Thursday, 20 September 2012

Thursday, 20 September 2012

Thursday, 20 September 2012

Mr Speaker took the Chair at 2 p.m.

Prayers.

Business Statement

Business Statement

Hon GERRY BROWNLEE (Leader of the House): When the House resumes on Tuesday, 25 September, the Government will look to pass the National War Memorial Park (Pukeahu) Empowering Bill and the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill. The Government also intends to progress the Lawyers and Conveyancers Amendment Bill, the International Finance Agreements Amendment Bill, and the first reading of the Crown Minerals (Permitting and Crown Land) Bill.

Hon TREVOR MALLARD (Labour—Hutt South): Is the Leader of the House yet in a position to share with us the likely dates for the liquor legislation, the Alcohol Reform Bill, including the cut-off date for substantive amendments, and whether or not he has been able to reach an agreement with the Minister in charge of the bill as to whether we will have a logically ordered debate or whether it is just going to be a free-for-all?

Hon GERRY BROWNLEE (Leader of the House): Well, working backwards, the Minister in charge of the bill, of course, was in a former role a lawyer, so naturally likes order to be something that is to the fore in these matters, and that would be the desire of the Government and, I believe, the House as a whole. What is intended is that the bill would likely come back into the House around 23 October for dealing with the Committee stage. I think there has been a request that the out-of-scope amendments be put in place by today, and the Business Committee will have further consideration next week of all of the matters that would lead to a very ordered process around a bill that now has had perhaps its most controversial aspect already dealt with by the House.

Points of Order

Bills, Members’—Preliminary Ballot

CHRIS HIPKINS (Senior Whip—Labour): I raise a point of order, Mr Speaker. I thought this was the appropriate moment to do it. I want to draw your attention to Standing Order 277(2) and ask you to do some investigation and come back to the House with a considered ruling on the point that I am about to raise. It turns on the interpretation of this Standing Order as to what a bill that is “the same or substantially the same in substance.” should be. I do not want to relitigate an issue from this morning. I want to clarify this for future circumstances. The question that I would like you to go away and turn your attention to is whether “the same or substantially the same” refers to the outcome a bill seeks to achieve or the means by which it seeks to achieve that outcome. The question that we were faced with this morning—and I want to make it clear that I am not relitigating that at all—was we had two bills in the ballot that sought the same outcome, but had different means through which they intended to deliver that.

The interpretation that was placed on it this morning was that because they sought the same outcome, they were the same, and therefore there should be a pre-ballot to determine which of those bills went into the ballot. I want to be clear that I am not relitigating that process. What I am saying is that it would be useful for the future if we had a clearer ruling from the Speaker about whether or not it is actually the outcome or the substance of the bill that has to be the same in order for a pre-ballot to be conducted.

Mr SPEAKER: I appreciate the member’s point. I will indeed look into that. I suspect it may be a combination of both—that it may depend a little on whether or not a reasonably minor amendment can turn one bill into the other. But I think the issue is a legitimate issue, and I am very happy to look at that further.

Questions for Oral Answer

Questions to Ministers

GDP Growth—June 2012 Quarter

1. JONATHAN YOUNG (National—New Plymouth) to the Minister of Finance: What recent reports has he received on the economy?

Hon BILL ENGLISH (Minister of Finance): Statistics New Zealand this morning released the GDP data for the quarter ended June 2012. It showed that the New Zealand economy grew 0.6 percent in the 3 months to 30 June. This took growth to 1.6 percent for the first 6 months of the year. It brought annual growth to 2.6 percent compared with June 2011. This indicates that the economy is picking up some momentum, because it is the highest rate of annual growth since 2007. So we are making progress, and on track to moderate growth of 2 to 3 percent per year.

Jonathan Young: What were the main components of GDP growth in June?

Hon BILL ENGLISH: We do have to be careful not to read too much into components of growth for just 3 months, because from one quarter to another they can change significantly. Agriculture was a significant contributor, up 4.7 percent, reflecting the end of a good growing season. Construction was up, indicating that the Canterbury rebuild, maybe, is now picking up momentum. Manufacturing was up 0.8 percent. Investment in fixed assets was up 3.1 percent, due to increases in plant machinery, equipment, and construction of infrastructure such as roads and residential buildings.

Jonathan Young: How do the latest New Zealand growth figures compare with growth in other developed countries?

Hon BILL ENGLISH: The New Zealand economy continues to perform along with the better-performing developed countries, despite uncertainties in Europe and the US. In the first half of 2012 New Zealand grew by 1.6 percent, which was higher than the US, Japan, Canada, the UK, and the euro area. Our quarterly growth is now in line with that of Australia. The fact that we are in a somewhat better position than a number of developed economies is one reason why our exchange rate remains relatively high.

Hon David Parker: Has the Minister read the report from Bernard Doyle of JBWere that by doing nothing about our overvalued exchange rate we are “importing other countries’ problems.”?

Hon BILL ENGLISH: I have, and I disagree that the Government is doing nothing. We are focused strongly on the competitiveness of our businesses. It is difficult, if not impossible, to manage our exchange rate to a significantly lower level, so we are focusing on helping our exporters to be profitable, regardless of what the exchange rate is.

Jonathan Young: Given the Government’s focus on creating a more productive and competitive economy, how will its economic programme build on the moderate growth confirmed by the latest GDP figures?

Hon BILL ENGLISH: We will continue to focus on those factors that will protect us from the worst aspects of something going wrong in the global economy—so we will continue to focus on the financial stability of our banks and on getting the Government’s finances back in order. We will also press on with the wide-ranging economic programme, which is focused on the long-term competitiveness of New Zealand, because that is what will help households get their debt down, and help export businesses generate the jobs and incomes that we would all like to see.

Hon John Banks—Police Investigation into Electoral Returns

2. GRANT ROBERTSON (Deputy Leader—Labour) to the Minister of Police: Does she have confidence in the New Zealand Police?

Hon GERRY BROWNLEE (Leader of the House) on behalf of the Minister of Police: Yes.

Grant Robertson: Does she have confidence in the police to be the best people to make an assessment in the first instance as to whether someone has complied with the law?

Hon GERRY BROWNLEE: That would be an operational matter for the police. The police are independent. The member knows that.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I do not think you could get a simpler or a straighter question: does he have confidence in the police in a particular matter?

Mr SPEAKER: Order! I think the question should be repeated. It did seek an opinion but I am not sure the opinion being sought was totally an operational matter.

Grant Robertson: Does she have confidence in the police to be the best people to make an assessment in the first instance as to whether someone has complied with the law?

Hon GERRY BROWNLEE: Yes. Might I say that I was momentarily distracted there when I heard Grant Robertson refer to me as “she”.

Hon Member: You’ll be lucky.

Grant Robertson: Exactly. Do not push your luck, Gerry. See whether you can stay calm through this one. Does she have confidence in the integrity of Detective Inspector Mark Benefield’s investigation that concluded that John Banks’ election expense return did not comply with the law, as it was wrong in content, and that the donations from Skycity and Kim Dotcom should not have been recorded as anonymous?

Hon GERRY BROWNLEE: Section 16 of the Policing Act makes it abundantly clear that the New Zealand Police is an independent organisation. It is completely inappropriate for a Minister to express a view about an operational matter of that type, but I do have confidence in the New Zealand Police.

Grant Robertson: Does she think that the Prime Minister should accept the police’s view that John Banks did not comply with the Local Electoral Act, as outlined in their investigation report, or should he rely on Mr Banks’ assurance that he did?

Hon GERRY BROWNLEE: It is beyond the portfolio brief to have an opinion about what the Prime Minister should think.

Grant Robertson: Does she think it is appropriate for the Prime Minister to make judgments on the police investigation and decisions about prosecution of John Banks without giving the police the courtesy of reading their report into the investigation?

Hon GERRY BROWNLEE: It is inappropriate for a Minister to second-guess the Prime Minister’s activities. What I would say is that he has a right to accept the police’s final conclusions. They are an independent body.

Grant Robertson: Was she or her office briefed by the police on when the public release of the file on the John Banks investigation would happen?

Hon GERRY BROWNLEE: I am unable to give a clear answer to that.

Grant Robertson: Given the answers to the supplementary questions, has the Minister now changed her position, when she used to say she always agreed with the Prime Minister?

Hon GERRY BROWNLEE: Far from it. I am sure that she does always agree with the Prime Minister. But the question asked for an opinion about whether or not the Prime Minister’s position was correct. That is not a question that is within the portfolio bounds of the Minister of Police.

Grant Robertson: If the police’s independence is so important to the Minister, will she speak to the Prime Minister about the opinions he has been giving on police reports such as that on Bradley Ambrose and now that on John Banks?

Hon GERRY BROWNLEE: No. But I would note that when people do stray into these things, as the previous Government discovered, it never goes well.

Youth Unemployment—Limited Service Volunteer Programme

3. ALFRED NGARO (National) to the Minister for Social Development: What announcement has the Government recently made on the Limited Services Volunteer programme?

Hon PAULA BENNETT (Minister for Social Development): Today the Prime Minister and I announced an initiative that will see more graduates of the Limited Service Volunteer course get work opportunities. We are asking employers to take on motivated young people who have done the Limited Service Volunteer course and are ready to work. The Limited Service Volunteer programme is a free 6-week course held at the Hobsonville, Trentham, and Burnham military camps, for 18 to 25-year-olds who are on benefit. Young people are referred to the Limited Service Volunteer programme by Work and Income, and the course is run by the New Zealand Defence Force. Here young people learn respect, discipline, and teamwork through a programme that focuses on getting them work-ready.

Alfred Ngaro: How can employers offer a young person a job?

Hon PAULA BENNETT: Employers can take on our Limited Service Volunteer graduates and there are employment subsidies available through the Government’s Job Streams initiative, which can help. I would encourage employers to get in touch with Work and Income. They can just ring 0800 778 008 and offer those young people a job. Sixty-two percent of those who go through this course do not go back on to benefit. We think we can do better by them for that.

Alfred Ngaro: What results has the Limited Service Volunteer programme seen to date?

Hon PAULA BENNETT: I know that the House has difficulty sometimes with good news for young people, but we have had truly encouraging results. For example, I know of one manufacturing employer who recently was looking for just one staff member. He interviewed four graduates from the Limited Service Volunteers, and he ended up taking two. He then went out of his way to get the other two a job with his mates in businesses around him because he saw that they were motivated young people. The number of young people on the unemployment benefit has gone down by over 10,000, by 20 percent, in the last year. We are seeing encouraging results, and we would like to see more.

Exchange Rate—Effect on Export and Import Substitution Jobs

4. Hon DAVID PARKER (Labour) to the Minister of Finance: How many export and import substitution jobs does he estimate have been destroyed in 2012 as a result of the exchange rate, which has been at 70 or above on the Trade Weighted Index for every month of this year?

Hon BILL ENGLISH (Minister of Finance): There is no officially accepted measure for what the member is asking for. What I can tell him is that total goods and services export receipts have increased 15 percent, from $52.9 billion in the year to March 2010 to $60.9 billion in the year to March 2012, and a net 57,000 more people have jobs than 2 years ago. The economy is dynamic, and jobs are constantly shifting as innovation, investment, and demand change. I would be suspicious of any measure that attempted to pick out one factor, when there are many factors in a company making a decision to export or to hire another worker.

Hon David Parker: Does he agree with the Prime Minister’s statement of January 2012: “We are concerned at the level of the exchange rate because we think that above $0.75 [U.S.]it’s very difficult for our export sector.”?

Hon BILL ENGLISH: Yes, I do agree with that. The export sector has shown itself to be very resilient and capable of increasing exports and production when it is backed by stronger policies on competitiveness. If the member is suggesting that there is some way to choose an exchange rate, then I would be keen to hear from him on that, but of course he needs to keep in mind that even if he could choose the exchange rate, reducing it would reduce the standard of living of all New Zealand households.

Hon David Parker: Does he agree with the Prime Minister’s statement of August 2012 that continued currency appreciation would make the economy at some point “splutter and stutter and probably stop”?

Hon BILL ENGLISH: It is possible that that could happen. As it has turned out in New Zealand, although we have had a high exchange rate now for a number of years, a relatively high exchange rate, our export sector has continued to expand. I think the member is getting at the issue of whether we can choose an exchange rate. It would be nice if we could, but there is no known method for picking the right exchange rate in the first place, and, secondly, there simply are not the tools to hold the exchange rate at whatever desirable level there is.

Hon David Parker: If China is running a programme of competitive devaluation of its currency, as are the US, the UK, and the EU, if Switzerland is defending a cap on its currency, which is the opposite of what the Minister just said could be achieved, if Singapore is managing within a range, if Brazil and Chile are intervening in capital flows, and if Japan is printing money too to protect its exporters, why should New Zealand exporters be slain and New Zealanders lose their jobs because his Government refuses to move on the primacy given to inflation targeting? [Interruption]

Mr SPEAKER: Order! It is a serious question.

Hon BILL ENGLISH: The member’s analysis is simply wrong. We could go through all those countries, but the countries that are actually defending a fixed rate, Singapore and Switzerland, both have very large reserves, and, in the case of Switzerland, they are building up huge imbalances in defending that rate, and one has yet to see whether the experiment is going to work. In the case of the UK and the US, they are printing money because they have zero interest rates. The fact that they are printing money is a sign of deep distress in their economies, not success. I would not like to be in that position. It would be bad for New Zealanders, bad for their incomes, and bad for their job prospects.

Rt Hon Winston Peters: Given his professed concern and that of his Prime Minister about real employment and real growth, has he asked Treasury and the Reserve Bank to calculate the damage, as the primary question asked, in terms of jobs and exports from an overvalued exchange rate; if he has not, why is he giving answers that say that nothing can be done about it, or nothing can be quantified?

Hon BILL ENGLISH: Well, the calculations on damage would depend entirely on your assumption about what the alternative was. Would the alternative be, you know, the Zimbabwe exchange rate, or the Japanese exchange rate, or the Aussie dollar exchange rate? I mean, it is a meaningless calculation. I mean, members of the Opposition are—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The question asked him as to why he has not asked the Reserve Bank or Treasury to do these calculations. I am not interested in his ideological views; I am interested—

Mr SPEAKER: No, no. Order! I have heard the member’s point of order. He is now going on to debate it. The Minister is answering the member’s question absolutely explicitly. The member asked why he has not asked Treasury to carry out these calculations. The Minister is explaining why he has not—that he believes such calculations are meaningless because of the difficulty in establishing the base level for the dollar to commence the calculation. That is his answer as to why he has not asked Treasury to do that. [Interruption] Order! He has answered the question. Does the member wish to ask a further supplementary question?

Rt Hon Winston Peters: Well, whilst most other Ministers of Finance in the developed world, in countries doing far better than New Zealand, are implementing policies to manage their exchange rates—policies endorsed by the IMF and leading international economists—why do he and his colleagues keep on saying again in the House today, as they have for months, that they can do nothing?

Hon BILL ENGLISH: We have not said we can do nothing. What we have said is that we can use the tool that is likely to be effective and sustainable for New Zealand, and that is to improve the competitiveness of our exporters. There is no free lunch around the exchange rate. Any attempt to move it comes with large costs and large risks. New Zealand has been down that path before. It found that it was not sustainable, and for the last 25 years it has maintained a policy of a floating exchange rate, with the capacity to intervene in extreme circumstances. We do not intend to change that policy, because we have not yet seen from the members a viable alternative way of managing an exchange rate.

Hon David Parker: Does he agree that the—[Interruption]

Mr SPEAKER: Order! I want to hear the Hon David Parker.

Hon David Parker: Does he agree that the current policy settings, which give primacy to inflation targeting over the exchange rate, are not working, and is he ready to conclude, after a four-decade-long current account deficit, that inflation is not the pressing problem for growing jobs in the economy—it is the exchange rate?

Hon BILL ENGLISH: No, I am not going to agree with that. The challenge here would be that even if you could change the Reserve Bank of New Zealand Act to tell the Reserve Bank to target the exchange rate, no one knows how it could do that in a sustainable manner that would significantly shift the exchange rate track. Oh, it is all in the book the member is waving about; it is all in the little red book. The fact is if the member looks at those countries that say they are doing it, such as Chile, Brazil, and Japan, it is highly arguable whether they are making any headway at all, given the large risks they are taking.

Emissions Trading Scheme—Effect of Proposed Changes

5. Dr KENNEDY GRAHAM (Green) to the Minister for Climate Change Issues: Is he confident that, in drafting the latest Emissions Trading Scheme amendment bill, he has sufficiently taken into account recent scientific concerns over dangerous and man-made climate change?

Hon SIMON BRIDGES (Acting Minister for Climate Change Issues): Yes.

Dr Kennedy Graham: Why is the Minister attempting to weaken the Government’s emissions trading scheme further, when leading British and Norwegian scientists are now warning of a “global disaster” unfolding, with the final collapse of the Arctic ice cap within the next 4 years—several decades ahead of what had been expected—with “terrible implications” in terms of methane release causing accelerated global warming?

Hon SIMON BRIDGES: Well, what we are doing is, effectively, potentially a short-term response to very fragile economic conditions globally, so that—as that party says it cares about—there are jobs for people and we remain competitive in this big world that we live in.

Dr Kennedy Graham: I seek leave to table two documents pertaining to that question: an item from the Guardian of 17 September, which quotes the British scientist, and a news item from BBC News of 1 September, which quotes the Norwegian scientists.

Mr SPEAKER: Leave is sought to table those two media releases. Is there any objection? There is no objection.

Documents, by leave, laid on the Table of the House.

Dr Kennedy Graham: Is New Zealand doing its fair share, given that, per capita, New Zealand’s gross emissions are more than three times those of China and we are the fifth highest of the countries that signed up to reduce gross emissions under the Kyoto Protocol?

Hon SIMON BRIDGES: We are absolutely doing our fair share. We are 0.2 percent of global emissions, so we are never going to solve this problem on our own. Actually, a concerted global effort is required, and on that front we provide huge leadership when it comes to the Global Research Alliance on Agricultural Greenhouse Gases and many other things. In fact, as the Minister has told his Associate Minister, he is overseas right now, doing great work in negotiations on climate change.

Mr SPEAKER: Dr Kennedy Graham. [Interruption] Order! I want to hear the question.

Dr Kennedy Graham: Why is the Minister, who is overseas doing great work at the moment, weakening the emissions trading scheme further when he is back home, when recordings in Alaska this month show methane levels as high as 2,500 parts per billion, and separate evidence shows methane gas now bubbling out of the seabed in the Arctic?

Hon SIMON BRIDGES: Because we are concerned about the New Zealanders the Green Party says it is concerned about. We want them to have jobs. We do not want to be uncompetitive. And, actually, on a world stage, we are doing more than our fair share. We are seen as leaders in this area.

Mr SPEAKER: Dr Kennedy Graham. [Interruption] Order! I want to hear—[Interruption] Order! I want to hear Dr Kennedy Graham.

Dr Kennedy Graham: I seek leave to table two more documents. One is pertaining to observations recorded at Barrow, Alaska.

Mr SPEAKER: Whose document is this?

Dr Kennedy Graham: It is an Arctic News blog by the scientist who recorded the observations in Alaska, University of London, the Centre for Polar Observation and Modelling.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Dr Kennedy Graham: I seek leave to table a document in Nature Geoscience by MacDougall, Avis, and Weaver, which depicts “Significant contribution to climate warming from the permafrost carbon feedback”.

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.

Dr Kennedy Graham: Will the Minister, when he is back, change his mind about further weakening the emissions trading scheme, given the comment by a senior European Union negotiator on 11 September that the world should recognise that the 2-degree threshold is not enough, yet the chance of achieving it is rapidly diminishing, plus the comment by the International Energy Agency chief economist that “Under current policy, we are heading for 6 degrees.”?

Hon SIMON BRIDGES: No. We are doing the right thing for New Zealanders at this time, and we are doing our fair share in relation to climate change.

Dr Kennedy Graham: I seek leave of the House to table two documents. The first is an AlertNet release of 11 September, citing Mr Betts of the quote that I just gave, plus footnote 7 of the World Energy Outlook report of November 2011, which quotes the International Energy Agency chief economist.

Mr SPEAKER: Leave is sought to table those two documents. Is there any objection? There is objection.

Dr Kennedy Graham: In the name of democracy! When he was drafting the amendment bill did the Minister keep in mind the warning by Nobel Prize winning economist Paul Krugman that “if the consensus of the economic experts is grim, the consensus of the climate experts is utterly terrifying.”?

Hon SIMON BRIDGES: As an international figure himself, the Minister knows that person, but the truth of the matter is that we also have to take into account a whole range of factors like the New Zealand economy and what is happening globally in making sure that the New Zealanders the Green Party says it cares about have jobs in this country.

Dr Kennedy Graham: Does the Minister feel an obligation when he is back to alert New Zealanders to the fact that annual global emissions of carbon dioxide rose 3.1 percent in 2011, the highest on record?

Hon SIMON BRIDGES: No.

