Embargoed until delivery, from 2.00 pm
Tuesday 13 February 2007

Rt Hon Helen Clark
Prime Minister
Prime Minister’s Statement

Parliament
Wellington
2.00 pm
Tuesday 13 February 2007

It’s my privilege to present this annual statement to Parliament setting out the government’s priorities for the year ahead.

Last year’s statement set out an ambitious programme, and a great deal has been achieved.

That has been due in no small part to the constructive working relationships Labour and the Progressive Party have with other parties in the House. New Zealand First and United Future as confidence and supply partners, and the Green Party and the Maori Party have been prepared to work through complex policy issues with the government, and I thank them all for their contribution.

There’s no question that New Zealand today is a stronger, fairer, and more confident nation than it was seven years ago.

Many more people are in work, incomes are higher, educational achievement is up, and crime rates are lower. These results have been achieved across the society, lifting Maori and Pakeha, along with Pasifka, Asian and other New Zealanders
But substantial as the gains have been, the government believes New Zealand can do even better.

As we reach each goal and target we set in economic and social policy, new ones must be identified and met.

Meeting the challenges our country faces in the 21st century requires substance, not slogans.

New Zealand’s future is dependent on long term sustainable strategies for our economy, society, environment, culture and way of life. Those strategies have to be driven by strong leadership and sound policies.

• Our challenge is to build a sustainable economy based on innovation and quality in a world where high volume, low quality goods and services will always undercut us on price.

• Our challenge is to sustain family and community living standards in our open, competitive economy.

• Our challenge is to sustain our unique culture, values, and national identity in a world of globalised media and culture.

Building a sustainable nation requires smart, active government working with key stakeholders across the economy and society.

The invisible hand of the market doesn’t deliver a sustainable nation, as an earlier era of New Zealand politics showed only too well.

Now the quest for sustainability has taken on a new urgency because of the scale of the environmental challenge the world faces.

Traditional patterns of development and fast growing populations have put an intolerable strain on the planet. The future economic costs of doing nothing are dire.

That’s why issues around sustainability and climate change have become the compelling issues of our times, dominating international forums and agendas.

Two decades ago it was the threat of nuclear war destroying the world as we knew it which galvanised New Zealand to become nuclear free and to work for a more peaceful world.

Our nuclear free policy and the values which inspired it have become central to our national identity and how we project ourselves to the world.

And so it must be with this century’s environmental sustainability challenge.

We have to make a stand – for our world, and for our own sake.

Without a commitment to greater sustainability in our resource use and way of life, we risk not only damaging our own environment, but also exposing our economy to significant risk.

That’s why I have called for boldness in our approach to these issues.

I believe New Zealand can aim to be the first nation to be truly sustainable – across the four pillars of the economy, society, the environment, and nationhood.

I believe we can aspire to be carbon neutral in our economy and way of life.

I believe that in the years to come, the pride we take in our quest for sustainability and carbon neutrality will define our nation, just as our quest for a nuclear free world has over the past twenty three years.

More than any other developed nation, New Zealand needs to go the extra mile to lower greenhouse gas emissions and increase sustainability.

In our high value markets in Europe, we face increasing pressure on our trade and tourism, from competitors who are all too ready to use against us the distance our goods must travel to market, and the distance tourists must travel to us.

By lowering our carbon footprint, we strengthen our position against that kind of protectionism – and the government is working to lower that footprint in many ways.

Several years ago we rewrote the land transport legislation to put emphasis on sustainability. Over seven budgets we’ve increased spending on public transport by around 750 per cent.

Now the draft New Zealand Energy and Energy Efficiency and Conservation Strategies set out to take sustainability to new levels.

They champion renewable energy across power generation and transport, and energy efficiency at home and at work.
I believe New Zealand has the potential to lead the world in its commitment to renewable energy.

On biofuels, the time has come to implement a sales obligation.

Biofuels can replace diesel or petrol, and reduce our greenhouse gas emissions. With domestic production they can also be positive for the current account.

