Budget 2016—Forecasts

1. NUK KORAKO (National) to the Minister of Finance: What do Treasury’s Budget 2016 forecasts show about the outlook for the economy, and how does this translate into more jobs and higher wages for New Zealanders?

Hon BILL ENGLISH (Minister of Finance): The outlook for the economy is positive. Businesses are investing, job growth is solid, and, on average, wages are rising faster than inflation. Treasury is forecasting real GDP growth of 2.9 percent over the coming year, and 2.8 percent, on average, over 5 years to June 2020. More than 200,000 more people are in work now than 3 years ago and a further 170,000 jobs are expected by 2020. Over that period the unemployment rate is expected to drop to 4.6 percent and the average wage is forecast to rise to $63,000 a year—$16,000 per year more than it was in 2008.

Nuk Korako: How has the downturn in dairy prices affected the outlook for the economy?

Hon BILL ENGLISH: It is clear that the dairy sector is doing it tough, but it is also clear that New Zealand is a bit less dependent on dairy than we had all probably assumed. Despite the downturn in dairy, New Zealand’s exports increased by $2 billion last year and are expected to grow by another 25 percent over the next 4 years, driven by tourism, construction, the beef sector, ICT, wine, and much of the manufacturing sector, which is performing well. But there is no doubt that when dairy does better, New Zealand does better, and the faster growth in exports forecast in 2018-20 is driven to some extent by an improvement in dairy prices.

David Seymour: How much extra money will the Government take from income tax payers due to bracket creep over the coming 4 years?

Hon BILL ENGLISH: I cannot give the member the details about that. What I can say, though, is that at a time of relatively low inflation—and the term for it is fiscal drag—it is probably slower and lower than it has been for some time.

Nuk Korako: What is the outlook for surpluses and debt repayment, given the Government’s continued focus on responsible fiscal management?

Hon BILL ENGLISH: Moderate surpluses are expected this year, ending at the end of this month; and also in the 2016-17 year. They will increase, according to these forecasts, to $6.7 billion in 2019-20. Net debt is expected to peak at 25.6 percent of GDP and to fall to around 20 percent by 2020. This gives us more room to support New Zealanders if we face another economic shock or natural disaster, and also means that New Zealanders who are dependent on the Government for support know that the Government’s books are stable and in good shape, and therefore their support is secure.

David Seymour: Would the Minister appreciate me telling the House that the answer to my earlier supplementary question is $1.1 billion?

Mr SPEAKER: A marginal question—the Hon Bill English.

Hon BILL ENGLISH: Yes, I have appreciated that already.

Nuk Korako: What choices does Budget 2016 make to support the growing economy and strengthen our communities?

Hon BILL ENGLISH: There were four main packages. Innovative New Zealand delivers $761 million over 4 years for science, skills, and regional development, backing our innovators, scientists, and entrepreneurs. There is a $2.1 billion public infrastructure programme, focused on schools and digitalisation within government. A social investment package provides $654 million to support vulnerable New Zealanders, and a $2.2 billion health package provides $550 million a year for the health sector.

Housing, Rental—Numbers

2. ANDREW LITTLE (Leader of the Opposition) to the Prime Minister: Does he have confidence in his Minister for Building and Housing given that, since 2013, the number of owner-occupied homes has fallen by 7,000 while the number of rentals has increased by 14,000?

Rt Hon JOHN KEY (Prime Minister): Yes, and I would point out that if the member wants to cherry-pick from that particular data set, he should just go back one more year to 2012. He will see that since then the number of owner-occupied homes has risen by 20,000 and the number of rentals has decreased by 2,000, which just shows you that the Labour Party likes to be quite selective with its data.

Andrew Little: What was the average house price in Auckland when he came into office, and what is it now?

Rt Hon JOHN KEY: I do not have that information, but you would have to put it down to the Minister for Building and Housing, who would have that.

Andrew Little: I seek leave to table a data series from Quotable Value that is not publicly available, which shows that the average Auckland house price has increased by $440,000, from $500,000 to $940,000—

Mr SPEAKER: Order! The document has been very well described. On the basis that it is not freely available, I will put the leave. Leave is sought to table that particular information. Is there any objection? There is none. It can be tabled.

• Document, by leave, laid on the Table of the House.

Andrew Little: Is he happy that since the brightline test and IRD number rules were introduced last year, Auckland house prices have risen by $1,750 a week on average?

Rt Hon JOHN KEY: Firstly, I would want to fact check the member, but, secondly, the brightline test is simply one measure that has been in place. In fact, the Labour finance spokesperson was talking quite positively on the weekend about the brightline test, I thought.

Jami-Lee Ross: Has the Prime Minister received any reports of house price inflation between 1999 and 2008, at all?

Rt Hon JOHN KEY: I have. House prices doubled over that period of time, and the actions taken by the Government of the day back then were absolutely zero.

Andrew Little: Coming forward 8 years to today, does he still agree with this statement: “We are facing a severe home-affordability and ownership crisis. The crisis has reached dangerous levels in recent years and looks set to get worse.”?

Rt Hon JOHN KEY: At the time that I made it, yes.

