Questions to Ministers:

1. Economy—Exchange Rate 1

2. Retirement Savings—State Sector 2

3. Employment Relations Act—Contractors 2

4. Fuel Taxes—Customs and Excise Duty 2

5. Schools—Network Reviews 3

6. Information and Communications Technology Sector Taskforce—Government Response 4

7. Corrections, Department—Chief Executive 4

8. Industry and Regional Development Policy—Reports 5

9. Crop and Food Research—Genetically Engineered Onions 6

10. Marine Mammals—Protection 6

11. Australia—New Zealand Relationship 6

12. Tertiary Education Commission—Student Numbers 7

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Economy—Exchange Rate

1. Dr DON BRASH (Leader of the Opposition) to the Minister of Finance: In making his statement yesterday that he is “not without options” to combat the rise in the New Zealand dollar, was it his intention to signal possible changes to the Reserve Bank of New Zealand Act 1989, changes to the floating exchange rate, or intervention in the currency market; if not, what was he hoping to achieve?

Hon Dr MICHAEL CULLEN (Minister of Finance): My intention was to signal that the Government is not without options. No specific conclusions can be drawn from that statement, and it would be most unwise to do so.

Dr Don Brash: Given that the rise in the New Zealand dollar is putting very considerable pressure on much of the export sector, why does the Government persist in dumping additional compliance costs on exporters, like yesterday’s announcement of a new $20 million trade tax and proposing still further cost increases by mandating additional paid annual leave?

Hon Dr MICHAEL CULLEN: I bow to the member’s superior knowledge about lifting New Zealand’s exchange rate. However, on the basis of the logic of the National Party, if increasing compliance costs reduces economic growth that will actually lead to a reduction in the New Zealand exchange rate over the long term.

Rodney Hide: Is it not the case that the Minister has no options on the level of the New Zealand dollar and he is actually just pretending that he has; if that is not the case, why is he not prepared to share what he thinks his options are with the public of New Zealand?

Hon Dr MICHAEL CULLEN: No, the ongoing activities of the Government impact on an exchange rate in a whole host of ways, but no specific conclusions can be drawn from my comments.

Rt Hon Winston Peters: Can he recall the inaction of the Labour Government between March 1985, when the dollar rose to US72c, and would he contemplate doing something this time, rather than doing nothing the last time he was in Government?

Hon Dr MICHAEL CULLEN: I do not think I was the Minister of Finance at that point in the history of the Labour Government, and, therefore, I am not responsible for what it did. However, I can point out to the member that the Government is not without options, but no specific conclusions can be drawn from that at this time.

Rod Donald: Why does the Minister now appear to be interested in the exchange rate and balance of payments blowouts, when in 2001, in answer to a question from me in this House, he claimed that our much larger balance of payments deficit was not a cause for long-term concern, and does he agree that exchange rate and balance of payment policies are long overdue for New Zealand?

Hon Dr MICHAEL CULLEN: At that point the New Zealand dollar was falling and in a highly competitive situation, which led to a strong correction in the current account deficit.

Dr Don Brash: Has the Minister seen the assessment by Westpac’s currency strategist Johnathan Bayley reported in this morning’s New Zealand Herald that he was “simply trying to jawbone the New Zealand dollar lower”, and can he tell the House whether by the end of yesterday there was any sign at all of that being achieved?

Hon Dr MICHAEL CULLEN: Yesterday was a good demonstration of the irrational exuberance of financial markets. On the back of the Australians lifting their interest rate, markets decided to mark the New Zealand dollar upwards, despite the fact that therefore the interest rate differential between the two countries disappeared. That suggests one should not listen too closely to currency strategists from banks about rationality.

Rt Hon Winston Peters: What does the Minister of Finance think the advantageous effects are for the export community of this country—the people who actually pump wealth into this nation—of a dollar ever escalating in the face of a Minister of Finance who refuses to do a thing about it?

Hon Dr MICHAEL CULLEN: So far in question time I seem to be accused by some parties of doing nothing, and some parties of doing far too much. That suggests that I must have it about right.

Dr Don Brash: Is the Minister aware that Japanese authorities have also been trying to prevent their currency rising against the falling US dollar, with intervention in the foreign exchange market, rumoured to be in excess of US$100 billion, and interest rates very close to zero, but with absolutely minimal effect on the yen - US dollar exchange rate; given that, why does he have any confidence at all that he will be able to achieve a better result?

Hon Dr MICHAEL CULLEN: I can confidently say that the Government does not have US$100 billion to spend in that kind of area at all.

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Retirement Savings—State Sector

2. DAVID BENSON-POPE (Labour—Dunedin South) to the Minister of State Services: What is the Government doing to promote retirement saving schemes for those employed in the State sector?

Hon TREVOR MALLARD (Minister of State Services): The Government has announced a new employment-based retirement savings scheme to be operational within the public sector from July next year. Employees will be able to choose their desired level of regular contributions. They will be matched by employers up to a maximum of 1.5 percent of gross salary in year 1, or 3 percent of gross salary in year 2, less withholding tax. This is good for the public service and a good example to other employers about the importance of retirement saving schemes.

David Benson-Pope: When was the last time State sector employees were able to join a Government-subsidised retirement savings scheme?

Hon TREVOR MALLARD: There has been a number of small and ad hoc arrangements from agency to agency, but on a public service - wide approach, it was in 1992.

Dail Jones: As this measure is good for the public service, which New Zealand First agrees that it is, why does the Minister not take similar action, or make incentives available also for the private sector?

Hon TREVOR MALLARD: Of course, it is available for the private sector if employers, like employers in the State sector, choose to make it so.

