(uncorrected transcript—subject to correction and further editing)

WEDNESDAY, 22 SEPTEMBER 2010

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

Tax System Changes—Tax Calculator

1. HEKIA PARATA (National) to the Minister of Finance: How much demand has there been for the tax calculator taxguide.govt.nz, and what are some of the benefits it confirms from the tax changes on 1 October?

Hon BILL ENGLISH (Minister of Finance): I am pleased to confirm that the website taxguide.govt.nz has been popular since the Budget, and demand is increasing. As of this morning, the calculator has received almost half a million page views. Clearly, New Zealanders are keen to see the effect of the Government’s tax package for themselves. The website confirms that the GST income tax switch on 1 October will leave the average family about $25 a week better off, the average worker about $15 a week better off, and a couple on New Zealand superannuation about $11 a week better off. It is no wonder the tax guide is popular, and I hope more New Zealanders will follow the example of the Opposition and spend a good deal of time looking at it.

Hekia Parata: How will the Government’s tax package leave an average household better off?

Hon BILL ENGLISH: If we take the case of a couple in their early 40s who jointly earn an average household income of $76,000 a year—one working full-time earning $50,000 and the other part-time earning $26,000—have two children, receive Working for Families, and pay $300 a week in mortgage repayments, under the tax changes that household gets a tax cut of $45.85 a week and pays an extra $21.14 in GST. So, overall, that household is $24.71 a week ahead, or nearly $1,284.92 a year better off.

Hon David Cunliffe: Does the calculator confirm the analysis by the New Zealand Institute of Economic Research that half of all households will be worse off, as their tax cut is wiped out by rising food prices, GST, and other one-off charges?

Hon BILL ENGLISH: No, it does not confirm that. What it confirms is that comparing the GST increase with the tax cuts, the vast majority of New Zealanders will be better off. As I pointed out to the member yesterday, real after-tax incomes will in fact rise between October and December by 1.2 percent, according to Treasury.

Hekia Parata: How will the Government’s tax package leave an average wage-worker better off?

Hon BILL ENGLISH: If we take the example of a plumber earning $50,000 a year—the average full-time wage—paying $120 in rent and saving $50 a week, under tax changes that person receives a tax cut of $29.42 a week and pays $13.51 more in GST. So, overall, they are $15.91 a week, or $827.32 a year, better off. But I remind the House that these tax cuts are not just about the hip pocket, they are about the vital need to rebalance our economy away from consumption and borrowing, and towards investment, exporting, and saving.

Hon David Cunliffe: How will the 160,000 people currently unemployed be better off when the consensus is that unemployment will remain at high levels for the next 2 years while food prices, rents—and I do not know where he found a figure of $120 for rent because it certainly was not in Auckland—and power prices continue to rise?

Hon BILL ENGLISH: All those people who are on a benefit will be compensated on 1 October, and the longer-term benefit is simply that if we continue on an economic track where all growth is funded by borrowing, and people spend too much, then none of those people without jobs will get proper jobs. With the kind of rebalancing assisted by this package they have the hope of getting a real and sustainable job.

Hekia Parata: How will the Government’s tax package leave a couple receiving New Zealand superannuation better off?

Hon BILL ENGLISH: Let us take the example of a married couple who are retired and receiving New Zealand superannuation with no investments but who own their own home, which is fairly typical. Under the tax changes they get a tax cut of $11.52 a week, plus a $10.12 increase in their New Zealand superannuation payments because of the impact on tax cuts on the average wage, and they will pay an extra $10.87 a week in GST. Overall, the retired couple will be $10.77 a week better off, or $560 per year better off.

Freshwater Management Reforms—Adoption of Board of Inquiry’s Proposal

2. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister for the Environment: Will he recommend the adoption of the board of inquiry’s proposed national policy statement on freshwater management now that the Land and Water Forum has reported back; if so, when?

Hon Dr NICK SMITH (Minister for the Environment): The Land and Water Forum, involving 58 diverse organisations with an interest in water, has recommended the adoption of a national policy statement on fresh water, but it also recommended that we amend the one recommended by the board of inquiry. I have been further advised by officials and stakeholders that the version recommended by the board of inquiry is ultra vires—that is, it goes beyond what a national policy statement can do under the Resource Management Act. That is why the Minister of Agriculture, David Carter, and I have asked officials from the Ministry of Agriculture and Forestry and the Ministry for the Environment to work on a revised national policy statement, taking on board the recommendations of the Land and Water Forum. If any significant changes are made from the board of inquiry report, the law requires that there be a process of consultation publicly.

Dr Russel Norman: In light of his answer that he accepts the recommendation of the Land and Water Forum that we need a national policy statement, does he also accept its recommendation that we need it quickly; and what does he understand by the word “quickly”?

Hon Dr NICK SMITH: Firstly, I want to make it plain that the Government has made no decisions on the Land and Water Forum report. We hugely welcome it. The fact that we have organisations like Federated Farmers and the Royal Forest and Bird Protection Society coming to a consensus around the way forward on freshwater management is, the Government thinks, a huge step forward. We have received the final report only today. We want to get advice from officials, but it is the Government’s view that we have been treading water—excuse the phrase—for a long time on freshwater policy and we need to make progress.

Dr Russel Norman: Does he agree with the Environmental Defence Society’s chairperson, Gary Taylor, that it is crucially important that we have the national policy statement as soon as possible, and that other issues can be dealt with separately; if so, when will we have the national policy statement?

Hon Dr NICK SMITH: I certainly agree that we have over 53 recommendations to consider from the Land and Water Forum’s report. I do not think the Government’s response will be a single measure. It will be a package that will take some time—likely, a number of years. I certainly accept that there is a need to get on and resolve the issues around the national policy statement, but the

Government has not yet decided on that programme, particularly given the advice from officials that the board of inquiry version will need to be amended in order for it to be consistent with the Resource Management Act, and given that the law itself requires a process of public consultation on any changes.

Dr Russel Norman: I raise a point of order, Mr Speaker. I have asked this question in three separate ways now, seeking some kind of time frame. I appreciate that the Minister cannot give an exact time frame, but I ask you to ask the Minster to give some kind of time frame for when we will have the national policy statement. Currently, we do not have anything out of him about a time frame.

