Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Volume:673;Page:19314] 
Debate on Crown Entities Public Organisations and State Enterprises 
In Committee 
The CHAIRPERSON (Lindsay Tisch) 
: The House is in Committee for consideration of the performance in the 2009-10 financial year and current operations of Crown entities public organisations and State enterprises. The debate on the performance of Crown entities public organisations and State enterprises is a series of debates on individual financial reviews of Crown entities public organisations and State enterprises as reported by select committees. 
A total of 3 hours is allocated for the debate. The debates on the individual financial reviews should be relevant to the entities’ performance in the 2009-10 financial year and their current operations. A member may have no more than two calls on each financial review. A compendium of the financial reviews available for debate is on the Table. Entities yet to be reported cannot be debated. 
I understand that members have indicated the Crown entities public organisations and State enterprises they wish to debate. I understand that the first entity members wish to debate is the New Zealand Tourism Board. 
New Zealand Tourism Board 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on this debate because tourism is one of our most important export sectors. In fact over the last decade tourism was our single biggest export earner. Dairy has become more important over the last couple of years but tourism has been our single biggest export industry. The New Zealand Tourism Board has done a good job in promoting New Zealand to the world and the way it has done that is under our “100% Pure New Zealand” brand. But this has created an enormous conflict within New Zealand because of the contradictions around the “100% Pure New Zealand” brand. The “100% Pure New Zealand” brand is valued at many billions of dollars—possibly $18 billion according to the 2005 Interbrand study. Not only is this brand how we sell tourism to the rest of the world but also it underpins all of our other exports as well particularly dairy: “Clean green and safe” is the foundation brand for dairy exports into China. So protecting this brand seems to me one of the fundamental jobs of the Tourism Board if we are to protect what has been our largest single export industry. 
This brand has come under increasing pressure in the last 12 months. Just recently we saw the BBC in an interview with the Prime Minister raise a series of concerns about New Zealand’s environmental performance. That was based on the work of Dr Mike Joy who is a leading freshwater ecologist in New Zealand. Those concerns undermine the “100% Pure New Zealand” brand on which our tourism industry is based. That is to do with the fact that the majority of our lowland rivers have become so polluted that at times they are unsafe for swimming let alone drinking. In fact according to Environment Waikato 70 percent of the sampling sites within their catchment are unsafe for swimming; 75 percent are unsafe for stock water. We are finding that the “clean green” brand which is promoted overseas through images of wild clean rivers—if members have seen those advertisements they will know that they often include wild rivers with people jetboating on them—is being undermined as we destroy the natural environment in our country. One of the key drivers of the destruction of our natural environment over the last decade has been the intensification of dairy farming which has resulted in increased pollution going into our rivers and increased abstraction of water out of our rivers. It has also put pressure in terms of damming rivers so that they can be used for irrigation. 
This Government is proposing hundreds of thousands more hectares of irrigated dairying in Canterbury alone which will have massive downstream effects of pollution of our rivers and waterways. That pollution is fundamentally undermining our “100% Pure New Zealand” brand which is our single most important tourism asset. Tourism has been our single most important export sector over the last decade. If we continue down this track of destroying our lowland rivers which has been Government policy now for more than a decade from both of the major parties we will fundamentally undermine our tourism industry. 
The Prime Minister is the Minister of Tourism and he looked extremely uncomfortable on BBC  
HARDtalk  
when he was asked about these issues. He was in denial and tried to say that one could find any old freshwater scientist just like one could find any old lawyer to say anything one wants. Actually one cannot. The freshwater science community is absolutely of a consensus and of one mind that we are watching the destruction of our lowland rivers in front of our eyes and that destruction is only accelerating under the pressures of intensive agriculture. We are fundamentally undermining one of our most important export sectors which also impacts on all our other export sectors that rely on the clean green and safe brand that underpins the tourism sector. 
We had an opportunity to do something about it with the National Policy Statement for Freshwater Management but instead we turned it into a piece of meaningless drivel. We had a draft National Policy Statement for Freshwater Management which actually would have resulted in the beginning of the clean-up of our rivers but it got watered down by the Government when the statement came back from the board of inquiry. That national policy statement could have been the beginning of protecting our “100% Pure New Zealand” brand by beginning to clean up our rivers. People overseas understand that we are not 100 percent pure but they will not tolerate our being in denial about the fact that we are not 100 percent pure and they will not tolerate our doing nothing to start the clean-up process. If we can say to people that we have a problem if we can acknowledge the problem and if we can offer a plan to clean it up then people will understand our position. Instead the Government has a programme to make it worse by accelerating irrigation and intensive agriculture by undermining the one single serious attempt we had the National Policy Statement for Freshwater Management that could have started up the clean-up. 
Report noted. 
Human Rights Commission 
Report noted. 
Hawke’s Bay District Health Board 
Report noted. 
Waikato District Health Board 
DAVID BENNETT (National—Hamilton East) 
: 
 It is with great pleasure that we talk about the Waikato District Health Board and the way in which that board has achieved so much under this National Government through the leadership of the Hon Tony Ryall and of Dr Coleman who has also been very active in the health field and who has made a huge difference in promoting health decisions with effective results for our region. When we look at some of the results that have come out of the Waikato region and especially the Waikato District Health Board the biggest thing that anyone who goes to the city will see is the massive change on the skyline as cranes operate on that health site. There has been an over $400 million expansion and renovation programme for the district health board in Hamilton. It is a huge programme; we are seeing a new emergency department being created which has just gone online and a new maternity department. A lot of work has been done on the wards and also in the theatres of that great institution. 
The district health board has led in the way it has delivered services to the community and we see that in the way that probably an extra 50 doctors have been added to the health service and 250 extra nurses. That is something that has been very very much sought after across the country and especially in the Waikato. We are delivering on access to elective surgery with an extra 3674 people having elective surgery. An extra 35 patients per week are getting surgery done and those are tremendous numbers. It makes a real difference to those people’s lives and it makes a difference to the effectiveness of their ability to contribute to our economy. 
There is better immunisation with an extra 868 two-year-olds being fully immunised in Auckland under National during 2009 which represented part of that total of 5053 two-year-olds being immunised around the country—a record of 86 percent which is something previous Governments would have been very jealous of. 
There are shorter stays in emergency departments. I know that the Waikato District Health Board has been very careful to make the best use of its resources in trying to get the best results it can from its emergency department. That is a challenge in the Waikato because we have a lot of traffic injuries in that area as we have a lot of roads that connect to the big centres of Auckland and Tauranga. So we deal with a lot of road trauma and there is a special trauma department at the Waikato District Health Board facility which makes a very effective contribution to recovery for people who are in those kinds of accidents or in the types of industrial accidents we see in that region. 
There are shorter waiting lists for cancer treatments which is another thing the Minister of Health has been very careful to see some results from in that regard. We have seen that across the country and it is good to see that happening in New Zealand with that horrible disease of cancer. Nobody really knows what can be done but we can do the best we can with our treatments and processes to enable the best for our patients in those areas. 
There have been a number of very significant additions to the health sector in the last 3 years. Elective surgery numbers continue to rise and the Minister has taken particular interest in seeing those numbers rise and in patients having the ability to get that surgery. The Waikato District Health Board has performed well over the time and it has done very well in its construction programme of renovating buildings for the sector especially for the Waikato. If we look at some of the third-quarter results for 2010-11 and at the Waikato District Health Board for example in regard to diabetes and cardiovascular services we see that our board ranks 8th out of the district health boards. That is a good ranking but it is something the district health board will want to improve on as well. It also ranks 16th in programmes giving better help for smokers to quit. In the increased immunisation figures the Waikato District Health Board ranks No. 9. 
Report noted. 
Waitemata District Health Board 
Hon Dr JONATHAN COLEMAN (Associate Minister of Health) 
: 
 If there was a train wreck in health that we inherited it would have to be the Waitemata District Health Board. I can remember the years from 2005 to 2008 when I would meet regularly with my colleague the Hon Dr Wayne Mapp and we would compare notes on the long queues of constituents who had beaten a track to our respective electorate office doors with tales of woe about what was going on at North Shore Hospital.  
I can now say that that long line of people has dried up because the performance of the Waitemata District Health Board which was in such dire straits has been radically turned round under the leadership of Tony Ryall as health Minister and very important of Dr Lester Levy as the chair of that board. Members will remember that that district health board was very dysfunctional. It was really run by people who were more interested in political considerations than in the health of the people of the North Shore and the Waitemata district. But we can say now that things really have turned round.  
If we want a symbol of that we can look at what is happening at Waitakere Hospital. That hospital was a complete mess; what have we got? From last week that accident and emergency facility is now open 24 hours a day to adult patients. Since last June it has been open 24 hours a day to children. That is a real service for the people of west Auckland.  
We can also look at what is happening at North Shore Hospital. Tomorrow we are opening a new renal dialysis unit so that people from the North Shore no longer have to go to other district health boards to get the dialysis that they need basically to save their lives and keep on living a functional life. That is an amazing achievement. If we looked at what was happening at the North Shore accident and emergency department under the last Government we saw there were perpetually long queues of people extending out into the car-park trying to get the treatment they needed. They could not get into that department; it was diabolical—mayhem. The morale of staff was at an all-time low. We have delivered on our promises. We have opened the first stage of the Lakeview development which will deliver a new re-engineered accident and emergency facility that will meet the requirements of patients. It was designed by the staff and it has had major input from them. There will be an assessment unit there and more beds in that hospital to allow the clinicians to manage the flow of patients. There is a major achievement there.  
We can look at what has happened in terms of doctors and nurses. Since National has come to Government there have been 1000 extra nurses nationwide and 500 extra doctors. In Waitemata alone there are 140 extra nurses and 70 extra doctors. So we are not just talking about front-line resources we are actually putting them in there. This year an extra $104 million will be spent at the Waitemata board to deliver the services that people need. 
There is no greater example of that I think than what has happened nationwide in elective surgery. We were aiming for an extra 4000 operations per year. We will actually deliver an extra 20000 operations this year. That is an extra 400 operations per week. That is outstanding. People are receiving the surgery that they need. If we look at what that means we see an extra 2018 people have had elective surgery for important life-inhibiting conditions over the past year in Waitemata. That is an extra 40 patients a week which is really amazing progress. 
If we look at the six key areas that Tony Ryall selected for us to focus on we see that in Waitemata 100 percent of patients receive cancer treatment within 4 weeks—100 percent. No one has to go to Australia now as they did under the last Government. People are being treated here at home. That is an amazing achievement. 
Hon David Parker 
: We trained some therapists! 
Hon Dr JONATHAN COLEMAN 
: These people can hark and yell but the fact is that New Zealanders know that a National Government is delivering on its priorities for health. If we look at the immunisation statistics we see that 90 percent of 2-year-olds in Waitemata are being immunised. That is an amazing improvement. There are shorter stays in emergency departments. The emergency department at North Shore Hospital is now functioning properly. I am not receiving complaints about it. People are coming in— 
David Shearer 
: It’s not what everybody else is saying. 
Hon Dr JONATHAN COLEMAN 
: My constituent David Shearer begs to differ. I can tell him that he will not get that sort of service on the Auckland City side. The service at North Shore Hospital has gone through the roof. 
I think we can be very proud of what is being achieved in our district health board. We are on the right track. 
CHRIS TREMAIN (National—Napier) 
: 
 I was stuck in the Business Committee. I seek leave that I may speak on the Hawke’s Bay District Health Board which I appreciate the Committee has already been through. 
The CHAIRPERSON (Eric Roy) 
: We will put that option to the Committee. Leave is sought for Chris Tremain to make a contribution on the Hawke’s Bay District Health Board. Is there anyone opposed to that course of action? It appears not. If there are no further speakers on the Waitemata District Health Board I will put the question on that and then we will accept the call on the other. I need to think about that because we did put the question so you will be making a debate without the question being put—OK? I will now put the question on the Waitemata District Health Board. 
Chris Hipkins 
: Leave for the question to be put again. 
The CHAIRPERSON (Eric Roy) 
: We will deal with this one first. 
Report noted. 
Hawke’s Bay District Health Board 
CHRIS TREMAIN (National—Napier) 
: 
 I thank you Mr Chairperson Roy for putting my leave request and the Opposition for granting me the opportunity to speak in this debate on the Hawke’s Bay District Health Board. I wanted to speak about the Hawke’s Bay District Health Board because over the last 3 years it has made significant progress. I acknowledge the chair Kevin Atkinson the chief executive officer Kevin Snee and his chief operating officer Warwick Frater. They have done an exceptional job of turning round this district health board lifting it from the bottom of the not-so-well-performing district health boards to the middle of the pack and in some areas of the six key performance indicators it is actually performing at the top of its game. I want to compliment the Hawke’s Bay District Health Board and make sure it is aware that members from across the Chamber are appreciative of its efforts to deliver better health care to the people of New Zealand—in this case the people of Hawke’s Bay. 
The Hawke’s Bay District Health Board receives about $418 million for the area each year and that covers the area right up to Wairoa and Mahia and further south to central Hawke’s Bay. The board received another $33 million in Budget 2010-11 which has enhanced its ability to deliver. In my own electorate of Napier that additional funding has been significant. Just a few short years ago the Wellesley Road Health Centre in particular was facing a difficult period. It had got to the end of a 10-year lease and the lease was coming up for renewal at an extremely high cost so the district health board was faced with moving on from that lease. The board renegotiated the lease bringing down the lease costs and now we have a secure integrated health facility in Napier at a much lower rate for another 10 years. What is great news in particular is that the Ministry of Health under the leadership of Tony Ryall is now investing in that centre. We are seeing increased specialist appointments the investment of another $500000 into new digital radiology equipment and the rolling out of new technology into that facility which is absolutely fantastic news. 