Rod Donald: While we support this scheme, we would like to know: will it be available to all State sector employees—whether part-time or full-time; what protections will the Minister put in place to ensure that the savings of low-income workers are not gobbled up by administration fees and other costs; what is he intending to do about the regressive nature of the scheme; nd will the Government continue to contribute to superannuation while women are on paid parental leave, in the light of the fact that women have lower lifetime earnings?

Mr SPEAKER: There were four questions there. The Minister may answer two.

Hon TREVOR MALLARD: There are a lot of details to work through. There will be at least three different options for each person involved to choose from. The scheme will be available to part-time workers. It is unlikely to be available to people on leave or not earning at the time, but those are details that will be worked through over the next period of time. I thank the member for his support. This is an important policy in giving an indication to the community in general that retirement savings, over and above Dr Cullen’s very good scheme, are important.

Lynne Pillay: Is the promotion of a retirement savings scheme for State sector employees supported by the industry?

Hon TREVOR MALLARD: Yes, overwhelmingly. Vance Arkinstall, the chief executive of the Investment Savings and Insurance Association, said that the scheme sent a powerful signal about the importance of personal saving for retirement. Traditional superannuation has been in decline for a decade now. We hope that this is the beginning of the reversal of that trend.

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Employment Relations Act—Contractors

3. Hon ROGER SOWRY (National) to the Minister of Labour: Is the recent Employment Court decision that found a set model technician hired as a contractor on The Lord of the Rings was actually an employee the result she intended when she introduced the Employment Relations Act 2000; if so, why?

Hon MARGARET WILSON (Minister of Labour): My intention was that the court do what it was required to do under the Employment Relations Act. The Act intended that such matters should be determined by looking at all the facts to determine the real nature of the relationship, and the court has done exactly that in this case.

Hon Roger Sowry: Has the Minister seen the statements of The Lord of the Rings producer, Mr Barry Osborne, warning of “significant consequences that are unfortunate to the full industry” arising from the decision of the Employment Court; and will she accept the responsibility for those negative outcomes as a result of her decision to change the law that previously provided certainty to the film industry?

Hon MARGARET WILSON: Yes, and I do not accept that there are inevitable negative outcomes as a result of this decision, but I am very happy to talk to the industry about it.

Hon Mark Gosche: Why is it important that parties are clear about the real nature of their employment arrangements?

Hon MARGARET WILSON: When parties determine the nature of their relationships, the rights and obligations of the parties will differ of course, depending on whether they are classified as employees or contractors. Certainty of rights and obligations is critical in business as well as in law. That is why it is always best to address those issues clearly at the start of the working relationship—which was not done in this fact situation.

Rodney Hide: Could the Minister explain to the House what that says about her Government’s whole-of-Government approach to issues, when, on the one hand, the Hon Jim Anderton goes around the country trumpeting the big success of spending taxpayers’ money to the tune of $40 million to try to get the film industry down here, and, on the other hand, her legislation is effectively canning that investment?

Hon MARGARET WILSON: The legislation was passed by this Parliament, and I do not believe that the two policies are in contradiction, at all. They do, in fact, support each other.

Paul Adams: In the light of the focus in the primary question on the implementation of the Employment Relations Act, will the upcoming amendment bill allow employers to impose a 1-month prohibition period for new employees, as vigorously promoted by the Minister for Small Business, John Tamihere; if not, why not?

Hon MARGARET WILSON: No.

Hon Roger Sowry: Why did the Minister change the law regarding a situation when, prior to the Employment Relations Act, it had been clear and extremely workable; and does she think that it is in the best interests of New Zealand to now risk losing a $300 million film like The Lion, the Witch, and the Wardrobe?

Hon MARGARET WILSON: I do not believe that, in fact, those projects are at risk, at all.

Hon Roger Sowry: Given that the Minister does not believe that the $300 million film The Lion, the Witch, and the Wardrobe is at risk, why on earth would the Lord of the Rings producer say it was at risk; does he not know what he is talking about?

Hon MARGARET WILSON: I cannot speak for the person who made that statement. What I do know is this was a particular case that was decided on its own facts, and that, in fact, it was stated within the case that it was much overstated as to what the precedent consequences of it would be. As I said, the answer is in the hands of parties and, of course, I and the Government are always available to assist them to ensure there is clarity in their contractual relationships.

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Fuel Taxes—Customs and Excise Duty

4. LARRY BALDOCK (United Future) to the Minister of Finance: How much of the $1,128 million “fuels excise and customs duty” that Transfund New Zealand estimates will be collected in the 2003-04 financial year is made up of “fuels excise” and how much is made up of “customs duty”?

Hon Dr MICHAEL CULLEN (Minister of Finance): The breakdown from the Transfund estimate is that $912 million is on excise duty and $216 million is customs duty. Treasury has slightly different estimates.

Larry Baldock: Can the Minister give the House a clear statement as to whether there is any possibility that the Government will reallocate the entire 18.5c per litre in fuel excise tax, which is currently allocated to the Crown account, back into the National Land Transport Fund in the foreseeable future, particularly in light of the recent financial forecast that the Budget surpluses may be reduced considerably?

Hon Dr MICHAEL CULLEN: No. There is no prospect of that happening within the foreseeable future. It would certainly be fair to say that some possibility of diversion may occur, depending upon the nature of Budget forecasts and the requirements of funding the Auckland roading system.

John Key: Does the Minister of Finance think that it is a good idea to spend an additional $800 million of petrol tax so that State Highway 20, a project running through the Prime Minister’s own electorate and one she once described as proceeding “over my dead body”, can be built using tunnels; if so, does he now consider that to be an expensive case of “under her dead body”?

