(uncorrected transcript—subject to correction and further editing)

WEDNESDAY, 10 FEBRUARY 2010

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

Government—2010 Economic Programme

1. CRAIG FOSS (National—Tukituki) to the Minister of Finance: Why is the Government embarking on a comprehensive economic programme in 2010?

Hon BILL ENGLISH (Minister of Finance): Because the country needs it. After 10 years of economic mismanagement and a global recession, we have a lopsided economy where we spend more than we earn and our export sector is weak. In fact, it has been in recession for the past 5 years, and in the 5 years to 2009 Government spending grew at twice the rate of economic growth. We can either muddle along and fall further behind, or set our sights higher and create the kind of country that the Prime Minister spoke about yesterday.

Craig Foss: What is the Government’s economic priority for 2010 and beyond?

Hon BILL ENGLISH: Better economic performance means having more jobs, new jobs, higher incomes, and better public services. In 2010 the Government will have less focus on managing the short-term impacts of the recession and more focus on raising our long-term economic prospects, so that we can have more jobs, higher incomes, and better public services.

Craig Foss: How will the Government’s economic programme deliver jobs and sustainable, higher economic growth?

Hon BILL ENGLISH: By correcting all the imbalances that arose through 10 years of economic mismanagement, and by improving our management of the economy in a systematic way. We have used a range of review groups and task forces to give us advice, and yesterday the Prime Minister set out in detail the Government’s policy programme and action programme for this year.

Craig Foss: Is there broad agreement across the community about what needs to be done?

Hon BILL ENGLISH: Yes, generally there is. Not everyone agrees—

Hon David Cunliffe: Oh!

Hon BILL ENGLISH: —as is obviously the case. Those who were responsible for the mess that we got into do not agree that things need to change. But even on issues such as taxation, there has been broad agreement that the taxation system needs to be improved so that it is fairer and more equitable, and so that it sends the right incentives to people to save, to invest, and to work, and less of an incentive for them to consume too much and borrow too much.

GST—Prime Minister’s Statements

2. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by all his statements on GST?

Hon JOHN KEY (Prime Minister): Mr Speaker—

Hon Dr Nick Smith: What about his own statement?

Hon JOHN KEY: We will get to him in a minute. Yes, I do, and if someone asked me whether I would want to raise GST to cover deficits, the answer would be no; it remains no today.

Hon Phil Goff: On what basis does he claim a mandate for increasing GST, when he explicitly promised the nation that he would not do so?

Hon JOHN KEY: I never made that promise. I said I would not raise GST to cover deficits, and we are not doing so.

Hon Phil Goff: I seek the leave of the House to table a DVD in which the Prime Minister explicitly promises not to raise GST.

Mr SPEAKER: Leave is sought to table that object. Is there any objection? There is no objection. Object, by leave, laid on the Table of the House.

Hon Phil Goff: Will the Prime Minister now admit to the country that he misled the country in promising not to raise GST to 15 percent, and that he has broken his word?

Hon JOHN KEY: No, because my word was that I would not raise GST to 15 percent to cover deficits, and I will not do so.

Chris Tremain: Has he seen reports of people supporting a rise in GST accompanied by compensation through tax cuts, increases in benefits, and increases in superannuation?

Hon JOHN KEY: Yes. As members will know, the Labour Government in 1986 introduced GST at a rate of 10 percent, accompanied by personal tax reductions, increases in benefits, and increases in superannuation. At the time, that proposal was greeted with enthusiasm by a person who said these words: “Every New Zealander will be better off under the proposals announced last night. It introduces a fairer system for New Zealanders. It reduces the burden of personal taxes, which wage and salary earners have to. If the goods and services tax is such a bad system, why has the National Opposition not pledged itself to repeal it? It will not do so, because it is not a bad system.” That was a great little speech from Phil Goff back in 1986.

Hon Hon members: Oh!

Hon Phil Goff: I raise a point of order, Mr Speaker—[Interruption]

Mr SPEAKER: Members, a little decorum, please. The honourable Leader of the Opposition called a point of order.

Hon Phil Goff: I seek the leave of the House to table this document, which says National is not going to raise GST, National wants to cut taxes—

Mr SPEAKER: The member has not indicated what the document is.

Hon Phil Goff: I am sorry, Mr Speaker. This document is from www.stuff.co.nz today—an article by Tracy Watkins.

Mr SPEAKER: The member knows that seeking leave to table stuff that is in the common media is no longer approved in the House.

Hon Phil Goff: Has the Prime Minister ever said that raising GST will not be necessary if National was doing a half-decent job in growing the economy, and is his decision now to raise GST an admission that National is not doing even a half-decent job in managing the economy?

Hon JOHN KEY: The question was whether I would be required to raise GST to cover deficits. The answer to that question is: “No, we will not.” In fact, National will not be increasing taxes; National will be reducing taxes, which actually proves we are doing a really good job.

Chris Tremain: Has the Government ever raised GST without compensating people through tax cuts, benefit increases, or superannuation increases?

Hon JOHN KEY: Yes, actually. In 1989 the Labour Government raised GST from 10 percent to 12.5 percent with no tax cuts, no increase in benefits, and no increase in superannuation. People on lower incomes were left significantly worse off. That will not happen under a National Government.

Hon Jim Anderton: When the Prime Minister, as the then Leader of the Opposition, told New Zealanders at his media interview 18 days before the last election: “National is not going to be

raising GST.”, what did he mean by the word “not”? Does he have a lot of other definitions that most of us do not understand?