In Wairoa there have been issues in attracting doctors to that area so the voluntary bonding scheme is certainly helping there. In particular what Kevin Snee and his team have done is to merge some of the GP practices together into an integrated family health centre based in the old hospital facility there. Again X-ray equipment has been brought into that facility and once again it is a far more practical and sustainable facility for the people of Wairoa. 
I will finish my speech by touching on the work of the immunisation team who are now recognised around New Zealand as the top team in respect of the six key performance indicators that Minister Ryall has given. I particularly acknowledge Margaret Dalton and the healthy population teams—all the primary-care nurses. This is an example of a woman and her team who have got the wider public health system together and made huge gains in the immunisation of Hawke’s Bay people and particularly of babies. We have a record 92 percent of our under 2-year-olds immunised which is significantly up on what was previously delivered there. 
I once again thank members for the opportunity to speak on this district health board. It has made huge progress under good leadership from the board and strong leadership from Kevin Snee as the new chief executive officer. I am proud that the district health board is delivering fantastic services for my community. Thank you. 
The CHAIRPERSON (Eric Roy) 
: Because we revisited the decision I will re-put the question. 
Report noted. 
Meridian Energy 
Hon DAVID PARKER (Labour) 
: 
 Meridian Energy is of course one of the three Government-owned electricity generation companies that the Government says it will if re-elected sell half of. 
Katrina Shanks 
: No that’s not true. 
Hon DAVID PARKER 
: I beg the member’s pardon— 
Hon Member 
: 49. 
Hon DAVID PARKER 
: Forty-nine percent of—half. If the debate was between 49 percent and 50 percent we probably would not be having it. The real debate here is about why the Government is proposing to do this and in the context of this debate what is wrong with the performance of this company in its current ownership structure. The answer to those questions is that there is nothing wrong with the company’s performance and its current structure. Indeed Treasury in its papers released with the Budget said that it is unlikely there will be a material improvement in the way in which this company operates as a consequence of half of it being privatised. 
The financial review report from the Commerce Committee shows that in the year under review the net profit of Meridian was $184 million. It paid two dividends: one of $89 million followed by a final dividend of $68 million—a total of about $150 million in dividends in one year alone. It makes no sense to sell these companies and Meridian is a good example of why that does not need to occur. Why then is the Government doing it? It is doing it because it has got New Zealand into a situation of a $16.7 billion deficit and its members have given themselves the excuse that as a consequence of their own conduct in putting forward unaffordable tax cuts in earlier Budgets they need to do this and that they are justified in doing it. 
I want to deal with one of the other issues. Government members say this is going to improve capital markets in New Zealand to give ma and pa investors and KiwiSavers more choices of what to invest in. The point is firstly that these assets are already owned by New Zealanders through the Government. Every New Zealander owns them not just the top 10 percent who so profited under the National Government’s tax cuts that they received 42 percent of those income tax cuts and therefore are disproportionately likely to be the people who can buy these assets if they are flogged off. But the underlying principle that the Government has to sell well-run Government-owned assets in order to help the private sector is wrong. Are we really so depressed about the ability of New Zealand’s private sector to generate good investment opportunities that we have to sell to the private sector what already exists on the Government’s balance sheet? What a narrow vision of New Zealand’s economic development in the future! 
Changing who owns these companies will not change the productive output of New Zealand’s economy one iota. The companies will still be producing electricity. The only thing that could change to the detriment of our productive sector is that electricity prices will go up. Why do we know that? We hear the Government saying for a start that the private sector is always better at running businesses and it quite rightly points to the fact that there is an increased private sector discipline to maximise shareholder returns. Well we agree with that. 
We agree that private ownership of assets does increase private sector disciplines to maximise shareholder returns. That is why on average Contact Energy and TrustPower charge more for electricity than the State-owned enterprises. That is why if these companies are privatised we will see maximisation of shareholder returns in two ways. Yes we will see further trimming of costs to a minor extent although I have to say salaries and those sorts of overheads are a minor proportion of total costs in these sorts of companies. But the other side of that same coin is that if we accept that private sector disciplines minimise costs so as to maximise shareholder returns they also maximise prices. It is two sides of the same coin—minimising costs and maximising prices. 
That is particularly problematic in this area because we know from reports of the Commerce Commission that the market is not competitive. A report produced under the auspices of the Commerce Commission that came out in May 2009 found that in the period under review New Zealanders on average had been overcharged— 
Hon TONY RYALL (Minister for State Owned Enterprises) 
: 
 On reading the financial review of Meridian Energy it is most interesting to note the focus of the report. The Commerce Committee noted Meridian Energy’s growing wind portfolio and the number of options it had in the pipeline in this area. There were a number of questions on a West Coast project and its impact on the environment—apparently Meridian Energy stood by this project—and it also talked about Meridian Energy’s offshore renewable projects being supported by the committee. 
Of course the other strong feature of any review of Meridian Energy would be the impact of the Christchurch earthquakes. I think in light of the events of yesterday we can all appreciate the sense of frustration anger disappointment or whatever we want to call it in Christchurch. So many people have lived on the edge for so long and to have yet another earthquake is obviously very destabilising and worrying for a lot of families down there but strong leadership is being provided by the authorities I am absolutely sure. An important part of Meridian Energy a company with strong links to Christchurch is the work it is doing to assist the electricity authorities in the whole of the Canterbury area in what they are doing. 
The member opposite David Parker spoke previously about some of the Government’s thinking around the mixed-ownership model. We would not think that Labour members would even acknowledge that electricity prices went up 72 percent in 9 years under the Labour Party opposite when in Government. Over those 9 long years power prices went up 72 percent. Those members can stand up now and wring their hands about the effect of electricity prices on consumers but they just ignore what happened during those Clark years when prices went up 72 percent. Ownership is not a feature of price rises and that is not an argument to be accepted. 
There are a number of reasons why the Government is looking at a mixed-ownership model much like we have with Air New Zealand—a model that was supported by the previous Government—in respect of Meridian Energy and a number of other companies. The first is recognition that the New Zealand economy and the New Zealand Government is facing huge demands on capital. Over the next 4 or 5 years we will need about $32 billion of capital to invest in vital public infrastructure like roads hospitals and schools. We can face the reality that we might have to borrow that money or we can say that some of our current capital is invested in areas that we could free up and move into higher-priority areas. I think hospitals schools and roads and building that infrastructure are vital for the future of New Zealand. 
Secondly a mixed-ownership model provides an opportunity for New Zealanders to invest directly in assets that are important to the New Zealand economy. You know I can recall going to a public meeting in Mount Maunganui in my electorate last year. It was a fascinating meeting. We talked about the fact that the Government was trying to move the incentives to encourage people to invest not in residential property but in productive investments. One of the older guys got up and said: “Well if we’re not to invest in residential property what do you want us to invest in?”. They had spent years investing in Blue Chip and years investing in risky finance companies and had not had the opportunity to invest in blue-chip companies that help build the infrastructure of New Zealand. The mixed-ownership model will give those people an opportunity to have a high-class investment in the future of New Zealand. It will allow them to have a secure investment and a better investment than other options they would have to invest in. 
It also gives our superannuation funds an opportunity to invest back into New Zealand. People’s KiwiSaver people’s savings can be invested in a good quality New Zealand company and there will be improved opportunities for that. There will also be opportunities for improved performance by the companies because we know there is much more scrutiny on the performance of the publicly listed energy companies their capital intentions and their behaviour in the market than there is on Government-owned businesses. There are real opportunities in using the mixed-ownership model to benefit Kiwi mums and dads in the next few years. 
Report noted. 
Mighty River Power 
Hon DAVID PARKER (Labour) 
: 
 Mighty River Power is the next of the companies that the Government proposes to privatise half of. I want to respond to some of the comments made by the Minister for State Owned Enterprises. He said that we have to do this in order for the Government to afford to build roads hospitals and schools. Here is a little lesson in history for Mr Ryall. Governments have to do that every year. They have done that every year since New Zealand was settled—every year. In fact Labour did that when it was in Government. We did that. We bought back Air New Zealand; we did not sell it. We did not run the books of this country so poorly that New Zealand was in the position of having to sell the family silver. Make no mistake—selling the family silver is what the Government is about. It is selling assets that are currently owned by all New Zealanders to the very very small subset of New Zealand that this Government so plainly governs for. It is not for the majority; it is for the small minority that has profited handsomely under this Government—that is 42 percent of the Government’s income tax cuts went to the top 10 percent and they are the people who will be buying shares initially. Then they will take a profit as they sell the shares like that which occurred in respect of Contact Energy and eventually most of those shares will end up in overseas ownership. 
Treasury was express in its advice to this Parliament that came out with the Budget documents. Treasury said that for the Government to achieve its objectives—and I am essentially quoting what Treasury said—significant proportions of overseas ownership in electricity State-owned enterprises would have to occur. Any pretence to the contrary really is just pretence. 
The profit this year of Mighty River Power was $84.6 million. In addition it had dividends. Its dividend of $80 million was paid in 2009-10 after a special dividend of $150 million in the 2008-09 financial year. The performance of these companies managed as part of the Crown portfolio of State-owned enterprises has been very good. It need not be better; the only way profits can go materially higher is if electricity prices go up further. As I said in an earlier contribution there is no doubt that if these companies are sold into private ownership of 49 percent or 50 percent the price of electricity will go up. 
The last contribution from the Minister criticised Labour for the increase in electricity prices during our term in Government. We did two things in response to price increases. Firstly we brought lines increases under control by regulating them which was necessary. The rate of increase dropped dramatically to essentially the rate of inflation. Then under our watch the Commerce Commission tried to get a handle on whether there was overcharging in the electricity wholesale and retail markets. That report did not come out until May 2009 after we had left office. It found an overcharge of 18 percent on average totalling $4.3 billion worth of excessive charges to New Zealand consumers under the period in review. As a consequence the Government should have done something to bring those excessive charges under control. But no Government members have washed their hands of it and in fact since then electricity prices have gone up according to the Minister today by 14 percent. 
Su’a William Sio 
: How much? 
Hon DAVID PARKER 
: They have not decreased; they have gone up by a further 14 percent. If people want to keep those assets in New Zealand ownership if they want to keep control of their power prices and if they want to keep our industries and jobs that are reliant upon large electricity usage and prices being kept under control they can use their choice at the forthcoming election; they have a choice because we are just not going to sell those assets. Most New Zealanders know that those assets have been built up over generations. They are well run and they are profitable. The system works better in a long stringy country such as ours if we have integration of those companies rather than competition in theory but market gouging of consumers in practice. 
The review of Mighty River Power takes us to the same conclusion as the conclusion we got from Meridian Energy: it is a nonsense if we sell off these companies. They are well run and they are profitable at the moment. The Government will not make any more money as a consequence of this sale than it would get out of dividends because its interest bill savings would be lower if it kept the assets and took the dividends. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is a privilege to speak on the financial review of Mighty River Power. I start by saying what a great company—what a great company—Mighty River Power is in the types of businesses that it runs throughout this country and also around the world. Part of its headquarters is in my electorate of Maungakiekie and people of my electorate are certainly thankful for the employment opportunities it provides locally. It runs a very efficient and effective enterprise and it is certainly welcome in my electorate if not in Mr Parker’s electorate. 
Todd McClay 
: He hasn’t got an electorate. 
PESETA SAM LOTU-IIGA 
: Of course; that is right. He lost his electorate some years ago. 
This debate has turned to the mixed-ownership model of our energy companies. It must be said that this mixed-ownership model has worked in the past. The honourable Minister for State Owned Enterprises referred to the current state of Air New Zealand but also Telstra and numerous companies around the world have used the mixed-ownership model effectively. They have used it firstly to raise capital and secondly to provide investment opportunities for investors—both private and family investors and also for superannuation funds. The mixed-ownership model will provide investment opportunities for our superannuation funds our KiwiSaver investment funds and our capital markets which are in dire need of expansion. 
The Minister also referred to the fact that the partial sale of these companies would result in assets being purchased—other infrastructure assets. Currently as we all know from Budget 2011 there is a $16.7 billion deficit for this financial year. One of the ways of addressing this deficit is through our infrastructure and investment strategy which requires funding. We do not want to go to Japanese financial institutions or Chinese lenders for that capital. Capital is available in this country through the mixed-ownership model and it will provide the roads schools and broadband investment we spoke about earlier this afternoon. But also it is about providing for those high-priority infrastructure projects that this country needs in order to lift our economic growth and to lift productivity for our businesses across this country. 
Private investment will bring with it financial discipline. It brings with it the discipline of being in a financial market where analysts and equity specialists can break down a company’s assets and liabilities can break down the balance sheet and its profitability and can break down its long-term sustainability as an enterprise. That is certainly one of the advantages of this ownership model. 
Mr Parker in the previous speech referred to the fact that such companies maximise prices and minimise costs and that the two are actually interchangeable. I beg to differ because minimising costs and running corporations or businesses effectively is a far cry from maximising prices. They are two distinct things. Mr Parker also failed to mention that the other way of increasing an organisation’s capability is to increase volume. That is exactly what Mighty River Power is doing—that is exactly what it is doing. It is investing overseas. We heard from Doug Heffernan in his testimony that Mighty River Power committed US$250 million for investment in geothermal developments overseas and it is in partnership with overseas organisations such as GeoGlobal Energy. These organisations are stable they are market leaders and in collaboration with Mighty River Power they are leading the world in geothermal technology. 