Hon Dr MICHAEL CULLEN: I can assure the member that the Prime Minister is very much alive, unlike his leader.

Mr SPEAKER: The question had certain comments in it, but I think the answer was out of order. The member will withdraw and apologise.

Hon Dr MICHAEL CULLEN: I withdraw and apologise. No, we do not have accurate estimates on any of the individual components, as I understand it, of the Auckland roading network at this stage—one interesting feature that has emerged from the officials’ exercise.

Rt Hon Winston Peters: Can the Minister confirm to the House that if the total amount of money collected for the purpose of roading, roading maintenance and upgrading, and road safety—namely $2.25 billion—was used for that purpose, then all these other funding arrangements supported by United Future would not be required?

Hon Dr MICHAEL CULLEN: No, as I have pointed out many times, that does not cover the full cost of roading. Some $1,673 million of that goes into the National Land Transport Fund, but, as is well established, the cost of capital for roading is not covered by the excise duty and other forms of income.

Jeanette Fitzsimons: Can the Minister confirm that unlike previous increases in petrol tax, the latest 4c increase voted in by Labour and the Greens and opposed by all other parties goes entirely into the National Land Transport Fund, with the effect of lowering the proportion of total petrol tax diverted to the consolidated account, compared with the previous regime that pertained under the National - New Zealand First Government?

Hon Dr MICHAEL CULLEN: Yes, and I shall remain eternally grateful to the Greens for their cooperation in that regard.

Larry Baldock: Can the Minister understand public concern on the allocation of fuel excise to the Crown account and their requests for accountability over this, when the facts show that the Labour Government increased the amount of diversion in 1986 from 9.8c to 25.8c, and the National Government, in August 1991, increased it from 19.3c to 23.1c, and will he confirm that this Government has no plans to increase the amount in a similar fashion?

Hon Dr MICHAEL CULLEN: Yes. As in many of these matters, I do not intend to follow either Roger Douglas or Ruth Richardson.

Rt Hon Winston Peters: What amount does he think is collected from all areas in respect of roading in this country, and why is that amount not spent on the purpose for which it is collected, which is what the New Zealand road user wants to happen?

Hon Dr MICHAEL CULLEN: The member gave a pretty accurate estimate. My estimate was based on the Treasury figures, not the Transfund New Zealand figures. Transfund New Zealand’s figure is $2,246 million, of which $1,673 million goes into the National Land Transport Fund. But, as I said, the cost of capital is not taken account of in those simple cash sums.

Larry Baldock: Is the Minister aware that in May 1988, the National - New Zealand First coalition Government made a small reduction in the amount diverted of 2.1c, despite the fact that the leader of New Zealand First and Treasurer of the day had his own member’s bill drawn up that required all funds to be used for roads; if so, does he think Winston Peters has any chance of achieving that goal in the near future?

Mr SPEAKER: That question is out of order. The Minister has no responsibility.

Larry Baldock: I seek leave to table the member’s bill that I mentioned.

Mr SPEAKER: Leave is sought to table the member’s bill referred to. Is there any objection? There is.

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Schools—Network Reviews

5. DEBORAH CODDINGTON (ACT) to the Minister of Education: In light of his reported statement that the total cost of “network reviews” will be pulled back through the money saved by closing about 300 schools, what is the total cost?

Hon TREVOR MALLARD (Minister of Education): The cost of administering network reviews is minimal when compared to the extra money that the schools receive once a review has been completed. The total Ministry of Education budget for administering all reviews is less than $3.2 million. This compares to around $17 million that has been reinvested in schools in just one of the reviewed areas. Previously, network reviews did save money, because the money was pulled back into central government coffers. Under this Government, the savings are reinvested in providing better schooling for children in the affected areas.

Deborah Coddington: With these reviews, does he know the dollar amount of the projected savings with each review; if so, what are they; if not, what was the basis for his statement that these closures are cost-effective?

Hon TREVOR MALLARD: To answer the second part of the question first, it is experience. In answer to the first part of the question, this Government does not predetermine the results of reviews.

Hon Bill English: Yes, it does. It does so.

Hon TREVOR MALLARD: The member might say that. When the member gets a little better informed, he might understand that communities are invited, and have an enormous role in making decisions. If the member goes to Turangi, or Putaruru, and has a good discussion with the locals, he will find that millions of dollars have been invested in their schools. It is a much better network that will last, rather than when Bill English was Minister of Finance, when he confiscated the savings, put them in his back pocket, and gave them as tax cuts to the rich.

Rodney Hide: I raise a point of order, Mr Speaker. I think you will appreciate that the Minister was completely out of order in his suggestions about Mr English, and I suggest that you ask the Minister to withdraw and apologise.

Mr SPEAKER: No, Mr English made interjections—as he is entitled to make—and the Minister is entitled to reply to them. If people want to make interjections, then they can do so. As far as I am concerned, the answer addressed the question. However, further supplementaries can occur.

Rodney Hide: I raise a point of order, Mr Speaker.

Mr SPEAKER: I have ruled, Mr Hide. What is the member’s point?

Rodney Hide: Mr Speaker, are you saying that it is OK for the Minister to say that Mr English put the savings in his back pocket? That has been ruled out of order ever since I have been in Parliament.

Mr SPEAKER: If I thought it was a reference to the fact that Mr English gained from the savings personally, then of course I would rule that out of order. I thought it was a metaphor that the money went back into the coffers of the country concerned. I am sure that is what the member, and everybody else, thought it meant.

Jill Pettis: Why is it necessary for the Government to conduct network reviews, and what are the aims of those reviews?