Mr SPEAKER: I hear the honourable member, but I ask him to reflect on the last supplementary question that he asked. If he had asked specifically: “What is the time frame?”, it might have been possible for me to insist on a more precise answer, but the member actually asked whether the Minister agreed with a statement by someone called Gary Taylor, if I remember the question correctly. The Minister answered that perfectly correctly. He said he agreed with some aspects of what that person said, so the remedy is in the member’s own hands. If he wants to receive a precise answer, he has to ask a precise question.

Dr Russel Norman: I raise a point of order, Mr Speaker. If you read the primary question, you will see that it does say “when”. I was giving the Minister the benefit of the doubt, as obviously there is an extended time frame, but I was trying to get a more specific time frame—and the primary question did say “when”.

Mr SPEAKER: The member has further supplementary questions. He can chase that matter up very precisely with the Minister, given that he is not satisfied with the answers so far.

Brendon Burns: Given that the Land and Water Forum’s laudable report suggests it will take considerable time to develop the environmental and economic tools necessary to maintain the quality of water emerging from new storage schemes, will he now advise the Prime Minister to abandon his goals of seeing new water allocations in place in Canterbury next year?

Hon Dr NICK SMITH: Firstly, what I think is hugely encouraging in the Land and Water Forum’s report is that we have key environmental organisations like Fish and Game New Zealand, the Royal Forest and Bird Protection Society the, Ecologic Foundation, and the Environmental Defence Society recognising the economic opportunities that go with storage, and equally so, organisations like Federated Farmers recognising the need to lift the game around water-quality standards. I think that is a huge step forward. I do not recall the Prime Minister saying any storage facility would be built next year. I know he is a tremendous Prime Minister, but I do not think he can do it quite as quickly as that. Members opposite should not doubt this Government’s view that fresh water is an incredibly important resource. There are economic opportunities that go with it, and we want to advance those economic opportunities but ensure that they are met with fundamental environmental bottom lines.

Dr Russel Norman: When will he recommend the adoption of the board of inquiry’s proposed National Policy Statement for Fresh Water Management?

Hon Dr NICK SMITH: We received the Land and Water Forum’s report just today, and Cabinet has not had the opportunity to consider any of the recommendations. I and my colleague David Carter have asked for officials’ advice on the amendments that would come from the recommendations in the forum’s report. I hope we would have those by year’s end. We have also given commitments, quite strongly, to the Māori Party and to the Iwi Leadership Group that we would consult them on such decisions. I think this is an issue that we should make progress on next year.

Brendon Burns: Can he give a commitment to this House that major new schemes to store and allocate water that come into effect before the recommendations of the Land and Water Forum are acted upon will be subject to the sorts of environmental rules that the forum’s 58 stakeholders signed up to?

Hon Dr NICK SMITH: It is certainly the Government’s view that if we are to have expanded irrigation in New Zealand—and large economic opportunities would come from it—we need to make sure that that is matched in parallel by good environmental standards that will ensure that water quality is not compromised by taking advantage of those economic opportunities. There is a huge amount of work to do in response to this report, and that work begins today.

Dr Russel Norman: Is it not the case that adopting the proposed national policy statement would be the swiftest way to immediately set rules for clean water, so that we can get on with cleaning up our degraded waterways; if so, does he believe that simply making progress on it next year is really fast enough?

Hon Dr NICK SMITH: I draw the member’s attention to exactly what the Land and Water Forum, representing 58 organisations like the Royal Forest and Bird Protection Society, Fish and Game, and the Ecologic Foundation, said, which was that the current draft is a basis to work from. They are not recommending that the Government immediately adopt the Land and Water Forum’s report. [Interruption] I hear the interjection from the Labour member: “What is the Government doing?”. What I would like to know is what the previous Government did in 9 years about freshwater management.

Dr Russel Norman: Will he give this House a guarantee that the proposed national policy statement will not be weakened when he finally recommends it?

Hon Dr NICK SMITH: What the Government will do is consider, alongside the board on inquiry report on the national policy statement, the advice that we have received from the Land and Water Forum. I have already indicated to the member that I and David Carter have indicated to both the Ministry of Agriculture and Forestry and the Ministry for the Environment that we want advice from those officials, so that we can put a robust national policy statement in place.

Dr Russel Norman: I raise a point of order, Mr Speaker. It was a very simple question; it asked whether it would be strengthened or weakened—whether he can guarantee that it will not be weakened. He did not address that part of the question—that was the only part of the question, actually.

Mr SPEAKER: I think the member has to be realistic. He cannot expect the Minister to give exactly the answer that he might want to hear, because there may be no yes or no answer. What does “weakened” mean? The Minister explained to the House what would happen and what has to be considered in dealing with the report. The member who asked the question may consider some of those matters to strengthen or weaken it, but those are matters of opinion. I cannot insist on a Minister giving a precise answer to that kind of question, because there is no precise answer to that kind of question.

Brendon Burns: I raise a point of order, Mr Speaker. I seek your guidance, Mr Speaker. The Minister said he did not recall the Prime Minister talking about new storage being built in Canterbury next year—

Mr SPEAKER: That is not a matter of order. The member seems to be litigating the answer given by the Minister, and he cannot do that by way of a point of order.

Brendon Burns: Point of order, Sir.

Mr SPEAKER: I must hear what the issue of order is.

Brendon Burns: I seek leave to table a written answer to a parliamentary question.

Mr SPEAKER: Leave is being sought to table what?

Brendon Burns: A written answer to a parliamentary question.

Mr SPEAKER: No, we do not table written answers to written questions; they are available to all members already.

Ministers—Compliance with Cabinet Manual

3. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he believe that all his Ministers have met the requirement of the Cabinet Manual to behave in a way that upholds,

and is seen to uphold, the highest ethical standards in their ministerial capacity, their political capacity and their personal capacity; if so, why?

Rt Hon JOHN KEY (Prime Minister): Yes, because as far as I am aware they have.

Hon Phil Goff: Does he believe that his Minister Rodney Hide upheld the highest ethical standards in his personal and in his political capacities when he did not disclose but covered up his law and order spokesperson’s criminal act in stealing the identity of a dead child?

Rt Hon JOHN KEY: Firstly, I am not responsible for either the selection of candidates or the background of candidates in partners that the Government has a confidence and supply agreement with. Nor would there be any reason for me to question the backgrounds of those members. In no time prior to the public statement made in this House by David Garrett had I ever had a discussion with Rodney Hide about that issue. Therefore he could not have misled me, because he did not.

