Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Text is incorporated into the Bound Volume 
Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Sitting date: 26 June 2012. Volume:681;Page:3323. Text is incorporated into the Bound Volume.] 
Debate on Crown Entities Public Organisations and State Enterprises 
In Committee 
The CHAIRPERSON (Lindsay Tisch) 
: The House is in Committee for consideration of the performance in 2010-11 and current operation of Crown entities public organisations and State enterprises. I remind members that this is a 3-hour debate. The debates on the individual financial reviews should be relevant to their performance in the 2010-11 financial year and their current operations. I understand members have indicated organisations they wish to debate. The first entity that I understand members wish to debate is the New Zealand Tourism Board. 
New Zealand Tourism Board 
DAVID SHEARER (Leader of the Opposition) 
: 
 I would like to speak on the Tourism Board. Obviously this is an enormously important industry for New Zealand. In fact as a result of that what we understand is that the Prime Minister as the Minister of Tourism is head of tourism in New Zealand. I am not allowed to refer obviously to the—[ 
Interruption 
] Obviously for New Zealand tourism is massively important: $63 million a day. That is the revenue of this industry. It is on a par with the dairy industry. One in ten New Zealanders is employed in tourism throughout New Zealand. Therefore it is very important that we take this industry very very seriously. 
This is what John Key the Minister of Tourism said just 4 years ago: “While times are getting tough right now the future for tourism is bright. You are a vital part of the economic engine that drives New Zealand and you will be celebrated and encouraged by my Government.” This is what the  
State of the Tourism Sector 
2012 
 said in its report: “New Zealand is perceived to have fallen off the global radar as a desirable destination ...”. It is predicting a downturn. So although Mr Key 4 years ago had lots of aspirations for this industry 4 years later those aspirations are not being realised. I think what happened here is that Mr Key realised that this was a particularly good sector for a “smile and wave” approach but not really a sector where you actually have to roll up your sleeves get on to it and actually give this industry a real boost. So although it was said to be important 4 years ago today it has actually fallen off the radar. We have some real concerns and some grave concerns about where this industry is heading. 
However Mr Key did come up with a partial solution—a little bit like a partial asset float—to where this industry might get a boost from and that is from a convention centre in Auckland. The good news is that he has found an ingenious way of funding this particular convention centre. You give a wink and a nod to one of the applicants for this convention centre process. You slightly just push the tender process to one side you go out to dinner with Skycity and you say: “Look if you’re willing to put up some money for this we’ll guarantee you 20 years of a gambling licence and 500 pokie machines and you will be able to build this convention centre.” What a great offer. That is a great offer. It is a slightly sleazy offer. It is a bit of a shonky offer but what a great offer. For Skycity it is a great offer because it gets $42 million a year from those 500 pokie machines and it gets a 20-year extension to its gambling licence. In the space of 6 to 7 years it will pay for the convention centre and it will still have 13 years—times $42 million per year—to go on that extension to its gambling licence. That is a pretty good deal. 
Hon David Cunliffe 
: Plus interest. 
DAVID SHEARER 
: Plus interest on that. So there is the big plan for New Zealand tourism. Smile and wave on the one hand and on the other hand give Skycity the ability to raise $42 million a year with pokie machines from the pockets of people who can least afford them. And do not worry about those other industries and those other sectors that vied for the opportunity to do this. Do not worry about that! No no no we just go out to dinner have a wink and a nudge and you will get the deal. I guess that is why the Auditor-General decided to have a bit of a look at this. 
Hon Gerry Brownlee 
: Is that what they got out of you at the sky box for the Rugby World Cup? 
DAVID SHEARER 
: Well I tell you that is exactly why Skycity is looking with a smiling face at what is going on and it is why the Auditor-General is taking a good look at it. Mr Brownlee might well ask that. What did it get out of that? It got nothing out of it Mr Brownlee. It got absolutely no return on that particular investment. This party stands up for good process— 
CHRIS HIPKINS (Senior Whip—Labour) 
: 
 I raise a point of order Mr Chairperson. I understand that it has been custom in this Committee that the Minister responsible for the vote in question comes to the Chamber and takes the chair. 
The CHAIRPERSON (Lindsay Tisch) 
: No. 
CHRIS HIPKINS 
: And we advised the Government beforehand of the votes we wished to debate on that basis. 
The CHAIRPERSON (Lindsay Tisch) 
: I have heard your point. No any Minister can sit in the chair. If the Minister whose portfolio it is is in the Chamber they must take the chair but any Minister can assume the chair. I am calling Barbara Stewart. 
Chris Hipkins 
: Big chicken. 
The CHAIRPERSON (Lindsay Tisch) 
: Order! Who said that? You cannot say that. The member will withdraw and apologise for that comment. 
Chris Hipkins 
: I withdraw and apologise. 
BARBARA STEWART (NZ First) 
: 
 I rise to speak on behalf of New Zealand First to the financial review of the New Zealand Tourism Board. We all know that tourism is one of the largest industries in New Zealand. It accounts for almost 9 percent of our GDP and employs the equivalent of almost 180000 full-time positions for New Zealanders. As we heard previously the revenue is $63 million per day. 
However despite New Zealand priding itself on the basis of being a wonderful tourist destination we are actually slipping behind and it was mentioned in the weekend papers. The  
New Zealand Herald 
 headline was “NZ’s tourism cash cow is going dry says report”. So something definitely needs to happen. We know that tourists are not coming here as frequently as they previously did. The figures between April and May show a 1 percent decrease in the number of tourists who are actually visiting New Zealand—not good. The numbers of tourists from Australia Britain Germany and the US have all fallen in the last year. All of these tourists who always saw New Zealand as a wonderful destination are now suddenly not so sure. We are not seen now as a must-see destination which is where we actually should be. 
We cannot use the global financial crisis as a scapegoat for this industry’s poor performance. In reality the problem is far more complex. Australia Britain Germany and the US—they are all doing well to get through this financial crisis. We know that Germany is the powerhouse of Europe. The Australian economy is growing at one of the fastest rates in the Western World. Tourism in New Zealand is actually lagging due to a lack of advocacy. With the Prime Minister holding the tourism portfolio who would have thought that this would be the case? It comes down to a lack of advocacy and it is basically costing New Zealand employers and employees alike. 
Remember last year when the UK decided to increase its departure tax to New Zealand? The tourism Minister John Key took great offence at that. He said he would be having stern words with his mate Prime Minister David Cameron over in the UK. What came of these discussions? We know that departure taxes in the UK are still extremely high. The Minister of Tourism has basically failed to get these down to a level that is in our favour. He has failed to make good his word to actually do that. It is little wonder that the number of tourists from the UK is down. 
And it is the same again with Australia. Every day in the media we hear about the huge economic boom over the Ditch. We see our young people queuing in the departure lounges eager to find their brighter futures over the Ditch and unfortunately my young son is one of them. Yet despite the promising job opportunities in Australia tourist numbers from that thriving country are also down. Just over a month ago the Australian Government decided to put up the departure taxes to New Zealand by 17 percent. 
Todd McClay 
: That’s shocking. 
BARBARA STEWART 
: It is shocking. The tourism industry had been lobbying John Key and this Government to intervene. It knows that these extra taxes are going to hurt its industry. It knows that these extra taxes are going to hurt both employers and employees but nothing has happened—absolutely nothing. 
And of course the other reason that tourists are being put off is the high New Zealand dollar overseas. New Zealand First has been calling on the Government to extend— 
The CHAIRPERSON (Lindsay Tisch) 
: I am sorry to interrupt the honourable member. The time has come for the dinner break. This debate is interrupted. I shall resume the Chair at 7.30. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
BARBARA STEWART 
: What we are saying here in New Zealand First is that the other reason that is putting off our overseas tourists is the high New Zealand dollar. We have been calling on the Government to extend the powers of the Reserve Bank in order to better control our overvalued currency. The IMF estimates that the currency is between 10 and 20 percent overvalued and every day that it remains overvalued it actually puts unnecessary pressure upon our tourism industry. 
If we are going to take a stand and restore New Zealand to its top position as a really top tourist destination we need strong leadership in this area we need decent advocacy on the international stage by the Minister of Tourism and we need sound policies that will actually ensure that our tourists return. We cannot afford to fall off the global radar as a desirable destination and headlines in the “Business Day” section like “NZ tourism industry suffers”— 
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 We are looking at the New Zealand Tourism Board’s performance and the report of the Commerce Committee on that. It is quite clear when we look back to the heady days after the 2008 election when the Prime Minister became the Minister of Tourism. He talked of a bold plan for tourism in New Zealand and a clear vision for tourism and said that we should make the most of our advantages and seize the opportunities they provide. Yet what we see from the  
State of the Tourism Sector 2012 
 report and from the Tourism Board’s own statement of intent is an industry that is stagnating. It is an industry that is simply no longer providing the boost to New Zealand’s economy that it once did. But this was of course the very reason the Prime Minister told us he wanted to take the portfolio on—that he would be this great leader to drive the tourism industry forward. Instead all we got were cheesy jokes on  
The 
Late Show with David Letterman 
 and a bad video in the back of a car in Napier. That was about the extent of the vision—the bold plan—that the tourism Minister John Key was going to bring forward to us. 
Then we got a new plan for tourism for New Zealand in this last financial year which is currently ongoing—the building of a convention centre in Auckland. This was the great blueprint the great vision that would provide New Zealand’s tourism boost. There are probably some good arguments for a convention centre in the Auckland area but a convention centre built on what basis? The Prime Minister responded with a top 10 list as he did on the Letterman show. So in terms of tourism and its future for New Zealand I think we could make a top 10 list of reasons why the Skycity pokie deal for the convention centre is in fact not the way forward for New Zealand. 
Reason No. 1 on our top 10 list is that the Problem Gambling Foundation says that Skycity’s “host responsibility is poor and fuels problem gambling”. The casino had 54 incidents of deserted children last year 25 cases of fraud and 14 assaults. So there is reason No. 1 on our top 10 list. 
We can go on. Goldman Sachs has estimated that Skycity will earn an extra $28 million a year on the additional pokie machines that are part of the deal rising to $42 million a year once the convention centre is running. That is the pay-off here. The legislation gets sold off. That is reason No. 2 for us to not like this deal for supposed tourism. 
Another one is the question of how many jobs will be created. The Prime Minister was very keen to tell us that there would be 1000 jobs in the tourism industry—1000 jobs. He overstated by more than half. That is reason No. 3. 
I will go back to the gambling side of things. Casinos return only 2.5 percent of their profits to the community—2.5 percent. So for extra machines going in—supposedly to bolster the tourism industry—the pay-off is more pokie machines and the pay-off of that is money out of the pockets of people who cannot afford it with only 2.5 percent going back to the community. 
We can go on. Reason No. 5 is that based on Goldman Sachs’ estimates there could be a loss of revenue for community organisations from anywhere from $10 million a year upwards. That is the outcome of selling off legislation that is supposedly to benefit tourism in New Zealand but is actually to benefit Skycity. We can go on. 
Reason No. 6 for this not being a good idea is the dodgy way this deal was done and the fact that the Minister of Tourism intervened in a process that was part-way through and said: “Forget all the other bidders. I’ve done the deal over dinner.” So there is reason No. 6 for us. 
Reason No. 7 is that the other bids that were on the table from people like Lloyd Morrison—rest his soul—were bids that did not require the selling off of legislation for New Zealand. That is another reason. 
Reason No. 8 around this is that Mr John Key the Minister of Tourism has told New Zealanders that it is OK to sell off legislation and that that should be part of the deal of being in Government. It is just plain wrong to have that kind of approach to funding tourism in New Zealand. 
This Government knows that this convention deal is a dodgy one. It is one where the Minister of Tourism the Prime Minister John Key has intervened in a process and allowed a non-complying bid to go forward. We now see the situation where we have a dodgy deal that will not do what it says it will do for jobs and will not do as it says it will do for tourism. 
Report noted. 
Reserve Bank of New Zealand 
TODD McCLAY (National—Rotorua) 
: 
 I wish to rise to speak on the Reserve Bank of New Zealand financial review undertaken by the Finance and Expenditure Committee the extremely hard-working and diligent committee that it is. I want to make a couple of general comments around the work of the Reserve Bank particularly the focus the Government has had over the last 3½ years but particularly what has happened since the election and in particular also I would also like to make mention of the current Governor of the Reserve Bank and the announcement made by the Minister of Finance today about the future appointment. 