Report noted. 
New Zealand Railways Corporation 
CLARE CURRAN (Labour—Dunedin South) 
: 
 Last Thursday was a tragic day in Dunedin and it was a tragic day for our skilled workforce in this nation. Last Thursday 41 skilled jobs were announced as being made redundant—41 skilled jobs in the critical area of manufacturing in this country which is the bedrock of our workforce and the bedrock of our rail engineering business. Forty-one skilled jobs will go; 41 families will be affected; 41 incomes and the tax paid will be lost to the local economy and that tax will be lost to the country. There will be 41 potential extra additions to the dole queue in Dunedin—and for what? 
Steven Joyce said today on behalf of the Prime Minister that no analysis had been done by his Government of the lost income the lost GST and the extra cost of benefits caused by his Government’s decision to have these lay-offs. It is just extraordinary. Yet in the Budget a few weeks ago we heard from both the Prime Minister and the Minister of Finance that somehow miraculously 170000 new jobs were going to be created in this economy over the next 4 years. When the Acting Minister for Economic Development was put on the spot about this last week in the Commerce Committee and was asked where those jobs are coming from and what analysis has been done by him or his department on what sectors the jobs would come from the answer was that they had not done any analysis and they do not know. They just think it will happen. 
Jobs have been lost in rail engineering and KiwiRail and mythical jobs are supposedly being created. Dunedin has been lied to. When the Minister of Transport Steven Joyce was asked last Thursday in this House about those KiwiRail job losses he said that KiwiRail must be able to operate without political interference despite promising last May that there would be plenty of jobs for the workers at Hillside. This also directly contradicted KiwiRail’s chief executive officer Jim Quinn who has been consistently saying that he has to take that narrow commercial focus because of Government policy. 
So somebody is not telling the truth here. Either it is Government policy that KiwiRail takes a narrow commercial approach and is not interested in the economic flow-on effects to the local economy of investing taxpayers’ money in those jobs and in that industry or it is not. It makes a mockery of the attempts in Dunedin for the last 18 months by a group of committed people including the Dunedin City Council the Chamber of Commerce the engineering cluster of nearly 70 firms in Dunedin all of the MPs the rail union and KiwiRail itself—until it basically got gagged—to sit around the table and try to come up with a strong economic case for keeping work in Dunedin and for keeping rail engineering business in this country. It is a mockery. 
What has happened since those redundancies have been announced? The local National list MP has been strangely silent. He sat around that table. He said he was committed. He said he was taking the case to Wellington. Where is the evidence of that case being taken to Wellington? And where is the evidence that the Government is listening? There is no evidence at all. It has been obvious for 2½ years that this Government is not committed to those workshops. It is not committed to the rail engineering business in this country and wants to get rid of it and will get rid of it. That is Government policy. 
KiwiRail will not guarantee the future of the rail workshops. Instead the Government has clearly signalled that there is no future for a rail engineering model that is about building and refurbishing our rolling stock. Any jobs that will remain will be maintenance and repair—probably not in Dunedin. Where is the local National Party member on this issue? 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 There is a bit of a double standard operating in this Government. The Government is willing to intervene when the interests of its corporate mates are at risk but when it comes to protecting Kiwi jobs the Government is totally and utterly absent and does not give a stuff about them. No better example exists than in the way the Government is treating KiwiRail. I speak as a resident of the Hutt Valley where we have one of the two major rail workshops in the country the Hutt Railway Workshops in Woburn. 
The CHAIRPERSON (Lindsay Tisch) 
: I remind the member that we are not talking about KiwiRail; we are talking about the Railways Corporation. Focus in on the Railways Corporation not on KiwiRail. 
CHRIS HIPKINS 
: I am happy to speak about the New Zealand Railways Corporation and the Government’s lack of commitment to rail in general in this country. In this year’s Budget no relief was provided to rail. In fact we in this country treat rail entirely differently from the way we treat roads. We put financial constraints on rail that we simply do not put on our roading system. That is one of the reasons why rail in this country is facing such a tough time. We have already seen lines being closed in provincial New Zealand because of this Government. The Stratford line has already been mothballed. The Napier to Gisborne line is at risk as is the Auckland to Whangarei line and the northern Wairarapa line. They are all at risk under this Government because this Government simply does not want to invest in rail. 
It is quite happy to go out and provide corporate subsidies to the people it supports and who support the Government but it is not willing to intervene to protect Kiwi jobs to make sure that investment in infrastructure stays in New Zealand and to make sure that we put that investment to good use. Rail provides an amazing opportunity to invest not only in New Zealand jobs but also in the future of the New Zealand workforce. We should be building trains locally here in New Zealand and using the opportunity of building those trains to train the future workforce of this country. 
Clare Curran 
: Look at him laughing. You think it’s a joke. 
CHRIS HIPKINS 
: I know that Wayne Mapp thinks it is hilarious that New Zealand would actually back New Zealand workers and New Zealand jobs. I know that is a point of humour for the National Government because it does not believe in doing that. The Government would much rather have those jobs exported off to China rather than invest in buying locally and in supporting the local economy. 
I will talk about the fact that the rail system is vital to our economic future as a country. We cannot have every piece of freight on the road and we cannot simply restrict ourselves to the main trunk line which is what this Government wants to do. The main trunk line through the centre of the North Island and the interisland ferries are all this Government is interested in supporting. I think we need a more comprehensive vision for rail than that. New Zealand’s engineering and manufacturing expertise is being lost because of the lack of vision by this Government. 
New Zealand should do what other successful economies do. Other successful economies around the world back themselves and their own workers and they use the power of Government procurement for the benefit of their own countries and their own economies. Why are we in New Zealand not willing to do that? Why is this Government not willing to back Kiwi workers and the Kiwi economy? It is purely ideological. The Government is willing to put our laws and regulations up for sale for its corporate mates Warner Bros and Skycity. It is willing to do that for the film industry and the gambling industry but it is not willing to back the rail workers in this country. Frankly that is disgraceful. New Zealand workers should be given a fair go. 
I do not think we should be exporting jobs offshore. It is time to say that enough is enough. We hold ourselves up as this virtuous country because we simply will not take any steps to protect New Zealand jobs. That is not good enough. We should start in the rail industry by protecting the workers at Hillside and Woburn and by building locally the new trains and wagons that are needed. We have the skilled workforce here in New Zealand. Our workshops can compete if they are given the opportunity to compete. It can be an economically successful option. This Government is simply not willing to consider that. It is willing to intervene for Warner Bros and to prop up Skycity but it is not willing to do anything to protect the jobs in the rail industry in this country. That is a disgrace. 
AMY ADAMS (National—Selwyn) 
: 
 I am very happy to take a call in this debate on the financial review of the New Zealand Railways Corporation. I start by commenting that I found it quite interesting that two fiery and seemingly impassioned speeches have just been made by Labour members but when the Finance and Expenditure Committee looked at the financial review of the New Zealand Railways Corporation— 
Hon Nathan Guy 
: What did they say? 
AMY ADAMS 
: —the Labour members of the committee said they had no matters to bring to the attention of the committee. Is that not interesting? They could not be bothered reviewing the New Zealand Railways Corporation at the select committee but now apparently all the evils of the world are being revealed and it is a tragedy that they have to debate and bring to the attention of the Committee. 
The New Zealand Railways Corporation is the story of Labour’s economic delinquency. Michael Cullen in his brilliance paid $1 billion for an asset worth a mere $200 million. In that one sentence is a picture of exactly why we inherited this country in the mess that we did. Labour went out and paid $1 billion for an asset worth $200 million. That is the sort of economic management that Labour wants to take to the New Zealand public and say to them that they should get behind it. Well that is not going to happen. 
The National-led Government is committed to New Zealand rail. It is committed to turning round the broken asset that we inherited from the last Government. I can tell members that we are not going to do that by going back to the bad old days of subsidies and tariffs when New Zealand was told that it was not good enough to compete on a global stage and that the only way it would get work was through subsidies. We say to New Zealand that we can compete. We have shown that time and time again. We can be the world’s best but we are not necessarily going to be world leaders in every single area of manufacturing. 
This Government has just seen the purchase of 20 new locomotives. Yes they came out of China but I can tell members this: they were on time they were on budget they are twice as powerful as the existing stock they are quieter they are more efficient and they are the sort of railway stock that will turn this asset round. If that party had not destroyed the New Zealand economy there would be more money to spend. As it is we have to be very careful with our spend. We spent a quarter of a billion dollars in Budget 2010 on New Zealand Railways Corporation and a further quarter of a billion dollars in this Budget on New Zealand Railways Corporation. 
We have made a massive commitment to the Auckland passenger rail system. 
Hon Nathan Guy 
: That’s right. 
AMY ADAMS 
: In my good friend the Hon Nathan Guy’s electorate we are right now rolling out the electrification of the extension to Waikanae and double-tracking through that electorate. This Government is committed to rail and to turning round the New Zealand Railways Corporation into an asset that is of benefit to the New Zealand taxpayer. I can tell members that it certainly was not of benefit when we inherited it from the last Labour Government. But we will not go back to the days of subsidies and tariffs. If Labour wants to go out there and grandstand on going back to the bad old days of tariffs and subsidies and inefficient manufacturers then I dare it to do that. I dare Labour members to stand up and say that they are proposing to go back to subsidising inefficient production and putting tariffs in place when everyone who is a sensible thinker knows we are moving into a free-market economy where efficiencies and global competitiveness is what will lift this country’s production. It certainly is not the head-in-the-sand economic delinquency that we saw from the Labour Government for 9 years which saw it pay $1 billion for a $200 million asset. 
I will say one further thing in my contribution. I want to commend KiwiRail for the work it has done in my electorate to improve rail safety. It has installed lights and warning signals at several of the rural crossings in my electorate that have been of concern to me for some time. I have been discussing this with KiwiRail since I came in in 2008. KiwiRail has listened and responded and as I result I am very pleased that the people of Selwyn will be that much safer when they are crossing the tracks in rural parts of my electorate. KiwiRail is responsive and it is working to improve its services. I think this country can be increasingly proud of the rail system we have and that is thanks to the hard work of Minister Joyce Associate Minister Guy and this National-led Government to turn round the asset of the New Zealand Railways Corporation. 
I also commend the Transport and Industrial Relations Committee which is ably chaired by my friend David Bennett which considered this matter. I would have thought that if Labour was that concerned about these crocodile tears we are seeing then the previous Government would not have overseen the signing off of the Matangi contract. Labour does not talk about that does it? The previous Government signed a contract for the Matangi purchase to Korea—to Korea! It was not to New Zealand but to Korea. 
Report noted. 
Accident Compensation Corporation 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 It is so appropriate that we go from the financial disaster that Labour left for this Government on rail and come to ACC. We know that in the last year Labour was in office this corporation lost $2.4 billion. In the following year the year that crossed over between the two Governments ACC lost a further $4.8 billion. That amounts to over $4000 for every New Zealand household—$4000 for every New Zealand household. In the course of that aftermath we had the inquiry that said that not only had there been these huge losses but— 
The CHAIRPERSON (Lindsay Tisch) 
: The member cannot say “Tell the truth.” I ask the member to apologise for that and withdraw the comment. 
Chris Hipkins 
: I withdraw and apologise. 
Hon Dr NICK SMITH 
: It is a matter of public record that the Public Finance Act was breached in the non-disclosure— 
Hon Maryan Street 
: No it’s not. That is absolutely untrue. 
Hon Dr NICK SMITH 
: The guilty lady Maryan Street the one who presided over ACC in her first year in good shape— 
Hon Maryan Street 
: I raise a point of order Mr Chairperson. You have just pulled up my colleague for requiring the Minister by interjection to tell the truth. The Minister then went on to say something exactly opposite to the findings of that public inquiry which was undertaken by Mr English. That is not the truth. 
The CHAIRPERSON (Lindsay Tisch) 
: These are debating points. The member will have an opportunity to rebut what the Minister has said as any member can. My previous point is a very clear ruling—I refer to Speaker’s ruling 43/1 which I brought up the member’s colleague for earlier. But the point the member has made is something that she can rebut when the time comes. 
Hon Dr NICK SMITH 
: It is a matter of public record that the Public Finance Act was breached and that is extremely serious. Maryan Street— 
Hon Maryan Street 
: I raise a point of order Mr Chairperson. I take offence at that. The Minister is perpetuating a mistruth. He is misleading this Committee. That is absolutely the wrong conclusion from that public inquiry which the Minister of Finance ordered. It came out and said there was no breach of the Public Finance Act. 
The CHAIRPERSON (Lindsay Tisch) 
: I have previously ruled that although the member is obviously not happy with what the Minister has said these are debating points and the member will have the opportunity to rebut them if she wishes to take a call. The Minister did not argue the point about telling the truth which was the point I brought up earlier on. There is a very clear ruling Speaker’s ruling 43/1 that states that saying “Tell the truth!” is out of order. There is a very clear message here. The phrase “Tell the truth!” is unparliamentary. The Minister did not say it. I say to the member that she will have the opportunity to rebut all the points that have come forward. 