Hon JOHN KEY: I urge everyone to look at the video. The exact question was whether I would raise GST “to cover deficits”. The answer to that question is no, I will not be raising GST to do that.

Hon Jim Anderton: I raise a point of order, Mr Speaker. I asked the Prime Minister in that question a very simple point: to explain to the House his understanding of the word “not”. I expect to hear the answer.

Mr SPEAKER: I do not need further help on the matter. The Prime Minister disputed in his answer the basis of the question the member asked. I think he is perfectly entitled to do that.

Hon Phil Goff: Was his answer, word for word: “National is not going to be raising GST. National wants to cut taxes, not raise taxes.”?

Hon JOHN KEY: Yes, because we are going to cut taxes, not raise taxes. Secondly, the question—

Hon Trevor Mallard: Oh, not raise taxes!

Hon JOHN KEY: I know it is a real downer for their story, but if I get asked a question, I answer it. Am I going to raise taxes and raise GST to cover deficits? The answer is no. But why let the facts get in the way of the story?

Hon Phil Goff: The facts were set out on the DVD that has been tabled.

Mr SPEAKER: I ask both sides to please settle down a little. It is obviously a fiercely contested issue, and I have allowed a bit of noise and robustness, but please, as the member is seeking to ask his question could we have a little more order.

Hon Phil Goff: If the top tax rate is lowered from 38c to 30c, what percentage of the total spend of this tax package will go to the top 10 percent of income earners in that bracket?

Hon JOHN KEY: I do not have that answer to hand. If the member wants me to go to the Inland Revenue Department, I can get him the answer to that question. We know that one in four New Zealanders who are tertiary qualified live overseas. The probability of someone who is tertiary qualified paying the top personal rate, given that 300,000 New Zealanders are paying the top personal rate—

Hon Phil Goff: I raise a point of order, Mr Speaker. My question was very specific, as you know. The Prime Minister answered that question by saying that apparently he did not have that information. There is nothing else to add.

Mr SPEAKER: The honourable Leader of the Opposition makes a fair point. He asked a question that was very specific, following a very general primary question. The Prime Minister was very upfront and said he did not have that particular information. In fairness, I have to acknowledge that that should have been the end of the answer.

Hon Jim Anderton: Under the policies he foreshadowed yesterday, which taxpayers will receive the highest dollar amounts per week in personal tax cuts? Will those taxpayers be the ones who need the money the most?

Hon JOHN KEY: We do not know yet, because the tax package has not been formally put together, but of course one would logically assume that the highest taxpayers would receive the highest personal tax cuts, and that is because they pay the most tax.

Hon Phil Goff: Instead of giving the lion’s share of the tax cuts to the very top income earners, why does not the Prime Minister bring in a package that gives fairer tax cuts to those on $40,000, $50,000, and $60,000 a year, in line with his undertaking that this tax package would be fair to all New Zealanders?

Hon JOHN KEY: All I can say to the Leader of the Opposition is that he is jumping to conclusions. He may find soon that he is factually incorrect.

Hon Phil Goff: I raise a point of order, Mr Speaker. The Prime Minister indicated that he did not have an answer to one of my supplementary questions, and that is a fair answer to a question. I wonder whether the Prime Minister would provide that answer subsequently.

Mr SPEAKER: That is not strictly a point of order.

Hon Phil Goff: He offered to. I just wanted to clarify that he is going to.

Mr SPEAKER: But I do not think the House’s time should be taken up in that way. It is not a valid point of order; it is something the member can pursue privately with the Prime Minister.

Education, National Standards—Support

3. ALLAN PEACHEY (National—Tāmaki) to the Minister of Education: What reports has she received on support for national standards?

Hon ANNE TOLLEY (Minister of Education): I have received several reports. I have seen the results of a New Zealand Herald survey in which 73 percent of respondents said they supported the introduction of standards for reading, writing, and maths in their children’s primary schools. National standards will set clear expectations of what children should have learnt and by when, and will ensure that parents will know, in plain language, how their children are doing. The New Zealand Herald survey confirms that this is overwhelmingly what parents want, and this Government is proud to be delivering that.

Allan Peachey: What reports has she received from the education sector that support national standards?

Hon ANNE TOLLEY: I have received several reports. I have had many principals and teachers tell me they have studied the standards, they have worked with their staff, and they are looking forward to using the standards this year. One of those principals emailed me, saying: “I think that the standards have long been needed to promote some evidence-based conversations around student achievement and progress at every layer of primary education. Thank you for being steadfast with the implementation of the national standards.”

Allan Peachey: What reports has the Minister received on people changing their position on national standards?

Hon ANNE TOLLEY: I have seen a report from one member who in 1999 said: “We will be requiring schools to work against national standards and to report to parents on that twice a year.” In October last year that same member said: “… I support the standards. I support better information for parents, I support looking at class and school results to identify”—

Hon Trevor Mallard: We’ve got it already!

Hon ANNE TOLLEY: —I am just reminding the member—“teacher and school strengths and weaknesses so they can be built and worked on.” The author of all that was Trevor Mallard from the Labour Party, which is opposing them up and down the country.

Hon Trevor Mallard: Going back to the primary answer, is she in the group of 11.9 percent who claim that they fully understand her system or in the 88 percent who acknowledge that they do not?