What has happened since the election and what work has the Reserve Bank been focusing on? Well the Government is getting its books back into order and setting a path back toward surplus. This is extremely important for the Government. We campaigned on this. But more so than that it is important for everyday New Zealanders. You see not so long ago the Governor of the Reserve Bank made an announcement that he would be keeping the interest rates in New Zealand at a steady rate—one of the lowest we have seen in many many years. This is great news for New Zealanders as we look around the world at the many challenges that countries are facing with their economies and with Governments that are not as single-mindedly focused as this Government is on doing the right thing for New Zealanders and the economy while there is great havoc being wreaked all over the place. We see it every day in Greece and other parts of Europe and so on. 
But the good news about where our interests rates sit at the moment is that mum and dad New Zealanders are paying much less for the money they have borrowed to invest in property and other things than they were 3½ to 4 years ago. I remember at the time returning to New Zealand having spent some time overseas as many Kiwis do and deciding to come back here and stand up and do my part on behalf of other New Zealanders because I was so very concerned at the direction New Zealand was heading in after 9 years of a Labour Government. The first thing I did with my wife and my family was to go and look to purchase a property. We went to the bank to find out what the interest rate would be and it was over 9 percent—over 9 percent. The member opposite has said “What about jobs?”. Well when hard-working Kiwis have to pay mortgages and their interest rates are over 9 percent actually it is no wonder it is so difficult for them and they find it so tough to get by. Today the interest rates are set around 5 percent if you want to go and borrow and what a great difference that makes. So very much reducing debt focusing on Government spending and making sure that the money that the Government spends on behalf of taxpayers is spent productively and for the very best return for those taxpayers is something that the Government is focused on 
 Of course we know that the Government books are set to move back towards surplus in 2014-15. This is going to be a very difficult job for us to deliver on. The reason for that is that there are all sorts of uncertainties in other parts of the world which of course will have an impact upon us as a trading nation. But the most important thing we can do here is to continue the work that we have done over the last 3 years so that New Zealanders so that businesses so that the Governor of the Reserve Bank and so that our country can have confidence that the Government is on the right track is moving forward and is taking sound financial management practices extremely seriously in the economy and so that they too can have confidence in the direction that we are moving in. 
We had an announcement last week around some of these statistics and it took many by surprise—increased growth rates. The quarter’s increase of the gross domestic product was 1.1 percent. It took the annual growth to 2.4 percent compared with March 2011. It is very difficult for the world’s economy at the moment. In fact I think we are probably second maybe third in the world when it comes to growth at the moment. Although that is modest growth it is better than what was forecast and again I think this shows that New Zealand is slowly but surely moving towards a stronger footing. I would say that I think that this could be patchy as we move forward because these things do go up and down a little bit. But certainly this is to be welcomed it is welcome news and I encourage other members of the House to get out and encourage New Zealanders to get on with their lives to do their jobs to run their businesses and together we can slowly move forward. 
So what I want to say here is that I want to recognise the Reserve Bank governor Alan Bollard for doing a fantastic job for a number of years. He can be very proud of some of the decisions he has taken and the way that we have been able to work as a Government in line with him. He has a done a very good job in these areas— 
Report noted. 
New Zealand Transport Agency 
JULIE ANNE GENTER (Green) 
: 
 I am very happy to take this very quick call to discuss the financial performance of the New Zealand Transport Agency. This is an agency that was a client of mine for many years when I was a transport consultant. I had the privilege of working on a number of research projects for the New Zealand Transport Agency. 
I am happy to say that there are some very hard-working and talented people working there but I would really like to raise a number of concerns. There is a problem with a lack of transparency about what the New Zealand Transport Agency is doing. As I understand it it is probably mostly around the massive expensive motorway projects that the Government is prioritising—the so-called roads of national significance. When we try to find out information about these projects the Transport Agency is very unwilling to share information like for example the updated costs and benefits for them. I asked the Minister of Transport some written questions recently and unfortunately he was not able to return them on time. And even when he did return them we saw that there were increased costs for example for the Wellington Northern Corridor road of national significance. That was initially estimated to be $2.1 billion to $2.4 billion and is now revised to $2.4 billion to $2.7 billion. There has been no update to the benefit-cost ratio. As far as I can tell there has been no update to the benefits so necessarily that project would have an even worse benefit-cost ratio than what it had before which was only over 1 because of some very creative accounting. 
I have heard from inside the organisation that there is a very machiavellian approach to project management and to public relations. They have a very proactive approach of identifying the stakeholders who are asking for information and then deciding to give information to certain stakeholders based on whether they think there is any sort of risk that there would be a media story. 
I think that it is clear from the Cabinet papers that the agency is facing a very tight funding situation. We have asked the agency about this in the financial review and it sort of wanted to sweep it under the rug saying: “Oh no there’s no problem here there’s no problem with funding.” But actually there is significantly less money coming in and that is totally understandable. We foresaw this in 2008 when we did the research report  
Managing transport challenges when oil prices rise 
. We said what was going to happen was that as oil prices rise households which do not have any opportunity to switch to other modes because we had not sufficiently invested in them would have to spend more money on transport. In the first instance they would cut some of their discretionary trips and in the second instance they would have less money to spend on goods in New Zealand in the economy. What happens after that is that 6 months later we see this beautiful lag and suddenly there is a reduction in demand for heavy vehicles because the freight industry takes a hit when households have to spend more money on petrol so then there is less demand for freight. What happens is that there is reduced demand for vehicle trips on the State highway there is less money coming in through road-user charges and petrol taxes and therefore there is less money to spend. But unfortunately the Government is still going ahead with these road projects of supposedly national significance. 
What we have been trying to find out from both the New Zealand Transport Agency and the Government is where the evidence is that these projects will have the desired positive impact on the economy. We are not ideologically opposed to roads or vehicle-based transport but we are asking why we should spend 75 percent of the money for new infrastructure on six very expensive projects when there might be more cost-effective ways to reduce travel times and to meet the needs for travel that the New Zealand Transport Agency is tasked with. We have heard in the House from the Minister of Finance the Hon Bill English that in fact there is no evidence that these are actually political projects. 
It is a very big problem because I think that New Zealanders expect to be able to get information to be able to participate in the assessment of these projects. And we cannot have proper scrutiny in the public sphere or in Parliament if the New Zealand Transport Agency is operating behind this cloak of secrecy and trying not to tell us any information because it does not support the narrative that the Government wants to tell which is that it is investing in productive infrastructure. We just want to help out really. The Green Party is interested in making intelligent choices in terms of how we invest in transport infrastructure and to do that we really need to understand why these projects are being prioritised as opposed to other projects. Also when we try to question the New Zealand Transport Agency on its—[ 
Bell rung 
] I will wrap this up right this second— 
The CHAIRPERSON (Eric Roy) 
: You have wrapped up. Your time has expired—your time has expired. Please sit. 
Report noted. 
Earthquake Commission 
DENIS O’ROURKE (NZ First) 
: 
 For the first time in a very long period of time the performance of the Earthquake Commission has been tested with the various Christchurch earthquakes. Of course Kiwis have been paying their earthquake levies for all of that very long time and obviously have a right to expect excellent performance by the commission. I am afraid to say that many people in Christchurch and I mean especially those who are actually affected by the earthquake are not in fact satisfied with the performance of the commission and I am one of them. Firstly this is because I think one of the problems is the definition of the liability for which the Earthquake Commission is liable. Secondly I think it is because of an initial lack of experience with earthquakes and how to deal with them although that has improved since. Thirdly it is because of the way the commission has addressed these claims and fourthly because of the concern over some of the commission’s internal practices. 
On the first of those issues the scope of liability the Earthquake Commission did attend to claims for contents within the first year quite adequately I feel. So the question really is: should the Earthquake Commission actually have to deal with claims for contents or should it be liable only for property? I think that is something that needs to be addressed in the relatively near future in case such an event happens again. I do not think that the commission should have to deal with contents claims. They are mostly covered by insurance. The contents damage causes inconvenience but not the loss of a place to live. It causes delays in the reinstatement of houses because the commission’s time and effort has to be taken up with contents claims and of course it has got the capacity to exhaust or certainly reduce the size of the resources that the commission has. So that is an issue for the future. 
But on the second issue the lack of initial experience I did feel that the Earthquake Commission was not properly prepared for the event that happened at the magnitude it happened. The commission did not have the people it needed it did not act fast enough it was very bureaucratic in its procedures and it constantly inspected things and did not do very much on the ground. So hopefully the commission learnt from that and will improve in the future. 
On the third issue I mentioned it has taken in fact far too long for the commission to attend to the repair or replacement of damaged homes. There have been multiple inspections as I said and too little action. Well after a year since the February earthquake thousands of people still live in seriously damaged homes and unrepaired homes. Many live elsewhere and cannot afford to do so. These are properties in the green zone. Many need to be replaced and many still have to be demolished. 
I realise that the numbers of claims are extremely high and that tens of thousands have in fact been attended to. But that is no comfort to the thousands whose claims have not yet been actioned this long—almost 1½ years—after the February earthquake. So the question really is: why is that? I feel that one problem has been the employment only of Fletcher’s as the sole provider. I think perhaps it would have been better to consider others as well. I think a monopoly may have created something of a lack of competition for good results and of course more resources should mean speedier attention. Overall progress has been too slow and it really needs to be better. So that is another lesson for the future. 
The fourth and final issue I raised was some concerns that people have expressed and I think with justification over some of the internal practices. Initially it did appear that there were conflicts of interest between some of the staff of the commission and the commission itself. I do note that the commission imposed a self-imposed review of that and this went some way to solve some of the problems. However suspicion still exists out there about some of the internal practices like that. So the conclusion that I am afraid I have to draw is that the performance of the Earthquake Commission was not as good as it should have been and of course it has never been tested as I said at the beginning. In trying to meet that test I do not feel it reached the standard we would require but I do not want to say that it has been a complete failure because it has not. The commission has done a lot of good work and I want to pay particular regard and acknowledgment to the people who have been employed by it. 
NICKY WAGNER (National—Christchurch Central) 
: 
 It is my pleasure to talk about the Earthquake Commission—EQC—in this Crown entities debate. The people of Christchurch and Canterbury have got to know the Earthquake Commission well over the last 16 months and the commission is the organisation that we love to hate. We love to hate it but actually just a little bit of reflection would tell us how very fortunate we are that it exists. 
New Zealanders are heavily insured. Possibly about 99 percent of them have their homes insured and this is a unique situation. Across the world particularly in earthquake-prone regions due to cost most people are uninsured. We look at places like the US which is a country very similar to us but in those areas like San Francisco that are earthquake-prone only about 15 percent of people have their homes insured—only about 15 percent. It is similar in Japan. It is because of the Earthquake Commission this Crown entity that virtually all New Zealanders have insurance. Let me explain a little bit about that. 
The Earthquake Commission was set up in 1933 after the Napier earthquake and it was set up to protect homeowners. It was set up to insure homes contents and land. “And land” is particularly interesting because we are one of the very few countries in the world that insures land. 
Hon Gerry Brownlee 
: The only one. 
NICKY WAGNER 
: We are the only country in the world that insures land. Really what it was was a Government safety net for insurance at a low cost. That low-cost insurance continues today. It is actually what the commission has activated by a levy on your main insurance premium. The Earthquake Commission takes the first $100000 risk. This keeps the major premiums down. This means that insurance in New Zealand is cheaper and available to all and hence we have that great cover. 
What this means is that Christchurch and Canterbury have a real opportunity to rebuild safer better high-quality housing and mostly out of insurance. There may be a little bit of a gap but this is an exceptional situation simply because of the Earthquake Commission. In comparison with recovery scenarios in other countries we are incredibly fortunate. There have been about 600000 claims to the commission over the last 11000 earthquakes. Those claim expenses totalled $11.4 billion in 2010-11 and that left the commission with a net deficit of $7.1 billion for the year ended June 2011. The Natural Disaster Fund was at $5.9 billion pre-earthquake with another $2.5 billion available for global reinsurance. That fund has now closed with a deficit of $1.2 billion. So what we are seeing here is that the Earthquake Commission’s liabilities exceeded its assets in 2011. But that is the way the commission is organised and the Crown has committed to meet that shortfall. The Crown has committed to meet it under section 16 of the Earthquake Commission Act 1993. So because of the Earthquake Commission people who have insurance have no need to worry that they will not be paid out. 
