Questions and Answers – December 6

Press Release – Office of the Clerk

1. LOUISE UPSTON (National—Taupō) to the Minister of Finance : What reports has he received on the economy?


1. LOUISE UPSTON (National—Taupō) to the Minister of Finance: What reports has he received on the economy?

Hon BILL ENGLISH (Minister of Finance): This morning the Reserve Bank issued its Monetary Policy Statement for December. It confirmed that the official cash rate has remained unchanged at 2.5 percent, supported by the Government’s fiscal policy and reducing offshore financing costs. This will help keep New Zealanders’ interest rates lower for longer. A family with a $200,000 floating rate mortgage is now paying $200 a week less in interest costs than they were 4 years ago. It is a significant saving in difficult times that is enabling them to further reduce their debt. The Monetary Policy Statement today presented a similar overall economic outlook to the previous statement in September. The outlook is slightly weaker in the near term, but activity is expected to be stronger in 2014-15.

Louise Upston: What does the Reserve Bank say about the cost of living and forecasts for the consumer price inflation?

Hon BILL ENGLISH: Current CPI inflation is at 0.8 percent, which is the lowest it has been in nearly 13 years. The Reserve Bank expects inflation to remain comfortably within the target band. That is good news for families who are trying to save and get ahead. They have got the lowest interest rates on mortgages in around 40 years and the lowest inflation in 13 years. The strong New Zealand dollar is helping to keep tradable sector inflation low, as is the spare capacity in the economy.

Louise Upston: What are the Reserve Bank’s forecasts for economic growth over the next 3 years, and what are the main factors behind those forecasts?

Hon BILL ENGLISH: The bank projects annual real GDP growth of 2.2 percent, 2.8 percent, and 2.9 percent respectively over the next 3 years. The forecasts are a little weaker in the short term, but are higher over year 2 and year 3. This is consistent with the recent history of the economy ticking along at growth rates of around 2 or 3 percent. The bank noted four key factors influencing the outlook: the Canterbury rebuild, that global economic activity and inflation are expected to remain subdued, that the kiwi dollar is expected to remain high, and that tighter fiscal policy is expected to dampen demand.

Hon David Parker: Given today’s news that the Governor of the Reserve Bank is negotiating the use of macro-prudential tools like loan-to-valuation ratios, does he now admit that for the last 4 years he was wrong in saying that our monetary policy required no change, because it was already world’s best practice?

Hon BILL ENGLISH: No. In fact, I have been part of those negotiations for the last 4 years.

Louise Upston: What impact has the uncertain global economic situation had on the Reserve Bank’s outlook for the economy?

Hon BILL ENGLISH: It continues to have a significant bearing on the outlook for New Zealand and at times, I think, on confidence in New Zealand. The euro area remains in recession, growth prospects are seen to be improving in the US and China, but the international economy continues to weigh on our prospects. It would certainly be helpful for everybody if the US was able to resolve its current issues around its fiscal deficit, its fiscal policy, and its debt ceiling. If that occurred, the US economy may do better next year than expected, and, as the world’s largest economy, that would certainly help us.

Tertiary Education—Foundation Level Course Providers

2. GRANT ROBERTSON (Deputy Leader—Labour) to the Minister for Tertiary

Education, Skills and Employment: Does he stand by his statement that those providers who have received funding for foundation level courses in the recent contestable process were chosen because of their ability to “deliver to those most at need of foundation education programmes”?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): Yes, and in doing so I would like to point out to the member that in 2011 around 60 percent of people enrolled at level 1 and 2 programmes already, in fact, held a National Certificate of Education Achievement level 2 qualification or higher. So one of the changes of the level 1 and 2 provision is to focus it on second-chance learners who can most benefit from it. So, yes, again, we do need to fund providers that are able to get people in the door and deliver to those most at need of foundation education programmes.

Grant Robertson: What action has he taken in response to the comments from Manukau Institute of Technology Chief Executive, Peter Brothers, who said: “We have been approached by some PTEs who are looking to buy curriculum and teaching materials from us because they bid for courses they have not previously been teaching.”?

Hon STEVEN JOYCE: Well, it may come as a surprise to the member that all the time providers start courses that they have not previously been teaching. The point to the member—

Grant Robertson: So they’re qualified to teach it, are they?

Hon STEVEN JOYCE: It is important to point out that—and I appreciate that Labour Party members are very focused on the public sector union, so this is pretty much something that they need to focus on—the focus here is on providers that can deliver foundation education. Their experience includes things such as Youth Guarantee, Foundation-Focused Training Opportunities, Youth Training, and subcontracted level 1 and 2 provision.