Andrew Little: In light of that quote from him in 2007, does he seriously believe he has done enough to address the crisis he declared when, under his watch, Auckland house prices have increased by $440,000, homeownership has fallen to its lowest level in 65 years, and record numbers of New Zealanders are now living in cars and garages?

Rt Hon JOHN KEY: Homeownership rates have been declining since the mid-1980s, a point made by the Productivity Commission when it looked at it. I just simply would make the point that there have been a tremendous number of steps taken by the Government. We know it is a lagging indicator, but today we saw record numbers of consents again—28,000—40 houses are being built a day in Auckland; there are 154 special housing areas; as was pointed out earlier, the brightline test has been introduced; and 12,000 families have been supported through KiwiSaver HomeStart. Yes, of course, there is some catch-up, but that catch-up is happening as a result of confidence in the economy and low interest rates under a National-led Government.

Andrew Little: Has blaming the councils, blaming Labour, blaming the Greens, blaming New Zealand First, and generally saying the buck stops anywhere but with him done anything to boost homeownership in New Zealand?

Rt Hon JOHN KEY: I am not quite sure we have blamed all of those people, but what is true is that under Labour house prices doubled and it was a complete failure. That is just a statement of fact. It is not an apportionment of blame. [Interruption]

Mr SPEAKER: Order! [Interruption] Order!

Andrew Little: After 8 long years and $440,000 of house-price increases in Auckland, is it not time to stop the excuses, stop coming up with half-baked, half-hearted measures, and just adopt Labour’s plan to implement a national policy statement on affordable housing, abolish the Auckland urban growth boundary, stop foreign speculators, and build thousands of affordable homes for Kiwis?

Rt Hon JOHN KEY: The Labour Party does not have a plan; it has a pipe dream. In fact, the last time I looked the Labour Party was rapidly adopting the National plan. I think, over time, we will find it will get there on all of these wonderful things that we are doing. Since Phil cannot come up with his own ideas, he may as well just have ours.

Budget 2016—Economic Growth and Skills and Innovation

3. IAN McKELVIE (National—Rangitīkei) to the Minister for Economic Development: How will Budget 2016 encourage innovation, skills, and economic growth?

Hon STEVEN JOYCE (Minister for Economic Development): A major initiative in Budget 2016 is Innovative New Zealand, a series of 25 programmes that will see $761 million invested over the next 4 years in science, skills, tertiary education, and regional development initiatives. These will help continue the diversification of the New Zealand economy and support jobs and higher wages for New Zealanders in the decade ahead. It includes $410 million for science and innovation, which will take the Government’s annual science investment to $1.6 billion by 2020, $256 million for more tertiary education and apprenticeship programmes, and $94 million to support regional economic development and investment opportunities in regional communities.

Ian McKelvie: Why is the Government investing more in growing an innovative economy?

Hon STEVEN JOYCE: We have been making very good progress as a country since the global financial crisis. We have been the world’s seventh-fastest-growing developed country over the last 5 years, but there remains more to be done to help strengthen and future-proof our future. The Innovative New Zealand packages focus on growing our science system, with an additional investment of $410 million over 4 years in investigator-led scientific research, in mission-led research, and in seeding new companies that commercialise Kiwi innovations. We are also investing more in the regions through the regional growth programme, the regional business partners programme, and more regional research institutes to help regions build on their own unique economic opportunities. [Interruption]

Mr SPEAKER: Order! [Interruption] Order!

Ian McKelvie: What investment does Budget 2016 make in ensuring that businesses across New Zealand have the skills they need in order to grow?

Hon STEVEN JOYCE: New Zealand’s employment rate is already the third-highest in the OECD, but we do have to keep developing the skills of our young people in order to meet the future needs of our economy. We need more skilled people in disciplines like science, engineering, agriculture, and the key trades if we are to continue to grow a high-value, diversified economy. Budget 2016 invests $256 million of new and reprioritised funding in tertiary education, including $86 million to continue to make science, technology, engineering, and mathematics a priority, making up for historical underfunding in this area. Driven by rapid advances in technologies, New Zealand has a constantly evolving economy. Innovative New Zealand will help ensure, as a country, that we stay ahead of change and are best placed to succeed in a competitive global world.

Inflation—Forecasts

4. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Is it correct that table 1.1 of the 2016 Budget Economic and Fiscal Update shows inflation rising faster than nominal wages in the next two financial years?

Hon BILL ENGLISH (Minister of Finance): Yes, but, of course, that depends on the inflation forecast turning into reality. I have to say to the member that over the last few years that was not the case. The effect of that has been that over the last 5 years the average annual wage has risen 14 percent and inflation rose by 4.7 percent.

Grant Robertson: Why is his Government delivering falling real wages to New Zealanders over the next 2 years?

Hon BILL ENGLISH: I just remind the member of the figures for the last 5 years, where real wages increases were delivered by the economy. There was a 14.1 percent increase in the average wage, and a 4.7 percent increase in inflation. So wages have risen faster than inflation. Whether they continue to do so will depend on whether the inflation forecasts come right. As the member knows, there is a connection between wage increases and inflation, and my guess is that if inflation is higher, wage increases will be bigger.