We all know that 2010-11 was an exceptional year for the commission. Both the September and February earthquakes came in the top five insurance claim situations in the globe. They are enormous claims. The Earthquake Commission is expecting to remediate land and to repair and cover contents for over 100000 homes. I believe that it has made significant progress. It has paid out $3 billion already and that is 10 percent of Canterbury’s GDP. So it has been a big shot in the arm and it has kept our economy going. It is averaging $37 million a week. It has repaired 15000 homes and to give you an idea about what that looks like that is the number of houses that are in Timaru. The commission has repaired the equivalent of Timaru and we have got about 35000 houses still coming through the process. We have got a long way to go and many people are tired and frustrated. But I think it is because of the Earthquake Commission that New Zealanders are insured. Because the commission takes that first $100000 risk we know that our houses will be repaired. We know that in the long term— 
Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery) 
: 
 I just want to make a couple of comments mainly in response to some of the offerings this evening from Denis O’Rourke a new member of Parliament for New Zealand First. I appreciate that he wanted to say that EQC the Earthquake Commission had sort of done OK but he could not give it a full pass mark. I think one of the interesting things is that since its modern inception in 1994 where it followed on from the Earthquake and War Damage Commission the Earthquake Commission has come up for review repeatedly in the House and MPs from all sides of the House have quietly let it slide through without too much attention. It is not until you have a big disaster like this that an organisation like that becomes tested. 
As the previous speaker Nicky Wagner said it is dealing with some 680000 claims. Those are each individual exposure across the land damage the built-property damage and the contents. When you aggregate those per household it is still over 400000 household claims. It is huge. There is no other insurance company in the world that has ever dealt with anything quite so big from one event. The only one that comes close is State Farm an insurer in the United States that dealt with the very big claims that came out of the Hurricane Katrina event some years ago. The difference though between the Earthquake Commission and State Farm in the United States was that the Earthquake Commission had a staff of 21 people on the day of the 4 September earthquake in Christchurch; State Farm had a standing staff of over 77000 when it dealt with its big hurricane event in the United States. So from 21 people dealing with the huge number of rolling claims coming through it has gone up to I think round about 1200 people now. So it is still a pretty lean machine. It has tried to do as much by contract as it can because we do not expect to have these events occur with the sort of regularity that would justify a staff of some 77000 as was the case with its counterpart in the United States. So I think it has done a pretty good job. 
It is often forgotten that we have had a series of earthquakes there. There have been over 11000 shakes in total over 2000 shakes that have been of a very substantial nature and five events that have been of such a magnitude that they have triggered a series of Earthquake Commission claims from those events. As the previous speaker said it has repaired through the project management office 16000 homes now and at any one time there are 2000 homes in Christchurch under repair. 
I noted the comment from Mr O’Rourke where he said that there were some homes that needed to be demolished and rebuilt. The Earthquake Commission does none of those. Once you go over the $100000 cap it is in the hands of the private insurers. So the Earthquake Commission is dealing with those repairs under $100000 and over $10000. The idea is simply that we will be able to put a brand on those repairs that will see the value of the real estate that is repaired maintained through the years ahead. Had we been in a situation where the Earthquake Commission simply cashed up those who have got damage firstly you are relying very much on the Earthquake Commission assessor getting it right first time—there is no second opinion. But under the project management office arrangement when the builder turns up to do the work he does the work. I think that is a very important distinction. 
The other thing is that the Earthquake Commission does cover land damage and that is totally unique in the world. I think it is a great thing that we have got it and we must do whatever we can to preserve it because it has allowed us to put together a programme to do the proper geological survey that is required of many many parts of Canterbury to determine where the best areas are—or the appropriate areas are—for residential occupation. It is that process that allowed us to be able to say sadly to about 9000 households: “You need to move on because where you are living is no longer suitable for residential occupation. The crust under your house has thinned. The depth to bearing is now a long way below you. You may have slumped. The land may have moved’’—in some areas in Christchurch it has dropped by up to 1.8 metres—“and it is ideal that you do look for some other opportunity for your residential occupation.” We came up with the two offers that have gone out to people and people can choose one of those: either deal with your private insurer or sell the land to the Government and the Government will then negotiate with the Earthquake Commission about what the repair payment might be. There will be a very large net cost in this whole thing to the Crown; there is no question about that. 
But to go back to my key point without the Earthquake Commission we would have had no basis to start a land assessment and no basis in fact to engage with the private insurers about where the liability stopped and started. There is a bit of concern out there at the moment over apportionment and continuity of assessment methods for damage. They are being worked through in a constructive way. None of this is easy. If it was it would have all been fixed quite some time ago. But anyone who comes to Christchurch will see the huge amount of effort that is going in down there. I am not going to stand here and say that everything is perfect with the Earthquake Commission but by the same token I cannot accept that we should determine in this process that it has come anywhere near a position that would say it has done less than its best. I think it has done very very well in difficult circumstances. 
The payments that are being made into the local economy through the Earthquake Commission are no doubt contributing to some of the very good and positive figures that we are seeing around population stability and around the local economic growth as well. That will continue for a few years to come. We are just seeing the thin end of the wedge of what will eventually be invested in Canterbury in the rebuild. That simply puts an onus on all of us to ensure that there is sufficient economic activity coming in behind that big rebuild over the next decade to ensure that the prosperity in that province continues and that is certainly a commitment that I make. 
There was mention made of the Natural Disaster Fund and how it is somewhat depleted at the present time. Some people have proposed a levy on people’s earnings to try to top it up. The reality is that it takes many many years to build up a fund of $5 billion. A Government of course is always in the sovereign position of being able to strike a levy or strike a tax if it thinks that is appropriate. Our strong view is that it is not required at the present time and that we can stand as guarantor behind the scheme. One of the positive things I can report is that when the Earthquake Commission went into the reinsurance market recently to buy cover for the exposures that it has to prepare for going forward it was able to get that cover and the terms were reasonable given the circumstances. 
I want to conclude by just saying that as a major player in the home insurance industry in New Zealand the Earthquake Commission performs an exceptional service. If the $100000 cap is too low it is because this House has allowed it to stay at that level for the last 18 or 19 years. At some point we will need to look at it. I want to acknowledge that Mr O’Rourke has raised the good issue about whether the Earthquake Commission should continue to cover contents. Well I think that in the difficult insurance market at the present time you would not want to be mandating from this House a lack of cover or a withdrawal of cover for the whole of New Zealand. So there is going to be a transition period that will come after we have had the review of the Earthquake Commission which should commence later this year. 
I think that in very difficult circumstances this organisation has served the country well. I know that there will be people who listen to this who perhaps want to scoff at it but really I think the question is: how could it have been done better? There was no way that you could have had a standing army of 10000 15000 or 20000 people hanging around waiting for the day that there was the big one somewhere in New Zealand to go in there and fix it. When you are dealing with the sorts of volumes that it is dealing with there will always be ups and downs. There is no question about that. But overall it has done a very very good job. I think it does deserve a commendation from the House. Also just a little note that all of us as members of Parliament—particularly those of us from Canterbury who are also I might say in most cases claimants—will be watching that progress over the next however long it takes to get the job done with the intention of ensuring that it is done to the very highest quality. 
Report noted. 
Accident Compensation Corporation 
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 It is hard to think of a Crown entity or a public organisation or a State-owned enterprise that we are looking into tonight that is in a worse state than the Accident Compensation Corporation and the fault for that lies entirely at the feet of this Government. That is where it lies. An organisation with a proud history has been turned into a shambles inside 3½ years by this Government. The core principles of ACC—prevention treatment and rehabilitation—have been replaced with scandal sleaze stuff-ups and a culture of disentitlement and that is what we are seeing from this Government. From day one it has sought to undermine ACC to ensure that it is not providing the service that New Zealanders would expect of it and to ready it up for the privatisation plans that we know that the Government has. 
It would be easy when looking at ACC to gloss over some of the matters that are not the scandal and are not the sleaze—I will return to those shortly—but what I want to mention now right off the bat is that in the report of the Transport and Industrial Relations Committee we see the heart of what this Government is actually doing to ACC. The committee chose to comment on the increase in the number of decisions going to review. There were 5193 decisions that went to review in 2007-08. That increased to 9271 in 2010-11—nearly double. 
Hon Trevor Mallard 
: That’s a scandal in itself. 
GRANT ROBERTSON 
: It is a scandal in itself. But it gets worse. The increase in decisions overturned at review or on appeal went up from 900 in 2007-08 to a staggering 2288 in 2010-11. That is what is really going on inside ACC. That is what is there. That culture of disentitlement was brought in by the former Minister for ACC Nick Smith actually deliberately targeting a situation whereby people would have their entitlements taken away. More and more decisions were going to review because ACC was working harder and harder to make sure people did not get what they were entitled to. But it is far far worse than that because in fact what we now know is that the Government pays ACC staff bonuses to get people off the books. That is why things are going to review. It is because people who are entitled to expect that ACC would be there for them are being pushed off it as part of an active campaign by this Government. So do not underestimate at any point the desire of this Government to undermine ACC as a public entity because the agenda is very clear. 
There is one good thing—there is only one good thing—from the stuff-ups scandal and sleaze that have bedevilled ACC. It is that the process of opening up the work account to competition is being delayed. That is the one thing that is good. But make no mistake this Government did it last time in the 1990s and it will do it again. It wants to privatise this organisation. This process of deliberately undermining the organisation of ensuring that people do not get what they are entitled to of seeing more cases go to review and more cases overturned on appeal because the basis of the ACC decision was wrong is the culture that National has been developing in ACC. The Minister for ACC talks about a culture change. Well the culture change that she wants is a culture of privatisation. We on this side of the House would like to see a culture change that actually sees ACC get back to its core business of prevention of treatment of rehabilitation and of making sure that it is the organisation that New Zealanders should be proud of. 
But there is absolutely no way New Zealanders can be proud of an organisation whose main contact points in the last few months have been the police the Privacy Commissioner and the Auditor-General. That is what most of the work going on in ACC is about at the moment—trying to manage the scandals and the stuff-ups and the sleaze. It is simply unacceptable to this day that such a large privacy breach could take place in an organisation like ACC and what followed from that was a disgrace. It was a farce actually but it was also a disgrace because this organisation—once proud—found itself mired in a huge breach of privacy Ministers going and a police inquiry at the end of which we saw the chair the chief executive and board members leave. This is a Crown entity in chaos. It is a shambles. It has been poorly managed from day one of this Government by Ministers Nick Smith and Judith Collins. So mired in the scandal and the sleaze are they that they have completely taken their eye off the ball of this organisation. 
MICHAEL WOODHOUSE (National) 
: 
 There are many things that National Governments can be proud of and ACC counts among them. ACC is an organisation that was established under a royal commission set up by a National Government. It was set up by the Holyoake Government passed into law by Jack Marshall’s Government and maintained over 40 years by the National Government. 
I find it really really tiresome to have to continue to remind this House why it is that every time National comes back to office it has to tidy up the mess left by Labour. The one thing we have not heard from members of the former Labour Government is the simple word “sorry”. Maryan Street is there; she has the opportunity. She put her signature on a financial loss of $2.4 billion and oversaw 6 months of a $4.8 billion loss. I will do many things—and I certainly regret the fact that there was information leaked on several thousand claimants—but I will not apologise for this Government’s management of ACC. 
Let me tell you why. When the Bolger Government came to office in the early 1990s I wonder whether you know how many long-term claimants there were on the books at ACC. I can tell you that there were nearly 27500—27500. It was under a National Government that ACC implemented the case management model that not only is enduring today but is being picked up by social agencies and other insurance companies around the world. The impact of that was profound because at its core the very first thing ACC is required to do is prevent injuries then treat them and then compensate for them. But the most important part of that equation is the rehabilitation model and rehabilitation when it works involves people exiting the scheme. I think a reduction in the number of people who are long-term ACC claimants is a heck of a good thing. When we came in in the mid-1990s with long-term claimants at 27500 the case management model was successful in reducing that number down in the late 1990s to about 14000. And then claims continued to reduce. But under the Labour Government by how many were long-term claimants reduced? None. They went back up by about 1000. There were 100000 fewer claims— 
Jacqui Dean 
: How can that be? 