Dr Kennedy Graham: How can the Minister, whether he is overseas or back in New Zealand, argue that New Zealand is doing its fair share—

Hon John Banks: I raise a point of order, Mr Speaker. There is a well-known precedent in the Standing Orders that you cannot continually refer—in fact, you cannot refer—to a member being away or to when he is back. [Interruption]

Mr SPEAKER: Order! I do not think the House needs to spend more time on this issue. I am not sure that the member asking the question specifically referred to a member’s absence. He asked the question whether or not the member was away, and he was not saying the member was actually away. That is why I have not intervened.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. The paradox here is that the first person who mentioned that the Minister may not have been here was his Acting Minister, and Mr Banks completely missed that one as well.

Mr SPEAKER: Order! I think the House should just proceed with the question.

Dr Kennedy Graham: How can the Minister, when he is punching above New Zealand’s weight, overseas or at home, be sure that New Zealand is doing its fair share to combat climate change and fulfil its obligation to future generations when the amended emissions trading scheme will do nothing to discourage pollution or incentivise clean technology, and has this Government not turned the emissions trading scheme into an emissions trading scam?

Hon SIMON BRIDGES: I utterly reject that. What we are doing is maintaining current settings in the short term. While the economy worldwide is incredibly fragile, we need to protect New Zealand jobs, but when the time is right we may well ramp things up. We are doing our fair share on climate change in comparison with, really, most other countries the member might like to mention.

Emissions Trading Scheme—Effect of Proposed Changes on Forestry

6. MOANA MACKEY (Labour) to the Minister for Climate Change Issues: What advice has he received about the impact of the Government’s proposed changes to the Emissions Trading Scheme contained in the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill on forestry, and what impact will these changes have on the Government’s ability to meet its stated target of a 50 percent reduction in New Zealand greenhouse gases emissions from 1990 levels by 2050?

Hon SIMON BRIDGES (Acting Minister for Climate Change Issues): I have had a broad range of advice in various forms, including the regulatory impact statements, and meetings with officials and foresters. In general terms the introduction of offsetting in this bill will be highly beneficial for foresters. It is also true that in the short term some of the proposed changes may reduce incentives for forestry, especially where we are proposing to mitigate costs and burden on households and business, but forestry is a long-term game, so I am advised that changes in the bill are unlikely to have a significant impact in terms of a 2050 target.

Moana Mackey: Is he aware that, as a result of the current low cut-price of carbon of less than $5, not only is no new planting being planned, but deforestation is accelerating as carbon foresters exit the emissions trading scheme; if so, why is New Zealand the only country that has not restricted or banned removal units from our emissions trading scheme to stop us becoming a dumping ground for hundreds of millions of these cheap units?

Hon SIMON BRIDGES: In fact, units and the price of units worldwide are a product of the global response and what is happening. The fact of the matter is that the member is wrong in her assertion. Even those who are critics of the Government are saying that the forestry industry is not going to fade away, that replanting will occur, and that it is a long-term gain that is here to stay.

Moana Mackey: How can he claim that the price here in New Zealand is as a result of the global response, when even an increase in the European carbon price would not stabilise the price in New Zealand, and when the cheap international units, which are or will be banned in every other scheme, will have nowhere to go but New Zealand, thereby collapsing the value of our carbon price, evidenced by the fact that thanks to these restrictions Europe currently has an effective carbon price of $11 compared with $3 in New Zealand?

Hon SIMON BRIDGES: The Government recognises that the current low global carbon prices may affect incentives in this area. It is important to note that these low carbon prices—as I have already said—reflect the current level of global effort. The Government could intervene in the short term to raise carbon prices to affect these incentives, but it has made the decision that now is not the time to raise costs to businesses and households, during this period of economic recovery.

Moana Mackey: Was the reason he backed down on the commitment he made in April to restrict cheap international units to secure the vote of John Banks, who issued a press release claiming credit for the back-down, saying that he had convinced the Minister to change his mind by explaining that “such a restriction on imported units would mean that no matter how low the price of carbon fell in other countries, New Zealanders would have to pay the NZU price, currently set [by the Government] at $25.”?

Hon SIMON BRIDGES: No.

Moana Mackey: Did he then explain to Mr Banks that there is no fixed New Zealand Unit price of $25 set by the Government, and that Mr Banks appears to be confusing the price cap with the carbon price, or are we passing a bill that will kill off the very sector we are hugely reliant on to meet our emissions targets based on the confused demands of a man who can add the Climate Change Response (Emissions Trading and Other Matters) Amendment Bill to the growing pile of documents he clearly has not read?

Hon SIMON BRIDGES: No.

Kenepuru Hospital—Proposed Closure of Overnight Accident and Medical Centre

7. BARBARA STEWART (NZ First) to the Minister of Health: What reports, if any, has he received regarding the proposed closure of Kenepuru Hospital Accident and Medical Centre overnight?

Hon JO GOODHEW (Associate Minister of Health) on behalf of the Minister of Health: I have been advised by the Capital and Coast District Health Board that it is exploring the option of replacing the Kenepuru Accident and Medical Clinic overnight service, which sees around one patient per hour, with a more effective model, the urgent community care model, which was been trialled in Kāpiti and Horowhenua since 2009. In Porirua it is only a concept at this stage. It is being explored by a working group that includes community stakeholders, general practitioners, Wellington Free Ambulance, Porirua City Council, Pacific groups, Kenepuru Hospital Consumer Committee members, and district health board staff. Should the concept exploration result in the development of a proposal, full community consultation will be undertaken next year.

Barbara Stewart: Has he been made aware of how the proposed changes for Kenepuru Accident and Medical Clinic would improve services in the Porirua-Kāpiti area; if so, how will these services be improved?

Hon JO GOODHEW: What I have been advised is that in the Kāpiti area the urgent community care model that I spoke of has successfully met the needs of the 5,000 patients in Kāpiti for 3 years. It provides an urgent and medical response by sending specially trained—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. We seem to have a problem with the cross bench.

Mr SPEAKER: Sorry?

Hon Trevor Mallard: Oh no, it is all right. He is alive.

Mr SPEAKER: Order! That is not helpful to the order of the House. The member interrupted a Minister’s answer, and that is not helpful.

Hon JO GOODHEW: The member has asked about improvements in the Kāpiti and Porirua area. I am advised that in terms of the needs of the 5,000 patients in Kāpiti over the last 3 years, the model has provided an urgent and medical response by sending specially trained advanced care paramedics in really well-equipped vehicles to the patients, providing treatment in their own homes. In terms of speculating on what the improvements would be in the Porirua area, I would have to say first of all that what it would mean is that the treatment would be free. At the moment, the patients who attend the accident and medical centre have to pay between $34 and $60, unless they are under 6. So, first of all, it would be free. Secondly, the treatment would be in their own homes, which in the Kāpiti area they have said is certainly what the patients prefer.

Barbara Stewart: How can the Minister ensure that Capital and Coast District Health Board in the Porirua-Kāpiti area is providing quality care if Kenepuru Hospital goes ahead and closes its accident and medical overnight service, replacing it with roving paramedics with far less training and experience than doctors?

Hon JO GOODHEW: These are specially trained paramedics, not just the paramedics who currently staff ambulances. They have actually had specific training over and above those of paramedics who staff ambulances. The Kāpiti model does give us some confidence that this has been working well. But, in fact, where the paramedics arrive at the person’s home and find that treatment by a doctor is required—and I am told that currently about one or two of the 10 or 12 who are seen each night would go to the emergency department in Wellington—then they will still go to the emergency department in Wellington, where they will actually have medical care. This is another option that is seen to be a better, sooner, and more convenient option for the patients of the region.

Barbara Stewart: Are the proposed changes at Kenepuru Accident and Medical Clinic the forerunner for a widespread change of health service delivery nationwide, in a bid to save money?

Hon JO GOODHEW: Absolutely not. What these are are options that have already been used in Kāpiti for a better, sooner, more convenient system. In fact, 4 years ago the Capital and Coast District Health Board was in serious difficulty. This Government has put $100 million extra over the last 4 years into that district health board, and $200 million more into deficit funding. This is not about cutting costs. This is about a much better, sooner, more convenient health care model for the patients of the region.

Teachers and Support Staff—Problems with Novopay Payment System

8. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education: When was she first informed of problems with the Novopay system for the payment of teachers, and was she given a date for when problems with the system would be solved?

Hon HEKIA PARATA (Minister of Education): As the member will know, given that it was his colleague the Hon Chris Carter who approved the contract with Talent2 to develop Novopay in 2008, it is the largest and one of the most complex pay systems in Australasia. I am pleased to note that over 89,000 school staff were paid in each of the last two pay cycles, since Novopay went live. As with any new IT system there have been some teething problems. I have been kept informed about how the system is performing since it went live. I appreciate the patience of school principals and payroll administrators as the new payroll system is rolled out.

Chris Hipkins: I raise a point of order, Mr Speaker. I appreciate that the Minister is having a go at the Labour Party in her answer, but could she actually now address the question? It is—

Mr SPEAKER: Order! I think I can assist the member. Indeed, the question did not ask for all that information; the question asked when the Minister was first informed of problems with the system, and whether she was given a date when they might be remedied. It would be helpful if that was answered.

Hon HEKIA PARATA: On 20 August. There were different problems in each of the pay cycles, each of them is being sought to be dealt with, so there is no fixed date.

Chris Hipkins: Can she give the 85,000 teaching and support staff relying on the Novopay system an assurance that they will receive their correct pay in the next pay round; if not, why not?

Hon HEKIA PARATA: It is actually 89,000 permanent teachers.

Grant Robertson: That makes it better?

Hon HEKIA PARATA: Well, it attests to the complexity and size of the payroll. There have been problems in each cycle, and the Novopay team is working really hard to overcome them. I am advised that up to 250 known errors occurred each month under the previous system.

Chris Hipkins: I raise a point of order, Mr Speaker. My question was relatively specific, notwithstanding the fact that the Minister disputed the figure I quoted in it. It was whether she could give teachers an assurance they would get their correct pay in the next pay round. She has not actually addressed that question.

Mr SPEAKER: I suspect she has not because, I suspect, she cannot, but the Minister may like to correct that impression, given her answer.

Hon HEKIA PARATA: The reason I corrected the first part of the member’s question was because I know that we all want to deal with facts. There are 89,126 teachers being paid, so that was why I was correcting it. We are aiming, of course, at that—that is the intent of the payroll system. For each one of them we are working hard to make sure that that occurs, yes.

Chris Hipkins: Will any employees who have incurred late-payment penalties or defaulted on any automatic payments—for example, mortgage repayments—receive any compensation, either from the payroll provider or from the Government as their employer; if not, why not?

Hon HEKIA PARATA: My understanding is that for both of the last two pay cycles since the system went live, those who were not paid in the first run were either paid within 24 hours or arrangements were made with their schools.

Chris Hipkins: I raise a point of order, Mr Speaker. That was not actually my question. I did not ask what time frame they were paid in. In fact, only a couple of hours’ difference can result in somebody defaulting on their payments. I asked whether somebody who defaulted on their payment because they did not get their pay on time will be compensated, either by the payroll provider or by the Government as their employer. That matter has not been—

Mr SPEAKER: That is, indeed, the question the member asked, and I accept that absolutely. Maybe the Minister could answer that question, because the answer she gave was not to that question.

Hon HEKIA PARATA: It is not my expectation that that would be the case, because arrangements have been made with each school in respect of the particular errors in each of the two pay cycles.

Chris Hipkins: Is she therefore suggesting that if any teachers have in fact incurred late-payment penalties or defaulted on any automatic payments, the responsibility for remedying that in fact rests with the school, and not with the payroll provider or with the Government as the employer of the teacher or support staff member concerned?

Hon HEKIA PARATA: I will have to take advice on this and come back to the member, but my understanding is that the way that some of these errors has occurred has been as a result of the inputting of the data.

Aviation—Air Transport Policy

9. JAMI-LEE ROSS (National—Botany) to the Minister of Transport: What progress is the Government making in implementing an “open skies” air transport policy?

Hon GERRY BROWNLEE (Minister of Transport): On 30 August 2012 the Government announced its new international air transport policy. Under the policy New Zealand will continue to pursue reciprocal open skies agreements except where it is not in its best interests to do so. It will recognise the benefit to the country of new or additional services by foreign airlines, while ensuring that New Zealand airlines have a fair and equal opportunity to compete. In particular, the new policy directs officials to give favourable consideration to granting extra bilateral approval to any airline seeking to operate into Christchurch until 2017. This recognises that a new international air service would provide a significant boost to the Christchurch economy at a time when many businesses and tourism operators are struggling to recover from the 2010-11 earthquakes.

Jami-Lee Ross: Can the Minister tell the House what has been the response to the new open skies air transport policy?

Hon GERRY BROWNLEE: The response has been very favourable. Christchurch International Airport said: “We congratulate the Ministry and the Minister on their common sense approach in considering the many submissions from aviation and tourism industry groups, then confirming a policy which puts emphasis on connecting New Zealand to global markets.” The Chief Executive of the Tourism Industry Association, Mr Martin Snedden, made similar comments. The New Zealand Airports Association made similar comments again. Air New Zealand made no comment.

Jami-Lee Ross: Can the Minister tell the House what the benefits are of an open skies air transport policy?

Hon GERRY BROWNLEE: Liberalised air services arrangements make it easier for airlines to enter or expand in the New Zealand market. As additional airlines enter the market, air fares, cargo rates, etc. are likely to fall. New airlines coming to New Zealand to enhance our connectivity with additional parts of the world provides additional opportunities for New Zealand travellers, and, in particular, for our traders to do business with those people. The Government has already negotiated a number of new or enhanced air services agreements with Turkey, South Africa, Papua New Guinea, Niue, the Netherlands, Japan, and China, and negotiations with Qatar, Brazil, Thailand, and the United Arab Emirates are under way. The agreements so far will triple the amount of travel between New Zealand and China, and that is a good thing for our traders.

Rt Hon Winston Peters: I seek leave for Jami-Lee Ross to ask that question he just asked—the third question, that is—again, because during the whole answer—

Mr SPEAKER: Order! The member knows there is no Standing Order that provides for that. It can only be grandstanding that would cause a member to do that.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I would like to challenge you. There are very clear Standing Orders and Speakers’ rulings requirements for people to address the Chair.

Mr SPEAKER: That has got me whacked.

Schools, Canterbury—Proposed Closures and Mergers

10. Dr MEGAN WOODS (Labour—Wigram) to the Minister of Education: Is she satisfied with her handling of the education renewal plan for Christchurch, Selwyn and Waimakariri; if so, why?

Hon HEKIA PARATA (Minister of Education): In the context, yes. In the context of multiple earthquakes, 215 schools, and 69,000 learners, the challenge to the education sector has been immense. Under these circumstances it was always going to be difficult to have one approach that meets everyone’s needs. Eighty percent of schools are not affected by the proposed closures or mergers. We cannot go back, but we can do better, and that is why we are investing $1 billion into the education sector and into raising educational achievement across the entire network.

Dr Megan Woods: Given principals’ concerns over the accuracy of the information in relation to roll numbers, the number of buildings, and the presence or otherwise of facilities such as swimming pools that is being used to determine the future of schools, does the Minister have faith in the data that she has based her decisions on; if so, why?

Hon HEKIA PARATA: Yes, I do have faith in the data and the information that the Ministry of Education has used. It has been collected over a period of 2 years. But if schools have other additional information that they would like to contribute, I invite—and, indeed, encourage—them to do so in the meetings that have been set up.

Dr Megan Woods: I seek leave to table four documents. The first document is an email from the principal of Woolston School to me detailing that the information that she has received from the ministry has errors in the number of classrooms, no mention of the Canterbury District Health Board dental hub, and errors in the roll numbers.

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.

Dr Megan Woods: The second document is an email from Manning Intermediate School to me that details concerns it has with the information it has received from the ministry over the number of buildings claimed to be on its site, claims that it does have a dental clinic, which was removed in 2009, on its site, and claims that it does have a swimming pool, which was removed in 2009, on its site.

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.

Dr Megan Woods: The third document is an email from Branston Intermediate School to me that spells out concerns over the ministry’s claims of the building utilisation on its site.

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.

Dr Megan Woods: The fourth document is an email from Greenpark School to me detailing concerns it has over the ministry’s information about the building count on its site and the roll data that has been used.

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.

Dr Megan Woods: Why was there a 17-day delay between Cabinet’s approving the educational renewal plan for Greater Christchurch on 20 August and invitations being issued to the announcement meeting on 13 September, which was 25 days after Cabinet had made its decision?

Hon HEKIA PARATA: Invitations were issued on 5 September and followed up on subsequent dates. The delay was as we prepared individual school packs and cluster packs—to have them ready to go.

Dr Megan Woods: Does the Minister consider that her treatment of principals and board of trustee chairs at last Thursday’s announcement meeting afforded them the respect and courtesy they deserve; and does she consider the issuing of colour-coded name badges an appropriate way to inform a principal that their school is to be closed?

Hon HEKIA PARATA: I think that the colour coding of cards was unfortunate. In terms of being able to brief 500 people around a complexity of issues, it would always have been difficult to present it in a way that met everyone’s needs.

Health Care—Quality and Safety Markers and National Patient Safety Campaign

11. Dr JIAN YANG (National) to the Associate Minister of Health: What recent announcements has she made regarding new initiatives to improve quality and safety in the health sector?

Hon JO GOODHEW (Associate Minister of Health): Today I announced that the Health Quality and Safety Commission is developing a set of quality and safety markers for the health sector. The markers will track progress in reducing health-care acquired infections, surgical harm, medication errors, and in-patient falls. These are major causes of the serious and sentinel events. A patient safety campaign and regular public reporting against the markers will encourage sector-wide performance improvements.

Dr Jian Yang: How will the patient safety campaign work?

Hon JO GOODHEW: The campaign will reduce the number of patients affected by falls, health-care acquired infections, surgical harm, and medication errors. In fact, this campaign will save lives in our health system. This will be achieved by raising awareness and increasing the use by clinicians of internationally proven interventions to help improve patient safety in this area. It will be launched at the beginning of next year, and reporting will start from midway through next year.

Schools, Canterbury—Criteria for Proposed Closures and Mergers

12. CATHERINE DELAHUNTY (Green) to the Minister of Education: What educational achievement criteria were used to choose the schools proposed for closure or merger in Christchurch and Canterbury?

Hon HEKIA PARATA (Minister of Education): Educational achievement criteria were one of a number of factors in determining the proposals. The Ministry of Education has also considered demographic shifts and demographic projections, viability of land, and compromised infrastructure. Educational achievement information included Education Review Office reports and the cycle of return review, the level of student engagement, and National Certificate of Educational Achievement (NCEA) data.

Catherine Delahunty: How can educational achievement data be relied upon when Christchurch principals say that ministry data provided to them under her supposed renewal plan is fundamentally wrong, including NCEA results being out by up to 30 percent, stand-down rates being completely incorrect, and even the number of buildings at schools being wrong?

Hon HEKIA PARATA: I am not aware of the data being incorrect. We rely on the New Zealand Qualifications Authority and the Education Review Office to provide us with that data.

Catherine Delahunty: Will all New Zealand schools now be assessed for survival based on their educational achievement?

Hon HEKIA PARATA: We have always been focused on the educational achievement of schools. That is why Governments invest in schools—so that students achieve.

Catherine Delahunty: I raise a point of order, Mr Speaker. My question asked whether the schools would now be assessed for their survival.

Mr SPEAKER: Indeed. I hear the point the member is making. The member actually asked whether schools remaining open or being closed would be based on that matter.

Hon HEKIA PARATA: In the context of Christchurch, not only are we interested in how we repair and renew the network there, we are also interested in how we make the system better. So the proposals are in that context, and as to whether educational achievement is part of that, the answer is most unashamedly yes.

Catherine Delahunty: I raise a point of order, Mr Speaker. I asked the very specific question of whether all New Zealand schools—

Mr SPEAKER: I will save the member’s time. The member was not asking about Christchurch schools. The member was asking about the rest of the schools in New Zealand, and whether educational achievement data that the member mentions was used in Christchurch would be used to decide whether other schools in New Zealand would remain open or closed.

Hon HEKIA PARATA: When we are considering the status of schools across the country, a range of factors are taken into account, and that includes educational achievement.

Catherine Delahunty: Will she be using the same achievement criteria to close other schools around the country, and should kids in schools that tend to have lower “achievement” because of the complications of poverty be preparing to lose their schools, too?

Hon HEKIA PARATA: This Government is investing considerably in raising achievement across the country—this year, $9.6 billion. I think that is a testimony to this Government’s commitment to raising achievement wherever there are learners.

Catherine Delahunty: I raise a point of order, Mr Speaker. I understood what she was saying but it did not relate to my question.

Mr SPEAKER: I invite the member to repeat her question so that everyone can hear it again.

Catherine Delahunty: Will she be using the same achievement criteria to close other schools around the country, and should kids in schools that tend to have lower “achievement” because of the complications of poverty be preparing to lose their schools, too?

