and ask insightful questions about a portfolio, following on from a review by a select committee. They do not have to be rocket scientists. They do not have to be geniuses. They do not have to have all the facts and figures at their fingertips. They have to simply listen to what has been said, what select committees have done, distil from that some questions, and come to the Chamber and ask them.
Mr Coleman began his series of discussions by talking about dividends. If he simply looked at the dividend for Television New Zealand, he would find that right through the 1990s the National Government got 25 percent dividends from Television New Zealand, on average, every single year. That was commercial television. That was a publicly owned commercial television company providing for the Government 25 percent dividends every single year. That Government was also the genius Government that allowed Television New Zealand to sell its shares in Sky, so it no longer had a foot in the digital world that we are now having to go into in 2007. Those members were the geniuses who drove the National Party policy in the 1990s. On top of that they gave the broadcaster money to pay for it and never got it back, at all—never ever raised that money back again.
So we have Mr Jonathan Coleman, in his first time down in the Chamber, asking what sort of dividend we get. It is, on average, around 6 percent. That includes the highest level of revenue that Television New Zealand has enjoyed in probably 30 years. During the period 2004-05 advertising went through the roof for all broadcasters. They made substantial money. Do we ask Television New Zealand for all of that? Do we say that we should have that dividend back? Or do we reinvest it in the broadcaster? Mr Jonathan Coleman would not know. Jonathan Coleman did not know what his own Government was gouging out of Television New Zealand. Would he know what is coming out of it now? No. He did not bother to read the report. He does not know anything about the dividend. He does not know why a dividend is asked for. This company earns over $400 million a year. Would taxpayers thank this Committee for saying: “Don’t act like a business on that money. Don’t try to make a return on that money. Just go soft. Don’t worry about it.”? Of course they would not. They would say: “No, you cannot do that; what we want to see is a financially robust organisation.”
It could be possible to go on and talk about why a company might carry some debt. This company carries no debt. We could go on and talk about what the charter actually does, but I doubt whether it has been read. We could talk about how much a set top box costs, which is run, of course, by a private company called FreeView which is being launched tomorrow. I doubt whether Mr Coleman has been invited, because I am sure that company does not know who he is, but if he did turn up, he would find that the starting price is not $300 as he said, but $249. It would be interesting, in other words, to get a spokesperson on the other side who knew something about the portfolio and therefore could have an intelligent debate, but so far no good.
The CHAIRPERSON (H V Ross Robertson) Link to this
I understand that the next entities members wish to debate are the Crown research institutes. Is there any objection to taking these as one question? There is not.
Hon BRIAN DONNELLY (NZ First) Link to this
Thank you for that accommodation, but with the Crown research institutes there are lessons to be learnt from the reviews of each and every one of them and just to speak to one is, in fact, very limiting.
But I rise, in fact, first and foremost to make a confession. Because last year, in this debate when I—
Hon BRIAN DONNELLY Link to this
Mea culpa, mea culpa. I actually made this brilliant speech about two Crown research institutes and their financial reviews from, in fact, the year before, prior to the one we were supposed to be debating. To the credit of the Minister, without the blink of an eyelid he just got up and responded to my speech as if I was making it in the right year. The only person in the Chamber who actually knew that I had made this blunder was Katherine Rich and, bless her heart, she never brought it to the attention of the Committee. But in this particular case I am going to be talking about the Crown research institute review from the particular year that we are supposed to be debating.
First and foremost I want to range across a number of them and some of the lessons learnt from each of them. The National Institute of Water and Atmospheric Research is the first I want to touch upon, noting that, in fact, the institute paid a dividend to the Government, and this is something that we have to recognise with Crown research institutes. It paid a dividend of $13 million to the Crown, so its work assisted all areas of New Zealand through that financial contribution.
During the previous financial review of the National Institute of Water and Atmospheric Research, before the Education and Science Committee 3 or 4 years ago, concern was expressed about the continued viability of the research vessel Tangaroa. The vessel had just completed a major oceanographic study of New Zealand’s continental shelf, out as far as Lord Howe Island, and expanded our knowledge extensively, particularly with the finding of a considerable number of previously unknown species of flora and fauna. However, at the time of that review the National Institute of Water and Atmospheric Research had no decent contracts for which it could employ the specialities of the and hence concern was expressed that it may have to be sold. It is therefore to the credit of the institute that, in the financial year under review, contracts were gained that kept the and, in fact, one other vessel at sea for a total of 562 days covering 1,000,399 nautical miles, and I want that particular achievement to be noted.
I also want noted the potential conflict between the Meteorological Service and the National Institute of Water and Atmospheric Research, but it is good, in fact, to hear that confidential mediation is going on to ensure that they stick to their knitting and that taxpayers’ money is not being used for duplication of roles.
The next Crown research institute I want to refer to is the Horticulture and Food Research Institute of New Zealand. That institute certainly has had a difficult and chequered past. In 2002 it lost $5 million of Government research investment, which led to 40 redundancies, the subsequent loss of scientific capability, and financial losses for 2 years. The institute has had to work hard to get back on its feet. In particular it is noted that HortResearch won the HR Initiative of the Year award for its great leadership programme. Staff turnover is, in fact, relatively low at this particular time, and that is necessary for the continued growth of this Crown research institute.