The government has decided that a Biofuel Sales Obligation will be set at 3.4 per cent of the annual energy content of total annual petrol and diesel sales by 2012. This initial target is considered sufficient to encourage the uptake of biodiesel and the development of infrastructure for ethanol distribution.

Further details about the Biofuels Sales Obligation are being announced by Ministers today.

This measure complements decisions already made to ensure that cars imported into New Zealand in future meet higher emissions standards and that consumers have proper information on the fuel efficiency of the cars they are purchasing.

Last year in recognition of the important contribution of forestry to climate change mitigation strategies, the government announced its Permanent Forest Sinks Initiative.

Already an announcement has been made of a major investment to develop 30,000 hectares of permanent forest on Ngati Porou land on the East Coast.

But there is potential to do much more. In the coming weeks consultations are being held on the wide ranging proposals for sustainable land management in agriculture and forestry released before Christmas.

These major export sectors have much to gain from association with sustainability policies.

In the future, business overall will need to be sustainable to make money, and there will be money to be made from being sustainable.

In agriculture part of the answer lies in changing farming practice now, while longer term answers are also sought on how to reduce animal methane emissions. We should aim for world leadership in this area of science.

I am also announcing today new sustainability priorities for the government this year.

1. Towards a Carbon Neutral Public Service

The government intends to lead by example by moving the public service towards carbon neutrality.

This year the first group of six departments will commit to reaching carbon neutrality by 2012. By early next year, the Ministries for the Environment, Health, and Economic Development, the Departments of Inland Revenue and Conservation, and Treasury will have reduced their carbon footprint significantly. Their objective will be to reduce their department’s emissions, but at the point that it is not feasible to reduce further,
they will offset them; for example, by supporting tree planting on Crown land, which will also contribute to our sustainable land management policies.

Over the next year all other departments will develop their plans. In 2012 all public service departments will be on the path to carbon neutrality. The wider state sector will also be encouraged to join in the programme.

2. The Role of Government Procurement in Achieving Sustainability

The government sector is a significant purchaser of services within the economy. We intend to use our purchasing power to help drive innovation, cleaner production, and improved cost effectiveness over the whole life cycle of goods and services.

We will be developing a single procurement policy for government, requiring sustainably produced goods and services to be used whenever possible.

We are announcing today that as the VIP car fleet of the Department of Internal Affairs is replaced, vehicles which are more fuel efficient and have lower emissions will be acquired. It is estimated that this will lead to 550 fewer tonnes of CO2 being emitted, 400,000 fewer litres of fuel being used, and $500,000 being saved over three years.

The government accepts the responsibility to lead by example in these areas, but we also want to encourage and support others to reduce their carbon footprint.

Supporting Households to become more sustainable

A big priority this year is to raise the awareness of households about sustainable practice in energy and water use, transport, and waste disposal.

Already the government has many separate initiatives, ranging from Energywise grants for assisting with energy efficiency retrofits, to solar water heating programmes, and improving energy efficiency requirements within the review of the building code.

These programmes need to be integrated, so that households can see that they are all part of a programme they can implement to achieve the overall objective of improved sustainability.

Supporting business sustainability

Business has a big contribution to make to improving New Zealand’s overall sustainability performance, and can take up the commercial opportunities which the worldwide interest in sustainability creates. Many businesses are involved already, and many more are interested. The new government procurement policy gives companies an added incentive to be sustainable.

Already the Crown Research Institute Landcare has developed a CarbonZero programme, enabling businesses which meet its criteria to brand themselves credibly as carbon neutral.

The government will work with leading business networks, like the Business Council for Sustainable Development and the Sustainable Business Network, to promote awareness by companies of what they can do to improve their sustainability and their profitability.

Together we can ensure there are standards set which give businesses and customers confidence in the integrity of our sustainability programmes.

We are also following closely exciting work in the private sector on the development of carbon trading regimes, and will be willing to consider what legislative and regulatory changes might be needed to put them into effect.

