Tuesday, 29 July 2014

TUESDAY, 29 JULY 2014

TUESDAY, 29 JULY 2014

Mr Speaker took the Chair at 2 p.m.

Prayers.

Questions for Oral Answer

Questions to Ministers

Ministers—Confidence

1. METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he have confidence in all his Ministers?

Rt Hon JOHN KEY (Prime Minister): Yes.

Metiria Turei: Does the Prime Minister agree with his Minister of Conservation that Fish and Game should be quiet and let our rivers become more polluted?

Rt Hon JOHN KEY: I think that the member is misrepresenting the Minister of Conservation.

Metiria Turei: Well, does the Prime Minister then back the Minister of Conservation’s threats to sue David Haynes, the president of the Federation of Freshwater Anglers, and to stifle Fish and Game from advocating for cleaner rivers; if so, why?

Rt Hon JOHN KEY: Firstly, I am not sure that the Minister ever actually said that, and, secondly, the Minister has made it quite clear that he is not pursuing a course of legal action.

Metiria Turei: How can the Prime Minister have confidence in his Minister for Economic Development when he is planning to cut real funding to science and innovation by 21 percent over the next 10 years, or does he think that smart Green innovation is not the future for New Zealand?

Rt Hon JOHN KEY: The member is quite wrong. She was wrong when she tried to say those things last week, and she is wrong this week.

Metiria Turei: Does the Prime Minister retain confidence in the Minister for Social Development when she twice claimed not to have read the most important epidemiological research on the health impacts of poverty from Otago University, showing that in New Zealand one baby a week dies from conditions associated with low income?

Rt Hon JOHN KEY: I have tremendous faith and confidence in the Minister for Social Development. I think when people look back on the history of this Government in many years to come, they will remark on what an incredible job she has done in terms of welfare reform, in terms of getting people into work, in terms of her caring about vulnerable children, and in terms of the work that she has done to shepherd that important issue through this Parliament. If that member could achieve about 10 percent of what the Minister for Social Development has, she would be doing well, but I do not hold out—

Mr SPEAKER: Order!

Metiria Turei: Does the Prime Minister back statements from his Minister for Social Development that she absolutely stood by her decision to deny newborn babies born into severe poverty at serious risk the same baby payment that is given to other babies, or does he think that all children in New Zealand have the right to thrive?

Rt Hon JOHN KEY: Yes, in the context she made them, which was around the in-work tax credit, which, I might point out, was actually a part of Working for Families. It was established and implemented by the previous Labour Government.

Metiria Turei: How can the Prime Minister have confidence in his Ministers when they are threatening Crown entities that stand up for the environment, meddling with scientific research, and deliberating denying support to the poorest newborn babies in New Zealand? Is that level of arrogance his idea of working for New Zealand?

Rt Hon JOHN KEY: Well, I would reject the characterisation that the member has made, but what I would say is that not only are we a group of people, on this side of the House, who are focused on the important issues—the economy, law and order, health, education, and the environment—but we are actually a group of people who agree on the direction in which we are going. Every time we see the Greens talking about what they might do with Labour, with Kim Dotcom, and with other political parties, we find complete and utter disagreement. No wonder it is a shambles—

Mr SPEAKER: Order!

Hon David Cunliffe: Does he have confidence in the Minister of Immigration given that thousands of records from the immigration contact centre have gone missing as a result of an IT “upgrade”?

Rt Hon JOHN KEY: Yes, I do have confidence in the Minister of Immigration.

Economic Programme—Progress

2. DAVID BENNETT (National—Hamilton East) to the Minister of Finance: What progress has the Government made in delivering on its economic objectives for this term of Parliament?

Hon BILL ENGLISH (Minister of Finance): The Government has made good progress. That progress amounts to a significant, strong platform for further sustained growth in the New Zealand economy. For example, New Zealand’s economy grew by 3.8 percent in the year to March 2014—among the top half-dozen growth rates in the developed economies. Growth is forecast to reach 4 percent this year, a far cry from the deep domestic recession that began in 2008. This is delivering benefits to hard-working Kiwis. Average wages have increased by around $3,000 in the past 2 years to nearly $55,700. They are forecast to grow to $62,300 by 2018.

David Bennett: How are the benefits of the Government’s economic programme being reflected in the labour market, and how do average wage increases compare with cost of living changes?

Hon BILL ENGLISH: I am pleased that member and the Opposition have raised the issue of jobs. In the past year alone, 84,000 new jobs were created across New Zealand, and Treasury forecasts another 172,000 over the next 4 years. As some members of the House will recall, back in 2011 there was a forecast of 171,000 new jobs to be added by 2015. The latest household labour force survey shows we are on track to achieve those 170,000 new jobs. This will bring unemployment down to 4.4 percent by mid-2018.

David Bennett: How has the Government’s economic programme helped to address the twin fiscal and current account deficits this Government inherited 6 years ago?

Hon BILL ENGLISH: The Government has more influence over the fiscal deficit than the current account deficit, where it has an indirect influence. When we came to office the previous Government’s final Budget predicted a $3.9 billion deficit in 2008-09 and never-ending deficits into the future. The current account deficit was between 7 and 8 percent of GDP—that is, at record high levels. Since then, of course, we have got back on track. In Budget 2014 we are on track to a small fiscal surplus in this next year, and the current account deficit has narrowed to 2.8 percent of GDP in the year to March, although it is forecast to increase over the next few years.

David Bennett: How is the Government’s economic programme helping to keep interest rates lower for longer, and what reports has the Minister received suggesting New Zealanders are supporting its programme?

Hon BILL ENGLISH: There are two things the Government can do to prevent us reaching Labour’s record interest rate levels, where first mortgage rates were over 10 percent in 2008. Those two things are to restrain Government spending and to limit, as far as we can, rapid increases in the price of houses. On both of those fronts we are making considerable progress. In answer to the second part of the question, New Zealanders are supporting this programme because they are staying home rather than leaving New Zealand. There was no net loss of New Zealanders to Australia in June. That is zero net outflow to Australia for the first time since 1991.

Prime Minister—Unemployment, Support for Minor Parties, and Minister’s Actions

3. Hon DAVID CUNLIFFE (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that there are “plenty of jobs out there”; if so, why are there 42,000 more people unemployed now than when he took office?

Rt Hon JOHN KEY (Prime Minister): I can certainly see why that member would be worried about unemployment. But to the first part of the question, yes. According to ANZ, 38,000 job advertisements appeared in the newspaper and on the internet in the month of June, up by almost 6 percent over the previous month. To the second part of the question, more people are looking for work and, subsequently, more people are becoming employed. Since we took office, over 100,000 more people have become employed. The combination has pushed New Zealand’s participation rate to 69.3 percent, which is the highest it has ever been since the household labour force survey began, and significantly higher than in Australia.

Hon David Cunliffe: Given that the Prime Minister seems to think that unemployment is a joke, can he confirm that the number of jobless is now 50,000 higher today and that there are more jobless in every region of the country except Canterbury?

Rt Hon JOHN KEY: No, I cannot confirm that. What I can confirm is that there are 100,000 more people with jobs. As I said, I congratulate the member on getting through caucus—

Mr SPEAKER: Order! That will not help.

Hon David Cunliffe: Does his definition of getting more people into jobs include, by fair means or foul, getting the ACT candidate for Epsom a job; if so, what will poor old Paul Goldsmith do for one?

Rt Hon JOHN KEY: We will see what the voters decide—we will see what the voters decide. All I do know is that on this side of the House people support the person who is the leader; on that side of the House they do not.

Hon David Cunliffe: Why is he finding a job for Peter Dunne in the Ōhariu electorate rather than campaigning for his own candidate, when Peter Dunne has never denied that he is the leaker of a sensitive classified document, or is that just “#teamleak”?

Rt Hon JOHN KEY: What the Government is doing is making sure that New Zealanders are clear about both the direction we are taking the country and whom we will work with. The member might have some credibility if he was prepared to rule out Kim Dotcom and working with that party, but he will not. As I said, if the member really wants to be seriously focused on the issues that matter, he should focus on his own job, because what I keep hearing is that they are counting up the heads—

Mr SPEAKER: Order! That answer is sufficient.

Hon David Cunliffe: Given that the Prime Minister is quoted as saying he thinks ACT’s three-strikes bill is “good policy”, why is he keeping Nick Smith in a job, when he struck one with a letter he wrote for Bronwyn Pullar to ACC, struck two with the Ruataniwha Dam, and now has struck three by attacking Fish and Game New Zealand for its statutorily required role?

Rt Hon JOHN KEY: Firstly, I do not think the member should believe everything he hears on Radio New Zealand or reads in the paper. Secondly, if this is what “Vote Positive” looks like, I would hate to think what “Vote Negative” looks like. Oh, that is right, I know that: it is called the Labour Party caucus this morning. That was—

Mr SPEAKER: Order! [Interruption] Order!

Hon David Cunliffe: Why is the Prime Minister keeping the Minister of Transport in his job when he is currently being investigated by his own officials for allegedly breaching the law and causing an airport security risk?

Rt Hon JOHN KEY: They are not his own officials. There is an independent investigation going on, and I am not going to taint that investigation. But, as I say, it is good to see that Labour members kept “Vote Positive” for a couple of days. All I can say is maybe they will need to go and change the billboards.

Family Court Reforms—Reports

4. JOANNE HAYES (National) to the Minister of Justice: What recent reports has she received on the Family Dispute Resolution services in the reformed Family Justice system?

Hon JUDITH COLLINS (Minister of Justice): Four months after the Government’s Family Court reforms came into effect, it is clear they are having a very positive effect. The new family dispute resolution service has completed 562 assessments for mediation, and a further 530 are in progress. Of the 122 mediations completed, 71 percent have resolved all matters in dispute between the parties without going to court. This means that more parents are entering into parenting plans by agreement, fewer parents are going to court to resolve disputes over their children, and fewer children are being stressed by warring parents.

Joanne Hayes: What other statistics has she recently received on the new Family Court reforms?

Hon JUDITH COLLINS: In the past 4 months 1,609 parents and family carers have undertaken the Government’s Parenting through Separation course, and 1,175 parties to parenting disputes have received or are receiving Government-funded legal assistance to prepare for family dispute resolution or standard court proceedings. Forty thousand parenting plans and booklets have been provided to agencies to assist family carers reach agreement on caring for their children, with a further 1,400 downloaded from the family justice website. The website has had around 1.7 million page views since its launch in March. Might I recommend it to the people opposite, who clearly need it.

Joanne Hayes: What impact are the family justice reforms having on the Family Court?

Hon JUDITH COLLINS: Before these reforms were introduced, the Family Court was experiencing huge delays with processing cases. The court was being clogged up with disputes over where children should spend Christmas or what after-school activities they might engage in. Most of these can now be dealt with in the family dispute resolution mediations instead of in court. Since the reforms have been introduced, the average number of guardianship applications—[Interruption]

Mr SPEAKER: Order! The level of barrage from my left is now at an unacceptable level. I call the Hon Judith Collins to complete the answer, please.

Hon JUDITH COLLINS: Since the reforms have been introduced, the average number of guardianship applications has dropped from 481 per week to 231 per week. This means the court can focus on more serious matters. The overall reduction in new cases has meant that the court is able to dispose of cases more quickly. The Auckland court, in particular, now has 1,000 fewer applications on hand than it did at 31 March 2014.

Hon David Parker: I raise a point of order, Mr Speaker. I could see you becoming concerned at the level of interjection from the Opposition. The length of the answer invites disorder in the House, and it was longer than the Standing Orders would allow.

Mr SPEAKER: I will be the judge of the length of an answer, but on that occasion the answer was certainly getting towards the lengthy stage. It was not helped by the persistent level of interjection coming from two members to my left, particularly.

Economy—Pre-election Economic and Fiscal Update and Export Sector Performance

5. Hon DAVID PARKER (Deputy Leader—Labour) to the Minister of Finance: Will the forecasts in the Treasury PREFU include the effects of the recent fall in the overall value of exports, including log and dairy price drops?

Hon BILL ENGLISH (Minister of Finance): That will be a matter for Treasury. As the member knows, the Pre-election Economic and Fiscal Update is a fully independent forecast by Treasury. I am sure it will reflect a range of economic data, like 84,000 new jobs in the year to March, an increase in average weekly wages of 3.2 percent against inflation of 1.5 percent, GDP growth of 3.8 percent in the year to March, the current account deficit down to 2.8 percent, and the lowest net international investment position of 65 percent of GDP.

Hon David Parker: I raise a point of order, Mr Speaker. I think he is finished.

Mr SPEAKER: Order! That is the second time consecutively that the member has taken the opportunity to tell me that. I will judge when an answer is going on too long. It is for me to do so, not for the member.

Hon David Parker: Is the level of exports as a percentage of GDP higher or lower now than when he took office?

Hon BILL ENGLISH: I would have to check those numbers, but, as usual, on “Planet Labour” there was no global recession, so Labour always counts the pre-recession numbers and compares them with today’s. What I can tell the member—

Mr SPEAKER: Order! On this occasion, the question now has been answered. [Interruption] Order! I have concluded the answer.

Hon David Parker: I seek leave to table a table showing that export—

Mr SPEAKER: The source of the document?

Hon David Parker: The department of statistics’ figures.

Mr SPEAKER: No, if it is the department of statistics, those figures are freely available to all members.

Hon David Parker: Given that exports have dropped as a percentage of GDP, does he now accept that National is failing to achieve its promise to raise exports as a percentage of GDP—its promise being to raise them to 40 percent of GDP by 2025—given that they have fallen from 33 percent when he took office to 29 percent now, and that the Treasury forecast shows them falling even further to just 26 percent of GDP?

Hon BILL ENGLISH: No. What I can tell the member is that in the year to June, the value of exported goods increased by 12 percent to a record high of $51.2 billion. Actually, our export sector has done a remarkably good job in the face of the stiff headwinds of a high exchange rate. New Zealanders have been able to buy more with their Kiwi dollar than ever, and exporters have continued to create jobs, make profits, and pay tax, and they should be supported for it, not criticised for it.

Hon David Parker: Why does he think that the narrowing of New Zealand’s exports towards primary products that have now collapsed in value was a good idea?

Hon BILL ENGLISH: I simply disagree with the member, but it would not surprise me if the policy of the Labour-Greens Opposition was that the dairy industry should be shut down and should not sell—

Mr SPEAKER: Order! [Interruption] Order!

Louise Upston: How does the Minister expect the Pre-election Economic and Fiscal Update of 2014 to compare with forecasts in Treasury’s Pre-election Economic and Fiscal Update of 2008, which was delivered under the previous Government?

Hon BILL ENGLISH: The Treasury Pre-election Economic and Fiscal Update under the Labour Government said this: “Households and businesses have come under increasing cost pressures—electricity, interest rates, fuel and food—which are dampening private consumption and firm profitability.” It also said: “We are now expecting weaker economic growth … slower growth in tax revenue and higher Government expenditure. Combined with increases in the costs of some existing policies, these factors lead to sustained operating balance deficits”. I am pleased that this Pre-election Economic and Fiscal Update will not say any of these things. In fact, it will say the opposite in every respect.

Hon David Parker: Given that exports have peaked and are now dropping, 147,000 people are still unemployed, wages are stagnant, homeownership rates are dropping, and severe child poverty is increasing, why does he refuse to tackle the imbalances in the economy?

Hon BILL ENGLISH: We are tackling the imbalances in the New Zealand economy, including the reference the member has made to inequality. In fact, there has been slight improvement in the measures of income equality in New Zealand.

Sue Moroney: No, there hasn’t.

Hon BILL ENGLISH: I know the Opposition does not like hearing it, but actually it is flat to better, despite the fact that we have had a major recession. We will be campaigning hard for the right to improve the performance of the economy and to improve equality in the economy.

Schools—Student Achievement and Management of Behavioural Issues

6. TIM MACINDOE (National—Hamilton West) to the Minister of Education: What recent announcements has she made on schools addressing difficult behaviours of students?

Hon HEKIA PARATA (Minister of Education): Today I was pleased to announce that student stand-downs, suspensions, and exclusions have reached 14-year lows. Early leaving exemptions have dropped by 89 percent between 2006 and 2013. Since 2008 there have been 4,700 fewer stand-downs, a reduction of 24 percent; 1,292 fewer suspensions, a reduction of 30 percent; and 300 fewer exclusions, a reduction of 22 percent. Under this Government we are seeing far fewer kids being removed from school and more students staying longer and gaining better qualifications.

Tim Macindoe: What approaches are being taken to help pupils stay at school longer and leave better qualified?

Hon HEKIA PARATA: We have a range of initiatives investing into safe and positive school environments to keep kids at school longer, and there are more educational pathways to choose from so that they can be successful. They include, for example, a $145 million investment into Positive Behaviour for Learning school-wide programmes, which will involve 800 schools by 2017; a $15 million investment by the Prime Minister’s Youth Mental Health Project initiatives for youth resilience programmes; a much improved nationwide integrated attendance service; and more kids are leaving with National Certificate of Educational Achievement (NCEA) level 2 results through a mix of very targeted support and options such as trades academies coupled with clear vocational pathways that are seeing kids getting NCEA level 2 because they can see the practical application of their learning. More kids are starting earlier, staying longer, and leaving better qualified under this Government.

Inequality, Economic and Social—Income Gap and Child Poverty

7. JACINDA ARDERN (Labour) to the Minister for Social Development: Does she agree with the Prime Minister’s statement that “the fastest way to get children and grown up New Zealanders out of poverty is through work”, when the latest report on household incomes states that two out of five children living in poverty are in households where at least one adult is in full time work or self-employed?

Hon PAULA BENNETT (Minister for Social Development): Yes, there are some people in work who are struggling but they have access to a range of support including in-work tax credits, the accommodation supplement, and childcare assistance, and I certainly encourage people to check their entitlement, as often people do not know that they can get that. Being in work is also the best way to gain skills and experience that could lead to a wage increase, more hours, or even a higher paying job.

Jacinda Ardern: If work alone is the answer and the Government has in place all of those additional entitlements she has listed, why are working families still living in poverty?

Hon PAULA BENNETT: It is because their income is not sufficient, which is why we give them extra assistance. We also believe that work is the way out of poverty. The percentage of those who are working and are in poverty is far fewer than those who are in benefit-dependent households. It is also a fact that they can gain skills and experience, which means that they are more likely to get wage increases and are more likely to get higher paying jobs. The best thing that we can do is keep on our track of improving the economy.

Jacinda Ardern: Given that she has acknowledged that for some families their wages are insufficient, has she advocated for a greater increase in the minimum wage to ease the pressure on working families; if not, why not?

Hon PAULA BENNETT: No; because I want jobs to be available for New Zealanders, and we have evidence that says that increasing the minimum wage beyond what businesses can afford to pay means that jobs will be cut from the economy. That is the last thing we want to see, because people are far more likely to be in poverty if they are on a benefit. There is also plenty of evidence that says that our minimum wage is the seventh highest in dollar terms in the OECD, and on a percentage basis it is actually the highest.

Jacinda Ardern: Are the additional entitlements the Minister has listed as coming from the Government supplementing the fact that we have a low-wage economy and employers who are not paying working families sufficiently?

Hon PAULA BENNETT: Well, considering that certainly the in-work tax credits and the Working for Families were brought in under the previous Labour Government, I acknowledge that that was to supplement those people who are working and struggling to get by. It may be because of the hours that they are working and a range of other factors like the number of children they have got. So, yes, we acknowledge that some people need a boost and we are prepared to give them that, but, actually, being in work is the best way to get ahead.

Jacinda Ardern: Does she stand by her statement that “another target that I can well and truly point to is making sure that we have more jobs and better paying jobs in New Zealand.”; if so, what evidence does she have that she has achieved her target of better paying jobs?

Hon PAULA BENNETT: Speaking to the first part of that statement, the fact that we have 22,000 new jobs in the economy in the quarter just to March actually shows that we are making a difference for those people—that is a fact.

Jacinda Ardern: I raise a point of order, Mr Speaker. I gave a quote that the Minister had previously given, but I asked her to reference the evidence around better paying jobs.

Mr DEPUTY SPEAKER: The difficulty is that the member asked a supplementary question to which there were two legs, and the Minister has addressed the first leg of that question.

Immigration Policy—Numbers and Impact

8. Rt Hon WINSTON PETERS (NZ First) to the Prime Minister: Is he satisfied that the current Minister of Immigration is working for all New Zealanders?

Rt Hon JOHN KEY (Prime Minister): Yes.

Rt Hon Winston Peters: How is the Minister working for all New Zealanders when record net migration numbers are fuelling the Auckland housing crisis and the Reserve Bank’s raising of interest rates to deal—[Interruption]

Mr SPEAKER: Order! Would the member complete his question.

Rt Hon Winston Peters: Yes. How is the Minister working for all New Zealanders when record net migration numbers are fuelling the Auckland housing crisis and the Reserve Bank’s raising of interest rates to deal with the Auckland housing bubble is adversely affecting the entire country?

Rt Hon JOHN KEY: Firstly, there is a number of factors that drive net migration in New Zealand, but the most pronounced of those, of course, is that New Zealanders are not leaving for Australia in droves as they were under the previous Labour Government. Secondly, there are certain aspects of migration policy that are, for want of a better description, out of the control of the Government—that is, Australians, for instance, are free to come to New Zealand. I do not think the member is really saying that he is going to stop Australians coming over, and 25,000 of those come every year. We then have people who come under the Pacific category. Is the member actually saying he does not want people to come under the Treaty of Friendship with Samoa? I could go on. The truth of it is that this is a Government that is working so well for New Zealand that New Zealanders want to stay here and be part of it.

Rt Hon Winston Peters: How is the current immigration Minister working for all New Zealanders when there is record net migration at a time when there are almost 150,000 unemployed New Zealanders and half the workforce got no pay increase last year?

Rt Hon JOHN KEY: The member should really avoid using data that he probably does not understand. That is the labour cost index. [Interruption]

Mr SPEAKER: Order!

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! This is a point of order. I want to hear it in silence.

Rt Hon Winston Peters: Just because the Prime Minister is embarrassed, that is not a reason to start with a character assassination or attack on a member of Parliament doing his humble duty.

Mr SPEAKER: On this occasion, the member makes a reasonable point. Would the Prime Minister just address the question.

Rt Hon JOHN KEY: I was simply trying to be helpful to the member. The labour cost index does not actually measure what he said. If he would like me to send around one of the Treasury officials to take him through it, I am more than happy to do that. The second point is that it is not record-high migration. I can actually point to a time not that long ago when there were high levels of net migration under the previous Labour Government.

Rt Hon Winston Peters: What does he say to New Zealanders concerned at the high ratios of non-skilled, non-working immigrants last year, when 49 percent of immigrants were granted permanent residence under family, parent, and humanitarian categories?

Rt Hon JOHN KEY: As the member knows, there is a parent category, and that category allowed 4,000 parents to come in under family reunification. The member also knows that the Government actually changed that back in 2012. The member also knows that for a very, very long period of time, New Zealand has agreed to take 750 refugees, and that happened the entire time that the member was Minister of Foreign Affairs.

Rt Hon Winston Peters: What does he say to New Zealanders concerned that with 44 percent of recent migrants from China being aged 50 and over, there will be a serious impact on health care, aged care, and New Zealand superannuation?

Rt Hon JOHN KEY: Firstly, I would have to check that fact, and I am not entirely sure—

Hon Member: You should know that.

Rt Hon JOHN KEY: Well, I have learnt to be cautious, you know? I am not entirely sure that that fact is right. But what I can say is that if you look at migration overall in terms of people who come to New Zealand, the vast, overwhelming bulk of them actually add to New Zealand. They come in all sorts of areas, from students who come and study in New Zealand, many of whom may well stay and add to our economy. They come in the highly skilled labour markets where they are needed, they come with capital that they bring to New Zealand, and they come with the right attitude towards New Zealand. If you look at the entire time that I have been Prime Minister, the average net increase in the population per year has been under 10,000 people. For a country the size, roughly, of Great Britain, to increase our population by 10,000 people or fewer a year is hardly some sort of crisis that we cannot cope with.

Rt Hon Winston Peters: Why did the immigration Minister, who was working for all New Zealanders, expand work permits to over 79,000 foreign students, which means it is not export education at all, and when Australia abolished the—

Hon Steven Joyce: What a load of rubbish!

Rt Hon Winston Peters: I know you are a load of rubbish, but I would like to ask my question.

Mr SPEAKER: Order! Just ask—

Rt Hon Winston Peters: Can I stick to my question, not you?

Mr SPEAKER: Order! The member will just complete his question.

Rt Hon Winston Peters: Well, you heard what he said.

Mr SPEAKER: Just complete the question.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. There is a certain member over there who has barracked every time a question was asked, from the very beginning. Frankly, he is tiresome and boring—

Mr SPEAKER: Order! Now the member—

Rt Hon Winston Peters: —and you should stop him.

Mr SPEAKER: Order! I want to allow this member the opportunity to ask his supplementary question, and I do not want any interjections coming from my right-hand side.

Rt Hon Winston Peters: Why did the immigration Minister, who was supposedly working for all New Zealanders, expand work permits to around 79,000 foreign students, which means it is not export education at all that is happening there for them, when Australia abolished these work permits after it realised that foreign students were earning money in Australia to repay loans back in their own countries for their international school fees in Australia?

Rt Hon JOHN KEY: Firstly, I am not sure that the member is right that all of them got work permits. Secondly, if you look at export education, it is an industry that earns New Zealand about $2.6 billion a year. It has added 28,000 jobs to New Zealand. Actually, the member is right about one thing, and that is that quite a lot of these students who come to New Zealand from countries all around the world do get off their backsides and work in a cafeteria, they do go and work in bars around New Zealand, they do clean motels around New Zealand to pay for their education, and what happens with many of them is they actually stay in New Zealand. They become long-term citizens of this country and they add to the fabric—

Rt Hon Winston Peters: I raise a point of order, Mr Speaker.

Rt Hon JOHN KEY: Well, I have not finished my answer.

Mr SPEAKER: Order!

Rt Hon Winston Peters: The thrust of this question simply is that if a student is working in New Zealand—

Mr SPEAKER: Order! That is not a point of order. If the member wants another supplementary question, I can—

Rt Hon Winston Peters: I haven’t finished it yet.

Mr SPEAKER: The member will resume his seat. Would the Prime Minister please complete his answer.

Rt Hon JOHN KEY: The point I am making is that a great many of these international students who come to New Zealand do actually work part-time. That gives them some money to pay for the time that they are in New Zealand, but it also demonstrates that they are committed to our country and that they have got a good work ethic, and I think they add enormously to New Zealand. If New Zealand First does not want these people coming to New Zealand—

Mr SPEAKER: Order! The answer is now long enough.

Freshwater Management—Role of Fish and Game Council

9. EUGENIE SAGE (Green) to the Minister of Conservation: Does he stand by his statement that “the Government needs to take a broader perspective than just Fish and Game’s advocacy for their recreational fishing”?

Hon Dr NICK SMITH (Minister of Conservation): Yes.

Eugenie Sage: Is the Minister concerned that the Department of Conservation has reduced by more than two-thirds the number of Resource Management Act plans and consent applications it has submitted on in the last 3 years, leaving Fish and Game and community organisations to stand up for our rivers?

Hon Dr NICK SMITH: No, I am not concerned, because I hold a strong view that you make best progress on issues like freshwater quality through collaborative processes, rather than conflict, which is the approach that the Greens seem to thrive on.

Eugenie Sage: Can the Minister confirm to the House that he has not initiated any work to weaken the powers and ability of Fish and Game councils to advocate for the protection of sports fish and game habitats, including clean water in our rivers and lakes?

Hon Dr NICK SMITH: Yes, I can. I think actions speak louder than words. After the council meeting that has caused some controversy, the weekend before last, I approved a modest increase in Fish and Game’s licence fees. This was before the controversy arose. It will actually increase the funding that Fish and Game has this year by about $330,000 a year, and that is why there are these sorts of conspiracy theories around me trying to stop its role. My advice to Fish and Game was that it needs to focus on being pro - freshwater quality and not anti-dairy and anti-farming.

Eugenie Sage: I raise a point of order, Mr Speaker. That was a straight question, asking whether he could confirm whether he has initiated any—

Mr SPEAKER: Order! And the very first word given in the answer was “yes”.

Eugenie Sage: Will the Minister apologise to Fish and Game for giving the impression that if Fish and Game councils did not pull back on their advocacy for clean and healthy rivers he would consider removing or weakening the organisation’s statutory powers, or was that his intent?

Hon Dr NICK SMITH: No, but I do find it interesting that the key protagonist, Mr David Haynes, immediately after the meeting wrote a blog. I will quote the blog: “Smith delivered his opinions and thoughts as professionally as ever,”. That is what Mr Haynes said. This is the same Mr Haynes who a week later said that I was bullying and threatening. Well, being bullying and threatening is not being professional. That is, Mr Haynes could not have been telling the truth both times.

Transport, Minister—Breach of Airport Security Rules

10. PHIL TWYFORD (Labour—Te Atatū) to the Minister of Transport: Does he stand by all his statements?

Hon GERRY BROWNLEE (Minister of Transport): Yes, in so much as they are accurately reported.

Phil Twyford: Does he stand by his statement “I unreservedly apologise to those people who felt, and were, compromised by my actions.”; if so, has he apologised in writing to all those workers who were compromised by his actions last week? If so, when; if not, why not?

Hon GERRY BROWNLEE: I most certainly stand by that statement. I sent a note to the airport company to that effect. If there are others, then I will certainly get to them.

Phil Twyford: Outside of the current investigation, is this the first and only time he has breached airport security or operating procedure; if not, when else has he done so?

Hon GERRY BROWNLEE: Yes, it is.

Phil Twyford: Has he been interviewed as part of the Civil Aviation Authority investigation into his security breach; if not, when will he be interviewed, when will the official version of events be made public, and can he reassure the House that no Ministry of Transport officials will be involved in the investigation into his security breach?

Hon GERRY BROWNLEE: I have not been interviewed at this point, and those other matters are all for the investigators.

Phil Twyford: Why has he not followed standard Cabinet procedure and resigned while he is under investigation by his own agency?

Hon GERRY BROWNLEE: I did tender a resignation. A decision was made about that. I have relinquished responsibility for the Civil Aviation Authority. The member misleads the House by saying that there is any further requirement in the Cabinet Manual.

Rt Hon John Key: Has the Minister seen any reports about whether the previous Prime Minister resigned when she was under investigation for fraud?

Hon GERRY BROWNLEE: Mr Speaker—[Interruption]

Mr SPEAKER: Order! The member will resume his seat. There is no transport ministerial responsibility for that. [Interruption] Order! The question is out of order. There is no ministerial responsibility.