However, two critical points came out of that review. We were told that an alarming figure of 30 percent of key scientific time at HortResearch is taken up in bidding for funds. We have just had a lecture by Professor Peter Gluckman who once again said that we have not got the balance right between contestability and competitiveness, and the ability to enable our scientists to focus upon the science that they need to develop.
The second issue concerns the cumbersome procedures dealing with post-entry requirements for research on organic material from outside New Zealand. Once again, it is worthwhile noting that HortResearch, the Environmental Risk Management Authority, and the Ministry of Agriculture and Forestry are in fact working together to develop protocols that will simplify this complicated process.
Industrial Research Ltd, usually referred to as IRL, is another Crown research institute that has had to face significant financial challenges, largely through going it alone in selectively risky commercial ventures in areas where it was hard to attract investment partners, particularly from within New Zealand. Realistically, Industrial Research Ltd has only 100 to 150 potentially joint-venture partners that are commercially viable. The select committee has noted the strengthened financial performance of Industrial Research Ltd and improved internal financial discipline. It also noted that eight out of 12 of the Foundation for Research, Science and Technology contracts that have been “on watch”, as it is said, have now been removed from that status. The lesson to be learnt from the experience of Industrial Research Ltd is that Crown research institutes need to be realistic in setting up their projected revenues.
Hon STEVE MAHAREY (Minister for Crown Research Institutes) Link to this
It is good to follow on from Brian Donnelly, who chairs the Education and Science Committee and therefore would know a great deal about what is going on with Crown research institutes at the moment. Following on from his comments, I want to highlight four general areas that will be of interest to the Committee.
The first one is that in this financial year the total revenue from the Crown research institutes portfolio rose by 4.7 percent, which is, I think, an interesting turn-round in where things have been with the Crown research institutes over the last little while. These are difficult businesses. Once again—a little like Television New Zealand—we are asking them to earn revenue, because around the world these days science clearly earns large revenue. As well, we are asking them to ensure that they match their public service goal of delivering on good science. They have to balance those goals, so it was good this year to see a little bit of a turn-round in the amount of money they have been able to return, with the National Institute of Water and Atmospheric Research Ltd being, yet again, as the member pointed out, the stand-out institute in relation to the dividend returned to the Government.
The second general point I would like to raise is commercialisation. We are now putting very, very systematic pressure, if you like, on Crown research institutes to commercialise—to build a culture of trying to create value that they move down the chain and out the door—to try to create some extra value for the country. This year Crown research institutes entered into at least 50 joint ventures and licensing agreements. Some very interesting work has happened around Industrial Research Ltd. We have not yet seen the money, of course, but this year Industrial Research Ltd entered into the sixth biggest biotechnology licensing agreement in the world. If that pays off, we are talking in terms of about $600 million being generated, and that will be captured, in part, by Industrial Research Ltd. Those kinds of developments are very good. AgResearch itself is the biggest of our Crown research institutes and it has had a large number of licensing deals this year. A lot of new activity is going on in relation to AgResearch, with the appointment of Andrew West as its chief executive. We are seeing some very interesting things happen there.
The third major point I would like to mention is collaborations. One of the things that is also encouraging is for universities, firms, and Crown research institutes to get much closer together, and over the last little while this year I have been extremely pleased to see—taking AgResearch as an example—something like 80 agreements signed up around the country between AgResearch and the universities. The Hopkirk Research Institute at Palmerston North, now one of the major research centres in New Zealand, will be a good expression of that, between Massey University and AgResearch. I am sure that collaborations are something the select committee would have been pleased to see, as well.
Lastly, I really urge members to get alongside Crown research institutes in terms of the sheer quality of science that is going on within them. When it comes to science, Crown research institutes quite often feel that although they are chugging away doing hard work, it is the universities that people always seem to talk about when it comes to doing research. These are big research engines that the Crown research institutes represent. They are large, in the shape of AgResearch, and a lot smaller in the shape, say, of Geological and Nuclear Sciences Ltd, but they are all doing outstanding scientific work. Their people are publishing. For example, last year there were 4,500 publications from Crown research institutes, 700 workshops and seminars, and so on. This is the kind of work they are doing constantly, and I certainly urge members, if they are keen to get alongside the Crown research institutes, particularly if they happen to be in a Dunedin seat, a Christchurch seat, or in Hamilton, Wellington, or Auckland, to make sure the institutes understand they are recognised and to tell their stories. They are doing great science at the moment. They are publicly owned, but they often feel a little left behind by the universities when people talk about these issues.
I think it has been a good year and I commend the Crown research institutes. It is a tough environment. They are given the tough task of balancing science and commercial goals, but I think that this year they have done us proud, both in the financial sense and in the sense of producing good science. I thank the select committee for its excellent review of the Crown research institutes this year.
