Tuesday, 14 June 2011
Volume 673
Sitting date: 14 June 2011
Tuesday, 14 June 2011
Tuesday, 14 June 2011
Mr Speaker took the Chair at 2 p.m.
Prayers.
Visitors
United States of America—American Council of Young Political Leaders
Mr SPEAKER: I have much pleasure in informing the House that a delegation from the American Council of Young Political Leaders is present in the gallery. I am sure members would wish that the delegation be welcomed.
Business of the House
Business of the House
Hon CHRISTOPHER FINLAYSON (Attorney-General) on behalf of the Acting Leader of the House: Prior to a discussion in the Business Committee, I seek leave for the members from the Canterbury region to be considered as attending to official business, and therefore regarded as being present in the parliamentary precincts for the purpose of the casting of party votes.
Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker. There might just be a vote while the Business Committee is on, and could the understanding be that the leave be for today until the Business Committee—I think the member said “prior to” the meeting of the Business Committee.
Mr SPEAKER: That makes sense. The Business Committee will be able to consider the matter later on this afternoon, but for today’s purposes I think the leave needs to be sought from the House. Is there any objection to that course of action being followed? There is no objection.
Questions for Oral Answer
Questions to Ministers
Prices—Effect on Families
1. Hon ANNETTE KING (Deputy Leader—Labour) to the Prime Minister: What recent reports has he received on the impact of rising prices on families in light of his statement that “no one is worse off”?
Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: I have seen reports showing that the true test for the cost of living is the rate at which wages, benefits, and superannuation are rising compared with prices. We do not know the situation of every New Zealander, because their circumstances will be different. However, it is a fact that main benefits have to increase each year by the same rate as prices. New Zealand superannuation has to increase each year by at least the same rate as prices, and often increases by more. The after-tax average wage has increased by 7.1 percent over the previous year, which is considerably more than the increase in prices over that time. In fact, real increases in wages over the last year have been 2.5 percent.
Hon Annette King: Has he seen the report in the Dominion Post yesterday quoting the principal of Porirua East School, who said that she had taught for 30 years in Porirua and the situation was “probably at the worst it’s been.”; if so, does he still stand by his statement that no one is worse off under a National Government?
Hon BILL ENGLISH: Yes, I did see those reports, and they concern me. We know that the parents of those children have received full compensation for inflation and GST, in their incomes.
Chris Tremain: By how much have after-tax wages grown since September 2008 and how does that compare historically?
Hon BILL ENGLISH: Since September 2008 the after-tax average wage, which is the measure used to set the rates of New Zealand superannuation, has increased by 10 percent in real, inflation-adjusted terms. That is very solid growth in historical terms; for example, over the entire 9-year period between September 1999 and September 2008 real growth in wages was only 4 percent. That was a 4 percent increase over 9 years, compared with a 10 percent increase over the last 2½ years.
Hon Annette King: Is he aware that half of the 200,000 children now living in poverty are from working families whose wages are so low they cannot adequately care for their kids, and why is increasing the minimum wage to $15 an hour not as important to him as tax cuts for those earning $192.55 an hour?
Hon BILL ENGLISH: I contest the member’s first statement, about children in poverty, because most of the measures I have seen show that by any measure of poverty most of the children affected by it are those whose parents used to be on benefits. As the member may be aware, the Government has increased the minimum wage each year. It has also implemented neutral tax cuts. We have reduced income taxes and increased GST, across the board.
Chris Tremain: How does the growth in real after-tax wages in New Zealand compare with Australia?
Hon BILL ENGLISH: As I said before, the real after-tax average wage, which is a calculation based on how this Parliament has set New Zealand superannuation rates for the last 20 years, has grown by 2.5 percent in the last year. In Australia the real after-tax average wage grew by 0.6 percent over the last year. From year to year those growth rates are likely to fluctuate but in the last year New Zealand’s has grown 2.5 percent and Australia’s by 0.6 percent.
Hon Annette King: Has he been told that thousands of children are now going hungry each day, and charitable organisations are struggling with the demand, with one organisation saying that poverty in New Zealand is a hidden shame; if so, why are people worse off, rather than better off, after 2½ years of a National Government?
Hon BILL ENGLISH: I will make two points. First of all, through the recession the Government has protected the most vulnerable. We have ensured that both the core benefit rates and the child payment rates have been increased for inflation and for GST. Secondly, that member had 9 years to deal with that issue. If, after the expenditure of many billions of dollars extra, the situation is worse, then she should look at whether the kinds of solutions she put forward actually worked.
Hon Annette King: What does he say to a constituent in the Te Tai Tokerau electorate who told Kelvin Davis that she had to sell raffle tickets to pay for her power bill and that she is worse off under a National Government—has she not got the message from the Government that she is supposed to be better off?
Hon BILL ENGLISH: I would be fascinated to hear what Kelvin Davis said to her. Did he apologise for the 9 years under Labour, when that person might have been promised a job that turned out to be unsustainable, or she thought the Labour Government was going to increase her benefit rate and it never did?
Te Ururoa Flavell: Kia ora tātou. What impact has there been for low-income families as a result of the emissions trading scheme negotiations with the Māori Party, which halved the price increase of petrol and power?
Hon BILL ENGLISH: Actually, it has been a very significant impact. As a result of those negotiations, the impact of the emissions trading scheme on households was halved. I understand that the Opposition intends to double it at the same time as it claims it wants to get the cost of living down. We also boosted the home insulation fund to insulate 8,000 homes of low-income New Zealanders to give them warmer houses and healthier lifestyles. Those were the results of the discussions between the Māori Party and the National Party.
Hon Annette King: What impact does he think the 7.1 percent increase year on year in food prices will have on struggling Kiwis?
Hon BILL ENGLISH: Many Kiwis, particularly those on lower incomes, struggle every week to pay their bills. The fact is that overall inflation—as the overall increase in prices according to the official measures, even including GST—is around 5 percent. As I have pointed out to the member, real after-tax wages have risen by more than inflation. That is a fact.
Hon John Boscawen: Supplementary question to the Minister of Finance—
Hon Trevor Mallard: I raise a point of order, Mr Speaker.
Mr SPEAKER: I can understand what it is. The member should address his supplementary question to the Prime Minister, not the Minister of Finance.
Hon John Boscawen: How much lower would the price of electricity and petrol have been if National had accepted the advice of the ACT Party and scrapped the emissions trading scheme totally, rather than doing a deal with the Māori Party in which the price rise in electricity was halved rather than being scrapped totally?
Hon BILL ENGLISH: I think it demonstrates just what a balanced and considered approach this Government takes. We did not take the advice of ACT to scrap the emissions trading scheme altogether; we did take some advice from the Māori Party that helped to reduce its cost. But the fact is that in countries like Australia, where they do not have an emissions trading scheme, power prices are going up much faster than in New Zealand, because they are trying to achieve climate change policy with a mixture of bureaucratic whim and excessive regulation, so their consumers are suffering from much higher increases in electricity prices.
Mr SPEAKER: I take it the Minister does not have the figures that were asked for. The Prime Minister was asked how much lower prices would have been.
Hon BILL ENGLISH: No, I do not know.
Mr SPEAKER: The Minister does not have those figures.
Hon Trevor Mallard: Does he understand that real average wages go up when high-income earners get massive tax cuts—$1,000 a week, in his case—and low-income workers lose their jobs?
Hon BILL ENGLISH: No, I do not understand that, because it is not true. But I am interested to know whether the Labour Party in Te Tai Tokerau is making promises to those voters that it knows it cannot pay for. My bet is that it certainly is. It will be promising to cut GST, promising to control power prices, and promising all sorts of stuff—
Mr SPEAKER: Order!
Earthquakes, Canterbury—Government Support for Recovery
2. AARON GILMORE (National) to the Minister of Finance: How is the Government supporting the earthquake recovery effort in Canterbury?
Hon BILL ENGLISH (Minister of Finance): The Government, as we set out in the Budget, has set up a Canterbury Earthquake Recovery Fund. That fund amounts to $5.5 billion, and it has been pre-funded. By that I mean that the Government already has the cash, which it has borrowed in order to fund the rebuild of Christchurch. We believe that the fund demonstrates the determination of all of New Zealand to rebuild that city and gives the people of Christchurch comfort, even after the earthquake yesterday, that New Zealanders are with them.
Aaron Gilmore: Will yesterday’s earthquakes delay the recovery effort?
Hon BILL ENGLISH: No. Although there may be some hold-ups in the next week or two as the damage is reassessed, the fact is that what is required to rebuild Christchurch has not changed—that is, the demolition and rebuilding of the central business district and significant decisions about land use in the suburbs, as well as the repairing of thousands of houses. Much of that effort, and the planning that goes with it, can continue regardless of the earthquake yesterday.
Aaron Gilmore: Will yesterday’s earthquakes increase the Government’s earthquake costs?
Hon BILL ENGLISH: That is not entirely clear yet. The picture seems to be that there has been more damage in the central business district, where extensive demolition was already occurring, and pretty severe liquefaction in the eastern suburbs, where there is already significant damage. As we speak, both the Canterbury Earthquake Recovery Authority and Ministers and the Prime Minister are surveying the damage, and pretty quickly we will have an assessment of whether there are significantly more costs.
Aaron Gilmore: How will the Earthquake Commission treat yesterday’s earthquakes?
Hon BILL ENGLISH: The Earthquake Commission has publicly stated that it will treat it as a new event, and we would expect there will be further claims on top of the, I think, already in excess of 400,000 claims since September last year. The Earthquake Commission had reinsurance put in place from 1 June, so this earthquake is covered by its reinsurance arrangements.
State-owned Assets, Sales—Shares
3. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Prime Minister: Does he stand by his statement that his plan to sell public assets would give “New Zealanders a fantastic opportunity to invest in this country’s future”?
Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes. The mixed-ownership model introduced by the previous Labour Government for Air New Zealand is one example of the opportunity many New Zealanders have taken. There are now many thousands of New Zealand investors who lost money in collapsed finance companies telling us they want better investment options.
Hon David Cunliffe: In that case, is he aware that his Budget supplement to the investment statement says that the Crown would forgo only $200 million in dividends per year by selling $6.8 billion worth of assets, which works out to a dividend return of 3 percent per year—less than people can get in the bank—or does he think that the real forgone dividends would be larger than those described in the Budget?
Hon BILL ENGLISH: Well, as we have discussed in this House, if we look at the dividend flow that came from the State-owned enterprises under the previous Government, and when we exclude the special dividends mostly paid by Meridian Energy, we see that those flows were less than $100 million per year for Mighty River Power, Solid Energy, and Genesis Energy. When we add Meridian’s special dividends, it puts the number up, on average, to about $300 million a year. So, as Treasury says in the Budget documents, the mixed-ownership model is likely to be about fiscally neutral for the Government.
Hon David Cunliffe: Does the Prime Minister realise that if we take him at his word, and impute dividend flows of only $100 million a year, then he is making the problem of the return to shareholders worse, and that the return would, in fact, be only about 1.5 percent; in that case, is he not relying on things like future electricity price increases to bring those assets up to something close to the $6.8 billion sale price he has forecast?
Hon BILL ENGLISH: No. This Government has been working hard to improve the governance and performance of the State-owned enterprises. Actually, the big question here is whether Labour will go into the election promising to buy them back—
Mr SPEAKER: No, what Labour might promise is not actually the responsibility of the Prime Minister.
Hon David Cunliffe: In light of that answer, has he read the Budget documents that state “there is little evidence to suggest that privatisation would significantly improve the financial performance of many of the SOE companies.”, and that “significant participation by foreign investors would be essential to achieve the Government’s overall objectives”; if he has read those, can he confirm what those objectives are, and why foreign ownership is essential to achieve them?
Hon BILL ENGLISH: I presume that the member is quoting from Treasury and in both cases we disagree with its views, which, I think, is a very healthy thing. The Government’s objectives are better performance for the companies, better investment opportunities for New Zealand, and reduction in our need to borrow billions of dollars in volatile overseas financial markets. We would rather pay dividends to New Zealanders than interest to foreign lenders. Clearly, that member would prefer to do the opposite.
Hon David Cunliffe: I seek leave to table the Minister’s executive summary where he signs off—
Mr SPEAKER: The member knows we do not seek leave to table Budget documents.
Hon John Boscawen: What is the point of the Government owning Landcorp as a public asset?
Hon BILL ENGLISH: It does not yield a strong flow of dividends—that is for sure. I think the return on assets for Landcorp is about 1 percent. But the Government’s continued ownership means it has a greater ability to deal with Treaty of Waitangi claims and various other complications around contested ownership of coastal land, reserve land, and potential Treaty settlement land.
Hon John Boscawen: Does he agree that New Zealanders would have an even more fantastic opportunity to invest in the country’s future if the Government simply sold State-owned enterprises outright; if not, why not?
Hon BILL ENGLISH: We think that, as one would expect from a considered and balanced Government, the mixed-ownership model represents a good balance between a better opportunity for New Zealanders to invest on the one hand—better than the $8.5 billion they lost in finance companies over the last 4 or 5 years—and a sense of security on the part of New Zealanders that the Government still has majority ownership on the other.
Criminal Justice System—Pilot Scheme for Court Audiovisual Links
4. KANWALJIT SINGH BAKSHI (National) to the Minister of Corrections: What progress has been made in using technology to improve public safety and reduce costs in the criminal justice system?
Hon JUDITH COLLINS (Minister of Corrections): I am very pleased to report that a 6-month pilot programme to test audiovisual links between Auckland District Court and Mt Eden Corrections Facility has been a resounding success. The audiovisual pilot was a joint project between the Ministry of Justice and the Department of Corrections, which followed the passing of the Courts (Remote Participation) Act by this Government. An audiovisual link means that prisoners do not have to leave prison to appear in court on administrative matters, such as suppression hearings and bail applications. It improves public safety and reduces cost to the taxpayer. This pilot resulted in 695 cases being heard by an audiovisual link, and a further 362 cases have subsequently been heard. It is another success for the department.
Kanwaljit Singh Bakshi: What are the next steps towards the wider implementation of audiovisual technology?
Hon JUDITH COLLINS: A review of the pilot programme found that it has improved safety for the public, judges, and court and corrections staff who may be at risk from violent prisoners. During the pilot, 24 percent of the audiovisual link appearances were for prisoners with escape alerts. The audiovisual link technology is now being expanded to include Waikeria Prison, with corresponding links to the Hamilton and Manukau district courts. It is estimated that by 2014 some of New Zealand’s biggest courts could each have up to 2,000 audiovisual link appearances by remand prisoners every year. This represents a big contribution to community safety and significant savings to the criminal justice sector.
KiwiRail—Railway Workshops
5. Hon DAVID PARKER (Labour) to the Prime Minister: Does he stand by his statement “each of us can do something that could save someone’s job, create a new job for another person or help someone else find a new job as soon as possible”?
Hon STEVEN JOYCE (Minister of Transport) on behalf of the Prime Minister: Yes.
Hon David Parker: Does the Prime Minister accept that his Minister of Transport, Minister Joyce, was plainly wrong in saying that blocking Hillside and Hutt railway workshops from even tendering for the manufacture of rolling stock and instead purchasing rolling stock from overseas would not put jobs at risk?
Hon STEVEN JOYCE: No. The Prime Minister has spoken with the Minister of Transport, and the Minister has informed him that KiwiRail has never been stopped from bidding for any of the projects that the member mentions.
Hon David Parker: Does the Prime Minister think that successful Asian, USA, and Australian economies are wrong to use Government procurement to achieve outcomes that support businesses in their countries; if not, why did his Government not do it in respect of rolling stock?
Hon STEVEN JOYCE: I point out that the member was part of a previous Government that also saw fit to have an international tender for rolling stock and under its watch the Korean trains were built in Korea. It is important, when New Zealand is a trading nation, that we trade with other countries and we allow them to bid for our projects in the same way that we have the opportunity to export to their countries.
Clare Curran: Is he aware of any analysis done by the Government of the lost income, GST, and extra cost of benefit caused by his Government’s decision to lay off New Zealand manufacturers of rolling stock in favour of jobs in other countries; if so, can he make that analysis available?
Hon STEVEN JOYCE: I reject the member’s assertion. It is for KiwiRail to determine the best mix of resources it needs to try to turn round its operations. It is an organisation of some 4,000 staff, it needs to be turned round successfully, and it is very challenging to do so. We need it to be able to make sensible business decisions, and we need to stop asking KiwiRail to do something that we would ask of no other New Zealand company.
Clare Curran: I raise a point of order, Mr Speaker. I asked whether he is aware of any analysis done by the Government.
Mr SPEAKER: I think the Minister’s answer indicated it was not the Government’s role to do that analysis, because it was not the Government making the decision. It was my understanding of the Minister’s answer that he was arguing that KiwiRail has to be left to make its own decisions. I cannot judge that answer, and I cannot insist on the Minister answering further, because it appears the Government was not involved.
Clare Curran: Why was no analysis done by the Government of the relative cost and benefits of supporting rail engineering jobs compared with the $35 million in subsidies in this year’s Budget for new irrigation schemes?
Hon STEVEN JOYCE: In answer to the first part of the question, again it is important to point out that KiwiRail is a company that has been charged with turning round its performance and actually performing well for all the 4,000-odd staff who work for that organisation. We do not expect any other company or organisation in the country to maintain the exact same workforce and the exact same roles for ever and a day. It would be great if we could do that, but we do not do that. They have to have the ability to adapt and make changes, and that is no different from any other organisation in this country.
Hon Trevor Mallard: Why is it appropriate to use regulatory methods to favour Telecom with regard to ultra-fast broadband and to favour Skycity with regard to tourism jobs but not to add up how much tax the Government is losing and the benefits it will be paying by giving Chinese workers Kiwi jobs?
Hon STEVEN JOYCE: I reject about four assertions in that member’s question.
Broadband, Ultra-fast—Benefits for Education
6. LOUISE UPSTON (National—Taupō) to the Minister for Communications and Information Technology: What benefits will ultra-fast broadband services bring to education in New Zealand?
Hon STEVEN JOYCE (Minister for Communications and Information Technology): Ultra-fast broadband to schools will transform the education system, making New Zealand school networks among the most wired in the world. It will enable schools to significantly enhance teaching practices, improve student engagement, and lift achievement. More than a third of all State and State-integrated schools will be fibre-ready by the end of this year, with all State and State-integrated schools given a broadband boost by 2016. This technology means that students anywhere in New Zealand can have instant access to the best teachers and online resources from anywhere in the world, and this Government is proud of its investment in this network for education.
Louise Upston: What services will schools receive under the Government’s broadband policies?
Hon STEVEN JOYCE: Ninety-seven percent of schools will receive ultra-fast fibre, enabling speeds of 100 or more megabits per second. The remaining 3 percent of schools, in the most remote locations, will receive a high-speed wireless or satellite connection. The Government is investing an additional $150 million to prepare the sector for the roll-out. This includes $28 million to pay for the drop costs to get fibre from the street into school buildings. The Ministry of Education School Network Upgrade Project is progressively upgrading the internal networks of State and State-integrated schools in readiness for fibre.
Clare Curran: What formal analysis has been carried out on the extra cost of delivering broadband under the separate procurement activity and remote schools rural initiative to the 361 schools not covered by his existing urban and rural broadband fibre schemes?
Hon STEVEN JOYCE: The rural broadband request for information looked at that issue and came up with the fact that around $15 million would adequately cover both of those parts. As I have said to the member previously, we are confident that the additional schools between the urban and zone 4 footprints, plus the remote schools, will be successfully linked using that extra $15 million.
Hon Trevor Mallard: Why is it proposed to charge those schools that receive the 100 megabit connections four times the amount of the other schools, when there is no extra cost to Telecom to turn the tap on full?
Hon STEVEN JOYCE: Again, I am sorry; I have no idea where the member is coming from. I can tell the member that neither does he. I think somebody handed him a question at the last minute.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. One issue was the nature of the answer. Secondly, you know, but I am not sure that that member does, that members cannot be required to ask questions on behalf of others in the way that was implied there.
Mr SPEAKER: Certainly, the last part of the member’s point of order had some merit to it; no member should imply that. But, obviously, when a member makes an assertion in a question in the way that the member did about costs, a Minister can dispute that. The Minister is entitled to do that, but perhaps should do it in a slightly less provocative way.
Hon STEVEN JOYCE: I can tell the member that the schools are getting a particularly good deal for broadband in schools. I will give him two examples. Firstly, the school upgrades—the School Network Upgrade Project upgrades—are being paid for in partnership with the Crown. The Crown is paying 80 percent of that cost. Also, the drop costs are being paid for centrally, as well. There will be some cost to schools for their regular, ongoing reception of data and for data going out, but it is very inexpensive compared with a commercial alternative.
Clare Curran: I seek leave to table a letter dated 27 May from the Hon Steven Joyce to InternetNZ, Federated Farmers, and the Telecommunications Users Association of New Zealand, explaining the procurement activity for 303 schools and for the 58 schools that will be part of the remote schools rural initiative.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.
Document, by leave, laid on the Table of the House.
Budget 2011—Vote Health Allocation
7. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Health: Is it correct that there is a $156 million gap between the amount the Ministry of Health has advised was necessary to meet population and demographic growth in Vote Health for 2011/12 and the amount of new spending allocated for Vote Health in the 2011 Budget?
Hon TONY RYALL (Minister of Health): It is correct, as the Ministry of Health advised, that to meet costs and demographic pressure the Health vote would need $576 million to be available. As my Budget press statement of 19 May said—and I have made it clear at every opportunity—funding of $585 million was made available, which was made up of $420 million of new money and $165 million of reprioritised, unallocated, and unspent money.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. We have taken your advice very carefully about the framing of questions that are straightforward and that ask for a specific answer. We know that normally you do not insist on a yes or no answer. In this particular case, I cannot tell from the answer the Minister gave whether he was affirming what was said in the question or denying it. I am not sure what we can do.
Mr SPEAKER: The member is better than that. The Minister must correct me if I am wrong here, but I heard the Minister say that the answer was essentially yes. If I am wrong on that, then the Minister had better correct it.
Grant Robertson: In light of that answer, why did he state in his media release dated 19 May that an additional $585 million had been allocated for Vote Health when in fact $165 million of that was not additional funding but recycled money from the rest of the health budget?
Hon TONY RYALL: Because that money is available for new initiatives. I cannot understand the issue. It is quite clearly set out in the press statement of 19 May.
Dr Paul Hutchison: What is the total amount of new resource that has been invested in Vote Health over the last 3 years?
Hon TONY RYALL: Despite the world’s worst economic recession in 70 years and the enormous effects of the Christchurch earthquakes, this Government has invested over $1.5 billion of new money into health. This has been part of the reason why the Government has been able to lift elective surgery to record levels, speed up access to cancer treatment, reduce waiting times at emergency departments, and lift immunisation rates for 2-year-olds to record levels.
Grant Robertson: What reasons does he have to disagree with the Whanganui District Health Board chair, Kate Joblin, when she told the Wanganui Chronicle after the Budget that “We will receive a small increase of funding over the previous year, but this is unlikely to keep pace with [inflation].”?
Hon TONY RYALL: I have not seen that quote, but I know that in the last three Budgets the Whanganui District Health Board has increased its funding by $20 million. The board is providing more elective surgery, better treatment for its patients, better immunisation, and is delivering results for the people of Whanganui.
Grant Robertson: What specific programmes will be discontinued as a result of the reduction in funding of $38.1 million for public health purchasing that was announced in the Budget?
Hon TONY RYALL: In respect of the public health’s $38 million, more than half of those savings come from water subsidy decisions announced earlier this year, but there have been savings. There have been savings in advertising from the merger of the Auckland city councils, from shifting vaccine procurement to Pharmac, and from the low uptake of some vaccines. We are on track to spending $449 million on public health this year, and we are budgeting to spend $453 million on public health next year.
Skycity—Licence Criteria
8. KEVIN HAGUE (Green) to the Prime Minister: Does he stand by his statement on Breakfast yesterday that “we’re constantly changing aquaculture laws, or fishing laws, or whatever it might be. I mean in the case of Sky City, that particular licence is site specific”?
Hon STEVEN JOYCE (Minister of Transport) on behalf of the Prime Minister: Yes, Parliament regularly changes legislation, and, yes, the particular licence is site specific.
Kevin Hague: Where does the Prime Minister draw the line on altering legislation to suit business interests at the expense of wider society?
Hon STEVEN JOYCE: I think the Prime Minister would reject the second part of that question completely. This is a very big opportunity for New Zealand. The New Zealand International Convention Centre will be a major boost to the New Zealand economy, attracting 33,000 convention delegates and pumping an additional $90 million of international visitor spending into the economy each year. Once completed, it will employ around 800 people, and it will employ around a thousand people during construction. Those are very good things for New Zealand.
Kevin Hague: Given that it appears there is no line—
Mr SPEAKER: The member should not make that sort of statement.
Kevin Hague: That did appear to be the answer.
Mr SPEAKER: The member should just ask the question.
Kevin Hague: Have the Prime Minister, his Ministers, or their advisers discussed changes to the regulatory framework for gambling with any other gambling providers?
Hon STEVEN JOYCE: I am not aware of any discussions. What I can say in relation to this matter is that negotiations are ongoing, and the Government has ruled some things out. It has ruled out providing additional casino licences to Skycity, allowing Skycity to have an internet gambling licence, reducing the age of entry to casinos, or allowing gambling in the new convention centre. All those things have been ruled out. The Government is considering allowing Skycity to increase the number of gaming tables and machines at its Auckland casino.
Kevin Hague: Has the Government not effectively agreed to all Skycity’s demands by accepting its tender for the convention centre, which the company has made very clear is contingent on all of its demands being met?
Hon STEVEN JOYCE: No. The negotiations continue, and I draw the member’s attention to two press releases released in the weekend. One is from the Prime Minister, headed “Convention centre development moves ahead”, and the other is from the Hon David Carter, entitled “Discussions underway on International Convention Centre”.
Kevin Hague: What will the Gambling Commission’s role be in governance negotiations with Skycity over its demands for changes to the regulatory framework for gambling?
Hon STEVEN JOYCE: Discussions in relation to the convention centre are continuing. If there were to be any changes in regard to legislation—for example, in relation to the commission the member mentioned—they would be brought before Parliament for Parliament to decide on.
Kevin Hague: What economic study has there been or will there be into the downstream negative effects on society of the increase in the opportunity to gamble that Skycity is demanding?
Hon STEVEN JOYCE: There are a number of studies on gambling harm. Of course, the Government is very concerned to ensure that gambling harm is minimised. We have a problem gambling levy in place that raises around $20 million a year to fund services such as front-line counselling, including dedicated services for particular communities, including the Asian community and Māori and Pasifika. The Government will keep a careful eye on Skycity, as it always does, to ensure Skycity upholds its part of any bargain in terms of continuing harm minimisation work. But the Government is certainly keener on controlled, regulated gambling rather than gambling occurring all over our communities.
Sue Kedgley: How many meetings has the Prime Minister or his Ministers, such as Minister Joyce, had with Skycity representatives or their lobbyist Mark Unsworth to discuss the proposed law changes to the Gambling Act?
Hon STEVEN JOYCE: I cannot answer that question, except with regard to the Minister of Transport. I can confirm he has had no meetings with Skycity.
Sue Kedgley: I seek leave to table my Lobbying Disclosure Bill, which would require lobbyists to disclose how many meetings they have with Ministers or MPs to discuss changes they are seeking to legislation.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.
Chris Hipkins: How can his Government justify changing tax, labour, and gambling laws to benefit the film and gambling industries, when it will not lift a finger to save jobs at a railway workshop, it will not lift a finger to save TVNZ jobs at Avalon, and it will not lift a finger to save jobs at Industrial Research Ltd in Lower Hutt, or is it only the large corporates, whose profits largely go offshore, that this Government is interested in helping?
Hon STEVEN JOYCE: No, that is not the case. The Government is involved in encouraging all sorts of new economic development, and that is what it is seeking to do. But, as the Prime Minister said in answer to a previous question, it is not the role of the Government to fix the workforces of companies around the country. It is the job of companies to determine the appropriate mix of their workforces at the time. I point out to the member that a previous Government was involved in making law changes to create one of New Zealand’s biggest corporates, a company called Fonterra, so there are definitely some precedents to this case.
Job Creation—Prime Minister’s Statements
9. JACINDA ARDERN (Labour) to the Prime Minister: Does he stand by his statement that “it is New Zealanders … that create new jobs and opportunities - not the Government”?
Hon TONY RYALL (Minister of Health) on behalf of the Prime Minister: Yes, the Prime Minister stands by the full statement, which states: “ultimately it is New Zealanders, through their own entrepreneurial efforts and business decisions, that create new jobs and opportunities—not the Government.”
Jacinda Ardern: If the Government is not responsible for creating jobs, why did it hold the Job Summit in 2009 and establish “a rolling maul” of initiatives like Job Ops, Community Max, and the cycleway?
Hon TONY RYALL: Because this Government is focused on improvements within the economy in order to create the platform on which business and New Zealanders can invest and grow jobs.
Jacinda Ardern: When will one of the three improvements to the economy he named on 7 June, including national standards, early childhood education, and interest rates, help people looking for work in Northland, where unemployment is almost 10 percent?
Hon TONY RYALL: One of the key incentives for New Zealanders to invest is low interest rates, which, together with low taxes, leave money in the pockets of the people for whom we are looking to create jobs into the future.
Jacinda Ardern: How will his welfare reforms help young job seekers like Daniel Alker and Tāwhai Tāpene to find work, as he implied on The Nation last week?
