Financial Review Debate

The CHAIRPERSON (Lindsay Tisch) Link to this

The House is in Committee on the Appropriation (2008/09 Financial Review) Bill. The financial review debate is the Committee stage of the Appropriation (2008/09 Financial Review) Bill. The time allocated for this debate is 4 hours, and comprises two distinct elements. The first is the debate on the annual financial statements of the Government, as reported on by the Finance and Expenditure Committee. Once this has concluded, the Committee debates individual financial reviews of departments, Offices of Parliament, and non-departmental appropriations as reported on by select committees. The debate on the Government’s financial position may be a fairly wide-ranging one, but the debates on the individual financial reviews of departments, Offices of Parliament, and non-departmental appropriations should be relevant to their performance in the 2008-09 financial year and their current operations.

The compendium of financial reviews and non-departmental appropriations available for debate are on the Table. A member may have no more than two calls on each financial review. At the conclusion of the debate, a single question is put on the provisions of the bill. There is no amendment to, or debate on, this question. The Chairperson then reports the bill to the House, and it is set down for third reading forthwith. There is no debate on the third reading.

Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this

Thank you for that introduction, and in keeping with past practice the Opposition would like to begin by commenting on the general state of the Crown accounts, reflecting on several of the important macro-aggregates, and then proceeding to look at individual departments.

New Zealanders are asking themselves three key questions in respect of the Crown accounts and the Government’s economic performance. Why is there no coherent plan for growth and jobs? Why is the Government talking down the recovery, rather than boosting confidence in it? Why is the Government raising GST after the election, when National certainly did not tell New Zealanders that was its plan before the election?

Let me talk first about the Crown accounts themselves. There is no doubt that these accounts show that the impact of the recession on New Zealand’s books was serious. But as economic conditions start to improve, the Minister of Finance and the Prime Minister need to ensure that all New Zealanders will benefit from the recovery. It is time that the Minister of Finance was frank with New Zealanders that the books are improving, to ensure that he does not talk down the recovery as cover for delivering a tough Budget that New Zealanders will not want to hear.

The recent Crown accounts show that New Zealand is doing much better than forecast. Gross debt was $2.9 billion lower than forecast and continues Labour’s legacy of trajectory towards lower debt, with gross Crown debt the third-lowest in the entire OECD. The operating deficit was $1.4 billion lower than forecast and is now only $630 million negative, and that closes the operating gap by around 70 percent. Net worth is $1.3 billion higher than forecast. The Labour Opposition does not pretend New Zealand’s economy is out of the woods yet. To do so would be irresponsible. But when the gap between the forecast deficit and the actual deficit has been closed by approximately three-quarters, we believe it is time the Government was frank with New Zealanders about the progress that is being made. New Zealand does not need to face a decade of deficits or anything like it. New Zealand does not need to forget about pre-funding superannuation, thereby risking the future of the scheme. New Zealand does not need to starve much-needed social services in health and education of the necessary funding to offset cost growth.

It is very notable that some of the most successful of the Crown’s investments were in the New Zealand Superannuation Fund and the Accident Compensation Corporation, both of which tracked above forecast. With those improved forecasts, Labour challenges the Government to resume payments into the New Zealand Superannuation Fund, noting that the Crown accounts would now be much better if they had not been suspended. New Zealanders have gone without during the recession. The Minister of Finance was kind enough to draw attention to some of the activities of the Labour Party’s tax tour of the country during the parliamentary adjournment. I can reassure the Minister that in the small towns up and down New Zealand, people are very clear about the tax package. They did not vote for an increase in GST, because National did not tell them it was going to do it. It told them the opposite. They are feeling shafted, I think is the word in the mining communities, by this Government. What they really cannot get their heads around is that even if they could believe the rhetoric from the Minister of Finance that they would be “no worse off after compensation”—leaving aside inflation, of course, which he would not discuss today—they cannot understand why it is OK for the middle class to stand still at best while the wealthiest New Zealanders get a major windfall gain from a tax reduction from 38c to 33c in the dollar, or perhaps as low as 30c in the dollar. That is a one-way street towards redistribution from the middle of our society and the bottom towards the top. It is Robin Hood in reverse. It makes no sense in terms of social equity, and even less in terms of good economics.

As we were going around during the adjournment, New Zealanders up and down the country were also asking what the game plan is for growth. What is the Government’s strategy for recovery from this recession? In advance of the May Budget, which the Minister of Finance knows well will compress new Government spending to the lowest levels in many years, he is trying to convince New Zealanders that the crisis is still as bad as it looked 18 months ago, and it patently is not because the gap has been closed by three-quarters of those original forecasts, as revealed in these Crown accounts. The risk in trying to keep New Zealanders gloomy so they will accept his harsh medicine is that he is not telling them the full story and he will talk down the prospects of recovery. It is no surprise that commentators and journalists—even those at perhaps the more conservative end of the media spectrum, people like Fran O’Sullivan—are increasingly saying they are frustrated with this Government that seems incapable of making decisions, and incapable of laying out a plan for New Zealanders that business can understand and investment can get behind.

We have a duality. Business says it wants to see a game plan, and ordinary New Zealanders say that the game plan the Government is showing them so far looks absolutely rotten to them. That is why this Government is stuck in a cold, hard place between the focus groups that the Prime Minister cannot take his eyes off and the reality of the Crown accounts, which is that the books are improving. They are improving because we are moving out of a cyclical recession. It is a recession we went into with some of the lowest debt and lowest unemployment in the OECD, thanks to the previous Government.

Just this morning Statistics New Zealand released productivity data that shows that for the years 2000 to 2008, labour productivity grew by a little over 1.5 percent per annum, but it declined when the recession hit in 2008 through 2009 and it has not shown the slightest hint of improving, according to the Government’s programme. I ask members what the Government has done. It has a cycleway to nowhere and a 9-day fortnight scheme that was good as far as it went but did not go far, which the Government has now cancelled, removing the sporran from the Scotsman—the fig leaf of activism—that it never had. New Zealanders are left wondering whether the Government has been doing any thinking at all about how to take the country forward or any thinking about how to get growth back in the economy. Businesses are asking why the Government will not get behind their efforts rather than staying on the sideline or, worse, talking the recovery down. Why is the Minister ignoring the fact that in these Crown accounts the operating deficit gap has been closed by three-quarters, yet still using the rhetoric of the dark early days of the global financial crisis?

I challenge the Minister to take a call and explain to New Zealanders exactly why it is that when the operating deficit forecasts have reduced by three-quarters, he has not changed his song at all and he is talking New Zealand into a funk. New Zealanders are still waiting for the answers to their three key questions: how will we get growth and protect jobs; why is the Minister talking down recovery; and why is this Government raising GST on ordinary people just to fund a massive tax cut for the few? Thank you.

Dr RUSSEL NORMAN (Co-Leader—Green) Link to this

The Green Party’s vision for Aotearoa New Zealand is one of prosperity without growth in resource use or waste. In fact, it is a vision of prosperity with declining resource use and waste, and declining inequality. We believe the Government should approach the raising and the spending of money with this aim in mind. On the revenue side, taxes should be structured to not only raise the money the Government needs but also move our economy in a green direction by taxing resources and waste. The Government’s books would be in a much healthier position by potentially billions of dollars if there were a levy on the commercial use of water and a levy on the production of greenhouse gases. At the same time, by increasing the price of water and carbon, the market would direct our economy to use water and carbon more efficiently. A country that uses water wisely will prosper in the 21st century as water becomes scarce globally—likewise for carbon. Sadly, the Government is doing neither of those things. There is no price on water for irrigation, which is the biggest user, and there is a scant price on carbon, as the emissions trading scheme is too weak. We miss out on the revenue that resource rentals could raise, and we lock in our economy to investments that use water and carbon inefficiently.

The one bright spot on the revenue side in the Government’s accounts is catching the banks’ attempt to steal $2.2 billion from the taxpayer. The banks got caught but suffered no penalties. I ask members to think about that. It is possibly the biggest theft of public money in New Zealand history. The banks got caught and had to pay it back, which helped the revenue side of the Government’s accounts, but there were no penalties. No one was sent to jail. In fact, some of the people who advised the banks were appointed to the Tax Working Group.