Hon TREVOR MALLARD: The aim of the network reviews is to ensure that all children, whatever their background and wherever they live, have access to quality education that is sustainable well into the future. I should reiterate that 70 percent of the children in schools involved in network reviews currently live in urban centres of 10,000 people or more. People who go around spreading malicious lies that this is a rural issue are away with the fairies.

Hon Bill English: Why is the Minister spending so much time and money bullying communities into closing successful, viable schools, when he and his ministry allow schools that are consistently failing their pupils, and parents, to stay open?

Hon TREVOR MALLARD: I have closed failing schools in my electorate, such as Waiwhetu School. I have closed failing schools in the member’s electorate, such as Ohai School. This Minister fronts up to failing schools in a way that no one on the opposite side of the House ever had the guts to.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. You cannot possibly allow the Minister to rattle on in that way and end up saying that people in the National Party did not have the guts to do something. Those were the very words he used.

Mr SPEAKER: Yes, and I think that, on reflection, those words will be withdrawn and the member will apologise.

Hon TREVOR MALLARD: I withdraw and apologise.

Hon Brian Donnelly: Can the Minister confirm that the per-pupil cost for small schools is significantly greater than for medium to large schools, and that, therefore, the major long-term benefactor of school closures will be the taxpayer, a reality that seems to have escaped the spokesperson for the Association of Consumers and Taxpayers?

Hon TREVOR MALLARD: If one looks in the very long term, then that is the case. I reiterate to the member that for the first 4 years in operational matters, and for the first 5 years in property matters, all the money is reinvested back into the local network, as opposed to the approach promoted by the National Party, which would have it going to tax cuts.

Metiria Turei: Since South Canterbury schools report being told by ministry officials that neither choice nor quality of education count in the review, and in light of even Mr David Benson-Pope’s confession in a newspaper article that the Taieri community had its issues completely rejected by the ministry, can the Minister not just admit that the review is designed to extract money out of education, as 50 percent of any savings will go back into the consolidated account after only a few short years?

Hon TREVOR MALLARD: There are a number of issues there. In the Taieri review, the second option put up by the facilitator was the one that I accepted. I do want to make it clear that I think it is much better to spend education funding on teachers, teacher-aides, information and communications technology, and not on painting empty buildings, the way that the Green Party does with its sustainable approach to empty schools.

Gerrard Eckhoff: When the ministry analysed the cost savings of closing schools such as the one in Temuka, did it also consider the extra cost to families for such things as new uniforms, extra transport charges, the problems of special-needs children, as well as the need to travel each day to and from Timaru; if not, why not?

Hon TREVOR MALLARD: No decisions have been made in Temuka and no recommendations have been made to me for that area.

Deborah Coddington: Given that the $19.4 million review in Wainuiomata will not be recovered until the year 2017, does he know when the $32.4 million review in Timaru will be recovered; if not, why not?

Hon TREVOR MALLARD: I am pleased the member asked me that question because she misled the Sunday Star-Times with that information, as well. Regarding the review in Wainuiomata, the figures she included were the $12 million in capital costs—$12 million that was going to be spent anyway. That is not anything to do with the net cost of the review. I am quite happy for the member to get a briefing on it so she can understand the figures.

Deborah Coddington: Why does he not just leave it up to parents and communities to decide whether to have a 200-pupil school, instead of herding them across town or to another town to the school he thinks they should go to?

Hon TREVOR MALLARD: Because around the country there will be a net 63,000 drop in the number of primary pupils over the next 15 years, and that will include, I think, about an 80,000 drop in the areas outside of Auckland. What happens if we let schools drift to failure in the way that members opposite want? Drift to failure is what happens on a relatively regular basis; I end up closing schools that have teachers and no pupils.

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Information and Communications Technology Sector Taskforce—Government Response

6. RUSSELL FAIRBROTHER (Labour—Napier) to the Minister for Information Technology: What has been the Government's response to the report of the Information and Communications Technology Sector Taskforce?

Hon PAUL SWAIN (Minister for Information Technology): Very positive. The Government has responded to the report of the Information and Communications Technology Sector Taskforce with a funding package of more than $14 million over the next 4 years, specifically for information and communications technology, and more than 30 new initiatives to support growth in New Zealand’s high-tech sectors, including information and communications technology. The money will be targeted at various initiatives designed to support the task force goal of 100 information and communications technology companies each turning over $100 million annually by 2012.

Russell Fairbrother: How many information and communications technology companies currently have sales levels of over $100 million, and what is the potential for more?

Hon PAUL SWAIN: There are currently 16 information and communications technology companies with sales of more than $100 million in New Zealand. I am told that over 80 companies have already signed up to the high-growth programme, indicating that there is a high degree of support and enthusiasm in the information and communications technology sector for participating in this initiative. As the task force said, there is no shortage of great ideas in New Zealand, but a shortage of the managerial skills to take them global. Addressing this issue is a key focus of the Government response, in partnership with the private sector.

Dr Muriel Newman: With regard to the communications issues raised by the task force, did the Government consider the significant impact on all New Zealanders, including the Department of Child, Youth and Family Services, courts, and police, of the Telecommunications Privacy Code 2003, which, just this week, has caused Telecom to shut down its nationwide search capability of the electronic white pages on the World Wide Web; if not, why not.

Hon PAUL SWAIN: No.

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Corrections, Department—Chief Executive

7. Hon TONY RYALL (National—Bay of Plenty) to the Minister of Corrections: Does he have confidence in his department's chief executive; if so, will he still have confidence in him after the State Services Commission inquiry into the so-called “goon squad”, and the inquiry into the supervision of paedophile Lloyd Alexander McIntosh?

