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Financial Review DebateAppropriation (2009/10 Financial Review) BillYear 2009/10

In Committee

Tuesday 22 March 2011 (advance copy) Hansard source (external site)

BarkerThe CHAIRPERSON (Hon Rick Barker) Link to this

The House is in Committee on the Appropriation (2009/10 Financial Review) Bill. The financial review debate is the Committee stage of the Appropriation (2009/10 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 the select committees. The debate on the Government’s financial position may be fairly wide ranging, but the debates on individual financial reviews of departments, Offices of Parliament, and non-departmental appropriations should be relevant to their performance in the 2009-10 financial year and their current operations.

The compendium of financial reviews and non-departmental appropriations for debate is 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.

Treasury

Financial Statements of the Government of New Zealand for the year ended 30 June 2010

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

It is hard to imagine a fiscal circumstance where this debate of the Appropriation (2009/10 Financial Review) Bill could be more important for New Zealanders, because the Crown’s accounts, which this debate seeks to discuss, will take a hit to the tune of $8 billion to $10 billion from the recent 22 February 2011 and September 2010 earthquakes. That comes against the background of a recession that has gone on for months and months, and years and years, longer than it should have done, and a Government that has revised downwards its growth forecasts and revenue forecasts, sequentially at every Budget update and half-yearly update, making the budgetary situation worse. In these brief remarks this afternoon I will cover three key points: firstly, the fiscal baseline from which this debate springs; secondly, important issues to do with the earthquake response and how it is funded; and, thirdly, the implications for ordinary New Zealanders of the fiscal position, and what it means for the rising cost of living and the squeeze on lower and middle income earners, particularly.

On 18 December 2008 the Minister of Finance, the Hon Bill English—the Minister in the chair—said: “I want to stress that New Zealand starts from a reasonable position in dealing with the uncertainty of our economic outlook. We have room to respond. This is the rainy day that Government has been saving up for.” He was referring, of course, to the onset of the global financial crisis. The backdrop to that was that the Labour Government had left the incoming National Government with a net debt position that was actually a surplus, to the tune of 4.7 percent of GDP in 2008. There was a net credit position by the time the assets of the New Zealand Superannuation Fund—which the Government has done its best to run down since then—were added to the very modest amount of debt the Government was then carrying, despite the urging of the now Minister of Finance to give tax cuts that would have worsened the fiscal position and further inflated the bubble of the preceding decade. That was the starting point.

It is sad that today’s debate is against the background whereby that relatively sound position has been beggared by two Budgets, which have showed no more imagination than, firstly, the jeopardising of New Zealand superannuation and, secondly, the delivery of $22 billion over 4 years in tax cuts, two-thirds of which have gone to upper income earners who did not need it.

CunliffeHon DAVID CUNLIFFE Link to this

Two-thirds has gone to the top third, who did not need it and who did not spend it all, and from whom it has been lost from the economy. It has been lost from stimulus, making the recession deeper and longer, keeping people out of jobs, and making the fiscal position more difficult in periods to come.

So it is no surprise to us that the recession has ground on. A little spark of hope in 2009 was snuffed out by our deteriorating position through all of last year, with a negative third quarter after a faltering mid-year, and with every prospect that we will have zero or very low growth in the fourth quarter—possibly even negative growth. This is not the global recession; this is National’s recession. This is the recession brought on by $22 billion of misdirected tax cuts and the lack of a growth plan. It is a human-induced tragedy fuelled by a lack of planning and a lack of imagination from that Government.

Then the earthquake hit. That was not the Government’s fault, and I think that all members of this House have been at pains to show that we are putting Canterbury first and politics second in respect of the response to that earthquake. Our top priority, all around this House, has quite rightly been to get resources flowing to Christchurch to stabilise and to support the people of Christchurch, and to commence the rebuild. We remain in support of the Government’s broad objectives in that respect.

But what is disturbing to me is that in the last week in particular, the Government’s fiscal response to that earthquake has been all over the map, all over the road like a drunk driver behind the wheel of a car. Last week the Minister of Finance told this House that it would be fine for the Government to bear the whole cost of the earthquake response, be it $8 billion or $10 billion—roughly half of out-of-pocket infrastructure costs and half of lost tax revenue that has to be made up—all of it on debt, none of it on expenditure reprioritisation, and none of it on a revenue response, be that a levy or a backing off from some of those tax cuts. It was an extraordinary position, and our colleague Dr Russel Norman rightly pointed out that it was a highly fiscally irresponsible position.

There was no surprise, then, that on Sunday on nationwide TV the Prime Minister confirmed that it was a highly fiscally irresponsible position, and he overrode it. He said that we would have a zero new-expenditure Budget in 2011. I ask New Zealanders to pinch themselves for a second. No, I tell them they are not dreaming. That is not the ghost of Ruth Richardson; that is a real statement by the current Prime Minister about a Budget that will be the most radical surgery to the public sector that we have known in two decades. Coming in the middle of a recession, it is a highly dangerous surgery from which the patient may not recover. It is dangerous because it will suck demand from out of the economy, it will prolong the recession, it will make tax receipts lower, and it will create and produce a doom-loop, from which this economy will be lucky to recover before the change of Government.

It is no surprise that it took the International Monetary Fund to raise the alarm on the ninth floor in order for the Minister of Finance to be overridden on Q+A on Sunday. The International Monetary Fund is calling the shots in the Beehive, not the Minister of Finance. He has been rolled in the last week—absolutely rolled. His “Whack It On the Bill, Bill” strategy has been canned by the Prime Minister, who has said “No, no—we are going to cut the lot to pay for it.”

What will that mean for ordinary New Zealanders? It means that, firstly, the Prime Minister is out of touch. He is a man who would have got well over a thousand dollars a week out of his own tax cuts because the man is a man of means. He is a man of independent and private wealth. How did he get there? It was by being one of those fancy-pants money men who brought the world to its knees in the global financial crisis. He was a paper shuffler and a money trader, and he took a cool $50 million for himself.

That is why he is out of touch today with the hard-working New Zealanders up and down the country, who every time they go to the supermarket are asking how it is that their trolley of groceries is costing 20 bucks or 50 bucks more than it seemed to cost last week, and how it is, when they go to the petrol station, it is costing them a hundred dollars to fill up a small car with gas—100 bucks. My little Toyota Prius cost a hundred bucks to fill up last week. It broke the hundred-dollar limit for the first time in history. I can afford that; I am an MP on 130 grand. That is not as much as the Prime Minister’s dividends, but it is enough to get by. But a hell of lot—in fact, about 90 percent—of New Zealanders are on less than that. In fact, 70 percent of New Zealanders are on less than the average wage, let us not forget. Seventy percent of New Zealanders are on less than the average wage, and I can honestly say that I do not know how people are bringing up families, with the cost of living rising in the way that it is at the moment, and with a Government that does not care. Families that can barely pay the bills and that are dependent on Government support to have low doctors’ fees, good-quality public schools, and good-quality hospitals have just been kicked in the guts by John Key. He has said there will be no new money in this year’s Budget—ah, except for the holiday highway; that is sacrosanct. There will be an exception for new missiles for the frigates; they are sacrosanct. Anything that goes to health and education will come out of something else. It will come out of stuff that ordinary people use, because that seems to be the way of the world.

In the last couple of weeks Steven Joyce has been running around cutting cosy deals with the broadcasting industry in an election year. Shame! I do not care whether he has sold his shares, but those deals ought to be a breach of the Electoral Finance Act. He has also done a cosy deal with Telecom to hand the telecommunications and broadband markets back to them on a plate and beggar the rest of the industry. He may know where his bread is buttered, but it is on a different side of the loaf from that of ordinary Kiwis, who are struggling and finding that with rising rents, power, petrol, and food, and with GST on everything, things are getting desperate.

FossCRAIG FOSS (National—Tukituki) Link to this

The previous speaker today, the Hon David Cunliffe, issued a statement, and it shows why he is destined to be only the Opposition finance spokesman, and for quite some time. His statement is pretty scary stuff. It says: “Trying to balance the Government’s budget … is no recipe for success.” How scary is that for the rest of New Zealand? How scary is that for our credit rating? How scary is that for households across New Zealand that are trying to balance their own budgets? In fact, balancing a budget is a recipe for success. Showing open, transparent intentions to balance a budget is a recipe for success. But, to be fair to the previous speaker, his statement aligns with the policies Labour has announced so far, which, I think, add up to something like $6 billion or $7 billion of extra spending. We can read from that $6 billion or $7 billion of extra tax, or $6 billion or $7 billion of extra borrowing, which some day must be paid back—those are the only ways to fund the policies Labour has announced so far.

The rebalancing of our economy is happening. After out-of-control, rampant, economic mismanagement, after the 9 long Labour years, finally the rebalancing is starting to come to play. Households are rebalancing. They are spending less. They are borrowing less. Actually, they are saving more. They are responding to our tax switch of the last Budget. In fact, they are earning higher after-tax incomes. After only 2 years their incomes—that is, their real after-tax incomes—have gone up 9 percent versus the 3 percent over the total 9 years of the previous administration. The Government is also trying to rebalance its accounts and balance its budget. We are working hard, but it was because of rampant spending that interest rates in the previous administration were at record highs and floating interest rates were in double figures, and those exact statistics squeezed the rest of New Zealand into having to borrow against their own house to start to at least try to live. Labour’s $2.8 billion of extra spending, year after year after year, squeezed real jobs, real families, and the real economy, and, actually, has made the job of rebalancing the economy now so much harder. Unfortunately, the total bill for the tragic episode in Christchurch has been estimated to be between $10 billion and $20 billion. The cost to the Crown has been estimated to be somewhere between $5 billion and $10 billion. We are still learning about those figures. The previous speaker seems to blame events in Libya and the Middle East on this current Government. Sorry, we might want to be able to affect the price of oil and what is going on over there, but we cannot. The Government is doing with its accounts what it is asking every single New Zealander to do.

Every single tax dollar is a precious dollar. Every single tax dollar is a precious hard-earned dollar. It is imperative that households, which are rearranging their own affairs and rebalancing, witness and watch the Government do the same thing with the money it takes from them in the first place. Every single borrowed dollar—every single borrowed dollar—is a charge against all New Zealanders. Therefore it is imperative we optimise and prioritise all Government spending to get the best, most efficient, and most effective outcomes in this very capital-constrained world we live in. No one, of course, wanted the natural events that have come to pass around the world. No one, of course, wants the war-like events that are happening around the world. But we need a robust economy, we need a robust balance sheet, and we need robust forward projections to be able to sustain such shocks in the future.

This Government has found, so far, $4 billion in savings—$4 billion in savings after only 2 years. That is $4 billion that does not have to be borrowed, and it is $4 billion that does not have to be obtained through taxation. We can contrast that with the $6 billion of extra spending announced by the Opposition so far. Labour continues to confuse the cheque book with the balance sheet. Press release after press release after press release seem to say that Labour members must have failed Accounting 101, or sixth-form economics, or something. A cheque book is somewhat different from a balance sheet. Those members should take a bit of time to look that up, because their promises so far, and where they are going, will leave New Zealand in dire straits.

NashSTUART NASH (Labour) Link to this

That speech made by Craig Foss was astounding. That member said New Zealanders are responding to the tax switch. Well, I will tell him how New Zealanders are responding. They are responding by going in ever-increasing numbers to food banks, by going in ever-increasing numbers for budget advice, and by going in ever-increasing numbers to creditor courts. If that is the sort of response the National Government wants from New Zealanders, then I am ashamed. It is a disgrace—an absolute disgrace.

I stand during the Committee stage of the Appropriation (2009/10 Financial Review) Bill to talk about the financial review of Treasury, and, more specifically, the $6 million spent by Treasury over and above the amount allocated in Budget 2009-10. I have only two points to make: the first is that the National Government has no plan; the second point is that Labour does.

Treasury is not a big department when compared with many others, but it is most important. Treasury provides financial and economic advice to the Government. I wonder what the $6 million worth of extra money spent on providing advice resulted in. I wonder whether it was the sort of advice that ended up with very wealthy New Zealanders—New Zealanders who earned over $1 million a year or more—getting a tax cut of about $1,000 a week. Yet those who are on the median wage in Napier, as in most cities, have ended up with a tax cut of about $5 per week. What sort of advice is that? There are 650 people in New Zealand who earn $1 million or more. Every one of those people received over $1,000 a week more, yet thousands and thousands of New Zealanders received around $5 a week. That is simply not fair. The National Government is not working for the vast majority of Kiwis; it is working only for its very wealthy mates. I say, as do the vast majority of people who come into my office, that the National Government is out of touch. Its members simply do not understand how hard it is for hard-working New Zealand families to make ends meet. They do not care about those who are on the median wage who receive just $5 a week in tax cuts, and who are facing an increase of $20 a week in their food bills. Those members are so out of touch, and they simply do not care.

The thing that astounds me is that the $6 million overspend by Treasury resulted in only two plans for economic growth. The first was to mine national parks, and the second was to sell State assets. When is a plan not a plan? When National is so desperate that it comes up with the plan to mine national parks and sell State assets. That is no plan, because this Government has no plan. It is as simple as that.

With an extra $6 million, Labour would ensure that advice sought is on how to create jobs, how to provide opportunities for the nation’s children, and how to create a future for the nation’s grandchildren. Labour believes in giving all a fair go, not just those who earn substantial amounts of money. Advice from Treasury to a Labour Government after November—if Treasury wants to be heard—will never ever include a suggestion to sell State assets, because, unlike the National Government, Labour will never sell State assets. Labour has a plan for the future that gives all New Zealanders a fair go. Labour has a plan for the future to make sure that everyone who wants to work has a job. We have proven that we can do it. When Labour left office, there was 3 percent unemployment, and now 160,000 New Zealanders are out of work—160,000 New Zealanders are out of work. I tell members that the National Government has no plan to get those New Zealanders back into work. It has no plan to create jobs for good, hard-working New Zealanders. Thank you.