Hon TONY RYALL: Because incentives matter, and we want to make sure there are incentives for New Zealand businesses to invest in growing and creating jobs. That means low interest rates, low taxes, low bureaucracy, and a Government committed to that sort of future.
Jacinda Ardern: I raise a point of order, Mr Speaker. My question was quite a specific reference to how welfare reform would help job seekers. The Minister spoke primarily about incentives. That was not my question at all. My question asked how welfare reform would help those already seeking work.
Mr SPEAKER: The member’s question was not exactly that, at all. The member went on to name some people on a television show, which inevitably left more licence for a Minister in answering the question. The Minister’s answer could apply equally to welfare reforms. Incentives in welfare, I imagine, are perfectly legitimate ways of changing behaviour.
Housing Shareholders’ Advisory Group Report—Government Response
10. KATRINA SHANKS (National) to the Minister of Housing: What recent announcement has he made about the Government’s response to the Housing Shareholders’ Advisory Group report?
Hon PHIL HEATLEY (Minister of Housing): Today I announced $40 million for the next financial year to grow the volume of social housing provided by the community sector. One of the main things the sector has told us is that the current funding framework is too prescriptive, inflexible, and uncertain. This funding consolidates all the previous social housing funds, plus additional money, to create one new flexible fund. It will help both smaller niche providers with specialised services, and urban and rural iwi and other providers wanting to substantially grow their housing portfolios.
Katrina Shanks: How will this funding be administered?
Hon PHIL HEATLEY: The advisory group also recommended that funding of third-sector social housing providers be independent of Housing New Zealand, and that a new organisation be created to develop the social housing sector. Today I also announced the establishment from July of the social housing unit, which is a semi-autonomous body within the Department of Building and Housing. This unit will be responsible for engaging with the sector, and entering into contracts with the Crown’s contribution of land, surplus State houses, or cash to grow the quantum of social housing in New Zealand. It will also monitor those providers. We know that the community housing sector is ready, willing, and able to provide more social housing, along with the Government, and we want to work with it.
Employment Legislation, Changes—Prime Minister’s Statements
11. DARIEN FENTON (Labour) to the Prime Minister: Does he stand by his statement on proposed labour law changes “we are not talking dramatic changes”?
Hon STEVEN JOYCE (Minister of Transport) on behalf of the Prime Minister: Yes.
Darien Fenton: Will he rule out reintroducing a youth minimum wage; if not, why does he think a wage cut would not be a dramatic change for hard-working young people?
Hon STEVEN JOYCE: No decisions have been made as to what the package will be at this point, and there have been no announcements, so the member will just have to wait and see.
Darien Fenton: Will he rule out making changes to collective bargaining that would allow bargaining agents, such as a human relations manager or even someone from Black Power, to charge workers for negotiating non-union agreements, or does he think that would not be a dramatic change?
Hon STEVEN JOYCE: The Prime Minister would stress that the Government is looking at practical, incremental changes. No decisions have been made and there have been no announcements, so the member will just have to wait and see.
Darien Fenton: Does he agree with his Minister of Finance that having a 30 percent wage differential with Australia is a competitive advantage; if so, is it his intention to return to past failed National Party policies that drove down wages and productivity in New Zealand?
Hon STEVEN JOYCE: The response has to be that the past failed policies the member refers to could be only in relation to the previous Labour Government, which put the tradable sector of the New Zealand economy into recession for 4 years before the global financial crisis. This Government is putting in place the policy objectives to achieve faster economic growth, and we are doing so successfully. Members opposite will see that and they will just have to sit and watch.
Power Prices—What’s My Number Campaign
12. JONATHAN YOUNG (National—New Plymouth) to the Acting Minister of Energy and Resources: What recent initiatives has the Government undertaken to help New Zealanders control the cost of their power bills?
Hon HEKIA PARATA (Acting Minister of Energy and Resources): There are a number of initiatives led by this Government to increase competition and drive down costs to New Zealand householders. The What’s My Number campaign, which was launched a fortnight ago by the Electricity Authority, has had an enthusiastic response, with over 146,000 visits to its website. In a few quick minutes the website tells consumers the estimated potential savings available to them by switching electricity retailers, and users can then link to Consumer New Zealand’s Consumer Powerswitch website to organise a switch.
Jonathan Young: What reports has the Minister received on the savings that consumers can make by switching?
Hon HEKIA PARATA: The average saving per customer, as a result of switching, is estimated to be $150 per year. In some instances, the savings by switching can be as much as $600. The average number of switches per month now sits at around 30,000. Under this Government the time it takes to implement a switch has reduced from 8 days in 2008 to just under 4 days currently. I am delighted to see that so many New Zealanders are using this tool to actively manage their household costs, and to encourage electricity retailers to offer better deals.
Hon David Parker: Is the Minister aware that average electricity prices have continued to increase, rather than decrease, following the Commerce Commission’s investigation report released on 21 May 2009, which found evidence of substantial overcharging and uncompetitive prices?
Hon HEKIA PARATA: In the just over 2 years since National came to office, prices have risen by less than 14 percent, and that includes the effect of the emissions trading scheme. During the 9 interminable years under the previous Labour Government, average residential electricity prices went up by a massive 72 percent.
Bills
Appropriation (2010/11 Supplementary Estimates) Bill
First Reading
Hon BILL ENGLISH (Minister of Finance): I move, That the Appropriation (2010/11 Supplementary Estimates) Bill be now read a first time.
A party vote was called for on the question, That the Appropriation (2010/11 Supplementary Estimates) Bill be now read a first time.
Ayes 67
New Zealand National 58; ACT New Zealand 5; Māori Party 3; United Future 1.
Noes 53
New Zealand Labour 42; Green Party 9; Progressive 1; Independent: Carter C.
Bill read a first time.
Bills
Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill
Second Reading
Hon STEVEN JOYCE (Minister for Communications and Information Technology): I move, That the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill be now read a second time. I begin by thanking the Finance and Expenditure Committee for its consideration of this bill. I acknowledge the submissions that have resulted in changes to the bill, and also the Māori Party for its work to ensure that Māori maximise the opportunities provided by the Government’s broadband plans.
During its consideration the committee considered a large and complex Supplementary Order Paper that allows for a structurally separated Telecom. By including Supplementary Order Paper 204, the committee recognised that structural separation will resolve many of the issues that have arisen in the past from a vertically integrated monopoly. The bill contains the regulatory framework for the Ultra-fast Broadband Initiative and the Rural Broadband Initiative, and it enables the funding of the Rural Broadband Initiative.
The key issue raised by the committee and by submitters in relation to the bill was regulatory forbearance, as the bill prevents the Commerce Commission from regulating wholesale prices. Although I consider that the concerns raised were mostly theoretical, officials and I have listened to the committee and have found an alternative solution that will give infrastructure builders confidence to stay committed to their low capped prices, and that will give customers confidence that they will continue to get the best prices over the 8½-year build period. This alternative option relies on a key change made to the bill by the committee, which was to bring forward the general review of the telecommunications regime to 2016. The committee made changes to improve the content, transparency, consultation, and decision-making processes around the development of copper and fibre open-access undertakings. Penalties have also been increased from $300,000 to $10 million for breaches of the fibre undertakings consistent with copper. These amendments give additional comfort to the sector about the robustness of the undertakings and the monitoring and enforcement of them.
The committee has also required that the Chorus copper undertakings must specify reasonable time frames for the transition away from sharing of systems and services between Chorus and Telecom. This amendment is a pragmatic solution that encourages a move away from those sharing arrangements, but that recognises that imposing arbitrary fixed deadlines may have resulted in forced migration from systems or services at the expense of service quality standards for access seekers and consumers, or in complex and costly variations of processes.
I also support the committee’s amendment to the definition of “equivalence” to make it clear that the Government’s intention is to apply the equivalence of inputs standard that applied under the Telecom operational separation regime. This will remove concerns that the previous definition watered down the important equivalence test. Further, making it mandatory in the deed that all local fibre companies build their network equivalence of inputs ready for unbundling at layer 1 in 2020 will ensure that the new fibre network is being built for full open access and competition after the initial build stage.
The committee’s amendments to the Commerce Act authorisations tighten the authorisations so that they cannot be used for arrangements outside those between the Government and Ultra-fast Broadband Initiative and Rural Broadband Initiative providers, and make it clear that they are time-bound. I will be tabling a Supplementary Order Paper at the Committee of the whole House stage that will make the amendments to remove forbearance, and other technical amendments to the bill that have arisen since the report back.
This bill provides the regulatory framework for improvements in broadband that will be truly transformative to this country. The Ultra-fast Broadband Initiative will see New Zealand leapfrog its competitors and become one of the most connected countries in the world. Its broadband speeds will revolutionise the way Kiwi firms do business, the way our kids learn, and the way our health services deliver to us as patients. The Rural Broadband Initiative will deliver on the Government’s plan for vastly improved and affordable broadband services for rural New Zealand. Finally, the bill also facilitates a dramatic improvement in the way New Zealand’s telecommunications industry is organised. I commend this bill to the House.
CLARE CURRAN (Labour—Dunedin South): Let me say from the outset that Labour opposes the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, and we will vote against it. Labour is committed to faster broadband. We are committed to delivering a digital transformation for this country. We are not committed to supporting a charade and the formation of a new fibre monopoly that encourages anti-competitive, price-gouging behaviours and that will not be good for consumers.
This bill takes us backwards and creates a new monopoly for broadband that is free of proper regulatory control and will increase the cost of broadband for New Zealanders. The bill that came out of the Finance and Expenditure Committee was an extraordinary thing to behold. It included as its centrepiece a 10-year regulatory holiday for the winning bidder, which we all knew would be Telecom. This is Steven Joyce’s baby. It was the price he was prepared to let the country pay for the new fibre network by handing the price-setting powers to a secret contractual arrangement between Crown Fibre Holdings and the contractor, with no ability for the regulator to intervene. Thankfully, he has ditched it, but he did so at the last minute after his bill came back to the House, and it was done under force. Consequently, the compromise position allows the Commerce Commission to regulate pricing on fibre, but if the commission believes that prices should go lower at some point, Steven Joyce says the Government should wear that risk, not the consumer, and he gets to make the decision on whether to regulate. Why would the Minister ever agree to regulate if it will cost the Crown? What is the nature of the compensation being promised to the contractor rolling out broadband? It effectively insulates the contractor from any risk. Steven Joyce has confirmed that no analysis has been done of the risk to the Crown.
Labour has indicated publicly—and I repeat it—that it may repeal other sections of this legislation that it believes will have an anti-competitive effect on the telecommunications industry to the detriment of consumers. John Key’s personal guarantee was to deliver ultra-fast broadband fibre to 75 percent of New Zealand homes by the end of this decade for $1.5 billion. People thought that sounded good. It was No. 2 in John Key’s top 10 pledges before the 2008 election. Instead they will get Telecom taking its time to deliver the vast bulk of the Ultra-fast Broadband Initiative to New Zealanders. Telecom has a long and infamous track record of price-gouging and monopolistic behaviour. It is not even committed to New Zealand’s need for a fibre scheme. It is committed to its existing copper asset and believes that New Zealanders can receive adequate broadband services over it for at least the next decade and possibly longer. It has a string of court convictions for ripping off the public, for charging too much, and for not providing accurate information on the services it is offering. This Government swore it was not in collusion with Telecom, but took us all through an elaborate charade to get to the point where it awarded Telecom the bulk of the contract.
Labour believes that this bill is deeply flawed and allows anti-competitive behaviour. Even though the last-minute amendment allows some influence by the independent regulator, this legislation will disadvantage New Zealand consumers. From the start this bill has been severely hampered by the rushed and secretive drafting process and a complete disregard for potential compromises. The Government used the commercial tendering process as an excuse to avoid proper consultation.
The bill does a number of things. The most significant thing it does is set out a process for Telecom to separate into two companies so it can qualify for the majority taxpayer-funded stake in rolling out ultra-fast broadband. That contract, as we know, is now being let to Telecom, which we all knew it would be. Many submitters expressed concern about the bill’s potential to entrench anti-competitive behaviour by blocking the influence of the independent regulator. Concerns were expressed that it would result in the price of broadband fibre to New Zealanders rising rather than falling, and Labour shares those concerns.
It is important to put on the record that much of our opposition to this bill lies in the way it came before the House and before the select committee, the secrecy and lack of transparency surrounding that tender process for ultra-fast broadband, the method in which the Supplementary Order Paper to this bill was put before the select committee, and the speed with which it was rushed through—as well as the substance.
In addition to this, I will talk about the perceived conflicts of interest on two fronts within the tender process. The first relates to revelations that Murray Milner, who is a director of Crown Fibre Holdings, acted as a consultant for Chinese telecommunications firm Huawei while simultaneously serving as a director for Crown Fibre Holdings. That represents a potential conflict of interest in that Crown Fibre Holdings is managing the tendering process to provide coordination, assistance, and commercial technical advice to the ultra-fast broadband selected partners in electing the equipment suppliers for passive infrastructure and layer 2 equipment for the Ultra-fast Broadband Initiative. That is the same contract that Huawei is vying for to provide equipment for the roll-out of ultra-fast broadband.
The second conflict of interest relates to Bruce Parkes, who is currently the deputy secretary at the Ministry of Economic Development for the energy and communications branch. He was a senior Telecom executive who was involved in what was later found to be anti-competitive practice by a High Court judge, Rodney Hansen, in his judgment that penalised Telecom for historical breaches to the Commerce Act. Bruce Parkes’ responsibilities as a deputy secretary are for the information and communications technology policy and the ultra-fast broadband plan, which means that he is heavily involved in the development of, and advice on, the broadband policy.
This comes down to the fact that before the election this Government made a promise to the New Zealand public that it could not keep. It promised that 75 percent of homes, businesses, schools, and hospitals would be connected by fibre within 10 years for $1.5 billion. But the promise was too big, and the Government could not deliver. Steven Joyce has spent the last 2½ years working out how to come up with an elaborate way of appearing to deliver a service that many New Zealanders will just not get—certainly not within 10 years, and not at the speeds being promised.
In September 2009 the Government released its final proposal for the Ultra-fast Broadband Initiative. At that stage the Government investment would have been directed to an open-access, wholesale only, passive fibre network infrastructure, and let us remember why the Government wanted it. The Government was looking for a step change in broadband services to deliver economic benefits to New Zealand. However, in July 2010 the policy was changed; no longer was the focus on providing passive infrastructure that anyone could use. Instead, the local fibre companies—the LFCs, as they are called—would not have to share that passive infrastructure, and they would be protected from the regulator until 2020. This meant they would have the power through to 2020 to restrict access to the network and impose value pricing, so that consumers would get only what they were willing to pay for. This would result in much of their fibre capacity not being used, even though the cost of letting consumers have that capacity would have been close to zero. It would allow the local fibre companies to make more money, potentially reducing the capital cost to the Government of the roll-out. But the price being paid instead is that this country will miss out on the full potential of that step change, which is at odds with the rationale for the intervention in the first place.
Telecom seems to have won the majority of the contracts because of a perception that selecting the lines companies would not guarantee fibre coverage or uptake due to competition from Telecom, even though that competition would arguably produce better results for consumers, including better speeds across the board. So we have ended up with legislation before this House that will allow, and even promote, anti-competitive behaviour, which will promote monopolistic behaviour that will likely result in higher costs to consumers for the new broadband network. What this is all about is a good deal for New Zealanders and a step change for the economy. We will get neither through this legislation.
AMY ADAMS (National—Selwyn): It is a great pleasure to rise in the second reading debate and speak in favour of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, which, as others have said, has spent some time before the Finance and Expenditure Committee, of which I am a part.
I will start my contribution by taking a moment to say broadband is very much infrastructure. You know, it did not use to be as little as 5 or 10 years back, but now I think it is quite safe to say broadband is as important an item of infrastructure as power, phones, or roading. I have been amazed, as I am sure many members of the House have, at how quickly New Zealand has adopted broadband access and taken it to be an absolutely fundamental part of existence. I say that particularly in my capacity as an electorate MP for a largely rural electorate. When people are not in the major cities, they increasingly rely on access to the world through broadband. Having broadband in our houses lets us connect with our suppliers, customers, and advisers—our lawyers, accountants, and bankers—as if we were there. The productivity gains we have made from access to broadband, particularly in rural and more remote communities, are significant.
New Zealand is a remote country, yet through access to good, high-quality broadband we can do business throughout the world in an almost seamless way. It is a way of New Zealand negating the geographical disadvantage that we have. But we were seeing that fibre was not being rolled out beyond very limited central business district areas, and that was tremendously disadvantageous to rural and remote communities. In order for that roll-out to happen, it was going to take the Government to be prepared to put up some money, to incentivise business to get on board. That is what we promised in 2008 to the people of New Zealand; that is what New Zealand elected this National-led Government to deliver. This bill is a large part of delivering that roll-out, which will see 75 percent of New Zealanders have access to high-speed, ultra-fast broadband, and the vast bulk of the rest of New Zealand be connected through our Rural Broadband Initiative. That will make us one of the most connected countries in the world, and I think that is something to be very, very proud of.
One of the things I think it is important to put on record is that this initiative is about the Government and private enterprise working in partnership to roll out the framework. The framework has open access, so as that backbone infrastructure is rolled out any internet service provider can access it and offer services to its customers. This is not about Telecom being the only game in town—and I will come back to Miss Curran’s comments on Telecom in a moment—this is about the backbone infrastructure being rolled out in a partnership between the Government and industry, and every internet service provider being able to access it in order to provide services to New Zealanders.
I will touch on a couple of other things in the bill before I move back to the comments of the speaker who preceded me, Clare Curran. The bill also amends the Telecom service agreements between the Crown and providers. It sets up the telecommunications development levy to fund the service obligation compensations, the upgrade of infrastructure, and the likes of that. It sets out, of course, the functional separation rules for Telecom. So although a big part of this debate will no doubt focus on the Ultra-fast Broadband Initiative and Rural Broadband Initiative roll-outs, there are also those important other aspects to the bill that I think are worth putting on the record.
We have heard an interesting array of objections from Labour. Over the course of the ultra-fast broadband discussions and the rural broadband discussions we have heard Labour members say it is too fast: it is all happening too fast. We have also heard them say it is all happening too slowly. We have heard Labour members say the Government is putting in far too much money, and we have heard them say the Government is putting in not nearly enough money. Now we hear them hammer us for selecting Telecom as the provider.
Let me read a couple of comments from Ms Curran, who just stood there and made a vitriolic attack on Telecom as the provider. Let me read to members some of these comments. “It looks very interesting. I certainly think any proposal that puts Telecom seriously in the frame is worthy of merit and should be looked at carefully by Crown Fibre Holdings and the Government, because the future of Telecom is important.” I thank Ms Curran for that. What about these comments? “We think Telecom should have a future in New Zealand and if that requires it to structurally separate, it should seriously consider doing so. They should have a crack at accessing the broadband money.” “It is obvious to everyone that Telecom desperately want to and need to be in the running.” “It is not in New Zealand’s interests for Telecom to be run into the ground and excluded from the biggest network build for the next generation or more.”
Those comments come from the same member who just stood in this House and attacked this Government and attacked Telecom as the broadband provider. The Labour members need to decide where they stand. Why are they not supporting this bill? Why is the broadband initiative at the same time too fast or too slow, delivering too much or too little, and involving the right provider or the wrong provider? Labour members’ only real objection to this bill is that they did not introduce it and the National-led Government has done so. I am very pleased to commend the bill to the House.
Hon TREVOR MALLARD (Labour—Hutt South): I start off by broadly agreeing with the opening points that Amy Adams made, and at the same time I congratulate her on her promotion to the chair of the Finance and Expenditure Committee. She knows I think she should be in Cabinet because she has more talent than many of the junior members, but at least it is recognition and a step in the right direction for her—although it might be some time, of course, until she gets where she should have been earlier this year.
The point I agree with her on is that broadband is very important. All of us know that it is important and that the quality of broadband can make an enormous difference to the quality of life for people and to the way our economy works. I also agree with her point—and it is a point made by the Minister in charge of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, Steven Joyce—that this is part of the country’s infrastructure now, in a way that sewerage, water, telephones, power, and other utilities are. Part of the problem that has occurred with this Minister is that he has been caught up in the excitement of the stuff built on top of this infrastructure—the electronic stuff and the add-ons—and he has therefore lost focus on, essentially, what is happening here.
What is happening is that we are having fibre laid. It is effectively a pipe. We are having something through which electronic signals go—I do not pretend to understand how it works—and we are having that fibre laid around the country in places where it would not be laid otherwise. This is being encouraged in two ways. One is by a very attractive subsidy to Telecom in particular, from the Government, and the other is by a regulatory arrangement that ensures that the company makes hyper-profits as a result of this investment. I say to the Minister that it is my view that Telecom would have done this with either the subsidy or the regulatory preference it has and that he did not need to do both. We have seen a case of his being conned by a company that has, clearly, superior public relations, superior legal, and superior technical people compared with the people who were giving him immediate advice.
I shall focus on the important thing that is happening here. That is, the lower level, the bottom of this, the way it was originally started, and that was the laying of the fibre and not the add-ons. That is the difference that is happening here and it is where the focus should be.
I ask the Government to focus on the returns Telecom is giving. The figures the Minister and the committee got showed an average cost per connection of $2,500. Telecom has announced—and the Minister has agreed and has underwritten this figure—a $37.50-a-month charge for basic services. That is an 18 percent per year return. Telecom is getting at least double the risk-free rate of return it should be getting; it is getting 18 percent. I will be interested in the comments from Roger Douglas of ACT about these regulatory arrangements. That figure is for the basic level, but Telecom says that the average cost per consumer—and this is the average cost that has been agreed to as part of these arrangements by the Minister—is $50. That equates to a 24 percent—24 percent—risk-free rate of return for Telecom on the $2,500 it is putting into every connection.
I do not want to sound too much like Roger Douglas, but I have some sympathy for his views on excessive regulation in this area, and I ask the Government what business it is of the Crown to guarantee to Telecom, a foreign-owned company, a 24 percent rate of return at least until 2020 on its investment. It is wrong and it is excessive, and for a Minister to stand behind that company and guarantee that is inappropriate.
The other question I want to ask is why the Minister last July—and I want to make a water analogy, because I understand that better—moved from having the pipe as the key part where the separation would occur, to having the pipe and the taps. What we have now is effectively Telecom with the power to turn the tap up or down with the pipe, so that individuals can get better quality and they can get a lot more broadband. It costs Telecom nothing extra at all. But if one is prepared to pay $100, or $200, or $400 a month, instead of $37.50, one can get what the Government has paid for. I ask people why Telecom should face no additional costs whatsoever. We have an unconstricted broadband arrangement. We were meant to get unconstricted access for everybody, but Steven Joyce has given Telecom the right to turn the tap right down for a lot of consumers, unless they agree to pay an excessive amount of money to Telecom. That will last until 2020.
I will be kind to Steven Joyce and say he does not understand what he is doing. I think that is the kindest thing. Otherwise he would understand that he is giving Telecom on average a 24 percent rate of return, but, more important, saying to every school around the country—and it is all very well Anne Tolley effectively paying for pipes to go into schools; that is what is occurring—and saying to the decile 1 schools in my electorate, that they do not pay $37.50 a month, they pay $400 a month in order to get unconstricted access, which is available. It costs Telecom not a cent more to turn on the tap. Why is that fair? How can that be fair? The Government has already paid for this fibre, the subsidy has occurred, and we are allowing Telecom to extract what is, in my view, economic rent in a way that is totally inappropriate.
There has been a lot of discussion about the involvement of the Commerce Commission. There is debate, and it will be ongoing, about whether the present arrangement is better than the arrangement that was there before. My view, frankly, is that they are both dogs. But the idea is that the Government will underwrite if Telecom is found to be acting uncompetitively, as it has on dozens of occasions in the past; the Government will pay its bills. The Government will pay the bills for anti-competitive behaviour, if the Commerce Commission finds it to be that.
What sort of democracy do we live in? This is the sort of arrangement I would expect from Mugabe, or people in the old Soviet Union, or countries like that. But what it does show—and I just want to go back—is either we have a Minister who does not understand what he has done, or we have someone who is in the pocket of an international company. What he has done is turned on a money tap, a 24 percent return, guaranteed, to Telecom. It stinks. It stinks, and it is wrong.
Hon TAU HENARE (National): I raise a point of order, Mr Speaker. To say that the Government is in the pocket of some foreign country—
Clare Curran: Company.
Hon TAU HENARE: —foreign company or country—is not allowed. Members cannot accuse the Government of being in the pocket of somebody overseas—or anybody.
The ASSISTANT SPEAKER (H V Ross Robertson): Can I just refer the Hon Trevor Mallard to Speakers’ rulings 51/5 and 52/1. It is not in order to say that the Government has been “dictated to” or has “received instructions” or “directions” or anything like that—to imply those imputations. The member has finished his speech. I was going to ask him to desist.
GARETH HUGHES (Green): Kia ora, Mr Assistant Speaker Robertson. Ngā mihi nui ki a koutou. Kia ora. It is a real privilege to take a call today on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. The Green Party supports the bill’s intention of ultra-fast broadband and a roll-out across the country of high-speed broadband, but we thoroughly disagree that this bill is able to deliver that. We support the intention, but we will not be supporting this legislation through the House. We supported it at its first reading, but after going through the select committee process, witnessing the poor process and witnessing the poor outcome that has come out of these last-minute deals that were stitched up in back rooms, the Green Party cannot support this bill, even though we wholeheartedly support better, faster, and cheaper broadband. We will keep working with whatever Government takes the Treasury benches to make sure we get it.
We believe that ultra-fast broadband can transform our economy and our society through better businesses, through lowering air miles and greenhouse gases, through videoconferencing, through better telecommuting, and through medical advances such as sending magnetic resonance imaging scanning images to doctors, potentially all around the country and all around the world. It can make our medical system much more efficient, much cheaper, and much better for both patients and doctors. It could also transform our educational systems. It is disappointing that 500 schools will miss out; they might get this advanced form of microwave or other broadband. But the potential for education is massive.
Lastly, and probably of most interest to me, is the entertainment potential. We have just wrapped up the Copyright (Infringing File Sharing) Amendment Bill in Parliament. We are seeing more and more Kiwis and people around the world living their lives online. They get their entertainment online. More of the business models into the future will provide massive services through broadband. A couple of weeks after the UN special rapporteur’s report that terminating internet access is a breach of human rights, it is great to be having this debate in Parliament.
I thank the Finance and Expenditure Committee members and in particular the chair, Mr Foss, who is going on to other things. I congratulate him. I congratulate all the submitters, who put a lot of effort into the process.
In this call I intend to look at four things. I will look at the bill’s history and process. I will look in particular at the forbearance issue: the embarrassing back-down the Minister was forced to undertake, and the last-minute compromise that was stitched up. I will look at Telecom, which was the winner of the Crown Fibre Holdings contracts. Lastly, I will look again at why we are opposing this bill: the missed opportunity. That is what this bill is: a missed opportunity. We are investing $1.35 billion of Government funds—of taxpayer funds—to roll out broadband across the country with our scarce resources at a time when we are borrowing hundreds of millions of dollars a week. We need to make sure that every dollar counts. Unfortunately, that is not being achieved through this bill.
This bill spends the Government’s money on ultra-fast broadband. It also rolls out the Rural Broadband Initiative, the telecommunications service obligations, and the levy. Although we disagree with the definitions around high-speed broadband, we can agree to disagree on that matter. We would have liked to see much speedier broadband and much better uploading speeds. The internet is not just a way of downloading files, which most people do currently; the real transformative benefits of the internet come from being able to upload files, be they magnetic resonance imaging scan pictures, or a file for a teacher to send all over the country for her class.
When we look at the history of the telecommunications sector in New Zealand, we see that it is older than I am. We have seen a sector characterised by monopolies, poor services, and lack of historical investment. We saw the failed privatisation experiment. I note that Brian Gaynor recently published some research showing that up until 1999 Kiwi taxpayers missed out on more than $8 billion in investment, which they would not have if we had adopted a similar service to the Australian Government with Telstra. We have missed out on infrastructure investment, and we have missed out on dividends to Kiwi taxpayers. In this sector we have seen a significantly anti-competitive Telecom. I note that Telecom just recently received a $12 million fine for its anti-competitive activities between 2001 and 2004.
We have to look at why we are even standing in this debating chamber looking at the issue of ultra-fast broadband. The reason we are here is that historically Telecom, primarily, has dismally and woefully lacked investment in broadband. This was one of National’s major election platforms. Steven Joyce, unfortunately, is also the Minister of Transport. To answer Trevor Mallard’s question, I say that Mr Joyce is more knowledgable when it comes to asphalt and concrete for his “roads of significance to National” than he is about high-tech services such as ultra-fast broadband. He has simply left it too late. He had to get something out of the door before the election in order to realise his election promise.
He left it too late, and because he raced through the process he has alienated businesses and sector groups. We have seen an unprecedented outpouring. We have seen full page ads in the daily papers, and television commercials criticising this Government’s poor process and the poor outcomes of this bill. We have seen the Government in an embarrassing back-down, only 2 days after the Finance and Expenditure Committee report was tabled in this House. We have seen secretive meetings and a lack of cross-party consultation or consensus reached, which is to the detriment of Kiwi consumers and the Kiwi broadband market.