Hon GERRY BROWNLEE: There is no ministerial responsibility? Well, can I not—

Mr SPEAKER: Is this a point of order?

Hon GERRY BROWNLEE: I was asked whether I had seen reports.

Mr SPEAKER: I do not see that a report would be part of the member’s ministerial responsibility. [Interruption] Order!

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. It is not often in this House that you hear someone accusing a former Prime Minister of fraud. It is a most serious allegation, and I thought you would have done something to ask him to apologise for it. Either make out the case or apologise.

Mr SPEAKER: Order! There is no member here who I think would be offended by that particular remark—

Rt Hon Winston Peters: Well, I would.

Mr SPEAKER: Well, if the Rt Hon Winston Peters is saying that he was offended by that remark, then I will ask the Prime Minister to withdraw that remark. [Interruption] Order! The member has said he is offended; that surprises me. He has said he is offended. I am asking the Prime—[Interruption] Order! I ask the Prime Minister to withdraw that remark.

Rt Hon John Key: I withdraw.

Mr SPEAKER: Thank you.

Organ Donations—National Renal Transplant Service and Other Initiatives

11. Dr PAUL HUTCHISON (National—Hunua) to the Minister of Health: What investment has the Government made to increase the number of live kidney donor transplantations in New Zealand?

Hon TONY RYALL (Minister of Health): An extra $4 million has been allocated to establish a national renal transplant service to increase the number of live kidney donor transplantations over the next few years. The target is to increase transplants by 10 per year, year on year, over 4 years, which will mean that an extra 100 people will receive kidney transplants over the next 4 years. The new renal transplant service will be led by doctors, nurses, and renal transplant experts and will help us better coordinate and improve transplantation services across the nation.

Dr Paul Hutchison: Why has this Government made investing in kidney transplantations a priority?

Hon TONY RYALL: It is part of a wider plan that the Government has had to improve organ donation rates in New Zealand. The new service includes specialised staff to support donors and recipients throughout the transplantation process, from providing education for interested potential donors to organising blood tests and carrying out pre-surgery preparation. This increase in funding—

Mr SPEAKER: Order! I apologise to the Minister, but it is difficult to hear because the Minister is talking and addressing the person who has asked the question. It is very difficult to hear the answer.

Hon TONY RYALL: This investment is part of a wider plan that this Government has to increase the rates of organ donation in New Zealand. It builds on an investment of $4 million that was made in Budget 2012 to improve donation services. This additional $4 million will provide new services from specialised staff to support donors and recipients, to provide education to interested potential donors, and to organise blood tests and carry out pre-surgery preparation. As I said earlier on, this certainly is yet another part of this Government’s plan to increase kidney transplants in New Zealand.

Fish and Game Council—Minister’s Statements

12. Hon RUTH DYSON (Labour—Port Hills) to the Minister of Conservation: Does he stand by all his recent statements?

Hon Dr NICK SMITH (Minister of Conservation): Yes, particularly my statement to the Fish and Game Council and to Federated Farmers that New Zealand will make more progress on improving water quality through collaboration than through conflict.

Hon Ruth Dyson: Why did he say that Fish and Game struggles with the concept of being a statutory body but behaves like a rabid NGO, and that it had to decide which it wanted to be or “the perks of being statutory body could go”, if not to threaten it with that loss?

Hon Dr NICK SMITH: I dispute those statements as to what was said at the meeting. I think it is a bit of a commentary of the season that exaggeration and overstatement just go with the time of the year. I think the notes that were taken by an independent Department of Conservation official are a pretty accurate record. Actually, David Haynes’ original comments that my contribution was very professional I thought were also quite accurate.

Hon Ruth Dyson: When he said, as recorded by his Department of Conservation official, that Fish and Game needed to work out what it wanted to be, a statutory body with legislation and a relationship with Government, or an NGO, did he threaten its statutory monopoly; if not, what does the further comment recorded by the Department of Conservation official—“Statutory monopoly! Big issue.”—mean in the notes?

Hon Dr NICK SMITH: I get lots of commentary from rural Fish and Game licence holders who object to having to pay compulsory fees to an organisation that then uses that money to criticise the very industries that sustain those rural communities. I did say to the Fish and Game Council that it needs to ensure that it is pro - freshwater quality and does not get in the space of being anti - rural industries like farming.

Hon Ruth Dyson: Why did he describe the Fish and Game irrigation billboard campaign “How much is too much?” as “a problem politically” and then say to Fish and Game that when you cause trouble, you burn good will, and how do those comments relate to its legal obligation to maintain, manage, and enhance fish stock?

Hon Dr NICK SMITH: I made some generic comments to Fish and Game that it needed to be more collaborative in improving fresh water. It was actually a member of the Fish and Game Council itself who raised criticisms of the billboard campaign. It was a member of the council who actually said they thought it was unwise and they voted against it, but the director of Fish and Game wanted to proceed. I actually do not think that billboard campaign did anything to advance the key issue of freshwater quality.

Rt Hon John Key: Speaking of billboards, is the Government running any kind of programme around recycling of billboards, because I can feel about 20,000 “Vote Positive” ones that need to be taken down—

Mr SPEAKER: Order! Again, no—[Interruption] Order! Settle down. Settle down. There is no ministerial responsibility for the Minister of Conservation. [Interruption] Order!

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. I seek leave for the Prime Minister to ask a similar question again so that he can make a fool of himself twice.

Mr SPEAKER: Order! The member knows he cannot seek leave for another member.

Hon Ruth Dyson: Has the Minister rung Mr Lindsay Lyons of the Fish and Game Council or six of the other participants who have been reported as being prepared to swear under oath the accuracy of Mr Haynes’ comments about his threats, and has he threatened them with legal action as well?

Hon Dr NICK SMITH: I spoke to Mr Lyons on the telephone last Friday. He apologised to me for what had occurred after the meeting, saying it was not intended as a public meeting and that the public comments were most unfortunate. I feel this is simply a matter of election season. It is a season of exaggeration and misquotation. I stand by the written records of the meeting that were taken at the time.

Motions

World War I Centenary—Commemoration of New Zealand’s Entry into War

Rt Hon JOHN KEY (Prime Minister): I move, That the House recognise that on 4 August 2014 we will mark the centenary of New Zealand entering the First World War. A few hours after the declaration of war by the British Empire, of which New Zealand was a part, the Governor of New Zealand, Lord Liverpool, told a crowd of thousands outside Parliament that New Zealand was at war with Germany.

The New Zealand Government’s offer to send an expeditionary force, a move endorsed by this Parliament, was hugely significant. New Zealand’s population in 1914 was just over 1 million. The initial deployment was of 8,000 men, but by 1919 over 100,000 New Zealanders, or 10 percent of the population, had left these shores to serve overseas. They were not just soldiers. They included, for example, medical staff, sailors, and tunnellers. Over 5,000 Māori served in the war alongside 500 Pacific Islanders. Five-hundred and fifty women served in the New Zealand Army Nursing Service.

Of those who served, 18,000 lost their lives and another 41,000 were wounded. One in 20 New Zealanders, therefore, became casualties of the First World War. This was a war on a scale beyond anything New Zealand had experienced before and the effect on the nation was profound. Worrying about loved ones, grieving for lost relatives, working to support the war effort, making do, going without; the war touched every person at every level in our country.

Today’s New Zealand has roots in the patience and endurance of those communities carrying on through the aftermath of the war and building a future for those who followed. It is no wonder that the First World War is marked by memorials that stand in almost every community in New Zealand. The contribution of that First World War generation, both on the battlefield and at home, has a deep significance for New Zealanders and is integral to our sense of nationhood.

In the last decade the number of New Zealanders attending Anzac Day services at home and overseas has risen. Many have travelled to battle sites and cemeteries in far-off places. We are proud of those who took part in the First World War, as we are proud of our current defence force. I believe New Zealanders will embrace this centenary. It will be a time to honour those who served, a time to remember those who died, and a time to remember our understanding of a formative event in New Zealand’s history.

Other nations are embarking on a similar journey. Many millions of people died as a result of the fighting, not just in Europe but in theatres across the globe. New Zealand will be marking the centenary alongside a number of countries, and it will be an opportunity to strengthen our relationship with the people and Governments of those nations.

There are too many commemorations and events to name, but I want to mention just a few. In November we proudly join Australia at the ceremony at Albany, Western Australia to mark the joint departure of the Australian Imperial Force and the New Zealand Expeditionary Force. Alongside our Australian, Turkish, and British friends, New Zealand will be commemorating the 100th anniversary of the Anzac landings at Gallipoli in 2015. Over the next 4 years we will be increasing our presence at Anzac Day services and commemorations in France and Belgium.

Although the Gallipoli campaign will always hold an important place for New Zealanders, the centenary is an opportunity to expand our awareness and knowledge of what happened after Gallipoli and in particular on the Western Front, where by far the majority of our casualties occurred. We will be commemorating New Zealand’s involvement in the battle of the Somme, at Passchendaele, and other major battles in France and Belgium. Plaques with the names of those battles and others New Zealanders fought in the First World War surround us in this debating chamber.

More broadly, New Zealand’s WW100 programme encompasses the whole range of this country’s commemorative activities, from State ceremonies and Government-led initiatives to grass-roots community projects. Part of that programme involves major legacy projects such as the National War Memorial Park, a place to commemorate New Zealand’s involvement in all military conflict and peacekeeping. Heritage trails in Europe will tell the story of New Zealanders at Gallipoli and the Western Front. These and other projects will be enduring reminders that ensure current and future generations never forget the sacrifices that have been made and the role of war in shaping this country.

The Government is also a major partner in the First World War Centenary History Programme, a series of up to 13 print publications covering the major campaigns in Europe and the Middle East, New Zealanders’ contribution in the air and at sea, the experiences of soldiers at the front and civilians at home, the Māori war effort, and the war impact and legacy.

Equally important are the many community projects that are under way around New Zealand. World War 100 is not a Government-run initiative. It is a collaboration between the Government, local bodies, communities, and individuals who seek to ensure that every New Zealander has the chance to be part of commemorations and to feel a sense of ownership.

When you travel around New Zealand, as I said before, you see a lot of war memorials with a list of the fallen from that town or city or country district. They remind us that each community has its stories to tell. The WW100 programme encourages communities to tell those stories and to honour their forebears in whatever way they feel is best. From now until 2019 we will mark the centenary of our troops returning. The various commemorations, events, and projects throughout the country will provide us with the opportunity to honour those who have gone before us and reflect on their legacy. We will always remember them.

Hon DAVID CUNLIFFE (Leader of the Opposition): On a bare, windswept hill above a little South Canterbury village called Cave stands a stark, lonely cenotaph. Cave is a tiny village of a few dozen souls surrounded by the rolling downland that slopes up to the Hunters Hills. It is surrounded by farms. It was the place where I can first remember an Anzac Dawn Service. What I remember is that for all of the small size of that town, inscribed on the cenotaph are the names of dozens of local lads who lost their lives in the war to end wars—the so-called Great War. It is 100 years since the Great War, which broke and refashioned so many ideas of who we are, which underscored emerging concepts of nation and nationhood, which hurled humanity into modernity, and which birthed a new international age. It is an age that in many ways we are still living in.

For New Zealand it was no less than a formative moment of mud and fire, one of those points in our national history that defined us. It defined us in grief and in loss, and it was a great loss. One hundred years on, it seems so distant, but that sheer weight of loss remains with us. Of the over 100,000 deployed, nearly one in six was killed and over 40,000 were wounded from a country with a population of just over a million. Less than half returned unscathed in body; almost none returned unscathed in mind. It is no exaggeration to say that the effects of this war rippled viscerally through our nation—those empty farms, the endlessly damaged families, the silenced fathers and brothers, and the stoically silent ones who returned—and was a rupture that changed us for ever. It was a loss but it was also a fundamental and violent change to who we were and a part of who we are now. It is ever-present in the memorials of town after town like Cave, each holding the names of the lost, and in the Dawn Service. It is still with us in the way we think of ourselves as New Zealanders, in our sense of independence, in our great sense of uniqueness, in our drive for self-determination, and in our desire to be exactly who we are.

Today is a day to commemorate the First World War. In doing so, we do not lose sight of the immense sacrifices made by millions on both sides. Indeed, the concept of there being any other side than that of humanity seems alien so many decades later, because today we also commemorate the strength and compassion of our soldiers, of their families, and of what they brought to us. Their stories are our stories. They are deeply and resonantly a part of who we are as individuals and as a nation.

Like many New Zealanders, I have a strong connection to this watershed moment in our history. My maternal grandfather, Bob Tuke, served at Gallipoli. His brother, my great-uncle, Athol, served in France. Both were decorated. They were lucky; both survived. Another brother was gassed. On my father’s side, my great-uncle Thomas Henry Walsh was killed in action on 21 May 1918. Even now it is impossible to truly grasp just what they went through in that savage industrial mincer of warfare. From the beaches of Anzac Cove to the pocked, barbed wire fence - strewn fields of the Western Front, our troops and those who supported them must be celebrated and remembered. They are all part of the fashioning of New Zealand as a proud and independent nation. Their experiences and those of the people they left behind were the start of New Zealand casting off its colonial outlook and recognising that we could and must stand on our own two feet as a nation that honours the sacrifices of its forebears and through those sacrifices sees pity, not glory, in war. It is reflected in our pride of being a nation that uses its voice on the world stage to promote peace and a better world for all.

In commemorating World War I, we are commemorating the New Zealand that that conflict helped shape. The famous ode states: “Age shall not weary them,”. Nor will it weary the spirit they have imbued our beautiful nation with.

Dr KENNEDY GRAHAM (Green): The Green Party supports the motion that this House recognise that on 4 August 2014 we will mark the centenary of New Zealand entering the First World War. It may be that no military conflict, no war has scarred the human psyche as did World War I. The Great War has taken its toll not only in death but on the continuation of life, for death reigned supreme a century ago in the days of our grandparents. They who fell, they who never grew old, paid the supreme sacrifice.

One hundred years ago New Zealand numbered 1 million souls. One-tenth of our compatriots went to fight in distant lands. About one-fifth of them were killed, never to return. Twice as many lay wounded. For a young country the sheer scale was difficult to comprehend.

I stand also to acknowledge those who displayed a different courage, they who stood against the fighting itself, firm in their belief as conscientious objectors, for they too paid a heavy human price of a kind unique to their own.

Those who did return, they who grew old among us, paid a price equivalent in human pain. For even as the cenotaphs went up, they lived to see another conflict of equal intensity and greater destruction, making the war to end all wars tragic rather than seminal. If the sacrifice of our people and that of others—Russian and German, French and British, Australian and Turk—is to have meaning, it is to be found in the lessons we draw.

World War I gave rise to the first attempt at universal organisation, in the League of Nations. If the league was fated to fail and to be replaced by the United Nations a quarter of a century later, then so be it, provided we have drawn the necessary lessons. That remains the unanswered question. With the going down of the sun, we shall remember them.

ANDREW WILLIAMS (NZ First): New Zealand First joins with other parties in recognising that on 4 August 1914 New Zealand entered the First World War, alongside Britain and the rest of the British Empire. That followed from 3 August, when neutral Belgium was invaded. Also on that day war was declared on France. Those of us in this House and many New Zealanders and, indeed, those from around the Commonwealth, must all recognise that that was a hugely significant date for this country, and it changed the course of history.

For those of us who have been fortunate to visit Flanders, and the World War I fields in Flanders, it is a most moving place and occasion. I can recall, in the 10 years while I represented the Belgian and the Flemish Government here in New Zealand, visiting the fields on a number of occasions, and going to the Passchendaele cemetery and seeing the thousands and thousands of white crosses with New Zealand ferns on them. To see all those names of so many young New Zealanders—and many without names; many in unmarked graves—was very moving. I remember one day walking in complete mist through the cemetery. I was just there on my own. To be walking through the mist where you could see only 20 or 30 feet in front of you, and just see gravestone after gravestone coming up before you, wondering when they would ever end, and seeing all the silver ferns was most moving.

I was fortunate also to represent New Zealand at the laying of a wreath at the Messines Gate at Ypres. Every night at 8 p.m. the Belgians have a ceremony there—they have done so since the 1920s—to mark the tragedy of the First World War. The fact that they still recognise the great sacrifices that were made by so many young people coming from all over the world to uphold democracy is most moving.

A few years ago we did the same here in New Zealand. In 2009 we held the Fields of Remembrance event in Takapuna to mark the Battle of Passchendaele commemorations. It was most moving to have 5,000 crosses up on the headland at Fort Takapuna. People from all over Auckland and, indeed, from around New Zealand came to see those white crosses. Again, it was most moving to see the equivalent of the cemeteries in Flanders and in France transported to the shores of New Zealand. It was great to see so many young people want to go and see those crosses, be a part of it, and understand the history of it. When 100 white pigeons were released into the air, I was very, very proud, as mayor of the city at that time, to see how we were taking on that important part of history and how people were very much recognising the part that New Zealand played.

The First World War is now history, but it has shaped the world of today. Anyone speaking of that catastrophic event does so with due respect for all the loss and suffering it entailed. Although far distant from New Zealand, this country paid a heavy price in that conflict. Historians and others have produced volumes about the war. We may think we understand that war, its causes, and its consequences, but we should observe due discretion about judging those events.

New Zealanders can be proud of the part their country took in that conflict. It was a war in which our country found a deeper sense of national identity in the terrible carnage of Gallipoli and in the fields of France and Flanders. New Zealand First considers that this is a time for all who value New Zealand and its democracy to acknowledge the sacrifices made in the First World War. We will remember them.

TE URUROA FLAVELL (Co-Leader—Māori Party): Tēnā koe, Mr Speaker. Kia ora tātou katoa i tēnei ahiahi. If you were to attend any significant Māori hui these days, you are likely to hear waiata, songs, that connect directly to the trenches of Passchendaele and the Somme. The unofficial national anthem, “Pokare Kare Ana”, was popular with Māori soldiers preparing to go to war in 1915. “Te Ope Tuatahi” was popular in 1916, a recruiting song crafted by Sir Apirana Ngata and Paraire Tōmoana. “I Runga o Ngā Puke” was sung in September 1915 to farewell the second Māori contingent. “Hoea Rā Te Waka Nei” derives from a call for financial support for men in the trenches in France in 1917. “E Pari Rā” was a song for Māori soldiers lost in battle during World War I.

I remember all of those songs. We learnt them as a part of our kapa haka at school at St Stephen’s. They were songs that we learnt, maybe not necessarily recognising the significance of these particular songs and their message. The fact that these waiata amongst many, many others are still part of our lives in effect means that the history and tragedies experienced in World War I live on in the hearts and the memories of this generation.

Other speakers have spoken of the loss. I want to focus instead on the decimation of whakapapa Māori experienced during World War I. The first Māori contingent, Te Hokowhitu a Tū, which has a kapa haka group named after it, sailed from Aotearoa in February 1915 and fought as combat engineers and snipers in Gallipoli. In all, 477 men marched in; only 134 marched out. More than 2,000 Māori served in the Māori Pioneer Battalion, a native contingent. I note that the word “native” was not dropped from official use until 1947. There was an interesting context to Māori participation in World War I. Promoters of imperial policy opposed the idea of “natives” fighting in a war amongst Europeans, fearing that they might seek equal treatment with European soldiers or, worse still, might turn on their colonial masters. Indeed, imperial policy had officially excluded Māori from fighting in South Africa.

But some Māori leaders, such as Tā Apirana Ngata, saw participation in war as the price of citizenship. It was a view that involvement by Māori would strengthen the ability of other New Zealanders to accord tangata whenua equal status with non-Māori. Many years later, at the onset of the Second World War, Sir Apirana Ngata explained this view in the booklet he wrote in 1943, entitled The Price of Citizenship, which asks “whether the civilians of New Zealand, men, and women, fully realised the implications of the joint participation of Pakeha and Maori in this last demonstration of the highest citizenship.” So it was that perhaps for the first time some New Zealanders went to Gallipoli and France to find out about their own indigenous peoples, the first peoples of the land.

The four Māori members of Parliament at the time were united in their support for Māori participation in war. Indeed, the MP for Northern Māori, Te Rangi Hīroa, led the charge literally and sailed with the first contingent in February 1915. In that recruitment waiata I mentioned earlier, Ngata singled out recruits from Te Arawa, my area, Te Aitanga-a-Māhaki, Te Aitanga-a-Hauiti, Ngati Porou, and Ngāti Kahungunu as stepping up for the obligations and ideals of patriotic service. His waiata, in fact, names these tribes as an expression of honour.

It is important to note that there was also considerable opposition from Māori. Although some supported the approach and rushed in to join up, others did not see the value of fighting for the British Crown, which had done so much harm to whānau, hapū, and iwi throughout the 19th century. So when compulsory conscription of Māori was introduced into the Military Service Act in 1917, those Māori who had had land confiscated for being deemed to have been in rebellion against the British Crown mounted a campaign of resistance. The Kīngitanga leader Te Pūea Hērangi was notable in her courage and determination to support the men who resisted conscription. She openly questioned why Māori should fight for an empire that had, from within living memory, invaded and occupied their lands. If the land that had been confiscated in the 1860s had been returned, then perhaps Waikato may well have reconsidered their position.

The Māori King at the time, Te Rata, also adopted the position that it was a matter of individual choice and no one should be forced to serve. Many of the men who refused to serve were imprisoned for refusing to serve. Some who refused to wear the army uniform were subjected to severe military punishments, being fed only bread and water and provided with minimal bedding. The imposition of conscription had long-lasting effects on the people of Waikato, and it is important that we also remember that history as we acknowledge today the onset of World War I.

Finally, when the Māori contingent returned in March 1919, it received a rousing welcome with parades and receptions throughout the country. A Māori Pioneer Battalion rugby team even toured the country for a series of provincial games. There are, indeed, many faces to war and many experiences that have followed us throughout this century. The native contingent suffered heavily in France and by early 1919 the Māori reinforcements were being supplemented by our brothers from Te Moana-nui-a-Kiwa, the Pacific, particularly Niue, Samoa, Rarotonga, and Tonga. Today we remember the courage and the sacrifices of those who occupied the ranks of the mighty Te Hokowhitu-a-Tū. We remember those who were evacuated from Gallipoli and survived physically, but they bore the scars of psychological warfare for the rest of their time on this earth.

We will remember the whānau who supported their families, their fathers, their husbands and brothers as they wrestled with the demons and their memories of devastation in the trenches, many of them turning to alcohol as a medicine to try to help them forget—a coping mechanism that would have disastrous effects. We remember the sheer determination of those who constructed the trenches, earning them the name of the “diggers”, the expertise and the genius evident in the military architecture they created. We remember the whānau who, through the policy of compulsory conscription, were deprived of their men either on the battlefields or from being imprisoned and we remember the suffering of family members who became casualties of that spirit. I tēnei wā e koro mā i te pō, takoto mai, takoto mai, takoto mai. Ko koutou i tae ki te mura o te ahi. Ko koutou rā i kite i ngā uauatanga o tēnei mea o te pakanga. Kāre anō kia oti noa te wāhi o tēnei mea o te pakanga. Ko te pakanga kei tēnei wā, kei tēnei whakatipuranga ēngari, ko koutou tērā i whakaritea mai ai te wāhi kia tau mai te rangimārie ki tēnei whenua. Ahakoa ngā uauatanga i pā atu ki a koutou, e kore koutou e warewaretia mō te āhuatanga o tā koutou tū ki mua i te aroaro o te hoariri. Mō te aha? Mō te painga o tēnei whakatipuranga. Koutou i te pō, e moe, e moe.

[At this point in time, lie down, lie stretched out and rest there in the underworld veterans. You were the ones who got to the battlefront and witnessed the difficulties related to this thing about waging war. It is not over yet. It is present still in this generation, but you were the ones who sorted out this matter about war so that peace would prevail over this land. Regardless of the difficulties that affected you, you collectively will never be forgotten in regards to the stance taken against the enemy at the battlefront. And what was the purpose for that? So that this generation will be better off. So slumber on those of you in the world of the dead and rest.]

Hon PETER DUNNE (Leader—United Future): When this raw, young, enthusiastic but naive country joined with the declaration of war in August 1914, we set in train a series of events that changed the face of this land for ever. The statistics do not tell the full and clear story. We know our population was about a million people at the time, of whom around 120,000 were to enlist and 59,000 were to be wounded, and, of that 59,000, 18,000 were to be killed over the next 4 years. The picture is even more stark when we look at the breakdown of our population at that time. Men between the age of 20 and 45, the fighting age, numbered around 200,000 only. So, over the next 4 years, the majority of that working population of men—and they were mainly men; there were a few hundred women involved—went overseas to war, and a significant proportion of them were wounded and killed.

Let us fast forward 100 years and put that into today’s context. In today’s context we would be looking at casualties of around 270,000 people. That is the population of Wellington and the Hutt Valley. Eighty-one thousand of those in today’s figures would have been killed. I ask this House how we would comprehend and cope with tragedy and destruction of that magnitude, because that is what our forebears 100 years ago had to deal with. It was not just the tragedy of the events of World War I but the ongoing ripping out of the heart of a generation or more of New Zealand’s youth that these events unleashed.

When they sailed in February 1915 with the first New Zealand Expeditionary Force, there was that sense of excitement, of adventure, and of duty to the mother country, although I have to say that my forebears, who were staunch Irish republicans, were not of that bent and did cause some trouble in this country. But, generally speaking, this was an adventure to be hailed and embarked upon. When they landed in Egypt for their training, that sense of mystery and excitement continued. It was only when some of them found that their eventual destination was Gallipoli and even more found that they were heading for the intractable difficulty of the Western Front that the awful reality of the adventure that they had embarked upon struck home. Over the next 4 years New Zealand forces, with distinction, admirable courage, valour, and strength, carried out their mission. They were loyal, they were effective, they were united, and they were committed. They believed very strongly—and their country backed them—that they were doing their duty to make a better world.

When they came home it was not the land fit for heroes that Lloyd George promised in Britain. They came home to the outbreak of the Spanish flu and more misery and a troublesome decade through the 1920s leading to the Great Depression of the 1930s. It is little wonder that the next generation is captured in that seminal novel by John Mulgan, Man Alone—the essential spirit of the New Zealander fighting against the world. Those images and influences have shaped our heritage today—for the better, I think. We are determined, we are courageous, and we are a plucky nation that is prepared to stand up for the things we believe are right and that is the legacy of those who went away 100 years ago.

Sadly, it was not the war to end all wars. If anything, it was the war to start the ongoing round of difficulties we still face today. The legacy of unwise decisions of World War I is still felt in the Middle East. We still see it in parts of Europe in the constant attempts to rewrite national boundaries. We still see it in some of the lingering enmities that are abroad. But let not that detract from the courage, the passion, or the commitment of those New Zealanders whose sacrifice we see reflected around these walls. They went with the best of intentions, they made a huge sacrifice on behalf of a fledging nation, and they carried out their duty bravely, courageously, and proudly. If there can be an epitaph for those New Zealanders, it must surely be around those terms.

It is appropriate that this Parliament remembers them. It is appropriate that this Parliament draws some courage from their determination. But it is appropriate too to remember that the challenges that they confronted when they went away in that naive sense of optimism have not been resolved, are still with us today in a more horrific and more dramatic sense than ever, and challenge New Zealand and all nations to continue to work for peace, to work for freedom, and to work for a world where people actually feel quite good about each other.

Motion agreed to.

Bills

Imprest Supply (Second for 2014/15) Bill

First Reading

Hon BILL ENGLISH (Minister of Finance): I move, That the Imprest Supply (Second for 2014/15) Bill be now read a first time.

Bill read a first time.

Bills

Appropriation (2014/15 Estimates) Bill

Third Reading

Imprest Supply Debate

Imprest Supply Debate

Hon BILL ENGLISH (Minister of Finance): I move, That the Appropriation (2014/15 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2014/15) Bill be now read a second time. It is a pleasure to be able to put this motion to the House as we close off the debate over the 2014 Budget, as we close off the Budget for 2014, and also as we look to the prospect of a general election just 8 or 9 weeks away. This Budget underpins a strong economy where the Government has sound finances, an economy where there is confidence in the direction of the economy and the conduct of economic policy and credibility built up on a track record with 84,000 new jobs last year, and, most particularly, the confidence in households that they have the prospect of better incomes and of finding a job if they do not have one. That is the platform for growth and for the prospects for sustained economic performance over the next 3 to 5 years.

It is that sustained economic performance that has the capacity to make a real difference to the prospects of young New Zealanders so that they can take part in a productive economy that gives them scope for the use of their capacities and also sustained growth that gives the prospect of a lift in household incomes. In the last 2 years the average wage has lifted by $3,000, and in the forecasts that underpin this Budget there is the prospect that by 2018 the average wage will lift by a further $7,000 to over $62,000.

I must say that it is a sharp contrast in outlook as we approach the election compared with that which we inherited back in 2008. I have here the 2008 Labour pre-election update—the pre-election update under the previous Labour Government. Let us read just a brief part of the executive summary: “Imbalances have built up … including inflation pressures,”—well, inflation was then 5 percent; today it is 1.6 percent—“[and] an overvalued housing market,”. It had doubled in 7 years—it had doubled—and, yes, there are housing pressures in the market and I will come back to dealing with those, but it is nothing like a doubling in the previous 7 years. This is Treasury. It then goes on to list high household debt. Well, household debt up to 2008 reached record levels. Our households have never been as indebted as they were in 2008. Then it goes on to add to the list of its outlook for the economy. So we have already got high inflation pressures, an overvalued housing market, high household debt—in fact, record household debt—and a large current account deficit. If there is a moral platform on which the Opposition members like to strut their stuff, it is complaints about the current account deficit. What was it in 2008?

Chris Auchinvole: What was it?

Hon BILL ENGLISH: Currently it is less than 3 percent, and Opposition members say it is terrible. I would have thought that if you went back to look at the current account deficit and you saw it as a measure of stewardship of the previous Labour Government, and if it is bad at less than 3 percent, it must have been less than that.

Chris Auchinvole: What was it?

Hon BILL ENGLISH: It was 8 percent. That is more than double. In fact, it had been at record levels in 2006, 2007, and 2008. It had never been that high.

Hon Dr Nick Smith: What did they say then?

Hon BILL ENGLISH: Well, they did not say anything, actually. They just did not talk about it. If credibility is an issue, and it always is in an election, then the current account deficit was sufficiently worse, and that is not the end of the list—that is not the end of the list. Treasury then refers to implications for interest rates. What it did not say, which it could have said bluntly, was that under Labour’s stewardship to 2008, the first mortgage rates reached almost 11 percent. I do not think any household today believes that that could have been possible—that that was how badly managed the economy was then, and that in a country where we have had the benefit of 50-year low interest rates now rising somewhat, first mortgage rates were over 10 percent.