MICHAEL WOODHOUSE 
: —and 1000 extra long-term claimants. I can tell you how that can be. It is because under Labour ACC was left to take its eye off the rehabilitation ball—a come one come all approach. 
There is one thing that Mr Robertson did not mention—and that no Labour member when discussing ACC has ever mentioned—and that is the other stakeholders in ACC. Because it is not only about the claimants; the important thing is that the scheme is affordable. In the late 1990s it was absolutely apparent that with the growing numbers of long-term claimants the scheme could not be sustained in the model that it was in. The full funding model was put in place and the Labour Government had 9 years to change the full funding model and did not. 
But I will tell members what the Labour Government did do. It allowed rehabilitation rates to drop. This is very important because every 1 percent drop in rehabilitation rates over a 12-month period costs the scheme half a billion dollars. The rehabilitation rates under Labour went down and down and down and the long-term tail went up and up and up. I make no apology for the former Minister for ACC Nick Smith and the present Minister Judith Collins being very clear about the importance of rehabilitation not just for the claimants but also for the levy payers. And let us be very clear about that. Any softening of that approach is not only bad for the levy payers but very bad for the claimants. We should not be afraid to talk about rehabilitation with somebody even somebody who has been out of work for 12 months—and there are difficulties in rehabilitating claimants who have been out of work for a time. 
I congratulate the case managers on the work that they do. If 15 percent—a small proportion—of their remuneration is based on rehabilitation rates why should we apologise for that? Eighty-five percent of their performance is based on other factors including I am quite sure claimant satisfaction. A very small proportion of it is for doing what the law requires them to do and that is to rehabilitate claimants in a fair and timely manner. This Government is going to make no apologies for that. 
Yes there is work to do in ACC and I look forward to that work being well managed by the Minister Judith Collins but I make no apologies— 
ANDREW LITTLE (Labour) 
: 
 There is no question: ACC is in crisis. It is in the deepest crisis it has ever been in and I suspect it is the deepest crisis that any Government agency or department has been in for decades and decades. It is probably unprecedented in the history of the New Zealand public sector with perhaps the exception of the New Zealand Tourism Board under Bryan Mogridge but that is a different story. 
That address we have just heard from the member Michael Woodhouse just frankly defies credulity. There is no question that people who have been on ACC legitimately properly—trying to be rehabilitated entitled to compensation and entitled to treatment—have been pushed off it when there are no grounds to do so. They have been pushed off it not because they are rehabilitated not because they are capable of returning to independent living and being without support not because they are ready to go back to their old job but because this Government introduced an incentive scheme to claims managers and the management of ACC to push those people off to make the figures look good and the bottom line look better. Under this Government ACC has lurched away—lurched in a direction far removed—from its founding principles. Those principles are community responsibility proper rehabilitation and injury prevention. 
We now know how this crisis has unfolded. It started with Nick Smith’s declaration of a crisis in 2009—a financial crisis that did not exist. It did not matter that ACC was generating surpluses— 
Hon Anne Tolley 
: It did exist. Outrageous! 
Jonathan Young 
: Of course it existed. Tell that to the levy payers! 
ANDREW LITTLE 
: —of a billion dollars a year Ms Tolley. It did not matter Mr Young that it had reserves then of $11 billion—now of about $18 billion. So National declared the crisis. It hiked levies totally unnecessarily. What we now know from the most recent media reports is that there was a crook deal done between Nick Smith and the management of ACC to set up incentives to drive long-term claimants off ACC. Let us be under no illusion. What ACC has done in the last 3½ years has been done at the direction and directive of this Government. It is totally the political decision and directions of this Government that have driven ACC. I say to those who want to exculpate the present Minister and the previous Minister for ACC that they miss the point completely. ACC has acted in accordance with the instructions of its political masters and we should not let those political masters off the hook whether it is Nick Smith or Judith Collins. And those who are looking to the present political masters and the present Minister for a solution to the current problems are looking in the wrong place. I make no apology for saying that. 
Let us see what happened under this great regime. The surpluses at around 2008 were about a billion dollars a year. Last year they were $3.5 billion. The reserves are now at $18 billion to $19 billion. But the price of that has been paid by the claimants—the long-term claimants. They have been subject to a brutal managerialism that has taken over ACC. The number of long-term claimants has gone down 25 percent in 3 years. What on earth logic applies there—that in 3 years a quarter of your long-term claimants are miraculously rehabilitated and can go back to work? Jesus could not do as good a job as that! By way of comparison in the 5 years to 2008 there were 12 percent of claimants who went from ACC on to benefits because they were rehabilitated and there was no job for them. In 2010 it was 19 percent. What is the miraculous remedy? It is not because rehabilitation improved; it is because claimants have been shoved off it. 
Let me read from some correspondence I have had just in the last couple of days. It does not take much to cite evidence when it comes to ACC. I just dip at random into my “In” pile for the current day and you get something like this. Here is what this Wellingtonian said: “At the end of January 2010 I had an accident coming down a ladder while off on holiday. When I first applied for ACC they queried whether it was due to any pre-existing conditions and whether I could get anyone else to help me apart from ACC.” That is January 2010. Fast-forward to the end of 2011. The old case manager went; “a new case manager was appointed and at our first meeting after introducing herself she simply stated that her job was to get me off ACC. Alarm bells rang. Where was the rehabilitation? Where was the job training?”. That question is being asked by hundreds of innocent New Zealanders up and down the country right at this moment because ACC is in crisis and they are paying the cost. 
The issue in ACC is no longer just one of confidence in ACC. It is about how the issues are handled—politically. The present Minister is not up to it. The top echelons of the— 
Hon MARYAN STREET (Labour) 
: 
 In 2008 when Nick Smith took over the portfolio there were two difficulties with ACC. One was that the return on its investments was dropping. And why was that? There was a global financial crisis: a global financial crisis in which every investment company and investment account around the world began to notice a falling away in the interest and the returns on their investment. So that was one problem. There was another difficulty and it was with the non-earners account. There was some underfunding in the non-earners account. ACC has six accounts: five were fine and are funded by levies. The one that is not funded by levies is funded by appropriation. There was some underfunding because of the increased costs of medical treatment in large measure. There were two difficulties and two challenges—one that needed to be waited out and the other one that needed to be addressed by an incoming Government. 
But what did we have? We had Nick Smith come in go round in tiny circles and create a panic. He created a panic around an institution that had existed since the 1970s and was brought in by a National Government as Michael Woodhouse said because it saw the purpose and usefulness of it as well. But this Government has now reduced this ACC institution to chaos and destruction. It has wrought more chaos and visited more destruction on this organisation than any other public sector agency that I can think of. 
When we have a look at the report of the Transport and Industrial Relations Committee we notice that in the period from 2007-08—I was Minister for ACC over that time—there were 5000 decisions going to review but by 2010-11 there were over 9000. The increase in the decisions overturned at review went from 900 when I was the Minister to 2288 during the time Nick Smith was the Minister. Let me give you one other significant factor and it goes to the issue of morale. The select committee reported on staff issues. It said proudly that ACC had said that it had met the target of exceeding the New Zealand State sector 50th percentile and had improved from 2009-10 to 2010-11. I will bet my bottom dollar that by the time the 2011-12 review comes round it will have plummeted. 
But maybe there is some remedy that is in the report because if we go on to the very next sentence it says: “We noted that the biggest collective employment agreement covering ACC staff had expired 3 years ago and remains unsettled.” Perhaps ACC could get some performance from its staff if it treated them well to begin with and it concluded their collective agreement instead of cooking up ideas that provide the worst of incentives by offering bonuses if you shoot as many people as possible off the long-term caseload. If you get those people off and you get a bonus for it that has got to be the most pernicious the most evil and the most destructive way of addressing rehabilitation that I have ever heard. It creates the wrong kinds of incentives for staff. 
Sign that collective agreement. Get the staff morale back on board. People want to work in an organisation that they know works well for people. At the moment they are leaving in droves from ACC starting at the top. They are leaving in droves. Nick Smith’s plan may well have been to turn the corporation into chaos. That may well have been his plan because it happens a lot with portfolios that Nick Smith takes over. They are reduced to chaos in short order and he usually gets bumped off and changed so that it can be repaired by somebody else. This one is now in Judith Collins’ lap to repair. She needs to address these issues. If she wants a culture change try settling the collective agreement in that workplace. Try stopping putting in perverse incentives that are going to make people unwell and will not assist in rehabilitation. 
KEVIN HAGUE (Green) 
: 
 There is something fundamentally wrong in ACC. It has been wrong for a while and it gets “wronger and wronger” by the year. The year in question 2011-12 has been the worst year on record. Other speakers have spoken about the social contract that historic bargain in which New Zealanders gave away the right to sue in exchange for a system based on the Woodhouse principles. I have spoken previously in the House about those. It was a great system—a great system that has been brought low. 
I want to tell a story about that system and about that process. It starts more or less in 2009 when we had a Government coming in and a new Minister for ACC who spoke about a financial disaster at ACC. Again other speakers have spoken about that. That new Minister appointed a board and signed a service and purchase agreement with the chair of the board that actually required a target for fewer and fewer people to remain on long-term compensation. In the subsequent years after that 2009 agreement—and in particular in the 2011-12 year that we are discussing today—those targets have become increasingly steep. 
So we were faced with a board of ACC that was under pressure from its Minister and in place were some instructions about what ACC needed to do. What ACC proceeded to do was progressively disentitle New Zealanders by reinterpreting the law so that more and more New Zealanders making claims were not covered. ACC chose to pursue that by introducing this staff remuneration incentives scheme by which staff who contributed to the goal of getting more and more people off long-term compensation would be financially rewarded. It contributed to that goal by hand-picking particular medical assessors who the ACC board knew were likely to give it the result it wanted which was a recommendation that this person was rehabilitated and ready to go back to work. Well it would be fantastic if that were true would it not? Would it not be fantastic if all of those people whom ACC threw off its books—those 3500 people over the past 3 years—in fact did go back into paid work? Sadly that is not the case. Actually only a tiny minority of that group were able to go back to work. Most of that group actually found themselves on income support benefits or in that dreadful limbo world of being neither employed nor eligible for benefits. That is the outcome for those groups. 
The test of that has been in the number of reviews of those decisions that ACC has faced. The current Minister said in the House last week that the rehabilitation decisions—the decisions to remove people from compensation—reflect the fact that the people were rehabilitated and ready to go back to work. Well the problem with those financial incentives for front-line staff is that there is no counterbalance. There is nothing that measures whether the decisions were the right ones or the wrong ones. In fact the increasing rate—that sharply increasing rate—at which decisions have been found at review and in the courts to be wrong suggests that there is something fundamentally wrong with the decision-making processes at ACC. 
What has happened fundamentally is that financial incentives—the dollars—have been put in front ahead of the needs of ACC’s claimants. That is nowhere better reflected than in the issues around privacy. Why is it that ACC had this catastrophic failure of privacy culture? It is because it did not really care about the claimants. Fundamental culture change is needed. Judith Collins’ first service and purchase agreement is due now. What will it say? 
Report noted. 
Independent Police Conduct Authority 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Chair. Kia ora tatou katoa. Kia ora taku tama e noho mai ra ki runga ake na. 
[ 
Greetings to you Mr Chair and to all of us. Greetings my son seated up there. 
] 
The Maori Party enters this debate with the clear line that we took to the polls last year when we sought to disestablish the Independent Police Conduct Authority. We believe that the public needs to have trust and confidence in the New Zealand Police and unfortunately recent history has not enabled that to occur. I have to say that I have got great admiration for the job the police do having been out with them but unfortunately some issues have been really testing that admiration. In fact our full trust and confidence in the police is actually at an all-time low. Recent surveys have reported 28 percent of New Zealanders have full trust and confidence in the New Zealand Police. Whether it is perception or practice this is about the fragile trust and confidence that New Zealanders have in our police force. 
I would have to say that the financial review that we have in front of us or at least I have in front of me is not all that flash. The report of the Law and Order Committee revealed that there was a deficit of $538000 in the 2010-11 year and despite a goal of inspecting 30 detention facilities during the year the authority managed about 20. The number of open files is still quite high. In 2011 there remained 584 open files. The Maori Party believes that every New Zealander has the right to expect trust accountability and transparency out of the Independent Police Conduct Authority and we are mindful of the observations of Transparency International that “The numerous agencies in government responsible for minimising corruption represent a problem. … There should be fewer more centralised controlling agencies.” It was in light of that that the Maori Party called for a single anti-corruption commission which might bring together the Independent Police Conduct Authority the Serious Fraud Office the Judicial Conduct Commissioner the Judicial Conduct Panel and even the investigative functions of the State Services Commission. 