On the spending side, our accounts are weighed down by the ghosts of years past. The dramatic increase in inequality in the 1980s and 1990s has left our budget with huge legacy spending due to high crime and violence, a high prison population, high spending on social services and preventable illness, and an education system that is struggling to teach kids who are dragged back by poverty. Inequality is really, really expensive on the public purse, and we are living with that legacy and paying taxes through the nose to pay for the downstream effects of the Rogernomics experiment.

Also on the spending side, we are throwing vast amounts of treasure at new motorways—literally tens of billions of dollars. It makes the spending on buses, trains, cycling, and walking look like peanuts. It is Joyce’s think big project, with the inevitable production of white elephants. Clearly, Labour and National do not read the reports from the International Energy Agency that warns Governments that the era of cheap oil is over. I suggest that one way for the Government to save money is to stop paying for the International Energy Agency reports, because clearly no one in the Government is reading them.

Then there is the small question of our accounting framework for those accounts. When we consume natural capital by mining minerals to buy consumer goods, are we really richer? Our national accounts certainly say so, as GDP increases, but if we start selling off parts of our house in order to buy flat-screen TVs, are we actually richer? Of course not; we are simply consuming our capital. That is exactly what we are doing with our minerals. We are simply consuming the natural capital today that we will never have again. I ask members how much better our books would be today if we had invested a good proportion of the returns of the Maui gas field in a gas fund whose dividends would now be helping our chronic current account deficit and the Budget deficit. Norway turned a good chunk of its North Sea oil—its natural capital—into financial capital in the form of the giant half-trillion-dollar Norway Pension Fund, while New Zealand and the United Kingdom simply consumed their mineral resources, and now we have nothing to show for it except a few mothballed Think Big plants. Thinking long term to ensure prosperity is the Green way, and we encourage all parties in this House to steal our ideas instead of stealing the next generation’s inheritance.

Hon BILL ENGLISH (Minister of Finance) Link to this

I am not sure who it was, but someone famous said that he or she changed his or her mind when the facts changed—

BRENDON BURNS (Labour—Christchurch Central) Link to this

I am pleased to speak following the Minister of Finance as we debate the Crown accounts this afternoon. I will pick up on some of the comments from my colleague the Hon David Cunliffe about GST. I address to the Minister some questions about the Government’s proposals for GST and ask exactly what increasing the GST rate will do to advance the rate of increase in jobs in New Zealand. What would an increase in the GST rate do to improve economic growth, the economic recovery, or, indeed, the Crown’s financial balance? The indications thus far from the Government are strongly that for every extra dollar it takes in from the GST increase, it will compensate New Zealanders. If one believes that, difficult though it may be, it begs the question of why the Government would bother to introduce a tax increase that was certainly not judged by our GST bus tour as being by any means popular—absolutely the contrary of that.

I think the answer to that question is simply this: it is payback time for the Government in terms of cutting the top tax rate again. We saw that in the rushed legislation prior to Christmas of 2008 where the tax changes were such that about 3 percent of taxpayers received a third of the gains from them. One suspects, from the newspaper projections of a cut in the current top tax rate from 38c in the dollar to 33c in the dollar, that we know which end of town that cut will fall in. On behalf of my electorate of Christchurch Central, which although it has its leafy suburbs is certainly not a wealthy electorate, I have to say I know where the impact will fall. The figures for my electorate show that 76 percent of people earn less than $40,000 a year. They spend every dollar they receive on the basics of life. They do not have discretionary income. They do not have overseas holidays, and they do not have much capacity to save. So they will be whammied by an increase in GST, effectively, of 20 percent. That is why people are concerned about that, and that is why they were turning out in large numbers in support of the bus tour that Labour recently took around the country. They know what that tax increase will mean for them and their families.

I say to the Minister that OECD statistics show that in terms of consumption taxes, already New Zealand has the fifth-highest rate of consumption tax with GST. We do not have the highest rate itself at the current 12.5 percent, but we have virtually no exemptions. So currently we have the fifth-highest rate of consumption tax in the whole of the Western World. Where does the Minister want to take us to? Do we want to go to second or third in terms of the consumption tax? What benefit will that bring to ordinary people?

I will touch upon the financial review of Radio New Zealand. During the course of the Commerce Committee hearing into Radio New Zealand’s financial year we were given a letter from the Minister of Broadcasting, Jonathan Coleman, to the Radio New Zealand board, in which he said the board needed to change its mind-set—

Dr KENNEDY GRAHAM (Green) Link to this

I rise in support of the comments by my colleague Dr Russel Norman. The purpose of the Appropriation (2008/09 Financial Review) Bill before us today is to confirm expenses incurred for the 2008-09 financial year that are in excess but within the scope of an existing appropriation in accordance with the Public Finance Act.

I begin by recognising the Minister of Finance for his cautious custodianship of the country’s public purse for the period in review. I am aware that he is responsible for only 7 of the 12 months involved and that his Government would claim that was an insufficient time to make the mark it intended in battling the economic recession that it had inherited. But we have already had an additional 8 months since the end of the period under review. So our judgments are inevitably coloured by the passage of time since then, in which his Government has had sole responsibility for macroeconomic policy and financial management of this country.

This is no simple responsibility. I count, as constituting the Government reporting entity in Part 3 of the Public Finance Act for which he and his colleagues are responsible, some 41 departments, 19 State-owned enterprises, 70 Crown entities, and 23 other organisations, including the New Zealand Superannuation Fund and the Reserve Bank of New Zealand. We are talking of some $55 billion of revenue and $64 billion of expenses, a net operating deficit of $11 billion, a gross debt of $43 billion, and a net Crown worth of $100 billion. It is a major challenge to ensure that the economy is prudently managed and the financial statements are well prepared. As the Minister said in his covering statement: “By taking the shock on its balance sheet, the Government has helped to cushion New Zealanders from the worst of the recession”.

Given all this, why, then, does the Green Party oppose adoption of the appropriation review? Why will we be voting against the Government on this bill, which is essentially a serious annual exercise? It is because of the philosophical divide that separates this House. There is a numerical divide and there is a philosophical divide in this House. Numerically the House is divided between the two largest parties, between National and Labour; 69 votes square off, though not always, against 53. But philosophically, the House is divided 113 to nine.

What is the nature of this divide? It has to do with the fundamentals of economic and financial management, which go to the heart of government, and on which this financial debate rests. All other parties embrace the concept of unlimited economic growth. We heard that from the Minister of Finance, from Mr Cunliffe, and from Mr Burns just recently. In contrast, the Green Party alone repudiates this concept. The Green Party embraces the concept of a steady-state economy: economic development, yes; economic growth, no. There can be no more fundamental party divide in a political democracy than over underlying macroeconomic belief. This House, and, in a more general sense, this country, is divided between those who believe that human technology has freed us from the primitive grasp of nature and those who believe that indefinite economic growth on a finite planet is a logical impossibility, even allowing for technological growth.

It is important, therefore, that we explain, even in a technical debate of this kind, the theoretical tenets on which the Green philosophy rests and which prompt us to vote against the Government while acknowledging to some degree its financial stewardship. This has to do with the relationship between the biosphere and the economy. The Earth’s biosphere continues as a whole in an approximately steady state. Contrary to what the opponents of steady-state theory say, this does not mean that the Earth is static. Much qualitative development can happen inside a steady state. This has happened on Earth, and it can happen inside today’s modern global economy. But after millennia of relatively harmonious living on the planet, human society has changed within just the last 200 years, with the enormous growth of the economy relative to the encompassing ecosystem. It is as if the aggressive child is killing off its nurturing parent.

The distinction has to be made between growth and development. Growth is simply more of the same stuff. Development is the same amount of better stuff. The natural world is no longer able to provide the sources and sinks for the metabolic throughput necessary to sustain the oversized and overheated global economy. Yet with the global population growing from 6.7 billion to 9.2 billion and every country determined to increase its per capita GDP, the economic managers of our times call, none the less, for the mindless pursuit of more growth. We are locked in an economic asylum of circular logic that is incapable of accounting for the externalities beyond the perimeter’s limits. Those externalities in the 21st century will prove to be lethal to most, if not all, societies. Economic growth has, in fact, become uneconomic in the sense that it cannot be sustained indefinitely, which is, of course, its primary objective. We in the Greens advanced this critique of orthodox neo-liberal economic policy in our address in reply to the Prime Minister’s statement in February. We reiterate that critique today, and we will continue to do so up to, and into, the next election.