Improving Waste Management
During this year we will be advancing new proposals to improve waste management. They will include funding the construction of more recycling facilities for use in public places. While household recycling is progressing well, we need more facilities to encourage recycling of waste when people are away from home.

We will continue to work with the Green Party on refinements to the Waste Minimisation (Solids) Bill which is currently before Parliament. We want effective legislation for some form of waste levy to help fund better waste minimisation infrastructure.

Product stewardship will also be improved by measures in that legislation. While voluntary initiatives have been useful, some form of regulatory backup will be necessary for the environmental impacts of manufactured products to be minimised as much as possible.

Overall the government has a huge and credible work programme this year to improve New Zealand’s environmental sustainability credentials and move our country towards the vision of carbon neutrality.

This is the way the world will move, and we have the opportunity to be at the forefront.

Sustainability and an identification with the vision for carbon neutrality can be central to our national identity and the way the world perceives us – and be to our overall benefit as a nation.

Sustainability is central to our government’s programme across all three key policy themes; economic transformation, families young and old, and strengthening national identity. We are committed to long term sustainable strategies to take our country ahead.

Economic Transformation
This year’s Budget will outline the government’s decisions on new settings for business taxation, aimed at increasing innovation, investment, and growth. Business tax changes this year are made possible by solid economic and tax growth over seven years, and by careful government fiscal management.

Export Year 2007 is underway, with extra funding for market development grants, more targeted trade missions, and business – government collaboration around export focused events and forums. I thank the many private sector agencies throughout New
Zealand who are supporting Export Year. I salute Ken Stevens, Export Year’s Business Champion, who is a superb example of how to take Kiwi ingenuity to the world and grow a high value export business.

2007 is a big year for trade policy. The Doha Round of the WTO is showing signs of life again, and our Minister of Trade and officials are actively engaged. The round is our top trade policy priority.

New Zealand negotiators have recently completed the eleventh round of talks with China on a free trade agreement. The best possible access to China’s fast growing markets for goods and services is essential for our economy.

Planning is beginning on how to make the most of the New Zealand Pavilion at the Shanghai Expo in 2010, as one of many initiatives to lift our nation’s profile in China.

A study on the potential of an FTA with Korea will also be advanced this year.

Three regional trade initiatives are of keen interest to New Zealand :
• the ASEAN-CER FTA negotiations, which are expected to be completed this year,

• the proposal for a Free Trade Area of the Asia Pacific which is being developed for the APEC Summit in September,

• the study on the potential of a Free Trade Area covering the countries in the East Asia Summit.

As a high proportion of New Zealand’s trade is done with nations in the Asia Pacific, the government is an enthusiastic supporter of developments which could improve our access to these markets.

A highly educated and skilled workforce is critical to realising the opportunities for New Zealand in international markets and to developing a high value economy. Over the past year the government has undertaken a major review of tertiary education policies and funding, aimed at getting better value for money from the investments we make. An Education (Tertiary Reforms) Amendment Bill will be introduced this year.

As well, we will continue to increase the numbers in work-based training, and in the Gateway programme which introduces high school students to industry. These programmes are well supported by business and union partners. We will continue to work with them to lift skill and productivity levels, and will be strengthening the Skill New Zealand tripartite forum.

The development of Auckland as a world class international city is critical for New Zealand’s overall growth and development.

The government is currently considering its response to the region’s proposals for strengthening its governance, and our investments in Auckland’s transport infrastructure are large and growing. It has become increasingly important to align central and regional strategies for Auckland transport, and joint working parties are progressing that.

Timelines around rail electrification will need to be agreed on, and new funding mechanisms for transport initiatives outside the current funding parameters need to be developed.

The government has also reviewed the public transport procurement legislation with the objective of enabling regional councils to get better value for money in their public transport spend. Decisions will be made shortly on changes to the legislation.

Already this year there have been major developments in guaranteeing Auckland’s power supply. The Electricity Commission’s announcement on the upgrade of transmission into Auckland is going through a formal consultation process. Its proposals are consistent with the government’s priorities of ensuring security of supply and focusing on renewable sources of energy.