It is a real worry that in the financial review there is comment that the authority has had to rely on staff taking on extra work in order to meet its responsibilities. Something I think is terribly wrong if the workload does not appear to have been reduced. There is a significant deficit return and some work simply is not getting done. Particular concern is related to the responsibilities of the authority to issue its report into the activities of what has now become known as the Tuhoe raids back in October 2007. Five years on it is a miscarriage of justice if the State agent established to report on matters such as this has still not offered up its report. When I asked questions of the former Minister of Police last October the response from Minister Collins was that in the interests of justice that report would not be public until the court case had been completed. Well as the local MP I am pretty disappointed that the reports into the treatment suffered by the people living in and around the Ruatoki valley have not seen the light of day—both the Independent Police Conduct Authority report and the Human Rights Commission report. The violations of human rights that occurred on 15 October 2007 have cast a real sad and wide shadow over this nation and it is my belief—it is the Maori Party belief—that it is time that the events of that day were exposed for all to see. 
Finally there is a headline comment made in the report of the Law and Order Committee about the role of the New Zealand Police and the Independent Police Conduct Authority that these two organisations are “on a ‘parallel path’ towards ensuring public confidence in policing.” If that is really the case then I would hope that there is someone listening who might have some courage to have those reports issued so that all New Zealanders then can make up their minds. Kia ora tatou. 
Hon ANNE TOLLEY (Minister of Police) 
: 
 I want to take a short call just to address a couple of points that the previous speaker Te Ururoa Flavell made particularly in relation to the Independent Police Conduct Authority and the Operation Eight report. I want to preface it by saying as a relatively new Minister of Police and having received only one report from the authority that the quality of that report was outstanding. I think the authority should be commended for the very thorough work that it does do in reporting on some of these major events in a way that the general public can follow pretty carefully through what has happened. Of course the report that I am referring to is the report into the accidental shooting of an innocent bystander when the police were pursuing an armed offender in Auckland. 
If I come back to Operation Eight the member himself made the point that the previous Minister of Police commented on the delay in the report from the Independent Police Conduct Authority until the court case was completed. Well it might be 5 years down the track but we are still awaiting the finalisation of that court case. We are still awaiting appeals. So in the interests of justice as much as all of us would like to have that Independent Police Conduct Authority report finished and have the report out in the public we do have to await the finality of the justice system. 
In the meantime I commend the Commissioner of Police for his meetings with Tuhoe. The point he has made is the fact that the operation was not against Tuhoe; in fact the operation took place right across the country against a wide array of people. But no doubt the people of Tuhoe await with the most interest the report from the Independent Police Conduct Authority—as we all do. Once the court case has been completed I have no doubt that that report will be forthcoming very promptly. 
So I would just like to finish by saying that I think we are very well served by the Independent Police Conduct Authority and of course we have a new head of that authority in Judge Carruthers. I am sure that the very high standard that has been set will continue under its new leadership. 
JACQUI DEAN (National—Waitaki) 
: 
 The Independent Police Conduct Authority is an independent Crown entity and as it notes in its statement of intent for 2009-12 it has a role as watchdog over police actions. When the Chair of the Independent Police Conduct Authority Justice Goddard appeared before the Law and Order Committee she was very clear on that point—that the Independent Police Conduct Authority is there as an independent body on behalf of the public of New Zealand to scrutinise and take complaints about and write reports on behalf of the people of New Zealand on the New Zealand Police. 
It was interesting also in the evidence that Justice Goddard gave to the Law and Order Committee that she was well aware of the fiscal constraints that this present Government has and was satisfied also that the Independent Police Conduct Authority could fulfil its functions as a Crown entity in that environment. In fact Justice Goddard made no complaint at all about the requirement to operate within a constrained fiscal environment and seemed rightly satisfied with the work of the Independent Police Conduct Authority over the previous year in her evidence to the committee. 
What I believe was most notable in the evidence in the financial review to the Law and Order Committee was the comments that Justice Goddard made around its investigative capacity. In respect of the most serious matters brought to the Independent Police Conduct Authority it had been the practice that the authority would wait for the police investigation of that particular serious matter and then perhaps review it afterwards. So what is now the practice of the Independent Police Conduct Authority is that it itself undertakes the investigation rather than sitting back and waiting for the police to investigate themselves and then review that complaint after it had been determined. I thought that was a very powerful attitude to take and I commend the Independent Police Conduct Authority for taking that approach. As the Minister of Police has just mentioned Justice Carruthers will pick up the role of the Chair of the Independent Police Conduct Authority and we look forward to continuing with his contribution to the watchdog role over the New Zealand Police. 
The authority independently investigates all deaths and all instances of serious bodily harm caused by police employees. It also investigates or directly oversees the investigation of the most serious complaints against the New Zealand Police. This is an incredibly important role that the Independent Police Conduct Authority has and so the committee questioned the relationship the Independent Police Conduct Authority has with the police and what the relationship is like between those two organisations: the police and the watchdog. 
Well we were told that although the authority has a memorandum of understanding with the police—which was signed in 1994 so it is now a few years old—there is a good spirit of cooperation between the Independent Police Conduct Authority and the police and that in its view that agreement although it was useful is now largely irrelevant because both bodies understand very clearly their role. The point was made also that the two authorities were not in an adversarial relationship but actually were working on—and these are the words of the Independent Police Conduct Authority—a parallel path towards ensuring public confidence in policing. 
I just want to pick up on the comment made by the Maori Party MP Te Ururoa Flavell about the deficit that was recorded of $538000. The Maori Party member noted that this was a bad thing. Well actually there is a simple explanation for that. The shortfall came about because of a very important child abuse inquiry for which it received an allocation spanning 2 financial years. Thank you. 
Report noted. 
Privacy Commissioner 
TIM MACINDOE (National—Hamilton West) 
: 
 I am pleased to take a call in this Crown entities debate in my capacity as chair of the Justice and Electoral Committee. The Justice and Electoral Committee has attempted this year to review all the Crown entities for which we have oversight. That is a fairly tall order. Some such as the Abortion Supervisory Committee and the Law Commission are reviewed quite rarely so I want to thank members of the committee one of whom is right behind me at the moment for their attention to this most important aspect of our function of scrutiny this year. 
Another of those entities which is also reviewed only periodically and which I wish to focus on here is the Office of the Privacy Commissioner— 
Sue Moroney 
: “Pry-vacy”. 
TIM MACINDOE 
: Well it depends Miss Moroney on which of your parents you listen to. My mother always said “pri-vacy”; my father always said “pry-vacy”. Dad is dead so I tend to stick with Mum in case she might be listening. But I am confident that all members of this Chamber would agree that we are fortunate to have a commissioner of the calibre and experience of Marie Shroff. She has a very proud record of public service in New Zealand. 
As is the case with many Crown entities in the current fiscal environment demand for their services is often increasing while funding necessarily remains static. That is certainly true of the Office of the Privacy Commissioner which is an independent Crown entity established under the Privacy Act 1993. Just for the benefit of the many people who are listening in the gallery at the moment or who may be watching on their television sets at home it may be useful to explain that the commissioner has wide-ranging functions including but not limited to investigating complaints about breaches of privacy running privacy education programmes examining the privacy implications of bills maintaining the Privacy Act’s information privacy principles safeguarding human rights ensuring that New Zealand meets its international privacy obligations and adheres to general international guidelines and protecting social interests that compete with privacy such as freedom of information. 
That last function in particular requires particular wisdom discernment and constant vigilance. The commissioner’s work has to adapt rapidly to emerging trends and technologies and demand for it is ever-increasing. In spite of budgetary constraints and growing demand the commissioner has improved productivity and service quality. We were very pleased as a committee to hear that and to be able to commend the commissioner for that achievement. 
We were advised that over the last 5 years there has been a substantial increase in public complaints lodged with the commissioner. Media inquiries have doubled and telephone and email inquiries have also increased by about 50 percent. We were told that about 10000 calls are made to the commissioner’s inquiries line every year. There is no Minister responsible for privacy issues so the Privacy Commissioner is the only legitimate source for media information on matters pertaining to privacy. 
The commissioner expects the number of inquiries to continue to increase as privacy accidents are increasing because of the large databases of personal information held by public agencies. We had an interesting discussion with the commissioner about the implications of ever-evolving technology especially social media. The commissioner is concerned at evidence that employers in the United States are increasingly requesting access to or passwords for prospective employees’ social media accounts. That is a really worrying trend and it is apparently quite common now in the United States. Fortunately it is not yet thought to be a problem here in New Zealand but the commissioner is aware of the possibility of it and will remain vigilant. 
We also discussed the very real and growing problem of cyber-bullying especially among young people. We all know that this can lead and indeed has led to some considerable distress and tragic outcomes. So we were very pleased to hear that information kits for teachers on protecting online privacy were distributed to secondary schools several years ago and that the commissioner has recently received funding from Unesco for a similar initiative for primary schools. 
The Office of the Privacy Commissioner is a Crown entity that is performing a very valuable public service. It has sensible priorities and a very realistic understanding of the current fiscal environment. So I am confident as indeed were all of the committee as we met with the commissioner and conducted this financial review that New Zealanders are well served by the Office of the Privacy Commissioner. 
Report noted. 
Electricity Corporation of New Zealand 
Report noted. 
New Zealand Post 
Report noted. 
LOUISE UPSTON (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. Some of the issues that we wish to debate have been passed. Are we still able to do that? 
The CHAIRPERSON (Lindsay Tisch) 
: Well I need to know which ones they are because on the list— 
Louise Upston 
: Genesis Power please. 
The CHAIRPERSON (Lindsay Tisch) 
: Which one? 
Louise Upston 
: Genesis Power. 
The CHAIRPERSON (Lindsay Tisch) 
: Well if you wish to debate that you can but that is not on the list that I was given. I understand then that members wish to debate the entity Genesis Power Ltd. 
Genesis Power 
JONATHAN YOUNG (National—New Plymouth) 
: 
 I am very pleased to stand and discuss the financial review of Genesis Power. Genesis Power is a developer and procurer of fuel sources a generator of electricity and a retailer and a trader in energy. It supplies 19 percent of New Zealand’s electricity. As a result of the enactment of the Electricity Industry Act 2010 in June 2011 Genesis purchased two of Meridian Energy Ltd’s hydro generators Tekapo A and Tekapo B. This acquisition of the two hydros changed the generating portfolio of Genesis. Dame Jenny Shipley the chair of Genesis reported to the Commerce Committee that Genesis went into the South Island market and in a difficult environment succeeded in securing and actually exceeding its targets in terms of the numbers of people who joined Genesis. She reported that it was a very competitive environment but that competition was good for customers and it also made companies perform very well indeed. She said that its approach was to try through good customer service to reduce and avoid churn. 
Many of the energy companies reported as did the Electricity Authority on the effect of what they call churn where through the website www.whatsmynumber.org.nz consumers have the opportunity to compare retail prices and be able to switch between those retail companies in order to get the best price for their electricity. What they intended to do and did was understand the customers relate to them in terms of communication response time time to serve getting back to people solving their problems and so forth and also offer a range of products that met different customers’ profiles. So the competition that www.whatsmynumber.org.nz has created has caused a great response to the market and the effect of that has been the reduction in prices particularly around those discounts for early payment. One energy company increased its discount from 10 percent to 22 percent because of that. So it has had a very positive effect. 
In 2010-11 Genesis generated revenue of around $1.8 billion and it made an overall post-tax loss of $17 million partly as a result of the $97 million revaluation costs when there was a revaluation of the Tekapo B station particularly for the forward planning around work it wanted to do there. It acquired 26500 additional South Island customers. 
Genesis Power is one of the energy companies in which the Government will offer 49 percent interest in the mixed-ownership model. Inevitably this came up in discussion at the financial review by the Commerce Committee. Dame Jenny Shipley reported that she was very happy with both the board and the management’s performance. She reported that Genesis raised debt. It raised a corporate bond in order to fund the transaction of purchasing Tekapo A and Tekapo B and having a listed bond required it to give every consideration to performing as if it was a listed entity. This came up I understand last week in the debate in the House. 
