Questions and Answers – August 19

Press Release – Office of the Clerk

1. CHRIS BISHOP (National) to the Minister of Finance : How does the Governments fiscal strategy support the New Zealand economy?
Questions to Ministers

Economy—Fiscal Strategy

1. CHRIS BISHOP (National) to the Minister of Finance : How does the Government’s fiscal strategy support the New Zealand economy?

Hon BILL ENGLISH (Minister of Finance): At the time of the Budget we issued the latest Fiscal Strategy Report setting out the Government’s priorities. These priorities, for good management of Government finances, underpin the stability and sustainability of Government transfers and services, and have been an important part of the sovereign rating provided by credit rating agencies to New Zealand. These priorities are: returning to surplus this year; reducing net debt to 20 percent of GDP by 2020; reducing ACC levies; beginning to reduce income taxes from 2017, with a focus on low and middle-income earners; and using any windfall gains to get debt down to 20 percent by 2020.

Chris Bishop : What progress has the Government made on the first of its priorities, which is returning to surplus this year?

Hon BILL ENGLISH : Four years ago the Government posted the largest deficit that a New Zealand Government has had—$18 billion, or 9 percent of GDP—following the global financial crisis and Canterbury earthquakes. The deficit was halved in 2012, halved again in 2013, and reduced to $2.9 billion last year. The Government continues to focus on achieving the surplus target. We will not know for another couple of months whether we will get to surplus in 2014-15. What is clear is that the Government is succeeding in supplying more services and better services to the New Zealand public, under relatively tight financial conditions.

Chris Bishop : What progress has the Government made in progressing its other fiscal priorities?

Hon BILL ENGLISH : We remain on track with the other priorities. In Budget 2015 we signalled another $500 million reduction in annual ACC levies, on top of the $1.5 billion reduction since 2011. Our net debt is projected to fall to 19.7 percent of GDP by 2020-21, in line with our long-term target. And if there are any positive revenue surprises, which looks a bit less likely now, then we would apply those to reducing debt.

Chris Bishop : What are the benefits of returning to surplus and paying down debt? [Interruption]

Mr SPEAKER : Order! [Interruption] Order! I have called the Minister of Finance to answer the question.

Hon BILL ENGLISH : New Zealand Governments have tried to run low debt for the last 20 or so years in order to ensure that they can deal with significant economic shocks, such as the global financial crisis and the Christchurch earthquakes. But achieving lower debt now does mean that for the foreseeable future the Government will have to be quite careful with its spending so that it can generate sufficient surpluses to reduce the debt that we have run up over the past 6 or 7 years.

Foreign Affairs, Minister—Auditor-General Investigation

2. JAMES SHAW (Co-Leader—Green) to the Prime Minister : Will he stand down Hon Murray McCully as Minister of Foreign Affairs while the Auditor-General investigates the Saudi Arabia Food Security Partnership; if not, why not?

Rt Hon JOHN KEY (Prime Minister): No; because I do not believe that it would be appropriate to do so under the circumstances.

James Shaw : Given that the Auditor-General had “insufficient information about the legality” of the Saudi deal, how can the Prime Minister continue to have confidence in a Minister who pushed the deal through anyway?

Rt Hon JOHN KEY : I am not going to go through all the merits of it, because it is now before the Auditor-General, but I think that the member is actually referring to a statement made quite early on in the piece—there was a lot that happened after that—but I am advised that the officials confirmed that the transaction was lawful and within the scope of the ministry’s appropriation.

James Shaw : Does he have concerns about Murray McCully’s involvement in the Saudi sheep deal, given that Murray McCully has previously been caught making “unlawful payments” to members of the Tourism Board?

Rt Hon JOHN KEY : No.

James Shaw : Given that Judith Collins resigned prior to an inquiry being launched on the basis of one email, why has the Prime Minister not called for Murray McCully’s resignation, given that there is now an investigation into his actions?

Rt Hon JOHN KEY : I note that Ms Collins resigned, but I am also advised that officials confirmed that the transaction was lawful, within the scope of the ministry’s appropriation in the purview of Cabinet. I am quite happy with the transaction.

James Shaw : Given that Phil Heatley resigned over a $70 expense claim, why has the Prime Minister not asked Murray McCully to resign for making a $4 million payment of questionable legality?

Rt Hon JOHN KEY : I am pretty sure that what the Auditor-General will find is that it is not of questionable legality; it is lawful.

James Shaw : Given that Ministers have gone down over emails and $70 expense claims, does his propping up of Murray McCully show that his own standards are slipping?

Rt Hon JOHN KEY : No. I am quite comfortable, actually, that the transaction will bear the scrutiny of the Auditor-General. It was done within the purview of officials, it was done lawfully within the authority that the Ministry of Foreign Affairs and Trade and others had, it was signed off by Cabinet, and I am very comfortable with the process.

James Shaw : Why should Kiwis be represented on the world stage by a Minister who is under investigation for yet another possibly unlawful payment?

Rt Hon JOHN KEY : The Minister is not under investigation.

Grant Robertson : Yes, he is.

Rt Hon JOHN KEY : No, he is not. The Minister is not under investigation, and he has my 100 percent confidence.