Grant Robertson: How does a private training provider who has to ask a local polytech for curriculum and teaching materials for a course that they have successfully bid for demonstrate that they have the ability to deliver to those most at need of foundation education programmes?

Hon STEVEN JOYCE: Well, again, I think the member is a little bit blinded by his approach, but the reality is that private sector providers do a very good job of providing foundation education. They may be supplying new courses as part of this new provision, but many of them, as I said previously, have been supplying Youth Guarantee, Youth Training, Foundation-Focused Training Opportunities, and subcontracted level 1 and 2 provision and are very good at it.

Grant Robertson: How is it that a private training provider could be awarded the contract to deliver a foundation level course but does not have the teaching or curriculum materials to deliver it?

Hon STEVEN JOYCE: I do not know how often I have to repeat this for the member, but, actually, providers all the time have the opportunity to take up provision and then set up courses and actually proceed with those courses. It may sound weird to the member, but it is sort of how the world works.

Grant Robertson: Is he aware of the flow-on consequences of polytechs losing $32 million worth of funding for foundation courses, which include WelTec cancelling English for speakers of other languages classes for 80 refugee students, many of whom will not have the resources to enrol anywhere else?

Hon STEVEN JOYCE: Again, the member seems to be completely focused on the idea that the only good provision in his world is polytechnic provision, and that is the problem we are dealing with here. The reality is that the polytech sector has done very well over the last 4 years. Its income has grown 12 percent. In terms of this year’s investments by the Tertiary Education Commission, there are a number of things happening. There are the new competitive level 1 and 2 programmes, increased Youth Guarantee places, more trades training, and many polytechnics are moving up the levels. So what is going on is a range of things and, yes, providers are changing courses and it is an entirely appropriate thing for them to be doing.

Tertiary Education System—Performance

3. COLIN KING (National—Kaikōura) to the Minister for Tertiary Education, Skills and

Employment: What progress is the Government making with strengthening the performance of our tertiary education system?

Hon STEVEN JOYCE (Minister for Tertiary Education, Skills and Employment): The Government is making good progress and is committed to increasing achievement in the tertiary sector, improving quality, and better matching the educational provision to the skills needed in the New Zealand economy and the skills needed by the learners. Profile and Trends 2011, an annual report on the performance of the tertiary system that was released today, shows that we are making steady progress. In particular, the report shows that people with degrees earn substantially more than those who do not have degrees. I think it is important to note, for those considering learning opportunities, that in 2011 people with a Bachelor’s degree or higher qualification earned, on average, 65 percent more than those people without a qualification. That is up from 63 percent in 2010.

Colin King: Does the Profile and Trends 2011 annual report include any other performance measures that highlight the progress the Government is making in the tertiary sector?

Hon STEVEN JOYCE: Yes. It is actually a very large report, which has many indicators. I will give just a few highlights. For the first time in this country’s history, the majority of New Zealanders—more than 50 percent; 52 percent—now have a tertiary qualification, be it a degree, diploma, or certificate. The number of people aged 15 years and over with a Bachelor’s degree or higher qualification was 17 percent in 2011, and that has been a steady improvement on 11 percent 10 years ago. Women continue to outnumber men in holding a Bachelor’s or higher degree, while men are more likely to have certificates and diplomas. The number of 16 and 17-year-olds in the Youth Guarantee scheme grew to just under 3,600 in 2011, and the number of places will grow to 7,500 in 2012. The report also shows that enrolments in adult and community education in schools rose by 16 percent in 2011.

Grant Robertson: When he triumphantly tweeted: “Government policy changes in recent Budgets equals shorter student loan repayments. Medium repayment time now 5.5 years for those staying in New Zealand.”, was he aware that the previous year it had been 5.2 years, and the year before that it had been 4.6 years?

Hon STEVEN JOYCE: I understand that the method of calculation has changed in the intervening years. But I think the member makes a good point and it is an important point to highlight. It is important to note that those who do study and stay in New Zealand after their study tend to repay their student loans in just about 5.5 years. I think that is a very good record to show that we achieve in this country. And actually there is an improvement for Bachelor’s and higher degrees; they actually pay them off in a shorter period again.

Grant Robertson: I seek leave of the House to table from Steven Joyce’s Facebook page his comment that Government policy changes in recent Budgets equal shorter student repayment times. This would normally be publicly available, but Mr Joyce has so few friends I think we had better put it out there.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Government Financial Position—Current Account Deficit Forecasts

4. Hon DAVID PARKER (Labour) to the Minister of Finance: Does he stand by his statement that “I just don’t think the world will let us run 7 and 8 percent current account deficits. It just won’t. I think you’d get the kind of sharp adjustment that the textbooks tell you would happen in the exchange rate or interest rates”; if so, has he seen NZIER’s forecast for New Zealand’s current account deficit as a percentage of GDP for 2014 and 2017?