Hon HEKIA PARATA: No.

Catherine Delahunty: What would the Minister say to children in Christchurch who have lost family members, have lost their homes, and are now facing the loss of their school?

Hon HEKIA PARATA: What I would say is that we are committed to ensuring that there is educational provision across the network, and to that end we are investing $1 billion in 16 new schools, five new schools, and some new concepts about integrated whole-of-life provision, including the provision of health and guidance support.

Bills

Social Security (Benefit Categories and Work Focus) Amendment Bill

First Reading

Hon PAULA BENNETT (Minister for Social Development): I move, That the Social Security (Benefit Categories and Work Focus) Amendment Bill be now read a first time. I nominate the Social Services Committee to consider the Social Security (Benefit Categories and Work Focus) Amendment Bill. The changes in this bill form part of a comprehensive package of welfare reforms staged over 2 years. These reforms will fundamentally shift the focus of the benefit system towards encouraging and supporting more people into paid work. The status quo is not an option any longer.

I do not for one moment underestimate what I am asking people to do, but I am backing them to be able to do it. Every time that the Opposition cries that this is beneficiary bashing, I simply just see people who are ignorant of the effects of the welfare trap. It is not enough to feel sorry for people trapped on welfare and do nothing. The left’s answer is to transfer people between benefits and throw more money at them. I am far more ambitious for them than that. I will back, cajole, encourage—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! Would members leaving the Chamber please do so quietly.

Hon PAULA BENNETT: I will back, cajole, encourage, and incentivise people to get work-ready, to take up the jobs as they become available, and to get ahead in life. There is a compelling case for investing up front. We already spend around $8 billion a year on welfare, but we are seeing intergenerational welfare dependence. By investing in people sooner, we can actually start to break that cycle.

Through this bill, the investment approach will target resources to those who are likely to end up welfare dependent without some extra support. Actuaries have done a detailed valuation of the total future liability of the benefit system and have it at around $78 billion. That is based on the expected length of time individuals will stay on benefit, given that we know that some will stay on for 10 weeks, some for 10 months, and some for 10 years. That gives us a clear basis for targeting more money, more support, more resource to the right people at the right time. Too many New Zealanders have been stuck in a system that provides little incentive to get out, for too long. This bill will change that.

This is the next step in a concerted programme of reforms. At the end of July this year the Social Security (Youth Support and Work Focus) Amendment Act 2012 passed into law. The new youth service kicked off in August, and community providers are already working closely with our young people to connect them back into education, training, or work-based learning. From 15 October this year, sole parents will be expected to look for part-time work when their youngest is 5 and full-time work when their youngest is 14 years old. Most New Zealanders, I think, see that as reasonable. Similar expectations will apply to those on the women alone benefit and the widows benefit. Those without dependent children will be expected to be available for full-time work.

This new bill represents the largest structural change of the Social Security Act in decades. Central to reforms in this bill is the introduction of three new benefits: jobseeker support, sole parent support, and the supported living payment. These replace seven categories of main benefit. The emergency benefit is not being changed. This bill will modernise and simplify the benefit system. It removes outdated, offensive terms like the invalids benefit, and reinforces the fact that most beneficiaries can work and want to work.

Jobseeker support brings together people on the unemployment, sickness, women alone, and widows benefits, and sole parents with children aged 14 years or older, and those who do not have children. Those on jobseeker support will be expected to be available for and looking for full-time work. There will be some who are able to work only part-time, and some who will be exempt from work for a period of time.

Bringing sickness beneficiaries into jobseeker support marks a fundamental shift in attitude to support beneficiaries to get back to work as soon as possible. It will also increase the number of people on this benefit to 135,000. Just as the health benefits of work are well documented, we know that the health costs of unemployment are high. Professor Sir Mansel Aylward, recently in New Zealand, said: “After six months’ unemployment, each additional day out of work is as detrimental to your health as smoking 200 cigarettes.” We know that work can play a vital role in recovery, and the worst thing we could do is actually leave people with illness on benefits long term with no support. This bill will not do that.

As with the current unemployment benefit, the new jobseeker support will require people to reapply for the benefit after 12 months. Through the Future Focus changes we made in 2010, this change has seen thousands cancel their benefits. Many had already found work and no longer needed it. This bill also includes the flexibility to apply this to other benefit types in the future.

Sole parent support replaces the DPB for sole parents, and the widows benefit, if the beneficiary’s youngest child is under the age of 14. Those with children over 5 will be expected to be available for part-time work, and to be preparing for work before then. This benefit is expected to have around 87,000 people on it, because those previously on the DPB with children over 14 will have moved to jobseeker support.

The supported living payment merges the invalids benefit and the DPB for those caring for the sick or infirm. Benefit eligibility for these groups will not change. We recognise that some people will never be able to work to support themselves, or, as full-time carers, may not be able to. Because we are bringing those caring for others into this benefit, the numbers on this benefit will increase to 91,000.

Changing the name is significant. It removes the outdated and demeaning attitude that disabled people or those with serious health conditions have nothing to contribute. I had many representations about the name. I will be very interested, after submissions, to see what the select committee recommendations are.

Those with very disabling, long-lasting, or terminal conditions will have streamlined access to the supported living payment. They will be offered day services, supported employment, and community participation. Current provisions for people on the—as it is now—invalids benefit to try out paid work and return to a benefit seamlessly if it does not work out will remain under the supported living payment.

People in the current benefit streams will automatically transfer—the bill makes a request for this—to the new, appropriate benefit on 15 July 2013.

Beneficiaries expected to be available for work will be required to take up suitable employment opportunities. Simply put, if there is a good job and they are suitable, they should take it. In the current climate a job is an opportunity not to be missed, and, as we know, one job leads to another, as people improve their circumstances. I believe that we need to send a clear signal about what it means to refuse work. For this reason, the bill introduces a 13-week stand-down if a beneficiary fails to accept an offer of suitable employment without a good and sufficient reason. This is the same sanction that applies to people who become voluntarily unemployed, either because they quit a job or were dismissed due to misconduct.

I think it is important to note that the new benefit categories and associated rules would have meant a reduction in benefit levels for some if we did not fix that. I have ensured there are safeguards in this bill to protect the higher benefit rates of those currently on the women alone benefit and the widows benefit. I am also keeping the same abatement rules for those who are transferring to jobseeker support. If we had not done that, it would have meant that those like those on the DPB with children aged 14 years or over, who get a part-time abatement, when they moved to jobseeker support would have been full-time. We are actually going to keep them on the part-time abatement—leave them there—so that they have that opportunity.

Some speed-mentions, if you like. This is a huge bill and has a lot in it. We will be at the select committee for the full time, so that the members can really go through it. But as I think we have already said, there will be pre-benefit activities. We are also looking at drug tests for, particularly, those on jobseeker support. Where there is a job available that requires a test, they must be able to do that. Overseas absence is being also looked at. So beneficiaries with obligations to be looking for or preparing for work will not get a benefit while overseas, except in exceptional circumstances. I think that is fair and reasonable. This will not affect superannuitants or those on the war pension or veterans pension.

Work and Income will gather more information about people, to determine what they can do and what sort of support they may need to get into work. The bill also provides Work and Income with the ability to require beneficiaries to work with contracted service providers. As well signalled, there will be social obligations that will require parents to have their children enrolled in early childhood education from age 3, enrolled in and attending school, and enrolled with a general practitioner and getting well child checks. As well indicated, there will be warrants to arrest, and those subject to warrants to arrest will have their benefit stopped after 38 days, unless they clear them. There are also changes in the bill that enable the Ministry of Social Development to improve the way it procures goods and services for welfare recipients, and it clarifies some things around sanctions.

This is a significant bill. I commend it to the House. I wish the select committee good travels as it hears submissions from New Zealanders and reports back. I commend this bill to the House.

JACINDA ARDERN (Labour): It is with a sense of déjà vu that I rise to speak to this bill, the Social Security (Benefit Categories and Work Focus) Amendment Bill. Again, it is with a sense of disappointment at an opportunity lost.

The Minister for Social Development, when she speaks in this House around the changes that she is introducing to our social security system through this bill, does so in what might seem a calm and rational way, yet it is quite different to the same old mantra that we sometimes hear from that Minister when she speaks publicly on issues around social security. It is time for us to stand up against the politicking that happens every time we discuss social security or welfare out in the wider public.

I feel like Labour, in fact, has nothing to lose on this debate. National uses this area as a political football, and characterises parties like Labour in a particular way during that process. That is minor when you look at the way that that party characterises the people who legitimately need and use social security in this country. I can get mad from a moral perspective, but my anger actually comes from the place around what that characterisation then does to us and our ability as politicians to make the changes to the system that we need to make. Every time National characterises those who use social security in the way it does, it makes it harder for us to do our job.

Let me give you an example. In the public’s mind, what are the reforms that they know about through this bill? It is drug testing. They know about seeking people who have warrants for arrest whilst on welfare. They know about fraud and stand-down periods for saying no to taking up jobs. Those are the messages that the National Party then sends out about those who are using social security in New Zealand. Then today we saw a perfect example of the contradiction and the corner that the Government then backs itself into. We had the Prime Minister writing to employers asking them to take on young people who have committed themselves to the Limited Service Volunteers programme, who are on Government support, asking those employers to take them on. But within the next breath he is telling them they are drug-takers, they have got warrants out for their arrest, and they are committing fraud. You cannot have it both ways.

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

JACINDA ARDERN: It is time to call time out on the politicking around social security. Labour is calling the Government out on the way that it treats this system. There is no doubt that we can improve social security in New Zealand on behalf of those who are currently using the system. Labour, though, has a set of values it will always stick to when it looks to reform in this area, and that is the lens from which we view legislation like this.

The first point is that Labour has always been the party of work. We were the architects of social security, and for us we will always hark back to the foundation principles behind social security. When Michael Joseph Savage established it he said that social security will never be an armchair ride to prosperity. It must always be looked at alongside good, decent health, good, decent education, and the support of all citizens.

So what do we do to create a more active social security system? That is what this side of the House wants to look at. If we want to make a more active system, we need to make sure that we fulfil our side of the bargain. If we ask people to go out and seek work, which we do—if you are able to work, you should seek it—we should be making sure that jobs are available. If you want to fix welfare, fix the economy.

Secondly, how to prepare people for work? This bill simply implements more work testing. Work testing does not make people work-ready. We have a Minister who, since she has been in Government, has cut the training incentive allowance, and has not allowed people to get support so that they can move into bridging courses so they can move into training. Through this bill she is now telling people on the domestic purposes benefit that they cannot be in study and be on Government support any more. What are those young mums who, perhaps, have low skills going to do if they are going to upskill themselves and move into employment, when she is telling them: “All I care about is whether you get a low-wage, part-time job. It does not matter whether the Government subsidises you and your child for the rest of your life, because I have a narrow view of what Government support is all about.” That is a passive system, and we do not support changes like that.

We also need to treat everyone fairly, but not the same. We cannot look at everyone simply through a lens of “You sit within a particular benefit category and, therefore, the system will treat you in this particular way.”

Finally, on the notion of the Government needing to fulfil its side of the bargain, there is no better example of that than social obligations. Here we have a Minister saying that if you wish to still receive Government support, you must enrol your child in early childhood education, enrol in a Well Child provider, and enrol with a general practitioner. Yet when we asked the Minister whether she will ensure every child can access early childhood education, her answer was no. Where is the Government’s obligation to fulfil its end of the bargain?

We will always look at this bill through our sense of what it is that we are trying to build when it comes to social security. We support notions around simplification, which this bill talks about, but in the select committee process we will be looking at what those impacts will be of simplification. It is not entirely clear what impact the merging of the domestic purposes benefit into jobseeker support will have in monetary terms on children, and we want to explore that question, and also for those on the sickness benefit. Also, we will be delving in a lot more detail around the decision-making process around what categories those seeking Government support are placed into.

We must avoid the mistakes of our international counterparts, and I have grave concerns about the path we are travelling down. The use of outsourcing of assessment of work capacity and the ACC-style model of vocational independence assessment process bears striking resemblance to that used in the UK. The Department for Work and Pensions in the UK made use of contractors like Atos to perform work capability assessments, at a cost to the State of ₤300 million. Since that time an estimated 500,000 people have been wrongly assessed. People with terminal cancer have been found fit for work, and people with mental health issues have been ignored. Not only should we not lose sight of the lessons from abroad but also we must apply our own values around the role of social security in our country.

It is not about being too soft. It is not about being too tough. It is about doing what is right and what is fair. The Minister may claim in all of her discussion around welfare reform—and I have heard this said many, many times—that the Government is taking an investment approach. I have one question for the Minister: demonstrate to me in tangible terms how the system is investing in people who are currently on Government support. Just demonstrate to me what you are changing about our passive social security system that is moving people from Government support into work.

I challenge those members to demonstrate that to me, because so far I have seen one area, and it was in the last bill. The one area where I applaud what the Government did was the improvement of child support for young parents. But that was for 1,500 people, and we asked the Minister to consider extending that to the 100,000 people on the domestic purposes benefit and that has not happened. So, Government members, show me where you have done anything more than simply work test. Show me what you are doing to support those who are on the sickness benefit to become well and to move into work—more than just being passive, sitting back and waiting for things to change without any kind of investment. There is nothing in this bill that does that. In fact, under this Government, if anything, we have seen the small tools that we had, like the training incentive allowance that the Minister used, cut. That is that Government’s form of investment approach.

Labour will not support this bill. It does not fulfil our values of an active social security system that supports people into work. It does not fulfil the Government’s end of the bargain around job creation. It does not. It does not treat social security as a dignified springboard into a better life. We are calling time on the politicking of this area, because the Government is doing nothing but disrespect a social security system that was built around dignity.

The ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the next member, can I advise the House that robust and passionate debate is healthy and to be expected, but every time a member uses the expression “you”, the member is referring to the Chair, and in that case, it is me. I would refer members to Speaker’s ruling 27/5(1).

MELISSA LEE (National): It is a great pleasure to rise to make a contribution on this first reading of the Social Security (Benefit Categories and Work Focus) Amendment Bill. I would like to first of all start off by commending the Minister for Social Development, Minister Paula Bennett, who has done a tremendous amount of work to bring together this comprehensive reform of the welfare system.

I am a little surprised at the speaker who just took her seat, Jacinda Ardern, talking about this being a passive—passive—reform. If we are talking about a passive social welfare system we could go back to the 9 years under the Labour Government, when it did nothing to stop fraud and abuse of the welfare system, allowing it to go largely unchecked. It fudged welfare fraud data to hide the problem of welfare abuse. Beneficiaries were shifted between different types of benefit rather than being supported back to work. Welfare is about readying people for work so that they can actually get back to work and provide for their families and for themselves, so that they can feel better about themselves instead of feeling like they do not deserve whatever it is that people throw at them.

Under the former Labour Government the number in receipt of the sickness benefit went from 33,000 in 1999 to 46,000 in 2008, and the number receiving the invalids benefit went from 53,000 to 85,000. Miss Ardern did not like the fact that this Government is, in fact, going to stop payments to criminals on the run from the police. That is probably because Labour did that: it continued the payments for criminals who were on the run from the police. This Government is making sure that that is not going to happen.

I am going to make only a little contribution on this bill, in terms of the changes to the three benefit category types that are being established rather than the seven current types: jobseeker support, sole parent support, and supported living payment. Previously, when we talked to ethnic communities about the unemployment benefit and the invalids benefit, we found that they had a major stigma in those communities, especially when translated into their languages. Often people who are in dire need, who desperately need to be on the benefit, actually do not go and get the help they require. It is because “unemployment benefit” and “invalids benefit” often translate to meaning that they do not deserve it or they do not want to work. So the changes in the language are something I support.

I look forward to the submissions in the select committee process in regard to the changes to the Social Security Act 1964. This bill, which is having its first reading, does a lot for people who are on benefit. Currently, we are paying $20 million for benefits each day, which equates to $7 billion a year. We need to get people who are ready to work, willing to work, and able to work back into work. I commend this bill.

GRANT ROBERTSON (Deputy Leader—Labour): I am sick to death of hearing from this Government that the people who are to blame for the situation this country finds itself in are the most vulnerable people in our community. That side of the House needs to take some responsibility for the fact that its economic mismanagement is what has led New Zealand to be in the position it is in today. We have a situation with unemployment going up, and, my God, it would be higher if more than 50,000 people had not gone off to Australia in the last year. This Government has done nothing to create jobs. This Government has done nothing to improve our current account deficit. This Government has done nothing to improve wages. This Government has done nothing to find job opportunities. But day after day in the media the Government comes out with diversions and tactics to blame the most vulnerable people in our community for the situation we find ourselves in.

As Jacinda Ardern has already said, what have we heard about the Government’s welfare reform programme? What have people who do not spend all day analysing every bit of this legislation heard about what the Government’s approach is? What they have heard about are people who fail to meet their obligations; people who do not get their kids into early childhood education, who do not take them to the doctor when they are sick, and who are not part of a well child programme; people who need to be drug tested; and people who have been arrested. That is the message the Government is sending. That is the message the Government wants people to hear. It does not want to talk about its poor economic record. It does not want to talk about the fact that hundreds of jobs are being lost every week in this country, and that there are no jobs—Melissa Lee—for people to go to, who might well be work-ready. Those people do not have the opportunity to get into work, because there are no jobs, yet the finger of blame gets pointed at them every day by members opposite.

When people in privilege blame the most vulnerable for what is wrong in society, that is wrong. That is the wrong approach from this Government. It is wrong and it is a failure of leadership of this Government to resort to blaming the most vulnerable in society for the problems we face. But worse than that, every single time there is a problem for the Government—if it is John Banks, high unemployment figures, or whatever it is—Paula Bennett rolls out a re-announcement. She comes along and she re-announces one of these punitive measures, just to make sure everybody is reminded that “Those people are shirking, those people are dragging us down, and we will get them.”, and every single time it diverts away from this Government’s failure to provide leadership in the economy. This Government has let New Zealanders down and sets about a smoke-and-mirrors approach that says there is someone to blame.

We on this side of the House have had enough of this policy of fearmongering and exclusion—that there are people out there to be fearful of, that there are people who are ripping you off, and that you have got to look out for them because if we solve that, then everything will be fine. Well, I have got a message for the Government: it is not like that and it will not be fine. The real problems relate to the economy of this country and the exclusion of people who cannot achieve their potential because this Government will not really invest in them.

The Government uses rhetoric like “an investment approach”. The real investment this Government could be making is to help create jobs. The real investment this Government could be making is to actually invest in skills and training for people who are out of work. That is what happened when Labour was last in Government. The reason we got unemployment so low is that we took an active approach. We took an approach of investing in people. We said: “If you need skills and training, we will help you to get it.”, and we did that through things like the training incentive allowance, which this Government has cut. We had an active case management process, because we believe social security should be a springboard into work. We believe social security should be a springboard into a better life. But this Government does not believe that. This Government says: “This is the way we can get to people and fearmonger. This is the way we can exclude people from our community.” Well, I think that is a disgraceful approach.

What is needed is actually some hope for these people, and some inclusion in society, so that they actually feel they have a place and a role. Of course, people should not be getting benefits if they are not entitled to them, just as people should pay their fair share of tax and should not avoid paying their tax if they are on a high income. We do not stand for that on this side of the House, whoever is doing it, but that is not the issue. That is a diversion. It is a diversion from the Government’s total failure to come up with a plan that will actually move people into work.

The key to moving people into work is to actually have jobs for them to do, and week after week in this House we hear about the jobs that are going from this economy. Week after week we hear about the impact on families, yet the best thing this Government can do is set up straw people for people to look at and say: “If that’s solved, everything will be all right in our society.” It is not true, and shame on this Government that it is using the most vulnerable in our community to play that kind of game in politics.

The Minister for Social Development, in her first reading speech on this bill, the Social Security (Benefit Categories and Work Focus) Amendment Bill, talked about social obligations. On this side of the House we agree that there are the obligations of citizens and there are the obligations of a Government. Where are the social obligations of this Government? Where is its investment in housing, health, and education—in the things that will actually enable families to improve their circumstances, to grow their wealth, and to contribute to society? Where is that investment? Instead, we see things being cut all across the country in health services. We see a lack of critical investment in housing. We seek a lack of investment in education. Education in this country at the moment is seen by the Government as being a cost to cut, rather than an investment in our future. They are the social obligations of a Government, and this Government is, sadly, lacking in them.

The social obligations of a citizen go hand in hand with the social obligations of a Government. It is called a social contract. It was the basis on which the social security system in New Zealand was established, and this Government is failing its part of the social contract. It has broken the social contract. If people are breaking the social contract, that is wrong, but what kind of example are they getting from over there? What kind of example are they actually getting from this Government when it comes to social obligations? Again, it is the rhetoric of obligations from this Government—people are not meeting their obligations.