BennettDAVID BENNETT (National—Hamilton East) Link to this

The debate in the Committee stage of the Appropriation (2009/10 Financial Review) Bill is shaping up to be a classic debate between Labour and National. Labour does not have a plan, it has no direction, and its members come to this Chamber and try to use fear tactics on ordinary New Zealanders; that is what they do. They go out there and prey on the most vulnerable people in society. They try to scare them, although they are saying: “We’re here to help.” What does Labour want to do to help ordinary New Zealanders? It wants to tax them more. Labour’s answer to Christchurch would be to tax the good, hard-working people of New Zealand; that is Labour’s plan. That is not a plan. That would actually kill the economy. That is not the economic plan we need when the economy needs growth; it needs production, and it needs the tradable sector to be effective and to provide a future for New Zealand. That is the difference between National and Labour. Labour is based on fear tactics. It tries to keep people down, and says: “You don’t know what can be done. We will redistribute. We will take that money off you.” National, on the other hand, understands economics and through its coalition partners understands that we need a growing economy. A growing economy means more revenue coming to the Government, and more revenue to the Government means we can pay off our debts. More repayment of debt means that we can pay off what Christchurch will need to rebuild, and we can build an even stronger economy, a stronger country, and a strong Canterbury going forward. National provides a vision that will work. Labour provides a vision that is based on fear tactics, keeping people under the thumb so that Labour can control their votes at election time. That is the simple rhetoric Labour brings out.

Let us have a look at the reality of what economics demands. It demands prudent management, and it demands that we invest and have savings. Economics demands that we have a plan for the future that leads to growth, and a Government that can sustainably use that growth to—

KingHon Annette King Link to this

What is the plan?

BennettDAVID BENNETT Link to this

The plan is that we will get savings and investment and we will not tax ordinary, hard-working New Zealanders just to keep in Government, as Labour did year on year. National does not believe in taxing people just to stay in power; we believe in giving people the opportunity to make this country stronger and better, and therefore able to pay for whatever we need to do as a Government or, as in this case, to pay for the terrible tragedy that befell the people of Christchurch resulting in the need to rebuild that great city. That is the fundamental difference between the two political parties.

At the next election that fundamental difference will be shown in the economic field, because the people will have a choice. They have a choice of being told that they do not know what they can do, that they need fear tactics, and that they need a Labour-Green approach where hard-working, ordinary New Zealanders are taxed to pay for things. Or they have a choice where they see a future for New Zealand—a future that is long, dynamic, and successful. Our future, the National Government’s future, is the right future and it is the future that will be sustainable long term. We need to invest in and grow this economy long term. Growth is not just a short-term requirement to pay for Christchurch. Growth is the long-term answer so that our people stay in this country and so that we can deliver the social services and the standard of living we want. It is the long-term answer; New Zealanders want that. They do not want a Government that will use fear and prey on the tragedy of Christchurch to try to keep itself in Government. New Zealanders want a country that is built on growth, that is successful, and that provides a future for New Zealanders so they stay here and do not want to go to Australia. That is the future National has and will continue to deliver through the rest of this year and going forward. That is a stark choice for New Zealanders—a choice they understand and very much support, because they know what is important long term. New Zealanders know that they need to have that kind of economic growth to enable a country to provide those services.

GilmoreAaron Gilmore Link to this

Ambition versus scaring.

BennettDAVID BENNETT Link to this

It is. As my colleague has said, it is ambition versus scare tactics, and that is the difference. It is an ambitious plan for a New Zealand that can be a successful country, where we can have pride in ourselves, and where we can deal with any situation.

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

This is a very strange debate we are having in the Chamber this afternoon. It is a very strange debate because the Government has no clothes. The Government is presenting itself on this occasion as being fiscally responsible. Actually, the Government is not being fiscally responsible. If we look at the options that the Government has in terms of paying for the Christchurch rebuild, we see that there are three basic options: to cut spending, to borrow more, or to raise more revenue. The most responsible approach would be to raise more revenue, because that would protect the Government’s books. If members’ concern is fiscal responsibility, then money should be raised to cover the costs of the rebuild. In fact, the Government plans to borrow the money. This is a borrow-and-hope Government.

Of course, the presentation of the National Party—and this is what is core to the National Party—is that it is the fiscally responsible party. It wants to present itself to the world as the party that will safely look after the books in Government. In fact, we have many quotes from the Minister of Finance where he talks at some length about the problems of increased borrowing. Just recently, on 1 February, Mr English said, in relation to the Labour Party plan, which he claimed would lead to $5 billion worth of more borrowing, that $5 billion worth of more borrowing would almost certainly lead to credit rating downgrades for New Zealand, thereby putting up interest rates for Kiwi families and businesses, and costing jobs. Well, that is a fair statement from the Minister of Finance.

The question, then, is why the Minister of Finance and the Government are proposing to dramatically increase borrowing to pay for the rebuild in Christchurch. The most fiscally responsible thing to do is strike a temporary levy. If the Government wants to pay for the rebuild, it should reach out to fellow New Zealanders, who actually want to contribute to the rebuilding of Christchurch, and strike a temporary levy so that everybody in New Zealand who can afford it would contribute to the rebuild. At the end of that process, we would not have Government debt to pay for it, because we would have paid for it out of a temporary levy. We would not have had to cut spending, as this Government is proposing to do.

When we look at what options the Government is choosing, we see it is going down the path that will increase borrowing and cut spending quite savagely. The Prime Minister’s comments at the weekend, for anyone who was paying attention, are very, very scary. The Prime Minister said that there will be zero new spending, in nominal terms. That means a very significant cut in real terms. If inflation is running at 5 percent—we will see what the price of oil does—then there needs to be a 5 percent increase to keep things where they are. The health budget tends to run higher than general inflation so there needs to be a higher increase just to stand still. So if the Government is proposing that it will keep nominal spending flat, then it is talking about a savage cut in real spending. Those are the kinds of cuts we have not seen since 1991. This will be a “black” Budget. We have not had a “black” Budget in New Zealand since 1991. If the Government does what the Prime Minister told the country on the weekend that he plans to do, we will have a “black” Budget this year, because the cuts in Government spending will be savage.

If people think that that is pretty bad, because there will be very significant real cuts, on top of that the Government has said that it wants to put more funding into health and education, even while keeping a cap on nominal funding overall. If $600 million to $800 million is being transferred out of the rest of the Budget to be put into health and education, that means the cuts in the rest of the Budget will be even more savage. Not only does the funding have to be cut, because in real terms it is dropping given that inflation is not being accounted for, but on top of that another $600 million to $800 million has to be found to transfer into the health and education budgets. It means that we are looking at multibillion-dollar cuts, maybe in the order of $4 billion, in the rest of the Budget. Those are very, very significant cuts.

People who think that it is easy to find that money—just to snip a little bit here, and snip a little bit there—are kidding themselves. If we cut Working for Families for everyone earning above $100,000, then we might save $20 million, or we might save $50 million, depending on how we calculate it. That is peanuts compared with the $4 billion worth of cuts that the Government is now talking about. It is not easy to find multibillion-dollar cuts in the Government’s Budget outside of health and education.

EnglishHon BILL ENGLISH (Minister of Finance) Link to this

It is good that the Greens have got a position of some principle on the Government’s fiscal position, and that the co-leader of the Greens has set out the fact that there are some choices; they are quite legitimate choices and the Government will get to weigh them up one way or the other. As explained in question time, the Government has decided that it would be better to reduce spending, when it is low-priority, than to put on a levy. It is quite possible that another Government would make a different decision. That stands in stark contrast to Labour, whose views on this are—

EnglishHon BILL ENGLISH Link to this

—forming, perhaps—still fluid. Labour’s views are certainly impossible to describe to anyone else who is not part of its own little internal squabbles over economic issues.

CarterHon John Carter Link to this

And then they don’t know, either.

EnglishHon BILL ENGLISH Link to this

Well, I do not think those members do. It is a bit like the position on the GST increase when the Government went through a public debate. There was a high degree of understanding in the public mind about the increase in GST, well before it was announced—which was not the style of some of our former Ministers of Finance in this place, who just announced all the big packages on the day—so people understood the increase. Labour members understood what the Government’s position was, but even with the time since the 2010 Budget those members still cannot make up their minds whether they are for it or against it. They took the bus out, in the “Axe the Tax” campaign, but after a couple of stops no one would get on it so they started taking the axe to each other instead of to the tax. But we hear the axe coming back again with the worry about the—well, Labour almost lost the Mana by-election. That was meant to be about campaigning to get rid of GST, but Labour still almost lost a safe seat. I do not blame the candidate completely; I think it was the Labour Party rather than the candidate. So those members still cannot make up their minds.

CarterHon John Carter Link to this

Aren’t they for and against it?

EnglishHon BILL ENGLISH Link to this

Well, they are for and against it. I think they are for and against income tax cuts, and I think they are against a GST increase; they are just not going to do anything about it.

I suspect it will be the same with the discussion about how the earthquake rebuild is financed. Labour will be unable to make up its mind about whether it supports the reductions in expenditure, and the more strongly controlled Government expenditure that will be required to get the New Zealand Government’s accounts back to surplus. But we are certainly aiming to do that. The earthquake has made the job more challenging. If it had not been for the earthquake, with tight Government expenditure we may have been able to get back to surplus, perhaps, as early as 2013-14. We will never quite know now. The Government set out on the path early in the year to control expenditure more tightly, then the earthquake came along. We have to meet the earthquake costs. They are not choices in the way a lot of our Government programmes are choices. The earthquake costs do not amount to choices, but we will aim to get back to surplus.

Of course, the fiscal discipline will not end as soon as we get back to surplus. By that time the New Zealand Government will have a higher stock of debt, which will sit alongside a very high stock of private sector debt. Both the private sector and the Government will face a challenge over the next 10 years or so to try to get their stock of debt down.

Why do we worry about that? It is simply because of the kind of events we have seen go on in the last 6 months, which none of us would have forecast 6 months ago: a large-scale earthquake in Christchurch, and a disaster on an even grander scale in Japan, which may affect us through its impact on the Australian economy, if not directly on our economy where it is a relatively small trading partner. So we are at the edge of our comfort zone. In fact, we are probably past the edge of our comfort zone, with the amount of debt the Government will be racking up over the next couple of years.

The Government accounts that we have been debating, and the Budget we will be debating in this House in a few months, are focused on getting the Government’s books back in order at the same time as rebalancing the economy to where it is going to earn more than it spends, through growth in the tradable sector and, relatively speaking, a shrinkage in the non-tradable sector. I have to say that it will be a fairly long job.

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

I thank the Minister of Finance for his intervention. He acknowledges the problem of debt that the Government has, yet the Government has chosen not to use the instrument that would have resulted in a reduction in Government debt, and that instrument is a temporary earthquake levy. The way in which a temporary earthquake levy would work is that if we were to strike it at 1.5 percent on incomes between $48,000 and $70,000, and at 3 percent on incomes above $70,000, and if at the same time we were to delay the cut to the company tax rate, which is due to drop shortly, we could raise around a billion dollars a year in a temporary earthquake levy. For someone earning $50,000 a year, that would be an extra 50c a week in tax. For someone earning $70,000 a year it would be an extra $6 a week in tax, and for someone earning $100,000 a year it would be an extra $23 a week in tax.

An extra $6 a week in tax in order to rebuild Christchurch is a very, very important way for us to do the rebuild without going into debt. An extra $6 a week for someone on $70,000 is 1½ cups of coffee. Literally, 1½ cups of coffee is what most New Zealanders would be willing to contribute if it meant that we could rebuild Christchurch without going into serious debt. If we go into serious debt of just under $5 billion, we find that the cost of servicing that debt is $250 million a year. So Government members are saying that they want to rack up $5 billion in debt, which will cost the taxpayers of New Zealand $250 million a year to service. Then, on top of that, as the Minister of Finance has repeatedly pointed out, it will drive up interest rates right across the economy because the Government is going into further debt. So every person in New Zealand who has a home mortgage will pay a higher interest rate because Government members do not have the common sense to have a temporary earthquake levy so that we do not have to go savagely into debt in order to pay for the rebuild.

A temporary earthquake levy is one of the options we have on the table. It is an option that the Minister of Finance and the Government have chosen not to take. I think that is a mistake, because we have an opportunity to reach out to New Zealanders who are willing to contribute to the rebuild of Christchurch so that everybody right across the country kicks in a few bucks a week, and, over the course of a few years, we pull together the money we need to pay for the rebuild. The alternative is that we go seriously into debt, which adds to the interest payments of the Government, which also puts upward pressure on interest rates for all mortgage-holders right across the country.

We actually have a choice here. We will end up paying a temporary earthquake levy or we will end up paying higher mortgages on our homes, so that we will pay the money to the overseas lenders or we will pay the money to ourselves and not go into debt to pay for the Christchurch rebuild. These are the genuine options that we have before us. We can have a temporary earthquake levy, we can cut spending, or we can increase borrowing. The Government has chosen to cut spending and increase borrowing. I think that they are poor choices and that we would do much better to have a much more fiscally responsible approach.

The other thing I want to touch on briefly in talking about the Government’s strategy is what came up during question time in relation to the price of petrol. The Prime Minister described the increase in the price of petrol as an unexpected one. There is nothing unexpected about an increase in the price of petrol. Not only is it expected but it is predictable; not only is it predictable but the Greens predicted it. In fact, I say to the Minister of Finance that the price of petrol will continue to go up, and we need to factor that into the building of our infrastructure. It is completely insane, in a world of rising petrol prices, to throw all of our money at new motorways. That is not a sensible, rational approach to increasing petrol prices.

When petrol prices go up we should invest in the alternatives to the private motorcar and the use of petrol. Instead, the Government is throwing billions of dollars at new motorway projects. There is a deep insanity and irrationality in the Government’s throwing more money at new motorways. In terms of the Pūhoi to Wellsford road, we can make that road safe for $300 million instead of the $2 billion new motorway project. We have done the costing to make that road safe, because it is unsafe. We can improve the safety of that highway for a fraction of the cost.

DouglasHon Sir ROGER DOUGLAS (ACT) Link to this

Where are we currently, economically speaking, and how did we get into our current position? In terms of income per person, if New Zealand were considered a state in the Anglo world, we would be 81st out of 82 such countries. We would be behind Prince Edward Island, behind Tasmania, and behind New Brunswick. Of these 82 countries, the only country with a per capita income lower than ours is Wales. We have to ask how we got to that position. We need to remember that 100 years ago we were first, and 50 years ago we were in fourth or fifth position. We might well ask what the heck has happened since. How did we get into the mess we are in? How have we managed to make ourselves so poor, in relative terms?