Grant Robertson: Will he meet his election promise that the average wage would rise to $62,000 by 2018?

Hon BILL ENGLISH: There is an election next year, as I understand it. The promise of that would be more of the same, and that is an economy growing faster than most developed countries, delivering moderate and consistent wage increases. We do not promise some specific level of income, because if we could we would promise it is much bigger than what they have got now.

Grant Robertson: In light of that answer, why did he promise at the last election that the average wage would rise to $62,000 by 2018?

Hon BILL ENGLISH: If the member regards Treasury’s forecasts as promises by a political party, then he is not fit to be the Labour finance spokesman.

Grant Robertson: Does the Budget now indicate that the average wage will be $59,400 by 2018, and where should working New Zealanders go looking for the missing $2,600 from his election promise? And please do not blame the Auckland Council for this.

Hon BILL ENGLISH: As I have pointed out to the member, if the Labour Party’s finance spokesman regards forecasts of the average wage as a guarantee by the Government that that is what will happen, he simply does not understand how an economy works. I would say that is a risk for the Labour Party.

Grant Robertson: If believing Treasury forecasts makes you incapable of being the Minister of Finance, why did he use a Treasury forecast to promise New Zealanders an average wage of $62,000 by 2018?

Hon BILL ENGLISH: I have dealt with that issue in the last couple of questions. What has actually happened in this economy is inflation has turned out to be quite a lot lower than anyone expected, and until now wage earners have benefited from that because, on average, wage increases have been considerably higher than inflation. Over the next few years it is still uncertain as to whether inflation will pick up at the rate specified in the forecasts and to whether wage increases will continue at the rate that they have. No one can be quite sure. Treasury has published its forecast. It has been wrong about inflation for the last 2 or 3 years; it might be in the next 2 or 3 years.

Rt Hon John Key: What was the Treasury forecast, approximately, of the budget surplus or deficit in Budget 2015, and what was the actual result that the country enjoyed?

Hon BILL ENGLISH: I think the forecast would have been something like minus $700 million, and it turned out to be higher. [Interruption]

Mr SPEAKER: Order! [Interruption] Order! Question No. 5—[Interruption] Order! I have called for some order now.

Budget 2016—Housing

5. METIRIA TUREI (Co-Leader—Green) to the Minister of Finance: He aha ngā tono Pūtea Tahua a Te Minita Hanga Whare, Whakawhiwhi Whare, a Te Minita Pāpori Take Whare me Te Minita Take Monī ki a ia mō Te Pūtea Tahua o te tau 2016, e pā ana kī ngā raruraru mō te whiwhi whare?

[What Budget bids did the Minister for Building and Housing, the Minister for Social Housing, and the Minister of Revenue make to him for Budget 2016, in relation to housing issues?]

Hon BILL ENGLISH (Minister of Finance): There is no translation.

Mr SPEAKER: I certainly received an interpretation, and it is as written on the sheet. If the Minister is happy to proceed—otherwise we can have it again, but I certainly got the interpretation.

Hon BILL ENGLISH: On the basis that it is the question on the sheet—the member will just have to wait for the release of all the Budget papers for the details about that, but I can confirm for the member that there were 11 successful bids: a $258 million package for more social housing places in Auckland, investment in the Tāmaki Redevelopment Company and support for 3,000 emergency housing places and a new special needs grant, an $100 million injection into the development of surplus Crown land in Auckland, a $12.6 million increase over the next 4 years for Māori housing, and an additional $36 million for the Healthy Homes and Warm Up New Zealand initiatives. In total, that is over $400 million of new spending on housing-related issues.

Metiria Turei: Did the Minister for Social Housing bid for more money in Budget 2016 for the building of more State houses to help address Housing New Zealand’s 4,500-person waiting list?

Hon BILL ENGLISH: As it happens, Housing New Zealand has got probably one of its largest ever capital investment programmes over the next financial year—probably close to $1 billion—but, of course, that is not the only answer. It is part of an answer, but the member needs to understand that the way the system works now is we do not have to wait for Housing New Zealand to build a new house. The Ministry of Social Development can go and procure social housing from community housing providers and developers so that it can place people on the waiting list. In Auckland the problem is not a lack of money; it is a lack of houses.

Metiria Turei: I raise a point of order, Mr Speaker. My question was very specific about whether the Minister for Social Housing bid for a specific purpose; that was not addressed in the Minister’s answer.

Mr SPEAKER: It is a very marginal call, because there was a figure then given, but I accept the point that the member in her question talked specifically about more State houses. I am going to invite the member to ask the question again.

Metiria Turei: Thank you. Did the Minister for Social Housing bid for more money in Budget 2016 for the building of more State houses to help address Housing New Zealand’s 4,500-person waiting list?

Hon BILL ENGLISH: No, because that is not her role. Her role as Minister of Social Housing is to bid for places. Those places can now be secured from community housing providers and developers as well as from Housing New Zealand. As I said to the member, Housing New Zealand has got an extensive investment programme, but the real issue in Auckland is not a lack of Government money, it is a lack of houses. When we go out bidding for social houses, we are competing with providers of emergency houses and with first home owners, and we need more houses on the ground so everyone’s needs can be more easily met.