Question No. 3 to Minister

ANDREW LITTLE (Leader of the Opposition): I raise a point of order, Mr Speaker. This question was originally set down for the Prime Minister, and I therefore seek leave for the House to have the question transferred back to the Prime Minister.

Mr SPEAKER : Order! No. I refer the member to Speaker’s ruling 169/5. I am not prepared to put the leave. It is the prerogative of the Government to decide whom the question goes to. It has made that decision. If the member wants to continue asking it as it is on the Order Paper, he can do so.

CHRIS HIPKINS (Labour—Rimutaka): I raise a point of order, Mr Speaker. I anticipated that this was going to arise because of the transfer of the question, so I went back and reviewed all of the Hansard from the last Labour Government when the then Leader of the Opposition, John Key, was putting down questions to the then Prime Minister, Helen Clark, and I could not find any examples of where the Prime Minister transferred a question from the Leader of the Opposition—from the Leader of the Opposition. Therefore, I ask that the House give consideration to whether the ruling that you have referred to should actually apply in this circumstance. There has to be an ability for the Opposition to question the Prime Minister on a range of issues. The Prime Minister is, ultimately, responsible for all issues around the Government’s policy and progress.

Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery): I raise a point of order, Mr Speaker. Quite apart from the fact that the appropriate delegation does lie with the Minister who was going to answer the question today, referring to the previous Government’s arrangements simply points to the fact that when it came to Helen Clark, she was head and shoulders above anybody else in that Government in competence.

Mr SPEAKER : Order! [Interruption] Order! The last comment—[Interruption] Order! I am on my feet for the benefit of all members. The last comment from the Leader of the House was unhelpful to the order of the House, but in regard to the point—[Interruption] Order! In regard to the point raised by Chris Hipkins, there are plenty of opportunities for the Leader of the Opposition to ask questions of the Prime Minister, and that has been used on a very regular basis through most question times. When I look at the wording of this particular question, it is very much about the workings of the Overseas Investment Office, and, therefore, I see no difficulty at all with the fact that it has been transferred. I do not think, in any way, that it will lessen the quality of the answer. The answer, therefore, is that in the future, if the Leader of the Opposition wants to target a question to the Prime Minister, he needs to change the wording, and in this case not refer so much to the portfolio of the Overseas Investment Office.

Chris Hipkins : Point of order—[Interruption]

Mr SPEAKER : Order! This is a point of order.

CHRIS HIPKINS (Labour—Rimutaka): I raise a point of order, Mr Speaker. The point of order is this: it is the tension that the Opposition finds between asking general primary questions and more specific primary questions. What we are endeavouring to do now in most of our questions—rather than asking “Does he stand by all of his statements?”—is actually be more specific and give an indication of the direction of travel of the supplementary questions. The risk of doing this is that now, under this arrangement, the Prime Minister could, in fact, answer next to no questions, because as soon as we give an indication of the nature of the question, he has grounds to transfer it. [Interruption]

Mr SPEAKER : No. I need no further assistance—

Hon Gerry Brownlee : Point of order, Mr Speaker.

Mr SPEAKER : I will hear from the Hon Gerry Brownlee.

Hon GERRY BROWNLEE (Leader of the House): I raise a point of order, Mr Speaker. I think the point is that although the shadow leader may say that the Labour Party is asking questions that require a high degree of specificity in order for it to get good information, equally, it is the Government’s desire that the Opposition does get good information. Therefore, the question has been transferred to the Minister who is likely to have far more at her fingertips than the general information that might come in preparation for those closed-off questions. [Interruption]

Mr SPEAKER : Order! No. I invite members to have a careful read of the Speakers’ rulings on both pages 168 and 169. It has been a long-held convention that the Government has the right to decide where a question will be directed. The only involvement from me as Speaker would be to intervene in that process if I saw it as a deliberate attempt by the Government to not be accountable to the question being asked. In this case, I do not see that at all. We will postpone—

Grant Robertson : Point of order, Mr Speaker.

Mr SPEAKER : Order! Again, I have ruled tightly on this matter, so we are not addressing that. If it is a fresh point of order, I am happy to take it.

GRANT ROBERTSON (Labour—Wellington Central): I raise a point of order, Mr Speaker. I want to refer you to Speaker’s ruling 168/2, from Speaker Smith, where it does state, as you say, that the Government is entitled to transfer questions. However, it does say that the Speaker would be concerned if this were anathema to the obtaining of information and if the Minister, or Prime Minister, being questioned were the only person who had the particular information. The first leg of this question is about a statement made by the Prime Minister. We simply cannot see how any other Minister can have that information. I think this is a clear case where Speaker’s ruling 168/2 comes into play. How can a Minister—

Mr SPEAKER : Order! I disagree entirely with the member, and, furthermore, although he said that he was raising a fresh point of order, he has taken the opportunity simply to relitigate a decision that I have made. If the Leader of the Opposition wants to proceed with the question, he can do so. If he does not want to proceed with the question, then we will move immediately to question No. 4. It is in the hands of the Leader of the Opposition.

Technology Sector—Reports

KANWALJIT SINGH BAKSHI (National): My question is to the Minister for Economic—[Interruption]

Mr SPEAKER : Order! [Interruption] Order! Both sides of the House need to settle. I have called question No. 4—[Interruption] Order! The member Kanwaljit Singh Bakshi has every right to have his question heard.

