Debate on Crown Entities, Public Organisations, and State Enterprises

The CHAIRPERSON (Lindsay Tisch) Link to this

The House is in Committee for consideration of the performance in the 2009-10 financial year 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.

A total of 3 hours is allocated for the debate. The debates on the individual financial reviews should be relevant to the entities’ performance in the 2009-10 financial year and their current operations. A member may have no more than two calls on each financial review. A compendium of the financial reviews available for debate is on the Table. Entities yet to be reported cannot be debated.

I understand that members have indicated the Crown entities, public organisations, and State enterprises they wish to debate. I understand that the first entity members wish to debate is the New Zealand Tourism Board.

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

I rise to speak on this debate because tourism is one of our most important export sectors. In fact, over the last decade tourism was our single biggest export earner. Dairy has become more important over the last couple of years, but tourism has been our single biggest export industry. The New Zealand Tourism Board has done a good job in promoting New Zealand to the world, and the way it has done that is under our “100% Pure New Zealand” brand. But this has created an enormous conflict within New Zealand because of the contradictions around the “100% Pure New Zealand” brand. The “100% Pure New Zealand” brand is valued at many billions of dollars—possibly $18 billion, according to the 2005 Interbrand study. Not only is this brand how we sell tourism to the rest of the world, but also it underpins all of our other exports as well, particularly dairy: “Clean, green, and safe” is the foundation brand for dairy exports into China. So protecting this brand seems to me one of the fundamental jobs of the Tourism Board if we are to protect what has been our largest single export industry.

This brand has come under increasing pressure in the last 12 months. Just recently we saw the BBC in an interview with the Prime Minister raise a series of concerns about New Zealand’s environmental performance. That was based on the work of Dr Mike Joy, who is a leading freshwater ecologist in New Zealand. Those concerns undermine the “100% Pure New Zealand” brand on which our tourism industry is based. That is to do with the fact that the majority of our lowland rivers have become so polluted that at times they are unsafe for swimming, let alone drinking. In fact, according to Environment Waikato, 70 percent of the sampling sites within their catchment are unsafe for swimming; 75 percent are unsafe for stock water. We are finding that the “clean, green” brand, which is promoted overseas through images of wild, clean rivers—if members have seen those advertisements they will know that they often include wild rivers with people jetboating on them—is being undermined, as we destroy the natural environment in our country. One of the key drivers of the destruction of our natural environment over the last decade has been the intensification of dairy farming, which has resulted in increased pollution going into our rivers, and increased abstraction of water out of our rivers. It has also put pressure in terms of damming rivers so that they can be used for irrigation.

This Government is proposing hundreds of thousands more hectares of irrigated dairying in Canterbury alone, which will have massive downstream effects of pollution of our rivers and waterways. That pollution is fundamentally undermining our “100% Pure New Zealand” brand, which is our single most important tourism asset. Tourism has been our single most important export sector over the last decade. If we continue down this track of destroying our lowland rivers, which has been Government policy now for more than a decade from both of the major parties, we will fundamentally undermine our tourism industry.

The Prime Minister is the Minister of Tourism, and he looked extremely uncomfortable on BBC HARDtalk when he was asked about these issues. He was in denial and tried to say that one could find any old freshwater scientist, just like one could find any old lawyer, to say anything one wants. Actually, one cannot. The freshwater science community is absolutely of a consensus and of one mind that we are watching the destruction of our lowland rivers in front of our eyes, and that destruction is only accelerating under the pressures of intensive agriculture. We are fundamentally undermining one of our most important export sectors, which also impacts on all our other export sectors that rely on the clean, green, and safe brand that underpins the tourism sector.

We had an opportunity to do something about it with the National Policy Statement for Freshwater Management, but instead we turned it into a piece of meaningless drivel. We had a draft National Policy Statement for Freshwater Management, which actually would have resulted in the beginning of the clean-up of our rivers, but it got watered down by the Government when the statement came back from the board of inquiry. That national policy statement could have been the beginning of protecting our “100% Pure New Zealand” brand by beginning to clean up our rivers. People overseas understand that we are not 100 percent pure, but they will not tolerate our being in denial about the fact that we are not 100 percent pure, and they will not tolerate our doing nothing to start the clean-up process. If we can say to people that we have a problem, if we can acknowledge the problem, and if we can offer a plan to clean it up, then people will understand our position. Instead, the Government has a programme to make it worse by accelerating irrigation and intensive agriculture by undermining the one single serious attempt we had, the National Policy Statement for Freshwater Management, that could have started up the clean-up.

DAVID BENNETT (National—Hamilton East) Link to this

It is with great pleasure that we talk about the Waikato District Health Board, and the way in which that board has achieved so much under this National Government through the leadership of the Hon Tony Ryall, and of Dr Coleman, who has also been very active in the health field, and who has made a huge difference in promoting health decisions with effective results for our region. When we look at some of the results that have come out of the Waikato region, and especially the Waikato District Health Board, the biggest thing that anyone who goes to the city will see is the massive change on the skyline as cranes operate on that health site. There has been an over $400 million expansion and renovation programme for the district health board in Hamilton. It is a huge programme; we are seeing a new emergency department being created, which has just gone online, and a new maternity department. A lot of work has been done on the wards and also in the theatres of that great institution.

The district health board has led, in the way it has delivered services to the community, and we see that in the way that probably an extra 50 doctors have been added to the health service, and 250 extra nurses. That is something that has been very, very much sought after across the country, and especially in the Waikato. We are delivering on access to elective surgery, with an extra 3,674 people having elective surgery. An extra 35 patients per week are getting surgery done, and those are tremendous numbers. It makes a real difference to those people’s lives, and it makes a difference to the effectiveness of their ability to contribute to our economy.

There is better immunisation, with an extra 868 two-year-olds being fully immunised in Auckland under National during 2009, which represented part of that total of 5,053 two-year-olds being immunised around the country—a record of 86 percent, which is something previous Governments would have been very jealous of.

There are shorter stays in emergency departments. I know that the Waikato District Health Board has been very careful to make the best use of its resources in trying to get the best results it can from its emergency department. That is a challenge in the Waikato because we have a lot of traffic injuries in that area, as we have a lot of roads that connect to the big centres of Auckland and Tauranga. So we deal with a lot of road trauma, and there is a special trauma department at the Waikato District Health Board facility, which makes a very effective contribution to recovery for people who are in those kinds of accidents, or in the types of industrial accidents we see in that region.

There are shorter waiting lists for cancer treatments, which is another thing the Minister of Health has been very careful to see some results from, in that regard. We have seen that across the country, and it is good to see that happening in New Zealand with that horrible disease of cancer. Nobody really knows what can be done, but we can do the best we can with our treatments and processes, to enable the best for our patients in those areas.

There have been a number of very significant additions to the health sector in the last 3 years. Elective surgery numbers continue to rise, and the Minister has taken particular interest in seeing those numbers rise, and in patients having the ability to get that surgery. The Waikato District Health Board has performed well, over the time, and it has done very well in its construction programme of renovating buildings for the sector, especially for the Waikato. If we look at some of the third-quarter results for 2010-11, and at the Waikato District Health Board, for example, in regard to diabetes and cardiovascular services, we see that our board ranks 8th out of the district health boards. That is a good ranking, but it is something the district health board will want to improve on, as well. It also ranks 16th in programmes giving better help for smokers to quit. In the increased immunisation figures, the Waikato District Health Board ranks No. 9.

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

If there was a train wreck in health that we inherited, it would have to be the Waitematā District Health Board. I can remember the years from 2005 to 2008, when I would meet regularly with my colleague the Hon Dr Wayne Mapp, and we would compare notes on the long queues of constituents who had beaten a track to our respective electorate office doors with tales of woe about what was going on at North Shore Hospital.

