Annual Review Debate — In CommitteeText is incorporated into the Bound VolumeAnnual Review Debate — In Committee[Sitting date: 13 April 2016. Volume:713;Page:10480. Text is incorporated into the Bound Volume.]Annual Review DebateIn CommitteeThe CHAIRPERSON (Hon Trevor Mallard): This debate comprises the Committee stage of the Appropriation (2014/15 Confirmation and Validation) Bill. The time allocated for this debate is 10 hours and it comprises two distinct elements in accordance with determinations of the Business Committee. The first is the debate on the annual financial statements of the Government as reported by the Finance and Expenditure Committee. The second is the debate on the annual reviews of departments Offices of Parliament Crown entities public organisations and State enterprises as reported on by select committees. The second debate is structured around those 10 sectors established by the 2014 estimates of appropriations.As with last year there will be a mixture of allocated and supplementary calls. However this year the debate on the annual financial statements of the Government will draw from only the 45-minute supplementary calls. The annual financial statements of the Government debate will be led by a call from the chairperson of the Finance and Expenditure Committee and this debate will expire after 2 hours or earlier if no member seeks the call.Annual Financial Statements of the Government of New Zealand for the year ended 30 June 2015DAVID BENNETT (Chairperson of the Finance and Expenditure Committee): It gives me great pleasure to lead off this debate and these are great times to be a New Zealander. These are the best times to be a New Zealander because not only do New Zealanders have a great Government that is looking after them—a great Government that is delivering for them now—but they have a Government that is setting them up for the future and building a strong prosperous country that is connected open free and in a very strong economic and social position for our people to enjoy the best times to be New Zealanders in this century of New Zealand and the Asia region. New Zealand will do extremely well in the future and these financial statements we are looking at today are the basis of the strength that this Government has delivered for New Zealand.Not only have we delivered a surplus to this country—a surplus in the most difficult of economic times—but also we have delivered strong economic growth for New Zealanders. Jobs are aplenty. New Zealanders are finding work. New industries are being created just as we speak. Our ICT sector is growing compoundly. We are seeing big growth in our exports of fruit vegetables and other products like that. New Zealand is in good shape and that is shown in the financial statements of this country when we look at them and when we looked at them in the Finance and Expenditure Committee. New Zealanders know that they are enjoying low interest rates. They know that they are enjoying the sound economic management that this Government has delivered and that is giving New Zealanders choice. They are seeing the options that are in front of them they are making choices about their future and they are looking to this country with a positive and strong opinion of its future.Other people are coming to New Zealand to make it their home as well. They are seeing the advantages of this country and its stable economic management its social strength in the way that we look after people and provide education and health services and our interconnected and open approach to life. Those are the things that you will hear from this side of the Chamber during this debate. We will talk about a strong Government that is delivering for New Zealanders about a Government that is focused on the economic matters that challenge our country and the world at this time and about a Government that also has a heart and is looking after the social connections that our country needs in making the reforms through our Government. We have seen just recently in the Child Youth and Family space how those reforms have been promoted and how they have been supported by our countrymen and women. They understand that this is a Government that is doing things and doing things for the success of our country going forward.Today we saw another example of that with small businesses. The initiatives in that area show a Government that is doing good things for the country going forward and a Government that has delivered. On the other side the members of the Opposition will talk about envy. They will try to make a lot of accusations and build up all these cases for some kind of conspiracy theories which will see them harking back to their past as conspiracy party theorists. That is all they have—that is all they have. They have no economic policy. They have no theory that New Zealanders would support. But when they do come out with theories and things that they want to do—let us have a look at some of the things that the Labour Party would like to do like setting interest rates. It is setting interest rates from the Labour Party leader’s chair. Setting interest rates is one of those things that is not possible for one individual in a political party to do in a modern economic environment and no political party worth its salt anywhere in the world would agree to doing that.We see that members of the Green Party want to build a communal bank out of Kiwibank and take it to the next level you could say with their $100 million contribution. That will be quite ineffective as well and we will see no policy from the Green Party other than more envy more anger and more frustration at being in Opposition for the whole time that it has ever been in this Parliament.From the New Zealand First Party we are going to hear how there should be no migrants to New Zealand. Those members will undervalue those people who have made New Zealand home. They will talk about conspiracy theories because that is all that their leader knows and that is the approach that they take to New Zealand—an approach of failure.The CHAIRPERSON (Hon Trevor Mallard): I am now going to interrupt David Bennett and indicate to him and other members who are following that this is a very broad debate. The member probably tested the margins of it but my ruling is that I am not going to rule him out of order because the first 2 hours can be very broad and after that it will tighten up on particular entities. But I must say at least referring to the reviews a bit would be vaguely helpful.GRANT ROBERTSON (Labour—Wellington Central): Yes the member David Bennett ranged around there and probably reflected a little of I think the overall theme that we will see in this debate which is that the National Government is bereft of any actual ideas about how to grow the economy in a sustainable way. It is bereft of any ideas about how it is going to ensure that we lift productivity in New Zealand that we lift exports in New Zealand and that we actually have sustainable growth that is going to lead to good high-paying high-value jobs in the future. Instead we will get David Bennett’s fantasy views on what other political parties might say or do. I think unfortunately for Mr Bennett that if he throws his hat in the ring for the mayoralty of Hamilton he is actually going to struggle alongside Tim Macindoe his counterpart. I think we will actually see a meeting of the minds in that contest and David Bennett will come second to Tim Macindoe in that meeting of the minds and not for the first time in his life I might say.The financial statements have some numbers in them that the National Government if it bothered to read them or even to talk about them might be able to put up there and say: “This is why we think we are doing well.” It could point to growth rates that look to be around the 2.5 to 3 percent level and it could say: “Well we know we are doing all right. We have got the economy growing.” But any exploration of those numbers will tell you that the New Zealanders who every single day say “But I’m not feeling the value of that growth rate. My life doesn’t feel like it’s getting better in the way you would expect it to with a growth rate of around 3 percent.”—there is a reason for that. When we actually look at per capita growth in New Zealand per person how is the economy going? It is flat. It is barely moving. It was described by a Westpac economist as sluggish. Most commentators look at it and say that this is not an economy that is growing sustainably. It is barely moving at all and that is the truth.The growth that we have got is simply a result of there being more people here and that is not sustainable. You cannot keep growing the economy just by adding more and more people to it. At some point the economy has to grow because we are more productive because we are smarter and because we are more innovative but that is not the story of the National Government. Its story is the story of a complacent out-of-touch Government that does not actually have the wherewithal to say: “Let’s stop the belief that there is some kind of great trickle-down economic growth that is going to support everybody and actually get in behind New Zealanders grow wealth from the ground up and give everybody a chance to share in prosperity.”What we now see under National is that working people’s share in the economy is actually declining and that those people who have already aggregated wealth are the ones who are succeeding and the value of working people’s wages is going down. In the last set of accounts the Government put out real national disposable income has now dropped not only for the second or third quarter in a row but for the whole year. So the real value of the income that New Zealandershave per person is dropping. We are getting poorer as a nation every day because this Government is relying complacently on the fact that more people are coming into New Zealand at the moment and it is pretending that the economy is growing sustainably when clearly it is not. We are getting poorer by the day under this Government.So what would help drive the economy? What should we be looking for in these financial statements? What about exports? Well we are not seeing it there. The Government sets a lofty target of increasing exports to 40 percent of GDP and—Hon David Parker: It promised.GRANT ROBERTSON: What was that?Hon David Parker: It was a promise.GRANT ROBERTSON: A promise—yes it was a promise. It was not just a target Mr Parker—you are right. It was a promise and where have we gone? We have gone backwards. Exports started out at 30 percent. They are now at below 30 percent—27 to 28 percent of GDP is the value of exports. That is not an economy that is going to go forward and create high-value high-paying jobs.The Government crows about tourism. Tourism is an important industry for New Zealand but it is not a route to prosperityon its own. It does not provide the high-value high-wage jobs that New Zealanders need in order to sustain our standard of living into the future and there is no evidence from this Government that it is investing in those high-value jobs or that it is getting alongside industry to say: “How can we move ourselves up the value chain?”.Why are we still continually reliant on raw commodities? The wave that we have to surf when the value of those commodities goes down is now hitting the regions of New Zealand. We have three or four regions in New Zealand that are in recession because this Government has sat back and allowed us to think that we were wealthy while we rode that commodity wave. We as a country are not. We are going backwards because we have not invested in those industries. We have not diversified the economy sufficiently so that New Zealanders can feel confident that there is a sustainable future.ALASTAIR SCOTT (National—Wairarapa): Those members say that they care about small businesses but they do not. They say that they care about families and children but they do not. They say that they support farmers and provincial towns but the Opposition does not. I will tell you what: we on this side do care and we can prove it because we vote for it.Here are a couple of examples. The free-trade agreements—the free-trade agreements that give the opportunity for New Zealanders to take part in an international market place. They are an opportunity for exporters to produce high-value products to export to growing economies.The other example of how we prove that we support families in communities is that we support irrigation projects. There was a question on this in the House today and again we demonstrated that we support these projects because not only do these things increase productivity across the land that we farm—that we put horticulture across or vineyards or whatever it might be—but these projects also give a huge amount of value to the social benefit of the communities. They give social benefits by providing sporting and recreational facilities. There are environmental benefits through the higher minimum flows that irrigation projects will bring to waterways and by the stringent regulations that these irrigation projects will be run under. The irrigation projects I would have thought would be a key part of any Green Party policy quite frankly because these things are going to be fantastic for the environment.The free-trade agreements and the irrigation projects are just two examples of initiatives that we have on this side that demonstrate that we support families businesses and provincial towns and if we can do those two things in tandem we will raise the standard of living for all New Zealanders. We will have the GDP that allows us to invest in such things as broadband which continues to roll out through the provinces and through the towns of New Zealand.I would like to focus a little more on the balance sheet of the Government. We talk quite a lot about the income statement and we quite often talk about surpluses and so on but in fact we should be thinking about the long term. We should be thinking about the balance sheet of this country—in particular the liability side. That is exactly what we are doing with Minister Tolley’s announcements where she is going to be focusing on the million-dollar kids—the kids who are most in need. We know who these kids are. We know where they live. We know their backgrounds. We know that with the backgrounds that they have they will cost the taxpayer a million dollars. So it makes common sense. It is very sensible to invest in that cost which will eventually have long-term benefits not just for the families involved and not just for the communities that are involved but for the taxpayer—for the benefit of the balance sheet.There is a huge number of other initiatives that will be brought up today but those things that I talked about at the beginning—the free-trade agreements and the irrigation projects—are but two very pragmatic very sensible initiatives. I really cannot for the life of me understand why the Opposition will not support them because those things bring about increased productivity. It is not just about dairy; these irrigation projects will increase and diversify land use. They bring in seed companies from Europe that can develop their seeds with reliability which is brought about by irrigation projects. With that comes highly skilled jobs with that comes increased GDP and with that comes increased taxes to the Government which enables the Government to do what it should be focusing on—that is supporting those most in need. Thank you.JULIE ANNE GENTER (Green): The National Government claims that it is doing a great job for New Zealand’s economy. Very superficially if we look at some of the numbers it may seem like it stacks up. It is true that GDP growth is above zero—it is actually above 2.5 percent. It is one of the higher rates in the world but what it does not tell us is how we are doing as a country and the other statistics that have been coming out in recent weeks tell quite a different story. So in fact when we look at income per capita once we assess GDP growth alongside immigration and population growth the truth is that income per capita is stagnating.We have had about as much population growth as we have had GDP growth if it were even the case that GDP was really a measure of true progress in this country which of course it is not. A lot of GDP growth has been driven by the Christchurch earthquake. We are not better off because one of our major cities was nearly completely wiped out in a horrific earthquake and a lot of money had to go into rebuilding it which has taken a lot longer than it should have because it has been poorly managed by the National Government.Another really important factor that we need to look at—and I would love the Minister in the chair Bill English to comment on this. The Minister of Finance used to go around and give talks in the first few years that the National Party was in Government and he would show a graph that showed a gap between the growth in the non-tradable sector of the economy versus growth in the tradable sector of the economy. Bill English said: “We’re going to fix this. We’re going to turn it round. Under the Labour Government growth in the tradable sector of the economy—the really productive sector; the part that sells goods and services to the world—has been lagging and growth among the part of the economy that is really just selling things to each other like buying and selling houses has been growing.” But the Minister of Finance has stopped showing this graph and I will tell you why. I have got a copy of the graph right here. He stopped because at the latest release in GDP figures we saw that in fact the gap between non-tradables and tradables is at its widest point ever. This is after 7.5 years of the National Government and it must be quite disappointing for the Minister of Finance.I do not blame him. I am sure that he has every intention and had every intention of fixing this problem but he has been unable to do so. Why is that? It is because National’s ideology and the policies that it implements simply will not deliver the improvements to the economy that need to be made to have a truly productive economy. The ideology of the National Government says that we need to cut taxes for the rich we need to privatise and sell off State assets and we need to reduce environmental protection but none of those things will actually create a more productive and prosperous economy nor will they look after the things that are really important to New Zealanders like protecting the natural environment and having fairness and opportunity.So the sad truth is that when we look at the evidence the National Government is failing to deliver the competitive and productive economy that it has promised and that is because those members’ ideology and instinct is to protect the status quo and to look after the people like themselves—the people who are already rich and want to get a lot richer and the people who might want to use tax havens to avoid paying tax in their home country. The National Government’s instinct is to protect those industries. Its instinct is to not go after the multinational companies that are avoiding anywhere from $500 million to $1 billion worth of tax each year. Its instinct is instead to crack down on student loan defaulters and beneficiary fraud. Although that is all well and good—we should do those things—the reality is that the value of doing that is much smaller. Those people are vulnerable people and they are taking a lot less money from us than the rich and powerful are.So what we need are policies that are actually going to deliver a productive and smart economy. The National Government has instead delivered subsidies for irrigation which contrary to what the member Alastair Scott said is not good for the environment at all. It encourages more intensive dairying which is terrible for our rivers which are already highly polluted. It has refused to set standards for water quality that would actually improve water quality. We have got a standard for wadeable rivers rather than for swimmable rivers.We have got subsidies for oil and gas exploration. This is actually absolute madness in 2016. When I was in Paris for the climate talks in December I went to a conference at the OECD about green growth. The keynote speaker there who was from Oxford University said in his speech that in order to meet the agreement that we signed up to in Paris all new infrastructure from 2017 basically would have to be carbon-neutral—that is zero carbon.In order to achieve the goal of phasing out fossil fuels by the mid-century which is absolutely logical and necessary if we want civilisation to continue to prosper as it has for the last millennia we have to be phasing out fossil fuels now and that is the role and the responsibility of the Government. It is the role and responsibility of the Government to protect our natural environment and to look after the most vulnerable people but unfortunately National is simply failing to do that. It says that it is pursuing its policies because it wants to achieve better economic performance and then someday down the track we will be able to afford to look after our environment and our people. It has got it round backwards. The way we build a productive sustainable economy is by looking after the most vulnerable in our society—by not allowing the rich to get richer through cutting taxes and refusing to reform tax rules around foreign trusts for example. The way that we will achieve this is by looking after the most vulnerable in society and by protecting our natural environment which frankly I think is precious to all New Zealanders.We hear a lot of “greenwash” from this Government at the same time that it is pursuing oil and gas exploration which is supposedly going to make us rich even though oil prices have collapsed. Simon Bridges who is the Minister of Energy and Resources and Minister of Transport goes around trying to get into a lot of photo ops with charging infrastructure for electric cars but that has not been paid for by this Government. It has got virtually no new policy to support the uptake of electric vehicles. The vast majority of its transport budget is being spent on motorways that are not even going to resolve congestion let alone reduce dangerous carbon pollution.It is continuing the asset sales with Kiwibank now and is trying to squeeze out as much money as it can—suck it out of the Government—so that it can spend it on its priorities which are very short term. Ultimately that is going to cost New Zealanders in the long run. That is what we saw with the asset sales with regard to the energy companies. That has now cost us almost as much as the cash that we raised from them which was then not even spent on productive infrastructure as the Minister had promised.So this National Government is letting down the people who voted for it and who trusted it to deliver an economy that was going to look after New Zealanders and it is time that it took responsibility for its poor decisions. We have got lots of constructive ideas here Minister about how we can actually build a productive successful economy by looking after our people and our environment. That is the smart thing to do. That is what the Green Party is committed to delivering in Government. Although that Government will continue to scaremonger about Green Party policies rather than engage in a constructive and informative debate and give actual reasons why it will not support such policies—Hon Maggie Barry: Because they’re rubbish.JULIE ANNE GENTER: —they will simply call it rubbish. A perfect example—Minister Barry says it is rubbish. Why is it rubbish Minister Barry? Why are our policies rubbish? For example the Kiwibank policy that we announced—we have a problem in New Zealand that the four big Australian banks are sucking out $4 billion in profits from our economy every year and what would make sense is to use our Government-owned bank to deliver wider social and economic benefits for all New Zealanders. We could do that. We know that when Kiwibank was first introduced it actually did drive down mortgage rates and lending rates but the reality is that for the four big Australian banks their most profitable area is here in New Zealand and that is a market failure. They are not delivering benefits to New Zealanders; they are sucking out profits from New Zealand. So it does make sense to use our State-owned bank not to earn a profit that is going to go to the Government—The CHAIRPERSON (Hon Trevor Mallard): I am going to call the honourable Minister but I just want to warn Mr Bennett that if he is going to continuously interject at least do it in the proper form and do not involve me.Hon BILL ENGLISH (Minister of Finance): It is a pleasure to take part in this debate about the annual reviews from the 2014-15 year—the year when the New Zealand Public Service achieved a surplus after 6 or 7 years of deficit some of them very large deficits. I want to just acknowledge the work done by so many public servants select committee members and chairs of select committees in helping to produce essentially more for less. At a time when money has been pretty tight this is a period when public services have improved and that is to a large extent due to the efforts of the Public Service and also my colleagues in Cabinet.Just to comment a bit on the Greens’ finance spokesman’s words—you know I will give the Greens credit. At least they have got their own internal coherence. I do not agree with them—and I will point out some ways in which I disagree with them—but it is quite a contrast to the Labour Party. With the Greens you know what those members are going to say; you know how they are going to say it. Generally it is with a bit of nasty edge although this member is a bit better than some of the previous occupants of that position which is welcome because it makes it more likely that you can have a constructive discussion. Whereas with the Labour Party you do not quite know what those members are going to say and it is pretty hard to connect one bit to another.So just to a couple of points raised by the Greens spokesman—Hon Annette King: Spokeswoman actually.Hon BILL ENGLISH: —spokeswoman—actually as a result of the tax changes made in 2010 the higher-income brackets are paying a higher proportion of income tax and there is a great deal less structuring around companies trusts sole proprietors and so on because the tax systems for the higher-income earners are more coherent and harder to avoid and they do pay pretty much at the statutory rate. That part of the Green Party prejudice is simply wrong as it is about protecting the most vulnerable. As any number of members of Cabinet could attest we spend an awful lot of time on not just protecting the most vulnerable but working out how to assist them to realise their aspirations.Here are a couple of examples of that. New Zealand now has one of the highest ratios of minimum wage to average wage in the developed world because of consistent increases in the minimum wage. Just a few weeks ago on 1 April were the first increases in base benefit rates for households with families in over 40 years. This is the lesson that the Greens should learn: if the Green Party wants a constructive discussion then it should be a bit more objective about what has actually been achieved so that we can talk about how to achieve more.To come back to the financial reviews I think a growing feature which is actually reflected in the material prepared by the select committee is the way the Government is taking a longer-term view—in fact a multigenerational view—of what drives our expenditure. Sure it is a good thing that we got a surplus in 2014-15 of around $400 million after much effort but actually if we want to have a surplus in 2025 there are decisions being made now that will affect that. The effectiveness of programmes for 5-year-olds will determine whether they need support when they are 15 years old. Too often in the past the Government has been flying blind on whether our programmes and spending have an impact. Most of our spending is social spending and for most of it we need to have a better idea of what impact it has. By and large in the mainstream services it is fairly effective but particularly for the most vulnerable—whom the Greens keep talking about—and for the most complex families we have got quite some way to go.I expect that in the future we will see more in our select committee reports on the financial review for this year—further progress on that shift to the long-term view that this Government is taking. We do have to account for this year’s cash—that is important; important for the Parliament—but we do also have to work out whether