Hon BILL ENGLISH (Minister of Finance): Yes, I do stand by my statement. In answer to the second part of the question, I have not seen its forecast, but the Reserve Bank this morning noted that the current account deficit has improved significantly since it was around or above 8 percent of GDP between 2006 and 2008. It forecasts the deficit to be between 5 and 5.5 percent of GDP over the next 3 years—a significant improvement on the record levels of current account deficit that applied under Labour’s period up to 2008.

Hon David Parker: Does he agree that international credit rating agencies are less tolerant of large current account deficits than before the global financial crisis?

Hon BILL ENGLISH: Yes, I do, and that is why we have been pursuing a mix of policies that can, in the end, have only an indirect influence on the current account deficit, to repair the damage done by the previous Government—

Mr SPEAKER: Order! Order! The question was an absolutely straight question.

Hon David Parker: Why, if he is sticking to a plan that is working, is the current account deficit forecast by the IMF to be the worst in the developed world next year, and forecast by the New Zealand Institute of Economic Research to get worse, to negative 8 percent of GDP within 2 years and negative 9.9 percent of GDP in 5 years?

Hon BILL ENGLISH: We are pursuing a bunch of policies that, as I said, can indirectly influence the current account deficit—because we cannot influence it directly. They are aimed at increasing savings, exports, and the rewards for work, and decreasing debt-fuelled consumption. The forecasts the member quotes happen to be at the pessimistic end of a pretty wide range of current account forecasts. I think economists are not sure yet about the extent to which New Zealanders may or may not be changing their behaviour. The Reserve Bank is a bit more optimistic. For the period that the member says one forecast says the deficit will be 8 percent of GDP, the Reserve Bank says it will be about 5.5 percent, and 5.5 percent is closer to sustainable.

Hon David Parker: Given that export values have declined 11 percent over the past year, unemployment is at the highest level for 13 years, next year’s current account deficit is forecast by the IMF to be the worst in the developed world, income inequality is at the highest level ever recorded, and household savings have turned negative again, when will he admit he has failed to rebalance the economy?

Hon BILL ENGLISH: I think, as I have said many times, there are certainly some strong headwinds for the rebalancing of this economy. That is not a reason to give up. I mean, if the member believed his rhetoric, he would certainly not have backed a promise to build 600,000 houses funded by the Government. That will have all the negative effects that he is predicting.

Trans-Pacific Partnership—Forecast Economic Benefits

Dr RUSSEL NORMAN (Co-Leader—Green): I understand we are meant to use these microphones.

Mr SPEAKER: Yes. I do apologise for that, but it is to make certain that the member will be heard on television. [Interruption]

Dr RUSSEL NORMAN: It is the end of school for the week, is it not? [Interruption]

Mr SPEAKER: Order! [Interruption] Order!

Hon Bill English: Sing “Waltzing Matilda”.

Mr SPEAKER: Order! That is enough.

Dr RUSSEL NORMAN: No, that is where all your mates are.

Mr SPEAKER: No, order! The member was provoked, I accept that, but this must stop. I want to hear Dr Russel Norman.

5. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: Does he agree with the Prime Minister that the Trans-Pacific Partnership agreement is worth about US$2.9 billion to the New Zealand economy; if so, has he or the Treasury seen this forecasting?

Hon BILL ENGLISH (Minister of Finance): Yes, I have seen the forecasts, and I agree with the Prime Minister that they suggest that New Zealand’s membership of the Trans-Pacific Partnership could be worth US$2.9 billion or 1.4 percent of GDP, I think, by 2025. I also agree with both the Prime Minister and the Minister of Trade, Tim Groser, that economic models are not perfect. Sometimes they undershoot the benefits and sometimes they overshoot them. They undershot the benefits in calculating the value of the Closer Economic Relations with Australia back in the 1980s. We believe that the negotiations reflect the importance of the Trans-Pacific Partnership. If economies come together in a trade deal that represents around $21 trillion of GDP then we are likely to be better off inside it than outside it.

Dr Russel Norman: What is the name of the report that the Prime Minister and the Minister of Finance were referencing with regard to this forecast?

Hon BILL ENGLISH: I can refer to a report I have here, completed, I think, by the East-West Center. I cannot give the member the name of a report. It sets out a range of scenarios, and the one that the Prime Minister referred to was what you would regard as a medium scenario, not one of the more optimistic ones.

Dr Russel Norman: If indeed the report was from the East-West Center and was called The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment, has he read the results of the report, which show that the baseline case—that is, New Zealand without a Trans- Pacific Partnership—still results in a US$2.2 billion gain to the New Zealand economy compared with the claimed gain of around US$2.8 billion or US$2.9 billion inside the Trans-Pacific Partnership?