I can now say that that long line of people has dried up, because the performance of the Waitematā District Health Board, which was in such dire straits, has been radically turned round under the leadership of Tony Ryall as health Minister, and, very important, of Dr Lester Levy as the chair of that board. Members will remember that that district health board was very dysfunctional. It was really run by people who were more interested in political considerations than in the health of the people of the North Shore and the Waitematā district. But we can say now that things really have turned round.

If we want a symbol of that, we can look at what is happening at Waitakere Hospital. That hospital was a complete mess; what have we got? From last week that accident and emergency facility is now open 24 hours a day to adult patients. Since last June it has been open 24 hours a day to children. That is a real service for the people of west Auckland.

We can also look at what is happening at North Shore Hospital. Tomorrow we are opening a new renal dialysis unit, so that people from the North Shore no longer have to go to other district health boards to get the dialysis that they need, basically, to save their lives and keep on living a functional life. That is an amazing achievement. If we looked at what was happening at the North Shore accident and emergency department under the last Government, we saw there were perpetually long queues of people, extending out into the car-park, trying to get the treatment they needed. They could not get into that department; it was diabolical—mayhem. The morale of staff was at an all-time low. We have delivered on our promises. We have opened the first stage of the Lakeview development, which will deliver a new, re-engineered accident and emergency facility that will meet the requirements of patients. It was designed by the staff, and it has had major input from them. There will be an assessment unit there, and more beds in that hospital to allow the clinicians to manage the flow of patients. There is a major achievement there.

We can look at what has happened in terms of doctors and nurses. Since National has come to Government, there have been 1,000 extra nurses nationwide, and 500 extra doctors. In Waitematā alone, there are 140 extra nurses and 70 extra doctors. So we are not just talking about front-line resources, we are actually putting them in there. This year an extra $104 million will be spent at the Waitematā board, to deliver the services that people need.

There is no greater example of that, I think, than what has happened nationwide in elective surgery. We were aiming for an extra 4,000 operations per year. We will actually deliver an extra 20,000 operations this year. That is an extra 400 operations per week. That is outstanding. People are receiving the surgery that they need. If we look at what that means, we see an extra 2,018 people have had elective surgery for important, life-inhibiting conditions over the past year in Waitematā. That is an extra 40 patients a week, which is really amazing progress.

If we look at the six key areas that Tony Ryall selected for us to focus on, we see that in Waitematā 100 percent of patients receive cancer treatment within 4 weeks—100 percent. No one has to go to Australia now, as they did under the last Government. People are being treated here at home. That is an amazing achievement.

CHRIS TREMAIN (National—Napier) Link to this

I was stuck in the Business Committee. I seek leave that I may speak on the Hawke’s Bay District Health Board, which I appreciate the Committee has already been through.

CHRIS TREMAIN (National—Napier) Link to this

I thank you, Mr Chairperson Roy, for putting my leave request and the Opposition for granting me the opportunity to speak in this debate on the Hawke’s Bay District Health Board. I wanted to speak about the Hawke’s Bay District Health Board, because over the last 3 years it has made significant progress. I acknowledge the chair, Kevin Atkinson, the chief executive officer, Kevin Snee, and his chief operating officer, Warwick Frater. They have done an exceptional job of turning round this district health board, lifting it from the bottom of the not-so-well-performing district health boards to the middle of the pack, and in some areas of the six key performance indicators it is actually performing at the top of its game. I want to compliment the Hawke’s Bay District Health Board and make sure it is aware that members from across the Chamber are appreciative of its efforts to deliver better health care to the people of New Zealand—in this case, the people of Hawke’s Bay.

The Hawke’s Bay District Health Board receives about $418 million for the area each year and that covers the area right up to Wairoa and Māhia, and further south to central Hawke’s Bay. The board received another $33 million in Budget 2010-11, which has enhanced its ability to deliver. In my own electorate of Napier that additional funding has been significant. Just a few short years ago the Wellesley Road Health Centre, in particular, was facing a difficult period. It had got to the end of a 10-year lease, and the lease was coming up for renewal at an extremely high cost, so the district health board was faced with moving on from that lease. The board renegotiated the lease, bringing down the lease costs, and now we have a secure, integrated health facility in Napier at a much lower rate for another 10 years. What is great news, in particular, is that the Ministry of Health, under the leadership of Tony Ryall, is now investing in that centre. We are seeing increased specialist appointments, the investment of another $500,000 into new digital radiology equipment, and the rolling out of new technology into that facility, which is absolutely fantastic news.

In Wairoa there have been issues in attracting doctors to that area, so the voluntary bonding scheme is certainly helping there. In particular, what Kevin Snee and his team have done is to merge some of the GP practices together into an integrated family health centre based in the old hospital facility there. Again, X-ray equipment has been brought into that facility, and, once again, it is a far more practical and sustainable facility for the people of Wairoa.

I will finish my speech by touching on the work of the immunisation team, who are now recognised around New Zealand as the top team in respect of the six key performance indicators that Minister Ryall has given. I particularly acknowledge Margaret Dalton and the healthy population teams—all the primary-care nurses. This is an example of a woman and her team who have got the wider public health system together and made huge gains in the immunisation of Hawke’s Bay people, and particularly of babies. We have a record 92 percent of our under 2-year-olds immunised, which is significantly up on what was previously delivered there.

I once again thank members for the opportunity to speak on this district health board. It has made huge progress under good leadership from the board, and strong leadership from Kevin Snee as the new chief executive officer. I am proud that the district health board is delivering fantastic services for my community. Thank you.

Hon DAVID PARKER (Labour) Link to this

Meridian Energy is, of course, one of the three Government-owned electricity generation companies that the Government says it will, if re-elected, sell half of.

Hon TONY RYALL (Minister for State Owned Enterprises) Link to this

On reading the financial review of Meridian Energy, it is most interesting to note the focus of the report. The Commerce Committee noted Meridian Energy’s growing wind portfolio and the number of options it had in the pipeline in this area. There were a number of questions on a West Coast project and its impact on the environment—apparently Meridian Energy stood by this project—and it also talked about Meridian Energy’s offshore renewable projects being supported by the committee.

Of course, the other strong feature of any review of Meridian Energy would be the impact of the Christchurch earthquakes. I think, in light of the events of yesterday, we can all appreciate the sense of frustration, anger, disappointment, or whatever we want to call it, in Christchurch. So many people have lived on the edge for so long, and to have yet another earthquake is obviously very destabilising and worrying for a lot of families down there, but strong leadership is being provided by the authorities, I am absolutely sure. An important part of Meridian Energy, a company with strong links to Christchurch, is the work it is doing to assist the electricity authorities in the whole of the Canterbury area in what they are doing.

The member opposite, David Parker, spoke previously about some of the Government’s thinking around the mixed-ownership model. We would not think that Labour members would even acknowledge that electricity prices went up 72 percent in 9 years under the Labour Party opposite, when in Government. Over those 9 long years, power prices went up 72 percent. Those members can stand up now and wring their hands about the effect of electricity prices on consumers, but they just ignore what happened during those Clark years, when prices went up 72 percent. Ownership is not a feature of price rises and that is not an argument to be accepted.

There are a number of reasons why the Government is looking at a mixed-ownership model, much like we have with Air New Zealand—a model that was supported by the previous Government—in respect of Meridian Energy and a number of other companies. The first is recognition that the New Zealand economy, and the New Zealand Government, is facing huge demands on capital. Over the next 4 or 5 years, we will need about $32 billion of capital to invest in vital public infrastructure like roads, hospitals, and schools. We can face the reality that we might have to borrow that money, or we can say that some of our current capital is invested in areas that we could free up and move into higher-priority areas. I think hospitals, schools, and roads, and building that infrastructure, are vital for the future of New Zealand.