The Digital Future
Last year’s far reaching reform of regulatory settings for telecommunications has ushered in a new era of competition in the market. Broadband is already cheaper and faster.

The new settings are helping us to catch up with other countries which have enjoyed more competitive settings for longer – but there’s still a long way to go.

Now to keep up and press ahead we need to continue to challenge the telco sector and our regions to lay down new high speed infrastructure which can match our aspirations to be a knowledge economy and society.

This year the government will be refreshing its strategies for broadband and high speed connectivity. New Zealand needs a clear pathway to the roll out of fibre infrastructure, and we will be working with business and local government on that.

Specific decisions are pending this year on the three way operational separation of Telecom New Zealand, and on a range of mobile issues, including termination rates, co-location, roaming, and spectrum. The Digital Content Strategy will be launched, as will the Freeview digital TV platform. The Minister of Communications and Information Technology will be convening an ICT Summit aimed at refreshing the Digital Strategy and getting input from the sector on its future growth and development.

Families : Young and Old
In policy for families, young and old, this year, the government has major programmes rolling out and others in development.

In health, the success of the district health boards in meeting targets for big increases in joint replacement and cataract surgery has encouraged us to develop a similar approach in other areas of surgery.

Elective services will increase across the board by about ten per cent this year, and nearly all DHBs are already eligible for the extra funding.

In addition, we will be negotiating specific targets for delivery with DHBs in areas other than elective surgery where progress is both needed and achievable.

July 1 will bring 25 – 44 year olds into the Primary Health Care Strategy, completing the coverage of all age groups. As with the earlier extensions to the scheme, doctors’ fees for this age group will reduce substantially, and their prescription charges will drop from $15 to $3 per item. This is very helpful to family budgets.

Health legislation this year will include the introduction of a new Public Health Bill, to update legislation which is half a century old.

We are making big investments in the health of children and young people, by moving to screen all new babies for hearing loss, increasing funding for dental health, and by tackling obesity through promotion of better nutrition and more physical exercise.

In housing, income related and fair rents for state housing remain fundamental to Labour. This year will see big moves to upgrade the social housing stock; moves to increase the supply of affordable housing – including through the integrated development of Hobsonville, and decisions about the shared equity scheme for first home owners.

Home ownership has always been part of the Kiwi dream. We believe the state has a role to play in supporting modest income families to reach that dream.

On 1 July the new KiwiSaver Scheme will begin, encouraging savings for first home ownership, as well as for retirement.

This year the Rates Inquiry will look at the factors driving the steep rates increases which have been of such concern to superannuitants and others on fixed and modest incomes.

Legislation for the Supergold Card for superannuitants and the Veterans’ card will be passed this year, with the cards available from August.

In education, July 1 heralds the introduction of twenty hours free early childhood education and care for three and four year olds, with substantial uptake by the sector likely.

The review of school operational funding is complete and government will be considering its response this year.

The new school curriculum will be published in September.

New initiatives are being taken to ensure school attendance. The District Truancy Service is being strengthened; parents whose children are not regularly attending school can expect to be prosecuted. New funding is being introduced this year to give more support to schools to manage disruptive behaviour.

While New Zealand’s overall levels of attainment in the school system are high relative to other OECD countries, we do have a significant minority of young people who fail badly.

This needs to be tackled at a number of levels.

Engaging teenagers in education which is meaningful and relevant to their futures is one of them. We have already invested heavily in the Gateway Programme, and this year will go further with the development of a young apprenticeship scheme in schools.

Overall the government is looking to personalise education so that it is tailored to the needs of every student.

This requires effective teaching, strong professional leadership, engaged families, a strong grounding in the basics of literacy and numeracy, completing secondary schooling, setting clear boundaries for students, and adequate resourcing. I have no doubt the New Zealand education system can deliver the quality teaching children and young people need to learn.

But capacity to learn is also heavily influenced by wider social factors. Labour in government has focused on more affordable health care, fair state house rentals for low income families, and adequate income through rising employment levels and the family tax credits of Working for Families.