it is going to contribute to the future financial sustainability of the New Zealand Government.Hon CLAYTON COSGROVE (Labour): I thank Minister English for his contribution. He talked about ambition and he talked about National’s commitment tobeing—as I think the election slogan was back in 2008—ambitious for New Zealand. I have to say to the Minister that it is hard for people to be ambitious about their own circumstances when real disposable income for people is decreasing.If you look out in the communities how do communities benchmark their take if you will on whether an economy is thriving for them? It is pretty simple. It is not loaded with economic terms and analysis for your average Kiwi battler out there or your average family;it is about whether that family and the breadwinners within that family feel they are getting ahead economically whether they feel they are getting a fair go whether they feel they can get ahead—not just make ends meet but actually have a little bit of their own surplus in their own domestic economy for the extras in life perhaps for their family—and whether it is getting financially tougher for them. I would argue that that is how your average Kiwi would measure and benchmark the progress of an economy and therefore the progress and quality of the economic stewardship of a Government.If you have a look at some of the statistics that have been produced independently and by the Government’s own agencies you are of course looking at per capita growth being flat. The only real growth really is off the back of (1) the earthquake and (2) population growth. If you look at exports as a percentage of GDP—there was a Government target which was trumpeted all around the country that the target for exports as a percentage of GDP was 40 percent. It started at 30 percent; it is now 27 to 28 percent and going backwards.As another benchmark or acid test for an economy if you look at per capita GDP last year it was 0.03 percent—0.03 percent. As I said real disposable income is heading south.Then the Minister talked about the wafer-thin surplus of $400 million. What he failed to mention of course is that if you look at the Earthquake Commission papers you will see that the $400 million so-called surplus is exactly the amount that the Earthquake Commission did not spend last year in Canterbury. You could argue whether the people of Canterbury of my province are getting as fair a go as they should. Are they benchmarking the quality of management of this economy based on that $400 million surplus which is exactly the same amount that the Earthquake Commission did not spend last year? That is the fact.In terms of being ambitious for New Zealanders I think that we would all agree cross-party that we would like to see Kiwis get ahead and that we want to see their ambitions achieved. Whether they live in the poorest of our communities or whether they live on the entrepreneurial side of the road if you will and have a bit extra to invest in business and to employ people we want to see Kiwis get ahead. We want them to do better than simply stretching their budget to breaking point to get the kids’ school shoes and to get a feed on the table—if that is as good as it gets for people then I would argue that that is not particularly ambitious. This of course is from an incoming National Government that inherited 9 long years of surplus which the Minister of Finance sort of parked in the back in the archive. In every year a Labour Government put a Budget together there was a surplus and not just an offset “rob Peter to pay Paul” one but a real one that grew every year.Hon Annette King: That’s why they appointed Michael Cullen to the bank.Hon CLAYTON COSGROVE: Well indeed. Those members showed their confidence in the financial stewardship of Sir Michael Cullen by appointing him to the only Kiwi-owned bank that we have which is Kiwibank. Mr Muller is nodding and he knows that is the truth. Michael Cullen was the Minister of Finance who delivered to the National Government and to Bill English zero Crown debt—zero. Not 1 percent but zero Crown debt.The National Government inherited a surplus and it inherited zero Crown debt and that I would argue would have provided a quite decent platform for a Government that was ambitious about our local communities and our Kiwis and that wanted to get people doing better than just trying to string it together to make ends meet.Yet that legacy I would argue has been squandered. You can say global financial crisis—I am sure the Minister would and to be fair to him there is a component of that. But we are through that and this Government has had options. God only knows had it inherited from Labour in 2008 a Budget of huge debt of huge deficit then goodness knows how it would have coped with that global financial crisis. I note that the Minister was honest enough many many years ago to say that that was the rainy day and acknowledged the fact that Michael Cullen and others had set up a situation a platform of zero Crown debt and 9 years of surpluses so that we could tough it out when the global financial crisis was put upon us through overseas influence.I would be interested in the Minister’s comments on those statistics that per capita growth is flat and that exports—particularly exports as a percentage of GDP—are nowhere near the ambitious target that the Government set. The target started at 30 percent aimed for 40 percent and now it is 27 to 28 percent and winding back. That was before the dairy crisis by the way—that was before the dairy crisis. I would be interested in the Minister’s comments in terms of the rationale of the plan and why that went awry or whether there is a strategy going forward given the dairy crisis and other international issues. What is the strategy to increase exports as a percentage of GDP to anywhere like that target of 40 percent? Likewise real disposable income—I would be interested in having the Minister talk to us about how he proposes to increase it or what the Government plan is to see it reversed from decreasing to increasing. Likewise I would be interested in his comment—I am sure it is one that is well rehearsed within the propaganda of the Beehive—as to how he justifies a surplus which he calls a real surplus of $400 million with an Earthquake Commission offset of spending that it did not make of an equivalent amount.As I said we all agree I think cross-party—the Greens the National Party—I think we all come into this place wanting to be ambitious for New Zealanders and wanting to do our best. We do disagree around the edges I think as to how we should get there.I come back to my original point. Mum and dad on Struggle Street Minister—I say through you Mr Chairman—are not going to sit there and read these weighty financial statements. They are not going to pick through them line by line. They are probably not as a priority concerned with the analysis of Treasury the Inland Revenue Department and independent economists. They will sit there at home on a Thursday after they get the pay coming in and say: “OK how do we make our household economy our household expenditure? How do we actually get through the next fortnight?”. That is how they will judge it. They will ask “Is it easier for us? Is it harder for us?” and for many many people in New Zealand it is a hard week-to-week fortnight-to-fortnight pay cheque - to - pay cheque war of attrition to get ahead. Kiwis want to get ahead and that is how they measure their ambitions and how they achieve those ambitions—through their week-to-week economies.I forget was it Muldoon or somebody else who said—or I think it might have been a couple of Ministers over there—that people would not understand the economy if they fell over it? People really do understand economies because they have to take money coming in and money going out and somehow make it balance. They do not do it through a Budget once a year; they do it every fortnight or every time they get their pay cheque. I would be interested in the Minister’s comments on that as we move through this debate.STUART NASH (Labour—Napier): There are a couple of points I want to make just addressing the notes of Mr Scott. He talked about the fact that that Government over there is supporting dams. Well he is talking about the Ruataniwha Water Storage Scheme and what I would like to say is that the Government has taken a really arrogant out-of-touch approach on this. What the Government has said is “We know best.”—in a 1950s-style command and control economy—“This should be built.”The really interesting thing about the Ruataniwha Water Storage Scheme is that those who will extract value from it—i.e. the farmers—have not invested in it. You would think that if anyone was right behind this and if anyone was investing in it it would be the farmers. But yet again it is a classic case of that Government forgetting how to listen to key stakeholders. “We know best we will build it and they will come”—that is not the 21st century economy that New Zealand deserves and not the sort of leadership that I think this country needs.I think that one of the major differences between Labour and National is that National believes that you leave it up to the market and the market will determine the optimal outcomes whereas Labour believes there needs to be a strategy there needs to be a vision and the Government needs to get behind it and put the legislative and regulatory environment in place that allows businesses to really thrive.If we have a look at what happened with exports as a classic case—and we are a trading nation—this Government inherited an economy where exports were 30 percent of GDP. It had a plan to take them to 40 percent of GDP. Well we have found out that it is not a plan because exports are now 28 percent of GDP. There was no plan there; it was fancy rhetoric. What I am finding more and more is that the massive plan—the vision the strategy—is hollow promises. You cannot keep saying these things and hoping they happen. There actually has to be a strategy. Provincial New Zealand is a classic case. We talk about regional economic development and yet we see nothing from this Government in terms of policies except when there is a by-election. When there is a by-election it comes out and promises the world but I look at my own region and I see there is no strategy from central government. Local government has driven growth there in a way that this Government has no idea how to do because it breezes in articulates a couple of platitudes and then it takes off.The other thing that disappoints me is the Minister in the chair Bill English standing up and talking about “more for less”—we expect people to do more for less. He talks about an investment approach but the problem with that is that communities are not about rates of return. Solving police numbers is not about what the rate of return is that we get from moving a police station out of Napier and moving it to Hastings. An interesting thing in the briefing to the incoming Minister of Police was that the first priority was managing within a budget. Moving a police station out of Napier was all about how much money we were going to save. It was nothing to do with communities.I think this Government has stopped listening to communities. It has started telling communities what they need. It has stopped listening and asking: “What do you require?”. It is an arrogant and out-of-touch approach which unfortunately tends to afflict a lot of Governments in the third term. I am brave enough to stand up and say that it happened to Labour and it is happening to National now. The National Government is out of touch it is arrogant and New Zealanders are seeing this. It is just not good.Let me give you an example around overseas investment. We absolutely believe that overseas investment is vital to driving economic growth in this country—I think we would all agree with that—but there is a difference between good economic investment and bad economic investment. The company that I want to talk to you about for 2 seconds is called Hikurangi Forest Farms. It came here 20 years ago—20 years ago—and it bought—[Interruption]The CHAIRPERSON (Hon Trevor Mallard): Order! David Bennett will stand and withdraw the comment he just made. The suggestion that any company is paying me is something that is completely out of order and he will not do it. Even if he meant it about another member he would still have to withdraw. The member will withdraw.David Bennett: I withdraw.STUART NASH: Thank you Mr Chair. This is a company that in 1996 promised—promised—in an application to New Zealanders that it would build a state-of-the-art sawmill. In 2006 it bought more land and went through the Overseas Investment Office again and what did it promise? To build a state-of-the-art sawmill. In 2007 it bought some more land and—you guessed it—it promised to the Overseas Investment Office which acts on behalf of New Zealanders to build a state-of-the-art sawmill and it has done nothing.Hon BILL ENGLISH (Minister of Finance): It is good to hear occasionally from Stuart Nash who I think is the remaining member of the Labour right wing—well he says he is when he is in Napier; he probably says something different down here. I think that discussion reflects the wishful thinking of the Labour Opposition. Those members wished when they were reviewing the finances here that they could say the National-led Government is a nasty cutting uncaring Government. They wished that they could say the regions are struggling and getting nowhere. They are saying it and they wish it was the case but I detected even from that remaining member of the Labour right wing—with due respect to Trevor Mallard who is starting to look like he is a member of the Labour right wing although he did not used to be. Relatively speaking without moving anywhere he is starting to look really quite conservative.The CHAIRPERSON (Hon Trevor Mallard): Order!Hon BILL ENGLISH: Now I have lost my train of thought. But none of those things are correct because very little of what the member for Napier said—in fact none of it—was correct. Although some of the regions are under some pressure—I can think of Southland my own spiritual home where GDP in the year to March 2015 dropped by 10 percent because of the slowdown in dairy conversions and the drop in the dairy prices—most regions are actually doing pretty well because of the increasing diversification of the New Zealand economy.In this year to 2015 the Government invested substantially more amounts of money into the kind of innovation and research that does not replace the entrepreneurialism of our companies but supports it which I think is one of the differences between the Government and the Opposition parties. The fundamental driver of the kind of growth that we would like to see is people taking risks with their own money and succeeding because of their skills and reinvesting the profits that arise from that success whereas the Opposition parties look through this kind of document and what they want to see is politicians—whom they regard as smarter than the people who run our businesses—making decisions in detail about where the economy should go what risks should be taken and what risks should not be taken.The kind of investment that the Government has made through here in innovation and research and development does not always show a direct flow through to profitability but it has certainly created an environment where—building on work done by the previous Labour Government to be fair—New Zealand businesses are now much more orientated towards spending a bit of money on research and development enhancing their productivity and in the long run therefore producing more jobs.There have been some issues raised—actually there is another member Mr Phil Twyfordwho is starting to look like the right wing of the Labour Party although he entered it on the left because Damien O’Connor needs some company. By “right wing” I just mean vaguely logical. That is all I mean—vaguely logical. Vaguely logical.Phil Twyford: Is this you being nice Bill?Hon BILL ENGLISH: It is good to see that he is paying some attention to that.Some questions have been raised about per capita income. That is a legitimate measure of progress and like other measures of the economy it fluctuates. More recently because of the surge in migration which is at a many-decades high and a relatively slower-growing national income largely influenced by the drop in dairy prices the per capita measure has dropped back a bit. I do not think there is any doubt about that. Of course as migration flattens off and comes back—which it certainly will; it is just a matter of when that happens—and dairy prices pick up again all other things being equal per capita incomes will tend to rise. Across the developed world of low growth low inflation and low interest rates it is a significant challenge to have consistently increasing per capita incomes but the outlook for New Zealand in that respect is pretty positive.FLETCHER TABUTEAU (NZ First): Thank you for the opportunity to speak. I just acknowledge the Minister in the chair Bill English for having now taken two calls in this debate. I was raised well I like to think in that you acknowledge your elders and their experience and there are very few in the Committee who have more experience and more knowledge about New Zealand and its economy than the Minister. I fully acknowledge that. So it was particularly frustrating to sit here and be told that we have gained a surplus this wafer-thin surplus based on the grinding down of Government departments—the conglomeration of super-ministries brought together to create efficiencies within the Government’s day-to-day operations so that it can cut and cut and cut costs. More than that it has ground down the very daily lives of the average New Zealander. I talk about health I talk about homes and I even talk about infrastructure in Northland.In terms of infrastructure and growing the Northland economy to promise 10 bridges was a wonderful thing to do. It was wonderful to say it but where is the follow-through—where is the follow-though? It is not there. It is an artificial surplus—cuts here cuts there—so much so that for me this example just highlights the ludicrous nature of the situation. A Department of Conservation (DOC) ship—a DOC vehicle—took the big oil industry players out into our deep-sea oceans so that they could further explore deep-sea oil drilling in New Zealand. It was DOC that was facilitating the exploration by these big oil companies which want to go out and explore oil exploitation off New Zealand shores. The mandate was: “You guys need to make more money. Create your own revenue. It’s not good enough to ask the New Zealand taxpayer to do it.” Well the Government will not do it and so here we are today talking about artificial surpluses.Let us accept that the Minister’s words are true and that there was a surplus. The reality is that that surplus is a short-term short-minded focus on balancing the books today. The question that that Government over there needs to be asking—that those members on that side of the Chamber need to be asking—is what is the true long-term cost to New Zealanders of trying desperately to gain this surplus? What will that do to those who are raised in substandard housing? What will that do to those who are suffering so poorly in terms of their health and who are not able to find real alternatives in our public health system so that they can come back and contribute to the economy? What will it do to the lower-income earner who now resorts to crime because they literally cannot feed their family? They resort to desperate desperate measures that we would call unacceptable but when you reflect the situation is just unacceptable. There is no strategy here. There is no long-term strategy and I think the chairman of the Finance and Expenditure Committee highlighted that very point brilliantly. Long-term strategy? No.In terms of having a long-term strategy to grow the economy Mr Joyce for example is travelling around the world trying to find foreign investors to come and buy up New Zealand’s assets. That is his investment strategy. I stand here and acknowledge that in doing so Mr Joyce—if he finds those investors—will increase New Zealand’s GDP but that highlights the farcical nature of taking GDP as a measure of a country’s success. As those GDP figures go up through investment and business undertaken within our borders the profits simply go offshore. Incomes will fall because in most of our trade agreements—for example with China and within the Trans-Pacific Partnership—there are provisions for bringing in labour from offshore and they do not have to comply with local employment legislation. So we are talking about cheap labour being brought in from offshore to facilitate the profits of foreign companies that are then taken offshore. It just makes no sense. GDP will increase—that is a given; it is accepted—but what will that do for everyday New Zealanders? Nothing. In fact it will make us worse off. The inequality problem that New Zealand has been facing for decades now will continue to grow and this Government has done nothing to address that.I just want to address some of the comments from the chairman of the Finance and Expenditure Committee and from some of the other members on the other side of the Chamber. It was not Mr Bennett himself but some of the members have used pretty words. They have used wonderful rhetoric to describe a New Zealand economy that is doing well and that is strong—it is fantastic. That is the picture that is being painted on that side of the Chamber—it is wonderful. But the reality is that when we came to the point—and the crunch came in the by-election last year for example—it highlighted the fact that our regions for example are being completely neglected by this Government. For Mr Joyce to go around the country and come up with these regional development plans with no money behind them and then for them to be disabused of any common sense or any benefit from the people within those communities just highlights the dearth of actual strategy that this Government has to grow our regions. It wants to grow Auckland. You know it is a big city—let us get up with the modern world. Well the reality there is that average incomes in Auckland have fallen since the party on that side of the Chamber came into Government. That is a reality. It is just unacceptable.In his contribution earlier Mr Bennett said to the Committee that we are enjoying the lowest interest rates this country has ever seen. I think he does not realise that that underpins the farcical nature of the comment. First of all there are two points to make around that. Interest rates are not low by international standards; they are ridiculously high. That is creating huge pressures for our foreign currency exchange. Our dollar is so overvalued it is not funny and it is undermining the very industry—and I mean the export industry—that this Government purports to want to support. By failing to manage our official cash rate and our foreign exchange the Government is undermining every effort that private businesses are trying to take to export overseas. It is ridiculous.The second point is that it is simply an indication of how badly the economy is struggling. Low interest rates are indicative of a time of low growth constraints and—[Interruption]The guys who are yelling abuse at me need to listen to what I am saying: interest rates are high by international standards. What we are seeing is this ridiculous juxtaposition where—by contrast—they are too high by international standards but here in New Zealand the Government is not doing enough for local businesses and interest rates need to come down. It is just absurd.Immigration—those guys label us as xenophobes for wanting controlled immigration policies. We simply need to manage the flow of people coming into New Zealand so that we actually get skilled labour where we need it. This uncontrolled inflow that we are seeing now is a band-aid on the New Zealand economy. It is a band-aid because it simply covers up the reality that GDP per person—the income of a New Zealander here an individual New Zealander—is going down and it is not going up. That is the band-aid that immigration is for this country. The fact that pretty much two-thirds of it is going straight into Auckland so that the infrastructure there cannot cope is just absurd. Earlier today in the House Mr English was asked about what conditions—BRETT HUDSON (National): It is a pleasure to rise to speak on this annual review. What we see with the Opposition members is that despite their very best—and a recent poll would suggest that most of New Zealand does not see their best as that good—attempts to talk down New Zealand and despite the fact that they show that they have no aspiration and that they have no confidence in New Zealanders and New Zealand businesses performing the fact is that New Zealand is doing very very well. The economy is growing—2.3 percent in 2015. Most pundits are predicting an average of 3 percent over the next few years. The country is doing well. There have been 170000 jobs created over the last 3 years—170000—with a further 148000 forecast over the next 3 years. Those members have tried to talk it down but the facts are just getting in the way of their story. It is not even a good story.But to compound that despite their best efforts to talk down the facts that get in the way their colleagues are completely confused. They do not know whether things are good or bad whether interest rates are too high or too low—apparently they are both the same at the same time. It is quite interesting. Mr Tabuteau says interest rates are too high and that it is constraining our exporters the people whom National members say they support—yes the exporters. So last year exports grew $1.9 billion—$1.9 billion into the headwind created by a drop-off in dairy. Dairy fell by $3 billion. With exports growing a total of $1.9 billion that tells us that other export industries and sectors grew $4.9 billion. By any measure in New Zealand that is an economy that is performing extraordinarily well.There was a previous comment too from the member for Napier. The Minister of Finance noted that that member the member for Napier would appear to be on the right-wing side of Labour. He also pointed out that it is quite relative and the reason it is relative I would argue is that that member was talking about—whereas this Government has a very strong focus on optimisation in public services and delivering better public services for the same or less amount of money the member for Napier on the other hand was just consumed with the idea of not spending less. He clearly sees that the Government is a big driver of economic growth through its own spending. We accept that the Government is a big spender in the economy. It has to be. But on this side of the Chamber we know that it is businesses—businesses—that drive growth businesses that drive employment up and businesses that drive wages up. That is why we are committed to opening markets for our exporters to export their products and services. That is why we are open to channels of investment whether it is direct foreign investment or whether it is innovative approaches like crowdsourcing. This is a Government that knows it is private enterprise that drives the ultimate results for Government business. So we are there supporting our businesses to grow and to reach new markets to have the confidence to employ more New Zealanders and through that to push incomes up. We have seen that. We have seen incomes rise.If we take a longer view of this the Minister of Finance recently reported that from 2010 average wages have grown 15 percent. Inflation over that same period has risen only 10 percent. More recently inflation has been incredibly low—at a decades’ low of around 0.1 percent—yet average wages continue to rise. People in New Zealand are better off. They are better off because their incomes are growing faster than inflation and they are better off because there are more employment opportunities because this is a Government that is supporting businesses to grow and to get out into the worldwide market. So what we see and what we report on is a New Zealand Government that is performing well is supporting businesses and is also supporting Government entities.The member from the Greens made a point that I think symbolises their lack of understanding of business. She talked about how utility companies or mixed-ownership model companies are now delivering greater dividends under the new model than they were previously. She completely missed the point. The reason they are delivering better