KEITH LOCKE (Green) Link to this
The Greens are pleased to be able to speak on the financial review of Land Transport New Zealand. The Green Party, under its agreement with Labour in the last Parliament, helped to rearrange Land Transport New Zealand through the Land Transport Management Act, and out of that came Land Transport New Zealand as a management and funding body.
A land transport strategy was developed to guide Land Transport New Zealand, involving such criteria as the contribution of the mode of transport—the particular project—to economic development, to environmental protection, and to the health of people, their safety, and their mobility. If we look at all those criteria, we see that they apply more directly to public transport, to walking, and to cycling, which are clearly healthier, have fewer polluting fumes, are safer, etc. The better our public transport system is, the greater the contribution will be to the economy of our cities and our country.
On all of those grounds, the direction of Land Transport New Zealand should have been twisting more away from road building to developing alternatives to individual car use through public transport, walking, and cycling. It is true that in Land Transport New Zealand’s annual report one will find that increased attention has been paid to such things as walking and cycling, and to how that body will implement the major components of the report called Getting there—on foot, by cycle. Some progress has been made, as is indicated in the report. But we see from the figures that the total funding of $4.4 million for walking and cycling projects funded 36.7 kilometres of walkways and cycleways, which is not all that much really for a country of the size of New Zealand. The report then goes on to talk about this involving cycle plans and things like that.
Fifty-five school travel plans were funded, which is, of course, a good start, but there are a lot more schools than that in the country. Forty-one workplace travel plans were funded. So although some progress has been made, there is a long way to go towards really developing alternatives to using cars to get to work, school, etc.
Then there is the section on spending on public transport—$209 million in that financial year, out of $1,700 million altogether in terms of what was funded. So that is 12 percent going to public transport, which is still a very small proportion, particularly when public transport has fallen behind so much in New Zealand. That is particularly the case in Auckland, where I am living at the present time. That is a small proportion—12 percent—of spending on public transport. We then had the problem that when the Budget came forth towards the end of that financial year, it announced a $1.5 billion roading package, which made that imbalance worse.
Often when the Greens question the Government on this imbalance between public transport spending and road construction, we are told that public transport spending has gone up percentage-wise a lot more than road expenditure has over the period of the Labour Government—which is true in percentage terms. But actually, when we look at the figures, we see that the gap between road spending and public transport spending in straight dollar amounts has widened. We look at the projections further out and see that the gap is widening all the time, and that is not good enough.
One of the problems is the guidelines that Land Transport New Zealand has been operating under, in terms of how it either subsidises or pays for road construction and public transport infrastructure. There is what is called the financial assistance rate, which means that State highways are fully funded—
DAVID BENNETT (National—Hamilton East) Link to this
As we look at the financial review of Land Transport New Zealand, it is important also to look at a document that came out earlier this year, the report of the Ministerial Advisory Group on Roading Costs. That gives us a fairly good indication of how Land Transport New Zealand is going, and how this Minister is going in her portfolio. Let us have a look at some of the quotes from that document. It states: “Land Transport NZ should take an enhanced role in evaluating major projects, and in monitoring scope and cost.” The report is pretty damning of this Minister and this Government. It states things like: “Papers presented to Land Transport NZ for the release of design funding do not appear to present the full evaluation of incremental costs and benefits for the various options. Therefore, it is difficult for the Land Transport NZ Board to make a fully informed decision about the merits of [a decision]. … There does not seem to have been a systematic process to establish the scope of [projects]”. It carries on with comments such as: “… Land Transport NZ appear to have accelerated the funding consent … for [certain projects]. … Unfortunately, this is often at the expense of a comprehensive review of the justification for additional scope and the related cost.” It states: “The Advisory Group considers that there is currently a strategic gap in the overall framework. There needs to be greater clarity of outcomes and monitoring against measurable objectives, together with strong leadership and governance to achieve these.”
These are pretty damning comments about a department and about the process it uses. It states: “There is a gap in the existing national strategy and planning framework for land transport.” It states: “Value for money was not identified as a key objective … The performance measures should also include indicators of value for money.” “Land Transport NZ needs to play a clearer role in the strategic process and in funding to achieve outcomes as well as to oversee project scope. … Land Transport NZ needs to be satisfied that projects are still delivering value for money.” But there is more: “The manner in which Land Transport NZ is involved in overall project decisions, where major scope change and costs are involved, should be reviewed. … The Advisory Group believes the current system used by Land Transport NZ can be improved.” It states: “it is considered appropriate that a review is undertaken of the competencies required of the respective boards” of Transit and Land Transport New Zealand “including the appropriateness of dual membership of the Land Transport NZ and Transit NZ Boards.”
This has probably been the most damning report that has come out on a Minister this year, and there have been other reports on other Ministers who have failed to succeed in their portfolios. Essentially, when a ministerial advisory group on roading costs can come out and present a report that says there are fundamental problems in the way that this department is carrying on its business, then we have a major problem—a major problem that this Minister has to follow up in the next-steps review that is coming out soon.