There is no doubt that our policies have made a big difference, with the numbers of children living in households below the poverty line decreasing dramatically.

At least 60,000 children were lifted out of income poverty between 2001 and 2004, and another 70,000 will have been lifted out with the full implementation of Working for Families after 1 April this year. On that date, all families eligible for Family Support will receive another ten dollars per child a week.

Can we do better and move to eradicate child poverty ? That’s certainly my dream – but let’s not dismiss the huge progress which has been made in that direction.

Over the past seven years, the number of working age beneficiaries has decreased by over 28 per cent; that is by close to 115,000. This has been achieved by huge decreases in the numbers on unemployment benefit, and now with decreases in the DPB numbers too. The numbers of those on unemployment benefits for two years and over are down by seventy per cent.

We believe that the numbers on benefits can be reduced further by extending employment services to those on all categories of benefits, and setting stronger work expectations.

Significant changes in legislation, policy, and services are being made this year so that we can support even more beneficiaries into work.

Labour believes that the best form of social security is a job, underpinned by fair labour law, good public healthcare and education, and affordable housing for people on low incomes.

Good policies in these areas followed over the long term help build a more sustainable society.

But we are also directly targeting violent and destructive behaviour in the community which causes so much concern and grief.

Late last year we launched a 26 point Action Plan aimed at young people at risk and those already causing mayhem in their communities through youth gangs.

Seven government departments are involved, working closely with local government, NGOs, schools, and communities, including supportive businesses which are backing good programmes.

Across Auckland, where the youth gang issues are the most prominent, the police are adopting a no tolerance approach to offending by youth gang members, and have increased their presence in areas known for gang violence.

The message is that no part of our communities will be abandoned to gang influence. There must be no “no go” zones.

Family violence is also being targeted, with new prevention and support services rolling out this year. A major community campaign will begin to reinforce the unacceptability of family violence and change attitudes towards it. High priority is being given to the SKIP programme which teaches positive parenting and alternatives to physical discipline. The changes recommended by the Justice and Electoral Select Committee to Section 59 of the Crimes Act would also have a positive impact on violence in the home, and it is my hope that Parliament will support them this year to help make our children safer.

Last year the government announced significant changes to law and practice in the criminal justice system.

Legislation now before Parliament aims to deliver greater consistency in sentencing, greater truth in sentencing through reform to parole laws, and more effective community based sentences for low risk offenders.

New drug and alcohol and special treatment units are being set up in prisons this year, and there will be many more opportunities for employment.

We want better results from the criminal justice system, through a greater emphasis on rehabilitation and through more appropriate punishment for low risk offenders.

The recent violent offending by a prisoner on parole, leading to murder and the infliction of serious injury, has shocked our nation. Enquiries establishing exactly how his case was handled are ongoing.

But the government has already decided to give serious consideration to allowing the police to make a recall application to the Parole Board where they have serious concerns about a parolee’s behaviour.

Where a recall application is being made on the basis that an offender is failing to comply with the conditions of his or her release, or is acting in a way which makes those conditions now inappropriate, it is proper that responsibility for applying for recall rests with the Community Probation Service, because the probation officer who
is supervising the offender has first-hand knowledge of the information upon which the application is based.

Where, however, the application is based upon the fact that the offender is posing an undue risk to the safety of the community, or has committed an offence punishable by imprisonment, it is likely that the information upon which the application is based will have been derived from police investigations or intelligence received by the police. In these circumstances, it can be argued that the police should have the power to make an application for recall, rather than the CPS determining whether to act on the information that the police provide.

This proposal for enhancing the ability to recall prisoners from parole is aimed at improving public safety and security.

National Identity

Reinforcing and celebrating New Zealand’s unique national identity is very important to my government.

As I said in my Prime Minister’s Statement to Parliament last year, there is an evolving New Zealand way of doing things and a stronger New Zealand identity is emerging.

We pride ourselves on being a nation with a sense of fair play, on being clean and green, and on being nuclear free.

We stand for decent values at home and abroad.