Hon BILL ENGLISH: No, I have not read the report myself, and I would have to check with the Prime Minister whether he has. We are following a policy where we believe that getting better access for our exporters to large markets is going to be better for New Zealand because in the long run we have to earn an income, and it is one of those things that the Government can do to support businesses. I understand that the Greens have a different view, and if the member became a Minister of Finance he would probably pull us out of free-trade agreements. I doubt that anyone—

Mr SPEAKER: Order! The Minister should not be speculating on that.

Rt Hon Winston Peters: Does he agree with the demands of American drug companies involved in the Trans-Pacific Partnership negotiations that there needs to be a “fairer process and more transparency” around Pharmac?

Hon BILL ENGLISH: If the Government agreed completely with the demands of American pharmaceutical companies, the negotiation would probably be over. It is not. It is a long, complex negotiation, and the New Zealand Government’s position is to preserve the role and effectiveness of Pharmac.

Dr Russel Norman: In light of the East-West Center report showing relatively small gains from being inside the Trans-Pacific Partnership, has he read the Australian Productivity Commission report that found that this kind of economic modelling was used to oversell the benefits of these kinds of agreements? It was produced by the Australian Productivity Commission with regard to bilateral and regional trade agreements.

Hon BILL ENGLISH: Well, it is not unusual for us to disagree, actually, with Australian views about modelling. We have been going through one of those over having a common investment market between Australia and New Zealand. Regardless of the contest of spreadsheets, we believe free trade is a good idea. It has served our exporters well, and we want to continue with it because it provides jobs and incomes. We understand the member’s position. He is opposed to more jobs and more incomes from free trade and would pull New Zealand out of free-trade agreements.

Rt Hon Winston Peters: Given the Minister’s answer to my first supplementary question, if concessions are agreed to and the American drug companies are given a legal right to attack Pharmac processes and be part of those processes, will the Government be able to claim that it has defended Pharmac rather than having sold Pharmac down the river?

Hon Steven Joyce: Pretty hypothetical.

Hon BILL ENGLISH: Yes, that is a bit hypothetical. I mean, if you do not do something, you cannot claim you have not done it. The fact is we are protecting Pharmac’s role. Any trade negotiation amounts to weighing up compromises you might have to make of your own direct interests with the larger benefits in the long term of our exporters, in a small economy at the end of the world, being able to access large markets, where it is easier to sell our products for higher prices, because that flows back to jobs and incomes in New Zealand. I own up to the fact that in this negotiation we are focused on more jobs and higher incomes. We accept that the Opposition parties are not.

Dr Russel Norman: Has the Minister given consideration that these kinds of agreements may involve benefits, but they may also involve risks, and one of those risks is the risk that was alluded to in the previous question—the attack on Pharmac—which could cost the New Zealand Government many hundreds of millions of dollars if it loses the ability to use Pharmac to drive down the price of pharmaceuticals?


Dr Russel Norman: Has the Minister looked at the costs and risks around Pharmac with regard to the costs that may come from investor-State disputes actions, and, in that light, is he aware of the recent decision to award costs against the Government of Ecuador of US$2.4 billion as a result of a case that was brought by an oil company?

Hon BILL ENGLISH: Yes, and yes.

Dr Russel Norman: I seek leave to table the working paper from the East-West Center about the potential benefits of the Trans-Pacific Partnership.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Dr Russel Norman: In the Government’s analysis of the benefits and costs of the Trans-Pacific Partnership, what consideration did it give to the decision by the Australian Federal Government to refuse to sign up to investor-State disputes provisions because that Government took the view that the risks to the Australian economy are too great to sign up to investor-State dispute provisions?

Hon BILL ENGLISH: The member can be assured that the risks have been studied extensively. The whole business of negotiating these agreements is precisely to weigh up the benefits with the costs, but I have to say a New Zealand Government has not yet signed a free-trade agreement that was not beneficial to New Zealand. Given our objectives of more jobs and higher incomes, we will continue to negotiate through this agreement, bearing in mind the risks. It is hard to understand why

the Greens-Labour Opposition seems to be moving to a position of opposing free-trade agreements when they have such a track record of success for New Zealand.

Dr Russel Norman: I seek leave to table a document from the International Centre for Settlement of Investment Disputes, dated 5 October 2012, regarding the decision in the case against Ecuador where Ecuador lost a case of US$2.4 billion.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Health Facilities—Announcements

6. MAGGIE BARRY (National—North Shore) to the Minister of Health: What announcements has the Government recently made on new facilities in the public health service?