At the select committee it was a real privilege to hear the submissions, and to hear the good questions asked by other select committee members. I heard in the select committee a resounding objection to forbearance from industrial watchdogs, consumer groups, and the players in the industry. They were resoundingly opposed to forbearance, because it was unprecedented. Steven Joyce must be a cowboy movie fan, because it essentially sets up a Wild West situation. We heard from the officials that, quite simply, the Government did not invest an adequate amount of funds to achieve its ambitions of 75 percent coverage, so it had to set up an unregulated Wild West - type environment to stimulate investment. We heard from the Minister over and over again—
Hon Trevor Mallard: The member’s got it exactly wrong. He’s got it arse about face.
GARETH HUGHES: Mr Mallard says it is arse about face. Faced with massive objection and criticism from all across the political spectrum and all across the industry spectrum, we heard constantly from the Minister that people simply do not understand. Only the Minister knew the ins and outs of the bill! When it came to any question the Minister’s only answer was: “You don’t understand. Go and look at the bill again.”, yet we see the Minister’s embarrassing back-downs.
We saw some good changes in the select committee in relation to the definition of “equivalence”. We also saw the review brought forward to 2016, but the fact is that the review will now be completed over a 3-year period. It is not really a review when the end of the review is the end of the broadband period. In effect, it will not be of much practical use if the plan is a lemon and is not working out.
Forbearance was our major criticism, and the primary reason why we changed our vote. In the minority report the Green Party stated: “The Government’s plans for the roll-out of ultra-fast broadband will be significantly compromised by creating an unregulated monopoly in the industry because of a lack of Government investment to achieve its own coverage aims. Unregulated monopolies, especially in critical industries like telecommunications, undermine the competitiveness of the New Zealand economy and deliver poorer services.” That issue has been picked up, too, by Sir Roger Douglas and the rest of the ACT Party.
The forbearance period of 8½ years was absolutely unprecedented in our history and, I understand, internationally as well. Google was not the primary search engine 8½ years ago; people were still using Ask Jeeves to find a website. How on earth can the Government predict what the telecommunications and internet market will be in 8½ years’ time? It is simply ridiculous. The Minister was absolutely intransigent in the select committee process, through the officials, that the Government would not budge on this matter, until the Government came up against the realpolitik of the Māori Party potentially withdrawing its votes. Two days after the report was tabled the Government backed down, so I say good on the Māori Party for forcing the Government’s hand. It was a poor process from the get-go, and an even poorer process because the Government backed down and had to stitch up this compromise. None of it went through a select committee process. None of the public got to submit or have their views on these changes heard.
Essentially, the big change replacing forbearance is that the Commerce Commission can regulate pricing on fibre, but it is up to the Minister to decide whether regulation is needed. As Clare Curran rightly asked, why would the Minister regulate if the taxpayer will have to wear the risk? We have seen no analysis by the Government. This is just continuing the poor process of massive Supplementary Order Papers being tabled in the select committee, of secretive meetings, and of these embarrassing back-downs and stitch up deals. Thank goodness they have had good sense—and we congratulate the Government—to back down on forbearance and on the regulatory holiday. We now wish for the Minister to back down on the “Holiday Highway”, which is a $1.7 billion economic mistake.
When I look at what the Government has stitched up in the back rooms, I fear that the cure is, in fact, worse than the disease. Essentially, Telecom is the massive winner, with more than 70 percent of the coverage: of $1.35 billion, Telecom will receive $929 million. The vast bulk of those profits will simply flow offshore, and overseas shareholders will be the winners. More worrying is that we will see dependence on copper, continuing Telecom’s copper legacy, which will see Kiwi broadband customers worse off.
Essentially, we have missed a once-in-a-lifetime opportunity. It has been a poor process. We have seen a poor outcome with the copper, and it is a poor deal for Kiwis. Kia ora.
Hon Sir ROGER DOUGLAS (ACT): At the last election the Government blindly promised to invest in New Zealand’s telecommunications infrastructure—in particular, in ultra-fast broadband. It was a blind promise, because National had no evidence that such an investment was needed or would produce promising outcomes. We are 3 years down the track, and there is still no evidence that this initiative will benefit New Zealanders.
The Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill sees New Zealand embarking on a modern form of Muldoon’s Think Big project. Under this bill, the taxpayer will end up spending $1.5 billion on a gamble. I cannot condone such reckless spending; nor can Heather Roy. The remaining ACT members believe that this was a fundamental election promise made by our coalition partners, and will therefore vote for it. This bill is a gamble because we simply do not know whether it will bring any benefit whatsoever to New Zealand. There is a total lack of a cost-benefit analysis to justify spending taxpayers’ money. As is the case with all significant interventions, the onus is on the Government to show that the investment of taxpayers’ money is warranted, and is beneficial to New Zealand.
There has never been a wide economic analysis done by Treasury on the bill. This bill has been driven by a political imperative rather than an economic one. The lack of a cost-benefit analysis means that the information is not present for anyone to make an informed decision. To embark on major infrastructural development based on very little economic analysis is reckless at best. In the absence of such analysis it is difficult for any side to determine whether there will be a real return to taxpayers. I ask members which is more extreme: National, which is willing to spend taxpayers’ money in times of economic hardship, with no cost-benefit analysis, or politicians who seek fiscal restraint in times of economic hardship and require sound evidence to justify Government spending programmes. On this point alone I urge the House not to support this bill.
The reality of the telecommunications industry in New Zealand is that it is a network industry. Therefore, it is inevitable that the Government has some role to play in regulation. The issue is whether this bill enhances the goals that we as New Zealanders would like to see in the telecommunications industry. The central goal that we are concerned with is enhancing efficiency in the industry. Does this bill seek to further this end? Put simply, it does not.
There are two major reasons in support of this conclusion. First, the Government is once again looking at entering into the telecommunications market with both money and heavy-handed regulation in order to try to actively pick future technology winners with taxpayers’ money. New Zealand and Australia are guinea pigs in going down a Government-determined ultra-fast broadband path. That alone should worry us. There may be a case for Government involvement, as it is a network industry, but this bill imposes a singular future on a complex industry.
The central difficulty with Government investment in this area is that there is a need for significant investment coupled with a high commercial risk. The development and use of ultra-fast broadband in the future is not a fait accompli; if it were, the risk calculus would heavily favour private investment. It is possible that the next generation of wireless networks could potentially deliver the speed of ultra-fast broadband, and on that basis alone some of us do not consider that ultra-fast broadband is necessarily the future of the telecommunications industry in New Zealand. If the Government is wrong and technological developments favour other ways to provide the internet, then there will be a large opportunity cost for New Zealand. The opportunity cost is borne out in two ways. First, in a static sense, $1.5 billion has been invested in a way that has a low return. If the money was left in the hands of private individuals, they could seek out more productive investments, leading to greater prosperity for New Zealand as a whole. Second, in a dynamic sense, there is an opportunity cost for future development in the telecommunications industry.
The bill means that New Zealand companies have been artificially incentivised due to the Government subsidy to invest in the roll-out and development of a technology that may become increasingly irrelevant. This might be particularly true for the Fibre to the Home aspect. This approach will see us down the road of path dependency. Once the network has been built, path dependency will ensure that it keeps on being used and developed because the fixed costs will be much lower. This occurs because the set of decisions that one faces in the future is limited by decisions made today. This hinders the long-term development within the telecommunications industry, to the detriment of us all.
Second, it may be that this investment will produce low-value return for New Zealanders. It is unclear whether New Zealanders are utilising telecommunications infrastructure to its capacity at present. The Motu Economic and Public Policy Research Trust has done the only empirical work in this area, and it concluded that faster broadband speeds are likely to have a negligible impact on the New Zealand economy. Again, such investment is extreme on the part of National. The little evidence there is suggests that we should not invest.
The heart of the problem is that there is not enough information at present to determine whether this project is a waste of money. The Government has moved quickly to implement an election promise and has not been able to produce the evidence that favours support for the proposal. If we are going to spend $1.5 billion, I would rather see greater emphasis given to efficiency and competition within the telecommunications industry. For this to result from current policy, I suggest we would need to create a situation where we have true open access and the development of our network by new consumers taking up the service. This means that the costs involved are met as they sell to consumers. This would be akin to the way Sky television boxes have been distributed. This would maximise competition without the need for heavy-handed regulation. The Government has said that without a regulatory holiday, broadband initiatives will cost at least another $400 million. There is so much uncertainty about the regulatory surroundings that it may well be desirable to spend that $400 million up front, in order to get rid of the regulatory holiday and to allow for greater competition in the future. This is a problem that I faced in the steel industry in the 1980s. I found it better to pay $2 billion up front so that we could get rid of the large tariffs that were impeding competition in the industry.
The second point I make is that we should abolish telecommunications service obligations requirements for Telecom. My first and second points are not mutually exclusive. This would allow costs to fall where they should, which would end the practice of cross-subsidisation from urban to rural areas. In addition, it would force other technological developments to solve the problem. It is not clear that there is a good case for mandating any form of universal service. As part of this, I also advocate getting rid of the Kiwi share and free-calling requirements.
This bill has not been well-thought-out. We have an election promise, and that is what this is all about. In terms of any studies that have been done, the indications are that the money will be largely wasted.
Hon TARIANA TURIA (Co-Leader—Māori Party): Tēnā koe, Mr Assistant Speaker Robertson. Tēnā tātou katoa. I am proud to speak on the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, which is, ostensibly, about supporting a range of measures to facilitate the deployment of broadband.
The Government has had a very clear goal in sight for the Ultra-fast Broadband Initiative, and that is that 75 percent of New Zealand households will be connected. That goal has been advanced for and on behalf of tangata w’enua by the establishment of Ngā Pū Waea, the Māori broadband group. As a result of that group and the advocacy of the Māori Party we can be assured that marae, kōhanga reo, kura, wānanga, iwi, rūnanga, and Māori health and social service providers throughout Aotearoa will benefit from the roll-out of ultra-fast broadband. This is, of course, exactly how it should be, but far too often Parliament falls short of the mark in achieving anything near a Treaty-based solution. This bill has been different, and the Māori Party wants to ensure that Hansard records the contributions of Māori and the difference made by having Māori voices at the table.
The concept that information is power is never more evident than in understanding how the internet can provide us with instant access to information at our fingertips, as well as improving communication and connectivity. Under this bill, Māori will have access to the knowledge, access to the power, and access to the connectivity that links us through to an enormous and influential social network.
So how did it occur that Ngā Pū Waea will oversee the roll-out of the Ultra-fast Broadband Initiative and the Rural Broadband Initiative? During the select committee process some very strong submissions were put forward by Māori, which helped set a new context. Te Huarahi Tika Trust, the Māori Spectrum Charitable Trust, paved the foundation for a new approach. To give some background, Te Huarahi Tika Trust was incorporated as a charitable trust in 2000 to enable Māori to have a right of purchase over the third-generation spectrum radio frequency being auctioned by the Crown that year. By virtue of that experience, Te Huarahi Tika Trust challenged the Crown that it had missed an opportunity to partner with Māori to provide substantially better outcomes for all of Aotearoa with the Rural Broadband Initiative. It also argued that Māori have suffered the consequences of poor regulation in the past, and that it has no confidence that that is likely to change.
The second key submission was put forward by Anthony Royal on behalf of the Torotoro Waea Partnership. The Torotoro Waea Partnership shared much the same view as Te Huarahi Tika Trust. In its view the Crown had overlooked an opportunity to work with Māori in building a better future for our next generations. There were three key platforms that it put forward for consideration. It argued, firstly, that the Crown should be confident in working with Māori, given the extraordinary outcomes that Māori have been able to achieve for all New Zealanders over the last 20 years—an argument that we endorse completely. The second view was derived from a Treaty perspective, and it was that the Crown is failing in its obligation through kāwanatanga to manage the development of our telecommunications infrastructure for the benefit of Aotearoa. The third plank in the submission was to suggest that the Crown has failed in not developing a vision for telecommunications in New Zealand that has as its primary goal what is best for our communities, nor has it involved Māori in developing that vision or communicated it with industry and the public of New Zealand. These perspectives and challenges laid out in submissions provided a vital context to ensure that Māori can maximise the opportunities and that Māori views are represented as the roll-out of broadband progresses.
So what is the litmus test to demonstrate success in opportunities for all Māori to be digitally literate and connected? What measures will be introduced to effect Māori-targeted initiatives in the broadband sector? Inevitably, the increased scope and coverage will have a direct benefit in Maori communities. As a result of this bill, 93 percent of rural schools will receive fibre, enabling ultra-fast speed, with the remaining 7 percent achieving moderate speeds, and over 80 percent of rural households will have access to broadband.
We know that strong connectivity to the outside world is important and that economically it is key infrastructure. But there are some specific initiatives that have come about through the select committee process that particularly relate to, and are influenced by, Māori input. For a start, there is the amendment to clause 18A to require the Minister to consult with interested parties, including Māori, industry participants, the Commerce Commission, and consumers when conducting the review. A particularly significant development arising from negotiations with the Māori Party was the lifting of the 10-year forbearance period, exempting companies that won tenders from Commerce Commission oversight. Our negotiations to remove the forbearance period will help to ensure lower costs for the end consumer, something that is an enormous achievement and will have direct benefits for all our constituents.
Finally, I want to mention the significance of connecting marae to broadband, which could, over time, be crucial to marae retaining their role as the hub of the community, or, indeed, restoring that vital role if lost. If marae become the digital hub, particularly in rural communities, the results could be really exciting, leading to increased participation in the economy, improved educational outcomes, and, ultimately, more resilient communities.
In the community and voluntary sector, I have been delighted to secure additional funding of $3.3 million over 3 years for community-based initiatives to increase digital literacy and connection. That new funding builds on the $8.345 million I announced in last year’s Budget that has given life to an amazing collective of over 1,000 families who have access to the Computers in Homes programme. The funding will also contribute towards the development of a further Computer Clubhouse, which is another fantastic community initiative.
I truly believe that broadband is crucial to the future of Aotearoa, whether it is in greater information technology access in schools, linked-up communities, or greater connectivity for our marae. I am so proud, too, that as a result of our negotiations to remove the forbearance period, the resulting policy will help to ensure lower costs for the end consumer. The development of information and communication technologies within a country is seen as vital. The Māori Party has fought hard to ensure that Māori will benefit from, and be directly involved in shaping, an information-based economy.
We are very pleased to support the second reading of the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. Tēnā koe.
DAVID BENNETT (National—Hamilton East): I congratulate the Māori Party on its support of the Government and the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. That shows the true nature of the Māori Party’s desire to have a stronger New Zealand where not only is there economic growth but also there are community linkages we can grow so that we can provide better services to our people and so that our people can have better interaction within themselves and also with the modern world, which this technology will enable. The Māori Party is very progressive in understanding that in these very troubled and difficult economic times we must still look forward in a progressive way.
It is a shame that Labour is not so progressive. It has tried to create a whole lot of issues around this bill, and it has failed in doing so. Labour has shown a lack of desire to see this country go forward. Labour has no intent for economic growth or to see New Zealand progress as a country. That does not fit in with the Labour mantra of how it rules by control. It is very interesting to see Labour members trying to pick holes in legislation like this, which is in the best interests of New Zealanders and in the best interests of building growth and a dynamic and growing economy.
I will quote a section from the commentary to this bill. The commentaries of bills are very rarely read by anybody, but Labour members pore over these commentaries and spend hours on them in select committees. I want to remind Labour members of what they said on this bill. The commentary states: “New Zealand Labour supports the need to improve New Zealand’s telecommunications infrastructure as it will encourage productivity, innovation, and export-led growth.” That is what Labour members said in their minority report. They said that improving New Zealand’s telecommunications infrastructure is a good idea, that it promotes growth and innovation, and that it encourages productivity. Why, then, can Labour not vote for this bill? Why can Labour not support those things? Labour members say they do, but they do not act on it.
The New Zealand public has seen false rhetoric and no action time and time again from Labour. From a National-led Government, with our partners the Māori Party, the public gets an action-led Government that delivers solutions and provides that avenue for growth and success.
This is a good bill.
Hon Craig Foss: Economic transformation.
DAVID BENNETT: It is about economic transformation. I congratulate Mr Foss, who led this bill through the Finance and Expenditure Committee, and the Minister for Communications and Information Technology, as well. Mr Foss has moved on to bigger things, but this bill is something I know he took a lot of pride in in the select committee. We had to battle an Opposition that did not want to see New Zealand grow, did not want to have this development in our country, did not want our schools to be connected by broadband, did not want our hospitals connected by broadband, and did not want cities like Hamilton to be the first cabs off the rank in getting broadband developed there.
Labour did not want that. Labour was more interested in playing petty politics and trying to pit people against people in this country when we need to be working together to build a stronger country, not trying to pit people against each other, as Labour has done in Opposition. It is very sad to see those members having to resort to that in this election year.
This bill is a good bill. It is good for growth. It is part of the infrastructural development that New Zealand wanted and has received from this Government. The people of Hamilton are very, very happy with this bill, because we were the first ones to get the contract to go ahead, and the Hamilton community will benefit from it. Young people growing up in Hamilton will have the opportunity to access ultra-fast broadband a generation earlier than they would have under a Labour Government. A generation earlier we will have a stronger country and a stronger city of Hamilton to deliver even more economic growth for our future and for this country’s future. Thank you.
Hon DAVID CUNLIFFE (Labour—New Lynn): The member who has just resumed his seat, David Bennett, the brains trust of the National caucus, has encapsulated the problem with the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. If this is an example of the National Party moving quicker, I point out that it took National 2½ years to even think up what its policy was, because all it was elected with was a slogan. That slogan said—and I call it to mind—“A $1.5 billion subsidy buys fibre to the home for 75 percent of New Zealanders within 10 years.”
Clare Curran: Here it is.
Hon DAVID CUNLIFFE: There is the card. The problem was that the numbers never did add up. There was never any way that $1.5 billion of a commercial investment seeking a commercial rate of return could have achieved that. When the Minister for Telecommunications and Information Technology, Steven Joyce, realised he had made an undeliverable promise, he went through all sorts of contortions to try to make ends meet. The net result of that was essentially to “sell the law” for a subsidy that none other than Sir Roger Douglas pinned officials to admit was between $400 and $600 million per annum worth of disguised subsidy.
The point about selling the law is that it has become a habit for this Government. Whether it is Warner Bros, Sky City, Telecom, or CanWest, the issue here is that this Parliament is being dragged into disrepute by a Government that has deserted principle and has no clue about policy design.
I will not go further in speaking about Mr Bennett’s speech because, to be honest—and I try to be fair—he made no contribution to the select committee process at all, and he has made no contribution of substance to this debate. Mrs Turia, however, did, and I will pick up on a couple of points she has made. The first is that the Māori Party was late to the play in supposedly forcing a concession from the Government on the issue of the regulatory holiday—that bizarre prospect of 10 years with no oversight on fibre by the Commerce Commission. I agree with the position the Māori Party finally took, but it voted with the Government at every stage of this bill in the select committee, and it made no oral contribution to the debate at all. What I suspect is that the Minister, rather like his involvement in the Epsom election for ACT, realised that he had got the entire industry offside, that everybody other than Telecom was siding against the Government, and that he was isolated with a minority of one. I can imagine a conversation when he told the Māori Party to come up to his room and pretend to force concessions out of him so that he could get out of the dead-end street he had got the Government into.
I suggest that the public think very, very carefully before accepting the Māori Party’s protestation that it got this over the line. The Government knew it was in trouble. Nobody at all in the industry other than Telecom supported it. Not even Te Huarahi Tika Trust, which was the owner of shares in 2degrees, supported it, and 2degrees and Bill Osborne in particular argued vociferously against this bill. They made clear that the bill was bankrupt in terms of policy design. Why did the Māori Party not take a stand earlier in the select committee process? Only the rear-view mirror and the voters will tell. I note that the Māori Party is coming a dismal third in the Te Tai Tokerau by-election, because it is becoming irrelevant to the national debate. It has become the plaything of the National Party, and it is a sad thing to see a party that once held the mantle of some people’s aspiration fall so far, so fast.
Sitting behind Mrs Turia in the Chamber is Sir Roger Douglas, and I offer a sincere compliment to Sir Roger. His questions in the select committee were incisive, and his minority report—or at least the first four parts of it—are of a very high standard, and I reference them for the public’s reading. Unfortunately, his alternatives were almost worse than the problem, as they were to just leave it to the free market.
It is here that I have to take a brief trip down memory lane. Before the Labour Government busted the Telecom monopoly we had Telecom taking monopoly rents off New Zealanders, and we had low investment, high prices, and one of the world’s slowest broadband networks. When we busted that market wide open we got double the investment flows, New Zealand climbed up the broadband rankings, and we had a better competitive environment where all, including 2degrees, could play. More market means more monopoly, I say to Sir Roger—that is the problem we came from. Let us look at this bill to see what it does. The slogan, as I said, was “$1.5 billion buys fibre to the home for 75 percent of New Zealanders.” But it never could and never would, not when that funding was a straight subsidy. That was a commercial investment through Crown Fibre Holdings, with a rate of return and big strings attached. The Minister realised when he came into office that it was not a policy at all; it was a slogan.
Labour had ultra-fast broadband packages up and down the country ready to go. I know, because I was the Minister. I had them signed off and sitting on his desk the day that he took office, nearly 3 years ago. We have lost a full 2½ years of roll-out because the National Party campaigned on a slogan and the Minister had no policy when he took office. So what did he decide to do after those 2½ years? He came up with an absolute mess, an absolute dog’s breakfast of a prescription. I have to say to listeners to the debate that I have never seen a Crown agency testify so strongly against the Government of the day as the Commerce Commission testified—and good on it—against this bill. The regulatory holiday would have taken the commission off the job for 10 years. That is about 5 generations of broadband technology. The great-great-great grandchildren, in technology terms, would have got a look-in from the Commerce Commission, but not until then.
The bill replaced the old Telecom wire monopoly, abridged by our pro-competitive regulation, with a new fibre monopoly. It was not Telecom; that name was always a furphy. It was Chorus that had the monopoly on the wholesale and network layers. If the Government wanted a competitive environment, it needed a fair and open access regime. We managed to twist National’s arm into getting “equivalence of inputs”, which is technical language, I know, for the public, but it means that Chorus will be forced, at the wholesale level, to at least tell people what the conditions of offer of sale of services would be, and that would have to be the same for internal and external parties. It just does not apply to fibre for the first 8 years. What we are left with is a system where the business that owns the network, Chorus—“Telecom II”—does not have to tell people how the detail is drawn, does not have to offer exactly the same product on exactly the same terms at the layer zero and layer one level of the wholesale network, and can screw the scrum under this bill.
The effectiveness of the regulation is cut to pieces and the Government knows it. It is not an accident. The public need to know that this is a deliberate policy choice, made because the Government subsidy fell short, so it had to buy the bids by selling the law, just as it did for Warner Bros, just as it is doing for Sky City, and just as it did for CanWest on the broadcasting spectrum fees. It is a terribly dangerous slippery slope the Government is on here, where the integrity of the Crown itself is called into question, not only by terribly bad policy design but by the deliberate giving away of the public’s protection in exchange for money in the hands of the bidders. It is as crass and crude as that.
If Government members of the Finance and Expenditure Committee did not appreciate the game, they have less intelligence than we credited them with. I would like to think that they do. Concerning Peseta Sam Lotu-Iiga and Craig Foss, I say that I know Craig Foss is an intelligent man. I know that he must understand that these bids have been bought. Sam Lotu-Iiga has a so-called business background, as well. If he does, let him take the next call, or Mr Foss, and explain to us how the Government has not sold the law to encourage bids in terms of bad regulation.
Our key concerns were the ridiculous regulatory holiday through five generations, the lack of clarity around the open access regime, the mandatory averaging of prices, the opaque and tilted asset split within Chorus, the Commerce Commission exemptions, the possible breaching of our World Trade Organization obligations, and the question of tax write-offs for Telecom, which we will explore in the Committee stage. This is bad law; it will leave New Zealand worse off than before. The next chapter of this debate is a monopoly on content for Sky television and we will come to that later.
PESETA SAM LOTU-IIGA (National—Maungakiekie): Thank you for the opportunity to talk on this Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. We have heard from the Opposition the personal attacks on a Minister, the personal attacks on an institution—that is, Telecom New Zealand—and the personal attacks on this Government. But what this Government stands for is about fulfilling our election promises, and one of those promises was about bringing ultra-fast broadband—100 megabytes per second—to 75 percent of all New Zealanders.
This bill is part of an overall plan that this Government has. The Opposition lacks a plan, it lacks leadership, and it certainly lacks the ability to recognise what this bill stands for. This bill stands for infrastructure spend. It stands for bringing about a step change in economic growth. It stands for bringing about the ability of businesses, the ability of individuals, and the ability of communities to communicate in more effective and efficient ways. That is what it presents. It presents an opportunity for this country, for us to better our quality of life, to improve our economic productivity, and to provide jobs and opportunities for our families and our friends.
I put it to members that this bill impacts on our communities in so many different ways. For businesses it allows us to better connect to markets, to better connect to advisers, whether they be professional accountants, lawyers, or advisers, as well as to clients both locally in New Zealand and across the globe. That is what this bill will do for our businesses. For our schools it is about the sharing of content. When I went to one of the schools in my electorate and I saw the communication that went on between 10-year-olds in Tāmaki and young kids in America and the United Kingdom, I saw the ability of these children to learn not just from their teachers and their peers but also from kids across this globe and across this nation. This bill is about positive things for our schools.
It also is about improving our health care. It allows X-rays to be downloaded in seconds and diagnostic tools to be readily available where they are not currently available, particularly in our rural areas. But we did not hear a word about that from Opposition members, because they plainly cannot see the benefits of broadband for our country. It is clear what this Government stands for: it stands for economic growth, and it stands for a plan to develop and benefit our communities and families. However, the Labour Opposition is against this bill. As we campaign later this year on what matters to New Zealanders, let us remind them daily that Labour is against this bill. It is against economic growth. It is clearly against jobs and employment. I do not know how Labour members explain that to their union lackeys and their self-serving union mates, but they are clearly against jobs and employment. It was seen with The Hobbit, it is clearly seen with the convention centre, and in relation to this bill Labour has shown that it is clearly against jobs and opportunities across this country.
Labour is the party of no. It is the party that stands against jobs in our communities. Let the electorate make its decision on 26 November with that in mind. This Government is about supporting the roll-out of broadband. It has been conducted at the Finance and Expenditure Committee in a very timely manner, despite the delaying tactics from the Opposition. It is about the Government building for our future with commercial jobs, connecting families and friends across this country and across the world, and it is about our quality of life. Dare I remind friends across the aisle that this is about productivity and economic growth. I support this bill. Thank you very much.
STUART NASH (Labour): The last speaker, Peseta Sam Lotu-Iiga, outlined things that the Labour Party is against, but let me outline what the Labour Party is for. Let me outline why the Labour Party has major concerns about the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. The Labour Party is about consultation. The Labour Party is about going out to the people of New Zealand—the taxpayers who will be funding this bill—asking for their opinion, and listening to their advice. The Labour Party is about proper process. The Labour Party is about listening to everyone involved in this sector. The Labour Party is about transparency. The Labour Party is not about doing deals in secret. The Labour Party is about putting a plan in place that allows consultation, that allows transparency, and that allows proper process to be followed.
The Labour Government was the one that came up with the Digital Strategy, which recognised the need for ultra-fast broadband. The Labour Government knew that if New Zealand was to increase its productivity and get to the upper quartile of the OECD, we needed to have a decent Digital Strategy. What happened to the strategy?
Clare Curran: It got canned.
STUART NASH: By whom? Mr Joyce canned that Digital Strategy, because he had a plan. Mr Joyce had a plan, and he decided that he did not care about what anyone else thought or did, or about their opinion. “I”, said Mr Joyce, “have a plan.” I feel a bit sorry for Mr Foss, who chairs the Finance and Expenditure Committee, which this bill had to run through. I think this bill probably went against every instinct in his body. Mr Foss knows that the people of New Zealand are meant to be consulted, but when this bill was rushed through, and when Supplementary Order Paper 204 was rushed through, I could tell that Mr Foss felt uncomfortable about it. He knew that this was not the proper process to follow. That is just not right. There was no plan, and that is just not right. It is simply not fair.
I know that the New Zealanders who are listening to this debate will remember a time when, under Telecom, phone prices went through the roof. I remember being a student in Wellington and having to pay $200 to $300 a month in phone charges, because of Telecom’s monopoly. The service was dreadful—
Clare Curran: A rort.
STUART NASH: It was a rort. I say “Welcome to this bill.” Once again, Telecom has a 75 percent monopoly on ultra-fast broadband. Now, anyone who thinks that is good for New Zealand, and anyone who thinks that is fair for New Zealanders, needs to have their head read. The Government should be ashamed, and as is the case with everything else that has gone through the House in the last month to do with the Budget, I would love the Government members to call a public meeting and talk to their constituents about why this bill is good. This legislation will result in more cost.
Labour recognises the fact that New Zealand needs to improve its telecommunications infrastructure. We understand that improved infrastructure will be great for productivity, good for education, and good for business. We know that; we understand that. That is why we set up the Digital Strategy. But this bill is not the way to do it. This is simply not the way to do it. The Government is struggling to meet one of its major 2008 promises: the one about getting broadband to 75 percent of New Zealand homes for $1.5 billion.