If we want to look at that, we might look at where we were a few years ago compared with Singapore, and where we are today. In 1960 New Zealand’s GDP was three times that of Singapore. By 2015—and probably earlier—Singapore’s GDP will be three times ours. Singapore has gone from having a level of GDP that was one-third of ours to having a GDP that is three times ours. We have to ask how that has happened.

In a word, it was productivity. In the end we get higher wages only through higher productivity. If we look at productivity per worker, we find that in Singapore it is $182,000; in New Zealand it is $93,000. In the period between 1984 and 1996 our productivity grew quite rapidly. It has been in the years since 1996 that we have had problems. Why is it that we have gone down and Singapore has improved so rapidly? In a word, I guess it is about policy. I will highlight some of the policy differences that have made the difference in terms of Singapore’s growth rate, its improvement in productivity, and, therefore its increases in wages.

First, there is taxation. Singapore has a zero tax on incomes up to NZ$21,000, then a tax of 2c on incomes from between $21,000 and $35,000. In other words, Singaporeans pay virtually no tax until they earn beyond $35,000. They reach the top rate of tax only when they earn $320,000, and that rate is 20c in the dollar. We, on the other hand, reach our maximum rate at $70,000, and that is a major difference between Singapore and New Zealand. It is one of the reasons they have shot ahead compared with New Zealand.

The other area is expenditure. Government expenditure in Singapore is 17 percent of GDP. New Zealand’s expenditure, by various measures, could be as high as 50 percent, according to one answer the Minister gave, but the figure I would use is about 42 or 43 percent. The thing that has killed New Zealand more than anything else is the massive increase in expenditure that took place in this country after 1996, and more particularly from 2000 on. If one looks at the amount of Government spending per person, one will see quite a big increase between 1970 and 1984. Government spending actually went down per person, in real terms, between 1984 and 1996, but then there was an absolutely massive increase in Government spending from 1996 to 2009.

I think that was outlined in an article I wrote called “How the Labour Government Robbed You Blind”. It sure as heck did. It was responsible for a massive transfer of about $25 billion to $30 billion from the private sector to the public sector. The increase in Government expenditure that took place during that period of 12 years was $7,567 per person. It had gone down by $320 in the 12 years before, but then it went up by over $7,500 per person over the 12 years from 1996. We saw, essentially, under a Labour Government, an increase in expenditure of $30,000 for a family of four. Members might well ask what this country got under a Labour Government when it increased expenditure by such a massive amount. It certainly went up quite dramatically under National between 1996 and 1999, but it went up primarily under Labour. I think a lot about what people could have done with that $30,000 for a family of four. What did they actually get for that money? Most taxpayers are not really sure what they got for that increased size of Government.

But it is not only in those areas. Certainly, tax policy and expenditure are important, but productivity has also hugely increased in areas such as health and education—it has hugely increased. In Singapore the Government spends only 3 percent of GDP on health. The private sector has a much larger role. In New Zealand we are looking at Government expenditure on health being 10 percent of GDP. It is 9 percent at the moment, but it will soon be 10 percent. Under Labour we did not see an improvement in productivity in the health area over 6 or 7 years; in fact, we saw the productivity of doctors in the health sector in New Zealand actually decline by 15 percent. We saw a decline in the productivity of nurses by 11 percent. Overall, the decline in productivity in the health sector was, I think, 8 percent. One might ask how the rate for doctors can be 15 percent and for nurses can be 11 percent, yet overall there is a decline of only 8 percent. The answer is that there were actually improvements in productivity in those areas that were largely covered by the private sector in public hospitals in New Zealand.

I think we need to look at where we are going, because unless we improve productivity we are going to fall further behind. In the public sector, in areas like health and education, we have the wrong focus. We are focused on the wrong things—for example, we are focused on class size. I have asked probably 100 audiences around the country—and it is my request to members in this House—to hold up their hands according to whether they would want to put their sons and daughters in a class of 35 with a quality teacher or a class of 15 with a mug teacher. I have not had anyone hold up their hands for the poor teacher yet. We need to improve our productivity in all these areas, and if we do not we are going nowhere.

GilmoreAARON GILMORE (National) Link to this

I will go back to a few things raised by the Opposition—in particular, the complete ranting about the Government’s lack of a plan for the economy. I will go back to the six key things that people keep forgetting about. This Government is spending more on infrastructure than anyone has ever spent before. We are spending more on education than anyone has ever spent before. We are spending plenty more money on innovation, thanks to Minister Mapp sitting in front of me. We are spending plenty of money in turning round and getting rid of waste in terms of lack of resources and bureaucrats. We are putting plenty of effort into dealing with crime and getting things put in place. Those are the key parts of the Government’s economic plan.

The report we are debating today was released in early February. The key aspect of what has happened between then and now is that on 22 February the town I was born in and grew up in suffered a tragedy—a massive tragedy that probably cost the lives of about 180 people. New Zealand has changed as a result of that tragedy, and my home town has changed as a result of that tragedy. We need to think carefully about what that might mean for our fiscal accounts. There has been much debate by many people on the other side of the House about some of the options and choices that that gives us. From my perspective, we have limited choices. We have to rebuild Christchurch. Christchurch makes up about one-sixth of the New Zealand economy. Not only does it make up one-sixth of our economy, but it is a more productive part of the economy than other parts of New Zealand. More exports come out of Canterbury than almost any other part of New Zealand, and it has much higher levels of exports per capita than any other part of New Zealand.

The tragedy we have incurred will cost our country about $15 billion. We are very lucky in that most of that cost is insured money that will be paid for by people having been prudent and having put insurance contracts in place. Some money has to come from the Government, and I think that is one of the key reasons why we are starting to make some tough key decisions about our choices in the future. You see, we do not have a giant piggy bank of money sitting there to pay for things. I wish we did. We have made choices in the past that mean we do not have a giant piggy bank of money. So we have to make collectively some tough choices about how we will pay that $15 billion. There are options in place for us to make some tough calls, and spend it on the things that make the most sense.

We have had a series of community meetings in Christchurch in the last 2 weeks. They have been attended by about 3,000 people in total. I can tell members what the feelings of those people are. Those people have strong feelings about the future of Christchurch, and about the role of the Government in that future. I know that the gentleman currently sitting in the chair, the Minister of Finance, sat in on one of the smallest of those meetings and listened to some of those people’s views and opinions. They are worried and concerned about their futures in New Zealand, and they want guidance from the Government to provide them with some clarity about what will happen to their jobs, their homes, their families, their schools, their roads, and everything else that makes up their lives in this country. This Government is one that will provide that.

Yes, that will mean that some time in the future there will be tough decisions made about things we probably do not really need right now, because there are some other things we do really need right now, and they will need to be rebuilt—things like schools in my area that kids cannot go to at the moment, or the sewerage system that is currently floating through the Avon River. About 80 percent of sewage from Christchurch is floating through the Avon River, through our wetlands, and out through the beach. It is like the forests that I normally go mountain-biking through. There are 240,000 tonnes of silt and demolition material in that massive recreational area, which 800,000 people a year used to go through. Those are the things we have to fix, before we can get back to growing our economy the way we want it to grow.

Despite all the things that have happened over the last 2½ years—global recession, global credit crunch, a series of one-off economic disasters ranging from our first earthquake to our second earthquake, and Pike River in between—it is remarkable that the Opposition seems to think that nothing has changed. It is a bit like a drunken sailor who keeps going from town to town, spending his money everywhere he goes, and, having spent everything, turns up to the next place and thinks he can borrow money from his mates. Then he turns round and thinks he can borrow money from another mate. He turns up at home and borrows it from his mum and dad, and still thinks he can keep spending the way he has been spending in every single town.

We cannot keep doing that; we have to think very carefully. That is the reason this Government has taken prudent positions and prudent decisions on the way forward. That is wise, not just for me but for my children. Those decisions mean that my children will stay in New Zealand in times to come. Those are the reasons why we have to rebuild our country—particularly, my home city—in the way we really want it to be. That will not be easy. The easy option is to jump on a plane and leave for Australia. The tough decision is to stay here and make New Zealand the way we all want it to be. For my home town, in particular, that will be a long, hard road.

HughesGARETH HUGHES (Green) Link to this

Kia ora, Mr Chair. I wonder how many Government MPs were boy scouts or girl scouts when growing up. I wonder, because if they were, they have forgotten the Scout motto “Be prepared.” When it comes to New Zealand’s vulnerability stemming from its dependence on oil, we are as unprepared as we could be.

Oil is the lifeblood of the modern economy. We are so dependent on oil that when prices seriously fluctuate or rise, as seen in the previous oil shocks of 1973, 1979, 1990, and 2008, those fluctuations have preceded global recessions. Morgan Stanley says that sharp increases in global oil prices pose the biggest threat to the global economy, and in New Zealand we are particularly vulnerable. A parliamentary report entitled “The next oil shock?”, found that as a country we are reliant on oil imports, and heavily dependent on cheap oil for our major sources of income.

New Zealand is highly exposed to oil shocks. I recently released research showing that every US$1 price rise in a barrel of oil wipes out between $40 million and $60 million from New Zealand’s annual gross domestic product, and destroys between $22 million and $33 million in household spending. Oil is pervasive and is in everything from fertiliser, to food, to furniture. New Zealand is particularly vulnerable because of our transport sector, which is 99 percent dependent on oil. In total, oil makes up over 30 percent of our nation’s imports.

Right now we are just a few cents shy of the highest petrol prices in our country’s history. People are feeling the pain at the pump. The last time petrol was over $2 a litre in New Zealand thousands of people switched to public transport in their droves, but they found public transport lacking. In Wellington the sector literally went to the museum to pull carriages out of retirement to deal with the capacity crisis. So in facing another period of volatile and increasing price pressures, is our Government prepared? In the absence of a national plan, I asked the Minister of Finance whether he would finally support an inquiry into how New Zealand can best prepare its economy for the effects of high oil prices. His response was “Probably not.”

New Zealand is one of the few countries with no modern strategy to deal with oil price shocks. Last year the Government turned down a Green Party request for an inquiry that was made at the Finance and Expenditure Committee. Less than a month ago the UK Government released its carbon action plan, which has more than 130 actions to reduce emissions and that country’s dependence on oil. Yet New Zealand, an internationally outlying country, is unprepared and is relying on the “She’ll be right.” attitude. In short, the Government has no plan, and no plan to start planning to reduce our dependency on oil.

The Minister of Finance believes that the best strategy is for people to see the price signals and change their behaviour accordingly. I ask how people can have a real alternative to paying more to fill their car, like cycling more, when we lack safer cycling facilities. How will someone near the now-closing Muri railway station north of Wellington change their driving commute and catch the train when their station closes? How will an East Coast logging company transport logs to the port on anything other than trucks when their rail line closes? Without a clear plan, people lack alternatives to respond to those market signals, and on the flip side the Government has a plan to increase New Zealand’s dependency on oil and vulnerability. The Government still intends to invest some $10 billion on motorways, further locking us into a car and oil-dependent future and increasing our national emissions. The Government is idly standing by as New Zealand looks set to lose four regional rail lines from a sudden desire to extract a profit from the lines, which have faced decades of asset-stripping and under-investment.

We have asked the New Zealand Transport Agency what oil price assumptions were used in its latest models for the roads of national significance. We found that oil was not even factored in, at all. It is irresponsible, as petrol hits over $2 a litre, that the Government still has its head in the sand on the role of oil prices in its transport planning. The responsible solution to reducing our vulnerability is an inquiry, leading to a strategy, and the redirection of funding to public transport infrastructure, like the Auckland CBD rail loop or a light rail link for Wellington, and better walking and cycling options. We need to protect our economy by decoupling the economy from its addiction to oil. We are a resilient, innovative, can-do nation. Let us take a leaf from the Scouts and be prepared.

Reports noted.

Ministry of Economic Development

ParkerHon DAVID PARKER (Labour) Link to this

I struggle to see why we should approve any funding for this Minister for the Ministry of Economic Development. I know that is a little harsh, and I do not really believe that, because there is some machinery of government work that the Ministry of Economic Development has to continue to do. But why we should give the Minister more money for the support that he receives in his office from the Ministry of Economic Development or for some of the other things that are funded through this Budget, I cannot see. We had a National Party that, when it came to office, said it would lead New Zealand to a brighter future. Do members remember that? National talked about a brighter future, and said its key to a brighter future was that it would develop the New Zealand economy so that it became more profitable.

One of the things that National kept saying to us was that it would bridge the wage gap with Australia. What has happened since? Has the wage gap grown, or has it decreased? It has gone up, and by a lot. The wage gap with Australia continues to grow. The Minister of Economic Development, during the year under financial review, was asked about that in Parliament. He turned up and was questioned as to whether the wage gap with Australia has gone up or down. He got the answer wrong; he did not even know. So then the big spin machine came out of the National Government, and the Prime Minister came to the Chamber the next day and tried to manipulate the figures by using some purchase price parity figures—figures adjusted for purchase price parity. He said that on that basis the wage gap had narrowed. But, of course, when we looked at that we found the Prime Minister was wrong, too. At the time TV3 accused the Prime Minister of being too slippery by half. It used the words “too slippery”.

On that measure, as a consequence of that, we have been trying to get the Minister of Economic Development at least to say what the milestones are, if that is the Government’s objective by 2025, by which time many members of this Parliament will, sadly, be dead, most of the sitting members will have retired, and no one from National will be accountable for the promise that it made. Given that it is a meaningless promise and National does not even know where it is getting to halfway through that period, we have asked it to give us some milestones. We have asked National to give us something by which it will be held accountable. We asked whether it could at least agree that if by the next election the gap is still getting wider, it will have failed. National would not accept that as a target. So we asked it to promise that it would get the wage gap back to where it was when National started in office. It would not even agree to do that, so we have not been able to get any milestone by which the Government will be held accountable.

What other promises was the Government making at the time? It said it would cause a step change in the New Zealand economy. That was another of its promises. I cannot see any line item in the Budget that describes an initiative to get towards National’s step change in the New Zealand economy, because the Government has given up on that lingo too. That term has dropped out of the Government’s lexicon; we no longer hear Government members talking about a step change in the New Zealand economy.

