Volume 690 Week 42 - Tuesday 14 May 2013Text is incorporated into the Bound VolumeVolume 690 Week 42 - Tuesday 14 May 2013[Sitting date: 14 May 2013. Volume:690;Page:9841. Text is incorporated into the Bound Volume.]Tuesday 14 May 2013Mr Speaker took the Chair at 2 p.m.Prayers.Points of OrderQuestions for Written Answer—Ministerial Responsibility for Operational MattersHon TREVOR MALLARD (Labour—Hutt South):I raise a point of order Mr Speaker. Before you get to question time I want to raise with you a matter to do with requirements around the answering of written questions and specifically refer you to written parliamentary question No. 2711 of this year which was lodged on 19 March and answered by the Hon Peter Dunne on 22 March in which he indicated that it was an operational matter. I raised this matter in this House with you on 26 March because of the inadequacy of the reply. At that stage you indicated you would get back to me. I wrote to you on 26 April to remind you of that matter and I am yet to get a response. I am just wondering—because this is a representative case; there are a number of other written questions that have been inadequately answered—how long it will be before we get a response.Mr SPEAKER: I thank the member. The issue has been raised with me now by the Clerk. She informs me that the matter has been worked on and as we speak a draft response to the member Mr Mallard is being prepared. He will have it within the next day or so.Dr RUSSEL NORMAN (Co-Leader—Green):I raise a point of order Mr Speaker. Could we please have the answer shared amongst other parties? It is a common problem—the Government not answering written questions because it is an operational matter. It would be good to have a generalised response so we can all figure out what is going on.Mr SPEAKER: I will look into the matter for the member.Questions to MinistersSkycity Convention Centre—Terms of Agreement and Implications1.DAVID SHEARER (Leader of the Opposition)to the Prime Minister: Does he stand by all his statements?Rt Hon JOHN KEY (Prime Minister):Yes.David Shearer: Does he stand by his statement of Skycity to “think laterally” about its deal with the Government; if so did he expect that it would tie future Governments into a 35-year contract?Rt Hon JOHN KEY: Yes and it is quite normal actually for contractual arrangements that might span from one parliamentary term to another to ensure that those contracts are honoured. We also have 35 years of obligations that we expect Skycity to honour.David Shearer: Can he confirm that the decision to increase pokie machines in 2001 was made not by the Government but by the then chair of the Casino Control Authority Judith Collins and that soon after that decision was made the Labour Government legislated to introduce a sinking-lid policy on future pokies?Rt Hon JOHN KEY: That may well be the case. I also know that in 2001 when the then Labour Government negotiated a deal with Skycity there were 230 pokie machines for less than one-third of the size of this convention centre.David Shearer: Why has his Government refused to release the advice it received on possible harm to the community of gambling with the additional 230 pokie machines 40 extra gaming tables and cashless technology for pokie machines and with allowing 17 percent of pokies to accept more than $20 denominations?Rt Hon JOHN KEY: I am advised by the Minister that all of that information will be released in due course.David Shearer: Will the public have an opportunity to have a say on this legislation and the shape of the convention centre or will the Government go along with Nigel Morrison who says that it is not necessary?Rt Hon JOHN KEY: A few things. Firstly the legislation will go to a select committee. Secondly the member will be aware that in 2011 we actually campaigned on this issue and broadly in line with the deal that has been announced. Thirdly this would be a way I guess of describing it: “In Auckland Sky City has pumped $140 million into its new Convention Centre and Auckland City has rebranded and upgraded its conventions facilities” and “it has been pleasing to see continuing investment in the quality of our tourism infrastructure.” I could not have said it better myself except that came from Helen Clark when Labour last did the deal.David Shearer: Is he proud that his legacy according to the Dominion Post will be “a flashing palace that is a shrine of misery”?Rt Hon JOHN KEY: I really think the Leader of the Opposition should stop talking about the Labour caucus like that.David Shearer: Given that the Auditor-General said that the tendering process was “not transparent or even-handed” does he still believe all the other companies had the same opportunity as Skycity?Rt Hon JOHN KEY: Yes but Skycity clearly had some natural advantages given that it is already operating a convention centre authorised by Labour. But I think it is worth—David Shearer: I raise a point of order Mr Speaker. It was adequately answered thank you. [Interruption]Mr SPEAKER: Order!Hon Judith Collins: I raise a point of order Mr Speaker. Despite what Mr Shearer said I who am just along from the Prime Minister could not hear a word of his magnificent answer.Mr SPEAKER: It was political question and a very political answer.Rt Hon Winston Peters: If as the Prime Minister said National campaigned on this in 2011 when precisely during that campaign did he refer to a 35-year guarantee that would go towards Skycity?Rt Hon JOHN KEY: I think we made it quite clear when we campaigned on the deal that there would be various concessions. It is quite obvious that if we have a 35-year expectation on Skycity—Rt Hon Winston Peters: I raise a point of order Mr Speaker. The Prime Minister made a boast in a previous answer that they campaigned on it. I am asking for a specific detail and either they did or they did not. Can we have that answer please?Mr SPEAKER: And the Prime Minister is attempting to answer it. Would the Prime Minister please complete his answer.Rt Hon JOHN KEY: It is quite obvious that if we have a situation where we enter into a commercial contract where a company is going to have 35 years’ worth of cost and obligation that that would run both ways. I think it is also quite normal.Rt Hon Winston Peters: I raise a point of order Mr Speaker.Hon Member: Here we go. He doesn’t like it.Rt Hon Winston Peters: No I do not like it—you are right—because it is a lie.Mr SPEAKER: Order! Would the member please raise his point of order.Rt Hon Winston Peters: Yes and when I am asking a question—[Interruption]Mr SPEAKER: Order! Point of order.Rt Hon Winston Peters: —or raising a point of order you will shut them down.Mr SPEAKER: It will be heard in silence.Rt Hon Winston Peters: OK. My point of order is that I am asking a precise question on the issue of when he talked about 35-year guarantees to Skycity in the 2011 campaign—Mr SPEAKER: Order! [Interruption] Order! The Prime Minister has adequately addressed the question that was raised.Rt Hon Winston Peters: I raise a point of order Mr Speaker. Then seeking clarification from you when was that date?Hon Member: Is he a liar too?Rt Hon Winston Peters: Well he could be if he does not answer that question. When was the date that I asked for?Mr SPEAKER: Order! That is not a point of order. What the member is now doing is challenging a decision I have made. That will lead to disorder and the member should not do so.Budget 2013—Focus and Reports on Economy2.DAVID BENNETT (National—Hamilton East)to the Minister of Finance: What will be the main priorities of the Budget on Thursday?Hon BILL ENGLISH (Minister of Finance):The Budget this week will be about building momentum across the Government’s clear and comprehensive economic programme. As with the Government’s previous four Budgets it will involve careful stewardship of public money investing wisely in skills and infrastructure and stewardship of our natural resources in ways that improve the lives of New Zealand families and grow the economy. In particular it will build on the four priorities the Government set for this term: responsibly managing Government finances building a more productive and competitive economy delivering better public services and rebuilding Christchurch.David Bennett: What recent progress has the Government made in its economic programme as it prepares for Budget 2013?Hon BILL ENGLISH: A number of indicators confirm the economy is headed in the right direction. For example the economy grew 3 percent last year around the same rate as Australia and better than most other developed countries; real wages are growing while cost of living increases are relatively low; around 50000 more jobs have been created in the past 2 years; unemployment is coming down and the Government remains on track to surplus; and last week 113000 New Zealanders took the opportunity to buy shares in Mighty River Power and more than 2 million Kiwis benefit from that sale through their KiwiSaver accounts.David Bennett: What recent reports has he received from overseas about the New Zealand economy?Hon BILL ENGLISH: It is important for New Zealand because of its historical dependence on borrowing money offshore that it is regarded as a good credit risk. Standard and Poor’s has published its global sovereign debt credit risk report for the first quarter of 2013 which ranks New Zealand in the top 10 least risky sovereign countries. That means New Zealand is among the countries rated least likely to fail to honour its debt obligations over the next 5 years even though our debt obligations as a country are relatively high.David Bennett: What other reports has he received on the New Zealand economy?Hon BILL ENGLISH: I have recently seen a report titled Rebalancing the New Zealand Macroeconomic Environment. It confirms that the Government’s goal to rebalance the New Zealand economy is having some success with five of the six key measures cited in the report showing improvement—that is more balanced growth over the last 2 or 3 years. Information released with that report confirms that the tradable sector went into recession in 2006 after being hit by the effects of the poor policy of the previous Government. It has taken some time for us to begin fixing that damage.Question No. 3 to MinisterGRANT ROBERTSON (Deputy Leader—Labour):I raise a point of order Mr Speaker. This question was originally set down for the Prime Minister and given the notoriously poor communication between Mr Joyce and the Prime Minister I seek leave for the question to be answered by the Prime Minister.Mr SPEAKER: That is certainly not a valid point of order. If the member is seeking leave the easiest way of resolving it—members have a right to seek leave for just about anything in this House. The member has sought leave to transfer the question to the Prime Minister. Is there any objection? There is.Hon Trevor Mallard: Chicken!Mr SPEAKER: Order! The member will stand and withdraw that remark.Hon Trevor Mallard: I withdraw.Job Creation and Unemployment—Budget Forecasts3.GRANT ROBERTSON (Deputy Leader—Labour)to the Minister for Tertiary Education Skills and Employment: Has he been advised whether the Prime Minister stands by his statement about Budget 2011 that “This is a Budget that will see 170000 new jobs created”; if so according to the Treasury in that Budget what progress should have been made by March 2013 towards reaching that target?Hon STEVEN JOYCE (Minister for Tertiary Education Skills and Employment):Firstly I would say that if I were the Opposition I would not necessarily pick today to ask that sort of question when it has opposed yet again—Mr SPEAKER: Order! [Interruption] Order! Would the Minister just answer the question. [Interruption] Order! I have called the Hon Steven Joyce to answer the question.Hon STEVEN JOYCE: A little bit tetchy maybe. I would provide the usual caveat around Treasury forecasts: they are no more or less than the best predictions available at the time they are made and of course suggesting it gets it right quarter by quarter—as the member suggests it is doing—is actually particularly fraught. Having said all of that Budget 2011 projected job growth by March 2013 of 99000. We have had 70000 more people employed than 3 years ago according to the latest version of the household labour force survey which had unemployment down to 6.2 percent. So we do still have a way to go to meet our 4-year target but it is nothing that a convention centre some more aquaculture a new mine down on the West Coast some more investment in innovation more oil and gas exploration—Grant Robertson: I raise a point of order Mr Speaker. [Interruption]Mr SPEAKER: Order! [Interruption] Order! I apologise to the member. I have a point of order from Grant Robertson.Grant Robertson: There were two parts to this question. The Minister addressed part of the second part. He did not address the first part which was whether he had been advised—[Interruption] Is this a point or order or not?Mr SPEAKER: It is a point of order. [Interruption] Order! It is a point of order and the point of order will be heard in silence.Grant Robertson: The first part of the question asked whether he had been advised whether the Prime Minister stood by his statement that “This is a Budget that will see 170000 new jobs created”. He has not addressed that part of the question.Mr SPEAKER: From my recollection of the answer I think that is absolutely true. I do not believe the Minister has addressed the first part of that question.Hon Annette King: I raise a point of order Mr Speaker. On two occasions you called “Point of order” and the Minister continued with his answer and took absolutely no notice of you calling “Point of order”. I think you need to ensure that he follows the Standing Orders.Mr SPEAKER: I thank the member for her comments. Would the Minister please now address the first part of the substantive question.Hon STEVEN JOYCE: Well I am sorry I intended to answer the first part of the question by saying: subject to the usual caveats around Treasury predictions and quarter-to-quarter variations yes the Government does stand by its—Hon Trevor Mallard: I raise a point of order Mr Speaker. It was not a question about whether the Government stands by the statements; it was a question about whether the Minister has received advice from the Prime Minister. That is what the question is. It has nothing to do with the Government.Mr SPEAKER: I think in the normal course of—[Interruption] Order! In the normal course of events there is collective responsibility and therefore the Prime Minister Cabinet any of the Ministers speak as one but on this occasion when the Prime Minister is specifically listed in the primary question it would be helpful if the Minister would actually address that.Hon Gerry Brownlee: I raise a point of order Mr Speaker. We are getting incredibly pedantic around this stuff. The Minister has answered twice now and he has answered the question. The question does ask whether he has been advised whether the Prime Minister stands by his statement. His answer was given the usual caveats around Treasury forecasting yes. It cannot be clearer than that.Mr SPEAKER: No I do not believe that is the case. I will certainly look back in Hansard but the easiest thing to move this matter forward is for the Minster to please address the first part with regard to the reference to the Prime Minister.Hon STEVEN JOYCE: Well I am not sure which part you are asking me to address except to say that my understanding is that yes the Government the Prime Minister the Minister of Finance I and other Ministers do stand by that target.Grant Robertson: Will he recommit today to meet the promise of 170000 new jobs being created by 2015?Hon STEVEN JOYCE: Well you are making us give exact answers; I would have thought that the supplementary questions would then take account of the answers.Mr SPEAKER: Order! Would the Minister just answer the question that has been asked? [Interruption]Hon STEVEN JOYCE: Well actually it is fair but nevertheless the Government has not changed its commitment and is working hard to achieve it as opposed to the Opposition which seems to oppose every single initiative the Government takes to increase jobs in this country.Grant Robertson: How will it be possible for the Minister and the Government to meet their target when there were only 8000 jobs created in the last year when projections were that 57000 jobs were required to be created in order to meet the promise he has just recommitted to?Hon STEVEN JOYCE: Well my understanding is that around 54000 new jobs were created according to the quarterly employment survey of the last 2 years. But to answer the member’s questions more generally the Government is focused on a huge range of things to increase investment in jobs and growth in this economy. One example from just the last couple of days is the convention centre in Auckland which the Labour Party and the Green Party have yet again opposed—yet another initiative. I say again if I were them I would not have picked today to ask that question.Grant Robertson: Why would he try to dispute that he is more than 40000 jobs behind meeting his promise when the data comes from the household labour force survey which he has described as the standard internationally recognised measure of employment and the Prime Minister has called the most rigorous form of measuring employment in the country; why will he not just admit that he is 40000 jobs behind his promise?Hon STEVEN JOYCE: Well the reality is we are growing jobs. I have been quite open that we are not growing them yet as an economy as fast as we would wish but the Government is focused hugely on growing jobs. Let me give you a few examples of that to make the member feel happier about the efforts that we are—Rt Hon Winston Peters: Point of order.Hon STEVEN JOYCE: —putting in: one—Rt Hon Winston Peters: Point of order.Hon STEVEN JOYCE: —in terms of the increased oil and gas—Rt Hon Winston Peters: Mr Speaker.Hon STEVEN JOYCE: —exploration which the Opposition opposes; two—Mr SPEAKER: Order! I apologise to the Minister. I have a point of order from the Rt Hon Winston Peters.Rt Hon Winston Peters: Forget about apologising to him I am the one who is asking for the point of order.Mr SPEAKER: And I am giving the member—Rt Hon Winston Peters: Well great—get it right. My point of order—Mr SPEAKER: Order! The member has a right to raise a point of order. As soon as I saw the member on his feet I called that point of order.Rt Hon Winston Peters: And Mr Speaker I expect you to pay more attention when people raise points of order. I should not—Mr SPEAKER: Order! [Interruption] Order! It is that sort of interchange that leads to disorder and leaves me with little choice but to discipline the member. Would the member please raise his point of order without criticism—Rt Hon Winston Peters: My point of order raised is very clear. The Minister was asked a specific question as to how he would reconcile the data not to give a long-winded speech about how he cannot and you let him go on and on and on. When a specific question was asked by Mr Robertson he could not answer it refused to answer it and you did not stop him. Then when I raised a point of order you did not recognise me—you let him carry on. That is what leads to disorder in this House.Mr SPEAKER: Can I invite the member to have a look at the specificity of the question that was raised—Rt Hon Winston Peters: I did.Mr SPEAKER: Well I invite the member to have another look at it. I think the Minister was very adequately addressing that question.Rt Hon Winston Peters: I raise a point of order Mr Speaker. The member asked about the household labour force survey described by two senior Ministers as the most rigorous analysis of employment or unemployment in this country and why he could not reconcile the fact that there were 40000 jobs short. If he—Mr SPEAKER: Order! [Interruption] Order! That is quite enough. That is why I invited the member to have a look at the question again because it talked about why the Minister continues to dispute the figures and that is how the question started. Has the Minister finished his answer to the question? He has.Grant Robertson: Can he confirm that unemployment is still above the worst-case scenario that was projected in last year’s Budget?Hon STEVEN JOYCE: No I cannot do that for the member today but what I can confirm is that it is the 11th lowest right across the OECD. Nobody is arguing that there is not more work to do and that is why this Government is out every day working on initiatives to increase growth. What is the Opposition doing?Grant Robertson: For the benefit of the Minister I seek leave to table the section of last year’s Budget that shows that the worst-case scenario—Mr SPEAKER: No. [Interruption] Order! Budget documents are well and truly available to every member in this House.Skycity Convention Centre—Terms of Agreement and Implications4.METIRIA TUREI (Co-Leader—Green)to the Prime Minister: Does he stand by his statement in relation to the SkyCity Convention Centre “it’s a day of celebration actually for Aucklanders and for New Zealand”?Rt Hon JOHN KEY (Prime Minister):Yes.Metiria Turei: When did he or other Ministers of his Government or officials first discuss with Skycity guarantees of compensation in the event of future regulatory change?Rt Hon JOHN KEY: Those negotiations were held by the office of Minister Steven Joyce. I do not have those details. You will need to put down questions to his office.Metiria Turei: Under the agreement does his Government intend to dissuade New Zealanders in 20 or even 30 years’ time from changing gambling laws to provide stronger public health protections if those laws would impinge on Skycity’s profits?Rt Hon JOHN KEY: No but what is clear is that Skycity is putting on the table around $400 million to build a convention centre and what is quite fair is that while it honours its obligations we honour our obligations. That is not unusual. As a Government we came into office and inherited a contract that said that the Government of the day would give to the America’s Cup whatever the number was—$27-odd million—and we honoured that. It was $35 million or $37 million and we honoured that deal.Metiria Turei: Under the agreement what remedies could Skycity seek from a future Government if New Zealanders ask that Government to reduce the value of banknotes that casino pokie machines can take?Rt Hon JOHN KEY: The member is asking for a legal opinion and would need to look at the contract that will ultimately be signed by the two parties.Metiria Turei: I raise a point of order Mr Speaker. This is not a question that asks for a legal opinion. The Prime Minister has signed a heads of agreement that guarantees compensation. He is able to give an indication of the remedies that are expected under that agreement in the negotiations. This is not asking for a legal opinion—Mr SPEAKER: Order! I also accept on this occasion the Prime Minister’s answer when he interpreted your question as him saying that he would then be required to give a legal interpretation of a contract that is at some stage to be signed with Skycity.Rt Hon Winston Peters: I raise a point of order Mr Speaker. It will become very apparent to you in this line of questioning that the first supplementary question from my colleague from the Green Party got an answer to go and ask Steven Joyce. Except in question No. 1 when he was asked that very question he said he mentioned the 2011 campaign. If the Prime Minister can get up and say any old thing in this House then question time is a total waste of time.Mr SPEAKER: Does the member have further supplementary questions?Metiria Turei: Is the Prime Minister now telling the House and the New Zealand public that he does not know the implications of the heads of agreement that he is signing with the Skycity convention centre that provides for it a guarantee of compensation for loss of profits for 35 years if there are regulatory changes? He does not know what that means—is that what he is saying?Rt Hon JOHN KEY: What I am saying is that there is an expectation that both parties will honour their obligations for the next 35 years but there will be a legal contract signed between the parties and that contract has not been formed or signed yet.Metiria Turei: Can the Prime Minister confirm then given that he has signed this agreement that under the agreement if New Zealanders do want to have stronger protections to prevent gambling harm in the future they could be liable to pay to Skycity up to $400 million for the privilege to make public health law?Rt Hon JOHN KEY: Firstly it is important that the member understand I did not sign the heads of agreement; they were signed on behalf of the Government by I think Mr Joyce; secondly the answer to the last bit is no.Metiria Turei: Can the Prime Minister confirm that the agreement that his Government has entered into with Skycity means that if New Zealanders in the future want stronger protections to prevent gambling harm they could be liable to have to pay to Skycity up to $400 million for the privilege to make public health law?Rt Hon JOHN KEY: The member is quite incorrect. The specifics around compensation are related specifically around the deal and the issues that were listed yesterday not on the point the member is making.Metiria Turei: Given that increased gambling will have a social and financial cost and that New Zealanders may under this deal have to pay Skycity up to $400 million if they want to improve gambling laws why not simply be transparent and frankly ethical and just pay for the convention centre which everybody wants and which is in a place where everybody can use it but which is not attached to a dirty casino deal?Rt Hon JOHN KEY: A couple of things: firstly the premise that the member’s question is based on is incorrect; secondly if we want to get into dirty and inaccurate deals then this is a member who presents 100000 signatures that are bogus. I suppose it was Clint who told her to do that as well was it?Skycity Convention Centre—Terms of Agreement and Effect on Auckland Economy5.MARK MITCHELL (National—Rodney)to the Minister for Economic Development: How is the Government encouraging investment tourism and job growth in Auckland?Hon STEVEN JOYCE (Minister for Economic Development):The Government is working hard in many ways to encourage investment in jobs and growth. Yesterday morning I announced that the Government has signed a heads of agreement with Skycity to build a $402 million international-sized convention centre in Auckland. An international convention centre will enable Auckland and New Zealand to tap into the lucrative convention centre market attracting an estimated 33000 conference delegates each year and significant spin-offs for the local and national economy. The convention centre which will be capable of holding 3500 delegates at one time is expected to employ 1000 people in construction and there will be a further 800 jobs once it is up and running.Mark Mitchell: What concessions in harm minimisation and anti - money-laundering measures have been agreed to?Hon STEVEN JOYCE: In return for Skycity’s fully funding the $402 million project costs the Government has agreed to extend Skycity’s Auckland casino licence due for renewal in 2021 to 2048 provided it operates within its licensing requirements. There will be 230 new pokie machines—which incidentally is the same number granted under the previous Government for a convention centre one-quarter of the size—40 gaming tables and 12 gaming tables that may be swapped for automated gaming tables allowing up to 17 percent of gaming machines in restricted areas to accept notes of greater value than $20; and the introduction of ticket-in ticket-out cashless gaming like in Australia. Identification will be required when any amount over $500 is being loaded on to ticket-in ticket-out tickets in non-restricted areas. There will also be voluntary pre-commitment systems—a modelling tool to identify players at risk of problem gambling—and double the number of host responsibility staff at the casino.Mark Mitchell: How does the agreement compare with other convention centre agreements?Hon STEVEN JOYCE: Very well. To contrast this agreement with another convention centre deal made under a Labour Government in 2001 that deal also involved 230 pokie machines in exchange for a convention centre but it was a teensy-weensy bit smaller than the current one—in fact a quarter of the size. The interesting thing about that deal of course was that it was struck under the previous Labour Government. It did have a number of very strong supporters. One of the most vocal supporters was pleased to see continuing investment in the quality of our tourism infrastructure—that was one Helen Clark—and one of the most silent opponents to that arrangement was the Green Party which set up zero petitions against it and made zero threats to overturn the agreement that Labour set up.Economy Rebalancing—Progress and Alternative Policies6.Hon DAVID PARKER (Labour)to the Minister of Finance: Does he stand by his Budget 2012 statement “We are moving towards growth that is driven by savings exports and productive investment in the parts of the economy that trade with the rest of the world”?Hon BILL ENGLISH (Minister of Finance):Yes and I thank the member for asking about the rebalancing of the economy. Yes I stand by that statement. Savings are up exports are up and investment is up. New Zealand is one of the faster-growing economies in the OECD. That has been in the face of headwinds that have made the process of rebalancing considerably more difficult—for instance a high exchange rate. Employment is rising unemployment is falling New Zealanders are saving more and paying down debt and real wages are increasing. This is a reasonably positive backdrop for this week’s Budget.Hon David Parker: How do double-digit house price inflation in our two largest centres and a current account deficit that is the worst in the developed world demonstrate that “We are moving towards growth that is driven by savings exports and productive investment in the parts of the economy that trade with the rest of the world.”