All of those things are dramatically better—not a little bit better but dramatically better—now than they were then. The point of that is partly underlining the credibility of economic management over the last few years, which has dealt with a major recession, the earthquakes, and now a recovery that brings with it its own risks of growth. But more important than that is that it demonstrates that the prospects for sustained growth from here are remarkably better than they were in 2008 and significantly better than they were in 2011. The platform for that outlook is sound Government finances heading into surplus, rising but moderately rising interest rates, moderate inflation, strong export growth, and, most particularly, the verdict of the people, and that is in the migration figures.

You see, what this Government has focused on is not just the numbers; it is the resilience and positive aspirations of New Zealanders in their households and in their workplaces. What they have demonstrated in the last 5 years is impressive resilience—changing how they do business, becoming more productive, getting on top of their debt, and taking care with their spending so that now they have built the platform for what could be 3 to 5 years of sustained economic growth that delivers higher incomes and tens of thousands of more jobs annually. The people who made the decision that that looks likely are the tens of thousands of Kiwis who decided to stay home.

Interestingly, tens of thousands of Kiwis are predominantly in the regions that the Opposition members say are suffering. The net outflow to Australia 3 years ago was 40,000; last month it was zero—last month it was zero. Why? Well, partly because the Kiwi battlers have a better understanding of the Australian economy than Australian economists. They know it is more difficult to get jobs in Australia. But, more important, they know that if they stay here, they will not be on the dole; they will be getting jobs, and that is what has happened.

This economy has demonstrated an impressive ability to expand the supply of labour and capital to sustain growth. If we can stick to that, New Zealand will have a period of sustained growth that will not finish off with a collapse like it did in 2008, but will continue into the future, growing out our potential, and generating higher incomes year after year. I think we have all learnt that getting a country in shape is like getting a household in shape. You might get a lucky break but you probably will not. You have to graft away, doing everything a bit better, as we have set out in our Business Growth Agenda, getting 200 things a bit better. So I want to pay a tribute to the New Zealanders in their homes and in their workplaces who have turned this country round.

I also want to pay a tribute to our public servants. If we can get re-elected, the Public Service will be on the verge of the most substantial effective shift in the delivery of public services to vulnerable New Zealanders and all New Zealanders in 20 years.

Hon DAVID PARKER (Deputy Leader—Labour): The question New Zealanders will be asking themselves after they heard that last speech is why, then, the Government has gone early. Why has it gone early? Why has it called an early election? Because from here on, all of the forecasts show that the economic fortunes of the country get worse than they currently are. In other words, this is as good as it gets. This is as good as it gets. There are 147,000 people unemployed. The overall unemployment rate is still 6 percent. The youth unemployment rate, the 15 to 19-year-olds—it is terrible—is 24 percent. But even the unemployment rate for 20 to 24-year-olds, which is a more reliable statistic, is 13 percent. There are 74,000 New Zealanders not in education or training. In addition to that, we have got dropping exports. The current Government inherited amongst the lowest Government debt in the world. Indeed, Bill English was good enough at that time to acknowledge that it inherited amongst the lowest unemployment in the world and amongst the lowest net Government debt in the world. Indeed, he said, in the face of the global financial crisis and the recession around the world: “This is the rainy day that Government has been saving up for.”

Hon Annette King: It wasn’t him.

Hon DAVID PARKER: It was not him—no. National opposed all of the surpluses that Labour ran to leave the books in that good shape. Since then, we have the gaps widening in New Zealand—we have the gaps widening in New Zealand. It is not just the Labour Party saying that; it is just about everyone.

Hon Bill English: No, it’s not true.

Hon DAVID PARKER: Oh, it is not true. It is not true, says Bill English. Well, I will quote for him Shamubeel Eaqub, the chief economist at the New Zealand Institute of Economic Research, who said: “One of the biggest issues of this generation is the widening gap between the haves and have-nots. The gaps are opening up in New Zealand and are really big across geographical, race and education lines.” It is true, Mr English, and you know it is true. You know that it shows up in things like rising extreme child poverty. We have the lowest housing homeownership rates in 50 years and they are still dropping. You are not shaking your head now, are you, Mr English?

Hon Bill English: I am.

Hon DAVID PARKER: He is shaking his head, denying that homeownership rates are the lowest in 50 years. He complained about the increase in price rises for housing under the Labour Government. It is true that by the time we left office, house prices were higher than we had wanted. They have since gone up at a higher rate under this Government, and from that high base that he complained about they have gone up another $200,000 so that the average house price in Auckland is a fraction under $700,000 for a house. As a consequence, the Reserve Bank is jacking up the interest rates for everyone, holding up the New Zealand currency further to the detriment of exports, and, as a consequence, we are still losing jobs in our export industries. Bill English came to power promising that he was going to lift exports to 40 percent of GDP by 2020. When he came to office, exports were 33 percent of GDP. They have now dropped to 29 percent of GDP and Treasury’s own forecast dropped them to 26 percent of GDP over the next 3 years.

Hon Annette King: He didn’t mention that figure.

Hon DAVID PARKER: No, he did not mention that figure because, again, it just shows that the reason the Government has gone to an election early is that there are imbalances in the economy that have not been fixed. We have got exporters and manufacturers still cutting jobs in the face of an overvalued dollar. We, in the Labour Party, know that for sustained, economic growth that lifts the wages of everyone rather than it all going to the people at the top who benefit from the speculative economy that booms under the National Party, we need an economy built on a diverse range of sophisticated job-rich exports.

That is why the Labour Party’s policies do just that. Our economic upgrade policies include a universal KiwiSaver scheme. KiwiSaver, of course, was a Labour Party initiative that the National Party opposed and that it now thinks is a good idea, but it will not go so far as they have in Australia and have a universal, work-based scheme. We know that we need that in New Zealand so that we have got more of our own capital to invest in the productive sector. Having more capital is not the only answer. That capital has to be directed towards the right parts of the economy. That is why we need a capital gains tax. Bill English did not show last night. He had agreed to come to a debate on the capital gains tax at Victoria University but he pulled out. He is pulling out of most of the economic debates between now and the election because the Government does not want to answer the difficult questions about why, from here, the economy gets worse. We do need a capital gains tax excluding the family home.

The international experience is that in America 60 percent of their capital gains tax is paid by the top 1 percent. It is the same in Canada. In Australia, 60 percent of the capital gains tax is paid by those on incomes of more than $180,000. It is a fair tax as well as being economically efficient and pushing investment into the bits of the economy that we, in the Labour Party, want to grow. That is why we have also got a research and development tax credit to encourage innovation, and why we want to encourage investment and the increases in productivity that come from the sophisticated and expensive plant that we want our manufacturers to invest in. We do that through our accelerated depreciation policies.

Industry training is important. KiwiBuild is important, for building some of the houses we need, especially in Auckland and Christchurch. The overall package that the Labour Party has will transform the New Zealand economy, it will support higher incomes, and it will lower inequality. In the housing area, through KiwiBuild, through universal KiwiSaver and a variable savings rate, which gives the Reserve Bank another tool other than interest rates to control inflation, through the capital gains tax, and through restrictions on overseas ownership of New Zealand land to stop offshore speculation, we will stabilise the housing market and we will restore the Kiwi dream of homeownership.

The reason the Government has gone early to an election is that the results from here get worse. I want to deal with the assertion that we hear so often from the Minister of Finance and the Prime Minister—because they are so nervous about it—and that is the misrepresentation of where we are at with inequality. We know that the rapid increase in inequality of income from year to year happened in the 1980s and then the 1990s.

Hon Bill English: It’s not happening now, is it?

Hon DAVID PARKER: Well, it is actually happening. The most significant increase in income inequality from year to year occurred during that period. The only significant decrease was, of course, through Working for Families, which was opposed by the National Government, which called it “communism by stealth”.

Hon Bill English: It’s not happening now.

Hon DAVID PARKER: Well, it is happening now because the statistics that the Minister of Finance conveniently quotes exclude capital gains—exclude capital gains. The other underlying reality here is that New Zealand went from being in the best 30 percent of countries in the world to the worst 40 percent during that period, at a time when the whole OECD club was getting bad. So New Zealand now has high rates of income inequality—so bad that the consequences of inequality pile up year after year. You see that in the statistics about homeownership, which is at the lowest rate for 50 years and continuing to get worse. You see it in the fact that luxury car sales are taking off, and they are the highest they have ever been, at a time when child poverty, particularly severe child poverty, gets worse and worse.

That is the contrast between the party on this side of the House and the National Party. We actually do have a plan for structural change. National Governments only ever trim the sails. They tinker otherwise. This Government increased GST and dropped income tax rates, especially for the wealthy, in its first term. This term, all it has done is sell off State-owned enterprises. It has done nothing to deal with the underlying imbalances under our economy and nothing to improve savings. The Minister of Finance referred to rates of household debt decreasing during the recession, and they did, and they always do. Now, household debt is projected to increase again because the imbalances in the economy have not been fixed and we are not exporting enough to cover the cost of our imports and interest. As a consequence, New Zealand’s debt will go up and so will the sale of our land and our companies to overseas owners.

New Zealand needs the economic reform package that the Labour Opposition is bringing forward. It has widespread respect out there. We know from a wide range of sources, whether it is the business audiences or the union audiences—

Hon Dr Nick Smith: More tax, more spending.

Hon DAVID PARKER: Well, actually, we reduce debt faster than the National Party does under our alternative Budget, which has already been released.

Hon CRAIG FOSS (Minister of Commerce): It is a pleasure to speak in this third reading debate on the Appropriation (2014/15 Estimates) Bill. I will pick up where my colleague Mr English left off, and also pick up some of the points that the previous speaker, the Hon David Parker, was just making. I do note that he was monstered, thrashed, beaten last night by the humble Simon O’Connor, one of our MPs, in a debate around the capital gains tax up there at the university, I believe it was. So things are looking good in showing the depth of National’s understanding of things economic and the competency across our caucus.

National is working for New Zealand. National is working for all of New Zealand. National’s plan is working for all of New Zealand. New Zealanders can continue to trust in the National Party and in a National-led Government. New Zealand can continue to be confident about where our country now sits in the world and where we can be. Our families can be confident and continue to trust in the National Government to deliver for them and their families. That is in spite of the global financial crisis. That is in spite of New Zealand being in recession when the National Party came into Government in 2008. That is in spite of the decade of deficits it inherited, as outlined in the pre-election update in the independent analysis by Treasury in 2008. That is in spite of the unfortunate and tragic circumstances in Christchurch and the resources we have committed to in rebuilding Christchurch.

Also, we continue our prudential management of the economy, which delivers better public services each and every single day across a myriad of Government services. Of course New Zealand can trust and be confident that we will continue to deliver a surplus in the accounts, as shown in this Budget. New Zealanders can continue to trust National to deliver results, be it on interest rates—positive results on interest rates for our families—on the official cash rate, on mortgage rates, or on net migration. New Zealanders can continue to trust National to deliver. The cost of living is low, unlike the contrast, which I will talk to in a minute, of when we came into Government in 2008. After-tax wages are improving under this National-led Government. A fairer tax system has been put in place, rewarding all Kiwis, particularly lower-income Kiwis and those receiving assistance, in one way, shape or form, be it assistance or tax credits.

We are delivering across the social sector as well as the economic sector. We are delivering in education, be it in early childhood education, virtually doubling the spend on early childhood education; in the primary sector, with national standards helping parents be informed as to the progress of their children; in the secondary sector, with targets and hard lines in the sand for attainment and achievement by our students across their demographic; or, of course, in the tertiary sector. In the law and order sector there is a 30-year low for various crime statistics. Reoffending statistics are low, and declining. There are more police on the beat, due to Better Public Services. We are also delivering across justice, court time, and prisons. New Zealanders can continue to trust National to deliver for all New Zealanders.

The challenges a National-led Government now has are how to manage and sustain a surplus in our accounts and an ongoing growing economy, create higher after-tax wages for our families, deliver better public services, and create wealth for our population. Those are the challenges that this Government has and they are much better challenges, I gather, than the challenges that Labour members are now trying to articulate and that they had, because their current challenge is to try to be positive for more than 5 minutes. It does not seem to last, whatever slogans they may put on their billboards or talk about. They are not positive; they are negative.

The previous speaker talked about the growth of a Labour-led Government, so the only thing we really have to compare is the growth and the statistics and the metrics and the results that it had when it left Government in 2008. That is what we inherited. The growth those members talk about was actually based upon inflation. They inflated wages. Yes, gross wages grew, but inflation was running at 5 percent when we came in and Labour left. They talk about a big book.

Actually, at one point the previous speaker started talking about their capital gains tax. That is typical Labour—normal form for Labour and the Greens—talking about tax. They talk about new taxes and adding taxes, which are basically other ways to take money out of our hard-working New Zealand families. Another tax is what they are talking about. This capital gains tax they talk about—Labour members say it will raise $4.5 billion in the first 4 years. That is what they said—$4.5 billion cash in the first 4 years. How does that work? I think their tax is at 15 percent, so if you work the numbers, it is about $1.1 billion realised tax every year for 4 years. The numbers do not add up, like any of their numbers. Actually, they must be trying to be a bit tricky somewhere. Under the settings that they have announced, they cannot raise $4.5 billion cash over the first 4 years of their tax—yet another tax—no matter how they colour it and how they describe it.

Let us look at some contrasts. The previous speaker, Mr Parker, was talking about contrasts, and that is fair enough. It is actually quite appropriate and right, as we move towards the end of this Parliament, to look at where the National-led Government is at after 6 years, and the economic results particularly, because this is the third reading of the Budget debate, and contrast that with where Labour was at when it left office in 2008. Remember some of the highlights at the time. The previous speaker spoke about exports. There was a problem. The export sector, as we discovered when we came into Government, had essentially been in recession for about 4 years. New Zealand is an exporting nation. The previous speaker seemed to be quite happy, in fact, if exports did decline. They were declining and in recession for 4 years when we came into Government. We are an exporting nation. What was Labour’s solution? Does anyone remember Export Year? That was Labour’s solution—some highlight.

What else did we have back then? Back then, when National came in, we had 5 percent inflation. After years of good economic prospects, Labour blew it, and that is the test if it were to come into Government again—5 percent inflation. Absolutely the result of that is theft of financial assets, and theft of savings. It actually hurts the vulnerable the most because it makes their cost of living so much more expensive than it needs to be. So, yes, Labour just sits on inflation to try to boost its accounts. Contrast that with where we are now. There is 1.6 percent inflation. It was 5 percent when Labour left office. After 6 years of a National Government, with all the issues we have dealt with, there is 1.6 percent inflation in New Zealand.

The official cash rate when Labour left office was 8 percent. Labour talks about changing the Reserve Bank of New Zealand Act or something, but nothing will change that part. When Labour left Government the official cash rate was around 8 percent—8 percent. It is currently just over 3 percent. It is just over 3 percent. Mortgage rates—what better measure, when one talks about Kiwi families and their aspirations for homeownership. Mortgage rates when Labour left office, that is the test. When we go to the election and wonder how National has performed in the economy, and how Labour performed, they are our test. Under National, mortgage rates are just over 6 percent. Under Labour, they were 11 percent—11 percent mortgages on our families in New Zealand under Labour.

The current account deficit under the National Government is 2.8 percent, and that is apparently deeply worrying for Labour. Under Labour, the current account deficit was 8 percent—a further theft from our population. Net migration to Australia was zero this June. Net migration was 40,000 in the last year of Labour and 3,000 per annum. New Zealanders can trust National to continue the hard work on implementing our plan for a better, sustainable, brighter economic future. Thank you.

GRANT ROBERTSON (Labour—Wellington Central): That member says that we can trust him. Well, I wonder whether the teachers of New Zealand trust the man who brought them Novopay. That is who Craig Foss is. He is the man who oversaw teachers not being paid. If there is one thing we should be able to expect when we get into a job, it is that we will get paid. Even today, the legacy of Craig Foss carries on. There are still problems with Novopay today. It was Craig Foss, Hekia Parata, and Bill English who signed off on that, and he asks us to trust him. Craig Foss asks us to trust him, and he cannot be trusted.

This appropriations debate is the debate where we finalise how we feel about the National Party’s Budget. The truth is that this Budget is a huge lost opportunity. This could have been the Budget where, once and for all, New Zealand addressed inequality, and where, once and for all, every New Zealander was guaranteed a fair go. This could have been the Budget where every child got the best start in life, with support for parenting programmes, with income support, and with making sure that ante-natal classes were properly funded. This could have been that Budget, but it is not. This could have been the Budget that restored the Kiwi dream of owning a home and of actually having a warm, dry home for every New Zealander to grow up in, whether they are in their own house or in a rental house, but that was a lost opportunity as well. This could have been the Budget where we put people back at the centre of the economy, where we guaranteed that every New Zealander who wants to work can have a job, and where we set a target and said that full employment is what we should have in New Zealand, because work brings dignity and work brings prosperity to this country. It could have been the Budget where the Government stepped up and said: “We will be a partner in this economy, not some bewildered bystander watching the ebb and flow of commodity prices.” But, no—this Budget was a lost opportunity.

All of those things I have mentioned that could have been done are a core part of the Labour Party’s economic plan. Our economic plan is not just about celebrating a statistic here and there or slapping ourselves on the back when dairy prices go up and then grimly tightening our belts when they go down because there is no other alternative for us. That is not the economy that I believe in or that the Labour Party believes in. We believe in an economy with a human purpose. It is actually about what people gain and benefit from it. It is not an end in itself, and that is where the National Party runs out of ideas. It believes the economy is simply an end in itself. The statistics are all it is interested in. Well, the real people out there in New Zealand are worried about their jobs, whether or not there is a future for them and their children, and their wages. That is the economy for most people—do they have a job, and are they being paid sufficiently to meet their bills and look after their families? And time and again this National Government fails to recognise that.

What we need is active job-creation policy. That comes from the very big picture, as David Parker said, of making monetary policy actually work for New Zealanders and saying that we will use a variable savings rate to influence monetary policy, to stabilise the dollar, and to give exporters a fair go. It is worth noting that a target of exports at 40 percent of GDP is a laudable one—

Shane Ardern: Yeah.

GRANT ROBERTSON: —but it is going in the wrong direction, Mr Ardern. It is going the wrong way. It started at 33 percent, hit 29 percent, and is projected to go to 26 percent. The percentage of exports as a part of GDP will be down to Bill English’s poll rating before long. That needs an active Government. It needs industry policy that says we will support the industries where there are jobs to grow. We, in the Labour Party, are not going to rely on a big pile of raw logs in the port here in Wellington as our future. We are going to support an industry to process those logs, to add value to those logs, and to create jobs in New Zealand because that is what a Government does when it is a partner in the economy—

Hon Dr Nick Smith: By putting energy costs up? You already did that.

GRANT ROBERTSON: —not a bystander like Nick Smith would like to be. It is where we support regional development, with funding to be a catalyst for making sure that there are jobs, and that is a $200 million fund that we have announced for right across the regions. Lawrence Yule, who is hardly a great friend of the Labour Party, has said that that is a step in the right direction. What did National come up with, with its great regional development idea? You get to text Paula Bennett. That is regional development for the National Government: text Paula Bennett with your ideas about crazy and loopy rules. Those are the ones like where you have to specify every single tree in your plans. That was the rule brought in by the National Government.

Real regional development happens in partnership between a Government, local government, local industry, and workers, and that is what the Labour Party will bring in as part of our economic plan. The focus must be on jobs. Nearly 150,000 people are still out of work in New Zealand, and the National Government complacently believes that that is somehow OK and that it somehow represents a measure of success. It cannot be a success when we have that many people out of work. There are more people who are jobless today in every region bar Canterbury than when National took office. That is a measure of failure, not a measure of success.

We look at young New Zealanders striving to find their way into a job and to get some training, and we see more than 70,000 young New Zealanders not in employment, education, or training. The commitment of the next Labour Government is that every young New Zealander under the age of 20 will be in work, education, or training, and that is the future we owe the next generation of New Zealanders. We owe them lifelong learning because the jobs of tomorrow have not even been thought of today, in many cases. We need to provide opportunities for people to constantly train and retrain, and that is what the next Labour Government will do.

When we look at this Budget it is the smoke and mirrors of the National Government. It is the “fudge it Budget”, as we said on the day. You shift a bit of money around for ACC, people have to pay more in their levies than they need to, you have a $375 million loan for a road that has never been heard of before in order to disguise spending, and you have $560 million less spending on infrastructure in Canterbury, all so that Bill English can come forward with his wafer-thin surplus. That is not a real economic plan. A real economic plan has to be based on more than milk prices and recovery from a disaster, but that is all that National has brought to the House with this Budget. It needs to be based on a diversified economy and on a range of industries—high-value manufacturing, information and communications technology, agribusiness, working with iwi in the post-settlement environment to develop new industries in forestry and wood right across New Zealand. That is real economic development. That is economic development with a human purpose that is about jobs.

Instead, “Sheriff” Steven Joyce sits in his office in the Beehive and fires off his latest silver bullet for the economy. So it is oil and gas, and everyone must be in on it. Well, maybe there are some opportunities for that in some regions of New Zealand, but, actually, it is not a long-term proposition. It is not a long-term proposition from an environmental point of view, and it is definitely not a long-term proposition in a number of areas in New Zealand where those resources simply are not there. Then we have the National Government’s other big solution: throw $200 million at roads. Well, what is emerging as the papers for that are coming out is that there are some pretty poor benefit-cost ratios.

Jonathan Young: That’s all you’re doing for the regions—$200 million being thrown away.

GRANT ROBERTSON: Mr Jonathan Young might want to have a look at the papers on the Kawarau Falls Bridge—a $25 million bridge, which the Deputy Speaker will be familiar with. It is a bridge with an appalling 1:1 benefit-cost ratio that Bill English has had built, essentially, so that he can drive from Queenstown to Dipton when he pops in on his holidays down to Dipton. It is smoke and mirrors—wasting money on things that will not actually drive economic growth in the regions.

This Budget truly is a lost opportunity. The focus should have been on getting New Zealanders into work, on giving New Zealanders the opportunity to own their own home and to live in warm, dry, safe houses, and on supporting families through more spending on health and education and having more support for children. In the future, we must make it our priority for New Zealand to reduce the gap between the haves and the have-nots. When that gap grows, all it does is drive a wedge between New Zealanders, and it limits our potential as a country. It is not just haves and have-nots when it comes to individual income; it is haves and have-nots when it comes to regions in New Zealand. We need to see widespread economic growth right across the regions. The East Coast of New Zealand and Northland deserve as much attention as Auckland does. We need to make sure that there are opportunities in the regions for good, sustainable jobs. That should be the priority of the Government, that should have been the priority of this Budget, and it is huge lost opportunity that it is not.

Hon TODD McCLAY (Minister of Revenue): That was a speech from the next leader of the Labour Party, and can I say that it is one of the best speeches I have heard from a member of the Labour Party in Opposition for a long, long time. But do you want to know what marks it out from a speech by its current leader? There was not a single apology in that speech, and that is where it started to go wrong. As an adviser to the previous Labour Government, as with all other members of the previous Labour Government, he is yet to apologise to New Zealanders for the great mess that they left us when we took office. Grant Robertson needed to apologise for only one thing in that speech. He needed to apologise to his Labour colleagues who will lose their jobs on 20 September this year for not rolling David Cunliffe 3 weeks ago, when he had the numbers.

This is a very good Budget for New Zealand. It is Bill English’s sixth Budget in a row, under very difficult circumstances, where New Zealand has faced one of the steepest recessions over the last 50 years, in the global financial crisis. It is a Budget to help bring New Zealanders with us because New Zealanders have been working so very hard over the last 6 years, as New Zealand has had to face the effects of the previous Labour Government and the effects of the global financial crisis upon all of their jobs and upon our Budget. This Budget was about balancing the books. It was cautiously optimistic and it was all about opportunity for New Zealanders. It was about growth, it was about balancing those Government books, and it was about keeping interest rates lower for much longer so that Kiwis can keep extra money in their pockets.

It was about immigration and a great change, so that more New Zealanders find opportunity at home and choose to stay at home. Many more New Zealanders are choosing New Zealand to return to from Australia, the country about which the Labour Opposition has said resoundingly over the last 6 years: “Why can’t New Zealand be more like Australia?”. Do you remember that? In our first and second Budgets, when those members criticised us for being cautious, they said “Why can we not be more like the lucky country?”—that is, Australia. Well, if New Zealanders were to vote for the Labour Party and the Green Party and the Mana Party and the Dotcom party, and for every other party that those members on the other side will not rule out, to form a Government in the next term, then we will be more like the country that they call the lucky country. Is this not such a different Budget to that of Australia’s, where everything is going in the opposite direction? I am saying that a Labour Government, with the cabal on the other side that will try to form a Government, would drag New Zealand in the direction that the current Australian Government is having to fix after having a Labor-Green coalition over there.

This Budget was about jobs and it was about wages, and about putting families and children first. Do you know what? For the first time ever in the history of this country, exports have hit $50 billion. Every speaker on the side of the Opposition in this debate so far has been talking about the great myth of the manufacturing crisis and the perilous state that our export economy is in. For the first time ever, we have hit $50 billion of exports, based on a productive and growing economy.

As a Government we have been working very hard to get the Government’s books back into shape. In our very first Budget, Treasury forecast, after the mess that Labour had left us, that this country would almost never be back to surplus and that debt would continue to grow and grow and grow for the next 10, the next 20, and the next 30 years. Well, Bill English has done a significant amount of work on behalf of New Zealanders. We are predicting, through the last Budget, a modest surplus in the coming financial year, with those surpluses growing up to $3.5 billion through to 2018, which is a significant turn-round. We are one of the first countries in the developed world that are forecasting not only significant growth but surpluses. That gives the Government more choices about what we spend money on. Those are not choices that were there when we came to office 6 years ago. These choices that will be offered to the Government are choices that this Government, over six Budgets, has had to work so strongly with the help of New Zealanders to be able to deliver.

Where will this come from? Well, there is some very good news around the economy. It has grown by 3.8 percent to the year 31 March 2014, which is one of the higher levels of growth of any developed country and any developed economy in the world, and it is forecast to grow by 4 percent next year. We will hear the cries from the Opposition members, who will say: “Well, that’s just because of Christchurch and Canterbury.” Well, Christchurch and Canterbury are a part of that growth story, but we must also remember that Christchurch was our fastest-growing city, it was our second-largest city, and its growth was based upon production. It was a productive growth. The earthquakes that hit Canterbury and Christchurch did great damage to the New Zealand economy and great damage to people’s livelihoods down there. For the Government to be able to invest and work with the people of Christchurch to turn that round is part of that success story—4 percent growth predicted for next year.

Within that, what does that mean? Well, average wages have increased by $3,000 over the past 2 years. There is $3,000 extra on average in the pockets of hard-working New Zealanders, and that growth is forecast to increase by an extra $7,000 on average by the year 2018, so that the average wage will be $62,300. That is why we need to make sure that we have another 3 years of stable Government, another 3 years of carefully managing the economy, and another 3 years of being cautious around spending of Government resources and taxpayers’ taxes, so that we can continue to build on the economy and grow real-time wages for New Zealanders by an extra $7,000 up to the year 2018. Eighty-four thousand jobs have been created in the year to March, and Treasury forecasts that 170,000 jobs will be created over the next 4 years.

That is quite a contrast to what we found 9 years ago, when the productive economy in New Zealand was already in recession. The productive economy—the people out there who manufacture, who make things, who add value to them, who sell them, and who export them—was already in recession. In a very short period of time, as the whole of the world has grappled with the global financial crisis, we have been able to turn that story round so we have a stronger manufacturing base in New Zealand and we have more productive businesses. We have invested in all parts of the economy and infrastructure so that we can be more productive and therefore more competitive. This means that our economy continues to grow, there are more jobs for New Zealanders, and those jobs pay much better.

The other great part about this Budget was some of the things that we were able to reprioritise and spend money on. Grant Robertson said that this was a Budget of missed opportunity. Well, this Budget delivered by Bill English was all about opportunity and helping children and families: free general practitioner visits and free prescriptions for all children under the age of 13, 4 weeks’ extra paid parental leave for families, and $155.7 million extra for early childhood education, getting more children participating, supporting their families, and keeping fees down. We are not just throwing money at a problem, as the previous Government did, but spending it productively so more young people in New Zealand will be able to go and be involved, with increasing participation rates in early childhood education. There is $33.4 million extra to support vulnerable children, including eight new Children’s Teams to work with at-risk children around the country.

We are building a more productive and competitive economy. There is $69 million for New Zealand Trade and Enterprise to do more work in China, South America, and the Middle East, and help 200 more firms break into overseas markets. There is $57 million of contestable funding for science and innovation. We are at the cutting edge of that in this country. There is $52 million to establish another three centres of research excellence; $83 million to lift tuition subsidies for science, for agriculture, and for health sciences; $20 million to increase apprenticeship reboot places from 6,000 to 20,000 places; and ACC is on track to reduce costs for New Zealanders.

Finally, I want to say that education is very important to us. Over 4 years, $858 million of new spending will lift our investment in early childhood education and in primary and secondary schools. We will spend $10.1 billion a year. This Government and Hekia Parata’s commitment to education is second to none. It is being spent to give young New Zealanders every opportunity that they can give them. Can I say this is a good Budget for New Zealand. I want to thank Bill English for his hard work over 6 years, and I look forward to the next 6 weeks, when we talk to New Zealanders about the need for another 3 years of stable, careful Government and careful management of our economy.

Dr RUSSEL NORMAN (Co-Leader—Green): I rise on behalf of the Green Party to analyse, I guess, the Government’s Budget, and also its economic direction and the path that it seems to be taking the country on. I think we have a pretty clear choice in front of us. We have the National Party’s pollution economy, which is the direction that it is proposing to take the country in, versus a smart Green economy. I think that in this election and what is in front of us at the moment with this Appropriation (2014/15 Estimates) Bill and the Government’s Budget, we have got a pretty clear sense of the different paths that are open to New Zealand.

If you look at the economic performance of the country under this Government, it is a simplified economy. As time has progressed, our export profile has become simpler and simpler. Whether you are looking at milk solids, which obviously are probably the mainstay of the Government’s economic agenda, whether you are looking at raw logs—and over 50 percent of all forest trees felled now are exported simply as raw logs; that is the Government’s strategy—or whether you are looking at oil and gas, these are the key parts of the National Party’s economic agenda. It is a very simple, very low value-add, commodity-based approach to economic development. That is what National is directing the New Zealand economy towards: that kind of simplified commodity exporting.