I was really embarrassed at the other failure by the National Government to do what it promised to do on curbing the flow of people to Australia. Why was I embarrassed? Because I am a member of Parliament who thinks we should not make promises to the electorate that we will not keep. Another of National’s promises was to stop the great flow of people from New Zealand to Australia. What has happened? Last year that flow was the highest that it has been in the last decade, bar one year. The figure is the second-highest in a decade. When Julia Gillard was here recently she said she liked having New Zealand as a provider of talented, well-educated people as a source of labour to make Australia’s economy grow. We are losing too many of our best, well-educated, and productive people to Australia.

What is the Minister for Economic Development doing in response to that? The answer is very little. During the year that is under review we saw the failed attempt to mine national parks. National said the big difference between New Zealand and Australia was mining, and it would mine New Zealand’s national parks and other schedule 4 areas. There was an outcry against that, as there ought to have been, partly because the Government was exaggerating the difference that mining those areas would make, and partly because doing that was just wrong in principle. In the end, in the face of public protest, the National Government backed down on that proposal, but it did not replace it with a new policy.

Now we have come to the Government’s third Budget and we have been told by Mr Bennett, one of the members for the Hamilton area, that the big thing in the Budget will be savings. National is finally admitting, after 2½ years in power, that one of the big differences between the New Zealand economy and the Australian economy is Australia’s depth of savings, and therefore the investment capital that is available to its enterprises to invest in more productive equipment and improve the productivity and competitiveness of its economy. Well, hello? That has been obvious for a number of years in the New Zealand economy. That National did not have a plan in that respect after its members had spent 9 years in Opposition is lamentable. Indeed, everything that the Government has done in respect of savings since then has been wrong.

When we were in Government we ran Budget surpluses, and that means public savings. When we were in Government we introduced the KiwiSaver scheme to encourage private savings. What did the National Government do? It undermined it. The third thing that we did whilst in Government was to establish what is known as the Cullen fund to, through public savings, help pre-fund superannuation, and by doing so increase the depth of our savings and investment in New Zealand. For National to say, after 2½ years in office, that the focus of the next Budget, in terms of economic development, will be savings is a sad indictment on the lack of a plan on the part of this Government. It obviously has an inadequate plan, so much so that the New Zealand Institute produced a report, which I thought was a very clever flick at the Government, stating that a goal is not a strategy. I think that might have been in reference to the Government’s 2025 goal of bridging the wage gap with Australia but having no strategy or accountability for milestones in the meantime.

Mr Brownlee has had to go away to perform duties in Christchurch post-earthquake. Good on him for doing that, and I wish him well in those efforts. We now have the Acting Minister for Economic Development present in the chair. We have asked him about his economic plan for lifting us out of the economic malaise that New Zealand is in. We are in a second recession—National’s recession. Over half of the latest re-estimation of Government revenue and economic growth was caused by factors other than the earthquake, yet National says the earthquake is the cause of all its problems. We have not heard from the Acting Minister one new idea—not one. We have rising unemployment, bigger gaps with Australia, and dropping tax revenue. The only way we will get out of this mess is through improved economic growth.

“Bomb cases”, as commentators have described them, such as the United States and the United Kingdom are bouncing out of recession, and what is happening in New Zealand? We are heading into a second recession. The economic malaise continues, and we have no alternative vision for growth being shown in New Zealand. Instead we have the Government saying it is all the fault of the earthquake. Of course the earthquake has made New Zealand’s problems worse, but it is not the underlying cause of the malaise. The underlying cause of the malaise—low growth in jobs and low economic growth—is mismanagement by the National Government.

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

I was not going to take a call, but a comment such as that from Mr David Parker, who has just resumed his seat, cannot go without being challenged. The first thing I will do is take an opportunity to remind the member that he has selective memory loss. Let us consider the early 2000s, when New Zealand had the best opportunity for economic growth that the globe had seen in Mr Parker’s lifetime. He has the audacity to say that Labour established a pattern of Budget surpluses, yet when Michael Cullen handed over the reins, he left us with a legacy of facing 10 years of Budget deficits. That was the legacy of the previous Labour Government.

The member further does not realise that having successfully won the election, we faced a global financial crisis—the biggest financial challenge the world had seen since the 1930s. The member may have also failed to notice two earthquakes that have devastated my home city and caused a loss of life. He then said he would take away my budget. I tell him that I was in Christchurch today when we announced another package to assist businesses in Christchurch. I want Mr Parker to stand and say in the Chamber today, for the benefit of those businesses, whether he and his Labour colleagues support that package for Christchurch businesses.

KingHon Annette King Link to this

Yes, of course we support it.

CarterHon DAVID CARTER Link to this

Oh, they now support it. So Labour members want to take my budget from me but also expect me to deliver support packages to Christchurch businesses to help them get through their economic crisis. It is no wonder Labour is struggling to poll over 20 percent. In fact the people who give Labour 20 percent support need to have a serious look at why they have bothered to support it.

I will give Mr Parker a lesson on the economic plan of this Government. We need to get our tax system sorted out, and we have moved to do that—but Labour opposed that measure. We established a substantial amount of investment in innovation, and, again, Labour opposed that.

ParkerHon David Parker Link to this

I raise a point of order, Mr Speaker. The debate is on the 2009-10 year, not the 2010-11 year. The Acting Minister seems to be confused about that. I ask that you bring him to order.

RoyThe CHAIRPERSON (Eric Roy) Link to this

It is an interesting point of order. The debate is on the 2009-10 financial year and current operations. That does not mean that any member can get into the estimates. It covers current operations. I am listening carefully.

CarterHon DAVID CARTER Link to this

It is typical of Mr Parker to take such a frivolous point of order when he cannot win the debate while he is on his feet. This Government has a very established economic agenda, which was well and truly elaborated to Mr Parker when he worked on the financial review while sitting on the Commerce Committee as a freshman member. He ought to refresh his mind that the examination in that financial review was very much about what this Government was doing. There was a lot of mention of our broadband strategy. There were 10 years of neglect of ultra-fast broadband by Mr Parker and Ms King when they had a chance to do something about it. This Government has stumped up with a magnificent programme involving $1.5 billion plus an associated rural broadband package—

KingHon Annette King Link to this

Not 1 metre has been laid.

CarterHon DAVID CARTER Link to this

—and again Annette King continues to decry it. She cannot have it both ways.

CarterHon DAVID CARTER Link to this

Only Ms King would try to have it both ways. Only she would try to go out to the public of New Zealand and acknowledge the good things we are doing, and then come into this House and try to argue against them. That sort of presentation to the public of New Zealand is exactly the reason that Labour continues to poll at around 20 percent, and I do not think it has much chance of lifting that between now and 26 November.

Report noted.

Ministry of Health

RobertsonGRANT ROBERTSON (Labour—Wellington Central) Link to this

It is a pleasure to participate in this debate. In the last couple of days the Government has told us that health and education are safe—health and education are safe. As the “slash-and-burn Budget” comes before the country in May, the Government tells us it is OK because health and education are safe: money will be redirected to the health system.

The truth is that the health system is operating in significant deficit. We know that before the last Budget, just for health expenditure to stand still, we needed to see an investment of $555 million or $600 million. That amount was needed just to stand still, but that investment did not come from this Government. This Government under-invested by $150 million. Programmes in public health and primary care were cut as the district health boards—pushed by the Minister to look at his manufactured targets and meet his slogans rather than the actual needs of the communities around them—were getting in there and making sure that those targets and league tables were met while primary care and public health were let go and under-invested in.

This year—I know I can talk only a little about current operations—we will see a hole in the health budget of around $700 million. Mr Key and Mr English have told us that there is only $600 million to $800 million for everything in health and education. Mark my words: we will be back in this Chamber debating a Budget that will show a cut in health spending. Government members will say more money is going into health, but everybody involved in the health system knows that health inflation, an ageing population, and the increasing costs of buying equipment because GST has gone up—all of those things—mean that just to stand still in the health sector it will take $600 million or $700 million. This Government will not be making that investment; this Government will be making cuts.

This Government has lost its focus on the core part of the health system. As my mother would say, prevention is better than cure. But the Minister of Health is not interested in prevention; the Minister is interested in looking good with his targets and charts that say that he managed to improve elective surgery, even though the Auditor-General’s report on elective surgery, which we await with interest, might actually be telling a different story about how people get their surgery.

I will leave that issue to one side. We have reviewed the district health boards’ performance and we have learned that they are following the money. They are following the Minister’s targets, which means public health and primary care are being cut back. Everywhere I have been in New Zealand since I have been the spokesperson on health for Labour—from Wanganui to Rotorua to Nelson—I have been told constantly that the cuts are coming in public health, primary care, and mental health. That is a problem for the future of New Zealand. Although the Minister’s priority might be to look good in the health portfolio and have a nice colourful chart, the priority for New Zealanders is affordable access to quality primary care. That is not happening at the moment.

That is not happening when it comes to after-hours care. When I was in Rotorua I was told by a doctor the story of somebody ringing his clinic just after 5.30, wanting advice about whether they should bring in their child. She said that if it was after-hours and the cost was going to be $40 or $50, then she would not bring in her child. The doctor said that she had better come in. When they came in the doctor found that the child was potentially suffering from meningococcal disease. If that mother is deciding whether to take her child to the doctor on the basis of how much it costs rather than how sick her child is, then there is something wrong in our system. The Minister needs to take some responsibility for what is wrong in our system.

People in Queenstown are paying $102 to take a baby to after-hours care. That is wrong.

RyallHon Tony Ryall Link to this

That’s not true.

RobertsonGRANT ROBERTSON Link to this

They are. That is exactly what they are doing. Someone on the Kapiti coast is being charged $41 to take a 20-month-old to get a cut lip repaired at 5.30. That amount represents 20 percent of that family’s grocery bill. Something is wrong. That person asked me whether Mr Ryall wants her to go to the emergency department at Wellington Regional Hospital. Is that what the Minister wants? It is the wrong priority to send people the signal that primary care and public health are not important.

RyallHon TONY RYALL (Minister of Health) Link to this

The National-led Government continues to grow and protect the public health service in New Zealand. The Government continues to grow and protect the public health service in New Zealand as we move public money into the areas of priority. In the last 2 years, under this National Government, we have employed over 500 extra doctors and over 1,000 extra nurses in our public hospitals, and we are close to having a thousand fewer administrators. We are employing 500 extra doctors, 1,000 extra nurses, and close to a thousand fewer managers. We are also investing very heavily in the New Zealand health service. We put in an extra $750 million with our first Budget, keeping up with population change and inflation. Last year we put an extra $512 million into health, keeping up with population change and ageing, and using the benefits of reprioritisation within the health service.

We are delivering for New Zealanders. Every week 400 extra New Zealanders are getting elective surgery, compared with any week under the Labour Government.

ChadwickHon Steve Chadwick Link to this

It’s all about counting.

RyallHon TONY RYALL Link to this

The member says it is how we count it. Four hundred extra people are getting operations. Labour members do not like that. The more they do not like it, the louder they get. We are also treating more and more patients faster than previously in our country’s emergency departments. People will remember that on the North Shore and in many parts of the country, old people used to languish for 3 days on end on hospital trolleys under bright, fluorescent lights. North Shore Hospital was described as the weeping sore of the public health service. This Government pushed aside the Labour lackeys in Waitematā and put money into a new emergency department—$50 million that Labour said no to. We said yes, and we are speeding up the emergency department in Waitematā.

What is more, we are providing cancer radiation treatment for New Zealanders. When the party opposite was in Government it was not unusual for New Zealand women to be sent to Australia for radiation treatment, and they were waiting 12 to 13 weeks. We had women Labour Ministers of Health defending 13-week waits for treatment for breast cancer. Women Cabinet Ministers were defending that situation. In the last quarter not one patient who was ready for treatment waited more than 6 weeks. In fact, right now most are being treated within 4 weeks.

We are also investing very heavily in preventive health. We have the highest number of 2-year-olds being immunised in the history of New Zealand. Here is my favourite bit: do members remember the Labour Government’s plan about closing the gaps, which became about reducing disparities? The Labour Government never did anything about the gap between Māori and the rest of the community in immunisation. We have closed that gap under a National Government. What is more, we have invested hundreds of millions of dollars in a home insulation programme that has benefited over 80,000 New Zealanders. The programme is having a real impact on the health of a lot of low-income New Zealanders. The health ministry put $25 million—members should wait for this—a year into that home insulation programme, and Labour members described that as a cut to the health budget. We put $25 million of health money into the single most effective public health initiative in this country in the last 10 years, and Labour called that a cut to the health service.

What is more, the timid party opposite put the price of smokes up by 10 percent once in its 9 years in office. It put up the price of smokes, with a 10 percent increase, once in 9 years—once in 9 years. We have done that three times in 20 months. Doing that three times in 20 months resulted in the single-biggest increase in the price of smokes in the history of New Zealand. Those members had one 10 percent increase in their very first year in office, hoping that no one would remember it, but we have put a 30 percent increase on the price of smoking in 22 months. What is more, let us remember the Labour members saying: “We have a little smoking-cessation medicine here.” We have provided more people with more choice and with more smoking-cessation medicine than ever before.

RobertsonGRANT ROBERTSON (Labour—Wellington Central) Link to this

That was a fantastic amateur dramatic performance there from the Minister in the chair, the Minister of Health. The Whakatāne amateur dramatic society has never looked so good. The Minister is failing to remember something about a couple of the issues he raised: firstly, closing the gaps. I remember National telling us that closing the gaps was a racist policy. That is what National told us, but now the Minister stands up and proudly says that his Government has done it. That is selective memory from the Minister.

It was selective memory from the Minister on smoking, too, because I know that that Minister and all, bar two, of his colleagues opposed every measure that the Labour Government tried to bring up on smoking. I ask Mr Ryall who opposed the Smoke-free Environments Act. Did Mr Ryall oppose that? Mr Ryall opposed that bill. “Old Smoky” over there, Associate Minister of Health Jonathan Coleman, opposed it as well while he was blowing cigar smoke all over people. This Government has no creditability to lecture Labour on smoking cessation, because those members opposed all the measures that our Government put up. Labour stands proud behind people like Steve Chadwick, Annette King, and Helen Clark, who brought those measures into play.