Hon Dr NICK SMITH 
: I can understand why Labour is so sensitive about this point because it goes to the core of the issues and the debates this year about the competency of the Government to manage the public’s finances. It is a matter of public record that the previous Labour Government breached the Public Finance Act in not disclosing hundreds of millions of dollars of losses in ACC. That member Maryan Street as the Minister for ACC at the time must accept reasonability for that. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I will quickly correct what the Minister for ACC has just claimed. The independent inquiry that his Government called for found that the previous Government’s Ministers did not do anything wrong. That was clearly stated by this Government’s own independent inquiry. To suggest otherwise is simply untrue—full stop end of story. 
This Government is hanging a massive “For Sale” sign over New Zealand and ACC is smack-bang in the middle of the fire-sale list. This Government is interested only in hocking off everything as fast as it possibly can. Nick Smith’s talk of a financial crisis in accident compensation is absolute nonsense. I tell him to look at the financial review from the financial year in question. ACC was over $2.5 billion in surplus which is a $2.5 billion decrease in ACC’s liabilities this year. ACC is not now and never has been broke or broken despite Nick Smith’s best attempts to suggest otherwise. Scaremongering has been done by Nick Smith because this National Government has one agenda in accident compensation which is to carve it up and hock it off to its private sector mates. 
National does not believe in accident compensation as it stands now. It believes that it should be provided by the private for-profit insurance industry. That is the National Party’s sole goal in accident compensation: to prepare accident compensation to be privatised. It can use terms like “competition” but its model of competition is privatisation by any other name. 
Nick Smith is offensive enough to go around saying that it is no different to deregulating the broadcasting industry. I say that there is one major difference: New Zealanders did not give up any of their civil or legal rights under broadcasting law. Under the accident compensation scheme they have given up their legal rights in order to be part of the scheme. This Government sees that New Zealanders giving up their legal rights to be part of accident compensation creates all sorts of fascinating interesting profit-making opportunities for its corporate insurance mates. I think that is wrong—I think that is fundamentally wrong. 
This Labour Opposition will be arguing and fighting against the Government’s plans to privatise accident compensation. We send a very clear word of warning to the insurance industry: insurers will invest in accident compensation at their own peril. A future Labour Government—and we already have a commitment from the Greens to support us in this—will not support this change. We have reversed a National Government’s privatisation of accident compensation before and we will do it again. 
This change will not stand because ultimately it undermines what should be a world-leading scheme. Despite all Nick Smith’s scaremongering the Government has still not come up with evidence to suggest that this change will work and that New Zealanders will end up with better cover or better compensation as a result. The independent PricewaterhouseCoopers study found that ACC is already offering the lowest cost accident cover in the developed world. Nick Smith’s own officials provided evidence to the Transport and Industrial Relations Committee that New Zealand employers are paying on average half what Australian employers are paying for accident cover. 
Perhaps that is what National meant by catching up with Australia: loading a whole lot more compliance costs on to our employers. That is what this Government seems to think is meant by catching up with Australia. National certainly does not seem to want to catch Australia when it comes to wages any more; in fact Bill English thinks that it is a competitive advantage to have lower wages than Australia. 
Moving back to accident compensation I say that this Government manufactured a crisis in accident compensation. It is not broke. It never has been broke and it is not broken. This is all part of the National Party’s agenda to strip out accident compensation and hand it over to the private insurance industry. New Zealanders will end up paying more to get less. The only way the private insurance industry will be able to make money out of accident compensation is by declining more claims or decreasing cover and that is fundamentally wrong. New Zealanders having given up their legal rights in order to be part of the scheme deserve better than that. 
As the Christchurch earthquake showed us a lot of unforeseen things can happen in this country. Accident compensation was there when Cantabrians needed it and the extension of accident compensation cover that Nick Smith and the Government were able to offer following the Christchurch earthquake would not have been possible if he had already privatised accident compensation as he intends to do. 
Nick Smith and the National Government are hanging a massive “For Sale” sign over New Zealand over our State-owned assets over accident compensation and over everything else—even over our law books—and saying that it is for sale if the foreign investors are willing to pay for it. 
HILARY CALVERT (ACT) 
: 
 There has been a lot of agreement about the Accident Compensation Corporation here this afternoon and I would like to recap that. It has been agreed that there was a loss of $2.4 billion in 2007-08 followed by the Labour Government outdoing itself with a $4.8 billion blowout in 2008-09 and now there is a surplus of $2.5 billion. 
David Shearer 
: That’s remarkable isn’t it? 
HILARY CALVERT 
: That is a remarkable turn-round by this National-led Government. The Opposition has argued constantly—and continues to argue this evening—that there was a never a problem and that things are just fine. Well losing $4.8 billion of New Zealand’s money is not fine. 
Costs and claims have also dropped substantially and there is something else to celebrate here. Labour it seems equates higher claim costs with success. Lower costs come from fewer claims and improved rehabilitation and I am sure employers and employees alike prefer that definition of success. 
Much has been made of the $638 million savings over 4 years to the non-earners account. Those who object would prefer that the Government keeps increasing that account for all eternity. It is simply not sustainable. When faced with a record national deficit the country must spend less not more. We must live within our means not borrow and hope. 
With accident compensation National again with ACT’s help is on the right track. The proposed extension of the Accredited Employers Programme from next April is also to be applauded. Employers do a far better job of managing injury and rehabilitation costs than the State does. The Accredited Employers Programme has so far resulted in 12 percent fewer claims and 15 percent lower costs. Only 136 major employers are part of the programme and it is past time that more were allowed to reap the scheme’s benefits. 
One change that ACT is particularly excited about is the plan to open ACC’s work account to competition. This is an ACT initiative and we are proud of it. It is hardly revolutionary of course. A mix of private and State insurance is the norm in most developed nations. It worked very well when New Zealand last tried it in 1998. Levies went down as did the number of accidents. It was scrapped by Labour not because of poor results but because of poor ideology. 
Choice forces everyone—employers employees and ACC itself—to lift their game. Let us put it this way. If a private insurance company suffered a $4.8 billion loss in 1 year it would be out of business—unless of course the Government added it to its long list of taxpayer-funded bail-outs. 
I will quote my colleague Sir Roger Douglas at this point. In this same debate 2 years ago Sir Roger said the following about ACC: “The real problem with ACC is that it is a monopoly … Monopolies always fail and they fail for one simple reason: they are not required to offer cost-effective and good-quality services to attract customers. Monopolies fail to meet consumer demand because consumers simply have no other choice. Monopolies fail to reduce costs because they have no competition to drive out their high-cost structure. Only competition in this area will make the fundamental changes and restore ACC to some level of reasonable performance.” That statement was correct then it is correct now and it always will be. It holds true whether we are talking about accident compensation or any other part of society. 
It is worth noting that in 2005 under the then leader Don Brash National’s policy was to open to competition all aspects of accident compensation except for the non-earners account. This has always been ACT policy and it remains so. When the Government sees the benefits of competition in the work account we hope it looks to implement National’s 2005 policy. 
MICHAEL WOODHOUSE (National) 
: 
 One of the things that perplex me is that if Labour is so comfortable with its performance in its term in Government is so relaxed that there was no problem with the Accident Compensation Corporation as Mr Hipkins claims and that everything was all right despite these so-called paper losses why does the member who was responsible for the debacle that was accident compensation under Labour get so excited every time we point out those shortcomings? 
In the interests of reinforcing those shortcomings I will reiterate what the Minister in the chair the Minister for ACC has said. In August 2008 the Labour Cabinet had every opportunity to include in the Pre-election Economic and Fiscal Update the $305168000 that ACC and the Department of Labour had told the Labour Government was required in the non-earners account. The Labour Government chose not to act on the basis that the matter had not been subject to sufficient detailed scrutiny. How on earth can one get more detailed scrutiny than down to the nearest dollar? 
The report into that matter showed unequivocally that choosing not to act was in breach of the Public Finance Act. Labour’s response was to hang Treasury out to dry. So much for loyalty to the Government department that stood by the Labour Government! That was very disloyal in my view. 
Hon Maryan Street 
: That is quite wrong. 
MICHAEL WOODHOUSE 
: Amongst all that we have not just the $2.4 billion that was presided over by the member Maryan Street who is ferreting on but half of the $4.8 billion deficit that was incurred in the first 6 months after National came to power should also be taken responsibility for by Labour. 
There are 7.2 billion reasons to improve the performance of ACC and that party still says there were no problems. A couple of financial reviews ago when the member interjecting was no longer the spokesperson on ACC the then spokesman Mr Parker came to the financial review and made some very interesting comments about the Accredited Employers Programme which the previous speaker Hilary Calvert referred to. He basically said there was no evidence of improvements in rehabilitation or cost as a consequence of the Accredited Employers Programme. 
That comment was pretty consistent with Labour’s view that the only people who can operate ACC are the Government and ACC. There are a couple of areas where Labour very begrudgingly accepted that that was not the case. The first was elective surgery where 88 percent of all treatments are undertaken in the private sector. When Labour came to power it was very keen to do something about that but then when Labour realised how efficient how cost-effective and how important that elective surgery was to rehabilitation it left it alone. 
The other thing that Labour very begrudgingly accepted was the Accredited Employers Programme—the partnership programme. Despite the programme being very much at odds with Labour’s ideological beliefs Labour left the programme alone although I note that the number of people in the Accredited Employers Programme drifted off in the last few years. 
Mr Parker claimed there was a lack of evidence to support it so I was delighted to see amongst all of the stocktake reports that were prepared for the Minister in June last year that the  
Review of Employer-managed Workplace Injury Claims  
had exactly answered those questions. It asked whether accredited employers show lower medical and rehabilitation costs. They do not; they show higher rehabilitation costs and medical costs. But guess what that does? It lowers weekly compensation costs. Employers invest early because they know that getting people back to work faster and in a lasting way reduces total costs to the employer. The review also found that the time between the date of the first injury— 
Hon Maryan Street 
: It’s not what he’s talking about. 
MICHAEL WOODHOUSE 
: It is what I am talking about; I am talking about the Accredited Employers Programme. We will come on to what the Government is proposing amongst the discussion document on increasing choice. Goodness me! “Choice” is a word that is the antithesis of Labour’s ideology. Choice? No we could not have that. 
The  
Review of Employer-managed Workplace Injury Claims 
 by Martin Jenkins and the ACC’s stocktake report unequivocally showed that there was faster rehabilitation higher costs on treatment lower costs on weekly compensation and overall better outcomes not only for employers but also for employees. They also showed that the really good accredited employers are doing the rehabilitation not just for the work-related personal injuries but for the personal injuries that are not work related. They do not really care how these people got injured; they just want them back at work. And so do we which is why this document is a really good start. I look forward to the consultation on it. We keep ACC in the game. I think that is a really good improvement on the sensible changes that were made in 1998. If employers do not think there is cost-benefit in it they do not need to change. 
Report noted. 
New Zealand Qualifications Authority 
CATHERINE DELAHUNTY (Green) 
: 
 The Green Party would like to take a call on the New Zealand Qualifications Authority and the issues associated with it because we think that in education the distinctions between the roles of different agencies are sometimes very important. 
We are not criticising the New Zealand Qualifications Authority this evening. We think the New Zealand Qualifications Authority has a pretty clearly defined and distinct role but we are quite concerned that a decision has been made with the Budget or a proposal amongst the many rumoured mergers that there may be a merger between the New Zealand Qualifications Authority and the Education Review Office. It is quite an important issue when one thinks about the relative functions of the New Zealand Qualifications Authority and the Education Review Office. 
Jo Goodhew 
: I raise a point of order Mr Chairperson. I just ask for clarification. I believe we are dealing with the financial review of the New Zealand Qualifications Authority as opposed to any announcements in the Budget. 
The CHAIRPERSON (Lindsay Tisch) 
: I hear what the member says. The brief is that we are looking at organisations’ performance as recorded in 2010 and current operations. There is some leeway although I remind the member that we are on the financial review of the New Zealand Qualifications Authority. 
CATHERINE DELAHUNTY 
: In terms of the current operations of the New Zealand Qualifications Authority the Green Party thinks that the authority has a very distinct role: dealing with qualifications in the education sector. We believe that that role needs to be maintained and upheld. 
In the past year the whole issue of qualifications has been the subject of a major political debate not only within the New Zealand Qualifications Authority but right throughout the education sector. We think it is very important that the New Zealand Qualifications Authority should continue to focus on the level of qualifications that it does best which is right across the sector of a certain age group of young people. We think the New Zealand Qualifications Authority does a reasonable job of that but there are current discussions about merging the New Zealand Qualifications Authority with the Education Review Office and although that may be seen as the future we have to look at both the current financial performance of an organisation and its capacity at present to carry out any broader functions. We will be concerned if the functions of the New Zealand Qualifications Authority do not carry on as they are currently described but become part of a broader agency that is focused purely on measuring and assessment. 
I myself have written New Zealand Qualifications Authority documents. I worked in polytechnics for many years and I understand what the New Zealand Qualifications Authority does but I do not think it is the same thing as the kind of educational review that other agencies carry out. Its functions do not need to be expanded into areas that could potentially risk the integrity of what goes on in schools. Although we are not critiquing the authority’s financial performance we are saying that there is a risk if we start to broaden its functions and what it could mean. 
Those two agencies that have been signalled have very different functions and we do not want to see the Education Review Office become more like the New Zealand Qualifications Authority. The functions of the New Zealand Qualifications Authority are quite clearly described. We would rather see the New Zealand Qualifications Authority continue to do its job without subsuming any other agencies. In its current practice it does not go into schools and measure in the way the Education Review Office does which is a deep and profound whole-of-school approach. The New Zealand Qualifications Authority’s role is to look at very restricted performance in terms of certain outcomes and certain unit standards. 