dividends now is the structural change this Government put in place because of the reprioritisation they have through their different governance model. If it was simply a matter that they could have delivered those dividends the real question is why they did not do it beforehand. By any measure the mixed-ownership model is delivering more for New Zealanders and it is delivering better results for the Government. This Government is in great shape.Report noted.The CHAIRPERSON (Lindsay Tisch): Members we now turn to the second part of the debate. This is the debate on the annual reviews of departments Offices of Parliament Crown entities public organisations and State enterprises as reported on by select committees. The time allocated by the Business Committee for this debate is 8 hours. However the debate on the annual financial statements of the Government ended early and the remainder of the time is available for debate. I remind members that this debate now includes the reviews and performance of Crown entities as well as departments.The Business Committee has determined that this part of the debate will follow the structure established by the 2014-15 estimates of appropriations. The annual reviews are grouped into 10 sectors. A list of the entities covered by each sector is available at the Table. Each debate will be led by a call by the chairperson of the select committee nominated by the Government as the major committee reporting on the sector. Parties have the following calls allocated for each sector: Labour Party two calls; Green Party one call; New Zealand First one call; and the Minister in the chair three calls. All calls are 5 minutes in length.In addition there is the remainder of the 40-minute supplementary calls not used in the debate on financial statements of the Government which may be taken by all parties as they see fit. The time taken on each question is in the hands of members depending on parties’ use of their allocation of supplementary calls. At the end of each sector debate the question will be put that the Committee reports relevant to the sector be noted.At the conclusion of the debate a single question is put on the provisions of the bill. There is no amendment or debate on the question. When the chairperson reports the bill to the House it is set down for third reading forthwith. There is no debate on the third reading. I remind members that this is a debate not like the previous one that we have just concluded in that we are specifically dealing with the reports of the committees that are relevant.Economic Development and Infrastructure SectorMELISSA LEE (Chairperson of the Commerce Committee): It is a great pleasure as the Commerce Committee chair to lead off this debate. What a great year of annual reviews the Committee has had and received from the select committees. It has been great to listen to the excellent accomplishments through the Government’s work to support economic development around our country.The Commerce Committee was privileged to hear about a wide array of great initiatives our Government is offering to New Zealand. I was particularly interested in the Commerce Commission and I would like to commend the work—the great work—by the Commerce Commission to help New Zealanders become more financially literate thus supporting better saving and budgeting in Kiwi households. It is clear that financial capability is a priority for the Government and that further work in this area will help support New Zealanders to shape their lives for the better.I think that everyone in this Chamber is in fact aware of the website called Sorted.org.nz released by the Commerce Commission. This website which helps New Zealand families work out their financial situation has undergone a revitalisation to better fit the needs of those who use its services. All New Zealanders go through times when they need a little bit of help—whether it is budgeting for a new “want” item or trying to work out the interest rates and repayments of mortgages that they are trying to negotiate with a new bank for example. They can make their plans via the website because it does actually provide that assistance and I think it is great work that it is doing.Another thing that I am particularly fond of from the Commerce Commission is the animation on tv.comcom.govt.nz. It is called It’s All Good. It has been a fantastic way for New Zealand households to check out information on common issue areas and the first item that it put up had 140000 views in the first week alone. It should be commended by this Parliament and members in the Committee. I think it is absolutely fantastic work. The animation gives examples like when characters are trying to get a loan and it shows what they should be aware of and some of the pitfalls they could actually fall into. I think it is incredible that our people should actually use that website to get some guidance when they are making financial decisions.During the annual review the New Zealand Trade and Enterprise presentation to the Commerce Committee about the New Zealand Story Group was also of particular note. This is a plan that focuses on promoting New Zealand’s international brand under the Business Growth Agenda and it will aim to lift exports to 40 percent of GDP by 2025. New Zealand’s focus to get our brand to the rest of the world is an essential one if we are to be a part of a growing global economy.New Zealand is in good shape and we are working towards building a stronger more prosperous country where hard-working New Zealanders can have a brighter future. The review of the Ministry of Business Innovation and Employment was another great presentation. It was commendable to hear how the Government’s National Science Challenges are working as another great success for New Zealand. The Ministry of Business Innovation and Employment told the committee about the levels of funding access available to New Zealand scientists to support further research and development within our country and how it was supporting the needs of New Zealand research.Eight National Science Challenges were under way by the end of 2015 with a total of $650 million in funding committed for their 10-year lives. It is part of New Zealand’s plan to get the best of New Zealand’s scientists working together on a given issue supporting collaboration and partnership over direct competition. More money in research and development will be the key need for New Zealand’s future and this is being accomplished. It was noted in the Business Operations Survey that total research and development investment growth was up almost $200 million on 2014 to $1.4 billion. As the Prime Minister said earlier today the Business Growth Agenda is the master list of the Government’s initiatives and is a great example of our plan to lift job growth support better business—GRANT ROBERTSON (Labour—Wellington Central): Thank you for the opportunity to speak in this debate on the economic development and infrastructure ideas. I want to pick up where the chair of the Commerce Committee Melissa Lee left off and that was talking about the importance of exports to the New Zealand economy. I think right around the Committee we would all agree that for New Zealand to succeed we have got to lift our game when it comes to exports. That is where we are going to find the industries that are going to drive high-value jobs and are going to give New Zealanders the standard of living that we want our future generations to have.So the Government set itself a lofty goal. It was actually a promise and that was to lift the percentage of GDP that exports constitute to 40 percent. I note in the report of the Commerce Committee on this that it was described by the Chief Executive of the Ministry of Business Innovation and Employment as “an aspirational target”. That is an interesting change of tune. It is not actually an aspirational target. It was a specific promise of this Government that it would lift exports as a percentage of GDP from about 30 percent when it came into office to 40 percent. Where are they today? Around about 27 or 28 percent. We are going backwards under this Government when it comes to exports. We are going backwards on the very thing that will help generate the kinds of high-value jobs that New Zealanders want.The Government complacently sits there with exports at the moment being still approximately 80 percent from primary industries many of which are unprocessed commodities leaving our ports. That is not going to grow the kind of future New Zealand that our children and our grandchildren want to stay in. We have got to have a greater aspiration than that. Once upon a time the National Government had aspiration. Once upon a time it said it was ambitious for New Zealand but now we are going backwards. There is absolutely no ambition among the National Government members for New Zealanders particularly when it comes to the export target.But do not worry because hidden here in the report of the Commerce Committee on the Ministry of Business Innovation and Employment is the Government’s big strategy and plan for economic growth. It is called here an agribusiness hub in Saudi Arabia. For those not familiar with this genius economic plan from the Government it involves giving approximately $12 million to a man named Mr Al Ali Khalaf. Mr Al Ali Khalaf was given this money to set up his agribusiness hub in the desert.Many people around the Committee and perhaps listening will not be aware that the sheep that were flown over to set up this agribusiness hub actually belonged to Mr Al Ali Khalaf in the first place. So the taxpayer paid out to get the sheep from his farm in the Hawke’s Bay and pop them on a plane—they may as well have put them in business-class seats because that is how much it cost to fly the sheep over there. A sad part of the story is that many of the sheep died on the way. Those that did not died when they got there. We had some dispute with Nathan Guy about whether or not it was a sandstorm that killed them but they did die.In the end though the money just kept flowing out of New Zealand. Murray McCully called it a “facilitation payment”. Well there is another word for that. It begins with “b” and has the letters “r” “i” “b” and “e” after that and that is actually—The CHAIRPERSON (Lindsay Tisch): Order! No no.GRANT ROBERTSON: Here in the report of the Commerce Committee on the annual review of the Ministry of Business Innovation and Employment is a description of the agribusiness hub in Saudi Arabia. This kind of approach from the Government is appalling. It is about looking after its mates. It is about looking after those at the very top rather than hard-working New Zealanders supporting and investing in the regions of New Zealand.Here we have $12 million being pushed offshore to Mr Al Ali Khalaf in the vain hope that he will somehow support a free-trade agreement with Saudi Arabia that does not actually seem to be going anywhere at all. We await with interest the Auditor-General’s inquiry into the agribusiness hub in Saudi Arabia because it is murky and it finished off most recently with the payment for an abattoir in Saudi Arabia and that—Hon Clayton Cosgrove: No sheep.GRANT ROBERTSON: Ha ha! There are no sheep there but they have got the abattoir. That impoverished group of people the Saudi Government has been now given by New Zealand an abattoir because it is actually not possible for Mr Al Ali Khalaf under Saudi Arabia law to own the abattoir himself so we had to give it to the Saudi Government. This is the best the Government can do in terms of an economic development strategy for New Zealand according to the review that we have here: to throw away $12 million on the vain hope of some kind of pay-off. That will not happen.BRETT HUDSON (National): I said in a previous contribution that the Opposition was doing its best to talk New Zealand down and Mr Robertson has just shown us that its best is not very good. There are a couple of points I would address that he did raise. Of course we do have this goal of raising exports by 2025. What Mr Robertson either glosses over or simply cannot comprehend—I will leave it to the New Zealand public to decide which of those two it is—is that there is this very large-scale internal spend that has been going on in New Zealand. It is called the rebuild of Christchurch. This is a Government that has stood alongside the people of Christchurch since the earthquakes. The fact is that that is such a large contribution from the Government—about $16 billion—and it is such a large-scale piece of activity also by insurance companies that the implication of that is that it will create a counter-pressure to the percentage rate of exports. So it is up to the New Zealand people to decide having heard Mr Robertson saying that export percentages are going backwards and knowing that the Christchurch rebuild is such a great determinant of that whether that means that a Labour Government would set aside the rebuild of Christchurch so as not to negatively impact exports as a percentage of GDP. I would have to say I would not have much confidence of Labour doing anything other than that.But the reality is that exports are growing exceptionally well. Even in the headwinds of a reduced dairy price globally exports grew at net $1.9 billion over the last financial year which actually meant that exports as a whole grew at $4.9 billion extra because the dairy contribution declined by $3 billion. In fact one of the best areas where we can see that in economic development is the work that has gone into improving the tourism spend—the number of tourists we get and the amount of money they spend. I have just seen a report that the Telegraph Travel Awards have rated New Zealand as the best country in the world. Over 75000 readers voted in that annual poll and they have identified New Zealand as the best country the best destination. We see that in the results of the last financial year. They perhaps in some respects were a bit slow to see it because tourism in the last financial year was up over 30 percent—in fact 31 percent—with $9.7 billion as a contribution to the New Zealand economy. That is an export. That is exceptionally good.In areas of infrastructure investment you see a Government that appreciates that in order for New Zealanders to live the lives that they want and for New Zealand businesses to succeed they need to be connected to the world. We do that in a couple of ways. One way which I will get to is through trade agreements. But the other way is through infrastructure that actually permits that connection. For us that is the Ultra-fast Broadband Initiative and the Rural Broadband Initiative. Investment is now at over $2 billion that this Government is making to ensure that Kiwis and Kiwi businesses can connect with customers across the country and around the world that they can deliver their services more effectively and more efficiently and that they can use the power of technology to help them develop new and more innovative and exciting products to take to the market.This Government is investing billions in ensuring that New Zealanders can fulfil their potential and can compete on the world stage. It is one thing to connect Kiwis to the world through technology; it is another to actually connect them in the sense that they can market their goods and services. This Government through our economic development programme does this through free-trade agreements. We are it seems now the sole champions—except for maybe our friends in the ACT Party and the United Future Party—of free trade in this Parliament. Labour used to believe in it but it no longer does. New Zealand First has never believed in it; it just thinks that Fortress New Zealand is the answer to everything. But we do. We know that a small country at the bottom end of the world is never going to get rich by selling its stuff to itself. If we want to create the prosperity and the lives that Kiwis want to enjoy then we are going to have to do that—and we want to do that—by creating opportunities for our businesses to take their products and their services to countries around the world and to do so on a more level playing field so that they can compete and not be locked out of markets or have things made that much more difficult for them to be successful through high tariffs. So we spend a lot of energy in creating those relationships and creating those agreements. It is a shame—The CHAIRPERSON (Lindsay Tisch): Just before I give the Minister of Commerce and Consumer Affairs a call I ask members to focus on the sectors. Although the member Brett Hudson was referring to free-trade agreements there is actually a separate debate on foreign affairs defence and trade matters. Although one could argue that trade and enterprise was actually in this sector one must tie it back. But of course talking about free-trade agreements is not part of this one. Sector debate—[Interruption] No no. I let you continue but just be mindful that this is a sector debate and there are opportunities to have your say on all of them.Hon PAUL GOLDSMITH (Minister of Commerce and Consumer Affairs): I was running my eye through the list of sectors that we are dealing with here and there are three of them that I am responsible for that I wanted to comment on today around the Commerce Commission the Commission for Financial Capability formerly the Retirement Commission and the Financial Markets Authority. All three of those areas are integral to a broader discussion that we are having around expanding the financial capability of New Zealanders protecting those New Zealanders who struggle—or who have an absence of basic money skills and get themselves into terrible situations with very expensive debt—and what the Government is trying to do to improve the lot of those New Zealanders.There are three elements to it. First legislation itself can take you so far and we have done very significant reforms in the consumer credit space in the last couple of years. We have introduced the Responsible Lending Code in which we have introduced rules around responsible lending in the pay-day lending space and in the truck-shop space trying to get much better clarity around what particularly vulnerable consumers are signing themselves up to. That legislation has been passed and we are confident that it is going to make quite a big difference particularly to people at that end of the spending spectrum who have got themselves in trouble over the years. But it is only so good if it is properly enforced. That is why the Commerce Commission needs to be actively engaged in the enforcement of that new legislation and it has been. It has been very interesting and reassuring to see over the past few months the Commerce Commission being very active in this consumer space policing the Fair Trading Act as well as the Consumer Credit Act. It has been out there dealing with some of the truck shops and sending clear notices to them to change their behaviours and the way that they operate.Changing that legislation and enforcing that legislation only takes you so far. The much broader multigenerational task that we have got is to improve the financial capability of New Zealanders as a whole. That is why the Government last year put out a Government statement on financial capability. One of the things that struck me when I first became a Minister responsible in this area was that just about every Government department had some form of financial capability programme under way whether it was through the Ministry of Social Development and the massive investment that it makes in budgeting through to the Ministry of Youth Development to the Ministry of Pacific Island Affairs to the Commerce Commission to Treasury to schools to all sorts of areas. It is such an important thing and many private sector players and banks have also engaged in this discussion. There was a danger that we had not really got a coordinated effort and so there is a national strategy that is being developed by the Commission for Financial Capability.We have said as a Government that this is actually important to us this is the strategy and we are expecting all the Government agencies at least to work together very collaboratively on trying to improve the outcome of this area and also to work collaboratively with the private sector. I am looking forward to a 1-year update in a couple of months on the progress that has been made in that area. Overall if we can do everything we can to equip New Zealanders once they come out of school and into the community with a better understanding of how debt operates how interest operates and how when you buy something for $15 a week for 20 weeks that is going to be a lot more expensive than potentially buying something directly. All those basic things that we are going about in a systematic way—Hon Member: Yawn!Denis O’Rourke: This is waffle.Hon PAUL GOLDSMITH: —so dealing with the legislation dealing with the enforcement followed by dealing with a wider effort of financial capability. And I am conscious of the fact that one or two members at the back end of the House may find this a little dry but it is these kinds of systematic thorough and ongoing efforts that need to be made across every aspect of Government that lead to the outcome for New Zealanders that we are trying to attain and that is an ability to raise living standards in this country and to give every New Zealander the opportunity to thrive and succeed.DENISE ROCHE (Green): I rise to take a call on the Economic Development and Infrastructure Sector in the annual review debate. I am going to restrict my comments to the whole area around the Ministry of Business Innovation and Employment.It is a rather interesting process that we go through to scrutinise the performance of what is essentially the Public Service as part of our democratic process. I applaud the work done by the Public Service and I also think that we need to recognise the pressure that our public servants are under with this National Government coping with the expectations of having to do more with less which is a consequence of National’s persistent underfunding of public services in order to give more and more to those who have too much already. Unfortunately it is not only the public servants who bear the brunt but also the most vulnerable people in New Zealand—people like our exploited workers and new migrants who deal with the reality of having a Public Service that has to do too much with too little and cannot service them properly.I would like to talk about two areas specifically and they are immigration and employment where because of the lack of resources our public services are falling short of delivering the core services that they are supposed to. Nearly one in five investigations into suspected breaches of minimum employment standards has not been completed within 6 months of the initial notification by the labour inspectorate and that is the natural consequence of having a stretched labour inspectorate. Australia has one labour inspector for 19000 Australians. Here in New Zealand we have one labour inspector for 58658 New Zealand workers.With limited compliance checks bad employers like Nelson’s Taste of Egypt restaurant or Masala are able to exploit their workers paying them less than the minimum wage. In Taste of Egypt’s case it was paying them for 30 hours a week when they were actually working 70 and the employer continued to intimidate and exploit these workers even after a labour inspector had visited them.Having an underfunded labour inspectorate and an imbalanced industrial relations climate allows these gross breaches to happen. Essentially it favours employers and National’s donor class over ordinary working New Zealanders. If the labour inspectorate cannot adequately fulfil the target set out for it which is a 90 percent completion rate of investigations of suspected breaches within 6 months then clearly we need more labour inspectors.Immigration New Zealand is also feeling the consequence of underfunding with nearly one in five audited visa decisions being rated as not accurate. As with the labour inspectorate we cannot keep expecting the Public Service to do more with less. Overworked public servants are under pressure to meet high targets for processing applications but they are only human and are liable to make mistakes. The persistent underfunding of this crucial public service has led to an explosion in the growth of an immigration advisory industry and some of them are dodgy. Looking at the data nearly 40 percent of cases of complaints about immigration advisers had still not been resolved more than 5 months after the first complaint was made and it is clear that the Ministry of Business Innovation and Employment is having issues in regulating this industry.It makes it more perplexing when you consider that the immigration levy has been underspent. In the year 2014-15 the migrant levy collected amounted to $9979000. This is money that is supposed to be allocated to support new migrants to settle here but only $9190000 of that was allocated last year leaving more than half a million dollars unallocated. When so many of the wonderful migrant centres and multicultural associations around New Zealand are struggling for funding and are providing useful support why is the Government continuing to penny-pinch the money that migrants actually pay to this country to provide the services for them? It is clear from the annual review process that our public services are struggling from the strain of having to do more for less.DENIS O’ROURKE (NZ First): I want to talk about this Government’s appalling record on transport infrastructure. We have often heard speeches in this Chamber about roads of national significance but we never hear anything about rail because this Government does not care about rail; it only cares about more and bigger roads. That is a forlorn strategy doomed to failure as shown in many places worldwide. A good arterial roading system is essential but that does not mean putting all the eggs into that one basket leaving other land transport modes a basket case which New Zealand rail has certainly become.Rail in New Zealand is grossly neglected by this National Government funding for capital development of rail is pathetic and maintenance in many areas is clearly underfunded. The saga of failures of the Cook Strait ferries alone—[Interruption]The CHAIRPERSON (Lindsay Tisch): Order! Sorry to interrupt the honourable member. I would like to hear what the member is saying. There are too many other discussions going on. If one wants to talk that is what the lobbies are for. All right?DENIS O’ROURKE: I was saying that the saga of failures of Cook Strait ferries alone proves what I have been saying. It shows that rail is being run down across New Zealand quite deliberately by this Government.Rail in Northland needs special attention with neglected lines failing to attract customers because of the sheer poor quality of the product offered to them. The line to Northland must be improved if the port is to realise anything like its potential and the Napier-Gisborne line remains mothballed damaging economic viability for many exporters in that region. Here is what one of them wrote just this week: “Transferring product moved by road to rail has huge implications for our area. During peak season we are restricted by the amount of trucks we can obtain and transport cost increases with volume. However transporting this volume to rail will decrease transport costs to port making Gisborne competitive.”I would also have to say that if New Zealand is going to have any hope at all of meeting its climate change obligations we cannot do it with a run-down rail system. Our only hope in fact is to reduce the growth of transport of road freight and to invest in rail freight. That is in fact what the road transport industry itself wants too. New Zealand First of course has a much better policy than this National Government; we have instead of “RONS” a “RONI” policy—railways of national importance. That is a strategy to redevelop rail in New Zealand properly funded through a single land transport fund giving rail the priority it needs.Turning to regional roads despite desperate promises for the two-laning of 10 bridges in Northland during the recent by-election Minister Bridges will actually only in fact build four of them as now set out in the National Land Transport Programme confirmed by this month’s Northland Regional Council’s transport committee. So it is clear the Minister has no genuine plans to widen more than the four bridges currently budgeted for when only three more are part of corridor studies and may be considered in the future.As for the remaining three of the promised 