Secondly, a mixed-ownership model provides an opportunity for New Zealanders to invest directly in assets that are important to the New Zealand economy. You know, I can recall going to a public meeting in Mount Maunganui in my electorate last year. It was a fascinating meeting. We talked about the fact that the Government was trying to move the incentives to encourage people to invest not in residential property but in productive investments. One of the older guys got up and said: “Well, if we’re not to invest in residential property, what do you want us to invest in?”. They had spent years investing in Blue Chip and years investing in risky finance companies, and had not had the opportunity to invest in blue-chip companies that help build the infrastructure of New Zealand. The mixed-ownership model will give those people an opportunity to have a high-class investment in the future of New Zealand. It will allow them to have a secure investment and a better investment than other options they would have to invest in.

It also gives our superannuation funds an opportunity to invest back into New Zealand. People’s KiwiSaver, people’s savings, can be invested in a good quality New Zealand company, and there will be improved opportunities for that. There will also be opportunities for improved performance by the companies, because we know there is much more scrutiny on the performance of the publicly listed energy companies, their capital intentions, and their behaviour in the market, than there is on Government-owned businesses. There are real opportunities in using the mixed-ownership model to benefit Kiwi mums and dads in the next few years.

Hon DAVID PARKER (Labour) Link to this

Mighty River Power is the next of the companies that the Government proposes to privatise half of. I want to respond to some of the comments made by the Minister for State Owned Enterprises. He said that we have to do this in order for the Government to afford to build roads, hospitals, and schools. Here is a little lesson in history for Mr Ryall. Governments have to do that every year. They have done that every year since New Zealand was settled—every year. In fact, Labour did that when it was in Government. We did that. We bought back Air New Zealand; we did not sell it. We did not run the books of this country so poorly that New Zealand was in the position of having to sell the family silver. Make no mistake—selling the family silver is what the Government is about. It is selling assets that are currently owned by all New Zealanders to the very, very small subset of New Zealand that this Government so plainly governs for. It is not for the majority; it is for the small minority that has profited handsomely under this Government—that is, 42 percent of the Government’s income tax cuts went to the top 10 percent, and they are the people who will be buying shares initially. Then they will take a profit as they sell the shares, like that which occurred in respect of Contact Energy, and eventually most of those shares will end up in overseas ownership.

Treasury was express in its advice to this Parliament that came out with the Budget documents. Treasury said that for the Government to achieve its objectives—and I am essentially quoting what Treasury said—significant proportions of overseas ownership in electricity State-owned enterprises would have to occur. Any pretence to the contrary really is just pretence.

The profit this year of Mighty River Power was $84.6 million. In addition, it had dividends. Its dividend of $80 million was paid in 2009-10, after a special dividend of $150 million in the 2008-09 financial year. The performance of these companies, managed as part of the Crown portfolio of State-owned enterprises, has been very good. It need not be better; the only way profits can go materially higher is if electricity prices go up further. As I said in an earlier contribution, there is no doubt that if these companies are sold into private ownership of 49 percent or 50 percent, the price of electricity will go up.

The last contribution from the Minister criticised Labour for the increase in electricity prices during our term in Government. We did two things in response to price increases. Firstly, we brought lines increases under control by regulating them, which was necessary. The rate of increase dropped dramatically to, essentially, the rate of inflation. Then, under our watch, the Commerce Commission tried to get a handle on whether there was overcharging in the electricity wholesale and retail markets. That report did not come out until May 2009, after we had left office. It found an overcharge of 18 percent, on average, totalling $4.3 billion worth of excessive charges to New Zealand consumers under the period in review. As a consequence, the Government should have done something to bring those excessive charges under control. But, no, Government members have washed their hands of it, and, in fact, since then electricity prices have gone up, according to the Minister today, by 14 percent.

PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this

It is a privilege to speak on the financial review of Mighty River Power. I start by saying what a great company—what a great company—Mighty River Power is in the types of businesses that it runs throughout this country and also around the world. Part of its headquarters is in my electorate of Maungakiekie, and people of my electorate are certainly thankful for the employment opportunities it provides locally. It runs a very efficient and effective enterprise, and it is certainly welcome in my electorate, if not in Mr Parker’s electorate.

CLARE CURRAN (Labour—Dunedin South) Link to this

Last Thursday was a tragic day in Dunedin, and it was a tragic day for our skilled workforce in this nation. Last Thursday 41 skilled jobs were announced as being made redundant—41 skilled jobs in the critical area of manufacturing in this country, which is the bedrock of our workforce and the bedrock of our rail engineering business. Forty-one skilled jobs will go; 41 families will be affected; 41 incomes, and the tax paid, will be lost to the local economy, and that tax will be lost to the country. There will be 41 potential extra additions to the dole queue in Dunedin—and for what?

Steven Joyce said today, on behalf of the Prime Minister, that no analysis had been done by his Government of the lost income, the lost GST, and the extra cost of benefits caused by his Government’s decision to have these lay-offs. It is just extraordinary. Yet in the Budget a few weeks ago we heard from both the Prime Minister and the Minister of Finance that somehow, miraculously, 170,000 new jobs were going to be created in this economy over the next 4 years. When the Acting Minister for Economic Development was put on the spot about this last week in the Commerce Committee and was asked where those jobs are coming from and what analysis has been done by him or his department on what sectors the jobs would come from, the answer was that they had not done any analysis and they do not know. They just think it will happen.

Jobs have been lost in rail engineering and KiwiRail and mythical jobs are supposedly being created. Dunedin has been lied to. When the Minister of Transport, Steven Joyce, was asked last Thursday in this House about those KiwiRail job losses he said that KiwiRail must be able to operate without political interference, despite promising last May that there would be plenty of jobs for the workers at Hillside. This also directly contradicted KiwiRail’s chief executive officer, Jim Quinn, who has been consistently saying that he has to take that narrow commercial focus because of Government policy.

So somebody is not telling the truth here. Either it is Government policy that KiwiRail takes a narrow commercial approach and is not interested in the economic flow-on effects to the local economy of investing taxpayers’ money in those jobs and in that industry, or it is not. It makes a mockery of the attempts in Dunedin for the last 18 months by a group of committed people, including the Dunedin City Council, the Chamber of Commerce, the engineering cluster of nearly 70 firms in Dunedin, all of the MPs, the rail union, and KiwiRail itself—until it basically got gagged—to sit around the table and try to come up with a strong economic case for keeping work in Dunedin and for keeping rail engineering business in this country. It is a mockery.

What has happened since those redundancies have been announced? The local National list MP has been strangely silent. He sat around that table. He said he was committed. He said he was taking the case to Wellington. Where is the evidence of that case being taken to Wellington? And where is the evidence that the Government is listening? There is no evidence, at all. It has been obvious for 2½ years that this Government is not committed to those workshops. It is not committed to the rail engineering business in this country, and wants to get rid of it, and will get rid of it. That is Government policy.

KiwiRail will not guarantee the future of the rail workshops. Instead, the Government has clearly signalled that there is no future for a rail engineering model that is about building and refurbishing our rolling stock. Any jobs that will remain will be maintenance and repair—probably not in Dunedin. Where is the local National Party member on this issue?

CHRIS HIPKINS (Labour—Rimutaka) Link to this

There is a bit of a double standard operating in this Government. The Government is willing to intervene when the interests of its corporate mates are at risk, but when it comes to protecting Kiwi jobs, the Government is totally and utterly absent and does not give a stuff about them. No better example exists than in the way the Government is treating KiwiRail. I speak as a resident of the Hutt Valley, where we have one of the two major rail workshops in the country, the Hutt Railway Workshops in Woburn.