The authority is no longer new. It has developed through a lot of struggles and it has become quite proficient in the way it does that but if it should subsume the Education Review Office we would have very deep concerns. That belongs in a wider debate. The role of the New Zealand Qualifications Authority needs to be part of that wider debate about what we are doing and what we have done in the past year on education standards in this country. 
We are in the middle of a fierce political debate about the type of education we want at all levels in this country. We do not want to see a loss of the holistic and the broad in schools in exchange for the narrow. One of the struggles that those of us who started teaching early on under the New Zealand Qualifications Authority had was that there was a certain mechanistic narrowing of the curriculum. That is appropriate for certain types of learning but it is not appropriate for the compulsory sector. We would have grave concerns if that happened and if the authority was moved into a broader role and stepped outside the narrow definition of what the New Zealand Qualifications Authority is currently achieving. I say it is a broader political debate because right across this country right now a struggle is going on about whether we narrow education or whether we broaden it. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
CATHERINE DELAHUNTY 
: Before dinner I was waxing lyrical about the importance of not merging the New Zealand Qualifications Authority with the Education Review Office. I was about to speak about the importance of protecting jobs in education. I suspect that I may have run out of time to expand on that theme. I acknowledge to the young people in the gallery how important education is. 
The CHAIRPERSON (H V Ross Robertson) 
: The member must address through the Chair not the gallery. 
CATHERINE DELAHUNTY 
: My apologies Mr Chair. I acknowledge how important education is to young people so we need to get it right. With the New Zealand Qualifications Authority it has improved a lot. There are reasons why the Education and Science Committee did not review the authority this year but I reviewed it and I had a look at it. 
Report noted. 
New Zealand Teachers Council 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Chair. Tena tatou katoa. It is good to see us here tonight looking at Crown entities in particular—in this case the New Zealand Teachers Council. [ 
Interruption 
] That is right. 
It is often said in education circles that good teachers are costly but bad teachers cost more. That is what they say. The New Zealand Teachers Council is the professional body for all registered teachers working in any teaching situation. It should theoretically be the body that distinguishes between the good and the not so good and between those who inspire and those who merely tell. The council’s purpose is to provide professional leadership in teaching to enhance the professional status of teachers in schools and early childhood education and to contribute to a safe and high-quality teaching and learning environment. Members will understand then that the Maori Party has been interested in looking at the progress achieved by the Teachers Council with a particular focus on Maori education. 
Despite some positive trends educational indicators for Maori generally compare poorly with those of the total population. Maori still have lower rates of participation at early childhood level higher truancy rates and lower mean scores for reading maths and scientific literacy. Maori are less likely to stay on at school to the age of 17½ years and are less likely to leave school with high qualifications. 
What does this tell us about good and bad teachers? Ka Hikitia sums it up: “education system performance has been persistently inequitable for Maori learners … fewer teacher-student interactions less positive feedback more negative comments targeted to Maori learners under-assessment of capability widespread targeting of Maori with ineffective … teaching strategies … failure to uphold mana Maori in education inadvertent teacher racism” and so on. Those are some of the comments that have been made. This is not a Maori Party document; it is the Government’s own publication. It is a Ministry of Education resource that defines issues that impact on teacher credibility and success with Maori. 
How then can we get to the 2009-10 financial review of the New Zealand Teachers Council and find that Maori education or Maori students are not even mentioned? How does a select committee comprised of Labour National ACT and Maori MPs—including Kelvin Davis a former school principal—not appear to have asked even one question about Maori? It does not take much investigation work to find an organisation briefing paper presented to the members of the Education and Science Committee. This is a two-page paper. It highlights significant variations between estimated and actual performance in the annual report: “a report to identify further research and policy development concerning the reo proficiency required of graduates of Maori medium initial teacher education programmes that was due by March 2010 has not been completed”. 
The question I ask is why. And why was that question not asked by the committee? The financial review’s introductory statement states quite clearly that part of the role of the Teachers Council is ensuring that individual teachers have gained the skills encompassed in teacher education programmes such as proficiency in te reo and the ability to motivate students. So why not ask what was going on that meant that the Teachers Council did not complete such a vital report? 
If our own Education and Science Committee does not ask the questions and the Teachers Council does not complete the work then perhaps we need to look elsewhere for robust advice on teacher professional development. Just last week the Maori Youth Council presented a report to the Minister of Maori Affairs that had three simple recommendations to improve Maori youth success in the education system. It recommended that Government: “1 Requires all secondary school teachers in New Zealand to complete a level 1 Te Reo Maori and Maori Education/Tikanga course at a tertiary institution; 2 Provides the resources for existing teachers to sit at least level 1 Te Reo Maori as a part of their professional development and ensures that teachers have the resources to effectively deliver on the objectives of  
Ka Hikitia—Managing for Success 
; and 3 Encourages schools to actively strengthen the relationships between teachers and the wider community through hui with iwi or hapu to ensure that schools have the discretion to develop programmes that suit the needs of the community.” Perhaps these recommendations can be picked up. 
I close by saying that they say the art of teaching is the art of assisting discovery. I hope that the solid foundation provided by the Maori Youth Council will assist the Teachers Council to discover some of the key skills we believe are required to ensure that all of our children benefit from excellent teaching and quality teachers. 
Report noted. 
New Zealand Trade and Enterprise 
Hon MARYAN STREET (Labour) 
: 
 I rise to speak on the New Zealand Trade and Enterprise financial review. This is a critical arm of our international experience but it is also a critical arm of our economic strategy. New Zealand Trade and Enterprise is located within the Ministry of Economic Development. It is quite a complicated accountability mechanism in that a number of Ministers have an interest in the operation of New Zealand Trade and Enterprise. 
I draw attention to the fact that some points of dissatisfaction have been registered with the performance of New Zealand Trade and Enterprise. They need to be addressed. They need to be addressed in a number of ways. 
In the first instance I say that in the course of my duties as the Opposition spokesperson on foreign affairs and trade and overseas development assistance I have had the opportunity to visit a number of New Zealand Trade and Enterprise offices around the world. I have visited the one in New York the one in Dubai the one in Shanghai and most recently the one in Brasilia. In all of those offices there are highly skilled individuals who are doing their best to promote New Zealand’s economic interests and New Zealand’s investments where that is the appropriate form of partnership with that country or are marketing New Zealand goods overseas. 
We have very good people but we lack a Government vision directing them where they ought to go next. In the financial review done by the Commerce Committee that lack of vision was demonstrated in some of the dissatisfaction registered by some of the clients of New Zealand Trade and Enterprise. In fact the chief executive himself who is relatively new in the role is reported to have said in the select committee that the figure of 84 percent of those who said that New Zealand Trade and Enterprise added value to their business might not accurately reflect the situation and could mask a higher level of dissatisfaction. 
This is not good enough. We need to be able to maximise the opportunities that are being carved out around the world through a sequence of free-trade agreements. As those free-trade agreements are coming on stream—all of them so far initiated by the previous Labour Government—we need to ensure that this Government has the right vision the right emphasis and the right energy and get-up-and-go to make the economy grow through the use and support of very good staff in these offices around the world. They are an integral part not only of our international mission and our international footprint but of the growth of our economy. 
There is a lack of integrated vision a lack of imagination and a lack of willingness in this Government to address the issues that are beginning to stymie our progress in picking up the free-trade agreements that are coming on stream. This needs to be addressed. It is there in the report. There is not universal satisfaction with what New Zealand Trade and Enterprise is doing. I think the blame for that lies at the feet of the Government because I know that the people I have met in the course of my travels work hard to promote New Zealand’s interests and they do it differently in each country. 
Why was expenditure on grants significantly below budget—$46 million compared with $62.8 million the previous year? Why has there been virtually a 50 percent drop in the expenditure on grants? Why is that money not going out the door? If it has been appropriated by the Government for grants to assist New Zealand businesses to maximise their export opportunities overseas why is that not happening? This is not good enough. If the Government is going to appropriate that money for New Zealand Trade and Enterprise then the money should be going out the door. 
Hon DAVID CARTER (Acting Minister for Economic Development) 
: 
 It is a pleasure to follow that contribution from Maryan Street. First of all I say that New Zealand Trade and Enterprise is a complex beast; I fully agree with that. When I first got involved with the portfolio as the Acting Minister for Economic Development New Zealand Trade and Enterprise was described to me as being spread too far to be effective. The comment was that it was an inch deep and a mile wide. 
That tallies exactly with what the performance improvement framework review determined. That work—the PIF review as it is known—was done by Sue Suckling and Murray Horn. They identified that New Zealand Trade and Enterprise as an organisation did not seem to know its purpose. I am pleased to say that that has changed and it is changing very dramatically. 
I congratulate the new chief executive a man called Peter Chrisp. He came from the private sector. He has fully accepted the criticisms that were levelled in the performance improvement framework review at New Zealand Trade and Enterprise and he has now restructured the senior management leadership team completely. It is already a far more focused organisation than it was even 6 months ago. 
This organisation needs to give a mechanism by which New Zealand companies can internationalise. We have good commodity traders and they need to take every opportunity to become more sophisticated. They need to seize every opportunity to add value to whatever they produce. Although the very foundation of our nation’s economy is still the primary sector we also have some very smart companies around the country that I get the opportunity to be introduced to. I would describe these companies as being knowledge intensive. 
I went quite recently to a company in Christchurch called Stickmen Studios. That company had about 50 young computer graduates working for it in Christchurch—it had only just moved to a new building because the previous building they were in had been destroyed by the earthquake—developing computer games and immediately exporting them straight from New Zealand and into the States. It is a very inventive company. 
There is the jetpack organisation in Christchurch which has been in  
Time  
magazine. It is another example of a business that New Zealand Trade and Enterprise has to work with and give it the opportunity to become better connected with international opportunities. That is essential if this economy is to grow and grow faster. 
When we look at New Zealand Trade and Enterprise now we see that it is far more focused than it was. It employs about 700 people and 60 percent of those are offshore. Miss Street spoke about the ability and enthusiasm of the people she had the opportunity to meet in cities like New York Shanghai etc. She has obviously spent a lot of time outside of New Zealand. She has had the opportunity now to see how dedicated those people are but unless they are well led from the chief executive down then we will not be getting the best value from the organisation or bang for bucks if you like. That is why I congratulate the new team at New Zealand Trade and Enterprise. My impression is that they are substantially better led and focused than they ever have been. We have developed with them an intervention logic the very reason for their existence and the very rationale for them joining with companies and working with them. 
I will briefly talk about two other initiatives where I have had the opportunity to see New Zealand Trade and Enterprise’s role within New Zealand companies: Better by Design and the Lean Business programme. Effectively what New Zealand Trade and Enterprise does with companies is go into these companies and work with them using the Toyota model basically—that is trying to drive out inefficiencies and increase their productivity. Villa Maria Estate wines is just one company that has been involved in both those products of New Zealand Trade and Enterprise. When I visited it quite recently it told me that it has lifted production by about 20 percent. If we get that amount of performance improvement out of companies here in New Zealand for them to then connect with international markets that will help grow the economy. 
TODD McCLAY (National—Rotorua) 
: 
 I am happy to take a call in this part of the debate on New Zealand Trade and Enterprise because as with Mrs Street I believe that it is a very important organisation with very hard-working people doing a very important job on behalf of New Zealand. But that is where my agreement with her finishes. I found her intervention to be far too pessimistic not only about the challenges we face and how we are moving through them but about the feeling among those who work for New Zealand Trade and Enterprise. Those I have met have a great amount of pride in the job they are doing—a very good job—on behalf of this country. 
Also she was far too pessimistic in her view of what the clients of New Zealand Trade and Enterprise thinks of its work. We see that 84 percent of those who have had assistance from New Zealand Trade and Enterprise say they have had value added to their business. Eighty-four percent say they have had value added to their business. Mrs Street said they were not universally satisfied. Well I am yet to meet anybody who is universally satisfied with the exception of the people of Iraq I read about in the newspaper some years ago who were asked to vote in an election. They were universally satisfied with the then president Saddam Hussein. He got 107 percent of the vote. 
With the exception of that situation it is not unusual for New Zealanders to have differences of opinion but 84 percent of businesses helped said value was added to their companies by New Zealand Trade and Enterprise. I say good on New Zealand Trade and Enterprise and the hard-working people there who are doing a very important job. 
So why do I think they are a very important group of New Zealanders who are doing a fantastic job for us overseas? Well the work they do fits very closely with the Government’s economic agenda and with our economic plan that has been rolled out over the last 2 years: to back New Zealanders and to invest in the local economy so that our economy can grow so that more people can be employed and so that we have a better standard of living and can afford more and better services for New Zealanders. We get to do that by exporting more to other parts of the world. 
Since we have come to Government we have had a number of trade agreements that have been negotiated where the negotiations have been concluded or have entered into force which New Zealand Trade and Enterprise then had to do something about. I will not go through all of them because I have only 5 minutes and the list is an extremely long list of achievements by this Government but I will pick one that I think holds great opportunity for us: the entering into force of the free-trade agreement with China. 
Why is China important to us? Well that is very straightforward. In the 2 years since we have been in Government and this agreement has entered into force our trade with China has grown in value from $8.5 billion to $11.1 billion. Do members know what that means? That means that very many more New Zealand businesses are producing goods and exporting them to China. Their trade has grown. But more important it means that many companies that were not exporting before have now been helped out by New Zealand Trade and Enterprise. 