4. KANWALJIT SINGH BAKSHI (National) to the Minister for Economic Development : What reports has he received on the growth of New Zealand’s technology software and services industry over the last seven years?

Hon STEVEN JOYCE (Minister for Economic Development): I am very pleased to answer that question. I have seen a number of very positive reports. They show that the technology software and services sector has been growing at a rate of 9 percent per year since 2008 and now contributes 1.7 percent of New Zealand’s GDP. Exports of IT services have more than doubled, from $416 million in 2008 to just under $1 billion in 2014, and the number of people employed in computer system design and related services has increased from 28,000 in 2008 to nearly 37,000 in 2014. That is a growth of 30 percent in just a short period of time. Along with the growth in a number of other industries, the information and communications technology sector is a new sector, showing the ongoing diversification and strength of the New Zealand economy.

Kanwaljit Singh Bakshi : Why is it important to encourage growth in all parts of the economy?

Hon STEVEN JOYCE : It is important to encourage growth in all parts of the economy in order to avoid being too reliant on one or two industries. A recent example, of course, would be the decline in dairy prices and the ongoing uncertainty there. So it is good to see other industries growing. We are seeing export revenues from industries like beef, for example, up nearly 35 percent in the last year, to $3.1 billion. Wine exports are $1.4 billion, which is up 8.2 percent on the previous year, and high-tech manufacturing has grown from a $139 million business in 1991 to a $1.4 billion one in 2012. This is an indication that there is a range of industries continuing to grow, prosper, and carry their share of the load in terms of New Zealand’s economic development.

Dr David Clark : If everything is going so well, why do the official New Zealand statistics show that information, media, and telecommunications are now a smaller portion of the economy than when the member took office?

Hon STEVEN JOYCE : Well, the member just needs to have a look at that, because that is a bundled-up version of communications services, information and communications technology services, and software. The member may not be aware of this, but the value of the communications sector has been declining, as people get cheaper broadband and cheaper data services. If he needs a briefing, perhaps he could get one from the Minister of information and communications technology, who would explain the elements of that. But what I can tell the member is that software and services exports have doubled since 2008, and no matter how he spins it—

Mr SPEAKER : Order!


GRANT ROBERTSON (Labour—Wellington Central): My question is to the Minister of Finance—[Interruption] Settle down, Gerry—

Mr SPEAKER : Order!

5. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance : Did he approve the recommendations in the Treasury Report Capital Investment, Recycling and the Fiscal Strategy, and if so, what priorities for capital recycling within the commercial portfolio did he indicate to officials?

Hon BILL ENGLISH (Minister of Finance): I declined some recommendations and approved others. With regard to the second part of the question, commercial priorities for capital recycling are just that: commercial. What I can say is that the Government has a clear policy of no further Government share offer – type sales, or, indeed, no outright sales of State-owned enterprises. We will maintain our current ownership of State-owned enterprises. Of course, all businesses owned by the Government need to actively manage their balance sheet; that is, where they have assets that are no longer useful, they should sell those assets and recycle the capital. So individual State-owned enterprises will be buying and selling assets all the time, as part of their usual business.

Grant Robertson : Does he still accept the Treasury assessment in the paper that at least $2 billion of savings are achievable through so-called capital recycling from State-owned enterprises and Crown entities?

Hon BILL ENGLISH : Over a period of—who knows—5 to 7 years, that may be possible. I have to say that realising those kinds of savings would prove to be a considerable challenge, so the savings would come from a combination of dispensing with assets that are no longer needed—for instance, land held in Auckland by the Ministry of Education that it no longer thinks is right for the new schools that it wants to build—as well as demanding extensive discipline over Government agencies’ capital-planning intentions so that they do not just dream up projects that invest more money than is needed.

Grant Robertson : Why was it appropriate that Treasury developed proposals for the partial sale of assets within State-owned enterprises without discussing them with the boards of the respective entities, as noted in the paper?

Hon BILL ENGLISH : The Government often discusses policy about assets it owns or businesses it owns without consulting directly with the board. Housing New Zealand, for instance, might have had a different view about our social housing policy than the Government has, because it prefers to be the monopoly over all the State houses in the country and we prefer it not to be a monopoly. So at the appropriate time we discuss it with the board, but in the end the Government makes the decisions that it makes, and the boards are there to carry them out because they are 100 percent owned subsidiaries.

Grant Robertson : Has he now informed the boards of all entities for which proposals are being developed for the partial sale of their capital?

Hon BILL ENGLISH : No, I have not been part of informing the boards of all entities. What I have been part of is making it clear to these boards that if they have assets they are not using and are important to their business, they should not just sit on them in the way that they might under a Labour Government when apparently wasting taxpayers’ money is compulsory.

Grant Robertson : Did he approve work on the sale of Landcorp farms as part of his response to this paper?

Hon BILL ENGLISH : No—well, I am not exactly sure which paper he is referring to, but it is unlikely that I specifically approved work on that. I would expect the board of Landcorp, as with the board of any other State-owned enterprise, to be focusing on the sustainability of its business. After all, we own these businesses only because Kiwis work hard every day, including out in the rain and the cold, or run small businesses where they work 16 hours a day to try to make a living. It is their money we are talking about, and we expect the boards to pay respect to that and make sure they are using that money efficiently.