Hon ANNE TOLLEY: In answer to that question, I think the member should think very carefully, being 20 points behind—

Mr SPEAKER: The member asked a very simple question, and the Minister has made absolutely no attempt whatsoever to answer it. The Minister seems to want to make a statement that bears no relationship to what the member asked. The member asked whether the Minister was in the percentage who believe they understand the proposal fully or the group that does not. People can have their own judgement about the question, but it should be answered.

Hon ANNE TOLLEY: Parents know what they want, and this Government is delivering what they want. Labour does not seem to know what it wants.

Mr SPEAKER: Order! This point—

Hon Trevor Mallard: What do you know?

Mr SPEAKER: I am on my feet, and there will be silence. The member asked a very simple question. The Minister may not think it is a very good question; I have no problem with that. But it

is a fairly easy question to answer. I think the House deserves to hear an answer, and I invite the member to repeat the question, since we asked the Minister to answer it twice.

Hon Trevor Mallard: Is the Minister in the group of 11.9 percent who claim that they fully understand her system or in the 88 percent who acknowledge that they do not?

Hon ANNE TOLLEY: I understand perfectly well what the national standards are and what they can do to lift student achievement for the 150,000-odd students whom the previous Labour-led Government left to fail in the education system.

Hon Trevor Mallard: Does she agree with the Prime Minister’s mentor, John Hattie, who said this system will hurt the most able children; if not, why not?

Hon ANNE TOLLEY: I have seen that comment from Professor Hattie, and I have talked with him on a number of occasions. I have also seen his comments where he said national standards, if implemented well, can make a difference.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I again asked a very specific question that goes to a specific comment from Professor Hattie. It was not addressed, other than by the Minister saying she saw it. She was asked whether she agreed with it, and if not, why not.

Hon Gerry Brownlee: The answer from the Minister pointed out a contradictory statement from the same person. That makes it very difficult to take an opinion on one person’s interpretation of what he said, when there is evidence that the same person said something completely different.

Mr SPEAKER: I do not need to take further time on this point of order. In fairness, where a member asks for an opinion, it is very difficult for the Speaker to insist on any particular answer. As the Hon Gerry Brownlee pointed out, the Minister drew attention to a comment that was somewhat different from the one that the member quoted in his question. In doing so, I think it demonstrated the difficulty in agreeing to any particular one of those comments. The member has more supplementary questions.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. The problem I have is that we in the House know we are allowed to ask about opinions. It is something that did not use to be the case, and the Standing Orders and Speakers’ rulings have changed. But Ministers have been required to, as you say, answer, and as previous Speakers have said address questions. The question I asked was neither addressed nor answered. A completely separate question was addressed and answered, but no opinion was proffered to the House on the question that I asked.

Hon Gerry Brownlee: There is surely no need to proffer an opinion on an assertion that is offered by way of a question. In this case the Minister pointed out that the particular quote the member was basing his question on was potentially or possibly contradicted by the person to whom the quote was attributed in a subsequent comment. I think the Minister answered perfectly adequately by saying she had seen it, but she had also seen the subsequent quote. We could go back and forth all day on this. I think asking for opinions in questions should mean that the person who answers that question has some discretion about whether he or she offers that opinion. It cannot become mandatory.

Hon Trevor Mallard: I raise a point of order, Mr Speaker.

Mr SPEAKER: I have heard quite sufficient on this. I do not want to take more time of the House. The points that have been made are fair enough. The member made the point that opinions can be sought in questions and that although it was not always the case, with our Standing Orders today it can be done. The dilemma is that I cannot insist on particular answers when opinions are sought. That is the risk that the member takes when asking a question that seeks an opinion, but I think, in fairness, the Minister addressed the question just as much as I have heard questions being addressed in this House over recent years. I think the member has further supplementary questions. He is clearly not satisfied with the answer he received in response to the question he asked. He can dig deeper with further supplementary questions, should he wish to do so.

No. 4 to Minister

Hon ANNETTE KING (Deputy Leader—Labour): My question is to the Minister for Social Development and Employment, what action—[Interruption]

Hon Anne Tolley: I raise a point of order, Mr Speaker. I take exception to the comment that member has made and I ask that he withdraw and apologise.

Mr SPEAKER: I understand that. The member will withdraw and apologise.

Hon Trevor Mallard: I withdraw and apologise. [Interruption]

Mr SPEAKER: I apologise to the Hon Annette King. Let us get some rules pretty clear here from the word go. When I require a member to withdraw and apologise there will be not be comment on it afterwards. A comment afterwards indicates that the member was not the least bit sincere in withdrawing and apologising. I ask the Hon Trevor Mallard again to get to his feet, withdraw and apologise, and not add any further comments.

Hon Trevor Mallard: I withdraw and apologise.

Mr SPEAKER: I call the Hon Annette King. [Interruption] I ask the House to settle down. I did not hear that interjection. The member has the floor to ask the question. I have tried to get silence for her and I ask her to do so.

Unemployment—Government Actions

4. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister for Social

Development and Employment: My question is to the Minister for Social Development and Employment—[Interruption] She is answering it already.

Mr SPEAKER: Just ask the question.

Hon ANNETTE KING: What action, if any, is she taking to address unemployment?

Hon PAULA BENNETT (Minister for Social Development and Employment): This Government has made unemployment our No.1 priority during the course of this recession and has implemented a balanced, responsible, and successful plan to steer New Zealand through the global economic crisis.

Hon Annette King: Can she confirm that the number of people going on to the unemployment benefit increased by 2,000 in January alone—a figure she quietly slipped out yesterday—if so, when will all the amazing and comprehensive policy initiatives she has been talking about start helping the 168,000 New Zealanders who are now out of a job?