Mr Ryall seems very concerned about the notion of patients going to Australia. He seems very concerned about the notion of patients going to Australia—other than the fact that, of course, under National, cancer patients did go to Australia—but I will tell members whom Mr Ryall should actually be worried about going to Australia. He should be worried about doctors and nurses going to Australia. There has been a 300 percent increase in the number of doctors going to Australia in the last 2 years.

RobertsonGRANT ROBERTSON Link to this

That is what he said, that is right. That is what he said. But actually, a 300 percent increase in the number of doctors going to Australia is the move to Australia that the Minister should be worried about. It is all smoke and mirrors with this Minister. It is manufactured targets, it is being able to show off his little league table, but the reality is that for people on the ground, health care is now less affordable and less accessible than it was previously, because this Government has decided to focus on its cheerleading targets, rather than on the actual needs of people in New Zealand.

We have to remember that the cuts that have come have come to some of the most vulnerable people in our community, such as the cuts that have come in aged care. People have been called on the phone and asked “How are you feeling?” and at the end of the call they have received a cut because they have said they are feeling OK. My constituent’s father, a 92-year old war veteran, was called up and asked over the phone how he felt, and had his home care cut, and a neighbour found him on the ground several hours after he had a fall in his house—because his home care was cut by this Government. That is the kind of cut we have seen under this Government.

We have seen cuts here in my region of Wellington to programmes in sexual health and community mental health. Organisations that have worked for years in mental health and community mental health have had their funding cut by this Government. Because the Minister does not have a target for mental health, the district health boards look somewhere else. The Minister does not have a target for public health, so the district health boards look elsewhere. This Minister likes to shove the problem off to other people.

KingHon Annette King Link to this

Where did the 500 doctors come from?

RobertsonGRANT ROBERTSON Link to this

Yes, and we would like to see evidence of the 500 doctors who were magicked up from somewhere by the Minister. But the problem for this Minister, and the problem for this National Government, is that the affordability and accessibility of health care have declined under this Government and will decline further in the future, as the amount of money needed to go into health is simply not being invested. This Minister might be able to throw his arms around in the air and tell us, in his dramatic style, about all the wonderful things that he has done, but the truth is that on the ground, faced with an increased cost of living and the inability to put a healthy meal on the table for many people—because it is now too expensive—people are making choices on the basis of how much money they have about whether they and their family can access primary care. That is not the New Zealand that I want to live in. I want to live in a New Zealand where people know that they can get quality health-care and that cost is not a barrier for them. Primary care, public health, and prevention should be the priority; sadly, from this Minister, it is manufactured targets and slogans.

Lees-GallowayIAIN LEES-GALLOWAY (Labour—Palmerston North) Link to this

There are New Zealanders out there who are saying this Government is out of touch. They are saying this Government is out of touch with what ordinary New Zealanders need and New Zealand’s health system is going backwards. The Government must be out of touch with ordinary New Zealanders, because the Minister in the chair, Tony Ryall, the Minister of Health, is completely out of touch with his own party’s stance on tobacco cessation and tobacco control in this country. He got up and said the Labour Government had been timid when it came to smoking cessation and trying to reduce the number of people in New Zealand who smoke. But it was his party, the National Party, that railed against everything that the Labour Government did when it was in office to curtail the number of people in New Zealand who were smoking.

Lees-GallowayIAIN LEES-GALLOWAY Link to this

It was not once; it was on the Smoke-free Environments Act, it was on the increase on tobacco excise, and it was on a whole range of measures right through the 9 years that the Labour Government was in charge. The National Party voted against every single one of those measures.

Now, because the Māori Party has managed to get one little thing out of its coalition deal with the National Government, Tony Ryall suddenly turns round and says—

KingHon Annette King Link to this

That he’s in favour.

Lees-GallowayIAIN LEES-GALLOWAY Link to this

—he is charge. He is in favour—

RobertsonGrant Robertson Link to this

Closing the gaps.

Lees-GallowayIAIN LEES-GALLOWAY Link to this

He is closing the gaps; that is right. He has had his road to Damascus moment. He has turned round and said the National Government is interested in smoking cessation. We know the truth; New Zealanders know the truth. If the Māori Party was not involved—and I have to give this to the Māori Party—National would be doing more to make sure that the tobacco companies had their way, and more people would be taking up smoking. That is the truth about this Government.

I tell members that what people are really worried about is the cost of living. As the cost of living continues to go up, as this Government adds GST to people’s food bills and lets car registration and ACC costs go up, people are becoming more and more worried about the cost of living. The reason they are so concerned about the cost of going to see the doctor is that that has gone up under this Government, as well. The cost of seeing the doctor is going up, and what is really appalling is the outrageous cost of going to see the doctor after hours. People in Auckland and Wellington are being charged up to $100 for after-hours care. In Queenstown it can be as high as $139 just to go and see the doctor. For children under 5, who are supposed to have free access to primary care in this country, the cost can be as much as $102 if they happen to live in Queenstown.

It is an outrage that the National Government has let those costs skyrocket and made it very much harder for hard-working Kiwi families to get to the doctor or to get their kids to the doctor. Sometimes, if we are adults, we can wait and we do not have to go to the doctor after hours, but when it is our children—when it is a 2-year-old, a 3-year-old, or a 4-year-old—we want to get them straight to the doctor. We want to get them dealt with straight away, because it can be a very scary time for parents when children are ill, their temperature is going up, and they are showing signs that something could be seriously wrong. If we are adults, we can handle that and deal with it. We might take an aspirin and go to see the doctor on Monday. But we never ever want to do that with our children, and that is why the Government should be doing more about the cost of primary care. It should be rolling up its sleeves and doing something for Kiwi families. It should be making sure that there are no barriers to access to primary care because of its cost, which this Government has allowed to explode.

The Minister got up and crowed about the $750 million extra that the Government provided in its first year and the $512 million extra in its second year. Well, $750 million was simply a continuation of the funding track that the Labour Government had put in place, and $512 million was actually the first cut, because the Government needed $750 million just to tread water, basically—just to maintain current services. The first cut was $512 million, and the Government is forecasting more and more cuts over the years to come. That will mean there will be more and more cuts to front-line services: the kind of cuts we have already seen to mental health, to diabetes clinics, to primary care; the cuts that we are seeing right across the country. I say to the Minister in the chair that people are feeling the effect of that, and it is real to people.

This is what ordinary Kiwis are crying out for: they want their basic services to be retained. That is not what this Government is delivering. It is all about smoke and mirrors. It is all about pretend targets that the Minister makes up, with no substance behind them whatsoever. He says there are 500 extra doctors, a thousand extra nurses, and a thousand fewer administrators. I ask where the evidence is. He will not answer the Official Information Act requests that our spokesperson has put in. He will not put it on paper.

Report noted.

Ministry for the Environment

SmithHon Dr NICK SMITH (Minister for the Environment) Link to this

I thank the Local Government and Environment Committee for its report on the excellent performance that the Ministry for the Environment achieved in the first full year under the John Key - led National Government. First, I will note the background. When National came into Government, the ministry was almost in a state of crisis. Both the chief executive and the Minister for the Environment had had to resign as a consequence of a scandal that immersed this Parliament and had sapped away the motivation and the good work that we needed to do in this important space. Three chief executives in less than a year, three Ministers in less than a year—it was a ministry that was crying out for a fresh start.

The financial review shows quite stunning and progressive change that is consistent with the blue-green agenda that this Government came into office with. Let me go through some of the achievements in the financial year. Firstly, the implementation of the waste levy and the implementation of the Waste Minimisation Act have seen real green growth, with a whole number of new businesses from Kaitāia to Bluff starting up in that blue-green space. I will give an example. In Southland, in which I know the Chair Eric Roy would have some interest, there are new businesses recycling antifreeze so that that waste does not end up in our drains. That is a good programme. In the area of Canterbury we have had a new business supported by my ministry that recycles nappies into usable compost. We have had businesses start up to recycle silage wrap, which is a huge area of plastics. Businesses that are recycling building waste have started up, which will become particularly important with the huge rebuild job we have in Christchurch. New businesses that are using a whole range of plastic and other wastes that would otherwise go to landfill have been successfully implemented in this financial year in review.

We have had the very successful implementation of the emissions trading scheme. Let me give members two key outcomes that are so important to New Zealand’s environmental performance. Under the Labour years, despite all the rhetoric on climate change, 70 percent of new generation stations built were thermal power stations—a trebling in the amount of electricity produced from burning coal. In the first 12 months of the emissions trading scheme, we have seen a huge shift in investment to renewable energy—in fact, 100 percent of consents granted under the Resource Management Act changes implemented by the ministry have been for renewable power stations, and that is a good thing.

After the record period of deforestation that occurred under the previous Government, we have seen a welcome shift to New Zealand planting more trees than it removed in any one year. That is so hugely important in the balance.

Let us take the issue of fresh water. Freshwater quality is another big challenge. In the financial year under review, the ministry, supported by this Government, increased five-fold the amount it is investing in freshwater quality; initiatives in Lake Rotorua, the Waikato, and Lake Taupō are making a real difference.

I will note the steps we are taking to try to get more efficient resource consent processing. The bill we passed in this Parliament in 2009 has seen a huge improvement in the efficient processing of resource consents. We had compliance levels of about only 50 percent but we are now at over 80 percent. We are heading for over 90 percent performance in resource consents being processed on time so that the work of the ministry is supporting a growing economy, new initiatives, and the sort of infrastructure that will support a growing economy.

The last point I wish to make on our blue-green agenda is in terms of the Environmental Protection Authority and the work that the ministry has successfully done for that new authority. It had its first stage last year and has moved to full implementation this year. We really have a successful blue-green agenda being advanced by the Ministry for the Environment.

Report adopted.

Department of Corrections

CollinsHon JUDITH COLLINS (Minister of Corrections) Link to this

It is an absolute pleasure to speak to this report in relation to the Department of Corrections. I am extraordinarily proud of the work it has done over the last year and the fact that it is, in my opinion, a stand-out department. That is certainly something that was not true under the previous Labour Government.

I acknowledge that in the past year we had a tragedy happen to corrections with the death of our first corrections officer to have died on duty, Jason Palmer. I acknowledge his loss and the loss that that was for all of our staff—as well as, I am sure, for many people in the country who felt very deeply for him and for his family.

However, apart from Jason’s very untimely death, this year has been a fantastic year for corrections. Our staff turnover has been the lowest that it has been in the last 5 years. Escapes are down to the lowest level ever—escapes from our prisons are at the lowest level ever, despite the fact that we have more people in prison now than we have ever had in the past. Positive random drug tests are down to the lowest level ever—despite all the rhetoric from the previous Government, they are at the lowest level ever. Community Probation and Psychological Services is now working at levels it has never worked at before. It is doing outstanding work. It was a part of the department that we came into a crisis with when we came into Government.

We also inherited a crisis in accommodation for prisoners. We found that we were suddenly faced with looking at whether we had to let prisoners out of their sentences earlier—we certainly were not about to do that. We have now got almost 1,000 extra bunks from the double-bunking that we put into our prisons. Despite all the calling from the Labour side and the fact that it left us with a prison-muster crisis, there was not one word from Labour to congratulate our staff on the excellent work they have done to deal with the situation.

We have had the container cells. Everyone will remember the container cells. Well, Labour said that container cells would not happen, they were a stunt, and they would not be used. I announced them in about August, and by September we got the funding approved. Work started on them around November, and in March they were ready to go. It took about 4 months to get them ready. Despite all the rhetoric that they would be slums and that they would be inhumane, I am told that at Rimutaka Prison the prisoners are basically lining up to get into them because they are so good. They are some of the best accommodation, and they are about one-third of the price of a traditional build. So what we actually have is a department that is doing the most amazing work.

In addition to that, it is rehabilitating people. Under Labour, only 500 prisoners a year could get into drug and alcohol rehabilitation. By the end of this year we will have over 1,000 prisoners in rehabilitation—we will have doubled Labour’s number over the 3 years we have been in office. Not only that, but we are now targeting people who are in prison on short sentences. Basically, under Labour, they had to be in there for years and years, and at the end of their sentences they would finally get some help—just before they went out. Now we are getting to them early, and that means we are getting to people who are in prison for crimes that are not as bad as some others. I think that is really important. It is important to get to them while they are young, earlier during their time in the system, so we can get them out of the system and keep them out of the system. This is rehabilitation that works.

MoroneySue Moroney Link to this

But violent crime is going up.

CollinsHon JUDITH COLLINS Link to this

Well, I say to that member: “Just wait for the crime stats next week, honeybun, because they won’t be.” Crime is actually coming down under this National Government, and I am so thrilled that it is, because we are taking crime very seriously. We take it very seriously and we take victims seriously. Unfortunately, the previous Government had absolutely no idea what to do. It was so soft on crime that it sent out the message to criminals that they could just keep going back to jail because it was a nice warm place to be. Well, funnily enough, under a National Government what we are forecasting for prisons is that they are not going to grow in number to the same extent that they did under Labour, and that is because people want to get out of prison. What we are seeing, as well—[ Interruption] and let us be sensible here; I know that it is difficult for the Labour Party—is that rehabilitation is absolutely paramount when we are dealing with the prison population. It is absolutely paramount to get drug and alcohol rehabilitation both in prisons and in the community. Labour never did it, but National is doing it.

BorrowsCHESTER BORROWS (National—Whanganui) Link to this

It is a pleasure to take a call in respect of the work of the law and order Minister—Minister Collins, the Minister of Corrections and the Minister of Police. It is very interesting to note that nobody from the other side of the Chamber decided to jump up and seek a call after the Minister completed her speech. The reason for that is that the National Government has taken the heat out of the law and order debate. The issues that were going on within the police portfolio, and within the corrections portfolio, up until December 2008 have dissipated away, because the Government has taken some initiative.

This Government has built on work that was done under the previous Government around police numbers. At the end of 2008 it was obvious that if the Government did not take some action in South Auckland, or Counties-Manukau, in respect of where the state of affairs had got to around law and order issues and policing in South Auckland, there would be some big trouble. The National Government committed to putting 300 new staff into South Auckland. What did that do? It put 25 two-manned incident cars, their supervisors, and their relievers on the front line 24 hours a day. What did that do? It drove down crime in Counties-Manukau. It took the number of murders down, in the year after Labour left Government, by 57.1 percent.

