Questions to Ministers

1. Economic Programme—Budget 2015 and Better Public Services

1. CHRIS BISHOP (National) to the Minister of Finance : How will Budget 2015 progress the Government’s commitment to manage the Government’s finances, while delivering better public services?

Hon BILL ENGLISH (Minister of Finance): We will follow the same approach of stable and predictable management of the Government’s finances, with the objective of better public services for New Zealanders. We know that this is working because there are today 42,000 fewer children living in benefit-dependent households than 3 years ago and 194,000 new jobs compared with 4 years ago. Core Crown expenditure this year will be around $4 billion lower than we thought it would be back in 2011. These changes are making a real difference to people’s lives.

Chris Bishop : How will Budget 2015 help New Zealanders and their families?

Hon BILL ENGLISH : The member will have to wait until Budget day to see the whole plan, but we have already made some announcements that will benefit New Zealand families. ACC levy cuts will bring about $500 million worth of savings to New Zealanders. We have announced $98 million for more timely elective surgery and improved orthopaedic treatment and also $32 million to strengthen compliance with minimum employment standards. And we are putting $33 million towards more immigration officers because New Zealand is such a success story that we are getting more visitors, migrants, and tourists and need more capacity at the border.

Chris Bishop : What other Budget 2015 decisions have been announced?

Hon BILL ENGLISH : We are providing the Inland Revenue Department with an additional $29 million for greater property tax compliance. We already tax the gain that people make when they sell a property that they bought with the intention of reselling it, and that is fair. We are sharpening up those rules to make it easier for the Inland Revenue Department to enforce them and help ensure that people understand their liabilities. So everyone will have to provide their IRD number on every property they buy, other than their main home, and everyone will know there will be a 2-year brightline test, meaning that gains from property sold within 2 years of purchase will be taxed, except if it is the main place of residence, or inherited, or part of a matrimonial settlement.

Grant Robertson : Does he recall saying in the 2014 Budget speech “There will be a small surplus next year, and increasing surpluses are forecast over time.”, and now, having broken that promise, will he be using exactly the same sentence in this year’s Budget speech?

Hon BILL ENGLISH : I do remember making that statement as part of the 2014 Budget, and it indicated significant progress from an $18 billion deficit to what will turn out to be a $500 million or $600 million deficit. It falls short of the surplus that was budgeted by a bit, and that means we will achieve surplus next year.

Chris Bishop : What particular measures in Budget 2015 apply to property investors who may be based overseas?

Hon BILL ENGLISH : As well as having to supply a New Zealand IRD number, all non-resident—that is, non - tax resident—buyers and sellers must also provide their tax ID number from their home country, along with a current ID such as a passport. This will enable the Inland Revenue Department to share tax information with overseas authorities. Also, to ensure that our full anti - money-laundering rules apply to non-residents, they must have a New Zealand bank account before they get a New Zealand IRD number. Finally, we will be looking at introducing a withholding tax for non - tax residents, which, if adopted, means we will take the tax off immediately when the property is sold, and the foreign owner will have to square up with the Inland Revenue Department later.

Andrew Bayly : How does the increased compliance on property gains fit within the Government’s response to escalating Auckland house prices?

Hon BILL ENGLISH : The real issue in Auckland is that there are too few houses to meet demand. So the problem is pretty simple, but ensuring more supply is the most effective long-term tool for bringing some order to the Auckland property market. So we are working on a number of fronts: changes in the tax regime, which may dampen demand; setting up special housing areas to free up more land; and concentrating on redeveloping extensive Government landholdings in Auckland—for instance, transferring Housing New Zealand properties to the Tāmaki Redevelopment Company.

Andrew Bayly : How do those decisions sit within the Government’s commitment to control its spending?

Hon BILL ENGLISH : These commitments are all being financed by a relatively low level of new Government initiatives. So, for instance, the total annual cost of new initiatives in this Government’s last six Budgets is around $3 billion. The last six Budgets of the previous Government had $20 billion of new initiatives, and at the end of that time, even supporters of it, such as the Salvation Army, were led to conclude that despite all the spending, there were no better outcomes for New Zealand communities. With less new spending we are getting better outcomes.

2. Housing, Auckland—Prime Minister’s Statements

2. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister : Does he stand by his statement that there is no housing crisis in Auckland in light of the fact the average Auckland house price has risen by $100,000 in the past year and the Reserve Bank says this is “increasing the risk of financial instability”?

Rt Hon JOHN KEY (Prime Minister): Yes, because over the last few years I have heard many overstated claims of a crisis in various parts of the economy. The previous one was apparently in manufacturing. The Government and the Reserve Bank have both acknowledged that we need more houses built in Auckland and we need to make that happen faster. That is why the Government has taken significant action to increase supply and speed up land development.