Hon PAULA BENNETT: The January figures for the unemployment benefit were released publicly last week—

Hon Annette King: No, they weren’t.

Hon PAULA BENNETT: —yes they were—along with the household labour force survey. The number of people on the unemployment benefit did go up by 2,000 in the month of January, which we were expecting. But, equally, 3,180 people came off the unemployment benefit in that month alone and went into jobs.

Hon Annette King: Does she stand by her statement “Let’s not panic. There are jobs out there”; if so, why cannot 16,000 new job seekers find them, why cannot 168,000 unemployed people find them, and why is the chief economist for ASB saying that he cannot find them either?

Hon PAULA BENNETT: What we saw for the last quarter of last year was a 5 percent increase in the number of jobs advertised. We are seeing more jobs come into Work and Income than ever before. A third of job applicants are still being triaged away and are going into jobs. This is what happens in the lag of one of the worst global recessions that we have seen. Things are tougher out there, but this Government’s plan is implementing more jobs.

Katrina Shanks: Why is the Minister particularly concerned about the increasing number of people who are unemployed for more than a year?

Hon PAULA BENNETT: This year the Government will spend $7.6 billion on benefits. That is more than $20 million a day. With an ageing population, rising levels of long-term welfare

dependency have serious consequences for future taxpayers. It is our children who will bear the cost unless we do something about it.

Hon Annette King: If she is so concerned about long-term unemployment, is she aware that the number of long-term unemployed has soared in the 15 months that she has been the Minister from 14,800 to 40,500 today? I thought that these were the people whom John Key was going to get off welfare dependency. You have just added, Minister—

Mr SPEAKER: Order!

Hon Annette King: —about 30,000 more to it.

Mr SPEAKER: Before I call the Minister to answer, I just ask the member to remember that when she says “you have just added”, she is referring to the Speaker. I would remind members of that.

Hon PAULA BENNETT: I think that the member struggles to understand what happens in a global recession and the effect that it has on jobs and employment. What I can say, Mr Speaker— and I do not want to raise your ire in the first question time—is that there is a long, long list of initiatives that this Government has implemented that are making a difference, including $1.1 billion in broadband; nearly 30,000 home insulation cases; Job Ops, which is being expanded because it is so successful; and Community Max, which is already signed up. I could go on, but I shall not.

Hon Annette King: Can she confirm that funding for Job Ops and Community Max has almost run out; if so, will she be putting in additional money in this financial year to help more New Zealanders into work?

Hon PAULA BENNETT: Job Ops is doing fine. We have already put another 2,000 places into it. We have not started on those 2,000 yet, so I am fairly confident that we will be able to keep up with the demand for Job Ops. Community Max is getting close to being fully done, but we announced just this morning that we will expand that slightly so that more people can go on it.

Greenhouse Gas Reduction—Intergovernmental Panel on Climate Change 2020 Target

5. JEANETTE FITZSIMONS (Green) to the Prime Minister: When he referred yesterday to avoiding “overly-ambitious climate change targets”, did he mean that the minimum target of 25 to 40 percent below 1990 levels by 2020, which the Intergovernmental Panel on Climate Change says is necessary to keep global warming below 2 degrees, is overly ambitious?

Hon JOHN KEY (Prime Minister): Before I answer the question, I will just take a moment to acknowledge Jeanette Fitzsimons and the fact that she is giving her valedictory speech today after 13 years in Parliament. I know that members will want to join with me in congratulating her on such an illustrious and successful career here in Parliament. In answer to the question, that is a global target, and for New Zealand a target of 25 to 40 percent would be an overly ambitious target, in our view.

Jeanette Fitzsimons: In light of the UN advice that the targets announced so far by all countries are “not enough to forestall the dangerous effects of climate change by mid-century”, will he commit to working with other world leaders to raise all countries’ targets, including New Zealand’s?

Hon JOHN KEY: The answer to that is that New Zealand is already putting up what is an ambitious target relative to those of other countries. If one was to look at the analysis provided by the New Zealand Treasury, one would see that it argues very strongly that we are doing much more than our fair share. Of course, over the course of the next 12 months or so, as we head to Mexico, countries will be working to see what agreements can be secured, and New Zealand will play its part in those discussions.

Jeanette Fitzsimons: Now that he has had 2 months to think about my questions last year, which he was not able to answer at the time, can he now name even one country that he expects will make bigger than 25 to 40 percent cuts to its emissions in order to balance our smaller ones?

Hon JOHN KEY: I am sure there are some out there. I do not have the names of those particular countries to hand, although they would almost certainly be in the European Union. I just make the point that the aggregate reduction in 1990 emissions that would be achieved if all developed countries were to meet their currently stated targets would be about 18 percent. We know that it is more difficult for New Zealand to achieve its target, for all the reasons we know, not the least of them being that we have had the fastest per capita population growth of any annex 1 country. I think that New Zealanders can be proud that we are paying more than our fair share when it comes to the battle on climate change.

Charles Chauvel: Is one of the ways in which the Prime Minister plans to avoid “overlyambitious climate change targets” to completely ignore the huge opportunities from investment in clean technology; if not, why was there no mention whatsoever of those opportunities in his speech yesterday?

Hon JOHN KEY: I am sure we will work on those, but one of the ways in which we will come to terms with the challenges of climate change is through the global alliance, and I can tell the member how successful it has been. I am sure he joined with us in the celebrations at Copenhagen when the United States committed US$90 million to that fund. We are pleased that so many countries will be coming to New Zealand at the start of this year for those negotiations and discussions. That alliance will make a real difference when it comes to the world combating climate change.