The Minister will be well aware that this department is not performing at the level it should be. We are not getting the value for money that we are putting into Land Transport New Zealand, simply because of the inadequacies of this department, and also of the governance that this Government should hold over this department. It is up to the Minister and the Government to run this department in a way that delivers the outcomes that people expect from that money. It is fine for Government Ministers to go around the country saying the Government is putting more money into Land Transport New Zealand, but we are not seeing the outcomes—we are not seeing the delivery of that money. We are seeing a system that is not working, and a Minister who is sitting there knowing that it is not working and who is not making the changes to get value for money. How can this Government’s Ministers stand up in front of New Zealanders and say they are putting more money into land transport, when they are not getting the outcomes because the system is not working. They need to get out there and devise a better way of doing this, so that we do get the outcomes that are commensurate with the money being put in.
Another example is one the Greens have just raised—that of public transport and electrification. Today we heard the Prime Minister say that it is a matter of not if but when. Well, when is it going to be? When will the people of Auckland know that they can catch a train because it has not been stopped through signalling faults or people not having made decisions about whether trains will run on diesel or electricity? When will those decisions be made, so that Auckland councils will have the ability to make decisions for funding in the future?
The CHAIRPERSON (Ann Hartley) Link to this
I just point something out to the member. I was not aware until a minute ago that Transit’s report has not actually been reported back. So it should not—
The CHAIRPERSON (Ann Hartley) Link to this
Yes, you were. The only thing is Land Transport New Zealand—
The CHAIRPERSON (Ann Hartley) Link to this
Yes—so it is Land Transport. I call Keith Locke, but I remind members again that Transit New Zealand has not been reported.
KEITH LOCKE (Green) Link to this
I was talking about the financial assistance rate whereby Land Transport New Zealand fully funds State highways, but local bodies have to scratch up, normally, 50 percent of the cost of public transport infrastructure, such as in Auckland in terms of rail developments.
It was good to read more recently that there seems to have been some change in relation to Wellington, where Land Transport New Zealand has agreed to fund rail improvements there to 90 percent. I hope that will be transferred to Auckland, because today I received a petition from 3,755 Aucklanders who want a timetable for the electrification of rail, and funding from the Government to achieve that. That is the demand from Aucklanders for a decent rail backbone to the public transport system and for substantial expenditure from Land Transport New Zealand on infrastructural development. The public is on board—that is what the petitioners found. Everywhere they went people supported public transport and wanted to sign that rail petition. But it has taken a while to shift the Government and Land Transport New Zealand around in terms of where they direct their funding.
There is all this talk about the Auckland western ring route and how important that is when even a few kilometres of that would take a billion dollars, and that money would be better spent in the meantime on public transport. That is what Aucklanders are really about. An officials report on Auckland transport that came out a couple of weeks ago—from national officials, such as from the Ministry of Transport, and from local body officials, etc—said that 40 percent of the benefit of new public transport spending goes to car users in reduced congestion. I think that all of our plans have to take in the two critical new developments—that is, firstly, the move towards peak oil, where oil will get very expensive and people will not be able to use private cars nearly as much. They will be forced into public transport and we want that infrastructure there for them.
The other thing, of course, is global warming, where 40 percent of our emissions are coming out of transport and we have to reduce those. Obviously, the best way to do that is to go for public transport, particularly electrification, if that electrification is provided by sustainable energy sources and not fossil fuels. I think the public is much more aware of that, and the Government and Land Transport New Zealand need to get much more on board with the public.
It is true that in the report things are happening, like bus lanes, but when we look at the figure for bus lanes we see that 16 kilometres of bus lanes have been provided over the year. In Auckland we need lots and lots of bus lanes, because one of the things that makes public transport really attractive is if it is fast, and faster then commuting by car. We do have some signs of that in Auckland, down Dominion Road and Ōnewa Road, where the buses actually get there quicker than the cars. We need lots more bus lanes and much more funding by Land Transport New Zealand for that.
I think there really needs to be a whole turn-round in the thinking in this Parliament—in the Government in particular—to say that instead of spending, as this report shows, $1,700 million on land transport and only $209 million of that on public transport, the spending has to be turned towards a much higher proportion for public transport, so that we can really go forward as a nation in this era of global warming.
Hon ANNETTE KING (Minister of Transport) Link to this
I thank both members who have spoken on the financial review of Land Transport New Zealand. Perhaps those who were listening would be interested to know that the Transport and Industrial Relations Committee reported back to this Parliament that the committee had no matters to bring to the attention of the House. It is rather interesting tonight to note that when members of the select committee had an opportunity to bring matters to the attention of this House, they did not take that opportunity; the select committee decided not to bring any matters to Parliament.
But let us address some of the issues that were raised. Can I say first off to Keith Locke that I agree with him wholeheartedly when it comes to investment into passenger transport. But in my view and in the view of the Government there has to be a balance between roads and public transport. We have not had that. It is fair to say that over many years the balance was very much tipped towards roading in New Zealand and away from other modes of transport—passenger transport, the use of coastal shipping, rail, and so on. The Government has set out first of all to address the deficit that existed not only in investment into roading but also in investment into passenger transport. I remind the member that right throughout the 1990s passenger transport funding for the whole of New Zealand was frozen at $40 million per year.