Andrew Little : Why has he introduced a measure that looks like a capital gains tax, but which he says is not one, to fight an Auckland property market that is in crisis, but which he says is not?

Rt Hon JOHN KEY : Just to quote Mr Little, he said the policy is “not a capital gains tax”. What we have done is said that for anyone who is an investor in a 2-year period, we will take the ambiguity out of the current situation because we believe that that is reasonable. And for foreigners whom we do not have good records on in New Zealand—yes, they will be forced to pay their fair share of tax.

Andrew Little : In light of his finance Minister’s comment that it is “a bit unclear” what impact his new measures will have, by how much does he say the new brightline test will slow the growth of Auckland house prices; and if he does not know, why not?

Rt Hon JOHN KEY : Well, we have not modelled that, but what I can say is that, of the additional money we are putting into inspectors—which is $29 million in this Budget and $33 million from Budget 2013, which is yet to be spent; that is $62 million—the expectation is that we will get $420 million. The reason we are likely to get at least $420 million, if not more, is that the ambiguity is removed. I will say, though, that the intention test has been around for a very long period of time. Funnily enough, and I have not actually bothered to go and look at it, if one was to go back and look at all the advice that the previous Labour Government got when house prices doubled under its watch, one would probably look at this issue as an issue that was raised back then. But guess what? Labour did nothing; National acts.

Andrew Little : How many property speculators who are not already caught by the intention test will be caught by the brightline test; and if he does not know, why not?

Rt Hon JOHN KEY : The analysis of the Ministry of Business, Innovation and Employment suggests that between 17 and 18 percent of Auckland’s housing transactions currently involve houses being bought and sold within 2 years. I would be pretty surprised if all of those owners are paying tax on that, and I would strongly suggest that quite a few more will as a result of the brightline test.

Andrew Little : Why has he announced a tax policy when he does not know how well it will work, whom it will catch, or what the rules even are?

Rt Hon JOHN KEY : I know whom it will catch, and they are people who buy and sell an investment property within 2 years. They are foreigners who are currently non - resident income taxpayers who are not paying their fair share of tax. Yes, the Government takes a careful and cautious approach in this regard, but that is the right thing to do because, in the end, taxpayers are entitled to have some clarity in what they are doing. But I do think, and the Government has thought this for quite a long period of time, that the intention test needs reflecting upon, and that was the very reason why we asked the Inland Revenue Department to look at this very issue back in 2010. The officials in 2010 said they did not think we should move on it; in 2015 they changed their minds.

Andrew Little : Why will he not just be straight with New Zealanders and admit that his new policies will not fix the Auckland housing crisis, and that he is just doing the bare minimum and hoping the problem will go away because he does not have a clue what to do?

Rt Hon JOHN KEY : Under this Government we have special housing areas of which there are about 90 in Auckland. Under this Government we have reduced the duty on imported materials. Under this Government we have reformed the Resource Management Act, and we are looking to do more. Under this Government we have introduced a new brightline test for those who buy and sell investment properties. We have done a lot in the housing area. I know that Labour members do not like it, but house prices doubled under their watch. Actually, Auckland house prices went up by 79 percent under the previous Labour Government. When they asked Andrew Little last week what—[Interruption]

Mr SPEAKER : Order! [Interruption] Order! The Prime Minister will resume his seat.

3. Prime Minister—Statements

3. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister : Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

Rt Hon Winston Peters : Does he stand by the following statements: in May last year, “There is no housing crisis in Auckland.”; also in May last year, “I do not believe there is a crisis in housing.”; in June last year, “It’s not a crisis.”; in April this year, “So I don’t think you could call it a crisis.”; and just last month, “I don’t believe a capital gains tax works.”?

Rt Hon JOHN KEY : Yes, I stand by all of those statements. Interestingly enough, if you look at the information by the Real Estate Institute, figures across New Zealand actually show that although Auckland house prices are up, the rest of the country is very mixed; some are actually down. And, interestingly enough, if you look at the equivalent period of time under the last Labour Government, house prices doubled. Under National they have gone up nationally by 35 percent.

Rt Hon Winston Peters : Does he stand by this statement, made by himself: “I don’t believe foreigners buying the odd house in New Zealand is what’s driving the escalation of prices”?

Rt Hon JOHN KEY : Yes, I believe that statement is correct. I think that there is quite a degree of confusion, actually, about the people who buy houses in New Zealand, who may come from overseas originally or may not be Caucasian. But I think the number of very large purchases of properties in New Zealand that are from offshore is likely to be quite a low number—lower than what people expect, in my view.

Rt Hon Winston Peters : Does he agree with Lyndon Fairbairn of All Property—[Interruption]

Mr SPEAKER : Order! Will the Leader of the House contain himself. Will the member please start his supplementary question again.