There are a number of problems with this strategy. The first problem with this strategy, obviously, is that it has pretty low value-add. It is pretty hard to become prosperous when you are a simple commodity producer, and it is a pretty low value-add strategy. On top of that, we are running into these very significant environmental constraints. If you look, for example, at the agri-food sector, the Government’s strategy of more and more volume—increased milk powder production every year—is having this dramatic impact on the rivers and lakes across New Zealand, because, as every scientific study has shown, if you increase the volume of production, you very soon start to have this very dramatic impact on rivers and lakes, which, of course, are downstream of intensive agriculture. As the Government has subsidised industrial dairying and subsidised dairy production, we have had these very big consequences for our rivers and lakes. The Government has said that we should just accept this as a kind of Faustian bargain, if you like. The idea that in order to pay our way in the world, we have to accept that we are going to have toxic rivers, is essentially the National Party’s position.

There is, of course, a different strategy, which is the smart Green strategy, which has been promoted by the Riddet Institute, which is the institute of agri-food research based out of Massey University and is the leading voice for the agri-food sector. This is much more about value-add and innovation, the very opposite of the strategy being pursued by this Government. In order for that to happen, of course, you have to invest in research and development. If you look at the Government’s projections in its own documents, it is proposing to cut investment in research and development, as it said in its Draft National Statement of Science Investment. It is proposing to cut investment in research and development by 10 percent in real terms over the next 3 years, whereas the Green Party is proposing to increase investment in research and development and innovation over the next 3 years by $1 billion.

It is not just about the quantum of the amount of money you spend on research and development, but that clearly is significant. It is also about how you do it. When the Government came in it abolished the research and development tax credit. The thing about a research and development tax credit is every business gets to direct its own innovation and its own research and development spending and then get some support from the taxpayer for that research and development spending. What the National Government replaced it with was a series of grants that Steven Joyce controls. Steven Joyce sits there and picks the winners. He says “OK, you’re going to get some Government money in the form of research and development grants, but only if you satisfy my particular criteria and I happen to like your business.”, and all the other businesses will not get any money to support them for research and development.

Instead of picking innovation as the winner, which is what the Green Party approach is, the National Government picks particular individual businesses that get money from Steven Joyce through research and development grants. That is a very different strategy, which is kind of ironic because the Government goes on and on about not picking winners, but when it comes to research and development funding that is exactly what it is doing. It abolished research and development tax credits, which give all businesses the freedom to innovate and give all businesses the opportunity to get some support to do research and development, and replaced it with Steven Joyce picking individual companies and saying “You’re going to get a research and development grant.”

Steven Joyce is a bright guy, no question about it, and I kind of acknowledge him as a worthy opponent. But the thing is, in spite of that, Steven Joyce cannot know which are the right businesses to pick across the whole of the New Zealand economy, or which are the right businesses to direct research and development support towards, in order to pick the winners that are going to come out of it. Steven Joyce just is not that smart. Nobody is that smart. That is why the majority of OECD countries use research and development tax credits to support innovation across their whole economy. That is what the Green Party proposes, which is the exact antithesis of picking winners, which is what the National Party policy is through its research and development tax grants.

You get a similar kind of issue in what you might call investigator-led research or science. The Marsden Fund basically says “Here’s money to scientists so that they can do science, so that they can investigate things and do research, if not development.” That is open-ended. It says “Investigators pursue things.” The Government is moving funds away from the Marsden Fund and into the National Science Challenges, which has meant that lots of scientists are extremely critical of the National Science Challenges. What those science challenges are is that, again, Steven Joyce has picked these 10 science challenges, and he has said “I am going to direct a whole bunch of money into those, instead of supporting the sciences more generally.” Instead of supporting investigator-led research, whereby researchers try to investigate problems and come up with solutions, which tends to produce those kinds of breakthroughs that are incredibly valuable for society as well as the economy more generally, once again the heavy, dead hand of Steven Joyce is upon innovation in our country.

Steven Joyce’s heavy hand sits on innovation in the research and development grants. You get a grant if Steven Joyce approves it, whereas the other system that the Green Party is proposing is a research and development tax credit. We give all businesses the freedom to innovate. Then we see the same thing in what we might call more pure science, where instead of actually supporting science across the board, where scientists are given support to investigate things, Steven Joyce is picking 10 particular science challenges. His dead, heavy hand sits on it and says “If you’re not doing something that meets these criteria, if you haven’t filled out all these forms, filled out all this bureaucracy, you’re not going to get the money.”

That is the contrast between what the Green Party is proposing for a smarter, greener economy versus the National Government, which is picking winners in dirty industries. The National Government’s pollution economy says that if you are creating pollution, you are probably going to get a grant, because that is what the National Party is going to support. If you are doing simple commodities, yes, you’ll get some money. If you are doing milk powder, then of course the National Party will support you. If you are doing oil and gas, it turns out you will get massive support from the National Government for what you are doing. But if you are involved in innovation in all these other different fields—and there is no way any one person can understand the full field of innovation—you do not get support from this Government. That is, I think, the stark contrast: the pollution economy supported by the National Government versus a smarter, greener, innovative economy promoted by the Green Party.

There is also a lack in the National Government’s Budget for all the simple things. There is no price on carbon. The Green Party put a proposal for a carbon tax cut, where we put a price on carbon and return the revenue to income earners in the form of a tax cut. The first $2,000 will be free of income taxes under the Green Party’s carbon tax cut, plus we cut the company tax rate one point, from 28 to 27 percent. The idea of that is to create a very strong incentive for those businesses that are efficient in greenhouse emissions, the kinds of businesses we need to grow to protect our climate but also to build a resilient New Zealand economy in a carbon-constrained world. Instead, the National Government says “Carbon is free. You can create as much pollution as you want. In fact, the Government will subsidise it.” It is the same with water pollution. The National Government will subsidise it. Actually, it has got the signals exactly the wrong way round, if we want to build a resilient green economy that will actually prosper in the years ahead.

Finally, I just finish on the issue of fiscal conservatives. The National Party opposed every Budget when it was in Opposition to cut Government debt. It said the surpluses when Labour was in Government should be spent on giving tax cuts to the rich. Fortunately, National was in Opposition, so it lost all of those debates and we were able to cut Government debt very significantly. As soon as National got into office, what did it do? It started borrowing again. It has never run a surplus, not a single surplus. It gave tax cuts to the rich. It had to borrow over $5 billion to fund tax cuts for the rich. That is ridiculous. It is the most fiscally irresponsible Government we have had in living memory in New Zealand. Whether they are in Opposition or whether they are in Government, National Party members are not fiscal conservatives; they are the exact opposite.

PAUL GOLDSMITH (National): I always seem to get to follow the Greens, which is a little bit frustrating. Dr Norman, I understand, has a PhD. I am sure it cannot be in history, because his history is very wonky when he implies that the Labour-Greens Government left the country in good shape in 2008. Yes, it did run surpluses and was reasonably disciplined for the first 6 years of the Government. But in the last term the taps were opened and spending exploded by about 50 percent over a short period of time. The final Budget that it bequeathed to this Government was a $3.9 billion deficit before any other countries in the world were going into recession, and a promise of 10 years of deficit and a massive increase in Government debt if we carried on the path that it was carrying on. So, it is quite incorrect what he said.

This is the sixth Budget of a Government led by John Key, who has the unanimous support of his entire caucus, which has led this country from recession to sustained growth. It is interesting to see how Labour and the Greens try to characterise the situation. They certainly cannot go and say that the economy is weak or that the economic management of this Government has been poor, because that is manifestly not the case. We have only to look at New Zealand growing by 3.8 percent in the year to March, one of the highest growth rates in the world’s developed countries, and much better than the 2 percent in the United States or the 0.9 percent in the Euro area. They certainly cannot point to the fact that growth is forecast to reach 4 percent next year—a far cry from the recession that we inherited in 2008.

This is delivering benefits to hard-working New Zealanders. Average wages have increased by about $3,000 in the past 2 years to nearly $55,700. They are forecast to grow—this is the average wage in New Zealand—to around $62,000 in 2018. In the past year alone, as we have heard, 84,000 jobs were created in New Zealand and Treasury forecasts a further 172,000 jobs will be created over the next 4 years. When we look at unemployment, it is forecast to fall to 4.4 percent by 2018. The cost of living increases are low and that is helping New Zealand families get ahead. Inflation was 1.6 percent in the year to June—well below the nearly 5 percent inflation that we inherited in 2008.

New Zealanders are looking at a brighter future here in New Zealand, such as this Government promised. They are voting with their feet and staying home. When I got into Parliament, like a number of people in this party I was concerned about the continual loss of New Zealanders to Australia and concerned when talking to people who loved living in New Zealand but were distressed to see all their family living offshore. That takes a long time to turn round, but there was no net loss of New Zealanders to Australia in June, the last month that figures have been collected for. That is the first time since 1991, and it shows that New Zealand is doing very well indeed.

So where does that leave Labour and the Greens? What argument, what angle, can they come against us with? The angle that Mr Parker always peddles is that, yes, the economy is doing well, but it is unbalanced. The only problem with that is that none of the arguments really stack up. He says that the economy is unbalanced and that, OK, it is doing very well but not everybody is benefiting from it; in fact, inequality is rising. That is the argument he puts forward, but it is just not backed up by the facts. Every study that has been done, such as the leading study by Mr Perry, shows there is no discernible increase in inequality in New Zealand thanks to the very substantial redistribution we have in the New Zealand economy.

Then Mr Parker goes on: “Oh, well, it’s the balance of payments deficit. It’s getting worse. It’s forecast to get worse as we look out.” The only problem with that is that it has actually narrowed very, very substantially since Labour was in Government. The balance of payments deficit was knocking up around 7 percent or 8 percent and now it has narrowed to 2.8 percent of GDP—a very low record. That is because New Zealanders are paying their way in the world. So, that argument does not work. Then he says: “Oh, well, but we’ve built up a whole lot of debt.”, forgetting the fact that there were the Christchurch earthquakes, which we had to pay for, and there was a recession we had to work our way through. Thanks to prudent management by this Government, Government debt will fall to around 20 percent of GDP in 2020 if we stick with National’s plan—

Dr David Clark: Record debt—$56 billion!

PAUL GOLDSMITH: —well below the 60 percent of GDP that would have been the case if the party of that fellow there from Dunedin, Mr Clark, was in power, continued its reckless ways, and continued to spend more that it was earning.

So that is the past. What about the future? I think that this Government is very focused on building an internationally competitive economy, which is the whole basis of everything we look forward to in terms of affordable healthcare, such as the free under-13s visits to general practitioners, which we were able to afford in this current Budget; quality education; superannuation when we are old; and protection for the vulnerable in difficult times. Those sorts of things all rely on a strong, internationally competitive economy. That is not going to come about because some well-known business expert like Russel Norman says he has the elixir, the solution to smart, green growth, or anything like that. It is certainly not going to come about from that other well-known business expert, Mr D Parker, who says we should do this or that, or from some activist Government.

It is about fundamentally continuing to provide stable, predictable, competent government so that businesses have the confidence to invest, to grow their businesses, and to create jobs. It is businesses that create real wealth in this country, and they thrive in an environment where they have the confidence to invest. That is what this Government has given over the past 6 years, and that is the greatest thing we can bequeath to this economy if we are given another 3 years or 6 years to carry on the work.

When we break down the detail, the Government’s Business Growth Agenda outlines the future proposals we are doing and the six areas that Mr Steven Joyce and Bill English have been so effective in channelling the thinking of the Public Service into, which are the areas where we need to do well to create an environment in which New Zealand businesses can be internationally competitive—so, looking at building export markets by negotiating high-quality free-trade agreements. That, of course, is opposed by the Greens at every turn because they are opposed to free trade and they are opposed to an open economy, notwithstanding the fact that New Zealand has thrived following its free-trade agreement with China.

It is about building capital markets, and they have been given a huge boost by the partial flotation of some of the State-owned enterprises. We have the most vibrant and strong stock market we have had in years in this economy, and we will continue to rebuild our financial reserves. We will establish the New Zealand Trade and Enterprise regional investment attraction programme to bring more capital into the economy. We will be implementing the legislation formerly called the Credit Contracts and Financial Services Law Reform Bill. Supporting crowdfunding and peer-to-peer lending are two of a number of projects we will be looking at over the next little while.

Business innovation is another area of the Business Growth Agenda. We again hear Mr Norman complaining that the so-called simple economy is the basis of all our prosperity in New Zealand at the moment. Well, that is nonsense. In the Epsom electorate, where I am based, services exports are very strong. In fact, one of the fastest-growing areas of export in New Zealand is high-end services. IT companies like ConnectNet, which I have been to in Parnell, and many other IT companies, health services companies, architects, and public relations firms are all exporting their services around the world and doing very well indeed. This Government has been enormously enthusiastic in the way that it has supported science research and development. Other areas are building skilled and safe workplaces, building natural resources, and making use of wind-blown trees.

It is frustrating to hear Russel Norman talking about logs on the wharves. Well, the main thing that is holding back the wood-processing industry in New Zealand is the cost of electricity, and, lo and behold, it is the Greens who want to greatly increase the cost of electricity by slapping a great carbon tax on it. So they are confused and muddled, and this Government is clear and stable in its progress. On that basis I commend the Appropriation (2014/15 Estimates) Bill, the Imprest Supply (Second for 2014/15) Bill, and this Budget to the House.

RICHARD PROSSER (NZ First): I am pleased to rise on behalf of New Zealand First to take a call on the third reading of this predictably diabolical Appropriation (2014/15 Estimates) Bill. The appropriations ultimately rest on integrity. They rest on the integrity of the figures, but, as we all know, National has a nasty habit of treating figures and facts as flexible. They mean what National wants them to mean or, from time to time, what National needs them to mean. National uses fudging and manipulation to cover the weaknesses of the economy. It does not want the stark facts of growing inequality in New Zealand to be revealed. Despite the best terms of trade in decades, we still have a chronic balance of payments deficit. That underlying weakness puts the New Zealand economy and all the estimates and projections at risk. New Zealanders should be deeply concerned.

In the 2014-15 Budget a small, highly contrived Budget surplus of a few hundred million dollars was manipulated. It vanishes like a desert mirage on closer examination. National knows 100 ways—probably 200 ways—to manipulate a surplus when the Government’s income is over $65 billion. If this Government were a company, the auditors would now be in jail for deception. Where is the true accounting for the hundreds of rotting school classrooms? Where is the making good of the scores of cuts and freezes in important public services and agencies?

Simon O’Connor: Give one example.

RICHARD PROSSER: Let us think of a few of them—more than one, Mr O’Connor. Conservation is underfunded. Conservation is always underfunded. It is always required to deliver a great deal and it is never funded adequately. That is why we are talking about public-private partnerships for conservation—the “Pepsi-Cola Kahurangi National Park” is coming to you soon, perhaps. But there seems to be plenty of money for additional 1080. This Government seems hell-bent on bombing the bush with more and more poison. You know, New Zealand uses something like 90 percent of the world’s production of 1080. Nobody else seems to need it, but we carry on increasing its use. Years ago it was all for possums. We do not hear much about them anymore; now we are chasing rats and stoats. Another $20 million is to go into dumping 1080 on another half-million hectares of conservation land—1080, which kills native birds and insects directly—and all in the name of a beech mast and a biblical plague of rats.

When, I wonder, is this Government’s scaremongering going to start dredging up demons, vampires, and witches? This is a biblical plague of rats for a beech mast that we are told is unprecedented. Well, beech masts occur about every 3 to 5 years, and you know what? It is already over. The great beech mast with this great drop of seeds is already finished. The seeds that were not consumed are rotting on the ground or probably gone by now, and yet the operation to kill the rats is only just about to start. We know that after drops like this, populations of fast-breeding animals such as rats rebound much faster than slow-breeding populations of native birds. So this 1080 bombing will create a plague of rats where there was not going to be one before.

The Government says there is no alternative to 1080. Well, the argument for that is that lots of this country is inaccessible, but I ask the question: if the country is inaccessible, how will we know there is a problem there? In actual fact, the country is not inaccessible. The way that we determine whether or not there is a problem with pests on the ground is by flying people in there and laying trap lines. From the trap lines we extrapolate how many rats, stoats, and other pests we believe are in a certain area and then calculate the amount of poison needed to kill them, and go away and bomb it. When that has been done, they fly the trappers in again, and they lay more trap lines. When the residual trap catch is done to 6 percent or 2 percent, they declare it has been a success. Well, if you can fly people in to lay trap lines to determine how many pests are there in the first place, then you can fly people in to lay trap lines to kill the pests. It does not even pass the logic test.

Border control is another area of this Government’s chronic underfunding. The budget keeps being cut. There are fewer boots on the ground. We rely on the SmartGate. New Zealand and Australian passport holders with electronic passports used to be able to just waltz through without so much as a by-your-leave. Now that has been extended to frequent flyers from a particular Chinese airline. They could be bringing in anything at all uninspected—a jar of honey, foot-and-mouth disease. We inspect only about 25 percent of shipping containers that arrive in this country—one in four. We have no idea what could be in the other three in four. It could be snakes. It could be foot-and-mouth. It could be spiders. It could be anything. We do not know. We are never going to know because we do not inspect them, and we have not got enough dogs.

The police budget, again, has been flat for 5 years and, actually, in this year’s Budget, was reduced by $40 million. When you take inflation into account, that is an actual $80 million reduction in the amount of budget that the police have for front-line operations. So the police are underfunded, under-resourced, and understaffed because of that, and now we have the debacle of one police region reclassifying burglaries and other crimes so that they do not get recorded. If that is not covering something, I do not know what is. While all of this is happening, dedicated officers disappear to Australia where they get paid properly and resourced properly. Crime continues to rise, but this Government rests on the falsehood that it is falling because the figures are dropping. Well, the figures are dropping because crime is not being reported because people are simply aware that the police have not got the resources to respond to it.

And then there is defence. Again, in New Zealand, defence is always underfunded, and even more so under this Government. We are beginning the commemorations of the 100-year anniversary of World War I. In the Prime Minister’s speech this afternoon he made reference to our proud history of waging war at sea and in the air. And that is true—we have got a proud history of that. For a maritime nation such as New Zealand, isolated completely by sea and by air, it is only common sense that that is where we should focus our defence. But at the beginning of World War I, at Gallipoli, our forces were slaughtered because they had no air cover. That lesson was repeated on Crete, where our forces were slaughtered because they had no air cover. Today under this Government we have no air cover because National never restored the strike force that 73 percent of the population wanted brought back.

Simon O’Connor: They forgot to counterattack the airfield at Maleme.

RICHARD PROSSER: I am not sure what Mr O’Connor is muttering about there but he is probably saying something along the lines of that we do not need it. Well, there were some luminaries in Britain in 1936 in the Labour Party who almost succeeded in disbanding the entire Royal Air Force because they had decided in their prescient wisdom that those sorts of wars were never going to be fought again and that that kind of hardware would never be needed again. Three years later, World War II came upon them. I would love to have the same crystal ball that the National Party has where it can predict the future and where it can say that there will be no more wars, that we will never have to fight again, that we will never have to defend our territory, and that we will never need this high-tech hardware because it knows the future and this is not going to be a feature of it.

We are getting some new trainers. The air force needed a new, advanced, high-tech trainer because the leased Beechcraft that we have got are coming to the end of their serviceable life. We had 17 highly advanced trainers sitting in storage—17 Aermacchis. They were bought and paid for. It cost $35 million to keep them in storage for 10 years because they could not find a buyer. In actual fact, they were never going to find a buyer because Uncle Sam was never going to let them be sold. So after spending $35 million to keep these planes in storage for 10 years, we flicked the whole lot off for $8 million to a private American company, which is using them to assist in training for the United States Air Force. After that, we go and spend $156 million on another American trainer, the T-6 Texan, which is not as good as the Aermacchi. If that makes economic sense—well, I mean that just sums up this Government’s approach to it.

What of Christchurch? What sort of Government holds back money from the Christchurch rebuild so it can claim a surplus in the Budget? There have been all sorts of devious bookkeeping with the hundreds of millions flying through the rebuild. Mr Brownlee needs to fully explain himself to the people of Christchurch and to New Zealand.

The surplus is insignificant when set against the real economic problems that New Zealand has. Unemployment remains our single-biggest economic problem. Where is a measurable action plan for jobs? There are almost 150,000 unemployed in this country. If you add to that the total who want to work but who are underemployed or have just given up trying, we run up to about a quarter of a million people who are looking for more work than they have. It is a shocking, even obscene, waste of human potential. The so-called surplus is a myth. It is a scandal to pretend that it actually exists. On 20 September New Zealanders will have the opportunity to put some real integrity back into our system, and some common sense, by voting for New Zealand First. Thank you.

JONATHAN YOUNG (National—New Plymouth): I am very pleased to stand here this afternoon in this Budget debate and the third reading of the Appropriation (2014/15 Estimates) Bill and the second reading of the Imprest Supply (Second for 2014/15) Bill. New Zealanders want a Government that is dependable, one that they can trust, one that is moving in the right direction, one that is not lurching to distinctly different policies that have a maybe chance of success, one that understands how economies work, and one that is making incremental improvements every day of every week. This Government is that Government, led by the strong and stable leadership of the Prime Minister John Key and also by Deputy Prime Minister Bill English, who for six Budgets has produced incremental improvements that have seen the New Zealand economy through tremendously complex international difficulties, and have seen the New Zealand economy come into strong growth. We believe that returning a National Government to the Treasury benches will mean that we will be able to bed that growth in over the years to come.

We have a Business Growth Agenda that has 350 different initiatives. Well over half of those have been completed or are well under way. Every single one of these is bringing some positive change and assistance to our economy. That is what I mean. When we have such a number, it shows the depth of understanding of the economy, led by the Minister for Economic Development, Steven Joyce, and the team that supports and surrounds him. We understand that with 350 different initiatives every sector of New Zealand society is touched by these improvements. What we are seeing is a recovery that is gathering pace all around this nation.

The Government has made good progress in delivering on its economic objectives for this term, and that progress will continue should we have the privilege of governing for another term. For example, New Zealand’s economy has grown by 3.8 percent in the year to March. This is one of the highest growth rates among the world’s developed economies. Our 3.8 percent annual growth compares with 3.5 percent in Australia, 2 percent in the United States, and 0.9 percent in the eurozone. Growth is so important because employers out there in our industries and our workplaces, as they see their businesses growing and expanding, as they see their cash flows improving, start to think that the future is looking brighter. They start to think that there is an opportunity where they can employ somebody to continue the growth they are experiencing.

So employment starts to increase; unemployment starts to decrease. We have seen exactly that. In the past year alone an extra 84,000 jobs were created across New Zealand. The good news is that Treasury forecasts another 172,000 jobs to be created over the next 4 years. We see that this comes about not by magic, not by a Government department or a Minister fabricating jobs or creating further Government employees, as happened under the previous Government, but by confidence in the economy. It is confidence in the economy that private sector employers can go out there, take that step, and give somebody a go. One of the groups that suffer most through difficult times is the school-leavers—those who leave school at 17 or 18 and do not have experience in the workforce. When somebody advertises for somebody with experience, none of them qualify. So they are the cohort of people out there who have the highest rate of unemployment.

The 90-day probation measure that we put in not only for small and medium enterprise businesses but wider than that enables employers to give those young people a chance. Even though that may be decried in some quarters—we understand their philosophical point of view—our figures tell us that in the first year of that piece of legislation 13,000 new jobs were created by employers stepping out and taking that chance. I know many of them in my own electorate who have said that that made a difference for them. Certainly, it made a difference for those young people who were struggling to find employment.

Budget 2011 forecast 171,000 jobs to be added to the economy by mid-2015, mid - next year. The latest household labour force survey confirms we are on track to meet this forecast. Including the 84,000 new jobs created in the past year alone, there have been 131,000 jobs created since Budget 2011. So I believe that the people of New Zealand, who are riveted by this Budget debate, can have confidence that those things that have been forecast are coming to pass. That is what I mean. You need to be a student of history in many regards. Somebody who is interested in politics and what is happening can see over time those incremental improvements and increases, the buoyancy and the effect that our economic plan is creating for New Zealanders. These new jobs are helping to bring down unemployment, which Treasury forecasts to fall to 4.4 percent by mid-2018 from 6 percent currently.

When economies grow, what also happens is that not just jobs are created but people receive higher wages, and we know that in New Zealand that is very important. It is one of the reasons we are seeing people returning to New Zealand because of the opportunities that exist here, when other countries, like the USA, Australia, and Europe, are not seeing that same increase. Average wages have increased by around $3,000 in the past 2 years to nearly $55,700 and they are forecast to grow to $62,300 by 2019. This is important not just because people want to earn better wages and because we know that we have this tsunami of silver coming towards us as the population of this country ages but because we need to be a high-wage economy in order to adequately support the retired and the elderly of our population in ways that we expect.

In my last couple of minutes, it is good to reflect the positive progress that this Government has brought to this country. It has been progressively through six strong, well-led, well-managed Budgets, and Budget 2014 continues in that same vein where we see new jobs being added and where we see low cost of living increases. These are also helping New Zealand families to get ahead. Inflation was just 1.6 percent in the year to June, well below the average weekly wage increase of 3.2 percent in the latest statistics. New Zealanders can feel, I believe, a degree of confidence going forward. People can plan for their future, not rashly but they can have confidence that there are opportunities that are increasing for employment and for the prosperity of this nation that is coming up.

More Kiwis know that they have got a brighter future here in New Zealand. They are voting with their feet and coming home. Just last month more stayed. We had a net increase here in this country in June. There was no net loss of New Zealanders to Australia in June—the first time this has happened since 1991. Under Labour we know that 3,000 New Zealanders a month left for Australia, but under this Government they are deciding to stay. I am very, very happy to commend this Budget legislation to the House. Thank you.

JACINDA ARDERN (Labour): It is my pleasure to give a contribution in this appropriations debate. I think we should hark back to what the leadership of that National Government recently said when asked what legacy it would like to leave. I understand that it was a group of young people who asked the Prime Minister what he would like to be remembered for. His response was something along the lines of “I would like to be remembered for my management of the economy.” Not a particularly inspirational response, but, look, if that is what he chooses to be measured on, then let us measure him on that alone.

Of course, the National Government and National generally like to ride on the assumption that they are good, sound economic managers, and it is an assumption because when you drill down into the legacy that that Government has left, it is not nearly as rosy as it would like to present. Think, for instance, about the fact that we have $56 billion in additional debt since National took office—$56 billion. It is easy when you bandy about numbers like that to lose sight of the impact that that is having on the economy and future taxpayers, but that is the equivalent of New Zealanders having to pay $10 million a day in interest. That is astounding, and that is debt that we took on to fund things like the Government’s tax breaks that went predominantly to the top income earners in New Zealand. That is what the rest of New Zealand is paying for.

But if the Prime Minister and that Government want to be judged on their economic record, let us look specifically at this last Budget. Let us look beyond debt. Let us look at their claim that they have moved the Government’s books into surplus—an admirable goal if it is real, but this Government’s surplus is a surplus on paper. How did it achieve its surplus on paper? Well, it kept ACC levies higher than it needed to—in fact, $120 million higher than it needed to. That essentially means that New Zealand taxpayers have provided the funding for that Government to be able to say that it has a surplus. What was the second thing that it did? It put up on the books that the $375 million in New Zealand Transport Agency spending was not spending but a zero-interest loan. That was the second measure. And the third measure—perhaps the most cynical of them all—was that it spent $560 million less in this Budget on the Canterbury rebuild than it did in the last Budget. That, ladies and gentlemen, is the surplus delivered by that Government. It is hardly sound economic stuff, but that is how it got the books to look a little more rosy.

What does that all mean for individual New Zealanders, for individual taxpayers? That is what is important. I think David Parker probably summed it up best when at the Labour congress recently he said: “What’s the point of a rock star economy that does not pay the roadies?”. That, essentially, is the difference between Labour and National. We both strive for Budget surpluses. In fact, Labour had nine real ones under its belt when we left office. But it matters to us how we get there and it matters to us what point sound economic growth serves. Who is benefiting from the economic prosperity that we deliver as Governments? That is where you will see a difference between Labour and National. We do not believe in growth for growth’s sake. We believe in growth that benefits people and at the moment we are not seeing that. What is the point of a surplus when housing ownership is at a 50-year low, when first-time home buyers and people of my generation do not fundamentally believe that they will ever own their own home? They do not believe that there is any hope for them in that regard. Jonathan Young shakes his head. All that tells me is that he has not had a conversation with a young person from Auckland in a very, very long time, but that is the reality.

Simon O’Connor: In Grey Lynn—one in their first home in Grey Lynn.

JACINDA ARDERN: I would expect the member, who lives in Auckland, to perhaps be slightly better versed on this issue. Housing prices in Auckland are up $200,000 on average since National took office—$200,000. That is absolutely astounding and that is why my generation believes that they are being locked out of what was always perceived to be almost a rite of passage in this country. What point is a Budget surplus if inequality is reaching record highs? We hit that in 2011, and as much as that Government—

David Bennett: Prove it.

JACINDA ARDERN: We can easily prove it. It is called the housing income survey and it tells us that actually we are still reaching high points. If you average it out, all it tells you is that we are just as bad as we have always been. Nothing is getting better. We might not have reached some of the high points that we had seen in previous decades, but it is still high. It is hard to celebrate something that is just as equally awful as it was for the past 3 years. Inequality is not something to be celebrated and it is not something we can deny. New Zealanders know it exists.

Try telling a New Zealander that we are in surplus and everything is fine when, for instance, they are amongst the 46 percent of New Zealanders who did not get a pay rise last year. You can almost guarantee that they have felt the impact of rising housing costs. Their rent has gone up or they cannot afford to even save to get into their first home. And what point is a Budget surplus and a rock star economy if you still have 260,000 children in poverty and, as we pointed out in the House today, two out of five of those families are in work? I absolutely resent the fact that the Government continues to try to portray poverty as an issue that happens to other people who almost deserve it because they are on benefits. Poverty happens to sole parents, to people struggling to find work, to families who are in work, and it is not good enough to say that it is just because we have got low wages but that is the necessary evil of employment.

This side of the House believes we can strive for full employment and we can have full employment and decent wages at the same time. What point is a booming economy if it does not benefit people? As I have said, that is the difference between them and us and that is why our economic agenda for growth and prosperity is around three key themes. The first is housing. We still believe in the old mantra that everybody needs something to do, someone to love, somewhere to live, and something to hope for—and the somewhere to live is becoming dire. A capital gains tax not only addresses the issue around supply but also addresses the fact that we at the moment have a tax system that is simply not fair.

Hon Members: Oh!