10 the report says: “The Government may decide on an investment approach …” for them. This “maybe” approach to six out of 10 promised bridge-widening projects for Northland shows the Minister’s duplicity on that matter—promising one thing and delivering less than half. He may be “Bridges” by name and by promises but not by promises fulfilled. This is a good illustration in fact of the National Government’s failure everywhere on transport. As I have said that is seen by a run-down rail system—run down actually quite deliberately by this Government by not properly funding the infrastructure that the country needs poorly funded regional roads and totally inadequate commuter rail for Auckland. This is all caused by a Government that has not the remotest clue how to invest to solve New Zealand’s transport woes. Its approach is non-strategic.Dr MEGAN WOODS (Labour—Wigram): I would like to take a call on two votes within this sector—the Vote Canterbury Earthquake Recovery and the Earthquake Commission within this. We have heard the traditional rubbish from Government members about what a fantastic job the Canterbury rebuild is and the amount of money being put into there and what a positive effect that is on New Zealand’s economic development. Well there is no denying that the rebuild of Canterbury has had a stimulatory effect on the economy. There is no denying that but this is the year when the Canterbury rebuild is forced to cease to become a net generator of growth within our economy.One cannot help but fear the way that Canterbury and the rebuild of Canterbury and Christchurch is slipping down this Government’s agenda because it is not that source of growth any more. Sure there will still be money spent in our region and it still will be good but it is not going to be driving economic growth in this country in the same way that it has been since 2011. The Canterbury earthquake recovery portfolio has lurched from problem to problem under the leadership of Gerry Brownlee. We have wide open spaces and wastelands in our city where Government action was meant to be happening. It simply has not been the case that the Government has performed in the way that it should. Years on only five out of the 12 anchor projects even have business cases completed. The anchor projects were meant to be the things within the central city that anchored the recovery—that provided the stimulus for private enterprise to build around and to fuel that development. Well the anchor projects have become more of a weight and a millstone in the centre of Christchurch rather than having a stimulatory effect.What we have are delays and uncertainty and these delays and uncertainty from Government are actually causing capital flight from Canterbury. We are hearing on the ground in Christchurch all the time about vast sums of capital that is leaving Canterbury because the risk and the uncertainty is far too much for those investors to bear. There are fantastic things happening in Christchurch—there are wonderful things happening within the central city—but they certainly are more than likely to be something the Government has nothing to do with. Where the Government has touched something it is subject to delays and repairs. Just last week we saw that Treasury gave the Canterbury earthquake recovery—and specifically in the central city—the worst rating of any other Government expenditure on capital in this country.And how did the Minister respond? Well when I was 13 years old if I had gone home and blamed the report writer for a bad report my parents would not have bought it. But what we had from the Minister was a tantrum about Treasury rather than him owning up and saying: “Yes things haven’t gone so well. We haven’t seen the kind of progress that we would like to see in central Christchurch. We haven’t seen the development that we need and 5½ years on we are behind schedule. But we’re entering a new phase and I’d like to think that we can get on and do this.” No we saw the usual bluster from the Minister rather than owning the problem and this has been part of the problem all the way through. What we have is a Minister who has presided over a Government department that has spent money telling Cantabrians that everything is OK when the blindingly obvious around them is that this is not the case.In the final part of my contribution I want to turn my attention to the Earthquake Commission. This is quite frankly something we must learn a lesson from. We can see we have gone through yet another financial year where we have huge numbers of complaints. We have re-repairs on re-repairs occurring. We see the sale of people’s property in Canterbury falling through because of shoddy and dodgy earthquake repairs the first time. And still we have a Government that refuses to open its ears to open its eyes and to understand that we must learn from these mistakes. What we have been through in Canterbury is not something that we ever want to see anyone in any other part of this country go through again but this is a Government that is intent on not learning from those errors—not learning how we can do this better. This is something that we simply must face up to by having an independent inquiry—JULIE ANNE GENTER (Green): The Green Party wants to create a smarter greener economy that is going to look after all New Zealanders and that is entirely possible. One of the ways we can do that is through smarter investment in infrastructure. This Government in its National Infrastructure Planannounced a series of projects the vast majority of which were motorways that it calls roads of national significance. The reason these projects had to be given this special title of “national significance” is that none of them actually stacked up under the traditional economic evaluation method that was used by the New Zealand Transport Agency at the time.National got into power it did the economic analysis and it saw that these motorway projects it had promised do not make any economic sense. At the time I was working as a consultant for the New Zealand Transport Agency and I remember the officials there at the time expressing great concern over the priorities of this Government—how they simply did not make any economic sense and that it was a poor use of money. Naively I thought as a consultant that we could present the evidence to the politicians. They say they care about the economy they want to reduce costs to households business and government so I thought: “Great. There’s opportunities to do that that not only reduce all the cost to households business and government but also reduce pollution protect the environment and the climate make life easier for all New Zealanders make it easier for them to access goods and services create healthier happier cities and all these win-wins.” But unfortunately the National Government has completely failed to take up the opportunity that exists for it.It has been a bit of a mystery for me because if we look at countries overseas there are centre-right Governments that understand the economic benefits of having a balanced transport system and they are investing in public transport safe cycling and rail to move freight because it makes economic sense. We have business people freight experts here in our own country—like Mainfreight which is by far the largest freight company—that have said it makes sense for their business to invest in rail and to use rail to move goods around the country. But it is the Government’s responsibility to invest in the underlying infrastructure and unfortunately this National Government has failed to invest in the infrastructure that we need to have a balanced transport system because it has been so busy delivering these promises which are hugely expensive—we are talking $12 billion at least—on just a few stretches of extremely expensive motorway which of course is going to do nothing to help the vast majority of Kiwis get to work and avoid congestion. It is not even going to help freight that much if you look at an objective analysis of these projects.So it is a real missed opportunity and the Green Party has a clear alternative solution. We demonstrated right before the last election exactly how we would pay for fast frequent reliable public transport in our major cities: Auckland Wellington and Christchurch. We demonstrated how we would pay for safe walking and cycling to schools. That is one of the smartest ways to reduce peak-hour congestion in our towns and cities but not only that it is better for our kids. It is better for the environment. It means they get moving before school so they can learn better when they get there and that is really their birthright—to be able to walk and cycle to school. That is a popular policy but unfortunately the National Government has still failed to implement it after 8 years now in power. It is moving on with the urban cycleways which is great and we support that but it needs to go further.As an Aucklander I can say that public transport in Auckland is bursting at the seams. Buses and trains are full to standing. The buses that pass where I live—oftentimes at peak time three to five buses will pass completely full leaving 10 or 20 people waiting at the bus stop. That is simply not acceptable. It is also too expensive. Households are having to pay far too much for public transport.But the other big missed opportunity is in the freight area. As I said earlier Mainfreight our biggest freight logistics company has said that we need more investment in the rail network. The way to do that is to have the infrastructure the rail network not treated as a State-owned enterprise that needs to somehow return a profit to the Government through its surplus—which KiwiRail does have; it has an operating surplus on its freight operations—but we should treat the rail network as part of the transport network and invest in it because of the wider economic environmental and social benefits for all New Zealand businesses.Hon NICKY WAGNER (Associate Minister supporting Greater Christchurch Recovery): I would like to take a short call on this infrastructure theme and I would really like to have this focus on the infrastructure investments repairs and rebuilds in Christchurch. Listening to the member for Wigram Megan Woods I would think I live in a different city.I am enormously proud of the work that the people of Christchurch have done in Christchurch over the last 5 years. I am enormously excited about the future of our city and I am really impressed with how they have managed to rebuild so much of our infrastructure. When you think about it earthquakes are really tough on infrastructure and 15000 earthquakes are particularly tough. That number of earthquakes has made us think about how we manage our rebuild how we can be innovative and how we can really make the most of this opportunity—5 10 15 years of investment as we replace our infrastructure has made us the construction capital of New Zealand and we are making the very most of that opportunity.The challenge of rebuilding and repairing the majority of Christchurch has required us to innovate. They say that necessity is the mother of invention. Really the problems we had replacing our horizontal infrastructure—who knew about horizontal infrastructure before our earthquake? It is the three waters: fresh water stormwater and the sewers—and on top of that the roads. That is horizontal infrastructure. To replace that we have had to create an organisation called “SCIRT”. “SCIRT” is the Stronger Christchurch Infrastructure Rebuild Team and it is a new way of working. The team has brought five of our major construction companies together and they have worked in a collaborative model to be able to deliver the huge amount of work that has to be done to bring together their expertise and capacity. And it is interesting that that model has been recognised internationally as something that is really good as an immediate response to a disaster and it is being used for our disaster risk reduction kaupapa around the world. In fact Fiji has used it after their recent cyclone.Of course as well as the repair of horizontal infrastructure—and at this stage we think we have repaired about 90 percent of the inner-city horizontal infrastructure and about 85 percent of the suburban area—we are also investing in all of the things that a city needs in order to go forward. We are investing in roads we are investing in transport mechanisms we are investing in hospitals and we are investing in education. We have got a significant roads of significance programme in Christchurch we have got a new transport interchange which connects not only our local buses but also our intercity buses and has places for biking and walking at the end of those bus routes and we have also got the biggest hospital redevelopment and replacement in New Zealand’s history. Two major hospitals are being built—one in Burwood and one in the centre city and the Burwood hospital is going to open some of its wards within a couple of months.Finally I would just like to mention the investment that we have in education: $1.1 billion going into new schools primary and secondary—magnificently well-designed creative new learning environments; places that our kids are really going to have the opportunity to take off. Of course there is also investment going into our universities and our polytechs. So I am really excited about the future of Christchurch. We are building a safer more innovative people-friendly city; a city that has opportunities for our young people that we can see going forward and that is a place I hope all generations will feel comfortable and will feel is their home. Kia ora.PHIL TWYFORD (Labour—Te Atatū): I am very glad to take a contribution in this annual review debate. I want to talk about housing and the work of the ministry of business innovation and enterprise—or should it be employment?Grant Robertson: Employment.PHIL TWYFORD: Employment. The Ministry of Business Innovation and Employment—otherwise known as “Mobie”. The Minister the Hon Dr Nick Smith has talked a good game over the last 4 years about this Government’s commitment to try to make homeownership affordable once again. But when we look at the record in Government of this Minister and this ministry it is a tale of woe and I am going to catalogue that woe for the record. I think it is clear to everybody that New Zealand is in the grip of a housing crisis and the latest Statistics New Zealand numbers show that under this National Government homeownership has dropped from 66 percent to 63 percent. It is a very significant drop in the last 7 years. In the last 12 months according to recent data released by one of the international banks New Zealand had the highest rate of house price inflation of 23 countries in the Western World—the worst record in skyrocketing house prices and unaffordable homeownership in the Western World. Young Kiwis are locked out of the dream of homeownership. We have unprecedented numbers of families all over the country but probably most acutely in Auckland living in cars and garages.How does this Government respond? What does Nick Smith do? He wheels out one stunt one phoney press release after another and we have been discussing it in the House for the last couple of days. The centrepiece of the Government’s housing announcement in the Budget last year was its vacant Crown land initiative in Auckland. The Prime Minister and Nick Smith promised 500 hectares of new land freed up from Crown ownership to be developed to provide housing in Auckland. What has happened in the last year? Nick Smith has spent $52 million and all he has got to show for it is 25 hectares of Crown land. Not a single new house has been built. This was the centrepiece of the Government’s housing announcement in the Budget and the nation has been subjected to this classic Nick Smith fiasco as he has denied point blank that cemeteries power substations and schools were included in the list of land sites that he used to make that 500-hectare promise. Thanks to Nick Smith’s officials under the Official Information Act that list has been released. The substations the schools the cemetery—they are all on the list as is Government House. If this was not such a tragedy it would be funny but Aucklanders desperately need real houses that they can live in.The Crown land fiasco is just one of them. The special housing areas in Auckland which is supposed to be the Government’s centrepiece policy to tackle the supply shortage of houses in Auckland in 3 years has resulted in the construction of only about 700 houses according to Nick Smith—700 houses. Under this National Government we have seen a shortfall of between 30000 and 40000 houses build up over the last 4 years. They are only building about 9000 houses a year in Auckland but the city needs 14000 just to keep up with population growth. Record net migration in Auckland means that in the last 12 months an additional 31000 people have settled in our country’s biggest city. The new build rate in Auckland will not even house those new arrivals. So the shortage under Nick Smith and this National Government is getting worse by about 4000 to 5000 a year.Why this elaborate charade why this constant procession of fake phoney policy announcements that are obviously designed to have minimal impact? Why go to all the bother? Well John Key made it very clear the other day when he told Leighton Smith on Newstalk ZB that a lot of people in Auckland like their house prices going up. That is why his policy is not to do anything that will disturb that house price inflation and he is cynically prepared to look after the interests of the wealthy the leafy suburbs the speculators but he is prepared to cut adrift Generation Rent the mortgage slaves—IAIN LEES-GALLOWAY (Labour—Palmerston North): With the couple of minutes I have remaining before the dinner break I would like to briefly discuss the immigration services aspect of the annual review of the Ministry of Business Innovation and Employment. The Commerce Committee looked particularly at the Investor Plus category and questioned I think quite rightly the lack of oversight of that particular category. It was concerning to discover under questioning that the ministry officials have actually got no idea what the impact of the Investor Plus category has been on the New Zealand economy. They do not know how many jobs if any have been created by the Investor Plus category. They do not know what the people who have come into New Zealand under the Investor Plus category have gone on to actually contribute to New Zealand’s economy. I think it is an appalling lack of oversight for a new category that this Government introduced.The Government claimed that it was going to add huge economic benefit to New Zealand that it would put people of extreme wealth to the front of the immigration queue ahead of other people looking to come into New Zealand only because they are extremely wealthy. The Government claimed that that was going to have a massively positive impact on New Zealand yet it is not prepared to actually monitor that in any way and to actually produce any data that tells us whether the Investor Plus category is working or not. There have been allegations that the Investor Plus category has been used for money-laundering.Sitting suspended from 6 p.m. to 7.30 p.m.IAIN LEES-GALLOWAY: Before the dinner break I was talking about the Commerce Committee’s report into the review of the Ministry of Business Innovation and Employment and particularly the section that pertained to Immigration New Zealand. In that report some of the members raised concerns about the Investor Plus category the lack of oversight of that category and the lack of information telling us whether or not the Government’s intentions for setting up that category for setting up the system whereby wealthy migrants get to jump to the front of the queue ahead of everybody else was actually working in New Zealand’s interest.One of the signs that there might be some issues with this category is the report that we got earlier this year that police investigated two American investors who brought their money into New Zealand through the Investor Plus scheme but then withdrew their money into a different account whence it came before they gained residency in New Zealand. What the police were interested in was whether this was money-laundering. Was New Zealand’s immigration system being used to launder money? The bit that concerns me is that Immigration New Zealand did not pick up on this. It was not Immigration New Zealand that looked into this; it was the police who looked into this after I think a tip off from the bank where the money had been moved to. So I do not think that Immigration New Zealand’s oversight of that particular category is up to muster.I think the Government should be resourcing Immigration New Zealand and asking it to take a much closer look to make sure that the Investor Plus category is actually working in New Zealand’s best interests because an immigration system that works in New Zealand’s best interests is an immigration system that works for us as the host country and also works for the migrants themselves so that they get good outcomes. It is not just the Investor Plus category that Immigration New Zealand is not looking closely enough at; in fact it is all the categories. We do not actually know what the outcomes are for a lot of migrants.I looked particularly at the skilled migrant category. What we do know—not from research done by Immigration New Zealand but from outside research that has been done—is that around 90 percent of people who apply to come to New Zealand under the skilled migrant category get work after 6 months and that sounds quite good on the face of it. What we do not know is whether or not they actually get work in the area for which they are skilled. I look at two examples. I had a long conversation with a bloke who came from Egypt. He is a civil engineer he has been in New Zealand for over a year and he cannot get work. He came to New Zealand under the impression that he was wanted here. He came to New Zealand under the impression that he had a skill that New Zealand needed and yet he cannot get work. I have to ask whether our immigration system is working if people who come to New Zealand under the skilled migrant system are not able to get work.FLETCHER TABUTEAU (NZ First): It is a pleasure to take a call on behalf of New Zealand First in this part of the debate. I choose to speak about the Ministry of Business Innovation and Employment this evening and its report. I think everyone in the Chamber this evening will acknowledge that it was a ministry designed to fix all woes—that was the intent. I do have some sympathy for Minister Joyce. He must be getting tired. It must be exhausting. He is like a bald Hercules running around the country putting out fire after fire. We will all soon be talking about lost productivity within the ministry loss of focus and how whole departments are getting lost within this super-structure. Although to be fair there is a giant TV right at the start of the maze to light the way for those lost and confused staffers and members of the public brave enough to enter.The report describes the Ministry of Business Innovation and Employment as the primary-facing agent for New Zealand business. I am just wondering whether that means the stone sign outside the super-herculean ministry facing passers-by which cost $24000 more than they had budgeted for—a total of $70000 for a stone sign on the side of the road. It is just unbelievable. The report from the super-herculean ministry states that if the community is confident that its society and environment will be protected and enhanced and the benefits of growth are fairly shared the New Zealand business environment will flourish. New Zealand First could not agree more with that statement but yet again the superlative choice of language from this Government is first rate and paints a picture not just in the minds but also in the heart. It is just truly wonderful.But let us examine the statement “if the benefits of growth are fairly shared” in a bit more detail. We know the benefits of growth are not being fairly shared and this ministry has no solution. We now know that this Government is cool or simply apathetic about tax havens. We know that tax avoidance by New Zealand and international corporates totalling somewhere in the vicinity of $7 billion is all good with this Government. We know that it is fine to allow international fraudsters to use the Auckland housing market to launder money. We know that it is fine to allow Kiwi homes to be the means for foreign speculators to make giant or gigantic capital gains at the cost of our Kiwi lifestyle and our Kiwi Dream. “No rush.” says the National Party “Let us not upset big business. We do not want to compromise big corporate profit margins—heaven forbid if they drop in any given year.”As the ministry itself has said the benefits of growth must be fairly shared for the business environment to flourish. What we do know for sure is that New Zealand’s inequality measures are rapidly increasing—that is the rich are getting richer and the poor are getting poorer and there are more of them. Actually small to medium sized businesses and even the big players in the New Zealand economy are literally losing out on profits because of income inequality here. Rising inequality is responsible for wiping a third off New Zealand’s economic growth over the past 30 years. New Zealand’s GDP growth was stunted by as much as 15.5 percentage points between 1990 and 2010—more than any other OECD country. Income and wealth inequality in New Zealand gets bigger by the day. It is not all the fault of the Ministry of Business Innovation and Employment I acknowledge but “Rising inequality has been the norm in most developed countries but few have seen its increase by as much as New Zealand.”This ministry’s Minister needs to stop talking about huge trade gains which even by their own analysis of the Trans-Pacific Partnership for example are less than a 2 percent increase by 2030. These gains are so tiny actually that impartial analysis of this free-trade agreement shows us that as we sign up to this type of partnership—and that is what it actually is a partnership—income inequality in New Zealand and in those partnership nations will actually increase. That is not a solution.Reports noted.Education and Science SectorDr JIAN YANG (Chairperson of the Education and Science Committee): Thank you for the opportunity to speak on the education annual review. As the chair of the Education and Science Committee I am proud to say that the National-led Government is delivering an education system that New Zealanders can be proud of. The Hon Hekia Parata and the Hon Steven Joyce are doing a fantastic job as Minister of Education and Minister for Tertiary Education Skills and Employment respectively. We are seeing great results and outcomes for our children.This Government is committed to ensuring that every young New Zealander has the skills and qualifications needed to successfully participate in the modern economy. Under National the lift in achievements has been astonishing in some cases. This year 98 percent of new entrants in schools have participated in early childhood education. This means New Zealand is in the top third of OECD countries for the participation of children in early childhood education. National introduced national standards in 2010 not only to identify children who were behind at school but also to help parents support their children and to help schools focus on what they needed to do.I am proud to say that projections show that students are on track to surpass challenging educational targets—almost 2 years ahead of schedule. The number gaining National Certificate of Educational Achievement (NCEA) level 2 or an equivalent qualification for 18-year-olds increased by 3.2 percent to 84.4 percent last year. Since National came to power in 2008 there has been a 24 percent increase in achievement. The lift in achievement has been astounding for Māori and Pasifika students. The number of Māori students gaining NCEA level 2 at school has increased by 33.2 percent to 69.4 percent and the number of Pasifika students gaining NCEA level 2 at school has increased by a massive 48 percent to 75.2 percent. Sixty percent of 25 to 34-year-olds will have a qualification at level 4 or above by 2018.Under National student achievement is real because our plans to monitor progress and lift achievement in education are working such as the Investing in Educational Success programme. We have also seen significant growth in our international education industry—now our fifth-largest export