AMY ADAMS (National—Selwyn) Link to this

I am very happy to take a call in this debate on the financial review of the New Zealand Railways Corporation. I start by commenting that I found it quite interesting that two fiery and seemingly impassioned speeches have just been made by Labour members, but when the Finance and Expenditure Committee looked at the financial review of the New Zealand Railways Corporation—

Hon Dr NICK SMITH (Minister for ACC) Link to this

It is so appropriate that we go from the financial disaster that Labour left for this Government on rail and come to ACC. We know that in the last year Labour was in office, this corporation lost $2.4 billion. In the following year, the year that crossed over between the two Governments, ACC lost a further $4.8 billion. That amounts to over $4,000 for every New Zealand household—$4,000 for every New Zealand household. In the course of that aftermath, we had the inquiry that said that not only had there been these huge losses but—

CHRIS HIPKINS (Labour—Rimutaka) Link to this

I will quickly correct what the Minister for ACC has just claimed. The independent inquiry that his Government called for found that the previous Government’s Ministers did not do anything wrong. That was clearly stated by this Government’s own independent inquiry. To suggest otherwise is simply untrue—full stop, end of story.

This Government is hanging a massive “For Sale” sign over New Zealand, and ACC is smack-bang in the middle of the fire-sale list. This Government is interested only in hocking off everything as fast as it possibly can. Nick Smith’s talk of a financial crisis in accident compensation is absolute nonsense. I tell him to look at the financial review from the financial year in question. ACC was over $2.5 billion in surplus, which is a $2.5 billion decrease in ACC’s liabilities this year. ACC is not now and never has been broke or broken, despite Nick Smith’s best attempts to suggest otherwise. Scaremongering has been done by Nick Smith because this National Government has one agenda in accident compensation, which is to carve it up and hock it off to its private sector mates.

National does not believe in accident compensation as it stands now. It believes that it should be provided by the private, for-profit insurance industry. That is the National Party’s sole goal in accident compensation: to prepare accident compensation to be privatised. It can use terms like “competition”, but its model of competition is privatisation by any other name.

Nick Smith is offensive enough to go around saying that it is no different to deregulating the broadcasting industry. I say that there is one major difference: New Zealanders did not give up any of their civil or legal rights under broadcasting law. Under the accident compensation scheme they have given up their legal rights in order to be part of the scheme. This Government sees that New Zealanders giving up their legal rights to be part of accident compensation creates all sorts of fascinating, interesting, profit-making opportunities for its corporate insurance mates. I think that is wrong—I think that is fundamentally wrong.

This Labour Opposition will be arguing and fighting against the Government’s plans to privatise accident compensation. We send a very clear word of warning to the insurance industry: insurers will invest in accident compensation at their own peril. A future Labour Government—and we already have a commitment from the Greens to support us in this—will not support this change. We have reversed a National Government’s privatisation of accident compensation before, and we will do it again.

This change will not stand, because ultimately it undermines what should be a world-leading scheme. Despite all Nick Smith’s scaremongering, the Government has still not come up with evidence to suggest that this change will work and that New Zealanders will end up with better cover or better compensation as a result. The independent PricewaterhouseCoopers study found that ACC is already offering the lowest cost accident cover in the developed world. Nick Smith’s own officials provided evidence to the Transport and Industrial Relations Committee that New Zealand employers are paying, on average, half what Australian employers are paying for accident cover.

Perhaps that is what National meant by catching up with Australia: loading a whole lot more compliance costs on to our employers. That is what this Government seems to think is meant by catching up with Australia. National certainly does not seem to want to catch Australia when it comes to wages any more; in fact, Bill English thinks that it is a competitive advantage to have lower wages than Australia.

Moving back to accident compensation, I say that this Government manufactured a crisis in accident compensation. It is not broke. It never has been broke, and it is not broken. This is all part of the National Party’s agenda to strip out accident compensation and hand it over to the private insurance industry. New Zealanders will end up paying more to get less. The only way the private insurance industry will be able to make money out of accident compensation is by declining more claims or decreasing cover, and that is fundamentally wrong. New Zealanders, having given up their legal rights in order to be part of the scheme, deserve better than that.

As the Christchurch earthquake showed us, a lot of unforeseen things can happen in this country. Accident compensation was there when Cantabrians needed it, and the extension of accident compensation cover that Nick Smith and the Government were able to offer following the Christchurch earthquake would not have been possible if he had already privatised accident compensation, as he intends to do.

Nick Smith and the National Government are hanging a massive “For Sale” sign over New Zealand, over our State-owned assets, over accident compensation, and over everything else—even over our law books—and saying that it is for sale if the foreign investors are willing to pay for it.

HILARY CALVERT (ACT) Link to this

There has been a lot of agreement about the Accident Compensation Corporation here this afternoon, and I would like to recap that. It has been agreed that there was a loss of $2.4 billion in 2007-08, followed by the Labour Government outdoing itself with a $4.8 billion blowout in 2008-09, and now there is a surplus of $2.5 billion.

MICHAEL WOODHOUSE (National) Link to this

One of the things that perplex me is that if Labour is so comfortable with its performance in its term in Government, is so relaxed that there was no problem with the Accident Compensation Corporation, as Mr Hipkins claims, and that everything was all right despite these so-called paper losses, why does the member who was responsible for the debacle that was accident compensation under Labour get so excited every time we point out those shortcomings?

In the interests of reinforcing those shortcomings, I will reiterate what the Minister in the chair, the Minister for ACC, has said. In August 2008 the Labour Cabinet had every opportunity to include in the Pre-election Economic and Fiscal Update the $305,168,000 that ACC and the Department of Labour had told the Labour Government was required in the non-earners account. The Labour Government chose not to act, on the basis that the matter had not been subject to sufficient detailed scrutiny. How on earth can one get more detailed scrutiny than down to the nearest dollar?

The report into that matter showed unequivocally that choosing not to act was in breach of the Public Finance Act. Labour’s response was to hang Treasury out to dry. So much for loyalty to the Government department that stood by the Labour Government! That was very disloyal, in my view.

CATHERINE DELAHUNTY (Green) Link to this

The Green Party would like to take a call on the New Zealand Qualifications Authority and the issues associated with it, because we think that in education the distinctions between the roles of different agencies are sometimes very important.

We are not criticising the New Zealand Qualifications Authority this evening. We think the New Zealand Qualifications Authority has a pretty clearly defined and distinct role, but we are quite concerned that a decision has been made with the Budget, or a proposal amongst the many rumoured mergers, that there may be a merger between the New Zealand Qualifications Authority and the Education Review Office. It is quite an important issue when one thinks about the relative functions of the New Zealand Qualifications Authority and the Education Review Office.

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

Tēnā koe, Mr Chair. Tēnā tātou katoa. It is good to see us here tonight looking at Crown entities, in particular—in this case, the New Zealand Teachers Council. [ Interruption] That is right.

It is often said in education circles that good teachers are costly but bad teachers cost more. That is what they say. The New Zealand Teachers Council is the professional body for all registered teachers working in any teaching situation. It should, theoretically, be the body that distinguishes between the good and the not so good, and between those who inspire and those who merely tell. The council’s purpose is to provide professional leadership in teaching, to enhance the professional status of teachers in schools and early childhood education, and to contribute to a safe and high-quality teaching and learning environment. Members will understand, then, that the Māori Party has been interested in looking at the progress achieved by the Teachers Council, with a particular focus on Māori education.

Despite some positive trends, educational indicators for Māori generally compare poorly with those of the total population. Māori still have lower rates of participation at early childhood level, higher truancy rates, and lower mean scores for reading, maths, and scientific literacy. Māori are less likely to stay on at school to the age of 17½ years and are less likely to leave school with high qualifications.

What does this tell us about good and bad teachers? Ka Hikitia sums it up: “education system performance has been persistently inequitable for Māori learners … fewer teacher-student interactions, less positive feedback, more negative comments targeted to Māori learners, under-assessment of capability, widespread targeting of Māori with ineffective … teaching strategies … failure to uphold mana Māori in education, inadvertent teacher racism,” and so on. Those are some of the comments that have been made. This is not a Māori Party document; it is the Government’s own publication. It is a Ministry of Education resource that defines issues that impact on teacher credibility and success with Māori.