One member of the committee asked: “what is the upside in your view or the board’s view … [regarding] partially floating a sound company” …?” The chair Dame Jenny Shipley replied: “let me say that I think taxpayers are entitled to know that SOE boards attempt to run these companies in the best way possible.” But she said that “the second point in the case of Genesis is we do have a corporate bond and so we actually have real and legal obligations to continuous disclosure—we have to—in any material decisions that we make. So we are right in the zone and frankly the board’s skill attention and competency has … already moved into that space.” She went on to say that it was “because of the bond requiring us to pay attention in order to partially fund the cost of the Tekapo transaction.” Genesis raised a bond and because of that bond issue according to the chair it became subject to market scrutiny regarding their company performance. 
Report noted. 
Landcorp Farming 
Report noted. 
New Zealand Railways Corporation 
DAVID BENNETT (National—Hamilton East) 
: 
 Thank you for the opportunity to talk in regard to KiwiRail today and just the importance that that organisation has for the future of this country as we look forward. We are a trading nation and we rely on getting freight to ports quickly efficiently and in a timely manner. We also rely on taking freight from ports to New Zealand’s businesses. 
Hon Trevor Mallard 
: What’s the Government doing about the Gisborne line? 
DAVID BENNETT 
: The Labour Party wants us to talk about Gisborne. Is the Gisborne line what you want to talk about? Well we will come to that. But we have to look at the essence of what KiwiRail is there for. It is a major infrastructural asset that we have as a country. This Government has committed to turning KiwiRail round. We have a turn-round plan which has a distinct Government investment in that organisation and it is in the best interest of KiwiRail and New Zealand business going forward. 
We want KiwiRail to be effective and to have a long-term strategy. To do that KiwiRail needs to stand on its own two feet. And what KiwiRail has suffered from for many years is political interference telling it how to run its business. KiwiRail has then been required to do things that are not economically in its best interests and cost it money and therefore it is not competitive. The thing we need to do with KiwiRail is let it be a business. Let it have the freedom to go out there and compete. Let it go out there and make decisions on where it wants to invest its money and not be told by people in this House how it should run its business just for purely political motives. The Labour Party bought KiwiRail back to do that. We have taken KiwiRail on and will make it run as a real business and that is the defining difference between the two parties. 
Sue Moroney 
: But no passenger train from Hamilton to Auckland right David. 
DAVID BENNETT 
: You want to talk about the passenger train from Hamilton to Auckland. That is what Sue Moroney wants to do. This is Sue Moroney’s election pledge for the last two elections which has not got off the ground. It cost $15000 a year per passenger on that train. Sue Moroney wants to give 95 people a subsidy of $15000 each for a year do you not Sue? 
The CHAIRPERSON (Lindsay Tisch) 
: Order! 
DAVID BENNETT 
: That is what it costs. Those are the numbers. The city council said no. The regional council said no. But yet Sue Moroney went to the electorate year after year seeking that train—a train that has not worked in the past. Let us have a look at the trial during the Rugby World Cup. Guess how many people went on that train. 
Hon Chester Borrows 
: Five. 
DAVID BENNETT 
: No it is more than five. 
Chris Auchinvole 
: Six. 
DAVID BENNETT 
: Six? It is more than six. It is not many more than six; keep going guys. There is a potential— 
Nikki Kaye 
: 20. 
DAVID BENNETT 
: No it is less than 20. It was nine. Nine people went on this great train during the world cup to a rugby game and Sue Moroney said it would be full. That is from the great Labour Party geniuses of economic management who know better than KiwiRail management about how to run their own business. They said: “Let’s have this train. Let’s do it. It will be economical.” And there were nine people on it. It is $15000 Sue if you have 95 people. So if you have only nine people on it how much is that subsidy for that train per year? It is a lot of money. That is what it is Sue. It is a lot of money. 
The CHAIRPERSON (Lindsay Tisch) 
: Order! The member knows that he must use the member’s full name. All right? It has happened twice in this debate. The member knows the consequences of not using the member’s full name or title. 
Sue Moroney 
: And he needs to tell the truth. 
The CHAIRPERSON (Lindsay Tisch) 
: The member cannot say that. I ask the member to withdraw and apologise for that comment. 
Sue Moroney 
: I withdraw and apologise. I raise a point of order Mr Chairperson. 
The CHAIRPERSON (Lindsay Tisch) 
: If it is on this matter the member will be out of order. 
Sue Moroney 
: I do wish to ask the Chair to ask the member to speak to the Crown entity that he is actually supposed to be talking to. 
The CHAIRPERSON (Lindsay Tisch) 
: I will decide on that about relevance. I know the member will come back to it. 
DAVID BENNETT 
: Thank you Mr Chair. KiwiRail is an important part of our infrastructure. It has an opportunity in two areas: freight and passenger transport. Rail works really well when you have a large contingent of freight in one place that wants to go to another place. And it works well when you have a large number of people in one place who want to go to another place. We have to be careful how we invest in KiwiRail to make sure it uses that strategic advantage. For example Hamilton is a great place for a freight hub for KiwiRail and we are working closely with Tainui to develop that at Ruakura. That is in the best interest of Tainui and it is in the best interest of the New Zealand economy and it will help us to deliver those resources and that infrastructure to our people going forward. 
Passenger transport works well in Wellington and Auckland. Wellington is a very good place for passenger transport because it is a straight line; people live in one place and they work in another place and it is not a great distance. We are investing heavily in the passenger transport network in Wellington. In Auckland it is important as well because Auckland is our biggest city and we need to develop that infrastructure. We have put a billion or so dollars into the electrification of the Auckland network. That is a huge investment for the Auckland rail system. It is for passenger rail. 
Report noted. 
Solid Energy New Zealand 
EUGENIE SAGE (Green) 
: 
 I am pleased to take a brief call on the financial review of Solid Energy. The way in which we define and measure the success of companies like Solid Energy goes to the heart of how we run our economy. In the 2010-11 financial year Solid Energy generated $828 million and recorded a net profit after tax of $87.2 million. But that profit does not take account of externalities. It does not take account of the environmental costs of the company’s coalmining at Stockton and the acid mine-drainage into the Ngakawau River and other waterways. It does not take account of the increased greenhouse gas emissions from the company’s increase in coal exports. Solid Energy is a creature of our traditional economic model and our system of Government accounts where we measure economic success by the financial bottom line and the focus is on growing GDP. 
 That is what the Green Party would like to change through Dr Kennedy Graham’s Public Finance (Sustainable Development Indicators) Amendment Bill— 
Hon Trevor Mallard 
: Where is he? Let him speak. 
EUGENIE SAGE 
: He is in New York. That is why that bill is so important because we would be discussing different questions here tonight in this financial review if we had the 39 environmental indicators of prosperity in our national set of accounts and if Solid Energy’s performance was evaluated in terms of those indicators. The profit line for Solid Energy conceals the death of hundreds of rare  
Powelliphanta augustus 
 snails frozen to death in the fridges of the Department of Conservation in Hokitika because Solid Energy insisted on removing them from their natural habitat so that it could take the top off Mount Augustus. The Green Party wants these externalities to be taken into account in both the company’s balance sheet and its annual report and in our national accounts. 
One of the most serious externalities which cannot be adequately considered in this financial review is the impact of the company’s lignite mining in Southland. The large profits that Solid Energy has made have allowed it to experiment with untried technology. It is proposing to convert low-quality lignite into briquettes into urea and into diesel. 
Hon Trevor Mallard 
: That’s just stupid. 
EUGENIE SAGE 
: It is just stupid. Thank you Mr Mallard. The Parliamentary Commissioner for the Environment says that the proposed lignite plant would be responsible for the single biggest increase in carbon emissions in New Zealand’s history. The Government went to Rio but it should not have been proud to be at Rio because shareholding Ministers should have seen the irresponsibility in Solid Energy being allowed to proceed with lignite mining in Southland. 
In 2009 New Zealand in Copenhagen took responsibility for reducing our annual greenhouse gas emissions to between 10 to 20 percent below 1990 levels by 2020 yet our greenhouse gas emissions are on track to be 30 percent above the 1990 level by 2020. Solid Energy is making a major contribution to that. It makes no sense for New Zealanders to subsidise new investment in the carbon-intensive technology that Solid Energy is undertaking in Southland. It makes no sense to allocate free carbon credits that will equate to billions of dollars of taxpayer subsidies to this company. 
It made interesting reading looking at the Commerce Committee’s report and the transcripts because there is a whole issue too around lack of accountability and lack of transparency. There was an issue that the shareholding Ministers—the Minister of Finance and the Minister for State Owned Enterprises—should have pushed the organisation on. It will certainly get worse with the mixed-ownership model because there is no ability for Ministers to seek information from the mixed-ownership model companies and there is no ability for the Official Information Act to apply. Solid Energy declined despite questions from members of the select committee to release the business case for its Southland lignite conversion projects. It also declined to release the results of its annual public opinion surveys which it claims substantiate its view that the majority of New Zealanders believe that our coal should be developed if our environment is protected. There is no ability with that business case not being released and the public opinion surveys not being released—not being able to see the questions that Solid Energy is asking—to actually look properly at the operations of the company. So there has been very limited accountability and transparency in the way that Solid Energy does its business. Thank you. 
Report noted. 
Auckland District Health Board 
Dr JACKIE BLUE (National) 
: 
 I am delighted to speak in the Committee stage of this debate on the Auckland District Health Board. First I would like to acknowledge the Minister of Health the Hon Tony Ryall for his leadership in the health sector which is now happily a very settled sector that is in stark contrast to what it was before we took over. Back then it was a demoralised and disenchanted sector where clinicians were considered part of the problem not the solution where women with breast cancer were shipped off for radiotherapy in Australia and where tens of thousands of New Zealanders had been culled from waiting lists. 
I would like to focus on the 2010-11 financial review of the Auckland District Health Board which the Health Committee viewed in conjunction with that of the Waitemata District Health Board. The committee made this decision in its timetable because both district health boards had worked collaboratively for some years and were working towards practical collaboration and it seemed sensible to review both district health boards together. 
Both district health boards share a chair—that is Dr Lester Levy a Maori board member—and integrated back-office functions. I would like to acknowledge Dr Levy for his leadership in particular with reference to the Waitemata District Health Board which was quite a troubled district health board prior to his taking the chair. Dr Levy reported collaboration at every level which the committee was very pleased to hear. 
 Waitemata had quite serious financial difficulties in the past recording deficits in 3 out of the last 5 years but the financial result in the year under review shows it recorded a surplus. The committee felt that this was actually an outstanding dramatic and astonishing turn-round and I think that that is all down to Dr Levy’s leadership. 
I will just make some general comments about Auckland District Health Board. It is responsible for 87 percent of the people in the Auckland Council wards; it is the fourth-largest of the 20 district health boards. It covers almost half a million people which is about 10 percent of New Zealand’s population. As at June 2011 Auckland District Health Board received about $1.8 billion in revenue and employed 10000 staff which is the equivalent of nearly 7500 full-time equivalents. It had a small net surplus for the year under review of $142000 which is slightly up from the budgeting surplus of $58000. 
To get some perspective around this district health board I would just like to make the comment that it is the largest trainer of doctors with approximately 1200 doctors and at any point 630 of them are at various stages of training. It is the largest clinical research facility in New Zealand. It provides local hospital and outpatient services for more than 400000 people living in the Auckland City area. It provides tertiary services for the northern region and over 50 percent of services are provided to people outside the district. There is a significant what we call inter-district flow. 
It is a provider of many specialist services such as organ transplants—that is heart lungs and livers—acute massive pulmonary embolism treatment services paediatric intensive care major head trauma following neurosurgery high-risk obstetrics and a number of other tertiary services such as clinical genetics and paediatric oncology for patients in the northern and midland regions. It is a very busy district health board and there are many layers and complexities in its operation. 
The committee was very pleased to hear from Dr Levy that improving productivity was a priority area for the Auckland District Health Board and that it was focusing on greater productivity done more efficiently with lower costs shorter hospital stays and more satisfied patients—and who could complain about that? 