New Zealanders need to have access to ultra-fast broadband in their workplaces, in their schools, and in their houses. But we believe that when the Government spends $1.5 billion of taxpayers’ money, it had better have its processes sorted out. I get the very distinct impression that New Zealanders do not like the secrecy. They do not like to feel that perhaps a deal has been done behind closed doors, because this has been a little bit sneaky. They do not like the fact that they cannot get a regulatory impact statement, or even a cost-benefit analysis, to hang their hat on and say: “Oh, I see; this is why it is done.” They do not like the fact that there is no research or evidence. If this deal was well researched, if there was a lot of evidence for New Zealanders to be able to see what the justifications and the rationale were and how the Government will do it, then that would make us feel happy. New Zealanders do not like sneaky stuff, and this deal reeks of it. This reeks of the sneaky deal stuff. That is why New Zealanders are not happy with this deal.
It is not only New Zealanders who are unhappy with this deal. I know that Mr Joyce underestimated the industry. He treated the people in it like fools. That has been shown in the way that they have come out hammer and tongs against this bill. In fact, they did so to the point where Mr Joyce was forced to pull one of the major platforms of this bill, the 10-year regulatory holiday. I do not think that anywhere else in the world—nowhere else in the world—there was anything like a 10-year regulatory holiday. It basically said we should wipe out the market, have no policing, and Telecom could do whatever it wanted to do. As my colleague David Cunliffe said, the Commerce Commission came out against this bill so hard that I am surprised Mr Joyce did not sit down, have a cup of tea, and rethink the matter. But, no, he busted straight on through when the Commerce Commission said it had major concerns. That made everyone sit up.
That is why I think Mr Foss felt so uncomfortable about how this bill was progressing. He knew. He had read the reports, he knew the Commerce Commission was not happy about the deal, and he saw the way that Telecom sat in front of the Finance and Expenditure Committee and acted with an arrogance that I thought had gone. I thought that arrogance had gone 20 years ago; I hoped it had gone 20 years ago. It filled me with the same sort of dread I used to feel when I received a Telecom bill. What was it called in the old days? I do not know. When I received a Telecom bill as a student I thought: “Oh my God, $200.” That was when jugs of beer cost $3. Telecom now has a 75 percent monopoly on ultra-fast broadband. I do not think that is right for the people of New Zealand. I do not think it is good for the industry.
As I said, we accept the need for faster broadband, but this deal is only one part of what is needed to deliver a digital transformation strategy for this country. We want to transform our economy. We know that we need to transform our economy by giving New Zealanders better internet access and the best technology, and by making sure that every New Zealander has an opportunity to take advantage of that technology. I tell every New Zealander who has a concern about this bill to look at Labour’s minority report and at ACT’s minority report. Labour and ACT do not often agree on things, but if people look at the ACT minority report they will see that it also raises major concerns. They should look at the Greens’ minority report; it raises major concerns. I heard the Māori Party speak on this bill, but I do not remember its members being at the select committee. They might have been. There is no disrespect, but I certainly do not remember a Māori Party member uttering one comment during the process of considering this bill. I ask the question that my colleague Clare Curran has been asking: what was the pay-off?
This bill was very close to being pulled down, because every single party across the political divide, across political philosophies, had a good, hard look at the bill, heard the submitters, listened to the arguments, and said “Whoa, we need to pull back on this. We need to think about how we will deliver it, because something is not right.” When the Government spends $1.5 billion, it needs to do that properly. There needs to be a proper process and transparency. I for one would not have minded if we had delayed this process by 6 months, to make sure we got it right. When the Government spends this sort of money on this sort of infrastructural strategy, it needs to make sure it gets it right. Sure, there is a need and there is urgency, but there was nothing that the select committee and this Parliament could not have pulled back on and worked together on. This matter is very important. As I said, when ACT, the Greens, and Labour all say something is not right, then perhaps it is not right. David Cunliffe used to be the Minister for Communications and Information Technology. He knows this area inside out. Sir Roger Douglas went through this bill with a fine-tooth comb. Clare Curran went round the world—well, to a couple of places—and talked to people in the different areas that have implemented this sort of thing. Everyone came to the same conclusion: this measure simply is not right and is not fair, so we should pull back and do it properly. But Steven Joyce had a plan. This is Steven Joyce’s plan.
AARON GILMORE (National): It is a pleasure to stand and support the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill. This Government is all about the iPad generation, whereas that party over there, who wants to be in Government, is all about blackboards. One of the things we are worried about is getting on and giving people what they really need.
Clare Curran: Oh really? Skynet.
AARON GILMORE: That member over there who just blurted out a comment has been wonderful. She pointed out the fact that she criticised us for being too slow. She turned round and said that there were worrying signs of backsliding in time for the Government to tell us how fast it would roll out the $1.5 billion programme. That was in June 2009. Then Ms Curran outlined in May 2011 that Labour consistently attempted to ask for more time to discuss the issues. She said that we were going too fast. One of the problems the Opposition has is the spokesperson on telecommunications. She sat on the Finance and Expenditure Committee and outlined all sorts of problems and issues. We had to delay one of the select committee hearings for 30 minutes while that member got her notes together. The member turned up, and what ended up happening? Very little change was put forward.
The select committee heard submissions over 3 days from a number of different parties from across the country, including from a very interesting submitter, one Jordan Carter. He is a Labour Party candidate. Mr Carter said the submission process over those 3 days was well done. He is now a Labour Party candidate. He may end up being the telecommunications spokesperson for Labour, because he seems to have a little bit more sense and understanding of what operates in this industry than the spokesperson over there, who seems to be more worried about her dress sense than anything else.
Labour members’ understanding of telecommunications and information and communications technology is so inept that they could not even get right the security of their own website in the last few days. First of all, they blamed all sorts of things—in fact, they blamed me at one stage, and a newspaper rang me and accused me of being the leaker of documents. That is outrageous. It was that party’s own website.
We care about economic growth and activity. We care about getting our telecommunications sector to a position where we can grow the real economy and get things running. Labour does not. The select committee made some good changes. The process was appropriate. It made some neat changes, particularly in some of the technical areas of how the telecommunications levy will work, which no member from the other side seems to have touched on. In fact we agreed on some of those changes. I am surprised that no member from the other side has pointed that out. There was agreement on a number of aspects of this bill.
I was in Christchurch yesterday when a major aftershock hit. During that time period, telecommunications services went down again and were out for a period of time. To me that outlined the issue we have of the fragility of our telecommunications network. Many parts of the city that I live in, in Christchurch, have had many problems with the telecommunications network over many years. That was proven again by the processes that were implemented following the aftershock yesterday. I was on the phone doing a live TV interview when the 6.3 aftershock hit. I say that the telecommunications network worked very well, and I was very impressed with that. But in our part of town the earthquake recovery work being undertaken at the moment is by contractors of the Earthquake Commission, and their own email and phone systems do not work adequately enough to send files back and forth to members. That means they cannot undertake the processing work to assess claims for those people in Christchurch. This bill will facilitate a building and roll-out of systems and a network that will allow that to happen and speed up those sorts of economic activities.
This is a good bill that brings in, and speeds up, the processes that we all want to see. It will create jobs and wealth. It will not create anything that members from the other side think. Thank you.
Amendments recommended by the Finance and Expenditure Committee by majority agreed to.
A party vote was called for on the question, That the Telecommunications (TSO, Broadband and Other Matters) Amendment Bill be now read a second time.
Ayes 66
New Zealand National 58; ACT New Zealand 3 (Boscawen, Calvert, Hide); Māori Party 4; United Future 1.
Noes 55
New Zealand Labour 42; Green Party 9; ACT New Zealand 2 (Douglas, Roy H); Progressive 1; Independent: Carter C.
Bill read a second time.
Debate on Crown Entities, Public Organisations, and State Enterprises
In Committee
The CHAIRPERSON (Lindsay Tisch): The House is in Committee for consideration of the performance in the 2009-10 financial year and current operations of Crown entities, public organisations, and State enterprises. The debate on the performance of Crown entities, public organisations, and State enterprises is a series of debates on individual financial reviews of Crown entities, public organisations, and State enterprises as reported by select committees.
A total of 3 hours is allocated for the debate. The debates on the individual financial reviews should be relevant to the entities’ performance in the 2009-10 financial year and their current operations. A member may have no more than two calls on each financial review. A compendium of the financial reviews available for debate is on the Table. Entities yet to be reported cannot be debated.
I understand that members have indicated the Crown entities, public organisations, and State enterprises they wish to debate. I understand that the first entity members wish to debate is the New Zealand Tourism Board.
New Zealand Tourism Board
Dr RUSSEL NORMAN (Co-Leader—Green): I rise to speak on this debate because tourism is one of our most important export sectors. In fact, over the last decade tourism was our single biggest export earner. Dairy has become more important over the last couple of years, but tourism has been our single biggest export industry. The New Zealand Tourism Board has done a good job in promoting New Zealand to the world, and the way it has done that is under our “100% Pure New Zealand” brand. But this has created an enormous conflict within New Zealand because of the contradictions around the “100% Pure New Zealand” brand. The “100% Pure New Zealand” brand is valued at many billions of dollars—possibly $18 billion, according to the 2005 Interbrand study. Not only is this brand how we sell tourism to the rest of the world, but also it underpins all of our other exports as well, particularly dairy: “Clean, green, and safe” is the foundation brand for dairy exports into China. So protecting this brand seems to me one of the fundamental jobs of the Tourism Board if we are to protect what has been our largest single export industry.
This brand has come under increasing pressure in the last 12 months. Just recently we saw the BBC in an interview with the Prime Minister raise a series of concerns about New Zealand’s environmental performance. That was based on the work of Dr Mike Joy, who is a leading freshwater ecologist in New Zealand. Those concerns undermine the “100% Pure New Zealand” brand on which our tourism industry is based. That is to do with the fact that the majority of our lowland rivers have become so polluted that at times they are unsafe for swimming, let alone drinking. In fact, according to Environment Waikato, 70 percent of the sampling sites within their catchment are unsafe for swimming; 75 percent are unsafe for stock water. We are finding that the “clean, green” brand, which is promoted overseas through images of wild, clean rivers—if members have seen those advertisements they will know that they often include wild rivers with people jetboating on them—is being undermined, as we destroy the natural environment in our country. One of the key drivers of the destruction of our natural environment over the last decade has been the intensification of dairy farming, which has resulted in increased pollution going into our rivers, and increased abstraction of water out of our rivers. It has also put pressure in terms of damming rivers so that they can be used for irrigation.
This Government is proposing hundreds of thousands more hectares of irrigated dairying in Canterbury alone, which will have massive downstream effects of pollution of our rivers and waterways. That pollution is fundamentally undermining our “100% Pure New Zealand” brand, which is our single most important tourism asset. Tourism has been our single most important export sector over the last decade. If we continue down this track of destroying our lowland rivers, which has been Government policy now for more than a decade from both of the major parties, we will fundamentally undermine our tourism industry.
The Prime Minister is the Minister of Tourism, and he looked extremely uncomfortable on BBC HARDtalk when he was asked about these issues. He was in denial and tried to say that one could find any old freshwater scientist, just like one could find any old lawyer, to say anything one wants. Actually, one cannot. The freshwater science community is absolutely of a consensus and of one mind that we are watching the destruction of our lowland rivers in front of our eyes, and that destruction is only accelerating under the pressures of intensive agriculture. We are fundamentally undermining one of our most important export sectors, which also impacts on all our other export sectors that rely on the clean, green, and safe brand that underpins the tourism sector.
We had an opportunity to do something about it with the National Policy Statement for Freshwater Management, but instead we turned it into a piece of meaningless drivel. We had a draft National Policy Statement for Freshwater Management, which actually would have resulted in the beginning of the clean-up of our rivers, but it got watered down by the Government when the statement came back from the board of inquiry. That national policy statement could have been the beginning of protecting our “100% Pure New Zealand” brand by beginning to clean up our rivers. People overseas understand that we are not 100 percent pure, but they will not tolerate our being in denial about the fact that we are not 100 percent pure, and they will not tolerate our doing nothing to start the clean-up process. If we can say to people that we have a problem, if we can acknowledge the problem, and if we can offer a plan to clean it up, then people will understand our position. Instead, the Government has a programme to make it worse by accelerating irrigation and intensive agriculture by undermining the one single serious attempt we had, the National Policy Statement for Freshwater Management, that could have started up the clean-up.
Report noted.
Human Rights Commission
Report noted.
Hawke’s Bay District Health Board
Report noted.
Waikato District Health Board
DAVID BENNETT (National—Hamilton East): It is with great pleasure that we talk about the Waikato District Health Board, and the way in which that board has achieved so much under this National Government through the leadership of the Hon Tony Ryall, and of Dr Coleman, who has also been very active in the health field, and who has made a huge difference in promoting health decisions with effective results for our region. When we look at some of the results that have come out of the Waikato region, and especially the Waikato District Health Board, the biggest thing that anyone who goes to the city will see is the massive change on the skyline as cranes operate on that health site. There has been an over $400 million expansion and renovation programme for the district health board in Hamilton. It is a huge programme; we are seeing a new emergency department being created, which has just gone online, and a new maternity department. A lot of work has been done on the wards and also in the theatres of that great institution.
The district health board has led, in the way it has delivered services to the community, and we see that in the way that probably an extra 50 doctors have been added to the health service, and 250 extra nurses. That is something that has been very, very much sought after across the country, and especially in the Waikato. We are delivering on access to elective surgery, with an extra 3,674 people having elective surgery. An extra 35 patients per week are getting surgery done, and those are tremendous numbers. It makes a real difference to those people’s lives, and it makes a difference to the effectiveness of their ability to contribute to our economy.
There is better immunisation, with an extra 868 two-year-olds being fully immunised in Auckland under National during 2009, which represented part of that total of 5,053 two-year-olds being immunised around the country—a record of 86 percent, which is something previous Governments would have been very jealous of.
There are shorter stays in emergency departments. I know that the Waikato District Health Board has been very careful to make the best use of its resources in trying to get the best results it can from its emergency department. That is a challenge in the Waikato because we have a lot of traffic injuries in that area, as we have a lot of roads that connect to the big centres of Auckland and Tauranga. So we deal with a lot of road trauma, and there is a special trauma department at the Waikato District Health Board facility, which makes a very effective contribution to recovery for people who are in those kinds of accidents, or in the types of industrial accidents we see in that region.
There are shorter waiting lists for cancer treatments, which is another thing the Minister of Health has been very careful to see some results from, in that regard. We have seen that across the country, and it is good to see that happening in New Zealand with that horrible disease of cancer. Nobody really knows what can be done, but we can do the best we can with our treatments and processes, to enable the best for our patients in those areas.
There have been a number of very significant additions to the health sector in the last 3 years. Elective surgery numbers continue to rise, and the Minister has taken particular interest in seeing those numbers rise, and in patients having the ability to get that surgery. The Waikato District Health Board has performed well, over the time, and it has done very well in its construction programme of renovating buildings for the sector, especially for the Waikato. If we look at some of the third-quarter results for 2010-11, and at the Waikato District Health Board, for example, in regard to diabetes and cardiovascular services, we see that our board ranks 8th out of the district health boards. That is a good ranking, but it is something the district health board will want to improve on, as well. It also ranks 16th in programmes giving better help for smokers to quit. In the increased immunisation figures, the Waikato District Health Board ranks No. 9.
Report noted.
Waitematā District Health Board
Waitematā District Health Board. I can remember the years from 2005 to 2008, when I would meet regularly with my colleague the Hon Dr Wayne Mapp, and we would compare notes on the long queues of constituents who had beaten a track to our respective electorate office doors with tales of woe about what was going on at North Shore Hospital.
Hon Dr JONATHAN COLEMAN (Associate Minister of Health): If there was a train wreck in health that we inherited, it would have to be the
I can now say that that long line of people has dried up, because the performance of the Waitematā District Health Board, which was in such dire straits, has been radically turned round under the leadership of Tony Ryall as health Minister, and, very important, of Dr Lester Levy as the chair of that board. Members will remember that that district health board was very dysfunctional. It was really run by people who were more interested in political considerations than in the health of the people of the North Shore and the Waitematā district. But we can say now that things really have turned round.
If we want a symbol of that, we can look at what is happening at Waitakere Hospital. That hospital was a complete mess; what have we got? From last week that accident and emergency facility is now open 24 hours a day to adult patients. Since last June it has been open 24 hours a day to children. That is a real service for the people of west Auckland.
We can also look at what is happening at North Shore Hospital. Tomorrow we are opening a new renal dialysis unit, so that people from the North Shore no longer have to go to other district health boards to get the dialysis that they need, basically, to save their lives and keep on living a functional life. That is an amazing achievement. If we looked at what was happening at the North Shore accident and emergency department under the last Government, we saw there were perpetually long queues of people, extending out into the car-park, trying to get the treatment they needed. They could not get into that department; it was diabolical—mayhem. The morale of staff was at an all-time low. We have delivered on our promises. We have opened the first stage of the Lakeview development, which will deliver a new, re-engineered accident and emergency facility that will meet the requirements of patients. It was designed by the staff, and it has had major input from them. There will be an assessment unit there, and more beds in that hospital to allow the clinicians to manage the flow of patients. There is a major achievement there.
We can look at what has happened in terms of doctors and nurses. Since National has come to Government, there have been 1,000 extra nurses nationwide, and 500 extra doctors. In Waitematā alone, there are 140 extra nurses and 70 extra doctors. So we are not just talking about front-line resources, we are actually putting them in there. This year an extra $104 million will be spent at the Waitematā board, to deliver the services that people need.
There is no greater example of that, I think, than what has happened nationwide in elective surgery. We were aiming for an extra 4,000 operations per year. We will actually deliver an extra 20,000 operations this year. That is an extra 400 operations per week. That is outstanding. People are receiving the surgery that they need. If we look at what that means, we see an extra 2,018 people have had elective surgery for important, life-inhibiting conditions over the past year in Waitematā. That is an extra 40 patients a week, which is really amazing progress.
If we look at the six key areas that Tony Ryall selected for us to focus on, we see that in Waitematā 100 percent of patients receive cancer treatment within 4 weeks—100 percent. No one has to go to Australia now, as they did under the last Government. People are being treated here at home. That is an amazing achievement.
Hon David Parker: We trained some therapists!
Hon Dr JONATHAN COLEMAN: These people can hark and yell, but the fact is that New Zealanders know that a National Government is delivering on its priorities for health. If we look at the immunisation statistics, we see that 90 percent of 2-year-olds in Waitematā are being immunised. That is an amazing improvement. There are shorter stays in emergency departments. The emergency department at North Shore Hospital is now functioning properly. I am not receiving complaints about it. People are coming in—
David Shearer: It’s not what everybody else is saying.
Hon Dr JONATHAN COLEMAN: My constituent David Shearer begs to differ. I can tell him that he will not get that sort of service on the Auckland City side. The service at North Shore Hospital has gone through the roof.
I think we can be very proud of what is being achieved in our district health board. We are on the right track.
CHRIS TREMAIN (National—Napier): I was stuck in the Business Committee. I seek leave that I may speak on the Hawke’s Bay District Health Board, which I appreciate the Committee has already been through.
The CHAIRPERSON (Eric Roy): We will put that option to the Committee. Leave is sought for Chris Tremain to make a contribution on the Hawke’s Bay District Health Board. Is there anyone opposed to that course of action? It appears not. If there are no further speakers on the Waitematā District Health Board, I will put the question on that, and then we will accept the call on the other. I need to think about that, because we did put the question, so you will be making a debate without the question being put—OK? I will now put the question on the Waitematā District Health Board.
Chris Hipkins: Leave for the question to be put again.
The CHAIRPERSON (Eric Roy): We will deal with this one first.
Report noted.
Hawke’s Bay District Health Board
CHRIS TREMAIN (National—Napier): I thank you, Mr Chairperson Roy, for putting my leave request and the Opposition for granting me the opportunity to speak in this debate on the Hawke’s Bay District Health Board. I wanted to speak about the Hawke’s Bay District Health Board, because over the last 3 years it has made significant progress. I acknowledge the chair, Kevin Atkinson, the chief executive officer, Kevin Snee, and his chief operating officer, Warwick Frater. They have done an exceptional job of turning round this district health board, lifting it from the bottom of the not-so-well-performing district health boards to the middle of the pack, and in some areas of the six key performance indicators it is actually performing at the top of its game. I want to compliment the Hawke’s Bay District Health Board and make sure it is aware that members from across the Chamber are appreciative of its efforts to deliver better health care to the people of New Zealand—in this case, the people of Hawke’s Bay.
The Hawke’s Bay District Health Board receives about $418 million for the area each year and that covers the area right up to Wairoa and Māhia, and further south to central Hawke’s Bay. The board received another $33 million in Budget 2010-11, which has enhanced its ability to deliver. In my own electorate of Napier that additional funding has been significant. Just a few short years ago the Wellesley Road Health Centre, in particular, was facing a difficult period. It had got to the end of a 10-year lease, and the lease was coming up for renewal at an extremely high cost, so the district health board was faced with moving on from that lease. The board renegotiated the lease, bringing down the lease costs, and now we have a secure, integrated health facility in Napier at a much lower rate for another 10 years. What is great news, in particular, is that the Ministry of Health, under the leadership of Tony Ryall, is now investing in that centre. We are seeing increased specialist appointments, the investment of another $500,000 into new digital radiology equipment, and the rolling out of new technology into that facility, which is absolutely fantastic news.
In Wairoa there have been issues in attracting doctors to that area, so the voluntary bonding scheme is certainly helping there. In particular, what Kevin Snee and his team have done is to merge some of the GP practices together into an integrated family health centre based in the old hospital facility there. Again, X-ray equipment has been brought into that facility, and, once again, it is a far more practical and sustainable facility for the people of Wairoa.
I will finish my speech by touching on the work of the immunisation team, who are now recognised around New Zealand as the top team in respect of the six key performance indicators that Minister Ryall has given. I particularly acknowledge Margaret Dalton and the healthy population teams—all the primary-care nurses. This is an example of a woman and her team who have got the wider public health system together and made huge gains in the immunisation of Hawke’s Bay people, and particularly of babies. We have a record 92 percent of our under 2-year-olds immunised, which is significantly up on what was previously delivered there.
I once again thank members for the opportunity to speak on this district health board. It has made huge progress under good leadership from the board, and strong leadership from Kevin Snee as the new chief executive officer. I am proud that the district health board is delivering fantastic services for my community. Thank you.
The CHAIRPERSON (Eric Roy): Because we revisited the decision, I will re-put the question.
Report noted.
Meridian Energy
Hon DAVID PARKER (Labour): Meridian Energy is, of course, one of the three Government-owned electricity generation companies that the Government says it will, if re-elected, sell half of.
Katrina Shanks: No, that’s not true.
Hon DAVID PARKER: I beg the member’s pardon—
Hon Member: 49.
Hon DAVID PARKER: Forty-nine percent of—half. If the debate was between 49 percent and 50 percent, we probably would not be having it. The real debate here is about why the Government is proposing to do this and, in the context of this debate, what is wrong with the performance of this company in its current ownership structure. The answer to those questions is that there is nothing wrong with the company’s performance and its current structure. Indeed, Treasury, in its papers released with the Budget, said that it is unlikely there will be a material improvement in the way in which this company operates as a consequence of half of it being privatised.
The financial review report from the Commerce Committee shows that in the year under review the net profit of Meridian was $184 million. It paid two dividends: one of $89 million followed by a final dividend of $68 million—a total of about $150 million in dividends in one year alone. It makes no sense to sell these companies, and Meridian is a good example of why that does not need to occur. Why, then, is the Government doing it? It is doing it because it has got New Zealand into a situation of a $16.7 billion deficit and its members have given themselves the excuse that, as a consequence of their own conduct in putting forward unaffordable tax cuts in earlier Budgets, they need to do this and that they are justified in doing it.
I want to deal with one of the other issues. Government members say this is going to improve capital markets in New Zealand to give ma and pa investors and KiwiSavers more choices of what to invest in. The point is, firstly, that these assets are already owned by New Zealanders through the Government. Every New Zealander owns them, not just the top 10 percent who so profited under the National Government’s tax cuts that they received 42 percent of those income tax cuts and therefore are disproportionately likely to be the people who can buy these assets if they are flogged off. But the underlying principle that the Government has to sell well-run Government-owned assets in order to help the private sector is wrong. Are we really so depressed about the ability of New Zealand’s private sector to generate good investment opportunities that we have to sell to the private sector what already exists on the Government’s balance sheet? What a narrow vision of New Zealand’s economic development in the future!
Changing who owns these companies will not change the productive output of New Zealand’s economy one iota. The companies will still be producing electricity. The only thing that could change, to the detriment of our productive sector, is that electricity prices will go up. Why do we know that? We hear the Government saying, for a start, that the private sector is always better at running businesses, and it quite rightly points to the fact that there is an increased private sector discipline to maximise shareholder returns. Well, we agree with that.
We agree that private ownership of assets does increase private sector disciplines to maximise shareholder returns. That is why, on average, Contact Energy and TrustPower charge more for electricity than the State-owned enterprises. That is why, if these companies are privatised, we will see maximisation of shareholder returns in two ways. Yes, we will see further trimming of costs to a minor extent, although I have to say salaries and those sorts of overheads are a minor proportion of total costs in these sorts of companies. But the other side of that same coin is that if we accept that private sector disciplines minimise costs, so as to maximise shareholder returns, they also maximise prices. It is two sides of the same coin—minimising costs and maximising prices.
That is particularly problematic in this area, because we know from reports of the Commerce Commission that the market is not competitive. A report produced under the auspices of the Commerce Commission that came out in May 2009 found that in the period under review New Zealanders on average had been overcharged—
Hon TONY RYALL (Minister for State Owned Enterprises): On reading the financial review of Meridian Energy, it is most interesting to note the focus of the report. The Commerce Committee noted Meridian Energy’s growing wind portfolio and the number of options it had in the pipeline in this area. There were a number of questions on a West Coast project and its impact on the environment—apparently Meridian Energy stood by this project—and it also talked about Meridian Energy’s offshore renewable projects being supported by the committee.
Of course, the other strong feature of any review of Meridian Energy would be the impact of the Christchurch earthquakes. I think, in light of the events of yesterday, we can all appreciate the sense of frustration, anger, disappointment, or whatever we want to call it, in Christchurch. So many people have lived on the edge for so long, and to have yet another earthquake is obviously very destabilising and worrying for a lot of families down there, but strong leadership is being provided by the authorities, I am absolutely sure. An important part of Meridian Energy, a company with strong links to Christchurch, is the work it is doing to assist the electricity authorities in the whole of the Canterbury area in what they are doing.
The member opposite, David Parker, spoke previously about some of the Government’s thinking around the mixed-ownership model. We would not think that Labour members would even acknowledge that electricity prices went up 72 percent in 9 years under the Labour Party opposite, when in Government. Over those 9 long years, power prices went up 72 percent. Those members can stand up now and wring their hands about the effect of electricity prices on consumers, but they just ignore what happened during those Clark years, when prices went up 72 percent. Ownership is not a feature of price rises and that is not an argument to be accepted.
There are a number of reasons why the Government is looking at a mixed-ownership model, much like we have with Air New Zealand—a model that was supported by the previous Government—in respect of Meridian Energy and a number of other companies. The first is recognition that the New Zealand economy, and the New Zealand Government, is facing huge demands on capital. Over the next 4 or 5 years, we will need about $32 billion of capital to invest in vital public infrastructure like roads, hospitals, and schools. We can face the reality that we might have to borrow that money, or we can say that some of our current capital is invested in areas that we could free up and move into higher-priority areas. I think hospitals, schools, and roads, and building that infrastructure, are vital for the future of New Zealand.
Secondly, a mixed-ownership model provides an opportunity for New Zealanders to invest directly in assets that are important to the New Zealand economy. You know, I can recall going to a public meeting in Mount Maunganui in my electorate last year. It was a fascinating meeting. We talked about the fact that the Government was trying to move the incentives to encourage people to invest not in residential property but in productive investments. One of the older guys got up and said: “Well, if we’re not to invest in residential property, what do you want us to invest in?”. They had spent years investing in Blue Chip and years investing in risky finance companies, and had not had the opportunity to invest in blue-chip companies that help build the infrastructure of New Zealand. The mixed-ownership model will give those people an opportunity to have a high-class investment in the future of New Zealand. It will allow them to have a secure investment and a better investment than other options they would have to invest in.
It also gives our superannuation funds an opportunity to invest back into New Zealand. People’s KiwiSaver, people’s savings, can be invested in a good quality New Zealand company, and there will be improved opportunities for that. There will also be opportunities for improved performance by the companies, because we know there is much more scrutiny on the performance of the publicly listed energy companies, their capital intentions, and their behaviour in the market, than there is on Government-owned businesses. There are real opportunities in using the mixed-ownership model to benefit Kiwi mums and dads in the next few years.
Report noted.
Mighty River Power
Hon DAVID PARKER (Labour): Mighty River Power is the next of the companies that the Government proposes to privatise half of. I want to respond to some of the comments made by the Minister for State Owned Enterprises. He said that we have to do this in order for the Government to afford to build roads, hospitals, and schools. Here is a little lesson in history for Mr Ryall. Governments have to do that every year. They have done that every year since New Zealand was settled—every year. In fact, Labour did that when it was in Government. We did that. We bought back Air New Zealand; we did not sell it. We did not run the books of this country so poorly that New Zealand was in the position of having to sell the family silver. Make no mistake—selling the family silver is what the Government is about. It is selling assets that are currently owned by all New Zealanders to the very, very small subset of New Zealand that this Government so plainly governs for. It is not for the majority; it is for the small minority that has profited handsomely under this Government—that is, 42 percent of the Government’s income tax cuts went to the top 10 percent, and they are the people who will be buying shares initially. Then they will take a profit as they sell the shares, like that which occurred in respect of Contact Energy, and eventually most of those shares will end up in overseas ownership.