?Hon BILL ENGLISH: Of course those are risks to the rebalancing of the economy which is why the Government is attacking them vigorously. I would hope that the Opposition will support the Government’s efforts to increase the supply of housing in Auckland instead of running poster campaigns against the Minister of Housing who understands the problem and is working with the Auckland Council to help resolve it.Hon David Parker: Why is he claming that economic growth is driven by savings exports and productive investment when in the last quarter of 2012 the tradable sector of the economy shrank and when merchandise exports declined in the year to March 2013 with non-primary exports down by another 6.4 percent causing misery to those who have lost their jobs as a consequence?Hon BILL ENGLISH: I cannot confirm those numbers. What I can confirm is the direction the Government has set and some progress in that direction despite the headwinds. What I can tell the House though is that pursuing policies of shutting down the mining industry strangling the dairy industry borrowing more money and Governments spending a lot more is not a recipe for rebalancing the economy.Todd McClay: What is the recent history of output in the tradable sector?Hon BILL ENGLISH: It is interesting if you look back through what were apparently the good times in the early 2000s. The tradable sector—that is the sector exposed to the rest of the world’s economy—went into recession in 2006. This was quite an achievement given the state of the world economy at the time. The tradable sector was then hit by the global financial crisis and it did not start growing again having gone into recession in 2006 until 2010. Since then it has grown at about the same rate as the domestic sectors of the economy reflecting in part the Canterbury earthquakes rebuild’s $40 billion contribution to the non-tradable sector. The Government is playing its part in building a productive and competitive economy by backing the businesses that export that invest and that employ people.Hon David Parker: Would lower power prices for businesses assist economic growth driven by exports and investment in the parts of the economy that trade with the rest of the world?Hon BILL ENGLISH: Well they might but I have not seen any indication that the Opposition’s policy would achieve lower power prices. In fact its climate change policy guarantees that power prices will go up.Hon David Parker: Given that National’s efforts to rebalance the economy have patently failed when will he follow the advice of the OECD the IMF the Reserve Bank and the Labour Party and implement pro-growth tax reform through a capital gains tax?Hon BILL ENGLISH: Because those other three entities that are not the Labour Party do not agree with the Labour Party. They advocate a comprehensive capital gains tax. The Labour Party advocates a capital gains tax that exempts housing and is imposed on every productive growing business in New Zealand. So it does not become a tax on capital gains; it becomes a tax on successful businesses.Hon David Parker: Would the Minister prefer a capital gains tax that included the family home?Hon BILL ENGLISH: That is why this Government has not put a capital gains tax on—but that is what all those other organisations advocate. A policy of more spending financed by a capital gains tax by the Government more regulation by the Government more borrowing by the Government and shutting down productive industries as he advocates would not work.Hon David Parker: I raise a point of order Mr Speaker. That was very interesting but that was not my question. The Minister in the earlier answer said they want the family home included. So I asked him whether the Minister would prefer a capital gains tax with the family home included. He has not answered that question.Mr SPEAKER: I thought the Minister said no right at the very start and others have confirmed that that is the case. I think the question was very adequate—Hon David Parker: I raise a point of order Mr Speaker. I listened very carefully to that question. So did my colleague Annette King. That is not what I heard. If you are trying to interpolate the Minister’s answer that is not appropriate.Hon Gerry Brownlee: It is a very interesting argument being run by David Parker but the point here is that that is their policy and previously Ministers have been asked not to comment on it. The reality is that the Minister of Finance said that we do not have a policy on capital gains in this particular area. That has to be a full answer.Mr SPEAKER: We are moving on. The question has been adequately addressed.Grant Robertson: I raise a point of order Mr Speaker. Just speaking to that contribution from the Leader of the House it is my understanding of the rules of the House that if a Minister brings a matter into a supplementary answer as the Minister did it is allowable to ask supplementary questions about that material.Mr SPEAKER: And—[Interruption] No I do not need further—Hon Gerry Brownlee: That is true but it is not appropriate to use a question to ask advice from the Minister of Finance about your policy.Mr SPEAKER: Order! On the point raised by Grant Robertson the question was certainly not out of order.Housing Affordable—Projects and Auckland Housing Accord7.Peseta SAM LOTU-IIGA (National—Maungakiekie)to the Minister of Housing: How will today’s announcement of a $377 million investment by Housing New Zealand in Project 324&5 and Simply Smart Homes help the Government achieve its social and economic goals?Hon Dr NICK SMITH (Minister of Housing):Project 324&5 involves converting 1000 three-bedroom State houses and making them into four-bedroom homes and converting another 1000 into five-bedroom homes by adding 3000 modular bedrooms. Housing New Zealand has too many three-bedroom houses. Some are overcrowded some are half empty and some have large sections that are underutilised. Simply Smart Homes involves building 500 two-bedroom homes on these underutilised sections in Auckland. These projects will house an extra 4000 people and contribute to our social goals of healthier homes more affordable homes and happier families. The Minister of Finance is pretty happy because it is very good value for money.Peseta Sam Lotu-Iiga: How will these projects contribute to the housing accord that the Government reached with the Auckland Council last Friday?Hon Dr NICK SMITH: The accord we have reached with the Auckland Council is to ramp up investment in housing to increase supply and to do so in a balanced way that includes both greenfield and brownfield development. This $377 million investment by the Government is in infill housing over the next 3 years and will contribute towards those goals of an extra 39000 houses over that period. This is a common-sense and pragmatic Government that is delivering real benefits for families and for the economy.Peseta Sam Lotu-Iiga: How do these initiatives match up with the Government’s broader programme of reform for social housing?Hon Dr NICK SMITH: Housing New Zealand has historically been just too focused on the number of State houses rather than the quality or for that matter whether they are the right size. For instance there was a very deliberate decision by the previous Government to reject the recommendations of the Housing New Zealand board and spend money on maintaining the houses because it said the only thing the public notice is the number. We are focused on quality houses not just the number and making sure that those houses are the right size for the modern and diverse families that exist today.Phil Twyford: Now that the Government has recognised that over-crowding is a problem for 2000 State tenants what is he going to do to fix the situation of hundreds of thousands of New Zealanders living in overcrowded and uninsulated homes and why will he not back a building programme that will deliver high-quality affordable houses instead of just tinkering with the planning regulations?Hon Dr NICK SMITH: This Government has an incredibly proud record of insulating 230000 homes. I ask this question: how many did Labour do during its 9 years? Less than 10 percent of that. The fact is that the previous Government had a shameful record on the quality of both State houses and others. Watch this space. There will be even more action in the Budget that is announced on Thursday.Child Poverty—School Food Programmes8.JACINDA ARDERN (Labour)to the Prime Minister: Does he stand by his statement at the start of the year that “there will be—and there are—isolated examples that are reported of a child being hungry”; if so what does he consider to be “isolated”?Rt Hon JOHN KEY (Prime Minister):Yes. There are examples of children being hungry at school but not every child.Jacinda Ardern: Does he stand by his statement in response to Labour’s proposal to introduce food in schools that it was unnecessary because “The vast overwhelming bulk are [fed] in New Zealand”?Rt Hon JOHN KEY: Yes.Jacinda Ardern: How does he reconcile his position that kids are being fed and the problem is isolated with his position 6 years ago that hungry children in schools was “a major issue” when since then and since he has been in office material deprivation and the number of families struggling to put food on the table has gone from 15 percent to 21 percent?Rt Hon JOHN KEY: On a number of fronts. Firstly the Government has made changes to the Fruit in Schools programme to mean that it is more efficient. Secondly the Government has put more money into KidsCan to ensure that there are breakfasts. Thirdly the Government has supported Fonterra which has been running a food in schools programme. If one was to look at say Fonterra’s programme as an example my understanding is that it is in all the decile 1 to 4 schools around the country that want it. It operates 2 days a week. It basically feeds about 566 schools. That represents about a fifth of the number of schools in New Zealand. Only about 15 percent of children actually actively participate in those programmes. So if you extrapolate all those numbers very approximately that is about 3 percent of New Zealand kids.Jacinda Ardern: Does he stand by his position as Opposition leader on food in schools when he said that “We’re going to put together the package while in Opposition. We are not waiting to be in Government because all kids deserve the best.”; if so what was the nature of that package that he claims to have put together?Rt Hon JOHN KEY: Yes and we have been doing a number of things. As I just outlined before they are some of the examples around food. But actually as the Minister of Housing just announced before we are going to be extending a number of the three-bedroom State houses in Auckland to four bedrooms. We have insulated 230000 homes. We have been rolling out a programme on rheumatic fever working very closely with the Māori Party in terms of the Ministerial Committee on Poverty. All of these issues are issues that lead to the well-being of youngsters.Jacinda Ardern: Is he satisfied that all that needs to be done on food in schools is complete or will he introduce a package as part of his Budget?Rt Hon JOHN KEY: Oh the member will have to wait a couple more sleeps.Electoral System MMP Review—Response to Recommendations9.HOLLY WALKER (Green)to the Minister of Justice: Does she intend to bring legislation to the House that will implement the recommendations of the MMP Review in time for the 2014 election?Hon JUDITH COLLINS (Minister of Justice):No.Holly Walker: Why did she bother to hold the MMP review if she had no intention of implementing its recommendations in the time line intended?Hon JUDITH COLLINS: Of course I did not hold the MMP review; that was a matter that was undertaken by the Electoral Commission. But I can also say that I have made it very clear that we need consensus on these matters for any change and there is no consensus for any change.Holly Walker: Given that 77 percent of the public submissions to the review and 52 percent of the general public support abolishing the one-seat threshold how can she justify leaving this hugely unpopular coat-tailing rule in place for the next election?Hon JUDITH COLLINS: I believe that Dr Holly Walker was correct on this matter when she wrote: “There is a tradition of legislation making changes to the electoral system being passed unanimously in Parliament and it would be great if all parties were able to put aside their own short-term political interests and build a consensus around the Electoral Commission’s report.” Dr Walker wrote that on 6 November last year in a little-read blog called Frogblog and I agree with her.Holly Walker: Thank you for the promotion—[Interruption]Mr SPEAKER: Order! Would the member like to start her question again.Holly Walker: Thanks for the promotion Minister. Which party or parties have blocked consensus in Parliament on the recommendations of the MMP review?Hon JUDITH COLLINS: Actually no party has been able to reach consensus because consensus actually requires all parties to agree.Budget 2013—Budgeting Services10.MELISSA LEE (National)to the Minister for Social Development: What announcements has she made to provide extra funding in Budget 2013 to support Budgeting Services?Hon PAULA BENNETT (Minister for Social Development):As part of Budget 2013 we are supporting people on low incomes by investing more money into organisations providing budgeting advice and support. An extra $1.5 million has been allocated for 2013-14. This is in addition to the funding that has already been allocated and it will relieve pressure on this sector in the short term.Melissa Lee: How can budgeting services apply for this extra funding?Hon PAULA BENNETT: This extra funding is in recognition of the good work that budgeting services do and is being allocated to address demand in service provision. Applications opened yesterday Monday 13 May and close on Friday 24 May with providers being notified by the end of the month. It is a short 2-page form that all should be able to easily fill out and I encourage people to put in their applications.Melissa Lee: What will the strategic review look at?Hon PAULA BENNETT: A strategic review of the overall funding model will be completed this year with a view to implementing a sustainable funding path from July 2014. We are in the process of scoping the review but I think it is a good idea to look at policy decisions ensure we are getting the changes and the desired effects intended and look carefully at the consequence of policy decisions on individuals Governments and our partner NGOs.Police Minister—Confidence in Judgment of Senior Police Staff11.Hon TREVOR MALLARD (Labour—Hutt South)to the Minister of Police: Does she have confidence in the Police?Hon ANNE TOLLEY (Minister of Police):Absolutely. The police are doing an outstanding job of protecting our community but are always looking at how they can do things better. Crime has fallen nearly 17 percent in the last 3 years and recorded crime is at a 24-year low. We now have more police in the right places at the right time with the right tools working hard to stop crime before it occurs. As a result public trust and confidence are at an all-time high reaching 87 percent last month.Hon Trevor Mallard: Does the Minister support the comments made in the eulogy to the late Detective Inspector Bruce Hutton by the Deputy Police Commissioner Mike Bush including the comment that Inspector Hutton was a man of “great character”?Hon ANNE TOLLEY: I understand that those comments were read from Mr Hutton’s service record and that was an appropriate action to take at the man’s funeral in front of his family and friends.Hon Trevor Mallard: Can I therefore take it that the Minister thinks it is appropriate that the Deputy Commissioner of Police describes the individual who a royal commission found planted evidence in the Crewe murder case as being of “great character”?Hon ANNE TOLLEY: No that is not what I said. In fact I thought I said very clearly that those words were read from Detective Hutton’s service record. They were not the opinion of the deputy commissioner; my understanding is they were on the man’s record prior to the Arthur Allan Thomas case.Hon Trevor Mallard: Will she rule out supporting Mike Bush as a candidate for the soon to be vacant police commissioner’s position in light of his appalling judgment in reading those comments out in that eulogy?Hon ANNE TOLLEY: We currently have a commissioner and it would be inappropriate for any politician at any stage to make any comments about the future employment of any of our outstanding police commissioners. I am amazed that that member would sully the name of the one of the top serving police officers in this country.Immigration Policy—Cap on Number of Older Migrants12.DENIS O’ROURKE (NZ First)to the Minister of Immigration: Does he agree that there should be a cap on the number of older immigrants; if not why not?Hon MICHAEL WOODHOUSE (Minister of Immigration):Yes I do. That is why there is a limit to the number of older migrants able to be approved for residence each year under the capped family stream.Denis O’Rourke: How can the Government have a sustainable immigration policy when last year 49.5 percent of all immigrants were reunification migrants as reported on 23 April this year by Lincoln Tan in the New Zealand Herald?Hon MICHAEL WOODHOUSE: I cannot verify that 49 percent figure. However I do note that the same newspaper published this: “Professor Spoonley said ‘being more generous’ with family migration would encourage more skilled migrants to come and remain here and he did not agree parents were a burden to New Zealand.”Denis O’Rourke: Will the Minister verify that nearly 40 percent of immigrants from China last year were 50 years of age or more as reported in Lincoln Tan’s article in the New Zealand Herald?Hon MICHAEL WOODHOUSE: I cannot exactly verify it. It could well be correct. But what I would note also is that the average age of permanent migrants to New Zealand is 29 compared with the general population’s age of 36. So overall there is a very young cohort of migrants coming to this country.Denis O’Rourke: Does the Minister agree with Professor Spoonley that the ratio of all reunification migrants should be maintained at no more than two-thirds of skilled migrants?Hon MICHAEL WOODHOUSE: I think that is an oversimplification of the issue. As I have mentioned to the member in this House on a previous occasion the number of parent category migrants is a function of the skilled migrant numbers 5 to 10 years ago so it would be very difficult to maintain a strict fixed proportion of one over the other.Personal ExplanationsMember of Parliament—ResignationAARON GILMORE (National):I seek the leave of the House to make a personal explanation under Standing Order 354 in respect of my role as a member of Parliament and issues that have been raised in recent days. In relation to this statement I would like to talk for about 4 or 5 minutes in lieu of making any further valedictory speech.Mr SPEAKER: Leave is sought for that personal explanation. Is there any objection? There is none. The member may proceed.AARON GILMORE: Mr Speaker I have tendered my resignation to the Prime Minister as a member of the National Party caucus and to you as a member of Parliament. I have done so because I have made errors of judgment as a member of Parliament. Those errors are causing an unnecessary distraction for the Government. This is causing immense stress to me and to members of my family and in the light of constant media scrutiny into my life I am unable to continue to function properly as an MP. It has already been widely canvassed through the media just what some of those incidents have been. I behaved rudely to bar staff at the Heritage Hanmer Springs hotel. I behaved badly on that night. I have never wanted things to get to this point. I cannot offer any excuses for that conduct or for the poor management subsequently.Over the past 2 weeks I have gone through the five stages of grief and I have come to terms with resignation denial anger bargaining depression and acceptance. The stages have not always been in that order and changed hour by hour. At times my anger has been such that I have contemplated utu against my enemies. It is fair to say that I have said and done many stupid things in my life and if I were to stand here and list all of them and try to talk my way out of them then we might not have time to pass next year’s Budget let alone this one. Although some of the things said about me I have found to be deeply hurtful and untrue I accept this is one of the consequences of holding public office. I also accept as other politicians from across the spectrum have found over the years that when you are caught in a media storm of your own making the only honourable thing to do is to step out of politics and attempt to rebuild a private life.The stress of dealing with a media frenzy as I have over the past 2 weeks is enough to drive anybody out of public office. I am not seeking sympathy with that statement but I would like to put it on the record of the House just how grateful I am to friends in this House who have expressed support for me personally. I have had close to a thousand calls messages and emails in recent days. I have had the media chase me my family friends and loved ones across the country but I have never committed any crimes. They do not deserve that treatment and I am ultimately responsible for the effects that my political career has had on them. For that I am truly most sorry.I wish to thank the Prime Minister and the National Party as a whole for providing such strong leadership in challenging times. I was first elected to Parliament almost 5 years ago but more important I value the dignity of my party the leadership of John Key and those here who have worked hard to have a John Key Government. I have learnt plenty and through my time here have many to thank. I have been through thousands of earthquakes and helped as many people as I possibly could along the way. I am disappointed I will not be able to continue as a member of Parliament but I do hope to help in a more modest way at some time in the future.I also wish to thank my family and friends for their generosity and support since I was first elected to Parliament. The last couple of weeks have been particularly hard for them and I am eternally grateful for their support in helping me in such trying times. I apologise to them just as I do to the Prime Minister my colleagues and supporters in the National Party and this House as a whole for my misjudgments. I will continue to be supportive of the Prime Minister the National Government and the National Party from outside Parliament in the limited capacity of a private citizen.Now that I have the opportunity to lay it out on the record of this House it would not dignify this House or me to use unseemly words against others in my final speech here. I know I have angered many people and if I am going to seek their forgiveness I must be prepared to forgive unkind words about me. To those in the media who predicted I would dig in my heels and hang on to Parliament as long as I could—and although many of my friends wished me to stay in this House and fight these issues—today I am not surrendering; I am retreating. I am sorry I did not meet your expectations. For those of you who tried to goad me into seeking retribution in this House today I too seek your forgiveness.When I finish packing up my office and saying my farewells to this House I intend to take time out with my family and friends. I do not expect to be making any public statements for some time. I ask the media to respect my privacy and that of my family.When I gave my maiden speech I quoted George Patton’s words: “Lead follow or get out of the way for those who will.” Well today I am choosing to get out of the way. I am looking for something new to do.Finally to the one I love: babe I am coming home.Urgent Debates DeclinedSkycity Convention Centre—Terms of Agreement and Legislative ImplicationsMr SPEAKER: I have received a letter from Metiria Turei seeking to debate under Standing Order 386 the agreement between the Crown and Skycity concerning the construction of a convention centre and various regulatory concessions. The announcement is a particular case of recent occurrence involving ministerial responsibility. A heads of agreement has been signed and a final agreement is expected to be reached in June. It will require legislation to give it effect. Where a matter will come before the House reasonably soon in the form of legislation that is a relevant consideration in considering whether it requires the immediate attention of the House. The test for an urgent debate is a high one. Given that a final agreement is not yet in place and it will require legislation I am not convinced that I would be justified in setting aside the business of the House today. There will be other occasions on which the House can debate this matter. The application is therefore declined.METIRIA TUREI (Co-Leader—Green):I raise a point of order Mr Speaker. Can I just get some clarity on your decision? Is your decision to decline this application on the basis that legislation may in time come before the House and therefore a debate on the issue can occur then? Is that part of the test that you have applied?Mr SPEAKER: That is exactly right.Offices of ParliamentAddress to Governor-GeneralHon GERRY BROWNLEE (Leader of the House):I move That a respectful Address be presented to His Excellency the Governor-General commending to His Excellency the alterations to the appropriations for the 2012/13 financial year in respect of Vote Audit Vote Ombudsmen and Vote Parliamentary Commissioner for the Environment and the appropriations and information for the 2013/14 financial year in respect of Vote Audit Vote Ombudsmen and Vote Parliamentary Commissioner for the Environment. These three officers are in fact Officers of Parliament and do have some high degree of—or in fact total—statutory independence. The Controller and Auditor-General is the position currently held by Lyn Provost. She has held that position since October 2009. It is the Public Audit Act 2001 that gives that person the authority to effectively be the public’s person looking at the probity of all public expenditure—Rt Hon Winston Peters: Put some heart behind it.Hon GERRY BROWNLEE: —in New Zealand and that includes local government expenditure as well. Members are extolling me to be a little more excited in my speech this afternoon. I would be—I would be—but when it comes to the Auditor-General there is a degree of dignity about that office that does need to be respected and I am not going to fall into the trap posed for me this afternoon by the Rt Hon Winston Peters who has a great deal of respect for the Office of the Auditor-General and for that matter Mr Grant Robertson on the other side who is only just now learning what that office is.One of the other groups here is the Ombudsman. Currently there are a number of people holding that office and have done so on behalf of the people of New Zealand since 1962. They continue to do good work making sure that the Government of the day or other agencies of Government are able to be accessible to New Zealanders.Finally the Parliamentary Commissioner for the Environment Dr Jan Wright has been in that position since 5 March 2007. She was reappointed for a second term in 2012 and continues to be a watchdog for the people of New Zealand when it comes to environmental matters. Some of her work although at times controversial and at times challenging to some people is absolutely necessary and she does a great job.There are two changes to Vote Audit: a $35000 increase in the permanent legislative authority baseline arising from a determination by the Remuneration Authority; and a decrease of $181000 resulting from an updated forecast for the revenue-dependent appropriation of audit and assurance services. In the cases of the other officers there are small alterations that I do not think are necessary to mention this afternoon. There are both increases and some decreases as well. All of those by and large come from Remuneration Authority determinations. I commend the motion to the House.DARIEN FENTON (Labour):I am pleased to take a call on this motion on the 2012-13 alterations to appropriations and the 2013-14 appropriations for Officers of Parliament. As a member of the Officers of Parliament Committee I have become more personally acquainted with the fine calibre of people we have in the Office of the Ombudsmen the Office of the Auditor-General and the Parliamentary Commissioner for the Environment. During the consideration of this report all of the committee members were in accord about the excellent work done by these officers and we agreed particularly in the case of the Office of the Ombudsmen and the Parliamentary Commissioner for the Environment that the offices should not be expected to continue without additional appropriations. So Labour supports the recommendations in the report from the Officers of Parliament Committee but we still have some reservations about the level of funding particularly for the Office of the Ombudsmen.Last year the Chief Ombudsman Beverley Wakem warned that the office was in crisis saying it was under considerable pressure in terms of staffing and funding and had been for the previous 3 years. She told the Government Administration Committee that the office’s baseline funding had been established on the basis that it would be actively working on 800 to 1000 cases at any one time but in fact it had been dealing with about double that. There were outstanding cases because of a lack of staffing to do the work and the workload had been increased by complaints from the Christchurch earthquake victims’ dealings with the Earthquake Commission and the Canterbury Earthquake Recovery Authority. This was causing lengthy delays for people trying to hold the Government to account get answers or have their cases resolved. In addition Labour has seen Government Ministers systematically avoiding questions and refusing to reply to Official Information Act requests and therefore we believe loading the Ombudsmen with more and more work.We do believe that there is now a culture of secrecy and suspicion within the Public Service and that has been encouraged by the National Government and that has to stop. The decision by the Chief Ombudsman in December 2012 to review Public Service processes for handling official information requests was very timely. After all there have been a lot of botch-ups by National in the recent past and we do not believe that the Government has the right to shut