Charles Chauvel: I seek leave to table a letter dated Friday, 29 January 2010, from Phillip Mills, Lloyd Morrison, Sir George Fistonich, Geoff Ross, Rob Fenwick, Sir Stephen Tindall, Rob Fyfe, and Jeremy Moon, urging that opportunities for New Zealand in clean technology and green technology be seized by this Parliament.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Jeanette Fitzsimons: How do the Minister’s plans to mine the conservation estate, to expand oil production, to mine, burn, and export more coal, and to build more roads align with his stated ambition to do our part for climate change?

Hon JOHN KEY: Firstly, the member will be aware that the largest proportion of our greenhouse gas emissions comes from the agricultural sector. If we are going to make significant inroads into our emissions, we need to tackle the bit that is causing the biggest problem from New Zealand’s perspective. That is why we have the global alliance. In terms of building roads, if we do not build those roads we will have more traffic congestion, and that means that motorists end up emitting even more emissions. Finally, as we all know, when we build roads things called buses travel along them, and that actually helps public transport. [Interruption]

Jeanette Fitzsimons: It is nice to see such cross-party accord on the building of roads! Was the Prime Minister’s lack of ambition on New Zealand’s climate change target the reason he refused to meet with the New Zealand youth delegation in Copenhagen, despite its letter requesting a meeting?

Hon JOHN KEY: I do not know where the member gets her information, but I did meet with the youth delegation. Funnily enough, the youth delegation members were absolutely thrilled that I met with them, because they said that no other leader had bothered to meet with them. I welcomed the opportunity to talk to people from America and other countries.

Jeanette Fitzsimons: I seek leave to table a letter from the New Zealand youth delegation written on 15 December to Minister Nick Smith, asking to meet with the Prime Minister while he was in Copenhagen.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Jeanette Fitzsimons: Did the Prime Minister meet with the New Zealand youth delegation, as requested in that letter, or did he just have a meeting with a few people?

Hon JOHN KEY: I cannot honestly recall the letter, but I certainly recall the meeting with members of the youth delegation in Copenhagen.

GST Increase—Effect on Families

6. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: What advice, if any, has he received outlining the effect of an increase in GST on families?

Hon BILL ENGLISH (Minister of Finance): The advice is that the way an increase in GST impacts on families and other taxpayers depends entirely on what other tax changes accompany it.

Hon David Cunliffe: Does the Government currently have a Budget deficit, and is the Government planning to increase GST—yes or no?

Hon BILL ENGLISH: It may be news to that member—in fact, I think it is news to that member—that the Government has a Budget deficit. We are not raising GST to close that deficit now, and that is what the Prime Minister stated before the election.

Hon David Cunliffe: I think it might be news to the Prime Minister—

Mr SPEAKER: Just ask the question.

Hon David Cunliffe: Can the Minister confirm that he told the Dominion Post, in response to a question about whether he would support raising GST or imposing any kind of capital gains tax: “We won’t be doing that … It is not our policy,”?

Hon BILL ENGLISH: I can confirm that. I can also confirm that the following descriptions were given just 6 months ago: “His initial plan was right. The things we did on Family Support, accompanying GST as a way of cutting down your huge tax rates …”. That was Phil Goff, just 6 months ago, referring to the plans he was part of back in 1989.

Mr SPEAKER: Order!

Hon David Cunliffe: I raise a point of order, Mr Speaker.

Mr SPEAKER: I am on my feet, and there will be silence. Forgive me, my attention was a little divided, but I thought I heard the member’s question, and I am not sure the answer bore a lot of relationship to the question. I think the only fair thing I can do is invite the member to repeat his supplementary question.

Hon David Cunliffe: I am happy to ask a different one.

Mr SPEAKER: No, I invite him to repeat it.

Hon David Cunliffe: Then I will repeat that question. Can the Minister confirm that he told the Dominion Post, in response to a question about whether the Government would be raising GST and imposing any kind of capital gains tax: “We won’t be doing that … It is not our policy,”?

Hon BILL ENGLISH: I will give the same answer that I gave before, which was: “I can confirm that.” I also add, if I am allowed to, that the previous Government left the economy in such a mess that we have had to set out to design a tax package that will increase our economic performance.

Amy Adams: Under what conditions might GST be increased?

Hon BILL ENGLISH: We have not considered increasing GST for the purposes of closing the Government’s deficit, which is a very large one. The Government has been looking to increase New Zealand’s long-term economic performance because, after 10 years of mismanagement, we have a lopsided economy where the incentives to invest and save are weak, and we have had too much consumption and borrowing, as illustrated by the fact that New Zealand now owes the world around $160 billion. So we have proposed a package that bundles up GST, income tax rate changes, and changes to the taxation of property as a way of improving the tax system and our economic growth prospects.

Hon David Cunliffe: Sorry seems to be the hardest word to say. How can—

Mr SPEAKER: The member will just ask his supplementary question without adding any—

Hon David Cunliffe: Respectfully, a reprise deserves a reprise, and it was not me that started reprising.

Mr SPEAKER: The member will not now argue with the Speaker. I invite him to ask his supplementary question, and to do just that.

Hon David Cunliffe: How can the Minister say that Kiwis will be better off after a hike in GST, when low and middle income earners will, at best, be compensated for their increased costs? How does he expect those hard-working Kiwis to get ahead?