Rt Hon Winston Peters : Does he agree with Lyndon Fairbairn of All Property Solutions, who, when asked on Morning Report this morning if the Government’s measures will be strenuous on foreign buyers, replied “No, not at all.”?

Rt Hon JOHN KEY : That is an interesting view that the gentleman might have—and I do not know who he is. But let us put it this way. If the rules are, as they will be, that a foreign buyer or a non - resident taxpayer—because that is the test, actually, a non - resident tax status—has to provide their IRD number, has to provide a New Zealand bank account, and, by the way, by the middle of next year will have withholding tax taken off any sales of properties, and they will then have to reverse the burden to get that tax back. If that is no effect, then that is a very interesting world that that gentleman lives in, but I would suggest it is one that is quite a long way away from reality.

Rt Hon Winston Peters : Why does he not just stop tinkering around the edges and, to use his words, “get some guts” and back New Zealand buyers, and stop foreign non-residents buying New Zealand land and houses?

Rt Hon JOHN KEY : We know Mr Peters’ views about foreign investment and the likes into New Zealand. But, interestingly enough, maybe the member, when he returns back to his office for a nice cup of tea this afternoon, might want to have a look on the Sydney Morning Herald website, where they actually talk quite openly about how house prices are rising much faster there than they are in Auckland. And the article goes on to say: “It would be nice if there was a single guilty party—foreigners, investors, negative gearing, local Government, capital gains discounts, cheap money, population growth—but it’s much more complicated” than all of those

4. Government Financial Position—Return to Surplus

4. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance : Does he stand by his statement that “we believe the strong underlying economy and responsible fiscal management can deliver a surplus when the final Government accounts are published next October”?

Hon BILL ENGLISH (Minister of Finance): I stand by my full statement made at the Half Year Economic and Fiscal Update, which was: “falling dairy prices and low inflation are restricting growth in the nominal economy and Government revenue. This makes it more challenging for the Government to achieve surplus in 2014-15. However, we remain on track to reduce debt to 20 per cent … by 2020. Although this latest Treasury forecast predicts a small deficit for the current year, we believe the strong underlying economy … can deliver a surplus when the final Government accounts are published next October,”.

Grant Robertson : Can he explain to the House how it is an example of “responsible fiscal management” to allow a blowout in expenditure from $34 million to $210 million for the upgrade of the Child Support system at the Inland Revenue Department?

Hon BILL ENGLISH : The member may want to delve into the details of that. As I recall it, at least a fair bit of the expenditure came from two sources. One was that the complexity of the proposals was underestimated while trying to take into account the income of multiple parents with respect to particular children. Further changes were then made by the select committee, which made it even more expensive. Underlying the expense is the fact that the Inland Revenue Department’s computer system is now so old that it costs an enormous amount of money to make relatively small changes. That is why we are investing in a 5 to 10-year programme to upgrade the Inland Revenue Department’s system. We believe that children deserving the support of their separated parents cannot wait around until the Inland Revenue Department’s system is all changed.

Grant Robertson : How is it “responsible fiscal management” to ignore the advice of Treasury, which told him “We believe the costs of the proposed change outweigh the benefits.” and which recommended postponing or not proceeding with the proposal? How is that responsible?

Hon BILL ENGLISH : The member may be surprised, but the Government quite often disagrees with Treasury. Occasionally I wish it would agree with Treasury more, but it quite often disagrees with it. In this case, the Government decided that it needed to make changes to what was a 25-year-old formula for child support. Families constitute themselves differently these days and there are different sets of expectations, so we went ahead.

Grant Robertson : I seek the leave of the House to table a memo from Treasury, dated 6 August 2012, in which it recommends postponing or not proceeding—

Mr SPEAKER : Order! The document has been described. I put the leave. Leave is sought to table this particular memo from Treasury. Is there any objection? There is none. Document, by leave, laid on the Table of the House.

Grant Robertson : How is it “responsible fiscal management” to ignore the further advice of Treasury, the State Services Commission, and the Government Chief Information Officer, which recommended that the delivery of the Child Support system reforms be discontinued despite the large sunk costs?

Hon Gerry Brownlee : They didn’t get elected.

Hon BILL ENGLISH : I think my colleague Minister Brownlee made exactly the right point. In the end, the Government makes decisions, as the elected representative, about what it believes is going to work for the community. Officials saw that the costs were higher than expected. The Government decided to incur those costs; they did not. I have to say that it is more fiscally responsible than that member protesting for excessive wage increases and now saying that the Government should prop up a failing social services provider—more money for every problem.

Grant Robertson : I seek the leave of the House to table an email from Treasury, dated Tuesday, 18 February 2014 at 2.51 p.m., with advice from Treasury, the State Services Commission, and the Government Chief Information Officer that the Child Support—

Mr SPEAKER : Order! The document has been described enough for the House. I will put the leave. Leave is sought to table that particular email. Is there any objection? There is none. It can be tabled. Document, by leave, laid on the Table of the House.