sector—with over 100000 international students in New Zealand. This industry is now worth $2.85 billion to New Zealand and provides more than 30000 jobs for New Zealanders. This shows that parents from other countries have confidence in our education system and our reputation for educational achievement has spread across the world.To ensure that our schools are equipped for the 21st century we have built 30 new schools since 2009 and 2111 new or replacement classrooms since 2010. The National-led Government has also invested $700 million in digital infrastructure and has connected 90 percent of State schools and State integrated schools which is 2282 schools to the managed network. Our next steps for continuing the investment in our education system are reviewing how we deliver special education updating the Education Act and of course investing in the Christchurch education sector.Our unrelenting focus is on raising achievement for all of our students and it is paying dividends. National is delivering an education system that New Zealanders can be proud of. I would like to finish by acknowledging that the lifts in educational achievement are also a result of the hard work of students teachers principals and parents. Thank you.CARMEL SEPULONI (Junior Whip—Labour): I raise a point of order Mr Chair. I have just noticed that for a couple of speeches tonight—and I just want clarification from you—people have been reading their speeches during these stages. So I am just checking whether or not that is within the rules of what we are supposed to be doing during this debate.The CHAIRPERSON (Hon Chester Borrows): Given the speech that has just been delivered I was happy with that and of course I am the judge of that. Thank you very much for pointing that out. I will feel free to jump in any time if that is OK.TRACEY MARTIN (NZ First): Kia ora Mr Chair. I rise on behalf of New Zealand First to speak particularly on the areas of Education New Zealand and the New Zealand Qualifications Authority.I will pick up on some of the comments by Dr Jian Yang the chair of the Education and Science Committee particularly around export education which is covered by both Education New Zealand and by the New Zealand Qualifications Authority. If I can just quote from the New Zealand Qualifications Authority’s annual report one of its key pieces of work is: “administering the Code of Practice for the Pastoral Care of International Students which involves working with other quality assurance providers and the International Appeal Authority and Review Panel to verify that Code signatories perform as required and that international students receive ethical and responsible care from their providers.”What I want to touch on here is that it is interesting—Dr Yang actually touched on it—that in 2014 there were 110000 international students inside the post-secondary environment here in New Zealand. Just the universities alone made $883 million from those studentsfor that particular year. Education New Zealand for example spent approximately $31 million on marketing overseas and so on in order to get those 110000 students to come here to New Zealand. They were given a marketing opportunity by this Government in the last few years which was the ability for students to actually have 20 hours’ part-time work. Dr Yang said quite rightly that it has been extrapolated out that the export education industry has created 30000 jobs in New Zealand. The Government has handed out 70000 part-time work visas. So if Dr Yang would like to do the maths New Zealand has actually lost by 40000 jobs—40000 jobs have been taken from New Zealand students under the marketing ability of export education.So if we get back to the fact that export education spent $30 million to $31 million of New Zealand taxpayers’ money going overseas to promote export education which let me say is vital to New Zealand—the reputation of that education is vital to New Zealand—what would the House think that the State received back for that $31 million worth of investment? The State actually received a $4 million return from the training institutions not just universities but all private training establishments all training institutions from tier 1 to tier 4—why we have tier 3 and tier 4 training institutions when our reputation is vital overseas I have no idea but perhaps the Government could tell me. The Government received a $4 million return. That is because every training institution that receives a benefit from the $31 million worth of marketing pays $185 per year per institution—$185 per year per institution. That is what the New Zealand taxpayer received back for that investment. Apart from the fact that it is a woefully sorry return for the New Zealand taxpayer on the investment that they make at the same time it is supporting private businesses to gain a benefit from the overall New Zealand taxpayer dollar.Then there comes this issue of care and this is where the New Zealand Qualifications Authority needs to step up and where the New Zealand Qualifications Authority’s resourcing under these financial documents needs to be looked at quite strongly. What we have had from the AUSA the Auckland University Students Association is that it has had a 96 percent increase in students coming to it over the last few months for food parcels for legal aid and so on. That is all students—a 96 percent increase in all students coming to them in January and February. What is very interesting is that 55 percent of those people are international students. International students are coming to them for legal advice around sex-for-rent. International students are coming to them for food parcels. International students are coming to them for assistance in the workplace where they are being ripped off. And yet what we have is a lack of resourcing for the New Zealand Qualifications Authority to be proactive or to hold those private training establishments and those universities which hold our reputation in the palm of their hand—we have a lack of resourcing by that department to maintain the level of reputation that we need for what is an incredibly vital service.So when New Zealand First raises these issues consistently around the abuse of international students inside the workplace and the abuse of international students—and particularly female students—with the sex-for-rent scandal why was there no noise from any member of the Government or any Government department when there was an investigation into the sex-for-rent scandal that happened up in Auckland? That is a resourcing issue.The other issue that we have and I think is very interesting—and this is from the 2015 year—is a statement put out by the Hon Hekia Parata and the Hon Steven Joyce. The statement that they have made here is that “In addition New Zealand is one of only nine OECD countries where salaries for experienced tertiary-educated teachers compare favourably with salaries for people with equivalent qualifications in other occupations. The report shows that teacher salaries have risen faster in New Zealand than the OECD average since 2005.” I bring this to your attention because it relates to the financial documents but it is the spin that is put on these financial documents. Dr Yang just spoke about how well the New Zealand education system is doing insisting that it is because the National Government has invested so highly in it. But the National Government has underspent in special-needs education. The National Government has continued to fight for increased funding for all students. The National Government has continued and is continuing to this day to put barriers in the way of extension for gifted and talented students and also for our special-needs students.What is interesting about the statement I just read is that I actually had research done to try to prove the statement that was put out by Hekia Parata and Steven Joyce. The researchers’ comments are: “we cannot replicate the above statement with data. There is no data to support the statements made.” This again is what happens inside these reports and inside the conversations that this Government talks about with regard to education. Statements are made—they go off just like water down the road—but there is no substance to those statements. One can say again and again and again that one cares and wants to get five out of five students over the line. Yet the Government is not funding not spending not making sure that they support the organisations—the Government departments—that should be proactive to keep the reputation of our education system intact. Ensuring they have the right funding should be inside not only these financials but the financials going forward.TODD MULLER (National—Bay of Plenty): It is with great excitement and privilege that I stand and talk for the first time actually in my new role on the Education and Science Committee about the review of the education and science year. After the Opposition ramblings let us talk about children shall we and the incredible effort that this Government has made in partnership with the ministry and teachers around New Zealand to actually deliver a better outcome for our children in New Zealand. The other side might get lost in all its lamentations and study around the future of work—Carmel Sepuloni: No expectations; no aspirations.TODD MULLER: —but this Government will focus on ensuring that our children when they leave at the end of their education are fit—Carmel Sepuloni: That’s why the Deputy Prime Minister calls them all hopeless. No aspirations.TODD MULLER: —and ready to be able to take those skills to the world. That is why I am delighted to be able to talk to this review. Let us look at the results that Carmel Sepuloni is spurning from the other side. In 2008 just 7—The CHAIRPERSON (Hon Chester Borrows): Order! The member has achieved cut-through; can she tone it down a bit now?TODD MULLER: —short years ago—7 short years ago—only 68 percent of our 18-year-olds had National Certificate of Educational Achievement (NCEA) level 2 or equivalent. The other side did not worry; it is not particularly interested in the actual achievement of these young people but this Government over the last 7 years has lifted that to 84.4 percent. We get absolutely no credit; the Opposition is constantly looking for fault. These are real children who have achieved under this Government and we are still relentlessly unsatisfied with 84.4 percent. We will push on to make it higher because that is the aspiration Carmel of this Government. We are interested in children and in ensuring that they succeed and have the skills and resilience and attitude to be able to embrace their future. I can assure you that they will have very little interest in the future of work that you spend all of your hours lamenting and debating.Let us look at Māori and Pasifika children in particular. In 2008 over half of them were not achieving NCEA; now Māori are at 69.4 percent up 33 percent and Pasifika 75.2 percent up 48 percent. These are real numbers real children and it is making a fantastic difference to the people of New Zealand particularly to the people of the Western Bay of Plenty whom I have the privilege of representing. A number of our schools are in excess of that 84.4 percent target.The other issue I would like to cover off relating to education and science which I am sure will get the accolades that have been coming from the Opposition is the community of learning concept. What a fantastic concept that is. As a parent of three children who are in the education system at the moment I am very interested and supportive of that particular programme because I want to know how my children are performing against the national standard of reading writing and arithmetic. In particular I want to understand how their performance continues through their lifetime of educational attainment particularly in the years 1 through to 13. I want to know what is working I want to know when they are under pressure and above all I want to know that their data of performance is actually being followed year by year teacher by teacher school by school.I am not interested in a cliff face where they go from a primary school to an intermediate and suddenly it is like a new child and we have got to work out who they are. I expect the education system of the Western Bay of Plenty to have my children at the core of its focus. For every single step that they make in their academic attainment and challenge I want it databased I want it evidenced and I want the teachers to be able to understand how they are succeeding and where their challenges are. If as a group of teachers they can see that my child or a group of our children is under pressure in a particular area be it science or education I want to make sure that those teachers then work together drawing out best practice to ensure that they can apply what is the best in the education system and in particular our area to improve our children.I know when I look at the face of Stuart Nash over there that he fundamentally agrees with what I am saying because it is common sense it is intuitive it is evidence-based and it has got our children at the core and heart of this policy. That is why when we sat and listened to this in the Education and Science Committee we were so impressed with the analysis that we were having put in front of us. The other thing that really impressed me about the community of learning and the teachers who are involved with that is that they are seeing data and evidence as their friend—Hon LOUISE UPSTON (Associate Minister for Tertiary Education Skills and Employment): I want to just start by focusing on an area that the Opposition is clearly interested in and that is workplace literacy and numeracy. I want to follow my commendable colleagues and particularly the chair Dr Jian Yang—I want to thank him for his work on the Education and Science Committee. I thought it would be useful to put some statistics on the table. The findings from the Adult Literacy and Life Skills Survey of 2006 showed that around 43 percent of New Zealand’s adult population has less than optimal literacy skills and 51 percent—Carmel Sepuloni: But why did the National Government cut adult education?Hon LOUISE UPSTON: —has less than optimal numeracy skills—2006. So it is very clear that one of my ministerial colleagues is clearly lifting achievement for primary school students.I have been clearly talking about the examples of those in the workplace who unfortunately do not have sufficient workplace and literacy skills to do well. That is why I thought it would be useful just to start talking about the fact that we do actually have a clear - funded programme for those who unfortunately the previous Government left behind. The previous Government was not able to provide them with the fundamental skills in literacy and numeracy they require which is why we have a workplace literacy and numeracy fund. It helps employers provide for their employees whatwe know on this side very clearly are the basic skills that they need to do well.But I want to just look at the tertiary system as a whole and say that at the end of the day as we on this side of the Chamber know the higher the level of education that an individual is able to obtain the greater the opportunities they have through tertiary education. One of the myths unfortunately that the Labour Opposition has been putting out there concerns the amount that the taxpayers of New Zealand pay to fund tertiary education. The person in the street whether they are the person who works in the petrol station or those who serve the coffee in the local cafe—they are the ones who fund tertiary education in New Zealand. For an individual student who is studying at university for example and who has a student loan 70 percent of the cost of their tuition is covered.I think it is useful just to put some figures on the table for taxpayers because the Opposition tends not to include them. I want to put this figure again. Taxpayers subsidise around 70 percent of the costs of tuition for—[Interruption]The CHAIRPERSON (Hon Chester Borrows): Order! I would encourage the member to at least seek a call if she wants to give a speech. In the words of a previous and sometimes esteemed Speaker Speaker Hunt interjections should be rare and reasonable and hopefully witty. I would ask her to dwell on that before she tries to intervene again.Hon LOUISE UPSTON: As I was saying New Zealand is also the only country in the OECD that does not charge interest on loans after graduation. If you look at the generous support that we provide—well actually the taxpayers; those who work for New Zealand and pay tax and provide the opportunity for students to study at tertiary level—the Government spends 48 percent of its tertiary education budget on financial aid to students. The OECD average is only 22 percent. So we provide 48 percent—as opposed to 22 percent—which is I think a really important and generous package recognising that the higher levels of education for young New Zealanders provide them with greater opportunities.I did want to touch on just one other aspect. I think it is important that not only are we delivering higher levels of education but we are also focused very clearly where industry needs it. One of the exciting developments is the ICT grad schools of which we are funding three. This is recognising clearly that we need to make sure that we are connecting students with educational providers to shape the development of ICT and also research and development. So that is these ICT graduate schools.The other area that I would like to touch on is the focus on the areas of science technology engineering and mathematics. Again we need to focus our efforts on training our young New Zealanders in the areas that we know are high growth and high demand and also have higher wages. So we need to lift the participation rate in science technology engineering and maths and we can clearly see in terms of a report around domestic graduates in 2011-14 that there is a greater proportion of degree-level domestic graduates completing qualifications in these areas which is significant. I am really pleased that we are also lifting the participation rate of women in these areas to make sure that they achieve those equal opportunities as well.CHRIS HIPKINS (Labour—Rimutaka): Thank you very much for the opportunity to take a call on this. I want to correct a few things that the Minister the Hon Louise Upston just mentioned. The first is that I think even a relatively cursory glance at the finances relating to tertiary education would show that on average on a per student basis the Government probably funds somewhere between 50 to 55 percent of the cost of a tertiary qualification and not the 70 percent that the Minister just mentioned.A relatively cursory glance at the statistics released by Universities New Zealand would also show that over the course of a graduate’s lifetime—or a trainee’s lifetime if it is someone doing an industry qualification—the amount of extra money that they would earn and the extra tax they would pay more than covers the cost of providing the subsidies for their education and more than covers the cost of meeting that additional component should the Government of the day choose to do so as the Labour Party is proposing. So what we find is that the higher the skill level of the population the higher the tax take we actually get. The Government ends up fiscally better off overall from having a more highly educated population because it collects more tax because they earn more money as a result. Actually the numbers simply stack up. Even Steven Joyce would acknowledge that because he is the one who is touting all of the figures to justify doing certain courses of study.But Universities New Zealand has gone so far as to calculate not just the post-qualification earnings but also the post-qualification tax take. And the post-qualification tax take of course goes up as well. It shows that actually an investment in tertiary education—whether it be a university degree a polytech programme or an on-the-job qualification—pays back to the Government more than it costs many many times over and even if we make it free. So it actually makes sense for the Government to be investing in that. This is a Government that claims it is taking an investment approach to social services but not when it comes to education apparently. I think the evidence there is pretty clear regarding the provision of free post-school education: that it stacks up. Of course if it did not then I am sure all those members on the opposite side who benefited from a free post-school education when they had the opportunity to get one would be clamouring to pay the money back.I want to turn instead to the issues around the school sector. I want to commend the people working in schools for the improvement in National Certificate of Educational Achievement (NCEA) results. I think they definitely deserve a commendation for that. I do want to say that when it comes to NCEA it was a proposal floated by the then National Government in the 1990s adopted by the last Labour Government and continued with by the current National Government. I think NCEA is the right qualification system for New Zealand.I do however think that we need to be mindful as we push forward to encourage more and more students to gain NCEA qualifications that we are ensuring that they are on meaningful pathways that are going to lead them to something at the other end of it—because it is possible to increase the number of students getting NCEA qualifications but not necessarily getting better outcomes when they leave school. The analogy that one of the people who works in the education system used with me is that it is like going to the supermarket with an empty basket: you can fill up your basket with toothbrushes but you cannot then go home and bake a cake. If you look at NCEA being the same—if you fill your basket with a particular type of credit that is not necessarily going to give you all of the ingredients that you need to then go somewhere else once you have got it.So now that we have got the education system on a pathway to improving NCEA results which is a good thing we need to turn our attention to what is in that. What is actually in the basket? What are the skills and attributes that we are giving the kids when they leave school so that they are actually going on to do something meaningful whether that is employment or whether that is further education or training? That is where I think the next big challenge and the next big step for our focus on improving results must be because a qualification in itself—and we have had some good interchange on the 85 percent target for NCEA level 2—is not enough. This is the critical point. We could hit the target and get 100 percent of kids getting NCEA level 2 but if they are making up those qualifications with the wrong credits which are not then leading them on to another pathway are they actually better off? I am not convinced that they necessarily are.ADRIAN RURAWHE (Labour—Te Tai Hauāuru): Tēnā koe Mr Chair. Thank you for this opportunity to speak in this debate. In the Ministry of Education’s annual report Māori are referenced 108 times which is quite a lot. I think in carrying on and contributing to this debate it would be remiss of us not to acknowledge that. One of the big issues—and I support what my colleague Chris Hipkins has said around the National Certificate of Educational Achievement (NCEA)—is that although the NCEA results for Māori have improved as it says in the report “disparity of achievement remains a challenge.” There are a number of things that the Ministry of Education has been doing. For example it has been working with 11 iwi which have worked with around a hundred whānau each to develop Whānau Education Action Plans.My contribution to this debate around that is that that is great—but there are a lot more families out there and I think that maybe we are just tinkering around the edges a bit. There needs to be a lot more engagement at that level for it to be successful. I think the really important thing also is that plans are great but if you have not got the means to implement them then they become just ideas on a piece of paper. So we need to look at how that can be done and from my point of view I support what Chris Hipkins has just said: free post-school education would be a huge contributor to making those plans work for our people.Over the years we have had this thing called historical and intergenerational trauma. That means the population today—this generation—has inherited the hurt and the problems that have been passed down generation by generation. Unfortunately we let that impact on our lives far too much. I think it is more important for us to acknowledge that and to actually put things in place that address those issues. That is why I stand to say that the 305000 children living in poverty today are a huge barrier—and a huge number of those children are Māori children—to overcome in an education system that should be addressing all of those issues for all children.Today we heard the opinion of the Deputy Prime Minister around a cohort of people. I would suggest that a number of those people are brown people. And to systematically write them off as being “pretty damned hopeless” is absolutely not good enough. No matter how you characterise that group there is no doubt about it that Māori and Pasifika make up a huge part of that group. I am really disappointed that this House has accepted the answers from the Deputy Prime Minister around that because it is actually not good enough. I think that there are things that need to be addressed within the education sector—although there are a number of programmes within this annual report that deserve credit—and I would say that it needs to go a lot wider and it needs to include a lot more people for them to be successful.Unless we make major major changes to the way that we deliver education in New Zealand then these results here as part of the annual report will continue and that gap will just move incrementally along with everyone else. So we might make some gains but unless we address that fundamental issue I think that we are doing the future generations a disservice. Thank you.Hon HEKIA PARATA (Minister of Education): Ā tēnā koe Mr Deputy Speaker otirā tātou huri noa i tō tātou Whare.[And so greetings to you Mr Deputy Speaker and at the same time to us throughout our House.]I am very pleased to be able to take a call in this annual review and to talk about the progress that has been made in education generally as well as specifically in early childhood and secondary education and as my colleague Minister Upston talked about in adult education. New Zealand has a wonderful education system and it has served generations of New Zealanders very well. One of the truly inspiring dimensions of our education system is our willingness to recognise that we cannot be complacent about what we have got that we have constantly got to be building on it paying attention to what is not working and being courageous about making changes that will effect greater and better outcomes for all of our kids.Our Government has taken up that challenge. We have set ourselves Better Public Services targets that make us publicly and transparently accountable for what it is we are doing. We understand that at every point in the education journey—as my colleague Todd Muller said the whole-of-life journey of his children of all our children of our grandchildren and of all young New Zealanders. So we have focused on early childhood and said that based on all of the evidence and just common sense we need to ensure that most if not all of our early learners have the opportunity of a strong start in education.We led the world in developing an early childhood curriculum Te Whāriki and it is our challenge to make sure that every kid gets the opportunity to experience the learnings under Te Whāriki. So we set ourselves a target that 98 percent of all kids starting school by the end of 2016—this year—would have participated in early childhood education. We are at 96.4 percent as of the end of last year so we still have a way to go but we are very focused on that. At primary school we now have really good information emerging from national standards as well as the richer information that teachers routinely gather to inform their practice to make sure that they are undertaking what the former Chief Review Officer of the Education Review Office Dr Graham Stoop said is the core business of schools which is to cause learning to happen and to know that it did—to cause learning to happen and to know that it did.Under this Government we have built PAI the Public Achievement Information framework which gives us real measurable evidence on how well learning is being caused to occur for which children and whom we need to target resources to to ensure that those who are most at risk of underachievement get the best chance possible. We have seen that data incrementally improve each year as well. At secondary school level as a number of speakers have already acknowledged this evening we have seen tremendous growth—perhaps more than we even anticipated so much so that in respect of our Better Public Services target that says that 85 percent of all 18-year-olds by the end of 2017 have at least our minimum qualification of National Certificate of Educational Achievement (NCEA) level 2 we know that at the end of last year we were at 84.4 percent. So we are 2 years ahead on that target.And here is where I would like to find unusual concourse with the Opposition spokesperson for education: it is really important that it is a meaningful qualification. I absolutely agree—no argument there whatsoever—because we want to ensure that those 80 credits that young people have do come together in a coherent fashion that allows them to step out on the next part of their educational journey whether into employment whether into workplace internships whether into more training whether into higher academic studies and that they do so on the back of a very strong minimum qualification. NCEA heralded a profound shift in our culture in New Zealand because what it did was move away from what many of us in this Chamber tonight experienced which was the rationing of educational success. In order for some of us to be successful the system was predicated on others not being successful. NCEA is a profoundly democratising qualification because it anticipates that anyone—everyone—can be educationally successful at any time in their lives.I recall that when it was first introduced I arrived back at Wellington Airport from Ruatōria—when I say I arrived back in Wellington I was coming from Ruatōria—and I remember getting into a taxi the font of all local wisdom. I said to the driver: “What do you think of this new qualification?”