How then can we get to the 2009-10 financial review of the New Zealand Teachers Council and find that Māori education or Māori students are not even mentioned? How does a select committee comprised of Labour, National, ACT, and Māori MPs—including Kelvin Davis, a former school principal—not appear to have asked even one question about Māori? It does not take much investigation work to find an organisation briefing paper presented to the members of the Education and Science Committee. This is a two-page paper. It highlights significant variations between estimated and actual performance in the annual report: “a report to identify further research and policy development concerning the reo proficiency required of graduates of Māori medium initial teacher education programmes that was due by March 2010 has not been completed”.

The question I ask is why. And why was that question not asked by the committee? The financial review’s introductory statement states quite clearly that part of the role of the Teachers Council is ensuring that individual teachers have gained the skills encompassed in teacher education programmes, such as proficiency in te reo and the ability to motivate students. So why not ask what was going on that meant that the Teachers Council did not complete such a vital report?

If our own Education and Science Committee does not ask the questions and the Teachers Council does not complete the work, then perhaps we need to look elsewhere for robust advice on teacher professional development. Just last week the Māori Youth Council presented a report to the Minister of Māori Affairs that had three simple recommendations to improve Māori youth success in the education system. It recommended that Government: “1 Requires all secondary school teachers in New Zealand to complete a level 1 Te Reo Māori and Māori Education/Tikanga course at a tertiary institution; 2 Provides the resources for existing teachers to sit at least level 1 Te Reo Māori as a part of their professional development, and ensures that teachers have the resources to effectively deliver on the objectives of Ka Hikitia—Managing for Success; and 3 Encourages schools to actively strengthen the relationships between teachers and the wider community through hui with iwi or hapū to ensure that schools have the discretion to develop programmes that suit the needs of the community.” Perhaps these recommendations can be picked up.

I close by saying that they say the art of teaching is the art of assisting discovery. I hope that the solid foundation provided by the Māori Youth Council will assist the Teachers Council to discover some of the key skills we believe are required to ensure that all of our children benefit from excellent teaching and quality teachers.

Hon MARYAN STREET (Labour) Link to this

I rise to speak on the New Zealand Trade and Enterprise financial review. This is a critical arm of our international experience, but it is also a critical arm of our economic strategy. New Zealand Trade and Enterprise is located within the Ministry of Economic Development. It is quite a complicated accountability mechanism, in that a number of Ministers have an interest in the operation of New Zealand Trade and Enterprise.

I draw attention to the fact that some points of dissatisfaction have been registered with the performance of New Zealand Trade and Enterprise. They need to be addressed. They need to be addressed in a number of ways.

In the first instance, I say that in the course of my duties as the Opposition spokesperson on foreign affairs and trade and overseas development assistance I have had the opportunity to visit a number of New Zealand Trade and Enterprise offices around the world. I have visited the one in New York, the one in Dubai, the one in Shanghai, and, most recently, the one in Brasilia. In all of those offices there are highly skilled individuals who are doing their best to promote New Zealand’s economic interests and New Zealand’s investments, where that is the appropriate form of partnership with that country, or are marketing New Zealand goods overseas.

We have very good people, but we lack a Government vision directing them where they ought to go next. In the financial review done by the Commerce Committee, that lack of vision was demonstrated in some of the dissatisfaction registered by some of the clients of New Zealand Trade and Enterprise. In fact, the chief executive himself, who is relatively new in the role, is reported to have said in the select committee that the figure of 84 percent of those who said that New Zealand Trade and Enterprise added value to their business might not accurately reflect the situation and could mask a higher level of dissatisfaction.

This is not good enough. We need to be able to maximise the opportunities that are being carved out around the world through a sequence of free-trade agreements. As those free-trade agreements are coming on stream—all of them, so far, initiated by the previous Labour Government—we need to ensure that this Government has the right vision, the right emphasis, and the right energy and get-up-and-go to make the economy grow through the use and support of very good staff in these offices around the world. They are an integral part not only of our international mission and our international footprint but of the growth of our economy.

There is a lack of integrated vision, a lack of imagination, and a lack of willingness in this Government to address the issues that are beginning to stymie our progress in picking up the free-trade agreements that are coming on stream. This needs to be addressed. It is there in the report. There is not universal satisfaction with what New Zealand Trade and Enterprise is doing. I think the blame for that lies at the feet of the Government, because I know that the people I have met in the course of my travels work hard to promote New Zealand’s interests, and they do it differently in each country.

Why was expenditure on grants significantly below budget—$46 million, compared with $62.8 million the previous year? Why has there been virtually a 50 percent drop in the expenditure on grants? Why is that money not going out the door? If it has been appropriated by the Government for grants to assist New Zealand businesses to maximise their export opportunities overseas, why is that not happening? This is not good enough. If the Government is going to appropriate that money for New Zealand Trade and Enterprise, then the money should be going out the door.

Hon DAVID CARTER (Acting Minister for Economic Development) Link to this

It is a pleasure to follow that contribution from Maryan Street. First of all I say that New Zealand Trade and Enterprise is a complex beast; I fully agree with that. When I first got involved with the portfolio as the Acting Minister for Economic Development, New Zealand Trade and Enterprise was described to me as being spread too far to be effective. The comment was that it was an inch deep and a mile wide.

That tallies exactly with what the performance improvement framework review determined. That work—the PIF review, as it is known—was done by Sue Suckling and Murray Horn. They identified that New Zealand Trade and Enterprise as an organisation did not seem to know its purpose. I am pleased to say that that has changed, and it is changing very dramatically.

I congratulate the new chief executive, a man called Peter Chrisp. He came from the private sector. He has fully accepted the criticisms that were levelled in the performance improvement framework review at New Zealand Trade and Enterprise, and he has now restructured the senior management leadership team completely. It is already a far more focused organisation than it was even 6 months ago.

This organisation needs to give a mechanism by which New Zealand companies can internationalise. We have good commodity traders, and they need to take every opportunity to become more sophisticated. They need to seize every opportunity to add value to whatever they produce. Although the very foundation of our nation’s economy is still the primary sector, we also have some very smart companies around the country that I get the opportunity to be introduced to. I would describe these companies as being knowledge intensive.

I went quite recently to a company in Christchurch called Stickmen Studios. That company had about 50 young computer graduates working for it in Christchurch—it had only just moved to a new building because the previous building they were in had been destroyed by the earthquake—developing computer games and immediately exporting them straight from New Zealand and into the States. It is a very inventive company.

There is the jetpack organisation in Christchurch, which has been in Time magazine. It is another example of a business that New Zealand Trade and Enterprise has to work with and give it the opportunity to become better connected with international opportunities. That is essential if this economy is to grow, and grow faster.

When we look at New Zealand Trade and Enterprise now we see that it is far more focused than it was. It employs about 700 people, and 60 percent of those are offshore. Miss Street spoke about the ability and enthusiasm of the people she had the opportunity to meet in cities like New York, Shanghai, etc. She has obviously spent a lot of time outside of New Zealand. She has had the opportunity now to see how dedicated those people are, but unless they are well led, from the chief executive down, then we will not be getting the best value from the organisation, or bang for bucks, if you like. That is why I congratulate the new team at New Zealand Trade and Enterprise. My impression is that they are substantially better led and focused than they ever have been. We have developed with them an intervention logic, the very reason for their existence, and the very rationale for them joining with companies and working with them.