Grant Robertson : Is—[Interruption] Hundreds of millions of dollars being wasted is funny, is it, Gerry?

Mr SPEAKER : Order! [Interruption] Order! I have called Grant Robertson to ask his supplementary question.

Grant Robertson : Is one of the reasons that he will not be delivering a surplus in this Budget, or any meaningful changes on child poverty, because he wasted hundreds of millions of dollars pursuing a project that all of his key advisers on fiscal, State sector, and technology issues told him to bin?

Hon BILL ENGLISH : No, and the member should try to get his head around what changes have been made to Child Support. As he will know, as a constituency MP, for the last 20 years families have been complaining about the way the formula works. It is always difficult to change it, but it was changed in ways that Parliament and the select committee decided were fair. It did cost more than was expected. The Government came to the view that it was in the interests of the thousands of families affected by Child Support to make those changes.

5. Accident Compensation, Levies—Budget 2015

5. SARAH DOWIE (National—Invercargill) to the Minister for ACC : What indicative reductions to ACC levies are signalled in Budget 2015?

Hon NIKKI KAYE (Minister for ACC): Budget 2015 will signal that ACC is on track to provide further levy cuts of around $375 million in 2016-17 and $120 million in 2017-18. These indicative levy cuts represent a total saving for New Zealanders of around $500 million and will be spread across the motor vehicle, work, and earners accounts. The indicative reductions, if confirmed, will take total levy cuts since 2012 to around $2 billion, benefiting all New Zealanders. These cuts are possible only because of good financial management. This is great news for New Zealanders.

Sarah Dowie : What factors could see these indicative levy reductions change?

Hon NIKKI KAYE : Although there could be some change to the total amount into the per year amounts, the Government is committed to reductions of at least $500 million across the three accounts. Before the Government makes final decisions on levy reductions this year, ACC will consult under existing legislation with levy payers and make a recommendation. The final decision will take into account other factors like claim numbers and discount rates. It is important to understand that the exact amounts for each year may vary depending on the consultation. However, I can confirm reductions of at least $500 million—and that is $2 billion since 2012.

Sarah Dowie : What recent announcements has the Government made about improving the transparency of the levy-setting process?

Hon NIKKI KAYE : Last week I introduced the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill to the House. The bill will make a number of amendments to the Act to improve the levy-setting framework. The bill will also amend the Act to allow the collection of residual levies to be discontinued earlier. New principles will be introduced into the legislation to ensure greater levy stability and solvency over the long term. The Government will be required to publish a funding policy and the long-term implications of levy decisions. This will ensure there is maximum transparency around ensuring enough money is available to pay the lifetime cost of people’s injuries. It is also my hope that levy payers can see levies are as low as possible while ensuring our most vulnerable have greater security for the long term.

Sarah Dowie : What reports has she seen on alternative approaches to setting ACC levies?

Hon NIKKI KAYE : I have seen a report about people suggesting going back to a pay-as-you-go approach. The advice I have had is that this would lead to higher costs for claims and increasing levy rates over the long term. It would also be a big step backwards for some of our most vulnerable New Zealanders whose quality of life depends on long-term rehabilitation. It would also mean less certainty and stability for New Zealand businesses. These reports come from Andrew Little at the same time that Labour has removed its ACC policy from its website. He needs to front up to New Zealand and actually tell people whether Labour’s plan is to raid the ACC coffers.

Sue Moroney : Why will she not cut levies immediately, as recommended by the Ministry of Business, Innovation and Employment, by Treasury, and by ACC itself; and what possible excuse does she have for overcharging ACC levies now that the Government will not even get to its promised surplus?

Hon NIKKI KAYE : We are cutting ACC levies now. There is $480 million dollars’ worth of cuts this year. There are several reasons why we have put a 2-year, $500 million policy in. The first reason is that there is still volatility in the accounts. The second reason that—[Interruption] You need to listen to this, Labour members. If you go down too far in terms of levy reductions, the overall levy path over the years means that you can have increases in the out-years. The members are going to have to understand this. The facts are: $2 billion since 2012 compared with a $480 million hole under members on that side of the House.

6. Prime Minister—Statements

6. METIRIA TUREI (Co-Leader—Green) to the Prime Minister : Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

Metiria Turei : How poor does a child need to be under his “definitional difference”, which he told Paul Henry about yesterday, when he claimed that there were only 60,000 to 100,000 children living in poverty?

Rt Hon JOHN KEY : The advice I have from the Ministry of Social Development material deprivation index is that there are indeed between 60,000 and 100,000 children who are living in more severe material hardship. They are children who, based on that index, lack nine to 11 items from that deprivation index.