Whatever few people there might be out there who do not meet their obligations, they are outweighed tenfold, 100-fold, 1,000-fold by the number of people who just want the best for their children, who just want the best for their families, and who want to get into work, and those people are being let down by this Government. Time after time I have people in my electorate office who want to do the best for their families and want to do the best for their children, and they are not being supported by this Government because this Government is not investing in those people. It is not giving them the skills or helping them to get the skills. It is not supporting them to get the health care that they need. It is not providing the kind of social housing that is needed so that people are healthy.

The investment approach, the social obligation of this Government, is totally lacking, yet Government members stand up day after day in the media and try to send that message of fear and exclusion. Well, on this side of the House we are sending a message of hope and inclusion to people. We will work with people who are on benefits to make sure that they have the skills to get jobs. We will invest in an economy that helps create jobs. We will make sure that there are opportunities for people to train. The jobs are being lost under this Government, yet it blames people for not taking them up. They are not there, Melissa Lee—that is why people are not moving into work.

Once again we have a social security bill in front of this House that preaches all kinds of things about how the Minister cares for people and wants to cajole people into work, and it uses words like “investment”, but the reality is that every single day Government members go out and engage in dog-whistle politics that seeks to drive New Zealanders apart. The Labour Party does not believe in that. We believe that we are all in this together and that we need to work together to support people into work, give them the skills and training, and help create the jobs. That is what the Labour Party will do, and that is why we are opposing this bill.

JAN LOGIE (Green): Tēnā koe, Mr Speaker. It is with a degree of suppressed rage that I am standing now to speak to the first reading of this bill, the Social Security (Benefit Categories and Work Focus) Amendment Bill. [Interruption] I know. I am holding it back, but it is actually there.

The Green Party will be voting against this bill because we believe that all New Zealanders deserve good lives and fair futures. We know that if we guarantee the essentials we guarantee the opportunities. Today I will focus on the values that have been spoken of around this bill, particularly in relation to people who are unwell or have disabilities. My colleague Holly Walker will focus on the impacts for children.

For me people in receipt of income support are not problems to be solved. They are not nameless, shapeless bludgers costing our country money or causing their children to live in poverty. I have in front of me today, as I speak to this bill, the faces and the voices of hundreds of people—people who are struggling, stressed, and very worried about what is to come. Some of these people are receiving income support, and some of them are family members trying to support a loved one who is receiving income support.

Talking about beneficiaries as if they do not know what is good for them and as if they need incentivising to take care of themselves or their children misses their fundamental humanity. I will not deny that some people’s decision making may be impaired due to long-term poverty, mental health issues, addictions, violence, or even continual rejection. But that is true whether somebody is in employment or not. I do not see people on income support as fundamentally any different from me. I am angry about the hardship they are subjected to now and the likelihood that this bill will make things even worse for them. I am angry and I am worried.

The Government has said it will be focusing on what people can do, not what they cannot, and will be transforming the Ministry of Social Development to provide much more support for people to get into employment, thus radically improving their lives. The Minister has accused Auckland Action Against Poverty in its response to the bill of wanting to leave people stagnating on welfare. She suggested that those who oppose these reforms are patronising and stereotyping people by not believing they can work. She characterises those of us with concerns as wanting to solve problems by throwing money around. She told us that being on a benefit is unhealthy, and today she quoted the evidence from a doctor who showed that every day on a benefit over 6 months is equal to smoking 200 cigarettes.

You know, it is a clever line, and I do not deny they are clever. It positions the Government as ambitious and willing to break with tradition and treat people receiving welfare as capable rather than not—needing help rather than punishment. In other words, the Government is progressive and it is taking on a major problem in our society. But there are many problems with this, and I will talk to just seven in this speech.

The first problem is that the Government is not treating people as capable. Focusing on capability is critically important. Unfortunately, the Government is not doing that. If it thought people were capable, it would not feel the need to incentivise job-seeking behaviours with sanctions. Sanctions are punishments for when people are not doing something right.

The second problem is that it individualises social problems. By focusing on the individual again, this whole model misses employer biases when it comes to employing people with mental or physical illnesses, people with disabilities, or even people who have a name that is not European. It is incredibly frustrating for me that while this Government focuses on creating these incentives for beneficiaries to work, there are thousands of people desperate to work who are being denied these opportunities because the Government refuses to recognises the structural inequalities that are locking them out of employment.

Recently, I have been working with People First, a wonderful self-advocacy organisation for people with learning disabilities, people whom we previously probably talked about as people with intellectual disabilities. They are really worried that the Government is going to decide that they are not work-capable and leave them languishing without support on the supported living allowance. I was encouraged to hear that this allowance will encourage people into supported employment, so that may go some way to countering their concerns. However, I do not think most people realise that over 600 people in this country are earning less than $3 per hour because there is a minimum wage exemption for them, and that requires them to stay on a benefit, go to these appointments, and work. There are fundamental injustices here.

I have also spoken to many people within the disability sector about the discrimination they are facing in gaining employment. I would like now to share a story from Allyson Hamblett, who is the chair of the CCS Disability Action local advisory committee in Auckland. To quote her—this is a long quote, so try to hang in there—“I have spent about 15 years working on the not-for-profit governance boards, starting when I was 17 years old at the Cerebral Palsy Society. My father commented once that all the work I do means the Government is getting my services really cheaply. The current Government policies, however, make me feel incredibly guilty that I have been unable to turn my contribution to society into something that can support me financially. I feel guilty because I know that I have enough intellect and function to get paid work, but employers look at the way I walk and talk, then freak. They need to see me at the LAC board table. They need to see me having meetings with the regional manager. They need to see the ideas that are generated by the Auckland LAC. They need to see me in the other advocacy roles that take up my time.” This bill does nothing to get Allyson paid employment. It reinforces her sense of guilt and the sense that she has the problem, when it is our society that has the problem.

The third problem with this bill is that there are many people who may not be in a place to work. I have suffered from depression, and I know how bleak the world can seem from that place and how even the smallest demands can seem impossible and reinforce existing feelings of inadequacy. The Government’s new policy sounds to me like the legislative version of the “pull your socks up” approach to depression. This has never worked, and it will not work, because even with the fancy new language depression is fundamentally different from laziness. Of course, it helps in recovery to have people supporting you and encouraging you to do things like get up and go outside, but a Government institution cannot be that person. It has too much of a conflict of interest, especially in a wider cost-saving culture. Also, being that supportive person does mean that you need to recognise that the healing process is not linear. Sometimes it will be OK not to get out of bed, and it will be OK not to go to work, and that is an important part in the process of recovery.

The fourth problem with this bill is that it is based on a model that has not worked in other places. This model in the UK has resulted in an increasing number of suicides of people with illnesses and disabilities.

The fifth problem with this bill is that it takes away people’s control of their own health. To require people who are sick to engage in work readiness activities and to look for work assumes that they do not know what is best for them. It assumes that they would not do that when they were ready. It even seems to assume their doctor does not know, either. This legislation will require people diagnosed with cancer to focus on what they are capable of in terms of employment, rather than what they are not. This will change once they have been diagnosed as terminal, admittedly. If they want to keep working or to look for work, then great—I am not against that—but, surely, in a reasonable society we would let somebody battling cancer focus on that battle, not siphon off their energies into proving their work readiness or availability.

The sixth problem with this bill is that not all work is better for you. Despite the evidence that was quoted, there is plenty of other evidence that says the contrary, and to quote from just one section of research: “These findings underscore the importance to a person’s well-being. Rather than seeking any new job, the study suggests, people who are unemployed … should seek new positions that offer more security, autonomy and reasonable workload.” This legislation proposes a 13-week stand-down loss of income for anyone who turns down what Work and Income defines as suitable, but has no allowance for security, autonomy, and workload. This will have negative health consequences.

TE URUROA FLAVELL (Māori Party—Waiariki): Tēnā koe, Mr Speaker. Ka nui te mihi ki a koe i tēnei rā. Tēnā koe, tēnā tātau katoa.

[Thank you, Mr Speaker. Regards for you today are great, so greetings to you and to us all.]

The ASSISTANT SPEAKER (H V Ross Robertson): Kei te pehea koe?

[How are you?]

TE URUROA FLAVELL: Āhua pai, āhua pai. Kia ora rawa atu.

[I am somewhat good. Thank you indeed.]

Koinei te mihi o te ngākau ki a tātau e kōrero nei i tēnei take nui, whakaharahara i tēnei rangi. Tēnā, i te tuatahi, kua rongo au i ngā whakawhiu ki te Minita i tēnei ahiahi. Ko au tētahi kāre i te tino whakaae atu ki ērā momo kōrero. Ko au tētahi e kī ana, ko te wahine nei ko tōna ngākau, he ngākaunui nei ki te āhuatanga o te hunga e rongo nei i te ngau o te pōharatanga me ērā mea. Ko au tēnā e kōrero pērā ana ki a ia. Nō reira, waiho tērā kōrero ki reira. He mahi uaua ki te whakatikatika i ngā uauatanga o te wā, me te penihana tonu, he take nui tērā. Nō reira, waiho tērā kōrero ki reira.

Kātahi anō ka hoki mai i tētahi tangihanga i roto o Tauranga Moana, i te motu o Rangiwaea. Nā, ko te tangihanga, he tangihanga mō tētahi tangata ko tōna īngoa ko Ben Tawhiti. Ko wai a Ben Tawhiti? He tangata nō roto o Tauranga Moana, ā, ka mutu nō Rangiwaea tonu. Ēngari kua roa ia e noho ana i roto o Tāmaki-makau-rau. He aha tāna mahi? E aua hoki kāre au i te tino mōhio i ngā rā ō mua ēngari, nō nātatanei kua koroua, kua pakeke. Ka mutu ko tana tino pūkenga ko te purei i te rakuraku, whakatangitangi i te rakuraku. Koinā tāna mahi i ngā tau kua hipa. Nā, he aha te pānga o te Ben Tawhiti ki tēnei o ngā kaupapa. Kāti me tuku i taku poroporoaki ki a ia. Kua ngaro atu i te tirohanga kanohi engari, ko tērā whakatipuranga, he whakatipuranga kaha ki te mahi. Ka haere ki ngā wāhi katoa ki reira kimikimi haere nei i te āhuatanga o tēnei mea o te mahi. Pai mai, kino mai, ka whai atu i ngā huarahi katoa kia taea ai e rātau te whiwhi i te mahi. Nō reira e aroha atu ana ki tērā whakatipuranga. Ki tērā whakatipuranga ahakoa pēhea te āhuatanga o te ngākau, i kimi mahi rātau, pukumahi tērā hunga.

Nā reira, ko te wero nui nei ki te titiro i a tātau e kōrero nei mō tēnei take, ēhara i te kōrero hōu. Ko te wero, ki te titiro ki te aronga tahi nei o te tangata ki te penihana, ehara i te mea hōu, ehara i te kaupapa hōu. Ono tekau mā ono tau kua hipa, nā Henare Waitoa tētahi waiata. Ko te īngoa o te waiata nei, ko “Moni Penihana”. He waiata tēnei ki te aki i a Ngati Porou ki te pōti mō Āpirana Ngata i te wā i a ia, ahakoa, kāre tērā koroua rā i tautoko i te āwhina a te penihana. Ēhara i te mea ko Tā Āpirana i tōna kotahi, nā tētahi anō rā o tērā iwi o Ngati Porou nā Tuini Ngāwai tētahi waiata. I kī mai ia i roto i tērā waiata, he mea patu mahara, he mea patu tikanga ā-Maori te penihana. E ōrite ana nei ōku whakaaro mō te penihana. Kāre au i te paku whakaae kia noho te toru tekau mā tahi paihēneti hei mōkai ki te penihana, Māori nei tāku e kōrero nei. Kotahi rau, tekau mā rua mano tāngata kei runga i te penihana. He rahi rawa tērā.

Kua roa te Pāti Māori e kōrero ana mō te noho tata o te ao Māori ki te penihana. Ahakoa ehara tērā momo kōrero i te reka ki te taringa a wētahi. Mēnā he roa rawa te noho i te penihana, arā noa atu ngā whāinga, ko te kore whai i te mātauranga, ko te māuiui ā-tinana, ko te patu wairua pēnei i tā Tuini i waiata nā i roto i tana waiata. Ki te pērā, he wā tōna, ia tipuranga, ia tipuranga, ia tipuranga, ka noho kōhatu i te penihana. Koinā te mutunga iho. Kai te pērā te āhua i ngā taone pakupaku, pēnei i a Tokoroa, pēnei i a Kawerau. Koinei te āhuatanga, ngā taone i rongo nei i te ngau o te kore mahi. Nō reira, e kore te Pāti Māori e tautoko i tētahi hīkoi mō te penihana kia noho tonu te tangata i te penihana ēngari, ka noho pokohiwi ki te pokohiwi, i te taha o te rawakore, i te taha o te tamariki, i te taha o te mokopuna. Koinei te raruraru. Kua noho taupatupatu ngā mea e rua. He noho taupatupatu tā mātau. Āe, he hiahia nō mātau kia kaua e noho i te penihana, he hiahia nō mātau kia kimi mahi, kia whai i te oranga o te tangata. Engari i tēnei wā kei te whakahē mātau i tēnei pire nā runga i te mōhio, he wā uaua tēnei, ka mutu, arā anō ngā uauatanga o tēnei momo penihana.

I tēnei ata, me pēnei rawa te kōrero, i whiwhi au i tētahi ī-mēra mai i tētahi o aku hoa nā runga i te putanga o ētahi kōrero mō te penihana. Anei tana kōrero i te reo Pākehā, kia huri ki te reo Pākehā kia mārama tonu te tikanga o tana kōrero. This morning I received an email from one of my constituents to share her concerns about this bill, the Social Security (Benefit Categories and Work Focus) Amendment Bill. This is what she said: “I think this is a really dangerous reform as it doesn’t take into account circumstances of poverty. And by this I mean people who are unable to run a whānau car, as they have just enough money to scrape by on; people who cannot physically get their children to these preschool centres, because the bus run is too far away; and people where there is no accessibility to a bus run. If they could walk their children some distance to the nearest bus stop, do they do so in the rain or in the cold of winter? Then once bussed to a certain spot, do they then have to walk the rest of the way to the centre? The solution is to find ways to empower, to provide creative ways towards educational opportunity, and to lift up, not to increase the burden of poverty.”

Nā, koinei te kōrero a tētahi o ngā mea i whakapā mai ki a au. Ko tā mātau, ko te kī atu, me puta te tangata i te penihana. Ēngari kei te mōhio tonu tātau, he wā uaua tēnei ahakoa koinei te moemoeā, te wawata, e kore e taea i raro i ngā uauatanga o tēnei wā. Nō te marama tata kua hipa i roto i tētahi pūrongo o te tari o te Minita i puta te kōrero kei te whānui tonu te wāhanga o te hunga e noho nei i te kore mahi ki ērā o te hunga me kī whai rawa. I roto i taua pūrongo kua piki haere te āhuatanga o ngā uauatanga kua pā mai ki ngā tamariki. Ko ngā mea Māori o te Moana-nui-a-Kiwa, ko rātau kua tino rongo nei i te ngau o te kore moni. Pēnei i a Kawerau kua ngaro atu te āhuatanga o ētahi mahi i roto i ētahi hāpori. Nō reira, ko te hunga ka rongo nei i te mamae ko te hunga tamariki ko te hunga rangatahi ko te hunga taiohi. Nō reira, ko te wero ki a tātau, kia kaua e titiro ki te patupatu i a rātau, engari me titiro ki ētahi huarahi hei whakapakari ake, hei whakahihiko i te ngākau, kia puta rātau. Anā, mēnā ka titiro ki tētahi tauira ko Vodafone tētahi. Kua whakakorengia te āhuatanga o te kirimana ki Īnia. Ka mutu kua hoki mai ngā kotahi rau mahi nei ki roto o Aotearoa mai i tāwāhi. Kātahi nei te mahi pai. I a mātau e haere nei i te mata o te whenua ko te trade training tētahi mea e kōrerotia ana. Nō reira, me mihi me whai atu i ērā momo mahi.

E kī ana te kōrero, ko te whakamoni nei i te penihana ana ko te capitalisation of family benefit. Koinei tētahi kaupapa i ngā tau kua hipa. Me whai atu i tērā i te mea, tērā tētahi kaupapa i whai painga nā runga i te hiahia o ētahi ki te hoko i tētahi whare. Me whai atu i tērā huarahi. Ko ētahi pēnei i a mātau kei te pīrangi ki te whai atu i te utu whānau ā tamariki, arā, te universal child payment i puta i roto i tētahi pūrongo inā tatanei. Ēnei kōrero katoa, me whai atu i tētahi huarahi kia puta te tangata i te penihana. I tōna mutunga mai, ko te mātauranga tētahi, ka mutu, ko te oranga o te tangata te huarahi hei whāinga mā te kāwanatanga tērā.

Nō reira, ahakoa te tautoko a te Minita me tōna hiahia kia puta te tangata i te kore mahi, i te uaua, ko tā mātau ko te kī atu, ehara tēnei i te huarahi e tika ana. Me huri kē ki kaupapa hai whakaora, hai whakapakari i te tangata. Nā reira pea, ka puta te tangata i te penihana. Tēnā koutou katoa.

[This acknowledgment to us, addressing this marvellous and great matter today, is coming from the heart. Now then, in the first instance I have heard criticism of the Minister for Social Development this afternoon. I am one who does not agree with those sentiments. I for one say that this woman is passionate and committed to the situation and other circumstances that cause people in poverty great hardship. I am one who talks like that to her. So park that statement there. Finding a solution for the hardships of the time is a difficult thing to do, and as for benefits, that is a major issue. So park that one there.

I have just returned from a funeral on Rangiwaea Island in Tauranga. Now the funeral was for a man and his name was Ben Tawhiti. Who was Ben Tawhiti? He was one from Tauranga, but really of Rangiwaea, yet he lived in Auckland for a long period of time. What kind of work did he do? I do not really know. I am not sure what he did in former times, but in recent times he became more grandfather-like and an elder. But he eventually became an exceptional guitar player. That is what he became known for in the past. So where does Ben Tawhiti fit into this issue of the policies? Enough, I must deliver my farewell tribute to him. He is seen no more and no longer with us, but he was from that generation of hard workers. They went anywhere to seek this thing called employment. Be it a good job or a bad one, they sought all avenues to secure a job. And so I empathise with that type of generation. That was the generation that sought work regardless how they felt. They went looking; they really worked hard out.

So this is the greatest challenge for us to take aboard as we address this issue, and it is not a new conversation. The challenge in confronting the battle of benefit dependency is not a new one. Sixty-six years ago, Hēnare Waitoa composed a song. The name of this song was “Pension Money”. It was composed to encourage Ngati Porou to vote for Sir Āpirana Ngata when he was a member of Parliament, even though that fine old gentleman did not support pension dependency. It was not as though he crusaded on his own against this. Another of that tribe of Ngati Porou, Tuini Ngāwai, composed a song. Through her song she suggested that reliance on the pension would render their Māori thinking and Māori ways useless. I have similar views about the pension. I do not accept at all the notion that 31 percent of working-age Māori should be enslaved by being on a benefit. That is 112,000 people on the benefit. That is really too high.

The Māori Party has been saying for a long time that Māoridom has been too closely aligned with the benefit. That sort of talk, however, is not sweet to some. If dependency on benefits gets too long, other considerations come up, such as lack of education, poor health, and low self-esteem and hope, as mentioned in Tuini Ngāwai’s song that I mentioned. If that became the situation, in time successive generations would become totally dependent on benefits or pensions. That is how it will end up. It is a bit like that in smaller towns like Tokoroa and Kawerau. This is the situation in towns where there are no jobs. So the Māori Party will not support a march related to benefits that encourages a person to remain on the benefit, but we will remain shoulder to shoulder with the destitute, the children, and the grandchildren. This is the problem. The two things are at loggerheads with each other. We have a double-edged situation with each other. Yes, we want non-dependency on benefits, and we want to find employment for the well-being of the person. But at this stage we oppose this bill, knowing full well that this is a time of difficulty and that, at the end of it all, this kind of benefit has other difficulties.

This morning—let me put it this way—I received an email from a colleague of mine, when some information about this benefit was published. Here is what she said in English, and I will switch to English now so that the meaning of what she said is clear. This morning I received an email from one of my constituents to share her concerns about this bill, the Social Security (Benefit Categories and Work Focus) Amendment Bill. This is what she said: “I think this is a really dangerous reform as it doesn’t take into account circumstances of poverty. And by this I mean people who are unable to run a whānau car, as they have just enough money to scrape by on; people who cannot physically get their children to these preschool centres, because the bus run is too far away; and people where there is no accessibility to a bus run. If they could walk their children some distance to the nearest bus stop, do they do so in the rain or in the cold of winter? Then once bussed to a certain spot, do they then have to walk the rest of the way to the centre? The solution is to find ways to empower, to provide creative ways towards educational opportunity, and to lift up, not to increase the burden of poverty.”

