Prime Minister’s Statement to Parliament

Speech – New Zealand Government

The Government is continuing to implement its plan to build a faster-growing economy with more jobs and rising incomes, and to support New Zealanders and their families.John Key

9 FEBRUARY, 2016

Prime Minister’s Statement to Parliament

Honourable Members.

The Government is continuing to implement its plan to build a faster-growing economy with more jobs and rising incomes, and to support New Zealanders and their families.

Over the next year, we have a comprehensive policy agenda, and a substantial legislative programme to put before the House.

Our policy agenda and legislative programme will reflect the Government’s four priorities:

• to responsibly manage the Government’s finances

• to build a more competitive and productive economy

• to deliver better public services to New Zealanders, and

• to support the rebuilding of Christchurch.

This year we look forward to continuing strong and effective relationships with our confidence and supply partners – ACT, United Future and the Maori Party.

The agreements we have with these parties, and the goodwill and respect that exists between us, enable the Government to operate in an effective, stable and inclusive manner.

Honourable Members.

The New Zealand economy continues to expand.The latest Treasury forecasts show economic growth averaging around 2.7 per cent a year over the next five years.

On average, people’s incomes are growing faster than inflation, and the forecasts show continued employment growth. Operating surpluses are expected to grow, and net debt to peak in 2017 as a proportion of GDP before beginning to fall.

However, weaker dairy prices, along with other factors, are contributing to slower growth in the nominal economy, which is expected to be around $17 billion lower over the next five years than was expected in last year’s Budget.This flows through to slightly less tax revenue, slightly lower operating balances and slightly higher debt, compared to Budget forecasts.

None of these forecast revisions change the Government’s overall fiscal strategy, which is to keep a tight rein on spending, focus on results from public services, start to pay down debt and look to return any excess revenue on top of this to taxpayers.

The Budget later this year will set out the Government’s revenue and spending intentions.

The operating allowance remains at $1 billion for Budget 2016, $2.5 billion for Budget 2017 and $1.5 billion for both Budget 2018 and Budget 2019, although some re-phasing of these allowances between Budgets is possible.

The Future Investment Fund has now been fully allocated and the capital allowance for Budget 2016 has therefore been increased by $1 billion.

This year the Government will progress legislation to apply GST to cross-border services and intangibles supplied by offshore suppliers, introduce a withholding tax on certain sales of residential property by people living overseas, and remove some of the legislative obstacles to making tax administration simpler and more certain.

The Government will continue to support the implementation of Inland Revenue’s long-term Business Transformation programme to modernise and simplify New Zealand’s tax system. It will also continue to work with other OECD countries on addressing international base erosion and profit shifting.

This year,ACC levies will drop by a total of $450 million and the Government will also confirm the funding policy for future levies.

From 1 April, the average work levy paid by businesses will reduce by 11 per cent to 80 cents per $100 of liable earnings, and the earners’ levy, paid by everyone in the paid workforce, will decrease by 4 per cent to $1.21 per $100 of liable earnings.

From 1 July, the average motor vehicle levy will drop by a third, to around $130 per vehicle. Honourable Members.

The Business Growth Agenda is the Government’s programme of work to build a more productive, confident and competitive economy that will deliver higher incomes and higher living standards for New Zealanders.

The BGA is focused on six key inputs for businesses: skills, exports, infrastructure, innovation, natural resources and investment. It also captures three important cross-cutting themes – Maori economic development, sectors and regions, and regulation.

The Government will continue this year to support and add to this programme.

This includes a Regional Growth Programme, working with local communities to identify economic growth opportunities in five regions – Northland, Bay of Plenty, East Coast, Manawatu-Whanganui and the West Coast. It also includes implementing the Investment Attraction Strategy to get more high- quality foreign business investment in New Zealand.

The Trans-Pacific Partnership Agreement is today being presented to this House for examination, together with a National Interest Analysis.TPP offers much better access to large and important markets for New Zealand’s goods and services, and New Zealand has had to make relatively few concessions in return.A free trade agreement including the United States and Japan – the first- and third-largest economies in the world – has been sought over many years by successive New Zealand governments.

Legislation will later be introduced to implement those parts of TPP that require a law change. Full public consultation will occur during these stages.

The Government will also continue to progress a number of other high-quality trade agreements, including a potential agreement with the EU and an upgrade of New Zealand’s FTA with China.

The Government will continue to work with and support the tourism industry, building on a 38 per cent growth in international visitor expenditure in the last year.This includes efforts to drive visitor numbers in the shoulder seasons, prioritise emerging markets, and increase special interest, business events and premium travel.