I would like to just talk about the health Minister’s introduction of health targets because that really has put the minds of district health boards on productivity. These health targets are national performance measures specifically designed to improve performance. They have been accepted widely through the sector. They have not been seen as threatening by clinicians. They provide a focus for action. They are published quarterly and they cover such matters as emergency departments elective surgery cancer treatment waiting times—particularly radiotherapy—immunisation helping smokers to quit diabetes and cardiovascular services. 
The health targets work as benchmarks for district health boards and in reality are a league table but as I said earlier they are not seen as threatening. In fact district health boards have used them to benchmark each other and to step up. Quite frankly Waitemata has turned from being one of the poor performers to being one of the top performers. 
Report noted. 
Career Services 
Hon HEKIA PARATA (Minister of Education) 
:  
Kia ora. Tena koutou tena tatou te Whare e whakawhaiti nei i runga i tenei kaupapa o te po. 
[ 
Thank you. Greetings to you and us collectively the House compressed here in this evening’s debate. 
] 
I am absolutely delighted to take a call about Careers New Zealand which was Career Services the Government agency responsible for leading the career development of all New Zealanders. It is because I have absolute confidence in the contribution that Career Services makes to the overall education landscape and the powerful support it provides to all New Zealanders—young people in particular including Maori and Pasifika—because we of course are very committed to those young people leveraging off their educational opportunities and being able to define the skills that are relevant to the career pathways that they would like to be able to take. 
So notwithstanding the deep scepticism that is being expressed by the Opposition members of this House I think it is important to appreciate that Careers New Zealand Mana Rapuara Aotearoa is very focused on how it will help all New Zealanders how it supports school career guidance officers and how it works with industry training organisations local councils iwi and hapu and Pasifika organisations in order that they are able to assist young people to design career pathways for themselves.  
There have been a number of recent achievements that I am very proud to bring to the attention of the Committee and which will have been reported at the select committee. In July last year a Careers Summit was held for instance with representatives from the private and public sectors to ensure the careers system works for both employers and individuals and contributes to economic growth in New Zealand. A career system action plan was developed focusing on education to employment and effective careers information because of course rather than just talking about how young people can be engaged Careers New Zealand actually provides services that support them to be able to have a real and meaningful opportunity to develop their lives. We believe in young people being self-determining rather than being dependent unlike the Opposition members of this House.  
Capable Auckland is a Careers New Zealand - led Auckland network because as we know a very big proportion of the youth of New Zealand is in Auckland. It is a network of career and education professionals and industry and business people. It is a key project in the Auckland careers blueprint.  
Career education benchmarks: Careers New Zealand has developed innovative self-evaluation tools for schools and tertiary organisations that help young people to assess what choices they should be making as they navigate their way through our qualifications framework. Canterbury recovery: Careers New Zealand is supporting the rebuild effort with a particular focus on matching skills with the developing labour market in Canterbury. Why is that important? It is important because we need to be boosting all levels of the employment opportunities of young people.  
The Canterbury Careers website has been launched. It provides information on available jobs in demand and the skills needed in Canterbury with direct links to Canterbury jobs advertised in a range of places. There are 16000 National Certificate of Educational Achievement (NCEA) students in Canterbury who are encouraged to plan for their future which of course is a fillip for them because we all know how challenging the times have been in Canterbury and the idea that they can also develop and progress their careers is extremely important. So 16000 NCEA students in Canterbury have been assisted. Careers New Zealand ensures that this support is made available in all sorts of media that young people plug into.  
Can I also talk about how young Maori people are being assisted. Nearly 4000 young Maori their whanau and other influences have been helped to identify what skills pathway they could pursue. Te Tukirunga which is a whanau-focused culture-based careers guidance model is a flexible programme that allows young Maori to see what choices they might have and to do it in partnership with their whanau. That is similar to Te Kauhanganui which the Opposition members may know is the Waikato Tainui initiative that builds skills for those young people in alignment with Waikato Tainui’s navigational approach. Similarly Pasifika young people: instead of just talking about it this Government has gotten on and focused on how we can help those young people to be successful. 
Report noted. 
New Zealand Qualifications Authority 
NIKKI KAYE (National—Auckland Central) 
: 
 I am very pleased to take a call on the New Zealand Qualifications Authority. Can I start by acknowledging the wonderful Ministers who are responsible for education Minister Hekia Parata and Minister Joyce. They are doing an outstanding job so I am very pleased to be chair of the Education and Science Committee. 
Can I just say there are three core goals for the New Zealand Qualifications Authority in the future. The first one is to ensure that we have a clearer system and that we promote recognition of learner achievement the second is to ensure that we have increased confidence in the system and the third is to ensure that for our young people we have more portable qualifications across the world. 
Can I start by saying that we have to talk about the base that we started from because we actually cannot talk about the future for the New Zealand Qualifications Authority unless we acknowledge the very difficult situation that we inherited. We had 16 and 17-year-olds dropping out of school with fewer qualifications and lower literacy. The number of degree-level graduates did not improve between 2000 and 2008 despite huge funding increases. We had low completion rates for courses we had no incentives for tertiary institutions to improve their performance and we had a bloated qualifications register. 
One of the core jobs of the New Zealand Qualifications Authority in the future is about reducing this number of qualifications. In 2008 there were 6000 qualifications in New Zealand. For a country with a working-age population of 2.2 million people that is appalling. Under our Government there is a review. Our goal is to ensure that by 2014 the number of qualifications is down to 1200. To give you an example in the area of hairdressing for instance there were 72 qualifications. We will be getting that down to nine. 
We spend $4.3 billion in tertiary education each year. If we are going to achieve the kinds of results through the New Zealand Qualifications Authority that we need to achieve we need to do a whole lot of other things. One of those other things is improving the financial performance of universities. There are 12000 more core tertiary places funded under our Government. We are investing more in engineering science and research-led learning. We have a target of 55 percent of 25 to 34-year-olds with a qualification of level 4 or above. 
Hon Trevor Mallard 
: Another target! Another one! Have you told John about this one? 
NIKKI KAYE 
: The Opposition says: “Another target!” but what we know is that we are working from an appalling record under the last Labour Government and secondly we also—and this was mentioned by the Minister of Education—have some very disadvantaged people in our country. We have unfortunately some very difficult issues around Maori and Pacific Island education. What we are interested in is actually having accountability and that is what targets are about. That is why we have them. We are able to focus Crown entities and other entities such as the New Zealand Qualifications Authority and actually say: “We want accountability; we want some targets.” This is not about pouring more money into the system; this is about ensuring there is clarity and there is a simpler system for New Zealanders to be able to go out across the world with decent qualifications. That is what this entity is now tasked with unlike under the last Labour Government where there were low completion rates and where we had 16 and 17-year-olds dropping out. 
It is also about ensuring that we know through schemes like the Youth Guarantee that some people do not suit classrooms. For those people we are investing more than $100 million in the Youth Guarantee scheme. Can I say that we are only able to do this with the support of Ministers like Hekia Parata and the Hon Steven Joyce who have fought very hard in the education budget to increase our education budget every single year—by $512 million over the next 4 years—and that is because of the Hon Hekia Parata. It is a tribute to this Government that we are investing more than ever before in the education portfolio. 
What we can also see is that we need to have more confidence in our private training establishments. That is why over 4 years there is $29.5 million to reward completion and innovation. But it is also about acknowledging that we are pouring more than many other countries into our student loan and allowances system and that is way out of step with many other nations. I think 41 percent or 42 percent of our total tertiary budget is spent on student support. You compare that with Australia at 31 percent. If we want to get the kinds of outcomes we want for young New Zealanders in the future we have to shift funds into things like research and into things like training not just into student support and that has been a big focus for this Government. 
Again it is about incentives in the system. So if we look at what— 
Report noted. 
Children’s Commissioner 
Report noted. 
Families Commission 
SUE MORONEY (Labour) 
: 
 I do want to talk about the Families Commission because the Government has made some moves to collapse the Families Commission and the Children’s Commission together. One would think that the Opposition might have some concerns about that but in fact what we are more concerned about is the lack of independence being shown by the Families Commissioner under this Government. After that Families Commissioner was appointed by the Minister Paula Bennett suddenly we had a Families Commissioner Mr Carl Davidson who in one press interview rendered the Families Commission absolutely irrelevant by declaring that he was going to revoke the Families Commission’s position on extending paid parental leave. This was from the Families Commissioner—the man who is supposed to be putting families at the heart of what he advocates for. When it came to being asked a question about extending paid parental leave on the back of a bill that had been drawn out in my name to do exactly that because the Government was not prepared to back extending paid parental leave suddenly we had a Families Commissioner who baulked at it also. He said and I am going to quote him: “I mean wouldn’t it be great if none of us had to go to work and we could just stay at home and get paid for it.” 
That was from the so-called independent Families Commissioner under this Government who in one fell swoop I think offended pretty much every woman in the country who knows that staying at home and looking after children actually is work. He pretty much managed to make his whole commission irrelevant to families in one statement all because he is working for a Government that insists that the Families Commissioner takes a position that they would want to favour. That is not the role that we should have for the independent Families Commission. The role we should have is that it should be a challenging role of the Government. It should be a role where the commissioner is prepared to stand up and fight for what families want and what families need. If that commissioner or this Government were in touch at all with the stress on working families then they would know that extending paid parental leave is indeed something that would make a big difference to family life. At the moment families do not get any financial support after their baby is 14 weeks old. That means that many parents are going back to work for financial reasons before they really want to and before their family is settled into the new routine. 
In 2007 the Families Commission actually did a very comprehensive evidence and research-based report led by Dr Rajen Prasad at the time and it was called  
It’s about time 
. In that research and evidence-based report they determined that in fact paid parental leave should be extended to 12 months. Suddenly in the year 2012 under this Government we have the Families Commissioner feeling that he needs to say that that no longer is a priority for his commission. 
But it is not the first time. He is not alone in that actually because strangely enough I had the opportunity to talk to the Children’s Commissioner also appointed by the Minister Paula Bennett recently. He is prevaricating also on the issue of extending paid parental leave. I have to pose the question to this House. What is the common denominator here? Both the Children’s Commissioner and the Families Commissioner are supposed to be independent. Those two entities were designed and set up to be independent to actually push the boundaries within the Government on behalf of children and on behalf of families. Well that now has to be the sole domain of the Labour Party because the Families Commissioner and the Children’s Commissioner are not prepared to do it in the face of that Government. The Labour Opposition is prepared to stand up for children and for families. We are at least prepared to put families and children at the centre of what we are pushing for and we will continue to perform that role even if those commissioners will not under the current direction of the Government. That means that there will no longer be a Families Commissioner. 
Peseta SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is a pleasure to rise and speak to this debate on Crown entities and State enterprises. As a Crown entity the Families Commission is about to undergo a transformation. The reason why it will be transformed is that this Government believes in better public services. In turbulent times this John Key - led Government is determined to take tough but necessary steps to manage our debt build a competitive economy and deliver on better Government services. New Zealanders know this and they know it because they have seen 600 more front-line police they have seen 2000 more nurses and they have seen 12000 more tertiary education places. 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. I know we have had a pretty broad-ranging debate but that just goes beyond the pale I think. 
The CHAIRPERSON (Lindsay Tisch) 
: I will just remind the member that we are actually on the Families Commission so come back to that. 
Peseta SAM LOTU-IIGA 
: Recognising this after the election our confidence and supply agreement with United Future promised this positive change: “The Families Commission will have two broad functions—the existing functions will be headed by a single Commissioner and new monitoring evaluation and research functions to drive quality services for families. In addition a Families Status Report will be developed to measure how New Zealand families are getting on and government will re-direct $4m over four years to fund extra parenting programmes and relationship education in secondary schools.” 
So what does this mean? Well we are restructuring the commission and this will see its core activities streamlined through a leaner more focused structure. It will be headed by a single commissioner down from the original seven. That is right: less bureaucracy in one fell swoop. However it will be governed by a board that will include Professor Sir Peter Gluckman as well as persons from the public sector and philanthropic and business representatives. This is about credible community input into the direction of an important entity. 
The commission will also take a new role providing for independent monitoring—that is right independence—evaluation and research to measure the effectiveness of initiatives across the social sector. Funding will be reduced from $32 million over 4 years to $28 million. This will be done primarily by setting up the new Social Policy Evaluation and Research Unit. 