Hon Phil Goff: What has he done to hold Mr Hide, his Minister, accountable for his failure to meet what most New Zealanders would regard as an ethical standard given the Cabinet Manual requirement that Ministers are accountable to the Prime Minister for their actions in a personal and a political capacity?

Rt Hon JOHN KEY: I think it is important here to understand the difference between judgment and ethical behaviour. The Cabinet Manual clearly states that Ministers are responsible to me for their ethical behaviour, not for their judgment.

Hon Phil Goff: What does the Prime Minister have to say about accountability for good judgment and high standards to the mother of the dead baby, who says that she has suffered huge stress and anxiety as a result of this criminal action, yet she still sees Mr Hide drawing a ministerial salary and the Prime Minister getting right in behind him and supporting him?

Mr SPEAKER: Although I have stressed today that questions to Ministers can be quite wide in relation to the wider responsibility of Ministers for public affairs, that question, which referred to matters relating to someone totally unconnected with Parliament, would need rewording to bring it within the Standing Orders. I do not believe that the Prime Minister can be answerable for how another person might feel about something. I do not want the member to lose a supplementary question; I invite him to reword his question.

Hon Phil Goff: Has the Prime Minister seen reports about the distress suffered by the mother of the dead baby caused by the criminal act of her child’s identity being stolen and the involvement of a member of Parliament, supported by his leader who covered up that story, and how does he think that she feels about that?

Rt Hon JOHN KEY: Mr Speaker—

Mr SPEAKER: If the Prime Minister is happy to answer the question I am happy for him to do so, but I stress that the Prime Minister is not answerable at all for how a person outside this Parliament might feel about something.

Hon Darren Hughes: I raise a point of order, Mr Speaker. I want to make just a brief contribution to say that the style of questioning that the Leader of the Opposition used was identical to the one used by Rodney Hide yesterday when he asked whether the Prime Minister had seen reports that related to Mr Goff. When you listen to the wording used by Mr Goff, I think you will find that it was in order for a question that was asked yesterday.

Mr SPEAKER: We do not need to take more time on a point of order like that. I invite the member to go back and have a look at the Hansard of the Hon Rodney Hide yesterday. It was a somewhat different situation as it referred to a report he had written to the Prime Minister himself, and the Prime Minister answered in relation to that report. The first part of the Leader of the Opposition’s question seemed fine. He asked whether the Prime Minister had seen a certain report. That is fine. But then the question asked how he thought someone outside Parliament, totally disconnected from this place, might feel. I do not want to prevent the Prime Minister from answering a question should he wish to do so, but I cannot ask him to answer the question given the way last part of it was worded. I am in some difficulty here. I am prepared to give the honourable

Leader of the Opposition a third go at this because I do not want him to lose a supplementary question, but the Prime Minister is clearly not answerable for how someone—[Interruption] I am on my feet—outside of this place might feel about something.

Hon Phil Goff: Has the Prime Minister seen reports about the distress suffered by the mother of the dead child whose identity was stolen, and is he prepared to relieve that distress by holding the person accountable who covered up the theft of that child’s identity?

Rt Hon JOHN KEY: Yes, I have seen reports. That is why I think Mr Garrett’s behaviour was unacceptable—

Hon Darren Hughes: What about the Minister?

Hon Clayton Cosgrove: What about the guy who covered it up?

Rt Hon JOHN KEY: Let me finish. That is why I believe it is wholly appropriate that Mr Garrett should resign from Parliament. As to the latter point, I am not responsible for whom political parties select as their candidates. I simply make this one point: the Cabinet Manual clearly says that in all these roles and at all times Ministers are expected to act lawfully. I make the point that this matter was covered by a suppression order.

Hon Phil Goff: I seek leave to table the relevant part of the Cabinet Manual because it not only requires the Prime Minister to be accountable for lawful behaviour but also—

Mr SPEAKER: The member cannot add that last bit. Leave has been sought to table part of the Cabinet Manual. I accept that it is not readily available to all members. Is there any objection to that? There is no objection. Document, by leave, laid on the Table of the House.

Hon Phil Goff: When the Prime Minister said yesterday that Mr Hide had complied in every respect with the high standards that he had set, was he confusing high standards with double standards?

Rt Hon JOHN KEY: No, and I can say about Mr Hide that as a Minister he has conducted his affairs in his portfolio to a high standard, and that in all of my dealings with him as a Minister he has been honest and trustworthy with me.

Hon Phil Goff: The Prime Minister says that Mr Hide has conducted his ministerial capacities to a high standard, so does he also agree that Mr Hide has conducted his personal and his political capacities to that same high standard, for which the Prime Minister is also accountable?

Rt Hon JOHN KEY: Mr Hide has carried out his affairs in a personal and private capacity to a high ethical standard. But I am not responsible for whom he might hire as an MP.

Hon Phil Goff: Does the Prime Minister accept that he is the only person in the country who believes what he has just said?

Rt Hon JOHN KEY: No.

Hon Rodney Hide: Would the Prime Minister consider it acceptable in his interpretation, as Prime Minister, of the Cabinet Manual for a Minister to sign a painting that the Minister had not painted, and then to arrange to have the evidence of that painting destroyed before it could be investigated?

Hon Darren Hughes: Point of order—

Mr SPEAKER: I say to both sides of the House: this carry-on during a point of order will cease immediately. A fair question was asked; a point of order has been called. I want to hear what this point of order is about.

Hon Darren Hughes: I raise a point of order, Mr Speaker. My point of order is that the question that is being asked by Rodney Hide is not only hypothetical but about a third person who is not in Parliament. You have previously ruled that there cannot be questions put to the Prime Minister about—

Mr SPEAKER: The member has jumped to conclusions. I never heard any member or person named. It was hypothetical, indeed, and hypothetical questions are allowed.