Metiria Turei : Under his “definitional difference”, is a child living in poverty if their parents cannot afford to buy them fresh food, if they do not have two pairs of shoes, if they cannot afford a school uniform, and if they do not have their own bed?

Rt Hon JOHN KEY : I refer the member to the Ministry of Social Development’s material deprivation index.

Metiria Turei : Is the Children’s Commissioner wrong, and are his experts who worked on the solutions to child poverty wrong, when they state that there are between 180,000 and 200,000 children who are materially deprived—that is, they go without three or more essential items such as fresh food, warm clothes, their own bed, and good shoes?

Rt Hon JOHN KEY : It seems to me that the member picks and chooses her index depending on what suits her argument, but all I can tell the member is that if one looks at the number of children who are deemed to be at the most significant level of deprivation in New Zealand based on the Ministry of Social Development index, it is 60,000 to 100,000. But I would say that this Government is very focused on all children, particularly those who are less well off, and there are degrees of how less well off they are. That is why the Government introduced free GP visits. That is why the Government has put more money into providers like KidsCan. That is why this Government has worked alongside Fonterra and Sanitarium to provide free breakfasts. That is why the Government has supported having social workers in all low-decile schools. It is why the Government has introduced children’s teams to work with at-risk children and families. That is why the Government has insulated every State house, and it is why the Government has worked to insulate 240,000 other homes and has given them clean heating. This is a Government that, in the very worst of times in New Zealand, has maintained benefits and entitlements that provide support for the very children whom that member is talking about.

Metiria Turei : Did the Ministry of Social Development fail to give him the 2014 Bryan Perry report that showed that there are 260,000 children in poverty and that 205,000 of them are living in severe poverty, where their parents earn less than half the median income?

Rt Hon JOHN KEY : The member will note—if she wants to refer to that particular report that she is talking about—how consistently the numbers that she is talking about have been at that level of deprivation. In fact, there were about 240,000 to 260,000 children living in poverty under Labour, at the height of what was theoretically an economic boom. But what I can say is that Bryan Perry’s new annual report—and the new edition will be out very soon—will make it quite clear that in terms of what they define as severe material hardship, there are between 60,000 and 100,000 children, and they have between nine and 11 conditions on the deprivation index.

Metiria Turei : Would the Prime Minister agree that by promising to tackle child poverty and then changing the definition of poverty to exclude most of the children who are actually poor, he is breaking yet another Budget promise?

Rt Hon JOHN KEY : I think the member is being extremely selective with the comments I have made. If she actually goes back and looks at the interviews that I have done on this topic ever since the last election, she will see that I have consistently said that there is a disagreement between ourselves and those who claim that there are 260,000 children in that category. We have made it quite clear that we see a group of 60,000 to 100,000 as our priority. It does not mean that we do not provide either services or support for the wider group; we actually do. I listed a great many, and I will not repeat them now. But our primary area of focus and attention is on those who are most in need. I think most New Zealanders, actually, would say that the Government having a focus on those who are in the worst of conditions is putting our resources in the right place.

Jacinda Ardern : Does he stand by his previous statements in this House that there are many measures of child poverty, in light of his position now that there is just one, material deprivation, which just so happens to be the smallest of all the measures that are used by the Children’s Commissioner?

Rt Hon JOHN KEY : I stand by the view that there is no one single measure, but I am simply saying that the material deprivation index, according to the advice that we have had from the Ministry of Social Development, is the best. That is one measure, but there is no one single measure of poverty in New Zealand, and I do not think there should be.

Metiria Turei : Will the Prime Minister just admit that he has made up an Oliver Twist definition of poverty so that he can ignore some 200,000 New Zealand children who suffer from poverty every day?

Rt Hon JOHN KEY : I think the member risks being a little bit silly. I listed a few moments ago a very wide range of support that we provide for all New Zealand children, and in some cases, obviously, the support is much more focused on those who are in need. I have made it quite clear that I think there is a group who are in worse hardship than others, and that is supported by the material deprivation index, which evolved, actually, from the European equivalent. It is a very thoughtful process that Bryan Perry goes through, and it looks at very detailed analysis. I am more than happy to have the debate with the New Zealand public, but I think you might find that the New Zealand public supports the view that those who are most in need deserve the most support. That does not mean that other children do not get support; they actually do. But this Government is very focused on that group, and I think most New Zealanders would say that is the right thing to do. The member shakes her head, but if we followed her economic policies a whole million of New Zealand children would be in hardship because none of their parents would be in work.

7. Relationships Aotearoa—Funding

7. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister for Social Development : How much in real terms has Government funding for Relationships Aotearoa changed since 2008?

Hon ANNE TOLLEY (Minister for Social Development): In so far as I have ministerial responsibility, baseline funding from the Ministry of Social Development for Relationships Aotearoa in 2007-08 was $3.1 million. In 2014-15 it received $3.8 million. In addition to this, Relationships Aotearoa has received around $13 million from the Ministry of Social Development in one-off grants for recession funding, services, and capability building during this time.