Grant Robertson : Apart from land owned by KiwiRail, has he approved further work on the sale of other KiwiRail capital?

Hon BILL ENGLISH : No, but then the board of KiwiRail does not need the approval of the finance Minister to think hard about whether it does something with the excess land that it does not need. It would be much better if it proceeded, as I understand it is, to, for instance, talk to councils around the country about what the possibilities are for housing development on some of the land that KiwiRail owns and may sell to a developer or develop in partnership with a developer. But we do not believe that it is compulsory to waste taxpayers’ money the way New Zealand First and Labour do. If it is not—

Mr SPEAKER : Order! The question has been answered.

Grant Robertson : I seek leave of the House to table a Treasury report entitled Capital Investment, Recycling, and the Fiscal Strategy, dated 3 November 2014.

Mr SPEAKER : Order! Before I put the leave, is it available on the Treasury website?

Grant Robertson : It was released under the Official Information Act—to us.

Mr SPEAKER : That is not the question I asked. Is it available for members to—

Grant Robertson : I do not know. It was released to us under the Official Information Act.

Mr SPEAKER : On the basis that the member does not know, then I will put the leave and the House can decide. Leave is sought to table that particular Official Information Act request. Is there any objection? There is objection.

Hon Gerry Brownlee : I raise a point of order, Mr Speaker. We have had a Business Committee discussion around this, and it is pretty clear, certainly from our side of the House, that if something is released under the Official Information Act it is most likely to be on a website. Because the member does not know does not alter the fact. If you would like Government departments to provide you with a list on a daily basis of what is released so you can make a selection, that would be one way through. But taking the time of the House, day after day after day, seeking to release information that is publicly available, in an age when newspapers are not quite the way that most communicate these days, is unreasonable.

Grant Robertson : Speaking to the point of order.

Mr SPEAKER : Order! No, I do not need assistance. There was a discussion at the Business Committee yesterday. Subsequent to that, I asked the Clerk to do some work on whether documents are always then subsequently released under the Official Information Act and immediately put on to a website. We could not ascertain that they all were. There may be some that are, so I think that the way forward is that in the future I will hope that members have done their homework and checked whether a document is available on a website. I will expect them to have done so. If they seek leave, I will ask them whether it is available. If it is available, do not expect me to continue with the leave. Sometimes members may not be able ascertain whether it is available, in which case the easiest way forward is that I do put the leave. It is then in the hands of the House as to whether leave is granted or denied.

Grant Robertson : I raise a point of order, Mr Speaker. To assist the House, this material was requested under the Official Information Act and released to us on 13 August in a heavily redacted manner. I do not think necessarily—

Mr SPEAKER : Order! I have ruled on the matter. I thank the member for his contribution.

Prime Minister—Statements

6. 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: “I actually think that New Zealand should show solidarity with other countries that have applied sanctions on Russia because of the actions it has undertaken. The reason that we do not have bilateral sanctions on Russia is to do with the fact that, actually, this Parliament will not give the Government the authority to do that, because it is blocked by the Labour Party.”?

Rt Hon JOHN KEY : Yes, I stand by that statement.

Rt Hon Winston Peters : How can he possibly reconcile that statement with the Minister of Trade’s statement this morning on resuming trade with Russia as being “a step in the right direction,”?

Rt Hon JOHN KEY : The member is confusing two different issues. The Minister of Trade continues to support the view, actually, that New Zealand should show solidarity even though we do not have bilateral sanctions on Russia in relation to the Ukraine issue. What he was talking about was the removal of unilateral restrictions that were put on by Russia that well and truly pre-date this issue and go back to 2011. Actually, the Minister of Trade is quite right for welcoming that.

Jami-Lee Ross : Does the Prime Minister stand by his statement that it is in the public interest for New Zealand to consider changing the New Zealand flag, and has he received any reports of former Prime Ministers supporting such a change?

Rt Hon JOHN KEY : Yes, I do stand by those statements, and I have received advice that there are other Prime Ministers who have supported the view of changing the flag in the history of our country. They include Helen Clark and David Lange, and last night I learnt that it goes all the way back to big old Norman Kirk wanting to change the flag. There are three Labour Prime Ministers who were enlightened. Maybe that is what it takes to become a Labour Prime—

Mr SPEAKER : Order! [Interruption] Order!

Rt Hon Winston Peters : Getting back to reality, who has upset him most—

Mr SPEAKER : Order! I apologise to the member. Because of the level of interjection, I cannot hear the member. Would the member start his supplementary question again.

Rt Hon Winston Peters : Who has upset him most: the Opposition, for, somehow, not allowing him to impose sanctions on Russia; his Minister of Trade, who is now advocating trading with Russia; or himself, for unofficially joining sanctions against Russia and advising Fonterra to do so as well?

Rt Hon JOHN KEY : The member’s question is just fundamentally wrong.

Rt Hon Winston Peters : When will he start taking foreign affairs and trade seriously and stop making policy decisions on the golf courses of Hawaii in an attempt to suck up to the Americans, who have thus far torpedoed his dairy industry Trans-Pacific Partnership agreement negotiations?

Rt Hon JOHN KEY : Mr Speaker—

Chris Hipkins : Get some guts.

Rt Hon JOHN KEY : Oh, OK. So the Labour Party’s position now is that we should be supporting and trading with Russia, even though it has done the despicable things that we have seen take place in Crimea. That is a very interesting position for the Labour Party.