The financial statements contain the audited results for the 2008-09 year in comparison with two sets of forecasts. The first is the original Budget as published in the 2008 Budget Economic and Fiscal Update, and the second is the estimated actual forecast, as published in the 2009 Budget Economic and Fiscal Update. There is an obvious, intimate relationship between the budgetary planning of the Government and the final financial forecasts. It is therefore consistent with Green Party philosophy that governmental approaches to macroeconomic planning and evaluation adopt a broader set of indices than the purely economic and financial ones that we currently use, which are before us today. The Green Party has been prescribing this for at least a decade now, and it is finally becoming mainstream.

Last year President Sarkozy of France established the eminent commission led by Joseph Stiglitz and Amartya Sen. The commission was asked by the President what was the best way to measure economic health. It concluded that GDP was inadequate as the principal measure. Perhaps, concluded the commission: “Had there been more awareness of the limitations of standard metrics, like GDP, there would have been less euphoria over economic performance in the years prior to the crisis; metrics which incorporated assessments of sustainability … would have provided a more cautious view of economic performance, but many countries lack a timely and complete set of wealth accounts, the true natural balance sheets of the economy that could give a comprehensive picture of assets, debts, and liabilities of the main actors of the economy.” President Sarkozy has embraced the commission’s findings. He said, with his usual candour: “The world over, citizens think we are lying to them, that the figures are wrong, that they are manipulated. And they have reason to think like that.” Behind the cult of figures, behind all the statistical and accounting structures, there is also the cult of the market—that it is always right.

We have reached a stage where we must incorporate environmental and social indicators into our macroeconomic management and our national financial accounts. To that end, I have been working with colleagues recently to develop a member’s bill that could amend the Public Finance Act to ensure that our budgetary planning and our financial reviews take these indicators into account. It is my hope that I can submit this bill into the ballot within a month or two and that we can engage in a constructive dialogue on the best way to improve matters.

RAYMOND HUO (Labour) Link to this

Debates like this are primarily about the Crown accounts. When we are talking about accounts, the most effective way is to show the actual numbers, or to show them by way of graphics. In that vein, I would like to offer my contribution by showing two cartoons from the Auckland Chinese media to illustrate the point. The point that the artist and the ethnic media are trying to make is that although Prime Minister John Key has maintained his beaming smile since taking office, his standing within the Kiwi Asian community has changed dramatically. Coincidentally, these cartoons accurately illustrate the points I want to make in relation to this debate.

This is cartoon No. 1, which was published shortly after the 2008 general election, as members can tell from the scoreboard, which shows National 1, Labour nil. This cartoon shows the approachable, energetic, and triumphant Mr John Key becoming New Zealand’s Prime Minister with an array of the promises that he will fulfil. Prime Minister John Key laps up the rounds of applause from the majority of the Kiwis—good on them!

The second cartoon was published early in 2010. This cartoon shows the same approachable, energetic, and triumphant Prime Minister John Key. However, the weight of his promises are becoming unbalanced. Tax cuts for the top income earners outweigh the gains made by lower-income earners. The rounds of applause now echo out only from the privileged few—as the cartoon shows—who can afford giant diamond rings. The title the artist gave to the cartoon was “Step forward, for the super rich; or tiptoe, for the low to middle income earners”.

That explains why Labour’s “Axe the Tax” campaign has struck a chord with the general public. I was at the campaign’s launch in Auckland and also in Christchurch last week, engaging with ordinary Kiwis. One cannot help but ask what on earth this National-led Government has been doing to help ordinary New Zealanders. More GST means higher prices, and no one voted for an increase in GST. Increasing GST to 15 percent means 20 percent more tax on the basics. The cost of living is already an issue, and having a higher rate of GST will just make it worse.

The Governor of the Reserve Bank, Dr Alan Bollard, indicated to Parliament’s Finance and Expenditure Committee recently that he agreed that an increase in GST to 15 percent would add 2 percent to inflation and living costs. Based on the Reserve Bank’s own forecasts in the recent Monetary Policy Statement, this means that with the introduction of an increase in GST, inflation is likely to outstrip wage growth, while the labour cost index currently looks to just remain steady without any additional inflationary pressures such as a rise in GST. It is not just the impact of GST and National’s money-go-round: most people get a rise in GST and small change, while the big cuts go to a few at the top. This will certainly raise a huge issue of equity.

The second issue I picked up while campaigning is the uncertainty in relation to the possible change to other aspects of the tax system. National has indicated that it may remove depreciation from buildings. This reduction in income to landlords will flow roughly as an increase in rent, possibly as high as $45 a week. That is on top of GST increases, inflation, minimal wage growth, job insecurity, and rising power prices.

With regard to another issue of how to catch up with Australia, as I argued in the House before, focusing on the bottom 50 percent, not on the top 5 percent, is more sensible. I borrowed the idea from my friend Keith Ng, whose research shows that New Zealand’s tax system is less progressive than Australia’s. That is, high-income earners in Australia pay more tax, both proportionally and in absolute terms.

CRAIG FOSS (National—Tukituki) Link to this

This session is certainly off to a scintillating start. I look forward to seeing a translation of whatever the speaker from the Green Party was talking about earlier, because, with respect to that member, I had absolutely no idea what he meant. I would like to thank the members and officials who helped and assisted us to prepare the various financial reviews that we have in the report before us today. I think it goes for all members that we thank the people who produced these reports. I also join with the spokesperson on finance from the Opposition, David Cunliffe, in congratulating Mr English, the Minister of Finance, on the improvement in the accounts and in the forecasts, which the Opposition spokesperson alluded to earlier. It is true that there is no longer a forecast of a decade of deficits; in fact, it is 6.5 to 7 years at the moment. I will come back to that matter later.

The accounts clearly demonstrate the need for accountability, responsibility, and transparency, and to have a line-by-line expenditure review, because if the accounts had continued to straight-line in the way that they had been doing in the previous 5 years or so, this country would be in dire, dire straits. I again congratulate the Minister for at least putting the brakes on some of the negative impacts of the accounts, such as a potential blowout of the debt to GDP ratio. Budget 2009 began that clean-up process, and Budget 2010 will start to bring some fairness and equity back into the economic system of New Zealand, particularly with regard to the taxation field. If I have time, I will touch base on that matter, because some of the comments of previous speakers, with perhaps just one eye open, were totally and patently wrong.

These accounts show a deficit of $10.5 billion, from a positive $2.5 billion balance in the year before. Much of that deterioration comes from the recession and the global financial crisis, to be fair, but also much of it was locked in, stepped up expenditure booked up by the previous administration. For example, many Public Service salaries had been locked into 5 percent annual increases over 5 years, which is 25 percent. That is before compounding the increases, so they are obviously higher than 25 percent. So much of the problem with the accounts comes from having straight-lined expenditure increases yet variable or decreasing revenue, as members have alluded to, to be fair.

If we run a deficit, it means having debt. It means we have to borrow funds. It means we have to fund that borrowing. That money is quite simply not available for other services within the economy. It is not available to pay for health or education. It really surprises me that the Opposition goes on about more and more spending increases—I think of up to about $7 billion, which would actually mean $7 billion worth of more borrowing. Well, as other members have said, that is a theft from, or a tax on, future generations, which is simply not fair. To listen to earlier speakers, one would think the problem was all over. It is not as bad as it had looked to be; that bit is dead right. But the issue is all about confidence and eliminating the deficits; it is not about pretending they are all over with a bit of a snapshot.

One point to note is that the commentary says the previous administration did not pay off 1c of debt. The ratio of debt to GDP improved somewhat, but that Government did not actually pay off 1c of debt. I invite members to look at the numbers.

I would like to point members to page 13 of the transcript, because the Opposition spokesperson on finance had a bit of difficulty with some of the issues there. He questioned the Minister about the percentage changes. If we want to show a percentage change between year 1 to year 2, we need to have two columns. We compare the two, and we get one percentage change over 1 year. The Opposition spokesperson kept questioning the Minister of Finance, who had produced a press release. It had six columns in it that produced percentage changes over 5 years. The media that were present were flabbergasted. Everyone around the table was flabbergasted, because the most important issue for that member at the time during the review was how many columns the Minister of Finance had produced in a press release, and even then the Opposition spokesperson got it round the wrong way. As I said, if we want to show the difference between 1 and 2 years, we need two columns of data. Again, that may to be seem trivial, but that is what the Opposition spokesperson on finance said; it is on page 13 of the report.