I will briefly talk about two other initiatives where I have had the opportunity to see New Zealand Trade and Enterprise’s role within New Zealand companies: Better by Design and the Lean Business programme. Effectively, what New Zealand Trade and Enterprise does with companies is go into these companies and work with them using the Toyota model, basically—that is, trying to drive out inefficiencies and increase their productivity. Villa Maria Estate wines is just one company that has been involved in both those products of New Zealand Trade and Enterprise. When I visited it quite recently it told me that it has lifted production by about 20 percent. If we get that amount of performance improvement out of companies here in New Zealand, for them to then connect with international markets, that will help grow the economy.

TODD McCLAY (National—Rotorua) Link to this

I am happy to take a call in this part of the debate on New Zealand Trade and Enterprise because, as with Mrs Street, I believe that it is a very important organisation with very hard-working people doing a very important job on behalf of New Zealand. But that is where my agreement with her finishes. I found her intervention to be far too pessimistic not only about the challenges we face and how we are moving through them but about the feeling among those who work for New Zealand Trade and Enterprise. Those I have met have a great amount of pride in the job they are doing—a very good job—on behalf of this country.

Also, she was far too pessimistic in her view of what the clients of New Zealand Trade and Enterprise thinks of its work. We see that 84 percent of those who have had assistance from New Zealand Trade and Enterprise say they have had value added to their business. Eighty-four percent say they have had value added to their business. Mrs Street said they were not universally satisfied. Well, I am yet to meet anybody who is universally satisfied, with the exception of the people of Iraq I read about in the newspaper some years ago, who were asked to vote in an election. They were universally satisfied with the then president, Saddam Hussein. He got 107 percent of the vote.

With the exception of that situation, it is not unusual for New Zealanders to have differences of opinion, but 84 percent of businesses helped said value was added to their companies by New Zealand Trade and Enterprise. I say good on New Zealand Trade and Enterprise and the hard-working people there who are doing a very important job.

So why do I think they are a very important group of New Zealanders who are doing a fantastic job for us overseas? Well, the work they do fits very closely with the Government’s economic agenda and with our economic plan that has been rolled out over the last 2 years: to back New Zealanders and to invest in the local economy so that our economy can grow, so that more people can be employed, and so that we have a better standard of living and can afford more and better services for New Zealanders. We get to do that by exporting more to other parts of the world.

Since we have come to Government we have had a number of trade agreements that have been negotiated where the negotiations have been concluded or have entered into force, which New Zealand Trade and Enterprise then had to do something about. I will not go through all of them, because I have only 5 minutes and the list is an extremely long list of achievements by this Government, but I will pick one that I think holds great opportunity for us: the entering into force of the free-trade agreement with China.

Why is China important to us? Well, that is very straightforward. In the 2 years since we have been in Government and this agreement has entered into force, our trade with China has grown in value from $8.5 billion to $11.1 billion. Do members know what that means? That means that very many more New Zealand businesses are producing goods and exporting them to China. Their trade has grown. But, more important, it means that many companies that were not exporting before have now been helped out by New Zealand Trade and Enterprise.

The challenge that we set for New Zealand Trade and Enterprise—and this Government backs it fully—is to help New Zealand businesses to get into some of these new markets and to take advantage of the great opportunity there so that we can sell more of our produce, bring those funds back to New Zealand, and employ more New Zealanders. Some wonderful work has been done.

Finally, the job of New Zealand Trade and Enterprise overseas is to leverage the very good work that this Government and our Minister of Trade are doing when it comes to free-trade agreements. Last year I had a chance to visit Shanghai for the World Expo 2010, and I went to the New Zealand Trade and Enterprise office. Millions and millions of people, particularly from China but also from around the world, visited the New Zealand pavilion at the expo. But, more important for tourism purposes, thousands of businesses visited New Zealand Trade and Enterprise, which leveraged the opportunity the Government had provided for New Zealand businesses to meet it in order to talk about New Zealand and some of our advantages, and to do more business and more trade. That was very important work.

One of the great things New Zealand Trade and Enterprise will be doing this year—and the Government is backing it fully in this—is leveraging the 85,000 visitors who will come to New Zealand for the Rugby World Cup. In my electorate of Rotorua I have had a number of meetings with New Zealand Trade and Enterprise and the businesses it has been working with and supporting. I tell the Committee that the feeling of satisfaction with New Zealand Trade and Enterprise in Rotorua is greater than 84 percent, in as far as this report we have been given. I thank the staff of New Zealand Trade and Enterprise, and ask them to keep doing that great job on our behalf. Thank you.

DAVID SHEARER (Labour—Mt Albert) Link to this

This is a rather unusual entity, in a sense—although not in the period we are talking about—because, of course, the Foundation for Research, Science and Technology no longer exists. It has been merged with the Ministry of Research, Science and Technology. So although we are debating it today, it is no longer in existence. It has been pushed together with the ministry in a restructure to make it look as if the Government is actually becoming more involved with, and more dedicated towards, science and innovation.

I have to give the Government credit. The Ministry of Science and Innovation is a terrific name—it is a terrific name. It is just a real shame that the ministry does not live up to that name. It came in during that plethora of reforms last year, which was trumpeted as being the step change for research and development. The Ministry of Science and Innovation was meant to be the new way forward; it was supposed to lead that change. To some degree we actually saw an increase in funding for research and development. The Government put $56 million a year more into it—$56 million. When we took into account the total spend, that was a little less than 5 percent. When we took into account inflation, it was a lot less than that, particularly as inflation is running now at nearly 5 percent or more.

The most important thing about that money, and where it went to, was that it went to giving businesses a handout to do more research and development. It did not encourage a real change in the culture of those companies. The research and development in our private sector is woeful—it is absolutely woeful. We do not spend a figure anywhere near the OECD average when it comes to research and development inside businesses. So although the Government trumpets the merging of these two entities as the new dawn of research and development, the reality is quite different.

I will give another example of exactly what this really means. We would expect that for a new entity like this ministry, the Government would search the world for somebody who would lead this new entity into a completely new field and really bring about major change in our research and development. But that did not happen. When we looked for the leader of the Ministry of Science and Innovation, the advertisement was open for only 2½ weeks and it did not look overseas for the best person, despite the fact that the Minister of Science and Innovation talks about the triumphs of Denmark. The Prime Minister talks about Taiwan and what it is doing. The Minister has just come back from Israel, where he has been looking at research and development. I expect he probably flew there on a commercial flight; I hope that he flew on a commercial flight to Israel in order to look at the research and development.

These countries put from 3 to 4 percent of their GDP into research and development, and they have science and innovation places that are world leading. Why cannot we have world-leading places just like that? The answer is that this Government certainly does not have the commitment to research and development that it talks about. It talks the talk, but it does not walk the walk.

When we look at this year’s Budget, despite the fact that in January we were told that it was about innovation and savings, we can actually see a $12 million decrease in the overall spend in science and innovation—a $12 million decrease. The top-line headline in the Budget is that $36 million has been reallocated. That will set the world alight! It will really set the world alight that we have reallocated $36 million!

Research and development in New Zealand is the driver of our innovation. It could be the driver of our economy—a new, smart, clean, green economy—but this Government has enabled research and development to languish and go backwards. Thank you.

Hon Dr WAYNE MAPP (Minister of Science and Innovation) Link to this

Funnily enough, I heard Mr Stuart Nash say, in relation to that last speech by David Shearer, “Good speech!”. I was a bit surprised to hear that. The Opposition had one of New Zealand’s foremost scientists, and indeed entrepreneurs, to speak at its conference. Labour made the person its keynote speaker. It was Sir Paul Callaghan. So I was anticipating that Labour was obviously planning something very significant as a way to project its commitment—the commitment I just heard Mr Shearer talk about. It is very hard to accommodate. So what was Labour’s big idea? What was the thing that was central to their conference that would take New Zealand to a bold new era? It was, in fact, a rehash of its tax credit policy. It may have been a little bit more targeted, because the limit went up to only $200 million, which was an increase of about $100 million. However, there was a hook in that increase. If we look at the New Zealand economy in the broad, we see that we have three core sectors. There is the primary sector, with over half of our exports. Indeed, part and parcel of why the current account deficit is reduced is because that sector is doing so well at the moment. There is tourism, with 10 percent of the total economy. It is a huge foreign exchange earner. I guess we would say there is manufacturing, particularly high value manufacturing, and advanced services, particularly in tertiary education and information and communications technology.