Hon PAUL SWAIN (Minister of Corrections): Yes, and I await the reports with interest.

Hon Tony Ryall: Why does he have such confidence. when is it not a fact that the reason he will not commit to an independent inquiry is that it may prove suggestions that the dangerous paedophile Lloyd Alexander McIntosh routinely flouted his parole conditions by making numerous phone calls to children, by not living at his mother’s home as he was required to, by failing to attend officially ordered counselling sessions, and by frequently being unsupervised for long periods of time?

Hon PAUL SWAIN: As I have already indicated, there is an inquiry into the matters that have been raised. The important point is this: it is a bit rich for that member to talk about confidence, when the National Party has demoted that member from No. 8 to No. 15.

Mr SPEAKER: That is irrelevant.

Martin Gallagher: How has the Department of Corrections, under the leadership of the current chief executive, performed over the last 5 years?

Hon PAUL SWAIN: The Department of Corrections’ latest annual report shows that the department has performed well over the last 5 years. For example, in the period since 1997-98 the number of breakout escapes decreased from 0.65 per 100 inmates to 0.12; the number of serious inmate-on-inmate assaults fell from 1.6 per 100 inmates to 0.02; the number of serious inmate assaults on staff fell from 0.08 per 100 inmates to less than 0.01. The department has been doing pretty well over the last 5 years.

Marc Alexander: What assistance and/or hindrance did the Minister receive from other political parties with regard to convincing him about the need for a full and frank investigation into the activities of the “goon squad”; and what was he referring to when he mentioned “grandstanding by Opposition parties”?

Mr SPEAKER: The Minister cannot answer the last part of the question; he can answer the first part.

Hon PAUL SWAIN: I had considerable input in terms of coming to a decision about this matter from the member who asked the question, who came to my office and discussed the matter in a proper and cordial manner. I did see other members of Opposition parties grandstanding in the media, and that is why I went cold on a select committee inquiry. This is not an opportunity for people to use that case down in Christchurch to try to ratchet themselves up in the polls.

Gerry Brownlee: I raise a point of order, Mr Speaker. I ask you to consider that answer very carefully. The substance of the question is serious, but the Minister is trying to lift it into a sort of light comedy show. That is not fair to the people who are listening or will be reporting this afternoon’s proceedings. The Minister’s suggestion that Opposition parties—in particular, the National Party—are not willing to cooperate with him and are grandstanding, is totally unacceptable to us. Offers were made in this House, using this forum, for reasons that will become apparent during the course of that inquiry. I suggest the Minister may wish to apologise for those comments.

Mr SPEAKER: No, if the Minister had mentioned the National Party I would have been down on him like a ton of bricks. He did not mention any party. I listened very carefully, because I had told him he was responsible for answering only the first part of the question. The member has made his point and that is probably where it rests.

Hon Tony Ryall: Given that the chief executive of the Department of Corrections, and his actions in running his department, will be under investigation in the State Services Commission inquiry into the “goon squad”, what confidence does the Minister have and what confidence should Parliament have that the chief executive can lead an inquiry into the actions of his department, in failing to maintain the supervision of a man who raped two children in this country?

Hon PAUL SWAIN: The inquiries are quite separate. The first one, which relates to the situation in Christchurch, is in the public arena. The second one is about contracts with third parties, and that is what the investigation will be looking into.

Marc Alexander: Will the Minister assure this House that the terms of the “goon squad” inquiry will not be too tightly circumscribed so that the key issues of accountability simply evaporate into no-go areas, and that the people found to be culpable will have the full measure of justice brought to bear on them, no matter what position they currently hold in the Department of Corrections; if not, why not?

Hon PAUL SWAIN: As I understand from the State Services Commission, the terms of reference are currently being worked through. I expect an announcement on this matter tomorrow. I say to the member that the whole issue of accountability will be part of it.

Hon Tony Ryall: Given that the chief executive of the Department of Corrections led an inquiry into the “goon squad” fiasco, and this Minister is now dismissing that inquiry and requiring a State Services Commission independent inquiry, why does he not take the concerns of the people of New Zealand seriously about the way he and his department are arranging supervision of dangerous paedophiles, and call for the independent inquiry that we know will come in this issue eventually?

Hon PAUL SWAIN: I do take the concerns of New Zealanders very seriously, which is why we are looking into both matters.

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Industry and Regional Development Policy—Reports

8. Hon MATT ROBSON (Deputy Leader—Progressive) to the Minister for Industry and Regional Development: What reports has he received on the response to the coalition Government's industry and regional development policies, and what do these reports indicate?

Hon JIM ANDERTON (Minister for Industry and Regional Development): I have seen many reports endorsing the coalition’s pragmatic and strategic approach to investing in industry and regional development, particularly in those sectors that have the best potential to help New Zealand to continue to create more high-quality jobs and improve living standards for all New Zealanders. For example, in response to the large-budget screen production grant, it includes the comment that this investment “allows the opportunity for New Zealand producers and directors to make larger budget films in their home country, which in turn will result in more jobs and will have obvious flow-on financial benefits for the local economy. The Government is to be congratulated for its continued support of New Zealand film makers and industry craftspeople.” Those words are from icon film director Peter Jackson.

Hon Matt Robson: What other industry sectors is the Labour-Progressive Government investing in to better enable the whole economy to grow faster and therefore produce more quality jobs and better social services?

Hon JIM ANDERTON: The Government is investing a further $16.8 million in the biotechnology sector in response to the ambitious targets of the biotechnology task force to boost dramatically export earnings and bolster the number of locally based biotech companies.