Rt Hon JOHN KEY: No, I would not think that that would meet the standards of the Cabinet Manual, and I think that raises a very interesting point about when a member or a Minister is acting as a Minister, as opposed to when a Minister is acting as a member of—

Mr SPEAKER: I apologise to the Prime Minister. The Labour front bench may not like the answer the Prime Minister is giving. The Deputy Leader of the Opposition will not interject while I am on my feet if she wishes to stay in the Chamber. The members may not like the answer the Prime Minister is giving, but he has a right to give an answer to what was a perfectly fair question within the terms of the Standing Orders. I could not hear the answer; I could not hear it at all, and I must, as Speaker, be able to hear the answer. The right honourable Prime Minister may carry on the part of the answer that I just could not hear, if he can determine what part that is.

Rt Hon JOHN KEY: The answer is no, and if the member wants to ask a question about other Ministers in the previous Labour Government who did not fit within that category of the Cabinet Manual, then this party will need to lend his party some supplementary questions, because he will not have enough to ask them individually.

Economic Growth—Reports

AARON GILMORE (National): My question is to the Minister of Finance [Interruption]—

Mr SPEAKER: I apologise to Aaron Gilmore but again both front benches will cease interjection; the previous question has been dealt with. Members will show some courtesy to the member seeking to ask question No. 4, Aaron Gilmore.

4. AARON GILMORE (National) to the Minister of Finance: What reports has he received on New Zealand’s economic growth?

Hon BILL ENGLISH (Minister of Finance): The lift in growth is becoming apparent through the balance of payments statistics, which show that both profits and imports are rising. Statistics New Zealand today published the balance of payments data for the June quarter 2010, which show the current account deficit for the year ended June of $5.6 billion, or 3 percent of GDP. This compares with deficits averaging about 8 percent of GDP over the previous 5 years. Despite this lift in growth, the outlook for the current account is improving. The Reserve Bank forecast shows the deficit averaging about 4 percent of GDP over the next 3 years, or about half of the average of the recent past.

Aaron Gilmore: What does today’s data reveal about external debt?

Hon BILL ENGLISH: The news on New Zealand’s external debt is less encouraging. These liabilities have risen by almost 40 percent to $164 billion over the past 5 years, which is something of a measure of the mismanagement of the economy. Net international liabilities are now 87 percent of GDP, which is one of the higher ratios in the developed world. It is not apparent that New Zealand has acquired good-quality assets as a result of this big upsurge in debt owed overseas. One consequence is that the annualised balance on investment income is, again, more than $10 billion in deficit, despite interest rates falling, and that will be a permanent drag on New Zealand incomes. The data reinforced the need for New Zealand to tilt the economy towards savings, exports, and investment, and away from excessive borrowing, excessive debt, and excessive Government spending increases, which characterised the economic management until 2008.

Aaron Gilmore: What steps is the Government taking to address New Zealand’s current account problems?

Hon BILL ENGLISH: New Zealand needs to raise exports and save more. Government policy is aimed precisely at those needs. Next week on 1 October the tax system changes in ways that will encourage savings and productive investment, and will discourage consumption and tax-driven speculation. Although the vast bulk of taxpayers will be better off, the real gains will be in the longer term as the changes help to change the incentives in the economy. At the moment, we also have the Tax Working Group undertaking some important thinking about how to further improve savings performance in New Zealand.

Hon Sir Roger Douglas: Can the Minister explain how a reduction in productive employment in primary and manufacturing industries of 11 percent and 5 percent respectively offset by increases in public administration and social assistance employment of 21 percent and 26 percent respectively over the last 6 years helped grow the economy?

Hon BILL ENGLISH: I agree with the member’s analysis. Too many of the new jobs that were created since about 2004 were, essentially, either funded by Government spending increases that turned out to be unsustainable, or by excessive borrowing, which equally turned out to be unsustainable. The number of jobs in the export sector of the economy actually shrank; in fact, there have been no net new jobs in our export sector since 2002. That is why the Government needs to manage Government spending much more tightly and reduce back-office expenditure where it can. The Government must also make sure that resources move from the sheltered parts of the economy—essentially, Government, domestic housing and so on—into the export and trading part of the economy, because in the next 10 years we have to earn it before we spend it. In the last 10 years, we spent it well before we earned it.

Aaron Gilmore: What alternative economic policies would lower growth and leave the economy poorly positioned for the future?

Hon BILL ENGLISH: There is a steady stream of suggestions about different ways to manage the economy, which includes increasing personal income taxes, borrowing more, fiddling with the GST system, increasing Government spending irresponsibly, and meddling with the Reserve Bank tool kit. All of those suggestions have come from the Opposition, and they are the same policies that got New Zealand into trouble. That is why we are changing them.

Freshwater Management Reform—Strategies for Sustainable Reform

5. RAHUI KATENE (Māori Party—Te Tai Tonga) to the Minister for the Environment: Does he agree with the Fresh Start for Freshwater report that sustainable reform must reflect the values and interests of both Treaty partners, and what strategies does he have in mind to recognise this?

Hon Dr NICK SMITH (Minister for the Environment): The Government is very mindful of the huge interest from Māori in issues regarding fresh water. That is why we initiated, in consultation with the Māori Party, a separate process of engagement with Māori through the Iwi Leadership Group. I met with the group yesterday; during the meeting we received the sad news regarding Sir Archie Taiaroa. We agreed out of respect to defer our discussions on the Land and Water Forum report until November. I note, though, that the iwi leaders indicated to me a strong level of support for the report.

Rahui Katene: What guarantee can the Minister give to iwi that a national land and water commission will be established in co-governance with iwi, as recommended by the forum?

Hon Dr NICK SMITH: That is one of the 53 recommendations of the Land and Water Forum. The Government received the final report only today and has not had the opportunity to consider that or the other recommendations. I am keen to firstly have a dialogue with New Zealanders through public consultation on the report. We are keen to have direct dialogue with the Iwi Leadership Group, and I also welcome a dialogue with parties in this Parliament, including the Māori Party.

Rahui Katene: Does the Minister agree that the transition to any new system of water allocation should proceed hand in hand with Crown-iwi discussions on iwi rights and interests in water management, and what progress can he report on discussions with iwi about water rights and interests?

Hon Dr NICK SMITH: In discussions on Waitangi Day and many other discussions the Government has had with iwi leaders, their huge interest in water has been repeatedly highlighted. I also say that in the discussions I have had with the Minister of Māori Affairs, he too has made claim that water is a very significant issue for iwi. The Government specifically has established and

worked with the Iwi Leadership Group on water policy. Those discussions have progressed very constructively, and we have scheduled a further meeting in November to specifically consider the recommendations of the Land and Water Forum.