People in this Chamber will recall, no doubt, as those listening on radio or television will recall, the early stages of 2008, when we had a horrific number of aggravated robberies and murders in the South Auckland area. People will remember, for instance, the murder of Navtej Singh and a number of others, and that the terrible situation there was put down by the then Prime Minister to the effect of the “mother of all Budgets”, and by the police Minister to the effect of the position of the sun and the moon. Well, the National Government has worked hard in this area and has had some stunning results.

As a result of law and order policy implemented as part of the 100 days of action programme, we saw the completion of the Criminal Proceeds (Recovery) Act, and we have seen $36.5 million of assets seized in the first years of operations in that particular area. The P busts had a street value of $30.4 million in 2010, up by one-third over the take seized in 2009. Police safety orders were another initiative of this Government, and 2,773 orders were issued as at the end of January. A number of people said those orders would just be breached, in any event. Actually, there have been only 186 breaches. This is all good news. Do members remember the street racing crime that was prevalent under the previous Government and caused all sorts of headaches? There has been a reduction of 18 percent just in that particular area of crime. The people of Christchurch have noticed that particularly, and are relieved about that. The number of confiscation orders was 49; that has shut it down completely.

I congratulate not only the Minister in the chair but the members of the police, operating under her administration and direction, on the huge successes they have had. Just recently I visited the child and sexual abuse centre on Auckland’s Great South Road, and was shown around there by Detective Senior Sergeant Dave Pizzini. He ran through the work that they do there, and how the various agencies work together in a very collaborative way to deal with sexual offences and child abuse offenses. I was incredibly impressed with the level of professionalism that has come into this area of police investigations. It was noticeably different from my experience in the time when I was in the police.

In respect of prison capacity and in respect of prison rehabilitation, I commend the Minister for her work in these areas. I commend her for the reduced level of recidivism we have seen, the enhanced number of mental health opportunities available to deal with the 65 percent of prisoners who do have mental health problems, and the drug and alcohol beds that are available for the 83 percent of prisoners who have drug and alcohol issues and dependency issues. The work we have done in 2 years in Government in respect of that has resulted in a doubling of the number of beds that are available for those prisoners.

It is great to see the level of confidence in the police has been completely enhanced—

RoyThe CHAIRPERSON (Eric Roy) Link to this

I am sorry to interrupt the member, but the bell is not working, and his time is about to expire.

BorrowsCHESTER BORROWS Link to this

—and the attrition rate in the police, which was very high under the previous Government, is now less than 1 percent. I congratulate the Minister.

Report noted.

New Zealand Police

CollinsHon JUDITH COLLINS (Minister of Police) Link to this

What a marvellous thing it is to be the Minister of Police in a National Government! My goodness, it is fun! The fact is that we are a Government that supports the police, and we can see it in the way in which the police now have the confidence to do what they need to do. Not only are the police dealing with very serious crimes and criminals, such as gangs and, in particular, methamphetamine dealers—who took over an awful lot of people during the 9 long years of the Labour Government—but they are also able to take the assets off these criminals. The police have so far recovered $37 million worth of assets and cash, including diggers—that is my personal favourite—houses, farms, and lifestyle blocks. It is pretty much a case of you name it and they have got it.

But the police have not been able to do this just because of their own excellent work; there are certain things the Government has done. We have been able, with our colleagues in the ACT Party in particular and, with support from the Māori Party and United Future on certain issues, to bring to this House 18 new laws that have made a huge difference to the way in which New Zealand is policed.

We have also been able to bring in, and approve the use of, Tasers. This has had a dramatic effect on the safety of our police officers and on the safety of offenders, as well as of innocent members of the public. I am sure that most members can remember the terrible tales of woe and doom that would come upon New Zealand should the police be able to use Tasers to subdue offenders who were about to do something extremely dangerous. We were told that Tasers were a tool of torture. Well, they are not in the way the New Zealand police use them. We have seen that offenders who have been about to kill themselves or others, attacking people, have been able to be subdued without loss of life. This has saved the lives of offenders, and in my opinion the most important thing is that it has saved the lives of police officers, it has saved them from harm, and it has saved innocent members of the public from harm.

I hope the police realise, and I am sure they do, that this Government absolutely backs the New Zealand Police to get on with the job. We have around 12,000 members of the New Zealand Police. Almost 9,000 are sworn officers or, as we call them, constabulary staff, and about 3,000 are employees. All of those people are absolutely devoted to trying to make New Zealand a safer place, and to keep it that way. I would like to thank each and every one of them for the effort they put into their work. We have seen so much of this in the last 6 months—at Pike River, after the first Canterbury earthquake, and following the aftershock in Christchurch on 22 February. We have seen police officers from those districts, but also from other districts who were brought in from outside to help, go to the utmost of their abilities to show humanity, compassion, and professionalism, and make us all extremely proud.

When I went around Christchurch on 24 February this year, when we saw the Pyne Gould building, the CTV building, and the terrible state of almost demolition brought about by the earthquake, our officers were there, working with the Fire Service, working with urban search and rescue, and working with the other emergency services. But what I also saw were people who really understood that they were making a difference not only for the people of that area, but for everybody in New Zealand. We saw our New Zealand police at their finest. We saw them making decisions that, in many cases, put their own lives at risk to be able to save others. I would like to thank them for that.

By the end of this year we will have 600 more front-line police on the beat than when National came into office. I can say that that is making a difference. When I said we were putting 300 extra police into Counties-Manukau, the Labour Party spokesman said it was an ill-conceived, un-thought-out plan, or words to that effect. What we have seen in Counties-Manukau, with the extra police and the different style of policing that is going on there, is crime dropping, which is something that nobody would ever have thought possible. Next week the crime statistics will be released, and I am very pleased to be able to say to the people of New Zealand and to this House that our police are doing everything they can to keep crime down. I am sure everyone will share the great amount of pride that I have in the work they are doing.

TischThe CHAIRPERSON (Lindsay Tisch) Link to this

Members, that is the sound of the new bell, just so you are aware of what it is.

Report noted.

Ministry of Education

HughesHon DARREN HUGHES (Labour) Link to this

Firstly, I congratulate the Minister who was previously in the chair, Judith Collins, on the invention of having the bell not work—presumably she could have talked for ever. That was a good trick, and I think everyone should at least try to do that.

In turning to the financial review of the Ministry of Education can I first of all, with your indulgence, Mr Chairperson, speak outside the period that is under review and thank the Ministry of Education for the work it has done in Canterbury in supporting the schools and early childhood services in that city to get to a state where many have been able to reopen in such a small amount of time. I think all members would like to thank the people in the ministry who have worked to support parents, teachers, and educators in that respect.

The period under review is the one where the Government’s flagship education policy was being developed. The 2009-10 financial year was when the national standards policy was being worked through by the Government as the answer to all the problems in primary education. It would be interesting to hear from the Minister an admission that in the end the national standards policy was never actually a policy; it was a slogan. As the work that has gone on in schools since the time of the work the ministry has done in trying to implement national standards has come to pass, it is absolutely clear that it was a slogan about something to say on the election campaign trail, rather than an actual educational policy that could be introduced. We see that through much of the research that has been done, which has come forward to show that the policy is not standing on the merits that members opposite campaigned on at the last general election.

There is no more clear sign of that than the fact that the person at the Ministry of Education who was charged with implementing the national standards policy has upped sticks and left the position. It is interesting that a policy that we were told was designed to assist parents, and was being demanded by parents has been rejected by a number of parents who serve on boards of trustees in New Zealand. There are 300 boards across the country, made up of parents, that are refusing to implement the national standards policy. That is a phenomenal number of boards, made up of parents of children and students in our country who do not believe that this is the right thing educationally for their school.

Tomorrow’s Schools was about ensuring that schools could fit the delivery of the curriculum in a way that best suited their community. The curriculum document that was developed under the previous Government, in a non-partisan fashion, has received widespread support across the education sector and from parents who see it as being an innovative and courageous curriculum, designed to bring out the best in all of our students. We should have trust in our parents and in our boards to choose a range of assessment tools that are available to them in order to report back against the curriculum. Instead, the national standards policy has been imposed on parents, boards, and schools in the country by the Government in a way that runs totally contrary to the way that the curriculum was developed as a way of unleashing potential in our schools.

We see it with the way that 500 boards of trustees chose not to lodge their charter with the Ministry of Education this year. These may seem like small things. In fact, Anne Tolley described it as a “petty protest”. But they show that committed parents who care about their children’s education enough to serve on boards of trustees are trying to express their frustration that these standards have been imposed on schools, untested, without research, and without the work done on such critical issues as moderation. The Minister, during the period of the financial review, was very gung-ho about this. She was convinced that she was right. She said that there would be no concessions, there would be no trials, and that the national standards would be enforced on all primary schools and intermediate schools in the country. That was during the period of the financial year.

This year John Key, the Prime Minister, said: “Oh well, there have been some major teething problems with the national standards and one of the reasons for that is that the first year was just a trial.” So that reinforces the point that under this Minister’s leadership of the sector, education has been allowed to fall into a mess because the right hand does not know what the left hand is doing. That is nowhere more obvious than in the implementation of national standards.

There is another issue I would like to raise, because I am sure we will hear about it from Government members, and it is that 20 percent of New Zealand children cannot read and write. Government members say all the time that 20 percent of our children cannot read and write at a level that will get them through life, and that is why national standards are in force. I would like Government members opposite who say that to let us know whether that is happening in their electorate. Members opposite always tell us how well schools are doing in their electorate, yet there is this mythical electorate around the country where 20 percent of children cannot read and write. I am sure if members go on school visits and they see children who cannot read and write, they would be very keen to draw that to the Committee’s attention, but I guarantee not one member opposite will give us the name of a school in their electorate where 20 percent of children cannot read and write. This is why we think the national standards policy is a mess. It detracts from the curriculum, which is an excellent document for transforming the lives of young people in our country.

PeacheyALLAN PEACHEY (National—Tāmaki) Link to this

I guess it would be gracious of me to begin my remarks by congratulating the young list member opposite on his appointment as the Opposition spokesperson on education. I think that was probably his first substantive address on education in this House since his appointment. Well, there is quite a bit of work to be done. But I can recommend a book or two to that member who previously spoke that he may well find instructive. In fact, there is one in particular he may like to take as his Bible.

HughesHon Darren Hughes Link to this

I’m one step ahead of the member.

PeacheyALLAN PEACHEY Link to this

Ha, ha! If I could be so bold, in speaking to this review, to say to the member who has just spoken that he has nothing to build on, that his party—the Labour Party—has not really brought any education policy to the table in the last 2 and a half years, and that, on reflection, I think that the best place to start would be to go back to 1999 and draw a parallel to where the economy was in that time. The Government that was elected in 1999, the Labour Government, had the very best of times. Never in the memory of most New Zealanders has there been the opportunity to grow and develop this country, and the same comment could be made and is being made now about the schooling system. When old dogs like myself get together and reminisce about our years of leading schools in the 1990s and that sort of thing, we talk about that time as having been a dream time to lead schools. Those were times when we were free of the controlling and the ordering and the bossiness that became a feature of the last Labour Government’s education policies.

It has to be said that schooling did not move forward in those 9 years. But at least there is a fresh face now. He was even at school, probably, during those dream years in the 1990s, if the truth is known. I urge that member to take a completely fresh approach, and, as I said, to read the right books.

There are a couple of specific things that I want to talk about, and one relates to special education. Special education stood still in a mire of ideology and argument, and ultimately a refusal to come to grips with some pretty hard questions during the first 8 years of this century. Now, at least, we are getting some movement as a result of this Government. I invite any of the members opposite to get up and say that they oppose the increase in Ongoing and Reviewable Resourcing Scheme funding for the highest-needs children in our schools. They should get up and say that they do not support that. Those members should not sit there and scream and shout across the floor; they should get on their feet and tell this House that they do not support the increase in Ongoing and Reviewable Resourcing Scheme funding for the least fortunate of our children. I suspect I will wait a long time.

I invite members opposite also to get up and say they do not support the actions of this Government in reinforcing and developing the role of special schools for our children. They should get up and say that the Labour Party does not support special schooling education. They should not shout across the floor at me; they should get up and say it so the people of New Zealand can hear them.

I would like also to make a brief comment about the relevance of early childhood education, because I suspect we will get a flurry about that in a moment. I invite the member who will deliver that little flurry—and it will be a little one—to explain to the people of Glen Innes in the Tāmaki electorate that I represent in this Parliament why the Labour Party does not want their children to have a fair crack at early childhood education funding.

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

In rising to speak to the report of the Education and Science Committee on the 2009-10 financial review of the Ministry of Education, I am faced with a not unusual predicament. That predicament is that my greatest concern—the issue of Māori disengagement and underachievement in education, which is arguably the most significant issue facing education—is barely mentioned in this financial review. I make it blatantly clear that the Māori Party is absolutely committed to enhancing Māori educational success. We want to see faster and more comprehensive improvement for Māori right across the sector.

There have been some key achievements in education that we must take the time to celebrate. These milestones include the following: an increase in the percentage of Māori children participating in early childhood education from 87.9 percent in 2006 to 89.4 percent in 2010, a 21 percent increase in Māori students gaining a National Certificate of Educational Achievement level 2 qualification, and a 5.5 percent increase in the retention rate at secondary school for Māori from 40.3 percent in 2008 to 45.8 percent in 2009. These are all significant advances, and I want to take the time to congratulate the Hon Dr Pita Sharples on his role as Associate Minister of Education, in his relentless drive to lift educational outcomes for Māori.

There are still some glaring omissions that I would have thought the financial review would bring up. The main areas of focus for the review were early childhood education, the new curricula, the national standards, and the review of special education. One would think from reading this review that there is only one language operating and only one curriculum in place. Well, it may be breaking news to some but there is another curriculum, Te Marautanga o Aotearoa—the Māori-medium curriculum. It is the partner document of The New Zealand Curriculum. It has been developed for Māori-medium setting levels 1 and 2, but all New Zealand schools can use this document. It is all a matter of the value we place upon ensuring excellence for Māori across all educational settings. It is not a translation of ; its development was based on Māori philosophies and principles.

In my second bout of breaking news for the day, there are also national standards in Māori. Ngā—

DavisKelvin Davis Link to this

Whanaketanga.