Metiria Turei: Did the Minister for Building and Housing bid for a State-sponsored build of affordable housing in Budget 2016, given that everything that he has come up with so far has failed to produce affordable housing on the scale that New Zealand families need?

Hon BILL ENGLISH: The Minister for Building and Housing bid primarily for money for the use of surplus Crown land. But the member is simply wrong with her second assertion, and seems to misunderstand, as the Labour Party does, that even if the Government wants to build houses, it cannot build one unless Auckland Council agrees to every single step. And, to be fair to Auckland Council, it is now seeing 40 new houses completed every day in Auckland, but that number needs to rise to 50 or 60 per day. But if the Government wants to do a redevelopment, say at Three Kings, it still has to deal with the community group that does not want that redevelopment to occur, or wants it modified—to go through the Environment Court—that is the law of the land.

Metiria Turei: Did the Minister of Local Government propose anything for housing in Budget 2016, other than blaming Auckland Council for the growing housing crisis driven by National in that city?

Hon BILL ENGLISH: The Minister of Local Government did not put in a housing bid, because he does not have any capacity to do that. What he is doing though is going around the country, working with local government, trying to get it more focused on the growth opportunities that come with a growing population, because a number of councils have yet to fully adapt. I give Auckland Council the credit for lifting the rate of building from about 20 a day, 6 or 7 years ago, to 40 a day today. The Auckland construction industry is in its fourth year of 20 percent compound growth.

Metiria Turei: Did the Minister for Māori Development bid for more funding for marae in Budget 2016 so that they could better house families who are currently living in cars and garages?

Hon BILL ENGLISH: No, he did not, but he certainly did bid for more funding for housing, because the Minister for Māori Development wants to help all those iwi who can now see that they can participate as providers of social housing right across New Zealand. The Māori Party is building a social housing network that will mean that in the future we will not be reliant on one Government monopoly—that is, Housing New Zealand—to meet the needs of every New Zealander with serious housing needs.

Metiria Turei: Did the Minister for Social Development propose, in Budget 2016, wiping the debt that New Zealanders owe to Work and Income for emergency housing, given the many months that beneficiaries are being forced to live in expensive emergency housing?

Hon BILL ENGLISH: The Minister for Social Development has pretty good insight into the often complex and challenging aspects of the lives of the people to whom the member is referring. The Minister for Social Development oversees the expenditure of $1.3 billion on accommodation benefit, part of the $2 billion that we spend every year subsidising housing. One of the reasons we want to change the Resource Management Act and want to see a proper unitary plan in Auckland is to reduce the pressure on Government to continually increase subsidies because of poor and misdirected planning that prevents enough houses being built.

Metiria Turei: Did the Minister responsible for HNZC recommend to Cabinet that his State house sell-off programme should be stopped as part of Budget 2016, given that there are 4,500 people on the Housing New Zealand waiting list today?

Hon BILL ENGLISH: No, because that would not help. In fact, what is happening is that there is an increase in the social housing stock in Auckland primarily because we have been able to change the system to secure houses from organisations other than Housing New Zealand. The selling of State houses has been applied in those areas where there is less demand, and certainly not large numbers of people on the register.

Tobacco Products—Legislation

6. Rt Hon WINSTON PETERS (Leader—NZ First) to the Associate Minister of Health: What is the real purpose behind his statements and legislation regarding tobacco product sales in New Zealand?

Hon Peseta SAM LOTU-IIGA (Associate Minister of Health): The real purpose behind my statements and legislation on tobacco product sales is that it saves many New Zealanders’ lives and it reduces the harm from cigarettes and tobacco.

Rt Hon Winston Peters: If he and the Government sincerely believe what he just said, then why does he and it not forego over $1.6 billion in taxes on tobacco and cigarettes and just ban them now?

Hon Peseta SAM LOTU-IIGA: No—the intention is not to ban cigarettes; the intention is to reduce the harm from cigarettes. That member knows that 4,500 to 5,000 people per year die prematurely from tobacco smoking, and that is why we are putting in place these measures.

Rt Hon Winston Peters: Why has the Government, whilst filling its coffers with $1.6 billion in taxes, launched this further attack on consumers of a legal product, many of whom are poor and a disproportionate number of whom are Māori and Pacific Islanders?

Hon Peseta SAM LOTU-IIGA: That member knows that the direct cost of tobacco smoking can be up to $1.9 billion. That member also knows that the intangible costs have been estimated to be up to $11 billion. These measures that we are putting in place are about reducing the harm to New Zealanders.

Rt Hon Winston Peters: Minister—[Interruption]

Mr SPEAKER: Order! I have not called the member yet. I am just waiting for a bit more assistance from my left.

Rt Hon Winston Peters: If that statement was remotely true, why does he and his Government not ban the smoking of tobacco and cigarettes and leave off this PC attack on the working people of this country when, in fact, that Government gains $1.6 billion – plus in taxes and does not tax multinationals for their $10 billion of transactions in this country—what is honest about that?