down the flow of information to avoid public scrutiny. In a democracy the general public are entitled to know what their Government is up to. Under National New Zealanders are being denied access to the information that will allow them to make informed decisions about the Government’s performance. The National Government cannot conceal its mistakes or incompetence by hiding information from the public.When Chief Ombudsman Beverley Wakem appeared before the Officers of Parliament Committee she told us that in addition to the extra workload existing staff were underpaid and attracting new staff was a challenge. In some cases she said staff had literally been worked to death by exceeding their maximum tolerable workloads. It was clear to the committee that funding needed to be increased to keep pace with the workload and the pressure on the office and its staff or it would be unable to achieve its performance targets for resolving complaints and meeting the expectations as a watchdog for the public—and as the old saying goes justice delayed is justice denied. So the committee agreed unanimously that the Office of the Ombudsmen would be funded by an increase of $960000 for 2013-14 and in out-years and it would be able to employ six additional investigative staff in order to perform their statutory duties. The Ombudsmen asked us for funding to employ eight staff and Treasury recommended four. Labour believes that six was a better-than-nothing compromise even though clearly it would have been better to meet the Chief Ombudsman’s request for the resources she believed were needed not only to deal with the huge backlog facing the office but also to deal promptly and effectively with the growing number of complaints.I also note the Chief Ombudsman’s request for more funding to address the remuneration issues for staff given that they are disadvantaged compared with others in comparable positions in other agencies. We were told that retaining or attracting high-calibre staff at current salaries would be an ongoing challenge and Labour believes that this issue must be addressed in future Budgets.I want to acknowledge here the work of the Office of the Controller and Auditor-General. Members will note that there have been adjustments for remuneration determinations. We were told that the principal pressures on the budget of the Office of the Controller and Auditor-General over the past year has come from the inquiries it conducts into matters of public concern. Generally the office undertakes two inquiries a year but over the past year the office received an unprecedented number of requests regarding important issues and undertook six major inquiries. Recent inquiries of the office include the Government’s decision to negotiate with Skycity Entertainment Group for an international convention centre also aspects of ACC’s board-level governance and going back a bit further Pansy Wong and her husband’s use of parliamentary travel entitlements. If this expectation or demand continues the office told the committee that it would have to look at options such as taking longer to complete inquiries or potentially declining to take them on. This is something that Parliament needs to seriously consider. If we want this kind of scrutiny sustained in future years there will be issues of workload and funding that must be considered.The Parliamentary Commissioner for the Environment presented a strong case to the committee for an increase in her budget especially as the operating baseline of the commissioner had not increased for the past 6 years. Again the committee was unanimous in its appreciation of the work of the Parliamentary Commissioner for the Environment’s office but noted that it managed with a very small staff of just 17 people. The office has a very wide-ranging role of inquiry and reporting on any matter where in the opinion of the Parliamentary Commissioner for the Environment the environment may have or has been adversely affected. The committee accepts the cost increases and pressures that have been absorbed in operating efficiencies achieved over that time—and it was clear to us that there was really no fat left to squeeze out of this office. Again we heard of recruitment and retention difficulties: a loyal and hard-working staff who have managed in a climate of cost cutting and expectations on them that simply cannot be humanly coped with. So the committee agreed to fund a modest increase of $100000 in the appropriation for Vote Parliamentary Commissioner for the Environment for 2013-14 and out-years. Labour supports this increase but again warns that the expectations that we have of this office with its small staff and budget are unsustainable in the longer term.So to conclude Labour supports this motion. However we note concern at the ongoing financial constraints that the Officers of Parliament are facing. Thank you.GARETH HUGHES (Green):Kia ora Mr Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to speak in support of this motion. I think it is right that this should go to the Governor-General. We should see these appropriations and draft budgets be agreed to by His Excellency. It is important that the budgets of the three offices we are talking about the Parliamentary Commissioner for the Environment the Office of the Controller and Auditor-General and the Office of the Ombudsmen are not set by this Parliament and are set by the Government through the annual Budget. It is important there is independence.I would like to acknowledge the chairmanship of the Officers of Parliament Committee of the Speaker and all the members and I would like to thank the staff and the office holders for all the work they do for our country.I would like to thank the Auditor-General Lyn Provost; the Ombudsmen Dame Beverley Wakem Professor Ron Paterson and the outgoing David McGee; and of course the Parliamentary Commissioner for the Environment Dr Jan Wright and I thank their staff. I guess tonight that no doubt the staff of all those three office holders are huddled around televisions in their offices watching this motion being debated in the House. I guess for them it might be disappointing or even galling that although those office holders are getting automatic remuneration increases through the permanent legislative authority we are not necessarily seeing that for the staff and I do not believe we are. So I would like to acknowledge the hard-working staff who have been working very well in a difficult and constrained fiscal environment.First up on the Vote Audit budget is the Office of the Controller and Auditor-General. There is no change in the appropriation because obviously it can collect fees. There is an increase in the permanent legislative authority. We would like to point out the important role it does within the constrained environment it operates in. As we heard from the member Darien Fenton it has traditionally done two inquiries. However over the last year we have seen six major inquiries into the likes of the Mangawhai waste-water issue Bill Liu former Minister Pansy Wong and the Auckland convention centre. These issues are I believe vitally important. It is important that we get good financial scrutiny of the Government of Ministers and of State-owned enterprises. Given that we have got such a shambles at the moment at Solid Energy I think it is vitally important that this budget reflects the importance this Parliament places on financial prudence and transparency.When we look at the Office of the Ombudsmen again we would like to thank the staff. We would like to acknowledge the incoming Ombudsman Professor Ron Paterson. We think he will do a good job and we welcome him into his role. I guess it is good news because for years the office has struggled with no baseline funding increases and what we are seeing with this motion and appropriation is just under $1 million for six new investigative staff. Six new investigators is a 12 percent increase for the Office of the Ombudsmen. Although we know that the office has been described as being in crisis in past financial reviews and that the number of complaints has literally skyrocketed over the last 10 years we hope the six new investigative staff will make a difference because the issues they are dealing with are important.In 1962 I think it was Sir Guy Powles the first Ombudsman said he was Parliament’s person put there for the protection of the individual. It is still the case but I guess we would expand that to say that the Ombudsman is actually the people’s person. He is New Zealanders’ person and I guess with the incoming Ombudsman we could have a discussion around what the nature is of this office in 2013 and the coming decades. Let us have a discussion around how we get adequate funding so that those complaints can be dealt with in an acceptable time frame because what we are seeing is that complaints are taking an awful long to time to be dealt with. People are not getting satisfaction. I believe that if we had a mechanism in place whereby Ministers had some sort of financial penalty for dealing with complaints the Office of the Ombudsmen might be another area for a funding increase. It might help it to do the important work. So let us have a discussion around the question: what does the Ombudsman look like in the coming decades? Do we even call it an Ombudsman? I do not know whether a Scandinavian term is the correct term to help engage New Zealanders with the office and the important role it plays.Lastly for the Parliamentary Commissioner for the Environment there is a permanent legislative authority increase of $10000—an increase of $100000 in the baseline which had not been increased for 6 years. The report notes appropriately that this is because of “cost pressures”. We note the quality of the commissioner’s reports. Obviously we in the Green Party do not agree with all of them but we do note all the hard work that the commissioner’s team puts behind it. We know that there are some increasingly important environmental issues facing our country that merit the commissioner’s oversight and investigation.I guess the last point I would like to leave on is that it has been widely signalled by the Government that the Office of the Parliamentary Commissioner for the Environment is likely to have increased environmental monitoring roles into the future. I think it is right that the baseline increases reflect that so that her office can gear up and get ready for it because we are in a catch-22 situation at the moment where the increased responsibilities have been widely signalled but the legislation has not been introduced so obviously there has not been an increase in appropriations. It is a catch-22 situation. If we value environmental monitoring if we want to get it right—and I believe we do because it is the basis of our economy of our prosperity—I think we should have a discussion on that in future years.The Green Party supports this motion. We would like to thank those office holders those staff and the other parties in this Parliament. Kia ora.RICHARD PROSSER (NZ First):I am pleased to rise on behalf of New Zealand First and also on behalf of my colleague Barbara Stewart to take a very short call on this Government motion the 2012-13 alterations to appropriations for Officers of Parliament and the 2013-14 appropriations for Officers of Parliament. New Zealand First gives its full support to the appropriations for the Officers of Parliament. We acknowledge the importance of these roles and agencies the services they provide to Parliament and how crucial it is that they be resourced in order to fulfil their functions adequately. With regard to the Office of the Auditor-General this is a critical office of Parliament that we wholeheartedly support. We would like to highlight three of the Auditor-General’s recent reports to illustrate the important work that the office does.Firstly is the report entitled Ministry for Primary Industries: Preparing for and responding to biosecurity incursions. This report alerted the Government that the Ministry for Primary Industries was underprepared for future biosecurity incursions. The report showed that responding to incursions took precedence over preparing for the potential arrival of other pests and diseases. The report revealed that there is still a lot of work to do to ensure that New Zealand is protected from biosecurity incursions. With New Zealand’s biosecurity breach in recent years involving Psa bacteria clearly there are absolutely no grounds for complacency.The second report I wish to mention in this debate is the inquiry into the Government’s decision to negotiate with Skycity Entertainment Group Ltd for an international convention centre. This report found a range of significant deficiencies in the advice that officials provided to the Government in relation to the new Auckland convention centre. The report also found that the quality of support provided to the Government fell well short of what we expect from the lead Government agency on commercial and procurement matters.The Office of the Auditor-General also produced a very comprehensive report entitled the New Zealand Defence Force: The civilianisation project. The report revealed that overall the civilianisation project obtained only limited success. These are the types of reports that are essential to holding the Government and State sector agencies accountable to the New Zealand public.The Office of the Ombudsmen has done excellent work over the past year. As an example the Ombudsmen commenced an investigation into the school closure and merger process. The office is now asking anyone who has information relevant to the investigation to contact the office. When the Associate Minister of Education refused to release the advice relating to the development of the partnership schools policy the office gave its opinion and recommendations on this decision. The Chief Ombudsman also raised serious concerns that charter schools are to be excluded from the provisions of the Official Information Act.In regard to the Plumbers Gasfitters and Drainlayers Board the Office of the Ombudsmen also released its report on the investigation into complaints received about a disciplinary levy continuing professional development licensing conditions and the refusal of licensing for non-payment of fees. In the last year the Office of the Ombudsmen also reported on the Minister for Economic Development’s refusal for access to official information regarding the production of The Hobbit and film production generally in New Zealand.Lastly the Office of the Parliamentary Commissioner for the Environment produced a range of useful and timely reports that contribute valuable input to environmental information and debate in New Zealand notably evaluating the environmental impacts of fracking in New Zealand—an interim report. New Zealand First supports this appropriation. Thank you.Hon MARYAN STREET (Labour):It is a pleasure to rise to speak to this Government motion concerning the 2012-13 alterations to appropriations for Officers of Parliament and the 2013-14 appropriations for those same bodies. These three offices—the Office of the Auditor-General the Office of the Ombudsmen and the Office of the Parliamentary Commissioner for the Environment—are three of the checks and balances against the ultimate power of the executive. They are three of the things that continue to make New Zealand one of the most transparent democracies in the world. They are three of the reasons that we continue to feature very highly in Transparency International’s assessment of transparency and accountability mechanisms in developed democracies—or in any democracy because those countries that do not have democracy or any of democracy’s apparatus are always ranked at the very bottom of Transparency International’s ledger.This motion from the Government today is important for a number of reasons. It focuses on the fact that these offices account to Parliament. They do not account to Ministers; they are not the creatures of ministerial portfolios—they are offices of Parliament and they report back to Parliament. So the Government does not own them; Parliament decides on the appropriation for them and the offices’ appropriations are determined by a multiparty committee in this House.It might be appropriate for us to reflect on why the appropriations have needed increasing in this next round the 2013-14 appropriation. There are two possible reasons. One is that our citizens have become more actively engaged with the processes to which they are subjected. And why do people become more actively engaged in the processes that affect them? Well this brings me to my second point. If the processes are seen to be unfair are felt to be unfair or are felt to have been inadequately addressed or inappropriately executed then these offices provide—particularly the Office of the Ombudsmen—a venue some recourse that an ordinary citizen might have to get those complaints or differences addressed. The Office of the Auditor-General is critically important for being there as a check against the behaviour of a whole range of bodies including local authorities.The Office of the Ombudsmen is there for particular purposes especially in relation to the enactment of regulations and legislation. The Office of the Ombudsmen is often the last port of call for a citizen who has a dispute over just how a regulation has been implemented. The previous speaker Richard Prosser referred to plumbers and gasfitters as a prime example and so they are. The fact that the office’s work has been increasing could lead us to conclude that there have been more infringements of regulations and legislation that has been implemented in recent times or there has been a greater disregard of citizens’ rights in the carrying out of current legislation and regulation. So I am pleased that there is an increase of staffing for the Office of the Ombudsmen.I want to turn particularly to the Office of the Parliamentary Commissioner for the Environment. This office was set up under the Environment Act 1986. Its roots lie in the 1980s reforms of this country’s environmental administration following an OECD report of 1981 called Environmental Policies in New Zealand. This report recommended changes including strengthening the environmental advice to the Government and establishing an environmental body with separate audit and oversight functions. Those functions of the Parliamentary Commissioner for the Environment have included reviewing the system of agencies and processes set up by the Government to manage the country’s resources and report to the House of Representatives. Again I state my previous point—the Parliamentary Commissioner for the Environment reports to Parliament; he or she does not report to the Government. The Government has its own agenda and that is cutting a swathe through environmental legislation as we speak. However the Parliamentary Commissioner for the Environment stands independent of any Government’s programme.My point here is that with the increase for the funding of the Parliamentary Commissioner for the Environment—that is an additional $100000 in the annual appropriation and subsequent years largely to accommodate the cost pressures on the office’s operating budget which is a very good thing—it also needs to be borne in mind that the work of the Parliamentary Commissioner for the Environment is increasing. And why is it increasing? Again there are two reasons. We have a more engaged citizenry who care about the environment and want independent advice not simply party lines about how well we are doing in the environment or how poorly we are doing with our environment and our natural resources. So we have engagement of people of all ages up and down this country on issues of environmental resources and they require more information.We laud the fact that science is making more and more of an impact on policy decision-making but it seems to me that in the area that the Parliamentary Commissioner for the Environment oversees there will always be a need for more science as more and more issues come to the fore. A few years ago we would not have had a report on fracking. Now we have had one and we are awaiting the second. We are awaiting the second because there have not been enough resources for the parliamentary commissioner to expedite that second report as quickly as she would like. She has produced reports on wild and scenic rivers. She has produced a report as she does from time to time on an endangered species. She has done a report on marine mammals but the most recent report was on long-finned eels. She has produced reports on water quality and the marine environment. There is any number of reporting measures that the Parliamentary Commissioner for the Environment undertakes on behalf of natural resources and our husbanding of natural resources in this country.So Labour welcomes the fact that the baseline appropriation is to increase by $100000 per annum but I would suggest also—and I would like to say it on the record here—that we need to be constantly vigilant about what is going on outside of this parliamentary environment that requires additional resourcing to the Office of the Auditor-General; to the Office of the Ombudsmen in addressing complaints; and to the Parliamentary Commissioner for the Environment. If we do not keep pace with the kind of funding they require their ability to act independently of any party in this House will be eroded. I support and endorse the recommendations of this motion.EUGENIE SAGE (Green):The Green Party supports Government motion No. 1 for alterations to the appropriations for the Offices of Parliament—the Office of the Auditor-General the Office of the Ombudsmen and the Office of the Parliamentary Commissioner for the Environment—and the appropriations for 2013-14. In my short call I would like to focus just on the Parliamentary Commissioner for the Environment. The mission of the parliamentary commissioner as the office has interpreted it under the Environment Act is “To maintain or improve the quality of the environment by providing robust independent advice that influences decisions.” As Maryan Street has noted the offices are reporting to this Parliament but nevertheless they make a number of recommendations to Ministers.I think the recommendation of the Officers of Parliament Committee to increase the funding for the parliamentary commissioner by $100000 is something that we would certainly support. It is a very modest increase. The office has a staff of only 17. It works very thoroughly in doing its reports and it does quite a lot of analysis yet its budget with this modest increase of $100000 has been brought up to only $2.726 million. So it is a very cost-effective office and it has as others have said had to absorb quite numerous cost increases over the last 6 years when its budget has remained the same.I would like to place on record the Green Party’s thanks for a lot of the work that the staff in the parliamentary commissioner’s office do. They have made some landmark reports. There was one on 1080 in 2011 which very carefully analysed the evidence and evaluated the use of 1080 and recommended that it should continue. In fact the report there recommended that the use should be expanded because as the parliamentary commissioner noted there is more Crown funding provided to the Animal Health Board to control TB and to kill possums to achieve that than there is provided to the Department of Conservation for it to spend on controlling possums rats and stoats over the entire conservation estate. That is why this Parliament and the executive need to listen more carefully to the recommendations of the parliamentary commissioner. It is robust and independent advice and yet we have not seen an increase in Department of Conservation funding to enable it to do better pest control. Instead that funding has been cut.There have been a number of other landmark reports by the office. One of those was Hydroelectricity or wild rivers? which was released in May last year. In it the office recommended that there should be much more proactive work done to protect rivers for their wild and scenic values and that water conservation orders should be strengthened yet we have not seen that. In the Government’s proposals for water reform we have seen the opposite—a weakening of water conservation orders.Again with the long-finned eels report the value of the work that the parliamentary commissioner has done there is to take a species that is not cute like the kiwi or comical like the kea to use the parliamentary commissioner’s own words and to very closely look at the threats to long-finned eels and to come out with a reasoned recommendation that commercial fishing be suspended until it can be shown that the long-finned eel population has recovered. The Government needs to take that recommendation seriously.The recommendations of the office are sometimes not popular because as its mission statement notes it is about providing robust and independent advice. As a member of the Local Government and Environment Committee I would like to record my thanks when the office makes submissions on legislation as it has done on changes to the Resource Management Act and as it has done on the Government’s discussion document on the Act. The parliamentary commissioner said then that these changes to the Resource Management Act which would strip out some of the criteria in Part 2 would erode the environmental protections in the Resource Management Act and tilt it towards promoting economic development. When you have the parliamentary commissioner saying that it needs to be taken seriously.The office also has quite an important educative function. It produced a very useful report on water quality and on understanding the science of water quality to help inform public debate. I hope that Ministers have read that report because there are a number of issues in terms of nitrate and nitrogen pollution and sediment pollution which it explains. In that regard the current push towards expanding irrigation just seems not to have recognised that the more you expand irrigation and the more you intensify agriculture the more nitrogen you have in waterways.One of the key issues to which my colleague Gareth Hughes alluded was state-of-the-environment reporting. It has been a promise of the Government since 2008 that there would be an environmental reporting Act to require independent and 5-yearly state-of-the-environment reporting and yet we have seen scant progress here. Last year the Government decided to stop producing consolidated nationwide state-of-the-environment reports. We are one of the few countries in the OECD that do not have a legislative basis for national reporting on the state of the environment. The parliamentary commissioner has got a potential responsibility for this role but her office needs to be resourced by an extra $1.3 million annually to carry out that role because she has estimated that it would take nine additional staff to do that reporting. If the work is to be done and a report were to be produced that would have to start now.So the recommendations in these reports need to be taken more seriously. The Government needs to listen especially where there are recommendations to Ministers. But we thank all of the Officers of Parliament and congratulate them on their work. We appreciate the robust and independent advice that they provide. Thank you.Hon LIANNE DALZIEL (Labour—Christchurch East):This motion Government motion No. 1 as we have heard is the process by which Parliament alters the appropriations for our Offices of Parliament. In speaking to the motion I wish to address the increase in Vote Ombudsmen. Clearly an increase is required—there is absolutely no question about that—but I want to speak about the reason why such a major increase is required.As we heard from our member Darien Fenton who was on the Officers of Parliament Committee which heard evidence on this particular matter the request was for funding for an additional eight ombudsmen. The committee came down with a recommendation of six I think with Treasury being at the other end of the bargaining table as it were with an offer of only four. I think four would have been an insult to the requirements of the office and I guess six is seen as a compromise.Just to reflect on what Darien Fenton said I think that she amongst others has felt that we really ought to be thinking very carefully about the pressure we are putting on the Office of the Ombudsmen. When we look at what the Chief Ombudsman actually said in her last report we see that she described the financial restraints under which the office is operating and the pressures on its staff as acute. What that means is that the office will increasingly be unable to achieve its performance targets for resolving complaints. I think that that is an incredibly serious indictment.We have the Office of the Ombudsmen for a very good reason. I think Maryan Street gave a very good summary of why New Zealand is held in good standing internationally—these independent Officers of Parliament who are able to scrutinise on behalf of the people of New Zealand ensure that the executive is held to account for the roles that it plays.Vote Ombudsmen is funded on the basis of about 1000 to 1200 complaints being open and under action at any one time. However it had over 1700 open and active cases at the end of June last year and nearly 2400 at the end of December. So within a 6-month period the over-representation of open complaints under action in the Office of the Ombudsmen doubled—it doubled in 6 months.So a lack of staff meant that of those complaints 465 requests for assistance remained unallocated at 31 December 2012 and it is not surprising given the extent of the increase. But when one looks at or drills into those figures what the Chief Ombudsman is saying is that the office is anticipating more than 14000 requests for assistance this year—an increase of 36 percent since June 2002 and of about 65 percent over the 2 years since June 2011.I think 2011 will have resonance with people in this House—certainly with those of us from Canterbury because we know what happened in 2011 and we know why this massive increase in the number of complaints going to the Office of the Ombudsmen has occurred. I want to just put on record that this is a direct result of the failure of the Government to provide support to the people of Christchurch as they are forced to deal with the Earthquake Commission and the Canterbury Earthquake Recovery Authority under the provisions of the Official Information Act.Instead of having a policy of complete transparency and instead of just saying: “Yes we’ll post that out to you. We will provide you with the information you want in a timely fashion.”