Treasury was express in its advice to this Parliament that came out with the Budget documents. Treasury said that for the Government to achieve its objectives—and I am essentially quoting what Treasury said—significant proportions of overseas ownership in electricity State-owned enterprises would have to occur. Any pretence to the contrary really is just pretence.
The profit this year of Mighty River Power was $84.6 million. In addition, it had dividends. Its dividend of $80 million was paid in 2009-10, after a special dividend of $150 million in the 2008-09 financial year. The performance of these companies, managed as part of the Crown portfolio of State-owned enterprises, has been very good. It need not be better; the only way profits can go materially higher is if electricity prices go up further. As I said in an earlier contribution, there is no doubt that if these companies are sold into private ownership of 49 percent or 50 percent, the price of electricity will go up.
The last contribution from the Minister criticised Labour for the increase in electricity prices during our term in Government. We did two things in response to price increases. Firstly, we brought lines increases under control by regulating them, which was necessary. The rate of increase dropped dramatically to, essentially, the rate of inflation. Then, under our watch, the Commerce Commission tried to get a handle on whether there was overcharging in the electricity wholesale and retail markets. That report did not come out until May 2009, after we had left office. It found an overcharge of 18 percent, on average, totalling $4.3 billion worth of excessive charges to New Zealand consumers under the period in review. As a consequence, the Government should have done something to bring those excessive charges under control. But, no, Government members have washed their hands of it, and, in fact, since then electricity prices have gone up, according to the Minister today, by 14 percent.
Su’a William Sio: How much?
Hon DAVID PARKER: They have not decreased; they have gone up by a further 14 percent. If people want to keep those assets in New Zealand ownership, if they want to keep control of their power prices, and if they want to keep our industries and jobs that are reliant upon large electricity usage and prices being kept under control, they can use their choice at the forthcoming election; they have a choice, because we are just not going to sell those assets. Most New Zealanders know that those assets have been built up over generations. They are well run, and they are profitable. The system works better in a long, stringy country such as ours if we have integration of those companies, rather than competition in theory but market gouging of consumers in practice.
The review of Mighty River Power takes us to the same conclusion as the conclusion we got from Meridian Energy: it is a nonsense if we sell off these companies. They are well run, and they are profitable at the moment. The Government will not make any more money as a consequence of this sale than it would get out of dividends, because its interest bill savings would be lower if it kept the assets and took the dividends.
PESETA SAM LOTU-IIGA (National—Maungakiekie): It is a privilege to speak on the financial review of Mighty River Power. I start by saying what a great company—what a great company—Mighty River Power is in the types of businesses that it runs throughout this country and also around the world. Part of its headquarters is in my electorate of Maungakiekie, and people of my electorate are certainly thankful for the employment opportunities it provides locally. It runs a very efficient and effective enterprise, and it is certainly welcome in my electorate, if not in Mr Parker’s electorate.
Todd McClay: He hasn’t got an electorate.
PESETA SAM LOTU-IIGA: Of course; that is right. He lost his electorate some years ago.
This debate has turned to the mixed-ownership model of our energy companies. It must be said that this mixed-ownership model has worked in the past. The honourable Minister for State Owned Enterprises referred to the current state of Air New Zealand, but also Telstra and numerous companies around the world have used the mixed-ownership model effectively. They have used it, firstly, to raise capital, and, secondly, to provide investment opportunities for investors—both private and family investors, and also for superannuation funds. The mixed-ownership model will provide investment opportunities for our superannuation funds, our KiwiSaver investment funds, and our capital markets, which are in dire need of expansion.
The Minister also referred to the fact that the partial sale of these companies would result in assets being purchased—other infrastructure assets. Currently, as we all know from Budget 2011, there is a $16.7 billion deficit for this financial year. One of the ways of addressing this deficit is through our infrastructure and investment strategy, which requires funding. We do not want to go to Japanese financial institutions or Chinese lenders for that capital. Capital is available in this country through the mixed-ownership model, and it will provide the roads, schools, and broadband investment we spoke about earlier this afternoon. But also it is about providing for those high-priority infrastructure projects that this country needs in order to lift our economic growth, and to lift productivity for our businesses across this country.
Private investment will bring with it financial discipline. It brings with it the discipline of being in a financial market where analysts and equity specialists can break down a company’s assets and liabilities, can break down the balance sheet and its profitability, and can break down its long-term sustainability as an enterprise. That is certainly one of the advantages of this ownership model.
Mr Parker in the previous speech referred to the fact that such companies maximise prices and minimise costs, and that the two are actually interchangeable. I beg to differ, because minimising costs and running corporations or businesses effectively is a far cry from maximising prices. They are two distinct things. Mr Parker also failed to mention that the other way of increasing an organisation’s capability is to increase volume. That is exactly what Mighty River Power is doing—that is exactly what it is doing. It is investing overseas. We heard from Doug Heffernan in his testimony that Mighty River Power committed US$250 million for investment in geothermal developments overseas, and it is in partnership with overseas organisations such as GeoGlobal Energy. These organisations are stable, they are market leaders, and, in collaboration with Mighty River Power, they are leading the world in geothermal technology.
Report noted.
New Zealand Railways Corporation
CLARE CURRAN (Labour—Dunedin South): Last Thursday was a tragic day in Dunedin, and it was a tragic day for our skilled workforce in this nation. Last Thursday 41 skilled jobs were announced as being made redundant—41 skilled jobs in the critical area of manufacturing in this country, which is the bedrock of our workforce and the bedrock of our rail engineering business. Forty-one skilled jobs will go; 41 families will be affected; 41 incomes, and the tax paid, will be lost to the local economy, and that tax will be lost to the country. There will be 41 potential extra additions to the dole queue in Dunedin—and for what?
Steven Joyce said today, on behalf of the Prime Minister, that no analysis had been done by his Government of the lost income, the lost GST, and the extra cost of benefits caused by his Government’s decision to have these lay-offs. It is just extraordinary. Yet in the Budget a few weeks ago we heard from both the Prime Minister and the Minister of Finance that somehow, miraculously, 170,000 new jobs were going to be created in this economy over the next 4 years. When the Acting Minister for Economic Development was put on the spot about this last week in the Commerce Committee and was asked where those jobs are coming from and what analysis has been done by him or his department on what sectors the jobs would come from, the answer was that they had not done any analysis and they do not know. They just think it will happen.
Jobs have been lost in rail engineering and KiwiRail and mythical jobs are supposedly being created. Dunedin has been lied to. When the Minister of Transport, Steven Joyce, was asked last Thursday in this House about those KiwiRail job losses he said that KiwiRail must be able to operate without political interference, despite promising last May that there would be plenty of jobs for the workers at Hillside. This also directly contradicted KiwiRail’s chief executive officer, Jim Quinn, who has been consistently saying that he has to take that narrow commercial focus because of Government policy.
So somebody is not telling the truth here. Either it is Government policy that KiwiRail takes a narrow commercial approach and is not interested in the economic flow-on effects to the local economy of investing taxpayers’ money in those jobs and in that industry, or it is not. It makes a mockery of the attempts in Dunedin for the last 18 months by a group of committed people, including the Dunedin City Council, the Chamber of Commerce, the engineering cluster of nearly 70 firms in Dunedin, all of the MPs, the rail union, and KiwiRail itself—until it basically got gagged—to sit around the table and try to come up with a strong economic case for keeping work in Dunedin and for keeping rail engineering business in this country. It is a mockery.
What has happened since those redundancies have been announced? The local National list MP has been strangely silent. He sat around that table. He said he was committed. He said he was taking the case to Wellington. Where is the evidence of that case being taken to Wellington? And where is the evidence that the Government is listening? There is no evidence, at all. It has been obvious for 2½ years that this Government is not committed to those workshops. It is not committed to the rail engineering business in this country, and wants to get rid of it, and will get rid of it. That is Government policy.
KiwiRail will not guarantee the future of the rail workshops. Instead, the Government has clearly signalled that there is no future for a rail engineering model that is about building and refurbishing our rolling stock. Any jobs that will remain will be maintenance and repair—probably not in Dunedin. Where is the local National Party member on this issue?
CHRIS HIPKINS (Labour—Rimutaka): There is a bit of a double standard operating in this Government. The Government is willing to intervene when the interests of its corporate mates are at risk, but when it comes to protecting Kiwi jobs, the Government is totally and utterly absent and does not give a stuff about them. No better example exists than in the way the Government is treating KiwiRail. I speak as a resident of the Hutt Valley, where we have one of the two major rail workshops in the country, the Hutt Railway Workshops in Woburn.
The CHAIRPERSON (Lindsay Tisch): I remind the member that we are not talking about KiwiRail; we are talking about the Railways Corporation. Focus in on the Railways Corporation, not on KiwiRail.
CHRIS HIPKINS: I am happy to speak about the New Zealand Railways Corporation and the Government’s lack of commitment to rail in general in this country. In this year’s Budget, no relief was provided to rail. In fact, we in this country treat rail entirely differently from the way we treat roads. We put financial constraints on rail that we simply do not put on our roading system. That is one of the reasons why rail in this country is facing such a tough time. We have already seen lines being closed in provincial New Zealand because of this Government. The Stratford line has already been mothballed. The Napier to Gisborne line is at risk, as is the Auckland to Whangarei line and the northern Wairarapa line. They are all at risk under this Government, because this Government simply does not want to invest in rail.
It is quite happy to go out and provide corporate subsidies to the people it supports and who support the Government, but it is not willing to intervene to protect Kiwi jobs, to make sure that investment in infrastructure stays in New Zealand, and to make sure that we put that investment to good use. Rail provides an amazing opportunity to invest not only in New Zealand jobs but also in the future of the New Zealand workforce. We should be building trains locally here in New Zealand and using the opportunity of building those trains to train the future workforce of this country.
Clare Curran: Look at him laughing. You think it’s a joke.
CHRIS HIPKINS: I know that Wayne Mapp thinks it is hilarious that New Zealand would actually back New Zealand workers and New Zealand jobs. I know that is a point of humour for the National Government, because it does not believe in doing that. The Government would much rather have those jobs exported off to China rather than invest in buying locally and in supporting the local economy.
I will talk about the fact that the rail system is vital to our economic future as a country. We cannot have every piece of freight on the road, and we cannot simply restrict ourselves to the main trunk line, which is what this Government wants to do. The main trunk line through the centre of the North Island and the interisland ferries are all this Government is interested in supporting. I think we need a more comprehensive vision for rail than that. New Zealand’s engineering and manufacturing expertise is being lost because of the lack of vision by this Government.
New Zealand should do what other successful economies do. Other successful economies around the world back themselves and their own workers, and they use the power of Government procurement for the benefit of their own countries and their own economies. Why are we in New Zealand not willing to do that? Why is this Government not willing to back Kiwi workers and the Kiwi economy? It is purely ideological. The Government is willing to put our laws and regulations up for sale for its corporate mates Warner Bros and Skycity. It is willing to do that for the film industry and the gambling industry, but it is not willing to back the rail workers in this country. Frankly, that is disgraceful. New Zealand workers should be given a fair go.
I do not think we should be exporting jobs offshore. It is time to say that enough is enough. We hold ourselves up as this virtuous country because we simply will not take any steps to protect New Zealand jobs. That is not good enough. We should start in the rail industry by protecting the workers at Hillside and Woburn and by building locally the new trains and wagons that are needed. We have the skilled workforce here in New Zealand. Our workshops can compete if they are given the opportunity to compete. It can be an economically successful option. This Government is simply not willing to consider that. It is willing to intervene for Warner Bros and to prop up Skycity, but it is not willing to do anything to protect the jobs in the rail industry in this country. That is a disgrace.
AMY ADAMS (National—Selwyn): I am very happy to take a call in this debate on the financial review of the New Zealand Railways Corporation. I start by commenting that I found it quite interesting that two fiery and seemingly impassioned speeches have just been made by Labour members, but when the Finance and Expenditure Committee looked at the financial review of the New Zealand Railways Corporation—
Hon Nathan Guy: What did they say?
AMY ADAMS: —the Labour members of the committee said they had no matters to bring to the attention of the committee. Is that not interesting? They could not be bothered reviewing the New Zealand Railways Corporation at the select committee, but now apparently all the evils of the world are being revealed and it is a tragedy that they have to debate and bring to the attention of the Committee.
The New Zealand Railways Corporation is the story of Labour’s economic delinquency. Michael Cullen, in his brilliance, paid $1 billion for an asset worth a mere $200 million. In that one sentence is a picture of exactly why we inherited this country in the mess that we did. Labour went out and paid $1 billion for an asset worth $200 million. That is the sort of economic management that Labour wants to take to the New Zealand public and say to them that they should get behind it. Well, that is not going to happen.
The National-led Government is committed to New Zealand rail. It is committed to turning round the broken asset that we inherited from the last Government. I can tell members that we are not going to do that by going back to the bad old days of subsidies and tariffs, when New Zealand was told that it was not good enough to compete on a global stage and that the only way it would get work was through subsidies. We say to New Zealand that we can compete. We have shown that time and time again. We can be the world’s best, but we are not necessarily going to be world leaders in every single area of manufacturing.
This Government has just seen the purchase of 20 new locomotives. Yes, they came out of China, but I can tell members this: they were on time, they were on budget, they are twice as powerful as the existing stock, they are quieter, they are more efficient, and they are the sort of railway stock that will turn this asset round. If that party had not destroyed the New Zealand economy, there would be more money to spend. As it is, we have to be very careful with our spend. We spent a quarter of a billion dollars in Budget 2010 on New Zealand Railways Corporation and a further quarter of a billion dollars in this Budget on New Zealand Railways Corporation.
We have made a massive commitment to the Auckland passenger rail system.
Hon Nathan Guy: That’s right.
AMY ADAMS: In my good friend the Hon Nathan Guy’s electorate, we are right now rolling out the electrification of the extension to Waikanae and double-tracking through that electorate. This Government is committed to rail and to turning round the New Zealand Railways Corporation into an asset that is of benefit to the New Zealand taxpayer. I can tell members that it certainly was not of benefit when we inherited it from the last Labour Government. But we will not go back to the days of subsidies and tariffs. If Labour wants to go out there and grandstand on going back to the bad old days of tariffs and subsidies and inefficient manufacturers, then I dare it to do that. I dare Labour members to stand up and say that they are proposing to go back to subsidising inefficient production and putting tariffs in place, when everyone who is a sensible thinker knows we are moving into a free-market economy where efficiencies and global competitiveness is what will lift this country’s production. It certainly is not the head-in-the-sand economic delinquency that we saw from the Labour Government for 9 years, which saw it pay $1 billion for a $200 million asset.
I will say one further thing in my contribution. I want to commend KiwiRail for the work it has done in my electorate to improve rail safety. It has installed lights and warning signals at several of the rural crossings in my electorate that have been of concern to me for some time. I have been discussing this with KiwiRail since I came in, in 2008. KiwiRail has listened and responded, and as I result I am very pleased that the people of Selwyn will be that much safer when they are crossing the tracks in rural parts of my electorate. KiwiRail is responsive and it is working to improve its services. I think this country can be increasingly proud of the rail system we have, and that is thanks to the hard work of Minister Joyce, Associate Minister Guy, and this National-led Government to turn round the asset of the New Zealand Railways Corporation.
I also commend the Transport and Industrial Relations Committee, which is ably chaired by my friend David Bennett, which considered this matter. I would have thought that if Labour was that concerned about these crocodile tears we are seeing, then the previous Government would not have overseen the signing off of the Matangi contract. Labour does not talk about that, does it? The previous Government signed a contract for the Matangi purchase to Korea—to Korea! It was not to New Zealand, but to Korea.
Report noted.
Accident Compensation Corporation
Hon Dr NICK SMITH (Minister for ACC): It is so appropriate that we go from the financial disaster that Labour left for this Government on rail and come to ACC. We know that in the last year Labour was in office, this corporation lost $2.4 billion. In the following year, the year that crossed over between the two Governments, ACC lost a further $4.8 billion. That amounts to over $4,000 for every New Zealand household—$4,000 for every New Zealand household. In the course of that aftermath, we had the inquiry that said that not only had there been these huge losses but—
The CHAIRPERSON (Lindsay Tisch): The member cannot say “Tell the truth.” I ask the member to apologise for that and withdraw the comment.
Chris Hipkins: I withdraw and apologise.
Hon Dr NICK SMITH: It is a matter of public record that the Public Finance Act was breached in the non-disclosure—
Hon Maryan Street: No, it’s not. That is absolutely untrue.
Hon Dr NICK SMITH: The guilty lady, Maryan Street, the one who presided over ACC in her first year, in good shape—
Hon Maryan Street: I raise a point of order, Mr Chairperson. You have just pulled up my colleague for requiring the Minister, by interjection, to tell the truth. The Minister then went on to say something exactly opposite to the findings of that public inquiry, which was undertaken by Mr English. That is not the truth.
The CHAIRPERSON (Lindsay Tisch): These are debating points. The member will have an opportunity to rebut what the Minister has said, as any member can. My previous point is a very clear ruling—I refer to Speaker’s ruling 43/1, which I brought up the member’s colleague for earlier. But the point the member has made is something that she can rebut when the time comes.
Hon Dr NICK SMITH: It is a matter of public record that the Public Finance Act was breached, and that is extremely serious. Maryan Street—
Hon Maryan Street: I raise a point of order, Mr Chairperson. I take offence at that. The Minister is perpetuating a mistruth. He is misleading this Committee. That is absolutely the wrong conclusion from that public inquiry, which the Minister of Finance ordered. It came out and said there was no breach of the Public Finance Act.
The CHAIRPERSON (Lindsay Tisch): I have previously ruled that although the member is obviously not happy with what the Minister has said, these are debating points, and the member will have the opportunity to rebut them if she wishes to take a call. The Minister did not argue the point about telling the truth, which was the point I brought up earlier on. There is a very clear ruling, Speaker’s ruling 43/1, that states that saying “Tell the truth!” is out of order. There is a very clear message here. The phrase “Tell the truth!” is unparliamentary. The Minister did not say it. I say to the member that she will have the opportunity to rebut all the points that have come forward.
Hon Dr NICK SMITH: I can understand why Labour is so sensitive about this point, because it goes to the core of the issues and the debates this year about the competency of the Government to manage the public’s finances. It is a matter of public record that the previous Labour Government breached the Public Finance Act in not disclosing hundreds of millions of dollars of losses in ACC. That member, Maryan Street, as the Minister for ACC at the time, must accept reasonability for that.
CHRIS HIPKINS (Labour—Rimutaka): I will quickly correct what the Minister for ACC has just claimed. The independent inquiry that his Government called for found that the previous Government’s Ministers did not do anything wrong. That was clearly stated by this Government’s own independent inquiry. To suggest otherwise is simply untrue—full stop, end of story.
This Government is hanging a massive “For Sale” sign over New Zealand, and ACC is smack-bang in the middle of the fire-sale list. This Government is interested only in hocking off everything as fast as it possibly can. Nick Smith’s talk of a financial crisis in accident compensation is absolute nonsense. I tell him to look at the financial review from the financial year in question. ACC was over $2.5 billion in surplus, which is a $2.5 billion decrease in ACC’s liabilities this year. ACC is not now and never has been broke or broken, despite Nick Smith’s best attempts to suggest otherwise. Scaremongering has been done by Nick Smith because this National Government has one agenda in accident compensation, which is to carve it up and hock it off to its private sector mates.
National does not believe in accident compensation as it stands now. It believes that it should be provided by the private, for-profit insurance industry. That is the National Party’s sole goal in accident compensation: to prepare accident compensation to be privatised. It can use terms like “competition”, but its model of competition is privatisation by any other name.
Nick Smith is offensive enough to go around saying that it is no different to deregulating the broadcasting industry. I say that there is one major difference: New Zealanders did not give up any of their civil or legal rights under broadcasting law. Under the accident compensation scheme they have given up their legal rights in order to be part of the scheme. This Government sees that New Zealanders giving up their legal rights to be part of accident compensation creates all sorts of fascinating, interesting, profit-making opportunities for its corporate insurance mates. I think that is wrong—I think that is fundamentally wrong.
This Labour Opposition will be arguing and fighting against the Government’s plans to privatise accident compensation. We send a very clear word of warning to the insurance industry: insurers will invest in accident compensation at their own peril. A future Labour Government—and we already have a commitment from the Greens to support us in this—will not support this change. We have reversed a National Government’s privatisation of accident compensation before, and we will do it again.
This change will not stand, because ultimately it undermines what should be a world-leading scheme. Despite all Nick Smith’s scaremongering, the Government has still not come up with evidence to suggest that this change will work and that New Zealanders will end up with better cover or better compensation as a result. The independent PricewaterhouseCoopers study found that ACC is already offering the lowest cost accident cover in the developed world. Nick Smith’s own officials provided evidence to the Transport and Industrial Relations Committee that New Zealand employers are paying, on average, half what Australian employers are paying for accident cover.
Perhaps that is what National meant by catching up with Australia: loading a whole lot more compliance costs on to our employers. That is what this Government seems to think is meant by catching up with Australia. National certainly does not seem to want to catch Australia when it comes to wages any more; in fact, Bill English thinks that it is a competitive advantage to have lower wages than Australia.
Moving back to accident compensation, I say that this Government manufactured a crisis in accident compensation. It is not broke. It never has been broke, and it is not broken. This is all part of the National Party’s agenda to strip out accident compensation and hand it over to the private insurance industry. New Zealanders will end up paying more to get less. The only way the private insurance industry will be able to make money out of accident compensation is by declining more claims or decreasing cover, and that is fundamentally wrong. New Zealanders, having given up their legal rights in order to be part of the scheme, deserve better than that.
As the Christchurch earthquake showed us, a lot of unforeseen things can happen in this country. Accident compensation was there when Cantabrians needed it, and the extension of accident compensation cover that Nick Smith and the Government were able to offer following the Christchurch earthquake would not have been possible if he had already privatised accident compensation, as he intends to do.
Nick Smith and the National Government are hanging a massive “For Sale” sign over New Zealand, over our State-owned assets, over accident compensation, and over everything else—even over our law books—and saying that it is for sale if the foreign investors are willing to pay for it.
HILARY CALVERT (ACT): There has been a lot of agreement about the Accident Compensation Corporation here this afternoon, and I would like to recap that. It has been agreed that there was a loss of $2.4 billion in 2007-08, followed by the Labour Government outdoing itself with a $4.8 billion blowout in 2008-09, and now there is a surplus of $2.5 billion.
David Shearer: That’s remarkable, isn’t it?
HILARY CALVERT: That is a remarkable turn-round by this National-led Government. The Opposition has argued constantly—and continues to argue this evening—that there was a never a problem and that things are just fine. Well, losing $4.8 billion of New Zealand’s money is not fine.
Costs and claims have also dropped substantially, and there is something else to celebrate here. Labour, it seems, equates higher claim costs with success. Lower costs come from fewer claims and improved rehabilitation, and I am sure employers and employees alike prefer that definition of success.
Much has been made of the $638 million savings over 4 years to the non-earners account. Those who object would prefer that the Government keeps increasing that account for all eternity. It is simply not sustainable. When faced with a record national deficit, the country must spend less, not more. We must live within our means, not borrow and hope.
With accident compensation National, again with ACT’s help, is on the right track. The proposed extension of the Accredited Employers Programme from next April is also to be applauded. Employers do a far better job of managing injury and rehabilitation costs than the State does. The Accredited Employers Programme has so far resulted in 12 percent fewer claims and 15 percent lower costs. Only 136 major employers are part of the programme, and it is past time that more were allowed to reap the scheme’s benefits.
One change that ACT is particularly excited about is the plan to open ACC’s work account to competition. This is an ACT initiative, and we are proud of it. It is hardly revolutionary, of course. A mix of private and State insurance is the norm in most developed nations. It worked very well when New Zealand last tried it in 1998. Levies went down, as did the number of accidents. It was scrapped by Labour, not because of poor results but because of poor ideology.
Choice forces everyone—employers, employees, and ACC itself—to lift their game. Let us put it this way. If a private insurance company suffered a $4.8 billion loss in 1 year, it would be out of business—unless, of course, the Government added it to its long list of taxpayer-funded bail-outs.
I will quote my colleague Sir Roger Douglas at this point. In this same debate 2 years ago Sir Roger said the following about ACC: “The real problem with ACC is that it is a monopoly … Monopolies always fail, and they fail for one simple reason: they are not required to offer cost-effective and good-quality services to attract customers. Monopolies fail to meet consumer demand because consumers simply have no other choice. Monopolies fail to reduce costs because they have no competition to drive out their high-cost structure. Only competition in this area will make the fundamental changes and restore ACC to some level of reasonable performance.” That statement was correct then, it is correct now, and it always will be. It holds true whether we are talking about accident compensation or any other part of society.
It is worth noting that in 2005, under the then leader Don Brash, National’s policy was to open to competition all aspects of accident compensation, except for the non-earners account. This has always been ACT policy, and it remains so. When the Government sees the benefits of competition in the work account, we hope it looks to implement National’s 2005 policy.
MICHAEL WOODHOUSE (National): One of the things that perplex me is that if Labour is so comfortable with its performance in its term in Government, is so relaxed that there was no problem with the Accident Compensation Corporation, as Mr Hipkins claims, and that everything was all right despite these so-called paper losses, why does the member who was responsible for the debacle that was accident compensation under Labour get so excited every time we point out those shortcomings?
In the interests of reinforcing those shortcomings, I will reiterate what the Minister in the chair, the Minister for ACC, has said. In August 2008 the Labour Cabinet had every opportunity to include in the Pre-election Economic and Fiscal Update the $305,168,000 that ACC and the Department of Labour had told the Labour Government was required in the non-earners account. The Labour Government chose not to act, on the basis that the matter had not been subject to sufficient detailed scrutiny. How on earth can one get more detailed scrutiny than down to the nearest dollar?
The report into that matter showed unequivocally that choosing not to act was in breach of the Public Finance Act. Labour’s response was to hang Treasury out to dry. So much for loyalty to the Government department that stood by the Labour Government! That was very disloyal, in my view.
Hon Maryan Street: That is quite wrong.
MICHAEL WOODHOUSE: Amongst all that we have not just the $2.4 billion that was presided over by the member Maryan Street, who is ferreting on, but half of the $4.8 billion deficit that was incurred in the first 6 months after National came to power should also be taken responsibility for by Labour.
There are 7.2 billion reasons to improve the performance of ACC, and that party still says there were no problems. A couple of financial reviews ago, when the member interjecting was no longer the spokesperson on ACC, the then spokesman, Mr Parker, came to the financial review and made some very interesting comments about the Accredited Employers Programme, which the previous speaker Hilary Calvert referred to. He basically said there was no evidence of improvements in rehabilitation or cost as a consequence of the Accredited Employers Programme.
That comment was pretty consistent with Labour’s view that the only people who can operate ACC are the Government and ACC. There are a couple of areas where Labour very begrudgingly accepted that that was not the case. The first was elective surgery, where 88 percent of all treatments are undertaken in the private sector. When Labour came to power it was very keen to do something about that, but then when Labour realised how efficient, how cost-effective, and how important that elective surgery was to rehabilitation it left it alone.
The other thing that Labour very begrudgingly accepted was the Accredited Employers Programme—the partnership programme. Despite the programme being very much at odds with Labour’s ideological beliefs, Labour left the programme alone, although I note that the number of people in the Accredited Employers Programme drifted off in the last few years.
Mr Parker claimed there was a lack of evidence to support it, so I was delighted to see, amongst all of the stocktake reports that were prepared for the Minister in June last year, that the Review of Employer-managed Workplace Injury Claims had exactly answered those questions. It asked whether accredited employers show lower medical and rehabilitation costs. They do not; they show higher rehabilitation costs and medical costs. But guess what that does? It lowers weekly compensation costs. Employers invest early because they know that getting people back to work faster and in a lasting way reduces total costs to the employer. The review also found that the time between the date of the first injury—
Hon Maryan Street: It’s not what he’s talking about.
MICHAEL WOODHOUSE: It is what I am talking about; I am talking about the Accredited Employers Programme. We will come on to what the Government is proposing amongst the discussion document on increasing choice. Goodness me! “Choice” is a word that is the antithesis of Labour’s ideology. Choice? No, we could not have that.
The Review of Employer-managed Workplace Injury Claims by Martin Jenkins and the ACC’s stocktake report unequivocally showed that there was faster rehabilitation, higher costs on treatment, lower costs on weekly compensation, and overall better outcomes not only for employers but also for employees. They also showed that the really good accredited employers are doing the rehabilitation not just for the work-related personal injuries but for the personal injuries that are not work related. They do not really care how these people got injured; they just want them back at work. And so do we, which is why this document is a really good start. I look forward to the consultation on it. We keep ACC in the game. I think that is a really good improvement on the sensible changes that were made in 1998. If employers do not think there is cost-benefit in it, they do not need to change.
Report noted.
New Zealand Qualifications Authority
CATHERINE DELAHUNTY (Green): The Green Party would like to take a call on the New Zealand Qualifications Authority and the issues associated with it, because we think that in education the distinctions between the roles of different agencies are sometimes very important.