Hon TONY RYALL (Minister of Health): This week the Government announced that the New Zealand Blood Service in partnership with Ngāi Tahu Property is building a new blood donor and laboratory centre in Christchurch. The new centre is planned to open its doors in just over 2 years’ time, and will be a purpose-designed building that will house a donor centre, manufacturing and testing laboratories, and specialised warehousing and support offices. In 2011-12 the New Zealand Blood Service collected 181,000 blood donations from 126,000 volunteer blood donors—just over 3 percent of the population. The new centre is important for the long-term future of the New Zealand Blood Service to ensure the ongoing blood supply to New Zealand public health services.

Maggie Barry: What can the Minister tell us about a new, multimillion-dollar mental health unit at North Shore Hospital?

Hon TONY RYALL: The Government has approved a new, $25 million inpatient mental health unit—

Hon Member: How much?

Hon TONY RYALL: —$25 million—at North Shore Hospital. It will replace the current Taharoto unit, which is an old maternity hospital and is no longer fit for purpose. The new unit will not only be larger, with seven extra beds, but doctors and nurses working in the unit will be involved in the design to ensure it is more user-friendly for patients and, in particular, families. I would like to thank the member for her representation on behalf of a number of families who have been concerned about the standard of the facilities. The building is expected to begin by the middle of next year and to take around 18 months to complete.

Hon Maryan Street: Does the Minister approve of the suggested model for the new elective surgical centre at North Shore Hospital, which includes financial incentives for surgeons of payments of up to $10,000 per day, and excludes training options for younger doctors in training?

Hon TONY RYALL: I certainly support the elective surgery centre that is being built at North Shore Hospital at a cost of some tens of millions of dollars. I am not sure the member correctly characterises the features of that unit. Certainly, those are the features that have been described by the senior doctors union. I am right behind the elective surgery centre because it will contribute to the more elective operations that New Zealanders want. We are now delivering 30 percent more elective surgery than when we came to office.

Hon Maryan Street: Does he see it as the way of new facilities in the public health service that public facilities should be set up to funnel post-operative care to the private clinics of surgeons who work in the public facilities, as appears to be the intention of the new North Shore elective surgical centre?

Hon TONY RYALL: I am absolutely certain that the elective surgery centre is going to be a stunning example of innovation and new ideas in health. Quite clearly, we do need to look at more productive ways of getting services for patients using our dollars. I welcome Dr Lester Levy and the clinicians at North Shore Hospital, who have developed this elective surgery centre, and the effort

they are making to get the best value for our taxpayers’ dollars. I want more hips, knees, and cataracts done for the people of Auckland, and this is part of that.

Pike River Mine Disaster, Report—Government Response

7. DARIEN FENTON (Labour) to the Minister of Labour: What steps is he taking to implement the recommendations of the Pike River Mine Royal Commission Inquiry?

Hon CHRISTOPHER FINLAYSON (Acting Minister of Labour): The Government is moving to implement all 16 recommendations. It regards this as an urgent matter and, as I told the families in Greymouth a couple of weeks ago, we will have implemented the recommendations by the end of 2013. For example, by reference to recommendation No. 1, which was that there needs to be a new Crown agent focusing solely on health and safety, that issue is being looked at by the task force and the ministry, and I hope that there will be some particular guidance on that matter, if not before the end of the year, then early next year. A detailed implementation plan is just about completed. It will be provided to the Pike River families, in the first instance, before Christmas, and then will be publicly released.

Darien Fenton: Why is his department proposing a major restructuring of the health and safety inspectorate where 150 jobs will be disestablished and health and safety inspectors forced to reapply for positions?

Hon CHRISTOPHER FINLAYSON: The Government is committed to dealing with all issues of health and safety. The task force is working on matters, but, at the same time, the department, even though there may be a transfer of some powers to the new regulator, is knocking itself into shape to deal with these issues.

Darien Fenton: What impact will this restructuring have on the major recommendation of the Pike River royal commission to establish a new Crown agency that is solely focused on health and safety, or will he instead make do with job and title reshuffling in the Ministry of Business, Innovation and Employment?

Hon CHRISTOPHER FINLAYSON: As I said, the Government regards this issue—health and safety—as a top tier issue, which is why we are giving very serious consideration to the exact shape, form, and function of the new regulator. The ministry is also going to have a major policy involvement in those issues. The suggestion that we are treating it in a cavalier manner—which is at the heart of the member’s question—is totally wrong.

Darien Fenton: Is he comfortable with the Safety and Health in Forest Operations code of practice, issued yesterday, which ignores major recommendations coming out of the Pike River tragedy such as the importance of employee participation in health and safety and reciprocal obligations on employers and employees?