JACINDA ARDERN: I cannot believe that members on that side of the House continue to treat a capital gains tax like an alien thing. Two countries in the OECD do not have one, but if you want to hold yourself up against Switzerland and Turkey, be my guest. KiwiBuild is the second thing we will do, but work, the principle on which this party was founded, continues to be a cornerstone of what we will campaign on in this election. We want to get unemployment down to 4 percent in the first 3 years, but, ultimately, we believe that everyone should have the dignity of a decent, paying job, one that allows them to put food on the table. With our plans around regional economic development, in particular, we believe we can do that.

Finally, on families, Best Start was just the beginning for us. We have an agenda that says we actually believe that parents should be able to still hold on to that mantra and that hope that their children will be better off than even they were. At the moment we are on a decline. We can reverse it but all it needs and all it requires is a vision from a Government that knows that GDP, your trade deficit, your surplus—none of those measures matter unless your ultimate focus is on improving the economy for people. That is why Labour deserves to be in Government after the next election.

SIMON O’CONNOR (National—Tāmaki): I love it today as we hear Opposition MPs talking so negatively—a sort of a Chicken Little approach, really, and then you go past billboards that say “Vote Positive”. The contradiction is incredibly inherent. They talk about leadership when none of them are behind their leader. [Interruption] No Cunliffe in them—that is right. In my own electorate two Labour Party billboards have been put up, in total—and two of them are illegal. They are in the wrong place, and should not be there. And it is very interesting—the candidate does not want to have his face next to the face of the party leader.

Jacqui Dean: Why not?

SIMON O’CONNOR: My colleague on my left asks why. Look, I do not know. I understand it was discussed at length today in their caucus and they were doing the numbers as well. “Vote Positive”, they say.

I am very pleased to take a call on this legislation, the Appropriation (2014/15 Estimates) Bill in its third reading and the Imprest Supply (Second for 2014/15) Bill in its second reading. National is the party of responsible Government and careful management of the economy. Labour and its friends have outlined a grocery list of reckless spending and shocking plans for economic mismanagement, and we have heard just an entrée, if you like, of that from the previous speaker, Jacinda Ardern. Spend, spend, spend—their ideas but you, ladies and gentlemen, the Kiwi public, have to pay for them.

Let us have a look at some contrasts. Let us talk about the National Government. More than half of the 350 Business Growth Agenda actions across the six areas are either complete or in the implementation phase. New Zealand’s economy grew by 3.8 percent in the year to 31 March—one of the five fastest growing economies in the developed world—and growth is forecast to reach 4 percent this year, a far cry from the recession that we inherited in 2008. I think it is really important for people to bear that in mind, and this side of the House has certainly reminded the Opposition time and time again that we inherited an economy in recession in 2008 and we have worked darn hard since then to bring it back to surplus. Average wages have increased by $3,000 in the past 2 years and they are forecast to grow by around another $7,000 to about $62,300 by 2018.

Dr David Clark: What about real median wages?

SIMON O’CONNOR: The great thing is that there are some members in the Opposition who might be learning about real wages in a few weeks’ time. This Government is proud that we have created an extra 84,000 jobs in the year to March, and Treasury forecasts about 172,000 jobs to be created over the next 4 years—4 years under, I am sure, a National Government.

The cost of living increases are low. Inflation was just 1.6 percent in the year to June, well below the average weekly wage increase of 3.2 percent. Unemployment is coming down, and Treasury forecasts it will fall to about 4.4 percent by mid-2018 from where it sits at the moment at about 6 percent. That has been falling. We have made the rate fall to about 6 percent and, as I noted, Treasury forecasts that it will be down to 4.4 percent.

The balance of payments has popped up a few times today. The balance of payments deficit—the difference between what we earn and what we spend—narrowed to 2.8 percent of GDP in the year to 31 March 2014. It is helped by our record exports and it is less than half the deficit 6 years ago. Finally, our better Government focus now is on a smaller number of 62 key priorities. This Government was not afraid to set benchmarks to test ourselves against, and we will be working to help more Kiwis internationalise and sell their products overseas, encourage innovation, make it easier to raise capital, lift young people’s achievement—and I have heard colleagues talk to that earlier—and make workplaces safer.

But, in contrast, what do we hear from the other side? Did Labour support any of the savings that this Government made to ensure the country came back into surplus? No, not at all.

Did Labour support welfare reform that has seen New Zealanders get back to work? No. Did Labour support tax changes to reduce taxes paid by every single New Zealander? No, not at all. Did Labour members support a 90-day probationary period? No, no, they did not. Did they support changes to the Resource Management Act so that people could build houses faster and support the growth in business? No. Did they support the housing accords, including in Auckland? No, not at all. Did they support the making of the Hobbit movies so that 5,000 jobs could be created? No. What about the 3,000 jobs in the South Island when it came to Tīwai Point? No. I would have thought yes, but, no—no, again. Did they support irrigation for our farms?

Hon Members: No!

SIMON O’CONNOR: No, indeed. Do they support gas or oil exploration? Well, depending on who you are talking to, it moves around, but the answer pretty much is no. Do they support foreign investment or skilled migrants? No. Ultimately, will they support any free-trade agreement with the largest economy in the world? No.

Jami-Lee Ross: Do they support their leader?

SIMON O’CONNOR: Do they support their leader? I had forgotten that one—no. When it comes to new taxes, though, Labour members are very happy to say yes. They are all into the capital gains tax. Earlier this afternoon—[Interruption] There are times, though, when you do wonder about a carbon tax with so much hot air coming from the other side. Let us stay on the capital gains tax. We heard David Parker complain earlier that he did not get a chance to debate Labour’s capital gains tax last night. He was very upset that he could not debate against the Minister of Finance. He had to make do with me. At that time he mentioned how disappointed he was to be engaging with a mere backbencher. Well, given how badly David Parker fared in last night’s debate against this mere backbencher, I would have thought he would be glad not to have to face off with one of the finest finance Ministers in New Zealand history. David Parker is not necessarily renowned for his humility, but I have to say that I would be happy to help him become a bit more humble by debating him on the capital gains tax at any time. You see, you cannot talk about growing jobs, the economy, and innovation, and want a capital gains tax. It is an inherent contradiction.

A growing economy like New Zealand’s needs risk takers. It needs people who are prepared to take risks and prepared to be rewarded for those risks. As I noted last night, a capital gains tax taxes the entrepreneurial. It taxes the very people who want to invest in jobs, innovative ideas, and new businesses in the hope of winning and making a profit. You see, we only need to look at various businesses across New Zealand where young people, in particular but not exclusively, have taken their business idea, taken the risks with their own capital, and either won or lost. Within the capital gains tax debate, Labour members who want the Government now to take a share in the risk do not actually want to take a share in the losses, but you will not hear them talking about that.

We heard an earlier speaker talk about how the capital gains tax will make people sell their houses and so forth. Why on earth would you sell your house if you were going to be taxed on a capital gain? It makes no sense. What you see from other countries, which the Opposition lauds, is that people continue to pump money into their homes—more pools, more double-glazed windows, more of everything to increase the value, but not sell. At the end of the day, a capital gains tax stifles businesses, stifles innovation, and stifles job creation.

There are reasons, though, why National wants to talk about good economic management and growth. It is the money that ultimately makes our way of life possible. It allows us to fund the many social programmes that Kiwis value and deserve. We are not talking about money for the greedy or to amass vast hordes of gold like some dragon under a mountain; we are talking about our hospitals and our schools, welfare, and Working for Families. New Zealanders need to know that when Labour says no to economic growth, when the Greens say no to resource development, it costs ordinary Kiwis. Their refusal to grow the economy costs it all. It makes the tax pool smaller, it shrinks Government, and it necessitates cuts to vital programmes.

Let us be very clear. When Labour and the Greens obstruct development, they hurt the poorest and the most vulnerable sectors of our society. The affluent can do without Government support—cutbacks do not hurt them—but when you cripple our economy, like Labour and the Greens suggest, you inflict great pain on our poorest. That is why National focuses on the economy, a strong one at that, the creation of jobs, and fostering a rise in income—a secure safety net for all. Every time Labour and the Greens say no to economic development and careful management, they are cutting the very strings that make up our social safety net.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand that the next call is a split call—5 minutes.

Dr DAVID CLARK (Labour—Dunedin North): What a lot of bunkum from that member, Simon O’Connor. I have to say I am not surprised that David Parker expressed his concern about sharing a panel with that member on the topic of the capital gains tax. My experience of sharing a panel with that member around the policy of a student loan limit of 7 equivalent full-time years was that he was very well briefed on every issue that came up in front of a group of medical students, except the one that concerned the students—their access to student support. Conveniently, he had not been briefed on that aspect of medical students’ concerns. He promised to take that concern back to the Minister, and the medical students heard nothing more. They badgered him. They asked him and they heard nothing more from that member. That is a lesson. I think that is why David Parker was reluctant to be on a panel with him, because he has a reputation for briefing himself only on the positives. He does not brief himself on those things that give a more balanced picture, which explain the damage that this Government is doing.

I want to talk a little bit now about why I came to Parliament. We are drawing to the end of the 50th Parliament. I came to Parliament because I was concerned about growing inequalities. That was a big part of my motivation to come into this Parliament. We are here debating the appropriations, which see this widening gap between rich and poor grow ever wider and the access to resources become ever more widely spread. I interjected during the last speech that real median wages told the real story, not average wages. I heard Mr Bennett yell back: “That is because average wages are more important.” He was trying to say that the net income of the economy is the most important thing and not how the benefits of economic growth are shared. Mr Bennett could only have been saying that he did not care whether those at the bottom were not getting their fair share.

That is consistent with this Government’s policies. It is consistent with the policies that that member has supported—the 2010 tax package that saw the top 40 percent of the value of the tax package go to the top 10 percent of earners, and the bottom 20 percent of earners get just 2 percent of the value of that tax package. Of course, it was all swallowed up at the same time in a GST rise that John Key promised would not happen—the 15 percent GST rise that John Key had promised would not happen. That is part of this explanation as to why the gap between rich and poor is so great under this Government. That is part of the picture.

Of course, my own experience here in Parliament in the limited time I have been here is that people have put forward measures to make a difference, and I have been fortunate enough to have a couple of member’s bills drawn out of the ballot. One went through this Parliament against—against—the wishes of the Government, which would make sure that there was an extra day set aside for people to spend with their families and friends after Anzac Day or Waitangi Day was celebrated on a weekend. So Anzac Day and Waitangi Day would be commemorated on the actual day on a weekend—those important parts of our history would be properly commemorated—and the following Monday would be made a holiday to make sure that every year, not just in 5 years out of 7, people got time with their friends and families. The Government still voted that down. It tried to vote it down. It could not because its support parties walked away from it on the issue; they were so embarrassed.

The other bill I had drawn from the ballot was the minimum wage bill. It would have put the minimum wage up to $15 an hour, which would make a real difference for people at the bottom of the heap, but National voted that down straight away. It talks about raising wages for all New Zealanders, but, given the chance, at the first opportunity it voted that down in this Parliament. That is the kind of Government we see opposite. That is the kind of Government that called Working for Families “communism by stealth”—

Hon Annette King: But kept it.

Dr DAVID CLARK: —but kept it—despite it lifting 130,000 kids out of poverty. We know that there are now 260,000 New Zealand kids in poverty, and across the way they are content to see that pattern continue.

On this side of the House we have a positive plan. Yes, Mr Simon O’Connor, it does involve a capital gains tax to make sure everyone pays their fair share. It is a plan that pushes money away from the speculative sector and toward the productive sector so that we grow our economy. That is what Labour Governments traditionally have done. We know that National Governments since World War II have grown the economy on average by 2.9 percent. Labour Governments have grown it on average by 3.7 percent. Labour Governments have grown the economy faster and they have shared the proceeds of that economy—economic growth—more fairly. That is the kind of positive change that is needed.

CATHERINE DELAHUNTY (Green): Tēnā koe, Mr Assistant Speaker. Tēnā koutou e te Whare. Unfortunately for Aotearoa New Zealand, the Government, in this legislation, the Appropriation (2014/15 Estimates) Bill and the Imprest Supply (Second for 2014/15) Bill, which we are addressing today, cannot say the “p” word. It is unable to pronounce the word “poverty” both in this legislation and in this House. This is a disaster for the country, because when poverty is biting in the way it is for so many families and the Government’s economic policies are increasing inequality, this is a serious matter. They are problem gamblers who are keeping the economic downward spiral for the many, but very definitely increasing the benefits for the top 10 percent.

Unlike the Government in this legislation, the Greens can deliver a fairer society where every child has enough to thrive. We are committed to addressing growing inequality with fresh ideas, which will make a difference to the more than 260,000 children who are living in poverty, and their families, whanau, and aiga. Firstly, we will help families with young children in early childhood by extending the 20 hours subsidy to 2-year-olds, closing the gap in support that has cost families dearly. We want choices for families about staying at home with their children if they can afford to or wish to. But for the 40,000 2-year-olds who are already in early childhood care, their parents need some level of support. We will make sure that the extension of the early childhood education subsidy will alleviate some of those costs.

Last week the Minister of Education denied that quality in early childhood education was an issue and said that the only thing that mattered was participation. But everyone in the sector wants to see the Greens’ commitment to a target of 100 percent qualified staff in teacher-led services, and also support for Playcentre, kōhanga, and puna that are parent-led and also committed to quality. These two things cannot be separated and we support them both. This is affordable. There is no greater investment than in our smallest people.

We have also announced an extension to free doctors visits up to the age of 18 because our rangatahi need specific medical support and they need the barriers removed for them to go to the doctor. That cost barrier would make a big difference to them. We need to invest in our young people and make sure that they are healthy and thriving so that in the end costs are reduced to our overall economy. That is what a decent society does. It makes sure that its young people up to the age of 18 can get to the doctor.

We really believe that our programme for reducing poverty, which is titled Schools at the Heart—the school hubs programme—is a very valuable one. I have been travelling for the last few months from Invercargill to Whangarei and everywhere to low decile schools, talking to the hard-working champions in those schools—the teachers and principals. They have welcomed the idea of the community hubs. They welcome the idea of a coordinator who is paid to engage the community, and they welcome the school nurse, the free lunch, and the out-of-school care and recreation being free for those decile 1 to 4 schools that want it. They welcome it because they are sick of being social workers. They want to be teachers. Teachers can teach if they do not have to deal with the poverty, hunger, and transience that are afflicting our communities because of the economic state of inequality.

So, for example, a principal whom I met this week in Palmerston North said to me that she was exhausted by being a social worker because their kids were coming to school hungry, cold, and transient, and in order for the children to be in a fit state to learn, the teachers have to pick up the pieces of Government policies that are having huge effects on these communities. If we do not address those wider issues, then it is impossible for the schools to do the work that we as public citizens have asked them to do and that as taxpayers we want them to do. Local, affordable quality education can make a huge difference to the opportunities for our kids to thrive, but only if we set it up in such a way that they are able to do so. The community hubs policy, the Schools at the Heart policy, is manifest in schools like Epuni in Lower Hutt and Victory in Nelson, and the schools welcome the idea that the Greens have of extending it to schools that want to buy into it right across the country.

What I found on the tour is that people are looking for hope. They are looking for hope that they can earn a decent wage, that they can see their school as being local and affordable. They are looking for hope right across this country, and they are not hearing it in the constant rhetoric from the Government that everything is OK. It is a self-congratulatory environment where everyone is doing well. You only have to walk through those neighbourhoods. You only have to talk to those schools to see that everyone is not doing well and that some children have been to 10 different schools by the age of 10—not because their parents are useless but because of inequality and the lack of stable jobs and housing. We will change that. All children can thrive under our watch. Kia ora tātou katoa.

DAVID BENNETT (National—Hamilton East): With approximately 6 weeks to go to the election, we will have a series of promises made. Today, before that election period has actually started, we are hearing promise after promise from the Opposition parties: how they will fix things, how they will change things, and that they will spend a lot of money. They will actually spend, spend, spend. That is what we are hearing from the Opposition, and we have not even started the campaign yet. Imagine what else they are going to promise over the next 6 weeks. Some members over there have not even started promising things, because they have not worked out where their campaign would want to go.

The reality is that New Zealanders are not that silly. New Zealanders understand that there needs to be a strong economic base and that they need to have the money in the bank to pay for anything that we need to do. That has been the fundamental lesson that all New Zealanders have learnt during the world recession that we have been going through over the last 5 years. If you do not have the cash, you cannot spend it. The Opposition parties are living in a fantasy world to think that they can go out there and promise, promise, promise, and suddenly it will all happen.

Even their promises do not make sense. If you look at things like the capital gains tax, it is their answer for every expense. In every expense that you will hear about in the next 6 weeks, I bet you your bottom dollar that when you ask them where the money will come from, they will say that they are going to bring in a capital gains tax. That is going to be their explanation. They will not actually tell you how much it would bring in, and they will not actually tell you when it would bring it in—

Hon Annette King: Oh yes, we do.

DAVID BENNETT: Oh yes, you do know the numbers? It would be lovely to hear them, because those numbers will be inaccurate, as they always have been, coming from the Labour Party. We look forward to Annette King telling us how much Labour would raise from a capital gains tax in each year for the next 5 to 10 years.

But remember this. We are not talking about a capital gains tax that is universal. We are talking about a capital gains tax that is imposed only on the wealth-accumulating businesses of New Zealand. It will be imposed on the farms, businesses, and those people who keep people in employment. Those are the people whom Labour wants to tax. The Labour Party wants to tax the goose that lays the golden egg, you could say. That is the Labour Party’s great economic plan. Not only is it uncosted, unfunded, and unplanned by the Labour Party, but at the same time the one thing they are using as their answer to all those issues is something that will hurt the income-earning productivity of New Zealand. It just does not make economic sense.

Then you go to the Green Party, which has got its great policy around the environment, and how it is going to tax those productive businesses even more, with a carbon tax, just to redistribute that money as a blatant tax cut to try to buy votes during an election campaign. It is not using that money for environmental purposes, it is not using that money to clean up our rivers, or anything like that; it is using that money to give a blatant tax break to middle New Zealand to try to win votes during an election. That is not sound Green economic policy. That is not sound policy that would be effective in making New Zealanders look at their options; it is blatant politics at this time from the Green Party, and it is trying to disguise it as rational economic theory.

The reality is that the carbon tax and the capital gains tax are the only ways that the Opposition parties have indicated that they are going to raise money at the moment. Oh, they are going to put up personal taxes as well, so if you do well in New Zealand you are going to be paying more in personal tax as well. Those three things are detrimental to New Zealand’s economic growth and are detrimental to this country going forward. At the end of the day, if you do not have the money, you cannot spend it. That is what New Zealanders understand and that is why New Zealanders back the Government, and they understand the economic management that we have gone through in the last 5 years.

Let us look at what we inherited when we came in. These are the facts. In 2008 New Zealand was in recession. We were in recession before the rest of the world. Before any share market crashes or anything like that, the Labour Government managed to put New Zealand in recession before the rest of the world. Under Labour there was a 50 percent increase in Government expenditure. We got that under control.

Simon O’Connor: How much?

DAVID BENNETT: A 50 percent increase in Government expenditure. Under Labour, mortgage rates were 10.9 percent—10.9 percent; basically 11 percent. Now they are at 6 percent. Food prices were up by 10.9 percent in the last year under Labour—1.5 percent last year under this Government. House prices went up 96 percent in the 9 years of Labour—28 percent under this Government. Electricity prices went up 72 percent under Labour—20 percent under this Government. The current account deficit was 7.9 percent under Labour—3.4 percent under National. New Zealanders have realised this and they are coming home. They are coming home in droves, and they are staying here because they realise that we have one of the best Western economies in the world. This is because we have had sound and prudent economic management. We have had a Government that has looked at the opportunities for our country going forward, and is not afraid to make the choices that deliver the pie that we can all share out, in this House.

Last week I was at a school event. It was a school that had started online voting, because its students cannot actually vote, at the age they are. The issue raised there was inequality. It is one thing that we hear from the Greens all the time. The website basically gave the students a chance to make their comments around that issue and to vote, essentially, so that they could say what they thought. It was interesting that the Labour speeches and the Internet-Mana speeches at that event basically centred on that everything should be equal: that there should be an equal world out there, that there should not be starting-out wages for young people trying to get a job, that there should not be the 90-day probation period to try to get people into work, and that everything in this world is equal and everything is the same.

You look at those students. Just because you turn up to class, do you all get an A? With those students, just because they all go to practice with the hockey team, does that mean they are going to be captain of the hockey team? No. The world does not work in that way. The world is one where you have to work hard and do your best. Some people achieve more than others. That is the nature of life. On the other side, members will paint this picture of equality and say that there is some utopia out there that we can create, and everything is equal, and everything is, in their eyes, fair. But it is not fair. It is not fair to those people who want to go out there and get a good education, take some risks, and build their future. It is not fair on New Zealand as a country that needs to succeed. For us as a country to succeed we need to invest in infrastructure, we need to invest in irrigation, we need to open up our mining industries, and we need to be there, making a strong economic base. We cannot live in a world that is a dreamland. We cannot live in a world where we think everything is necessarily equal, just for the sake of political purposes. We cannot live in a world where we can promise, promise, promise, and spend, spend, spend, but not actually have any costing for that.

That is the decision that New Zealanders will make in 6 weeks’ time. On the one side they will see the rational economic management that has delivered results in the most trying of times, and on the other side they will see people who will promise the earth, spout out some dreams and some visions of things that are not realistic, and then not have any basis or means to make them a reality. That is the stark choice New Zealanders have, and New Zealanders are not silly. They are not going to go for the fable on one side, when they have got the reality on the other side. They will not go for a wish list of dreams that will never happen, when they know they can build their own future and deliver those results in a strong and competitive way. Thank you.

Hon ANNETTE KING (Labour—Rongotai): That was a very disappointing and superficial speech by the current member for Hamilton East, David Bennett. I need to say to that member that he just needs to perhaps read a little more, open his eyes a little more. Labour’s economic policy not only has been costed and planned but has been released 3 months before the election so the public of New Zealand has an opportunity to see where our priorities are and how we will raise the money to pay for our policies.

This is unlike the Pre-election Economic and Fiscal Update that we are going to receive just before the election from the National Government. We already know that it is not going to include all issues in it and that we are not going to get the clear picture. I challenge members opposite whether we are going to have all the costs for the sleepovers, for example, or for carers. Is that going to be costed in the Pre-election Economic and Fiscal Update before the election? I suggest that people have a look. It will not be there. You know, National takes the old Muldoon approach to Budgets—keep the people in the dark and feed them manure.

This is the last debate before the election, and it is a time to contrast 6 years of a Government coalition of National, ACT, United Future, and the Māori Party—a coalition of the confused and the unwilling—with the positive vision that Labour has for New Zealand come 20 September. Today we have had to listen to a story of woe, of what the National Party inherited when it became the Government. Well, it was nothing more than crocodile tears. If I could use the “h” word, I would.

That very Government told the people of New Zealand in December 2008 that the economy in New Zealand had been left in such a state that we were in a good position for the rainy day, and the rainy day had arrived with the global financial crisis. Who said that? The Minister of Finance, Bill English. He went on then to appoint the former Minister of Finance, one Sir Michael Cullen, to be the head of one of the biggest State-owned enterprises in New Zealand. So hopeless was Michael Cullen that the Minister appointed him the chair of New Zealand Post! We do not believe these sorts of stories from the National Party when its members say how bad things were under Labour, because we remember our years in Government. Every year when Labour was trying to put away money into the Cullen fund, set up KiwiSaver, and bring in policies that New Zealanders wanted, National wanted tax cuts. Bill English said we had to give tax cuts. Well, if we had given tax cuts in those years, there would not have been funding for National to have money for the rainy day.

Labour paid down the Government debt that this country had, and we left National with net zero Government debt when we left office. National was left in a position where it could manage a global financial crisis. National members talk about 10 years of deficits. Treasury predicted 10 years of deficits if nothing changed. Well, do they believe the 10 years of high unemployment that Treasury—

Hon Michael Woodhouse: That member campaigned on that plan.

Hon ANNETTE KING: Just a moment, Mr Woodhouse. Has Treasury not predicted 10 years of high unemployment under a National Government? Did Treasury not predict that just a few weeks ago? Do you believe you are going to have 10 years of high unemployment, if you were to be in power that long? Well, of course you do not. You are going to say there are things you are going to do. So if it is good enough for you to say that, it is good enough to say that under a Labour Government we certainly had the ability to change our economy, and we did.

I have been an observer and a participant in this Parliament for quite a number of years. I have had the opportunity to watch the progress of our party in power and their party in power. I have to say that at times there are some things that we have in common. You see, there does come a time when Ministers—who do work very hard and work long hours, separated from their families, in a place where doors are opened for them and due deference is given to them, where “Yes, Minister” is the response they get from most of their staff and the people around them—become impatient and frustrated because people criticise their hard work and do not understand the pressures they are under. Eventually, that impatience and frustration turns to arrogance. The public see this Government as out of touch and, in the case of some Ministers—silly Ministers—out to lunch.

That is the position that the Key Government has reached today. It has stopped listening to the people of New Zealand. They have stopped listening if they believe that there is no problem with poverty in New Zealand. If they believe that it is all OK out there, then that shows that Ministers have stopped knocking on doors, they have stopped listening to what the people say, and they are now into the zone of thinking they know best.

We saw that sort of attitude from Gerry Brownlee, the Minister of Transport, just this last week. We see it with Nick Smith, with his arrogance towards the Fish and Game people. We saw it with Judith Collins, who did not think that you needed to separate your private business from your ministerial activities. And we see it with Bill English rewriting history every day of the week about how bad things were and how great they are now.

Well, let us just have a look at some of the facts and figures. We now have National clocking up $56 billion of debt since it became the Government. Some of that is going to be for Christchurch, obviously—and we get that; we say that that is right—but this Government has clocked up $56 billion of debt, and that is a debt that is costing New Zealanders $10 million a day. The big losers under this Government are the first-home buyers—the house prices in Auckland have gone up by $200,000 under a National Government.

This is a National Government that thinks that the only thing that matters is providing and achieving a surplus. It does not matter how you get there. It does not matter how much smoke and mirrors you use to try to show that you have achieved a surplus. What is important? Sure, getting a surplus is important, but it is also important that you invest in the things that really matter.

I want to mention health because health is in trouble—in serious trouble—under this Government. I am going to use Treasury’s own words, and they came out in the July papers. After the Budget, when Treasury released its papers—when you see some of the truth—this is what it said about health. It said that it thinks the funding package provided is a very real challenge for district health boards. It said it is going to take a mix of salary restraint, efficiency, productivity improvements, and service reconfiguration. We all know what service reconfiguration is. It said that the CPI is going to be up by 2.2 percent for 2014-15, and it said that it has advised the district health boards that the funding that they have received is for demographic purposes only, with a contribution—let me repeat that word, a contribution—towards cost pressures. The funding is a contribution towards cost pressures.

So what did the district health boards get? Inflation is running at 2.2 percent and they have got cost pressures. What did they get? Well, only three of the district health boards got an increase in funding above 2.2 percent. Therefore, 17 district health boards—17 district health boards—got less than the CPI in terms of their increase. They have faced, in real terms, a net 2.3 percent cut in their budget, and now it is starting to show—now it is starting to show.

Last night I was with members opposite—Scott Simpson and other members of the Health Committee—talking about mental health. There were 200 people there who provide mental health services. Did they think that they had had a lot of money provided to them? Many of them have had no increase in their NGO funding for 5 years and only four district health boards have passed on funding to the NGOs—and even then it was less than they paid themselves. We have got a mounting problem in health. If that is not recognised by an incoming Government—one led by Labour, which has committed to additional funding in health to meet those cost pressures—then the people of New Zealand will find that they do not get the health services they need. Already they are saying that they are missing out. When I get a moment I will release just how few people are getting orthopaedic surgery now, compared with when we were in Government.

JAMI-LEE ROSS (National—Botany): I remember that when I was still at school in the very late 1990s and the early 2000s, when Annette King was a Minister, she used to be a positive, happy, contributing member of this Parliament. Look at how things have changed with the Labour Party. Those members are so negative, they are down on New Zealand, they are no longer positive, they do not have anything positive to contribute, and it is sad. The public can see that this Government is upbeat, this Government is positive for New Zealand, this Government brings stability and gives confidence to New Zealanders, and this is a Government that New Zealanders can trust. They can trust it to implement the policies that are needed to lift New Zealand even further, and trust it to implement the policies that will help this country to grow even more, to deliver better public services for New Zealanders, and to build a better New Zealand for all of us.

We have delivered over the past 6 years, and this Budget shows further progress for New Zealand being delivered by the John Key - led Government. More New Zealanders are getting jobs, more New Zealanders are seeing their wages rise under this Government, and the economy is growing at one of the fastest rates in the OECD. When New Zealanders head to the polls in less than 2 months, they can compare our record as a Government with the Labour Party’s promises and negativity and the Labour Party’s down on New Zealand attitude towards New Zealand politics. It is not positive, it is not going anywhere, and it is not good for New Zealand.

I was listening carefully to a number of the speeches and I heard the member Jacinda Ardern, my Friday morning TV3 sparring partner, talk about housing affordability. I want to touch on that myself, because just a couple of weeks ago I held a public meeting on housing in my electorate. We had a number of signs up around the place and it was advertised in all of the public newspapers. It had a good turnout. I was expecting to get grilled on housing, because I know that there is a lot of discussion about housing out there. I was surprised, actually, at how comfortable New Zealanders are with the progress we are making on housing affordability. I almost had to drag questions out of the public, because the public can see that on housing affordability and housing in New Zealand, we have a plan that is going to see housing become more affordable in the long term. We are getting more building consents coming through the system and we are building more houses in Auckland. The Labour Party thinks that the solution to housing is the high mortgage rates that it delivered when it was last in Government.

Phil Twyford: No, we’re going to reduce interest rates.

JAMI-LEE ROSS: No, do not shake your head, Mr Twyford. Mr Twyford knows that when Labour was in office, when people like me were getting our first mortgages, we were paying 10 or 11 percent—10 or 11 percent mortgages. That was Labour’s record when it was in charge of the economy. Mortgage rates were at 10 or 11 percent. If you think that first-home buyers can afford a home—well, you might think so too, Mr Assistant Speaker—if the Labour Party thinks that first-home buyers can afford a home with a 10 or 11 percent mortgage, then it is just kidding itself. We have delivered an economy that has supported lower interest rates for New Zealanders. If the Labour Party wants to think about the issue that hurts first-home buyers the most, it is mortgage rates.

The best way to try to get housing under control in Auckland is to open up more land, build more housing, and make it easier for New Zealanders to get into housing. I am proud of the fact that in my area of Flat Bush, one of the largest special housing areas has been delivered. The National Government, under Nick Smith’s guidance, is delivering 39,000 houses over the next 3 years. They are going to be built by the private sector and delivered by the private sector. The Labour Party thinks that it will build 100,000 houses. It wants to build houses in Auckland. It cannot even build a caucus that likes itself, but it thinks it can build housing in Auckland that will be affordable. Its plan just will not work.