This is a positive step in the right direction for New Zealand, according to taskforce chairman, Bill Falconer. This is a critical sector for New Zealand’s future economic development—for which I note the National Party has no spokesperson.

John Key: What percentage of the companies that have received Industry New Zealand grants go broke, as De’Amalfi Survival Ltd did in March of this year, after receiving $30,000 in 2001; and would he still describe this company, as he once did, as a shining example of job creation, innovation, and success?

Hon JIM ANDERTON: The way to have no risk and no failure is to do nothing, which the National Party in Government had plenty of experience of doing—nothing. If one company out of 100 failed, the National Party would evidently claim that this was a disaster. This side of the House claims, when 99 companies out of 100 are succeeding, that is a success for New Zealand, and it is about time this Parliament talked New Zealand up, rather than down.

John Key: I raise a point of order, Mr Speaker. I asked the Minister “What percentage?” I did not ask him what a hypothetically good result would be—one in a hundred. I asked what the actual percentage is of companies that fail in New Zealand. As the Minister will know, it is a lot more than one in 100.

Hon JIM ANDERTON: If the member would like the actual figures, I am very happy to give them to him. But what is there about one in 100 that he does not understand?

Dave Hereora: How does the coalition Government’s investment in economic industry and regional development dovetail with its desire to promote higher living standards for Mâori?

Gerry Brownlee: I raise a point of order, Mr Speaker. How can that question be in order? If the Minister cannot answer a simple question in his own portfolio about the incidence of failure among companies, how can he possibly know how successful his policies were when it comes to the issue of Mâori involvement in commerce.

Mr SPEAKER: That is not a point of order. the member can see what happens when the Minister gives his answer.

Gerry Brownlee: Can I make a point? The point relates to the question. If the Minister cannot answer a previous question, surely the House—

Mr SPEAKER: No, that is just playing politics. I ask Mr Anderton to give the answer to the question.

Hon JIM ANDERTON: New Zealand is close to being at full employment, with the official unemployment rate now at a 15-year low of 4.7 percent. What is unacceptable to this Government—and would be unacceptable, I hope, to all New Zealanders—however, is that the unemployment rate among Mâori remains significantly above the national average. The requirement, therefore, to ensure that all New Zealanders, Mâori and Pâkehâ, are on the road to achieving full employment is urgent, and will not be achieved, in my view, by adopting any of the policies recently announced by the new leader of the National Party. This Government will see that the unemployment rate is lowered even further.

Rt Hon Winston Peters: Why does the Minister not talk to his colleague—the only colleague he has—Matt Robson, thereby saving us all these self-serving, egregious demonstrations that Mr Anderton still has an ego and that his old Alliance is still breathing?

Hon JIM ANDERTON: I know that it must gall the former Deputy Prime Minister of New Zealand and Treasurer that this Government has so much good news to spread around the country when he had none at all, but he will just have to wear it.

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Crop and Food Research—Genetically Engineered Onions

9. JEANETTE FITZSIMONS (Co-Leader—Green) to the Minister of Research, Science and Technology: How much public funding, from which sources in which years, has been received by Crop and Food Research for the development and field testing of herbicide tolerant genetically engineered onions?

Hon PETE HODGSON (Minister of Research, Science and Technology): Crop and Food has received a total of $250,700 from the Foundation for Research, Science and Technology for research involving the development and field testing of herbicide-tolerant genetically modified onions between 1999 and 2003.

Jeanette Fitzsimons: In light of the involvement of two large multinationals that will certainly expect their slice of the pie, and the extraordinary statement by Crop and Food this week that it does not know who will own the intellectual property or how any commercial benefits would be shared, can the Minister enlighten us on what the New Zealand public will receive in return for all this investment?

Hon PETE HODGSON: No, I cannot, because I neither govern, nor manage the company. However, it is routine amongst Crown research institutes in New Zealand to enter into some form of intellectual property arrangement that might be an equity arrangement, a licensing arrangement, a buy-back arrangement, or whatever, and I fully expect Crop and Food to do so.

Hon Brian Donnelly: How many of those Budgets that have been passed in this House through which public funding has been provided for the development of genetically engineered (GE) onions have been voted for by the Greens?

Mr SPEAKER: The Minister has no responsibility for that particular question.

Hon Brian Donnelly: I raise a point of order, Mr Speaker.

Mr SPEAKER: The Minister has no responsibility for how the Greens voted on a particular issue.

Hon Brian Donnelly: My point of order is that the Minister has the responsibility for preparation in his particular portfolio of Budget bids. The Budget comes before this House, therefore it has to be passed one way or the other. All I asked for from the Minister was information about how many of those Budgets that he has prepared, or has been prepared in this particular case, has had the support of the Greens.

Mr SPEAKER: That particular part of the question relating to his portfolio and the Budget is in order and the Minister may comment.

Hon PETE HODGSON: At least some of them.

David Parker: What advice has the Minister received about the use of herbicide in conventional onion horticulture and the possibilities of reducing its use?

Hon PETE HODGSON: The idea behind the research at Crop and Food is to reduce chemical use on onion fields by about two-thirds. This is just as well, because onion fields need a lot of chemicals. I am advised that between 10 and 15 different “toxic and persistent” herbicides are used each season. That advice comes from the Green Party.

Jeanette Fitzsimons: If the objective is herbicide reduction, why is New Zealand investing all this money in possibly reducing herbicide use by two-thirds or, as the onion industry submitted, more likely 40 percent when organic onion growers are already reducing it to zero, but funding for organic horticulture research has just been cut completely?