Hon CHRISTOPHER FINLAYSON: Yes, I am. Shortly after I became the Minister I asked for a briefing on the forestry issue. The importance of health and safety in forestry was also emphasised to me in a productive meeting that I had with the Council of Trade Unions a week or so ago. These regulations had basically been prepared before the royal commission’s report came out, so I was anxious to get them out. The task force is looking at broader issues, and if they need to be altered after the task force reports to the Minister on 30 April, then that is OK by me.

Darien Fenton: Will such alterations that may be proposed include looking at working conditions in industries such as forestry, where health and safety concerns and accidents are a major contributor to accident levels, with issues like long hours and fatigue, and will he be doing something about the suboptimal standards that were issued yesterday?

Hon CHRISTOPHER FINLAYSON: The answer is yes. I think the member makes a very fair point. There are too many deaths in this sector, most recently a tragic death last week, and that is why we got these regulations out, but it could well be that they have to go further. I am very happy to consult with both the industry and, importantly, the Council of Trade Unions to make sure we get it right.

Electricity—North Island Grid Upgrade

8. Peseta SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Energy and

Resources: What recent update has he received on Transpower’s North Island Grid Upgrade?

Hon HEKIA PARATA (Minister of Education) on behalf of the Minister of Energy and

Resources: I am delighted to announce that Transpower’s North Island grid upgrade is complete and will be commissioned by the Prime Minister later this afternoon. The project is one of the largest grid upgrades in 50 years, and involved building a new power link from Whakamaru to Auckland, at a cost of over $800 million. This is just the start of significant investment by Transpower in our electricity network, which is expected to be around $5 billion over the next 10 years.

Peseta Sam Lotu-Iiga: What are the benefits to New Zealanders of this great upgrade?

Hon HEKIA PARATA: This upgrade provides a number of benefits to New Zealanders. The upgrade will provide greater electricity security of supply to the upper North Island, and will ensure that, as cities and communities grow, the national grid will be able to meet the increasing demand. Aside from improved resilience and security of the national grid, the upgrade will also facilitate investment in new generation projects by providing confidence to investors, as well as supporting and facilitating the development of renewable energy by making the grid more robust and able to manage intermittent generation such as wind power.

Government Appointments—Crown Company Monitoring Unit Expectations

9. Hon PHIL GOFF (Labour—Mt Roskill) to the Minister of Foreign Affairs: Has he read the Owner’s Expectations Manual prepared by the Crown Ownership Monitoring Unit, and does he require directors he recommends for appointment to government companies to also read that manual?

Hon TONY RYALL (Minister of Health) on behalf of the Minister of Foreign Affairs: No. The Minister relies on the Ministry of Foreign Affairs and Trade to ensure that the appropriate checks are carried out with appointees. The ministry and the Crown Ownership Monitoring Unit advise that the manual did not apply in relation to the Pacific Forum Line, since it is not a Crown company. However, the ministry requires the normal steps to be taken in relation to declarations of conflicts of interest and other such requirements.

Hon Phil Goff: In view of the requirement in the ownership manual that sets out best practice that “Directors must disclose any relationship and/or matters that give rise to an actual or potential conflict of interest.”, when did Mr Kiely, as a trustee for a shareholder in Sofrana since 2008, first disclose that relationship to his Minister, or the ministry, or the Pacific Forum Line board?

Hon TONY RYALL: I understand Mr Kiely made that disclosure when it became aware to him that Sofrana was interested in purchasing the Pacific Forum Line. He immediately advised Mr McCully, and he then went on to make the chair aware of a non-beneficial interest that he had as a trustee. Mr Kiely is a man with a considerable reputation, impeccable credentials, and a person whom many of us have had the experience of having acted with the highest integrity of any New Zealander.

Hon Phil Goff: If, as the Minister says, he advised Mr McCully, which must have been in the last couple of months, why did not Mr McCully remember that fact yesterday?

Hon TONY RYALL: I am not in a position to answer that question. What I am able to say is that I think any allegations made by that member under the cloak of parliamentary privilege are—

Hon Phil Goff: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! A point of order has been called.

Hon Phil Goff: You have often directed people asking questions to ask straightforward questions. I think my questions have been of that nature, today and yesterday. I am not making any allegations; I am asking questions. Why should I—[Interruption]

Mr SPEAKER: Order! The reason why there was a reaction is that the member got beyond an issue of order there. I think members realise that this is a very tense issue that the member has raised, and it will evoke certain feelings. I will make sure members are careful in their replies, but some feeling in response to implied allegations is to be expected.

Hon Members: Oh!

Mr SPEAKER: It is to be expected. We in this House need to be careful of the reputations of people who cannot defend themselves in this House, and it is something that we all need to be careful of. The member is absolutely at liberty to ask his questions, and I will defend his right to do that.