So Labour’s big idea was to push up the extra spending in the high-tech sector and take that money directly from another sector—the farming sector. I thought that was actually a zero-sum gain. That was no change at all. And that was Labour’s big idea. That is why I was surprised to hear Mr Nash say that Mr Shearer’s speech was a good speech. I say to the Opposition members that if that is as good as it gets, I suspect they will spend a little bit more time sitting on those benches than one might think. They said to New Zealand’s largest export sector, the primary sector, that they were going to take $160 million off it, directly as at zero-sum gain. So our most profitable part of the sector at the moment, the export sector, was going to be a sop. It is hardly an innovative policy, I say to Mr Shearer.

I return to the facts of the situation. In 2008 Labour’s last Budget appropriated $689 million for research and development. That was during a time of relative economic success for New Zealand, in line with much of the rest of the world. This year we appropriated $773 million, which is a gain of 12 percent. The difference is that we had to do that in a time of relative economic difficulty and, in particular, when faced with the cost of reconstruction after the Christchurch earthquakes.

Dr PAUL HUTCHISON (National—Hunua) Link to this

I am grateful for the opportunity to speak on this review of the Foundation for Research, Science and Technology—which has now disappeared, as was pointed out by David Shearer—and also the Crown research institutes. It was a bit rich for David Shearer to talk about investment in science, given that from 1999 to 2008, Government investment in science as a percentage of GDP basically flat-lined, and private investment in science also flat-lined, as well. I agree with him entirely, however, that New Zealand does have a huge task in incentivising private sector investment in research and development. But there is no doubt in my mind that the way the previous Labour Government was going about it, splashing out $300 million in untargeted tax credits, was absolutely the wrong way to do it. We know right around the world that such a method is associated with rorts. [ Interruption] Yes, it is in Australia and we know that there are rorts right throughout the system there. Finland, for instance, with a much more attuned, sophisticated, targeted system, has had a far greater deal of success. But I do agree with the member that there is a major task for New Zealand in looking to increasing this investment if we want to sustain economic growth as part of the trifecta of how we will achieve that—firstly, through our primary products, secondly, through our tourism, and, thirdly, through science and innovation.

I think the other point that should be made is that if Labour ever thinks it will move the economy, then it has to make the basic regulatory regime suitable for business. That applies to science and innovation, as well—a low transparent tax system, such as the National Government has achieved; a more flexible labour market, such as has been achieved by the National Government, obviously concentrating on excellent graduates; and of course ensuring that the regulatory regime, in terms of bureaucracy, is as straightforward as possible.

But I think it is important, in terms of getting the context of today’s science system in New Zealand right, to look back to the past. The foundation was formed in 1990, under some rather interesting principles. They were, firstly, to allocate funds for the production of outputs relating to public-good science and technology, and indeed one would hope that we look for outcomes. I think that over the last 20 years it has been difficult to judge the performance of our science system accurately. Obviously, there are a whole variety of ways we do that, whether it be by citations, whether it be by conferences attended, whether it be by spin-off companies, or whether it be by underlying performance. All of those things are somewhat nebulous. It is absolutely important. The new science review and the new purpose of the Crown research institutes is to ensure that performance is looked at very carefully under independent 5-yearly audited reviews.

Secondly, back in 1990, the second principle was to allocate funds pursuant to ministerial schemes. That does fly in the face of ensuring that we have the discipline of an evidence base behind what we do, and hopefully that has changed for good in the new reforms under National after the science review.

Thirdly, the foundation is to provide independent policy advice to the Minister of Science and Innovation on matters relating to research, science, and technology, including our national priorities for those matters. That is partly where the rub was with the old foundation and the ministry. The foundation was the funder of the policy division and it became—

DAVID SHEARER (Labour—Mt Albert) Link to this

It is my pleasure to rise again to speak on an area that, like that of my previous contribution, is of critical importance to the New Zealand economy and to the way we develop and grow our economy. The Tertiary Education Commission is a complex being in terms of its funding and whom it funds. I want to touch tonight on just one aspect of what it does.

The Tertiary Education Commission establishes and promotes the opportunity for lifelong learning throughout New Zealand. This is an extraordinarily important area for New Zealand, for the simple reason that the economy is changing extremely fast and extremely quickly. As our economy changes, we want people to be able to engage and move with those changes. We also want to be able to cater for those who step out of the workforce for various reasons and step back into it again and need to upskill once more in order to join and become profitable members of society. I think it is a great worry for New Zealand that this Government, rather than promoting the opportunity for lifelong learning, has gone out of its way to erode the opportunities for those people. An amount of $2.3 billion goes into the tertiary education area through the Tertiary Education Commission. One of the areas that was targeted under the previous Minister for Tertiary Education was adult education. For a mere $13 million of that vast amount of money we stripped out what had become an institution in New Zealand and had helped countless numbers of New Zealanders to re-enter the workforce. For more than about 100 years thousands and thousands of New Zealanders, me included, re-entered the workforce as a result of second-chance education, re-skilling, and upskilling—a different way of getting back into the workforce, through having their skills renewed by joining the education system. We once had 212 schools involved in night classes, and now we have 24. That is disgraceful. It is absolutely disgraceful for $13 million out of a budget of $2.3 billion. PricewaterhouseCoopers said that the benefit cost was 70 to one, yet we still stripped it out.

I thought this Minister for Tertiary Education might have had a different approach from his predecessor. Yet in this Budget the over-55s are thrown on to the scrap heap. We could say that maybe the over-55s should be thrown on to the scrap heap. Maybe those people do not have to upskill and be re-skilled. But actually 55 now and in the future is, and will be, a very young age. Those people will go on to be working members of society perhaps well into their 70s. Yet those people cannot get student loans. We have discriminated against older people being able to get student loans, yet they are the very people who have paid their taxes for about 40-odd years and they are not able to have access to student loans any more. To compound the problem, we have also added to that the people who are part-time students. Those part-time students now cannot get their course-related costs paid. Those people tend to be women who have gone out of the workforce, perhaps for child rearing, and now want to move back into it. What we are seeing, and I would like to see the analysis on this—it would be very interesting, not only for this House but for New Zealanders in general—is that women are being targeted more unfairly under these policies than men are. I think women are being disadvantaged more than anybody else. I think that is a disgrace—it is an absolute disgrace. We should be encouraging people to get back into the workforce. We should be encouraging people to upskill. We should be encouraging our economy to move forward as a result of those people joining our workforce, with the right and appropriate skills, but instead we are penalising those people. We are penalising their initiative. We are penalising their self-sacrifice.

Hon STEVEN JOYCE (Minister for Tertiary Education) Link to this

The member David Shearer should not let the facts get in the way of a good story, and he obviously does not do that. Firstly, people can still borrow on a student loan if they are over 55 years old. They can borrow fees for courses if they are over 55. They cannot borrow for living costs, and there is a reason for that: once people are past 55, taxpayers end up writing off over 70 percent of their student loans. We thought about how we could strike a balance there, because, yes, we want to have people of that age upskilling, but we also have to acknowledge that they do not have as much time at that age to repay their student loans, which is the contract, of course, with the taxpayer. So we thought we would have a bit of balance, and we would have borrowing for fees but not for living costs. That is actually what we are doing, so the member made his first mistake there.

His second mistake was in talking about compulsory course costs for part-time students. Of course part-year students have never been able to get compulsory course costs from the fees component—we have changed the rule for full-year students to ensure consistency—but of course they can still borrow for fees. Once again, the facts got in the way of a good story.