Legislation will be introduced this year to enable New Zealand’s border services to respond and adapt effectively to new technologies, business practices and security risks.The Government will also consider options to streamline the collection of duty on low-value physical imports.

The Government and primary industry organisations will continue to share resources and work together to manage and respond to the most important biosecurity risks.

The Government will this year progress legislation to reform the Resource Management Act, to reduce costs and delays for homeowners and businesses, and to improve New Zealand’s planning and environmental controls.Among other things, the bill aims to achieve stronger national direction to improve consistency, simpler and quicker consenting, more affordable housing and improved environmental management.

Legislation will also be introduced to create an ocean sanctuary in the Kermadec region.At 620,000 square kilometres, this would be one of the world’s largest fully-protected areas.

The Government will consult publicly on a review of the Fisheries Management System, on improving the responsible use, management and conservation of New Zealand’s ocean environment, and on regulations to be issued under the recently amended Animal Welfare Act.

The Government will respond to a review of competition in the dairy sector and will partner with industry in new R&D programmes through the $720 million Primary Growth Partnership.

The Government will this year continue to encourage petroleum and mineral exploration while adhering to strong environmental and safety provisions. Projects such as aeromagnetic surveys and petroleum basin analysis will continue and, by 2017, data will be available on around 30 per cent of New Zealand’s land surface.

The Government will also continue to promote competition in the electricity market, for the benefit of consumers and to keep downward pressure on power prices. There are now around 30 electricity retail brands operating in New Zealand – the highest number on record.

The Government will continue to promote New Zealand’s renewable energy advantage. Renewable electricity made up 80 per cent of total generation in 2014 and the Government has a target of reaching 90 per cent by 2025.

Following the Paris Agreement on climate change, the Government will this year complete its review of the Emissions Trading Scheme, which will assess the Scheme’s operation and effectiveness to 2020 and beyond. Public submissions have been invited.

The Government will continue to partner with communities and businesses to protect our natural environment and native wildlife.

Honourable Members.

The Government will this year maintain and advance its programme of investment in modern infrastructure. In the coming financial year, the Government expects to spend a net $6 billion on capital investments, including state highways, schools and hospitals.

The Government will continue construction of the five remaining roads Roads of National Significance, and make progress on accelerated roading projects in Auckland and across the regions.

Significant investment will be made in urban cycleways, and the Government will consider measures to support and encourage the uptake of electric vehicles in New Zealand.

The Government will this year complete its review of the regulatory framework for small passenger services, to ensure regulations in this area are fit for purpose and accommodate new technologies. The Government will also respond to the review of the driver licensing system, and look to progress initiatives to reduce the risks of alcohol- and drug-related impairment in all transport activities.

The Government will help to complete the investigation and development of new regional-scale irrigation proposals, to help provide a reliable water supply.

The Government will this year extend its Ultra-Fast Broadband and Rural Broadband Initiatives, which together involve investment of over $2 billion in faster connectivity.The extension of UFB means it will eventually be available to 80 per cent of New Zealanders.

The Government will this year work to increase the supply of housing in Auckland by making underutilised and vacant Crown land available for residential development. In addition, over the next 10 years, the Government will support private sector development in Auckland of a further 3,000 homes at Hobsonville and at least 7,500 homes in Tamaki.

Legislation will be progressed to require insulation and smoke alarms in all rental properties and to increase enforcement of housing standards, without imposing unreasonable costs.

The Government will continue to strengthen the tertiary education system, including progressing legislation to improve administrative and governance arrangements for educational entities and funding bodies.

Three new ICT Graduate Schools – in Auckland,Wellington and Christchurch – will be funded, and the number of places in Trades Academies will increase.

The Government will also progress legislation to allow information on student loan borrowers to be shared between New Zealand and Australian tax authorities.

Legislation will be progressed to strengthen minimum employment standards and address zero hour contracts. Paid parental leave will be extended to 18 weeks from 1 April, following an increase from 14 to 16 weeks last year.

In April, new health and safety laws will take effect as the Government continues its push to lower New Zealand’s workplace death and injury rates by at least 25 per cent by 2020.

The Government will this year respond to recommendations from the Pay Equity Working Group, and will progress legislation to enable communities to decide – through local councils – whether to allow shop trading on Easter Sunday.

The Government will continue to ensure New Zealand’s immigration policies support economic growth while effectively managing risk at the border.A new Global Impact Visa will be developed to attract the likes of young technology entrepreneurs with global links.

The Government will review the refugee quota programme and complete the rebuild of the Mangere Refugee Resettlement Centre.The Government is also this year welcoming the first tranches of 600 Syrian refugees, on top of the normal annual intake of 750 refugees.

Honourable Members.