—because of course the Earthquake Commission is not emailing stuff at the moment for some reason—people are instructed to apply for information under the Official Information Act. This is what is clogging up the system. Instead of looking at the end of the problem which is the amount of funding that has to go into the Office of the Ombudsmen why for heaven’s sake will somebody not say to the Minister responsible for the Earthquake Commission and for Canterbury earthquake recovery: “Sort out the problem at the front end. Deal with the people of Christchurch in a reasonable and fair fashion.”?Nobody is asking for special treatment. Nobody is asking for favours in Christchurch. All we are asking for is that people have access to the information that they need so that they can make decisions about their own lives.Hon John Banks: Calm down calm down.Hon LIANNE DALZIEL: The Minister can say that I should calm down and I would like to calm down in respect of this particular matter but the trouble is we have been arguing right from the very outset that people were going to require additional support. We have been arguing that they would need support to deal with the Earthquake Commission and more particularly that they would need support to deal with their insurers. But to get to their insurers they have to get through the Earthquake Commission first and when the commission says as its default position: “Apply under the Official Information Act.” we end up with a snowball effect in the Office of the Ombudsmen. I do apologise if I sound like I am disappointed but I am. I am very disappointed—Grant Robertson: Very genuine.Hon LIANNE DALZIEL: Well we have actually been asking for some advocacy support for the people of Christchurch for actually years now—not just months and not just weeks. For years we have been asking the Government to actually respond to the needs of the people.Instead of giving people the information they want the Earthquake Commission says that they have to make an Official Information Act request. I just want to give you a little example. It concerns a friend of mine who actually thinks that the Project Management Office which has got a contractor in to fix up her house has charged the Earthquake Commission more than it should have had to pay. She thinks it has charged for things that it has not actually done. So she contacted the Project Management Office—Fletcher EQR they call it—and she sent them an email and said: “Could you just let me know whether they charged for a Portaloo because I know they did not have one?” and she asked whether they charged for x y and z because she knows they did not do it. The response that she got was: “You will have to forward your request to EQC under the Official Information Act.” Look she is trying to save them some money.I have heard case after case after case—I am just using this as one example. There are cases throughout Christchurch where good decent Christchurch residents are saying to the Earthquake Commission: “We think you’re being ripped off. We’d actually quite like to make sure that you’re not. We actually know that that’s good money that’s being spent on our behalf to get our homes repaired in a timely fashion.” They are offering to help and what did they get in response? “You will have to make an application for that information under the Official Information Act.” Wake up—wake up people! This is just so avoidable and preventable. Work with the people of Christchurch and they will work with you.The Earthquake Commission has helpfully placed an Official Information Act request form on their on-line presence but it has also had to say on there: “At present your request may have a 3 to 4 month delay as EQC works through the significant demand for information of this type.” Hello! Again wake up! The reason the public are asking for this information is that they now know that it is publicly available. They know that it can be provided to them in a reasonable fashion. It means that more and more complaints end up in the Ombudsmen’s office when they do not need to be there.This is all because the Government has refused to meet the needs of Christchurch residents who are struggling with the complexity of the Earthquake Commission insurance interface and with the interface with the Canterbury Earthquake Recovery Authority as well. This could have been resolved if the Government had taken up our offer of a collaborative solution a triage system an advocacy service—and I know that lawyers in Christchurch have offered on a pro bono basis to take some of those very very detailed cases to the court. The reason I believe that Mr Brownlee has scaled this back—and Mr Brownlee has scaled it back; an insurance advocacy service will be smaller than originally planned—is that apparently the need is no longer as great as it was. Well it is still a month away. We know it is going to be much less than what people need and that is why the people of Christchurch have responded by setting up something completely different which they will announce.Let us all work together and get a solution for this because otherwise we will be back here asking for more resources for the Office of the Ombudsmen because ultimately that will be where the buck stops.CLARE CURRAN (Labour—Dunedin South):A functioning democracy requires functioning and well-resourced watchdogs. They are the organisations that provide the important checks and balances. They give the public confidence that the Government is being held to account that there is transparency and that the values—the important values—of independent scrutiny are being upheld.In New Zealand unfortunately we have a shrinking media environment. We have under-resourced watchdogs which is why we are standing here today having this discussion. Those watchdogs include the Office of the Ombudsmen the Office of the Auditor-General and the Parliamentary Commissioner for the Environment. They also include the Privacy Commissioner the Human Rights Commission and many many other important watchdogs. Alongside that there is an unrelenting move away from the notion of a public media to a commercial media in the broadcasting environment which has eroded our ability—and public confidence—to uphold those important principles and values in our country.So when we heard from the Office of the Ombudsmen in a media release on 27 September last year that the office had ended that financial year with 10636 complaints and other contacts received which was up 22 percent on the previous year and that the number of cases had grown from 800 live cases to more than 1700 at one time shock waves went through the community about how this could have happened and what the impact was. “A crisis of democracy” was what was being said at that time. It is absolutely critical and important that we are here today discussing and agreeing on providing more resources to that particular office but the other offices are also under pressure and we must not take our eye off the impact that that is having as well.You have to ask yourself why there has been such an explosion and I know that other speakers have touched on this. The first explanation is that citizens are rightly becoming more demanding and more aware of the importance of transparency—there is no doubt about that—and technology has encouraged and allowed that to happen. But the second thing which is the most disturbing thing is that this Government is becoming more secretive. So on the one hand you have got the people wanting more transparency and on the other hand you have got a Government that is becoming more secretive and making it harder for people to actually access information.Our Offices of Parliament are swamped. There is no doubt about that. That is why we are having this discussion. These offices provide a valuable and important service to Parliament and the New Zealand public and it is absolutely vital that they are sufficiently funded to be able to carry out their full and proper investigations.I want to give you a couple of examples of just how difficult it is for the office to actually carry out investigations and of what is leading to that explosion in the number of complaints to the Office of the Ombudsmen in particular. This motion applies only to the Offices of Parliament. However as I have said that under-resourcing and overburdening of those agencies is endemic under this Government.Here is one example of what has happened in recent times. We have all heard now of the issues around Solid Energy—around the collapse of a State-owned enterprise through mismanagement and ministerial neglect. Soon after the company’s financial woes became public knowledge it appeared before the Commerce Committee for a financial review. While before the committee the acting chief executive officer and the chair were as one could say economical with the truth about the availability of the recently departed chief executive to appear before that committee they also declined to answer many of the committee’s questions as they were not present when the actual decisions were made that led to the demise of that company. Financial reviews are an essential part of Parliament. They do ensure that taxpayers receive value by holding Government departments and State-owned enterprises accountable. Government members of the committee have further blocked our ability to do this by objecting to a request for an inquiry.As a last-ditch attempt to gain insight into Solid Energy’s circumstances my colleague Clayton Cosgrove lodged an Official Information Act request from Solid Energy. It responded asking that the 1-month deadline be extended by a further 6 weeks. Treasury also refused to provide a date for the release of relevant information on its website declining an Official Information Act request because the information would soon be publicly available. Even journalists attempting to access background information were stymied by the Minister’s office with his refusal to release even in part a scoping document that brought to light the overwhelming size of Solid Energy’s debt. This was a complete disregard for public accountability and an excessive use of secrecy by the Government which is leading to the unmanageable workload on our watchdog agencies. This is why these complaints are going to the Office of the Ombudsmen and why it is being so swamped. When the Opposition has no mechanism by which to access information and hold public entities and their Government masters to account it undermines democracy.This is another example. As I am Labour’s broadcasting spokesperson my office frequently makes Official Information Act requests of Television New Zealand (TVNZ) or the Minister of Broadcasting in relation to TVNZ. Recently I found it necessary to complain to the Ombudsman. Why? A request was made to the Minister’s office and this was in mid-February seeking copies of the quarterly reports provided to the Minister from TVNZ. It was not a difficult request. It was not a complicated request. In mid-March the Minister wrote back to me seeking an extension of an additional 20 working days. He wrote again 2 days later advising me that the request was now being transferred to TVNZ as it was more relevant to it. Finally on 30 April TVNZ declined the request in full. It deemed this necessary to protect its commercial interests.Ultimately what should have been a straightforward request for advice provided to a Minister by the State-owned broadcaster has taken over 2 months to be refused and then for a reason that is now under investigation by the Ombudsman. We hope that the Ombudsman will review this decision. But these are just two examples of the length of time that it takes to get requests answered by Ministers and by ministries and then the deferrals of those requests and then the obfuscation of the responses.The Government is a significant influence in the day-to-day lives of many New Zealanders. People rightly expect that it should behave in a predictable open and transparent way where it can. In a democracy public confidence relies on citizens knowing what the Government is doing and why and being able to take part in debates knowing that the Government is listening and responding. Greater public confidence in the Government through having more open government is one of the goals of the party on this side of the House.One of the things that would result in a lesser workload for the Office of the Ombudsmen and provide confidence to public citizens that the principles of transparency are being upheld is the proactive release of information to establish—as is our policy—a default practice that Ministers and Government agencies release all Cabinet papers and other relevant papers on to a dedicated website in line with the Official Information Act once a decision is announced by the Government. Obviously exceptions would apply but the ultimate aim is to make information available and to be transparent. If we did that we would be killing two birds with one stone. We would be demonstrating transparency and we would be reducing the workload on one of our most important watchdogs.Motion agreed to and Address agreed to.Education Amendment BillSecond ReadingHon HEKIA PARATA (Minister of Education):I move That the Education Amendment Bill be now read a second time. I wish to thank the members of the Education and Science Committee for their assiduous efforts in considering all aspects of this bill. I would also like to thank those members of the public who made very thoughtful submissions and informed the consideration of the committee. I would particularly like to acknowledge the work done by Tracey Martin as part of the Education and Science Committee to develop useful recommendations and in particular those relating to the application of the Ombudsmen Act to the disciplinary parts of the bill. I have no doubt that her role on boards of trustees informed that particular contribution. All of these views are reflected in the changes made to improve the bill.The Education Amendment Bill has three main objectives. The first is to establish the framework for the creation of partnership schools kura hourua. They will be one of a third type of school in our system alongside State and State integrated schools and private schools that brings together the education community and business sectors to create new opportunities for student achievement. The second objective is to safeguard students by establishing clear provisions around the exercise of search surrender and retention powers in schools. This will enable principals trustees and teachers to create a learning environment that is safe and conducive to positive learning while respecting the privacy and dignity of students. Thirdly the bill enables changes and clarifications to be made to such areas as the functions and powers of boards alternative board constitutions the allocation of national student numbers and the use of Crown land for building early childhood centres.We believe that the Education Amendment Bill will provide fresh opportunities for the New Zealand education system but most of all will provide levers to raise student achievement.The bill generated a lot of public interest which was reflected by the number of submissions received by the Education and Science Committee. The committee has carefully considered all of the submissions and recommended some changes to the legislation.By majority the committee has recommended one change to the legal framework for partnership kura. The committee considered the concerns of those who made submissions particularly regarding parents’ ability to challenge disciplinary decisions by a partnership kura. It is proposed that the accountability to parents be strengthened by the inclusion of a new dispute resolution process. This process has two strands. First each partnership kura must set up an independent review procedure to manage disputes regarding decisions made by the school—clause 31 new section 158D—and second partnership kura will be subject to the Ombudsman’s complaints jurisdiction regarding disciplinary decisions. The independent review requirement recognises the importance of having an impartial decision-making procedure for students who are legally required to enrol and attend school and whose parents have no contractual relationship with the institution. It will be fit for purpose targeted towards meeting the needs of students and reflect the particular characteristics of the school.Giving the Ombudsman jurisdiction over complaints relating to disciplinary matters means that it can bring to bear its years of experience and expertise including the significant body of precedent that has been built up over time. In addition this will ensure that partnership kura in this particular regard are treated consistently with all the schools across the New Zealand school sector. The amendments make it clear how parents can be involved in the successful resolution of disputes at partnership kura ensuring that these schools are accountable to their stakeholders.By majority the committee has recommended changes be made to the search surrender and retention provisions of the bill. These changes respond to concerns expressed by submitters from across the education sector. The proposed approach will contribute to safe learning environments which in turn will better enable schools to focus on the goals that the Government has set in relation to raising achievement and in particular for 85 percent of all 18-year-olds achieving National Certificate of Educational Achievement level 2 equivalent or better in 2017. Submitters spoke of the need for a robust and comprehensive legal regime one that would enable schools to address issues arising from students bringing harmful items such as drugs or weapons on to school premises.The Government is keen to give teachers and authorised persons the full range of tools and powers to ensure that a positive and safe environment is created within which student learning can get on unhindered. We want to increase the level of safety for students and teachers. Schools where students do not feel safe are not fit for purpose. We want students to feel secure in their surroundings in order that they can learn. At the same time we want to ensure that the privacy and dignity of students is protected and that the actions taken by teachers and authorised persons fit within boundaries that protect everyone. The amendments make it clear that if teachers and authorised staff members have grounds to believe a student is carrying a harmful item they may direct the student to produce and surrender it. Should the student refuse teachers and authorised staff members can require a student to remove outer clothing and surrender any bag or container for the purposes of a search.The amendments provide further clarity on the collection of bodily samples the use of drug testing and voluntary drug programmes and the use of drug dogs by contractors in the school environment. The bill ensures that teachers and authorised staff members must conduct any search with respect and sensitivity and in a manner that affords the student the greatest degree of privacy. This is an important safeguard—that is the reciprocal obligations of search surrender and retention and respect for the privacy of students and reasonable search.The Secretary of Education will be required to issue rules and guidelines. These guidelines will be prepared in full consultation with the sector and will cover practical aspects of the new search surrender and retention provisions providing guidance to support and help boards in developing policies that are fit for purpose. The guidelines will provide best-practice advice examples and scenarios and boards must give regard to these in forming their policies. I am confident that the bill provides schools with an effective legal framework to create safe learning environments.By a majority the Education and Science Committee has recommended a change be made to provisions for alternative constitutions. Some submitters expressed concern that under the new streamlined option for ministerial approval of alternative board constitutions the Minister of Education’s powers were unconstrained. The committee has recommended that the Minister be required to approve such a constitution only if she or he has reasonable cause to believe that it is in the best interests of the affected school or schools.The Government intends to support the amendments recommended by the majority of the committee. The Government is committed to ensuring that every young New Zealander has the potential to succeed through acquiring the relevant skills and qualifications to successfully participate in the modern economy. Our unrelenting focus is on how we raise achievement for all students and move past the average of four out of five to how we can ensure that five out of five can be educationally successful.To conclude the Education Amendment Bill provides the foundation for further positive changes to our education system. It creates the framework for partnership schools kura hourua partnering New Zealand communities with education and business alongside parents and giving them more options. It ensures that we focus on raising achievement. It provides for schools to have a safe and secure environment and balances the reciprocal rights of creating security for students while respecting the privacy and dignity of other students. The bill enables a small number of other changes and clarifications to be made to such areas as the functions and powers of school boards alternative board constitutions the issuing of national student numbers and the ability to build new early childhood centres on Crown land.I am confident that this bill supports the Government’s aim of providing that five out of five learners are achieving educational success. I now commend the Education Amendment Bill to the House.CHRIS HIPKINS (Labour—Rimutaka):The very first question that any member of the House should ask themselves when debating any legislative change regarding education is whether this is going to be good for education. That should be our first question when we are debating any changes in the education system and on that count this bill the Education Amendment Bill fails at the very first hurdle because it will not be good for education. The question the Government asked itself was: “How do we get the votes in the House? Well we do it by giving John Banks charter schools.” It asked: “Is this consistent with Act Party ideology?” rather than: “Is this consistent with the evidence-based approach to education?”.We should start from the presumption that we have a very good education system in New Zealand. Our challenge is not to fix something that is not broken; it is to take a very good education system and make it a great education system. We can do that. We can do that but there is no evidence—no evidence—that charter schools are going to lead to improved results for New Zealand kids. There is no evidence—in fact there is very compelling evidence to the contrary—that having unqualified teachers in classrooms will lead to better educational outcomes. It will not. It is a recipe for disaster.Narrowing the focus of the education system in the way that the current Government is intent on doing is not going to be good for New Zealand kids. We should be focused on making sure that every student in New Zealand has the opportunity to reach their full potential and that means teaching them a broad and balanced curriculum—Hon Hekia Parata: Correct.CHRIS HIPKINS: I am glad Hekia Parata agrees with that because everything that this Government is doing—everything that this Government is doing—goes in the opposite direction. It goes in the direction of narrowing the focus of our education system down to two measures of success. Hekia Parata has two measures of success: national standards and National Certificate of Education Achievement level 2. According to Hekia Parata those are the only measures of success for our education system and that is fundamentally wrong. There are so many other things that go on within the education system that are far more important than that that Hekia Parata simply fails to acknowledge.This bill does not require even the head teacher in a charter school be a qualified and registered teacher. Even people who were in favour of charter schools—even the people who came to the select committee to argue in favour of charter schools—almost without exception argued that teachers teaching in them should be qualified and registered. Yet the Government continues to turn its back on amendments—Hon Hekia Parata: Then how do you account for the early childhood centres or kura kaupapa or trades academies?CHRIS HIPKINS: I think teachers in kura kaupapa should be registered teachers and the fact that we have a shortage of registered teachers in kura kaupapa is something that the Government should be focused on addressing not on lowering the bar—not on lowering the standard—for teachers.Hon John Banks: Shh!CHRIS HIPKINS: John Banks says “Shh!”. He does not like hearing the truth. He does not like hearing the truth although I suspect Mr Banks is going to hear a lot more about the truth in another area in the next few weeks. But let us talk about the truth around charter schools.Having unregistered and unqualified teachers in our schools will not be good for education. Who should we listen to on that? Well we could listen to one of the many contradictory statements that the Prime Minister has made about that because in fact a year ago John Key was telling the country—and I will give you a quote: “It’s not class sizes that matter; it’s the quality of teaching that we’re getting in our schools.” So what is the Government’s solution to that? The Government’s solution to that issue is simply to remove the requirement for teachers to be trained and qualified for the job that they are going to do because—make no bones about it—that is what this legislation does. It allows charter schools to be established without qualified and registered teachers and that is not going to be good for education.Under this legislation a teacher who has been the subject of disciplinary action in the State school system could go and teach in a charter school. And the Government members are silent. They are silent because they know that is true. A teacher who is suspended from the State school system could walk down the road to a charter school and they could get a job and there is nothing in this bill that will stop them from doing that—absolutely nothing in this bill will stop them from doing that. That is fundamentally wrong.I invite the Minister right now to tell me which clause stops this from happening. There is no clause. She is shaking her head because there is no clause that stops a teacher who is the subject of disciplinary action from teaching in a charter school. That is absolutely fundamentally wrong and Labour will under no circumstances support this. We recognise that the quality of teaching is vitally important to educational outcomes. It is the single biggest in-school influencer of student achievement and yet this Government—although it talks about valuing quality teaching—does so many things that go in the opposite direction.It is not just around charter schools. The Government promised to focus on teacher professional development and yet it has cut $15 million from the budget for teacher professional development. Under this National Government teachers have lost $15 million per year in professional development funding. That is not the action of a Government that cares about raising the quality of teaching in New Zealand.What did John Key say? Again after last year’s Budget when the Government thought that the big solution to improving the quality of education was to put more kids in every class what did John Key say? He said: “We have to find another way to go and lift those teacher quality outcomes. And we’ll go away and do that.” Well this seems to be his answer. John Key’s answer to lifting the quality of teaching in New Zealand is to remove the requirement for teachers to be trained and qualified. That is fundamentally wrong.The Government’s own advisers in the Ministry of Education who of course probably start their analysis of this from the question: “Is this good for education?”