Hon PETE HODGSON: It is possible to grow onions without chemicals, and, indeed, some progress in mechanical weeding has been made, so I am advised. However, even using a combination of flaming, brush weeding, harrowing, sowing in darkness plus brush weeding does not remove the need for all chemicals, therefore it seems that some form of chemical use should be an ordinary part of onion growing. If we are to go completely organic we will have slave labour or very high prices.

Jeanette Fitzsimons: Does the Minister agree with the recent report to his ministry by Professor Brian Wynne where he said “If the public has supported biosciences and biotechnology research and technology for 20 years or more, it has the right to expect real evidence of the beneficial effects of this funding.”; if so, what are the beneficial effects of the public investment in GE herbicide tolerant onions?

Hon PETE HODGSON: As with all research, the effects lie in the future and remain uncertain. If they were not uncertain, then they would not need to be researched.

Jeanette Fitzsimons: Is Professor Wynne right in his assessment that the public is concerned about—and I quote from his report: “The sense that Governments are primarily motivated by unacknowledged promotion of the commercial agenda whilst attempting to portray themselves as devoted to public protection and responsiveness.”?

Hon PETE HODGSON: Professor Wynne’s report is about 100 pages long. It is a shame that the member for the Green Party chooses to quote it so selectively. The conclusion of Professor Wynne’s report is very favourable towards this country, indeed.

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Marine Mammals—Protection

10. Dr ASHRAF CHOUDHARY (Labour) to the Minister of Conservation: What progress is being made on the protection of marine mammals?

Hon CHRIS CARTER (Minister of Conservation): Last night I announced three initiatives to improve the protection of marine mammals: an awareness campaign focusing on avoidable threats, such as marine debris; the development of a threat minimisation plan; and, finally, a cooperative working relationship between my department and the fishing industry to reduce marine mammal deaths.

Dr Ashraf Choudhary: What has been the response of the fishing industry to the Minister’s initiatives?

Hon CHRIS CARTER: Very positive. The Seafood Industry Council has welcomed the development of a plan for whale, dolphin, and seal recovery. Owen Symmans, the council’s chief executive, said yesterday that the seafood industry is keen to work with the Department of Conservation to develop practical solutions to marine mammal issues. I commend the industry for its responsiveness to conservation concerns.

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Australia—New Zealand Relationship

11. Dr the Hon LOCKWOOD SMITH (National—Rodney) to the Minister of Foreign Affairs and Trade: Does he stand by his statements made in the House on 4 November 2003 in answer to question No. 7, and by his press statement made on that same day?

Hon PHIL GOFF (Minister of Foreign Affairs and Trade): Absolutely, although I do note that the date quoted in the press statement for the high commissioner’s speech was the date on which it was published, rather than when it was delivered. By contrast, the member’s own press statement of 4 November wilfully misrepresents New Zealand’s position and contribution in respect of our deployment to the Solomon Islands. He should be ashamed of that.

Dr the Hon Lockwood Smith: Why did he state publicly on 4 November, in relation to the deployment of infantry to the Solomons: “The company was requested in mid-August.”, and why did he tell this House: “When it was needed and requested it was sent immediately.”, when Cabinet papers reveal, and defence officials confirmed at the Foreign Affairs, Defence and Trade Committee this morning, that the Australian Government formally requested New Zealand to deploy an infantry company, not on stand-by but alongside an Australian infantry company in the Solomons in July—a request his Government declined at the time?

Hon PHIL GOFF: The member is absolutely wrong. We did not decline the request. When I provide that member with all the Cabinet papers that show clearly and transparently the nature of the decisions made by this Government and then he misrepresents the position, he has something to answer for. There was a general request at the beginning. We sent Brigadier Clive Lilley to the Solomon Islands. Clive Lilley said there was not a specific job to do. We therefore did not refuse the request. We said we had the company on stand-by until such time as it was needed. When it was formally requested by the Chief of Defence Force, Peter Cosgrove, it was provided within 3 days, on confirmation that there was a task to do.

Luamanuvao Winnie Laban: In respect of New Zealand’s relationship with Australia, what information does the Minister have on the Australian Government’s view on the importance of that relationship?

Hon PHIL GOFF: Earlier this year Australia produced a white paper on foreign policy in which it stated that New Zealand is Australia’s most important ally in the South Pacific, and an important partner beyond. Just last week, in relation to the matter raised by Lockwood Smith, Foreign Minister Alexander Downer said, on the two countries most recent joint effort in the Solomon Islands—that is, restoring life to normality there—that it could not have been achieved without the contribution made by New Zealand and the other Pacific countries. Lockwood Smith saying that we did not make a sufficient contribution, therefore, hardly stacks up. We made a major important and successful contribution.

Hon Ken Shirley: Could the Minister answer the question without the bluster: did he deploy a New Zealand company to stand alongside the Australian company when first requested—yes or no?

Hon PHIL GOFF: As set out in Cabinet papers, the company was placed on stand-by until a task could be identified. As soon as a task was identified, the company was deployed.

Dr the Hon Lockwood Smith: If what the Minister has told this Parliament is the truth, why does the Cabinet paper say—

Mr SPEAKER: The question could perhaps be a little more felicitously stated. Could the member please have another go.

Dr the Hon Lockwood Smith: If the Minister has told this House the facts, why does he not come clean on the fact that the Cabinet paper says, in respect of the request by the Australian Government in July for a New Zealand infantry company to stand alongside an Australian company—and a Fijian one, by the same token—that the Government felt that the company would be involved in hapless tasks, rather than the fact that it was not requested, at all?

Hon PHIL GOFF: All of the information is in the Cabinet paper, which went on 14 July to Ministers with the power to act.

Dr the Hon Lockwood Smith: Well, read it.