One further thing I will say is in respect of superannuation. Basically, the Opposition spokesperson on finance was essentially saying the more one borrows, the more one makes. Supposedly, we should have borrowed more funds in order to put more money into the New Zealand Superannuation Fund. I think we put in $250 million, not the $2 billion that we would have needed to borrow in order to put into that fund. Members should look at the returns. They will see the returns are still not above the water. But the more one borrows, the more one makes, according to the Opposition member. Thank you.

JOHN BOSCAWEN (ACT) Link to this

I will refer to the collapse of financial markets and the importance of restoring confidence in financial markets, and particularly to page 107 of the Commerce Committee’s report on financial markets. The committee outlined the progress that the Government has been making to restore confidence in financial markets. But this afternoon I want to talk about one specific finance company, Strategic Finance. Sadly, it was placed in receivership last Friday, with, no doubt, the loss of many hundreds of millions of dollars. I believe that if the Government wants to restore confidence to the financial markets, it needs to put Strategic Finance into statutory management. I wrote to the Minister of Justice, Simon Power, on 14 December, outlining the reasons why I believe he should do just that. I believe that some of the investors who voted in the moratorium in late 2008 did so without knowing the full situation surrounding Strategic Finance’s financial affairs.

In setting out those reasons, I will come back to a speech I gave on the last sitting day of last year. In particular, I referred to the fact that in the June 2008 accounts Strategic Finance showed $300 million worth of second mortgages. Twelve months later in the June 2009 accounts, rather than showing $300 million worth of second mortgages, it showed $232 million of second mortgages—

RAHUI KATENE (Māori Party—Te Tai Tonga) Link to this

Members of the Māori Party were fascinated by the five pages that formed the substance of the report of the Justice and Electoral Committee on the Ministry of Justice. There has been a series of damning reports into the situation for Māori across the justice sector, so it was our expectation that the financial review would make at least a cursory mention in passing of these reports and the ministry’s response.

First off, there was the report of March 2009—a 60-month follow-up analysis of the reconviction patterns of released prisoners. That report highlighted that the relatively high rates of re-imprisonment for Māori and for young offenders are particularly concerning. The re-imprisonment rate over 60 months for Māori offenders, at 58 percent, is over 10 percentage points higher than for European offenders and nearly 20 percentage points higher than for Pacific Island offenders. Yet the only mention of reconviction in the report was the reference to the decision to limit parole for the worst repeat offenders.

The second report we thought would be entirely relevant for this report was the Offender Volumes Report of 2009. The data in this report is depressingly familiar: the graphs reveal as at 30 June 2009 the preponderance of Māori males in the prison population, especially in the younger age groups. As an example, approximately twice as many Māori 25-year-old males are in prison as European males of the same age. Data upon data demonstrate that Māori offender volumes have increased at given snapshot dates. A quick glance at the evidence and advice received, however, tells us that such vital information about offender volumes was somehow not considered relevant.

I turn to what we thought would have been a critical report for this ministry in terms of the emphasis on youth justice. We looked at the report presented by the Ministry of Social Development titled Effectiveness of Youth Court Supervision Orders: Measures of Re-offending. A key statement stands out in this report: “Currently in New Zealand there is no research on the effectiveness of Youth Court supervision orders in reducing the frequency and seriousness of re-offending.” There is reference in the financial review to the Youth Court and there is also reference to the involvement of the Ministry of Social Development. But this is where more questions are raised than resolved. Instead of drawing on this very significant finding, the financial review suggests that the primary focus for the Ministry of Social Development was to ensure that the policy information was accurate, “as distinct from advising on the appropriateness of expanding the jurisdiction of the Youth Court in this way.” I am sorry, but this just does not add up. The Ministry of Social Development’s own research tells us that there is no research on the effectiveness of Youth Court supervision orders, yet that information appears to have been ignored by the ministry in coming before the select committee.

Some other major findings in that research have failed to make it to the financial review. One is the fact that Māori are overrepresented in the profile of youth offenders, at 55 percent—a disproportionate figure relative to their proportion in the New Zealand population of 14 to 16-year-olds, at 22 percent. Another is the extremely high recidivism rate: four out of five of the 1,800 young people in the cohort committed at least one other offence within the follow-up period, consistent across the three supervision orders. One would have thought an 80 percent reoffending rate would be worthy of comment.

Finally, I turn to another major report undertaken in the justice sector during the period of review. I suggest every member of Parliament look at this report; its title is Identifying and Responding to Bias in the Criminal Justice System: A Review of International and New Zealand Research. What is so useful about this report is not that it finally points out the well-known fact that certain groups are disproportionately represented in adverse criminal justice outcomes at successive stages of the criminal justice system; its key value is that it reports on the factors likely to bring about success in addressing ethnic disparities. It recommends that indigenous peoples should have a central role in programme design, implementation, and governance; that there should be a holistic approach to addressing structural inequalities more broadly; and that it should be appropriately monitored.

I have bothered to go through these four different reports because it is our view that current New Zealand analysis and research on the key issues confronting the justice system should form a specific context to any financial review of the sector. These reports have told us that the current evidence depicts high and unchanging recidivism rates and continued overrepresentation of Māori at every level of the criminal justice system from apprehension through to recidivism.

Yet what do we find when we look at the 2008-09 financial review? On the first page we find a whole paragraph dedicated to the large number of departmental officials who attended the hearing, as if too many people at a hearing or meeting is one of the critical issues cutting through the sector. We fully appreciate the extra load that has landed on the Ministry of Justice in responding to not only the demands of electoral work following the general election in November 2008 but also the heavy focus on justice and law issues in the 100-day legislative programme of the new Government. But it is not as if the information is not on hand; these reports are all generated by various arms of Government: the Ministry of Justice, the Ministry of Social Development, and the Department of Corrections. The facts and figures are there for all to see—all except for the members of the Justice and Electoral Committee, it seems.

In one case, even when the facts are explicit, the review manages to slide past them in a way that downplays the reality. The youth justice sector of the report describes a question from the select committee as to whether the youth justice system continues to aim to take a diversionary approach to young offenders. The Ministry of Justice confirmed that this is still the intention, yet the statistics tell us that prosecutions of youth offenders have increased while there has been an associated decrease in the numbers of alternative actions available. Indeed, the report into child and youth offending describes youth prosecutions as trending upwards, with the proportion of apprehensions resolved in this way increasing from 13.2 percent in 1995 to 28.1 percent in 2007.

I have no pleasure at all in bringing to the Committee this up-to-date information about the performance of the justice sector. I do so reluctantly, with two clear aims. The first is to enable a far more solid context in which to understand performance issues than is provided in the financial review, and the second is to ensure that we have all information on hand in order that we do what is needed to create the solutions we so urgently desire.

I believe the section on drivers of crime offers the one glimmer of hope we need in order to move forward. The financial review reports that the Minister of Māori Affairs and the Minister of Justice co-hosted a ministerial meeting on the drivers of crime in April 2009. That meeting was distinctive in its ambit as it sought to address the underlying causes of crime rather than just the criminal justice sector’s response to it. These causal factors included early childhood trauma, disconnection from society, and deterioration of family, community, and cultural support structures. So it is heartening to read in the report that addressing the drivers of crime would be established as a whole-of-Government priority. We certainly feel confident that, with the work that Dr Sharples is leading in the drivers of crime policy and the work that Tariana Turia is leading in Whānau Ora, we are embarking on pathways that can help to address these disproportionate and persistent statistics by drawing on the strength of whānau as our greatest resource. Thank you.

JOHN BOSCAWEN (ACT) Link to this

I seek leave to lodge with the Committee a copy of my letter to the Minister of Justice dated 14 December 2009, requesting that Strategic Finance be put into statutory management.

CHESTER BORROWS (National—Whanganui) Link to this

It is good to be able to take the opportunity to review the year in this financial review of the Ministry of Justice, and to review the work of the Justice and Electoral Committee and the officials from the justice ministry who have appeared before the committee. The previous speaker commented on the work of the committee and on the proportion of justice legislation that formed part of the Government’s 100-day plan and has been transacted through the select committee and the House over the past 12 months. I take this opportunity to thank those justice officials who have worked with the select committee, and to thank the members of the committee, who have worked very collegially over the last 12 months to transact that legislation. Although there have been some significant points of difference, largely there has been a great deal of consensus within the committee, which is the way that things should be with regard to legislation that we would like to think was relatively apolitical and was certainly needed.