The challenge that we set for New Zealand Trade and Enterprise—and this Government backs it fully—is to help New Zealand businesses to get into some of these new markets and to take advantage of the great opportunity there so that we can sell more of our produce bring those funds back to New Zealand and employ more New Zealanders. Some wonderful work has been done. 
Finally the job of New Zealand Trade and Enterprise overseas is to leverage the very good work that this Government and our Minister of Trade are doing when it comes to free-trade agreements. Last year I had a chance to visit Shanghai for the World Expo 2010 and I went to the New Zealand Trade and Enterprise office. Millions and millions of people particularly from China but also from around the world visited the New Zealand pavilion at the expo. But more important for tourism purposes thousands of businesses visited New Zealand Trade and Enterprise which leveraged the opportunity the Government had provided for New Zealand businesses to meet it in order to talk about New Zealand and some of our advantages and to do more business and more trade. That was very important work. 
One of the great things New Zealand Trade and Enterprise will be doing this year—and the Government is backing it fully in this—is leveraging the 85000 visitors who will come to New Zealand for the Rugby World Cup. In my electorate of Rotorua I have had a number of meetings with New Zealand Trade and Enterprise and the businesses it has been working with and supporting. I tell the Committee that the feeling of satisfaction with New Zealand Trade and Enterprise in Rotorua is greater than 84 percent in as far as this report we have been given. I thank the staff of New Zealand Trade and Enterprise and ask them to keep doing that great job on our behalf. Thank you. 
Report noted. 
Foundation for Research Science and Technology 
DAVID SHEARER (Labour—Mt Albert) 
: 
 This is a rather unusual entity in a sense—although not in the period we are talking about—because of course the Foundation for Research Science and Technology no longer exists. It has been merged with the Ministry of Research Science and Technology. So although we are debating it today it is no longer in existence. It has been pushed together with the ministry in a restructure to make it look as if the Government is actually becoming more involved with and more dedicated towards science and innovation. 
I have to give the Government credit. The Ministry of Science and Innovation is a terrific name—it is a terrific name. It is just a real shame that the ministry does not live up to that name. It came in during that plethora of reforms last year which was trumpeted as being the step change for research and development. The Ministry of Science and Innovation was meant to be the new way forward; it was supposed to lead that change. To some degree we actually saw an increase in funding for research and development. The Government put $56 million a year more into it—$56 million. When we took into account the total spend that was a little less than 5 percent. When we took into account inflation it was a lot less than that particularly as inflation is running now at nearly 5 percent or more. 
The most important thing about that money and where it went to was that it went to giving businesses a handout to do more research and development. It did not encourage a real change in the culture of those companies. The research and development in our private sector is woeful—it is absolutely woeful. We do not spend a figure anywhere near the OECD average when it comes to research and development inside businesses. So although the Government trumpets the merging of these two entities as the new dawn of research and development the reality is quite different. 
I will give another example of exactly what this really means. We would expect that for a new entity like this ministry the Government would search the world for somebody who would lead this new entity into a completely new field and really bring about major change in our research and development. But that did not happen. When we looked for the leader of the Ministry of Science and Innovation the advertisement was open for only 2½ weeks and it did not look overseas for the best person despite the fact that the Minister of Science and Innovation talks about the triumphs of Denmark. The Prime Minister talks about Taiwan and what it is doing. The Minister has just come back from Israel where he has been looking at research and development. I expect he probably flew there on a commercial flight; I hope that he flew on a commercial flight to Israel in order to look at the research and development. 
These countries put from 3 to 4 percent of their GDP into research and development and they have science and innovation places that are world leading. Why cannot we have world-leading places just like that? The answer is that this Government certainly does not have the commitment to research and development that it talks about. It talks the talk but it does not walk the walk. 
When we look at this year’s Budget despite the fact that in January we were told that it was about innovation and savings we can actually see a $12 million decrease in the overall spend in science and innovation—a $12 million decrease. The top-line headline in the Budget is that $36 million has been reallocated. That will set the world alight! It will really set the world alight that we have reallocated $36 million! 
Research and development in New Zealand is the driver of our innovation. It could be the driver of our economy—a new smart clean green economy—but this Government has enabled research and development to languish and go backwards. Thank you. 
Hon Dr WAYNE MAPP (Minister of Science and Innovation) 
: 
 Funnily enough I heard Mr Stuart Nash say in relation to that last speech by David Shearer “Good speech!”. I was a bit surprised to hear that. The Opposition had one of New Zealand’s foremost scientists and indeed entrepreneurs to speak at its conference. Labour made the person its keynote speaker. It was Sir Paul Callaghan. So I was anticipating that Labour was obviously planning something very significant as a way to project its commitment—the commitment I just heard Mr Shearer talk about. It is very hard to accommodate. So what was Labour’s big idea? What was the thing that was central to their conference that would take New Zealand to a bold new era? It was in fact a rehash of its tax credit policy. It may have been a little bit more targeted because the limit went up to only $200 million which was an increase of about $100 million. However there was a hook in that increase. If we look at the New Zealand economy in the broad we see that we have three core sectors. There is the primary sector with over half of our exports. Indeed part and parcel of why the current account deficit is reduced is because that sector is doing so well at the moment. There is tourism with 10 percent of the total economy. It is a huge foreign exchange earner. I guess we would say there is manufacturing particularly high value manufacturing and advanced services particularly in tertiary education and information and communications technology. 
So Labour’s big idea was to push up the extra spending in the high-tech sector and take that money directly from another sector—the farming sector. I thought that was actually a zero-sum gain. That was no change at all. And that was Labour’s big idea. That is why I was surprised to hear Mr Nash say that Mr Shearer’s speech was a good speech. I say to the Opposition members that if that is as good as it gets I suspect they will spend a little bit more time sitting on those benches than one might think. They said to New Zealand’s largest export sector the primary sector that they were going to take $160 million off it directly as at zero-sum gain. So our most profitable part of the sector at the moment the export sector was going to be a sop. It is hardly an innovative policy I say to Mr Shearer. 
I return to the facts of the situation. In 2008 Labour’s last Budget appropriated $689 million for research and development. That was during a time of relative economic success for New Zealand in line with much of the rest of the world. This year we appropriated $773 million which is a gain of 12 percent. The difference is that we had to do that in a time of relative economic difficulty and in particular when faced with the cost of reconstruction after the Christchurch earthquakes. 
David Shearer 
: Oh yeah. No commitment—that’s the problem. 
Hon Dr WAYNE MAPP 
: Did members hear that member say “Oh yeah.” as if it is of no significance whatsoever that New Zealand taxpayers will spend $6 billion to reconstruct Christchurch? The Opposition as reflected by Mr Shearer just says “Oh yeah.” Is that what the Opposition really means about Christchurch? I might actually give a little bit of credit and say that maybe I misheard that. There is just an absence of reality in—how can I put it—Labour members’ rhetoric and their delivery. 
So there was $689 million appropriated in 2008 and $773 million appropriated in 2011 which is a 12 percent gain. Next year there will be further gains as a result of Budget 2010. Budgets are effectively 4-year Budgets and each year has an increase. The technology development grant started off at $22 million. It will grow a bit more this year by $60 million next year and a bit more the following year. That is a progressive increase that flows through into each Budget. 
David Shearer 
: How many companies didn’t get it? 
Hon Dr WAYNE MAPP 
: I want to make clear the distinction between a research and development tax credit and a technology grant. The problem with Labour’s plan is that it just showers the money out like confetti to get it through to the accountants and it essentially says that if they can rort the account system using highly paid accountants or lawyers then that will do. We looked at that and asked whether Labour had actually increased the level of research and development as a result of that undirected tax credit system. The answer was no. 
We have taken a smarter approach. We have analysed it by New Zealand’s most research and development-intensive companies and Mr Shearer knows which they are. They are set out in a publication called the  
TIN100 Report 
 which sets out the top 100 research and development-intensive companies. We will progressively work through those companies with the intent that each and every one of them will receive a technology development grant. That is the intention because we know that research and development-intensive companies will invest the grant directly into increased research. That is the fundamental difference from just simply sending the money through the tax system. 
David Shearer 
: They’re offsetting their other expenditure. That’s what they tell me. 
Hon Dr WAYNE MAPP 
: We hear from the Opposition members their fundamental misunderstanding. They say that companies will just offset it. I ask them how a tax credit targeted through accountants leads to behaviour change. How does it do that? 
Paul Quinn 
: It doesn’t. 
Hon Dr WAYNE MAPP 
: The answer is as Mr Quinn said that it does not. We need to focus on the companies that have the culture of research and development then invest in them. 
I acknowledge that in 2011 we had a difficult Budget. At least on this side of the Chamber we acknowledge that. On the other side they just advocate reckless spending and have a long list of promises completely oblivious to the fact that we are actually running an 8 percent deficit as it is which is one of the larger ones in the developed world. I guess that if it was 12 or 14 percent it would be a matter of real indifference to them. Maybe Greece is the kind of a country they would like to emulate. I went to Greece recently and I saw what happens when a deficit is left to get completely out of control. In the current environment we have to make realistic and sensible choices about dealing with debt dealing with growth putting the country back on track and setting an agenda that is predictable that is sustainable that people can believe in and that gets us back on a pathway towards growth. 
I say to members in the Chamber that every week the Hon Paula Bennett provides her colleagues with details of the situation of unemployment for both youth and the regions. I can say to members that in virtually every region in New Zealand unemployment is less this year—in fact it is significantly less than it was last year. The lines are heading in the right direction. There is a sense of some level of recovery reflected in part by that increase in exports from the primary sector. 
I close on this point. Labour’s plan in essence is to kick out the feet from under our most productive sector. New Zealand needs to understand that Labour’s big plan is to take money from New Zealand’s most productive export sector and say that is a plan that will grow New Zealand. I say to New Zealand that that is a bankrupt policy and it will fail and it will be seen as such by New Zealanders. They are looking for sustainable realistic predictable and sensible plans that take New Zealand into the future. Those plans rest with National; they do not rest with Labour. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I am grateful for the opportunity to speak on this review of the Foundation for Research Science and Technology—which has now disappeared as was pointed out by David Shearer—and also the Crown research institutes. It was a bit rich for David Shearer to talk about investment in science given that from 1999 to 2008 Government investment in science as a percentage of GDP basically flat-lined and private investment in science also flat-lined as well. I agree with him entirely however that New Zealand does have a huge task in incentivising private sector investment in research and development. But there is no doubt in my mind that the way the previous Labour Government was going about it splashing out $300 million in untargeted tax credits was absolutely the wrong way to do it. We know right around the world that such a method is associated with rorts. [ 
Interruption 
] Yes it is in Australia and we know that there are rorts right throughout the system there. Finland for instance with a much more attuned sophisticated targeted system has had a far greater deal of success. But I do agree with the member that there is a major task for New Zealand in looking to increasing this investment if we want to sustain economic growth as part of the trifecta of how we will achieve that—firstly through our primary products secondly through our tourism and thirdly through science and innovation. 
I think the other point that should be made is that if Labour ever thinks it will move the economy then it has to make the basic regulatory regime suitable for business. That applies to science and innovation as well—a low transparent tax system such as the National Government has achieved; a more flexible labour market such as has been achieved by the National Government obviously concentrating on excellent graduates; and of course ensuring that the regulatory regime in terms of bureaucracy is as straightforward as possible. 
But I think it is important in terms of getting the context of today’s science system in New Zealand right to look back to the past. The foundation was formed in 1990 under some rather interesting principles. They were firstly to allocate funds for the production of outputs relating to public-good science and technology and indeed one would hope that we look for outcomes. I think that over the last 20 years it has been difficult to judge the performance of our science system accurately. Obviously there are a whole variety of ways we do that whether it be by citations whether it be by conferences attended whether it be by spin-off companies or whether it be by underlying performance. All of those things are somewhat nebulous. It is absolutely important. The new science review and the new purpose of the Crown research institutes is to ensure that performance is looked at very carefully under independent 5-yearly audited reviews. 
Secondly back in 1990 the second principle was to allocate funds pursuant to ministerial schemes. That does fly in the face of ensuring that we have the discipline of an evidence base behind what we do and hopefully that has changed for good in the new reforms under National after the science review. 
Thirdly the foundation is to provide independent policy advice to the Minister of Science and Innovation on matters relating to research science and technology including our national priorities for those matters. That is partly where the rub was with the old foundation and the ministry. The foundation was the funder of the policy division and it became— 
Report noted. 
Tertiary Education Commission 
DAVID SHEARER (Labour—Mt Albert) 
: 
 It is my pleasure to rise again to speak on an area that like that of my previous contribution is of critical importance to the New Zealand economy and to the way we develop and grow our economy. The Tertiary Education Commission is a complex being in terms of its funding and whom it funds. I want to touch tonight on just one aspect of what it does. 
The Tertiary Education Commission establishes and promotes the opportunity for lifelong learning throughout New Zealand. This is an extraordinarily important area for New Zealand for the simple reason that the economy is changing extremely fast and extremely quickly. As our economy changes we want people to be able to engage and move with those changes. We also want to be able to cater for those who step out of the workforce for various reasons and step back into it again and need to upskill once more in order to join and become profitable members of society. I think it is a great worry for New Zealand that this Government rather than promoting the opportunity for lifelong learning has gone out of its way to erode the opportunities for those people. An amount of $2.3 billion goes into the tertiary education area through the Tertiary Education Commission. One of the areas that was targeted under the previous Minister for Tertiary Education was adult education. For a mere $13 million of that vast amount of money we stripped out what had become an institution in New Zealand and had helped countless numbers of New Zealanders to re-enter the workforce. For more than about 100 years thousands and thousands of New Zealanders me included re-entered the workforce as a result of second-chance education re-skilling and upskilling—a different way of getting back into the workforce through having their skills renewed by joining the education system. We once had 212 schools involved in night classes and now we have 24. That is disgraceful. It is absolutely disgraceful for $13 million out of a budget of $2.3 billion. PricewaterhouseCoopers said that the benefit cost was 70 to one yet we still stripped it out. 