This is what one of the ones who contacted me said. Our response is that we want people to get off the benefit. But we know for a fact that this is a difficult time, and despite it being the vision, the hope, and the dream, it is not possible under the difficult circumstances. In a report from the Minister’s department, the Ministry of Social Development, just a month ago it stated that the gap between rich and poor is wider than ever. In that report, as well, it said that hardship rates for children had increased. Māori and Pasifika ones had fared particularly poorly during the recent economic downturn in communities like Kawerau. So children and youth are often the most vulnerable in a recession. The challenge, then, for us as a country is to quit the blame game and to look for avenues that are inspirational and motivating for them to succeed. Vodafone is an example to look at. It has ditched its contract with India and, as a consequence, created a hundred jobs here in New Zealand. Now this is a great outcome. In our travels, trade training is something that is talked about across the country. Those kinds of employment are applauded and must be followed up.

There is a quote worth revisiting that is about capitalisation of the family benefit. This was a system of some years ago that should be followed up, because it was a policy that had good homeownership outcomes for those who wanted to buy a house. That avenue should be explored. Some like us want to follow up the universal child payment that emerged in a very recent report. All these statements should be followed up, to get a person out of the benefit-dependence syndrome. At the end of it all, education is one aspect, and well-being of the person is another for the Government to follow up.

Therefore, despite the support of the Minister and her desire for people to get into a job, it is difficult. We say to her that this is not the right way. She should turn to policies that will enhance the person’s well-being and outlook. That might just be the solution to make a person less dependent on the benefit. Thank you all.]

BARBARA STEWART (NZ First): On behalf of New Zealand First I rise to speak to the Social Security (Benefit Categories and Work Focus) Amendment Bill. New Zealand First has got some reservations about some aspects of this bill. That is why, contrary to what some parties expected, New Zealand First is prepared to vote the bill only to a select committee at this particular stage. New Zealand First has its own views about beneficiaries keeping faith with the taxpayer. We are voting for this bill to go to a select committee because we are very interested in what various organisations and people directly affected by this legislation have to say, and that is the only way we are going to hear what they say. It is only democratic that they have a say, and they must be heard.

Overall, the bill states that it seeks to improve the social and economic outcomes for all New Zealanders, and we agree with that—it does sound good. The bill does include some measures to protect the interests of children by encouraging parents to be employed in the workforce, to increase participation in early childhood education, which is good, and to have Well Child checks, which is also positive. We can agree with that. But we have to remind the Minister for Social Development that encouragement to work does not equate directly with the achievement of actually obtaining a job.

Some of the practicalities of the legislation raise some questions in our minds. We know that the challenge for everyone is paid work, and for those with few qualifications, or for those people over the age of 40, this bill will actually be a challenge. Are we actually raising the expectations of these people in a way that their expectations cannot be met? We know that those people are struggling, and it is quite a large group. We hope that there is light at the end of the tunnel and that this light is not a train actually coming to run them over. That is important.

We know, too, that 1,000 people a week approximately are travelling over to Australia for work, and, funnily enough, this has not translated into an oversupply of jobs, which one would think is a really logical progression. People want to work. They do not want to be excluded from the economy and the life that they want to lead. Work testing does not actually make people work-ready. They want that job right there at the end.

One of the areas that does concern us is the increasing focus of this Government towards greater use of the private sector in order to bring about achieving targets. New Zealand First sees a real problem of accountability in this particular area, and it is one area that we are going to be interested in exploring further, because we need to ensure that these private companies are actually meeting the targets and doing the work that they have been contracted to do. Obviously, we would like this work to be contracted back into the public sector so that we can ensure that those people have work.

Another area that we have got some concern about is in relation to recent widows benefit recipients. We believe that they will be insulted by their amalgamation into the new jobseeker support benefit, which requires recipients to be work-ready and available. We do not believe that that is very fair at all in this area.

Drug testing is another area that is going to be outsourced. Are there strategies in place to actually advance this drug testing in a timely and effective way? This is one area in which we cannot afford any mistakes, because people do not want to have a drug reference against their name, particularly if they are looking for work.

The availability of early childhood education and the number of places in these institutions also have to be explored. We were very concerned this week when this was raised during question time and the Minister was not certain whether or not this was going to happen. We know that a change like this is not going to happen overnight, so action has to be taken now if this is going to be part of the new way that benefits are going to be given out.

Whatever the views that people hold on these points, social welfare policy should be all about getting people off benefits and into jobs. Therein lies a major issue for this Government, because whatever welfare reforms that it is pushing through Parliament, it is doing absolutely nothing to foster an economy that ensures that there is job creation. We can take that even further by looking at National’s refusal very recently to even consider my leader’s member’s bill to give the Reserve Bank the flexibility that it needs to handle our seriously over-inflated dollar and to help our ailing manufacturing and exporting sectors. They are the sectors that are actually going to provide the jobs. We need to ensure that they can actually survive.

The reality is that we want to see jobs created. We believe that at this point in time the National Government is a bit like a fly trapped in an empty soft drink can—buzzing around, making a lot of noise, but going absolutely nowhere fast. Beneficiaries may end up being drug tested. Those wanted by the police may have their benefits slashed, but will these measures actually see them end up in paid employment? Sadly, New Zealand First does not think so, because these jobs do not exist under the policies of the National Government. But we are prepared to vote to refer this bill to a select committee so that the people of New Zealand can actually have a say. We believe that is what is required with such dramatic and drastic reforms as these, which are going to be imposed on a very vulnerable group in our society.

TIM MACINDOE (National—Hamilton West): I was fascinated at how silent members opposite were when the Minister for Social Development was moving the first reading of this bill a short time ago. In fact, I think I was not the only one on this side of the House who came to the conclusion that maybe they had had a road to Damascus experience and had actually decided to support the Social Security (Benefit Categories and Work Focus) Amendment Bill. But, sadly, we then had the clichéd and unconvincing contributions of Jacinda Ardern and Grant Robertson, and it was clear that they had fallen back on their failed ideology, which, it has to be said, is actually the reason why we have got the problems that we are tackling in this bill.

I have repeatedly argued in this House that New Zealand needs a generous and compassionate welfare system. I am going to start by repeating that today, because I firmly believe it, but it also needs to be said that we can have that only when the policy settings are right and relevant to contemporary circumstances, when incentives are in place to assist people out of welfare and into work and self-reliance, and when abuse of the welfare system is minimised, or, preferably, eliminated altogether.

I am hugely enthusiastic about this second tranche of our welfare reforms, and, I want to point out, so are all of my constituents who talked to me at length about these issues during the campaign last year. It would appear that the whole of the country is, because voters enthusiastically embraced the idea by voting for National in record numbers on 26 November. This bill sets out a vision and it sends the right signals, yet Jacinda Ardern questioned where the incentives focus is that the Minister talked about. I am really surprised that she cannot see it, because assisting people to gain skills and become ready for work is a significant investment in them, and it is the right thing to do. So is giving extra support to those who want to work but need a little bit more help in order to get ready for it, such as those who struggle with addiction, and we are putting that investment into them. Those provisions are in this bill. We have struck the right balance between incentives, obligations, and the provision of targeted assistance.

Miss Ardern’s protestations prompted me to have another look at Labour’s legacy, which it left the new Government just 4 years ago. If we are talking about incentives, let us remind ourselves of that record. Labour paid criminals the benefit while they were on the run from the police. Well, it has to be admitted, that is, I guess, an investment, but honest taxpayers deeply resent such nonsense as that, and this bill will stop it. Labour claimed that it had a strategy for reducing unemployment, yet what it really did—and the figures show this—is that it merely shifted beneficiaries between different types of benefits.

Iain Lees-Galloway: No. Don’t tell lies.

TIM MACINDOE: As I say—

The ASSISTANT SPEAKER (Lindsay Tisch): Order!

TIM MACINDOE: The figures show it. Let me give you some figures, Mr Lees-Galloway. Under the 9 years of the Labour Government the number on the sickness benefit increased from 33,000 to 46,000, while those on the invalids benefit increased from 53,000 to 85,000. I do not think there are a whole lot of young people in every town and city wandering around on the street all day who are invalids, but according to those numbers there must be.

Opposition members have again chirped today that our welfare reforms are cruel and callous and that there are no jobs available. Well, not only are our reforms an expression of confidence and belief in those who are on benefits but the evidence tells a different story. So let me just close with this. I am very happy to tell the House that as at 3 p.m. today 12,194 jobs were advertised on TradeMe, and 10,278 of those are full-time. Meanwhile on SEEK 16,420 jobs were advertised, and of those 13,085 are full-time. So there are certainly jobs out there. These reforms are about assisting as many people as we can to be ready to take them on. When they do, they will become aspirational. They will become self-reliant. The quality of their lives will improve, and so it will for all of their families. The whole country will be better off, but, most important, those whom we are assisting will be. I enthusiastically support this bill.

Dr RAJEN PRASAD (Labour): It is a sad task, really, to stand up and expose this bill, the Social Security (Benefit Categories and Work Focus) Amendment Bill, and expose this Government, because behind the figures and the facts we speak about are real human beings. So the National Government again is continuing with its war on the poor and its war on those who actually rely on social security. We have heard impassioned statements from this side of the House, and there is nobody from that side of the House who has taken a full call to actually defend—apart from the Minister for Social Development—the provisions of this bill, because they cannot, because they do not believe in it, or because they know that when they speak they will expose the very criticism that Jacinda Ardern directed towards that side. Melissa Lee was a case in point—a case in point. Tim Macindoe has just done that again. It is all about this fraud, and the attitude to those on benefits by those members—I will include Mike Sabin in that as well—

Tim Macindoe: We care about them.

Dr RAJEN PRASAD: I do not think the member does care about them, because of the language the member uses to describe them. The Government really has made it a virtue to appear tough, and to make life as difficult as possible for those who rely on social security through that period in their lives when there is nothing else for them to rely on and it is their entire means for them to fend for themselves and their family.

The National Government has waged this war on the poor and on those on social security right from its inception in 2008. This Government has convinced itself and satisfied itself, consistent with its particular ideology, that beneficiaries should be presumed guilty until they are found to be innocent. That is what they talk about. That is what Mr Sabin talks about. I have heard Mr Sabin on many occasions. The only person from that side that I might exempt from this is Alfred Ngaro, because Alfred Ngaro has actually worked with this group. He actually has seen what battered women do: safeguarding their children, on the benefit and doing the best they can to keep the house warm, to keep the house clean, to look after those children, and to protect themselves. That man has seen that, and I do not expect him to have the punitive approach to beneficiaries that all of the others who have spoken have taken so far.

But the Government’s entire attack on those on social security is anchored on the one concept, and this is the concept of welfare dependency. What the term “welfare dependency” does is it actually pathologises the problem to the individual. It is actually saying “You are dependent, it’s your fault, and we are going to have to fix you.”, when everything we know is that it is about an interdependent world in which we live. Members opposite might not remember, but when people in Mosgiel lost their work, the Government did nothing. Their factories closed down. They did not become bludgers overnight. But, in fact, according to the definitions that the Government members take, that was dependency, and, therefore, they pathologise their problem.

What they have done is they have gathered a whole bunch of information about those on the unemployment benefits and on the domestic purposes benefits and built a case around the length of time they are on those benefits, and, therefore, that is dependency. It has taken one more cynical step further in the recent research reported last week that the lifetime cost of beneficiaries is something like $67 billion. It is almost as if we are asking the mother whose child is born today whether she has got the $150,000 it will cost her to take that child through to the age of 15 or 16. Do we ask that question? No. But here the case is made for welfare dependency based on that kind of intellectual dishonesty. And we have a lot of intellectual dishonesty about many of these figures from that side of the House. They have actually convinced themselves that those who are unemployed prefer to stay unemployed, and make little attempt to get a job. The Government actually feeds off that prejudice.

Jacinda and the others on this side of the House were absolutely right when they said what the messages are out there about welfare reform. It is the message that these crooks are going around using our taxpayers’ money; that we pay the money, they are stealing from us, they are committing fraud, we have got to get them; that they are all on drugs, and they are all cheats; and that we are going to have to do all these nasty things to them. That is the message out there, and the Minister is quite two-faced about it. In the House there is that language, the language of “We are backing”—I think she uses that a lot—“these people.” Out there, it is that we will create a system that actually will reduce the bill. In a sense, that is intellectual dishonesty as well. What we have never heard from this Minister is a philosophically well-argued position on how to take this country to another place, where people will have jobs, where those who are needy will be looked after, and we will all move together—but, no, that is not there. It divides and rules.

In the end, where are the programmes that this Government has put together? The message in this bill is not that subtle. It really is about that those on social security behave contrary to “important social norms” around health, education, work, and social welfare. My own daughter who is looking after two kids today will not qualify, because she does not use 15 hours of early childhood education for her 3-year-old. She is a mum, and dad is at work, but she will not qualify. But a solo mother has got to ensure that that 3-year-old is in early childhood education. Here are these people who do not fill “important social norms”. This is prejudice of the worst kind. This is a punitive approach. The Minister does not like the term, but all of her welfare provisions are punitive. It blames somebody, it punishes somebody; it is not developmental. If the Minister took a developmental approach, this side of the House would support her, because we know what that is like. We know how difficult that is, and we know what needs to be done to put all of that together. But we do not get that from this Government. It is not actually interested in that.

It has become this Minister’s badge of honour to be unnecessarily aggressive and unnecessarily punitive. It is almost as if there is something in that. Well, there is not, because once they have gone from this place, they are not remembered for those characteristics. What people are remembered for when they leave here, particularly those who have been in Government, is the good they did, where they used the best science and the best information to bring about the best results, particularly for our most vulnerable but certainly for our families, who really are the driving force of our society.

Here, we know that this Minister is the “Minister of Distraction”. Whenever John Key is in trouble, whether it is the water issue or whether it is the John Banks issue, what you do is reannounce the policies again. We know that it is a distraction. There is no ethics in that. There is no morality in that. There is—

Mike Sabin: This Minister has done more in one bill than that party did in 9 years of Government.

Dr RAJEN PRASAD: Mr Sabin talks about 9 years. In 9 years we reduced child poverty. In this Government’s life, just about 260,000 children are in poverty. And where are the jobs? When will that member create them? That member comes from a very poor part of New Zealand. I expect that member to understand and advocate for those families. He does not. He actually does not. He is part of the problem, as, indeed, that member’s colleagues are part of the problem. These are the people whom I have worked with all my life. These are the people I know well. And these are the people Alfred Ngaro knows well. And here we are, screwing them down to the lowest common denominator. We call them names—that is the subtext of this bill, Mr Sabin.

Mike Sabin: Get off that ideological hobby horse that you keep riding.

Dr RAJEN PRASAD: Perhaps the member had better read up and we will debate every bit of this in the select committee. But there is nothing that is redeeming in this bill at all. This notion of an investment approach is the biggest—I better not use a certain term, because it is unparliamentary—load of rubbish I have heard. This is not an investment approach. We know what an investment approach is, and those business-oriented politicians on that side of the House have taken something out of the business world and are applying that to human relations, believing that the country will understand. There is no investment in this. This is punitive. This is negative. This is divisive.

But the other side is also possible, because every family on social security is known to the organisation. Our organisation, without any legislative change, can work very, very well with them to put them on the right path to development, which is what the Clark Government did. These unemployed people were triaged. We had the lowest unemployment rate in the world. I know about those because the same staff in Work and Income worked day in and day out alongside those people and got them into jobs, while the country was creating jobs as well. So here we are: do not create jobs, increase child poverty time, and at the same time punish our people. That side ought to be ashamed of itself, and I look forward to a robust debate throughout the select committee process. Thank you.

ALFRED NGARO (National): I stand here today unashamed. What I do is stand here to take a call on this Social Security (Benefit Categories and Work Focus) Amendment Bill and to talk about, first of all, the purpose and the principles. The purpose of the Social Security Act 1964 is to help people to support themselves and their dependants. Section 1B, “Principles”, says in subsection (a): “work in paid employment offers the best opportunity for people to achieve social and economic well-being:”. There has been a lot of talk and rhetoric about the young people who are going overseas to the GC—the Gold Coast. But what we do not talk about is the GFC—the global financial crisis. That is some of the reality, but somehow we forget about those things.

This bill addresses purpose and principle. That is what is important. It helps people for whom work may not currently be an appropriate outcome, and they should be assisted to plan for work for their futures. That is what this bill is doing. Very simply, what we are doing here, but very significantly, is changing a brand in order to change a focus. There is something about a name to give focus and direction. This bill amends the Social Security Act 1964. It does not change its purpose; neither does it change its principles. But, instead, it wants to transform a system that needs to be changed, because we are seeing many, many of our people being trapped in this system as well—and we know. This system is like a good Clint Eastwood western: it has the good, the bad, and the ugly. So when we talk about sanctions, when we talk about those who are inside that system, it is the ugly side of the system that is being recognised on the other side, in terms of people who are taking the system and taking it for a ride. When we talk about the bad in the system, it is the parts of the system that have entrapped a lot of our people in this system as well.

So what are we doing? We are rebranding benefits by calling them jobseeker support. That way, we will have work expectations that are set depending on capacity. We are not beneficiary bashing; instead, we are giving them a sense of hope and opportunity. Sole parent support is another new brand with a focus for sole parents with children under 14 years. From October this year sole parents are expected to be available for part-time work. Again, it is only if they are available in the circumstances that are there. In terms of the supported living payment, the ability to participate in society is very important. This was branded and the name was given by those in the disability sector themselves. They wanted to brand it as the supported living payment. Their sense was that they want to be active contributors to our community as well. In the Solutions to Child Poverty in New Zealand report that was brought out, the issues and options paper for consultation, it simply said that one of the range of areas that are absolutely important to reducing poverty—and we are not talking about just child poverty; we are talking about family poverty—is the opportunities for work and employment. To increase household incomes—that is the focus of this bill. We are supportive of that. We are thankful to the Minister for Social Development who has put forward a vision and a hope for our people and in our community. Thank you. I commend this bill.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand the next call is a split call. I will ring the bell at 4 minutes.

IAIN LEES-GALLOWAY (Labour—Palmerston North): That contribution from Alfred Ngaro absolutely sums up what this Social Security (Benefit Categories and Work Focus) Amendment Bill is all about. All he talked about was branding. It is an absolute distraction. It does nothing to actually help people into work. All it is is a branding exercise. Alfred Ngaro talked about the branding of the different benefits, but, I tell you what, this is not about the branding of benefits; this is about branding beneficiaries. That is all that this bill is about. When the Government is in trouble, when it knows that there are 270,000 children growing up in poverty in this country, when it knows that income disparity is greater now than it has ever been before, and that it is a direct result of the policies that this Government has implemented, what does it do? What does it do? It starts to pick on the beneficiaries. It tells New Zealand that every beneficiary is on the run from the law, or every beneficiary is a drug taker, or every beneficiary is a bad parent and needs to be told how to raise their children.

The things that those parents have to comply with! I saw Paula Bennett’s press release about forcing parents to put their children into early children education. The words “comply” or “compliance” occurred at least five or six times in that press release, and that is what this Government is all about. It is about getting people to comply.

Louise Upston: Social obligation.

IAIN LEES-GALLOWAY: I hear terms like “social obligation”. I hear terms like “social engineering”. This Government is working overtime on social engineering, getting people to comply with its view of the world—

The ASSISTANT SPEAKER (Lindsay Tisch): If I cannot hear the debate, members are too loud. Quieten down.

IAIN LEES-GALLOWAY: Thank you, Mr Assistant Speaker. I do not mind the Government members screaming back at me, because I know that they do that when they know they have been found out. They have been found out about what this legislation is really about. It is about pitting one New Zealander against their neighbour. It is about divide and rule. It is about distracting people from the Government’s own failures. That is all that this legislation is about. It will do nothing to get people into work.

Tim Macindoe tried to smear the last Labour Government’s record. He tried to say that all that the last Labour Government did was shift people from one benefit to the other.

Melissa Lee: That’s right.

IAIN LEES-GALLOWAY: Well, I have news—Melissa Lee believes that lie, as well. Melissa Lee has fallen—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! The member cannot use that word. There is Speaker’s ruling 42/2 about using the word “lie”. So I would ask the member to withdraw that comment.

IAIN LEES-GALLOWAY: Speaking to that—

The ASSISTANT SPEAKER (Lindsay Tisch): No, no. I have ruled—Speaker’s ruling 42/2. Just carry on.

IAIN LEES-GALLOWAY: I withdraw that comment. Melissa Lee has fallen into that trap, because she is so foolish as to believe the Government’s own rhetoric. This is what the last Labour Government did. We got people off benefits and we got them into work, because we made sure that there were jobs. That is what this Government should be focusing on, but it has so demonstrably failed to get people working that it has started this act of diversion, simply to get New Zealanders fighting against each other and not fighting against this pathetic, worthless Government, which is not working for New Zealanders.

The Government wants us to believe that all beneficiaries are on drugs, that they are not ready to work because they are on drugs. Tim Macindoe used an example; he cited the number of jobs that are available in New Zealand at the moment. I agree with Tim Macindoe—there are jobs out there. There are jobs out there, but people cannot get them, and here is why. First, for every job that there is out there, there are at least 10, if not 20, people applying for that job.