. He said with disdain in his voice: “I don’t like it.” I said: “Why is that?”. He said: “Next minute anyone could get a qualification.” I thought that captured right there this idea that we had inculcated in ourselves through the system we did have that we had to ration educational success. The idea that anyone can be successful is I think an absolutely valuable part of who we are as New Zealanders. So those “anyones” are increasing under this Government.Overall we have seen increases. For Māori we have seen them improve as we have said to just under 70 percent. That is good but it is not great and there is still work to be done. We have seen Pasifika grasp the opportunities and climb even higher. That is good but that is not great and we have got more work to do. This Government is absolutely interested in every child. Whether they are most at risk whether they come from homes where they get strong support every child can grow into their potential. That is the challenge to our education system and it is one that I as Minister of Education am absolutely and relentlessly committed to. We know that that occurs mainly through the quality of teaching and leadership in school through the strength of family and parents and whānau involvement with their kids’ education outside of school and through the expectations we hold for each and every one of them. And that is free. We can just have high expectations and it costs nothing but the effect it has on young people is extraordinary so we need to keep holding those high expectations.We have invested in the Communities of Learning which are whole-of-pathway approaches. The great thing about this policy is that no school loses anything. It does not lose its unique identity. It does not lose its roll. It does not lose its address. It does not lose its teachers. What it gains is the opportunity to collaborate over the transition pathways between early childhood and primary primary and secondary and secondary and tertiary. It also means that we can systematically invest in collaboration between our professionals who under the most recent OECD report indicated that we have in our education system one of the highest levels of professional integrity in the world. It is not something we are surprised about because we know that we have a very trusted profession but we have got to constantly push them as well to improve their practice so that all kids can routinely be successful.We are currently consulting about legislation in the update of the 1989 Education Act. It has been almost 30 years since the tremendous reforms under Tomorrow’s Schools were introduced. We know now what the strengths of those are and we know also what some of the weaknesses are. We need to maintain the strengths—self-management local decision-making parents involved in their children’s education—while also overcoming some of the weaknesses which are from the very extreme competitiveness where we see resourcing going to the size of the roll rather than to the size of the educational challenge. We in Government are very focused on how we do that and we are not leaving behind those most vulnerable. We spent all of 2015 looking at the update of special education provision and we now have got going 22 projects across New Zealand to ensure that those kids who are most vulnerable who have the highest need whose parents want the best for them every day—how can our system more routinely make it easier more accessible more timely and more supportive? We are doing all of these things. We are trying to make sure that every child gets the very best opportunity under this education system.Members of the Opposition also talked about what we are doing in terms of iwi. Although the member may be aware of 11 iwi in fact the Ministry of Education has 56 iwi partnership arrangements. Each of those is different as it should be because iwi are interested in particular as well as common things. We are working with them across the country. In addition we have invested in 16 Pasifika PowerUP Plus stations where we are working with Pasifika communities: Pasifika churches Pasifika sports teams. We have absolutely understood that we need to go to where the kids are. We are seeing success and we want more of it. Kia ora.Reports noted.Environment SectorSCOTT SIMPSON (Chairperson of the Local Government and Environment Committee): It is a pleasure to be leading off the debate on the Environment Sector in the annual review debate because as chairman of the Local Government and Environment Committee I have got the privilege of leading a select committee through some of the most important legislative work that I think this Parliament will be doing in its term in the 51st Parliament. We are I think making wonderful progress as a Government on some very important material that will help enhance preserve and maintain our natural environment which is so important to all of us as New Zealanders.The select committee had an opportunity to conduct several reviews recently and I want to focus on just two of those: that of the Department of Conservation so ably led by the Minister of Conservation the Hon Maggie Barry and the Director-General of Conservation Lou Sanson and also that of the Ministry for the Environment led by my friend and colleague the Hon Nick Smith and Vicky Robertson as the chief executive. These are two of the most significant State agencies that are involved with ensuring that in years to come our natural environment will be in as good a condition—or hopefully in a better condition—than it is today.I want to just focus on a couple of the matters that were brought to our attention. High on that list of course are the further reforms to the resource management legislation currently before the select committee. I was delighted that both agencies focused on this during their submissions to us at the select committee and both gave the committee encouragement to pursue its work in this area because at the heart of the work that we do on the Local Government and Environment Committee is a distinct and realistic understanding that our natural environment is actually our greatest asset as a nation. We on the Government benches absolutely sincerely believe that a successful economic policy can go hand in hand—in fact it must go hand in hand—with a successful environmental policy and position. We know that when those two matters are connected and are in sync we will be able to achieve for all New Zealanders a cleaner brighter future.This is a Government that is providing real leadership on environmental issues—real leadership—and it is fair to say that this Government has done more to maintain protect and enhance New Zealand’s natural environment than any other Government in the history of New Zealand. I think as a Government member we can all be proud of that as parliamentarians but particularly Government members can take a lot of pleasure in that achievement. And there is more yet to come because at the heart of this is the Government’s Bluegreen environmental vision. It is an understanding that at the core of our quality of life our national identity and our competitive advantage lies our natural environment. Since becoming the Government our party has simplified resource management legislation. We have enhanced opportunities to ensure that the natural environment is protected.I have the privilege and honour of representing the Coromandel electorate and it is without doubt one of the most beautiful parts of the nation. The people in the Coromandel—[Interruption] The member for North Shore confirms that the beaches of the North Shore are not quite to the standard of the Coromandel and I am sure that that will be a debate that she will continue to be on the back foot on in years to come.However we have done an awful lot in a lot of areas. One area that was highlighted during the reviews was the announcement on the legislation that pertains to the creation of the Kermadec Ocean Sanctuary. Notwithstanding issues that will be proceeding through the judicial system the select committee is continuing its good work on this piece of legislation. The Kermadec Ocean Sanctuary will be created—620000 square kilometres of no-take ocean reserve for the future of all New Zealanders and in fact for all citizens of the world. That is a land mass twice the size of New Zealand and about the same size as the footprint of France so this is deeply significant for us as a Parliament and also for us as citizens of the world.CATHERINE DELAHUNTY (Green): Tēnā koe Mr Chair. Tēnā koutou o Te Whare nui i tēnei pō.[Greetings to you of the great House this evening.]Everyone always says it is a pleasure to take a call. I do not know whether it is a pleasure. It is an opportunity but sometimes it feels less than pleasurable because when we come to the environment of this country and the annual review of the Ministry for the Environment—which I am going to speak about—it is not really that pleasurable to discuss the state of New Zealand’s water.It is interesting because Scott Simpson the previous speaker was talking about the Coromandel which is where I also come from. Everything that we have in that place we fought for. Every bit of environment every beach every river and every mountain that was basically under application to be mined we have fought for. When I say “we” I mean me and my mates. So I do take pride in being part of a community that stands up for the environment and I know that the environment is only as good and as strong as the community.As for the annual review of the Ministry for the Environment I was not on the Local Government and Environment Committee but I did read the report on the annual review. The ministry has been focused on the environment but to what end? There was a lot of rhetoric a lot of talking a lot of slogans and a lot of discussion of fresh water. In the annual review the ministry said that one of its goals is to make sure that fresh water is well governed and sustainably managed for maximum benefit for the future and the present. Unfortunately in its national reporting it also had to be honest and admit that 62 percent of our monitored rivers are too polluted to swim in. So it is hardly an indication of the success of the Ministry for the Environment’s track record let alone of the Government of the day that we are at this rather parlous state with our New Zealand rivers.The ministry has spent a lot of time saying that it is going to provide national direction and yet there is a fight going on in this country. It is going on community by community river by river and freshwater consultation meeting by freshwater consultation meeting where the ministry has to sit there and watch the Minister for the Environment say that it is impossible to meet the goal of having swimmable rivers.When I read the report on the annual review discussion that was held at the select committee it indicated that members of the committee had raised issues around achieving swimmable rivers. The Ministry for the Environment officials said that it was a challenge and they were going to do their best to think about whether it was possible. It is a bit awkward for them because the Minister is going around the country saying that it is impossible to have swimmable rivers because of—guess what? Birds ah volcanic ash—these are the reasons being given for why we cannot have swimmable rivers.Aotearoa has always had birds. It has always had rivers that have some volcanic ash in them. That is not the issue. The issue that has led to 62 percent of monitored rivers being unswimmable—which the Ministry for the Environment is saying that it is proud of but is also saying that it is recording with regret—is that we have created land uses and we have trashed the environment. We have trashed our rivers through intensive agriculture we have trashed our rivers through ways of disposing of sewage that are far from optimum and we have treated rivers as drains. So if the Ministry for the Environment is going to change this it is going to have to tell its Minister to step up to swimmable.Swimmable is what everybody outside the ministry and the Government wants. They want their mokopuna in that water they want it clean enough to put their heads under they want national standards and they want the National Policy Statement on Freshwater Management to be amended so that we have a goal of swimmable and not boatable or wadeable. All around the country the ministry officials who participated in this review have had to travel with the Minister and listen to the community—tangata whenua in particular—telling us either at the meetings or on the hīkoi that came to Parliament less than 2 weeks ago: “We want swimmable. We don’t want wadable.” In fact the people would really like to be able to gather the food again. I am very lucky that I live next to a river where the tuna are healthy but I have not seen a native fish for some time and I think that this is the issue.The Ministry for the Environment needs to be the guardian of these resources. It is meant to provide a pathway for achieving this taonga to be passed on in terms of fresh water to future generations and it does make great play of how important water and fresh water is to its strategy. But while we have a national policy statement that talks about having just a non-aspirational low-level standard of boatable and wadeable we are really not going to get there.So it is with some concern that I read the rhetoric of the collaboration that it is talking about. A lot of resource has gone into holding Land and Water Forum meetings and what they call providing education—Hon DAVID PARKER (Labour): I want to talk in the time that I have if I can about water climate change renewable energy and the Resource Management Act. I love that quote from Herman Daly a World Bank economist who said that the economy is a wholly owned subsidiary of the environment and I think that is true over the longer term. If we think about what the major parts of the environmental challenges that we have in New Zealandare as the last speaker Catherine Delahunty said you really cannot go past water and I would add climate change.Let us think about what has happened with water. There is a very sad history of the decline in water quality in New Zealand. It goes back to the Resource Management Act being passed. There was full delegated authority to regional councils to control the degradation of our rivers; they did not. They failed in their duty in part because I think they were surprised by the speed of the transition to more intensive farming practices which were caused by the increase in dairy prices following the Doha round of the GATT actually.In response to that the last Labour Government started to do something about it and then the whole thing got sideswiped by the foreshore and seabed controversy. The Labour Government made mistakes. Some mistakes were made by the National Party rarking things up and by Hone Harawira rarking things up on the other side. Anyway the terrible confrontation that we had over the foreshore and seabed left Māori feeling very suspicious that everything that we did in respect of fresh water was somehow going to try to usurp their claimed interests in fresh water. It took some 2 years for the Government to separate water allocation from water quality and by the time we did it we put the national policy statement into a process under the Resource Management Act. It did not pop out until just after the 2008 election.The effect of that national policy statement which was drafted by former Principal Planning Judge of New Zealand Judge Sheppard was to say that clean rivers ought not to get dirty dirty rivers ought to be cleaned up over a generation and in order to stop clean rivers from getting dirty we actually needed to stop and control intensification of land use. It is no longer the councils and the factories that are causing most of the pollution of our rivers; it is actually non-point source discharge which is the diffuse pollution caused by increasing numbers of cows mainly but also sheep and deer on our farms.What did National do? It spiked it. It put in place an inferior instrument that to this day does not control the increasing intensification of land use in New Zealand which is why in places like South Canterbury we have a continuing decline in the quality of our rivers not just in the lowland—it was worst there first in the lowland rivers—but also in the mid-country. Until we go back to that form of national policy statement—the Judge Sheppard form—we will not get our river quality under control.I believe that most New Zealanders want their rivers to be clean enough to swim in. I believe that most New Zealanders think that the most important river to them is the one that is local to them which they want to swim in. They are the two messages that I parley around this country and the people respond and say that they agree with the Labour Party that the standard should be swimmability and it should be for their local rivers. The simple proposition is that if their local river is clean and my local river is clean then all of our local rivers will be clean. We can do that over a generation but today we could stop our clean rivers from getting dirtier if we had the form of national policy statement that was promoted by Judge Sheppard.The National Government under Nick Smith says that you cannot do that—you cannot have a swimmability standard because when rivers are in flood you cannot swim in them. What nonsense—no one is suggesting that the standard is for rivers in flood. He says that some rivers occasionally have seagulls defecating in them—or in their nests on the banks of the Ashburton River which is another example I have heard used. Well again we are not trying to stop natural challenges to water quality; we are actually saying that it is the human-induced ones that we need to control.I want to turn to climate change because the performance of this Government on climate change shows a similar weakness to what it has done in respect of fresh water. Before doing so I will just say that I am a bit tired of Nick Smith standing up and claiming credit for the Taupō and Rotorua restorations which were approved by the last Labour Government and funded by us in our Budgets. I have to say that I opposed both of those initiatives in Cabinet because I did not think that we should have to pay farmers to stop polluting but anyway I lost. I think my colleagues including Ruth Dyson were right because it was actually a bit of money from central government that actually facilitated the processes that have led to improvements in Taupō and Rotorua.Climate change—well who is the Government preferring the interests of in climate change? Again it is farmers. It has an economically irrational emissions trading scheme. The Government has allowed the price of really its only instrument to control the growth of emissions to collapse to close to zero after the second Kyoto Protocol period did not happen and the price of carbon dropped to zero. It did not do anything to stop units coming in. Even worse than that the Government excluded agriculture which is where 50 percent of our emissions come from.What is the effect of that? Increases in agricultural emissions become a burden on the rest of the economy and a burden on the environment and you get the land use signal wrong between increasingly intensive farming practices which produce emissions and forestry which reduces emissions. It is economically unsound what the Government has done in respect of the emissions trading scheme.The Labour Party says that we should have different targets for carbon dioxide emissions than the target for reduction of methane and nitrous oxide emissions from agriculture which make up 50 percent of our emissions but are harder to reduce to zero. We say that you should have a 40 percent reduction target below 1990 levels in respect of the carbon dioxide emissions from transport and power energy production and factory emissions and the like by 2030 and a different target in respect of methane and nitrous oxide because you cannot reduce them to zero in the same way but you certainly should not be increasing them. You certainly should not be keeping them outside the emissions trading scheme. Sure the agricultural sector needs high levels of free emissions rights but you must preserve the marginal price signal that penalises that industry for increases in emissions and rewards them for decreases. That is how an emissions trading scheme works.In respect of renewable energy this is an illustration of how national policy statements work. The last Labour Government promoted a national policy statement on renewable energy. Since then our proportion of renewable electricity has gone up from 57 percent to 80 percent. That was through a combination of things—including the national policy statement and including the price of carbon and various things to improve the grid investments that the Labour Government recognised were necessary to get distant renewables to market and therefore to give the generators the confidence to invest in new renewables—and it has worked. Gerry Brownlee tried to abolish the target of 90 percent renewables by 2025 but luckily the Prime Minister saw fit to throw him out of that role and put Hekia Parata in that role instead and Hekia Parata had the good sense to keep the target that the last Labour Government established.The Resource Management Act—after all these years we still have National blaming the Resource Management Act for New Zealand underperforming economically. We have per capita growth rates of close to zero after 8 years of the National Government. After a couple of attempts to amend the Resource Management Act it still blames that as the cause of the economic underperformance of this Government. Luckily because the Māori Party Peter Dunne the Greens New Zealand First and Labour combined to vote 61 votes against changing Part 2 of the Resource Management Act—32 of those 61 votes coming from the powerful Labour Party I note—the Government did not get to ruin Part 2 of the Act.There are some other changes that we are working through under the capable chairmanship of Scott Simpson on the Local Government and Environment Committee. I am enjoying that process. We have got to fix things. I am suspicious of some of the collaborative processes—some of the stripping out of appeal rights for people whose interests are adversely affected—but there are also some good things like templates so long as they go to form not content.Overall I think the National Government has to be judged harshly for a decline in water quality and increasing agricultural greenhouse gas emissions. It has done all right in continuing what we started with renewable energy and in its Resource Management Act reforms this time round—I think we can probably make a decent job of them at the select committee. I hope if we have cooperation from members we can get to a decent outcome there.My final point—estuaries. Our wetlands in our highlands and in our lowlands—our estuaries—are our rarest landscapes. So many of them have been converted to agriculture or polluted. They are the filters through which we trap silts and things and stop them going out to sea. At the moment—EUGENIE SAGE (Green): In my brief call I would like to talk about climate change and if I get time the Resource Management Act. The report of the Ministry for the Environment for 2014-15 talks about an outcome statement being that “New Zealand becomes a successful low-carbon society that is resilient to climate change impacts on its climate economy and lifestyle”—a very laudable outcome with which the Green Party would agree. We have got $3.4 million having been spent to support policy making by Ministers and another $7.5 million for resource management policy advice yet all of this money has failed to deliver decent advice on adapting to climate change. We have seen that the National Government has got an extremely weak stance on reducing our climate emissions and also it is not ensuring that we prepare for the impacts of climate change such as sea level rise.Five months ago—last November—the Parliamentary Commissioner for the Environment delivered a report that made eight recommendations on how we could start to tackle the impacts of sea level rise yet the Minister of Finance Bill English seems to think that sea level rise is speculative. The Parliamentary Commissioner for the Environment recommended that there be a working party established to look at the fiscal and economic implications of sea level rise but according to Minister English there are other more pressing more immediate issues. That is despite the fact that the parliamentary commissioner identified a $20 billion cost to replacing just the homes in low-lying areas that are potentially at risk from the impacts of coastal erosion more coastal flooding and a higher water table associated with rising sea levels. So the Government has failed to act there.The Minister has also failed to act in providing clear national guidance to local authorities in terms of how they deal with sea level rise. The Government needs to provide that national direction under the Resource Management Act. What have we seen? The most recent guidance for local authorities in terms of the amount of sea level rise that they should plan for dates back to 2008 under the former Labour Government. It talks about a rise of 0.8 metres by 2100 yet since then we have had several reports from the Intergovernmental Panel on Climate Change. We need new guidance. I understand it is being developed in the ministry but we have not seen it yet.I was at a seminar just last week in a room full of quite anxious planners property and insurance experts and scientists where they were highlighting that the risks of the Antarctic and Greenland ice sheets melting can significantly exacerbate the rate of sea level rise. Potentially just from the West Antarctic ice sheet alone it will be 2 metres of sea level rise in a generation yet what is the Ministry for the Environment doing under this Government? It is failing to ensure that we have consistent national direction with a national policy statement on sea level rise and natural hazards.It is leaving it to coastal communities to deal with this challenging issue on their own. We have seen what happened in Kāpiti and in Christchurch when those councils tried to take a long-term view and tried to include provisions in their plans in order to control development in areas that were at risk of coastal hazard and at risk of rising seas. There