The Government will continue to support an increase in business-led research and development towards 1 per cent of GDP.This will include pursuing opportunities to increase R&D investment by multinational companies in New Zealand.

The Government will progress the establishment of Regional Research Institutes, which will accelerate regional economic competitiveness through commercially-focused research. It will also identify opportunities to develop Callaghan Innovation’s existing grant programmes to support business innovation.

The Government will progress legislation to strengthen New Zealand’s anti-cartel regime and will ensure consumers and businesses are well served through reviews of sections of the Commerce Act, the Financial Advisors Act and the Financial Service Providers Act. Feedback has been sought on a proposed bill to modernise the legislative framework for incorporated societies.The Government will also complete a review of Overseas Investment Office fees.

A bill will be introduced to remove 120 pieces of superfluous legislation, and parts of eight other acts. This would reduce the total number of public acts in force by more than 10 per cent.

Honourable Members.

The Government will continue to take a social investment approach to public services and ensure that departments and other agencies are focused squarely on getting better results for New Zealanders.

Over the longer term, what is good for communities through better services is also good for the Government’s books through more effective spending.

As part of this approach, the Government has set 10 challenging results for the public service to achieve, including reducing crime, long-term welfare dependency and educational underachievement. Agencies will continue to work to achieve these targets.

The Government will continue to apply rigorous and evidence-based investment practices to social services.This will include exploring the safe collection and sharing of government and business data through the Data Futures Partnership, and growing the use of data in decision making through initiatives like Statistics New Zealand’s Integrated Data Infrastructure.

The Government is committed to supporting families and children, and to helping more people get off a benefit and into work.

On 1 April this year, benefits for families with children will increase by $25 a week on top of the usual inflation adjustment – the first time benefits have increase in real terms since 1972.At the same time, low-income working families earning $36,350 a year or less, before tax, will get $12.50 extra a week from Working for Families, and some very low-income families will get $24.50 extra.

Most sole parents, and partners of beneficiaries, will have to be available for part-time work once their youngest child turns three, rather than five as now.All beneficiaries with part-time work obligations will be expected to find work for 20 hours a week, rather than 15 hours a week as now.

Childcare subsidies for pre-schoolers and the OSCAR subsidy for out-of-school and school holiday programmes will also increase for lower-income families from 1 April.

The Government will this year progress legislation to provide better support to 19-year-old parents and other unemployed 18- and 19-year-olds at risk of long term welfare dependence. Legislation will be introduced to rewrite the Social Security Act to reflect a modern, work-focused welfare system and to ensure the law is clear and fit for purpose.

Ongoing investment will be made in Whanau Ora.

The Child,Youth and Family Expert Advisory Panel will complete its work this year and the Government will respond to its report.The Government will also continue to roll out Children’s Teams across the country, with the tenth team in Counties-Manukau scheduled to be launched early this year.

Legislation will be progressed to establish a register of child sex offenders, to allow Police and Corrections to assess, monitor and manage risks to public safety.

The Government will continue to improve access to hospital services, including by funding an increase in elective surgical operations.With this year’s increase, the annual volume of elective surgery will have risen by 50,000, or 42 per cent, since 2008.The number of hospital specialist assessments has also risen from 432,000 a year to 542,000 a year, and remains a government priority.

The Government will continue to emphasise prevention and early intervention, supported by the development of a new Health Strategy. Initiatives include the B4 School Check – where a new health target has been created around childhood obesity – and the rheumatic fever prevention programme, which treats sore throats before they develop into rheumatic fever. Immunising children also remains a priority.

This year, Local Mobility Action Teams will begin to deliver early, community-based interventions for osteoarthritis patients, including physiotherapy, exercise programmes and pain management.

Hospital redevelopments will continue in Christchurch, Dunedin and on the West Coast. New facilities at Burwood Hospital are expected to be completed shortly and the new Acute Services building at Christchurch Hospital is scheduled to open in 2018.

The Government will continue to implement the Investing in Educational Success initiative this year, with more schools across the country expected to form communities of learning.This initiative will help to keep the best teachers in the classroom, and establish new teaching and leadership roles.

The Government will continue to drive better educational achievement among New Zealand’s most vulnerable populations, including increasing the number of Maori and Pacifica leaving school with qualifications. Further work on a review of the school funding system will be carried out, to ensure that the students who need the most assistance receive it.

The Partnership School Kura Hourua initiative will be progressed this year, with new schools to be established in 2016 for opening in 2017. Legislation will also be introduced to modernise the framework for education delivery in New Zealand.

The Government will continue to work on the Special Education Update, to ensure that the system is child-centred, simple to access, and available for as long as required.