Hon Annette King : In light of that answer, what CPI adjustments has the Ministry of Social Development made to its contract with Relationships Aotearoa in the past 7 years—has it been zero, 1 percent, 2 percent?

Hon ANNE TOLLEY : I am advised that the whole sector that the Ministry of Social Development works with has had no inflation adjustments since 2010-11. However, if you look at the baseline funding that I have just enunciated, the 2007-08 funding of $3.1 million would—

Chris Hipkins : What about the total funding?

Hon ANNE TOLLEY : If you would just listen—just listen—it is coming. It would be the equivalent of $3.6 million in today’s terms. Therefore, I repeat: Relationships Aotearoa has received $3.8 million, which is more than that CPI adjustment.

Hon Annette King : Why did she state on Television One recently that Relationships Aotearoa had received “a number of one-off grants from the Ministry of Social Development” when, in fact, it had received one grant for its IT system, not towards delivering services?

Hon ANNE TOLLEY : Because the member is wrong. It has received a number of grants. In fact, I can tell the member that it received just under $2.5 million in community response funding. That was for two separate grants, I understand. It has received just over $9 million for Canterbury earthquake recovery services and it has received $1.4 million for capability investment funding.

Hon Annette King : Why does she—

Hon Dr Nick Smith : Apologise.

Hon Annette King : Beg your pardon?

Hon Dr Nick Smith : The member should apologise.

Hon Annette King : The member should take a—

Mr SPEAKER : Order! The member should just ask her supplementary question.

Hon Annette King : Why does she continue to denigrate Relationships Aotearoa by claiming it has made no attempt to be financially sustainable when it has, one, reduced expenditure, and, two, laid off around 46 people last year, while at the same time providing much-needed services to earthquake-affected people in Canterbury?

Hon ANNE TOLLEY : I have made no comments that denigrate Relationships Aotearoa, but what I have said is that with taxpayers’ money, which is funding these organisations like Relationships Aotearoa, we have a duty, a responsibility, to make sure that we get the services we are paying for, and Relationships Aotearoa has not fulfilled its contracts for quite some time. We also have a responsibility to make sure that these organisations can live within their budgets. Relationships Aotearoa has run deficit budgets for the last 4 years—in fact, this year there is a large deficit that we are not sure how it is going to be able to fund.

Hon Annette King : Why have she and her office knifed Relationships Aotearoa publicly by leaking incorrect information to the media while knowing that the Government has cut $4.8 million off its budget since 2012?

Hon ANNE TOLLEY : The member makes a number of assertions—

Hon Ruth Dyson : That are true.

Hon ANNE TOLLEY : —none of which are correct. It is not true. I have not knifed it in the back. In fact, I met with the interim board this afternoon, and we had a very constructive discussion and negotiations are under way. That member needs to take a breath and go back to her sources, because they are dead wrong.

8. Information and Communications Technology Industry—Progress

8. JONO NAYLOR (National) to the Minister for Economic Development : What progress is the Government making in developing New Zealand’s ICT sector?

Hon STEVEN JOYCE (Minister for Economic Development): Last week I, along with the Hon Amy Adams, released the New Zealand 2015 Information and Communications Technology Report. This report provides in-depth analysis of New Zealand’s information and communications technology sector and showcases New Zealand’s very strong performance over the last few years in this sector, with the positive support of the Government. The report shows that the sector has been growing at the rate of 9 percent per year since 2008. The industry is expanding. The number of IT businesses has topped 10,000 for the first time and IT stocks now make up about 10 percent of the value of all listings on the New Zealand Exchange main board, compared with 1 percent 5 years ago. It is clear that New Zealand’s information and communications technology sector is an increasingly important contributor to our economy, both as a strong platform for future business growth and as the driver of the digitisation of our economy.

Jono Naylor : How is New Zealand’s information and communications technology industry performing on the world stage?

Hon STEVEN JOYCE : Very well. Exports have grown at 14 percent a year in the information and communications technology sector—that is, 14 percent a year—over the last 6 years, and are now worth just shy of $1 billion a year at $930 million; a doubling in value since 2008. To succeed internationally it is important our companies are linked with the world and encouraged to develop their products and ideas when they enter new markets. We are doing that through the roll-out of ultra-fast broadband, through partnering with Callaghan Innovation to encourage research and development, and by working with New Zealand Trade and Enterprise to make the most of opportunities offshore. The information and communications technology industry is just one example of a number of industries that are expanding and diversifying New Zealand’s economic base with the encouragement of this Government

9. Greenhouse Gas Emissions—Treasury Forecasts

9. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister for Climate Change Issues : What is the range of potential costs to the Government resulting from New Zealand’s current forecast for increasing net greenhouse gas emissions for the period 2021-2030, as reported in the Treasury’s climate change briefing dated 6 October 2014?