Darien Fenton: More like 200.

IAIN LEES-GALLOWAY: Darien Fenton suggests it is more like 200. There is so much competition for jobs out there. But here is the other thing. This Government has cut back the training that people require to have the skills that they need to get into those jobs. This Government has slashed polytechnic funding. It has slashed tertiary education funding. That is why people are not able to get into those jobs—because this Government does not want them to have the skills to be able to—

Hon Maurice Williamson: Not true.

IAIN LEES-GALLOWAY: Maurice Williamson says it is true. He is saying it is true—

Hon Maurice Williamson: I said “Not true.”

IAIN LEES-GALLOWAY: Oh, he says it is not true. Well, you just have to look at the facts, Mr Williamson. You just have to look at the facts. This Government has cut and slashed tertiary education. That is why people are not able to get—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member but his time—[Interruption] Order! Order! When the member’s time is up—[Interruption] Order! When the member’s time is up, when I have called the member and said his time is up, that is it. You do not carry on.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I raise a point of order, Mr Speaker. I would just like clarification over a point that you raised—

The ASSISTANT SPEAKER (Lindsay Tisch): No. I have ruled on that matter—[Interruption] Sit down. [Interruption] No, sit down. I have ruled on the matter. The member—sit down. The member has withdrawn the comment that he made at the time, and we have progressed. That is the end of the matter.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I raise a point of order, Mr Speaker. I am seeking clarification. You referred to 42/2. That is not the Speaker’s ruling, and I am seeking clarification—

The ASSISTANT SPEAKER (Lindsay Tisch): The member will sit down. Sit down. The member in this debate, and he did it earlier on as well, used the word “lie”. That is what I pulled him up on and that is why he apologised—no, he did not apologise. I asked him to withdraw the comment, and he has. We are now moving on.

Hon Damien O’Connor: Point of order—

The ASSISTANT SPEAKER (Lindsay Tisch): There is no further discussion on this.

Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman): I raise a point of order, Mr Speaker. I am referring to—

The ASSISTANT SPEAKER (Lindsay Tisch): If you are trifling with me, then—

Hon DAMIEN O’CONNOR: I am not trifling. It is an issue that has been raised with me during a speech that I have made, and I am seeking clarification, because it is the accusation against a member, which I accept, and the Speaker’s ruling says that it is not appropriate to say that a member lies. But my colleague said that a statement was a lie—

The ASSISTANT SPEAKER (Lindsay Tisch): No. I have ruled on this matter. The member will sit. I quoted 42/2. The member, when I asked him to withdraw the comment, did so. That is the end of the matter, and I am calling the Green member Holly Walker.

Hon TREVOR MALLARD (Labour—Hutt South): I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (Lindsay Tisch): I have ruled on this. The Hon Trevor Mallard, I have actually ruled on this.

Hon TREVOR MALLARD: I would like to refer you to the ruling on Tuesday of this week from the Dr The Rt Hon Lockwood Smith in the Chair during question time where he, in fact, allowed that comment to be made about a member during question time. Can I complete my comment please? That was consistent with the ruling from Speaker Wilson when Dr The Rt Hon Dr Lockwood Smith himself used that. It has been ruled out as a matter of interjection but not as part of a question or a debate. What you are not allowed to do is to say that someone lied in here. But the ruling has consistently been that people can say, especially if there is justification, that people lied outside.

The ASSISTANT SPEAKER (Lindsay Tisch): The member used the word “lie”. I have ruled on it. That is the end of the matter. The member withdrew the comment at the time. I am now inviting the Green member Holly Walker to continue.

HOLLY WALKER (Green): I am proud to stand in strong opposition to the Social Security (Benefit Categories and Work Focus) Amendment Bill. I would like to focus my comments, in particular, on the impact that this bill will have on children. Children are something we are all talking about at the moment, and I think that if there is one thing that we all agree on in the House it is that we are failing our children, currently, when we allow one in four children growing up in New Zealand to live in conditions of deprivation and poverty.

This bill makes the bold assertion, in the explanatory note, that it will improve outcomes for children by helping parents out of poverty. If only that really was the focus of the welfare system or the focus of this bill. But, in fact, this bill will do quite the opposite, and I want to address my comments to that today. So the way that this bill is supposed to help improve outcomes for children is through rather sinister and Orwellian language—which I think is probably familiar to members who remember Jenny Shipley’s code of social responsibility, which I remember debating at high school—in terms of talking about social obligations: “Using the welfare system to reinforce some important social norms relating to children’s education and health through the use of obligations that beneficiaries with children must meet in order to continue receiving Government assistance.” I find that language very concerning as, I am sure, do many members of the House.

Those obligations, as we have heard, are things like ensuring that children are enrolled in 15 hours of early childhood education from the age of 3, enrolled at a primary health organisation to receive health care, meeting their Well Child checks, and being enrolled at school when they are of age to do that. Those are all good things for children to do, but there is an inherent tension and a lack of logic in the Government’s approach to these issues in this bill, and it goes like this. We have a problem of child poverty, and we know that children are missing out on the basics and are not having access to the services that they need to get the best start in life. We want to do something about this. And the Government says what we are going to do about this is provide parents with less income with which to provide those basic services.

The logic goes in circles. Parents do not have enough income to provide the basics, so we will punish them, for not providing the basics, by cutting their income. It is absurd. It is absolutely absurd logic, and it completely undermines the bill’s supposed objective to improve outcomes for children, because all it will do is place children and their families in greater hardship. The Government knows that it will place children and their families in greater hardship, because it actually budgets to do that in its costings and the way that it anticipates the bill will apply.

So never mind the fact that families already make trade-offs in stretched financial environments, like with doctors’ bills versus power bills, and fuel versus food, which could be a very legitimate reason for not being able to meet those so-called social obligations. Indeed, it may be impossible for them to do so, because they do not have access to those services in their area, or because their primary health organisation has a closed book or a long waiting list, or because their local early childhood education provider or kindergarten accepts children for only up to 12 hours a week, so they cannot meet the 15 hours a week requirement. All of these are perfectly legitimate reasons not to meet these obligations. The Government knows this, and it knows that around 2,000 families will find it difficult to meet these obligations. It has budgeted for and fully expects to sanction around 1,300 parents a year in these situations. That is a huge number of children who will be adversely affected by those sanctions. There is something very wrong and very cynical about that. Budgeting for savings from sanctioning families, which the Government knows will disadvantage children—essentially, it is banking the kids’ lunch money. It is very disappointing and it is very disturbing. Again it completely undermines its apparent objective of improving outcomes for children.

It also breaches our international human rights obligations, like the United Nations Convention on the Rights of the Child, for children to have the right to benefit from social security. It is an absurd logic that underpins this bill, and it is a logic that will do nothing more than harm children who are already vulnerable and whom, we all acknowledge, we are not doing enough for at the present time. The Green Party is proud to stand in opposition to this bill and to stand up for our most vulnerable children.

MIKE SABIN (National—Northland): I am very pleased to stand in support of this particular bill, the Social Security (Benefit Categories and Work Focus) Amendment Bill. We have heard from the other side about politicking. If we want to fix welfare, then we should fix the economy. Yet the Labour Party and the Greens will oppose every move that this Government has to grow the economy. Well, I say that those members cannot continue to run with the foxes and hunt with the hounds. New Zealanders have woken up to that. We also hear about blame and that this bill is about blame. Well, we say on this side of the House that this bill is about overcoming barriers to work and ensuring that people get into work. They also say there are no jobs. Well, I challenge any of those members to come up to my electorate and do something else other than have fish and chips at the Mangonui fish shop and have a few photos taken. I challenge them to actually talk to local employers—talk to local employers. What they will find is that local employers want to employ local people, but those local people would rather not be employed. That is a rather unacceptable situation.

This bill is a fundamental change in welfare. We say that if someone can work, they should work, and, in simple terms, that means that if an individual is on a benefit, it is because they do not have a job. Therefore, the focus of welfare should be about getting people into work, not about finding the appropriate benefit category and just leaving them there to sit there and get on with it. This bill brings about three very, very important changes, which underpin what this fundamental change in focus is about: the three job benefit types—jobseeker support, sole parent support, and supported living payment. This bill will extend the work focus far wider than it has been to some 150,000 New Zealanders, as opposed to the 50,000 currently on the unemployment benefit. Job seekers will have work-ready requirements. A very good example of that is that those who are being work tested for jobs that require a drug test will have to pass a drug test. If they do not, there will be sanctions, and if they fail to comply, there is a possibility of benefit cancellation. That is about consequences for actions. If it is good enough for New Zealanders out there working in the workforce to be drug free, then I say it is good enough for those on a benefit, who are having their finances supported by the taxpayer, to be drug free as well.

This bill will introduce social obligations, and they are about supporting vulnerable children in real terms. Children over 3 will have to be enrolled in early childhood education where that can be the case. Children aged 5 and 6 will have to be in school. Those on a benefit will have to have their children enrolled in health care, and we will also ensure that the health-care checks are being done. For parents who are on a benefit, this is a positive thing. If they comply, it is a win-win; if they do not, then we will be asking questions as to why not. This is about really addressing vulnerable children, rather than thinking that if we provide a lunch and a breakfast, then somehow we are acting in the best interests of those children, relieving their parents of any responsibility.

This bill will also go on to ensure that those with a warrant to arrest will have their benefit cut. Of course, the Labour Party and the Greens want to fund those criminals on the run, and to maintain their taxpayer-funded evasion of the consequences of their criminal activities. The Greens will oppose this legislation. That is what we have come to expect of them. The Labour Party will oppose this legislation. That sends a very important message to New Zealanders. As long as that is the message it sends to New Zealanders, then that party will be wearing out the leather on the seats on that side of the House. I fully commend this bill to the House.

A party vote was called for on the question, That the Social Security (Benefit Categories and Work Focus) Amendment Bill be now read a first time.

Ayes 69

New Zealand National 59; New Zealand First 8; ACT New Zealand 1; United Future 1.

Noes 50

New Zealand Labour 34; Green Party 13; Māori Party 2; Mana 1.

Bill read a first time.

Bill referred to the Social Services Committee.

Bills

Student Loan Scheme Amendment Bill (No 2)

First Reading

Hon PETER DUNNE (Minister of Revenue): I move, That the Student Loan Scheme Amendment Bill (No 2) be now read a first time. I nominate the Finance and Expenditure Committee to consider the Student Loan Scheme Amendment Bill (No 2). At the appropriate time, I intend to move that the bill be reported to the House by 11 February 2013.

This bill is a continuation of the Government’s work to bring greater value, efficiency, and fairness to the student loan scheme. It builds upon the reforms that were contained in the Student Loan Scheme Amendment Act 2012, which focused on encouraging greater personal responsibility and accountability on the part of borrowers towards their repayment obligations. To recap, the changes in that Act included giving the Inland Revenue Department the ability to receive a borrower’s contact person details from StudyLink. The purpose of that change was to help facilitate the Inland Revenue Department’s contact with a borrower who is in default and who has not updated their current address details, so that they can re-enter the repayment system. To further improve the repayment levels of overseas-based borrowers, the 3-year holiday provision was reduced from 3 years to 1 year from 1 April this year. At the time I said that the changes would be a significant step towards improving the overall integrity of the student loan scheme by instilling greater fairness and accountability.

The measures that are proposed in this second Student Loan Scheme Amendment Bill are designed to further consolidate the value of the student loan scheme. As was foreshadowed in Budget 2012, this bill introduces measures to broaden the definition of income that we use to determine the loan amount a borrower has to repay each year. Under the current rules, only income that is taxed at an individual level is captured by the definition of income in the Student Loan Scheme Act. That current definition includes income such as salaries and wages, income-tested benefits, New Zealand superannuation interest or dividends, and personal business profits. However, for borrowers who receive other types of income, such as payments from a trust, the current definition of income may not always accurately reflect their actual earnings or the person’s real financial ability to repay their loan.

So the purpose of the change to the definition of income proposed in this bill is to strengthen the integrity and the transparency of the student loan scheme by ensuring that the student loan repayment obligations of all borrowers are determined on an equitable basis, irrespective of the type of income they earn. Drawing broadly upon the same definition of income that we use for the purposes of Working for Families tax credits and other social policy programmes also means we bring greater consistency to, and establish more transparency across, the whole spectrum of social assistance.

To build on earlier measures to encourage personal responsibility for loan repayments by overseas-based borrowers, this bill introduces measures to introduce an information match with the New Zealand Customs Service to identify at the border borrowers who are in serious default on their loan repayments. One of the biggest problems we face, in fact, in collecting repayments from overseas-based borrowers is access to current contact details and information about this highly mobile group of people. These borrowers can often fail to stay in touch, despite best efforts by the Inland Revenue Department to identify them, to locate them, and just to encourage them to do so. So under the provisions in this bill, the Customs Service will be able to identify serious defaulters when they cross the border, and forward their contact details, which will enable the Inland Revenue Department to get in touch with those borrowers in order to do what we might euphemistically describe as discuss their situation.

They are the main features of this bill. The remaining measures it contains are aimed largely at improving the efficiency of administering the student loan scheme and refining the technical operation of the legislation. Amongst these proposed changes, borrowers who have income other than salaries and wages will be required to make an end-of-year square-up repayment only if the non - salary and wage income is $1,500 or more over the current annual repayment threshold of $19,084. Currently, the $1,500 threshold applies to some borrowers but not to others, depending on the combination of the different types of non - salary and wage income. The change we are proposing will therefore bring greater equity to the scheme by applying the $1,500 threshold to borrowers consistently, while at the same time making it easier for the Inland Revenue Department to administer the scheme overall.

The other technical matters in the bill confirm the current late-payment interest rules, and repeal certain changes that have been rendered obsolete as a result of changes in the Inland Revenue Department’s approach to administering the student loan scheme.

These and other changes in the bill clearly demonstrate the Government’s commitment to the good governance of the student loan scheme as a major Crown asset, and in that respect I draw to the House’s attention the figures that I released during question time this week. The write-off cost of the scheme has reduced from 48c in the dollar to just over 39c in the dollar as a consequence of a range of moves that we have taken over the last few years. What this all means for taxpayers is that they can be best assured that their investment in the future intellectual capital of this country is being used efficiently and responsibly. That, in turn, ensures the long-term sustainability of the scheme.

For the overwhelming number of borrowers, who do take their repayment obligations seriously, it will not have a huge degree of impact, but it will send a very powerful signal to them and to others that we are prepared to take the necessary steps to ensure that the system is transparent and fair for all borrowers, and that the obligation to repay is paramount regardless of the overall circumstances of the individual. So against that backdrop it is with real pleasure that I commend this relatively procedural but important bill to the attention of the House.

GRANT ROBERTSON (Deputy Leader—Labour): The Labour Party will be supporting this bill, the Student Loan Scheme Amendment Bill (No 2), going to the Finance and Expenditure Committee. As the Minister of Revenue has noted, it is a largely technical bill, although I think he has raised a couple of reasonably significant points, which I will turn to shortly. Overall, whatever concerns we might have on this side of the House with the changes the Government has made to the student loan scheme, such as the eligibility change, we do recognise that it is important to constantly update and monitor the way in which the scheme is administered, and to ensure that it is fair. I think that the message I get time and again from parents and from borrowers themselves is that they do want to see fairness across the system, and there are elements of this bill that go to that.

One point to note in terms of our support of the bill’s referral to the select committee is about the issue of the sharing of information. Although we think that the goal is laudable, we do want to hear at the select committee from the Privacy Commissioner and others, to ensure that we get the procedures around that sharing of information right. There certainly is a lot of opportunity to share information between Government agencies, but, clearly, the more that is done, the more risks there are around civil liberties and around the reasons that people give information out. So we want to ensure that the committee is fully briefed by officials and the Privacy Commissioner on the impact of any information sharing under this bill.

The point in the Minister’s speech that I do want to go back to is about the definition of income. I think the Minister has made some important points about the current definition of income, leaving out important parts of what actually constitutes income and what any reasonable person would see it as: the idea that it is the money you live on—the money you gain from various sources. I am particularly interested in the idea of the inclusion of payments from trusts. The challenge I put out to the Minister—in fact, more broadly, to the Government—is to think about this in the broader context of the student support scheme. The biggest complaint that anybody who is involved in looking at the student support scheme gets is around the issue of people who get student allowances but appear to come from backgrounds that are not the low and modest income backgrounds that student allowances are currently targeted towards.

Hon Peter Dunne: That’s been addressed already.

GRANT ROBERTSON: Yes, and this is an issue that we need to constantly keep under surveillance, because, although it is good on one side of the coin to say that we have got a new definition of income for the student loan scheme, we also need to make sure that that is consistent across the allowance scheme.

Hon Peter Dunne: No, it’s already been done.

GRANT ROBERTSON: The Minister says it has already been dealt with, but there are still ongoing concerns, and particularly so in the context of the Government’s misguided and wrong decision to take away allowances from postgraduate students, which I believe to be one of the most backward moves in student support that I have seen in the 20-odd years I have been working in the sector.

The whole point of the student allowance system is to say that there are people from low and modest income backgrounds who need this support to be able to continue their study, and abolishing allowances for postgraduate students, I believe, sets up a massive inequity. The letters that came in to me when that decision was made focused on that, but also on people’s concern that there were still people out there who were ensuring that money went through their parents’ trusts so that their income appeared to be low, and there they were getting allowances. At the same time, the Government has frozen the parental income thresholds for access to allowances, meaning that the inequity grows each day, as these people who actually have much higher sources of income still get the allowances while those whose parents are on more modest incomes do not. So that inequity is something that I think the Government should address. At the moment, it is changing the definition of income here in the loan system, but it should be looking at it in the allowance system as well, to create that fairness there.

As I said, the other parts of this bill are largely about the efficient operation of the system, and what happens to overseas borrowers. I note that Mr Dunne in his introduction did mention the fact that the repayment holiday had been cut from 3 years to 1 year. We did debate that in some detail. Mr Dunne has had a number of positions on this issue. In fact, he has introduced a number of bills on this issue—one to create the repayment holiday, and one to reduce it—in different Governments, so it must be hard for even Mr Dunne to keep up with his positions on this particular matter. But I want to reiterate the Labour Party’s opposition to that change.

In fact, we are not the only ones. Treasury and the Ministry of Education told the Minister that reducing the repayment holiday from 3 years to 1 year would not improve student loan repayments, and in fact was highly likely to increase the debt held by overseas borrowers, and therefore discourage them from returning from overseas. So I do not think the Minister can stand proudly behind that particular change to the loan scheme. He should go back to his original position under the Labour Government and support the repayment holiday, which is a pragmatic initiative to enable people to go and do their OE in the way that many New Zealanders and many members of this House will have done. Reducing it to 1 year puts great limitations on that. So that particular change is one that the Labour Party certainly does not support, and we would encourage Mr Dunne to return to the position he held when he was a Minister supporting the previous Labour Government.

The other changes to the student loan scheme that the Minister alluded to are much more problematic for this side of the House. I want to take a specific example. I think the Minister used the word “fairness”, and I accept that making the scheme more efficient in terms of repayment and obligations on those who are overseas may have an element of fairness to it. What is not fair is taking away from those aged 55 and over the ability to borrow for the living cost component of the loan scheme. We have talked a lot in this House in the last few days about the loss of jobs, and people who lose their jobs, and we have seen hundreds of jobs lost around New Zealand. Here in Wellington, where I am an MP, we have seen a large number of people lose their jobs in the public sector.

One of those people came to visit me in my electorate office recently, a woman aged just over the 55-year age-limit, to say that she had worked out—she was a single woman—that she would probably have somewhere between 10 to 12 years left in the workforce, and that she wanted to retrain. She had been in a particular part of the Public Service, she had realised that there were not going to be a lot of job opportunities for her, and she wanted to retrain, particularly in something around computers and IT. She cannot do that. She is no longer able to get the living cost component. She has no other way of financing her costs. Mr Joyce likes to stand up in the House and say “Well, I’ve abolished allowances for postgrad students, but they can all borrow it from the student loan scheme.”, which is not actually correct, because they cannot get the same amounts of money that they used to. This is an example of somebody who is now unable to retrain.

Members on the other side of the House in the debate on the previous bill we were discussing, the Social Security (Benefit Categories and Work Focus) Amendment Bill, were going on and on about incentives to work and people being work-ready. Well, here is an example of somebody who is desperate not to be on a benefit, who is desperate to be at work, and who has an idea of exactly the programme they would like to do, and because of the changes to the student loan scheme that this Government has made, that woman cannot do that study. That is wrong. Those changes to the student loan scheme are grossly unfair. I call on the Government to revisit and relook at those changes.

It has put in a number of changes. It has reduced eligibility around having to pass more than half of your course. We need to look at what the impact of that is. We have also seen changes around residency requirements. Around 25,000 people have had their eligibility for student loans cut under this Government. I think there are unfair outcomes within that, particularly for those people aged over 55, and I believe the Government should revisit that.