Superannuation—Compensation Available from 1 October

6. Hon ANNETTE KING (Deputy Leader—Labour) to the Prime Minister: Does he stand by his statement that “We are boosting New Zealand Superannuation and Veterans’ Pension to fairly compensate for the GST rise”?

Rt Hon JOHN KEY (Prime Minister): Yes, because that is what the facts clearly show. After 1 October superannuation rates will immediately be increased by 2.02 percent to compensate for the price effects of raising GST. In addition to this, superannuitants will get the benefit of lower income tax rates, which will increase the amount of superannuation they receive in the hand. As a result of both these increases, superannuitants will be more than compensated for the rise in GST.

Hon Annette King: When he told single superannuitants living alone that they would be $15 a week better off from 1 October, did that mean that superannuitants will have $15 extra a week after they have paid for the increase in GST on all goods and services, other Government charges such as accident compensation, the cost of the emissions trading scheme, and inflation; if not, what did he mean?

Rt Hon JOHN KEY: The first thing I should have told them is they were right to vote National, because the emissions trading scheme would have been twice as expensive under Labour. I would tell them the same thing that every Government has told superannuitants since New Zealand superannuation was brought in: general increases in the overall cost base are met with the CPI adjustment that takes place on 1 April every year.

Chris Tremain: How much more will superannuitants receive in the hand after 1 October?

Rt Hon JOHN KEY: The Minister of Finance earlier used an example of a married couple who are retired and receiving superannuation. Under the 1 October tax changes they will get a tax cut of $11.52 a week, plus an increase of $10.12 a week as a result of GST going up. That makes a total of $21.64 a week. It is worth noting that since 2008, tax cuts and ongoing price adjustments have meant that that couple would have seen their superannuation payments go up by a grand total of $71.26 a week, or just over $3,700 a year.

Hon Annette King: Has he received correspondence from single superannuitants pointing out that after paying the increased cost of power, telephone, rates, bus fares, doctors’ bills, insurance, and groceries, they will be worse off, and does he think that they are incapable of working out the tax switch that affects their back pocket?

Rt Hon JOHN KEY: I do not see all the correspondence that comes into my office, but if letters of such a nature came in, I would go back to those superannuitants and say this. First, they will be better off absolutely as a result of the GST tax switch. Secondly, any changes that affect the overall price base—electricity and the like—will under our Government, as they were under previous Governments, be updated on 1 April of each year. Thirdly, I point out that this Government has been running an inflation rate that has been substantially lower than under the previous Government because we have good economic management skills.

Hon Annette King: Does he consider that spending over $250,000 to send a letter to all superannuitants in New Zealand—which fails to tell them how much GST they will pay and what impact the emissions trading scheme and other increases in Government charges and increased inflation will have on their tax switch—is a good use of taxpayers’ money?

Rt Hon JOHN KEY: Firstly, I cannot confirm how much the letter I sent out cost, because I genuinely do not know. But I do know that every dollar of taxpayer money spent on that letter was a better dollar invested than those spent on the one sent out by that mickey mouse party yesterday, which did not even convince a scuba-diver that 15 percent GST was the responsibility of this Government.

Hon Annette King: Has anyone explained the meaning of double standards to him? He criticises Labour’s GST pamphlet, which cost a fraction of the $250,000 he has spent on a letter to superannuitants that did not tell them the whole truth about what will be left in their pockets after 1 October.

Mr SPEAKER: I apologise to the honourable member. I say to National members that I struggled to hear the member asking the question. I encourage them to be a little more reasonable in their interjections. I invite the Hon Annette King to repeat her question so that I can hear it.

Hon Annette King: Has anyone explained the meaning of double standards to him? He criticises Labour’s expenditure on a GST pamphlet that cost a fraction of the $250,000-plus that he spent sending a letter to superannuitants that fails to tell them what will be left in their pockets after 1 October.

Rt Hon JOHN KEY: No, but I managed to watch the TV3 news last night, which pointed out that hundreds of thousands of New Zealanders will get a brochure from the Labour Party that is nothing short of a lie.

Chris Tremain: Supplementary—[Interruption]

Mr SPEAKER: I say this again to National members. Their own senior whip is seeking to ask a supplementary question, and they would be advised to show their senior whip some courtesy.

Chris Tremain: Can the Prime Minister name just one other country in the world with GST at 15 percent or higher that exempts fresh fruit and vegetables?

Rt Hon JOHN KEY: I thank the member for re-asking Phil Goff’s question, and I say that he did it better than Phil Goff did yesterday. I am advised that 23 OECD countries have GST or VAT rates of at least 15 percent. Of those 23 countries, only Mexico and the UK have no GST or VAT on fresh fruit and vegetables.

Chris Tremain: Has the Prime Minister seen any reports on exempting certain goods from GST?

Rt Hon JOHN KEY: Yes. The issue of exempting certain basic necessities from GST was discussed in the Tax Working Group’s report earlier this year. The Tax Working Group rejected this idea, stating: “However, narrowing the GST base would substantially reduce the efficiency of the tax and increase compliance and administration costs, while having limited impact on equality. For example, removing food from the base makes almost no difference to the distribution of tax across income levels, but loses 20% of GST revenue. This fall in revenue would then need to be recovered by higher rates of GST, or increasing other taxes.” There was a time when the Labour Party knew that the GST system we had in New Zealand was the right one—that was a time when it was not desperate.

Hon Annette King: Did he promise before the last election not to increase GST?

Rt Hon JOHN KEY: I said that I had no intentions of raising GST to cover the deficit, and we are not doing so. You see, that is the reason—[Interruption]

Mr SPEAKER: I want to be able to hear the Prime Minister.

Rt Hon JOHN KEY: That is the reason that I will make this prediction: we will not go into 2011 with Phil Goff reversing this policy. Why not? Because when New Zealanders get their $4 billion of personal tax cuts, they will not want Phil Goff and his bunch of muppets to take them away.

Freshwater Management Reform—Progress

LOUISE UPSTON (National—Taupō): My question is to the Minister for the Environment— [Interruption]

Mr SPEAKER: I know there is a bit of excitement and passion around some of these issues—I understand that—but I have called Louise Upston, and the unhelpful interjections should cease.