Hon Peseta SAM LOTU-IIGA: We know that increasing the price on tobacco is only one tool to reduce smoking rates. That is why we have got face-to-face programmes in place for smoking cessation, that is why we have got the Quitline, and that is why we do media campaigns—in order to bring down the rates of smoking.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker. From the start of the answer to my second question onwards, this Minister has not answered the question. I want to know why he does not ban it. All he is telling me is what he is not going to do.

Mr SPEAKER: Order! I have listened to every question. They have been quite sizable questions, and they have been addressed on every occasion.

Rt Hon Winston Peters: I raise a point of order, Mr Speaker.

Mr SPEAKER: I hope the member is not in any way—

Rt Hon Winston Peters: No, I am not.

Mr SPEAKER: Good I will hear the fresh point of order.

Rt Hon Winston Peters: I would like to know, if I could, which part of the Minister’s answers gave me the answer to the question, which was: “Why will he not ban it?”.

Mr SPEAKER: Order! The member is now going back and relitigating a decision I have already made. Go back and look at the length of the question. The member, in asking questions, put plenty into his questions, giving the Minister a far easier job in answering those questions and addressing them, and he has done so. I do not want this matter relitigated.

Rt Hon Winston Peters: Point of order

Mr SPEAKER: No. Order! The member is not attempting to relitigate where we have just been, is he?

Rt Hon Winston Peters: No. I seek leave to table from the Parliamentary Library the real facts on the excise duty being collected by this Government—

Mr SPEAKER: Order! I just want quickly the details of the information. I might put the leave.

Rt Hon Winston Peters: The details are that 80 percent of the cost of the packet of cigarettes goes to the Government; the other 20 percent to everybody else, including the tobacco companies.

Mr SPEAKER: Order! The documents being described may be of interest to members, so I will put the leave. Leave is sought to table that information from the Parliamentary Library. Is there any objection? There is objection.

Marama Fox: As a result of Māori Party lobbying and the introduction of four pieces of legislation by the Hon Dame Tariana Turia related to tobacco, how much have rates of tobacco consumption reduced since 2006?

Hon Peseta SAM LOTU-IIGA: The rates of consumption in the last 5 years have decreased by 25 percent. The smoking incidence in the last 5 years has decreased from 18 percent to 15 percent, and I would like to thank that member and the Māori Party and Dame Tariana Turia for the leadership and the vision that they have shown in this battle against this very large health issue.

Rt Hon Winston Peters: Is the Minister aware of the research of Dr Mārewa Glover on this matter, which utterly debunks the answer to the question that he gave to Marama Fox, as one would normally expect?

Hon Peseta SAM LOTU-IIGA: No, I am not aware of that member’s assertion. There is clear evidence that lower-income members of society are more price-sensitive, and that is how tax increases work. And Professor Blakely’s research I have taken on board, in that tax increases have been effective in bringing down the rates of smoking.

David Seymour: In light of the Minister’s answer that 15 percent of New Zealand adults currently smoke, what does he believe the percentage will be in 4 years’ time after the measures introduced in the Budget and today have been put in place?

Hon Peseta SAM LOTU-IIGA: I do not have a crystal ball to be able to see what is going to happen 4 years from now, but what I do know is that the rates of smoking have consistently decreased since this Government has been in power. In fact, there are 37,000 fewer smokers today than there were 3 years ago.

David Seymour: If the Minister lacks a crystal ball, could he at least be good enough to give the House his best estimate on which he introduced these policies?

Hon Peseta SAM LOTU-IIGA: Well, history is a good gauge of what may happen in the future, and history has shown that this Government’s measures have led to a 25 percent reduction in the consumption of tobacco. They have led to a reduction in the number of smokers over the last 7 years.

David Seymour: Is the House to take it that he actually has no idea what the benefits of his policy will be, even though the costs will be large?

Hon Peseta SAM LOTU-IIGA: I refute that assertion by the member. In fact, that member voted for these measures last Friday. So I put it to that member that what he voted for was clearly beneficial for New Zealanders, it is going to bring the smoking rates down, and I suggest he thinks about why we voted the way we did last Friday.

Housing, Auckland—Supply

7. PHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and Housing: Does he support abolishing Auckland’s urban growth boundary and replacing it with a smarter way of managing urban growth that includes bond-financing infrastructure; if not, why not?

Hon Dr NICK SMITH (Minister for Building and Housing): The Government is systematically dismantling Auckland’s urban growth limit through special housing areas, the fast-track unitary plan, and changes to the Resource Management Act, and this week we will be furthering this work with a national policy statement on urban development capacity. On funding infrastructure, the Government reformed the system of development contributions in 2014. That enables a more flexible approach of development agreements that enable the use of infrastructure bonds. However, we need to be plain that the costs of water, sewerage, footpaths, and drainage of subdivisions should be met by the developer. It would be wrong for developers to convert bare land into sections, to take $450,000—the median section price in Auckland—and then get someone else to pay for the infrastructure works.

Phil Twyford: Which statement reflects the Government’s position: when Bill English said Labour’s proposals on infrastructure financing were “interesting and constructive”, or when he said they were “creative accounting” and “nothing more than fool’s gold”?