I thought this Minister for Tertiary Education might have had a different approach from his predecessor. Yet in this Budget the over-55s are thrown on to the scrap heap. We could say that maybe the over-55s should be thrown on to the scrap heap. Maybe those people do not have to upskill and be re-skilled. But actually 55 now and in the future is and will be a very young age. Those people will go on to be working members of society perhaps well into their 70s. Yet those people cannot get student loans. We have discriminated against older people being able to get student loans yet they are the very people who have paid their taxes for about 40-odd years and they are not able to have access to student loans any more. To compound the problem we have also added to that the people who are part-time students. Those part-time students now cannot get their course-related costs paid. Those people tend to be women who have gone out of the workforce perhaps for child rearing and now want to move back into it. What we are seeing and I would like to see the analysis on this—it would be very interesting not only for this House but for New Zealanders in general—is that women are being targeted more unfairly under these policies than men are. I think women are being disadvantaged more than anybody else. I think that is a disgrace—it is an absolute disgrace. We should be encouraging people to get back into the workforce. We should be encouraging people to upskill. We should be encouraging our economy to move forward as a result of those people joining our workforce with the right and appropriate skills but instead we are penalising those people. We are penalising their initiative. We are penalising their self-sacrifice. 
Hon STEVEN JOYCE (Minister for Tertiary Education) 
: 
 The member David Shearer should not let the facts get in the way of a good story and he obviously does not do that. Firstly people can still borrow on a student loan if they are over 55 years old. They can borrow fees for courses if they are over 55. They cannot borrow for living costs and there is a reason for that: once people are past 55 taxpayers end up writing off over 70 percent of their student loans. We thought about how we could strike a balance there because yes we want to have people of that age upskilling but we also have to acknowledge that they do not have as much time at that age to repay their student loans which is the contract of course with the taxpayer. So we thought we would have a bit of balance and we would have borrowing for fees but not for living costs. That is actually what we are doing so the member made his first mistake there. 
His second mistake was in talking about compulsory course costs for part-time students. Of course part-year students have never been able to get compulsory course costs from the fees component—we have changed the rule for full-year students to ensure consistency—but of course they can still borrow for fees. Once again the facts got in the way of a good story. 
But the really good story here is the work that the Tertiary Education Commission has done. I salute the Tertiary Education Commission for the work it has done in improving the outcomes from our very large tertiary education spend which across student support fees and tuition subsidies is over $4 billion. The commission has had a real focus on value for money and the evidence in terms of outcomes is very impressive indeed. This year we will have the highest number of fulltime-equivalent students ever in New Zealand universities. It is a tremendous outcome. We also have the highest number of full-time core places at universities polytechnics and wananga right across the public tertiary sector—16500-odd more places than 3 years ago when the previous crowd left Government. But overall our expenditure has not gone up because we have had better value for money. This year we also have more private training establishment places—750 more. The previous Government froze those in about 2002. We have lifted the freeze this year. We have more opportunities for New Zealanders right across the board including more places at higher levels on the spectrum of qualifications. 
We have also managed to achieve better results out of industry training. That area was actually a horror story inherited from the previous Government—an absolute horror story. That Government had trebled the industry training budget over 10 years but it had not ensured accountability for the funding. It had not ensured that there was any accountability at all. As a result when the Tertiary Education Commission audited industry training in 2008 and 2009 we discovered that 44 percent of trainees had not earned credits over that 2-year period. Labour’s phantom industry trainees had disappeared from the scene. Some had not had training agreements signed some were not actually employed by the companies they were supposed to have been employed by and to be getting industry training from and a dozen even were deceased. They were deceased and the previous Government had not noticed. 
We have put in a much more reasonable industry training budget and we have cut it back a bit. Do members know what? We will get better results out of industry training with a lower-cost budget than Labour members managed to achieve with theirs because they are the crowd as I think Dr Mapp said who just like to get the bucket of money and keep tipping it in at the front and not think for a moment about what the accountabilities are at the back end. That approach was right across the public sector when we arrived and we are sorting it out. 
We are also sorting out a number of other areas. I think that adult and community education is very important but like Mrs Tolley I am not at all sure that the Government and taxpayer should be paying for people to do their hobbies. So we have refocused on literacy numeracy English for speakers of other languages and Maori language and I am very very proud of that. There is no doubt that people can take up their opportunities with adult and community education. 
Finally in the limited time I have available I refer again to the excellent job the Tertiary Education Commission is doing. It has managed to come up with additional funding over the next 4 years for English for speakers of other languages—$17.5 million. That has not been talked about a lot but it will be good for migrants and it will make a real difference for refugees in this country. This Government cares; this Government is focused on getting real value for money out of tertiary education and we are doing that. The previous crowd just could not get off their backsides for long enough to check what was going on. 
CAROL BEAUMONT (Labour) 
: 
 How timely it is that I get to respond to some of the comments that the Minister of Transport has just made about industry training. I concur with the comments that my colleague David Shearer made about this Government’s lack of commitment to lifelong learning. One particular aspect where the Government is a complete disgrace concerns the role of the Tertiary Education Commission in funding industry training. Just for the record let us note that industry training has been slashed in this year’s Budget. After $55 million of cuts last year a further $90 million has been taken out over 4 years. That means that tens of thousands of trainee places have gone. 
There may be issues in relation to needing to improve quality but there are two ways we can go here. We can either just cut money from the system and have fewer trainees or focus on what is working. That is where the Minister failed to address the issues. Many industry training organisations are doing a good job delivering good outcomes for trainees and lifting skill levels in New Zealand. We should be not cutting money from that sector but actually finding out what works and investing money there. I think it is a complete disgrace that $55 million went from industry training and into the university sector instead of that money being put into funding more apprenticeships and more industry training where we need it and where it is working. 
The Tertiary Education Commission is meant to be responsible for implementing the tertiary education strategy. That strategy states: “The Government sees the tertiary education system as a key national asset which enriches New Zealanders’ lives increases their employment opportunities and helps to build a productive skills base to drive economic growth.” Well frankly the record in the skills area is a completely disgrace. Participation rates in industry training are down; participation rates in apprenticeships are down. It seems that National thinks these are “nice-to-have” things rather than essential for meeting the skills shortages that we all know exist. Business groups unions and community groups understand that there is a problem here but this Government does not understand that. I would just like to quote Phil O’Reilly who says: “As we get out of this current slump—and let’s hope we do some time—we’re going to have skill gaps appearing all over the place. We know that business people are looking increasingly at that issue asking what the story is there and asking what we are going to do about it.” That is a good question. What are we going to do about the skill gaps that exist in New Zealand? 
The reality is that investing in industry training and apprenticeships lifts productivity which is something that Government members say they are concerned about. There is no doubt—all of the evidence is there—that lifting skills and better utilising skills will lift workplace productivity giving us economic growth better and more satisfying jobs and better-paid jobs. Why does the Government not support that? I think the failure to invest in our people is actually a form of economic vandalism. It is short-sighted. We are going backwards in relation to many other countries including Australia which has provided an additional $3.6 billion in funding to skills and training over 6 years in its recent federal Budget. That was on top of a higher base than ours. 
What are we doing? Not only are we cutting investment in skills and therefore the ability to lift our workplace performance but now the Prime Minister says that as well as that we will cut workers’ rights. We will have workplaces that are low quality low skill and low wage. That is the prescription of this National Government. Anybody who thinks that that will deliver the kind of income we need as a country and the kind of economic growth we need as a country is wrong. If the Minister thinks that is funny then he needs only to look at our comparative performance in relation to countries like Australia and the Scandinavian countries where there is a significant investment in skills. He needs to ask himself what the difference is. Why do Australian workers get 30 percent higher wages than New Zealanders? Part of the answer—not all of it but part of the answer—is because there is more investment in people. It is recognised that paying people properly means that employers will want to ensure that they are well skilled and that their skills are well utilised. 
So I say to the Minister that the work of the Tertiary Education Commission in implementing the tertiary education strategy has gone wrong. The reason it has gone wrong relates to the direction given to it by that Minister. I urge him to relook at the cutting of industry training. It is the most short-sighted cut that I can imagine and it sits on top of 2 years of no new initiatives in skills. We saw cuts of $55 million last year and now we see a further $90 million of cuts in skills training. That is an absolute disgrace. 
PAUL QUINN (National) 
: 
 I start by saying that I thought the Minister for Tertiary Education gave an excellent retort to the first speaker from the Labour benches and debunked everything he said. I wanted to focus on the positive in my contribution to this debate but after listening to the tirade from Carol Beaumont and the passionless rhetoric which no doubt was produced by Labour’s research group I would say that the Labour Party’s research group is lacking in skills. It is about time it got some skilled staff in there to produce decent material for Labour members to speak on. 
I remind the previous speaker Carol Beaumont that the responsibility of the Government is to make sure it gets value for money. That is why the Tertiary Education Commission has had to recover $4.3 million from 18 industry training organisations that have been claiming funding for students who are not eligible and in fact in most cases do not exist. I say to that member that the Government’s first priority should be to get value for money. I want to speak positively about this subject because it is very serious. I myself am a product of a tertiary education— 
Dr Rajen Prasad 
: Not a good one. 
PAUL QUINN 
: —and was challenged that I might not be able to succeed. Just to prove my challengers wrong I say to Dr Prasad I decided to get one A. I ended up getting an A in the hardest of subjects which was econometrics. For those who do not know what econometrics is I tell them it is mathematical economics. I got a couple of Bs in economics and then I wanted to prove that I could get passing down to an art form by getting Cs for the rest of my subjects. 
Tertiary education is a very critical matter that this Government takes very seriously which is why we have a Minister of Steven Joyce’s capabilities overseeing it to make sure that this country gets value for money in terms of the limited resources that are available. Because of that we are giving significant funding increases and there has been a huge increase in student places at university for instance as the Minister explained. 
I will also talk about why I think tertiary education is critical. The one thing I could agree with in terms of Mr Shearer’s contribution to the debate is that tertiary education is an extraordinarily important area. It contributes to economic growth and enables the country to move forward as the requirements change within the economic environment and we provide people who can bring the skills to bear in those areas that are required. 
One of the things I found fascinating in terms of this matter—having people who are qualified and can lead the economic growth that this country so sadly needs; and this Government is addressing that issue—is the fact that as I think a previous member alluded to Professor Sir Paul Callaghan addressed the Labour Party conference a few weeks ago. In addressing the conference the four critical words he uttered were: “We require entrepreneurial genius.” This was in response to a Labour Government that had gone through all the catchcries and clichés about having a knowledge wave economic transformation and growth in innovation but never produced a thing. Sir Paul Callaghan says we must have entrepreneurial genius. Thank you. 
Report noted. 
Children’s Commissioner 
Families Commission 
Dr RAJEN PRASAD (Labour) 
: 
 I want to make my comments around children and families so I will speak about both the Families Commission and children. The Families Commission has taken quite a battering under this Government and this Minister for Social Development and Employment—so much so that it now cannot operate effectively to advocate for our families. It cannot really effectively meet the roles for which it was designed: to advocate for families through community consultation research and policy development and to provide families with information. 
This Minister has done something called a value-for-money review which really means cuts. Now its work at the forefront of addressing the needs of families and advocating against family violence is stalling. 
The CHAIRPERSON (H V Ross Robertson) 
: I notice the member is actually addressing the Families Commission as well and that is a separate debate. But I am quite happy to ask the Committee whether there is any objection to the report on the Families Commission being taken together with the report on the Children’s Commissioner. There is no objection to that course of action? The member may proceed. 
Dr RAJEN PRASAD 
: The Minister says the commission would be much more effective if its work were based on evidence and focused less on advocacy. The major raison d’être for the Families Commission is really being frustrated by the focus of this Minister. It was interesting that when this Government and this Minister moved to close down the major programme in New Zealand that was evidence-based and provided services to children Te Hurihanga the commission was being asked to come up with evidence-based advice and programmes. The Minister has been playing a game with this commission. 
When the Government closed down Te Hurihanga it also focused on the boot camp programmes. I know that National does not like us to refer to them as boot camps but that is what they are. Now we have some evidence available to us. Last week we saw the Minister really struggling to defend that programme. The research last week was that there was 60 percent recidivism. She says now that the children are very very difficult. On the one hand the Minister is saying she wants evidence-based work from this commission but on the other hand the Government itself is not utilising evidence-based programmes. 
Then there was the review of the governance of this commission. That review and the model that is now being directed by this Minister is to really separate out classical-fashion operations and governance so much so that the commissioners simply become part-time board members. That is it. The very focus of this commission is being denuded. The Minister’s own hand-picked commissioners did not like this and one left. But it is quite interesting: 2 days after he left he got a $2.4 million contract to go around and do parenting programmes. There is no evidence base for that programme. It is fun yes and people support it yes and it is popular in the community without a doubt. But there is no evidence base. 