—what have they said? They have advised—and it is a quote—that there is a “potential for a negative impact on students’ education from teachers who do not meet the minimum standards for the profession”. That is what the Ministry of Education has said and it has also argued that changes in this bill will significantly damage the credibility of the Crown. I agree with the Ministry of Education that this bill will significantly damage the credibility of the Crown because the Government should be focused on lifting the quality of teaching in New Zealand and on making sure that every school in New Zealand is a good school—every school in New Zealand is a good school—not on trying to pour money into private profit-making institutions because money that is going towards the profits of the private providers of these charter schools is money that is not going into quality teacher education.I talked about teacher and school safety a moment ago and we agree with the amendments that have been made in this bill around the surrender and retention of student property. We worked through that process with the members of the Education and Science Committee very constructively and I want to thank all of the members of the select committee for the manner in which they approached that particular debate. I think we came to a very sensible compromise in the end.But I am concerned about students’ safety from being in classrooms with unqualified unregistered teachers and we were unable to reach any agreement on that because the Government followed Catherine Isaac’s advice. She came along and said: “Do not water down the purity of this legislation. The ideological purity of the legislation should not be watered down.” That was Catherine Isaac’s advice to the select committee and that was exactly what the National Government members on the select committee said that they would not do. There is—Hon Nikki Kaye: Is the member saying that children in early childhood centres are unsafe—is that what the member is saying? Is that what he’s saying to every single child in an early childhood centre?CHRIS HIPKINS: At least 50 percent of the teachers in early childhood centres have to be qualified and teachers in charter schools do not have to be qualified. Why should students in charter schools have a lower standard than those in early childhood education? In fact until this National Government came along we were working towards having 100 percent qualified teachers in early childhood education. But the Government does not like having qualified teachers because it has lowered the standard in early childhood education to 50 percent and now it is removing it altogether for charter schools.Actually we believe in quality teaching and we believe in having registered qualified teachers in classrooms including in early childhood education settings. That is something that this Government does not support so now it is going to lower the standard rather than focusing on how we get more teachers who are qualified and who are filling the skills shortages and gaps that we do have—and we have big gaps. Rather than focusing on that and rather than focusing on saying how we can improve the quality of teaching by making every teacher a brilliant teacher it is saying: “Let’s just do away with the requirements altogether.” and that is fundamentally wrong.There are so many other aspects of this legislation that are wrong which I am sure we will get into as we get to the debate in the Committee stage of this bill. Charter schools will not have to enrol students who live right next door. A charter school could decline the enrolment of a student who lives right next door to the school—no problem with that. There is nothing to stop a public school in Christchurch being forced to close by Hekia Parata only to have a charter school then pop up on exactly the same site and that is fundamentally wrong as well. That is also very very wrong.Charter schools will not have to teach to the curriculum. They will not have to teach to the New Zealand Curriculum. They will not have to teach science in the way that public schools have to do. Under the wording of this legislation they could teach creationism and there is nothing the Government could do to stop it. It is fundamentally wrong.This is bad legislation. It is going to be bad for education it is not based on evidence of what works and Labour will certainly not be supporting it. We have not supported it at all up to this stage and we will not be supporting it from this point onwards.Hon JOHN BANKS (Leader—ACT):I rise to speak in favour of the second reading of the Education Amendment Bill. The bill provides the legal framework for partnership schools which are well overdue. I want to join with the Hon Hekia Parata in thanking Dr Cam Calder the chairman of the Education and Science Committee and the members of the committee for their hard work. He is a first-class member of Parliament from the National Party who did a first-class job with this important work. The committee has improved the bill. The first change is to require the existing independent review option to now be a mandatory term of all sponsorship contracts. I can advise the House that officials are working on some default dispute resolution options that will be focused on the educational needs of the student. These will be superior to arrangements in most State schools. The second change is a partial extension of the jurisdiction of the Ombudsman to suspensions stand downs exclusions and expulsions. This change both protects the students and ensures sponsors who are non-governmental organisations have their status preserved. I want to acknowledge all of those who took the time to make a submission to the select committee. Even when we disagree I know that our education system can only improve with the passionate engagement of learners parents and education professionals.This bill as it relates to partnership schools is drawn from a proposal in the ACT-National confidence and supply agreement. That proposal was given life by the Partnership Schools/Kura Hourua Working Group ably led by Catherine Isaac whose work shaped this bill and which we acknowledge on the record today. Partnership schools spring from the values of ACT Party. In education we believe in parental choice and the funding following the child whatever the school type. We know that in education one size does not fit all. In essence we believe in the transformative potential of education. That is why we backed Aspire Scholarships last parliamentary term and why we promoted partnership schools this term. Every child has potential however humble their origins; every child has an inherent value; and every child deserves the opportunity to get a world-class education. No member can say in their heart of hearts that New Zealand is delivering on that so this bill is important. It will determine whether this House is on the right side of history.I believe we will stand with young Māori and Pasifika people who deserve to discover the spark of learning. We will stand with those with learning difficulties or from low socio-economic backgrounds who yearn to achieve and want to be successful. We will stand with the dedicated educators including Māori and Pasifika educators who are able to inspire lead and achieve for our most vulnerable learners. We will stand with the proposition that greater freedom for educators should be coupled with higher levels of accountability—more freedom and much more accountability. Partnership schools offer an important option to address the endemic problem of the underachievement of our most vulnerable learners.The good news is that the current education system works well for the majority of our young people. Our best students are indeed the best in the world. There is more good news. There have been significant recent gains for Pasifika students and slight gains for Māori students. The bad news is that still far too many of our vulnerable students are being left behind. In terms of equity which is the size of the gap between our highest and lowest achievers we are amongst the worst in all of the OECD countries. The good news is that partnership schools are on the way. Being a First World nation means five out of five students gaining the knowledge and skills to be successful citizens in the 21st century—not four out of five but five out of five. This country has huge potential. However we waste that potential because of the continuing disparity that characterises our education system.Partnership schools will help target the problem of underachievement. In the partnership schools model the Crown enters into a contract with a sponsor who operates the school. Sponsors vary from school to school and could be for example groups of parents not-for-profit community groups business churches iwi or Pasifika groups or indeed trusts. The term “partnership” captures the essence of what these schools represent—a partnership between the Crown the business sector and the community. They will introduce more choice and more flexibility into our education system which is well overdue. More choice for parents means they will have greater freedom to choose the education that best suits their children’s learning needs and their future. More flexibility for partnership schools means there will be greater freedom around how they operate. They will be given more autonomy from the usual rules and regulations under which State schools are required to operate. This includes the freedom to offer a different curriculum so long as it can be mapped against the New Zealand curriculum and its principles and qualifications framework and adaptable operating hours.They must employ teachers who are trained and qualified in their fields. Unregistered does not mean untrained but they may in certain limited circumstances be teachers who are not registered with the teachers union—[Interruption] Let me tell the Opposition today: the greatest fear the trade union movement within education has is that these partnership schools will be a huge success—a huge success. These partnership schools must employ teachers who are trained and qualified in their fields. This flexibility will allow them to do things differently. Flexibility allows things to be done differently to meet the needs of the pupils not the needs of the teacher trade unions or teachers themselves. They will be allowed to use new and diverse approaches to teaching and learning and to property and school organisation. They can focus on specialist areas of learning such as art music or sport and they can answer a particular need in the community. In exchange for this flexibility partnership schools will have higher levels of accountability with a unique evaluation framework.I am pleased to advise the House that we have received 35 applications from potential sponsors for partnership schools. They are currently being considered by the authorisation board which is an expert panel of independent advisers and this authorisation board will make recommendations to the Minister of Education. No final decisions will be made or contracts with potential sponsors entered into until this bill is passed. Contracts are expected to be in place by the middle of the year. This ensures successful sponsors have enough time to prepare their schools to open in 2014.Can I once again express my appreciation for the work of the select committee. Can I also place on record my appreciation for the support of the Prime Minister the Deputy Prime Minister the Minister of Education the Associate Ministers of Education and the Māori Party for partnership schools. Partnership schools will transform education in this country. It will be a paradigm shift for the aspirations of some of the most vulnerable and poorest families in this country. Partnership schools can help deliver world-class business opportunity and success in the future for young people coming out of those schools. They will have the dignity of contributing and the dignity of work and making a difference. Roll on day 1 term one 2014.Hon NANAIA MAHUTA (Labour—Hauraki-Waikato):I would like to extend my appreciation to the scores of passionate submitters—mums dads teachers and educators throughout the country—who submitted on this bill the Education Amendment Bill and who are passionate about public education in New Zealand. What today marks is a deliberate darkening a dimming of the public education light by the National-ACT Government.How will this be done under this bill? Charter schools will not be a welcome addition to our public education system. If we look overseas at the models and look at the research we can see that charter schools have not made a significant and systemic difference to educational achievement for the most vulnerable groups. If we look at some of the models from overseas charter schools will start to erode public funding going into your local school and will set up a competitive funding model. If we look at what the Government is proposing with charter schools kura hourua it will create a tiered system within the New Zealand context that will not benefit the great majority of Kiwi kids who do have the luxury right now of going to their local school and expecting that their local school will deliver a quality public education.We should be concerned about that as parliamentarians. We should not accept the rhetoric about charter schools without understanding the research and the evidence that was presented to the Education and Science Committee and that was presented to education spokespeople on this side of the House which obviously the Government is choosing to ignore. Why? Because our children are just too important to be experiments. Our children in Christchurch our children in South Auckland—those young people deserve a lot more from parliamentarians in this House when it comes to education policy.All the evidence that has been presented certainly to Opposition spokespeople which I am sure members of the Government are aware of shows that charter schools do not make a structurally significant difference to improving the learning outcomes for the most vulnerable learners. We should reflect on that because we have heard a lot of rhetoric from members on that side of the House. I would like to ask this question: why are we following failed examples from overseas and promoting them within the New Zealand context? You see we have choices here in New Zealand that other countries do not have. We have public schools boys schools girls schools integrated schools private schools—all manner of options—kura kaupapa wharekura kōhanga reo early childhood centres playcentres. We have enough scope within our public education system to do things well but there has to be a common strand and intent of education policy that drive quality and expectation to deliver widespread systemic benefits to the most vulnerable students.I do not accept what the previous speaker John Banks has spoken about that this bill will transform outcomes for Māori and Pacific students. In fact I find it intolerable that Māori and Pacific students are being used as guinea pigs for this type of initiative. I find it intolerable. If for example priority learners and Māori and Pacific learning outcomes were so important to the Government why are they not specifically mentioned within the bill? No answer from the Government. Why are those targets not set in the bill and specifically targeted to ensure that those outcomes will be delivered on? No answer. They cannot answer because they are being disingenuous with the rhetoric that they are providing on this particular matter.So what is the Government proposing with charter schools and how does this fundamentally challenge what is currently happening within our public education system curriculum? Every other school has to deliver a national curriculum but charter schools have choice—unbelievable. In relation to the entry criteria models from overseas show that through entry criteria charter schools will cherry-pick the best students. In the proposal here for New Zealand there will be no enrolment zone. You can just bet your bottom dollar that charter schools will be cherry-picking the best students. There will be the potential for charter schools in New Zealand under this Government and this model to manage those schools for profit—for profit. Every dollar that a public school gets must be spent on its children and on public education but that is not so for charter schools oh no. We will not know how they will be spending that dollar and it is highly likely that they can manage the income coming from the Government to deliver education in order to deliver a profit not a quality education.The fact that they are exempt from the Official Information Act is I think a real farce. If we want to ensure that the outcomes delivered are going to be publicly transparent to those who matter most the students and the parents then the Official Information Act must apply—must apply. But the Government continues to omit that really important amendment from the bill.The other point concerns the management of charter schools. The Government proposes that a board can oversee the management of a charter school. Board members do not have to come from the local community; they could be business people. Parents’ voices are lost. We challenge communities and parents to get actively involved in their local school within the next week so they can have a say about what is happening at their local school how the curriculum can be delivered and how it can be delivered for the best outcomes of the students at their school. But not charter schools oh no. Business people will be leading those charter schools and there will be no parent voice. In some of the overseas examples it is evident—it is evident—that this is a fundamental disconnect with the delivery of education where the parent does not have an active role in saying what happens at their local charter school.What else is happening? Well there has been a lot of discussion around teachers not being registered but being able to teach at charter schools. We have heard the previous speaker giving some justification for that but if we are really concerned about quality teaching and effective teaching practices in New Zealand we have to have a uniform standard across the board. There cannot be ins and outs. Everybody is all in or it is all over the show. It is as simple as that—everybody is all in or it is all over the show. If you want to ensure that there is quality teaching and effective teaching practices teacher registration is one way of achieving that. The Minister of Education is shaking her head disagreeing with that. I do not see her hurrying to disestablish the Teachers Council at all. I do not see her promoting in our public schools that the same standards that apply to charter schools should apply to our public schools. In fact what the Minister continues to perpetuate is that there are two standards that can be delivered in education: one through charter schools and one through our public education system. Our children deserve better. They deserve quality public education that is not infringed or compromised by dual standards set up by the Government.I am really concerned because I know that some of the best learning outcomes for Māori students have come through kura kaupapa and wharekura. David Bennett would know very well that the wharekura that has delivered the highest-performing outcomes of National Certificate of Educational Achievement level 2 qualifications is in our backyard: Te Wharekura o Ngā Taiātea a wharekura under the public education system.What needs to happen is for us to take the innovations from those schools that are currently delivering them and extend them across the public education system. John Banks shakes his head and says: “No no no. My mates aren’t going to benefit from that model because it’s in the public education system. Let’s give these charter schools some public funds and let them make a profit. Who cares what the outcomes are?”. If the Government really did care why are the targets for Māori and Pacific achievement not clearly set out in the legislation? Will he take a question in the House to answer that? He bends his head low because he knows very well that the Trojan Horse for this bill sadly was that it was done under the guise of Māori and Pacific achievement with the support of the Māori Party.This is a woeful step in the disintegration of the public education system and the Government should be ashamed.METIRIA TUREI (Co-Leader—Green):Thank you Mr Speaker—Hon John Banks: Oh no not this one!METIRIA TUREI: Oh John Banks is frightened—he is frightened. I do not know whether the people out there heard that. “Oh no!” he says. The Green Party knows that education can transform societies transform communities and transform lives. Education was a route out of poverty for me and it certainly can be for others. But for that to happen New Zealand must have a strong free inclusive and quality public education system whose quality does not depend on the size of your wallet where every New Zealand child is entitled to the highest-quality public education. That is where equity rests. That is where we get the best advantage from an education system to deal with the terrible issues of poverty that afflict 270000 New Zealand children. Despite what Bill English said this morning about poverty not really existing in this country there is a solution to poverty and it is education.The ACT-National Government is fond of promoting charter schools as a choice for Māori children for Pacific children and for vulnerable children one that is comparable to the choice wealthy parents apparently get when they choose to send their kids to private schools. That is part of the spin. But it is absolute and utter rubbish—it is absolute and utter rubbish. The reality could not be further from the truth. Charter schools offer to poor children to Māori and Pacific children a choice that wealthy families would not touch with a barge pole. They would not touch it with a barge pole. I challenge any National Party member here who sends their child to a private school to stand up and say that they would move their child from a private school to a charter school where there are untrained teachers where there is reduced funding where there is no oversight and where there is no parent representation. I challenge them to shift one of their kids into one of these schools.In fact it is such a problem that the association representing private schools submitted against this Education Amendment Bill along with 2100 other submitters. Only 93 submitters were in favour of it. Along with 2100 others the private schools association submitted against the bill because it knows that charter schools threaten the very reputation of the New Zealand education system which is one of the best in the world actually. For all the spin from the other side it is one of the best in the world. What is being done here is incorporating importing a system that has failed elsewhere.The truth is that this Government wants charter schools because they are cheaper—they are cheaper and they funnel money into the private profits of people whom it knows. These schools do not employ trained teachers they can make up their own curriculum and decide whatever they like to teach these kids they do not need to bother with parents on school boards they can determine the length of their own school day they are free from much of the oversight they are cheap and they are nasty. What is worse is that this Government knows that it is easier to try out this experiment on the children of families who have the least power are the least likely to complain and have the least resources to say whether something is going wrong with their kids—the most vulnerable families. Rather than giving Māori Pacific and less well-off Kiwi kids the best education that the Government can utilising decades of evidence built up by some of New Zealand’s best educationalists the National-ACT Government is inflicting this imported charter schools experiment on the children who most need to be protected from it.Catherine Delahunty: Quite right Metiria.METIRIA TUREI: Thank you. And why? It is because of this one sole MP from a little teeny-weeny dying party which sneaked into Government at the last election which Judith Collins is trying to protect for next time and which this Government is dependent on to get its scarce few pieces of legislation over the line. It is very much about the tail wagging the dog in this case. That MP from that failing party has made no secret that he wants the entire public education sector privatised. That is what he said in the weekend: that ACT would demand from a future Government its commitment to “private provision of education”. That is an unqualified declaration to privatise New Zealand’s education system.Privatising the education system is what this bill is all about actually. Charter schools are at the top of the waterfall triggering a cascade of changes in the public education system that will lead to an elitist education system in New Zealand where the primary school education that you get comes with a hefty price tag if it is going to be decent. What this means for kids and for parents is that the kind of school that you get to go to will entirely depend on the size of your wallet.Let us have a quick look at some of the changes in the bill. These charter schools can be established by overseas owners as long as they have a shell company in New Zealand and they can make a profit—as much profit as they like—from taxpayer education funds. We do not believe that this is at all right. In fact public education money should go towards public education not private profit. So we have introduced Supplementary Order Paper 236 to this bill to ensure that no profit-making entity can establish a charter school. There must be some protections for the public purse. This is public money after all.These schools can also be established anywhere the sponsor wants to set one up with no consideration of the impact on local schools. At the moment the Minister is legally obliged to consider the impact a new school will have on any nearby school before she lets a private school be established or integrated into the State system. This helps to protect public schools State schools from roll decline and it helps to manage the system overall. But National is pretty poor at sticking to the rules when those rules interfere with its mates and potential profit as we saw with the decision to integrate Wanganui Collegiate School where officials told Cabinet it would damage the local school rolls if it did that. It did it anyway because of its mates.Nevertheless the rule is there but it does not apply to charter schools which have the freedom to erode the rolls of other local State schools and continue to undermine the public education system as overseas evidence has shown that they will. We have a Supplementary Order Paper which also will protect local schools from the corrosive effects of charter schools obliging the Minister to consider the local school network before agreeing that a charter school can be established.Children need to learn from adults who know how to teach. Teaching is a skill. It is a highly professional skill. It is a profession. Children need to be taught by people who understand how children learn. That is why private schools are full of really well-trained teachers actually because those schools can afford to pay for the best. That is why we need to have the best possible teachers in our State schools as well particularly in front of our most vulnerable learners because all of the evidence shows that the most vulnerable learners need the best possible teachers in front of them in order to be able to do well.Yet teaching is more than just subject expertise. It is about pedagogy; it is about the science of learning. It is about a compassionate and caring profession where people dedicate their lives to the well-being of children in order to make sure they can live good lives and have good futures. The New Zealand Post Primary Teachers Association today produced a survey that showed that 86 percent of New Zealanders do not want untrained teachers in schools; that 86 percent of New Zealanders actually believe that teaching is a profession for which there should be good remuneration for which there should be some professional acknowledgment of their skill; and that they want their kids taught by professionals. Seventy-one percent thought that it was wrong for private business to make a profit from public education. The Government has completely ignored this feedback because of course this deal was the result of a cup of tea a quiet little cup of tea and a conversation the content of which it tried to keep secret if you remember. As a result the most vulnerable learners in this country are now going to have foisted on them an experiment that is proven to fail.We have already said that we will require any charter school if we are in a position to do so after the next election to subject itself to the integration process. If they fail that process they will have to close and if they pass that process they are in a better position to continue. We do not believe that these charter schools can continue to be made available to our kids when we know that even in the best-case scenario only one in five of those schools will do well. We are opposed to this legislation and look forward to the changes that can be made at the Committee stage.Dr CAM CALDER (National):As the chairman of the Education and Science Committee it is a great pleasure to rise and take this call. I just want to correct an assertion made by my colleague Mr Chris Hipkins who believed that partnership schools are exempt from current exemptions in the Education Act 1989 regarding the employment—or the continuing employment—of a teacher whose practising certificate or limited authority to teach has been suspended or cancelled. The schools are not exempt from those current restrictions.We received and considered 2277 submissions from interested groups—a large number of them were form submissions from the teacher unions and on the subject of partnership schools. Much of the committee’s work in fact has been looking closely at submissions on the surrender and retention issues and crafting amendments to clarify provisions in the bill and ensure schools can exercise powers in respect of the properties they occupy.I want to pay thanks to the New Zealand Post Primary Teachers Association and also Grant McMillan principal of Ashburton College for their very helpful submissions on the surrender and retention issues. May I also thank my National colleagues on the committee for their work. We were particularly fortunate to be able to co-opt Mike Sabin on to the committee. Mike brought 12 years of experience as a police detective and his time running a national consultancy addressing drug policies for schools and corporates. He has also spoken at the UN on drug-related issues. I wish to also acknowledge though opposing the bill the constructive engagement of New Zealand First’s Tracey Martin and Labour MPs particularly in framing and supporting the amendments made to this Education Amendment Bill—it was appreciated.The partnership school model is but a strand in this Government’s efforts to lift student achievement. Currently four out of five students are doing well in our system but we are working towards lifting five out of five students and equipping them to unlock the potential that lies within them all.The Programme for International Student Assessment studies are often held out to show that all is right with our education system but what is the reality? In 2009 New Zealand ranked seventh for reading. On the surface that is ostensibly a good result but if we disaggregate the score we find that Pākehā were second in the world Asians seventh in the world Māori 34th equal between Slovakia and Slovenia and Pasifika students 44th—just above Mexico. Our much vaunted system is not working for everyone. As one submitter to the committee pointed out in truth the only place where New Zealand is first in education in the Programme for International Student Assessment 2009 study is in the inequality scores. Our highest and lowest achievers are further apart than in any other OECD country. Another submitter said: “Are we living in two different countries? Can we afford to be complacent?”