was a substantial push back and both councils withdrew those provisions. So the National Government is being completely irresponsible by failing to provide that consistent national guidance. It is leaving it to the communities in low-lying areas of Napier on Wellington’s south coast in South Dunedin and in the eastern suburbs of Christchurch to have to cope on their own.We had the Minister for Climate Change Issues admitting in the House yesterday that councils are not providing enough guidance to communities about the potential impacts of sea level rise and the risk to property values. How are we going to solve that? The Government has got its head in the sand. It needs to tackle this issue because as the Parliamentary Commissioner for the Environment has said we have got time to plan but we have to start planning now. Her report came out 5 months ago and we have seen no action by the Government. There is a $20 billion cost for the replacement of homes yet the finance Minister has failed to set up a working group to look at this in more detail. It may be that the Government has got an economic policy and that like the costs of the rebuild after the Christchurch earthquakes it thinks that somehow this is going to spur economic activity if it leaves communities to be inundated and having to cope with issues on their own.Hon NICKY WAGNER (Associate Minister of Conservation): It is an enormous privilege to live in a country like New Zealand which has such a magnificent natural environment and all Kiwis have special places that they enjoy. We have magnificent birds trees rivers and lakes and we are privileged I think to have such easy access to these magnificent places.A third of New Zealand is in public ownership known as the conservation estate and I think I would like to spend a few moments just to reflect on the good work that the Department of Conservation (DOC) is doing in looking after that conservation estate. Those national parks our regional parks our reserves our lakesides and our riverbeds are something the world is enormously envious of and thousands of local New Zealanders tourists and travellers come here to explore and enjoy them.I think DOC has been doing particularly interesting work in terms of our native birds. It says that if you want to be a conservationist in New Zealand you need to be a killer and you need to be a very keen killer because our predators—rats mice stoats possums and feral cats; all those imported animals that have come to New Zealand—prey on our special birds and unless we kill them we are going to lose the birds themselves. I think the key issue here is that our birds are particularly vulnerable to these pests because they evolved without these animals in our country.Fortunately Kiwis as New Zealanders love our birds and we have got thousands of New Zealanders who go out and help in that conservation work and we have got businesses and organisations that are keen to be part of that conservation. Organisations such as Kiwis for Kiwi have done magnificent work in terms of turning up the number of kiwis being born and looking after them once they have been born. In the wild 90 percent of kiwi chicks are killed by predators but if we look after them properly up to 80 percent of them can fledge and have an opportunity to live in the wild again.We have just had the most successful breeding season for kākāpō. Kākāpō are now breeding this year in three different sanctuaries around New Zealand and we are thinking that we may have up to 40 new chicks which makes an enormous difference to this small population. On top of that the whio—the blue duck—has doubled in numbers since 2011. We now have more than 600 birds and we believe that they are back from the brink of extinction. I think we can celebrate the fact that ordinary New Zealanders have the opportunity to see such unique birds as takahē kāka kea mohua rock wrens tūī kererū—you name them—and many many many more. New Zealand is so fortunate with the birds that it has.We are also a Mecca for seabirds and migratory birds. I have just spent some time at Pūkorokoro Miranda Shorebird Centre where DOC was signing a memorandum of understanding with the Chinese Government to protect the godwits and the red knots which have come all the way from Siberia and the Arctic Circle. They fly via China all the way to the Coromandel Peninsula and it is wonderful that the Chinese Government is prepared to work with New Zealanders to protect their environment on the way and their habitat so that they actually can complete that journey.While I was there I had the particularly fortunate experience of seeing over 2000 wrybill birds. A wrybill is a bird that is unique to the Canterbury area for breeding—it breeds on our braided rivers—and if you are fortunate and you go out there with a birdwatcher you might see one or two on the braided rivers. They breed there but then they go to the Coromandel during the summer and they go in large flocks. I saw over 2000 of those wrybills. The wrybill is unique because it is the only bird in the world that has a beak that turns or bends—that is it is wry at the end—and it uses it to look for grubs and things under the stones in the braided rivers.I would just like to make the point that DOC is doing a very good job in partnership with numerous people to protect these special species to make New Zealand the country that it is and to reflect on our natural environment. Kia ora.CLAYTON MITCHELL (NZ First): Thank you for the opportunity to rise tonight to speak in the annual review debate on the Environment Sector specifically on the Department of Conservation (DOC). When I thought about my contribution tonight I thought it was a good idea that I start with the finance Minister’s speech last year on the Budget debate and some of the comments that he made in relation to that. He was talking about this Government having tighter controls on spending and a strong focus on value for money. He also went on to talk about the Government’s fiscal priorities and some of those priorities were: “Returning to surplus this year and maintaining surpluses in the future.”—I would certainly like to see how that goes and the jury is certainly out on that mark—and “Reducing net debt to 20 per cent of GDP by 2020 including repaying debt in dollar terms …” I wonder whether that includes selling off State houses selling off banks and further sell-offs of our power companies to try to get to that surplus and maintain it. Finally we go on to: “Using any further fiscal headroom to reduce debt faster.”I have to bring it to the attention of the Committee that there has been a real shortfall in that Budget speech from last year despite all of the MPs on the other side who take great pleasure in telling us what a fantastic environment we have got—and I do agree with the Minister that DOC does a magnificent job. However the reality is that tourism which has been driven so heavily through our conservation—through our beautiful rivers wonderful lakes mountains and our walks; the ecotourists who come to New Zealand for this beautiful country—is certainly not being taken seriously by the Government and is not being funded adequately.I bring your attention to page 13 of a 13½ page speech which has two sentences dedicated to looking after the department. It says: “Kiwi are New Zealand’s most iconic birds but numbers are declining every year. The Budget contains $11 million of funding over four years for breeding and predator control programmes run by community groups as well as the Department of Conservation.” The Government has not increased funding. In actual fact it has taken it from one department being the Natural Heritage Management System and put that into the kiwi fund. It is just a shuffling of paper and relocation of funds. If it really was taking conservation seriously it would adequately fund this very very important organisation which has seen job cuts.We have seen the closing of walks and tracks the closing of DOC huts and of course restructuring of $12.5 million which has just been absolutely worthless unless you are talking about that restructuring losing 100-plus jobs. If you were trying to create low staff morale and job uncertainly I think the Government did a good job in that sector. Our brand of “100% Pure New Zealand” is a brand that other countries like Ireland are trying to take up and hold on their mantel—its Government is taking conservation seriously looking after its flora and fauna and its topography and creating an environment where tourists and ecotourists can go and see it. We need to seriously fund the department and I hope that we see that coming in the Budget very shortly.I will also tell a quick story about life being a journey and at any point in time you could take your location in life but it does not give you a clear picture. Life is actually about the trajectories and the direction—the vectors—on which you are travelling. What we can do is ensure that the trajectory that the department is travelling on through the guidance of this Government is the right one.In 2009 the real expenditure for the department was $403 million. In 2015 it had dropped to $342 million—a $60 million drop since 2009. In real terms that is a negative trajectory which shows the Minister of Conservation and this Government are not putting the priority on to one of our biggest exports—in fact it is our biggest. Our biggest export is the export tourist dollar. Then of course we have got capital expenditure. In 2008 $98 million was being invested in the department particularly into track upgrades and DOC huts around the country. That has fallen in 2015 from $98 million to $23.5 million.SARAH DOWIE (National—Invercargill): Thank you for this opportunity to rise in support of the annual reviews for the Environment Sector in the 2014-15 year. I would like to take this opportunity to talk about the new wave of processes that are coming through both in conservation and in respect of the management of our environment—that is of course in respect of bringing the community along with us and in respect of collaborative processes and partnership models.If you look at what the Local Government and Environment Committee heard in respect of the Ministry for the Environment and the reforms that are due with regard to the Resource Management Act there is a call from the public to streamline processes and to make them less divisive in the community. What the Ministry for the Environment has endorsed is collaborative processes that engage the community and engage different stakeholders with often competing interests and bring them together to look at common wins for managing resources.One of those examples is the Land and Water Forum where over 90 stakeholders have come together to look at ways to manage the water resource and water quality moving forward. What we have found throughout that process is that at the other end when it comes to providing recommendations and providing management plans and moving forward to manage that water resource we have common elements flowing through—no pun intended—those stakeholder groups. They can come to agreement on and then put in practice those proposals through to a competent management plan.The same goes in respect of the Department of Conservation. In the past conservation has often been looked upon as the poor cousin. Funding for it often comes behind portfolios such as health and policing but conservation to New Zealanders is a very important portfolio and I really encourage the Department of Conservation in its move towards endorsing partnerships and taking the community with it in its conservation efforts. So as I said before often communities have competing interests but if the Department of Conservation can bring communities together and bring stakeholders together then it can find common elements and often with that community spirit get wins in a conservation effort to bring about a healthy environment for the community.I want to talk about one such effort in my own electorate. It is actually bringing together the Healthy Nature Healthy People initiative of the Department of Conservation which talks about having a healthy ecosystem getting people out into that healthy ecosystem enjoying nature and learning about the benefits of nature and through that creating a healthier lifestyle for themselves. That in conjunction with the Healthy Families Government initiative which is a health initiative has similar messaging in that we talk about preventing disease through getting out into nature being active and doing healthy things.One of the collaborative processes that I ran myself was to bring Healthy Families together with our Department of Conservation staff and run a function that encouraged our families to get out into nature and enjoy what Southland has to offer in our backyard. That was called the MAD Day Out—the Mud Adventure Discovery Day Out. Basically what people did was they came out to the Sandy Point reserve. We had a short and a long obstacle course where people traipsed through nature through some of our tracks up and down different obstacles that were put in the tracks and then through an optional mud run and families absolutely thrived on it. It was an event where mums and dads and guardians could get involved with their children and enjoy nature and understand the benefits of nature.So as you can see it is not just about getting big corporates involved; it is about taking the community with you and it does not often cost a lot of money to bring about these initiatives.Hon MAGGIE BARRY (Minister of Conservation): It is with great pleasure that I stand to talk about the performance and the achievements of the Department of Conservation (DOC) in this past year. I commend the hard-working Local Government and Environment Committee—in particular its chair Scott Simpson. The member of Parliament from Coromandel has a great sense of humour about the greatness of his own beaches but apart from those small flaws of I suppose bias he is in all other ways an outstanding chair. The select committee members from across the Committee have worked very constructively I think to ensure that there is robust discussion around the key elements of conservation.Conservation is at the heart of who we are as New Zealanders. It is certainly at the heart of why so many visitors want to come here and enjoy what we have to offer. Some 35 percent of the people who come to New Zealand say that they come here because of our nature. DOC’s ambitious aim is to extend that to around 50 percent and I think that is very much within reach.Conservation takes many forms. Partnerships have become something that are an important part of modern conservation and DOC under the visionary leadership of Lou Sanson—DOC is in his DNA—has assembled a stellar senior leadership team which works very collaboratively and involves businesses partnerships around philanthropy and conservation groups throughout the country of which there are many hundreds. Some 400 alone work conscientiously at weekends and on their holidays on for example kiwi conservation.As other members and other speakers have alluded to a lot of what you do when you are trying to save things is to kill the things that kill them before they try to extinguish some of our species. The Battle for our Birds which has had its very successful conclusion was really the first time I think that we did landscape predator control on the scale that we have. It was around 600000 hectares of quite hard-to-reach countryside. Aerial use of 1080 is the best weapon that we have in this battle and as a result of that successful battle we were able to save—certainly—10 species of birds from local extinction and also short and long-tailed bats and our snail species. These species are vitally important if we want to be able to ensure our ecosystems stay in balance.As a department DOC has worked very carefully with the various agencies that have some unease it is fair to say around the use of 1080. It is very interesting again to see the work that is being done in new technology. The Kiwi ingenuity No. 8 wire factor is very much a part of who we are and it is something that we do very successfully. When it comes to finding new and innovative ways to humanely kill creatures such as rats stoats possums weasels and mice DOC does it very well. There are a number of ingenious inventions in New Zealand and we have taken that to the world. When DOC looks at the various ways in which we can cope with the challenges of these eco-invaders—these creatures that have come here and made it more than their home; they have tried to take us over and unfortunately brought many of our key species to the brink of extinction—it is determined to win the fight. I believe that with the team that we have and with the collaborations that we have we will succeed.Some of the partnerships that we have been able to build have achieved some really remarkable results. One that I want to just dwell on briefly tonight in my call here is what has happened in Mount Taranaki with the maunga. There has been a project that has been pulled together with Wild for Taranaki and philanthropic and business interests—a boost to the local economy and a project that will see a major investment of $24 million over 10 years. Essentially that means ridding that extraordinary mountain of its pests and getting rid of the deer the pigs—and now the big challenge is to get rid of the goats. Then there will be a “ring of steel” put around the maunga and that will prevent re-infestation so that the birds that have been driven from that place will come back. These are ambitious goals but when you look at what is happening in Taranaki you have a community that is working together to aspire towards achieving these goals in partnership with DOC. We have the NEXT Foundation to thank for that as well.Genesis Energy has committed to an ongoing partnership with DOC over the next 5 years the main focus of which is the ongoing Whio Forever Partnership. I would have to say that sometimes when you give something you get back more than you gave and that has certainly been my experience in talking to the staff who work for Genesis Energy for example. I have had the privilege of being in the wild and releasing these extraordinary little blue ducks and the reward the enthusiasm and the bonding of the staff—who like each other a lot more for going out on a shared challenge and achieving some goals—are things that business acknowledges and recognises. I do not think some of these partners could pull out because their staff would not let them. The Whio Forever Partnership is one of the great success stories.I think other speakers have spoken about what has happened with Kiwis for Kiwi. We got $11.2 million of new money and that has been very well spent. We have put the money that we have into community groups to do what they have always done but we have removed the struggle that they have had to raise money. So we have launched the programme Kiwi Guardians—which is a new one a partnership with DOC and Toyota—which is involving younger children. If we can get them out and away from their computers television sets and other distractions and get them into nature then we have a great chance I think of igniting an enthusiasm that will be with them for life. Getting children out into nature also involves little inducements like collectable wooden medallions which are very much the thing that young people like at the moment. These have been enabled by our partnership with Toyota. We are raising new generations of conservationists.There are 20 sites around New Zealand that have been focusing on some of the main centres. Kiwi Guardians was launched in my own electorate area of North Head and we have seen significant increases in the number of people going there because when young people go there to a site and like it and enthuse they bring their parents along as well.As Sarah Dowie my colleague who is also on the select committee has indicated Healthy Nature Healthy People was the theme for last year’s Conservation Week and it will be again for this year. I really commend her for the Mud Adventure Discovery Day Out—MAD Day Out—initiative. More than a thousand people took part in that. It was a wonderful collaboration—a local member of Parliament with vision energy and ingenuity working alongside the Department of Conservation and others to achieve a great day out and something that has enriched lives.Our goal—and it is highlighted in this report—is to have 90 percent of New Zealanders’ lives enriched through a connection to nature. Research has shown—and this has been a compelling thing for my colleague the Minister of Health—that for every kilometre walked or cycled the health vote is saved $2.70 in future health costs. So if you extrapolate that out to the Otago Central Rail Trail that is worth about $2.66 million of avoided health costs each year. So on every level this makes sense. It enriches us as a people and it enables us to save money and redirect it into areas where it is better spent.I think that the Good to Grow Partnership which the Department of Conservation signed with the Department of Corrections is also enabling people who have made bad choices in life to get better qualifications and have the ability to earn a living when they get out of jail or when they get through their periodic detention and community service. We will teach them how to grow things—some of them admittedly are quite good at growing things anyway—but we can formalise that with good qualifications.With plants the War on Weeds has been a significant outcome from the last 8 months or so. We are really stepping up and have already started the process of ensuring that wilding pines do not continue with their hideous progress of encroaching on our natural landscape. If we do not do anything now to stop wilding pines—which are basically escapees; these things are too good at breeding—they will take over nearly a quarter of our natural landscape within the next 20 years. So it is my priority as the Minister of Conservation to ensure that that progress is halted and I am working alongside my colleague the Hon Nathan Guy and the Ministry for Primary Industries to achieve that outcome.The Dirty Dozen weeds initiative—we named 12 this year and there will be another 12 next year—is to encourage gardeners and to encourage everybody really to try to take a part in this. It is all very well to sit back and carp about the Government needing to do more—and that is true; we will never resile from it—but it is vitally important I think that people engage and we need to win hearts and minds if we are to win people over to the idea that they need to be part of the solution.Last year $918000 went to weed-busting groups. That was delivered through the DOC Community Fund and it is part of $1.2 million that was committed to combating weeds. As the select committee pointed out the wilding pines are one of the most pressing dangers. I absolutely commend the New Zealand Wilding Conifer Management Strategy.Reports noted.External SectorMARK MITCHELL (Chairperson of the Foreign Affairs Defence and Trade Committee): Firstly can I start by acknowledging the Foreign Affairs Defence and Trade Committee and David Shearer who sits on that committee and is in the Chamber tonight. Can I also acknowledge Lieutenant General Tim Keating our Chief of Defence Force and the Chief Executive of the Ministry of Foreign Affairs and Trade Brook Barrington.There is a fair bit to get through in 5 minutes but can I just firstly say to our New Zealand Defence Force the men and women who are serving overseas that we are proud of you you do a great job and you are wonderful ambassadors for New Zealand. We have deployed recently to Fiji which has been hit with a terrible natural disaster. We have seen the deployment of the HMNZS Canterbury which has carried the main New Zealand Defence Force contingent including relief supplies army engineers and helicopters. We sent up two navy SH-2G Seasprites. We sent up two of our new NH90s—they are obviously operational and doing a very good job—as well as our army light engineering unit. We have also got an Orion P3K up there and we have also got the HMNZS Wellington which I want to make a special mention of because the captain of the Wellington also lives in my electorate of Rodney.I also want to touch very quickly on the work that our team are doing up at Camp Taji just outside Baghdad. During the reviews we asked the Deputy Chief of Defence Force about how that deployment was going. We learnt that in the last 18 months since the coalition began operations Daesh has lost around 40 percent of its territory which is significant. This has been achieved by support provided by the Iraqi forces through airstrikes and a slow but steady campaign of targeting individuals and of course their supply routes. Weekly charts are compiled using satellite imagery and intelligence and show that there is a change of dominance in Iraq as to who controls that territory. So I want to acknowledge our troops up at Camp Taji because the work that they are doing—just their mere presence there—sends a very positive message to the Iraqi forces that are having to go out and meet this threat and that are obviously doing all that they can to seriously degrade Daesh and the threat that it poses.I just want to talk very quickly also about the role that we are playing through the Ministry of Foreign Affairs and Trade and our position on the United Nations Security Council and some of the work that has been done there especially in relation to—again I will come to Daesh—the progress that we have made on the Syrian humanitarian issues in the Middle East. As a co-leader on the Syrian humanitarian issues New Zealand has been at the forefront of the council’s efforts to alleviate the humanitarian effects of the Syrian conflict. This includes leading work to reinforce protection standards and principles supporting health care in the armed conflict.I am very proud of the fact that our people in New York on the United Nations Security Council took a genuine leadership role in making sure that we could actually open up the supply routes into Syria to make sure that proper humanitarian aid medical assistance and food got through to the refugees who had been cut off from that for a long time. We saw pretty heart-breaking stories on TV about children who were having to try to exist by eating grass.The work that has been done on the United Nations Security Council also involves the degradation of Daesh in the sense that the sanctions that have been imposed on Daesh are having an effect. We are encouraged to hear that Daesh is having to levy its members now for financial contributions because the sanctions regime is starting to affect its financial resources—bearing in mind that because of the territory that Daesh actually had they had a fair amount of resources available to them especially oil and petrochemicals to actually be able to generate a fair bit of revenue which was actually funding and feeding their terror attacks in their war against Iraq and neighbouring countries. We also actually chair the al-Qaeda sanctions committee as part of our United Nations Security Council role. I just want to acknowledge the work that is being done by our personnel in New York on the United Nations Security Council.The other very important piece of work that is being done that we feel very strongly about as Kiwis is around the veto that the permanent five countries have.DAVID SHEARER (Labour—Mt Albert): I would like to pick up a little bit on that line I think but I would like to speak about reputation and about New Zealand’s reputation—our reputation in the world. Although we are a small country we have a reputation for fairness for transparency and for honesty and that counts for a lot. For a country of only 4.5 million people amongst many of the larger countriesit counts for a lot that we are held in respect and listened to. That is exactly what happened when we were voted to be on the Security Council. We were able to beat overwhelmingly the other larger countries of Turkey and Syria because we were seen and respected for those very values which we hold very very close.I was up in New York a couple of weeks ago and had the opportunity of being able to sit in on the Security Council deliberations that were going on at that time and we were held in high regard. I pick up what Mark Mitchell was saying just now about our work on the Syrian file—on the humanitarian aspects and access and on the sanctions to stop terrorism being funded—and also about our ability to bring a fresh approach to the Security Council in challenging the older established members—the Permanent Five. I went and saw the