Rt Hon Winston Peters : I raise a point of order, Mr Speaker. I did not ask him about the Labour Party or about any other party’s view in that supplementary question. I asked him—

Mr SPEAKER : Order! The member—[Interruption] Order! When the member talks about a supplementary question that includes words like what has happened “on a Hawaii golf course” and “sucking up to the Americans”, it gives very wide licence to the Prime Minister to answer the question.

Andrew Little : Does he regret his pledge that he would not let “New Zealanders become tenants in their own country”; if not, why has he today refused to stand by that statement? Is it because he is ashamed of selling out New Zealand by rubber-stamping every overseas buyer’s application for the last 4 years?

Rt Hon JOHN KEY : In answer to the first part of the question, no.

Andrew Little : If he is really concerned about our country being sold out from under us, why has his Government approved every application by overseas buyers to buy land since 2011?

Rt Hon JOHN KEY : The member will be aware that since 2008 the Overseas Investment Office has introduced a pre-assessment rejection process, and I would note that the net amount of rural land approved for sale to foreign buyers has halved since National came into office.

Andrew Little : Is he now reneging on his 2008 promise that Landcorp will not have its assets privatised and, before doing so, “we’ll come back to the people of New Zealand with transparency and seek a mandate”? [Interruption]

Mr SPEAKER : Order! Could the member please repeat the question.

Andrew Little : Is he now reneging on his 2008 promise that Landcorp will not have its assets privatised and, before doing so, “we’ll come back to the people of New Zealand with transparency and seek a mandate”?

Rt Hon JOHN KEY : No, but Landcorp from time to time sells assets and it is free to do so.

Andrew Little : Can he guarantee that any farms sold by Landcorp will not end up in foreign ownership, or is he going to flog them off to overseas buyers too?

Rt Hon JOHN KEY : No, because Landcorp buys and sells farms all the time. It is part of its core business; it is what it does.

Andrew Little : When will he finally admit that it is time to stop selling out New Zealand, that we need proper rules that the Government actually enforces to prevent the sale of any more of our land unless there is significant, proven benefit to New Zealand, and that we need a transparent register of all foreign owners of farms and forests?

Rt Hon JOHN KEY : I just stand by the Government’s record, which is that the net amount of rural land approved for sale to foreigners halved under a National Government compared with a Labour Government. I just ask the member why he does not go back to his normal form of policy development and pick out Chinese names from the phone book and give them a ring and pick on them.

Andrew Little : Is it not the truth that he has taken no action to stop the sale of our productive land into overseas ownership and that his pledge to ensure that we will not become tenants in our own land is just more hollow words from a hollow man?

Hon Steven Joyce : Angry Andrew.

Rt Hon JOHN KEY : Well, he is angry because he has had to wait a wee while to ask his question. But I stand by my record. We have sold half the amount of land that occurred under a Labour Government. We have actually done a pretty good job in that regard. [Interruption]

Mr SPEAKER : Order! [Interruption] Order! Would the front bench to my right please stop interjecting.

Rt Hon Winston Peters : Is it not a fact that the real reason he, as Prime Minister, is opposed to New Zealand First’s register of foreign land and homeownership in New Zealand is that it would show that New Zealanders under his watch are fast becoming tenants in their own country?

Rt Hon JOHN KEY : No.

Milk Powder—Organics Advisory Programme

7. STEFFAN BROWNING (Green) to the Minister for Primary Industries : Will he reinstate the Organics Advisory Programme given the value of organic whole milk powder is more than five times that of conventionally-produced whole milk powder, and his vision for “premium, value-added products”?

Hon NATHAN GUY (Minister for Primary Industries): No, I am not intending to reinstate the Organic Advisory Programme. My belief is that farmers are innovative. They read market signals well, and if organic whole-milk powder prices are five times the value of conventional milk powder prices, then many might choose to convert to organic production themselves. The role of the Government is not to advise farmers on what they should be growing based on current market signals; farmers are more than capable of making those decisions for themselves.

Steffan Browning : I seek leave to table an email dated Friday, 7 August between Fonterra and an organic milk processor.

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

Steffan Browning : Given that organic milk powder is quoted at $14,600 per tonne by Fonterra over conventional at just $2,800 per tonne, a 500 percent premium, why will he not reinstate the Organic Advisory Programme to help farmers who want to move into organic milk production?

Hon NATHAN GUY : If the member listened to my primary answer, he would have understood exactly what he was saying. The Greens are very confused about dairy farming. Last week we had James Shaw, who was in here saying that the Government was not doing enough to help distressed dairy farmers. Then we had Catherine Delahunty, who is out there saying we should have a moratorium on dairy farming in New Zealand, and now we have this member proposing to say that actually conventional dairy farmers should all convert to organic dairy farms. I think the Greens are confused and should get together on their particular messaging.

Steffan Browning : Given that Oceania Dairy is currently asking farmers to supply organic milk for the Chinese market, how will the Government help farmers ensure that they can easily convert from high-impact conventional milk production to organic farming?