Hon TIM GROSER (Minister for Climate Change Issues): The range of figures contained in the redacted part of that now rather dated document was between 0.3 and 0.8 percent of GDP and, crucially, even at the very highest levels of carbon prices used, took no impact whatsoever on our emissions. Happily, I can inform the member that a lot more professional work has gone into modelling since then. Only yesterday we published modelling that has involved a range of agencies, including the New Zealand Treasury, which puts the cost of a minus 0.5 percent target between 2020 and 2030 at the rather more reasonable cost of $3.6 billion—not a small sum of money but not nearly large enough to meet the member’s political narrative.

Dr Russel Norman : In light of that answer, what exactly did Treasury get wrong when it said in this paper that the cost to the Government of not cutting our greenhouse gas emissions was up to $52 billion—as Treasury said in this paper?

Hon TIM GROSER : I think what Treasury got wrong was that it did not use sufficiently sophisticated software to conceal the redacted information.

Dr Russel Norman : It is nice of you to admit that, Minister. Why is it that the Government’s climate target consultation paper makes the unsubstantiated claim that the annual cost of cutting emissions is up to $1,800 per household but does not happen to mention Treasury’s rather detailed analysis that says that the cost of not cutting emissions is up to $3,400 per household—if we do not cut emissions?

Hon TIM GROSER : Well, we will let modellers debate the relative merits of these models. What we have done is commission a first-class piece by Infometrics with all the agents involved, and the figure they have come up with is the figure the member mentioned.

Dr Russel Norman : So is the Minister finally admitting that the redacted number in this paper for the cost to the Government of not cutting emissions is up to $52 billion?

Hon TIM GROSER : No, I am not verifying that. That was a matter of a so-called independent forecaster drawing two dots together that really should never have been joined together. I recommend to the member and the members of this House that they look at the very professional analysis that we put on the Ministry for the Environment’s website only yesterday.

10. Earthquakes—Risks

10. BRETT HUDSON (National) to the Minister for Building and Housing : What changes is the Government proposing to ensure New Zealand is more resilient to the significant risks we face from earthquakes?

Hon Dr NICK SMITH (Minister for Building and Housing): We have made two significant announcements. The first is about taking a more targeted approach to strengthening older buildings. We have zoned New Zealand into three categories of risk and have varied time frames to upgrade accordingly. We have also sped up the time frame for strengthening higher risk buildings like schools, hospitals, and other emergency buildings in medium and high-risk areas. The result of these changes will reduce the estimated cost, in net present value terms, by about $500 million, while at the same time retain the safety gains of 330 fewer deaths and 360 fewer serious injuries. Today I have also made announcements about post-emergency building management. We are ensuring that we learn the lessons from the experience after the Christchurch earthquakes, so that we manage our building stock as efficiently as possible so that people can get into their buildings quickly, and also so that we ensure public safety. This is part of the Government’s broader programme for ensuring we are more resilient to these risks.

Brett Hudson : What response has he had to taking a more risk-focused approach to the strengthening requirements for older buildings?

Hon Dr NICK SMITH : The Government’s revised approach to earthquake strengthening has been widely welcomed. The Institution of Professional Engineers New Zealand Inc., Local Government New Zealand, and the Property Council New Zealand have all endorsed the approach. Fundamental to it is understanding that the level of risk from earthquakes varies very significantly around New Zealand, as reinforced by the report today from GNS Science. In this city, an MM8 earthquake has got a frequency of once every 120 years, and in Auckland, of only once in every 7,400 years, so it is appropriate that our response takes into account that sort of risk profile.

Brett Hudson : How do the changes on post-disaster building management announced today learn from the tragic experience of the Christchurch earthquakes?

Hon Dr NICK SMITH : I think every member of this House can recall the huge tension about post-earthquake management after the earthquakes in 2010 and 2011. Some owners and tenants of buildings were incredibly frustrated that they were not able to get access. There was confusion about the stickering system, so, consistent with the recommendations of the royal commission of inquiry, we have changed that system. We are proposing to make changes to the Building Act, and I am confident that with these changes, were New Zealand—hopefully not—to experience a similar earthquake, we would be far better prepared to be able to manage those safety risks and, at the same time, get people access to their buildings more quickly.

Hon Damien O’Connor : What support will the Government offer the business owners in Franz Josef who have been told by the Westland District Council that they can no longer develop their businesses and must, over time, shift away because of the earthquake risk?