Hon Phil Goff: Has the Minister been advised that Mr Kiely, as a trustee, does not owe duties to the trust on behalf of which he was holding shares in Sofrana?

Hon TONY RYALL: I am uncertain whether the Minister has received specific advice on that matter.

Hon Phil Goff: Did Sofrana have any interest in purchasing shares in the Pacific Forum Line, and when did it first express that interest?

Hon TONY RYALL: I am unaware of when it first expressed that interest in a more general sense, but I understand that Mr Kiely may have been approached by Sofrana some time in July.

Hon Phil Goff: If Mr Kiely was approached by Sofrana in July, why was it not until 10 August that he relinquished his association with Sofrana as a trustee for the shareholders?

Hon TONY RYALL: Mr Kiely disclosed it to the chair of the Pacific Forum Line and then took action to remove himself from that position.

Hon Phil Goff: Is it good practice for somebody advising the Government on a share sale to be both a trustee for the share buyer and a director for the share seller, and not advise the ministry of that?

Hon TONY RYALL: I think the member is really seeking to create something out of that which really does not exist. Quite clearly, when Mr Kiely became aware that Sofrana had an interest he took action to advise the chairman of the Pacific Forum Line and then took action to remove himself from that trustee position. I think that is entirely appropriate. Mr Kiely is a highly experienced lawyer, who is well aware of his obligations and has served Governments from both sides of this House. He has, I am sure, acted with the utmost integrity.

Hon Phil Goff: Does he dispute the answers given to me by the Ministry of Foreign Affairs and Trade that Mr Kiely was a key adviser on the sale of shares but had never declared any potential conflict of interest?

Hon TONY RYALL: He obviously did not declare any potential conflict of interest when he became a director because none existed at that time. When Mr Kiely became aware that there could be a perception of a conflict as a result of Sofrana’s interest in the Pacific Forum Line, that is when he took the action that he did to advise the chairman, I understand, and to subsequently remove himself from that trustee relationship. That is what you would expect someone to do, and Mr Kiely is a very experienced legal practitioner and someone who acts with the utmost integrity.

Hon Phil Goff: Should have known better.

Hon TONY RYALL: I think it is not on for that member to be making—

Mr SPEAKER: Order! No. Order!

Kiwifruit Industry—Cost of Psa Outbreak

10. RICHARD PROSSER (NZ First) to the Minister for Primary Industries: What is the latest estimate by the Ministry of Primary Industries of the total cost to the kiwifruit industry of the PSA outbreak?

Hon NATHAN GUY (Associate Minister for Primary Industries) on behalf of the Minister

for Primary Industries: The ministry does not have an estimate of the total cost to the kiwifruit industry. However, what I can say is that, given that around 93 percent of our kiwifruit are

exported, the ministry does have data on the impacts on export revenue. New Zealand exported $987 million worth in 2009 and $1.043 billion in 2010. In 2011 this dropped to $944 million. In the current export season, export revenue is expected to exceed $1 billion.

Richard Prosser: How many jobs are expected to be lost in the industry as a result of the Psa outbreak?

Hon NATHAN GUY: I do not have that information at hand with me today.

Richard Prosser: Given that he cut the front-line biosecurity budget by more than $2 million and slashed the number of border control staff, does he accept responsibility for the regulatory failings that led to the Psa outbreak; if not, why not?

Hon NATHAN GUY: The member will be aware that there was a Sapere Research Group report that was done in relation to the Psa outbreak. The ministry is currently working its way through and implementing those recommendations, and they will be concluded by next year. I do not believe that the assertions that the member is making on any funding discrepancies are related to the Psa outbreak.

Todd McClay: What actions has the Government taken in response to the Psa outbreak?

Hon NATHAN GUY: This Government has been working closely with the industry in its response to Psa since it was confirmed in 2010. Almost immediately, the Government established a $25 million response package, matched by the industry. We continue to work alongside the industry. Yesterday the Minister announced a new package of support measures to be made available to the North Island kiwifruit growers affected by Psa, and this announcement has been well received by most.

Richard Prosser: Is it correct that an independent review commissioned by the Ministry for Primary Industries found major failings in the biosecurity system; if so, what assurances can he now give to the agriculture sector that biosecurity failures that have devastated the kiwifruit industry will not be repeated in other areas?

Hon NATHAN GUY: What I can confirm is that there has been an in-depth report done that could not conclude where Psa came from and how it arrived here. What I can say is that this report concluded that there should be six recommendations. They have been adopted by the Ministry for Primary Industries. There are 16 specific actions to be worked through in terms of the adoption. Ten of the 16 actions were completed before the end of August this year.

Todd McClay: What response has the Minister seen from the industry regarding the latest Government announcement?