I take issue with a number of comments made by the previous speaker as to the work of the select committee and those things that appear to have slid past the committee. It seems a little difficult for a member of a party that is not represented on the committee to be able to make those sorts of comments, not having been within the room. The point is that the issues raised in terms of youth offending are covered across a number of committees. They have been traversed within the Justice and Electoral Committee and the Social Services Committee, and it is important to point out a couple of points. One point is in respect of the number of prosecutions of youth appearing before the Youth Court. Actually, the proportion of youth who appear before the Youth Court, as a proportion of all youth who come to the attention of the police, is staying about the same as it was previously. About 20 percent of those who come to the notice of the police are dealt with by way of a family group conference along the Youth Court track, and only about 20 percent of that group actually appear before the Youth Court. The reason that more young people have been appearing before the Youth Court is due to the scale and severity of the crimes they have committed, particularly crimes against the person. The ability to deal with those crimes through ways other than prosecution is very, very limited.

It is important, though, to point to the work that the committee and the justice ministry have done over the last 12 months in respect of the legislation that has come before the House. They have worked on legislation that has clamped down on criminal gangs and their ability to work within the P trade. They have been tackling the problems of violent youth crime, which is what we were talking about a moment ago. Not long after the National Government came in after the 2008 election, one of the first pieces of legislation it introduced strengthened the bail laws in order to make it harder for violent criminals to get bail, rescinding a move by the previous Government. Then the National Government removed the right of the worst repeat violent offenders to be released on parole. We introduced legislation to enable the police to take DNA from all people who are arrested for an offence punishable by imprisonment, and that is probably the single piece of legislation with the ability to protect more people than any other single piece of legislation that this House is likely to look at enacting. We need to bear in mind that securing a DNA profile from somebody who is arrested for a relatively minor offence is likely to prevent an increase in the number of victims, because identifying such offenders means that if they ever escalate their offending they can be identified. That is especially so in respect of crimes against the person where bodily secretions or hair is left at the scene of a crime. Those offenders will be able to be identified and will not be able to go on to commit the level of offending that has been seen as abhorrent in our community.

The justice ministry gave advice on the setting up of the victims’ compensation scheme. That scheme involved the introduction of a $50 offender levy for any person who is convicted of an offence before the court. That money is put into a victims’ fund to assist in the education of victims as to their rights and the resources available to them to be able to attend, for instance, parole hearings, or to obtain childcare while they are giving evidence in court. It will enable them to attend trials involving family members or trials at which they are to give evidence. The Legal Services Agency helps victims of crime and the families of victims of crime to attend parole hearings and coronial inquests at no expense, but we had had instances in respect of that that we needed to address. We were pleased to receive support across the House in respect of that measure. Thank you.

SIMON BRIDGES (National—Tauranga) Link to this

The financial review of the Ministry of Justice proceeded without great moment this year. That, really, has been the measure of the Justice and Electoral Committee throughout this year: it has been an uncontentious committee. There have not been a lot of headlines about it and—as the chairman, Chester Borrows, has said—members have, on the whole, worked collegially and cooperatively. I think that probably has something to do with the fact that we are seeing a Government that is implementing its election promises in the areas of law and order and justice. Alongside our pledges to make a difference in the economy, those were the single biggest things upon which the National Party and John Key were elected.

The review process has been good and uncontentious. Together with the Law and Order Committee, this select committee has put through a large volume of legislation. My recollection, off the top of my head, is that it has considered about 11 substantial bills in the last year. That is not to say that it has been some sort of supermarket conveyor belt, just pushing bills through. In fact—as, again, Chester Borrows has said—a lot of thought has been put in by the committee. There has been a huge amount of deliberation and, of course, a large amount of work by the Ministry of Justice officials, who have done an excellent job, particularly—as, I think, Rahui Katene said—in that 100-day period at the start of this Parliament. They had a huge amount to do and did it with aplomb.

I do not want to go through all the legislation that has had impact in this area, but I want to single out one bill. My view as a former criminal lawyer is that this bill, along with one that was before the Law and Order Committee—the legislation on the proceeds of crime—will have the single most important impact and a large effect for the good of victims, ultimately creating less victims in our society. The bill I am talking about is one that Chester Borrows talked about: the Criminal Investigations (Bodily Samples) Amendment Act 2009.

Hon RUTH DYSON (Labour—Port Hills) Link to this

I am delighted to be able to speak in the debate on the Appropriation (2008/09 Financial Review) Bill on the financial review of the Ministry of Health. I will mention in this debate the new language that has come to the fore when we consider what is happening in the health system. When we look at the services that people are currently receiving that are being cut, when we look at the impact of the budget restraints that the Minister of Health is personally imposing on district health boards, and when we look at the lack of support that the Minister is giving to the key sector leaders throughout the health system, we see there really is a big change.

The new language of health, which the Associate Minister Jonathon Coleman repeated today, is extraordinary. We do not have cuts in health services; we just have “changes” in health services. Well, he should tell that to the older people in Otago and Southland who are currently receiving 1 or 2 hours’ home support a week, which enables them to have quality of life and to be able to stay safely in their own homes in Dunedin or Southland. I say the Associate Minister should tell them that the letter they have just received, which says they will no longer receive that home support, is not about a cut in health service, but is just about a change. A big change for them is that if they want to have that home support any more, if they want to have help with their laundry, meal preparation, or house cleaning, they will have to pay for it themselves. That is the change for them, but from their point of view they know what the Minister and the Associate Minister have really been saying, which is that this is not a change but a cut.

In the same way, the nurses at Nelson Hospital know that the cuts in staff numbers in Nelson’s public hospital are not a change but a cut. The chief executive has been directed personally by the Minister of Health to stop filling any vacancies in nursing positions. What did the Minister promise New Zealand before the 2008 election? He promised that there would be no cuts to front-line services. We cannot get someone who is more front-line than a nurse in a public hospital. The nurses are now speaking out publicly, saying patient safety is being put at risk. Patient safety is being put at risk in Nelson Hospital because the Minister of Health has told the chief executive to leave vacancies unfilled. So we have fewer staff, but the same number of patients is in the hospital. Nurses are now calling on overworked doctors to help them out, and this is all about cutting costs and services, which puts patients’ safety at risk.

The good people of Horowhenua will be very interested to hear Jonathon Coleman, the Associate Minister, say the cut of 24 patient beds at the Horowhenua Health Centre is not a cut in health services. The centre has only 24 patient beds, and 24 beds are being cut. Taking away 24 patient beds is being called just a change.

This is the new language of health that Tony Ryall and Jonathon Coleman are trying to ram down the throats of the public of New Zealand, but they are not having a bar of it. We know, particularly as we look through the details in this financial review, that those are not changes in health. They are cuts to front-line services and are hurting hard-working New Zealanders. Frankly, the most upsetting are the cuts to the services for older people. They have given their lives in the service of our country, either in paid employment or in raising their families, often serving our country overseas and literally putting their lives on the line for the good of the country. When older people need just 1 or 2 hours a week of home support to keep them safe and living, with that little bit of support, in their own homes, they are told that they will just have to pay for it themselves. That is not good enough, and it is certainly not what the older people of New Zealand deserve. Just to cap it off, though, the older people who live in Southland, which is the Minister of Finance’s own electorate, have been told that not only is their home support being cut but also there will be a 6-month waiting list for their rest home. That is not good enough for older New Zealanders.

Hon Dr JONATHAN COLEMAN (Associate Minister of Health) Link to this

It is quite clear that one of the reasons the last Government was thrown out of office was that the public no longer trusted it to manage the health service. That is absolutely true. That is what happened. Over 9 years, the previous Government failed to deliver elective surgery and failed to make a difference overall to service provision for New Zealanders, and it was found out.

You know, it is very interesting; that member just got up and talked about the new language of the health sector. Well, I have a document here, published under the previous Labour Government, that talks about programmes being reprioritised during the Vote Health October 2008 reprioritisation. Of course, that was not a cut; it was a reprioritisation! So when that Government took $10 million from the interim funding pool for people with disabling chronic medical conditions, oh no, that was not a cut; that was a reprioritisation! I think that it is very, very difficult for that member there, Ruth Dyson, to speak with any credibility in this Chamber on matters of health, when she is so badly—

Hon LUAMANUVAO WINNIE LABAN (Labour—Mana) Link to this

Kia ora, talofa lava, and warm Pacific greetings. I stand to speak on the Appropriation (2008/09 Financial Review) Bill with a heavy heart and with sadness as I reflect on this National Government, which continually uses rhetoric and nonsense over logic and common sense, and which labels cuts as changes.