We are delivering a better plan for Auckland when it comes to housing affordability. We are delivering more houses, more building consents are going through, and we are opening up more land. We are making it easier for the council to change its rules. The Auckland Unitary Plan is going to be in place in about 3 years. We are also taking the cost down when it comes to building materials and we have injected $30 million into the community housing sector.

Phil Twyford: He cannot say how many houses have been built. What a failure.

JAMI-LEE ROSS: The only people who can look at failure are Phil Twyford and the Labour Party, when they delivered high interest rates for first-home buyers. We are delivering more housing, we are delivering more consents, we are opening up more land, and we are making it easier for New Zealanders to get into housing. New Zealanders know that they can trust us and have confidence in our leader and our Minister of Finance to deliver policies that will make it easier for them.

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair for the dinner break.

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

JAMI-LEE ROSS: Before the dinner break I spent a few minutes telling Mr Twyford about the real world out there in Auckland and the real world in New Zealand, where we are seeing more houses being built. He does not believe it, but building consents are at a 7-year high. Building consents in Auckland are soaring and we are delivering more housing for New Zealanders. Mr Twyford believes that a Soviet-style socialist Government housing and building programme is going to solve Auckland’s housing issues. The real solutions are being delivered by Nick Smith. The real solutions are opening up land for Aucklanders to build housing on, making it easier for housing to be consented, and also reducing some of the regulatory barriers to building housing in Auckland, which is exactly what we are doing.

As I sit next to my colleague Alfred Ngaro, the next MP for Te Atatū, he could tell you and colleagues across the House that in Auckland we are seeing a boom. In Auckland we are seeing progress and prosperity and it is being delivered by this Government. How do we know that New Zealanders believe this Government is delivering? We know New Zealanders believe this Government is delivering because they are voting with their feet—they are voting with their feet. When Labour left office, every single month 3,000 New Zealanders were leaving this country to go to Australia.

Hon Tony Ryall: How many?

JAMI-LEE ROSS: Three thousand, Mr Ryall—3,000 New Zealanders every single month.

Hon Tony Ryall: How many now?

JAMI-LEE ROSS: Right now fewer than 100 are leaving every single month to go to Australia. That is a huge turn-round. The brain drain that we saw under Labour, when Phil Twyford was supporting a Labour Government that delivered high mortgage rates that made it difficult for first-home buyers to get housing—Phil Twyford and the Labour Party were seeing 3,000 people a month leaving this country.

Iain Lees-Galloway: Say “Phil Twyford” again. Go on.

JAMI-LEE ROSS: Iain Lees-Galloway is irrelevant in Palmerston North. He is about to lose that seat, just like Phil Twyford is going to lose his seat. But while he is still here for a couple more days, he is welcome to take a call and give his valedictory in this debate. It might be entertaining for 10 minutes. People in Palmerston North and people in Te Atatū know we are delivering.

I was in my electorate on Friday with the Hon Hekia Parata. We were visiting schools in my electorate—schools that are seeing achievement levels going up and up every year. Achievement levels under this Government show that more children are getting the education they need. When Labour left office one in three children was leaving school without the right education qualifications. We are now getting four out of five, and we are aiming for five out of five. In Counties Manukau we are seeing crime rates coming down with the extra 300 police officers that we have delivered. More decreases in crime rates will be delivered by this Government. Reoffending rates are on the way down too. We are making it easier for people to do business, and we are making it easier for children to get the health care that they need. The immunisation rates are up. The number of Botany residents getting operations are on the up because of Ministers like the Hon Tony Ryall.

This Government is delivering. The public know that John Key can be trusted to deliver what he outlines in this election campaign. The business community knows it can have confidence to invest in this country. It knows it can have confidence that the economy will continue to improve, and that is why this Government deserves to have this Budget passed tonight. This Government deserves to have another 3 years because we are delivering and the other side just simply does not have a clue.

PHIL TWYFORD (Labour—Te Atatū): Tēnā koe, Mr Assistant Speaker. I am going to talk about housing in this debate. Housing was, I think, the empty heart of this Budget. The people of New Zealand had such high expectations that this Government would finally take the housing crisis seriously. They looked to the Budget for some evidence that the Government was going to put its money where its mouth is and that it would have some serious policies to address the housing crisis that is gripping New Zealand. But, sadly, that was not the case.

I want to talk about the National Government’s lack of a decent political and policy response to the housing crisis. If I was going to tweet my speech in two tweets, this is what I would say. Tweet one: we have a housing crisis and National is in denial. Tweet two: only Labour has the policies and the political will to fix the housing crisis. Those are my two tweets, but I will, if I may, expand on them a little in the remaining minutes that I have.

It is interesting that the housing crisis has really touched a lot of people in New Zealand. It used to be the case in this country that when house prices went up, everybody assumed that was a good thing because the homeowners were getting richer. But, actually, what is happening now is that there are so many people in New Zealand who are affected by the housing crisis. They know that something is not working and that we desperately need change.

For a starter, first-home buyers find themselves shut out of the market, not only in the overheated housing markets of Auckland and Canterbury but in fact all over the country. In Auckland and Canterbury it is because of skyrocketing prices. In Auckland now the average house price is around $700,000. House prices are going up. In the last 12 months in Auckland the average house price went up by $72,000. How could any first-home buyer save enough to keep up with that sort of house price inflation?

But the thing that has really knocked it on the head for first-home buyers all over the country are the 20 percent minimum deposits, which are the consequence of loan-to-value ratio lending restrictions brought in by a Reserve Bank that was pushed into a corner by this Government’s failure and its resolute unwillingness to tackle property speculators in the Auckland housing market. First-home buyers’ parents and grandparents are standing by watching appalled as their young ones face no prospect of getting into the housing market and owning a home of their own.

People in the regions are distressed because they are copping again the failure of this Government to deal with a housing market that has melted down in Auckland and Canterbury. People in the regions are facing thousands of dollars more on their mortgage repayments every year because of interest rates heading north of 8 percent under this Government and because of loan-to-value ratios. What is happening is that even though 90 percent of house price inflation is coming out of Auckland and Canterbury, the other half of the country is being hit by loan-to-value ratio lending restrictions and interest rates going up.

In many places people are facing a serious decline in their home equity. Over the last 6 years since National has been in power, while house prices have been skyrocketing in Auckland they have diminished in real terms, inflation adjusted, by 20 percent on average in the far north. In Southland prices have gone down by 30 percent on average. This is an asset that people have spent their lives working for and paying off, and right before their eyes they are seeing the value stripped out of their houses as the market declines in the regions. People in the regions feel, justifiably, that they have been the victims of a failed housing policy.

In Canterbury, because of this Government’s near criminal neglect in failing to get the residential rebuild happening, only just over 2,000 houses have actually been built in Christchurch since the last earthquake when the Canterbury Earthquake Recovery Authority says that Christchurch needs 25,000 houses. This is why rents have gone through the roof. Rents have gone up by over 45 percent. House prices are up 30 percent in the last 6 years in Canterbury because of this Government’s hands-off approach in Christchurch. It is tweaking the planning rules and hoping somehow that a broken market will fix itself. That has left thousands and thousands of Cantabrians as the victims of a broken market. That is why people are in their fourth winter in Canterbury now and you have got people paying hundreds of dollars to live in sleep-outs, in caravans, and in all manner of substandard accommodation.

We have a housing crisis, but John Key does not think so. He is in denial, in spite of the OECD and the IMF saying that we have some of the most overvalued housing in the Western World. Both of those pre-eminent institutions have recently looked at the New Zealand housing market, rated us against every other country in the Western World, and said that little old New Zealand’s housing market is one of the most overvalued in the Western World. Interestingly, the OECD data looked at two different indicators. It looked at house prices to wages and house prices to rents. The difference between those two, the very big difference between house prices and rents, was interpreted by them and a number of other economists since then as indicating that the Auckland market is particularly driven by speculation; people essentially farming rental properties for capital gain. I want to come back to that, because that is one of the very big gaps in this Government’s housing policy.

Shamubeel Eaqub, the economist from the New Zealand Institute of Economic Research, brought out a report recently on housing in New Zealand. One of the really shocking bits of data in that report was that back in the late 1980s—when my wife and I bought our first home—on average it took 30 years to save up a deposit and pay off a mortgage on the average home. The figure now for my son’s generation? In Auckland it takes an average of 50 years to save a deposit and pay off a mortgage.

Poto Williams: How long?

PHIL TWYFORD: Fifty years. People are not buying houses now, according to the last census data, until they are in their 30s. So what does that mean? The current generation, if they can get that 20 percent deposit together, if they can service the mortgage, are going to be in their 70s before they have paid off that house.

So we clearly have a housing crisis. National has done very little to address it. The centrepiece of its policy is these housing accords. In spite of the bluster from Jami-Lee Ross, in his last contribution, not a single new house has been built in the special housing areas. After 6 years in office, and 14 months after it announced its policy of these special housing areas in Auckland, not a single new house has been built in those special housing areas. In fact, the rate of new building consents is only half what it should be in order for Auckland just to stand still in terms of new house construction. So the Government’s policy of tweaking the planning rules and hoping that the market will fix itself has clearly failed.

We have seen a whole lot of other tinkering. Government members have been talking for the last 6 years about reforming the Resource Management Act, but they have failed to bring legislation to the House in this term to speed up residential building consents. So there has been a lot of talk but no action on the Resource Management Act. On trying to drive down the cost of building material, the best that the National Government could do was to temporarily suspend anti-dumping duties and tariffs off varnish and nails and a few other building products, hoping that this might knock a few thousand dollars off the cost of a new house. How pathetic is that?

Labour is the only party that has the policies to seriously deal with the housing crisis. We will bring in a capital gains tax that excludes the family home. It will take the steam out of the Auckland property market. We will, through KiwiBuild, build 10,000 affordable starter homes every year for a decade. We will end the housing shortage and we will bring the dream of affordable homeownership back within the reach of a new generation of New Zealanders. We will change the law so it will be illegal under the next Labour-led Government for a landlord to rent out a property that is cold and damp. Our healthy homes guarantee will ensure that before a property can be rented it must meet the standards of insulation and it must have an effective heating source. Finally, a national policy statement under the Resource Management Act will give strong direction to local bodies that they must increase the rate of building of new houses and increase the supply of affordable housing. Only Labour has bold policies that will make a difference and fix this housing crisis.

The ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the next speaker, this is to advise the House that we have a split call. There will be two 5-minute calls. I recognise the honourable member Eugenie Sage. Tēnā koe, Ms Sage.

EUGENIE SAGE (Green): Tēnā koe, Mr Assistant Speaker, and thank you. This Government and its Budget rely on National’s pollution economy continuing to grow at the expense of our environment, at the expense of a fairer society, and at the expense of a diverse and innovative economy. National’s legacy over the last 6 years will be debt. Mountains of debt—fiscal debt, economic debt, social debt, and environmental debt. When John Key became Prime Minister in 2008 Government debt was $14 billion. Now it is $61 billion. That is $13,500 for every man, woman, and child in the country—$10,000 more per person than when John Key took office. Certainly some of it is for the Christchurch rebuild but a lot of it is to subsidise National’s favoured industries—more irrigation, more oil exploration. That debt means we have a billion dollars in interest costs every year and a billion dollars less to spend on education, housing, health, and the environment.

The legacy of the last 6 years will be 30 percent of New Zealand children living in poverty. The legacy will be a 50 percent increase in our greenhouse gas emissions, and New Zealand being shamefaced on the international stage because we have not done our share to reduce greenhouse gas emissions and avert a climate catastrophe. The legacy will be more pollution of our lakes, rivers, and aquifers. That is because National lacks ambition in relation to the environment except to exploit it. National’s legacy is about subsidising environmental exploitation. It found $40 million more in this Budget to subsidise irrigation, but not a single dollar more to increase the funding for the Department of Conservation to look after our treasured landscapes and threatened species.

New Zealanders identify with our wild places. They identify with our natural landscapes. They are the basis of our “100% Pure New Zealand” brand, which allows us to sell our food, fibre, and primary products overseas, and which draws tourists to this country. But National is not investing in protecting the brand. It is not investing in protecting the environment, which is the basis of a healthy economy. What have we seen in water? National has set very unambitious standards. It wants New Zealanders to be able to go wading in and boating on our rivers and lakes. The level of faecal coliform that is set in the National Policy Statement for Freshwater Management is to allow wading and boating. So the message to tourists is: “Welcome to New Zealand. Go boating, but make sure you don’t fall out of the boat, because you risk getting sick.”

The Green Party has a plan to clean up our rivers, to protect our aquifers and our lakes. We would have a much stronger regulatory framework under the Resource Management Act, and a much stronger national policy statement that reflected New Zealanders’ aspirations and hopes to be able to swim in rivers and lakes. So we would set a level for swimmable rivers. That would require more controls on land use and much more innovation. Regulation drives innovation, as we have found in Christchurch, where we have had innovation after a strong clean-air plan to drive low-emission woodburners.

Stronger regulatory standards to protect water would help shift the basis of our economy from producing more and more milk, more and more raw commodities like milk powder, into adding value to the milk that we produce. Dairying has reached its limit in many catchments in New Zealand. We cannot continue to have dairying expand on to marginal soils where there is huge leaching of nitrate into rivers and aquifers. We must add value. That is why we in the Green Party announced a major innovation package to transform the basis of our economy—to invest a billion dollars in research and development over 3 years to fund another thousand places in education, science, and technology at our tertiary institutions.

There is no limit to human creativity and innovation. We can add value. We can stop the free fall in manufacturing jobs. We can create more smart jobs and change the basis of our economy to one that is innovative and creative, not one that relies on exploiting nature and creating more pollution, as National’s does.

JULIE ANNE GENTER (Green): I love New Zealand. That is why I became a member of Parliament for the Green Party. I want to look after New Zealand and make it an even better place to live, not just in the short term but in the long term. I worked as a transportation planner before I got involved in politics. I can tell you that the most successful cities all over the world are doing well because they have taken a new approach to transport, one that prioritises people and goods rather than just focusing on more vehicles, which are very costly. Unfortunately, John Key and this National Government are taking New Zealand backwards, particularly when it comes to transport. It is like they are completely unaware of everything that has been going on in the rest of the world for the past 20 years. So I had to get involved in politics. I had to stand up because I could see that it is politicians who know nothing about transport—like the ones who are in charge right now—who are making the big decisions about where the money goes.

Where is the money going? National is spending huge sums of money on just a few motorway projects that do nothing to reduce congestion or to reduce the cost of getting goods and people around our towns and cities or, indeed, around the country. In fact, they are even going to be taking on debt to pay for some of these projects. We had the Transmission Gully public-private partnership announced today. Essentially, a public-private partnership is a more expensive way of borrowing. The Crown is borrowing from the private sector, and future taxpayers are going to be paying back $125 million every year for a quarter of a century for this road. Just to put that in context, it is $125 million a year for one stretch of motorway. The Government policy statement on transport funding has allocated only $70 million to $80 million a year for regional transport improvements around the entire country. So we will be paying for 25 years for this one project that has very low benefits.

Recently, National announced it would be using some of the Future Investment Fund to pay for regional roads. Of course, it has come out that there was no proper economic analysis of those projects before it picked them. So we have a Government that is selling off productive assets to pay for projects that can buy it votes in some regions but are not even the best use of money for building a stronger economy and one that is actually going to deliver in the long term. But there is an alternative to this. The Green Party, in fact, has the most sensible, costed, financially responsible programme for transport.

What would we do? The Green Party actually does think that roads are an essential part of our transport system, and we want to look after our existing roads, maintain them better, make them safer, and make them work better. How do you make roads work better? The best way to do that is to give more commuters the opportunity to take a fast, frequent bus or train to work. We can make it easier and more affordable for people to use public transport, and then there will be fewer cars congesting our roads, freeing them up for the essential freight and other vehicles that need to use them. We can make it safer for kids to walk and cycle to school, a Kiwi birthright. Everybody knows that there is practically no congestion during school holidays. By simply making it safer for our kids to walk and cycle to school, we can remove huge numbers of cars from the roads at peak time at very low cost.

But it is not just low cost; it is better for our kids and for our environment. They arrive at school fresh, invigorated, and ready to learn. There is research from Denmark that shows that kids who walk and cycle to school are actually half a year advanced on their counterparts. I know that New Zealanders love their towns and cities. They want to be able to let their kids walk and cycle to school, and it is not going to cost them more money. It is not impractical. All we need to do is reprioritise the transport budget and put people first. It is actually basic common sense.

But I have to tell the people of New Zealand that in order to do this, they cannot vote for the National Party. If it gets one more term in Government, it is going to put us into even more debt for transport projects that are actually going to aggravate congestion and do nothing to help most commuters. So to get a smart, green transport system that is going to enable us to have towns and cities that people love to live in and that work well, party vote Green.

MAGGIE BARRY (National—North Shore): It is with great pleasure that I rise to take one of the final calls on the Budget debate in the third reading of the Appropriation (2014/15 Estimates) Bill and the second reading of the Imprest Supply (Second for 2014/15) Bill. I could be tempted to be derailed—no pun intended, really—by the previous speaker, Julie Anne Genter. From that one phrase alone that there are no traffic jams in the school holidays—I used to think that the Greens lived on another planet; now I cannot come close to guessing where they belong and where they live. They are so completely, totally, and utterly out of touch that I am not going to dignify the nonsense we just heard from the previous speaker with a response, beyond saying that it is the usual fruit loop rubbish they come out with.

Let us concentrate instead on something that is a matter of substance, and that is Bill English’s sixth Budget. What a fair and cautiously optimistic document it is, and one that is also extremely appropriate for managing our fragile economy and its recovery. For those who are unaware, the economy grew at 3.8 percent this year. That is a fantastic thing. We are looking likely to grow at 4 percent next year. That compares really favourably when you look around the world. The USA is at 2 percent, and it is around 0.9 percent in the euro area. These are the kinds of countries that would give a great deal to be in our strong financial position. Look at what that actually means to individuals. It is all very well to talk about the growth in the economy—3.8 percent going up to 4 percent—OK, but what does that mean? Well, what it means in terms of average wages when you look at that as a measurement is a $3,000 increase in the average wage, which has brought that up to about $55,700. That is forecast to grow to $62,300, and that will be by the year 2018.

So, OK, we are getting higher average wages. What else do we have? We have better situations now when it comes to unemployment. It is 6 percent now; Treasury forecasts are saying it will be down to 4.4 percent in mid-2018. In the past year alone an extra 84,000 jobs were created across the country, and Treasury forecasts another 172,000 new jobs over the next 4 years. That means that our children and our people are able to get work. What does that mean for people who are in impoverished situations and who actually are not getting the sort of deal out of society they would like to get? Well, when we look at what has happened with the welfare into work scheme, that is where we see some really significant gains: 16,000 fewer people are on benefits now than there were in June of last year. That means that thousands of children are now growing up in households that are financially independent. For young people to get ahead and for young people to get the role models of parents and caregivers in work, that is what they need to have happen—that the parents move off the benefit. Some 30,000 fewer children are now living in benefit-dependent homes compared with just 2 years ago.

Let us look at the figures and the facts and let us not dwell in the twilight zone of hyperbole and hypotheticals, which the Opposition gets bogged down in. On average, 1,600 people a week are moving from welfare into work. Some things are priceless. That is a wonderful thing. We are not stopping there, though. When it comes to new funding, $100 million was allocated in this Budget, and that was on top of the $188.6 million in the Budget last year. That is to support people getting off welfare and into work. There have been a lot of different initiatives around training and employment. Eight thousand more employment and work readiness places have been targeted specifically at beneficiaries who are at risk of long-term welfare dependency. We have been trialling new approaches for beneficiaries with complex needs.

Youth one-stop shops now provide support to young people, and they have received under this Budget an additional $8.6 million. Twenty-two million dollars has been put aside for helping people with budgeting because if they have grown up in welfare-dependent households and they are not sure what is involved in balancing a chequebook, because no one around them has ever been into that unknown territory, then the budgeting services will be helping them with that. It is an important part of them getting the education and the life skills that they need to be able to manage their own finances and be independent. The cradle-to-the-grave mentality that the Opposition parties have fed upon for decades—generations, really—is something that needs to be stopped and needs to be addressed. It is not the way that this country needs to be built in its future. We need to want more for our people. We need to want more for their health, for their education, and for their employment prospects. That is what this Budget has delivered for them.

When you look at what we have done in health, there are really exciting developments like free general practitioner visits and free prescriptions as well for the under-13s. That costs about $90 million, which is a lot of money, but when you think about what it saves parents, what it saves the children in terms of their health—and, actually, if you are looking at it pragmatically, it is a lot more expensive in the health dollar sense to cure children who have had an illness for a lot longer than if you catch it at an early stage. Having free general practitioner visits and free prescriptions removes that problem. It removes that sense of pressure that parents will have.

We have also increased the parental tax credit by $70 a week. That brings it in now at $220 a week, and it has been extended out by 2 weeks to 10 weeks. The parental tax credit is one part of helping young people out of poverty and, of course, there is the paid parental leave. There are 4 weeks extra there, and we have extended it to caregivers other than parents. That is a fact that has been lost sometimes in the cacophony of the debate around this. There are a lot of children in this country who are not brought up by their own parents. Caregivers were not eligible, but under the paid parental leave provisions and the extension of 4 weeks we have managed to extend that out for caregivers other than parents, like grandparents who are bringing up their mokopuna and families who bring up foster children. These are the kinds of people who get various allowances, but these are targeted and they are focused and the children are always at the centre of it. That is why I think these initiatives have worked so extremely well.

Our Business Growth Agenda is something that is really exciting the people in my electorate. On the North Shore there are a lot of small to medium sized enterprises and there are really significant opportunities for them internationally, but they need a bit of extra help. There is $69 million extra for New Zealand Trade and Enterprise to grow New Zealand’s presence across a variety of nations—we have got China, South America, and the Middle East. That amount of money—$69 million for New Zealand Trade and Enterprise—is going to help some 200 more firms in New Zealand break into overseas markets. I can tell you there are a lot of businesses on the North Shore that are clamouring and looking forward to trying to get involved with that. They know that it is going to mean the difference between their businesses staying at a reasonably small level or actually growing exponentially. We had a firm in my electorate that got a research and development grant. It was a fantastic thing for the firm. It managed to grow its business up over the $10 million mark. Now, with a bit of additional input, it has been able to, as a pharmaceutical company, grow its business to a $50 million turnover annually. Now it is looking to break into China and India with the help of New Zealand Trade and Enterprise. These are practical, sensible ways in which people can get ahead.

The Opposition throws around this notion of a living wage. You would talk to most people in a small to medium sized enterprise and they would not pay themselves a living wage because that is what an investment in your business is all about. You get it up and running, you get it going, and you need to be able to invest money back into your business, so the idea that they would pay themselves a living wage as people who own a business is a joke. They will wait until the business has had the development that it needs and they employ a number of people and then they might look at putting money into their own pockets as a result. This is the kind of thing that has to happen, really, if you want to actually grow your business and to grow what is happening in your own small community as well as in the wider interests of the economy.

The Future Investment Fund, which was widely pilloried by the Opposition parties, has been put to very good use by Bill English. It raised $4.7 billion and it has funded vital assets such as schools and hospitals. The big thing is that we have not had to borrow. We have not had to go with the begging bowl out overseas and borrow to fund these particular elements. We have invested, for example, a further $1 billion of the Future Investment Fund. That included that $200 million in the health sector, $172.5 million to schools, and $40 million for irrigation, and KiwiRail has also absorbed $198 million. This is money that we did not have to borrow. This is money that we have been able to use and turn around from our Future Investment Fund, which is a policy that we programmed on.

I was around in the 1980s when that lot over there in Labour was selling everything off lock, stock, and smoking barrels—100 percent. Phil Goff was a chief cheerleader for GST. Oh, how things have changed! But, in fact, when you look at what we have done, it is to actually retain the ownership of it, the people who you put on the board, and the chairs of those boards as well. So we have managed, with some prudent rearrangement of things, to get what we need for health and education, the priorities that matter to New Zealanders and their families. We are not sidetracked by the antics and the show pony sort of nonsense that comes through from the Opposition. We are indeed focused on the things that matter to New Zealand.

Bill English has handed down this Budget, after two earlier ones where not very much money at all was given out—in fact, none. I cannot remember a time in New Zealand when we did not have lolly scrambles at all around the Budget, but Bill managed that twice. As a result of that and that very prudent management of our public services, we have had the money to invest in the things that matter to New Zealand, to New Zealanders, to the growth of our economy, and to the growth and benefit of all of our families. That is why I commend the Appropriation (2014/15 Estimates) Bill and the Imprest Supply (Second for 2014/15) Bill to the House. Thank you.

A party vote was called for on the question, That the Appropriation (2014/15 Estimates) Bill be now read a third time, and the Imprest Supply (Second for 2014/15) Bill be now read a second time.

Ayes 62

New Zealand National 59; Māori Party 2; United Future 1.

Noes 56

New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1.

Appropriation (2014/15 Estimates) Bill read a third time.

Imprest Supply (Second for 2014/15) Bill read a second time.

Bills

Imprest Supply (Second for 2014/15) Bill

Third Reading

Hon NATHAN GUY (Minister for Primary Industries) on behalf of the Minister of Finance: I move, That the Imprest Supply (Second for 2014/15) Bill be now read a third time.

Bill read a third time.

Bills

Local Government Act 2002 Amendment Bill (No 3)

Third Reading

Debate resumed from 24 July.

PHIL TWYFORD (Labour—Te Atatū): I am going to speak to the parts of the Local Government Act 2002 Amendment Bill (No 3) that relate to the issue of development contributions—that is, the way that councils levy developers for the cost of infrastructure and services for new residential developments. This bill had a close shave. It almost did not make it back to the House for a third reading before the House rises for the general election campaign. It was a surprise to us that a few weeks back, the Prime Minister basically tried to blame Labour for not supporting this bill and said that it therefore could not be passed. After 5 years of talking about the need to reform the regime on development contributions and trying to make housing more affordable, this Government almost failed to pass this bill before the end of the parliamentary term.

We are supporting this bill because of the provisions on development contributions. We are supporting them not because we think they are fantastic—they are not; they are actually pretty weak and inadequate—but because they are better than nothing. In a housing crisis like we have now in New Zealand, where there is an acute shortage—particularly in Auckland and in Canterbury, where not enough houses are being built—we think that the right thing to do is to try to remove the obstacles to new homes being built and try to make new housing more affordable. So that is why we are supporting this bill. We do not think it is going to achieve that much and it does have some negative, unintended consequences, but in the context of a housing shortage we think that it is worth supporting.

What does the bill do? It has two main provisions. One is that it sets up an appeal process, whereby developers will be able to appeal development contributions that are being levied on their project if they believe that the levies are inconsistent with the council’s policy. The second thing that it does is prohibit councils levying these development contributions in order to pay for libraries and swimming pools and other community infrastructure. That has been a controversial provision. Some colleagues in this House have argued—and I put some weight on those arguments—that this may lead to new developments being put in place that do not have those kinds of vital community facilities.

The Government hopes that these reforms may knock something like $3,000 off the cost of a new house. We have not seen any rigorous analysis of how it came to that figure, but what we do know is that development contributions generally, on average, amount to about 4 percent of the cost of a new home. They can, in fact, add anything between $10,000 and $15,000 on to the cost of a new house.

Our view is that this bill, in regard to development contributions, is a wasted opportunity. The effect of these provisions will be to shift the cost from the purchasers of new homes to ratepayers. You know, we actually need to reduce the cost of new housing, so you could make an argument that in the current housing shortage?

that is worth doing, but it is a pretty insignificant gain.

I just want to say that Labour believes that this was an opportunity to think far more thoughtfully about more fundamental reform of the way that we pay for infrastructure and services for new residential developments. I want to give the House three examples of things that the Government could have done when thinking about this issue.

The first is that this was a great opportunity to consider how development contributions could have been restructured to incentivise different kinds of development. So instead of levying development contributions on a single dwelling to recover a share of the cost of all the infrastructure and services that that new dwelling would need, why not apply those development contributions spatially? Why not apply them per square metre to the lot size or to the house size, and by doing that thereby encourage medium-density developments? This is the greater density that we need, particularly in our towns and cities. So why not give councils that kind of flexibility? Why not apply, for example, a differential that would allow councils to apply development contributions at a different rate for greyfields and brownfields developments? In our major cities we desperately need to encourage more intensification and more urban development within the city, and not out on the fringes, which encourages more and more sprawl. But, no, I do not think the Government even considered those kinds of options.

The other idea that should have been considered is, instead of loading all of the cost of the infrastructure and services—and it is a significant amount of money, because, as I have said, development contributions might be $10,000 or $15,000, but it is not uncommon for houses being built in a new greenfields development to have to pay another $30,000, $40,000, or even $50,000 to lay infrastructure such as the roads, the footpaths, the drainage, the water supply, the broadband, the electricity, the street lights, the parks—you name it. All the cost of that infrastructure and services gets loaded on to the cost of the new house. That is not only a cost to the person who purchases that house. No, that cost is capitalised into the market value of that house and of every other house on the market.

So if you add $50,000 or $60,000 on to the cost of new houses, that is a significant addition to the marginal cost of new housing in that town or city, and that gets capitalised into the market value of not only new housing but all housing. That has a really significant inflationary effect on the cost of new housing and, as we know, it is a huge barrier to first-home buyers. If you think about the fact that house prices in Auckland now are, on average, hitting $700,000—they are increasing by $72,000 a year—and that is a huge barrier. It is no wonder that homeownership rates are dropping. It is no wonder that first-home buyers have almost disappeared from the market.

If the Government had been willing to consider more fundamental reform, it would have had a look at the municipal urban development entities that are part of the institutional scene in Texas, for example, where, when new residential developments are happening, they create this new development entity. They fund the infrastructure. All of the roading, the street lights, the drainage, the water, the electricity, and so on gets funded through issuing 30-year bonds. So that is funding the lifetime of that infrastructure, and people pay that back through a targeted rate. Sure, someone still has to pay for that infrastructure, but the value in it is that you are spreading it over, say, a 30-year or 40-year lifetime of the infrastructure. You are not loading it all on to the price tag of the new house and seeing that extra cost capitalised into the value of that house and all other housing.

The Government did not take this opportunity to reform development contributions. It is simply shovelling the cost on to the ratepayers in a way that ratepayers and councils all around this country will, I am sure, resent. It typifies the kind of tinkering, superficial approach that this Government has taken to the issue of housing affordability. It has been in office for 6 years. This bill is the best that it can do for reforming development contributions. That is sad—that is really sad.