Hon PHIL GOFF: I not only read it but helped to write it, so I know what is in it. A general request was made. We responded immediately with about $6.8 million worth of military assistance, including 105 service personnel. We said the company was on stand-by, and it was on stand-by because Brigadier Clive Lilley told us clearly there was not a task worth doing at that time. We said that as soon as a task became available on formal request we would meet that request—and we did.

Dr the Hon Lockwood Smith: Is the Minister alleging that the head of the Ministry of Defence, the Secretary of Defence, did not tell the Foreign Affairs, Defence and Trade Committee the truth this morning when he said that the Australian Government formally requested New Zealand to deploy an infantry company, not on standby but alongside an Australian infantry company, in the Solomons in July, not August?

Hon PHIL GOFF: I most certainly am not alleging that the Secretary of Defence is not telling the truth. Unlike that member, he does not wilfully misrepresent the facts. I have told the member—and I will tell him for the third time today—that in response to the request, as set out in the Cabinet paper I provided to him, we provided 105 personnel and said that the infantry company was on stand-by, if required. As soon as the evidence was provided that it was required, it was provided. It cannot be clearer than that. The member has the paper; he can read it.

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Tertiary Education Commission—Student Numbers

12. Hon BRIAN DONNELLY (NZ First) to the Associate Minister of Education (Tertiary Education): What system or systems are utilised by the Tertiary Education Commission to verify numbers of students for funding purposes?

Hon STEVE MAHAREY (Associate Minister of Education (Tertiary Education)): Providers receiving student component funding are required to submit funding claims in advance for their intended enrolments. These must follow clear and published criteria. All claims are verified through validation routines, both by the provider and the Tertiary Education Commission, to ensure that funding claims are consistent with Government guidelines. The commission also undertakes compliance visits to private providers to ensure that student information management systems meet requirements.

Hon Brian Donnelly: Why is it that Carich is still waiting—having waited for several critical weeks—for the Tertiary Education Commission to provide it with a system to enable verification of student numbers in order to claim funding that would have kept it afloat?

Hon STEVE MAHAREY: I do not think that it is wise for us in this scene to get into who said what, etc. The core of the data return is that Carich provided a forecast for the number of students the company thought it would teach, and was funded on that. Subsequently it sought to change that, and then sought to change it again. No other provider in the country is in a situation of trying to provide that data return three times. Until the company can do so, it is very difficult for the commission to act.

Darren Hughes: What changes has the Government made to the way tertiary education providers are funded; and when will those changes take effect?

Hon STEVE MAHAREY: A key aspect of the tertiary education reforms is the introduction of an integrated funding framework that allows more strategic funding from the Tertiary Education Commission. The first funding profiles will be in place by the beginning of next year, and the commission will then be able to use them actively to allocate funding. The private training establishment funding area has already been capped. From 2003 all additional private training establishment places require applications to a strategic priorities fund. The Carich issue centres on places for the 2002 academic year.

Hon Bill English: How can this House have any confidence in the capacity of the Tertiary Education Commission to monitor student numbers, when it now employs over 300 people itself and is running 30 percent over budget?

Hon STEVE MAHAREY: It may help if I mention to the member that nearly all of the members of the commission come from the previous Skill New Zealand organisation, which involves a regional network of people who are in the field. Included in the number he quoted are people who are on temporary contracts while the organisation is set up.

Hon Bill English: I raise a point of order, Mr Speaker. I asked the Minister about the budget, as well. It is well known that the Tertiary Education Commission is 30 percent over budget, so why does he not answer that question?

Mr SPEAKER: I heard the second part of the question. The Minister might like to comment.

Hon STEVE MAHAREY: My understanding from the Tertiary Education Commission is that it will come in on budget during the year.

Bernie Ogilvy: Does the Tertiary Education Commission collect data on the numbers of students who fail courses, particularly in their first year, because that poses a significant potential cost to the Government in terms of equivalent full-time student funding; if not, why not?

Hon STEVE MAHAREY: In the area of private training, for example—which, I know, is an interest of the member—he will know that most of them are funded on completion rates. Yes, the Tertiary Education Commission does collect what amounts to failures. In the equivalent full-time students area, it does require a data return, but the member will know that one of the weaknesses of the system in the equivalent full-time students area is that students who are enrolled to the end of March become recorded as a student for funding purposes. My own view is that that is something that will need to change, and I am waiting for a report this month on some changes that will be put in place in that area.

Hon Brian Donnelly: Can the Minister confirm that the required roll audit, which was essential, was dependent upon the Tertiary Education Commission providing a definition of what 2.4 weeks actually meant, and that such a definition has not yet been provided?

Hon STEVE MAHAREY: I repeat that in this kind of debate there are always people who make one claim over the other. I say clearly to the member that from the Tertiary Education Commission’s point of view, it has provided all data and assistance that it possibly could to Carich. Unfortunately, even on the third try the organisation could not provide simple data on how many students it had enrolled for funding purposes, for example, and that is the core of the problem.

Hon Brian Donnelly: I raise a point of order, Mr Speaker. The question I asked had nothing to do with the answer the Minister gave. The answer the Minister gave was about what had occurred up to the point of the roll audit. My question asked whether it was the case that the roll audit could not take place until the Tertiary Education Commission provided the definition. The Tertiary Education Commission has not provided the definition, and I am asking the Minister why that is the case.

Hon STEVE MAHAREY: To clarify, what I was saying, in effect, is that the commission has advised me that it has provided all definitional advice of the kind that the member is asking for. It has provided clear instructions as to what it wanted and it has not been able to get the data.

End of Questions for Oral Answer

(uncorrected transcript—subject to correction and further editing)

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