Hon NATHAN GUY : If the member was in the real world, he would understand that a lot of that information is publicly available. He is more or less saying that he is dumbing down farmers by saying that they cannot read market signals and they do not understand how to convert from conventional farming to organic farming, when in actual fact farmers do that on a regular basis. He should actually be out there saying that there are market signals. If farmers want to convert to organic farming, there is a huge amount of information available. He should be out there encouraging that, instead of being so critical of what the Government is doing to help dairy farmers in New Zealand, who are currently facing a pretty tough time.

Steffan Browning : Will the Government commit to reviewing the Dairy Industry Restructuring Act to incentivise demand for organic milk, which will benefit both the sector and the environment?

Hon NATHAN GUY : If the member kept up to speed with what is happening in the dairy industry, we have already commenced a review of the Dairy Industry Restructuring Act with the Commerce Commission, and that report will be released next year. I am sure the member would be very interested in the findings.

Wine Industry—Growth

8. TODD MULLER (National—Bay of Plenty) to the Minister for Primary Industries : What reports has he received on growth in the wine industry?

Hon NATHAN GUY (Minister for Primary Industries): I have received reports that show that wine exports have grown by 7 percent, to $1.42 billion, rising from around $800 million in 2008. New Zealand wine operates at the premium end of the global wine market. Our wine commands the highest average price in the United Kingdom, the second-highest price in the US, and is more than double the average price of the nearest competitor in China. New Zealand winegrowers forecast that wine exports will be worth around $2 billion by 2020—very good news indeed.

Todd Muller : How is the Government supporting this growth in the wine industry?

Hon NATHAN GUY : That is a good question. The Government will continue supporting the wine industry through research and development, creating greater market access, and protecting the integrity of wine products through geographical indicators. For example, the Government and industry are partnering through the Lifestyle Wines Primary Growth Partnership programme. This $17 million investment over 7 years will be developing wines with lower alcohol content and with lower calories, and is the largest-ever research and development project in the history of our wine industry. Tariffs on wine were eliminated in our free-trade agreements with Chinese Taipei and Korea. Finally, the implementation of the Geographical Indications (Wine and Spirits) Registration Act will help our industry promote and protect its premium brand from misappropriation or misuse by overseas producers.

Social Housing—Reforms

9. PHIL TWYFORD (Labour—Te Atatū) to the Minister responsible for HNZC : How much has Housing New Zealand spent in total on consultants and contractors for work related to selling State houses as part of the Government’s social housing reforms?

Hon BILL ENGLISH (Minister responsible for HNZC): I am advised that Housing New Zealand provides an annual disclosure to the select committee on contractors and consultants that it uses across a full range of its activity, for the financial review. Housing New Zealand is unable to provide the specific information the member seeks because consultants frequently undertake multiple tasks, and individual tasks are not systematically recorded. However, the value is likely to be small, given that most of the work on the Social Housing Reform Programme is being undertaken by Government departments, not by Housing New Zealand.

Phil Twyford : I raise a point of order, Mr Speaker. This question was on notice. It is very simple. It is very specific. I cannot—

Mr SPEAKER : Order! The Minister gave a very full answer as to why he was unable to. That information is not collated the way the member has asked the question. That is the answer that has been given. The way forward is not to raise a point of order saying the question has not been answered; the way forward now is to use supplementary questions to delve further into the issue.

Phil Twyford : How can he not know how much the Government is spending on its flagship policy, which was the centrepiece of the Prime Minister’s state of the nation speech and involves selling assets worth up to billions of dollars?

Hon BILL ENGLISH : As I have said, the value of the work—although it is not the answer the member wants—is likely to be small, but it does depend on how you count some. So, for instance, because Housing New Zealand has been a State monopoly, it had a poor understanding of the condition of its houses. And when we have gone to the market about whether people wanted to buy the houses, they wanted more information about the condition of the houses, and Housing New Zealand has had to spend more money finding out what state its assets are in. Actually, it should have been doing that all along.

Phil Twyford : Is the reason that he is ashamed to answer the question that Housing New Zealand spent $1.6 million on advice from Andrew Body on selling State houses, and then tried to hide the fact, along with his conflict of interest with a public-private partnership adviser from the UK, John Laing?

Hon BILL ENGLISH : Absolutely not. I am advised that that member has been trying to get that story up in the media, but because he has not got his facts right, the media will not run it. So he has decided to try to run it in here.

Phil Twyford : Why is he refusing to release the names of 10 individuals or organisations that he or Treasury met with to discuss the sale of State houses when he had already released the names of 168 others, and what is it about those 10 individuals or organisations that he is trying to hide from the public?

Hon BILL ENGLISH : I do not know what the member is referring to, but if he is worried about the Chinese names, we could probably go and have a look and see how many of the 168 do have Chinese names. Frankly, we do not really record people by their ethnic origin, prospective residency, or whether their grandparents came here for the Central Otago gold rush in the 1860s, as many Chinese did.

Phil Twyford : Why is it necessary to legislate to give him the power to directly sell State houses, an approach his own officials have described as being without precedent, and is it just so that he can do dirty deals, flogging off billions of dollars of land and housing to his Cabinet club mates?

Mr SPEAKER : Order! [Interruption] Order! The first part of the question can be answered, and that is: “Why is this necessary under the legislation …”. The second part of the question is ruled out of order.