.The committee heard that the partnership schools working group has received 35 indications of interest with groups saying they want the chance to do something about this they want to see innovation to enable their kids to engage in learning and get a decent start in life and they are willing to be held accountable for their success in doing that.The most fundamental difference between partnership schools and State or State-integrated schools is that the relationship with the ministry is contractual rather than regulatory: a contract to deliver engagement and achievement outcomes in return for per-student funding. The Government will still safeguard taxpayers’ interests but with more emphasis on what results are achieved and less on micro-managing how they are achieved—a point that seems to be overlooked in the baying obscurantism of the unions in that the policy aims to lift achievement for children by empowering teachers and offering teachers greater autonomy. They overlook the point that this policy is aiming to empower teachers and offer teachers greater autonomy.It is noteworthy that in Sweden teachers unions did not oppose the introduction of this model. Believe it or not they did not oppose the introduction of this model some 20 years ago because they recognised the partnership schools model’s potential to provide professional development opportunities for their members. Interestingly the Swedish unions were proved correct and later research by the independent Swedish Quality Index found that teachers in the partnership model schools had a higher level of satisfaction than teachers in regular State schools.I have spoken in the House in the past regarding the outstanding principals and teachers I have met in the schools that I have visited in the vibrant and diverse community of Manurewa. I have long felt that the innovation and passion these committed professionals bring to their vocation do not square with the education unions’ quasi-nihilistic denial of any soupçon of merit in any of the measures this Government has introduced to lift student achievement.As recently as 26 April an opinion piece in the New Zealand Herald by the national president of the New Zealand Educational Institute criticised this Government’s—listen to this—$1.4 billion spend on early childhood education. The highest ever spend on early childhood education was criticised—our drive for parents students and teachers to understand at an early stage how a student’s achievement measured up against others of a similar age the clustering of specialist resources to facilitate access to them for a greater number of students and yes potentially and inevitably the partnership schools initiative. Virtually every strand in the education cable to help lift our children’s level of achievement in New Zealand has been opposed by the teacher unions and incidentally by their thralls in the Opposition.Their opposition flies in the face of the McKinsey consultancy report that looks at why countries like Finland Canada Korea and Singapore succeed so well in educating their young people. Fundamentally they get the best teachers they get the best out of teachers and they intervene early when children are falling behind. So why are the unions opposing all efforts to lift student achievement? The surprising tenor of the submissions seems to suggest that the unions alone know what is best for our children that experience elsewhere in the world can be ignored and that we can solipsistically say that all is right with our educational world and that we have enough choice already. Nothing new needs to be contemplated and nothing needs to change. This I find is a very worrying mind-set particularly among people charged with our children’s education and in the Opposition who you would hope would be trying to lift student achievement as well. The unions cannot seem to cope with choice. The unions and I should add the Opposition cannot seem to cope with choice and they seem to have a deep-seated anathema to democracy.Partnership schools are not compulsory. No one has to go to them. This Government is providing an education system that is capable of helping unlock the potential of all New Zealanders particularly our most vulnerable. Our public education system does well for many but not for all.To suggest that a partnership school because it sits outside the public system is inherently unable to provide an environment capable of lifting student achievement and unlocking individual student potential is fatuous naive and wrong. Successful education of necessity must be infinitely varied in its engagement strategies—no one size fits all. Partnership schools in their different manifestations will empower teachers working within them to use all their myriad of skills abilities and passion to engage with and lift the achievement levels of those students who choose to attend them. Partnership schools are but another strand in this Government’s drive for educational equity. Thank you.TRACEY MARTIN (NZ First):Kia ora Mr Assistant Speaker. The focus of our contribution will be on the charter school section of the Education Amendment Bill. Although there are other issues inside the amendment bill that concern us greatly at this moment we will concentrate on the charter schools section. I wish to acknowledge the kind mention by the Minister of Education of my contribution at the Education and Science Committee. As New Zealand First has always stated we will come to this House and do our best to be constructive to gain the best outcomes for New Zealanders. That is our single goal and our single purpose here.So when at the first reading the then chair of the Education and Science Committee and now Associate Minister of Education Nikki Kaye stood and implored all Opposition members to keep an open mind specifically around the charter schools issue during the select committee hearings I took that on board. I personally took that on board. I read every submission looking for a key element that would show up that would highlight a reason—a single reason—why charter schools would be of benefit to New Zealand children and New Zealand communities. I asked questions and I believe that my select committee colleagues on both sides of this House can attest to the fact that these questions were to seek answers. They were not vicious or overly political. They were designed to uncover any truth to the statements that these schools were an answer to those students currently performing in the stanine 1 to stanine 3 band of academic performance—the tail of underachievement.I listened to the comments and questions from the Government members in an attempt to judge their commitment to the open-minded consideration of this topic requested by us the Opposition. I listened to Paul Goldsmith tell submitters that because he had given some lectures at university that proved that it was not necessary for every teacher to be qualified or registered. I heard Colin King tell submitters that it was not really the quality of the school you attended but it was surely the school tie that would judge the students’ professional success or failure. For the party he represents that may well be true. We heard Government members and pro-submitters tell us that being non-registered did not mean non-qualified. We heard from Simon O’Connor that to teach was a natural human ability so therefore anyone can do it—no big deal. That is probably the single greatest problem with education today—every man and his dog think they can do it. I sat in those select committee hearings and I recognised that good people though they may be on the Government benches they had already been instructed to close their minds to any alteration of the charter school section of this bill.We spent hours discussing socks being up or down or roundabout or on or off under the surrender and retention provisions but hardly a single hour on charter schools. I am deeply deeply disappointed in my counterparts on the Government benches. Although evidence was produced again and again and again the flexibility and innovation touted as being required for charter schools are already there inside the current Education Act 1989. Although this evidence was put out by so many submitters—2100 submitters—the Government members on the select committee were left with a single course because they already had instruction. The only course that they had was to shrug their shoulders and say: “Oh well. Why not?”. So there is only one way to stop this profit-driven madness from destroying our country’s commitment to a high-quality education system for all—a system that does not discriminate by race or need and a system where the Government reinforces its commitment to lift its own performance rather than outsourcing it to a profit organisation—and that is for the New Zealand public to once again flex their muscle. So I am going to ask the New Zealand public. I am going to ask Māoridom to bombard the Māori Party MPs with calls to withdraw their support for this bill. Only they stand in the way of turning back this profiteering from our education system.I mentioned before—and I do not know where Mr Calder got his numbers from—that there were 2193 submitters to this bill. Of those 2100 were opposed—and yes some of them are actually trained educationalists—62 were in support of partnership schools and 31 remained silent on that specific issue. I say to the Māori Party: “Tell your people the truth.” On 8 May Te Ururoa Flavell and the Minister of Education through a manipulation of question time tried to send a message to Māoridom that there was overwhelming support amongst Māori educators for this proposal. There is not. The number of individuals involved in Māori education who are represented by submitters opposed to this legislation overwhelmingly outnumbers those who submitted in favour of this bill. The submission quoted by the Minister during question time on 8 May was in fact on behalf of 23 iwi schools that currently operate very successfully under the flexibility of the existing Act. They are a perfect example in fact of why we do not need to change this legislation.What we need is for this Government to commit to expanding those types of best-practice models throughout the country through compulsory professional development. Instead of introducing legislation that allows it to wash its hands of its responsibility to our Māori and Pasifika students—and we give warning to those communities—this Government will give you a contract. Yes you will receive public money but then you are on your own. There is an old saying out there: “Be careful what you wish for; you just might get it.”I note that one of the schools recently showcased in a mainstream newspaper as one of the possible best-practice solutions for Māori children boasts an 85 percent success rate among the students who remain in that school. I believe it is probably one of the 35 that have expressed an interest for charter schools. Considering the requirement of that school for physical activity in order to even gain entry this removes any special-needs children from this environment. Under this bill the school needs to be careful with its application because under an open-door policy you cannot have a requirement such as that. You cannot have a requirement that means only people who can run 300 metres in so many seconds can come into your school. But that requirement in that school removes any special-needs children from that environment and those children make up approximately 5 percent of the compulsory sector tail. I guess we are now looking at marketing spin because 85 percent is the same success rate as that of our State schools. It is a hell of a marketing job that is being put on to the public of New Zealand.I have here TheNew Zealand Curriculum. This is a world-recognised document. This document was developed within the profession and with the profession and it has been endorsed not only by educational professionals but by all political parties. Not a single political party says that this document is anything but valuable. This is a rubbish bin. This page I am holding is the single piece of The New Zealand Curriculum that charter schools have to follow. This is what you can do with the rest of it—you can bin it.And to the Māori Party this document here is the curriculum guidelines for teaching and learning Te Reo Māori in English medium schools. We can chuck it out too—there is no requirement for it. There is no requirement for it any longer under this legislation. Do Māori voters know that? Does the Māori Party itself know that? Never has this been mentioned and this is the sort of secrecy and this is the sort of comment that has been removed from any part of this conversation. What annoys me even more is when Mr Banks who is completely ignorant of how the National Certificate of Educational Achievement (NCEA) works goes on national television and makes a statement that every second young Māori is leaving school after 12 years of schooling without NCEA level 2 with no numeracy or literacy. I have here the numbers for school-leavers from 2011. There were 63362 school-leavers in the 2011 year and 28.25 percent of them left without NCEA level 2 qualifications. Of those 14.5 percent were Pākehā 10.33 percent were Māori and 3.87 percent were Pasifika. The New Zealand people need to see through the information and the spin that has been placed on this bill and they will. We will oppose the bill.MIKE SABIN (National—Northland):Can I suggest that the previous speaker Tracey Martin might want to keep hold of the rubbish bin and when the Hansard comes out she might want to throw her contribution straight into the bin as well. But I will move on. I am happy to take a call on the second reading of the Education Amendment Bill. I am not a member of the Education and Science Committee but I was happy to be involved predominantly in the search surrender and retention components of the bill. I just want to commend the work of the committee in what is a really challenging area. I think that in schools workplaces and communities the issue of drugs and the impact of some of the social dysfunction from that is significant. I just want to commend the committee for working very hard to traverse a number of the submissions that were made. Some very sensible changes have been made as a result of that.First and foremost the surrender and retention component of this bill is dealing with three core areas: the search of students and property within their control the use of dogs and the collection of bodily samples. The first point I want to make in respect of that is that over and above everything this is about ensuring that boards and principals can have a safe environment for learning and an environment that is conducive to students to learn and be educated in. That is where everything must come back to and be centred on when decisions are made as to how to deal with students who bring weapons or drugs into schools. The changes that have been made really were called for by the sector and I think they provide real clarity and a legislative framework upon which the sector can operate with some confidence. I think that is very important because of some of the confusion and ambiguity that has existed in terms of the practices in schools.I want to acknowledge a couple of submitters in particular and the reason for this is that I think what they have done has reflected some of the realities that it is very easy for the bureaucracies to lose touch with. It is a very evolving scene out there. I just want to commend submitters from the Post Primary Teachers Association and Tom Haig in particular; Patrick Walsh from the Secondary Principals’ Association of New Zealand; and Grant McMillan and Al Kirk from Ashburton College and Whangarei Boys’ High School respectively for the pragmatism that they brought and the reality that I think they brought into the conversation which were of great assistance to the committee.I just want to very briefly summarise the three main components that the surrender and retention aspects really deal with. Firstly when a teacher believes that a student has an item that is harmful to that learning environment the teacher or another authorised person has the ability to require that item to be revealed and surrendered. If that is not done and if the teacher has a reasonable belief that the item is harmful they can then require the student to hand over a bag or their outer clothing including headwear socks and shoes for the purpose of searching for that harmful item. Obviously the searches do have to be carried out—and it is set out quite explicitly in the legislation—in a sensitive private and decent manner as we would expect and I will touch on the guidelines that I think will provide great assistance in that. Also the bill makes it clear that where students refuse these requirements the teachers are entitled to take an alternative disciplinary approach. So we get to a situation where the boards the teachers and the principals must be in a position to ensure that that environment is safe. This bill ensures that where requirements are not met an alternative consequence can be taken because a school cannot be held to ransom by students who fail to follow the rules of that school. The bill provides some real clarity in that.The bill goes on to be very clear around drug testing and the fact that pre-suspension drug testing in the manner of a Rubicon programme where a requirement can be made for a student to pass a drug test as part of a condition of that programme is very much an allowable practice within the framework. There is nothing stopping schools at the moment by virtue of their board from having a requirement to pass a drug test when coming back from suspension—post-suspension—but the unintended consequence of saying that drug testing should be a requirement only after suspension is that teachers will suspend students simply to try to deal with the drug issue. So the ability to engage and encourage students to participate in voluntary programmes pre-suspension is infinitely sensible and is very reflective of the fact that the best place to get on and solve these issues is actually in the school environment.With regard to drug dogs the bill clarifies that contractors can be used and can engage with their dogs in schools for the purpose of searching the school grounds but not the students themselves or bags in their control. We have to be very careful that arbitrary random searches by virtue of a dog running along a line of students is just not an acceptable practice. Where there are reasonable grounds to believe that a student may have drugs on them then if need be you can certainly involve the police in that but there are other means to deal with it. But the bill points out the theatre of having drug dogs in schools—the ability to send that deterrent message and get that balance right.Can I just conclude with one of the important components of the changes to this particular part of the bill in the requirement for the Ministry of Education to prepare guidelines in consultation with the sector. Those guidelines must be given regard to when schools are forming their policies. This is vital in two ways: firstly because the sector and the ministry will engage in this on an ongoing basis in the realities and will form a much closer and better working relationship in reflecting the needs of schools in dealing with this; and secondly I think it will provide a great best-practice methodology and mechanism for boards and principals to ensure that in responding to the needs of this law they put some flesh on the bones and actually have a pragmatic and sensible means of achieving purpose. I wholeheartedly commend to the House the changes made here in this bill. Thank you.Dr MEGAN WOODS (Labour—Wigram):I am pleased to be able to take a call on this bill the Education Amendment Bill to address some of the speeches that we have heard in this House this afternoon about this legislation. I would describe some of the claims that we have heard in this House about partnership schools as truly extraordinary. First of all we had John Banks stand up and tell us that partnership schools will transform education in this country. This is about where my agreement with Mr Banks finished because yes they will. They will introduce State-funded education for profit. They will introduce unqualified and non-registered teachers into our classrooms. They will be run by individual contracts which is the way in which this Government seems to want to govern our country: government by contract. And it will mean a loss of boards of trustees and local communities having a say in how their schools are run. But then Mr Banks really hit the nail on the head when he told us that this was a “paradigm shift” and a “world-class business opportunity”. Well I thought we were here debating the Education Amendment Bill not talking about where the mates of this Government could make their next buck because that is what it seems to be boiling down to.Then we had an equally extraordinary speech from the chair of the Education and Science Committee Dr Cam Calder. I sat through the hearings on this bill. I am a member of that select committee and to sit there and hear or read 2100 submissions from people who told us very good reasons why it was that charter or partnership schools were a bad idea for education in this country and then hear a number of those submitters being denigrated by the chair of that committee is truly extraordinary. Dr Calder told us that the teacher unions should have behaved like their Swedish counterparts. They should have rolled over in the way the Swedish teacher unions did. Well Dr Calder let me tell you that educational achievement in Sweden stopped with the introduction of freedom schools. Even the Maxim Institute will tell you that it was a failed model. The chair of the Education and Science Committee should do his homework before he comes to this House and bandies examples about. It truly was 10 minutes of union bashing. How dare teachers in this country and their representative bodies make submissions on a bill about education! This shows today that the ideological blinkers that this Government is wearing with its coalition partner the ACT Party are firmly in place. This is about ideology. This is about votes in the House. The best he could come up with was 10 minutes of union bashing.Well Dr Calder these are educational professionals. These are the people charged with teaching our children and who do have opinions on education and the future of our education system in New Zealand. And do you know what Dr Calder? I do not know one teacher who would ever ever offer an apology for the fact that they do care about the education system in New Zealand and that they do care about the education of our children. New Zealand teachers whom I speak to are in favour of change. To claim that they do not want to see any change is simply not true. What they want to see is change that works and the legislation that we have before this House is in no way change that works.This is a sad day for New Zealand children because we are getting a step closer to a scheme that was cooked up over a cup of tea to ensure that this Government held the votes in this Parliament. Instead of the Government focusing on making all our schools the very best that they can be we have got a Government that is putting profit before our children’s education and that is not something that anybody in this House should be proud of. There are crocodile tears and words coming from the opposite side that this bill is not about profit; that it is about choice that it is about freedom and that it is about ACT Party values. Well then I challenge members of the Government to vote for my colleague Chris Hipkins’ amendment to this bill that says: “Fine. Take the profit motive out of it.” If you really do believe that it is for not-for-profits and iwi groups then vote in favour of the Supplementary Order Paper that removes the ability for people to make a profit from these partnership schools because until you do your words are hollow. They are—The ASSISTANT SPEAKER (Lindsay Tisch): Order!Dr MEGAN WOODS: Sorry Mr Assistant Speaker your words are not hollow. Until the Government votes for this Supplementary Order Paper they are going to be just hollow words words with little meaning and a thin veneer of what the Government is trying to do which is open up new business opportunities for its mates.Labour does strongly oppose this bill. We will not agree to National’s charter schools in any way shape or form. People need to know that the ongoing funding and support for charter schools will not be guaranteed under a future Labour Government. We will not guarantee any charter school established during the term of the present Government the right to integrate into the State school system. No further charter schools will be established under a Labour Government and legislation allowing for their establishment will be repealed. Why is this? It is because children in New Zealand deserve better than what the legislation we are debating offers them. They deserve more than a dangerous gimmick and a political stitch-up over a cup of tea between John Key and John Banks. Education is not a business; it is about the future of our children.There is no evidence that charter schools lead to improved results. In fact the overseas evidence has proved that more often than not charter schools fail. The evidence base for making the case to establish charter schools is simply not there. This is simply a Government that is continuing its modus operandi of governing us by contract. This is the traders’ approach to education not the educationalists’ approach to education. Under this legislation all we are getting is contracts that will not deliver for our children and unqualified and deregistered teachers in our classrooms. How is this going to be better for the education of our children? Would anybody in this House allow an untrained doctor to treat their child? The answer is more than likely a resounding no so why would anybody in this House want an untrained teacher to teach their child? If the Government’s claims that it is about educational achievement are true then why is it not following all the evidence that shows within the OECD that where the tightest teacher registration occurs you have the highest educational outcomes? The simple fact of the matter is that if this was a Government that did care about educational outcomes teacher registration would be high on its agenda.We heard from submitter after submitter to the Education and Science Committee about what could be done—even about the utilisation of people who did not have formal teaching qualifications under the present education system that we have. The difference is that they fell within a recognised system and that they were part of an overall scheme where registration was valued. They were not thrown in front of our children.The other objection we have to this amongst many—and my colleague Tracey Martin from New Zealand First spoke of this—is that there is no compulsion on charter schools or partnership schools to deliver the agreed curriculum. We have a very good curriculum in New Zealand. It is well developed and in many ways it is the envy of the world but there is no onus on charter schools to deliver the curriculum. The tragedy of this—and this has been lost by the rhetoric from the Government on this—is that New Zealand has a world-leading education system. Many of our approaches are seen by others around the world as innovative and our parents and our communities have some of the most say in the world in governing our schools through our boards of trustees model. This legislation does away with that for charter schools. Communities and parents will not be the governors of them. Contracts and boards are what are going to govern this type of education in our country and this is not good enough. Submitter after submitter came to the select committee and told us that this would not work and they did not want it. The Government did not listen to them. It did not listen to them about the flexibility.The other important piece in the puzzle in this for me is that of course Christchurch is being seen as one of the sites where we are going to experiment on our children. We have seen in New Orleans what happened post - Hurricane Katrina. Christchurch is being eyed up by the Government as a prime site for experimentation. Our schools are being closed. We are going to hear about that later this month. The children of Christchurch who have already been through so much are going to become the guinea pigs of this Government and the price of a coalition deal cooked up over a cup of tea. The poorest children in the eastern suburbs—The ASSISTANT SPEAKER (Lindsay Tisch): Sorry to interrupt the honourable member. Her time has expired.COLIN KING (National—Kaikōura):It is a pleasure to take a call in the second reading of the Education Amendment Bill. Just to push back a little at the comments from Opposition members if they accuse us of being ideologically focused on things then I trust that they will read their second reading speeches and try to understand the venom that is coming out from that other side which has absolutely no base. When you step back from it we are not actually taking over the State system. What we are doing is empowering communities. We are empowering cultures ethnic communities and groups to be able to find a way forward in education.I just want as time permits to talk about the challenge that confronts New Zealand around underachievement for both Māori and Pasifika. I can clearly understand why the Māori Party is supporting this bill because it would be fair to say that the State system has tried very very hard to be successful in that particular area but it admits itself that it has not succeeded. So on that basis I commend the Māori Party for having the courage and the strength of its convictions to support this bill so that it can have more input into Māori education.The major challenge is definitely about getting the right teachers in front of young people to spark learning. I must admit that in my early days on the Education and Science Committee I was