Hon BILL ENGLISH: The member will just have to wait and see. I know it is disappointing for him that the Prime Minister stated yesterday that lower-income New Zealanders, particularly on benefits and superannuation, will be compensated for any increase in GST. That is technically not difficult, and it is a policy objective of the Government if it decides to increase GST.

Hon David Cunliffe: Can he therefore guarantee that hard-working Kiwis earning $70,000 and below will be much better off in the tax package, or is his version of fairness that the Prime Minister gets a $500-a-week tax cut, the average wage earner gets 35c a week, and the minimum wage earner gets nothing?

Hon BILL ENGLISH: No.

Dr Russel Norman: Does the Minister agree that, whether one looks at it from the criteria of fairness and progressivity, of broadening the tax base, or of the size of the revenue actually raised, on all those criteria a capital gains tax excluding the family home comes out way ahead of GST?

Hon BILL ENGLISH: As we discussed this morning at the Finance and Expenditure Committee, the Government has been looking at tax changes that might meet a number of criteria, including simplicity of administration, positive impact on the economy, and fairness. In considering those changes in some detail, the Prime Minister stated yesterday that a comprehensive capital gains tax, along with some other options, were put off the table. I note that the Tax Working Group, which looked at this issue in some detail for 6 months, could not agree on whether a comprehensive capital gains tax would work.

Rahui Katene: What advice has he received about the benefits of introducing a 1 percent transaction tax—a flat tax for everything consumed, whether it be a product, service, or financial transaction—and how would that tax impact on disposable incomes for families?

Hon BILL ENGLISH: I have not received particular advice on a financial transactions tax, although I know it has been discussed and dismissed a number of times over recent years. GST amounts to a flat tax on all consumption except for financial services, housing rentals, and interest, and, as such, it is regarded around the world as a model of an effective tax.

Rahui Katene: Is he aware of my bill, the Goods and Services Tax (Exemption of Healthy Food) Amendment Bill, and does he support the Māori Party’s commitment to assisting those in low-income households to purchase healthy foods?

Hon BILL ENGLISH: I am aware of the Māori Party’s bill, and I am also aware of the Māori Party’s desire to participate in extensive discussion about a tax package. I might say this is an example where we need to be a bit careful about criteria. By some standards, milk and bread do not meet the standards of healthy food. Some people are saying to us we should exempt milk and bread, and others saying we should exempt healthy foods, which may be two different groups. By and large, we favour GST staying as it is.

Oil and Gas Production—Potential for Economic Growth

7. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Energy and

Resources: What evidence does he have that oil and gas production has the potential to lift New Zealand’s economic growth?

Hon GERRY BROWNLEE (Minister of Energy and Resources): This January I released the latest New Zealand Energy Quarterly, which showed that New Zealand’s production of crude oil jumped nearly 20 percent in the quarter ended September. That was largely due to the Māui field

reaching full production. Production of oil and gas in New Zealand will continue to rise, and this season will see the most extensive drilling programme since exploration began in this country. In the year 2008, oil was our third-largest export earner, at $2.8 billion. That was a 100 percent increase on the amount in the previous year. Those three facts, I think, provide the clear evidence the member seeks.

Peseta Sam Lotu-Iiga: How does the taxpayer benefit from our increasing domestic production of oil?

Hon GERRY BROWNLEE: The Crown received approximately $965 million, including taxes paid, from petroleum production in the last financial year. Of that, $543 million was in royalty payments alone. New Zealand produces in excess of 21 million barrels of oil a day. Closing the balance between oil imports and exports is a real benefit to the New Zealand economy and, consequently, the taxpayer.

Question No. 8 to Minister

Hon NANAIA MAHUTA (Labour—Hauraki-Waikato): I seek leave to hold this question over until the Minister of Māori Affairs is present to answer this very serious question.

Mr SPEAKER: Leave is sought for that course of action. Is there any objection? There is objection.

GST Increase—Effect on Māori Families/Whānau

8. Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) My question is to the real Minister of Māori Affairs, and asks—

Mr SPEAKER: The member must ask her question to the Minister of Māori Affairs as it is on the Order Paper.

Hon NANAIA MAHUTA: What advice, if any, has he received from Te Puni Kōkiri on the effect a rise in GST will have on the well-being of Māori families?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Minister of Māori Affairs: The next-best thing—

Hon Members: Oh!

Hon Darren Hughes: I raise a point of order, Mr Speaker. It is clear that the Minister of Māori Affairs cannot be present to answer the question, but the Associate Minister of Māori Affairs is present, and the member clearly wants to ask a Māori Minister about this—

Mr SPEAKER: It is up to the Government as to which Minister answers when the Minister is not present.

Hon BILL ENGLISH: I am—[Interruption]

Mr SPEAKER: The question has been asked; let us hear the answer.

Hon BILL ENGLISH: I am advised that the Minister of Māori Affairs has received some advice from Te Puni Kōkiri. That advice says the impact would vary from household to household, depending on income and spending patterns. Of course, the impact would depend entirely on what other measures were part of a tax package.

Hon Nanaia Mahuta: Does the Minister support the Māori Party member’s bill to remove GST from food; if so, how does he reconcile this conflict with his Government’s plan to instead increase GST across the board?

Hon BILL ENGLISH: The Minister of Māori Affairs is part of a range of discussions with the Government over this and related issues.

Hon Nanaia Mahuta: Does the Minister stand by his words to “argue the case for Māori”; if so, what response does the Minister expect to give to Māori families who, as a result of an increase in the rate of GST, will struggle to put kai on the table and feed their tamariki—how is that whānau ora?