If we are going to make a difference in our communities for our families who are struggling we need to be able to invest in interventions that we know will work. The body of evidence will allow policy makers service providers and anyone wanting to invest in those social services to make more informed decisions. It is about having evidence-based interventions that produce better long-term outcomes—something the Labour Government of the 2000s clearly did not achieve through the Families Commission. It is about our families it is about our communities and ultimately it is about the kids in our country. 
So financially what does it mean? Well it means we are going to prioritise funds into areas that actually matter to New Zealanders: $4 million into the parenting programmes relationship education and youth mental health initiatives—programmes that have actually made a difference to New Zealanders in need. I have talked about the $14 million that will be assigned to the Social Policy Evaluation and Research Unit and it will also have $1.8 million to take over the responsibility for the longitudinal study Growing Up in New Zealand. 
In summary then the Families Commission will remain an autonomous Crown entity. 
Sue Moroney 
: Ha! 
Peseta SAM LOTU-IIGA 
: That is right Mrs Moroney—an autonomous Crown entity. This is significant change for the commission in terms of its structural arrangements its work programme its capability requirements and its size. The commission will continue to work on issues that are important for families just within a leaner more focused structure. There will be an inter-agency team from the Ministry of Social Development the State Services Commission and the Families Commission that will oversee this transition. These changes will be due to be implemented by 1 January 2013. Finally may I say that— 
Report noted. 
New Zealand Antarctic Institute 
JOHN HAYES (National—Wairarapa) 
: 
 Thank you for the opportunity to speak on this part of this evening’s deliberation. I have got to say that most New Zealanders do not know too much about what goes on down in the Antarctic except that as our colleague across the floor said it is cold. You have got to believe that. But there are some really interesting things that I would like to draw to the community’s attention—the wider New Zealand community that is. 
The New Zealand Antarctic Institute was established I think in about 1996 and its purpose is to develop manage and protect New Zealand’s interests in the Antarctic in the Southern Ocean and particularly in the Ross Sea region. It provides a lot of support for scientific research and conservation activities and it has a job to raise public awareness of the efforts it is making in that part of the world. I have to say that I have now been in this Parliament for 7 years and I have listened to Lou Sanson the chief executive officer and more recently Rob Fenwick the chair of the Antarctic Institute and consistently this pair perform at a very very high standard. They are very very good people. They are a credit to our country. They run their books well—unmodified audit opinion—and they have very very good information and control systems. 
One of the big developments over the last year has been—and particularly supporting our Government’s emphasis on environmental issues—the Government funding the development and installation of three 330 kilowatt wind-powered turbines which actually deliver more power per turbine than any other installation on the planet. They are performing at 140 percent of what they were expected to deliver so that is pretty good. If we put in another four turbines we will be able to support the Americans at their base just along the way from us at McMurdo. That is hugely good for the planet. You have no carbon emissions etc. but more important you have no waste and no risk of causing damage through some sort of oil leakage. I think the environmental stewardship of this programme is particularly good. 
Hon Trevor Mallard 
: Who made them? Who project-managed it? 
JOHN HAYES 
: Nobody in your electorate that is for sure. I think there is an international component that we also have to keep in mind here because we are operating in the Antarctic in partnership with other countries. The institute helped Malaysia to accede to the Antarctic Treaty in October of last year and we had a very big issue that the institute managed to cope with in respect of encouraging Korea to set up its base very close to our own but also to use Lyttelton as the key point of entry. One of the issues was that we did not at that point have the right sort of diesel fuel to run a ship down into the Antarctic. That problem got solved thanks to our institute. We have also had a very good donation in the last year from the Norwegian Prime Minister who provided $900000 to the Antarctic Heritage Trust. All of these things are happening because we are running a really good operation down in the Antarctic and again I congratulate the management and the staff of the institute. 
Of course the closest relationship we have down there on the ice is with the United States Antarctic Program. Our people are working very closely with the Americans on logistical arrangements and I want to thank the Minister of Defence who is sitting here in the House tonight for making available a 757 as part of our overall contribution to joint logistics with the Americans. The Americans have had a bit of difficulty over the last year because they lost an ice-breaker and an ice pier and they have had to ship in a floating pontoon system into the area. So working with them helps rationalise the logistical arrangements for the difficult job of getting people from Christchurch down into the Antarctic. 
Hon Trevor Mallard 
: The Antarctic’s exciting. Don’t make it boring. 
JOHN HAYES 
: Yes and I can think of some lovely people I would like to send down to the Antarctic and leave there to permanently freeze to become exhibits for future polar explorers. With those words I have nothing further to say and will end. Thank you. 
Report noted. 
Energy Efficiency and Conservation Authority 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Chair. Nga mihi nui ki a koutou. Kia ora. I rise to take a call on the Energy Efficiency and Conservation Authority. I want to talk about the good the bad and the ugly in this Crown entity but first I would like to acknowledge former Green Party co-leader Jeanette Fitzsimons. In 2000 it was Jeanette’s Energy Efficiency and Conservation Bill a member’s bill which passed into law the first ever piece of legislation in our country’s history to explicitly address climate change. Although we are having huge debates across the country about electricity production what we often forget is that the most effective way we could be reducing the need for electricity production is simply to use the electricity we have already just more efficiently. We would like to acknowledge all the hard work done by those Energy Efficiency and Conservation Authority officials. 
I will begin with the good. It is good to be working with the Government through a memorandum of understanding on the Warm Up New Zealand: Heat Smart programme. This $347 million budget has recently been extended increasing the amount of homes we are going to insulate to 230000. This is actually massive. It is making a real difference to New Zealand families a real difference to kids’ health and a real difference to the economy. I note that the economic benefits have recently been estimated at $1.2 billion. From those 150000 homes that have been done to date if you laid the batt end on end across the country it would stretch from Auckland to Invercargill back to Auckland and then some. So it is a huge victory. It is good to be working with the Government. 
But now I guess it is important to touch on the bad in this Crown entity as well. In Budget 2012 we saw two very important Budget lines cut under the Energy Efficiency and Conservation Authority. The first was the biofuel subsidies. This Government drastically changed the good mandate scheme that the Labour Government formerly had and put in a woefully inadequate subsidy in the Biodiesel Grants Scheme of 50c. It was absolutely inadequate. The take-up was pitifully poor and now the Government has scrapped it. We can only hope that the Government now returns to a mandatory scheme if it actually wants to see biofuels being used in New Zealand. It is a huge issue because look we are importing $8 billion in oil from some pretty unsavoury countries around the world. It is a huge strategic economic risk but the Government is not doing anything about it. It is scrapping the biofuel grant. It is not doing enough to promote electric vehicles. It is definitely not doing enough for public transport. New Zealand could actually be self-sustainable in liquid fuels and other transport fuels using sustainable biofuels from wood waste other agricultural by-products electric vehicles and a greater investment in public transport. 
The other bad in the Budget was the scrapping of the solar hot-water grants scheme—again a scheme that was doing a pretty good job. We would have liked to actually see it enhanced. We should have seen the scheme enhanced to include photovoltaic solar panels. They have dropped about 50 percent in price in the last 18 months. We could be producing a huge amount of electricity from the energy wastage just hitting our roofs if the Government support included maybe a grants scheme supported with low-interest loans and maybe helped facilitate a council rates payback scheme which has worked pretty effectively in Nelson. 
And then you have got the ugly. We have seen the good we have seen the bad and now the ugly. The Energy Efficiency and Conservation Authority is struggling because the Government’s entire focus when it comes to energy issues—and you just need to look at the Energy Strategy—is to “drill it mine it frack it”. It is the only plan the Government has got. In fact the Minister for Climate Change Issues last week in response to my questions said deliberately he wants to stimulate the risky deep-sea oil industry despite what we know. There are going to be hardly any jobs for New Zealanders hardly any taxes hardly any royalties and the profits are going to go offshore. So instead of a Crown petroleum and minerals agency why does this Government not consider a Crown renewable energy agency maybe under the Energy Efficiency and Conservation Agency—it is doing some pretty good work in conservation. Why do we not have a Government department that is actually focusing on rolling out renewable energy? We could be building tens of thousands of green jobs. We could actually be boosting the economy in a sustainable fashion. We could actually be leveraging our advantages. Just look at the Pure Advantage report about a $6 trillion dollar industry. 
Hon Chris Tremain 
: We’ve got the second-most amount of renewable energy levels in the world. 
GARETH HUGHES 
: Yep we are getting there but what we are seeing under this Government is all the focus not on getting it to 90 percent—which is its target. It is another one of the National Government’s targets but it is one that it is doing nothing about achieving. Instead it is sitting on its hands subsidising the oil industry subsidising the carbon polluters—$1.5 billion in the emissions trading scheme in the last financial year. So we see this Government sitting on its hands but actively promoting risky deep-sea drilling. The sad thing is we are missing that green race which Pure Advantage pointed to. We could be doing so much better—not only making our kids healthier through a good insulation scheme but also providing prosperity and lifting them out of poverty. Kia ora. 
Report noted. 
Commerce Commission 
Hon CRAIG FOSS (Minister of Commerce) 
: 
 I am speaking on the Commerce Commission vote which is a very very important vote and Crown entity indeed. I do note and acknowledge that the Commerce Committee may in fact have missed on page 5 of the report a slight mistake there. 
The Commerce Commission plays an essential part in the monitoring and enforcing of a very very important part of the regulatory regime across New Zealand. Part 4 of the Commerce Act obviously gets a lot of attention in the way that it has played out in courts and merits reviews and inputs reviews etc. I do note that and the committee did talk about that plus some other matters in its report. 
One of the facets of New Zealand being a small economy is that in some instances where there are one or two large players they can potentially exploit their dominant position or monopoly-type position or perhaps drive monopoly rents. Of course that is not acceptable to anyone at all—at least I am sure not to most members in this Chamber. 
 One of the harder parts about the commission’s vote is that there is an estimate there in its outputs and deliverables but it is actually very hard to estimate the time frames under which judicial processes do happen. So that does create difficulties for that vote and can provide perhaps uncertainty out there in the commercial space. It can allow so much for judicial reviews judicial processes or testing in court and then a review can happen so these may well cross over into new financial years. There can be difficulties there but I do acknowledge that the commission is doing a very good job and the committee generally noted that in its report here before the Committee of the whole House. 
One point in the report that the committee noted is that it did ask the commission about issues around convergence particularly in and around broadcasting. I think that was pretty wise of the committee because of the challenges of all things governance. In fact as mentioned here in the report on the Commerce Commission to put it in a simple way that bit of glass in our lounges that we all traditionally call the TV or the television is actually only a bit of glass. Although we all probably call it a TV it can now receive data or content traditionally by analog signal although that is switching off across the country over the next 18 months; by digital—as DTT or digital terrestrial television—by satellite; or by cable in some instances. In fact many TVs now come with either a Wi-Fi or an ethernet enabler. Additions can be put on; other little modules can be put on. The simple message there is the challenges for organisations and entities such as the Commerce Commission in broadcasting you name it having to deal with a rapidly changing digital environment under which content can now be delivered by many means that were not even contemplated when much of the legislation—be it commerce-type legislation or even broadcasting-type legislation—was put together thought of and voted upon with I am sure the best of intentions around this House. 
I do note again that the Commerce Committee talks about this on page 171 but I make the point that we just have to make sure that we maintain flexibility and perhaps be platform-neutral as within this Parliament here we devise regulatory regimes and models that entities like the Commerce Commission look after. There is also the example that a person can now read on a tablet or an iPad things off the internet they can listen to the radio they can watch TV or they can watch a movie and all of those can be from either within New Zealand or afar. They can be live recorded sped up or slowed down as the user wants. 
My point is that with regard to much of the rules and regulations that entities like the Commerce Commission have to look after we may actually have to have a look at some of these models simply because technology and the real world if you like are moving at such a fast pace that there are grey areas—which the committee did start to have a look at here—of where governance is black and white and where it is grey. Of course there are sovereignty issues around things that ultra-fast broadband brings upon our economy. 
Report noted. 
Retirement Commissioner 
DARIEN FENTON (Labour) 
: 
 I rise to take a call on the financial review of the Retirement Commissioner. It is a very interesting report from the Social Services Committee particularly given the debates that we have in front of us right now around superannuation and the issues that face our country in terms of how we are going to be able to afford superannuation for future generations. It is very disappointing that we have not been able to reach any sort of agreement on this issue. 
Debate interrupted.