Let me prepare a snapshot of some of the changes; we are talking about the impacts on our families, our communities, and our elders out there in the community. In March 2009 the Taranaki District Health Board publicly signalled that its hospital was preparing for cut-backs. In April 2009 the Southland District Health Board and the Otago District Health Board confirmed they were cutting home-based services in order to reduce costs. The boards were looking to make savings of up to $10 million by reducing home-based support for the elderly. In May 2009 their anti-obesity, oral health, and mental health targets were cut. National took $2.3 million out of cancer controls in Budget 2009. It has slashed the “Get Checked” Diabetes Aotearoa budget by $4.8 million each year. It has cut $3 million from the cardiovascular disease budget, and mental health services have also had their funding cut.

In June 2009 the Whanganui District Health Board said that it would be closing hospital wards at weekends to save money on nursing overtime. The Fruit in Schools programme, which currently provides 100,000 children with fresh fruit each day, is under threat. In July 2009 the South Canterbury District Health Board said that it would be reducing the number of patients seen in its emergency department by up to 5,000 people a year. In August 2009 there were cuts to elderly care in South Canterbury. Rest home care limits have annoyed general practitioners, and Dunstan Hospital has reduced community, physiotherapy, and disability home support. In September 2009 $2 million was cut from mental health services in Nelson’s mental health funding. In October 2009 there were home support cuts for the elderly in Canterbury. I quote from the Christchurch Press: “Man, 83, offers to clean shower with foot”.

In November 2009 a total of 12.5 nursing positions were chopped across Palmerston North Hospital’s main surgical, medical, and child health wards. In December 2009 a survey showed that spending was down on general practitioner visits, and on surgery. Research commissioned by Southern Cross Healthcare found that the number of people who visited their general practitioner when they felt unwell fell from 64 percent in 2008 to 56 percent in the following year, and senior doctors voted overwhelmingly to focus on achieving a pathway to try to better conditions. In January this year Mary Bourke, a district health board member, was candid about the accident compensation squeeze. She said “So effectively, madam chair, what we are talking about here is that ACC is trying to cut down on its costs by shoving its responsibilities on to someone else?”. More than 1,200 Canterbury elderly have had their home help hours cut or reduced since the new assessment service, and we have numerous stories in part of my electorate, the Mana electorate, where home-based support cuts are being assessed via the telephone. We have heard these stories all over the country. What is really disturbing is the anxiety and stress that is caused. For example, in my electorate of Mana 24 percent of Kapiti are over 65 years old, and people are worried. If we look in terms of the elder example we see that we are actually talking about over 28,000 people in rest home care and over 60,000 people who receive home-based care. It is cheaper and much more cost-effective to continue to give that little bit of support to enable our elders to continue to live independently and in their own homes.

At the end of the day, this particular group is very important to our society because they hit us at a personal and intimate level. They are our parents, they are our grandparents, and they have contributed to and built society. Is that the sort of reciprocity we want? At the end of the day, it is sad to see a lot of programmes that Labour embedded, and which needed more time to continually produce the achievement levels they were already showing—

Dr PAUL HUTCHISON (National—Hunua) Link to this

Thank you for the opportunity to speak on this very important financial review. I must say that I am very proud to be able to speak of National’s record in health.

GRANT ROBERTSON (Labour—Wellington Central) Link to this

What the financial review of the State Services Commission tells us is that the Government actually does not have a coherent plan for how to establish public services that are relevant and proper for the 21st century. It has made a series of moves that are nothing more than smoke and mirrors.

At the Government Administration Committee we looked into the question of what front-line staff are. One of the big centrepieces of the National Government’s public-sector policy is moving more people to the front line—out of the back room on to the front line—delivering services to New Zealand. We discovered in the financial review process that there was no definition of front-line staff. There is no definition whatsoever of what front-line staff in the public service are or what they do. In fact, as we look across the financial reviews, we can see that there are a variety of definitions of front-line staff.

Archives New Zealand is a Government agency that, I think, does an excellent job. It is a very, very good and efficient outfit. It told the select committee that it had 80 percent of its staff on the front line. Not even I, as a great supporter of Archives New Zealand, believe that it can really be saying that 80 percent of its staff is front-line. But the reality is that there is no definition of front-line, and it is the centrepiece of the National Government’s policy. We asked a number of other agencies; some of them told us that the State Services Commission was developing a definition and some told us that it had given them a definition. There was absolutely no clarity about one of the most central points in this Government’s policy, the idea that there will be more people on the front line.

Perhaps it is not too surprising that National wants to mask some of that. One thing became clear when the Ministry of Education told us that the percentage of people working as front-line staff in 2008 was 57 percent, and in 2009 it had gone down to 53 percent. So the number of front-line staff in the Ministry of Education actually declined in this National Government’s first year in office. So much for a policy to move staff to the front-line and give the New Zealand public the services it deserves! We can actually see in these financial reviews that the percentage of staff working in the Ministry of Education on the front line went down.

It is all smoke and mirrors when it comes to the public sector; there is no coherent plan. That became very evident on radio last week when the Minister of Education, Anne Tolley, was asked about the $25 million dollar cut to the Ministry of Education. She was asked what programmes and what activities would be cut. She told Radio New Zealand that she did not know. We know it will be $25 million, but we do not know what the programmes and the services are. That is completely the wrong approach to take towards State services. New Zealanders deserve a Government that looks to see what outcomes we want from the public sector and what kinds of services New Zealanders need and deserve, and then builds the ministries to deliver on those outcomes. But, instead, we hear from Anne Tolley that she does not know. It is $25 million; it is just a dollar figure. That is the problem with the National Government’s approach to the State sector. It is penny-pinching, and it is not prepared to invest. The Government is not prepared to ask questions about the outcomes. It just wants to cut into it.

There is a complete farce in this policy. The National started at the beginning of this term with a cap on the public sector—no cuts; just a cap. We know that is wrong; more than 1,500 jobs have gone out of the public sector. It is the front-line services that are going that matter, such as Child, Youth and Family staff, and, at the border, biosecurity staff. What could be more important as a public service provided to New Zealanders than protecting our borders? The National Government has made indiscriminate cuts. It is not about what the best services could be for New Zealanders; it is about putting in place ideological funding cuts right across the board. That will not deliver us the public sector that New Zealanders want.

When we look overall at the performance of the State Services Commission, there have to be questions asked about its future. The work of e-government is being done by the Department of Internal Affairs, the work on Government procurement is being done by the Ministry of Economic Development, and the work on productivity in the State sector is being done by Treasury. There is very little left for the State Services Commission to be doing. Its future must be in question. But once again what we are seeing coming out from the State Services Commission is seemingly random restructuring. It wants to bring Archives New Zealand back inside the Department of Internal Affairs. It went out in the 1990s because we realised that it was time to give Archives New Zealand its own mandate and the ability to get other Public Service departments to deposit their records. That is why it was done, yet it has now been put back in the Department of Internal Affairs.

There is no coherent plan. Why is the National Government not going back and looking at the State Sector Act, for instance, and asking how we can organise public services to be delivered in a coordinated manner? That is what New Zealanders want, and it is not coming from this Government.

KANWALJIT SINGH BAKSHI (National) Link to this

The financial review of the State Services Commission was undertaken by the Government Administration Committee. One of the main aims of the National-led Government is to provide services to the public. In February 2009 the Government released its Expectations for Pay and Employment Conditions in the State Sector. These new expectations reflect the Government’s priority in economic and fiscal situations.

The key points were that any changes to pay must not lead to private sector movements and must take into account the total cost and value of employment conditions. State sector agencies that were required to consult the State Services Commission regarding changes to the conditions of employment are expected to demonstrate that the outcomes are fiscally sustainable within the baseline, responsible, and demonstrate value for money. This was not a wage freeze. It was about moderating wage expectations in the public sector, which has continued through the financial year.

The National-led Government is not about growing the Public Service, but about growing services to the public. This means more front-line service delivery and more efficient back-office services.

The National-led Government has halted the growth in Public Service bureaucracy. The human resource capability strategy of 2009 shows that the Public Service is heeding the Government’s call for wages restraint and small core Government administration. The summary reports a decline in the number of public servants since December 2008, and labour force index data show that growth in Public Service wages has slowed. It is not the numbers; it is the service that this Government has committed to the public, and we are providing that. Thank you.