The very reason for having this commission is being frustrated by this Minister and this Government. Now we have to ask why have this commission at all. Why not do what we now need to do which is to really put children at the centre of our policies? We should give our children the best start possible have a real focus on the interests of children and put them at the centre of all policy development. In order to do that would it not be more reasonable more honest and more realistic to morph this commission into a Ministry for Children? That is exactly what our policy will be in the next Government. The very very competent people working in that commission would do an excellent job advocating for our children and our families in a Ministry for Children. They would not play games by pretending to be independent yet being directed by a Minister who has really confounded the work of this commission. So that will be the future of this commission. Thank you. 
Hon PAULA BENNETT (Minister for Social Development and Employment) 
: 
 I stand to speak about the Office of the Children’s Commissioner. I stand at this point and say thank you for the work of Dr John Angus who has been an outstanding Children’s Commissioner for 2 years. His focus has been on social work which is his background and on best practice which was a key focus for him. I also thank him particularly for some of the work he did in some of the youth justice facilities. I am not sure that people always recognise the extent of responsibility that the Children’s Commissioner has. The office has a statutory responsibility. It is a place where parents can go for independent advice and advocacy. It is also a place that holds Child Youth and Family to account if parents need another avenue to go to. Its commissioners also visit all youth justice and care and protection facilities look at the practices there and take any complaints. 
I particularly thank John Angus for the work he has done with some of our practices within youth justice. I personally asked him to do an inquiry at one stage when I was concerned about some of the gender mixing in some of those facilities. He went in there and I felt the advice he gave was incredibly sound. We have picked up the recommendations he made and I think the practice we have in our youth justice facilities is a lot in part to the work he has done in the last 2 to 2½ years. This is my opportunity to put my thanks on record. 
This is also my opportunity to welcome a new Children’s Commissioner who will be coming in in a few weeks’ time. He is Dr Russell Wills who is a working paediatrician at Hawke’s Bay Hospital. He will bring another dimension to the Office of the Children’s Commissioner that I think is really really important. I think we need to mix it up a little bit and have different commissioners who bring a different focus. I think the office itself should run in an incredibly steady manner under a general manager. The practice is pretty good on a day-to-day basis but I think a different commissioner can bring a different view and I think that is a strength and it is something I really wanted to bring to the commission. 
We have just heard what felt like I do not know an absolute buck-pass on the Families Commission. It was the baby of a previous commissioner who now sits in this House as a member of Parliament. He stood up and gave the most abysmal— 
Hon Christopher Finlayson 
: The most sanctimonious member of Parliament. 
Hon PAULA BENNETT 
: —sanctimonious claptrap on why he thinks the Families Commission is not currently working but with nothing behind it. I found it kind of shameful. 
I think the Families Commission in its respect is doing the best it can with the legislation it currently has. It is very much focused on families on making sure we have some of that research and evaluation that goes behind it and on hearing the voices of families. I always remember one of the great pieces of work by a previous Families Commissioner—and this will be enlightening to the whole Committee I am sure—that fathers in prison do not father as well as those who are out of prison. That took a number of months of research. It was one of the more enlightening pieces of research that I am sure the previous speaker is incredibly proud of and something I am sure he takes to real heart. It does not come as a great surprise to me that Labour has now decided it will bag the Families Commission. It is time that that member stood up and said sorry for being a previous Families Commissioner who did such an abysmal job and wasted so much taxpayers’ money that he should be ashamed of what he did for all of those years. 
I would be quite open to him taking another call and apologising to New Zealanders for some of the shocking research that came out in his time. I can mention some. One piece of qualitative research it did for over a year was to speak to 28 people. From that research it was able to devise something that had no substance to it and was not helpful at all to New Zealanders. 
I stand here now to thank the Children’s Commissioner. Since I have been the Minister I have put another $500000 into the Office of the Children’s Commissioner because I think the Children’s Commissioner holds us to account. The focus of the Office of the Children’s Commissioner is directly on children and it has a statutory responsibility as well. I certainly want to put on record my sincere thanks to the Office of the Children’s Commissioner for the work it does and the work I know it will continue to do on behalf of children. 
Reports noted. 
Housing New Zealand Corporation 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Chairperson. Kia ora tatou katoa i tenei po. One of the best pieces of news in this review was that as a result of $125 million for jobs and the growth plan over 11000 State houses were upgraded and 87 new State houses were to be built. We welcome the news and we hope that local labour will be utilised. I give big ups to the Minister. 
However when we come to this review we consider that the situation is a little bit more dire. In Auckland for example demand is there for an additional 10000 houses. Also as the review points out the changing demographics require different housing needs. 
Over 26 percent of Maori live in one-parent households and some 11 percent live in multi-family households. It is a different reality from the past when the norm was a two-parent household with two or three children in it. A very high proportion of Maori children—35 percent—live in single-parent households. This brings with it evident differences in household income. Maori living in homes reliant on single incomes have the lowest income—$28000 a year for one-parent households with children. 
When we are talking about the Housing New Zealand Corporation inevitably we are talking about Maori as an explicit part of its responsibility to provide housing for people with low incomes or specific housing needs. There has been some progress which we commend—along with the Minister again—including 25000 State houses being upgraded 5000 participants in the Welcome Home First Steps programme for first-time homebuyers and a particularly significant advance in more than 2000 families directly benefiting from the Healthy Housing programme led by the Ministry of Health in areas of high health risk. 
We cannot underestimate how important the relationship is between health and housing. In 2006 46.3 percent of Pasifika children 27.8 percent of Maori children and 22.3 percent of Asian children lived in crowded conditions. Rates of acute rheumatic fever have been shown to be significantly and positively associated with household crowding in Aotearoa. That is an important statistic that I think we should take note of. 
Coming back to the issue of low-income Maori households this is a significant population for the Housing New Zealand Corporation. It is impossible to ascertain from the reports how many of the 20000 people housed in the Tenancy Services are Maori. From the constituents who have come into my offices or our offices as a party we have little confidence that the corporation is adequately meeting the needs of whanau Maori and that worries us. But there is room for optimism and that is through the work of the iwi and Maori organisations that have indicated an interest in being involved in the management of State housing. The corporation’s annual report describes four projects approved under the Maori Demonstration Partnerships which will result in 44 new properties in Northland Tauranga and Whakatane. Of course as the MP for Waiariki I am very happy about that and I welcome it. 
But there are other developments I want to refer to that bear reference to this review. This is in the context of partnership arrangements to construct social housing that have been negotiated with groups such as Te Runanga o te Arawa the Ahipara Maori Committee the Panguru Development Trust Te Uri o Hau Settlement Trust the Ngati Hine Forestry Trust Mangatawa Papamoa Block Inc. which is in my area Ngati Awa Group Holdings which is in my area as well Te Runanga o Kirikiriroa and the Ngati Whatua o Orakei Maori Trust Board. 
There are probably over 300 properties of this kind where land is leased from iwi. Other iwi have also expressed an interest in the management of State housing within their rohe. Within my electorate of Waiariki Te Runanga o Ngati Awa has indicated a desire to purchase all of the corporation’s stock in and around Whakatane so that is great. 
I acknowledge our iwi who have stepped up and stepped into this gap picking up the responsibility to care for their own and to care properly for our whanau. We hope the Housing New Zealand Corporation continues to trust in their leadership and vision in the development of housing in those rohe. Kia ora tatou. 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 I very much look forward to the post-election environment. If New Zealanders decide to put John Key back in as Prime Minister and he chooses the next Minister of Housing that Minister will oversee the Housing New Zealand Corporation as it insulates its very last home probably in about 2013 or 2014. Out of 69000 State houses across this country the Housing New Zealand Corporation will be insulating the last home that requires it in a couple of years’ time. We have about 2500 to insulate next year and about 2100 to do the year after that. In the financial year before this one we did more than 8400 insulations in just over 12 months which is quite stunning when one thinks about it. 
Te Ururoa Flavell raised the issue of the condition of State houses. The Housing New Zealand Corporation has a commitment to increasing the conditions of its State housing stock rather than growing the State house numbers as much as under the previous Government. It has decided with the Government’s support to upgrade the State houses. The way the corporation has bitten off that challenge has been a huge credit to it. We have seen State houses with their bedroom numbers increased we have seen State houses that had fallen into serious disrepair bowled removed or sold and replaced with new houses and of course we have seen the insulation scheme which has been very very important. The member was quite right in saying that in delivering State housing we are delivering a large proportion of it to Maori families. 
One of the other issues to consider when we look at the State housing asset if you like—the actual houses out there—is that about 27000 State houses out of the 69000 are essentially inappropriate. About 42000 houses are about right and we can keep and maintain them but about 27000 have to be upgraded or sold and replaced so that we maintain the State housing stock. Essentially the problem is that many of those houses are three-bedroom houses when Maori families are often much larger and need four or five-bedroom houses. Many people live alone these days and they simply want a one or two-bedroom home. So we have thousands of houses that are the wrong size. Then we have a large number of houses that are in the wrong locality and need to be disposed of and we need to build or purchase replacement State houses in the right locality. We also have some State houses that are in a serious state of disrepair. On that side of it the Housing New Zealand Corporation is very focused on bringing the State housing up to what it calls a level that is fit for purpose so that no longer among the 69000 State houses do we have 27000 of them not fit for purpose. Instead the whole State housing stock will be fit for purpose. That will take a long time indeed but certainly the train has left the station. 
We are also looking at tenancies and the Housing New Zealand Corporation is very focused on this issue. On 1 July any new tenant signing up with the corporation will no longer be getting a State house for life. It was a Labour Party principle that if someone got a State house they got it for life. It did not matter if they won Lotto or their circumstances had improved. It did not matter even if they had had six kids who had all left home 25 years ago and the tenant was left with five bedrooms and just themselves there the Labour Party told them to keep the five-bedroom State house even though it was just one person on a quarter-acre section who was sick of mowing the lawns. That situation has ended. From 1 July any new tenant coming into State housing will have their circumstances reviewed every 3 years. That will mean that those families whom Mr Flavell talked about who are on the waiting list and who really need a State home will be able to move into one because those families who no longer need a State home will transition out of them and into renting in the wider social housing sector private rental or perhaps even homeownership. Essentially we will have a housing continuum there so we can help more people on the waiting list. That is a very important point indeed and I thank the member for his support of that. 
Report noted. 
Television New Zealand 
Hon Dr JONATHAN COLEMAN (Minister of Broadcasting) 
: 
 Of all the entities that the Labour Government completely knackered none can have been more completely knackered than Television New Zealand (TVNZ). Talk about receiving a hospital pass. The Labour Government managed to run down the public equity in TVNZ from almost $1 billion to 9 years later a little more than $200 million. It would need some real financial mismanagement on the part of the Minister in charge to do that but Labour managed it. 
How did Labour do it? It shackled TVNZ with a completely ridiculous charter that had it answering two masters. Those guys opposite inherited a very profitable commercial television station with massive equity but they tried to turn it into something it was not. Labour tried to turn back the clock and turn TVNZ into the old New Zealand Broadcasting Corporation. Labour tried to foist Steve Maharey’s charter on an organisation and frankly just about completely ruined it. By the time Labour had finished with it TVNZ was hardly returning a dividend. 
The good news is that under this Government we have turned round the performance of TVNZ. The commercial performance has increased considerably. Not only that we are just about to remove that terrible TVNZ charter. Do members know what the real indictment of the charter was? In actual fact there was no difference in the content on TVNZ before the charter as compared with during the charter. There will be no difference after the charter either. Steve Maharey put all that effort into wrecking TVNZ by foisting that charter on it. He just about wrecked it but TVNZ survived. What is even better is that the charter is just about to be removed for good. 
Members opposite never realised that TVNZ—93 percent commercially funded—was never going to be the public broadcaster of old. Those members will also say that this Government should not be closing down TVNZ 7 but the fact is they left $79 million on the table for it for 6 years with no plan as to how they were going to continue that funding. They just left it up to us. We are left with the hard decision of what will happen with TVNZ 7 and they expect us to find another $15 million to fund it. 
If Clare Curran gets time to speak—I think there are 2 minutes left in this debate—I want her to promise the Committee that a Labour Government will fund TVNZ 7 and that it will find the $15 million a year to do it. I tell members that she will talk tough but I bet she will not find that money. I will quit this speech early because there are 2 minutes left and I want to hear Clare Curran walk the talk and tell us that a Labour Government will fund TVNZ 7. So please now is Ms Curran’s chance. 
CLARE CURRAN (Labour—Dunedin South) 
: 
 This Government talks a lot about step changes and every time it says “step changes” I think of aerobics and of us all doing step classes— 
The CHAIRPERSON (Lindsay Tisch) 
: I am sorry to interrupt the honourable member but the time for this debate has expired. 
Hon STEVE CHADWICK (Junior Whip—Labour) 
: 
 I raise a point of order Mr Chairperson. I do not wish to challenge the Chair but I recorded that we started this debate at 4.35 p.m. and it is a 3-hour time-limited debate. We just hoped we would get that last 5-minute call. 
The CHAIRPERSON (Lindsay Tisch) 
: No we started at 4.32 p.m. on the official record and we finished at 2 minutes past 9. That is why we have closed the debate. 
A party vote was called for on the question  
That the report be noted. 
Ayes 110 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 3; Progressive 1; United Future 1. 
Noes 10 
Green Party 9; Independent: Carter C. 
Report noted. 
The CHAIRPERSON (Lindsay Tisch) 
: The debate on the performance in 2009-10 and current operations of Crown entities public organisations and State enterprises has concluded. I will report this debate to the House. 
Report adopted.