Hon NATHAN GUY: I have seen a number of very positive responses from the industry, including Zespri, New Zealand Kiwifruit Growers Inc., Kiwifruit Vine Health, and Horticulture New Zealand. Horticulture New Zealand noted that “The Government has listened to the concerns of our industry and reacted by providing support and reassurance.”

Sharemarket—Regulation of Unsolicited Share Offers

11. Dr CAM CALDER (National) to the Minister of Commerce: What regulations came into force this month that target unsolicited or “low ball” share offers?

Hon CRAIG FOSS (Minister of Commerce): From 1 December the Securities Markets (Unsolicited Offers) Regulations came into effect to rein in unsolicited or low-ball share offers. Alongside other measures, the new regulations will set minimum information requirements, including stating the market price or a fair estimate of the value of shares, and specifying a minimum offer period and a cancellation period.

Dr Cam Calder: What penalties will be in place for those who are identified as making an unsolicited share offer?

Hon CRAIG FOSS: An individual deemed to have made an unsolicited offer that does not comply with an order made by the Financial Markets Authority is liable on a summary conviction to a fine not exceeding $30,000. Predatory or low-ball offers damage the health of, and the confidence

in, our capital markets. These new measures and penalties are a further deterrent to those organisations and individuals who make unsolicited share offers.

Development Assistance—Funding for Climate Change Pledge

12. JAN LOGIE (Green) to the Minister of Foreign Affairs: Has the Government diverted money from its aid budget in order to pay for its $30 million pledge over three years to help developing countries address climate change?

Hon TONY RYALL (Minister of Health) on behalf of the Minister of Foreign Affairs: The Government has not diverted any money from its aid budget as described by the member. We are, however, investing aid funding in assisting developing countries to address climate change. This, for example, has seen us invest money in renewable energy initiatives, such that Tokelau is now expected to be 100 percent renewable as a result of this investment. I am sure that would be welcomed by the Green Party of New Zealand and its friends in Labour.

Jan Logie: I seek leave to table a report from Oxfam, The climate “fiscal cliff”: An evaluation of Fast Start Finance and lessons for the future, which shows that only 33 percent of the finance appears to be new money.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Jan Logie: I seek leave of the House to table a statement from Oxfam New Zealand showing—

Mr SPEAKER: Order! Is this a press statement?

Jan Logie: Yes, it is.

Mr SPEAKER: We do not table press statements.

Jan Logie: Given New Zealand signed the Copenhagen Accord, which commits us to “scaledup, new and additional funding”, why did the Government invest our $30 million contribution out of its existing aid budget?

Hon TONY RYALL: It was because this should be considered as part of the aid that New Zealand is providing. I would quite like to quote a report about this level of investment and this commitment from the Government. I have read a report that says: “This was an incredibly important step for many reasons – one it would actually help the low income countries avert some disasters for effective adaptation, two it would be a sign of good faith by high income countries that could break the gridlock in negotiations that centred around equity.” Those comments were made by Jan Logie, MP.

Jan Logie: I seek leave to table the Copenhagen Accord from the United Nations Framework Convention on Climate Change.

Mr SPEAKER: I think all members have access to the Copenhagen Accord.

Jan Logie: Why are the Pacific Island nations losing aid funding to pay for a problem that they had no part in creating and are set to bear the very worst impacts of?

Hon TONY RYALL: It is because the Government has joined with other countries in pledging money to address climate change issues in the Pacific, and that has been funded out of the aid budget. There have been some excellent projects, such as a new 1-megawatt project in Tonga, which will now supply 4.5 percent of—

Mr SPEAKER: Order! I am sure these projects are interesting, but the member asked a very specific question.

Hon TONY RYALL: As I said, this is part of aid to the Pacific, and it is quite appropriate that it be funded in this way. As the Government indicated, this was our contribution to join with the contributions of others, and it has been achieving great projects and great success for people in the Pacific.

Mr SPEAKER: I thank the Minister.

Jan Logie: I raise a point of order, Mr Speaker. I did not ask whether investing in climate change adaptation and mitigation was a good thing—of course it is. I asked whether those countries should be having existing aid programmes cut to get that.

Mr SPEAKER: Order! The Minister did answer that question, because he argued in his answer that the reason why that made sense was that this is aid to those countries. That was his answer. I cannot judge the quality of the answer. The member still has a further supplementary, as I understand it, and can pursue that further.

Jan Logie: Will he now commit to continuing the funding beyond the 3-year period currently agreed to and confirm that this funding will not come at the expense of money for other aid projects?

Hon TONY RYALL: I am not in a position to give an answer to that, because that would, no doubt, be subject to discussions with the Minister of Finance, who, of course, is under some considerable pressure to continue investing in the excellent performance of the New Zealand public health service.


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