On the Resource Management Act, the Government has been talking about reforming it for housing affordability and urban development. It has not even been able to bring a bill back to the House in this parliamentary term to speed up the consenting for new residential construction. On building materials, which it has also been talking about for the last few years, the best it could do was that pathetic little bit of legislation that it passed during the Budget to take tariffs and anti-dumping duties off some building materials. That will, it hopes, reduce the cost of a new house by $3,500, which is about 2½ weeks of house-price inflation in Auckland.

This is the sort of tinkering approach, and the manic effort by the Minister of Housing, Nick Smith, to look busy and to look as if he is doing something. It is a wasted opportunity. The people of New Zealand deserve much more.

MAGGIE BARRY (National—North Shore): I rise to speak to the Local Government Act 2002 Amendment Bill (No 3) at its third reading. As the previous speaker, Phil Twyford, noted, this is a bill that is going to improve housing affordability through the changes made to the development contributions. There has been a number of changes that occurred through the select committee process. We as a Government want people to be able to afford to buy houses. We needed to be able to make sure that the development contributions were fair and no higher than they actually needed to be. Nor did we want the local authorities unable to invest in the sort of infrastructure that is going to help our communities grow. So, as part of the Local Government and Environment Committee recommendations, a transitional clause was added to allow councils to continue to collect development contributions for community infrastructure that has already been built or is currently under construction. That makes a lot of sense, I think.

When you look at the provisions that this bill includes, extending the local boards model outside Auckland is one that needs some careful examination. Under the model that we have got currently, our local boards share governance with the council’s governing body. In the first phase of the local government reform we allowed the local boards model to be copied but only when the population was over a certain level, of more than 400,000 people. That was what was proposed in the reorganisation. But the bill that we are debating now will allow local boards to be an option during proposed reorganisations. They can either be part of a unitary authority, if that is what is required, or be a part of existing authorities, if that is deemed to be the better outcome. So whether to have local boards or not will be able to be determined on a case-by-case basis by the Local Government Commission and that will be very much in consultation with local communities.

This bill is going to encourage much greater collaboration and also shared services between the local authorities, which I think is a very good thing as well. It is going to allow easier transferral of responsibilities from the territorial authorities through to the regional councils as well. So, as with much of our legislation and much of the programme that we have put in place in this past term, it is about better consultation, better decision-making, and better planning overall.

This is a bill that will give councils more flexibility and also more clarity about how and when to consult. The current law does not really allow very much scope for flexibility. It makes it quite hard, actually, for councils to tailor their consultation so that it is proportionate with the matter being considered. Most requirements to use the special consultative procedure are going to be removed, so we are getting rid of some of the barriers to councils and local communities making the best decisions for their future, for their community.

The bill also—I am relieved to see—provides for a new plain English consultation document for long-term and annual plans. A number of my constituents have come to me and said that part of the problem they feel in making submissions on the Auckland Unitary Plan is that it is buried under a wodge of enormous fluff and highfalutin language that does not actually mean very much and needs to be translated. So going for a new plain English consultation document has got to be a good thing. Councils are not going to be bogged down either in needing to consult on detailed draft plans containing a lot of technical material. Instead, the long-term consultation will focus on major issues and major choices.

This is a bill that will improve the development contributions regime because it is going to be clarifying and narrowing the range of infrastructure that can be financed by development contributions. It will also at the same time provide greater transparency of development contributions policies, allowing that greater private provision of infrastructure through the use of development agreements. All in all, this is a very tidy piece of legislation that is going to make it a lot easier for individual councils to make informed decisions that their communities would like to see them make for the future of those communities. I commend the Local Government Act 2002 Amendment Bill (No 3) to the House.

The ASSISTANT SPEAKER (H V Ross Robertson): I recognise the honourable member Jacinda Ardern.

JACINDA ARDERN (Labour): And I recognise you Mr Assistant Speaker. Thank you very much for the opportunity to speak on the Local Government Act 2002 Amendment Bill (No 3). It is a pleasure also to follow on from my colleague Phil Twyford who, as housing spokesperson, has outlined the reasons why, after really careful consideration, Labour has decided, with some significant reservations, to support this bill. I want to spend just a little more time canvassing some of those for the benefit of the House but also for those who may be directly affected by this bill, particularly those working in a local government context.

I want to start off by addressing the context that, it feels to me, local government is operating in. It feels not too dissimilar to the environment that our teaching profession is operating in. There seems to be a bit of a habit with this Government. When it receives bits of feedback that it feels might be negative from a taxpayer it immediately looks for an alternative way to blame some other group or entity for the problems that that ratepayer or taxpayer group may be facing. A perfect example is the housing crisis in Auckland. It felt at times in that debate that there was an almost immediate attempt for the Government to say “Well, it’s council planning regulations that are causing that issue.”, or “It’s the fact that the council hasn’t released enough brownfields and greenfields sites.”, or “It’s the urban metropolitan limit that’s the problem.”

The Government has no real desire within itself to look at the systemic issues that are causing the housing crisis. Rather, it finds bandaid attempts to paper over them. But a lot of those statements were directed—sometimes unclearly—at local councils, particularly in Auckland. Look at the debates that councils have been having about how they deal with the growing bill of providing the services they need to provide to their ratepayers without increasing rates. It is an issue than any major Government department is facing in the wake of the global financial crisis and increasing inflation.

Everyone is meeting those various cost pressures, but the Government seems to want to heap blame on local government for that by implying that it was overspending on areas that were not its domain—and that was exactly the intention of removing the four well-beings from local government legislation. It is a way of sending this message to residents: “Look, your local government, your local council, has been spending money on things that we do not require them to spend on. We will be the saviours and we will put these restrictions on local government on your behalf.”

Not only was that a completely inaccurate way to portray our hard-working local councils around the country and local government generally but it has now restricted their ability to do their job—a double whammy. And you can see the difference even in the way the two parties have approached regional economic development: on the one hand a text message service, and on the other hand a genuine partnership with local government through a regional economic development infrastructure fund—a sizable fund; $200 million worth—as a way of ensuring that we partner genuinely with local councils to try to provide the kinds of projects that will really make a difference to their local communities. In the same way, we believed in things like the Mayors Taskforce for Jobs as a genuine way of partnering with local government to address the needs of local communities. So it is a very different approach from the two major parties.

But speaking specifically to how this plays out in this bill, as I have already said, this bill splits into two parts. One is the more omnibus set of reforms. One part of the more controversial reforms—actually, the omnibus reforms are controversial as well—sits around development contributions. This is in part an attempt by the Government to paper over what is a significant issue. Its view seems to be that one of the ways to address the housing crisis is to restrict the use of development contributions in an attempt to bring down the cost of those contributions on those who are trying to bring on stream new housing.

When you look at the scale of the issue in a place like Auckland, though, and at the fact that this change might bring down the cost of a new build by about $3,500—the equivalent of about 2 to 3 weeks of Auckland house-price growth in the grand scheme of things—you can see that it is hardly going to change the rules of the game. It hardly is. It is a small drop in the ocean. But we have become so desperate in the situation we have there, where under this term of government we have seen an increase in housing prices of $200,000 in Auckland alone. We are in a situation that is so desperate that we in the Labour Party found ourselves feeling like there were very few options for us other than to allow what is a rather piecemeal and potentially difficult piece of legislation to go through. That is how constrained we now feel and how bad we now feel about this situation—that we were willing to make that compromise. It is a very significant compromise on our part, and I want that to be put on the record.

We have put forward to the Government the kinds of initiatives that we think will make a difference in this space. A capital gains tax is a way of addressing the demand from speculators. There is the plan to build 100,000 houses. We know through KiwiBuild and the work that we have done that the way to start bringing down costs to a much more significant degree than the changes in this bill will do is to start building houses on the kind of scale that we are talking about: 100,000 houses over 10 years. When you reach that kind of scale you start seeing the economies of scale that we need. We just do not have them in New Zealand right now. No more than five companies, I understand, are building more than 20 or 100 houses a year—somewhere in that range, anyway. A very small number of significant construction companies are building to scale in the way that we need, and they are not, therefore, reaching those economies of scale.

When you couple that with the fact that we just do not have enough affordable housing coming on stream—in fact, something like roughly 5 percent per year if new builds are considered affordable—you can see that we need that systemic change. A capital gains tax, the building of 100,000 houses ourselves, and a clamp down on overseas speculators—who have no intention of living in New Zealand but simply want to make money off our market—are the systemic changes that we need to see, not piecemeal little changes to the way that the development contributions are used.

We have said, as well, that, actually, this bill is a missed opportunity. Within this framework we had the ability to try to look at other ways of addressing this particular issue. In fact, Phil Twyford spoke just before he sat down about the idea of the cost of infrastructure being spread over the lifetime of a project rather than front-loaded to first-home buyers at the start. You could do that through things like long-term bonds. In fact, there is a model, I believe, that is based on the municipal - urban development entities in Texas that does this very thing. That does not mean you do not have the cost in its entirety, but you do spread it over, potentially, up to a 30-year period. We do this in other sectors for significant infrastructure projects. I am asking why we cannot do it at that level as well, in order to spread that cost over the lifetime of a project, because, ultimately, what we are trying to overcome is that front-end loading that is occurring in development.

We also raised the question as to whether there were ways to improve the productivity of developing infrastructure through improved process management and agreements with developers. Can we also look at ways as to how we can make cost recovery an incentive for better urban design? There were so many issues that we could have looked at within this framework, but we just simply have not. So we wanted to highlight that we do believe that that is a lost opportunity.

Now I want to come briefly to some of our significant concerns in the rest of this bill. “Amalgamation” is one of those words that, for good reason, sends terror up the spines of both ratepayers and local government. Auckland was a different case. Auckland needed something to be done. We instigated the royal commission. We believed that change was needed. We were sceptical about some elements of the redesign that this Government implemented, though—not least the power of council-controlled organisations. Our concern now is that this bill is another attempt by the Government to spread out the model of Auckland Council before we have even had a proper attempt to review the way it is operated in the Auckland context, which is probably the best suited for some of the reforms that we saw.

Local boards, for instance, were very much designed for an Auckland model, and yet some of the issues we have seen at a local level are that some of these local boards have become the scapegoats. They deal one to one most often with local communities, and yet they are quite disempowered in terms of the changes they are able to make and the funding that they have to operate. Do we want to inflict that at a wider level for local government when the expectation of ratepayers is that they have very direct lines of communication with their representatives who have the direct ability to make change? That is not what has happened with our local boards in Auckland. We must learn those lessons. We should not force amalgamation on local communities, and we stand opposed to that. We have truly missed an opportunity with this bill.

EUGENIE SAGE (Green): Tēnā koe, Mr Assistant Speaker. I am pleased to take a call on the Local Government Act 2002 Amendment Bill (No 3). Local government has got a critical role in ensuring a democratic society, and the Green Party obviously supports democratic processes and democratic governance arrangements. We support public ownership and public control of assets and services. We want fair and efficient decision-making in service delivery and we want sound asset-management. This bill imperils quite a few of those principles, because citizens’ right to elect local representatives to make decisions about local matters is a fundamental part of our democracy. It is a way of constraining the power of the executive. But this bill, like so much of National’s meddling with the local government legislation—and this is the third amendment bill—shows contempt for that right. It is an attack on local government and an attack on local democracy. It is another reason why we need a new Government.

In the bill we see the Government increase the power of Ministers and increase the power of central government to override the decisions of councils or to constrain them. We strongly oppose the policy basis for this bill, which is why we are voting against it—because it undermines local democracy, because it deprives councils of significant and important revenue from development contributions, and because it will compromise councils’ ability to provide facilities and infrastructure for their communities. It is absolute nonsense for Government members to claim that it improves the law around development contributions. It does the opposite. Local Government New Zealand said the provisions around development contributions were some of the provisions that were of most concern to councils across New Zealand.

The Green Party believes that councils are in the best position to determine the link between population growth and what sorts of facilities should be provided to meet the needs of the growing population, whether they were swimming pools, libraries, art galleries, or museums. Yet, this bill cuts right across that because it narrows the definition of community infrastructure to which development contributions can be applied. It limits that to community halls, to play equipment on neighbourhood reserves, and to public toilets. So the bill will effectively prevent councils from using development contributions from new subdivisions in development to fund things like aquatic centres, swimming pools, libraries, art galleries, local museums, and the like.

There is scant evidence that there was any need for these changes. The three regulatory impact statements acknowledge that these changes to development contributions are unlikely to significantly improve housing affordability, which is the excuse that the Government keeps giving. Indeed, there was a development contributions working group, which produced quite a thick report. It noted that development contributions make up only a very small portion of the total cost of new housing. There was a discussion paper that the Department of Internal Affairs did. It highlighted that development contributions make up 4 percent of the total cost of a new 145 square metre house and land package in Auckland, and similarly in other areas such as Tauranga. So the development contributions working group said that these changes in this bill will do very little to reduce the development contributions charges. They are likely to reduce them by between a few hundred dollars per dwelling or lot and a few thousand. Will those be passed on to the consumer? It is quite unlikely. They are more likely to be built into increasing the margins of property developers and building companies.

Yet what the provisions in this bill around development contributions—that narrowing of the definition of community infrastructure—will mean is that councils are likely to shy away from growth-related expenditure to provide these facilities in greenfield areas, because they will not be able to recover so much revenue from the contributions. It means that the Minister, with his Housing Accords and Special Housing Areas Act, has been zoning large areas for a new subdivision, and these areas will potentially become ghettos if councils do not fund the facilities that give these greenfield subdivisions a heart.

The Green Party wants a society where children thrive—that means free doctors visits for all children to age 18. It means extending 20 free hours’ early childhood education to the under-twos, but it also means that children can grow up in communities where they can walk or cycle to their local library, where they can play indoor basketball in a local gym, where they can swim in rivers that are not polluted—[Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): Order! Courtesy please, colleagues.

EUGENIE SAGE: So these changes around development contributions mean that there is much less likelihood that councils will be able to afford to fund such facilities.

We have got the National Government on the one hand railing against councils and their increases in rates, yet it is depriving councils of a significant source of revenue as an alternative to rates to fund such facilities. The submissions showed that the changes in the bill are going to have severe impacts on councils. Auckland City Council estimated that its funding for community infrastructure from development contributions was in the order of $394 million, and Christchurch City Council estimated it at $322 million. So it is a major source of revenue that the Government is constraining. So that is one reason that the Green Party is opposing the bill.

Another one is the changes around local boards. What the Government is doing in the bill is encouraging the replacement of competent councils with local boards with much more circumscribed powers. Local boards, as in Auckland, cannot employ staff, they cannot levy rates, they cannot hold or dispose of property, and they cannot make by-laws. This is all part of the National Government’s plan to centralise power in large unitary councils. The bill allows the Local Government Commission to establish local boards in any reorganisation, not just in areas of over 400,000 people, as the law currently provides. That means that we are going to get fewer councils throughout New Zealand, with the National Government’s agenda to reorganise and amalgamate in Northland, Hawke’s Bay, and Wellington, and that reduces local democracy because it shrinks the number of councils.

We are also opposing the bill because we think it encourages privatisation and contracting out of council services by very prescriptive provisions around the review of service delivery. The Minister of Local Government, Paula Bennett, says she is against loopy law, and wants people to identify areas of loopy law. Well, this is one area of loopy law because it is telling councils how to do things that they are perfectly capable of doing themselves. The Government does not have a mandatory review of its services on a 3-yearly or other basis, but it is making it mandatory for councils to do such reviews. That creates ongoing uncertainty amongst staff as to whether they are going to have their jobs or whether the services that they are currently employed to provide are going to be contracted out and they will lose their jobs.

We also oppose the bill because it removes the mandatory requirement for councils to use the special consultative procedure on significant decisions, such as whether they are going to establish council-controlled organisations or sell off regional parks. It provides very little guidance on what decisions are significant and that means there is a lot of opportunity for minimal consultation.

The other area where there is a lost opportunity is around the infrastructure plans. Certainly it is a good idea to encourage strategic thinking about the maintenance of infrastructure, but as the chief executive of the Insurance Council said, these provisions around infrastructure plans may be well intentioned, but they do not focus on natural hazard management, which is a critical issue in terms of the provision and maintenance of infrastructure.

We are opposing this bill because it undermines local democracy, it severely constrains councils’ ability to fund community infrastructure, it potentially reduces consultation on quite significant council decisions, and it means that there is going to be much more likelihood of big unitary councils with weak local boards. It is a bad bill.

Hon PHIL HEATLEY (National—Whangarei): I rise in support of the third reading of the Local Government Act 2002 Amendment Bill (No 3). There are constituents in my electorate—I was speaking to some very recently, a Mr Bryn and a Miss McKenzie, who were in contact with me about the costs of local government and particularly development charges. They were concerned that when they are old enough to buy their home, they will not be able to afford it.

This is, of course, one of the pieces of legislation that National has brought to this House to address the issue of housing affordability. The Green Party has opposed them all. It has opposed reform of the Local Government Act, reform of the Building Act, and reform of the Resource Management Act, and it opposes this bill as well. This bill will improve housing affordability through the changes to development contributions. National does not want future generations like Miss McKenzie and Mr Bryn’s to be unable to afford homes and nor do we want local authorities to be unable to invest in the infrastructure necessary to help our communities grow. We want development contributions to be fair and no higher than what they need to be, just like the tax take—fair, but no higher than what it needs to be. A transitional clause, it must be noted, has been added to this legislation to allow councils to continue to collect development contributions for infrastructure that is currently in train, and we consider that to be fair enough.

I would like to point out one thing that has not been highlighted in this legislation, and that is the action in this bill to see more efficient delivery and governance of local authority services. The bill will encourage greater collaboration and shared services between local authorities. So in Northland, Kaipara District Council, Far North District Council, Whangarei District Council, and Northland Regional Council will be able to more easily share services. It will allow easier transferral of responsibilities from territorial authorities to regional councils, and this will provide local authorities with a range of practical ways to achieve efficiencies, better ways of doing things, and more cost-effective ways of doing things. I do not know why the Green Party would oppose such a move. I commend this bill to the House for future generations and for those concerned, whom I have been meeting with, like Miss McKenzie and Mr Bryn, and I ask that other members of the House support it, as well.

ANDREW WILLIAMS (NZ First): It is a great pleasure to come after the Hon Phil Heatley, who just ridiculed the Greens for opposing this bill, the Local Government Act 2002 Amendment Bill (No 3). I have got sad news and bad news for Mr Heatley, because New Zealand First is opposing it as well. So this is not going to make your day, I am sorry, Mr Heatley—it is not going to make your day at all.

We do so on the basis of a little bit of knowledge and experience in this area rather than what has come out of the National Government. We also do it on the basis of the submissions that were made to the Local Government and Environment Committee. We work on the basis that there if there are submissions from the public—interested parties and affected groups—we pay heed to what they say.

In this case I sat on the Local Government and Environment Committee hearings on this bill and we travelled around New Zealand to quite a few different places—in Auckland, Wellington, and other centres—and we heard from the grassroots. We heard from them, and from the likes of a developer in Tauranga who was there, and he spoke just before the Mayor of Tauranga and representatives of the Tauranga area. The developer in Tauranga I would have actually picked as being a National voter, because he gave me that impression; he was a fairly well-heeled gentleman and he looked like he had made a donation or two to the Tories over his time. He said in his submission that this legislation was crazy, that it was madness, and that it was just stupid to be going ahead with it.

The reason he gave was that in the case of Tauranga this would have a difference of about $750 per section in Tauranga. He said that in removing the ability of councils and local authorities to charge development contributions against community infrastructure, which is what this bill is partly about—and when I say “community infrastructure”, I am talking about sports fields, recreational facilities, swimming pools, libraries, children’s playgrounds, all sorts of community infrastructure that we expect in any decent town, city, or district in this country—it is madness to be taking $750 off the development of a section when, he said, in a place like Tauranga, $750 is neither here nor there. The market in Tauranga will determine the cost of a section and will determine the cost of the development of a house. Whether that levy is there or not there will not mean that that house becomes $750 cheaper.

But what it does mean, and he said this, is that when councils such as the Tauranga City Council are potentially approving subdivisions, approving sections, and approving expansions and developments, they will not necessarily go ahead with provision for sports fields or recreational facilities or local—

Jacqui Dean: Yes, they will.

ANDREW WILLIAMS: They will not, and you know that, Mrs Jacqui Dean. Council after council said to us that this will create a huge difficulty for many of them. They will have to put a clamp on. In the case of Mr Paul Goldsmith, he had the cheek to say to some of those submitters that they could just stop spending money on those sorts of things. They do not have to have these things. They do not have to have these things in their communities. It is very nice for Mr Goldsmith, coming from Epsom—does he come from Epsom? I am not sure. He comes from somewhere. It is very nice for people who live in central Auckland who have got all the parks, all the recreational facilities, and all the sports fields. But in new areas, out the back of Flat Bush, out the back of west Auckland, out the back of South Auckland, where they are developing new subdivisions and that sort of thing, if the council says: “Sorry, but we are not getting sufficient contributions from the developers to go towards the infrastructure in this area.”, they may well put the clamps on what they can provide.

In the case of the Auckland Council, we heard submissions from it about the next 10 years, as a result of this—and this was under the original bill. The Government has backed off and said: “Oh no, we will concede. We will let existing projects that are already in the pipeline go ahead.” So already the Government concedes that it made an error. It already knows it is wrong. So it is going: “OK. We’ll let things that are already approved go ahead, but anything in the future we will stop.” The Auckland Council said that under that original legislation it was going to cost the council $450 million in the next 10 years, and in order to continue providing community infrastructure in areas of Auckland—and you are talking from Tahuna up in the north, right down to Pukekohe in the south—it said it would be the equivalent of 8.5 percent over the 10 years, on top of the rates in Auckland, if it were to continue providing that community infrastructure. The council gave a sound warning. It is not good, sensible economics, by anyone’s standard, to then try to impose that amount of money, $450 million, on the existing ratepayers of Auckland.

New Zealand First very much opposes this, because what it basically will do is set up two tiers. The Government has said that existing schemes can go ahead, the ones that are already in place, but any new schemes, any new proposals, any new community projects that councils have will not be allowed to do this. It means that a lot of newer communities, the growth communities in New Zealand, the ones that are really needing it—not the old Dunedins of this world, which have got everything; they have been there for 100 years—the new growth communities, the likes of Christchurch going ahead and growing and needing all sorts of new facilities, the likes of north of Auckland and the north-west of Auckland, which is the fastest-growing area in Auckland, need community infrastructure, and a lot of that will be cut back. If it goes ahead, and if they continue to provide it, it will go on to the ratepayers. The ones who will most fear this will be those on fixed incomes, particularly the elderly and the seniors who are in their homes and have been there for often many, many decades. They in turn will have to suffer increased rates because this National Government has seen fit to remove a legitimate levy that was being imposed on the developers by the councils to ensure that new development was paid for out of that.

But it is typical of this Government, because last year, as the people of New Zealand will know, it changed the Local Government Act to withdraw the four well-beings from that Act as well. It was in an earlier tranche of these reviews. Those four well-beings covered social, cultural, economic, and environmental considerations by councils. The Government took those out. It just wants councils to do footpaths, roads, sewerage, and a few other hard-structured things. But by telling councils not to get involved in their communities, it is saying to communities all across to New Zealand that that is no longer the job of councils; they should not be doing it. I can assure you that councils around New Zealand are the community.

We have two tiers of government in this country. We have central government, and most of that is sitting here in Wellington, in vast ministries, vast bureaucracies, dreaming up the next thing that it can impose on local government, but it is local government that is the administrator and deliverer of services throughout this country. They are the ones that are the glue in the communities of this country. They provide the community well-being. They ensure that a good community is a safe community, a healthy community, and a community where people want to live. If they do not want to live there, they move out. Well, I am sorry, but this Government has a real downer on local government and is creating it into such a despised entity within government in this country that I am surprised that local councillors, local mayors, continue to stand. I am surprised that local mayors who are National Party supporters continue to support the Government, because, quite frankly, it spends half its life absolutely putting the boot into local government. It is time it stopped.

These development contributions were devised over many years—over the last 10 years—with the then North Shore City Council being one of the first councils to bring them in. Many High Court cases were held to get the case studies in place, so that there was fairness in the system. As a result of this, and putting this Act through, well-proven case studies through the High Court to show the legitimacy of it will be cast aside.

It is a nonsense that this Government says this will save costs to housing. We are surprised that Labour is supporting the bill. It should not be supporting the bill. It is so minimal—in the order of $750 to $1,000 is neither here nor there on a $400,000, $500,000, or $600,000 house in Auckland. It is absolute chicken feed for the overall thing, but I can assure you what it will do is impose increased pressure on councils. The next thing we will be hearing is more criticism from National about rates imposed by councils. The Government wants it on both sides. It wants councils to maintain and constrain rates. Fair enough. We all want them to do that. But how can they do that if this Government, in the same breath, takes away other mechanisms—mechanisms that it should have in place to ensure that the growth in their communities is covered not only by the existing ratepayers but by the incoming ratepayers as well?

I am sorry, but New Zealand First will most certainly be voting against this bill. We can assure the public of New Zealand that if we have any influence in the next Government, we will reverse these moves, including the four well-beings and including these community infrastructure levies. We will turn them round and get them back on track.

JACQUI DEAN (National—Waitaki): That was a very good “the sky is falling” speech from New Zealand First—a valedictory—telling local government how bad it all is. Actually, my interaction with local government is not on the basis of how bad it all is, but on what a really good job they are doing on behalf of their local communities. This bill, the Local Government Act 2002 Amendment Bill (No 3), adds to the armoury of those good local councils that are doing such a great job for New Zealanders.

I will just go through those provisions one last time, in this final reading. Extending the ability to have local boards outside of Auckland is a very fine idea—I was going to say a damn fine idea, but I do not think I can say that—because those added delegations to community boards will enhance democracy in some rural and provincial areas in New Zealand. I think it is a fantastic provision that we are going to be bringing in.

Greater collaboration for shared services—what is not to love about that? It happens already. Many local authorities are doing it already because it just makes good sense for certain activities. There is to be more flexibility, more clarity, about when and where to consult with their communities. Let us not have endless consultation just for the very sake of it; let us have targeted consultation, where people feel as if they want to be engaged with their local authorities.

Development contributions—let us really target the range of infrastructure that can be financed by development contributions. It has been abused, or it is a provision that has not been used at all by local authorities. It has been extremely patchy.

Finally, a greater focus and a better focus on asset management, looking out 30 years—again, what is not to love about that? Provide some certainty about forward spending, about what communities might need in terms of infrastructure for growth or for maintaining what they have already.

This is a great bill and I recommend it to the House.

DAVID SHEARER (Labour—Mt Albert): Actually, we are very fortunate that this bill, the Local Government Act 2002 Amendment Bill (No 3), made it to the House. It was going to be pulled because National did not realise that the Labour Party was supporting it. It was going to be pulled, and finally National came to its senses and had a look at what we were talking about. As a result of that, the bill is going forward today.

There are some good things about this bill. Jacqui Dean just mentioned a couple of them, such as shared services and asset management. Nobody can argue with that. But when it comes to issues such as the amalgamation, people are very passionate, and I want to just start on the amalgamation issue, because this is something that the people on the East Coast of the North Island, around Napier, are very passionate about. I want to thank National for being so forthright on the issue of amalgamation in Napier. It has made Stuart Nash’s job of getting across the line just that much easier. Wayne Walford has not got a show as a result of this Government going through, Minister after Minister, saying: “We support the amalgamation in the Hawke’s Bay.” It is wonderful stuff.

Hon Chris Tremain: Leader after leader.

DAVID SHEARER: It is a really sad day for Chris Tremain, I am sure. He has been working so hard, only to have that seat lost to the Labour Party, as it inevitably will be.

I just want to touch on the point that Phil Heatley mentioned a little bit earlier, and that is the development contribution—the development contribution that is going to save so much money for developers. He just could not quantify it. We were asking whether it was hundreds of dollars, or thousands of dollars, or tens of thousands, or hundreds of thousands. We calculated it to be around about $1,000. This is the huge amount—huge amount—that the development contribution is going to save those developers when it comes to building houses, and that is what is going to change in terms of housing affordability.

Well, let us think about this. What difference will that make? What difference will that make when house prices are going up by 22 percent across New Zealand under this Government, and are going up by 40 percent just in Auckland itself? A development contribution levy saving of $1,000 is going to make very little difference. In fact, it is not even going to cover about a third of the cost of the lawyer’s fees. This is negligible, and yet this Government is touting it as some sort of saving grace, and it shows, in the area of housing, just how desperate the Government is to dupe New Zealanders into thinking that houses are going to be that much more affordable. What does that mean for ordinary—[Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I am sorry to interrupt. Look, can Government members please show—[Interruption] Order! Please show some courtesy—[Interruption] Order! Just show some courtesy, please, to the speaker. It is very difficult to hear.

DAVID SHEARER: Thank you, Mr Assistant Speaker. Look, that is what we have come to expect, really. You have got a piece of legislation coming through the House at the moment that is going to save our house-buyers—people who want to be homeowners—$1,000, and all we can hear over here is a whole lot of chatter about what colour shoes those members are wearing, or whatever it is that they are talking about.

In New Zealand there are couples—and I will tell you about one couple in particular—who have been renting a house for a long time. As they have been renting it, they have been making some real changes to that house, such as putting in a vegetable garden and putting in a barbecue, and what happens? They get told to move. So they move further out from the inner city—where they want to live—their kids have to leave school, and they are renting another house. They have come to the conclusion that there is no way that they are going to be able to afford to buy a house.

This is a couple with two incomes and two kids. They are working like crazy and saving as hard as they can, but they are not going to get over the line. Why is that? It is because the average price to buy a house in Auckland is now $700,000—$700,000—and the Government has slapped the loan-to-value ratio on it, which will mean that they have to get a 20 percent deposit. If you do the maths around that, that is $140,000 that this couple has got to come up with. Everybody, except those who have got wealthy parents, is going to struggle to find $140,000. It is impossible.

Another couple whom I know were looking around at a house out in west Auckland. They looked at one house out in Glen Eden for $410,000. They went into this house. There was literally mould growing on the walls and on the carpet and on the ceilings. They simply could not put their children into that house. That was $400,000—that was the cheapest house you could buy. They are still looking. They are still looking for a house that they can afford.

This issue is affecting young couples, young people, right across this country. All they want is what everybody else in New Zealand has been promised, which is that if you work hard and you save hard, you will be able to get into your own home—but that dream has gone. That dream has gone. You simply cannot do it any more. Here is another couple, who have three young boys. They have already got a house. They have got a very small house and they want to get a larger house, because they have got a bigger family now. They bid on a house. It went. They could not afford the $500,000 price tag. It went to a buyer whom they kept track of. They went and saw this buyer and, a year later, the buyer agreed to have a private sale of this $500,000 house and sold it to them for $620,000. That was just 1 year later—just 1 year later. So this couple are now paying $120,000 more for the house that they missed out on the first time.