Hon BILL ENGLISH : All aspects of the Government’s policy around social housing reform are readily available on the internet. I know that is a bit much for Labour Party members, because they think a day’s work is sending a tweet, and actually looking at a website would be a week’s work, and he clearly has not done that. We are overcoming the legacy of 50 years of mismanagement of a multibillion-dollar asset, and we are keen to get expertise from people who know how to run State houses better and do a better job for our tenants. That is what the Social Housing Reform Programme is about.

Mr SPEAKER : Question—[Interruption] Order! If the two members wish to continue the conversation, I would be grateful if they would take it out to the lobby.

Corrections, Minister—Serco

10. MAHESH BINDRA (NZ First) to the Minister of Corrections : Does he have confidence in Serco?

Hon Peseta SAM LOTU-IIGA (Minister of Corrections): I expect Serco to live up to its responsibilities under the contracts that it has signed with the Department of Corrections. Where it has not lived up to the contracts, Serco will suffer penalties. My confidence in its management of Mt Eden Corrections Facility will depend on the outcome of the reviews currently under way and the action taken to address the issues that they raise.

Mahesh Bindra : Is he satisfied with the staff-to-prisoner ratio in the Serco-run Auckland South Corrections Facility?

Hon Peseta SAM LOTU-IIGA : The safety of the public, staff, and prisoners is paramount, and I expect all of our prisons—public and private—to reflect that. The contract requires that Serco operate a safe and secure site while meeting all applicable legislative and international requirements. It is my expectation that Serco follow this and that it be accountable for that at Wiri.

Mahesh Bindra : Is he satisfied that that level of staffing is adequate to ensure the safety, during unlocked hours, of both staff and prisoners in the units at the Serco-run Auckland South Corrections Facility?

Hon Peseta SAM LOTU-IIGA : As I said in my answer to the previous question, my expectations are that Serco follow the international requirements and the applicable legislative requirements. My understanding—and I have been given reassurances about this—is that the staffing levels are adequate.

Kelvin Davis : How can he have confidence in Serco, in light of last week’s report that Serco is deliberately avoiding health and safety laws and is under-reporting injuries, having reported only one incident since the start of the year, where a guard slipped playing touch football and pulled a hamstring?

Hon Peseta SAM LOTU-IIGA : As that member knows, there is currently a review by the chief inspectorate going on at Mt Eden Corrections Facility, with the Ombudsman providing oversight, and they will be dealing with these issues in due course.

Mahesh Bindra : If all of his answers are true, how can he be confident in Serco, given that just 6 weeks after the opening of the Serco-run Auckland South Corrections Facility, a staff member suffered serious head injuries in an attack by a prisoner?

Hon Peseta SAM LOTU-IIGA : Well, as I said in answer to the previous question, there is currently a review going on in terms of all violence inside Mt Eden Corrections Facility, and until that review has been finalised, we cannot comment on it.

Mahesh Bindra : Point of order—

Mr SPEAKER : No, listen—I can anticipate it. I am going to invite the member to repeat that question for the benefit of the Minister.

Mahesh Bindra : If all of his answers are true, how can he be confident in Serco, given that just 6 weeks after the opening of the Serco-run Auckland South Corrections Facility, a staff member suffered serious head injuries in an attack by a prisoner?

Hon Peseta SAM LOTU-IIGA : We take all incidents of violence at both public and private prisons seriously, and this incident will be taken seriously, too.


11. SARAH DOWIE (National—Invercargill) to the Minister of Revenue : What recent announcements has he made on proposals to improve the collection of GST on services, intangibles, and goods?

Hon TODD McCLAY (Minister of Revenue): Yesterday I released a discussion document on the collection of GST for online purchases. The proposed rules would require overseas suppliers to register and return GST when they sell services to New Zealand consumers. It also outlines the way forward for improving the collection of GST on all goods, including low-value imported goods. Currently, estimates put the amount of GST foregone on these purchases at $180 million each year and growing. This is revenue that would otherwise be available to the Government to help fund essential services like health care and education.

Sarah Dowie : What would these proposals mean for New Zealand consumers?

Hon TODD McCLAY : A growing number of countries have successfully implemented rules around online shopping and GST, including the 28 members of the European Union, Norway, Switzerland, Korea, South Africa, and, soon, Japan and Australia. This is about putting New Zealand businesses and jobs ahead of overseas retailers selling into our market, but it is also about fairness to consumers. It is important they retain freedom and choice and that our necessary compliance and costs are not moved to them. Through this consultation document, the Government seeks to balance these two issues and create a fair and level playing field.

Sarah Dowie : What is the time frame for the proposals?

Hon TODD McCLAY : Following feedback, the Government proposes to introduce legislation on cross-border services and intangibles later this year, with rules coming into effect in 2016. The second stage of the process—GST treatment on low-value goods—is more challenging. With more than 8 million parcels crossing the border each year, there are a number of logistical issues that will need to be worked through to ensure that compliance costs are reduced and consumers continue to receive their purchases in a timely fashion. The customs Minister will bring a paper to Cabinet in October, followed by a public consultation on low-value goods.

Agrihub—Development and Procurement

12. Hon DAVID PARKER (Labour) to the Minister of Foreign Affairs : Does he stand by his statement that “The Government is comfortable with the process that was followed in relation to the Agrihub”; if so, did his department follow all Government rules during the development and procurement of the $6 million Agrihub?