Hon Dr NICK SMITH : The community of Franz Josef is not different from areas in my own constituency of Nelson, where there are landslip and earthquake risks, or from the risks in Napier and all over the country. I note that during the 9 years that Labour was in office, the member made absolutely no progress in convincing his colleagues—

Chris Hipkins : I raise a point of order, Mr Speaker. It was a relatively simple question without any political loading in it. It was simply asking the Minister what support will be supplied to the community of Franz Josef. The Minister has not yet addressed the question and has simply begun an attack on the Labour Party.

Mr SPEAKER : No, the Minister was attempting to. He is certainly not answering it as directly as I might have hoped. I am going to invite the Hon Damien O’Connor to ask the question again, but I think I can suspect the answer. I will ask the member to ask the question again.

Hon Damien O’Connor : What support will the Government offer to the business owners at Franz Josef who have been told by the Westland District Council that because of a report identifying earthquake risk, they may no longer further develop their businesses and must, over time, move from their current locations?

Hon Dr NICK SMITH : The issues faced by the community of Franz Josef are not different from those faced all over New Zealand, where those risks are being better identified. What I can promise the member is that this Government will give those businesses in Franz Josef a better hearing than they got under the previous Government, when representations were made and were ignored.

11. Prime Minister—Statements

11. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister : Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

Rt Hon Winston Peters : Does he stand by his statement on 14 October 2013 when he said in regards to this country’s veterans: “our Government has been firmly guided by a keen sense of fairness, and a sense of the need to honour our current and future veterans in a dignified way.”

Rt Hon JOHN KEY : Yes.

Rt Hon Winston Peters : If that is the case, is it true that while he was at Gallipoli, and New Zealand was remembering 100 years of Anzac sacrifices, behind the scenes cynical moves were under way to treat veterans as a burden on the State?

Rt Hon JOHN KEY : I have not got a clue what the member is talking about.

Rt Hon Winston Peters : Well, half of that is correct—he has not got a clue. How can he stand by that statement when his Government sent out this letter to veterans on 30 April, 5 days after Anzac Day, signalling cuts to the services that they receive—this letter?

Rt Hon JOHN KEY : I do not know what letter the member is talking about.

Rt Hon Winston Peters : I seek leave to table a letter from Veterans Affairs New Zealand, dated 30 April 2015, written to veterans 5 days after Anzac Day.

Mr SPEAKER : Leave is sought to table that particular letter. Is there any objection? There is none. It can be tabled. Document, by leave, laid on the Table of the House.

Mr SPEAKER : Supplementary question—[Interruption] Order! It has been tabled—[Interruption] Order! [Interruption] Order! The member will resume his seat. Leave has been put, leave was granted, and the document will be tabled, but that does not stop the member now from proceeding with his supplementary questions.

Rt Hon Winston Peters : Given that what is proposed is a serious cut and privatisation of the services to veterans, does he not think that a better use of public money would be to use the $25 million that he is spending on a referendum to change the flag to support those who have fought and died for the flag?

Rt Hon JOHN KEY : I think the member is making it up.

Rt Hon Winston Peters : I raise a point of order, Mr Speaker. With the greatest respect, that is the second time. The first answer was that he said he did not have a clue—well, I did not disagree with that.

Mr SPEAKER : But he is allowed to say that, if that is the answer he has got. The second point?

Rt Hon Winston Peters : Well, OK. The second one is that now he is doubting my honour, and that is the real issue here, because, as you know, it is beyond question. [Interruption]

Mr SPEAKER : Order! The member will resume his seat. That is not a valid point of order.

12. Social Development, Minister—Statements

12. JACINDA ARDERN (Labour) to the Minister for Social Development : Does she stand by her statement that “it’s a priority for this term of Government that all New Zealanders benefit from the growing economy with a focus on children who are living in hardship”?

Hon ANNE TOLLEY (Minister for Social Development): Yes.

Jacinda Ardern : How many children living in poverty have benefited from the growing economy while her Government has been in office?

Hon ANNE TOLLEY : As we have heard before, there are a number of ways of measuring poverty. What we do know is that in the long term children who live in homes that are dependent on a benefit have considerably worse outcomes in life than those who do not. This Government has seen the number of children living in benefit-dependent households fall by almost 42,000 over the last 3 years.

Jacinda Ardern : If child poverty is a priority, does that mean she was right when she claimed last year that she was working on a new child poverty package for the 2015 Budget that was “a really big piece of work,” or was Bill English right when he said today that there would be no new specific initiatives?

Hon ANNE TOLLEY : The Prime Minister is always right, and he has said that hardship is going to be a focus of the Budget.

Jacinda Ardern : If child poverty is a priority, why will her Government not measure it or target it? But will she, in the interim, sign a petition by Tick for Kids that calls for Budget 2015 to be the Budget that ends child poverty; if not, why not?

Mr SPEAKER : Any of those three supplementary questions—the Hon Anne Tolley.

Hon ANNE TOLLEY : The member will just have to wait for the Budget.

ENDS

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