7. LOUISE UPSTON (National—Taupō) to the Minister for the Environment: What progress has the Government made on improving freshwater management in New Zealand, and the

collaborative process outlined in National’s 2006 Bluegreen Vision document and 2008 election policy?

Hon Dr NICK SMITH (Minister for the Environment): Today we marked a significant milestone, with 58 diverse organisations with an interest in water coming to an agreed way forward on water reform. This milestone is as significant as the Forest Accord that was struck in the 1980s on the vexed issue of indigenous forests. It is significant that organisations as diverse as Federated Farmers, the Royal Forest and Bird Protection Society, Fish and Game, and Fonterra are recommending a way forward on how to progress better management of fresh water.

Louise Upston: Does the Minister accept that proper measurement of water takes is an important part of improving management; if so, what steps is the Government taking to ensure that water takes are measured?

Hon Dr NICK SMITH: We cannot manage what we do not measure. That is why the Government has moved to provide for—[Interruption] Members opposite are interjecting; I think it is out of embarrassment that in 9 years Labour’s programme of action on water went absolutely nowhere. Only 31 percent of water takes by volume were measured. The new regulations coming into effect in November will ensure that 98 percent of water takes by volume will be measured by 2016.

Louise Upston: What financial commitments has the Government already made to improving water quality in New Zealand, and how does this compare with spending over the past decade?

Hon Dr NICK SMITH: This Government is investing $94 million in the 5 years from 2009 to 2014 in initiatives to clean up some of New Zealand’s iconic waterways—places like Lake Rotorua, the Waikato River, and Lake Taupō. The $94 million over 5 years compares with just $16 million, or one-fifth of that amount, spent in the previous 5 years. I think that shows the level of commitment that members on this side of the House have to improving New Zealand’s freshwater quality.

Tax System Changes—Tax Calculator

8. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does the Government’s tax calculator still omit the effect of inflation when attempting to establish whether members of the public will gain or lose from his Budget 2010 tax switch; if so, why?

Hon BILL ENGLISH (Minister of Finance): Yes, because the calculator correctly provides information on the effects of the switch between income tax and GST as it affects taxpayers on 1 October. As I said yesterday, even when all forecast cost of living increases are taken into account—and the calculator is not designed to take into account all forecast cost of living increases—real after-tax wages are forecast to rise by 1.2 percent in the 3 months to 31 December 2010. This means that the increase in wages will more than offset the effect of inflation, and that 1.2 percent increase in those 3 months compares somewhat favourably with the 3 percent increase in real after-tax wages over 9 years under the Labour Government. Those calculations are based on the same data series used to calculate annual adjustments to national superannuation.

Hon David Cunliffe: Can the Minister confirm that the 500,000 New Zealanders whom he said had dialled into the online tax calculator have been effectively misled not only because it has still omitted inflation but because the numbers that he has quoted account for Labour’s 2008 tax cuts under National’s real income growth figures?

Hon BILL ENGLISH: I can confirm that 500,000 people have looked at the tax guide, which is a lot more than the number of people who signed up to go to Mr Cunliffe’s speech in Rotorua today at lunchtime, which I understand was two, and that is why he cancelled it. [Interruption]

Mr SPEAKER: I do not believe that a serious attempt was made to answer that question, at all. I invite the Hon David Cunliffe to repeat his question, if he would like to. He does not have to. If he would rather go on, he is welcome to. I give him the choice.

Hon David Cunliffe: I would be delighted, Mr Speaker. I could do it again and again. Can the Minister confirm that the 500,000 people whom he said had dialled into his tax calculator were effectively misled not only because it continues to omit the effects of inflation but because the figures that he has quoted include Labour’s 2008 tax cuts under National’s so-called net income increase?

Hon BILL ENGLISH: As I have explained to the member any number of times, the tax calculator is exactly the same as the tax calculators that were used by the previous Government. It is designed to show the impact of the increase in GST on 1 October versus the reduction in income taxes, and it shows that most New Zealanders will, in fact, be better off. As I have also explained to the member, although the effects on 1 October are important to people and they will be interested in them, the real benefits of these tax cuts are about the long-run rebalancing of the economy.

Hon David Cunliffe: Can he further confirm that he has based his estimates on a data set that pre-dated the 2008 election, and that if that and the tax cut anomaly are corrected, there is far higher real income growth under the previous Government than under the current one?

Hon BILL ENGLISH: The member is trying to conflate two different sets of numbers: one is the tax calculator and the other is a calculation of real after-tax incomes, and they set out to measure quite different things.

Hon David Cunliffe: I raise a point of order, Mr Speaker. At no stage in that supplementary question, as opposed to the previous two, did I mention the online tax calculator. The Minister began his response to a question I did not ask—

Mr SPEAKER: I think the member should give the Minister a chance to answer the question. On this occasion, I believe that the Minister was attempting to answer the question in a pretty genuine way.

Hon BILL ENGLISH: I stand by my point. The primary question was about the tax calculator, and the member is trying to mix up those calculations with calculations of real after-tax wages. I guess the test will be whether Labour believes this tax switch makes New Zealanders worse off. If so, I look forward to seeing Labour members campaigning in 2011 on reversing the tax switch. Then I would believe that Labour members seriously believe what they are saying about these changes making New Zealanders worse off.

David Bennett: What reports has he seen on previous tax cuts and inflation?

Hon BILL ENGLISH: I have seen reports that confirm that tables explaining tax cuts in October 2008 did not include the impact of inflation, which at the time was running at 5.1 percent in the final months of the dying Labour Government, and that is with no GST increase. So it was actually right about that—with a tax calculator, it does not make sense to include inflation. After the tax cuts on 1 October this year, real after-tax wages, even accounting for all cost of living increases, will have increased very significantly since late 2008, but, more important, the tax changes will help rebalance this economy away from excessive consumption and debt, and towards savings, exports, and sustainable jobs.

Hon David Cunliffe: Were his revised net income estimates assisted by forecast revisions to the inflation track, which itself reflects the faltering recovery, loss of confidence, reduced GDP growth, and high unemployment; and will he now concede that he has just proven to New Zealanders beyond all doubt that his Government lacks a plan for jobs and growth?