motivated by the Post Primary Teachers Association paper that came out about technology which talked about technology or theory with no practice. That is sort of a piece of work that I have followed through for some time and I say that the limited authority to teach is a halfway house but it does not go anywhere near far enough. Although we listen to the other side talking about the untrained unregistered teachers there are some outstanding people out there who do spark and inspire people and we want to get them in front of our children. We want them to get in front of the communities that are crying out to be heard and to be given an opportunity.I would just like to refer to a couple of the submissions that came before the select committee and just read one from one particular school: “All too frequently we read about how badly Māori are doing at all levels of New Zealand society. Someone somewhere finally has got the guts to do something constructive with the decades of research that says why Māori is underachieving. We acknowledge the Education and Science Committee for taking a stand for our future.” There is another select committee submission here that says: “It is time for New Zealand to be innovative to prove to the world we do have a world class education system for ALL New Zealanders including Maori and Pasifika. At the moment our education system is 2nd in the OECD world for Pakeha and 33rd for Maori. This is unacceptable.”The one I really want to draw to the attention of the House is from Dr Stuart Middleton from the Manukau Institute of Technology who said: “I believe that the accommodation of Partnership Schools … into the education system is appropriate at this time when focus is sharpening on responding to the issues of disengagement”—hear that; responding to the issues of disengagement—“and low achievement the related issues of poor progression to tertiary education and training to pathways into employment” and so on.There were certainly a lot of people who spoke against this bill but on balance I would have to say that there was a very creditable cry for help for further input and I would have to say on that basis that we want to bear in mind that there will be a contract between the Minister and a partnership school. That contract will ensure that ERO—the Education Review Office—will review the learning outcomes. There will be national standards that will be measured against the outcome from years 1 to 8 and they will also be measured against what the national outcome is in the National Certificate of Educational Achievement level. They will be police vetted.So from that point of view what we are hearing from the other side is that they are ideologically opposed to the fact that we look for innovative solutions to address the problems that we are facing within education. I am looking forward to seeing when the first of these schools are opened because in my view we have narrowed down our focus around education. Sure we have got an outstanding curriculum but when we consider what is required to engage young men and young women in education to turn that light—that spark—on to turn it into a raging bushfire so that they see their place in society in being outstanding achievers the partnership school model will help to achieve that. It broadens out the options and choices.Nobody is going to be forced under compulsion to go there. The Ombudsman made a very very poor call when she submitted to us. She said that the Ombudsman should be there to judge and she used an analogy about prisons. But the point that we would like to make there is that partnership schools are not prisons because people can leave if they choose to. They can come in if they choose to. They are not being held against their will. What we hear from the other side is just a lot of noise and a lot of huff and puff and venom. They had no options. They were in Government for 9 years and they accepted failure.The ASSISTANT SPEAKER (Lindsay Tisch): I understand the next call is a split call.SUE MORONEY (Labour):Look I think anyone listening to this debate could not help but see where the passion for education in this House lies. Clearly it is on the Opposition benches and not with the Government. Those dry boring speeches where Government members have tried to distract from the real issues are not fooling anyone. Our children the children of this nation are being used as guinea pigs—as guinea pigs. That would not be quite so bad if we thought it might work but given that we know that it almost certainly will not work because of what we have seen overseas it is absolutely criminal that that party that Government is using this charter schools legislation to use our children as guinea pigs.What is behind this? What is all behind it? Well two things. The Government clearly does not value teachers. Government members have had it in for teachers ever since they got into Government. They started off with early childhood education where they scrapped the funding for 100 percent qualified teachers and now they are on to the compulsory sector and they want to scrap teachers in the compulsory sector as well. The vehicle for that is this legislation the Education Amendment Bill which is bringing in charter schools where they do not have to employ qualified teachers.What has the National Government got against teachers? Every teacher in this country needs to listen to this debate and understand that the National Government does not like teachers and does not want them in front of the children of this nation. All the parents need to understand that that Government does not want quality teaching in front of their children. This is just another slant at its failed attempt to increase class sizes. It could not get away with that but it wants to get away with dumbing down education by introducing charter schools.So it is about not valuing teachers but it is also about privatising our education system because National’s rich mates want to get their hands on taxpayer funding in education and that is the other motivation for this. For all the bluff and bluster about how concerned the Government is about Māori achievement and Pasifika achievement in our education system why did the Government not listen to what Ngāi Tahu had to say when they came before the Education and Science Committee? Ngāi Tahu said that they did not support this legislation because they thought that the introduction of charter schools would lead to corruption and fraud because of the privatisation agenda.But importantly they also said that poverty—poverty—is the largest factor in the underachievement of Māori and Pasifika students. That Government week in and week out refuses to deal with poverty in this country. It refuses to even measure poverty in this country. If it was serious about dealing with underachievement for those children it would deal with the underlying issue of poverty but it refuses to. Instead it is treating our children as guinea pigs through this legislation and it is doing it in a way where it is hiding it from the public. Those charter schools will not have any scrutiny under the Official Information Act or from the Ombudsman and I think that just about says it all.But one of the really frightening things that I saw when I was on that select committee was actually a fantastic submission—well it was not a submission; it was a briefing actually—from a parent activist from New Orleans a woman by the name of Karran Harper Royal who came to warn us off charter schools. She told us that in New Orleans they had shut down perfectly good State-funded schools and they had used that to bring in the privatised charter school model. Where does that remind you of? New Orleans had had a natural disaster. Christchurch has had a natural disaster and guess what! The Government is up to exactly the same thing in Christchurch. It is closing down perfectly good State-funded and State-operated schools and it is doing that in order to make way for this guinea pig this trial situation of charter schools. That is what it is doing to some of the most vulnerable children in Christchurch and up and down New Zealand.CATHERINE DELAHUNTY (Green):Tēnā koe Mr Assistant Speaker. Tēnā koutou i te Whare Pāremata. The Education Amendment Bill is ridiculous and it is also quite sick. It takes some of our most vulnerable students and is going to try to use them as lab rats for a profit-making experiment which has failed all over the world and which at best nearly equals the achievement results of the State schools in a number of countries including the United States. But this was never about evidence; it was always about ideology. We have a school system based on board of trustee charters. It allows for self-determination in communities and autonomy to a huge degree in schools already. The bill deliberately undermines it in order to sell a privatisation tool that nobody not one person ever mentioned during my experience on numerous education election platforms. At many meetings with the National Party and even with some of the relatively interesting ACT candidates no one said that we are going to bring in charter schools and we desperately need these. No one in the audience got up and said: “Please privatise the education system. That is what we need.” But we need to recognise that this bill is not the result of short-term thinking. It is clear that Treasury and the National Cabinet have been keen on this failed model for quite some time. The ACT-National coalition agreement was a good opportunity for them to force it on to the country.So let us think about who is supposed to benefit. I went to a meeting and met a Samoan parent. She works three part-time jobs and her husband works two. She said to me: “My children are not doing very well at school. It is because neither of us is ever home at the same time to help them with their homework. If you want our children to succeed please lift the minimum wage.” That is what she said and she was not making excuses. But she said: “We have many good Pasifika parents and teachers who know that if we lifted the minimum wage we might actually be able to put the time into the kids that they deserve and support them in the education. But right now poverty is getting in the way of our kids’ learning.” It is an unpalatable message but nevertheless very true.But the bill itself mandates the unwanted and unethical model and facilitates for-profit funded State schools with no requirement for some very interesting things—for a start registered teachers. A number of my colleagues have spoken about the fact that teaching is a profession. I myself have done a lot of tutoring. I know the difference between teaching and tutoring. There is great scope for tutors and experts to come into the school system. I find the Government speakers have a bizarre idea as if the schools were locked-down institutions where nobody without a certificate is allowed to walk through the door. That is not how the education system works. They do show their ignorance in this bill as well as their ideological commitment to a failed model. We need to look behind this in order to understand what is really going on because why would we set up for-profit State-funded schools with no requirement for registered teachers and unaccountable sponsors?Anyone can be a sponsor—anybody at all. They do not need an educational background. They do not need to have any experience or academic qualification. Anyone who wants to do this can be a sponsor. And then there is a secret contract that only the Ministry of Education knows about that it will set with the sponsor and that will be results based because of course results—meaning numbers—are the only thing that counts to people who do not understand how children’s learning actually works. We have had that demonstrated in the national standards debacle as well. People who are running this have no idea. Therefore we have no registered teachers no Official Information Act no board of trustees no commitment to The New Zealand Curriculum no fixed hours to protect families’ and teachers’ time and very limited powers in respect of the Ombudsman.The overwhelming number of submitters opposed this bill including parents of children with learning disabilities who are 5 percent of the tail. They expressed deep concern about what will happen to their children in this model—the one in five that John Banks is supposedly so concerned about as he suggests untrained staff with no accountability. The one in five is very interesting.Professor John O’Neill brought the Massey University study to the Education and Science Committee. What we found out was that we have innovation already but what is going to happen now is that education is going to be about privatisation for the benefit of the global franchises.TIM MACINDOE (National—Hamilton West):Members of the public who are listening will be aware that the provisions for kura hourua or partnership schools have excited a lot of public debate and controversy especially among the teacher unions and the parties opposite. Many submitters did oppose partnership schools when they appeared before the Education and Science Committee and that opposition has been widely publicised. However many others came to support them and that was much less widely publicised. So I think it is important to set out in this debate on the Education Amendment Bill the views of some of those who are in favour and their reasons for proposing the concept.One such submitter as we heard from my colleague Colin King a short time ago was Dr Stuart Middleton. He is currently Director of External Relations at the Manukau Institute of Technology. I have no doubt that he is widely respected in this House and throughout the country for his educational experience and expertise. He told us as Mr King has reminded us that the “accommodation of Partnership Schools Kura Hourua into the education system is appropriate at this time when focus is sharpening on responding to the issues of disengagement and low achievement”. Dr Middleton also argued that the “scale of disengagement from schools and the level of educational failure in New Zealand are such that no opportunity to provide new and other pathways through education and training and subsequently into employment should be discounted nor should the opportunity to widen the system capability to bring success to young people be lost.” Dr Middleton concluded that “It must be noted that this proposal is not as radical as it is being painted and that there are already existing and clear similarities between the international ‘academy school’ development and the New Zealand education system in general.”Importantly we heard from Catherine Isaac the Chair of the Partnership Schools/ Kura Hourua Working Group and her colleagues Dr Margaret Southwick of Whitireia Community Polytechnic and Mike Hollings the Chief Executive of Te Aho o Te Kura Pounamu—The Correspondence School and although they were not able to be there in person it is notable that others on that working group include Hana O’Regan John Taylor Tony Falkenstein and Vicki Buck. These are a representative and experienced group of very credible people. Ms Isaac told us that the motivation for kura hourua is to lift educational achievement amongst our most disadvantaged students pure and simple. It is just one more tool in the educational tool box to help those children who are not currently succeeding in regular State schools because despite the fact that we do have a world-leading public education system we have to acknowledge that it is currently not working for all of our children.Tellingly Ms Isaac and her colleagues made the point that as the chair of the Education and Science Committee my good colleague Dr Calder reiterated earlier when you disaggregate the figures for all OECD countries New Zealand European and New Zealand Asian children are doing very well and they are up there in the top 10. In fact New Zealand European are up in the first or second but New Zealand Māori are down below 25 and New Zealand Pasifika cannot even make it into the top 30. That is a real worry and we have to ensure that we do something about it. That is what the partnership schools model is all about: greater freedom to use fresh ways of engaging with our struggling students and much stronger accountability for ensuring that they will succeed. That is a really important part of the equation.At the heart of the partnership schools model is a contract. The Crown will contract with an entity to provide education services in a binding legally enforceable contract that will require the entity to meet specific and measurable performance goals including student academic achievement; student engagement indicators and we know that truancy is a major challenge for many of these young people; parents whānau and community engagement indicators; mission-specific outcomes; and financial legal and organisational performance. Applicants who wish to open a kura hourua will have to provide a very high-quality proposal and they will face a rigorous authorisation process. They will be assessed on their capacity their educational track record financial competence mission and demonstrated demand for it and how the target students will be attracted. These are good meaty things. They need to be placed on the record because we have not heard about them at all from members opposite. Their students must be from the Government’s priority learner groups: Māori Pasifika and low socio-economic and special-needs groups.The working group members went on to assure us that partnership schools will be subject to much greater scrutiny and accountability than regular State schools and monitored quarterly six-monthly and annually on the agreed outcomes set out in the contract. They will be bound to the same statutory accountability procedures as State schools with regard to enrolment policy special education needs exemptions and expulsions providing audited financial statements Education Review Office reviews and health and safety. It is important for the public to have these assurances. It is also important to note that the working group has closely heeded the failures and successes from around the world and they have assured us that they have drawn on the very best. They have provided evidence that shows how well they can work.This is an option that does work when it is well implemented and appropriately delivered. I commend the working group for its input and its thorough and dedicated work. I believe that this option will be a very positive addition to our options for some of the most vulnerable learners in New Zealand. I wish those children well as they seek to raise their levels of aspiration and achievement. Why would we deny them that opportunity?The question was put that the amendments recommended by the Education and Science Committee by majority be agreed to.A party votewas called for on the questionThat the question be agreed to.Ayes63New Zealand National 59; Māori Party 3; ACT New Zealand 1.Noes57New Zealand Labour 33; Green Party 14; New Zealand First 7; Mana 1; United Future 1; Independent: Horan.Question agreed to.A party votewas called for on the questionThat the Education Amendment Bill be now read a second time.Ayes63New Zealand National 59; Māori Party 3; ACT New Zealand 1.Noes57New Zealand Labour 33; Green Party 14; New Zealand First 7; Mana 1; United Future 1; Independent: Horan.Bill read a second time.Debate on Crown Entities Public Organisations and State EnterprisesIn CommitteeThe CHAIRPERSON (Eric Roy): The House is in Committee for consideration of the performance in 2011-12 and current operation 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 the individual financial reviews of Crown entities public organisations and State enterprises as reported by select committees. A total of 3 hours is dedicated for this debate. The debates on the individual financial reviews should be relevant to their performance in the 2011-12 financial year and their current operations and any member may have no more than two calls on each financial review. The financial reviews available for debate are available on the Table. Reports on entities that are not yet reported cannot be debated. I understand members have indicated the Crown entities public organisations and State enterprises that they wish to debate and I understand the first entity members wish to debate is the New Zealand Tourism Board.New Zealand Tourism BoardTE URUROA FLAVELL (Māori Party—Waiariki):Tēnā koe. In the short time I have got available I did want to put a Māori Party point of view and that is that it was pretty disappointing to read the report of the Commerce Committee about 2011-12 and see the extent of the 2011-12 performance summarised in one sentence: “no matters to bring to the attention of the House.” That is what the committee said: “no matters to bring to the attention of the House.” With that the report of the New Zealand Tourism Board presented on 9 November last year and the deliberations of the committee on 6 December are now on record as comprising no matters for our attention.I have to say that one would have expected a little bit more from the committee. I mean I would love to see this House debating a whole range of issues including the current tourism focus which has been on the “100% Pure New Zealand” brand. That is great. It reflects our environmental values a concept central to Māori Party psyche and what we commonly call kaitiakitanga. But I wonder what consideration has been given to for example the unique value of our cultural tourism in Aotearoa. What indeed has been given to nurture our Māori operators in the tourism industry?Sometimes I think that we need to challenge ourselves about the things we do as a country by not recognising some of the things that are actually right under our noses. In that regard I am talking about things Māori. This was discussed I think by a woman by the name of Pania Tyson-Nathan when she at the recent Trenz event encouraged tourism operators and said that Māori tourism is not about just entertainment value. Māori culture and the tourism product are important to our economy and to the cultural social and psychological frame of our country.Tourism is an industry where Māori are moving up the management chain from being just performers in the old days to managers owners and entrepreneurs and are developing Māori models of tourism business collaborating off the leverage of the Māori edge and integrating—The CHAIRPERSON (Eric Roy): I am so sorry to interrupt the member. He will be able to conclude his call at 7.30 p.m. when I resume the Chair for now is the time for the dinner adjournment.Sitting suspended from 6 p.m. to 7.30 p.m.Report noted.Reserve Bank of New ZealandDr RUSSEL NORMAN (Co-Leader—Green):I rise to speak briefly on the Reserve Bank. The reason why this is important is that the Reserve Bank gave a very important report to the Finance and Expenditure Committee last week about financial stability. The key point that it was making in its report was that the out-of-control housing market is threatening the financial stability of the financial sector and the banking sector in New Zealand. When I asked the Governor of the Reserve Bank directly whether the New Zealand economy had rebalanced which the Government set itself as its top economic priority when it first came into office the governor gave a very direct answer that the New Zealand economy has not rebalanced under this Government—that is if you look at the relationship between the internationally competitive sector of our economy or the tradable sector versus the non-tradable sector the non-tradable sector is once again growing dramatically. That means that our current account deficit is growing as we spend a lot more than we earn. Eventually as Treasury projects it will increase our overseas debt very significantly. The key criterion that this Government set itself when it came into office was to return the economy back to balance between the tradable sector and the non-tradable sector and what the Reserve Bank has been saying very clearly is that this has not happened.This is very important for people to understand in Budget week. In Budget week the Minister of Finance will make a big deal about the fact that after borrowing around $40 billion Bill English might stop borrowing money in the next couple of years—that is return to a fiscal surplus. This does not mean that the country stops borrowing money. In fact New Zealand is borrowing money hand over fist. We are currently running a current account deficit of 5 percent of GDP. This means that either we have to borrow 5 percent of GDP per year which is about $10 billion or we have to sell assets worth that much per year. And any country that persists in borrowing or in selling assets at that magnitude every year is a country that is on a path to a crisis. If you persist with a massive current account deficit like that as this Government projects to do and as the Reserve Bank shows that we are projected to do then you have not rebalanced your economy and in the long run there will be a very significant adjustment.The problem is that the Government has focused in its rhetoric purely on the fiscal surplus which is significant and important—after borrowing about $40 billion it is about time Bill English stopped borrowing so much money and putting future generations into debt. After borrowing that much money it is time to go into a fiscal surplus. But the point is that the country as a whole has been thrown into a massive deficit as a result of the policies of this Government.Bill English told us that he would fix this problem. In fact he told us that it was his No. 1 economic priority to rebalance the New Zealand economy away from consumption and debt. In fact he has done the exact opposite. What we are seeing in New Zealand now is that the tradable sector is shrinking and the non-tradable sector is growing. The result of that is that the current account deficit is growing according to Treasury’s and the Reserve Bank’s projections.Treasury’s projections are that the current account deficit will increase to about 6.5 percent of GDP. The Reserve Bank itself says that the current account deficit could increase even more than that as a result of the overvalued New Zealand dollar. Unfortunately the Government will not do anything to intervene against the currency. We have seen that the Reserve Bank itself has recently told us last week that it is intervening against the New Zealand dollar to try to bring it down using its reserves. That is not likely to be very successful because the quantum involved is pretty small whereas what we are seeing with other central banks overseas is they are using very large amounts of recently created money quantitative easing in order to reduce the value of their currencies and make their tradable sector more competitive. In New Zealand our Government is not doing anything about the overvalued exchange rate with the result that the tradable sector is suffering and the result that we are now running a very very large current account deficit. It is the second-largest in the OECD—second only to Turkey—and is projected to increase.If future generations want to have a country that is not owned from overseas if future generations want to have a country that is not highly indebted they will not simply be looking at the question of whether the Government is running a fiscal surplus though that is significant. The much bigger question the question that Bill English himself identified as the much bigger question is what the balance is between the New Zealand economy as a whole and the rest of the world. On that question what the Reserve Bank said very clearly is that rebalancing has failed. When I asked the Governor of the Reserve Bank what would happen if we continued down this path he said ultimately there would be a correction that would be forced on us by our creditors and by the foreign currency markets. The choice before us is whether we make that adjustment ourselves or we leave it for someone else.DAVID BENNETT (National—Hamilton East):It is very disappointing to see the Green Party coming in here and trying to use the Reserve Bank Governor in that way. The Reserve Bank Governor has clearly said to the Green Party that its economic policy of printing money is not one to be favoured by this country going forward.Andrew Little: When did he say that?DAVID BENNETT: At the select committee. If Mr Little was a member of the committee he would know that. Mr Jones is a member of the committee. He is here and he will be able to set Mr Little right. But the Labour-Green policy around economics around printing money just will not work. It is fairly rich for the Green Party to come into this Chamber tonight and talk about an economic policy that it believes is the right one when it is actually the last resort that any country in the world should want to undertake at this time.It is also sad for the Labour-Greens Opposition that economic policy has been ceded from the Labour Party to the Green Party. The Opposition talks about issues such as the high New Zealand dollar. Well the dollar is high but that reflects the strength of the underlying value of the New Zealand economy. If you went out there and printed money and if the Government of the day went out there and nationalised its power industries you probably would end up with a 40c dollar because the rest of the world would look upon the economic policies of this country as being substandard and not in the best interests of the country going forward. That is not rational economic planning.This Government has made a very strong movement towards increasing the tradables sector of the New Zealand economy. The Green member Russel Norman in that last speech talked about a reduction in the tradable part of the economy. The Green member needs to put the facts on the table because I would like to see the facts from the Green Party rather than just rhetoric. Can it actually put those facts on the table to show a reduction in the tradable economy under this Government? No it cannot. The Green Party cannot produce the information that it uses for its rhetoric.I do not know why a strong Labour Party its history based in economic policy as well as social policy would cede such an important part of its election planks to the Green Party; to the Green members who come into this Chamber and spurt facts and figures that they have no basis for