That is the public transport legacy of a National Government. This Government has taken seriously the need to invest. In terms of the funding from Land Transport New Zealand, we have seen a huge increase in the money going into public transport, not only in percentage terms but in total terms—closer to $400 million than $40 million. In looking at passenger transport, one has to include the funding that this Government has put into rail. This funding for rail does not come from Land Transport New Zealand; it is not included in the National Land Transport Programme. So the $600 million that this Government is investing into Auckland rail alone is not included in the National Land Transport Programme but is a very important part of the Government’s commitment to passenger transport.
I agree with the member around, particularly, the issue of travel plans, and around things like walking, school buses, cycleways, and walkways. But I need to say that although this Government has moved so that any new roads, including the inner city bypass in Wellington, must include cycleways, we are faced with the issue of including cycleways on existing roads. It is much harder to retrofit cycleways on existing roads, as anyone who has been involved will know. But, as the member pointed out, there is an approach to increase cycleways and walkways.
In terms of electrification, which the member raised, it has been made clear by the Government that electrification of rail in Auckland is very much on the Government’s agenda. However, it is not part of Land Transport New Zealand. Any decision on funding of electrification of rail in Auckland will not come out of the National Land Transport Programme. It will come out of the vote related to the State-owned enterprise ONTRACK. So that is not part of this debate tonight.
David Bennett spoke and he was a very confused member indeed. The only issue he could raise was the ministerial advisory group’s report to the Minister. Of course, the previous Minister of Transport was the person who called for the report. Such is the openness of this Government that we said we wanted the advisory group to look at roading construction in New Zealand and what drives the costs. We wanted the group to tell us how it is working and to give us some advice. I accept, as the new Minister of Transport, that advice. But the group was talking about the actions of Transit New Zealand. In fact, the examples it set out are examples from Transit not Land Transport New Zealand. So although the member said he was talking about Land Transport New Zealand, which funds, of course, Transit—so I suppose one could say there was some link—the major part of the group’s report relates to the 10 projects that Transit funds.
I raise a point of order, Madam Chairperson. I would like to table a copy of the ministerial advisory group’s report, which clearly states Land Transport New Zealand was one of the ones that was—
The CHAIRPERSON (Ann Hartley) Link to this
Please be seated. The member knows that he should not interrupt anyone’s speech for that. He should table that at the end of the speech.
Absolutely. What he is trying to do is to cover up his confusion. His one line of attack was one report—a report that this Government has accepted in terms of its recommendations. The National Government never listened to advice. It did not invest in either passenger transport or roads, and it deprived the transport sector year in, year out. This Government is serious about building infrastructure in this country; whether it is roads, passenger transport, hospitals, police stations, whatever, we are committed to it. That member needs to take a grip, do a bit more reading, and not stick on one report that he has read.
There are many other reports, including the Next Steps review. I have undertaken to follow up not only the ministerial advisory group’s report but the Cabinet committee on Government expenditure and administration reviews carried out by my very good colleague Trevor Mallard. The Government is serious about getting the best value for money we can out of taxpayers’ dollars, and we will do that. We will continue to invest in passenger transport, and I look forward to the support of the Greens for legislation that makes it much easier to contract for passenger transport. It will be in this House very soon. [Interruption]
The chirpy member is David Bennett, who is from Hamilton East, an area that benefited from this Government’s putting money into the Waikato, which had been deprived for decades under the National Government. When he got the money he said it was not enough. What did “Bob the Builder” from Tauranga say? He said it was fantastic and that people there loved the amount of money the Government had put into the Bay of Plenty. I ask Mr Bennett to thank the Government for that money, because he would not have got it from his colleagues. I ask him to have a look at what happened to the Waikato because his party would not invest into passenger transport or roads in his own region.
I say to members that this Government is serious about transport. Land Transport New Zealand as a Crown entity can always do better, and certainly in the Next Steps review we will look at how we can improve not only its performance but that of Transit, the Ministry of Transport, and other agencies that work with them. I say to members that they can be assured that the Government looks for value for money, we look to invest, and we look to get the best out of the money that taxpayers put in for all of New Zealand, not just one part of New Zealand.
DAVID BENNETT (National—Hamilton East) Link to this
I raise a point of order, Madam Chairperson. The Minister of Transport made some comments there that were not the case. The Waikato—
The CHAIRPERSON (Ann Hartley) Link to this
Please be seated. The member—[ Interruption] I am on my feet, ruling on a point of order. I say to the member that is a debating point, which I am sure he knows very well.
Hon DAVID CARTER (National) Link to this
It is with pleasure that I rise to make some comments on the financial review of AgriQuality Ltd for this particular financial year. I will start by commenting on the proposed merger that the Hon Mr Mallard suddenly announced towards the end of the last parliamentary sitting concerning AgriQuality and Asure. That issue has been ongoing for a number of years. The possibility of merging AgriQuality and Asure has been raised at the Primary Production Committee for about the last 3 years and has been noted in its annual reports. What I find incredible about Mr Mallard’s announcement—and I look forward to his elaborating on this—is that the legislation does not enforce the merger of the two entities. The legislation that Mr Mallard is proposing will allow the merger to occur if, subsequent to passing the legislation, a cost-benefit analysis suggests that a merger is a good idea. It just seems to me to be a very strange thing, particularly given the history associated with the proposed merger, that any Government would rush through legislation, under a very, very tight time frame, that does not ensure the merger but allows one to happen, and then the Minister proceeds to do the cost-benefit analysis.