KateneRAHUI KATENE Link to this

I thank the member. Ngā Whanaketanga Rumaki Māori shows the ongoing progress of tamariki in years 1 to 8 in te reo matatini, which is literacy, and pāngarau, which is maths, within Māori language immersion education. Why is this so important? It comes down to the evidence that tells us that 40 percent of Māori school leavers from Māori-medium schools qualified for direct entry to university compared with 20 percent of Māori at English-medium schools. Let me repeat that: 40 percent of Māori school leavers from kura qualified for direct entry to university compared with 20 percent of Māori at other schools. That is a powerful statistic. If we want to do something about lifting Māori educational performance, then we should be looking at those results and learning from them. If one group has a proven success rate that is 20 percent higher than another group, would we not take up every opportunity to study the success of the first group and modify practice accordingly?

There is another point in the financial review that I will highlight. The Ministry of Education claims that barriers to accessing early childhood education vary considerably, and that fee increases are only really a barrier for solo parents or parents on benefits. The House will be aware, of course, that numerous studies have shown the huge importance of a child’s first 5 years. Surely we should be able to support solo parents or parents on benefits to support their children in their right to participate in early childhood education, rather than just accepting it as a barrier and leaving it at that.

Finally, I want to highlight that in the coming year the Government will be facing a task of appointing new chief executives across various departments, including the Ministry of Education. Our call to the Government would be that if we really want to achieve progress and improve educational outcomes for Māori, we must ensure that management at its highest level is culturally competent and committed to the immediate implementation of Ka Hikitia—Managing for Success, in order to plan and manage for Māori educational success. Thank you.

MoroneySUE MORONEY (Labour) Link to this

If one issue in the last financial year has personified this Government’s lack of a plan for the future, it has to be its funding cuts to early childhood education. I know that the National backbenchers have all been told that they must deny that there have been funding cuts to early childhood education, but I invite every National backbench and front-bench member to visit any one of their local kindergartens and find out from them why they have $50,000 less of Government funding this year than last year—or $20,000, or $60,000, or whatever it may be. I want those National members to look the people at those kindergartens in the eye and tell them that they are making it up.

QuinnPaul Quinn Link to this

Kōhanga reo—9,000.

MoroneySUE MORONEY Link to this

Paul Quinn should look them in the eye and tell them that they are making up their funding cuts. Every time I debate this issue with any National member, that member tells me that there are no funding cuts and they do not know what the kindergartens are talking about.

It is even worse than that. Not only are National members in denial about it but also the Prime Minister has demonstrated that he is completely out of touch on this issue—[Interruption]

TischThe CHAIRPERSON (Lindsay Tisch) Link to this

Continued barracking across the Chamber is not acceptable. I ask the member to tone it down. You have had a fair go. It is one all.

MoroneySUE MORONEY Link to this

As I was saying, the Prime Minister has absolutely demonstrated that he is so out of touch with ordinary New Zealanders on this issue. He does not understand the cost pressures on families. On more than one occasion he has said that he would be very surprised if fees increased for families. In fact, he said on national television that fees would not increase, but he is absolutely wrong.

Has he talked, for example, to Gemma Greig? She has said that she will pay an extra $60 per week for her two children—Kaydyn, who is aged 4, and Kelsy, who is aged 21 months—to continue to go to the Redwood Early Childhood Centre. Has he talked to people like Gemma Greig? Has he spoken to Debra Bullock, who reports that she has two preschoolers who attend Durie Hill’s Polson Park Kindergarten? Her fees are going up by $35 a week. That is an extra $35 that that family has to try to find from somewhere. Lisa Kingsford’s child Caitlin goes to Newlands Childcare right here in Wellington. It will cost her family an extra $25 a week just to stand still.

Under this Government those families are paying more but they are getting less. Many of these early childhood education centres have told Labour members, in a survey that we did, that they are taking a range of measures to deal with the savage funding cuts to early childhood education by this National Government. They are doing things that affect the quality of early childhood education. They are reducing the number of staff. In particular, they are reducing the number of qualified staff. They are reducing the children’s access to field trips and a whole range of things. They are also having to put up fees. Because of the short-sightedness of this Government, families are being left in the position of paying more and getting less. That is happening in many, many neighbourhoods and communities in New Zealand at the moment.

Has the Prime Minister spoken to Megan Ross, who is the manager of the Motu Weka Neighbourhood Early Learning Centre? She was reported as saying that that centre is putting its fees up by 50c per hour for every child. She said that for some families that will mean an additional $30 a week per child. I do not know whether the Prime Minister understands this, but many people do not have just one preschool child; sometimes they have two or three under-fives, because that is the stage of their lives they are at. They are at the stage where they have young children. A fee increase of $30 a week at the Motu Weka Neighbourhood Early Learning Centre will cost some families an extra $60.

Megan Ross goes on to say that that cost increase is very significant, with the price of petrol and food going up. We know that one of the main causes of the price of food going up was the GST increase by this Government. Megan Ross says that everywhere they turn they are getting hit with increases. That is what she said about the families who are using the Motu Weka Neighbourhood Early Learning Centre in Nelson. I think many families from throughout the country, in lots of different neighbourhoods and communities, will be able to relate to that statement. Under this Government, everywhere they turn they are being hit with increases.

ColemanHon Dr Jonathan Coleman Link to this

So what answers can you give them?

MoroneySUE MORONEY Link to this

The member wants to know what Labour would do. I thank him for asking that question. Labour has pledged to put back into early childhood education the funding that his Government has stripped out. We get it. On this side of the Chamber we get that early childhood education is one of the best investments we can make in this country’s future.

The member asks why that is. He does not seem to have read any of the research regarding this issue. All the research tells us that for every dollar spent in early childhood education, this country saves up to $17 in the future. That is a great return on investment. If we spend $1 on early childhood education we save up to $17 in the future. It is a perfect investment in the future. But it requires a Government that actually has a plan for the future, a Government that thinks further than the end of its own nose, and a Government that understands about investing in small children and what that means for the future. It requires a Government that understands that if we get it right in early childhood education then we do not have extra remedial costs in our education system, and we do not have to keep building the prisons that Judith Collins was so proud of before. We do not have to keep spending money in that area if we get it right in this area.

It is no mistake that in the Budget the Government announced last year it cut funding to early childhood education and it increased the money being spent on building prisons. New Zealanders will get used to that style of Budget if they want to keep this National Government in power, because that is exactly what the future will look like for this country if we have such a short-sighted Government.

National members claim that they had no choice. They say they had no choice but to cut the funding to early childhood education—that is, when they admit they have made cuts—because of the recession. Next they will start blaming the earthquake. We will wait for that one! It is utter rubbish that they had to cut funding because of the recession. We know that as the Government cut $400 million out of early childhood education it also gave $9 billion away in tax cuts to just the top 10 percent of income earners in New Zealand over that same period of time. Does that not expose the lack of truth in the statement—[Interruption]

TischThe CHAIRPERSON (Lindsay Tisch) Link to this

I say sorry to the member. Speaker’s ruling 43/1 states that members cannot use the phrase: “Tell the truth.” I do not know where it came from, but I am warning members not to use that phrase. It is unparliamentary and it leads to disorder. I do not know where it came from, but I did hear it.

MoroneySUE MORONEY Link to this

I am absolutely prepared to tell the truth because this is from the Budget documents. The Budget documents tell us that the Government cut $400 million worth of funding to early childhood education at the same time as it gave away $9.1 billion of taxpayer funding to the top 10 percent of income earners in tax cuts. That is where the money for early childhood education has gone.

Government members would have us believe that they have taken the money out of some centres and put it into creating participation in some other areas. Let us just explore that for a moment, because the numbers do not add up. Government backbenchers need to understand that they are being fed a line by their Minister. The Ministry of Education website will tell them that $400 million of funding has been cut out of early childhood education in the last financial year, and $93 million, as opposed to $400 million, is planned to be used to boost participation in early childhood education. There is a discrepancy: $400 million is being taken out and $93 million is being used to fund increasing participation.

Where has the rest of it gone? I can tell members that it has gone into helping to fund the $9.1 billion of tax cuts given away—frittered away—to the top 10 percent of wage earners in this country. Those tax cuts did nothing to stimulate economic growth. Government members said that they were giving that money to the wealthy because it would stimulate economic growth. We now know that that stimulation never happened. Before the Christchurch earthquake even happened the Government was already admitting that there had been no growth in the economy.

KingCOLIN KING (National—Kaikōura) Link to this

This Government has got it right in relation to education. When we look at the situation in early childhood education, we see that it is all about giving people the opportunity that early childhood education offers. We recognise that lifting achievements in education is very important, and that starts at the earliest of stages. Directing nearly $100 million towards increasing participation is about getting it right, and for those people who would normally have the door of opportunity to early childhood education closed on them, it is opening the door up and giving them that opportunity.

When we look at education, we see that it has been central to this Government’s plan for lifting economic potential in the long term, and we see that plan starting with early childhood education. It was quite interesting that I had a small number of staff from early childhood education centres come to me early on when the policy came out for capping teacher-led services at 80 percent. For a while, I was led to believe that the policy was a terrible thing. But then Louise Upston came down, the wonderful MP from Taupō, and we went around the rest of the early childhood education centres in Marlborough and we got a totally different story. We got a very positive story about how capping teacher-led services at 80 percent was wonderful, that education centres were able to bring in very capable, senior, mature people who could meet those needs, and that we could make the funding go so much further, so much more effectively.

I also want to concentrate on the transition from schooling to work. It is an area in which the last administration failed miserably. It threw heaps of money at it and achieved nothing. The National Government has implemented the Youth Guarantee programme. It is a fantastic policy. It has enabled children who have not really been able to find a schooling environment that meets their needs to be given a universal entitlement of free access to wānanga, polytechs, and suchlike, in courses such as automotive engineering, tourism, travel, business administration, carpentry, and suchlike. It is such a common-sense approach for ensuring that those children who have a hands-on learning style are hooked into education for as long as possible, because if you can see the relevance of what you are learning, you will be passionate about it.

TischThe CHAIRPERSON (Lindsay Tisch) Link to this

Order!

KingCOLIN KING Link to this

Sorry, Mr Chairperson. So one will see the wisdom of education, and be quite passionate about it. The 4,000 places that have been made available under the Youth Guarantee are a great step forward, and the policy is making sure those young ones—16 and 17 year olds—do not fall between the gaps.

Adding to that, this Government is working to create a number of trade academies. This, too, is a further enhancement for young people who will not necessarily go to university but who will be wonderful citizens of New Zealand, and who need the literacy and numeracy skills to be able to complete a trade. They, therefore, need to be tied into education for as long as possible, so that when they commence their trades, they will have the level of literacy, numeracy, and maths to be able to complete the distance-learning aspects of their trades. It is an area where we have been void in this country in relation to education for many, many years. Too much of our focus has been on a single academic pathway leading into university.

The biggest challenge this Government faces now—and we will address it—is how we can attract the right teachers to do the training. If we do not get the right teachers to inspire, build up, and create the passion we need in our students, then we will have failed them, which is a point that National is very conscious of. It is good to see now that the Government has allocated $36 million to support those children under national standards who are identified as being the below the Plunket line, if members want to describe it that way, so that we can lift them up with the skills we have.

Report noted.

Ministry of Culture and Heritage

FinlaysonHon CHRISTOPHER FINLAYSON (Minister for Arts, Culture and Heritage) Link to this

I must say I am a little surprised that Mrs Chadwick has not leapt to her feet, that the new star of the Labour Party, Jacinda Ardern, has not leapt to her feet, or that Grant Robertson is not in the Chamber to speak, because, believe it or not, Labour—

KingHon Annette King Link to this

I raise a point of order, Mr Chairperson.

TischThe CHAIRPERSON (Lindsay Tisch) Link to this

I know what the member is going to say.

KingHon Annette King Link to this

Perhaps the Minister might like to talk about his own portfolio, rather than denigrating other people.

TischThe CHAIRPERSON (Lindsay Tisch) Link to this

The member cannot refer to the absence of another member. I ask him to come back to what this debate is about.

FinlaysonHon CHRISTOPHER FINLAYSON Link to this

I apologise. I was just, in passing, saying how disappointing it was that Labour has three spokespeople for this very important area, but no one has taken a call. But I am very happy to take a call, because our record in the arts is very good indeed.

Indeed, 2 years after Helen Clark skipped off to the United Nations, I am still finding there are huge amounts of big policy work and big expenditure work that need to be undertaken in the arts. Although it is a relatively small portfolio, it is actually an important portfolio. When one looks, for example, at heritage issues in Canterbury, one can see how important they are, but that is more for this financial year, so I am not going to talk about it, at all.

ChadwickHon Steve Chadwick Link to this

I wonder when the Minister got to Christchurch to look at heritage—rather late!

FinlaysonHon CHRISTOPHER FINLAYSON Link to this

I beg the member’s pardon?

ChadwickHon Steve Chadwick Link to this

I wonder when the Minister got to see heritage in Christchurch.

FinlaysonHon CHRISTOPHER FINLAYSON Link to this

This member has been to Christchurch on a number of occasions, working very closely—

ChadwickHon Steve Chadwick Link to this

After questions in the House.

FinlaysonHon CHRISTOPHER FINLAYSON Link to this

No; before questions in the House. The member’s question was—as the member’s questions so often are—utterly irrelevant in the circumstances.

Let me say something about some of the work we have been doing in the Ministry of Culture and Heritage, because it is very important. The first is the Cultural Philanthropy Taskforce that was working right through last year, in the relevant period. That task force has been looking very closely at how one can increase the pūtea for the arts and for heritage. When one thinks about the sorts of big issues that there are in Canterbury, I say to Mrs Chadwick, it will be very important that we engage private donors and corporate donors without cutting the budget. Indeed, right throughout the last election campaign, that was the clarion call from the Labour Party. Labour Party members went around the place complaining that funding for the arts would be cut. Well, look at what happened. The arts sector is in a very rosy position in dealing with the problems it faces, because of the dedication of people like the Minister of Finance and the support of the National Government.