We are not criticising the New Zealand Qualifications Authority this evening. We think the New Zealand Qualifications Authority has a pretty clearly defined and distinct role, but we are quite concerned that a decision has been made with the Budget, or a proposal amongst the many rumoured mergers, that there may be a merger between the New Zealand Qualifications Authority and the Education Review Office. It is quite an important issue when one thinks about the relative functions of the New Zealand Qualifications Authority and the Education Review Office.
Jo Goodhew: I raise a point of order, Mr Chairperson. I just ask for clarification. I believe we are dealing with the financial review of the New Zealand Qualifications Authority, as opposed to any announcements in the Budget.
The CHAIRPERSON (Lindsay Tisch): I hear what the member says. The brief is that we are looking at organisations’ performance, as recorded in 2010, and current operations. There is some leeway, although I remind the member that we are on the financial review of the New Zealand Qualifications Authority.
CATHERINE DELAHUNTY: In terms of the current operations of the New Zealand Qualifications Authority the Green Party thinks that the authority has a very distinct role: dealing with qualifications in the education sector. We believe that that role needs to be maintained and upheld.
In the past year the whole issue of qualifications has been the subject of a major political debate not only within the New Zealand Qualifications Authority but right throughout the education sector. We think it is very important that the New Zealand Qualifications Authority should continue to focus on the level of qualifications that it does best, which is right across the sector of a certain age group of young people. We think the New Zealand Qualifications Authority does a reasonable job of that, but there are current discussions about merging the New Zealand Qualifications Authority with the Education Review Office, and although that may be seen as the future, we have to look at both the current financial performance of an organisation and its capacity at present to carry out any broader functions. We will be concerned if the functions of the New Zealand Qualifications Authority do not carry on as they are currently described but become part of a broader agency that is focused purely on measuring and assessment.
I myself have written New Zealand Qualifications Authority documents. I worked in polytechnics for many years, and I understand what the New Zealand Qualifications Authority does, but I do not think it is the same thing as the kind of educational review that other agencies carry out. Its functions do not need to be expanded into areas that could potentially risk the integrity of what goes on in schools. Although we are not critiquing the authority’s financial performance, we are saying that there is a risk if we start to broaden its functions and what it could mean.
Those two agencies that have been signalled have very different functions, and we do not want to see the Education Review Office become more like the New Zealand Qualifications Authority. The functions of the New Zealand Qualifications Authority are quite clearly described. We would rather see the New Zealand Qualifications Authority continue to do its job without subsuming any other agencies. In its current practice it does not go into schools and measure in the way the Education Review Office does, which is a deep and profound whole-of-school approach. The New Zealand Qualifications Authority’s role is to look at very restricted performance in terms of certain outcomes and certain unit standards.
The authority is no longer new. It has developed through a lot of struggles, and it has become quite proficient in the way it does that, but if it should subsume the Education Review Office, we would have very deep concerns. That belongs in a wider debate. The role of the New Zealand Qualifications Authority needs to be part of that wider debate about what we are doing and what we have done in the past year on education standards in this country.
We are in the middle of a fierce political debate about the type of education we want at all levels in this country. We do not want to see a loss of the holistic and the broad in schools in exchange for the narrow. One of the struggles that those of us who started teaching early on under the New Zealand Qualifications Authority had was that there was a certain mechanistic narrowing of the curriculum. That is appropriate for certain types of learning, but it is not appropriate for the compulsory sector. We would have grave concerns if that happened and if the authority was moved into a broader role and stepped outside the narrow definition of what the New Zealand Qualifications Authority is currently achieving. I say it is a broader political debate because right across this country right now a struggle is going on about whether we narrow education or whether we broaden it.
Sitting suspended from 6 p.m. to 7.30 p.m.
CATHERINE DELAHUNTY: Before dinner I was waxing lyrical about the importance of not merging the New Zealand Qualifications Authority with the Education Review Office. I was about to speak about the importance of protecting jobs in education. I suspect that I may have run out of time to expand on that theme. I acknowledge to the young people in the gallery how important education is.
The CHAIRPERSON (H V Ross Robertson): The member must address through the Chair, not the gallery.
CATHERINE DELAHUNTY: My apologies, Mr Chair. I acknowledge how important education is to young people, so we need to get it right. With the New Zealand Qualifications Authority it has improved a lot. There are reasons why the Education and Science Committee did not review the authority this year, but I reviewed it and I had a look at it.
Report noted.
New Zealand Teachers Council
TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe, Mr Chair. Tēnā tātou katoa. It is good to see us here tonight looking at Crown entities, in particular—in this case, the New Zealand Teachers Council. [Interruption] That is right.
It is often said in education circles that good teachers are costly but bad teachers cost more. That is what they say. The New Zealand Teachers Council is the professional body for all registered teachers working in any teaching situation. It should, theoretically, be the body that distinguishes between the good and the not so good, and between those who inspire and those who merely tell. The council’s purpose is to provide professional leadership in teaching, to enhance the professional status of teachers in schools and early childhood education, and to contribute to a safe and high-quality teaching and learning environment. Members will understand, then, that the Māori Party has been interested in looking at the progress achieved by the Teachers Council, with a particular focus on Māori education.
Despite some positive trends, educational indicators for Māori generally compare poorly with those of the total population. Māori still have lower rates of participation at early childhood level, higher truancy rates, and lower mean scores for reading, maths, and scientific literacy. Māori are less likely to stay on at school to the age of 17½ years and are less likely to leave school with high qualifications.
What does this tell us about good and bad teachers? Ka Hikitia sums it up: “education system performance has been persistently inequitable for Māori learners … fewer teacher-student interactions, less positive feedback, more negative comments targeted to Māori learners, under-assessment of capability, widespread targeting of Māori with ineffective … teaching strategies … failure to uphold mana Māori in education, inadvertent teacher racism,” and so on. Those are some of the comments that have been made. This is not a Māori Party document; it is the Government’s own publication. It is a Ministry of Education resource that defines issues that impact on teacher credibility and success with Māori.
How then can we get to the 2009-10 financial review of the New Zealand Teachers Council and find that Māori education or Māori students are not even mentioned? How does a select committee comprised of Labour, National, ACT, and Māori MPs—including Kelvin Davis, a former school principal—not appear to have asked even one question about Māori? It does not take much investigation work to find an organisation briefing paper presented to the members of the Education and Science Committee. This is a two-page paper. It highlights significant variations between estimated and actual performance in the annual report: “a report to identify further research and policy development concerning the reo proficiency required of graduates of Māori medium initial teacher education programmes that was due by March 2010 has not been completed”.
The question I ask is why. And why was that question not asked by the committee? The financial review’s introductory statement states quite clearly that part of the role of the Teachers Council is ensuring that individual teachers have gained the skills encompassed in teacher education programmes, such as proficiency in te reo and the ability to motivate students. So why not ask what was going on that meant that the Teachers Council did not complete such a vital report?
If our own Education and Science Committee does not ask the questions and the Teachers Council does not complete the work, then perhaps we need to look elsewhere for robust advice on teacher professional development. Just last week the Māori Youth Council presented a report to the Minister of Māori Affairs that had three simple recommendations to improve Māori youth success in the education system. It recommended that Government: “1 Requires all secondary school teachers in New Zealand to complete a level 1 Te Reo Māori and Māori Education/Tikanga course at a tertiary institution; 2 Provides the resources for existing teachers to sit at least level 1 Te Reo Māori as a part of their professional development, and ensures that teachers have the resources to effectively deliver on the objectives of Ka Hikitia—Managing for Success; and 3 Encourages schools to actively strengthen the relationships between teachers and the wider community through hui with iwi or hapū to ensure that schools have the discretion to develop programmes that suit the needs of the community.” Perhaps these recommendations can be picked up.
I close by saying that they say the art of teaching is the art of assisting discovery. I hope that the solid foundation provided by the Māori Youth Council will assist the Teachers Council to discover some of the key skills we believe are required to ensure that all of our children benefit from excellent teaching and quality teachers.
Report noted.
New Zealand Trade and Enterprise
Hon MARYAN STREET (Labour): I rise to speak on the New Zealand Trade and Enterprise financial review. This is a critical arm of our international experience, but it is also a critical arm of our economic strategy. New Zealand Trade and Enterprise is located within the Ministry of Economic Development. It is quite a complicated accountability mechanism, in that a number of Ministers have an interest in the operation of New Zealand Trade and Enterprise.
I draw attention to the fact that some points of dissatisfaction have been registered with the performance of New Zealand Trade and Enterprise. They need to be addressed. They need to be addressed in a number of ways.
In the first instance, I say that in the course of my duties as the Opposition spokesperson on foreign affairs and trade and overseas development assistance I have had the opportunity to visit a number of New Zealand Trade and Enterprise offices around the world. I have visited the one in New York, the one in Dubai, the one in Shanghai, and, most recently, the one in Brasilia. In all of those offices there are highly skilled individuals who are doing their best to promote New Zealand’s economic interests and New Zealand’s investments, where that is the appropriate form of partnership with that country, or are marketing New Zealand goods overseas.
We have very good people, but we lack a Government vision directing them where they ought to go next. In the financial review done by the Commerce Committee, that lack of vision was demonstrated in some of the dissatisfaction registered by some of the clients of New Zealand Trade and Enterprise. In fact, the chief executive himself, who is relatively new in the role, is reported to have said in the select committee that the figure of 84 percent of those who said that New Zealand Trade and Enterprise added value to their business might not accurately reflect the situation and could mask a higher level of dissatisfaction.
This is not good enough. We need to be able to maximise the opportunities that are being carved out around the world through a sequence of free-trade agreements. As those free-trade agreements are coming on stream—all of them, so far, initiated by the previous Labour Government—we need to ensure that this Government has the right vision, the right emphasis, and the right energy and get-up-and-go to make the economy grow through the use and support of very good staff in these offices around the world. They are an integral part not only of our international mission and our international footprint but of the growth of our economy.
There is a lack of integrated vision, a lack of imagination, and a lack of willingness in this Government to address the issues that are beginning to stymie our progress in picking up the free-trade agreements that are coming on stream. This needs to be addressed. It is there in the report. There is not universal satisfaction with what New Zealand Trade and Enterprise is doing. I think the blame for that lies at the feet of the Government, because I know that the people I have met in the course of my travels work hard to promote New Zealand’s interests, and they do it differently in each country.
Why was expenditure on grants significantly below budget—$46 million, compared with $62.8 million the previous year? Why has there been virtually a 50 percent drop in the expenditure on grants? Why is that money not going out the door? If it has been appropriated by the Government for grants to assist New Zealand businesses to maximise their export opportunities overseas, why is that not happening? This is not good enough. If the Government is going to appropriate that money for New Zealand Trade and Enterprise, then the money should be going out the door.
Hon DAVID CARTER (Acting Minister for Economic Development): It is a pleasure to follow that contribution from Maryan Street. First of all I say that New Zealand Trade and Enterprise is a complex beast; I fully agree with that. When I first got involved with the portfolio as the Acting Minister for Economic Development, New Zealand Trade and Enterprise was described to me as being spread too far to be effective. The comment was that it was an inch deep and a mile wide.
That tallies exactly with what the performance improvement framework review determined. That work—the PIF review, as it is known—was done by Sue Suckling and Murray Horn. They identified that New Zealand Trade and Enterprise as an organisation did not seem to know its purpose. I am pleased to say that that has changed, and it is changing very dramatically.
I congratulate the new chief executive, a man called Peter Chrisp. He came from the private sector. He has fully accepted the criticisms that were levelled in the performance improvement framework review at New Zealand Trade and Enterprise, and he has now restructured the senior management leadership team completely. It is already a far more focused organisation than it was even 6 months ago.
This organisation needs to give a mechanism by which New Zealand companies can internationalise. We have good commodity traders, and they need to take every opportunity to become more sophisticated. They need to seize every opportunity to add value to whatever they produce. Although the very foundation of our nation’s economy is still the primary sector, we also have some very smart companies around the country that I get the opportunity to be introduced to. I would describe these companies as being knowledge intensive.
I went quite recently to a company in Christchurch called Stickmen Studios. That company had about 50 young computer graduates working for it in Christchurch—it had only just moved to a new building because the previous building they were in had been destroyed by the earthquake—developing computer games and immediately exporting them straight from New Zealand and into the States. It is a very inventive company.
There is the jetpack organisation in Christchurch, which has been in Time magazine. It is another example of a business that New Zealand Trade and Enterprise has to work with and give it the opportunity to become better connected with international opportunities. That is essential if this economy is to grow, and grow faster.
When we look at New Zealand Trade and Enterprise now we see that it is far more focused than it was. It employs about 700 people, and 60 percent of those are offshore. Miss Street spoke about the ability and enthusiasm of the people she had the opportunity to meet in cities like New York, Shanghai, etc. She has obviously spent a lot of time outside of New Zealand. She has had the opportunity now to see how dedicated those people are, but unless they are well led, from the chief executive down, then we will not be getting the best value from the organisation, or bang for bucks, if you like. That is why I congratulate the new team at New Zealand Trade and Enterprise. My impression is that they are substantially better led and focused than they ever have been. We have developed with them an intervention logic, the very reason for their existence, and the very rationale for them joining with companies and working with them.
I will briefly talk about two other initiatives where I have had the opportunity to see New Zealand Trade and Enterprise’s role within New Zealand companies: Better by Design and the Lean Business programme. Effectively, what New Zealand Trade and Enterprise does with companies is go into these companies and work with them using the Toyota model, basically—that is, trying to drive out inefficiencies and increase their productivity. Villa Maria Estate wines is just one company that has been involved in both those products of New Zealand Trade and Enterprise. When I visited it quite recently it told me that it has lifted production by about 20 percent. If we get that amount of performance improvement out of companies here in New Zealand, for them to then connect with international markets, that will help grow the economy.
TODD McCLAY (National—Rotorua): I am happy to take a call in this part of the debate on New Zealand Trade and Enterprise because, as with Mrs Street, I believe that it is a very important organisation with very hard-working people doing a very important job on behalf of New Zealand. But that is where my agreement with her finishes. I found her intervention to be far too pessimistic not only about the challenges we face and how we are moving through them but about the feeling among those who work for New Zealand Trade and Enterprise. Those I have met have a great amount of pride in the job they are doing—a very good job—on behalf of this country.
Also, she was far too pessimistic in her view of what the clients of New Zealand Trade and Enterprise thinks of its work. We see that 84 percent of those who have had assistance from New Zealand Trade and Enterprise say they have had value added to their business. Eighty-four percent say they have had value added to their business. Mrs Street said they were not universally satisfied. Well, I am yet to meet anybody who is universally satisfied, with the exception of the people of Iraq I read about in the newspaper some years ago, who were asked to vote in an election. They were universally satisfied with the then president, Saddam Hussein. He got 107 percent of the vote.
With the exception of that situation, it is not unusual for New Zealanders to have differences of opinion, but 84 percent of businesses helped said value was added to their companies by New Zealand Trade and Enterprise. I say good on New Zealand Trade and Enterprise and the hard-working people there who are doing a very important job.
So why do I think they are a very important group of New Zealanders who are doing a fantastic job for us overseas? Well, the work they do fits very closely with the Government’s economic agenda and with our economic plan that has been rolled out over the last 2 years: to back New Zealanders and to invest in the local economy so that our economy can grow, so that more people can be employed, and so that we have a better standard of living and can afford more and better services for New Zealanders. We get to do that by exporting more to other parts of the world.
Since we have come to Government we have had a number of trade agreements that have been negotiated where the negotiations have been concluded or have entered into force, which New Zealand Trade and Enterprise then had to do something about. I will not go through all of them, because I have only 5 minutes and the list is an extremely long list of achievements by this Government, but I will pick one that I think holds great opportunity for us: the entering into force of the free-trade agreement with China.
Why is China important to us? Well, that is very straightforward. In the 2 years since we have been in Government and this agreement has entered into force, our trade with China has grown in value from $8.5 billion to $11.1 billion. Do members know what that means? That means that very many more New Zealand businesses are producing goods and exporting them to China. Their trade has grown. But, more important, it means that many companies that were not exporting before have now been helped out by New Zealand Trade and Enterprise.
The challenge that we set for New Zealand Trade and Enterprise—and this Government backs it fully—is to help New Zealand businesses to get into some of these new markets and to take advantage of the great opportunity there so that we can sell more of our produce, bring those funds back to New Zealand, and employ more New Zealanders. Some wonderful work has been done.
Finally, the job of New Zealand Trade and Enterprise overseas is to leverage the very good work that this Government and our Minister of Trade are doing when it comes to free-trade agreements. Last year I had a chance to visit Shanghai for the World Expo 2010, and I went to the New Zealand Trade and Enterprise office. Millions and millions of people, particularly from China but also from around the world, visited the New Zealand pavilion at the expo. But, more important for tourism purposes, thousands of businesses visited New Zealand Trade and Enterprise, which leveraged the opportunity the Government had provided for New Zealand businesses to meet it in order to talk about New Zealand and some of our advantages, and to do more business and more trade. That was very important work.
One of the great things New Zealand Trade and Enterprise will be doing this year—and the Government is backing it fully in this—is leveraging the 85,000 visitors who will come to New Zealand for the Rugby World Cup. In my electorate of Rotorua I have had a number of meetings with New Zealand Trade and Enterprise and the businesses it has been working with and supporting. I tell the Committee that the feeling of satisfaction with New Zealand Trade and Enterprise in Rotorua is greater than 84 percent, in as far as this report we have been given. I thank the staff of New Zealand Trade and Enterprise, and ask them to keep doing that great job on our behalf. Thank you.
Report noted.
Foundation for Research, Science and Technology
DAVID SHEARER (Labour—Mt Albert): This is a rather unusual entity, in a sense—although not in the period we are talking about—because, of course, the Foundation for Research, Science and Technology no longer exists. It has been merged with the Ministry of Research, Science and Technology. So although we are debating it today, it is no longer in existence. It has been pushed together with the ministry in a restructure to make it look as if the Government is actually becoming more involved with, and more dedicated towards, science and innovation.
I have to give the Government credit. The Ministry of Science and Innovation is a terrific name—it is a terrific name. It is just a real shame that the ministry does not live up to that name. It came in during that plethora of reforms last year, which was trumpeted as being the step change for research and development. The Ministry of Science and Innovation was meant to be the new way forward; it was supposed to lead that change. To some degree we actually saw an increase in funding for research and development. The Government put $56 million a year more into it—$56 million. When we took into account the total spend, that was a little less than 5 percent. When we took into account inflation, it was a lot less than that, particularly as inflation is running now at nearly 5 percent or more.
The most important thing about that money, and where it went to, was that it went to giving businesses a handout to do more research and development. It did not encourage a real change in the culture of those companies. The research and development in our private sector is woeful—it is absolutely woeful. We do not spend a figure anywhere near the OECD average when it comes to research and development inside businesses. So although the Government trumpets the merging of these two entities as the new dawn of research and development, the reality is quite different.
I will give another example of exactly what this really means. We would expect that for a new entity like this ministry, the Government would search the world for somebody who would lead this new entity into a completely new field and really bring about major change in our research and development. But that did not happen. When we looked for the leader of the Ministry of Science and Innovation, the advertisement was open for only 2½ weeks and it did not look overseas for the best person, despite the fact that the Minister of Science and Innovation talks about the triumphs of Denmark. The Prime Minister talks about Taiwan and what it is doing. The Minister has just come back from Israel, where he has been looking at research and development. I expect he probably flew there on a commercial flight; I hope that he flew on a commercial flight to Israel in order to look at the research and development.
These countries put from 3 to 4 percent of their GDP into research and development, and they have science and innovation places that are world leading. Why cannot we have world-leading places just like that? The answer is that this Government certainly does not have the commitment to research and development that it talks about. It talks the talk, but it does not walk the walk.
When we look at this year’s Budget, despite the fact that in January we were told that it was about innovation and savings, we can actually see a $12 million decrease in the overall spend in science and innovation—a $12 million decrease. The top-line headline in the Budget is that $36 million has been reallocated. That will set the world alight! It will really set the world alight that we have reallocated $36 million!
Research and development in New Zealand is the driver of our innovation. It could be the driver of our economy—a new, smart, clean, green economy—but this Government has enabled research and development to languish and go backwards. Thank you.
Hon Dr WAYNE MAPP (Minister of Science and Innovation): Funnily enough, I heard Mr Stuart Nash say, in relation to that last speech by David Shearer, “Good speech!”. I was a bit surprised to hear that. The Opposition had one of New Zealand’s foremost scientists, and indeed entrepreneurs, to speak at its conference. Labour made the person its keynote speaker. It was Sir Paul Callaghan. So I was anticipating that Labour was obviously planning something very significant as a way to project its commitment—the commitment I just heard Mr Shearer talk about. It is very hard to accommodate. So what was Labour’s big idea? What was the thing that was central to their conference that would take New Zealand to a bold new era? It was, in fact, a rehash of its tax credit policy. It may have been a little bit more targeted, because the limit went up to only $200 million, which was an increase of about $100 million. However, there was a hook in that increase. If we look at the New Zealand economy in the broad, we see that we have three core sectors. There is the primary sector, with over half of our exports. Indeed, part and parcel of why the current account deficit is reduced is because that sector is doing so well at the moment. There is tourism, with 10 percent of the total economy. It is a huge foreign exchange earner. I guess we would say there is manufacturing, particularly high value manufacturing, and advanced services, particularly in tertiary education and information and communications technology.
So Labour’s big idea was to push up the extra spending in the high-tech sector and take that money directly from another sector—the farming sector. I thought that was actually a zero-sum gain. That was no change at all. And that was Labour’s big idea. That is why I was surprised to hear Mr Nash say that Mr Shearer’s speech was a good speech. I say to the Opposition members that if that is as good as it gets, I suspect they will spend a little bit more time sitting on those benches than one might think. They said to New Zealand’s largest export sector, the primary sector, that they were going to take $160 million off it, directly as at zero-sum gain. So our most profitable part of the sector at the moment, the export sector, was going to be a sop. It is hardly an innovative policy, I say to Mr Shearer.
I return to the facts of the situation. In 2008 Labour’s last Budget appropriated $689 million for research and development. That was during a time of relative economic success for New Zealand, in line with much of the rest of the world. This year we appropriated $773 million, which is a gain of 12 percent. The difference is that we had to do that in a time of relative economic difficulty and, in particular, when faced with the cost of reconstruction after the Christchurch earthquakes.
David Shearer: Oh yeah. No commitment—that’s the problem.
Hon Dr WAYNE MAPP: Did members hear that member say “Oh yeah.”, as if it is of no significance whatsoever that New Zealand taxpayers will spend $6 billion to reconstruct Christchurch? The Opposition, as reflected by Mr Shearer, just says “Oh yeah.” Is that what the Opposition really means about Christchurch? I might actually give a little bit of credit and say that maybe I misheard that. There is just an absence of reality in—how can I put it—Labour members’ rhetoric and their delivery.
So there was $689 million appropriated in 2008 and $773 million appropriated in 2011, which is a 12 percent gain. Next year there will be further gains as a result of Budget 2010. Budgets are effectively 4-year Budgets, and each year has an increase. The technology development grant started off at $22 million. It will grow a bit more this year, by $60 million next year, and a bit more the following year. That is a progressive increase that flows through into each Budget.
David Shearer: How many companies didn’t get it?
Hon Dr WAYNE MAPP: I want to make clear the distinction between a research and development tax credit and a technology grant. The problem with Labour’s plan is that it just showers the money out like confetti to get it through to the accountants, and it essentially says that if they can rort the account system using highly paid accountants or lawyers, then that will do. We looked at that and asked whether Labour had actually increased the level of research and development as a result of that undirected tax credit system. The answer was no.
We have taken a smarter approach. We have analysed it by New Zealand’s most research and development-intensive companies, and Mr Shearer knows which they are. They are set out in a publication called the TIN100 Report, which sets out the top 100 research and development-intensive companies. We will progressively work through those companies with the intent that each and every one of them will receive a technology development grant. That is the intention, because we know that research and development-intensive companies will invest the grant directly into increased research. That is the fundamental difference from just simply sending the money through the tax system.
David Shearer: They’re offsetting their other expenditure. That’s what they tell me.
Hon Dr WAYNE MAPP: We hear from the Opposition members their fundamental misunderstanding. They say that companies will just offset it. I ask them how a tax credit targeted through accountants leads to behaviour change. How does it do that?
Paul Quinn: It doesn’t.
Hon Dr WAYNE MAPP: The answer is, as Mr Quinn said, that it does not. We need to focus on the companies that have the culture of research and development, then invest in them.
I acknowledge that in 2011 we had a difficult Budget. At least on this side of the Chamber we acknowledge that. On the other side they just advocate reckless spending and have a long list of promises, completely oblivious to the fact that we are actually running an 8 percent deficit as it is, which is one of the larger ones in the developed world. I guess that if it was 12 or 14 percent, it would be a matter of real indifference to them. Maybe Greece is the kind of a country they would like to emulate. I went to Greece recently and I saw what happens when a deficit is left to get completely out of control. In the current environment we have to make realistic and sensible choices about dealing with debt, dealing with growth, putting the country back on track, and setting an agenda that is predictable, that is sustainable, that people can believe in, and that gets us back on a pathway towards growth.
I say to members in the Chamber that every week the Hon Paula Bennett provides her colleagues with details of the situation of unemployment for both youth and the regions. I can say to members that in virtually every region in New Zealand, unemployment is less this year—in fact, it is significantly less than it was last year. The lines are heading in the right direction. There is a sense of some level of recovery, reflected in part by that increase in exports from the primary sector.
I close on this point. Labour’s plan, in essence, is to kick out the feet from under our most productive sector. New Zealand needs to understand that Labour’s big plan is to take money from New Zealand’s most productive export sector and say that is a plan that will grow New Zealand. I say to New Zealand that that is a bankrupt policy and it will fail, and it will be seen as such by New Zealanders. They are looking for sustainable, realistic, predictable, and sensible plans that take New Zealand into the future. Those plans rest with National; they do not rest with Labour.
Dr PAUL HUTCHISON (National—Hunua): I am grateful for the opportunity to speak on this review of the Foundation for Research, Science and Technology—which has now disappeared, as was pointed out by David Shearer—and also the Crown research institutes. It was a bit rich for David Shearer to talk about investment in science, given that from 1999 to 2008, Government investment in science as a percentage of GDP basically flat-lined, and private investment in science also flat-lined, as well. I agree with him entirely, however, that New Zealand does have a huge task in incentivising private sector investment in research and development. But there is no doubt in my mind that the way the previous Labour Government was going about it, splashing out $300 million in untargeted tax credits, was absolutely the wrong way to do it. We know right around the world that such a method is associated with rorts. [Interruption] Yes, it is in Australia and we know that there are rorts right throughout the system there. Finland, for instance, with a much more attuned, sophisticated, targeted system, has had a far greater deal of success. But I do agree with the member that there is a major task for New Zealand in looking to increasing this investment if we want to sustain economic growth as part of the trifecta of how we will achieve that—firstly, through our primary products, secondly, through our tourism, and, thirdly, through science and innovation.
I think the other point that should be made is that if Labour ever thinks it will move the economy, then it has to make the basic regulatory regime suitable for business. That applies to science and innovation, as well—a low transparent tax system, such as the National Government has achieved; a more flexible labour market, such as has been achieved by the National Government, obviously concentrating on excellent graduates; and of course ensuring that the regulatory regime, in terms of bureaucracy, is as straightforward as possible.
But I think it is important, in terms of getting the context of today’s science system in New Zealand right, to look back to the past. The foundation was formed in 1990, under some rather interesting principles. They were, firstly, to allocate funds for the production of outputs relating to public-good science and technology, and indeed one would hope that we look for outcomes. I think that over the last 20 years it has been difficult to judge the performance of our science system accurately. Obviously, there are a whole variety of ways we do that, whether it be by citations, whether it be by conferences attended, whether it be by spin-off companies, or whether it be by underlying performance. All of those things are somewhat nebulous. It is absolutely important. The new science review and the new purpose of the Crown research institutes is to ensure that performance is looked at very carefully under independent 5-yearly audited reviews.
Secondly, back in 1990, the second principle was to allocate funds pursuant to ministerial schemes. That does fly in the face of ensuring that we have the discipline of an evidence base behind what we do, and hopefully that has changed for good in the new reforms under National after the science review.
Thirdly, the foundation is to provide independent policy advice to the Minister of Science and Innovation on matters relating to research, science, and technology, including our national priorities for those matters. That is partly where the rub was with the old foundation and the ministry. The foundation was the funder of the policy division and it became—
Report noted.
Tertiary Education Commission
DAVID SHEARER (Labour—Mt Albert): It is my pleasure to rise again to speak on an area that, like that of my previous contribution, is of critical importance to the New Zealand economy and to the way we develop and grow our economy. The Tertiary Education Commission is a complex being in terms of its funding and whom it funds. I want to touch tonight on just one aspect of what it does.