I sat in on the Commerce Committee last week when it was hearing submissions on this issue, and it became clear that consultation has been occurring with the unions over a long period of time about this proposed merger, but that the meat industry itself has not been consulted. What is more concerning to me, when I look at the financial review—
Hon Trevor Mallard Link to this
I raise a point of order, Madam Chairperson. The member is referring to a matter that is currently before the select committee and has not been reported on. It is not the subject of this debate. I request that you ask him to come back to the review, and also that he not breach privilege by reporting matters to the Committee before the appropriate time.
The Minister may not realise it, but this is a debate on the 2005-06 financial review of AgriQuality, and on page 4 of that review is a heading “Merger of AgriQuality and Asure”. I think it would be a very strange situation if the Minister were to suggest that we are not allowed to refer to what the Primary Production Committee specifically commented on in the financial review. We need that to be clarified, I agree.
The CHAIRPERSON (Ann Hartley) Link to this
The member may do that. But the Minister was clear—and I certainly thought I heard this too—that you were speaking to the bill that is currently before the select committee.
I have been talking to the financial review and the select committee report. The Primary Production Committee made specific mention of this issue in its report. It is now before Parliament, and I have every right to discuss it. The issue may be embarrassing to the Minister, but that does not stop me talking about it. It does not stop the fact that the select committee made special reference to it in its report.
Thank you very much for the opportunity to talk to the financial review. As I was saying, in the select committee over the past 2 or 3 years we have expressed concern about this merger. We went so far in this select committee report—
If we go back and look at the two previous financial reports, we see it is interesting that the committee as a whole was concerned about the proposed merger. This time I do agree that we modified the report and used the words “Some of us are concerned”. In other words, there has been a road to Damascus experience for Dr Choudhary, who in previous years had been concerned about the proposal, but who has been beaten about by Mr Mallard and suddenly had to change his position and appear less concerned than he had been in the past.
The reason I raise this issue is that we have examined, over a long period of time, AgriQuality, and its attitude towards the select committee and its cooperation with the committee is something that has taken a long time to develop. Asure, however, is an organisation that delivers with total efficiency. It has cooperated with the select committee process every year that we have examined it. I would hate to see the rushed merger proposed by the Hon Mr Mallard mean that suddenly we have a change in attitude by the newly merged entity towards the process before the select committee.
We have a very important role at the select committee to examine the financial performance of these entities, and when we examine the financial performance of AgriQuality, particularly in the last financial year, we find it has not lived up to expectations. Its revenue is down considerably in this particular year, and I do wonder whether one of the reasons why Mr Mallard has rushed the idea of a merger into Parliament is that he is not prepared to see the financial performance of AgriQuality come under the scrutiny that it has.
Mr Mallard says: “Oh dear!”. He may be doing the merger for one other reason: to satisfy the Public Service Association (PSA)—his union mates. It is interesting that in the very week that he rushed the bill off to a select committee, the Government suddenly fronted up with $850,000 to pay back the money it had ripped off the taxpayer. So Mr Mallard may well say: “Oh dear!”, and now do a bit of frowning when there is a connection made between this move to satisfy the PSA and the sudden appearance of $850,000 to pay back the ripped-off taxpayer.
Landcorp Farming Ltd
Hon DAVID CARTER (National) Link to this
Just for the sake of the Minister in the chair, Trevor Mallard, I assure him that I am talking about the financial review of Landcorp of 2005-06. I can say at the outset that this, again, was another very disappointing examination for the Primary Production Committee. It was disappointing because when we actually got through the financial performance of this particular entity, it left us with a real sense of disappointment. We have an entity here with a value of somewhat over $1.2 billion, and when we delved through the financial accounts of Landcorp, we were surprised and disappointed to note that in fact the farming profit from this very large entity was only $18 million. When we looked further at that figure, we noted that $12 million of that—two-thirds of the farming profit—actually came from the sell down of some Fonterra shares. In other words, I guess the true, attributable farm profit from an entity worth $1.2 billion is somewhere around $6 million. That is a totally unsatisfactory situation.
No, no. If I managed to farm like Landcorp, I do not think I would be farming for much longer.
The point that I do want to make is that although this performance is very, very disappointing, I would hope that Mr Mallard and Mr Darren Hughes take note that it is an indication of the financial pressure that most of rural New Zealand is under. Darren Hughes may not care to be sympathetic to the sheep farmers who are now facing financial returns of 25 percent less than they had a year ago, but in a situation when one’s income is down by 25 percent and one now has massively increased costs—many of them brought about by Government legislation—the situation is not very pleasant, indeed.