Hon BILL ENGLISH: No. We do not follow Labour’s “muppet-nomics”, as it has been called. The fact is that the member cannot have it both ways: he cannot claim that New Zealanders will be worse off because inflation is too high, and then turn round and say that the economy is failing because inflation is low. He needs to make up his mind which story he is telling.

Hon David Cunliffe: I seek leave to table Statistics New Zealand figures indicating that the Minister has misled the House in his response—

Mr SPEAKER: The member cannot allege that. The member is seeking leave to table a document. He cannot allege, in doing that, that anyone has misled the House. He must simply identify the document that he is seeking leave to table.

Hon David Cunliffe: I seek to table Statistics New Zealand figures that show that for the last 5 years the current account deficit was not 8 percent on average—

Mr SPEAKER: I do not believe that that is a proper description of any Statistics New Zealand document. The document will either be a series relating to New Zealand’s current account or it will be a document relating to a standard Statistics New Zealand release, and that is what the member should describe to the House, not his interpretation of what it shows. I am still none the wiser as to what the document is.

Hon David Cunliffe: I seek leave to table from Statistics New Zealand the BPM5 balance of payments ratios, quarterly March June September December for the current account balance to GDP from 2005 Q2 at minus 6.9 percent to 2010 Q2, which indicates—

Mr SPEAKER: I am very grateful. Leave is sought to table that document. Is there any objection?—

Hon David Cunliffe: —not minus 8 percent as claimed by the Minister.

Mr SPEAKER: The member will resume his seat immediately. The member is trifling with the Chair. I accept that he gave a very accurate description of the document, and I am grateful for that, but the bit he added at the end is totally out of order. He cannot use leave to table a document to tell the House about the document. He must only identify the document. He did that—

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

Mr SPEAKER: I am going to seek leave for the document to be tabled. Leave is sought for that document to be tabled. Is there any objection? There is objection.

Hon David Cunliffe: I raise a point of order, Mr Speaker. I seek your guidance because that appears to have left us in a difficult position. The Minister has, quite clearly, either deliberately or accidentally, made an error—

Mr SPEAKER: The member will sit down immediately. The Hon David Cunliffe is in grave danger because he is a senior member of the Opposition and he knows that he cannot litigate an answer by way of a point of order. He must not do that.

Rugby World Cup—Accessibility of Broadcasts for Deaf Community

9. CATHERINE DELAHUNTY (Green) to the Minister of Broadcasting: Will he ensure accessibility to Rugby World Cup television broadcasts for the Deaf community by requiring captioning on all public channels; and, will he remind all broadcasters of their obligations to provide reasonable access for the Deaf community under the United Nations Convention on the Rights of Persons with Disabilities?

Hon Dr JONATHAN COLEMAN (Minister of Broadcasting): Television New Zealand (TVNZ) is the only New Zealand broadcaster that has the ability to carry out the live captioning of matches. It is broadcasting seven Rugby World Cup games live, including the final, semi-finals, the bronze final, two quarter-finals, and the opening match, and all seven will feature live captioning.

Catherine Delahunty: Will he extend captioning beyond the Rugby World Cup, given that the United States of America has had captioning of all sports games on television since 1982?

Hon Dr JONATHAN COLEMAN: As I said, only TVNZ has the ability to do live captioning. The Government spends $1.9 million a year on captioning for the Deaf community, and in consultation with its members has decided how the money will be spent. So 240 hours a week of prime-time television is broadcast with captioning, and I think that is a pretty satisfactory result.

Melissa Lee: What reports has he had of calls for greater expenditure on public services in addition to public broadcasting services?

Hon Dr JONATHAN COLEMAN: I have had reports of a party that wants there to be greater expenditure on a range of public services. Surprisingly, it is the same party that is deeply opposed to

free trade, mineral surveys, Resource Management Act reforms, tax reforms, and road building—in fact, just about anything—

Mr SPEAKER: I look at the primary question, and I struggle to see how the Minister is telling the House about anything to do with the primary question. The primary question was around accessibility to Rugby World Cup broadcasts for the Deaf community. The member who asked the supplementary question tried to extend that to a question about parties calling for more public expenditure. I accept that the Minister, in his answer, mentioned what the Government spends via TVNZ on captioning, but I do not believe that that is a sufficient reason—I am happy for the member to ask specifically about that issue, but to extend that to a wider question around what other parties might be calling for in terms of wider expenditure simply stretches the Standing Orders too far. I invite Melissa Lee to reword her question.

Melissa Lee: What reports has he had of calls for greater expenditure on public services in addition to public broadcasting services like captioning?

Mr SPEAKER: I cannot see how the Minister of Broadcasting has any responsibility—well, let me not presume. The Minister of Broadcasting is welcome to answer that question in terms of the portfolios for which he is responsible.

Hon Dr JONATHAN COLEMAN: The point is that that member is calling for there to be more expenditure on public broadcasting, but there is absolutely no plan to pay for it, and that seems to be a consistent theme. That is the answer.

Catherine Delahunty: I raise a point of order, Mr Speaker. At no point in my question did I call for public expenditure.

Mr SPEAKER: I believe that the matter has been dealt with. The question was asked, and the Minister answered it. That is the end of that matter.

Overseas Investment—Sale of Crafar Farms

10. Hon DAVID PARKER (Labour) to the Minister for Land Information: When does he expect to announce the decision on the sale of the Crafar farms?

Hon MAURICE WILLIAMSON (Minister for Land Information): The Overseas Investment Office is continuing to assess the application by Natural Dairy (NZ) Holdings Ltd to purchase the Crafar farm interests against the requirements of the Overseas Investment Act 2005. I have been advised that the Overseas Investment Office has written to Natural Dairy seeking further information and has yet to receive its response. When the assessment made by the Overseas Investment Office has been completed it will provide a recommendation to the decision-making Ministers. To date no recommendation has been made. I have further been advised that the application is extremely complex, and that the Overseas Investment Office cannot be specific as to when Ministers can expect its recommendation.

Hon David Parker: Without commenting about the specifics of the Crafar farm application—I understand that would be difficult for the Minister—does he think New Zealand farm owners should be able to sell their farms to the highest bidder irrespective of whether that bidder is from New Zealand or overseas?

Hon MAURICE WILLIAMSON: That is a very difficult question to answer, because every case has to be treated on its merits. That is why we have an Overseas Investment Office, why every one of the applications is processed, and why, finally, Ministers make a decision based on those merits.