The Tertiary Education Commission establishes and promotes the opportunity for lifelong learning throughout New Zealand. This is an extraordinarily important area for New Zealand, for the simple reason that the economy is changing extremely fast and extremely quickly. As our economy changes, we want people to be able to engage and move with those changes. We also want to be able to cater for those who step out of the workforce for various reasons and step back into it again and need to upskill once more in order to join and become profitable members of society. I think it is a great worry for New Zealand that this Government, rather than promoting the opportunity for lifelong learning, has gone out of its way to erode the opportunities for those people. An amount of $2.3 billion goes into the tertiary education area through the Tertiary Education Commission. One of the areas that was targeted under the previous Minister for Tertiary Education was adult education. For a mere $13 million of that vast amount of money we stripped out what had become an institution in New Zealand and had helped countless numbers of New Zealanders to re-enter the workforce. For more than about 100 years thousands and thousands of New Zealanders, me included, re-entered the workforce as a result of second-chance education, re-skilling, and upskilling—a different way of getting back into the workforce, through having their skills renewed by joining the education system. We once had 212 schools involved in night classes, and now we have 24. That is disgraceful. It is absolutely disgraceful for $13 million out of a budget of $2.3 billion. PricewaterhouseCoopers said that the benefit cost was 70 to one, yet we still stripped it out.
I thought this Minister for Tertiary Education might have had a different approach from his predecessor. Yet in this Budget the over-55s are thrown on to the scrap heap. We could say that maybe the over-55s should be thrown on to the scrap heap. Maybe those people do not have to upskill and be re-skilled. But actually 55 now and in the future is, and will be, a very young age. Those people will go on to be working members of society perhaps well into their 70s. Yet those people cannot get student loans. We have discriminated against older people being able to get student loans, yet they are the very people who have paid their taxes for about 40-odd years and they are not able to have access to student loans any more. To compound the problem, we have also added to that the people who are part-time students. Those part-time students now cannot get their course-related costs paid. Those people tend to be women who have gone out of the workforce, perhaps for child rearing, and now want to move back into it. What we are seeing, and I would like to see the analysis on this—it would be very interesting, not only for this House but for New Zealanders in general—is that women are being targeted more unfairly under these policies than men are. I think women are being disadvantaged more than anybody else. I think that is a disgrace—it is an absolute disgrace. We should be encouraging people to get back into the workforce. We should be encouraging people to upskill. We should be encouraging our economy to move forward as a result of those people joining our workforce, with the right and appropriate skills, but instead we are penalising those people. We are penalising their initiative. We are penalising their self-sacrifice.
Hon STEVEN JOYCE (Minister for Tertiary Education): The member David Shearer should not let the facts get in the way of a good story, and he obviously does not do that. Firstly, people can still borrow on a student loan if they are over 55 years old. They can borrow fees for courses if they are over 55. They cannot borrow for living costs, and there is a reason for that: once people are past 55, taxpayers end up writing off over 70 percent of their student loans. We thought about how we could strike a balance there, because, yes, we want to have people of that age upskilling, but we also have to acknowledge that they do not have as much time at that age to repay their student loans, which is the contract, of course, with the taxpayer. So we thought we would have a bit of balance, and we would have borrowing for fees but not for living costs. That is actually what we are doing, so the member made his first mistake there.
His second mistake was in talking about compulsory course costs for part-time students. Of course part-year students have never been able to get compulsory course costs from the fees component—we have changed the rule for full-year students to ensure consistency—but of course they can still borrow for fees. Once again, the facts got in the way of a good story.
But the really good story here is the work that the Tertiary Education Commission has done. I salute the Tertiary Education Commission for the work it has done in improving the outcomes from our very large tertiary education spend, which, across student support, fees, and tuition subsidies, is over $4 billion. The commission has had a real focus on value for money, and the evidence in terms of outcomes is very impressive indeed. This year we will have the highest number of fulltime-equivalent students ever in New Zealand universities. It is a tremendous outcome. We also have the highest number of full-time core places at universities, polytechnics, and wānanga, right across the public tertiary sector—16,500-odd more places than 3 years ago, when the previous crowd left Government. But overall our expenditure has not gone up, because we have had better value for money. This year we also have more private training establishment places—750 more. The previous Government froze those in about 2002. We have lifted the freeze this year. We have more opportunities for New Zealanders, right across the board, including more places at higher levels on the spectrum of qualifications.
We have also managed to achieve better results out of industry training. That area was actually a horror story inherited from the previous Government—an absolute horror story. That Government had trebled the industry training budget over 10 years, but it had not ensured accountability for the funding. It had not ensured that there was any accountability, at all. As a result, when the Tertiary Education Commission audited industry training in 2008 and 2009, we discovered that 44 percent of trainees had not earned credits over that 2-year period. Labour’s phantom industry trainees had disappeared from the scene. Some had not had training agreements signed, some were not actually employed by the companies they were supposed to have been employed by and to be getting industry training from, and a dozen, even, were deceased. They were deceased, and the previous Government had not noticed.
We have put in a much more reasonable industry training budget, and we have cut it back a bit. Do members know what? We will get better results out of industry training with a lower-cost budget than Labour members managed to achieve with theirs, because they are the crowd, as I think Dr Mapp said, who just like to get the bucket of money and keep tipping it in at the front, and not think for a moment about what the accountabilities are at the back end. That approach was right across the public sector when we arrived, and we are sorting it out.
We are also sorting out a number of other areas. I think that adult and community education is very important, but, like Mrs Tolley, I am not at all sure that the Government and taxpayer should be paying for people to do their hobbies. So we have refocused on literacy, numeracy, English for speakers of other languages, and Māori language, and I am very, very proud of that. There is no doubt that people can take up their opportunities with adult and community education.
Finally, in the limited time I have available, I refer again to the excellent job the Tertiary Education Commission is doing. It has managed to come up with additional funding over the next 4 years for English for speakers of other languages—$17.5 million. That has not been talked about a lot but it will be good for migrants, and it will make a real difference for refugees in this country. This Government cares; this Government is focused on getting real value for money out of tertiary education, and we are doing that. The previous crowd just could not get off their backsides for long enough to check what was going on.
CAROL BEAUMONT (Labour): How timely it is that I get to respond to some of the comments that the Minister of Transport has just made about industry training. I concur with the comments that my colleague David Shearer made about this Government’s lack of commitment to lifelong learning. One particular aspect where the Government is a complete disgrace concerns the role of the Tertiary Education Commission in funding industry training. Just for the record, let us note that industry training has been slashed in this year’s Budget. After $55 million of cuts last year, a further $90 million has been taken out over 4 years. That means that tens of thousands of trainee places have gone.
There may be issues in relation to needing to improve quality, but there are two ways we can go here. We can either just cut money from the system and have fewer trainees, or focus on what is working. That is where the Minister failed to address the issues. Many industry training organisations are doing a good job, delivering good outcomes for trainees, and lifting skill levels in New Zealand. We should be not cutting money from that sector but actually finding out what works and investing money there. I think it is a complete disgrace that $55 million went from industry training and into the university sector, instead of that money being put into funding more apprenticeships, and more industry training where we need it and where it is working.
The Tertiary Education Commission is meant to be responsible for implementing the tertiary education strategy. That strategy states: “The Government sees the tertiary education system as a key national asset, which enriches New Zealanders’ lives, increases their employment opportunities and helps to build a productive skills base to drive economic growth.” Well, frankly, the record in the skills area is a completely disgrace. Participation rates in industry training are down; participation rates in apprenticeships are down. It seems that National thinks these are “nice-to-have” things, rather than essential for meeting the skills shortages that we all know exist. Business groups, unions, and community groups understand that there is a problem here, but this Government does not understand that. I would just like to quote Phil O’Reilly, who says: “As we get out of this current slump—and let’s hope we do some time—we’re going to have skill gaps appearing all over the place. We know that business people are looking increasingly at that issue, asking what the story is there, and asking what we are going to do about it.” That is a good question. What are we going to do about the skill gaps that exist in New Zealand?
The reality is that investing in industry training and apprenticeships lifts productivity, which is something that Government members say they are concerned about. There is no doubt—all of the evidence is there—that lifting skills and better utilising skills will lift workplace productivity, giving us economic growth, better and more satisfying jobs, and better-paid jobs. Why does the Government not support that? I think the failure to invest in our people is actually a form of economic vandalism. It is short-sighted. We are going backwards in relation to many other countries, including Australia, which has provided an additional $3.6 billion in funding to skills and training over 6 years in its recent federal Budget. That was on top of a higher base than ours.
What are we doing? Not only are we cutting investment in skills, and therefore the ability to lift our workplace performance, but now the Prime Minister says that as well as that we will cut workers’ rights. We will have workplaces that are low quality, low skill, and low wage. That is the prescription of this National Government. Anybody who thinks that that will deliver the kind of income we need as a country, and the kind of economic growth we need as a country, is wrong. If the Minister thinks that is funny, then he needs only to look at our comparative performance in relation to countries like Australia and the Scandinavian countries, where there is a significant investment in skills. He needs to ask himself what the difference is. Why do Australian workers get 30 percent higher wages than New Zealanders? Part of the answer—not all of it, but part of the answer—is because there is more investment in people. It is recognised that paying people properly means that employers will want to ensure that they are well skilled, and that their skills are well utilised.
So I say to the Minister that the work of the Tertiary Education Commission in implementing the tertiary education strategy has gone wrong. The reason it has gone wrong relates to the direction given to it by that Minister. I urge him to relook at the cutting of industry training. It is the most short-sighted cut that I can imagine, and it sits on top of 2 years of no new initiatives in skills. We saw cuts of $55 million last year, and now we see a further $90 million of cuts in skills training. That is an absolute disgrace.
PAUL QUINN (National): I start by saying that I thought the Minister for Tertiary Education gave an excellent retort to the first speaker from the Labour benches and debunked everything he said. I wanted to focus on the positive in my contribution to this debate, but after listening to the tirade from Carol Beaumont, and the passionless rhetoric, which, no doubt, was produced by Labour’s research group, I would say that the Labour Party’s research group is lacking in skills. It is about time it got some skilled staff in there to produce decent material for Labour members to speak on.
I remind the previous speaker, Carol Beaumont, that the responsibility of the Government is to make sure it gets value for money. That is why the Tertiary Education Commission has had to recover $4.3 million from 18 industry training organisations that have been claiming funding for students who are not eligible and, in fact, in most cases do not exist. I say to that member that the Government’s first priority should be to get value for money. I want to speak positively about this subject, because it is very serious. I myself am a product of a tertiary education—
Dr Rajen Prasad: Not a good one.
PAUL QUINN: —and was challenged that I might not be able to succeed. Just to prove my challengers wrong, I say to Dr Prasad, I decided to get one A. I ended up getting an A in the hardest of subjects, which was econometrics. For those who do not know what econometrics is I tell them it is mathematical economics. I got a couple of Bs in economics, and then I wanted to prove that I could get passing down to an art form by getting Cs for the rest of my subjects.
Tertiary education is a very critical matter that this Government takes very seriously, which is why we have a Minister of Steven Joyce’s capabilities overseeing it to make sure that this country gets value for money in terms of the limited resources that are available. Because of that we are giving significant funding increases, and there has been a huge increase in student places at university, for instance, as the Minister explained.
I will also talk about why I think tertiary education is critical. The one thing I could agree with in terms of Mr Shearer’s contribution to the debate is that tertiary education is an extraordinarily important area. It contributes to economic growth and enables the country to move forward as the requirements change within the economic environment and we provide people who can bring the skills to bear in those areas that are required.
One of the things I found fascinating in terms of this matter—having people who are qualified and can lead the economic growth that this country, so sadly, needs; and this Government is addressing that issue—is the fact that, as I think a previous member alluded to, Professor Sir Paul Callaghan addressed the Labour Party conference a few weeks ago. In addressing the conference, the four critical words he uttered were: “We require entrepreneurial genius.” This was in response to a Labour Government that had gone through all the catchcries and clichés about having a knowledge wave, economic transformation, and growth in innovation but never produced a thing. Sir Paul Callaghan says we must have entrepreneurial genius. Thank you.
Report noted.
Children’s Commissioner
Families Commission
Dr RAJEN PRASAD (Labour): I want to make my comments around children and families, so I will speak about both the Families Commission and children. The Families Commission has taken quite a battering under this Government and this Minister for Social Development and Employment—so much so that it now cannot operate effectively to advocate for our families. It cannot really effectively meet the roles for which it was designed: to advocate for families through community consultation, research, and policy development, and to provide families with information.
This Minister has done something called a value-for-money review, which really means cuts. Now its work at the forefront of addressing the needs of families and advocating against family violence is stalling.
The CHAIRPERSON (H V Ross Robertson): I notice the member is actually addressing the Families Commission as well, and that is a separate debate. But I am quite happy to ask the Committee whether there is any objection to the report on the Families Commission being taken together with the report on the Children’s Commissioner. There is no objection to that course of action? The member may proceed.
Dr RAJEN PRASAD: The Minister says the commission would be much more effective if its work were based on evidence and focused less on advocacy. The major raison d’être for the Families Commission is really being frustrated by the focus of this Minister. It was interesting that when this Government and this Minister moved to close down the major programme in New Zealand that was evidence-based and provided services to children, Te Hurihanga, the commission was being asked to come up with evidence-based advice and programmes. The Minister has been playing a game with this commission.
When the Government closed down Te Hurihanga, it also focused on the boot camp programmes. I know that National does not like us to refer to them as boot camps, but that is what they are. Now we have some evidence available to us. Last week we saw the Minister really struggling to defend that programme. The research last week was that there was 60 percent recidivism. She says now that the children are very, very difficult. On the one hand the Minister is saying she wants evidence-based work from this commission, but on the other hand the Government itself is not utilising evidence-based programmes.
Then there was the review of the governance of this commission. That review and the model that is now being directed by this Minister is to really separate out classical-fashion operations and governance, so much so that the commissioners simply become part-time board members. That is it. The very focus of this commission is being denuded. The Minister’s own hand-picked commissioners did not like this, and one left. But it is quite interesting: 2 days after he left, he got a $2.4 million contract to go around and do parenting programmes. There is no evidence base for that programme. It is fun, yes, and people support it, yes, and it is popular in the community, without a doubt. But there is no evidence base.
The very reason for having this commission is being frustrated by this Minister and this Government. Now we have to ask why have this commission at all. Why not do what we now need to do, which is to really put children at the centre of our policies? We should give our children the best start possible, have a real focus on the interests of children, and put them at the centre of all policy development. In order to do that, would it not be more reasonable, more honest, and more realistic to morph this commission into a Ministry for Children? That is exactly what our policy will be in the next Government. The very, very competent people working in that commission would do an excellent job advocating for our children and our families in a Ministry for Children. They would not play games by pretending to be independent, yet being directed by a Minister who has really confounded the work of this commission. So that will be the future of this commission. Thank you.
Hon PAULA BENNETT (Minister for Social Development and Employment): I stand to speak about the Office of the Children’s Commissioner. I stand at this point and say thank you for the work of Dr John Angus, who has been an outstanding Children’s Commissioner for 2 years. His focus has been on social work, which is his background, and on best practice, which was a key focus for him. I also thank him particularly for some of the work he did in some of the youth justice facilities. I am not sure that people always recognise the extent of responsibility that the Children’s Commissioner has. The office has a statutory responsibility. It is a place where parents can go for independent advice and advocacy. It is also a place that holds Child, Youth and Family to account if parents need another avenue to go to. Its commissioners also visit all youth justice and care and protection facilities, look at the practices there, and take any complaints.
I particularly thank John Angus for the work he has done with some of our practices within youth justice. I personally asked him to do an inquiry at one stage when I was concerned about some of the gender mixing in some of those facilities. He went in there, and I felt the advice he gave was incredibly sound. We have picked up the recommendations he made, and I think the practice we have in our youth justice facilities is a lot in part to the work he has done in the last 2 to 2½ years. This is my opportunity to put my thanks on record.
This is also my opportunity to welcome a new Children’s Commissioner, who will be coming in in a few weeks’ time. He is Dr Russell Wills, who is a working paediatrician at Hawke’s Bay Hospital. He will bring another dimension to the Office of the Children’s Commissioner that I think is really, really important. I think we need to mix it up a little bit and have different commissioners who bring a different focus. I think the office itself should run in an incredibly steady manner under a general manager. The practice is pretty good on a day-to-day basis, but I think a different commissioner can bring a different view, and I think that is a strength and it is something I really wanted to bring to the commission.
We have just heard what felt like, I do not know, an absolute buck-pass on the Families Commission. It was the baby of a previous commissioner, who now sits in this House as a member of Parliament. He stood up and gave the most abysmal—
Hon Christopher Finlayson: The most sanctimonious member of Parliament.
Hon PAULA BENNETT: —sanctimonious claptrap on why he thinks the Families Commission is not currently working, but with nothing behind it. I found it kind of shameful.
I think the Families Commission, in its respect, is doing the best it can with the legislation it currently has. It is very much focused on families, on making sure we have some of that research and evaluation that goes behind it, and on hearing the voices of families. I always remember one of the great pieces of work by a previous Families Commissioner—and this will be enlightening to the whole Committee, I am sure—that fathers in prison do not father as well as those who are out of prison. That took a number of months of research. It was one of the more enlightening pieces of research that I am sure the previous speaker is incredibly proud of and something I am sure he takes to real heart. It does not come as a great surprise to me that Labour has now decided it will bag the Families Commission. It is time that that member stood up and said sorry for being a previous Families Commissioner who did such an abysmal job and wasted so much taxpayers’ money that he should be ashamed of what he did for all of those years.
I would be quite open to him taking another call and apologising to New Zealanders for some of the shocking research that came out in his time. I can mention some. One piece of qualitative research it did for over a year was to speak to 28 people. From that research, it was able to devise something that had no substance to it and was not helpful at all to New Zealanders.
I stand here now to thank the Children’s Commissioner. Since I have been the Minister I have put another $500,000 into the Office of the Children’s Commissioner, because I think the Children’s Commissioner holds us to account. The focus of the Office of the Children’s Commissioner is directly on children, and it has a statutory responsibility as well. I certainly want to put on record my sincere thanks to the Office of the Children’s Commissioner for the work it does and the work I know it will continue to do on behalf of children.
Reports noted.
Housing New Zealand Corporation
TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe, Mr Chairperson. Kia ora tātou katoa i tēnei pō. One of the best pieces of news in this review was that as a result of $125 million for jobs and the growth plan, over 11,000 State houses were upgraded and 87 new State houses were to be built. We welcome the news, and we hope that local labour will be utilised. I give big ups to the Minister.
However, when we come to this review we consider that the situation is a little bit more dire. In Auckland, for example, demand is there for an additional 10,000 houses. Also, as the review points out, the changing demographics require different housing needs.
Over 26 percent of Māori live in one-parent households, and some 11 percent live in multi-family households. It is a different reality from the past, when the norm was a two-parent household with two or three children in it. A very high proportion of Māori children—35 percent—live in single-parent households. This brings with it evident differences in household income. Māori living in homes reliant on single incomes have the lowest income—$28,000 a year for one-parent households with children.
When we are talking about the Housing New Zealand Corporation, inevitably we are talking about Māori as an explicit part of its responsibility to provide housing for people with low incomes or specific housing needs. There has been some progress, which we commend—along with the Minister, again—including 25,000 State houses being upgraded, 5,000 participants in the Welcome Home First Steps programme for first-time homebuyers, and a particularly significant advance in more than 2,000 families directly benefiting from the Healthy Housing programme led by the Ministry of Health in areas of high health risk.
We cannot underestimate how important the relationship is between health and housing. In 2006, 46.3 percent of Pasifika children, 27.8 percent of Māori children, and 22.3 percent of Asian children lived in crowded conditions. Rates of acute rheumatic fever have been shown to be significantly and positively associated with household crowding in Aotearoa. That is an important statistic that I think we should take note of.
Coming back to the issue of low-income Māori households, this is a significant population for the Housing New Zealand Corporation. It is impossible to ascertain from the reports how many of the 20,000 people housed in the Tenancy Services are Māori. From the constituents who have come into my offices, or our offices as a party, we have little confidence that the corporation is adequately meeting the needs of whānau Māori, and that worries us. But there is room for optimism, and that is through the work of the iwi and Māori organisations that have indicated an interest in being involved in the management of State housing. The corporation’s annual report describes four projects approved under the Māori Demonstration Partnerships, which will result in 44 new properties in Northland, Tauranga, and Whakatāne. Of course, as the MP for Waiariki I am very happy about that, and I welcome it.
But there are other developments I want to refer to that bear reference to this review. This is in the context of partnership arrangements to construct social housing that have been negotiated with groups such as Te Rūnanga o te Arawa, the Ahipara Māori Committee, the Panguru Development Trust, Te Uri o Hau Settlement Trust, the Ngāti Hine Forestry Trust, Mangatawa Papamoa Block Inc., which is in my area, Ngāti Awa Group Holdings, which is in my area as well, Te Rūnanga o Kirikiriroa, and the Ngāti Whātua o Ōrākei Māori Trust Board.
There are probably over 300 properties of this kind, where land is leased from iwi. Other iwi have also expressed an interest in the management of State housing within their rohe. Within my electorate of Waiariki, Te Rūnanga o Ngāti Awa has indicated a desire to purchase all of the corporation’s stock in and around Whakatāne, so that is great.
I acknowledge our iwi who have stepped up and stepped into this gap, picking up the responsibility to care for their own and to care properly for our whānau. We hope the Housing New Zealand Corporation continues to trust in their leadership and vision in the development of housing in those rohe. Kia ora tātou.
Hon PHIL HEATLEY (Minister of Housing): I very much look forward to the post-election environment. If New Zealanders decide to put John Key back in as Prime Minister and he chooses the next Minister of Housing, that Minister will oversee the Housing New Zealand Corporation as it insulates its very last home, probably in about 2013 or 2014. Out of 69,000 State houses across this country, the Housing New Zealand Corporation will be insulating the last home that requires it in a couple of years’ time. We have about 2,500 to insulate next year and about 2,100 to do the year after that. In the financial year before this one, we did more than 8,400 insulations in just over 12 months, which is quite stunning when one thinks about it.
Te Ururoa Flavell raised the issue of the condition of State houses. The Housing New Zealand Corporation has a commitment to increasing the conditions of its State housing stock, rather than growing the State house numbers as much as under the previous Government. It has decided, with the Government’s support, to upgrade the State houses. The way the corporation has bitten off that challenge has been a huge credit to it. We have seen State houses with their bedroom numbers increased, we have seen State houses that had fallen into serious disrepair bowled, removed, or sold and replaced with new houses, and, of course, we have seen the insulation scheme, which has been very, very important. The member was quite right in saying that in delivering State housing, we are delivering a large proportion of it to Māori families.
One of the other issues to consider when we look at the State housing asset, if you like—the actual houses out there—is that about 27,000 State houses out of the 69,000 are essentially inappropriate. About 42,000 houses are about right and we can keep and maintain them, but about 27,000 have to be upgraded or sold and replaced, so that we maintain the State housing stock. Essentially, the problem is that many of those houses are three-bedroom houses, when Māori families are often much larger and need four or five-bedroom houses. Many people live alone these days, and they simply want a one or two-bedroom home. So we have thousands of houses that are the wrong size. Then we have a large number of houses that are in the wrong locality and need to be disposed of, and we need to build or purchase replacement State houses in the right locality. We also have some State houses that are in a serious state of disrepair. On that side of it, the Housing New Zealand Corporation is very focused on bringing the State housing up to what it calls a level that is fit for purpose, so that no longer among the 69,000 State houses do we have 27,000 of them not fit for purpose. Instead, the whole State housing stock will be fit for purpose. That will take a long time indeed, but certainly the train has left the station.
We are also looking at tenancies, and the Housing New Zealand Corporation is very focused on this issue. On 1 July any new tenant signing up with the corporation will no longer be getting a State house for life. It was a Labour Party principle that if someone got a State house, they got it for life. It did not matter if they won Lotto or their circumstances had improved. It did not matter even if they had had six kids who had all left home 25 years ago, and the tenant was left with five bedrooms and just themselves there, the Labour Party told them to keep the five-bedroom State house, even though it was just one person on a quarter-acre section who was sick of mowing the lawns. That situation has ended. From 1 July any new tenant coming into State housing will have their circumstances reviewed every 3 years. That will mean that those families whom Mr Flavell talked about who are on the waiting list and who really need a State home will be able to move into one, because those families who no longer need a State home will transition out of them and into renting in the wider social housing sector, private rental, or perhaps even homeownership. Essentially, we will have a housing continuum there so we can help more people on the waiting list. That is a very important point indeed, and I thank the member for his support of that.
Report noted.
Television New Zealand
Hon Dr JONATHAN COLEMAN (Minister of Broadcasting): Of all the entities that the Labour Government completely knackered, none can have been more completely knackered than Television New Zealand (TVNZ). Talk about receiving a hospital pass. The Labour Government managed to run down the public equity in TVNZ from almost $1 billion to, 9 years later, a little more than $200 million. It would need some real financial mismanagement on the part of the Minister in charge to do that, but Labour managed it.
How did Labour do it? It shackled TVNZ with a completely ridiculous charter that had it answering two masters. Those guys opposite inherited a very profitable commercial television station with massive equity, but they tried to turn it into something it was not. Labour tried to turn back the clock and turn TVNZ into the old New Zealand Broadcasting Corporation. Labour tried to foist Steve Maharey’s charter on an organisation and, frankly, just about completely ruined it. By the time Labour had finished with it, TVNZ was hardly returning a dividend.
The good news is that under this Government we have turned round the performance of TVNZ. The commercial performance has increased considerably. Not only that, we are just about to remove that terrible TVNZ charter. Do members know what the real indictment of the charter was? In actual fact there was no difference in the content on TVNZ before the charter as compared with during the charter. There will be no difference after the charter either. Steve Maharey put all that effort into wrecking TVNZ by foisting that charter on it. He just about wrecked it, but TVNZ survived. What is even better is that the charter is just about to be removed for good.
Members opposite never realised that TVNZ—93 percent commercially funded—was never going to be the public broadcaster of old. Those members will also say that this Government should not be closing down TVNZ 7, but the fact is they left $79 million on the table for it for 6 years, with no plan as to how they were going to continue that funding. They just left it up to us. We are left with the hard decision of what will happen with TVNZ 7 and they expect us to find another $15 million to fund it.
If Clare Curran gets time to speak—I think there are 2 minutes left in this debate—I want her to promise the Committee that a Labour Government will fund TVNZ 7 and that it will find the $15 million a year to do it. I tell members that she will talk tough but I bet she will not find that money. I will quit this speech early, because there are 2 minutes left and I want to hear Clare Curran walk the talk and tell us that a Labour Government will fund TVNZ 7. So please, now is Ms Curran’s chance.
CLARE CURRAN (Labour—Dunedin South): This Government talks a lot about step changes and every time it says “step changes”, I think of aerobics and of us all doing step classes—
The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member, but the time for this debate has expired.
Hon STEVE CHADWICK (Junior Whip—Labour): I raise a point of order, Mr Chairperson. I do not wish to challenge the Chair, but I recorded that we started this debate at 4.35 p.m. and it is a 3-hour time-limited debate. We just hoped we would get that last 5-minute call.
The CHAIRPERSON (Lindsay Tisch): No, we started at 4.32 p.m. on the official record and we finished at 2 minutes past 9. That is why we have closed the debate.
A party vote was called for on the question, That the report be noted.
Ayes 110
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Māori Party 3; Progressive 1; United Future 1.
Noes 10
Green Party 9; Independent: Carter C.
Report noted.
The CHAIRPERSON (Lindsay Tisch): The debate on the performance in 2009-10 and current operations of Crown entities, public organisations, and State enterprises has concluded. I will report this debate to the House.
Report adopted.
Bills
New Zealand Security Intelligence Service Amendment Bill
Second Reading
Hon CHRISTOPHER FINLAYSON (Attorney-General) on behalf of the Minister in charge of the NZ Security Intelligence Service: I move, That the New Zealand Security Intelligence Service Amendment Bill be now read a second time. This bill updates the New Zealand Security Intelligence Service Act 1969 to reflect new technologies. The Act’s warrant framework was designed in 1977, before technologies such as mobile phones and the internet became common. Technological changes have now overtaken the warrant framework, so the bill addresses, first, the prevalent use of computer, mobile phone, and internet technologies, and, second, new surveillance technologies available to the SIS. The bill also clarifies protections from liability for persons acting under warrants, and provides for delegation powers.
During the first reading the House referred the bill to the Intelligence and Security Committee for its consideration. That committee, comprising the leaders of the National, Māori, ACT, Labour, and Green parties, received and considered 23 written submissions on the bill. The committee heard from those submitters who wanted to be heard in person. I am advised the committee appreciates the efforts of all the submitters. Those submitters raised matters covering three general themes within the scope of the amendments: the surveillance powers of the SIS, the framework protecting employees and persons assisting the SIS when exercising intelligence warrants, and delegation powers. Submitters had concerns about extensions to the surveillance powers in respect of new technologies. There were also calls for any modernisation of surveillance powers to be accompanied by additional legislative safeguards. A number of submitters were concerned that the proposed delegation framework in the bill could undermine the existing accountability framework in the substantive Act. The Act currently requires each interception warrant to specify, in advance, the persons who may assist in the execution of the warrant.
The committee has recommended four changes to the bill, all of which either improve or add to the existing safeguards in the legislation. First, the committee recommends including a specific reference to human rights in the Act, requiring the intelligence service to perform its functions in accordance with a comprehensive set of principles, which include human rights. Secondly, the committee recommends applying an additional safeguard by requiring the warrant issuers to consider specifically whether mistaken identities or other third parties could be affected, and, if so, what conditions should be imposed on the exercise of the warrant. Thirdly, the committee recommends requiring any irrelevant electronic tracking records to be destroyed as soon as practicable after the warrant expires. Finally, the committee recommends requiring the director to maintain a register of delegations relating to the execution of warrants. The warrant issuers and the Inspector-General of Intelligence and Security will be able to inspect this register at any time, which will enable effective oversight of the delegations.