Hon BILL ENGLISH: The advice to the Minister of Māori Affairs makes it clear that the impact of an increase in the GST rate would depend on what other measures are taken as part of a tax package—for instance, a reduction in income taxes faced by those same Māori families. I would expect that his discussions with the Government will also include the longer-term benefits of an economy that creates more jobs and generates higher incomes. That is certainly in the interests of Māori families, probably more so than for many other families.

Hon Parekura Horomia: Does the Minister of Māori Affairs stand by his statement: “Sometimes we pass a bill and then we forget we passed it and talk against it. I have to ring the Prime Minister and say, ‘Whoops’. Or he rings me.”; if so, will his support for the Government to increase GST be something he votes for, then talks against, then tells the Prime Minister, and Māori, “Whoops.”?

Hon BILL ENGLISH: I can say the current Minister of Māori Affairs makes his views a great deal clearer than the previous Minister of Māori Affairs used to.

Mr SPEAKER: I say to members that it is hard for me to hear members calling.

Hon Nanaia Mahuta: Does the Minister intend to administer Whānau Ora through a newly established trust; if so, why is Te Puni Kōkiri not being used?

Hon BILL ENGLISH: The question is a bit wide of the mark, but I can tell that member that the Minister of Māori Affairs is engaged in intensive discussions with the Government over that programme. I must say there is real energy around the basic change—and vital change—in the delivery of our social services, which in 10 years the previous Government talked about but never did anything about. Many families have missed out on support that they should have had, and much money has been wasted that can now be used more effectively.

Hon Nanaia Mahuta: I raise a point of order, Mr Speaker. That clearly did not answer the question that was asked.

Mr SPEAKER: The dilemma I have is that the supplementary question that the member asked was a long stretch from the primary question. I did not intervene to stop the question being asked; I did not rule it out of order. But it makes it very difficult for me to then insist on the Minister giving a particular answer. It seems to me that he did give a reasonable answer to the question.

Economy—Gap Between Australia and New Zealand

9. JOHN BOSCAWEN (ACT) to the Minister of Finance: Does he agree with the Reserve Bank Governor Alan Bollard that “I don’t think we can catch Australia”, but “there’s a lot of crumbs come off the Australian table we can take advantage of”?

Hon BILL ENGLISH (Minister of Finance): No, I do not agree with that statement.

John Boscawen: If New Zealand adopts an emissions trading scheme tax and Australia does not, does he agree that this would put us at a competitive disadvantage and slow our growth rate relative to Australia’s; if not, why not?

Hon BILL ENGLISH: No, not necessarily. The Australian debate is pretty vigorous, but both sides are proposing to take some action on climate change. Even the actions that Australia’s Opposition is promising involve complicated public subsidies and heavy regulation. It is not at all clear that that would be better than an emissions trading scheme in the long run.

Hon Phil Goff: How did it help New Zealand close the income gap with Australia to scrap Labour’s research and development tax credits and the $2 billion Fast Forward fund, when a smart Government in Australia was increasing research and development by 25 percent?

Hon BILL ENGLISH: The Fast Forward fund is a fantasy in the minds of the Opposition members; it never actually existed. The Government replaced it with the Primary Growth Partnership. The one difference between the Primary Growth Partnership and the Fast Forward fund is that the Primary Growth Partnership actually has some money that is actually paying for some science. The Fast Forward fund had no money and had not bought any science.

Minimum Wage—Closing Income Gap with Australia

10. DARIEN FENTON (Labour) to the Minister of Labour: Does she stand by her statement: “The goal is to match Australian income levels by 2025”; if so, will the 25c change in the minimum wage achieve that?

Hon KATE WILKINSON (Minister of Labour): Yes. Yesterday the Prime Minister laid out an excellent plan for growing the economy, but simply raising wages by regulation is not the answer. Unlike that member, we are not prepared to risk sentencing 8,000 workers to the dole queue for the sake of a headline.

Darien Fenton: Is she aware that the 2 percent increase in the minimum wage will not even keep pace with estimated inflation increases of 2.3 percent, and can she explain how letting our poorest get poorer will help close the wage gap with Australia?

Hon KATE WILKINSON: As the member knows, the 2 percent increase in the minimum wage was linked to inflation at the time. As it turns out, it is also the average increase in wages across the board, so it is also linked to that—which also happened to be Labour’s policy 2 years ago.

Darien Fenton: What advice has she received on how much less our lowest-income New Zealanders could be earning in real terms once inflation increases as well as increases in accident compensation levies and GST are thrown in?

Hon KATE WILKINSON: The advice I received was that if we increased the minimum wage to $15 an hour, which was the suggestion made by that party over there, it could result in the loss of 8,000 jobs, and we were not prepared to put those 8,000 jobs at risk.

Darien Fenton: I raise a point of order, Mr Speaker. I do not think the Minister addressed the question. It was a specific question about the advice she had received on what the impact on the minimum wage would be once inflation and accident compensation levies had been taken into account.

Mr SPEAKER: As far as I heard, the Minister did give the advice that had been received in respect of the impact of raising the minimum wage, and I think for me to ask her to be more specific would be a little pedantic on my part.

Hon Sir Roger Douglas: Is she aware of the academic research in New Zealand that shows that Labour’s removal of youth rates is responsible for the huge increase in youth unemployment; and will she review that decision, or is she comfortable with youth unemployment of 17 percent, including Māori youth unemployment of 38 percent?