Significant investment will be made this year in new schools and classrooms, and all eligible schools will be connected to N4L’s Managed Network by the end of the year.

The Government is reforming social housing to grow supply and get better outcomes for people and families most in need of housing assistance.

Starting this year, community housing providers will deliver over 500 new social housing places in Auckland, through long-term contracts with the Ministry of Social Development.A request for proposal for a further 1,000 places is now open for responses.

In March this year, 2,800 Housing New Zealand homes will be transferred to the Tamaki Redevelopment Company.This will result in at least 7,500 new homes in that area over the next 10 to 15 years, of which more than a third will be for social housing.The transfer of Housing New Zealand properties to community housing providers in Invercargill and Tauranga will happen later this year.

Over the next three years, tenancy reviews – especially amongst those paying market rent – is expected to free up over 1,000 social housing places for those with greater housing needs.

The Government will maintain its strong focus on law and order, and on crime prevention. Separate pieces of legislation will be introduced to strengthen the Domestic Violence Act, following the 2015 review, and to act on recommendations from the Philip Smith/Traynor inquiry.

A Police-led, multi-agency Gang Intelligence Centre will be established to tackle and prevent gang crime and reduce the harm it causes to families and communities.

The Government will continue to roll out working prisons across New Zealand to provide offenders with transferable skills to support them in the community when they are released.Additional funding will go towards developing and delivering a drug and alcohol post-release programme.

The Government will progress legislation to modernise the rules governing the court system, including greater use of electronic technology.The Government will also progress reform of the Trust Act and progress legislation to tighten up on drug and alcohol testing of community-based offenders, and on electronic monitoring.

Honourable Members.

The Government will introduce legislation this year to reform Te Ture Whenua Maori Act, to help unlock the economic potential of Maori land.The Government will also continue to resolve historical Treaty of Waitangi claims, and intends for all willing and able iwi to have settled by 2017.

A second referendum on the New Zealand flag will be held in March this year.This will be a binding referendum that allows voters to choose between the current flag and the alternative design chosen late last year.

New Zealand will enter its second year as a member of the United Nations Security Council.We will continue our efforts to support the resolution of conflicts in Syria, the Middle East and elsewhere, and to encourage the Council to be more active in preventing the emergence of new conflicts.

The Government is committed to a strong security and intelligence community to protect the safety and security of New Zealanders.This year the Government will respond to the independent review of the intelligence and security agencies and their governing legislation.

New Zealand is not immune to the threat posed by the Islamic State of Iraq and the Levant.The Government’s response to ISIL will continue to span humanitarian assistance, diplomatic efforts through the United Nations, working with like-minded states, and through our Defence Force training mission in Iraq.

This year the Government intends to release a Defence White Paper.The White Paper will be the blueprint for how the Government addresses the security threats, challenges and opportunities facing New Zealand over the next 25 years.

A review of the non-combat training mission in Iraq will be completed.

A bill will be introduced this year to modernise the mandate of New Zealand’s fire services and bring volunteer, career, urban and rural firefighters together in one, integrated, new national fire service.

The Government will also progress the Civil Defence Emergency Management Amendment Bill to enable communities to better recover from small to moderate scale emergencies.

Honourable Members.

This year’s Budget will commit the last major tranche of funding to support the rebuilding of Christchurch after the destructive earthquakes in 2010 and 2011, as we move from recovery to regeneration.

The Government’s contribution to the rebuild is very significant, totalling around $17 billion, including payments made by the Earthquake Commission, net of reinsurance proceeds.

The focus is now on regenerating the economic and social life of the city as key projects are completed and the new Christchurch takes shape.

This year will see a transition to greater local control as the Canterbury Earthquake Recovery Authority is wound up. CERA’s functions have been passed to other government departments, and the Government has established two new organisations in its place.

A new Crown company, Otakaro Ltd, has been established to oversee the development of the central city anchor projects.Another organisation, Regenerate Christchurch, will provide strong local leadership. It will have the ability to propose planning changes and oversee the long-term development of the central city, residential red zone and New Brighton.

This year will see further progress made on the central city anchor projects, the Convention Centre, the Metro Sports Facility and residential developments in the East Frame.

The Justice and Emergency Services Precinct will be completed this year, which brings together all justice and emergency services in one purpose-built precinct in central Christchurch.The SCIRT horizontal infrastructure repair programme is also nearing completion.

Honourable Members.

Over the course of this year, other legislation will be put before the House and other policy initiatives will be pursued.

The Government has a busy work programme in front of it.

Our approach will remain as it always has been, taking the public with us by clearly outlining our actions and priorities, and always keeping in mind why we are in government – to make this country a better place for New Zealanders and their families.

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