Hon Dr NICK SMITH: The very changes that our Government made to the Local Government Act do allow appropriate infrastructure bonds to be used for infrastructure. Where I disagree with the member is this: the idea that you have an infrastructure bond or a special rate to pay for the sewerage, to pay for the water, and to pay for the footpaths in an immediate subdivision and bail out the developer, who picks up the big increase in value from sections, would, in our view, be a mistake. It would support the land bankers, rather than supporting the ordinary Kiwi families that need an affordable home.

Phil Twyford: Does he agree with the New Zealand Herald that his approach to make more land available in Auckland without new methods of financing infrastructure is “simplistic and, on its own, won’t achieve much”, but that Labour’s infrastructure bonds plan is “a very good answer”?

Hon Dr NICK SMITH: Oh, if only the New Zealand Herald had said that! The member, as usual, makes it up. I would note this, though. At the last election Labour said that the most you could get from KiwiBuild would be growth of 12,500 homes in home-building in this term of Parliament. We are on track to deliver double that—25,000 homes for Auckland—and that shows the progress we are making.

Phil Twyford: Does he think that Auckland Council’s plan to drip-feed 11,000 hectares of land into supply over the next 30 years is enough, or does he agree with Labour that getting rid of the boundary would do more to bring land prices down?

Hon Dr NICK SMITH: The irony in that member’s statement is that when the Productivity Commission came out with exactly that recommendation, he called it an ideological burp from the extreme right. When I changed that policy 3 years ago and started implementing it, he said it was an “idiotic policy”. So I say to the member opposite that he should listen to his own advice. He has come as a late conversion on the road to Damascus; we are getting on and doing the hard work.

Alfred Ngaro: What growth has been achieved in the rate of new home constructions?

Hon Dr NICK SMITH: The latest numbers out today show over 28,000 new homes over the last year, and $17.6 billion in building activity, which is an all-time high for New Zealand. In this term of Parliament we are expecting to build 85,000 homes. That is 25,000 more than in the last Parliament, when 60,000 were built. Specifically in respect of Auckland, 36,000 homes are going to be built during the term of this 51st Parliament, and that is the largest number ever on record in Auckland.

Phil Twyford: In light of that answer, how does he intend to build the 37,000 houses by the election that it would take for him to equal Labour’s building record in office?

Hon Dr NICK SMITH: We need to be honest about what occurred in 2008, because with the global financial crisis, the rate of home construction collapsed, down to Labour’s last month where only 10 houses per week were being built. We are now building 40 houses per week, and it shows the progress that this Government is making in building a record level of house construction. [Interruption]

Mr SPEAKER: Order! I will call the member; I do not need any assistance.

Rt Hon John Key: Has the Minister considered emailing his policies to Phil Twyford so that Phil can get and adopt those policies even quicker than taking the 12 months he normally takes?

Mr SPEAKER: Order! No; that question is out of order.

Budget 2016—Health Services

MAUREEN PUGH (National): My question is to the Minister of Health—

Mr SPEAKER: Order! The interjection between two members, both frontbenchers, must cease. Maureen Pugh can start again.

8. MAUREEN PUGH (National) to the Minister of Health: How will Budget 2016 continue to support greater access to health services, like the 26 percent rise in specialist appointments over the past 6 years?

Hon Dr JONATHAN COLEMAN (Minister of Health): Budget 2016 invests an extra $2.2 billion into the health system over the next 4 years, the biggest increase in 7 years and almost $170 million more than last year. This will increase access to services for more New Zealanders: faster cancer services, greater access to pharmaceuticals, more operations, and progress on bowel screening, to name but a few.

Maureen Pugh: How will surgical patients benefit from Budget 2016?

Hon Dr JONATHAN COLEMAN: This year’s Budget includes $96 million over 4 years to boost the number of elective surgeries by an average of over 4,000 per year. That builds on the increase in the number of patients receiving specialist assessments, including in orthopaedics, where appointment numbers have increased from 43,000 to 55,000, up 28 percent. However, there is always more to do.

Maureen Pugh: I would love to know how the West Coast will benefit—

Mr SPEAKER: Order! We will just have the question please, without the first part.

Maureen Pugh: Sorry. How does the West Coast benefit from increased investment in health?

Hon Dr JONATHAN COLEMAN: Very good question, and here is the answer. Last week the Government announced an extra $9.7 million for the new Grey Base Hospital, and I am pleased to say that construction work on the $78 million facility began yesterday. This new high-quality facility includes 56 in-patient beds, three operating theatres, and an integrated family health centre. The West Coast also received an extra $3 million in new money as part of this year’s Budget, taking the district health board’s total funding to $132 million for 2016-17. That is an extra $25 million over the last 8 years. I know that the Opposition will want to join the Government in welcoming this world-class facility for the people of the West Coast.

Prime Minister—Statements

9. Rt Hon WINSTON PETERS (Leader—NZ First) to the Prime Minister: Does he still stand by his statement, “Let me be clear: there is no room for separatism in New Zealand”; if so, how?