What does that tell you? It tells you that house prices are out of control, and this piece of legislation is being touted and held up to increase housing affordability in some way. Are we crazy? There is no way you can increase housing affordability with a bill like this. There is no way you can increase housing affordability with the policies that this National Government has come up with. It is afraid to take on the big issues. It talks about its housing accord with local government, and yet not one house has been built in the whole time that that housing accord has been there—not one house has been built. It has been in force now for nearly a year, and we still have no progress, whatsoever.

I want people to think about those young couples who do not have a chance to buy their own home, and then I want to say that we in the Labour Party are willing to step up, roll up our sleeves, and do what young people need in order to address the housing affordability issue—not pass this legislation and say that in some way it will enhance housing affordability, because it certainly will not. We will bring in a capital gains tax, and we know, because the bankers have told us, that that will take 22 percent out of the speculative value of houses today—22 percent will come out. That is the effect of having a capital gains tax—a 15 percent capital gains tax. [Interruption] The member interjects over there, the member from Epsom—well, I should say that the member is from Epsom; he is not representing Epsom. He squats in Epsom, but he does not stand for Epsom in any meaningful way. You would not get a $700,000 house in Epsom, Mr Goldsmith.

We will build more affordable houses—a range of houses—but we will use the ability to build large numbers of houses to get the value that will enable affordable houses to come into existence, and that will meet some of that demand. We will ban offshore people who are not residents in New Zealand from buying New Zealand houses. The housing market is not the stock market. It is not about buying and selling pork bellies; it is about houses where people need to live, and we do not want them to be a piece of speculation on the international market. So we will ban offshore speculation.

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt, but the member’s time has expired.

PAUL GOLDSMITH (National): Well, unlike the Opposition members, who think that the answer to every problem under the sun is the capital gains tax, we are very much concerned about the question of housing affordability in Auckland. But we are realistic enough to know, following the detailed research of the Productivity Commission, that there are many, many issues underlying it. The supply of land is so important, and that is why Nick Smith has been making such an effort around the housing arrangements. There are the materials, there are the Resource Management Act reforms, and another one of the many factors is the development contribution.

One of the things the Local Government Act 2002 Amendment Bill (No 3) does is try to get some basic discipline around the charging of development contributions, which everybody knows has been rather loose in some areas. So this bill clarifies and narrows the range of infrastructure that can be financed by development contributions, brings greater transparency, and delivers a reasonable objection process with independent commissioners so that developers can have some assurance about the quality of the decision making.

I cannot understand why anybody would oppose these practical measures. If parties are legitimately concerned about housing affordability I am sure they would be supporting this bill as I do. Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand the next call is a split call—5 minutes.

POTO WILLIAMS (Labour—Christchurch East): I just want to say, on this Local Government Act 2002 Amendment Bill (No 3), that Labour will support it, but Labour has some concerns, and has had some concerns from the beginning, about some provisions of the bill.

As I discussed in the second reading of this bill, I believe that the intent is to facilitate effective processes and governance arrangements that are fair and efficient, and sound asset-management planning by local authorities. We on this side believe in local democracy and the right of communities to have a say in major decisions affecting them. We believe local decisions are best made locally, and we are committed to a close and collaborative working relationship with local government to ensure that it is empowered and resourced to meet the needs of its communities. Our vision is to ensure that local government is responsive and accountable to local communities, is affordable for its residents and ratepayers, and is effective in dealing with local issues.

During the Committee stage we discussed a particular clause in reference to the long-term planning processes at a local level. Good, effective planning achieves a great deal more for the local community when local boards set out their long-term goals for that community and where, in the local board annual planning, they can then match their progress against their long-term plans. In fact, I believe many of our local boards do this work very well and that what we need is to have mechanisms in place to support our local community leaders to do their job well. We obviously differ, on this side of the House, on what that support should look like.

We had some concerns about aspects of the bill and, in fact, put up several Supplementary Order Papers on these aspects to cover off our concerns. In particular, one that I supported was about reinstating the four well-beings in the legislation to ensure that our communities have their social, economic, environmental, and cultural well-being maintained now and into the future and that there are clearly defined community outcomes that, rather than meet the needs, promote those well-beings, which I describe above.

Labour is committed to developing more affordable housing. We have already heard some of our speakers talk about the development contributions and how that may make some of the housing developments that are planned more affordable. But this requires changes, we believe, that are more meaningful so that reforms like our KiwiBuild programme can go ahead.

We also support monetary policy reform—lowering interest rates and tackling speculation through measures like the capital gains tax and restrictions on offshore purchases. This Government could have thought about some wider options, too, for looking at tackling infrastructure costs, such as how cost recovery could be used to incentivise better urban design, how to cut costs like discounts for smaller dwellings or brownfield developments, how the cost of infrastructure could be spread over the lifetime of a project rather than front-loaded to first-home buyers at the start, like long-term bonds, or how to improve the productivity of developing infrastructure through improved process-management and agreements with developers to ensure that projects are completed in a coordinated and efficient way.

During previous readings of this bill we have discussed the importance of community engagement, as I have said, in the local government processes; namely, that the consultation processes are addressed, adding alternative methods such as some non-traditional ways of accessing community views. Community consultation is vital for good governance and any opportunity to make and increase accessibility is welcomed. I welcome the day when we are able to receive submissions in languages of the presenters. It would certainly make it easier for ethnic groups, for example, to engage in the democratic process if they could present submissions in the languages they are most articulate in. We should be trying to make it easier to hear and consider the views of our people in whatever form that may be, and for whoever wants to submit. Our disability community, for example, are potentially left out of the consultation process, and we should ensure that we provide suitable access to this process for them. But it is not just about the ability to present, it is about how the information is provided. Thank you.

DENISE ROCHE (Green): Tēnā koe, Mr Assistant Speaker. Tēnā koutou e te Whare. In my community in the electorate of Auckland Central at the moment, the local boards are calling for submissions on the local board plans. Once those submissions have been heard, they will then need to negotiate with the governing body to set up the local board agreement. Our local boards—and there are three in that electorate, the Great Barrier Island one, the Waiheke Island one, and Waitematā Local Board—will negotiate, they will advocate, they will engage with our communities, they will put forward ideas, and they will get a local board agreement. But they will not be able to do a whole range of things, including make decisions around how the rates are spent or make by-laws.

We oppose the Local Government Act 2002 Amendment Bill (No 3) because we do not see that local boards are the panacea for all ills in local government that the current Government may have its concerns about. We do not believe this is going to fix anything, and certainly, where I live, although our local boards do their very, very best, they are not the same as having councillors being able to decide for themselves and for their communities how they will develop.

We will also be opposing this bill because of the whole issue around development contributions. Having an ability for developers, particularly, to challenge how much development contributions shall be if they disagree that the development contributions fit with the council purposes actually creates a huge amount of bureaucracy and turmoil for councils. The major winners in this situation will be lawyers and planners. It is estimated in Auckland that Auckland Council might spend up to about an extra $1 million per year basically fighting the opposition from developers to the contributions regime. Auckland Council also estimates that it could potentially lose around $3 million to $4 million a year in development contributions if this bill goes ahead, and that means about $40 million over a 10-year period. Over 95 percent of the submitters on this bill opposed this part of the bill around development contributions, and I think nearly every council raised their concerns about it.

The main beneficiaries of reducing the development contributions are actually the developers. It does not reduce the price of houses that much, and the biggest losers in the whole equation are the councils.

There is also the issue of how development contributions can be spent. Developers create more than houses. They create homes and communities when people live in those houses, and councils understand this. That is why they are concerned about the social well-being, the economic well-being, the cultural well-being, and the environmental well-being of their citizens. The impact of the restrictions will be to restrict provisions for the infrastructure that actually makes a community and keeps it cohesive—things like libraries, swimming pools, museums, and reserves.

On the weekend on Waiheke Island we had the opening of the Waiheke Pātaka Kōrero, our new library, which was 9 years in its creation. It cost around $5.1 million. That was not something that we all could have borne from the rates from our 8,000 residents, and so as a prized place for developers and people wanting to build there, we were able to build this through some of the development contributions that came our way.

We believe that we should be creating communities where our people can thrive. We believe that we can have a diverse, smart economy, a cleaner environment, and a fairer society, and that councils have a huge role to play in that. This bill undermines councils’ ability to do that. We will be opposing it. Thank you.

Hon Peseta SAM LOTU-IIGA (Associate Minister of Local Government): It is my privilege and pleasure to give the final speech on the third and final reading of the Local Government Act 2002 Amendment Bill (No 3). This bill will bring down the cost of building new homes. This bill will improve housing affordability. This bill will provide more effective local government services.

May I first thank the Local Government and Environment Committee, which was ably chaired by the now Hon Nicky Wagner. The committee wrestled with some difficult issues. I believe its multi-party approach brought about some useful amendments to the bill that we have tabled tonight. I also salute the officials from the Department of Internal Affairs as well as other Government departments who contributed to the progress of the bill.

Although my name is on this bill, I recognise that many other Ministers played a role in advancing the bill, including the Hon Chris Tremain and the Hon Nick Smith. Local government touches each and every one of us. We are a set of communities who are passionate about our neighbourhoods. I want to thank the 120 submitters on this bill who presented some strong thoughts and ideas. They played a vital role in influencing the final bill as read tonight. Local government reforms were needed to make sure that all public services are delivered in a cost-effective and efficient manner. This bill reforms the Local Government Act 2002 to encourage and facilitate improvements in how local government operates. My constituents in Maungakiekie demand this. I know, going around the country listening to residents and ratepayers, that this is important to all New Zealanders.

By supporting councils to operate more effectively we help build a more competitive and productive economy. By doing that we are able to increase jobs and opportunities and allow New Zealanders to live and prosper independent of the State. By doing that we improve the delivery of better public services. By doing that we improve housing affordability. With housing pressures on the rise, even more focus is needed to make sure that all the costs of building new homes are kept under control and minimised. There is no easy way to do this but there is a way. This is part of a suite of measures to improve housing affordability. These measures are done alongside increasing land supply, removing tariffs on building materials, implementing special housing areas, and one day reforming the Resource Management Act.

Everyone, including councils, needs to work differently to collectively deliver the savings to help make houses more affordable. When development contributions were introduced in 2002, it was another decade before they were reviewed. This Government had the courage to make the decisions to make the development contribution scheme fairer, more balanced, and more transparent. It does this by introducing new purpose and principles provisions. This bill takes the difficult but necessary task of changing the landscape for the way local councils work to a better way of working.

The changes include encouraging more collaboration between councils so that they can more easily share services. This will save time, energy, and costs for councils around our nation. The changes provide for flexible consultation processes between councils and stakeholders. Consultation is still required, but councils can choose the best approach appropriate for the circumstances. This will allow the right approach for the right matters at hand, and this improves the effectiveness of decision making, consultation, and engagement.

The bill narrows the definition of “community infrastructure”. It avoids inappropriate charging and improves fairness. Developers should pay only for the necessary infrastructure for their developments. This will provide transparency for the council, fairness for the developer, and ultimately less cost for the homebuyer.

The homebuyer, the ratepayer, the community—they are at the heart of what is critical in this bill. That is why I stand here compelled to tell you that this bill is ultimately about people. Every day I get a new letter asking me about local government issues. People are passionate about their children, their families, their communities, and ultimately their homes. In New Zealand we need to build council infrastructure to a standard that supports the current and future needs of New Zealand’s communities. That means making decisions for the long term with careful financial management; for this, future-focused and prudent management of council-owned community infrastructure is critical. Council-owned infrastructure can often have a lifespan of over 50 years. The current 10-year long-term plan requirements provide an inadequate time-horizon to manage many of the assets owned by our communities. That is why this bill introduces a requirement for a 30-year infrastructure strategy to provide for the prudent management of those assets. There is a need for decision makers and the public to have a good overview of the key infrastructure issues and options to make informed decisions.

The select committee took on board councils’ suggestions to improve the proposed infrastructure strategy. The amended provisions in the bill anticipate that the 30-year infrastructure strategy will focus on each of the first 10 years and then the remaining 20 years in 5-year blocks. This will allow councils to think ahead, to game-plan for likely scenarios. It does this without imposing an unnecessary administration burden on councils by requiring detailed year-by-year financial and circumstantial estimates. The increased focus on long-term planning means decisions about local infrastructure will be timely, considered, and will lead to better short, medium, and long-term outcomes. You see, good strategic planning is an important ingredient in the success of any organisation. Local government reform is needed to make sure that all public services are delivered in a cost-effective manner.

The Local Government Act 2002 Amendment Bill (No 3) is needed to ensure we are continuously improving our local body systems and services. The implementation of this bill and what lies ahead will ensure that we are doing the best we can for the benefit of every New Zealander. We have heard from people who want the best for their families, their communities, and ultimately our country. This bill will help councils to meet the fundamental needs of our changing communities now and into the future. I am proud of this bill. I commend it to the House.

A party vote was called for on the question, That the Local Government Act 2002 Amendment Bill (No 3) be now read a third time.

Ayes 94

New Zealand National 59; New Zealand Labour 34; United Future 1.

Noes 24

Green Party 14; New Zealand First 7; Māori Party 2; Mana 1.

Bill read a third time.

Bills

Veterans’ Support Bill

Third Reading

Hon MICHAEL WOODHOUSE (Minister of Veterans’ Affairs): I move, That the Veterans’ Support Bill be now read a third time. It is with a sense of both accomplishment and no small amount of relief that we come to the end of what has been a long journey. Some would say it has been too long, but I make no apology for the need to take care in getting correct the rewrite of such an important piece of legislation.

I want to thank the parties in this House for their strong support of the bill; the Social Services Committee, ably led first by Peseta Sam Lotu-Iiga and then by Melissa Lee; my ministerial predecessors Barker, Collins, and Guy, who all made important contributions; the officials of Veterans Affairs New Zealand, the New Zealand Defence Force, the Ministry of Social Development, and ACC; and the many others who worked incredibly hard and helped bring us to this point. I especially want to thank those individuals and groups in the veteran community and wider community who were involved in the development of the bill, particularly the Royal New Zealand Returned and Services’ Association.

The bill continues a tradition of support for veterans that dates back to 1866, when the first veterans legislation was introduced. Such support is never without its tensions. This country has a proud legacy of support, but we do not always agree with one another or with the veteran community about the manner and extent of that support. Indeed, as far back as 1928 the then Minister of Finance was reported in The Star as saying “When one amends the war pensions legislation, one is likely to be shot at from all directions.” Perhaps that is an unfortunate metaphor, but I understand the sentiment. This bill will maintain the key foundations from previous veterans legislation, including the principle of benevolence. Service eligibility criteria will remain the same, and all deployments currently covered under the 1954 Act will remain covered. The bill establishes two schemes. Scheme one will cover veterans who served from the Second World War through to, and including, the Viet Nam War. Scheme two will cover veterans who have served since 1 April 1974.

The bill adopts the statements of principles, or SOPs, made under the Australian Veterans’ Entitlements Act 1986 as the main reference point for deciding claims. The statements of principles are comprehensive, are based on robust international medical and scientific evidence, and will introduce much-needed certainty into decision making. Scheme one is based on entitlements available under this 1954 Act with some improvements. Veterans will continue to receive periodic disablement pensions for impairment. Veterans who are under 65 and unable to work will now have the option of receiving weekly income compensation at 80 percent of the average wage. The entitlement payments of veterans receiving support under the 1954 Act will not reduce. Scheme two is based on entitlements available through ACC, with an additional top-up to recognise the special nature of military service.

The bill also includes common entitlements that can be available to veterans under both schemes. These include a modernised approach to rehabilitation and continued access to medical treatment for service-related impairments. A key change in the new legislation is that the veterans pension will be made available to all veterans aged over 65 with qualifying service. This will enable an extra 16,000 veterans to access additional support over and above that provided to other New Zealanders who have reached superannuation age, in recognition of the sacrifice veterans have made in service to New Zealand.

Extending the veterans pension to all veterans with qualifying operational service and tailoring the subsequent entitlements to the veterans’ varying levels of impairment provide the legislation with the flexibility to better recognise the impact that service-related impairment has on the lives of veterans of operational service. Quite a large amount of time was spent in the Committee of the whole House on the recommendation of the Law Commission around the extension to all veterans of a lump sum paid on the death of some veterans. I do not wish to relitigate that debate except to remind the House that the Law Commission admitted that its recommendations were not costed. I am satisfied that the final $60 million package of improvements was generous to our veterans in the circumstances. I also would never consider a payment to further veterans after they die while at the same time quietly planning to increase the age of entitlement for the veterans pension from 65 to 67. I would not do that; my party would not do that.

I also want to acknowledge the Māori Party and the United Future party for their valuable assistance in improving the entitlements framework. It is fitting that this third reading is before the House today, given the milestones that bookend its passing. Yesterday marked 100 years since Austria-Hungary declared war on Serbia, marking the commencement of hostilities, and next Monday marks the 100th anniversary of the start of New Zealand’s involvement in the First World War, a war that become known as the Great War—if there was ever a literary contradiction, it is in the description of war as great.

Some members debating this bill have remarked on the futility of war and the cost paid by the participants, their families, and their descendants, and they caution against glorifying war and war service. I agree with many of those sentiments, but I do not believe that we need to glorify war in order to honour those who participated. We honour them in many ways, and this bill, when passed, will be another important way to do so.

In the first reading debate on this bill I referred, as many others did, to the silent sentinels that surround us in this House, the names of the theatres of war in which New Zealanders honoured us with their service and sacrifice: Gallipoli, Passchendaele, the Somme, Monte Cassino, Korea, Viet Nam, and many others. They are sentinels that remind us that the freedoms we enjoy today are all too often forged in the fires of conflict and are a constant reminder of the human cost of the decisions we make to send our people into harm’s way in defence of those freedoms. We owe it to them to support our veterans and to always remember them. I commend this bill to the House.

Hon PHIL GOFF (Labour—Mt Roskill): The Veterans’ Support Bill, which is about to pass into law after its third reading is completed, was initiated way back in 2006 in a series of meetings that the then Minister of Veterans’ Affairs, Rick Barker, and I, as Minister of Defence, had with the president of the RSA, John Campbell, and the president of the Ex-Vietnam Services Association. What we were trying to do at that stage was address the justified grievances of the Viet Nam veterans, and one way of addressing the grievances was to reform and update the War Pensions Act of 1954. It was a very old piece of legislation and reform was certainly long overdue. It was also very complex. What Labour did was set it up for the Law Commission to thoroughly investigate, analyse, and consult on the changes that were desirable and that would not only modernise the old War Pensions Act but would honour our veterans in the way that we believed they needed to be honoured.

I had always assumed that this would be done with a non-partisan approach, that we would find consensus on what needed to be done, and that we would honour our veterans in that way. When members of Parliament left this Chamber to fight and, for some of them, to die in the Second World War, party differences were put aside. So I thought that this was something that, in the context of the Social Services Committee, we could examine thoroughly and reach consensus on. We almost did, in the sense that most of this bill is supported by all of the parties of this House. But where we parted company from the National Government was where it made a deliberate decision to reject the recommendations of the Law Commission and the submissions made by the veterans themselves and by the RSA around eligibility for a veterans pension.

At the select committee I could find absolutely no justification why the war veterans pension should be restricted to only those who had suffered a 52 percent disability. There was no justification for that threshold. It was utterly arbitrary, and we worked in the select committee to get it removed. National refused to do so and brought a bill back to the House that excluded most of the veterans. I raised Supplementary Order Paper 441, which would have removed that threshold and made the veterans pension available to all veterans who had served operationally overseas. In the end National had to make that change in the Committee of the whole House, but even in making that change, it did it in a mean-spirited and penny-pinching way.

Yes, all veterans will now get the veterans pension. The veterans pension, of course, is set at the same level as New Zealand superannuation, but it has some additional benefits attached to it. One is the community services card. The Minister of Veterans’ Affairs has acknowledged that all veterans will get that automatically. Another very inexpensive measure is that they will not lose their pension if they are hospitalised for more than 13 weeks.

But there was a third measure, and it was eligibility for a lump-sum payment on death. The Minister said that he is not about to relitigate this. Actually, in the whole of this debate he has never once litigated it, because he has never once justified why we should deny our veterans, who served this country so bravely, what the Law Commission—after thorough consultation—said they should get, what the war veterans asked for, and what the RSA recommended. I have heard two sets of excuses. One from the Minister at one stage was that this is a benefit that would not go to the veterans; it would go to their families. Well, the veterans are not silly. The veterans know that, and that is precisely what the veterans wanted. They wanted their families freed from the worry over the cost of their funeral expenses. It was not a lot to ask for. We could have done it. Secondly, the payment would recognise that it was not only the veterans who made that sacrifice for their country but also their families.

On Monday of last week I attended the funeral of one of my constituents, a woman by the name of Audrey Stevens. She was 99½ years—99 years and six months old. Her husband, Ivan, whose funeral I had also attended some years earlier, was a World War II veteran. They were married in 1940. Two weeks after they were married, he embarked with the 24th Battalion and went to Europe. In Crete he was captured. It was months before she knew that he had not been killed. He was missing in action, presumed dead. He then spent 4½ years as a prisoner of war. When he came home, they were strangers. When he came home, he brought home with him the trauma of his experiences in battle and as a prisoner of war, and right throughout their married life together that trauma meant that there were also sacrifices made by every other member of that family. Is it asking too much that we in this House recognise that families, too, share in the sacrifice of their loved ones who went to war?

The second excuse given by the Minister is that it is too expensive. Well, at another select committee I found out that the cost was $7.4 million—$7.4 million for the lump-sum payment, declining by $1 million every 2 years. I want to put that into context. Every year to date under the National Government the money paid out to our veterans has declined, on average, by $7 million to $8 million—not by one lot of $7 million to $8 million, but cumulatively by another $7 million to $8 million—out of the Budget every year. What we are asking for, what the Law Commission was asking for, what the RSA was pleading for, and what the veterans wanted could easily have been accommodated because of the decline in the expenditure every year under this Government in terms of payments and services to our veterans.

It is not just that. In the regulatory impact statement we found out that 28 percent of our veterans who are alive today will have passed on within 5 years—within 5 years. So imagine the cynicism of our veterans when the National Government replied to the recommendation that said they should get this benefit: “Not at this time.” That is what the Government said. Do you know what the veterans said to me? They said: “They’ll give it to us when we are all bloody dead.” That was the cynicism of the veterans, and it is understandable.

We can afford that money. A Government that can spend $30 million on subsidising the operation of a foreign multinational—Rio Tinto—can afford $7.4 million for those who put their lives at risk for their country. A Government that can spend $150 million on commissions and legal fees to sell off our assets, which most veterans do not want sold anyway, can surely afford the money that it would take to pay the veterans this small extra amount, which is what the Law Commission recommended.

On 4 August next week we mark the centenary of the start of the First World War. I was in the Chamber this afternoon when the leaders each got up and expressed their gratitude for the sacrifices made by our veterans. But three of the leaders lead parties that voted against this small gesture of thanks and respect for our veterans, and it is to their and their parties’ eternal shame that they did so. But I make this pledge: with the election of a Labour-led Government, we will give our veterans that small amount of extra money. As we look around at the plaques in this Chamber that commemorate the battles, surely we, in our lucky generation, owe it to our veterans as an expression of gratitude for what they did on behalf of all of us.

MELISSA LEE (National): I would like to begin my third reading speech by just clarifying a couple of things so that people at home and people in the House are not confused after the speech of that member, the Hon Phil Goff. It is, in fact, all veterans with qualifying service who get the veterans pension; it is not selective. And if Labour had its way, it would give more money with one hand but take it away with the other, because it would give the pension when the veterans turned 67. So is it really giving very much? Let me just be clear, Mr Goff. The lump sum does not get paid when veterans are alive. Let me make it very, very clear that the lump sum is not paid while the veterans are alive. It is actually paid after they are dead.

I would like to first of all pay tribute to all men and women who have served our country, in particular, those Korean War veterans, who 2 days ago celebrated the 61st commemoration of the ceasefire on the Korean peninsula. I was at the Auckland commemoration held on Friday. As always, it is an honour to be among the veterans who served to keep Korea free. I am a beneficiary of their bravery and their noble sacrifice. The Korean veterans are getting on in their years, and since May this year 18 have passed away. That makes a total of 43 who have passed away since November last year. I take this opportunity to send their families my sincere condolences and my love. They have my gratitude and my love for their service in Korea.

There were 4,700 New Zealanders who served in the Korean War. Thirty-three died during the conflict. The war ended after 3 years, but the New Zealanders served until 1957. There were 3 million civilian dead and 800,000 military dead. That is a huge casualty that we have seen in recent years. As I have always said throughout the progress of the Veterans’ Support Bill—right throughout it—we need to honour our veterans.

It has been a long process to rewrite a 60-year Act and implement 132 of the 170 recommendations that the Law Commission made, which were the result of the War Pensions Act 1954 being referred to the Law Commission in 2007, as other speakers have mentioned earlier. The old War Pensions Act dealt with the physical risk associated with deployment but did not really cover the cost of the psychological and environmental risk that our troops faced as a result of their deployment. The National-led Government is committed to honouring the service of our veterans—service that these veterans have given to this country. It is a huge debt that we owe our veterans who have served all around the world in defence of our nation, for freedom and democracy, and the sacrifices they have made need appropriate recognition in legislation.

As the Minister of Veterans’ Affairs said earlier, we have committed $60 million for a package to support the new legislation. The Veterans’ Support Bill will mean that this Government will be able to better meet the needs of the war veterans who need help to remain in their own homes, and it will also enable us to meet the needs of veterans of modern day deployment who need rehabilitation and help to return to work. The changes in the bill will increase the number of New Zealanders eligible for the veterans pension from 8,600 to 25,000—that is an increase of 16,400 New Zealanders who will qualify for the veterans pension.

National has always supported our veterans. Without a doubt freedom and the legacy of service to our country came at a significant cost. Many lives have been lost in defence of this freedom and many more were injured. No veteran will have their current entitlement reduced and many veterans and their families will benefit from increased entitlement, care, and support.

I was looking for something to refer to when I was preparing for the third reading and I found a poem. It was not written by a New Zealand soldier, but I will start from halfway through in the fourth stanza. I quote Mr Frank G Gross, who wrote this in 1972:

Many countries remember their fallen with respect of honor due

but in these states such little relates and our history’s words were few

For in the hallway of the high school, mahogany plaques stand out

Of the names engraved and the sacrifice made to remind us what war is about.

There are names there of the first war, the very first bugle call,

And for the Taps that blew in world war two, and of the boys from Nam on the wall

But the Korean War, forgotten, Fifty Four Thousand lost their place

And the Eight Thousand more are MIAs, of them there is such little trace

So hear us, Five Star General, we heed to the words you say

That Old Soldiers never die, but why must they fade away.

This bill makes sure that those soldiers do not fade away. I commend this bill.

Debate interrupted.

Points of Order

Members—Appropriate Attire

JAMI-LEE ROSS (Junior Whip—National): I raise a point of order, Mr Speaker. I have waited until as near to the end of the House as possible, without interrupting anyone. Some of us on this side are a little offended by the lowering of dress standards by a member in the House and I wonder whether you could refer to Speaker’s ruling 16/2, the requirement for members to dress in business attire, and 16/4, around the wearing of hats. [Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! A point of order has been raised. If we look at Speaker’s ruling 16/4 there is no rule prohibiting a member wearing a hat. It goes on to say—I will just go to the last part—“But in the normal wearing of attire a member is perfectly entitled to wear a hat.” That was Chairperson Braybrooke in 1999. [Interruption] Order! I am upholding the ruling that appears in Speakers’ Rulings.

Bills

Veterans’ Support Bill

Third Reading

Debate resumed.

DAVID SHEARER (Labour—Mt Albert): Well, that was a ridiculous interruption to a very important—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I have ruled on the matter, so you do not refer to it.

DAVID SHEARER: Today we commemorated the beginning of the First World War 100 years ago. It was a war in which 103,000 New Zealanders served at a time when our total population in New Zealand was about 1 million. In other words, one in 10 New Zealanders, basically, one in five male New Zealanders, went away to war to fight. Eighteen thousand of them were killed and 41,000 were wounded. That is an extraordinary casualty rate. In fact, that casualty rate was exceeded per capita by only one other country, and that was Russia.

New Zealand paid dearly, and, as we heard today from a number of speakers around the House, it meant that New Zealand really forged its independence, its self-standing, on the beaches and on the fields of Europe and Turkey. It does remind us that when we send our service people away to war and to areas of conflict we are putting them in harm’s way, and that those in most recent times—whether they were in Afghanistan, Timor Leste, or in the Solomons, wherever—serve our country with honour. They do not do it for the glory or for the medals or whatever; they do it because our country asks them to do it, and they do it willingly. They put themselves in harm’s way. The least we can do in return is ensure that when they return and when they become a bit older we treat them with the dignity and grace they deserve.

The Veteran’s Support Bill, which Labour supports, gives effect to the recommendations of the Law Commission in its 2010 report recommending a new support scheme to replace the War Pensions Act of 1954. The Act was considered outdated. It was looked at by Rick Barker, who was the then veterans’ affairs Minister, and Phil Goff, who was the defence Minister. They asked the Law Commission to take a look at this piece of legislation and to analyse it and make some recommendations that would elevate it and bring it into today’s world, effectively—make it relevant for today.

So the Law Commission spent quite a long time on it. It reported back in 2010 and delivered 280-odd pages of analysis, discussions, and recommendations. It went away in 2008 and came back in 2010. It made a number of very important recommendations that we have largely endorsed. It has been through a full select committee process, and the Committee stage in the House. We are broadly in agreement around its major clauses. But there are a number of issues that we disagreed with and that the Government wanted to press on with anyway.

One of those was about disability. To get a veterans pension you needed to be 52 percent disabled. Yet nobody could actually tell us exactly how you measure, how you come up with, a 52 percent disability. This was in some ways a rather ad hoc way of being able to make that determination. We put forward an amendment, and after arguing it through with the Government—and I thank Phil Goff for his assiduous effort in this regard—the Government agreed to it. So now we do not have to prove 52 percent disability any more. That is being passed by this Government.

The other issue that the Government was not willing to accept was that the veterans would automatically receive the right to have a community services card. That too appeared to us to be the least we could do for veterans. The Government, again, disagreed. It disagreed that a community services card would be made available to them automatically. After Phil Goff and Labour put forward an amendment, the Government—reluctantly, I believe; screaming and kicking—agreed to allow veterans to have a community services card.

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair.

Debate interrupted.

The House adjourned at 10 p.m.