This bill is effectively tinkering with the loan scheme, and it may be useful tinkering with the loan scheme, in large part. But what is actually required when it comes to the issue of student support is for the Government to see student support as part of a package of investing in education, because education is an investment that will help New Zealand’s economy grow and will lead to more social inclusion, and that is something we should be seeing more of. Unfortunately, this Government sees tertiary education as a cost to be cut, not as an investment in our future, and student support is a very important part of making sure that tertiary education works. Rather than seeing it as a cost to be cut, I think the Government should be looking at an overall review of the scheme, to ensure that there is a fair approach and that people get the support that they need.

Abolishing allowances for postgraduate students sends all the wrong messages. Stopping people aged over 55 being able to borrow their living costs from the student loan scheme sends all the wrong messages. We should be supporting people to undertake tertiary education to get the skills they need to contribute to our economy. Although this bill does some useful administrative things, it fails to address the real issues: that we need more people in tertiary education, and we need people from all backgrounds being able to participate.

JONATHAN YOUNG (National—New Plymouth): I am happy to stand and speak to the Student Loan Scheme Amendment Bill (No 2).

Grant Robertson: The sound operator was sending you a message there.

JONATHAN YOUNG: Yes. Fortunately, I do not have to shout as loudly as the member from Palmerston North did in the last bill. [Interruption] Well, the louder he shouted, the less I could hear what was coming through. However, to the previous speaker, Grant Robertson, I say that I think there were a number of reasonable comments there. Probably not all of them would I agree with, particularly around this notional thought that he is putting out that we see tertiary education as an area where cuts can be made. I think that what we are seeing here is some adjustments to a student support scheme that bring some accountability, of course, and some efficiency. We want to ensure that future generations of students have access to such a scheme, so we are ensuring that we will retain or build the value of this scheme for New Zealanders.

It is true, as the Minister of Revenue said in his speech, that the cost of the scheme in the previous administration went to 48c in the dollar, and working to bring the cost of that down to something that is more acceptable has been quite a job over these last few years. Now it is just over 39c in the dollar. What that means is that there is a better return for taxpayers, but what it also means is that this scheme becomes more accessible for more students. We have been very focused on creating accessibility for tertiary students. We firmly believe that with the changes that happen in technology, you cannot just roll out of high school without a qualification and hope to get a high-paid job. More and more people need to have a skill and a qualification that are going to enable them to earn a high-paid job. Of course, this is all a work in progress.

I want to just touch on some comments regarding the efficiency, and the building of the efficiency, of the tertiary sector. Results from 2011 show that the Government’s continued focus on performance in the tertiary sector is paying dividends. Tertiary education, skills, and employment Minister Steven Joyce raised this in a press release just recently, on 6 September. He made the comment, and I am happy to quote this, that “Course completion rates have risen from 77 percent in 2009 to 82 percent in 2011, with qualification rates over the same period increasing from 62 percent to 71 percent.” So whilst we are seeing tertiary education becoming more accessible to students, what we are seeing also is that there is a lift in completion rates and a lift in qualification rates.

Some of the adjustments that we have made to the student loan scheme are part of that motivation. If somebody is going to go into a tertiary training situation and continue to receive support from the taxpayer, the requirement to get a 50 percent pass rate over that 2-year period is bringing accountability. It is not just the next experience after high school. It is not just the intermediate thing between high school and possibly employment. It is actually requiring people to be stewards of the funds that the taxpayer provides, and it is ensuring that the continuity of those funds is matched with hard work in that tertiary training, and with a qualification that in the end is going to give them a marketable qualification, so at the end of it a student does not come away with indebtedness that does not give, at the same time, an opportunity to gain employment.

I believe that these measures that we are putting in place are sound. I think that they are expected. I think in difficult financial times the taxpayer wants to see not only accountability but fiscal responsibility from Government. So I do commend the work that has gone into this bill. As the previous speaker said, it is a technical bill. I think the issues around data matching are important, I think that his comments around that were sensible, and I think that what we are going to see is some progress made to create a very robust system for the future for future generations of learners in our country. We know that we compete internationally and that the human capital of New Zealanders is very much tied to the education, qualifications, and skill base that we have here as a nation. So I am very happy to commend this bill.

Dr DAVID CLARK (Labour—Dunedin North): Labour will support the Student Loan Scheme Amendment Bill (No 2) because it makes some sensible, small steps towards the fair collection of student loans. We will support it going to the Finance and Expenditure Committee so that we can examine some of the issues that we think need to be picked through more closely.

Firstly, I want to relate some comments to an issue raised by Mr Young about the way in which indebtedness blocks opportunities for employment. I take issue, perhaps, with that generality, because the student loan collection system, effectively, works as a tax. We know that the tax rate going up is going to mean that those students who are new out of their studies will have fewer resources at their disposal, and that goes to really simple things like buying appropriate clothing for the job, be it a suit and tie—as in this occupation—or some gear for a job that involves a bit more physical labour, and also, of course, having the ability to photocopy curricula vitae, or to put gas in the tank so as to get to interviews. It is not quite as simple, I think, as Mr Young depicts it in that regard.

The tertiary sector, as we know, is very important for social good in our society. It is the critic and conscience of society. Those who study take on a responsibility, I believe, to contribute back to society. That is part of why we as a country choose to contribute towards the costs of study through the student loan and student allowance schemes. We believe that it is the right thing to do, we believe that it is the fair thing to do, and we expect our citizens to give back of their best to the future of this country. I think that is a fair expectation. “Fairness” is a very important term for the Labour Party in this respect. The word “fairness” appears often in the explanation for this material and in the publicity around the changes that are proposed. I guess I want to see the changes that this Government is looking at go a bit more broadly, so that they actually do begin to address the issue of fairness in greater depth.

I contend that this bill is, in fact, by and large, tinkering. Because most of the tinkering is positive tinkering, Labour will be supporting it going to a select committee. None the less, it does nothing to address the big issues in the sector. We know that access is dropping. Under this Government, 25,000 people have lost eligibility for student support—25,000 people—in a situation where unemployment has been rising. We know that there are nearly 50,000 more people unemployed under this Government. We know that 50,000 people each year are leaving for Australia. We know that opportunities here are limited in a way that they should not be, if the Government had more leadership. But we also know that it would be sensible in these times to make accessibility to tertiary studies a priority, particularly for our younger folk. We see here that this is becoming less and less the case under this Government, as the thresholds around student support become more stringent. That means that the wealthy, of course, can afford to study, but those who are from more modest backgrounds, of modest means, can no longer access courses in tertiary studies to better themselves, to become future taxpayers and contributors, in the way that they once could.

Mr Speaker, I am trying to restrain myself, because I can hear my own echo. The sound system today is very, very loud, but it is keeping me quiet, so you will be pleased to hear that.

The other issues, of course, that are not being addressed through this legislation, or elsewhere, by this Government include the issue of capital debt—you know, those other things that would help our economy grow, such as a pro-growth tax policy and research and development tax credits, which, of course, require not only the right incentives for business but also strong graduates. We need our best and brightest to be able to access our tertiary system, not just those who can afford it. We need to make sure our education system is accessible to everybody, and particularly to those who are high achievers, who could contribute more if they had access to our tertiary system.

So we need to review the adequacy of our student support. There is no doubt about that. If we are going to demand fairness in repayment and fairness in contribution afterwards—and I think we should, as a society—if we are going to demand that people give of their best to our country afterwards and repay their obligations, we have an obligation also to make sure that the system is fair to access. That goes to the heart of the adequacy of student support.

If we look at it over time, we can see that, as a percentage of the average wage, student support under Governments of all stripes has gone down over the years. This is something that does need to be addressed, for the good of students everywhere and for the good of our country in the long term. Because, of course, when our best and brightest do not study, they do not end up contributing perhaps as much as they might. Those who wish to study but cannot, who are deprived of the opportunity through affordability, cannot give of their best, and that costs us all. It costs them personally, it costs their families, and it costs the wider community that they are a part of, but it also means that they fail to contribute the maximum that they could have contributed to our gross domestic product, to our economy as a whole, and to the pot of tax that we all have the privilege, in this Parliament, of choosing to spend in the public good in terms of other education and health benefits.

So it is short-sighted when one sees tertiary education as a cost only. We need to see tertiary education as an investment. I am afraid that this Government seems to know the cost of everything and the value of nothing. That is a shame, particularly in this respect, when we know that the returns on a tertiary degree, for example, make it amongst the best investments anybody can make in his or her own life. The returns are phenomenal—the student loan data set tells us that—on an education. So for those who have the abilities and the desire, we need to make sure that an education is accessible.

To the issue of fairness in collecting, which is directly addressed in this bill, Labour does support the changes that the Government is proposing in terms of making it a fairer system. We support in principle these changes, but we would like to hear more advice from officials, and particularly from the Privacy Commissioner, as to the impact of the Customs Service sharing detailed and personal information with the Inland Revenue Department, because this is a privacy issue. Assuming that that can all be done in an appropriate fashion, then we might be likely to support it. But if concerns are raised, as there were, indeed, around the collection of data about a nominated person introduced in another piece of legislation, which went through as part of the Budget, then we would want to make sure that those concerns were covered off in an adequate way so that the legislation was as good as it could be.

We in Labour want to make sure that every borrower has to make sure that they pay back what they owe for the opportunity they have been given to study. That principle of fairness should apply in terms of the bill’s measure to expand the definition of income to include business profits and income from trusts. Labour is happy to see that matter being addressed. Those who receive income from a company, a trust, a superannuation scheme, or another source should be treated in the same way as those who earn a weekly wage. This is a small loophole that Labour is very happy to see closed. Broadening the definition of income will save the Crown, I understand, approximately $7 million over the next 5 years, according to Treasury.

We commend these measures to make sure that the system is fair and sustainable. We encourage the Government strongly to look at making sure that all New Zealanders can access tertiary education, not just those who are already privileged. Thank you.

HOLLY WALKER (Green): For a long time now the Green Party has spoken on bills like this Student Loan Scheme Amendment Bill (No 2), to articulate what are fairly fundamental concerns about the student loan scheme per se. Those concerns relate to its fairness, to the barriers in access that it creates to tertiary education, to the ballooning problem of the $12 billion—and growing—of student debt that we face as a nation, and to the impact that that debt will have on future generations, including my own generation, in terms of our ability to have a strong financial start in life, to aspire to homeownership, and to provide for our families. Indeed, we have also long articulated fundamental concerns about what the student loan scheme does to the desirability of New Zealand as a place to live for young people, and as a place to return to for people who have been living overseas. I am sorry to say that this bill, although it amends the student loan scheme, addresses none of these more fundamental concerns. But, worse than that, it may actually worsen the current situation in respect of some of these concerns.

I want to focus my comments in this first reading debate on two aspects in particular. The first is the fact that this bill is a missed opportunity in that although it does align the definitions of income for Working for Families and the student loan scheme, it actually misses the opportunity to align those in a way that would be meaningful and would actually increase fairness in terms of access to both of those schemes. The second thing I want to focus on is the greater risk, I think, that this bill introduces, in terms of data matching between the Customs Service and the Inland Revenue Department, of disincentivising young New Zealanders to return to live here and to contribute.

First of all, let us look at the definition of income, because that is one of the more significant changes that this bill makes: to align the definition of income for the purposes of the student loan scheme with the definition that is used in relation to Working for Families. Although it does that, we in the Green Party think that there is still a fundamental problem that remains unaddressed by this bill in terms of the definitions of income that are used. This was highlighted earlier this year when the Government introduced changes to increase the student loan repayment rate. What that highlighted was that because Working for Families entitlements are calculated on net income before student loan repayments are taken into account or deducted, increasing the student loan repayment rate, as was done in the Budget, has a real detrimental effect on many families who are working hard to make ends meet, and on the weekly budgets of those families, because, effectively, it is a tax increase and it is not taken into account when their Working for Families entitlements are calculated. There was no corresponding increase in Working for Families entitlements, and the net result is bad for the weekly budget and the back pockets of families with young children. So in seeking to align these income definitions this problem needs to be addressed, and although the bill does align the definitions it does not address the fundamental problem that Working for Families entitlements are calculated before student loan repayment rates are taken into account, and that just entrenches and compounds the negative changes already made in the Budget.

Another way that the bill entrenches and compounds negative changes that have already been made, as I have outlined, is in its provisions to allow greater information-sharing between the Customs Service and the Inland Revenue Department in an effort to crack down on overseas borrowers who may have defaulted on their loans. Although we have no problem per se with measures designed to encourage overseas borrowers to keep up with their student loan repayments, we cannot support punitive measures to track them down at the border unless we have corresponding enabling provisions that recognise the importance of spending time overseas, the important experience and skills that spending such time overseas can give to an individual and provide that individual, and that potential gain to New Zealand when the individual returns from their OE. Those gains are well documented, and what we do not want to do is discourage people from returning when they have spent a period of time living overseas. That is why the repayment holiday, when it was 3 years, was such a good idea, because it allowed for individuals to spend time overseas for a period in which they were not required to meet their student loan repayment obligations, and therefore were not racking up penalties and fines that might put them off returning to New Zealand.

We thought 3 years was a good period of time to have a repayment holiday, because it recognises the reality of how long most young New Zealanders spend overseas on their OE. We thought it was a realistic, reasonable, and appropriate time frame. Now that it has been reduced to just 1 year we have real concerns about the provisions in this bill to allow greater information-sharing between the Customs Service and the Inland Revenue Department, because we think that the change that has already been made to the repayment holiday means that there will effectively be a greater number of people who, through no particular fault of their own—because it is very difficult to meet your student loan repayment obligations while you are overseas—will be defaulting on their loans. And introducing this information-sharing provision means there is a much greater chance of them being pinged with huge penalties and extra debt when they return to New Zealand.

The cumulative impact of this policy, with a shortened repayment holiday, and other policies that have been introduced incrementally by this Government to crack down on overseas borrowers has, we feel, put at real risk the decision that many New Zealanders who are living overseas have to make at some point about whether they return or not. In the Green Party we want them to return, and I think no one could disagree that that should be a major priority for policy design at a time when we have record numbers of New Zealanders moving overseas every week. We want to make sure that those people come back, and we need to design our student loan policy to ensure that we are not creating disincentives for them to do so. We are concerned about the cumulative impact of this bill with other changes, and that the net effect of those changes will be to put talented young people off returning to New Zealand and making a contribution here.

If the Green Party was making amendments to the student loan scheme, I would like to give you an idea of what a better, improved student loan scheme might look like. Bearing in mind that we continue to have fundamental concerns about the existence of this scheme at all, there are ways that it could be improved. First of all, we need to guarantee that it remains interest-free, and that needs to be guaranteed for future borrowers and for borrowers who sign up to loan contracts now. That interest-free status of that loan needs to be guaranteed into the future.

Secondly, it needs to be freely accessible to all, including students who are over the age of 55. We heard, I think, a particularly upsetting example from Grant Robertson earlier in the debate of exactly how punitive that policy to remove access to student loans for students over 55 is in the context of an economy where we are seeing greater job losses and reduced opportunities for people to upskill and retrain. What kind of life do we condemn people to if we do not allow them opportunity to upskill and retrain at a time when they have lost their job at a mid-point in their career?

Thirdly, there would be a reduced need to borrow for living costs, because student allowances would be more widely available, and they would not be tested against parental income. For financially independent adults who are well into their 20s and often have other adult obligations, including children, it is absurd to test their eligibility for a student allowance against their parents’ income. Student allowances also would need to be reinstated for postgraduate students. We also heard from Grant Robertson earlier about the punitive impact that that has had on postgraduate students, and the fact that they now have to borrow to meet their living costs and cannot even borrow the amount that they were eligible for before, when they could receive a student allowance.

Fourthly, when the time comes for graduates to repay their loan, there would be a progressive repayment scheme, so that rather than raising the repayment rate across the board, as the Government did in the Budget earlier this year, graduates’ repayment obligations would be based on their ability to pay. It is absurd at the moment that when a graduate is earning less than the full-time equivalent of a minimum wage, they have to pay 12 percent of their income straight back on to their student loan. Student loan repayment rates should be progressive, and they should be based on the individual’s ability to pay.

Finally, as I mentioned earlier in my contribution, income definition should be aligned, not in the way that this bill does, but so that the impact of the student loan repayment does not negatively impact on the budgets of young families. Until we see a student loan amendment bill that makes these kinds of amendments, the Green Party will oppose the Government’s punitive tinkering with the student loan scheme and will oppose this bill.

KANWALJIT SINGH BAKSHI (National): Thank you for the opportunity to speak on the Student Loan Scheme Amendment Bill (No 2). As a country we need to strike the balance between educating our people and ensuring that the student loan scheme remains sustainable. If we do not do so it is fair to claim that the day when the Government will need to pull the plug on interest-free loans will not be far away.

With the cost of education increasing by the day it is only prudent to act now. We in New Zealand need to ensure, to fund our future development, that we are reducing the need to borrow. Towards this end this National-led Government is introducing changes to the way student loans are administered. We are working closely with the Inland Revenue Department and the New Zealand Customs Service towards establishing a system that can identify borrowers whose student loan account is in serious default by ensuring the person provides the details of a contact person whom the Inland Revenue Department can make contact with to establish their repayment obligation. This will ensure that all those who have earned their skills and qualifications with the support of New Zealand taxpayers and are now working in professional positions on their OE meet their obligation of repayment to the New Zealand taxpayers.

The Government is also working towards broadening the definition of income for student loan repayment purposes. The model we intend to use is one currently being used for the Working for Families scheme.

The changes that the National-led Government has initiated since coming back have resulted in a reduction of the cost to the Government from 48c in the dollar to 39c in the dollar. Our goal was to reach 40c in the dollar; being able to surpass this is a very significant achievement. This is a clear demonstration of how the National-led Government is delivering on the priorities of managing our national finances prudently. Having more money to invest in our education system clearly means that the probability of New Zealand having a skilled workforce in the future increases significantly.

By introducing this bill, we want to focus on achievement as well. As with any other investment, the Government wants to ensure that our citizens get value for the money that has been invested. To address this, we have introduced performance criteria for the students. This Government is focused on providing those students who really need it with the money, so that they can succeed with their studies, and, once they become an earning member of society, are willing to repay what they have borrowed. In realising our goals, we want our citizens to understand the meaning of personal responsibility and accountability. I support this bill.

TRACEY MARTIN (NZ First): Kia ora, Mr Speaker. I stand on behalf of New Zealand First to support the Student Loan Scheme Amendment Bill (No 2). I am pleased to see the bill back. I think it provides us with some opportunities.

First of all, just to address what the bill deals with right now, we are pleased to see that it broadens the definition of income, and that it aligns the definition of income with the definition used for similar entitlements, such as the Working for Families tax credit. New Zealand First believes that the more things are equal and understandable, the easier it is for the taxpayers to actually participate inside the system. They can make sure that they are filling out their tax returns correctly, or that they know what they have access to. The more variations to that, the more difficult it is for our citizens to participate fully. So we like the fact that the definition is being expanded, and that that will make it easier for our citizens.

We are also pleased to see that one of the objectives is to ensure that the aligning of those understandings or definitions should help make sure that when students are pursued for repayments to their loan, we have a really clear understanding of their ability to repay. We certainly do not want to place ourselves or our citizens in a situation where they are pursued by the Inland Revenue Department when they are not truly, in reality, in a position to repay their student loan. We are hopeful that this will avoid that situation.

The information matching between the New Zealand Customs Service and the Inland Revenue Department—identity matching—is always a little iffy. One always has to be careful about it, particularly when a State is doing it. However, people have responsibilities to pay their debts, particularly when those debts are to the country that has supported them. Those obligations need to be met. They need to be met before people take a holiday or before they decide that they are going to start a new life somewhere else. So although we believe that the Privacy Commissioner needs to keep an eye on all this sort of matching that goes on around the information of our citizens, we are supportive of that information matching inside this bill.

I want to pick up on a couple of things, however. There are some practical amendments in there. Clauses 7, 18, and 19 seem like particularly practical solutions to us. New Zealanders who are returning from being an overseas-based borrower to New Zealand—and it is their intention to come back to build a life here now—can contact the Inland Revenue Department. They can tell it that they are going to be staying—they have bought a house, they have got married, they are going to be staying, and they are going to meet the 183-day qualifying period. There is now an opportunity there for the Inland Revenue Department to assess their repayment obligations earlier, and to have a look at that criteria to make sure that when that citizen is returning to New Zealand and committing themselves to the country, that process can be shortened. We think that that is a very practical and reasonable outcome.

Clause 23 amends section 154, which enables borrowers with unpaid amounts to enter into an arrangement with the commissioner to pay by instalments. The amendment enables a borrower to also enter into a pre-emptive arrangement in relation to an amount where the amount is not yet due but the borrower knows that he or she will not be able to meet the repayment obligation in full and on time. It is a very practical, very sensible clause. I would encourage, once this bill goes through, any citizen who knows they have just been made redundant, before they get into strife, to make contact in this sort of a way with the commissioner and say: “I can see that I’m going to run into a problem. Can I please work out a solution?”. Again, it is a very, very, very sensible clause being put in there.