CATHERINE DELAHUNTY (Green) Link to this

I welcome this opportunity to speak to the Appropriation (2008/09 Financial Review) Bill on the financial review of the Ministry for the Environment. I was not a member of the Local Government and Environment Committee. That committee is incredibly important to the Green Party, and my colleague Sue Kedgley was a member of it.

CHRIS AUCHINVOLE (National—West Coast - Tasman) Link to this

It is my pleasure to speak in the financial review debate and to refer to the report of the Local Government and Environment Committee on the 2008-09 financial review of the Ministry for the Environment. As the chair of that committee, I must say that I am very pleased with what has been delivered. The committee itself is a hard-working and diligent committee with a high level of commitment to quality outcomes, a little like the example given by the National-led Government.

In the 2008-09 financial year we have seen a new Government with new priorities, significant changes to the ministry’s structure and governance systems, and a reduction in baseline funding. The new priorities included the reform of the Resource Management Act and developing new policy on the roles and functions of agencies operating in the environmental sector, including establishing an Environmental Protection Authority under the Resource Management Act. The amended Resource Management Act reduces the time for processing consents and reduces the paperwork required without forfeiting obligations to New Zealand’s unique environmental heritage. As part of the commitment to environment management, an Environmental Protection Authority has been established, and it will become effective on 1 October. It has been a pleasure to be involved with the first phase of the Resource Management Act reforms, and certainly those reforms clean up an awful lot of rubbish. It was mentioned on the other side of the House and that is where the rubbish emanated from. I look forward to the critical phase of two reforms later this year. Two call-ins have been completed—Te Mihi geothermal and Te Waka wind farm—and two new proposals have been called in.

The way we handle resources is very, very important. The Ministry for the Environment produced some excellent work in preparation for changes to the Resource Management Act. Indeed, it is possibly worth mentioning that it made an exceptional commitment at a staff level to making those changes and bringing recommendations forward. We could not have asked for more assistance than we got. It was exemplary.

I note the comments of the Green Party member who has just spoken and I certainly would not lessen the gravity of the toxic waste clean-ups. They have occurred, but I am not quite sure I agree with the member about the success or otherwise of the Māpua one. We had a report just yesterday that indicated that the situation is hopefully not as serious as could have been imagined initially. That work is being done and the report is out there for 6 weeks, during which time members of the public, particularly those with any concerns, are encouraged to make contact with the Ministry of Health. I encourage them to do so and, indeed, people in Māpua, where I was on Friday, are encouraged to get in touch with me if they think I can be of assistance with their inquiries. I would be happy to do so. It has been a long journey for them. It is not over yet, but, again, the way the Ministry for the Environment has worked through this has been an exemplary indication of commitment to getting things right even though they were wrong. I congratulate the ministry on the way it has done that work.

The emissions trading scheme has been an important priority during the reporting period. We have seen the Climate Change Response (Emissions Trading) Amendment Bill implemented. This was drafted to tight time frames and was introduced in September 2009. The Emissions Trading Scheme Review Committee reported back to the House on 31 August 2009 with recommendations and the Act was passed on 25 November 2009. Features of the amended Act include: revised entry dates of 1 July 2010 for transport, energy, and industrial sectors, and 1 January 2015 for agriculture; a transitional phase until 1 January 2013, with a 50 percent obligation, and a $25 fixed option for the transport, energy, and industrial sectors, and incentives for afforestation created by a domestic and international market for carbon credits.

Another important step that has been made is the investment of $36 million in a bio-diesel grants programme. This will promote bio-diesel production to kick-start the biofuels industry. Thank you.

Hon CLAYTON COSGROVE (Labour—Waimakariri) Link to this

In the brief time we have available, I want to make a couple of remarks concerning the funding of the New Zealand Police. I am pleased that the Minister of Police is in the chair because it was and still is that Minister who makes a great play of talking tough and saying she will back the police. [ Interruption] However, those members do not like this debate because, unlike a select committee, they cannot shut this debate down, which the chair of the Law and Order Committee, sitting over there, has tried to do in that committee.

There is a worrying trend within the New Zealand Police and it is not about the police officers themselves. The trend is that this Minister, after talking tough, making a large amount of promises, grinning like a Cheshire cat, and having a wee giggle, as she does, has embarked on a series of cuts that are evidenced in the documentation that is before us—[Interruption]—and they do not like it. It was this Minister who said she would put 600 new police on the streets by the end of 2011, when we know that although that sounds good in theory, in practice approximately 380 of those 600 officers were already promised. Before she says that one has to follow promises with funding, I say that those officers were already funded and being trained under the previous Labour Government.

We know the obsession the Minister has with her own patch of Counties-Manukau, and she and her Prime Minister celebrated the 200th graduate police officer to go into Counties-Manukau. OK, that is fair enough, because we know that Counties-Manukau has some unique crime and violence problems, but here is the rub: we found out, courtesy of an Official Information Act request and one district commander Mike Bush, that the Minister has, according to her own departmental papers, provided only 25—she now says it is 43—police cars for the so-called 300 police she is putting into Counties-Manukau. District commander Bush made a very interesting point. He said that that is one vehicle for every 12 officers. The Minister says it is now 43, but let us not quibble. Even if it is 43, it is far less than the normal ratio. Of course, district commander Mike Bush comments in the Official Information Act memo, this ratio of 1:12 is “considerably lower” than the current ratio, which ranges from 1:4 to 1:6. This is not a bureaucrat; this is a senior police officer who is probably the first at district commander level to question the rationale for this policy.

Hon JUDITH COLLINS (Minister of Police) Link to this

It is really great to be the Minister of Police and to remind members that in the last Budget the police were huge winners, getting almost $300 million extra. But there was not a word from the Opposition on that point. I say to the member who just resumed his seat, Clayton Cosgrove, that one thing our front-line police officers do not like is having their names used in this Chamber and brought into political debate. I ask him to kindly respect the fact that those officers are embarrassed by his using their names, and they would rather he did not do that. And, quite frankly, they also dispute many of the things he says about them.

One of the points we can note is that the New Zealand Police is the best police force in the world. There was not a word from the Opposition about the fact that a UMR Research poll shows that for the first time 78 percent of people polled thought that the police were fantastic and that they do a good job. That is the highest rating ever; a 7-point increase in 1 year. The Government had something to do with it in terms of funding, leadership, and direction and backing for the New Zealand police. But the majority of the credit should go to our police officers, who everyday put their lives on the line for us. I would like to give them that credit, and I want to tell members about some of the very good stories from the New Zealand police during the last financial year.

DAVID GARRETT (ACT) Link to this

I will take a fairly short call in the debate on the financial review of the New Zealand Police. When the Commissioner of Police appeared before the Law and Order Committee it was very gratifying to hear him acknowledge that using sworn police personnel to run speed cameras was a waste of resources. The commissioner came close to suggesting that traffic enforcement should be separated back out from what I would refer to as true policing. But he later issued a statement making it clear that that was not his intent. However, the commissioner agreed at that hearing that having six police running a checkpoint at 9 a.m. looking for warrants and registrations in the village near where I live was not a good use of resources. The commissioner noted that they must have been doing something other than that. Well, only they would know, but I doubt it.

I note that the speed camera van that is regularly parked in the village outside the school—and no one disagrees that it should be there—is manned by a man who looks like a retired policeman but who, in fact, told me he is an active sworn policeman. Surely he could be better deployed somewhere other than sitting in a van outside the Kaukapakapa School making sure that no one smashes the camera. I encourage the Commissioner of Police to look further at deploying resources better to fight crime rather than to look after speed cameras.

Policing in rural areas is a major problem. There must be a balance between the low population density and, therefore, relatively lower crime rate, and the shortage of resources. Obviously the police must be concentrated where most of the crime takes place. However, there is an old saying: “Build it and they will come.” In my view, that works the opposite way, and I will alter that truism slightly and say: “If they know they are not there, they will come also.” In the 4 years or so that I have lived in the country I have noted a marked increase in wheel skids all over the road every morning in and around our area. That is because the hoons know that the nearest manned police station at night is in Ōrewa, which is 15 kilometres away. So because the police are not there, they come and make mayhem.