I now turn to the need for this legislation and the balance that has to be struck between preserving the privacy of New Zealanders and maintaining the security of New Zealand. Inevitably there are costs associated with conferring surveillance powers on any State agency. Surveillance activities by their very nature intrude into personal privacy. However, these costs must also be weighed against the benefits of maintaining the security of New Zealand. Personal privacy is a basic human right and a central value of our democracy. All New Zealanders have reasonable expectations of privacy, including being protected from any unreasonable or disproportionate use of surveillance. As such it is significant that the SIS will be able to use electronic tracking or undertake computer-based surveillance activities only under a warrant. Additional safeguards introduced by the bill, including a requirement that the SIS perform its functions in accordance with a set of principles, which include human rights, will complement existing protections in the Act. Providing for specific protection against the surveillance of mistaken identities is new. It will apply across the board, not just to the limited circumstance of an alias as requested by submitters.
More generally, it is commendable that this bill seeks to clarify the law in respect of modern electronic surveillance techniques. The Act’s current warrant framework was designed to cover only those surveillance activities that were unlawful in 1977. The drafters could not have contemplated new electronic tracking or computer surveillance technologies, nor could they have anticipated the prevalent use of mobile phones and the internet and the ability to hide behind cyber-identities. The proposed amendments will ensure that the law clearly identifies the types of surveillance practices that may be used by the SIS and the authorisations that are required.
National security privacy and other fundamental civil liberties are complementary rather than conflicting values. Sir Geoffrey Palmer, the recently retired president of the Law Commission and also a former Minister in charge of the SIS, has said “To a very significant extent, ‘national security’ means just this—freedom from interference; freedom from terrorist attack, freedom from deliberately incited racial violence, freedom from espionage which itself threatens basic freedoms such as privacy, freedom from the kind of genuinely subversive activity that is aimed—not just in theory but in fact—at destabilising or overthrowing the very democratic system upon which the exercise of civil liberties depends.” With those thoughts in mind, Parliament must strike a balance allowing for effective national security measures on the one hand and protecting reasonable expectations of privacy on the other. Surveillance powers do have an impact on privacy; that must be acknowledged. But those same measures help the Government to uphold the security values that support all New Zealanders’ privacy and other basic human rights.
The bill includes measures to maintain an appropriate balance between these privacy and security values. It places clear limits on the issue of warrants, which must be approved before exercising intrusive surveillance powers. In the case of New Zealanders, this approval must be given both by the Prime Minister and by the Commissioner of Security Warrants. They must both be satisfied that any interception, seizure, or electronic tracking is necessary, that the value of the information justifies the surveillance, and that the information is unlikely to be obtained by any other means.
To summarise, the bill does contain measures that impact on aspects of personal privacy, but, as I have said, these intrusions are balanced against clear benefits to New Zealand’s security. The measure will mean that the SIS can continue to use effective methods to investigate threats to New Zealand security. The existing warrant scheme already includes important tests that have to be met before any intelligence warrant is issued. The exercise of these powers is also subject to effective, independent oversight. The existing protections contained in the warrants framework, the additional protections recommended by the committee, and the effective existing oversight will continue to ensure that impacts on privacy are indeed minimised. I commend the bill to the House.
Hon PHIL GOFF (Leader of the Opposition): Labour will support the second reading of the New Zealand Security Intelligence Service Amendment Bill, but in a moment I will come to the concerns that both Labour and the Green Party had about the way this bill was introduced and then considered by the Intelligence and Security Committee.
What we know about security intelligence is that it is inherently controversial. It involves intrusion into the privacy of individuals, and therefore involves the question of human rights. Those issues, however, need to be weighed against issues of national security, and in today’s world that means, obviously, international terrorism and the need to safeguard against it. It also means breaches of cyber-security. That is becoming a bigger thing in the world and it threatens the commercial interests of New Zealand. It is real, it is happening, and we need a Security Intelligence Service and relevant legislation in order to protect ourselves against it. National security involves issues such as drugs, arms, and people-trafficking. It involves nuclear proliferation and a range of threats to our national security and the well-being of our personnel—police and defence forces—deployed overseas. Security intelligence is a critical part of the protection against those threats.
This bill, in essence, takes an original Act that is now 42 years old, updates it, and explicitly authorises modern technological methods of surveillance. The original Act came in an era when nobody had heard of electronic communications such as cellphones, laptop computers, the internet, and social networks. The bill explicitly provides for the SIS to undertake the tracking of subjects by electronic means; it confirms that facilities such as cellphone numbers and internet protocol addresses can be the subject of warrant applications; it allows, under warrant, access to computer systems; it provides protection from liability to those persons exercising SIS entry powers when they are seeking to obtain or facilitate entry; and it provides for the delegation of responsibilities where that is necessary to improve efficiency and to enable the SIS to react more quickly during operations. In Labour’s view each of those changes is justifiable in that they make explicit or update mechanisms used by the SIS. It really updates rather than extends those existing powers.
But, naturally, this was an area that was going to be very controversial publicly. That is why, first of all, I believe that it was both unnecessary and stupid of the Government to introduce this legislation under urgency. That simply created suspicion that this was a Government that had something to hide. On top of that, we then had a situation where it was deemed necessary that submissions made to the committee be held behind closed doors. Both I and Russel Norman from the Green Party opposed the hearing of submissions in secrecy. There was no reason for it. The public should be able to have their voices heard on any piece of legislation in an arena where the media and the public are there to observe and to follow what is happening. Nothing that I heard through the entire process of submissions needed to be heard in secret. The hearings could have been held in public. That sort of transparency and openness would have encouraged the public to look on this legislation as necessary and as something that the Government was being quite upfront about. Instead, the way in which it was handled led people to suspect the worst of what the Government was trying to do. I regret that the Government made those decisions in the way that it did.
Although the process was marred in that way, in another sense, having heard the submissions, and particularly with the proposals put forward by Labour and the Green Party, I think we made some worthwhile changes to this bill that improve the nature of it. I acknowledge, in particular, three sets of submissions. One was made by the Human Rights Commission. I thought it was a very appropriate submission that led us to include in the bill a section that sets out the rights that should be observed by the SIS. Likewise I acknowledge the thoughtful contributions made by Hazel Armstrong and also by the Council of Trade Unions. Although at least two of those bodies opposed the legislation, they put forward their ideas in a very constructive and thoughtful manner that I thought was very helpful to the bill we have ended up with. We have put a clause in the bill that includes reference to human rights, democratic oversight, and the impartiality and the professionalism expected of the Security Intelligence Service. It is the first time we have those principles enshrined in the legislation, and I believe that they strengthen it.
A further safeguard was added to help prevent people from becoming subject to surveillance because of mistaken identity. That was a real risk. The provision we added to the bill will help prevent that. Another requirement was added to the effect that non-relevant records obtained by electronic tracking must be destroyed as soon as practicable after the expiry of the intelligence warrant. The final safeguard that I think was necessary, given the move to delegate power from the Director of Security to people who are named subsequent to the warrant being issued, is that there will be periodic reporting of those delegations to the Inspector-General of Intelligence and Security. I think that is important in terms of the inspector-general and the functions that he carries out in that regard.
In support of the bill, I note that the Ministry of Justice evaluated it and found that in terms of the Human Rights Act and the New Zealand Bill of Rights Act it was consistent with the rights and the protections enshrined in that legislation. Likewise, the bill received consideration from the Law Commission, by its deputy president, Dr Warren Young, a person who is, I think, widely respected across the House. Dr Young noted: “While there are some impacts on privacy, this is clearly justified by the associated benefits. In particular, updating the warrant framework is a recognition of technological changes in the storage of and communication of information, and is essential in order to enable the NZSIS to continue to effectively undertake its statutory functions.” Last but not least, the Office of the Privacy Commissioner did not oppose the bill, and noted that the warrant proposals represent an extension “in application” of existing powers rather than an extension “in principle” of existing powers.
I think this legislation is appropriate to the needs of New Zealand at this time. It is essentially a modernisation of the legislation. It respects the balance that needs to be found between privacy and respect for human rights and the necessity for national intelligence to protect New Zealand against international threats. On that basis Labour supports the second reading of this bill.
PESETA SAM LOTU-IIGA (National—Maungakiekie): I rise to support the second reading of the New Zealand Security Intelligence Service Amendment Bill. The bill, as has been explained by the two previous speakers, amends the New Zealand Security Intelligence Service Act 1969. As the Leader of the Opposition so clearly stated, that statute is outdated and needs further amendment. The bill is about allowing the Security Intelligence Service—or the SIS, as it has come to be known—to use electronic tracking devices to undertake its surveillance work and to intercept or collect a range of information. That includes email addresses, phone numbers, user account identifiers, and internet protocol addresses, as those have proliferated in recent times.
The issues canvassed by the Minister and the Leader of the Opposition are quite clear. They are issues around terrorism and cyber-security that we must deal with in these modern times. Of course, 9/11 was just one turning point in the fight, I suppose, against terrorists and the way that they operate in various cells using various technologies across the globe. But also there are issues about countering those who smuggle arms, those who smuggle drugs, money-launderers, and those who smuggle people across borders. These types of intelligence and communications, which the SIS uses, need to be incorporated into a modern bill.
The privacy and human rights of those who are under surveillance or being monitored certainly need to be respected and protected. To that end, the Intelligence and Security Committee inserted a clause to incorporate principles that would underpin the performance of the functions of the SIS so that those human rights would be protected. New section 4AAA, inserted by clause 5A, outlines some of those principles, and it refers to the contribution towards keeping New Zealand secure, independent, and a free and democratic society. New section 4AAA(1)(c) specifically refers to the actions of the SIS being “in accordance with New Zealand law and all human rights standards recognised by New Zealand law,”. Clearly, those human rights are protected under this legislation.
I support this bill, along with my colleagues. It modernises the New Zealand Security Intelligence Service Act, and it should be commended to the House.
Hon DAVID PARKER (Labour): As the Hon Phil Goff, Leader of the Opposition, has already said, Labour supports the New Zealand Security Intelligence Service Amendment Bill at second reading. I reinforce what Mr Goff has already said in relation to the process. We all know in this House that this is contentious legislation, because there are people who are always suspicious—and rightly so, to be honest—in their desire to protect civil liberties against unnecessary intrusions of the power of the State. The New Zealand Security Intelligence Service Amendment Bill sits right in that space. A wise Government that wanted to assuage concerns rather than make them worse would try to do as much as possible transparently and in the public arena, rather than give credence to those who suggest that what is being done is unnecessarily secretive and underhand, and confers wider powers than are necessary.
If the media had had the opportunity to consider the submissions that were made by the various 23 submitters on this legislation, the media would have been well able to make up their mind as to which of these submissions were wise, and which might have been fantastic submissions as to the ulterior motive of the Government. However, because the Government chose to use its power on the Intelligence and Security Committee to outvote the Greens and Labour and hold these hearings in secret, the media did not get the opportunity to hear from the range of submitters. Neither did the submitters have the ability to hear the full range of the explanations that might be given, or the contrary positions that might be put by other submitters. I think it is a great shame that the Government, instead of minimising the concerns of our citizens as to whether this is an appropriate use of powers, has in some ways amplified those concerns or given fuel to those who have a conspiratorial view as to what the Government is trying to achieve here. That is to be lamented.
For me, one of the most important aspects of the control of the New Zealand Security Intelligence Service lies in the role of the Commissioner of Security Warrants, who is by tradition, if not by statute, a retired High Court judge. I think it is always a retired High Court judge; someone can correct me in a later contribution. Mr Goff says that that is correct. We in New Zealand are fortunate: we are one of the least corrupt countries in the world. We have an independent judiciary we can be proud of. Our High Court judges, our Court of Appeal judges, our Supreme Court judges, and our lower court judges are free of corruption. The people we appoint as High Court judges in New Zealand are the crème de la crème of our legal fraternity. Our legal fraternity is imbued with generation upon generation of good values. Those values might not be expressed in a written constitution, as they have in the United States of America—although I note they have written constitutions in places like Zimbabwe and Libya, as well, and they are no guarantee of good conduct—but a better guarantee of good conduct is the traditions we have in New Zealand. They are embodied in our High Court judges. So the fact that we have a retired High Court judge as the person who, as the Commissioner of Security Warrants, conducts oversight of what is done through the New Zealand Security Intelligence Service under the warranted powers conferred by our existing legislation, and now as amended by this bill, should give New Zealanders comfort that we do have some proper oversight of the Security Intelligence Service.
The very fact that these services are somewhat secretive is necessary as a consequence of the role they perform. If they were advertising what they were doing, according to the Governments not just of New Zealand but really of every Western democracy, it would be impossible for them to properly go about their tasks. So we cannot have public scrutiny of their conduct in the normal way, and we have, effectively, to trust the delegation of that security to someone we trust. In New Zealand we choose to trust a retired High Court judge for that. This bill improves that, not just by updating the list of technologies that can be used in pursuance of the surveillance powers the Security Intelligence Service has in New Zealand. As Phil Goff has said, these amount to an extension of existing powers to new technologies rather than to a broad sweep of new powers.
One of the amendments that is recommended to this House by the committee—with the support of everyone, but I think brought forward by Labour and Green members—is the insertion into the principal Act of some principles that underpin the performance of the Security Intelligence Service. These are the principles that the retired High Court judge, who is the Commissioner of Security Warrants, will have regard to when he or she conducts oversight of the Security Intelligence Service. I will read out those principles, which are found in new section 4AAA, inserted by clause 5A: “(1) In performing its functions under this Act, the Security Intelligence Service—(a) contributes to keeping New Zealand society secure, independent, and free and democratic: (b) contributes to the participation of New Zealand in the maintenance of international security: (c) acts—(i) in accordance with New Zealand law and all human rights standards recognised by New Zealand law, except to the extent that they are, in relation to national security, modified by an enactment: (ii) in the discharge of its operational functions, independently and impartially: (iii) with integrity and professionalism: (iv) in a manner that facilitates effective democratic oversight.” So for the first time those principles are found in the legislation. I am not quite sure I properly understand the wording of new subsection (2) of new section 4AAA, but we might in the Committee stage have an explanation from the Minister in charge of the NZ Security Intelligence Service, who will then be in the chair, about the effect of this new subsection (2). I am not quite sure we have the exact wording of that right, but the Minister then in the chair can no doubt advise us of that.
I take considerable heart from the fact that the Law Commission has agreed that this is wise legislation and an appropriate balance of the different interests to be balanced, that the suggestion of the Human Rights Commission that human rights be protected in the legislation has been brought forward and adopted by the committee, that the Privacy Commissioner was involved in the development of the bill, as opposed to being a submitter to the bill, and that we in this Parliament have had advice that this bill infringes neither the New Zealand Bill of Rights Act nor the Human Rights Act. As a consequence, I am confident that this bill achieves the right balance between the interests of the State in being able to properly go about the security intelligence operations that, sadly, are necessary in any country, or that might be necessary in some situations in any country, and the rights of our citizens to be free from inappropriate levels of scrutiny and intrusions into their civil liberties—their right to go about their lives without the intrusion of the State.
I have read parts of the departmental report, including the reasons why it is necessary to update the legislation to have regard to new technologies, some of which lie within the warranted powers of other arms of the State, like the police, but at present have not been updated for the Security Intelligence Service because, as previous speakers have said, the legislation is so old it predates some of those newer electronic technologies. I also note that helpful submissions were made by the Council of Trade Unions and Hazel Armstrong. Hazel Armstrong is someone who is known to many people around this place as making wise contributions on quite a few areas of law, so I am sure the committee benefited from her advice. There was a total of 23 submitters, seven of whom, I think, were heard with oral submissions, and the outcome of that process is better legislation. But we would have greater public confidence in the process had it been more open.
KEITH LOCKE (Green): The major reason the Greens are not supporting the New Zealand Security Intelligence Service Amendment Bill is that we do not want to give more powers to such an unaccountable organisation as the Security Intelligence Service. The manner in which this bill came before the House and its treatment by the Intelligence and Security Committee reinforce our position.
Firstly, it is unclear why there needed to be such an amendment bill this year. The regulatory impact statement the Government produced on the bill proclaims “that a parallel policy review should be undertaken, aiming to achieve new security legislation by the end of 2012.” Is it not wasting this Parliament’s time to have one bill this year, then another, presumably more substantial, bill next year?
The Government trots out the Rugby World Cup as a reason for putting this particular bill through Parliament, when the regulatory impact statement actually says there is “a low probability” of any serious security breach during the Rugby World Cup games. In any case the police are preparing for all eventualities, and it is hard to argue a need to rush through more powers for the SIS.
Maybe, as is common with security institutions, the SIS would simply like more explicit surveillance powers. Perhaps—and this is a bit scary—the SIS is presently breaking the law in the manner in which it conducts some surveillance, such as the use of tracking devices, and needs this legislation to make legal what it is currently doing illegally. It is hard to be definitive about this, but some passages in the regulatory impact statement could imply that this is the case. For example, the regulatory impact statement says “the current framework does not specifically provide for the use of electronic tracking devices.” Has the SIS been using tracking devices when the law does not provide for it to use them?
Then there are the problems with the Intelligence and Security Committee’s consideration of the bill. The Prime Minister pronounced that all public submissions on the bill, including the Green Party one from me, would be held in private. Actually, the whole process was so secret that it was hard for the public to even find out how and when to make submissions. People were phoning me to find out because there was nothing about it on the parliamentary website, partly because the Intelligence and Security Committee is not a true select committee of this House and does not have a slot on the website. It is a statutory committee made up of appointees of the Prime Minister and the Labour leader, which runs by different rules and more secretly. So MPs like me and the media missed out on exchanges between other submitters and the committee because the doors were closed on us unnecessarily.
The exclusion of the media probably resulted in the bill being given less of a public hearing than it deserved. The committee was rightly under some fire for the secrecy around the public submissions, because there was no logical reason for it. Submitters like me were not going to disclose any classified SIS information, partly because we do not have any, and Phil Goff confirmed that none came out during the hearings. Under public pressure the committee did relent a bit. Initially it said that even the written copies of submissions would be kept secret, but it later reversed this decision and released copies.
Something positive did come out of the submission process: the Human Rights Commission had proposed that “Given the legitimate concerns about the breadth of the amendments and their possible impact, the Commission recommends including an explicit reference to human rights principles in the bill.” The Intelligence and Security Committee agreed to clause 5A, which adds after section 4 of the original New Zealand Security and Intelligence Service Act some principles underpinning performance of functions. The first of these, which will be section 4AAA(1)(a) of the Act, is for the SIS to contribute to “keeping New Zealand society secure, independent, and free and democratic:”—a very good aim. It will be a change if the SIS actually does that, because it seems to be going in the opposite direction. For example, in relation to independence it seems to be integrating more and more its operations with US intelligence, including more reliance on the US intelligence database to determine which political activists to watch. In the past the SIS has not particularly promoted a “free and democratic” New Zealand, otherwise why would it have kept a file on law-abiding people like me, whose only crime has been to criticise the policies of New Zealand Governments of the day? The existence of such files on dissenters has inhibited New Zealanders, particularly those working for the Public Service, from criticising Government policy for fear that they will be disadvantaged in the promotion stakes if the SIS is asked to vet them before promotion.
In practice, the SIS’s role over the years has been, rather than promote a free and democratic New Zealand, to make it easier for the Government to implement its own policies against domestic opposition. The SIS is aided in this by an existing clause in the New Zealand Security and Intelligence Service Act whereby it is tasked to combat influences detrimental to “New Zealand’s international well-being or economic well-being”. I doubt that means in practice that the SIS would be put the US embassy under surveillance for trying to subvert New Zealand’s cost-saving drug-buying agency Pharmac, which it is currently trying to do, thereby detrimentally affecting New Zealand’s economic well-being. Rather, it is the opposite: the SIS’s track record, as proved by the SIS files that have been released, is that it targets the very people who are protesting against free trade and investment agreements like the planned agreement with the US that threatens our treasured Pharmac.
The second part of the committee’s good amendment to the bill, which is in clause 5A—the addition of section 4AAA(1)(c)(i)—requires the SIS to act “in accordance with New Zealand law and all human rights standards recognised by New Zealand law, expect to the extent that they are, in relation to national security, modified by an enactment:”. This is a step forward, particularly in that our New Zealand Bill of Rights Act protects us, under section 21, from “unreasonable search and seizure, whether of the person, property, or correspondence, or otherwise.” Abiding by that has not always been the SIS’s practice. Unfortunately, however, we still have some provisions in our legislation that protect the SIS when it offends natural justice. For example, section 25 of the Human Rights Act allows the SIS to discriminate in employment on the grounds of politics, religion, disability, family status, or national origin. When citizens appeal to the Ombudsman for the SIS to release material, they will come up against the general exception from the Official Information Act on matters of national security.
The SIS is a pretty opaque organisation. Over the years, questions I have asked of the Ministers in charge of the SIS, either John Key or Helen Clark, have been met with “We don’t comment on matters of security.” Perhaps this will all change now we have a new section 4AAA(1)(c)(iv), which is being added so that the SIS will act “in a manner that facilitates effective democratic oversight.”, but I would not bank on it. MPs like me have been able to find out almost nothing about what the SIS does, so it is very hard for us to conduct any democratic oversight at the parliamentary level.
The SIS itself was not too keen on human rights principles being added to the Act, as they now have been. In its report, responding to public submissions to the bill, the SIS expressed concern that “to simply introduce a reference to human rights principles without considering a comprehensive set of principles for the SIS Act, might have unintended consequences.” What those unintended consequences could be were not spelt out. Why should the SIS be different from the police and other Government agencies that do have more explicit requirements to abide by national and international human rights standards? If there is to be a review of the SIS legislation next year, perhaps a major theme should be—
Mr DEPUTY SPEAKER: I am sorry to interrupt the honourable member, but his time has expired.
Hon RODNEY HIDE (ACT—Epsom): On behalf of the ACT Party I rise to support the New Zealand Security Intelligence Service Amendment Bill, but first let me pick up on Mr Keith Locke’s presentation. There have been a lot of puzzles around Parliament in my time here, and one of the more pleasant puzzles has been Mr Keith Locke. He is a very reasonable man and quite sensible. He has spent his time here in Parliament, as we have just heard, being highly critical of the Security Intelligence Service and its intrusive powers over ordinary citizens. Yet Mr Locke, by his very politics, has supported and given succour to the most oppressive and repressive regimes known in the 20th century—regimes that ran complete police States. I just do not understand Mr Keith Locke. I could understand his having concerns about the SIS if he were an anarchist or a hard-core libertarian, but given Mr Locke’s politics, his ideology, and the regimes that he supported around the world, it is very, very tough to sit through one of these criticisms of our own SIS and suggest somehow that it is not given proper democratic oversight and does not operate within the rule of law.
I turn to the bill. The ACT Party supports it. It does not change the framework within which the SIS operates or the principles under which it does its business. What the bill does do is simply update the legislation—keeping those principles and maintaining that framework—for the modern world. This is a modern world where we have technology that can track people without having to follow them, a world where we have mobile phones, and a world where we have the internet, email, and cyber-crime. In fact, the current legislation, as I understand it, was designed and thought of when Get Smart was popular on TV. That is how out of date our current legislation is. So all this bill does is to bring our legislation up to date, whilst keeping the principles that have been tried and tested and found to be true. For those reasons this change has the wholehearted support of the ACT Party. I continue to wonder about the puzzle that is Mr Keith Locke. Thank you.
TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe, Mr Deputy Speaker. Kia ora tātou katoa. I am taking a brief call tonight on the New Zealand Security Intelligence Service Amendment Bill, just to say that the Māori Party—as most will be aware, as it is expressed constantly—is founded on a kaupapa that expresses the importance we place on values that others would probably call transparency, accountability—
Mr DEPUTY SPEAKER: I apologise to the member. I would like to hear what the member is saying.
TE URUROA FLAVELL: As I was saying, we place a lot of importance on the values that others might call transparency, integrity, accountability, respect, and confidentiality. We are not fundamentally opposed to the notion of checks and balances, to be confident in the security systems we have in place. We think it is right that the law keeps up with the technology, as Mr Hide just talked about, to safeguard our citizens. But we also want to ensure that the agencies that are in place have strong oversight over the security intelligence system. Our prevailing concern is that when the Prime Minister and the director of the Security Intelligence Service consider issuing warrants, their judgment must be objective and not clouded by the subject of the warrant. I say that because, for example, if the subject were Tame Iti, I might suggest that the SIS would have more of a preconceived perception than if the subject were, say, Bob Jones. The key question is how we ensure objectivity. That is the problem. Although the need to have two people in the chain is a positive move, I think more needs to be done. Perhaps the full Intelligence and Security Committee should make the decision. All members of the committee are already sworn to secrecy, so there are no problems with issues of confidentiality.
Finally, I want to share the experience of Professor Jane Kelsey when she went to Australia and what she had to endure with Australian immigration, as an example of how ordinary New Zealanders can see the power that this secretive agency, the SIS, has over their lives. On a recent visit to promote her new book, Professor Kelsey was detained by immigration at Sydney Airport. She was subsequently informed by a senior immigration official that she was not eligible for visa-free entry to Australia, on the grounds that she was not an “appropriate person” under Australia’s 1994 immigration laws. Although she was allowed to enter Australia at that point, Professor Kelsey was told she would need to apply formally for a visa for any future visits, and was advised to seek a waiver from the Australian High Commission. The irony in this situation was that just a month earlier Professor Kelsey had entered Australia with no bother at all. One wonders, of course, whether the new book she was promoting on trans-Pacific partnership negotiations had anything to do with the change in approach; or perhaps it was the fact that last year she raised concerns over the apparent surveillance by the SIS of her activities as a critic of neo-liberalism and free-trade agreements.
The Māori Party accepts the need to amend the law relating to the SIS by updating and clarifying the New Zealand Security Intelligence Service Act 1969. We also acknowledge, as with other legislation before the House, the importance of being able to address technological changes and to ensure consistency with other legislation—in particular, to update the interception warrant system. The bill also deals with protections and administrative inefficiencies. We support the intention to use modern technology in the performance of the SIS’s functions. We recognise also the opportunity for streamlining requirements for the issuing of warrants. The Māori Party will support this bill at this stage in terms of pure efficiency and administrative improvements, but I signal to the House that our final vote will be determined by what we hear as the debate continues. Kia ora tātou.
JOHN HAYES (National—Wairarapa): I will make a brief contribution on the New Zealand Security Intelligence Service Amendment Bill, as probably I am the only person in the House who has actually had a close working relationship with the Security Intelligence Service over a long period of time—but not as long as my friend Keith Locke, who has been on their books since age 11, and he is much older than me.
Metiria Turei: Dull!
JOHN HAYES: Never mind; at least he is polite, unlike his rude colleague in the front seat.
In my experience, the 200-odd people who have made up the Security Intelligence Service at any one time over the last 7 or 8 years—and the last 25 or 30 years—are actually a great bunch of people. They have been really well led by people such as Don McIver, Richard Woods more recently, and at the moment a constituent of mine, Warren Tucker. It is worth recalling, when we think about this legislation, that, in fact, up until 1956 in this country the police did the work of the Security Intelligence Service. Then, between 1956 and 1969, the Security Intelligence Service operated without any legislative base whatsoever. Since 1969 we have had legislation. It has been reviewed on a few occasions, and because technological change has outstripped the old law, we are in the process of revamping the legislation again.
I would just like to say to people like Keith Locke and to other colleagues in this House that the bread and butter of the Security Intelligence Service is in vetting public servants, which is quite important as we remember that a couple of years ago the Ministry of Defence’s chief scientist unfortunately slipped through the cracks. Why does the Security Intelligence Service vet public servants? Because we want to have a system that we know is operating with integrity, so that the community can have a certain amount of trust in it. People who are checked in this way include those who work in defence and foreign affairs, and senior public servants. The Security Intelligence Service runs three offices—in Auckland, Wellington, and Christchurch—and aside from the main bread and butter, the job is primarily collecting intelligence, working on threats to our community, and making sure that those threats are disrupted. When we have the Rugby World Cup, we do not want an event to cause us some concern or damage during that occasion.
One other point I would like to make is that the Minister in charge of the Security Intelligence Service cannot name somebody or direct the service to follow a particular person of the Minister’s choosing. The system has a great deal of integrity. We have the Inspector-General of Intelligence and Security and, from my experience over a long period of time, I can say we can be very comfortable with the work the service does. We can be very proud of the work it does, and we can see that it is a system with impartiality, integrity, and a great deal of thoroughness. Thank you.
CHRIS AUCHINVOLE (National—West Coast - Tasman): The New Zealand Security Intelligence Service Amendment Bill is a balanced, well-structured bill that, on the one hand, provides for protecting New Zealand security and, on the other, minimises the effect on privacy. It was a pleasure to hear the second reading motion moved by the Attorney-General, Chris Finlayson.
There is a need to update and incorporate new information technology systems and new surveillance techniques. One has only to consider the rapid changes that have come about to see the need for such change. Human rights also have to be protected in balance with security requirements. Again, I say that the bill is a balanced, well-structured bill that, on the one hand, provides for protecting New Zealand security and, on the other, minimises the effect on privacy. Thank you.
A party vote was called for on the question, That the New Zealand Security Intelligence Service Amendment Bill be now read a second time.
Ayes 110
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Māori Party 3; Progressive 1; United Future 1.
Noes 10
Green Party 9; Independent: Carter C.
Bill read a second time.
The House adjourned at 10 p.m.