There are a couple of things that we think this opens the door for. I am hopeful that New Zealand First can have some influence, perhaps, to make some further amendments to what are fairly technical amendments to this bill. I want to pick up and make sure that we understand that there is a constant conversation inside this House around tertiary education. To me—and perhaps my understanding is wrong, and I apologise for that if I am taking it the wrong way—the conversations always seem, when we come to student loans and student debt, to be around university students. It is as if there are no other students in New Zealand—no trade school students, no Unitec students, no polytech students, no bakers, no builders, no labourers. It is as if there are none of the other people who are also participating in this scheme. Sometimes it is a little bit disturbing when we talk about particularly supporting our high achievers—just our high achievers. I would like to see conversations like this extend so that their success is valued and acknowledged, so that those students who go into institutions like Unitec, who go into polytechs, who become our bakers and our builders, who have gained and require student allowances, and have student loans, are also recognised in these conversations. It is not about just university students.

I think the other thing to mention is to pick up on what my Labour colleague mentioned, which was in respect of the access for those 55-plus to some of these allowances. There is a term that we use a lot inside of educational literature, and it is “lifelong learners”. I do not see how we can stand on and say that we want to have a community of lifelong learners if we are going to start shutting doors on people—55-plus is not old any more. I am almost 50 myself and I can tell you that it is not old any more. I would like to think that if I require a second career at 55, I will be able to get a student allowance and actually be able to participate in some lifelong learning so that I can continue to support my family, perhaps in some other environment.

We also talk about fairness. People talk about fairness. I raised this when the amendment bill came into the House the first time round. There is no fairness when New Zealand - based borrowers cannot access a repayment holiday. Whether it be 1 year or 3 years, there is no fairness there. New Zealand students who choose to go overseas have access to something that a person who stays here in New Zealand does not have access to. At the time, my example was that of a young couple where, let us say, they both have a student loan and they have their first child. They are still working but their financial circumstances have changed. They cannot access a 1-year repayment holiday while they readjust their expenses. I would like to think that while this bill transitions through the House, perhaps there is an opportunity for us to have a think about that and actually make that fair—make that fair for all New Zealand students who access student loans.

The other part that I mentioned the first time the bill came into this House was around the repayment holiday being attached to the loan, not the person. Again, the circumstances I used related to that same young woman in the first instance, with the young family. She had a student loan. She took a repayment holiday. It is attached to her, not to the loan. She took that holiday and then paid off the loan over a period of time. She is now in her 40s. She wants to go back to university. She wants to retrain. She gets another student loan. She is back out in the workforce. Her marriage breaks up. She requires some time, once again in her lifetime, to reassess her financial circumstances. She has already proven to us, the State, that she is a good risk. She has already paid off one loan. Why can the repayment holiday not be attached to the loan so that this lady in her circumstances could take another repayment holiday as required inside those circumstances? Generally, we are very happy to support this bill, but I will be looking to try to have some influence over those sorts of issues. Thank you.

MELISSA LEE (National): It is a great pleasure to rise to support the Student Loan Scheme Amendment Bill (No 2). I am going to make only a very, very short contribution, saying that one of this Government’s four priorities for this term is building a more competitive and productive economy. It is only by lifting our economic performance that we can create jobs, boost incomes, improve living standards, and provide a world-class Public Service, which all Kiwi families actually deserve.

Our interest-free student loan scheme is one of the most generous in the world, and we want to keep it that way. When I went to university, I never had this. I was an international student who actually paid through my nose in Australia, and then I moved to New Zealand. How I wish, and I am sure that my parents wish, that we had lived in New Zealand and had the benefit of the student loan scheme. We certainly did not, but the bill is a great one, and I commend it to the House.

Dr MEGAN WOODS (Labour—Wigram): I am happy to take a call on the Student Loan Scheme Amendment Bill (No 2) and talk about what Labour thinks about this bill and where this fits in with the vision of how we see New Zealand going. It is disappointing to see members opposite take such short calls on something that is actually so fundamental to how we will progress as a country. Unless we understand how tertiary education and its provision interlace with our economic future, we stand no chance.

Labour is supporting these changes to go to the Finance and Expenditure Committee, as these changes should make the repayment of student loans fairer. Although we are supportive in principle of these changes, we want to have the opportunity at the select committee to hear the advice of officials and, particularly, the Privacy Commissioner as to the impact of the Customs Service sharing contact details and personal information on loan borrowers with the Inland Revenue Department. Although it is useful for us to be able to think about how we link all these things together, there are real concerns that Labour members do want to hear advice on from the experts at this select committee consideration.

Student loan repayments are a huge burden on hundreds of thousands of Kiwis, myself included. I have a very large student loan, having had 10 years at the University of Canterbury, with interest accruing on my loan during this time. For those struggling to pay off student debt while also paying their bills and saving for a house, it is very, very difficult. It is very difficult to hear of overseas borrowers who are making a huge amount of money and making no attempt to pay these loans back. That is why we do support some of the equity issues that are raised in these proposals. There are many people who are struggling to buy a house and to pay their bills while also paying down their debt. We do expect every borrower to make an equal effort to pay back their student loan, whether they are overseas or in New Zealand.

One of the things that we want to see is a principle of fairness applying to the bill, and we do welcome this in the interest of fairness. We do welcome the measures that do not just look at income in the form of wages but look at an expanded form of income and look at it in terms of business profits and incomes from trusts as well. I know that when I was at university taking out my loan, there were many of my peers who received the student allowance, despite their parents earning far more than mine did, because they were receiving that money as profits or as income from a trust. Also there is a similar thing for those who receive their income from superannuation. So this is a loophole that we do support seeing closed.

But one of the things that we do want to raise in this is National’s general attitude to student support. Since Steven Joyce took the reins as Minister for Tertiary Education 2 years ago, National has made a series of cuts to student support in an effort—to use his words—to dampen demand for tertiary education. This is where I started my speech. Labour does not see dampening demand for tertiary education as a positive thing. We see tertiary education, whether that be at a university or at a polytech, as something that is crucial for New Zealand’s future and something that we should be encouraging. So when the Minister talks of dampening demand, we have real concerns and real fears. In many ways some of the rhetoric of this is in this bill, and it is very much discussed in the regulatory impact statement, which sits alongside this bill.

If we take some examples of where the Minister is dampening the demand for tertiary education, and look at an example that I bring up often in this House, it is the $42 million of money that was allocated to have extra trade training in New Zealand, following the Canterbury earthquakes. But this money has not been used, because the Minister thinks there is not demand. There is $34 million sitting there earmarked for further tertiary education in this country, which the Government does not think should be used. We on this side of the House think that that should be used, and we do not like the dampening in demand there.

We also have concerns about people who have been shut out of the borrowing scheme. Other members who have taken calls on this bill have talked about their concerns about those over 55, new migrants, pilot trainees, and part-time students not being able to access the loan scheme. There are many reasons why we should be supporting those over 55 to continue their education and to retrain. We are in an economy at the moment where many people in this age group are losing their jobs and want the chance to retrain. They may not have the money sitting in the bank to be able to go and pay for this training, and we do not think that it is fair that they have been excluded from the student loan scheme.

The changes made in Budgets 2010 and 2011 have seen 25,000 people lose access to the student loan scheme. This meant that 25,000 of our people cannot afford to study any more. We do not see this particularly redressed in this bill. We actually want to see more people having access to tertiary education. Labour has a proud tradition of the democratisation of education. It was Peter Fraser’s huge vision that we make not only secondary but tertiary education—following World War II—something that is accessible to far more New Zealanders.

So although some of these changes have been made—we are not saying that every change that this Government has made in terms of the funding that is available for the tertiary education system is unreasonable. But what has been especially unreasonable by this Government is the retrospective application of many of these changes. This was particularly so in the case of the 50 percent course pass rate requirement. For people who were already enrolled, who were already borrowing, to have that put on them retrospectively was a very difficult set of circumstances for them. The Ministry of Education’s answers to financial review questions show that almost 800 people lost access to their student loan, based on these retrospective course result requirements. This is a very large number of people to suddenly lose access to the loan scheme. Losing access to the loan scheme means you lose access to your ability to continue your studies—not something that we are particularly fond of. We already have 84,000 young New Zealanders who are not in any form of education, employment, or training. We do not see putting in place rule changes that actually increase that category as a particularly positive thing.

This year’s Budget hiked up the student loan repayment rate by 20 percent. This was very difficult for many new graduates. For people leaving university, getting their first or their second job, and still not earning a high income but nevertheless earning over the threshold, to be faced with a 20 percent hike in their student loan repayments is a pretty big thing. I have a student loan myself and faced that increase in cost. That is something that I was able to bear, but someone on a much lower income would not have been able to.

But the most mind-boggling part of the changes that were introduced is postgraduate students losing their right to student allowances. This is one of the things that is discussed in the regulatory impact statement. It has gone through at what level it is that we should be targeting education to the early years. If we truly want to be an innovation-led economy, then actually we need to be encouraging postgraduate research in this country. The changes that were introduced in this year’s Budget have done absolutely nothing to encourage that. We even had the regulatory impact statement on the bill identifying that actually it is not enough to be able to say that the Government’s retort to this has been: “They’re not going to get the allowance; they can go and use the loan scheme.” Well, for many postgraduate students who have dependent children or other dependents in their lives the student loan is not enough. It actually was the combination of the allowance with the supplement of the loan that let them continue their study. The regulatory impact statement identifies that the loan scheme was important to provide additional support for students with higher financial needs—for example, those with dependents. So this is something that is known to the Government—that it was going to cut out a whole lot of people from doing postgraduate study. We are still waiting for some kind of explanation about why there is a Government that thinks that postgraduate research is not something we need. Labour looks forward to having some of our questions answered at the select committee.

JAMI-LEE ROSS (National—Botany): This bill, the Student Loan Scheme Amendment Bill (No 2), is all about continuing to ensure the efficiency and affordability of the student loan scheme. It is a very big scheme—roughly $12 billion, with 200,000 borrowers every year. Sustainability is the key, and that is what this bill helps to achieve.

Let me give the House a couple of numbers, because we keep hearing a lot tonight from the Opposition about student support services: 40 percent and 18 percent. Eighteen percent is the OECD average of funds from the tertiary education budget going into student support services. This country spends 40 percent of its tertiary education budget in student support services. So I just wish to reject the points being made across the other side of the House that we do not have enough funding going into student support services.

The efficiency of the scheme relies on ensuring that borrowers are paying back their funds. In 2010 we had an important pilot, which saw overseas borrowers targeted and sought out to get funds recovered from them. We saw $32 million coming back in repayments from overseas borrowers. This bill helps to ensure that the overseas borrowers are still looked at carefully, and that we have good data-matching between the Customs Service and the Inland Revenue Department to ensure that overseas borrowers are fronting up to their obligations as well. With New Zealand based borrowers, it is easier for the Inland Revenue Department to ensure that they are repaying in the manner that they should. Overseas borrowers have had some issues. It has been more difficult to match the information. It has been more difficult to ensure they are repaying their loan, but this bill helps in that area.

There are also some smaller administrative changes that are being made, but they are also important, and should be supported by the House. Some further changes are made, and they line up with the Government’s Budget changes that we made, announced, and enacted, indeed, several months ago. I commend the bill to the House.

Mr DEPUTY SPEAKER: The next call is a split call, with two 5-minute calls. The first is to Louisa Wall.

LOUISA WALL (Labour—Manurewa): Kia ora. It is my pleasure to speak in the first reading of the Student Loan Scheme Amendment Bill (No 2) in the name of the Hon Peter Dunne. Labour supports this bill going to the Finance and Expenditure Committee.

When I was asked to speak about this bill, I thought about my own situation. I had a student loan. My parents could not afford to pay for me to go to university. I also had a student allowance. I recognise that the scheme, which started in 1992—I borrowed in 1998—was for people like me, people who came from communities where the parents of my generation did not go to university. I am a bit of an anomaly in my community because I have gone there. What I entered into with the Government was a social contract. That social contract was about my increasing the education that I had so that I could be a better citizen of our country.

I think the intention of this bill is good. Why should we differentiate between borrowers, or people who get loans, who live in New Zealand versus those who live overseas? In fact, the intention of this bill is really good. Of the approximate total of 465,000 students in our tertiary education system, half are borrowers, and of that half, approximately 91,000 live overseas. The biggest issue that we have is that those 91,000 students owe $2.3 billion. In fact, 41 percent of them are not paying towards their student loan. So we do have a problem. This bill is trying to rectify that.

But what I would like to have, actually, is a profile of who these people are. Have these people who no longer live in New Zealand completed their tertiary studies? If they have, obviously they are going to be in a much better position, because we know that through tertiary education you can earn a lot more money. I am really interested in the types of vocations they are engaged in. I am really interested in the gender difference, because what we do know is that 5 years post study there is an 18 percent difference between what men earn and what women earn. I also want to pick up on some of the concerns of my Green colleague Holly Walker. What is the future for these 91,000 New Zealanders who are not living in New Zealand? Do we want them to come back to New Zealand and be productive citizens here? So I think some investigation does need to be made, a case by case analysis of how much people borrowed, whenever they borrowed it, and, in fact, how much they owe now. One of the case studies I have read is about a gentleman who borrowed $7,000, and he now owes $157,000. He is not going to come back to New Zealand. He is going to stay in Australia, where he currently is. I do think he should pay something back, but what should that amount be? Should it be $157,000, or should he pay back what he borrowed—you know, the $7,000 that he borrowed in the first place?

What this bill will do is broaden the definition of income to include income from trust companies, superannuation schemes, etc. That is fair, because we should be including that income for all people. Secondly, we will look at information sharing between the Customs Service and the Inland Revenue Department. Again, if we want to find out who these 91,000 people are, then we will have to actually implement a scheme like that.

I want to reinforce the position that we have on this side of the House. We will support the bill going to the select committee, but we do that with the intention of having some advice from the Privacy Commissioner. We think that this information sharing does open up privacy issues, so, obviously, we want to hear from the expert in this area. Fundamentally, the point I want to make again is that the investment that the Government makes in all New Zealand citizens is a valuable one, and we should be treating New Zealanders who live in New Zealand and New Zealanders who choose to live in other countries the same within the context of ensuring that they pay back their loans. Thank you.

GARETH HUGHES (Green): Kia ora, Mr Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to take a call on this bill, the Student Loan Scheme Amendment Bill (No 2). Talk about fiddling while Rome burns. Talk about the punitive, tinkering approach we see from this Government, which is epitomised in this bill. At a time when we are facing huge economic challenges, when huge numbers of Kiwis are going across the Ditch and around the world to get a brighter future, presumably, offshore, when the student loan debt is topping $12 billion, and when we know that New Zealanders are starting their families later and they are not getting into homes—there are a huge number of problems—this Government’s solution is to tinker around the edges.

I want to take a quick call on this bill, but the Green Party will not be supporting it. It is tinkering while Rome burns, while that $12 billion student loan millstone is wrapped round more than 600,000 Kiwis’ necks.

Dr Cam Calder: Pay it all back.

GARETH HUGHES: I have paid mine back.

Hon Chris Tremain: And now you’re saying you wouldn’t tinker with it?

GARETH HUGHES: We would tinker with it; we would improve it. What we would actually do is we would focus on carrots. We would focus on incentives. This Government’s approach is all about sticks. Where are the carrots? The context of this bill—and there are some common-sense initiatives in it, like giving the Commissioner of Inland Revenue discretion on whether a debt is greater than $20 and whether that should be gotten back by the Inland Revenue Department. There is common-sense stuff like that, but when you put it in the context of all the changes this Government has made around education, what we know is that what it has done is make it less affordable and less accessible, and, in many cases, it has literally closed the door to thousands of students who want to study in New Zealand.

Let us just run through the list of what this Government has done—a bit of context for where this Student Loan Scheme Amendment Bill (No 2) comes from. What we have seen is limited access for postgraduate students. We have seen that the Government has blocked—blocked entirely—access for students over 55 years old to student loans. The Government has increased the repayment rate. It has frozen the parental threshold rate. It has shortened the loan repayment holiday for those Kiwis who do go overseas, presumably because we do not want them to come back. We have seen new fees introduced on the student loan scheme. The problem is, of course, that the Government wants to introduce interest, but it is so unpopular amongst New Zealanders that it could not do it, so it has had to introduce interest by stealth. There have been a whole bunch of new fees. The Government has egregiously, as Megan Woods pointed out, retrospectively applied pass rate changes—retrospectively, of course—again shutting the door to hundreds of students who wanted to study. We are seeing this Government, not students, decide how students should organise themselves, with the voluntary student membership bill.

I want to touch now on the point made by Jami-Lee Ross, who was playing with the figures—talk about spin; spin like Shane Warne—when he was talking about the percentage of money spent by the Government on student support services. It is not fair to describe it like that. We actually spend more than other countries, if you use that measurement, because we pay for their fees through the student loan scheme. If you compare apples with apples, what we know is that we actually spend $3,000 less per student than the OECD average. So it is unfair—and I do not believe that it is true—to be comparing those figures in that way, and when you do compare apples with apples we are spending less.

When you add it all up, and when you see this tinkering on the fringes but the whole range of very negative changes this Government has introduced, which has made it less affordable, less accessible, and, in many cases, downright impossible to be a student, you have got to question the Government’s motivation. We want New Zealanders, apparently, to have a brighter future, we want to keep our Kiwis in New Zealand, and we want a high-value, high-wage, innovative economy. But instead what this Government wants to do is send our Kiwis overseas. It is all sticks and no carrots. It does not make sense. It is not the high-wage, high-value economy we want to see, focusing on education.

I guess the big difference is that those on the Government benches see education simply as a cost. On this side of the House we see education as an investment—we see it as an investment—and that is why we would put more carrots in place, not this list of changes that make it less affordable, less accessible, and downright impossible to be a student in New Zealand. It is unfair, and that is why we will not be voting for this bill this evening. Kia ora.

MICHAEL WOODHOUSE (National): I am pleased to take the last call on the Student Loan Scheme Amendment Bill (No 2). For probably the last 3½ years as a member of Parliament in Dunedin North, not for Dunedin North, I say that the one prevailing theme in feedback from students has been this in respect of student allowances: they are available to the very poor and the very rich, and that is not fair. I am very pleased that this is the third bill in a tranche of three pieces of legislation that is going to undo some of the distortions that are in our taxation system. We were prided, in the 1990, as one of the least distortionary tax systems in the world. Thanks to things like the unintended consequences of loss attributing qualifying companies, trusts, and a punitive top tax rate we became very distorted, such that income-planning strategies that had the impact of reducing the primary earner’s tax obligations also had the impact of qualifying them for Working for Families and student allowances.

I find it difficult to accept from members like Grant Robertson and Dr David Clark, who is in fact, I believe, Labour’s spokesperson on revenue, the statement that this bill is just tinkering with the loan scheme in sensible, small steps, and then to hear them talk about fairness, because this bill is about restoring fairness to the student loan scheme in the same way that we have made the changes to student allowances through the No. 1 bill so that those who are most in need of a student allowance get it and those who are most able to repay a student loan get it. There is no point creating a system of increasing obligations and reducing the access to student allowances for the very well-off if one then gives them a student loan that they do not need to repay because they are sheltering income in other ways.

Grant Robertson talked about a cost to be cut. Well, we on this side of the House certainly see investment in tertiary education as just that, but in terms of costs we would certainly make no apology for seeing costs for phantom students cut, costs for spurious courses at polytechs cut, or costs cut in terms of students who consistently fail their papers, or in terms of graduates who fail to meet their repayment obligations because they go overseas and do not keep in contact with the Inland Revenue Department. The fact that we have reduced the non-repayment rate from 48 percent to 39 percent is a very good example of that. We make no apology for cutting the costs involved in managing the 5,000 separate qualifications that we found when we came into office. I think those are very important costs. This is a good bill, a very good bill, and I support it.

Mr DEPUTY SPEAKER: The question is that the motion be agreed to. Those of that opinion will say Aye, to the contrary No. The Ayes have it.

Jan Logie: I raise a point of order, Mr Speaker. I am sorry; I missed my vote. The Greens oppose and call for a party vote.

Mr DEPUTY SPEAKER: Well, I think you just missed.

Hon Trevor Mallard: Oh, come on. Do it quickly.

Mr DEPUTY SPEAKER: Righty-o. We will do it. The Clerk will conduct a party vote.

A party vote was called for on the question, That the Student Loan Scheme Amendment Bill (No 2) be now read a first time.

Ayes 105

New Zealand National 59; New Zealand Labour 34; New Zealand First 8; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 14

Green Party 13; Mana 1.

Bill read a first time.

Bill referred to the Finance and Expenditure Committee.

Hon PETER DUNNE (Minister of Revenue): I move, That the Student Loan Scheme Amendment Bill (No 2) be reported to the House by 11 February 2013.

Motion agreed to.

The House adjourned at 6 p.m.