But the really good story here is the work that the Tertiary Education Commission has done. I salute the Tertiary Education Commission for the work it has done in improving the outcomes from our very large tertiary education spend, which, across student support, fees, and tuition subsidies, is over $4 billion. The commission has had a real focus on value for money, and the evidence in terms of outcomes is very impressive indeed. This year we will have the highest number of fulltime-equivalent students ever in New Zealand universities. It is a tremendous outcome. We also have the highest number of full-time core places at universities, polytechnics, and wānanga, right across the public tertiary sector—16,500-odd more places than 3 years ago, when the previous crowd left Government. But overall our expenditure has not gone up, because we have had better value for money. This year we also have more private training establishment places—750 more. The previous Government froze those in about 2002. We have lifted the freeze this year. We have more opportunities for New Zealanders, right across the board, including more places at higher levels on the spectrum of qualifications.

We have also managed to achieve better results out of industry training. That area was actually a horror story inherited from the previous Government—an absolute horror story. That Government had trebled the industry training budget over 10 years, but it had not ensured accountability for the funding. It had not ensured that there was any accountability, at all. As a result, when the Tertiary Education Commission audited industry training in 2008 and 2009, we discovered that 44 percent of trainees had not earned credits over that 2-year period. Labour’s phantom industry trainees had disappeared from the scene. Some had not had training agreements signed, some were not actually employed by the companies they were supposed to have been employed by and to be getting industry training from, and a dozen, even, were deceased. They were deceased, and the previous Government had not noticed.

We have put in a much more reasonable industry training budget, and we have cut it back a bit. Do members know what? We will get better results out of industry training with a lower-cost budget than Labour members managed to achieve with theirs, because they are the crowd, as I think Dr Mapp said, who just like to get the bucket of money and keep tipping it in at the front, and not think for a moment about what the accountabilities are at the back end. That approach was right across the public sector when we arrived, and we are sorting it out.

We are also sorting out a number of other areas. I think that adult and community education is very important, but, like Mrs Tolley, I am not at all sure that the Government and taxpayer should be paying for people to do their hobbies. So we have refocused on literacy, numeracy, English for speakers of other languages, and Māori language, and I am very, very proud of that. There is no doubt that people can take up their opportunities with adult and community education.

Finally, in the limited time I have available, I refer again to the excellent job the Tertiary Education Commission is doing. It has managed to come up with additional funding over the next 4 years for English for speakers of other languages—$17.5 million. That has not been talked about a lot but it will be good for migrants, and it will make a real difference for refugees in this country. This Government cares; this Government is focused on getting real value for money out of tertiary education, and we are doing that. The previous crowd just could not get off their backsides for long enough to check what was going on.

CAROL BEAUMONT (Labour) Link to this

How timely it is that I get to respond to some of the comments that the Minister of Transport has just made about industry training. I concur with the comments that my colleague David Shearer made about this Government’s lack of commitment to lifelong learning. One particular aspect where the Government is a complete disgrace concerns the role of the Tertiary Education Commission in funding industry training. Just for the record, let us note that industry training has been slashed in this year’s Budget. After $55 million of cuts last year, a further $90 million has been taken out over 4 years. That means that tens of thousands of trainee places have gone.

There may be issues in relation to needing to improve quality, but there are two ways we can go here. We can either just cut money from the system and have fewer trainees, or focus on what is working. That is where the Minister failed to address the issues. Many industry training organisations are doing a good job, delivering good outcomes for trainees, and lifting skill levels in New Zealand. We should be not cutting money from that sector but actually finding out what works and investing money there. I think it is a complete disgrace that $55 million went from industry training and into the university sector, instead of that money being put into funding more apprenticeships, and more industry training where we need it and where it is working.

The Tertiary Education Commission is meant to be responsible for implementing the tertiary education strategy. That strategy states: “The Government sees the tertiary education system as a key national asset, which enriches New Zealanders’ lives, increases their employment opportunities and helps to build a productive skills base to drive economic growth.” Well, frankly, the record in the skills area is a completely disgrace. Participation rates in industry training are down; participation rates in apprenticeships are down. It seems that National thinks these are “nice-to-have” things, rather than essential for meeting the skills shortages that we all know exist. Business groups, unions, and community groups understand that there is a problem here, but this Government does not understand that. I would just like to quote Phil O’Reilly, who says: “As we get out of this current slump—and let’s hope we do some time—we’re going to have skill gaps appearing all over the place. We know that business people are looking increasingly at that issue, asking what the story is there, and asking what we are going to do about it.” That is a good question. What are we going to do about the skill gaps that exist in New Zealand?

The reality is that investing in industry training and apprenticeships lifts productivity, which is something that Government members say they are concerned about. There is no doubt—all of the evidence is there—that lifting skills and better utilising skills will lift workplace productivity, giving us economic growth, better and more satisfying jobs, and better-paid jobs. Why does the Government not support that? I think the failure to invest in our people is actually a form of economic vandalism. It is short-sighted. We are going backwards in relation to many other countries, including Australia, which has provided an additional $3.6 billion in funding to skills and training over 6 years in its recent federal Budget. That was on top of a higher base than ours.

What are we doing? Not only are we cutting investment in skills, and therefore the ability to lift our workplace performance, but now the Prime Minister says that as well as that we will cut workers’ rights. We will have workplaces that are low quality, low skill, and low wage. That is the prescription of this National Government. Anybody who thinks that that will deliver the kind of income we need as a country, and the kind of economic growth we need as a country, is wrong. If the Minister thinks that is funny, then he needs only to look at our comparative performance in relation to countries like Australia and the Scandinavian countries, where there is a significant investment in skills. He needs to ask himself what the difference is. Why do Australian workers get 30 percent higher wages than New Zealanders? Part of the answer—not all of it, but part of the answer—is because there is more investment in people. It is recognised that paying people properly means that employers will want to ensure that they are well skilled, and that their skills are well utilised.

So I say to the Minister that the work of the Tertiary Education Commission in implementing the tertiary education strategy has gone wrong. The reason it has gone wrong relates to the direction given to it by that Minister. I urge him to relook at the cutting of industry training. It is the most short-sighted cut that I can imagine, and it sits on top of 2 years of no new initiatives in skills. We saw cuts of $55 million last year, and now we see a further $90 million of cuts in skills training. That is an absolute disgrace.

PAUL QUINN (National) Link to this

I start by saying that I thought the Minister for Tertiary Education gave an excellent retort to the first speaker from the Labour benches and debunked everything he said. I wanted to focus on the positive in my contribution to this debate, but after listening to the tirade from Carol Beaumont, and the passionless rhetoric, which, no doubt, was produced by Labour’s research group, I would say that the Labour Party’s research group is lacking in skills. It is about time it got some skilled staff in there to produce decent material for Labour members to speak on.

I remind the previous speaker, Carol Beaumont, that the responsibility of the Government is to make sure it gets value for money. That is why the Tertiary Education Commission has had to recover $4.3 million from 18 industry training organisations that have been claiming funding for students who are not eligible and, in fact, in most cases do not exist. I say to that member that the Government’s first priority should be to get value for money. I want to speak positively about this subject, because it is very serious. I myself am a product of a tertiary education—

Dr RAJEN PRASAD (Labour) Link to this

I want to make my comments around children and families, so I will speak about both the Families Commission and children. The Families Commission has taken quite a battering under this Government and this Minister for Social Development and Employment—so much so that it now cannot operate effectively to advocate for our families. It cannot really effectively meet the roles for which it was designed: to advocate for families through community consultation, research, and policy development, and to provide families with information.

This Minister has done something called a value-for-money review, which really means cuts. Now its work at the forefront of addressing the needs of families and advocating against family violence is stalling.