Hon David Parker: Does the Minister believe that opposition by New Zealanders to overseas ownership of farmland is substantially caused by prejudice about the ethnicity of buyers, or has the Prime Minister changed the Minister’s mind?

Hon Christopher Finlayson: I raise a point of order, Mr Speaker. The primary question is very narrow. It relates to a decision on the sale of Crafar farms, and now we are venturing far and wide into general policy issues about overseas investment.

Hon David Parker: It has been a matter of public record that the Minister has said he thinks opposition to purchases by Chinese interests is caused by their ethnicity.

Mr SPEAKER: That of itself would not necessarily bring the question within order, but in answering the primary question the Minister emphasised that these matters need to be treated on their merits, and then there was a supplementary question, and I believe that the Minister expanded things somewhat in his answer. That is why I believe that the question is not unreasonable given the answers that have been given. So I invite the Hon David Parker to repeat his question but be mindful to try to keep it within the scope of the primary question.

Hon David Parker: I will repeat it word for word: does he believe that opposition by New Zealanders to overseas ownership of farmland is substantially caused by prejudice about the ethnicity of buyers, or has the Prime Minister changed the Minister’s mind?

Hon MAURICE WILLIAMSON: No.

Hon David Parker: Again without commenting on the specifics of the Crafar farms application, what outcomes for New Zealand other than economic matters does he think are relevant to decisions to allow or reject applications for foreign investment in New Zealand land?

Hon MAURICE WILLIAMSON: The criteria are very clearly set out in the Overseas Investment Act 2005. The Overseas Investment Office lays out its advice based on each one of those, I think, 17 criteria, and then the final recommendation is made to Ministers. That is how it has always been done, even when Labour was in power and sold off very large tracts of our farmland to overseas investors.

Hon David Parker: Does the Minister accept that in the changing world economic environment stricter controls on the sale of rural farmland to overseas buyers are appropriate?

Hon MAURICE WILLIAMSON: What I do accept is that any Minister making these decisions has to be mindful of what the Act says and work within that Act. That is why, as one of the two Ministers making decisions on a number of these applications as they come through, I am very mindful to stay within the law.

Hon David Parker: I raise a point of order, Mr Speaker. My question was not about what the law is. I asked for the opinion of the Minister as to what the law should be. That question has not been addressed.

Mr SPEAKER: An opinion was sought, and the Minister gave his opinion. I think his opinion is that the law should be upheld, and that is a perfectly fair answer when an opinion is sought.

Public Transport, Auckland—Commuter Rail Network

11. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Transport: What progress has been made on developing the commuter rail network in Auckland?

Hon STEVEN JOYCE (Minister of Transport): Another milestone was passed on Saturday, and I and my good friend Mike Lee opened the Onehunga branch line, which includes the three new stations of Penrose, Te Pāpapa and Onehunga. This $13.6 million investment will provide 49 weekday services between Onehunga and Britomart, offering an easy 25-minute trip. Modern and efficient transport corridors across all modes are vital to ensuring that as Auckland grows, its productivity and its economy grow even faster.

Peseta Sam Lotu-Iiga: How does the investment in Onehunga fit into the wider commuter network investment.

Hon STEVEN JOYCE: Thirty-seven years after commuter services to Onehunga ceased, it is once again open for business, thanks to the Government’s overall $1.6 billion investment to upgrade and electrify Auckland’s urban rail network. I thank the finance Minister. However, I must caution that there remains further work to ensure this new network is financially sustainable in terms of fair revenue and subsidies from ratepayers and the New Zealand Transport Agency. This is very important before new projects to further extend the network could be sensibly considered.

Hon Darren Hughes: Given that he boasted with great conviction in a recent speech that “there has been plenty of progress in this area. Over the past 18 months I have attended many project sod turnings, and station and line openings and I look forward to attending a few more as projects near completion.”, how many of those projects were approved and had funding started on his watch, and if the answer is none, does he not think it is time to give just a little bit of credit to the previous Labour Government, which got these projects going?

Hon STEVEN JOYCE: I think it is fair to say that transport projects are proceeding much faster under the current Government. I fully expect the trains over time to arrive on time, the cars to depart on time, and other such positive improvements. I can confirm, for example, that the electrification of the Auckland railway network has been voted by the current Government, and that is heading on towards a $1 billion investment.

Employment Relations Amendment Bill (No 2)—Minister’s Statements

12. DARIEN FENTON (Labour) to the Minister of Labour: Does she stand by all statements that she has made and that have been made on her behalf in relation to the Employment Relations Amendment Bill (No 2)?

Hon STEVEN JOYCE (Minister of Transport) on behalf of the Minister of Labour: Yes.

Darien Fenton: Does she stand by the statement made on her behalf in relation to the 90-day scheme on 16 September 2010 that “The Government has always said that the good-faith requirements to be communicative and responsive with employees … imply and include telling employees why a trial period has not worked out.”?

Hon STEVEN JOYCE: Yes.

Darien Fenton: What sanctions apply to an employer who refuses to give a reason for dismissal under the 90-day scheme, and what remedies does an employee have available under her proposed law?

Hon STEVEN JOYCE: The Government made sure there were adequate protections in the bill in a number of areas in terms of the trial period.

Hon Members: Name them.

Hon STEVEN JOYCE: Requiring any trial period to be entered by written agreement; allowing the trial period only for new employees; retaining good faith, which is the aspect the member refers to; protecting employees against discrimination; and ensuring employees on a trial period are treated the same as all other employees regarding leave, wages, and other entitlements.

Darien Fenton: What remedies are available to an employee who is dismissed under the 90-day scheme and given no reason, given that section 113 of the Employment Relations Act says: “If an employee who has been dismissed wishes to challenge that dismissal or any aspect of it, for any reason, in any court, that challenge may be brought only in the Authority under this Part as a personal grievance.”, yet section 67B says that a person dismissed under the 90-day scheme “may not bring a personal grievance or legal proceedings in respect of the dismissal.”?

Hon STEVEN JOYCE: I have to say that my detailed knowledge does not quite extend to all of the matters raised in that supplementary question by the member. In fact, I could not possibly remember them all. If the member would like to put her question in writing, I am sure that the Minister of Labour will answer it for her.

ENDS

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