Rt Hon JOHN KEY (Prime Minister): No need to shout; I am not losing my hearing. I stand by my full statement, which was: “there will always be extremists in the debate who falsely characterise things in a way that may even frighten you. Let me be clear: there is no room for separatism in New Zealand.” That statement was made in the context of the marine and coastal area debate, when some people were arguing that New Zealanders would be unable to visit the beach and that New Zealand had become an apartheid State. I will leave it to that member to determine who the extremist trying to frighten and divide New Zealanders for political gain might have been.

Rt Hon Winston Peters: If, to quote the Prime Minister, “There is no room for separatism in New Zealand”, why are millions of dollars towards increasing electoral participation being given out, not to the Electoral Commission, which is subject to both monitoring and performance criteria, but on race-based criteria?

Rt Hon JOHN KEY: The member would have to be clear by what he means.

Rt Hon Winston Peters: To be clear, Prime Minister, who is all over everything else in the past, why is he providing a slush fund of $5 million to Te Puni Kōkiri in a separatist approach to electoral participation, where there are no performance requirements whatsoever?

Rt Hon JOHN KEY: The member would need to ask the Minister for Māori Development.

Rt Hon Winston Peters: Why is the Government pursuing a separatist race-based spending policy, when, for instance, as Marama Fox boasts: “Every Māori will be on the Māori roll, and it will be near impossible to get them off and on to the general roll”, where most Māori now are; why is he pursuing such a race-based policy?

Rt Hon JOHN KEY: The Government has legal responsibilities about people going on the electoral roll, whether it is on the general roll or the Māori roll.

Schools—Funding

10. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education: When she accepted some responsibility for Hon Bill English’s statement that a lot of Kiwis are “pretty damned hopeless” and “can’t read and write properly”, was she referring to the findings of a survey that just 14 percent of secondary principals thought their school’s government funding was sufficient?

Hon HEKIA PARATA (Minister of Education): Tēnā koe. No, but it might mean that the member cannot read properly. I was last asked about Bill English’s statement in the House on 5 May. The New Zealand Council for Educational Research survey that the member refers to was published 2 weeks later on the 19 May, so unless I owned a time machine it would have been impossible for me to have been referring to that. It is naïve to think that principals would not always argue for more funding, just as I always argue for more funding for Vote Education.

Chris Hipkins: Why did she freeze school operations funding in Budget 2016 when 46 percent of secondary school principals say that a lack of funding is forcing them to cut field trips, the number of subjects their school offers, and funding for curriculum resources—and that was before the freeze was even announced?

Hon HEKIA PARATA: I have not frozen any funding whatsoever. What I have done, instead of providing for a universal grant, is target that funding for those kids most at risk of not achieving, and, in fact, respond to this commentator’s quote that “The modern education system needs to address poverty and the enormous effect it has on student achievement, improve targeted support to those students who need extra help either because they are struggling or due to special needs…”. The quote is from Chris Hipkins in December 2015.

Chris Hipkins: What specific poverty criteria will be used to allocate the additional funding?

Hon HEKIA PARATA: Specifically, those young people who have been identified as coming from long-term benefit-dependant households.

Chris Hipkins: If school funding is sufficient, why is demand from schools for parents to fork out for donations rising at 10 times the rate of inflation?

Hon Dr Nick Smith: Because inflation’s so low.

Hon HEKIA PARATA: Well, as the Minister says, because inflation is so low. The donations by definition—helping again with literacy on that side of the House—are voluntary. Funding for schools is provided for the delivery of the curriculum and this Government has increased Vote Education every year that it has been in Government. The decision about what donations are asked for is between the board, which comprises mainly of parents and grandparents, and the school. That is not something I have, or wish to have, control over.

Tracey Martin: Can the Minister tell us whether any work is being done on the revaluation of the delivery of the New Zealand curriculum, considering the new technical advances that now have to be delivered inside that curriculum?

Hon HEKIA PARATA: I am not entirely sure I have understood what the question actually is.

Mr SPEAKER: Would it help if I asked the member to repeat the question?

Hon HEKIA PARATA: To repeat it? That would be helpful.

Tracey Martin: Is the Minister, or the ministry, doing any work around the revaluation of the New Zealand curriculum, considering that new technical advances mean that subjects such as art must be delivered in a much more expensive manner, when considering the investment into current New Zealand education?

Hon HEKIA PARATA: Again, in so far as I can answer the question—because I do not know where the assertion comes from; that delivering the art curriculum is more expensive. What we are focusing on—[Interruption]. Perhaps the member would like to hear my answer. What we are focusing on is growing the quality of the curriculum, and we are seeing the result of that because we are seeing lifts in achievement, because we have transparent data every year.

Chris Hipkins: If school operations funding is sufficient, why has—[Interruption]

Mr SPEAKER: Order! Can the member please start the question again.

Chris Hipkins: If school operations funding is sufficient, why has the amount of funding contributed to schools by parents through donations increased by over 30 percent during the National Government’s tenure in office?

Hon HEKIA PARATA: Based on the actual returns by schools, donations by parents have remained at a steady 1.8 percent.

Schools—Funding

11. Dr JIAN YANG (National) to the Minister of Education: What recent announcement has she made that demonstrates the Government’s commitment to investing in educational achievement?