Hon KATE WILKINSON: The member may be aware that when Labour wanted to abolish the youth rate we did in fact vote against that legislation, for that very reason. We were concerned that it would price young people off the job market, and that it might also be a perverse incentive for them to leave education. I say to the member who asked the question that we are always willing to listen to good ideas.

Darien Fenton: If the Government does go ahead with an increase to GST, will she commit to supporting Trevor Mallard’s members’ bill to raise the minimum wage to $15 an hour by 2011, so that the more than 450,000 New Zealanders currently struggling to get by on less than that do not fall even further behind?

Hon KATE WILKINSON: I say to that member that if raising the minimum wage to $15 an hour is such a good idea, why did Labour not do it in the 9 years that it had the opportunity? Our advice tells us that raising the minimum wage to $15 an hour could result in the loss of 8,000 jobs. We are not prepared to risk that. I also remind the member that the Prime Minister made it very clear yesterday that any rise in GST would be offset by changes to income tax, so low-income workers will not be any worse off.

Roading—Christchurch Motorways Road

11. NICKY WAGNER (National) to the Minister of Transport: What progress has been made on the Christchurch Motorways Road of National Significance?

Hon STEVEN JOYCE (Minister of Transport): I am pleased to report that 2 weeks ago I was privileged to be able to turn the first sod on the Christchurch Southern Motorway’s stage one extension. This project was accelerated out of the Government $142 million stimulus package, and it will employ around 150 people directly as well as create more jobs in down-stream support services and suppliers. This long awaited project will deliver economic growth and improve safety by developing better access from the south of that wonderful city of Christchurch to the central business district and Lyttelton Port.

Nicky Wagner: What else will the road of rational significance deliver for Christchurch?

Hon STEVEN JOYCE: It is an exciting time for transport in Christchurch. Other projects in the package include further stages of the Southern Motorway and the Northern Motorway extension, and I am very pleased to report that the first stages of the Western Bypass will also commence construction this year. Christchurch people will now see real progress on that highway development plan as the result of the Government’s $11 billion nationwide commitment to State highway improvements over the next 10 years.

Mr SPEAKER: Before I call the last question, I say to the Opposition that an awful lot of noise was coming from the Opposition benches. I will insist on the other side giving more courtesy to their member as she asks the last question than they extended to the Minister in answering that previous one.

Hon Annette King: I raise a point of order, Mr Speaker. I do not know whether you recall it, but when Darien Fenton asked that question we could hardly hear the question being asked. I ask you that the rule you applied last year—that you can hear the question—be applied this year.

Mr SPEAKER: I hear the member, but the noise got totally unacceptable at that point. I am asking the Government now to extend courtesy to the member asking the next question. That was what I have just asked, despite the lack of courtesy the other way round.

Youth—Prime Minister’s Statement

12. JACINDA ARDERN (Labour) to the Minister of Youth Affairs: Does she agree with commentator Bernard Hickey that the Prime Minister’s statement yesterday sent a clear message to young New Zealanders: “leave the country now”?

Hon PAULA BENNETT (Minister of Youth Affairs): No, I do not. In fact, under the National Government more New Zealanders are choosing to come home and stay home than ever before. Bernard Hickey is throwing his toys because he wanted us to take a much more radical approach to economic reform. He wants the Government to increase the retirement age and drop superannuation from 66 percent—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I wonder whether the expression “throwing his toys” in reference to an outside commentator is an appropriate expression to use in this House.

Mr SPEAKER: Let us just settle down and not get too pedantic. I do not think there is anything wrong with suggesting someone outside this place may have thrown their toys. I do not think it is as insulting as that.

Hon PAULA BENNETT: Bernard Hickey has thrown his toys because he wanted us to take a much more radical approach to economic reform. He wants the Government to increase the retirement age, to drop superannuation from 66 percent, to bring in a capital gains tax, to ration health care, and to have a flat tax. I was not expecting the Labour Party to listen to Bernard Hickey; I did not know it was its policy.

Jacinda Ardern: How does she reconcile her answer with the New Zealand Herald article 10 days ago in which she was reported to already be concerned by the number of young people who see their future overseas?

Hon PAULA BENNETT: We want more New Zealanders to be in New Zealand. But New Zealanders have always done an OE and picked up a lot of skills and an amazing international

experience. I think under a National Government we are seeing more of them coming home because this is where they want to be.

Jacinda Ardern: Have her views on Kiwis going abroad changed since the Prime Minister’s statement, in which he offered no new ideas to reduce record high levels of youth unemployment and, according to commentators, “He is saying to a generation unlucky enough not to own property … that they can give up on their dream of family homeownership.”?

Hon PAULA BENNETT: New Zealanders are aspirational and so are young New Zealanders. They believe in themselves and their capability to earn a living and make something of themselves. They know that this country is the place to do it and that this Government is the one to deliver them tax reforms that will mean something.

Jacinda Ardern: I seek the leave of the House to table an article in the New Zealand Herald entitled—[Interruption]

Mr SPEAKER: A point of order was called and the member’s own colleagues were still interjecting. It is the first question time of the year, I know, but we have not been very brilliant today.

Jacinda Ardern: I seek leave to table an article titled “Minister concerned about youth intentions” from the New Zealand Herald, dated 1 February.

Mr SPEAKER: Is this an article from a recent New Zealand Herald?

Jacinda Ardern: It is.

Mr SPEAKER: Well, we are not going to do that.

ENDS

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