I have spoken in this Chamber before of our local general store and liquor store owner, Willie, and his family, who are hard-working New Zealand Chinese. The shop opens at 7 a.m. this time of year and does not close until 7.30 p.m. One would think Willie and his family deserve their rest, but he has to be out on the street at 2 a.m. most nights, especially on weekends, to deter the hoons who are doing doughnuts all over the road. The hoons do that because they know there is no policeman within 15 kilometres. What would happen if the little swine were to confront him? If Willie and his family were beaten up, it would take half an hour or more for an ambulance to reach him. In my view, the very successful community constable experiment should be extended more into rural areas. If money needs to be found, then we say it should be taken from the highway patrol car that is regularly to be found sitting at the Silverdale on-ramp looking for the dangerous speedster doing 120 kilometres an hour up a brand new motorway, which has presumably been built to the highest standards; from the highway policeman whom I used to encounter lying in wait at 5 a.m. on the straights north of Ngātea for some unsuspecting motorist doing 120 kilometres an hour on a deserted straight section of highway; or from the two policemen who once apprehended me on the southern motorway in Manakau City at 4 a.m. It is simply not credible that the best use of police time at 4 a.m. in Manukau City is for the police to sit on the side of the motorway hoping to catch someone driving an old Jag at 120 kilometres an hour.

The Commissioner of Police has said that the public are in favour by a large margin of having the traffic function remain with the police. Well, I would be interested in the evidence for that. “Rebalancing” is the current buzzword. In rural areas at least the residents believe that there should be a rebalancing away from handing out traffic tickets on country roads and towards establishing a police presence in rural areas.

Hon TREVOR MALLARD (Labour—Hutt South) Link to this

This is a case of our being more in sadness than in anger, as far as the Opposition is concerned. I think that we have gone through the point, with this Minister of Education, where we were angry with the Prime Minister for her appointment when her inadequacies were shown. I think it is important to know that as Heatley has gone, and as Worth has gone, it is our expectation that this Minister will at some stage join that group of former Ministers. I think that the Prime Minister has to make up his mind relatively soon as to when he will hand out the Not Achieved to this Minister.

As we focus on the different parts of this vote, we would have expected this Minister to be in charge of both parts of this vote as Minister of Education. But we note that effectively half her workload has been stripped from her because of the inadequacies that have been shown, and that half of the workload has been given to Mr Steven Joyce. It is sad that a Prime Minister has had to take half the workload from a front-bench Minister, in the way that the Prime Minister has had to do, by taking away from this Minister her responsibility for reporting on a very significant part of this vote.

We saw the Minister at the Education and Science Committee answering on this particular topic, and I think it is fair to say that there has been a previous Minister who had a worse performance at the select committee: Nick Smith, I can remember. I can remember Wyatt Creech and Dr Smith appearing before the select committee, and both of those people knew their subject. They did their homework; they understood. They knew what a vice-chancellor was, they knew what a vote was, and they knew how the system was put together. They knew what group special education was, because they were responsible for it, and they did their homework in the way that this Minister just does not.

They would never have put $62 million into national standards in a way that strips money out from making actual change in education. They would never have cut the money from professional development in the way that this Minister has. She has taken $45.6 million out of professional development.

LOUISE UPSTON (National—Taupō) Link to this

It is an absolute delight to speak about the financial review of the Ministry of Education. This is a once-in-a-lifetime opportunity to deliver a brighter future to every New Zealand child, and I am proud to be working with a Minister of Education who has the courage to take the steps needed to do that. Before the election, National promised to deliver national standards. In December 2008, just before Christmas, we passed legislation that would see national standards in every school and legislation to make sure that more of our young students attend school.

I will focus on the issues. They are the important things that are being delivered in education by the Ministry of Education. This Government is determined to do better for the one in five children who currently leave school after 10 years, unable to read, write, and do maths. That is a disgrace, and members on that side of the Chamber are unwilling to own that failure—one in five. Those members do not like it and they will not listen. We recognise that a strong foundation in literacy and numeracy is vital. That is the one priority and that is what the Ministry of Education has been delivering. It is fantastic news.

Hon MARYAN STREET (Labour) Link to this

I differ from my colleague Trevor Mallard in one respect: I rise to speak to the financial review of the Ministry of Education both in sadness and in anger. When I look at tertiary education I see that the characterisation of this Government’s work in tertiary education has been cuts, cuts, and more cuts. Yes, I am sad about it, but also I am angry. It is an ignorant approach to education to continually and routinely under-invest and cut just at the moment when other countries around the world are increasing their investment in tertiary education because they know that the way to sustained economic recovery is through investment in tertiary education and not through cutting it.

Worse than that level of ignorance, which is almost unfathomable, is the deliberate policy that this Government is demonstrating in tertiary education of narrowing access to tertiary education opportunities. The Government is not broadening the access, but narrowing it. We are talking about the period of appropriation when the Hon Anne Tolley was in charge of the tertiary education portfolio. We saw from the outset a Government beginning the way it meant to go on. It cut adult and community education funding by some 80 percent, taking out $13 million from a $16 million budget, and leaving $3 million behind. It reduced the number of high schools around New Zealand that ran adult and community education classes from 212 to 24, with a few others added on as clusters of schools led by one lead school out of those 24.

That was the first effort at narrowing the basis of access to post - compulsory education opportunities for New Zealanders. It is one area where New Zealanders have been able to step back into education in an accessible, non-threatening, low-cost environment that allows them to revisit what may have been a previously unsuccessful educational career and to begin to build the foundations that they need in order to excel.

Last year I went to about 17 or 18 public meetings. Sometimes there were 60 people at those public meetings protesting against the cuts to adult and community education; sometimes there were 500 people. Time and again, I saw at each of those meetings the level of anger and the level of loss that people felt for not only those things that the Minister does not count as necessary, such as social cohesion and strong communities, but also a loss of opportunity to learn, which those cuts represented. It was felt very acutely by people right across every community, even communities that one would imagine that the National Government would be keen to protect, such as rural communities, where post - compulsory education opportunities are few and far between. The National Government took no notice, because the hallmark of the previous Minister’s tenure in the tertiary education portfolio was obstinacy, ignorance, and just plain stubbornness.

That was the first of the cuts, but let us see what else happened under that Minister’s tenure. I have to say that the new Minister for Tertiary Education, Steven Joyce, is not proving to be any better, in that his approach to tertiary education is evidencing even more cuts. We will come to that shortly. In the year under consideration the Government cut $98 million from tertiary scholarships, with the bonded merit scholarship scheme, the Step Up Scholarships, and the Top Achiever Doctoral Scholarship ceasing from June 2009. So the efforts that the previous Labour Government put in place during its 9 years in office to allow people to access advanced tertiary education have been cut by this Government; $98 million was taken out.

Let us look at the CPI adjustments from 2009. For industry training, Modern Apprenticeships, and adult and community education elsewhere the CPI adjustments were cut. That is another $172 million shortfall in funding to those programmes over the next 4 years. Cuts, cuts, and more cuts.

Hon ANNE TOLLEY (Minister of Education) Link to this

It is a bit rich, is it not? It is easy for the previous speaker, Maryan Street, to come to the Chamber and talk about cuts, but she was a Minister in the previous Government and was responsible for leaving half a billion dollars’ worth—half a billion dollars—of promises that were made during an election campaign with no funding in place to deliver on them. Someone else had to come in and clean up the mess. It is all very well for her to get holier than thou, but someone else had to come in and clean up the mess.

I want to talk in this Chamber about student engagement, because that is what this Government has been focused on, and the previous Government ignored it. In fact, one could almost say that it was Labour’s dirty little secret. Let us talk about truancy. In 2006 a survey was done on truants, and it found that almost 30,000 kids were absent from school at any one time.

Hon TREVOR MALLARD (Labour—Hutt South) Link to this

I was not going to take another call—I have spoken with the Labour whips and I may be in a little bit of trouble—but I think that that speech by the Hon Anne Tolley cannot go unanswered. The first thing we should focus on is the comments the member made about standards, and her suggestion, which has been made here and around the country, that every single student will, when standards are properly implemented, leave with a National Certificate of Educational Achievement (NCEA) level 2. I have never heard so much nonsense in my life. There are hundreds, if not thousands, of students in every cohort in New Zealand who are not capable of getting NCEA level 2 unless the standards are dropped enormously. It is inappropriate for a Minister of Education to be so out of touch that she is going around the country promising parents—promising parents—that their children will achieve at that level when she, if she has a modicum of intelligence, will know that that is absolutely impossible. She has a system that she is putting $62 million into—