Bradford Sue: General Debates 
Bradford Sue: General Debates 
[Volume:607;Page:4422] 
SUE BRADFORD (Green) 
: 
 I move  
That the House take note of miscellaneous business 
. Today Cabinet’s policy committee was due to discuss New Zealand’s initial offer under the General Agreement on Trade in Services (GATS). On Monday next week Cabinet is due to finalise the initial offer that New Zealand is to make. The GATS is one of those arcane World Trade Organization treaties that make the eyes glaze over. Yet the decisions that Cabinet makes in the next week could constrain the ability of all future Governments to make policy and to provide public education and health services. 
We already know that the decision by the then National Government in 1994 to give GATS commitments on audio-visual services means that the current Government cannot introduce mandatory local content quotas. Does anyone here think it is right in a democracy that a Government cannot implement policies that it was elected on because some previous Government made promises to a bunch of trade bureaucrats in Geneva? 
But there is even more danger ahead in the GATS negotiations and that is the threat that GATS poses to our public services. The Government claims that public services are exempted from GATS but this is far from clear. Under GATS public services are exempted only if they are supplied neither on a commercial basis nor in competition with other service providers. As Paul Goulter from the Council of Trade Unions and many others have pointed out in a mixed economy like ours there are very few public services that neither have a commercial element nor are delivered in competition with others. 
Let us take public education as an example. We know that many public schools take private fee-paying students and thus have a commercial element. We also know that many parents have the option of choosing whether to send their children to a private or public school. Hence to say that public schools do not compete with private schools is a nonsense. Public education fails to escape the clutches of GATS on both those grounds. What this means is that public education is covered by the general provisions of GATS including the section on subsidies. Basically although this section is still under review it says that the Government should not give subsidies that distort trade in services and therefore the Government should not give subsidies to domestic service providers that it does not give to foreign providers. 
That leads us to the absurd situation whereby if a foreign education provider was to set up private schools in New Zealand it could apply to the Government to get exactly the same subsidies as the public school next door. It could also charge fees and have greater income than the public school and thus become a rather attractive alternative to the public system. Those new schools would stretch the Government’s education budget and the funding for the public system would decline even further making the public system even less attractive. We would end up with a two-tier education system with one tier for the rich and one for the poor—which is a system my colleagues in ACT evidently support. But get this: both systems would be subsidised by the taxpayer. 
Members might think that could not possibly happen that the Government would never allow it but it is not up to the Government. If the Government refused to provide exactly the same subsidies to an overseas education provider that it provides to the public system then the foreign provider could ask its Government to take a case against New Zealand at the World Trade Organization. The World Trade Organization would form a disputes panel consisting of three trade lawyers and bureaucrats to decide the issue. The panel would then decide in secret—the hearings are not open to the public—on whether New Zealand was breaching its GATS commitments in refusing to provide Government funding to the foreign private provider. If our Government failed to comply with the ruling of the disputes panel the World Trade Organization could then authorise sanctions on New Zealand exports. 
It is a disturbing scenario and one that might seem a bit far-fetched. Yet all the major institutions involved in education—the Post Primary Teachers Association the New Zealand Educational Institute and the Auckland University of Technology—are all saying that it is a real possibility. Moreover the European Union was so concerned about those issues that in the first round of GATS negotiations it put in a blanket exemption for all public services. If only the foolhardy New Zealand National Party Government had had the foresight to do the same! In this round of GATS negotiations the Government needs to amend our commitments so that public services are completely removed from GATS. Public health education and water supply are not the playthings of international business; they are the basic rights of citizens of a democracy and should not be flogged off in some desperate attempt to sell more mutton or beef overseas.