Well, the dairy farmers have a little more to be happy about, but not much. The payout has been consistently—
Well, if the member invested his own money—if he ever happened to make any—into a situation, it is not unfair to expect a reasonable return.
But I want to make a couple of comments on the running of Landcorp, and they are to assure the Committee tonight that it is a well-run organisation. But when we consider the advantage that it should have, for the scale of its operation and its size, it should be able to do substantially better. I will give two examples for the benefit of Darren Hughes, because he is not well versed in these agricultural matters—but he will not be there as the member for Otaki for much longer; we are assured of that.
One thing we have, with an organisation the size of Landcorp, is the advantage of purchasing tractors, trucks, etc. very judiciously, and it has the advantage of selling very advantageously. In fact, there has been quite a lot of angst down in areas like Te Ānau, where Landcorp has certainly been in the position of getting a higher return from PPCS, the farming cooperative, than other farmers do. So we would think that by amalgamating those benefits of better purchasing power and better selling power, Landcorp would be able to manage a far better profit than it did.
Landcorp is still New Zealand’s largest farming concern, and another thing that the select committee noted with huge disappointment was that as New Zealand’s biggest farmer, it has no plans at all around climate change. We asked Landcorp about that quite specifically, and the answer came back from the new chair of Landcorp—the previous Minister of Agriculture, Jim Sutton—that those plans for climate change are still being developed. It is a little like the Government, which rushed off and signed the Kyoto Protocol. When we ask the Government what its policy is, the answer is that it is still being developed. It is also worth noting, of course, while we are talking about climate change, that the biggest risk New Zealand faces is the huge amount of deforestation that is occurring at the moment. Who is the biggest deforester at the moment? It is one Landcorp Farming, with 22,000 or 23,000 hectares of central North Island land being taken out of trees, as we speak, to be converted to dairy farming.
No, Landcorp does not. It leases it on a long-term arrangement, but who is actually doing the development? It is the Landcorp Farming operation. And for the Minister to sit in his chair and think that he is not responsible because the underlying title of the land is owned by Adrian Burr—well, it just defies belief. Nobody else in this country believes that the Minister is not responsible because Landcorp does not own the land. The land has been leased under an agreement; I think it is a 40-year lease. Landcorp is the one that is chopping the trees down, it is the one putting the pasture in, and it is the one stocking it with cows. All of that means that our ability to meet our Kyoto Protocol commitments becomes harder and harder—and Landcorp is part of the problem.
But I will conclude by saying that the financial performance of Landcorp was not satisfactory. It should be an indication to every member of the Labour Government that that is the pressure rural New Zealand is under.
DARREN HUGHES (Labour—Otaki) Link to this
What an extraordinary contribution that was, from somebody who was once a National Minister in a Government that did not even have a Minister of Agriculture. David Carter used to be at the height of his political career 7½ years ago. He was the Associate Minister of Food, Fibre, Biosecurity and Border Control. That was the flash name the previous National Government gave to the agriculture portfolio way back then. That is how much the National Party in Government cares about the rural sector.
We have as our Minister of Agriculture in this Government the man who sits at No. 3 in Cabinet and leads the party that the Labour Party is in coalition with. That is how seriously we take the portfolio. We call it “agriculture”, because that is what it is. We do not come up with flash, management-speak, guru kinds of names as the National Government did. Whenever the Tories get close to power, they get so subsumed by it that they go for all these crazy kinds of names. But that was the height of David Carter’s career—Associate Minister of Food, Fibre, Biosecurity and Border Control; a portfolio that his good mate Mrs Shipley put him in charge of after he had been the junior whip and had ratted on Jim Bolger. I am not sure whether he turned up at the conference over the weekend and mentioned that, but that is exactly what he had to do.
The other thing Mr Carter did not mention was the National Party policy on Landcorp farms. Here we are, debating the financial review of that entity in the previous financial year, and what he does not have the audacity to tell the Committee is that the National Party went to the polls wanting to sell all those farms that are owned by New Zealand. National had a privatisation policy in that regard, but it did not bother saying any of that. Those farms were going to be gone by milking time under Don Brash, and I want to know right now whether the National Party has changed its policy. But, of course, there was not a word on policy, because those members tell people only what they want them to hear. Those members cannot come up with anything at all apart from criticise, whinge, and moan.
Mr Carter mentioned the plight that a number of sheep farmers are facing. Of course those are genuine and real concerns. But while he was slagging off Labour for that, did he offer any solution at all to the way Landcorp’s financial operations could have taken place that might have made a difference in that regard? There was not a word—and Labour says it is the serious party for rural New Zealand. Rural New Zealand towns and rural New Zealand villages and areas are much better off under the Labour-led Government than they were previously. Good times are happening around the place, which were not happening previously, with regard to all of the indicators we look at—particularly unemployment, which has fallen through the floorboards. That is why Landcorp plays a role in owning farms in rural communities and rural areas that are part of the local economy.