We take pride in all those who’ve put our nation on the map, like Sir Edmund Hillary whose exploits were celebrated in Antarctica last month, and like Professor Alan McDiarmid, one of three New Zealanders to win the Nobel Prize who passed away last week.

Our sports people, our artists and performers, and our leaders across the community provide inspiration at many levels.

In government we seek to support and strengthen what is fundamentally good and unique about New Zealand. In a globalised world we can’t take the preservation of our unique culture and our values for granted.

In this globalised world, we are determined that there will be a place for a small, smart, inclusive, creative, and sustainable nation like ours.

Many of our values are played out through our foreign and defence policies, and 2007 will be a particularly busy year in that sphere.

Our defence deployments will continue at a high tempo, with New Zealand playing a critical role in peace building in the near neighbourhood and beyond.

Supporting resolution of conflict and lowering tension in the Pacific is a top priority, with particular attention being paid this year to the situation in Solomon Islands, Fiji, and Tonga.

Relationships with the nations of Asia are more important than ever, and we are accepted as a partner in East Asian regionalism.

In the Middle East, we will continue our peacekeeping involvement, begin negotiations on a trade agreement with the Gulf Co-operation Council, and open the new New Zealand embassy in Cairo.

Our Latin American Strategy has led to much more contact with that region across diplomatic, economic, cultural, and other relations.

The Commonwealth Heads of Government Summit to be held in Uganda this year, reminds us of the traditional network of relationships we have in Africa. The new South Africa has emerged as a major world opinion leader, and our relationship with it is also growing fast.

I do want to emphasise the very high value the government places on its relationship with other Western nations. We are part of a community of shared values, which makes us feel at home in dealing with Australia, the United States and Canada, and the nations of Europe.

These bedrock relationships must be continually nourished and refreshed.

This year the government will host three major international conferences:
• the Commonwealth Local Government Conference,
• the World Heritage Committee of UNESCO , and
• the Regional Interfaith Dialogue at Waitangi, and an associated symposium on the major Alliance for Civilisations report to the United Nations.

Our international work on dialogue across civilisations and faiths is highly relevant to the nation we are building at home.

New Zealand’s growing diversity is recorded in last year’s census. A commitment to social cohesion and the willingness to be inclusive across ethnicity, culture, and faith is more important than ever before. It’s critical that all New Zealand’s peoples benefit from the progress our country makes and have a stake in our society.

The Human Rights Commission, the Ministry of Social Development, the Office of Ethnic Affairs, and the Ministry of Foreign Affairs and Trade, and other agencies are all contributing to work in this area.

Reconciliation at home between Maori and Crown matters too. The historical Treaty settlement process has considerable momentum. This year the government will be working with over twenty claimant groups, each with a number of claims.

Major developments in culture and heritage this year will include the commemoration of the 90th anniversary of the Battle of Passchendaele, government funded road works to safeguard the Kerikeri Mission Station, and development of plans for the New Zealand Memorial Park in Wellington.

Government support for culture, in partnership with local government, corporate sponsors, and philanthropy will continue to play an important part in the development of many new productions across theatre, music, and dance. There continue to be exciting developments in film and contemporary music which attract considerable international attention.

Other major bills before the House this year, and not already referred to include:
• legislation for election law reform to clean up campaign funding;
• the Therapeutic Products and Medicines Bill, establishing the Trans Tasman regulatory agency
• the Terrorism Supression Act ensuring that New Zealand is fully compliant with its international obligations
• the Property Law Bill, which rewrites the 1952 Act,
• Treaty settlement bills, and
• a major overhaul of immigration legislation.

My annual statement to Parliament this year is a call to action on sustainability.

Complacency will not do : we have to act to secure our future.

I do believe New Zealanders value our country’s clean and green, fair and inclusive status, and our first world living standards.

But none of that is a god-given right – only strong leadership driving farsighted, sustainable strategies can lock that in for future generations.

And only this Labour-led Government offers the leadership, the vision, and the substance to do that.

We look forward to 2007 and progressing our work with and for New Zealanders.

ENDS

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