Hon HEKIA PARATA (Minister of Education): This Government has invested the most money ever in education. At just over $11 billion, it continues this Government’s considerable investment in the educational future of all our children and young people. The investment includes an extra $396.9 million over the next 4 years in early childhood education, providing funding for over 14,000 more children in 2019-20. It includes: $42.1 million for children with special needs over the next 4 years; $882.5 million for school property for 480 new classrooms, nine new schools, two school expansions—

Tracey Martin: Even charter schools? Spending over private property, but with public money.

Hon HEKIA PARATA: —and the relocation and rebuilding of three schools and a kura; and $43.2 million over the next 4 years for schools educating students most at risk of educational under-achievement. Given the nonstop talking of the member from New Zealand First, I helpfully have a postcard here that sets out all of those numbers I have just read.

Dr Jian Yang: How will this investment ensure educational success for the most vulnerable New Zealanders?

Hon HEKIA PARATA: Budget 2016 uses a social investment approach to direct an extra $43.2 million of operating funding over 4 years to schools educating about 150,000 students most at risk of educational failure. The schools targeted for this new funding have students who have spent a significant proportion of their lives in benefit-dependent households. Research shows that children aged between 6 and 14 who have been supported by benefits for three-quarters of their lives have only a 48 percent chance of achieving National Certificate of Educational Achievement (NCEA) level 2 by age 21. By contrast, 73 percent of the general population will have NCEA level 2 by that age. Indicative modelling shows that the overwhelming majority of schools will receive some extra funding. This targeted approach to operational funding will increase these students’ chances of getting the educational qualifications they need and deserve.

Dr Jian Yang: What benefits will this investment bring to New Zealand children?

Hon HEKIA PARATA: Education is a passport for a better future. This investment will ensure that the children at greatest risk of under-achievement will get the support they need to succeed in education. This is intended to protect them from a host of poor social outcomes in their adult lives, which lead to increased costs to themselves and to the Government in the future. It will ensure that New Zealand children grow up to be successful, productive, and confident Kiwis.

Chris Hipkins: What does it say about the Government’s priorities in education that the funding allocated in this year’s Budget for new charter schools is almost the same as the total increase in funding for all secondary schools in New Zealand?

Hon HEKIA PARATA: The first thing to say is that overall Vote Education has gone up by 2.5 percent. The second thing to say is that the member is comparing a very small part of the overall investment in education. The third thing to say is that the kids who are at the partnership schools are kids who have not been successful in other options and are now being successful. The fourth thing to say is that we are committed to choice and diversity in our education system, and no parent is being forced to send their kids to partnership schools.

Freshwater Management—Water Quality of Rivers

12. CATHERINE DELAHUNTY (Green) to the Minister for the Environment: What advice, if any, has he received on the economic, cultural, health, or environmental benefits of making rivers safe for swimming?

Hon Dr NICK SMITH (Minister for the Environment): My advice is that leaving water quality decisions totally to regional councils without Government direction, as was the case for 25 years, was not working. That is why this Government developed New Zealand’s first national policy statement on fresh water, which, alongside the record investment of over $350 million in freshwater clean-ups is providing health and environmental benefits. Earlier this year I consulted the public on further refinement of these standards and a new compulsory requirement to fence stock out of rivers and lakes, which will improve swimmability of our waterways.

Catherine Delahunty: Will the environmental benefits that the Freshwater Improvement Fund announced in the Budget include making rivers safe for swimming, or just meet the Government standard of wadeable rivers?

Hon Dr NICK SMITH: Absolutely. It will be committed to the issue of improving swimmability as well. The national policy statement introduced by this Government in 2011 is actually the first national direction from any Government in New Zealand about the importance of our water bodies being swimmable.

Catherine Delahunty: Given the negative impact on water quality by intensive dairy farming and irrigation, how will opening up the Freshwater Improvement Fund to irrigators make our rivers safe for swimming?

Hon Dr NICK SMITH: My first point is that if we look at the swimmability of our waterways, let us not just talk about intensive farming. The region that has the least number of water bodies available to swim in is Auckland, where the principal pollutants are urban. So both urban and rural New Zealanders need to lift their game in respect of swimmability. On the issue of irrigation schemes, I would draw the member’s attention to a scheme that my colleague Nathan Guy is working hard on in respect of the Waimea where, actually, an irrigation scheme that will involve converting dryland farming to apple orchards results in increased production, increased exports, and improvement in water quality. It is not synonymous to say that water storage and irrigation schemes reduce water quality, because that is not true.

Catherine Delahunty: What advice, if any, has he received on the amount of money that could be saved in river clean-up costs if we put a moratorium on dairy intensification?

Hon Dr NICK SMITH: I know the Green Party would want to put moratoriums on every possible activity, whether it be on bottled water, whether it be on horticulture, whether it be on water storage, whether it be on the dairy industry. A blunt tool like a moratorium does nothing more than stop export growth, stop jobs growth, stop economic growth, and that is where National and the Greens disagree.

Catherine Delahunty: I raise a point of order, Mr Speaker. My question—

Mr SPEAKER: Order! No, if the member’s question is whether the question has been addressed, it has certainly been addressed. [Interruption] Order! The question has been addressed.

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