I want to say something about the Film Commission. I simply observe how nice it was to see Peter Jackson on the front page of the Dominion Post yesterday. David Court of Australia and Peter Jackson undertook a very important review of the Film Commission, and they reported about the middle of last year. Criticisms had been made of the commission’s historical performance, but the new chair and the new chief executive, both of whom are outstanding people, have been addressing those particular concerns. It was very timely that we looked at the governance of the Film Commission. It was set up in 1978 by Allan Highet, an excellent former National Minister for the Arts, and so much that has happened in the film industry can be traced back to the establishment of the Film Commission. The Film Commission has reported, and I am very pleased to see that it is working on a number of recommendations. Indeed, they had been working on those recommendations even prior to the report.

Associated with the Film Commission is of course the Film Archive. In last year’s Budget, after years of neglect by Labour, we injected some additional funds into the Film Archive so that it could go about its very important work of restoring New Zealand’s film heritage, and I am very proud of that intervention.

Perhaps the proudest intervention in the whole area of film over the last period has been the intervention by Mr Brownlee and the Prime Minister to save The Hobbit. It was their actions that saved from the haters and the wreckers in the unions. A very good job was done. When we look at the front page of yesterday’s and see that wonderful New Zealander Peter Jackson on the first day of filming of, we can be very, very proud indeed. I stand by what we did. It was necessary, and without it the films would have gone offshore. [] The self-proclaimed MP for Weta Workshop, the member for Rongotai, would not have been able to stand up in this House with any pride whatsoever.

A huge amount of work is being done on the Historic Places Trust. Again, it has a very old statute. It needs a total review and I am pleased to see reforms there. I am pleased to see reforms with the Arts Council. So much that is good is being done.

Report noted.

Ministry of Agriculture and Forestry

ArdernSHANE ARDERN (National—Taranaki - King Country) Link to this

It is a pleasure to rise and speak on the report of the Primary Production Committee on the financial review of the Ministry of Agriculture and Forestry. A number of things have happened in the agricultural sector over the last 2 years, but the establishment of the Primary Growth Partnership is probably right at the front of the list of important announcements and initiatives that have taken place under the very capable leadership of the Hon David Carter. The partnership involves an investment of $140 million a year, with industry-promoted innovation. It is wonderful to see, for the first time in many, many years, investment being put back into science, research, and development in the agricultural sector.

One of the things that Labour could never understand when it was in Government—and never does understand whenever it is in Government—was the fact that the economy of New Zealand is basically driven by primary production. I know that some members opposite hate that concept, some struggle with it, and some wish to change it, but after many, many years of their meddling, cutting, adjusting, criticising, and attacking they have failed to do so. In 2011 we are still in a situation where the low-hanging fruit, as far as growing the New Zealand economy is concerned, will come, and are coming, from our primary industries. Getting up and running an organisation with the horsepower of the Primary Growth Partnership and investing once again in technology, systems, environmental protections, and all of the things that will enhance our primary production sector as we go forward is a wonderful development and a wonderful initiative.

The establishment of the Global Research Alliance on Agricultural Greenhouse Gases, with an investment of $45 million, is the most significant single thing that has happened in terms of our looking at what we can do to minimise the agricultural footprint of New Zealand. One of the ironies, I guess, of the debate in that area, which is generally driven by our opponents on the other side, is the idea that we need to tax the primary sector.

New Zealand’s primary production system has one of the lowest carbon footprints of any production system in the world. That has been proven by research undertaken by both of our major agricultural research universities—Lincoln University and Massey University. The Opposition wants to tax that sector or reduce production, thereby increasing production in the systems elsewhere in the world that would have to produce that food, which in turn would lead only to higher carbon emissions. The alliance is a wonderful development, and it was led by this Government. We were one of the very first Governments to get in behind it. It is a great thing to see.

Improving water management is one of the key drivers that will lift our productive systems in the agriculture sector. It provides such a huge opportunity for us, particularly on the eastern belt of New Zealand. A lot of attention has been paid to Canterbury recently, for a range of reasons, but when we look right along the eastern belt of New Zealand, we see highly productive land that is suitable for a range of different production systems, and not only for development in the dairy industry, as a lot of people would say. When water was made available in Marlborough it was not dairy cows that went on to the land; it was grapes. I will not stand here and try to forecast what might happen if those opportunities were made available in other areas, but potentially there is an enormous opportunity there for us. Investment and leadership in that area are essential as we go forward, and it is happening under the National-led Government.

The animal welfare issue never goes away, and it is always a very sensitive and emotive topic. We have made a significant investment of $8.2 million in that area. We have provided more officers than in the whole 9 years of the previous Government.

CarterHon DAVID CARTER (Minister of Agriculture) Link to this

It is a pleasure to take a call in this debate, particularly in light of the very good report that was tabled by the Primary Production Committee, ably chaired, I might add, by my colleague Shane Ardern. I think it is a great pity that when we are talking about the most significant industry to the New Zealand economy, the Labour Opposition is not prepared to take a call. The thousands of listeners out there today need to note the interest shown by the Labour Opposition in the portfolio of agriculture and forestry. I guess it is not surprising; after all, when Labour was in Government it termed the industry a sunset industry.

There is so much this Government can be proud of in terms of what we have achieved within this portfolio, particularly when we review last year. My colleague Shane Ardern mentioned the Primary Growth Partnership. We now have the largest expenditure in primary sector innovation that New Zealand has ever seen. That programme was launched only 18 months ago. We now have $475 million worth of projects under way. That is a remarkable investment in 18 months. [Interruption] Annette King may criticise that, but no farmer in New Zealand, I assure her, would criticise this National Government’s expenditure in the primary production sector and in innovation.

There was a lot of talk about the emissions trading scheme last year, as we changed the scheme we had inherited from the Labour Government. We made it far more practical and far more affordable, and we faced with our farmers the issue about the introduction of agriculture in the scheme. We are reviewing that position at the moment, as we promised we would.

Let me make known the Labour Party’s position on the emissions trading scheme. We have heard the comments of Charles Chauvel, the previous Opposition spokesperson on climate change. He said that if the Labour Party is elected at the next election—not likely, I acknowledge—it will bring agriculture in immediately, and, rather than grandparenting any of the emissions to agriculture, it will land that immediately on the farmers of New Zealand. When farmers go to the polls I want them to realise that fact.

Animal welfare has been a big issue for a long period of time, and Mr Ardern is quite right in saying we have now allocated the largest increase in expenditure, at $8.2 million, that the sector has seen for years. We had a situation in Southland where the Ministry of Agriculture and Forestry and Federated Farmers had an issue with the conducting of a particular animal welfare inquiry. I am pleased to say that the report has now been accepted by both the ministry and Federated Farmers.

We want to move forward in a constructive manner with Federated Farmers, because we need their assistance, just as we need the assistance of organisations such as Beef and Lamb New Zealand Ltd and DairyNZ as we collectively make sure we help farmers who get into unfortunate animal welfare situations—but if it is a perpetual habit of any farmer, frankly I do not want that person in our industry.

There is mention of water in the financial review. Water is the greatest competitive advantage this country has, and collectively we have to find ways to better store and allocate that water. With the allocation of that water, farmers will then have to utilise it far more efficiently than they do at the moment. With water will come intensification, so, again, we need to be prepared to invest money in science to allow the agricultural scientists of this country to find mechanisms by which we can intensify and increase productivity and profitability on farms while mitigating the environmental impacts of such intensification.

The final issue I want to talk about is probably the biggest risk this sector faces, and that is the risk associated with biosecurity. Day by day 175,000 items come into New Zealand, and every one of those is potentially a danger. All of us in the sector have a duty and a responsibility—and this applies to members of Her Majesty’s Opposition—to do what we can to have the most efficient biosecurity system in the world. If we have a breach of our biosecurity borders—and we have had one in the last 12 months in the kiwifruit sector—we have to acknowledge that we have to move quickly to try to contain it and do what we can to mitigate the effect of any biosecurity incursion.

Report noted.

Ministry of Foreign Affairs and Trade

LockeKEITH LOCKE (Green) Link to this

The situation in the Middle East is now central to the considerations of the Foreign Affairs, Defence and Trade Committee, and was among the topics addressed in the financial review we are debating today. We have been inspired by the success of the Egyptian and Tunisian people in toppling their dictators, and we were hoping that the Libyan people would soon prevail over the Gaddafi regime. However, as we know, the regime has fought back and was making advances, prompting calls for an internationally imposed no-fly zone to neutralise Gaddafi’s air force, which was bombing rebel forces.

The proposal for a no-fly zone is only one element in the resolution recently passed by the UN Security Council. The motion had a very loose wording, allowing member states to “take all necessary measures … to protect civilians” in Libya. So far the coalition powers have bombed not only anti-aircraft batteries but also Gaddafi’s tanks, troops, and even his compound in Tripoli. The British Secretary of State for Defence, Liam Fox, has not ruled out Gaddafi himself being a target.

Five important Security Council members—Germany, Brazil, India, China, and Russia—did not support the UN resolution. They were reluctant to support military intervention in Libya, and the Greens share their concerns. Although we fully identify with the democratic forces in Libya and do not wish to see them crushed, we see a lot of problems with the military intervention as it is evolving right now. Many civilian casualties will result from the air attacks on Government facilities in the cities of Libya. That has been the case in all previous air assaults by Western powers in places such as Belgrade, Baghdad, and Kabul.

We are also looking at more than coalition air operations; it is a military intervention that could involve foreign forces on the ground, even though the UN resolution prohibits a “foreign occupation force” in Libya. We read in this morning’s New Zealand Herald that “Coalition commanders argue that a ground intervention is not the same as an occupation, and that this form of military action must remain a viable option” if Gaddafi stays in power. In other words, regime change is on the agenda, as it was in Iraq, a war that New Zealand stayed out of.

We know well the problem that evolved with the Iraqi regime change when it was controlled by foreign forces, as opposed to the more orderly transition that is currently taking place in Egypt, which is being driven by domestic forces—the people and institutions of Egypt. It is also possible that the attacks by foreign forces could strengthen the dictator Gaddafi’s base of support as he pushes the message to Libyans that the attacks are coming from Western powers, which have traditionally been seen as hostile to Arab causes in Palestine and elsewhere. In a related problem, it could be more difficult for the democratic forces to get ordinary Libyans involved in their struggle, particularly in the capital of Tripoli, if the regime can portray the democratic forces as agents of the foreign invaders.

The intervention also takes place against the background of hypocrisy from the Western powers involved. For the last few years those same countries have been good mates with the dictator Gaddafi, praising him and selling him the very weapons he is now using against his own people. The fact that Libya had oil was justification enough, they felt. They also said that he had a stable Government, and that was a plus for them, even though that stability was enforced by a complete clamp-down on anyone who dissented against Gaddafi.

Of course, the same countries that are involved in the air attacks at the moment backed a range of dictators across the Middle East, from Mubarak in Egypt to Ben Ali in Tunisia and the kingdoms in the Persian Gulf. Even today there is hypocrisy, with the same Governments that are taking action against Gaddafi’s forces not being particularly worried about the Saudi Arabian forces entering Bahrain to crush the democratic movement there, with many people being killed.

HayesJOHN HAYES (National—Wairarapa) Link to this

It is really interesting that people can find clouds even on a sunny day. I am interested in the comments made in the Chamber earlier this afternoon by Gareth Hughes, a Green member, and by Keith Locke, who has just resumed his seat. The issues in the Middle East are a water shortage, which goes right across North Africa and down through the Middle East, as well as poverty, decades of injustice, mass unemployment, and rapid population growth. Those things all put pressure on food prices, which underpin the instability in this part of the world. The Middle East is hyper-arid, the underground water resources are disappearing, the population will double to 600 million in the next 40 years, and climate change will result in increased temperatures, so we are dealing in that part of the world with political dynamite.

I say good on the Minister of Foreign Affairs for opening embassies in Kabul and Abu Dhabi, because he is in touch with reality. The issue is water. Abu Dhabi has been developing underground storage tanks to store 26 million cubic metres of desalinated water. That will represent a 90-day reserve. The UN estimates that in this country we could sustain a population of about 48 million, based on the amount of water that falls in this country. The Arab countries are as sensitive to water as Australia is to floods. This is the paradox: although the Arab countries depend on increasing oil prices, those increases in turn will cause increasing food prices.

Sitting suspended from 6 p.m. to 7.30 p.m.

HayesJOHN HAYES Link to this

Prior to the dinner break I was talking about the paradox that applies in the Middle East whereby the countries there want to increase the price they get for their oil, but as they do that they are pushing up the price of the food that they need to import.

We are here to address the financial review of the Ministry of Foreign Affairs and Trade. I pay a particular compliment to the Minister for focusing the ministry on backing John Key’s undertaking to lift our exports from 30 percent to 40 percent of GDP. We are doing that by consolidating trade agreements—for example, with China. In the financial year under review we secured a trade agreement with Hong Kong; initiated dialogue with the Trans-Pacific Partnership countries, with a view to establishing a trade agreement there; and entered into negotiations with India, Russia, and Korea, because those countries are our future.

The ministry has performed very well under the Minister’s leadership. For example, if we think about the ministry’s response to the tsunamis in Samoa and Tonga and, though not in the financial year under review, to recent events in Japan, we realise the ministry has performed exceedingly well. This work within the ministry is being done under the Minister’s leadership. He is looking at how to improve the efficiency of the department. The Minister has engaged with the private sector and taken advice from the export sector on how we can do more to support the activities of New Zealand businesses and exporters. At the same time, the ministry has brought together and reabsorbed the NZAID agency, which spends $500 million a year, back into the ministry, securing efficiency gains there in its administration.

The ministry has also performed very well in other areas of its work. It has preserved the International Whaling Commission and supported it as the sole agency representing the interests of whales and of people who support the longevity of whales on this planet. The ministry is also engaged in things like the agricultural research partnership, looking at how to engage other countries to address the issues of greenhouse gas emissions from our livestock in this country. Tim Groser has done a particularly fine job there in bringing a range of countries into a research partnership that involves not only New Zealand but also a lot of other countries and their money.

Report noted.

Ministry of Research, Science and Technology

HutchisonDr PAUL HUTCHISON (National—Hunua) Link to this

It is a great pleasure to speak on the 2009/10 financial review relating to science and innovation, because even this afternoon we had the Minister of Science and Innovation announcing that since 2008, under this excellent National Government, there has been an extra 13 percent increase in investment in science and innovation.

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