Russian ambassador who said to me “Look we think New Zealand is doing a good job but we wish it could agree with us a bit more.” then I went and saw the British ambassador who said “I think New Zealand is doing an excellent job on the Security Council but sometimes we wish that it could agree with us just a bit more.” and I thought that actually we have probably got it about right if that is the case.What is really sad about this story and the great work being done by our ambassadors and Ministry of Foreign Affairs and Trade staff up there is the fact that none of that filters back here to New Zealand. Of the many people who are listening to this debate I can guarantee that almost all of them will not have heard one bit of news about the great work we are doing on the Security Council. I think that is a real shame and I point the finger directly at the Minister for not taking those stories and making them more public. He seems to be sitting on that and in a sense saying: “We can do it. We know all about it. We don’t need to involve you.” He is taking a leaf out of the Tim Groser book. When he was negotiating the Trans-Pacific Partnership he did not feel that it was necessary to talk about what he was doing with anybody in New Zealand. It was that arrogant smug rather out-of-touch approach of saying: “We know what’s best for you and we don’t need to tell you what we’re doing.”I think most New Zealanders are fed up with that approach—that smug that arrogant that out-of-touch type of approach that is dominating the National Government so much more now and no more so than what we have seen with the Panama Papers over the last week. This is the Prime Minister standing up and undermining our very reputation which I was just speaking about and saying “There’s nothing to be seen here.” and denying that there is any problem. All of last week that is all Mr Key did and this week suddenly he has decided to change his tune because what he saw through his banker’s eyes was not cutting it with New Zealanders on the ground. He had to turn 180 degrees and say that he would set up an investigation.There is something to be seen here. There is a problem and as one economist said foreigners can set up untaxed trusts in New Zealand without disclosing their identity or the details of what they are being used for and because of that we are seen as a soft touch and as a tax haven. That is destroying the very reputation that we have built this country on. It is one of the reasons why we have slipped from being in first place under Transparency International down to fourth and we will continue that slide. Our response has been solely inadequate for dealing with what is going on.That money that is being squirrelled away by corporations individuals and leaders across the world could have paid for more taxes to go into education and into health. It is estimated that $1 trillion has been taken out of developing countries.Hon GERRY BROWNLEE (Minister of Defence): I do need to respond to some of the comments made by the previous speaker David Shearer. I would agree with him that New Zealand does punch above its weight in many international fora. I would agree with him that New Zealand does have a significantly valued reputation among countries of similar minds when it comes to some of the big issues that the world faces. We do have a voice in forums that is considerably greater than our population might normally or most usually allow. But I think the latter part of that speech about the external relations review was fundamentally flawed.The first point is that trust law in New Zealand is there for New Zealanders not for anyone else. It is there for New Zealanders who for one reason or another find it a necessity or prudent to put their assets into a trust. It is not as if it is unusual. There are large numbers of New Zealanders who choose to do this. When they do so they are subject to New Zealand tax laws because they are taxed as the settlor of the trust. So inside the New Zealand structure there cannot be avoidance in our tax jurisdiction. If Mr Shearer and his colleagues are making a case that we should change those laws and therefore bring in more pernicious laws for New Zealanders in order to protect the tax base of foreign countries then I think they are seriously missing the point—seriously missing the point.What Mr Shearer said is that there are trillions of dollars being hidden in New Zealand trusts. That is not true. That is a fundamental misrepresentation of the entire situation. What I would further say is that if there are people from offshore choosing to protect their assets by virtue of having a New Zealand trust and they are nominated as the settlor they will pay tax in New Zealand. If that tax means that there is some avoidance in another jurisdiction it means that that other jurisdiction has got its tax laws in such a complicated state that people cannot work effectively with them.Let me give you a small example. The first point is that if you are a low-income worker in New Zealand with an income below some $40000-odd a year your tax rate is 17.5 percent. If you are a very high-income earner in New Zealand your maximum rate exclusive of GST is 33 percent. If you are a low-income earner as I said under about the $40000 mark in an average OECD country your rate is 35 percent. If you are a high-income earner it could be 90-plus percent. So you have to ask what we are trying to do here.What the Labour Party is arguing is that because some people take advantage of registering a trust in New Zealand and as settlors are paying tax in New Zealand we should change the laws in this country to ensure that all New Zealanders are caught up in some higher tax rate. What it signals is the Labour Party has no real perspective of where New Zealand sits in the world—David Shearer: Why don’t you read the paper?Hon GERRY BROWNLEE: —and wants instead to raise the tax levels in this country to some of those highly pernicious rates. No other conclusion can be drawn from the rubbish that has been talked in the House in the last few days.The member might want to scream out at the top of his head: “Read the papers.” Well I have read the papers and I have got to tell you that he is making a wrong analysis. I am sure that as he stalked the halls of the United Nations in recent weeks with the United Nations job adverts clenched in his fist he was not saying to those foreign jurisdictions: “We’re coming after you for your tax rate.” I am sure that that is not what he was saying.We do have a strong reputation in New Zealand as being a fair country a reasonable country where people can live their lives in a peaceable fashion. We are a country that enjoys extraordinarily advantageous trading conditions throughout the world because successive Governments have chosen that for this country and they have gone aggressively after those trade deals. We have very very good country-to-country relations with other countries throughout the world and that is because they look at us and how we operate in this country—no matter who is in Government—when it comes to external relations and they see that there is a predictable path or at least they have up until now.What we have at the moment is a Labour Opposition that is totally opposed to our engagement in Iraq is totally opposed to anything that might you would say advantage New Zealanders in a domestic sense through our trust laws and in general is quite confused about a picture around trade because it does not want to support the Trans-Pacific Partnership (TPP) agreement. There are two gentlemen over there who do want to support it. One of them is allowed; the other is not allowed and he is going to tolerate that. He is going to say: “No I’ll accept that. I’m prepared to sacrifice my beliefs on the altar of socialism. I’ll just give up what I really think while my bench mate here gets an opportunity to go out and campaign for the mayoralty of Auckland on the basis that he’s in favour of a growing economy.” It is quite an extraordinary situation.It is always sad I think when the external relations of a country become caught up in the domestic politics of a country. There will always be policy differences about how there is an interaction—between one country and another; one institution and another—that may change with a Government. But generally the flavour of the way a country operates the reliability of a country and the fact that you can take a country’s political statements—or should we say international statements by its politicians—for what they are is extremely important. So it is somewhat disappointing that Mr Shearer who had a significant international background prior to his coming to the House would deliver a speech today that starts to destroy that level of trust.The Government is—[Interruption] Oh look at this. You see over there the Hansard will record the sighs and the moans from people saying: “Oh that’s not true.” Well stack it up and have a look at it. Labour members do not like the idea that a law that advantages New Zealand is being used by others to advantage their situation. They do not like the TPP agreement—they are dead against that. They are not going to have expanded trading opportunities for New Zealand. They do not want to acknowledge that the scourge of Daesh on the world is a terrorist organisation that could well affect a country like this and therefore we should be involved. No not from the Labour Party point of view—it does not want to be part of that. And when it comes to a range of other engagements it is a party that wants to deny its past.This Government is extremely progressive. This Government recognises that sometimes partisan politics gets set aside when it comes to dealing with our relationships in the international sense. There is no better example of that than this week when the Government was quite proud to throw its weight behind the Rt Hon Helen Clark in her bid to become Secretary-General of the United Nations and I personally think she has got an excellent chance. I think if we look at the various geopolitical arrangements particularly around Europe as per say the United States she is in a very strong position and this Government will support her.I wonder what the Labour Party really thinks about that because in her there is a leader who has said yes to the TPP agreement yes to a fight against Daesh and yes to a more international outlook for a country like New Zealand. That is the sort of leadership that kept the Labour Party in power for 9 years; it is the opposite of that which has got it in such a bad state at the present time—almost leaderless totally directionless and almost certainly consigned to a longer period to think about the types of policies that it should be offering to connect to New Zealand. It is sad that it is so starkly shown when it comes to external relations where we should expect a much higher level of understanding and commitment to us as a nation.Even this week we will see the Prime Minister going to a country like China. We have got differences and we make those differences known but we also know that this is a country that is going to be one of the strongest emerging economies in the world—it already is strong; it will only get stronger—and to be encouraging it to see us in a light that says “equals” in a light that says “reliable” and in a light that says “We are interested.” is very important.Hon PHIL GOFF (Labour—Mt Roskill): We have just heard an appallingly ignorant speech from the Minister of Defence. I heard him a moment ago justify laws that allow New Zealand to be exploited as a tax haven as being OK because it advantages New Zealand. That is what the Minister said; that is what his Hansard will show. I want to tell that Minister that $10 billion was made by multinational companies in New Zealand last year and they paid $1.8 million in tax on it. They pay tax at a lower rate—Hon Gerry Brownlee: I raise a point of order Mr Chairperson. I hesitate to take the point of order but I think it is worth pointing out that in this debate about external relations it is inappropriate to confuse revenue with profit.The CHAIRPERSON (Hon Trevor Mallard): Order! The member Phil Goff will resume his seat. The Minister in the chair knows that that is not a point of order. He will stand withdraw and apologise.Hon Gerry Brownlee: I withdraw and apologise.The CHAIRPERSON (Hon Trevor Mallard): The Hon Phil Goff—your time is starting again.Hon PHIL GOFF: Thank you Mr Chair. I think the point is that if New Zealanders are deeply disturbed that we are being ripped off by multinational companies making $10 billion a year out of New Zealand and paying just $1.8 million a year in tax we want to see an international system that stops that sort of tax dodging and evasion. And if we are not prepared to crack down on entities that are using New Zealand as a tax haven how are we going to get the cooperation of international countries to stop people ripping us off? That is the point that the Minister totally missed.First of all speaking to the Ministry of Defence annual review I want to acknowledge the work done overseas by our men and women in uniform. I had the privilege for 9 years of serving as Minister of Foreign Affairs and Minister of Defence and of seeing the sheer professionalism and commitment of the New Zealand Defence Force. I have got to say that the Kiwi emblem worn on the shoulders of those men and women is something that makes us proud because that Kiwi emblem stands for decency and professionalism in the work they do and are continuing to do today in Fiji. But the annual review is about the accountability of the Minister and I want to hold the Minister to account.I want to put four questions to him—four because I think he can count that far and will be able to remember the questions. The first question is about the training of Iraqi soldiers in Camp Taji. He was up there; the Prime Minister was up there. Last month he did a review of the effectiveness of the $30 million that we invest in that. We are not privy to that review yet but we do have the American Department of Defense review on Taji and the effectiveness of the training.These are the questions I have got for the Minister. This report says that the conditions under which those Iraqi trainees are living—without power without water—are appalling. They detract from the effectiveness of the defence training that we can do and they cause a very high level of desertion—absence without leave. I want to know whether the Minister when he was over there was aware of that fact—high levels of absence without leave appalling conditions and conditions so bad they detracted from our ability to do the training that would be worthwhile. Did he ask questions about that? Did he challenge the conditions that they were living under? Or was it just a public relations exercise to be over there wearing his flak jacket?The report also says that the real problem with the Iraqi army is the ineffective and corrupt leadership. Did the Minister ever raise that and ask why our guys are doing the best they can in training while their efforts are being undermined by a corrupt and ineffective Iraqi leadership? This report says another thing. It talks about the inadequacy of the equipment. We are trying to teach these guys how to do basic things like firing a gun.Ron Mark: A rifle.Hon PHIL GOFF: A rifle to use the correct term. The Iraqi trainees were issued with 300 M16s and seven cleaning kits for the rifles. How can we do the job when the equipment being provided to the people we are meant to be training is so thoroughly inadequate? The report says that much of the equipment that is meant to be used by those men who are being trained is syphoned off to go to the militias whose cause we do not even support. So that is the first question.The second question is about the poor relationship this Minister has with the Defence Force. I read the annual report. It said that the Minister of Defence had a 50 percent level of satisfaction with the advice he was getting from the Defence Force. Well that is better than the zero percent confidence that the Defence Force has in that Minister who is absolutely arrogant and out of touch. But I want to know why his relationship is so poor when that of his predecessors was actually quite good.I want to know how that Minister could come out and say things like the purchase of NH90s was a dreadful purchase when Wing Commander Scott McKenzie who runs No. 3 Squadron RNZAF said that these aircraft are the best thing that ever happened. Mark Mitchell heard him say that—that these aircraft ran rings around any alternative like the Black Hawk and they were really capable. Even his predecessor said that the NH90s were a quantum leap forward. So is it a problem with the advice given by the Defence Force—RON MARK (Deputy Leader—NZ First): I have to say it was quite interesting listening to the speeches from the two major parties in the Committee. I thank Mr Goff for reciting a good part of my press release because it was New Zealand First that actually found the American Department of Defense report. But the point he makes is a very valid one and I will get to that.But what I want to address for a start is that it is something worthy of note that this Government still has not produced a white paper. When I came back to Parliament one of the first things I did when I got the defence portfolio back was to have a look to see where the white paper was at. Of course all I could find was the existing white paper which is under review and a statement in it saying that it would be reviewed in 2015. So I was naively expecting to see the defence paper reviewed in 2015 and I am sitting here looking at this report here—the latest Ministry of Defence annual report of 30 June 2015—that says yes the defence white paper will be released in 2015. Well it is actually 2016.The reason I make that point is that we have been subjected to a barrage of propositions for defence and particularly in procurement that are the very issues and the very points and the very subjects that should be addressed in the white paper and about which we should not be taking any predetermined positions or evaluations without the white paper. So trying the hard sell and the big spin on having us buy a C17 and shifting our strategic lift from sealift to airlift is a big proposition because that is what a C17 is. It is a strategic airlift capability. We thought to ourselves that we would have had a white paper first—that we would have evaluated that concept within the white paper before we started trucking them out and offering MPs rides in them and extolling the virtues of them and trying to sell them before we had actually decided we even needed them.We know that there are questions around the NH90s and I think we share some of the same concerns as the Minister of Defence. We probably do not necessarily accept the arguments of the former Minister of Defence Phil Goff because we know the problems. But these problems need to be addressed in the white paper. So we are looking forward to seeing that white paper.It is the same as the protector fleet. There are some issues in there. The latest answers to the questions that New Zealand First has put up reveal that some of our vessels have not been to sea for in one case 4 years and in another one for 3 years. We have gone from a high in 2011 of having 218 days’ patrolling by our navy on fisheries work to 9 days’ patrolling dropping down steadily in 2012 2013 2014 and 2015. In 2015 we were down to 33 days’ patrolling in our fisheries. We would say these are serious matters and these are the things that we would like to see discussed in the white paper and have the solutions for this proposed. So we are waiting out for that white paper.There is some good news. The good news I would say is the announcement of the purchase of the Lewis Machine and Tool rifle as a replacement for the God-awful Steyr which should never have been bought in the first place. But there are problems in the backdrop of that too Minister and as I understand it they sit around the capability of that company to actually deliver the order and support the order given the size and the scale of the New Zealand order is different from what it is used to. But I actually said at the time that it was a good decision and let us see that rolled out because we need to get rid of that damned Steyr. That was something that I recommended from Oman that we not buy but you know the Government of the day went off and did that anyway despite the advice of the army officers and NCOs and warrant officers on the ground.But I have got to come to the Iraq deployment. I cannot find any figures around what the misinformation campaign cost—the gagging campaign that was imposed on soldiers and the threats of being charged and court-martialled if they were found out to be talking to MPs. That sort of nonsense has no place in the New Zealand Defence Force but it happened. It happened and we are saddened by that. We questioned the deployment to Iraq and the expenditure of that money and I guess it all came to a head with the very visit that Mr Goff was just talking about.How can we have the Prime Minister reporting from Iraq that the mission has been highly successful and we are achieving all of these wonderful things as coalition forces when at the very same time the Inspector-General of the Department of Defense in the United States has issued a report slagging the entire mission talking about the very things—the poor equipment the poor support for the Iraqi troops the defections the desertions the absolute unbridled corruption? And right at the time that all this is going on—Hon GERRY BROWNLEE (Minister of Defence): I think I should respond to some of the comments that have been made starting with the comments made by Phil Goff. The United States report that the member quoted from was brought to the attention of the select committee and allegedly in the absence of any other reports that were available.We have been in the Taji mission for just on 18 months and in that time—in conjunction with the Australians who are the senior partners in that particular mission—there have been some 4000 Iraqi troops pass through that training process. The suggestion was that they are living in difficult circumstances that they are not being treated properly let alone being given proper rations—particularly water—and that their absenteeism is at a high level. That is not the experience of the Australia - New Zealand mission. The matters that have been raised in that US report have been directly addressed by the New Zealand mission with the Iraqi authorities—in particular the on-base living conditions of the Iraqi trainees. There was also a question at the start of the mission about whether or not there would be sufficient numbers turning up to the training that was being offered by the Anzac mission. The subscription rate has been exceptionally high.The quality of what is being delivered has been accepted and the conditions under which that is being delivered have also been accepted so I totally reject the suggestions that the circumstances that were stated in a United States report delivered early last year are comparable to the circumstances and experience that the New Zealand training mission has—Hon Phil Goff: The US report is on Camp Taji. It’s on the very camp where we are doing the training.Hon GERRY BROWNLEE: Yes the member of course screams from his seat that it was about the place where the New Zealanders are working. The place is 65 square kilometres—a huge base—and the trainees whom we are dealing with are quite separate from the trainees other countries are dealing with. I am sorry—the member tries to call on his experience in these matters but he does not have the first-hand experience that others in this Committee have.As for the issue of the corrupt leadership that is exactly why the Iraqi Government has asked New Zealanders and Australians—and the United States and the Spanish and everybody else who is there—to be in Taji to offer a training system and to offer an experience and an example that is separate and different from what it has known in the past. What we have to do is ensure that in Iraq Daesh is beaten. It will be beaten only by competent Iraqi security forces. We are not going to put boots on the ground in that particular fight. It may be what the Labour Party would want to do but it is certainly not what this Government is going to do particularly in the absence of any request from the Iraqi Government itself.There was then this question about confidence in either me or the Ministry of Defence—whatever. I have huge confidence in the New Zealand Defence Force. I have huge respect for the New Zealand Defence Force. What it might think of me is somewhat irrelevant. My responsibility is to ensure that it has sufficient resources to do the jobs that it is doing. I have got to say I was extremely impressed by what I have seen in Taji and very impressed by what we have recently seen in Fiji. New Zealanders do make $1 of military spending go far further than almost any other military in the world and they are to be commended for that.Mr Mark raised issues about the white paper. All I can say is hold on—it is coming. There are a number of things that have emerged over the last few years since the 2010 white paper that have to be considered. Firstly New Zealand has a big interest in the Southern Ocean. We have a big presence in the Antarctic yet we have had very little focus on that as far as capability is concerned. We have sort of hung on in there. The incident that occurred about 18 months ago when the—[Bell rung] Mr Chair?The CHAIRPERSON (Hon Trevor Mallard): The Rt Hon—the Hon Mr Brownlee.Hon GERRY BROWNLEE: Thank you for the elevation—I am very impressed.The CHAIRPERSON (Hon Trevor Mallard): Well it is Speaker coming soon.Hon GERRY BROWNLEE: Ha ha! You have thrown me there I can tell you. I have never felt so uncomfortable in my life.Ron Mark: The incident.Hon GERRY BROWNLEE: The incident that occurred around about 2 years ago when there was a close go with the Boeing 757 landing in the Antarctic changed a lot of things because the Civil Aviation Authority brought in some rules that said well when you are heading down there with a 2-hour window for go/no-go loaded with passengers it does leave you in a difficult circumstance if you go just a few minutes more. The reality is that we do not have a plane that will get us there and get us back. When it comes to our ability to take a ship down to that part of the world we do not currently have a vessel because of recent signings-up to international rules or regulations about what you need for ice protection. We no longer have a vessel that is capable under those rules to safely get to the Antarctic. So we are in a position of saying that the Antarctic is important but we have got no capability to get there and back in a safe sense. Yes we can still send the C-130 Hercules in but their loads are somewhat compromised. We can still get the Boeing 757 to fly down there to pick up passengers but not necessarily to take them there and back. So there does have to be a broader consideration about how we work through that particular conundrum.The other thing that has emerged over the last few years is the potential reach for terrorist activities right into our own shores. We are part of a coalition in the Middle East expressed mainly in our roles in the headquarters in Kuwait and the Taji military camp in Iraq because we are not immune to the activities of terrorists. Although we might want to forget about the Lindt cafe in Australia which is very close to us and imagine that there would be no one living in this country who might want to engage in that sort of activity we need to remind ourselves that we do have people on a watch-list. We do not want to bring in laws that would impede the freedom of New Zealanders to go about their business in any old way they like but we do have to watch some people because they have expressed in various ways sentiment that would mean that they should be taken very seriously and at least watched to make sure that they do not carry out some of the activities that we have seen in other countries.So the whole concept of intelligence around security and its role inside the fence is something else that will be new in the white paper review when it comes. Once again it is not something that you can just magic up out of the air but it has to be part of a much broader approach to things. I would be as I have been in all things since becoming a Minister more—The CHAIRPERSON (Hon Trevor Mallard): I regret interrupting the member. The time has come for me to report progress.Progress reported.Report adopted.