I am proud that the Landcorp farms in the Otaki electorate are owned by the Government. They make a fantastic contribution to the local area. The National Party wants to sell them. It wants to hock them all off, around Whirokino and all of that area, and that goes with the National Party’s responsibility. We stood at the last election and told those members that they were doing the wrong thing. I am proud of that. I am proud of the way the Labour Party has made sure we have retained a commitment there. If the National Party wants to promise to sell off and privatise farms all around the place, why is it going to do that? What is the great benefit from doing that? David Carter did not mention it at all. He had nothing to say about that. Having a Minister for Food, Fibre, Biosecurity and Border Control, in a previous epoch of New Zealand politics, is about as serious as National ever got about agriculture. Landcorp has done a great job, it has a fantastic chairman, and I am sure that with the active support of its Minister, Landcorp will continue to make a contribution to rural New Zealand.
Meridian Energy Limited
GORDON COPELAND (United Future) Link to this
Meridian Energy is a great New Zealand company of world-class expertise in the electricity generation and retailing sector. It has an outstanding understanding of sustainability, and I think it gives a lead not only to State-owned enterprises but also to private sector companies in the practical application of sustainability principles. It also has a world-class capability for renewable electricity generation, especially hydro and wind.
From the view of the Government and the taxpayers, however, the news gets even better. During the year under review, the year ended 30 June 2006, Meridian paid a dividend to the Crown of no less than $879.4 million. I would imagine that that is an all-time record for any New Zealand company in history. If that was not enough, it paid a further $300 million in October 2006. That is a total of $1,179.4 million in a period of just 16 months. The people of Auckland should be very grateful for that because, as we know, about $650 million of that amount was put aside by the Government for roading in Auckland. So those are very considerable achievements by Meridian, which all of us should celebrate.
But it goes further. Meridian is, to my knowledge, the first electricity generator to become officially certified as carbon neutral. That has been done through a very robust process. So one of the largest companies in the country is now officially carbon neutral—a goal that the Prime Minister has for New Zealand, and a goal that is achievable, in my view, if we get it right, in about 25 to 30 years from now. Meridian is already there.
Also of great interest, particularly to the elderly—and I know that this is the No. 1 priority now for Grey Power—is that Meridian as a company limited its price increases in the year under review to about the rate of inflation, or about 3.5 percent. I would like it to be less. The elderly would like it to be less. But, nevertheless, Meridian again stands out from the crowd in the way that it has been able to control its prices over that period.
However, we should not take the continuation of the success of Meridian for granted. Some serious issues confront the company at this stage in relation to the wind generation of electricity. Wind generation of electricity is great for sustainability, because it is perpetually renewable, it is totally free, and New Zealand happens to be one of the windiest spots on the planet. It is also very, very positive for climate change policy—something that we all want. However, the Resource Management Act is providing some problems for Meridian in getting on with wind farm development.
Meridian actually received consent for Project West Wind, the wind farm in Mākara, in December 2005. We are now into May 2007, and that project is still stuck in the Environment Court. I would estimate that that delay has now cost Meridian about $100 million. At the time the Commerce Committee reported back to the House it was $80 million, but since then the New Zealand dollar has gone up to an all-time record high, which has increased the cost for the wind generator and the windmills themselves enormously. The economics of this very, very worthwhile project has now jeopardised its actually going ahead.
When I say “worthwhile”, I would ask whether members can imagine anything more perfect than using a free, perpetually renewable source of energy right on the doorstep of New Zealand’s capital city that will produce in and of itself enough electricity for all the homes of Wellington, the Hutt Valley, and Porirua City. It is right on our doorstep. Transmission losses are zero. It is possibly the most phenomenally well-placed energy source we could come up with, and it has now been delayed for too long.
I know that Meridian has expressed concern to the Government that the Resource Management Act 1991 does not contain clear national policy statements for specific outcomes and that, therefore, it needs to be looked at with a view to making sure these large wind projects are able to go ahead. I recently asked David Parker, the Minister of Energy and Minister responsible for Climate Change Issues, whether the delay would jeopardise this project. His answer was in the negative, but I have my doubts.
Hon TONY RYALL (National—Bay of Plenty) Link to this
One evening last month a 25-year-old man presented, with his family members, at the emergency department of Christchurch Hospital. He was in considerable agony and pain as a result of an injury he had sustained. He was turned away by the district health board employees at the emergency department in Christchurch Hospital, only to die 12 hours later. Another young man presented at Christchurch Hospital’s emergency department last week in considerable groin pain. He was in agony—a 23-year-old man crying—
Jo GoodhewHe was screaming. He waited for hours to be seen and was turned away, only to be admitted by ambulance to that very same emergency department 2 days later. That is the reason why more and more stories are surfacing in the media about what is happening at Christchurch Hospital and about its inability to provide the sort of quality standard of care that we would expect in our hospitals for our people in New Zealand.
The Government crows about the $4 billion a year extra it has put into the health budget, but what about the quality of the service that that money is producing? The Minister Pete Hodgson stood up in the Chamber today and said that the service is improving all the time. He should tell that to the partner of the 25-year-old man who is now dead. He should tell that to the family of the 82-year-old man who was given the wrong medication at Auckland Hospital because of an administrative blunder. The Minister should tell that man’s family members that the health system is improving all the time.
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