Hon TIM GROSER (Minister of Trade) on behalf of the Minister of Foreign Affairs : Yes, and we welcome the announcement by the Auditor-General that she will look into the Saudi Arabia Food Security Partnership and the agrihub project.

Hon David Parker : Is he aware that rule 21 of the Government procurement rules states: “An agency should not purchase procurement advice from a supplier that has a commercial interest in the contract opportunity, and to do so would prejudice fair competition …”?

Hon TIM GROSER : I am sure the Auditor-General will look into all relevant aspects of the issue.

Hon David Parker : I raise a point of order, Mr Speaker. I seek a ruling from you. The existence of an inquiry from the Auditor-General does not absolve the Minister from his responsibility to answer questions in this House.

Mr SPEAKER : I agree with the member. I think the best way forward in the first instance is for the member to have the opportunity to repeat the question for the benefit of the Minister.

Hon David Parker : Is he aware that rule 21 of the Government procurement rules states: “An agency should not purchase procurement advice from a supplier that has a commercial interest in the contract opportunity, and to do so would prejudice fair competition …”?

Hon TIM GROSER : The Government is very happy to answer all parliamentary questions on this, but on the specifics of this case we will be biding our time and waiting until the Auditor-General has produced a report, and then we will talk further.

Hon David Parker : I raise a point of order, Mr Speaker. I suggest that that answer is out of order. He does have a responsibility to Parliament. I did not ask anything about the Auditor-General’s inquiry.

Mr SPEAKER : Again, the way forward—because the question, to me, has no relevance to the inquiry; the question is a simple question about awareness of rules regarding advice around Government procurement. If the question can be asked again, we will take it after that and see where the answer gets to.

Hon David Parker : Is that using up another supplementary question?

Mr SPEAKER : No, no. [Interruption] Order! So I am clear, it is a chance for the Minister—[Interruption]—Order! Just so I am clear, it is a chance for the member to repeat the question for the benefit of the Minister, because I am not sure that he actually understands the question.

Hon David Parker : Is he aware that rule 21 of the Government procurement rules states: “An agency should not purchase procurement advice from a supplier that has a commercial interest in the contract opportunity, and to do so would prejudice fair competition …”?

Hon TIM GROSER : I am sure the Minister is aware of the rule. The relevance of this to the case may well be a matter for the Auditor-General to look into.

Hon David Parker : Why, then, was Brownrigg Agriculture paid to provide advice on the so-called business case and paid by his department to travel to Saudi Arabia as part of a team developing the business case and was then awarded the contract?

Hon TIM GROSER : This aspect of this issue has been gone into in excruciating detail in questions and answers prior. This matter has been conducted by a group of officials through a competitive process, and I am quite confident that the Auditor-General will be able to satisfy everybody on this when she completes her report.

Hon David Parker : I seek leave to table the Ministry of Foreign Affairs and Trade document dated 15 March 2013, showing that Brownrigg Agriculture was paid to provide that advice.

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

Hon David Parker : Is he aware that Cabinet agreed to the $6 million investment, subject to strict conformity with Government procurement rules; and, if so, does he think Cabinet directives should be followed all of the time or just some of the time?

Hon TIM GROSER : The Minister, I am sure, believes that Cabinet directives should be followed all of the time.

Hon David Parker : I seek leave to table the Cabinet minute of 18 February 2013 that says: “The $6 million will be undertaken in strict conformity with Government procurement requirements.”

Mr SPEAKER : Can I just clarify with the member—has that document not already been tabled in this House?

Hon David Parker : No, I have not tabled it.

Mr SPEAKER : OK, on the basis that it is a Cabinet minute, leave is sought to table it. Is there any objection? There is none. It can be tabled. Document laid on the Table of the House.

Hon David Parker : Is he aware that his officials told the Auditor-General—this is not part of the inquiry, Mr Speaker; these are earlier statements—“that some of the information gaps in the draft indicative business case are to be picked up in the procurement and contracting phase of the project.”; and, if so, why did his officials not proceed with that second phase of the procurement process and instead just gave the contract to Brownrigg Agriculture?

Hon TIM GROSER : In response to the first part of the question, yes.

Questions to Members

Electricity Industry (Small-Scale Renewable Distributed Generation) Amendment Bill—Intention

1. JAMES SHAW (Co-Leader—Green) to the Member in charge of the Electricity Industry (Small-Scale Renewable Distributed Generation) Amendment Bill : What is the intention of the Electricity Industry (Small-Scale Renewable Distributed Generation) Amendment Bill?

GARETH HUGHES (Member in charge of the Electricity Industry (Small-Scale Renewable Distributed Generation) Amendment Bill): This bill is about giving a fair go to the thousands of people who want a greater sense of energy independence by producing their own power from sources like solar. Currently, electricity companies have the power to change contract terms at short notice, leaving people in the lurch. This common-sense bill empowers the Electricity Authority to act as an independent umpire to establish standardised contracts and a fair and reasonable buy-back rate.

James Shaw : Does this bill promote subsidising solar power, as happens in Australian and American states and in European countries?

GARETH HUGHES : Absolutely not. Subsidies would be regressive and would not fix the problem, which is the uncertainty and market imbalance between households and energy companies. I do not believe subsidies are a good idea in New Zealand, as we are seeing rapidly falling solar prices.


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