who talk about things around economic policy that the Reserve Bank Governor says it is not in the interests of New Zealand to continue with and that are not the policies that the New Zealand public wish to see. That will be the demise of the Opposition at the next election those far-left economic policies that will not work.On the contrary this party the National Party is delivering strong economic policies that are in the best interests of New Zealanders going forward. There will be a strong Budget delivered this week that will show that. Compare that with our neighbours across the Ditch who are going to deliver a very poor economic Budget tonight. That shows what happens when you get a left-wing Government running a country. The left wing does not understand the economy of this world. It does not understand how to run a domestic economy. The result—well look at the result tonight. I say to the public of New Zealand: compare the Australian Budget tonight with the Budget that we will present on Thursday. Compare that and it shows what will happen if you have got economic vandalism done by the left wing against good strong economic management by the right wing. That is the difference that New Zealanders will see this week. That is the difference that is out there. The political divide is quite easy to see.The Labour Party gets very upset when we talk about the deficits that their colleagues and brothers in Australia will be presenting tonight. That is because the Labour Party understands that that is a direct reflection of what their policies would do.Dr Rajen Prasad: Oh that’s rubbish.DAVID BENNETT: That is not rubbish it is the truth and that is what happens when you have got left-wing policies. The Reserve Bank of New Zealand has a very important role in our economy and the left wing takes a very dim view of that. They do not see the independence of that organisation. They do not support that organisation in giving it the tools to do what it needs to do. They are coming up with policies that are just not effective. This Government is delivering the right policies for New Zealand going forward. We are delivering that infrastructural investment that New Zealand needs as well.Report noted.New Zealand Transport AgencyDAVID BENNETT (National—Hamilton East):The New Zealand Transport Agency—that is a great one. I wish to start with a speech from last week by a Mr Iain Lees-Galloway the Labour member for Palmerston North. This was a speech that I found very very helpful when writing my column for my local paper. I just want to read to you some of the words that have come from the de facto spokesperson for the left on transport—not the real spokesperson. The real spokesperson is Julie Anne Genter. Mr Iain Lees-Galloway is the puppet of the Green Party in a Labour dress. Congratulations to the Green Party on taking over another major plank of economic policy in transport. It is a shame that the Labour Party had to give up transport as well as economic policy.But listen to these words. These are the words from the spokesperson from the Labour Party: “the National Government’s … determination to waste taxpayers’ money on monster motorways that serve no real purpose”—determination to waste taxpayers’ money on monster motorways that serve no real purpose. I want to see that member and that party come to the Waikato and come to Hamilton and say that. They will not come to Hamilton and say that.Tim Macindoe: You bet they won’t.DAVID BENNETT: You bet they will not as Mr Macindoe says. The next line from Mr Iain Lees-Galloway is that this represents “the 1950s era of sprawl and motorways.” I remember a Labour Party that was proud of its heritage in the 1950s a Labour Party that goes back to its time in the 1950s and talks about how that was the formation of the real Labour Party but we do not see that real Labour Party in here today. It has moved away from its history. It has moved into bed with the Green Party and has forgotten about what it truly represents and that is very sad for Mr Iain Lees-Galloway.But there is more. There is more in this speech from Mr Iain Lees-Galloway that really defines Labour Party policy. Another line: “so that it can pay for its unaffordable monster motorways—its roads of national significance.” It says here: “this Government does not believe in different modes of transport; it believes there is only one way to move people and freight around New Zealand and that is cars and trucks.” That is simply not true. We have the KiwiRail Turnaround Plan. The future of rail is in freight in places like Hamilton. When you look at that freight development in Hamilton it shows a true future for rail. If you look at rail in Auckland the investment that the National Government has made into rail in Auckland it is something that we should be very proud of.But there is more—there is more. This is the best line. This is the line that I think he must have taken all day to think of: “Well we know that the least sustainable form of transport is the car especially the car carrying a single occupant.” This is the member from Palmerston North who is saying that the least sustainable form of transport is the car and that is a shame. It is a shame for a member of this Parliament to say things like that. When we look further we see that he calls it “ideological madness” a “fossilised approach” a “1950s vision of transport”. That is the Labour Party policy. It does not want the roads of national significance. For everybody in New Zealand—from the far north where the roads of national significance give a hope of a lifeline for that economy of the far north to the people of the Waikato which produces most of the exports of New Zealand—the roads of national significance are seen as very important and to the people of Auckland who have gained from the roads of national significance in the last few years. The Labour Party does not believe in that. It does not believe in the golden economic triangle of Auckland Hamilton and Tauranga. It does not believe in that economic growth heartland of New Zealand going forward. The Labour Party has been consigned to the policies of Julie Anne Genter. The Labour Party will follow Julie Anne Genter through the trenches and blindly follow their approach for rail.Andrew Little: What are you going to do with State Highway 3?DAVID BENNETT: There we have Andrew Little the man from New Plymouth. Andrew Little was the next Labour speaker after Iain Lees-Galloway and his whole speech was about how he wants State Highway 3 to be developed.JULIE ANNE GENTER (Green):Last year we saw a huge funding gap developing because of the Government’s single-minded focus on throwing the vast majority of the transport budget at a few motorways. For the benefit of the previous speaker David Bennett who appears to erroneously believe that his Government is taking a balanced approach to transport funding I have this pie chart that shows the New Zealand Transport Agency’s forward funding for 3 years. On this pie chart is all the new infrastructure spending for the next 3 years under the National Government and the entire purple part is for a few new State highways. You have got this green bit that shows the local roads and this tiny tiny bit here that is the red bit for new public transport infrastructure and an even smaller bit here in blue that is for new infrastructure for walking and cycling.The reason the National Government has such an unbalanced transport budget is that it campaigned on a few very poor business case motorways. Those were the Waikato Expressway the Pūhoi to Wellsford motorway—the “Holiday Highway”—and the Wellington Northern Corridor. These three motorways had such terrible business cases that the National Government had to invent a category called the roads of national significance so that they could get funded because otherwise they never would have been funded because their benefit-cost ratios are so low. The benefits that they will provide to the New Zealand economy are not greater than the cost that they will incur. They never would be justified by any rational economic analysis. The Government tried to hide the poor benefit-cost ratios of these three projects by lumping them together with other projects like the Victoria Park Tunnel which was planned by the previous Labour Government. Although it was completed under National’s watch the truth is it was not National’s idea. It was a project that actually had some merits and it has been completed on time under budget and that is fine. But it does not mean that these three motorways which most of the transport budget is going to be paying for over the next 10 years make economic sense.The Government has an opportunity to make much smarter investments in transport infrastructure. There has never been a better time to invest in walking cycling buses and trains because vehicle use has been falling for years now. If you look at the New Zealand Transport Agency’s traffic volume data it shows that daily traffic volumes on State highways are still down at 2003 and 2004 levels. Freight volumes on State highways are also down even though freight volumes on rail have been increasing in the past few years. Public transport boardings per capita according to the New Zealand Transport Agency and the Ministry of Transport all across the country are way up. They are growing.New Zealanders want to walk and cycle. They want to be safe. They want it to be safe for their kids to walk and cycle to school because it is good for their children’s health. It reduces congestion. Not everybody has to walk cycle and take the bus or train. If only a small portion of people were able to do this that frees up the roads at peak times.That is what smart Green transport is all about. We already have a road network and we already have a rail network and we want to use them better and we want to use them smarter. The next best dollar of investment is going to be on those modes that are the most cost-effective giving New Zealanders the choice that they have been denied by successive Governments obsessed with increasing road capacity which made it impossible to walk cycle and take public transport.So what we saw last year is that although the revenue from petrol taxes and road-user charges was down because there was less road use than was predicted the National Government was so obsessed with building these really poor-value motorways that it decided to put up the petrol tax in addition to allowing borrowing—in addition to going to the private sector to take out a loan for Transmission Gully which we will be paying back for many years. The National Government if it cares about New Zealand’s economy and about New Zealanders having choices should really take advantage and reprioritise the transport budget.As you can see here on this graph traffic volumes and freight volumes in Auckland are much higher than they are for Ngauranga Gorge State Highway 1. So where the Government is planning to spend $5 billion on these few—only 20000—vehicle trips a day on Transmission Gully in 10 or 20 years from now it could instead be funding the city rail link which would move 100000 Aucklanders by rail taking the equivalent of 12 motorway lanes of traffic off Auckland’s roads. That is smart Green transport and it is a shame that the Government is not willing to get behind it.The CHAIRPERSON (Eric Roy): I do have another National member if someone is seeking the call.Simon O’Connor: Mr Chairman.The CHAIRPERSON (Eric Roy): Simon O’Connor. Sorry I am not trying to lead members but I do have a script here and I am just making sure that we—I gave similar encouragement to this side of the Chamber. There is no favouritism here.Tim Macindoe: We thought there was a Labour call.The CHAIRPERSON (Eric Roy): So did I at one point. I call Simon O’Connor.SIMON O’CONNOR (National—Tāmaki):For the record I am not standing on behalf of the Labour Party as a plenipotentiary or anything I just think it is important—I know it is going to be a terrible disappointment to the other side of the Chamber.It was interesting just now listening to the speaker from the Green Party Julie Anne Genter. If you listened to the undertone of what was being said there it was a completely pro-Auckland approach. Those members are prepared actually to drop the roading projects in other parts of the country in order to build a central rail loop for Auckland. If you listened once again very carefully to what was said there it was: “Let’s drop this project let’s drop that project and let’s focus it all on Auckland.” Even I as an Auckland MP think that that is a little bit weird because at the end of the day this is the Parliament for New Zealand not the Parliament for Auckland. I think when we look at what the New Zealand Transport Agency is doing particularly through the roads of national significance it is an array of projects that are regional operational national and significant. I know that my colleague Mike Sabin from up north and Mark Mitchell as well along with what the New Zealand Transport Agency is suggesting—the Pūhoi to Wellsford project is very important. As someone who has originally come from Whangarei I am all for that. That is not about a “Holiday Highway”; that is about a highway of prosperity and opportunity. In fact I can see here across the Chamber engagement from New Zealand First’s Tracey Martin. She understands it as well.Projects through the Waikato and projects throughout the country are incredibly and vitally important—things like Transmission Gully. I was just driving back from Whanganui over the weekend and ran into the usual traffic issues in Nathan Guy’s electorate through Ōtaki and that. Of course the Green Party will stop that project. We have heard that very clearly: it is against Transmission Gully. A challenge that has to come of course is to the likes of the Labour Party. Is it going to stand and fall according to the principles of the Green Party?It was really important when the Transport and Industrial Relations Committee went through the review with the New Zealand Transport Agency to understand that the agency needs to be responsive to what New Zealanders want. Some of us are quite prepared to walk and to cycle in Auckland and some of us are happy to take the buses and the trains but there is also that reality check that kicks in that a lot of Kiwis take their cars. So we need to be able to respond to that appropriately. When I look at somewhere like Tāmaki Drive in Auckland I think that is a very good example of what the New Zealand Transport Agency is dealing with. You have got people who want to walk you have got people who want to cycle and you have got people who want to take the bus—in fact some people are even suggesting Julie Anne they want to take a ferry from St Heliers. There are people who want to take their cars.The challenge for the New Zealand Transport Agency and the challenge for this Government and all Governments is how you balance those needs of people. We even have the walking buses—a great initiative including from one who was my former lecturer in geography. It is a great initiative. But this is not an initiative that is an absolute. If we fall into the thinking of the Greens and if Labour follows that too we are falling into transport fundamentalism. At the end of the day the New Zealand Transport Agency is working across the board—Andrew Little: Ha ha! “Transport fundamentalism.”SIMON O’CONNOR: Transport fundamentalism—there is the phrase for the night: transport fundamentalism. This Government and the New Zealand Transport Agency as it reported back to us in the financial review are there working for what New Zealanders want. I know that Kiwis listening in tonight do not want to buy into that fundamentalism because they understand: they want to drive their cars they want to park them in the cities and they want to get around. It is the same for freight as well. They want to move around. We are going to avoid this fundamentalism.We applaud the work that the New Zealand Transport Agency has done and is doing. It was an excellent review process. I think the agency gave a very strong indicator of why it is implementing the projects it is doing. I just urge those looking at this review not to fall into that fundamentalism not to take approaches like the anti - Transmission Gully anti-roads approach but to take the approach that the New Zealand Transport Agency and this Government are following which is about roads about rail and about cars.Report noted.National Institute of Water and Atmospheric Research LtdThe CHAIRPERSON (Eric Roy): I believe the next subject of interest is the Education and Science Committee’s report on the National Institute of Water and Atmospheric Research Ltd. The question is that the report be noted.Dr CAM CALDER (National):I am ready and waiting Mr Chairman to do your bidding.The CHAIRPERSON: Thank you.Dr CAM CALDER: As you are aware the Education and Science Committee did do a financial review of the National Institute of Water and Atmospheric Research (NIWA). I have to say that the results were outstandingly good. This is from the auditors: the management control environment was noted as “Very good. No improvements are necessary.” and financial information systems and controls for the year 2011-12 were noted as “Very good. No improvements are necessary.” The comment was made: “Based on the areas we reviewed during 2011 and 2012 we found that appropriate policies systems and controls were in place and appeared to be operating effectively.” I was just speaking to a colleague on the committee and we have the pleasure tomorrow of visiting Greta Point seeing NIWA in action and visiting the Tangaroa. It is unfortunate perhaps that we are not making these speeches after that visit.But just to recap NIWA is a Crown research institute. Its purpose is to enhance the economic value and sustainable management of New Zealand’s aquatic resources and environments to provide understanding of climate and the atmosphere and to increase resilience to weather and climate hazards. In 2011-12 NIWA earned $121.4 million in revenue for research and applied science. It made a profit after tax of some $5.5 million which was up $1.3 million from the previous year. It received a lot of its revenue—51 percent in fact—from the Ministry of Science and Innovation as it then was 17 percent from the Ministry for Primary Industries and the remaining 32 percent from work for governmental organisations and the private sector. Since July 2012 the science skills and innovation group of the Ministry of Business Innovation and Employment has been the primary modelling department for NIWA and the Treasury Crown Ownership Monitoring Unit has taken a secondary role in relation to the financial performance thereof.The gain in total revenue between 2010-11 which is noted in the report is largely due to the gain in applied science revenue. In the previous year the Tangaroa was out of the water for 6 months so that explains to those interested the difference in the revenue of about $4 million that we noted. The key policy areas in which NIWA worked in 2011 taking into account its core purpose outcome—which of course is to increase economic growth through the sustainable management of use of aquatic resources—were natural resources and environmental science services; the sustainable use of aquatic resources; renewable aquatic and atmospheric energy; resilience to weather and climate hazards and tsunamis; climate vulnerability and change; and stewardship of freshwater and marine ecosystems.With that being the core purpose as we have noted it is not surprising that there are a number of vessels that are owned by NIWA and as I said the committee has the opportunity to visit the Tangaroa tomorrow. NIWA owns and operates three purpose-built research vessels: the Tangaroa the Kaharoa and the Ikatere which provide the principal platforms for marine-based research and surveying in New Zealand. There are a number of small vessels as well. The book value of these NIWA vessels as of 30 June last year was almost $27 million. Revenue to support the vessels is received from the Ministry for Primary Industries the Ministry of Business Innovation and Employment Land Information New Zealand—so there is cross-sector support of the vessels—and the private sector. NIWA made the comment to us that all these sources of revenue are needed to maintain the validity of the vessels’ operations.As many of you may know Tangaroa is a deep-water research vessel with an ice-strengthened hull. It was built in 1991 and is the only ice-strengthened research vessel in New Zealand. It undertakes work in four main areas: oceans research fisheries research hydrographic work and other commercial contracts such as for mineral exploration. It is a key source of revenue for NIWA and NIWA aims to have it at sea for at least 300 days of the year. It looks like it is all on track to exceed that expectation for the year ended 2012. NIWA invested $26 million recently in the installation of a dynamic positioning system and upgrade of Tangaroa between 2009 and 2011 to broaden the vessel’s capability and extend its useful life by another 20 years.Report noted.Accident Compensation CorporationMIKE SABIN (National—Northland):It is a pleasure to take a call on this. Can I firstly commend the Minister for ACC who shows an immense amount of robust leadership not only in this portfolio but across—Andrew Little: Why has she left the levies artificially high?MIKE SABIN: I thought that might get the members on the other side excited. I thought they had fallen asleep for a minute there.In all seriousness of course the ACC is a very very important part of the New Zealand fabric and provides assistance to many New Zealanders and there has been some significant work going on in this department in the last 12 months. There were 1.7 million claims per annum and 97 percent of those claims were accepted. There was $20.4 billion invested. There were 49000 client interactions each day $7 million a day paid out on average and 925000 general practitioner visits. There was weekly compensation for some 53500 people and over 80 million documents are held on file. It is a considerable department. Of course one of the very important focuses of the ACC is managing people back into the workplace because as we all know—certainly not only from this particular portfolio—work is something that provides health both mental and physical in many ways. The agenda of the ACC is rehabilitation performance trust and confidence injury prevention and financial performance.If we look across the past 12 months we see the 70-day rehabilitation rate has remained steady at about 70.6 percent despite some more complex claims and an ageing population leading to longer rehab durations. Fewer claims went on to weekly compensation and there was a greater use of abated compensation. The 273-day rate was also steady at 93.9 percent the highest recorded level and this contributed to helping longer-term clients back into work. A strong focus on management of all claims but particularly more complex claims substantially reduced growth in the long-term claims.The effectiveness of rehabilitation ultimately is where the rubber hits the road. There will always be those who will spend a long time perhaps a lifetime on ACC—my family knows that only too well—but for the most part many will be effectively rehabilitated back into work back into a full and healthy life. The ACC is exceeding most targets in this area with more serious-injury clients achieving their goals. The overall quality of treatment is improving. There is good management of health care costs.Client satisfaction is however slightly behind target. I think it points to the fact that there has been a change of focus that we do not want to see. Certainly this Government does not want to see people languishing on ACC and so by putting the support around them and by moving the boundaries—massaging the continuum at the edges if you like—there will always be an element of discontent. Having said that of course the aim is very much about returning people to work in a fit and healthy condition.Going on for the early resolution of disputes there is good progress being made here: 79 percent of reviews were withdrawn settled or decided in the ACC’s favour. A total of 1159 reviews were withdrawn or settled over that 12-month period.Andrew Little: The settlement could be in the worker’s favour.MIKE SABIN: I am sure that that member would very much enjoy taking the call to speak on this. Injury prevention initiatives—it is one thing to treat the injury it is another thing of course to prevent it in the first place and ActiveSmart—Report noted.Electoral CommissionSCOTT SIMPSON (National—Coromandel):As chairman of the Justice and Electoral Committee it was a great pleasure—Simon O’Connor: Fine chairman.SCOTT SIMPSON: —thank you Mr O’Connor—to hear and go through the financial review of the Electoral Commission. Although the Electoral Commission is of course accountable to the Minister of Justice it is not in any way subject to ministerial direction in the discharge of its duties nor should it be because in a democracy such as ours the independence of such organisations as the Electoral Commission is fundamental to the very basis of what we take as so important and sometimes sadly take for granted in terms of our democracy.The 2011-12 financial year was a very busy one for the commission. Not only did it have to organise monitor and control a general election but there was of course also the MMP referendum. I note that during the year reviewed the commission produced a deficit of $1.25 million from total revenue of $39 million which was not a bad effort. But I also note that the deficit was really attributed to the costs of conducting the MMP review for the Minister of Justice which was in addition to its normal budgeted activities. The deficit was funded from the commission’s reserves.It was also a year of change for the commission because it took over the statutory responsibility for the enrolment of voters as well as carrying out its other activities from 1 July 2012. The enrolment function was previously carried out by New Zealand Post Ltd through what we used to know as the Electoral Enrolment Centre. The Justice and Electoral Committee heard that the transfer process had gone well and that even though the change for the commission was quite significant the commission and its offices had handled it in their normal efficient way.We were also very pleased to learn that the commission was keen to further improve electronic access for enrolment. Currently voters can update their details online but cannot actually complete the entire enrolment process online. For that change to occur as the commission is seeking to achieve it would mean that a legislative change would be necessary. It is worth stressing that we are talking about electoral enrolment rather than electronic voting. I agree with the commission’s cautious approach to exploring options in regard to electronic voting.E-voting raises some very serious concerns and issues around security and the individual voter’s right to complete privacy. It is an absolute fundamental bedrock of our democracy and our democratic process that the ballot should be a secret ballot. Overseas experience the commission has reported to us shows that with e-voting the results are patchy to say the least. Some jurisdictions with e-voting have actually abandoned the process after one or two attempts but really the real issue is security. It is fair to say that currently no system of electronic voting yet devised can absolutely with certainty guarantee secrecy of the ballot.We take our democratic institutions pretty much for granted in New Zealand and that can be both a good thing and a bad thing. Most of us New Zealanders just accept that every 3 years there will be a general election it will be conducted and run efficiently and smoothly and it will be a result that no matter what happens we will as a nation abide by and get on with the job once the election is conducted.Sadly too many of our fellow New Zealanders do just take that for granted. So I just want to record as I speak tonight my thanks to the commission to its staff to its board and to its team members for the job that they do in ensuring that as I say the bedrock of our democratic process is secure is safe and is efficient and we can rely on it as New Zealanders when we go and vote every 3 years. In the heat of a general election I think that is an important aspect that we need to take absolute care to protect to enhance and to ensure continues without any undue influence by politicians or outside influences whether it be from this House or by anybody else.So I think that we are well served by our Electoral Commission. I think it does a good job on our behalf and I think we can congratulate it on the work that it has done over the last year or so. I look forward to the changes ahead.Report noted.Independent Police Conduct AuthorityJACQUI DEAN (National—Waitaki):The Law and Order Committee undertook the financial review of the Independent Police Conduct Authority noting that Sir David Carruthers took over as chair of the Independent Police Conduct Authority at the end of the reporting period replacing Justice Lowell Goddard. In his evidence to the committee Sir David Carruthers commended Justice Goddard for the work that she had done for the authority in the previous 5 years generating several significant reports which came to public attention in this reporting period.The Independent Police Conduct Authority provides an independent check and scrutiny on police which Police Commissioner Peter Marshall acknowledges as having a very positive impact on both the trust and the confidence ratings of our New Zealand Police and that is a matter that is of the utmost interest and importance to us in New Zealand and us in Parliament.The Independent Police Conduct Authority gets around 2000 complaints a year. Those complaints are triaged within the authority which means that it has a look at the potential severity of each and every complaint and those complaints are then allocated a rating between 1 and 5. The flow of complaints to the Independent Police Conduct Authority ranges from being not really complaints at all and a little bit marginal about whether the authority should indeed look at them any further in which case they are referred back to the police through to categories 1 and 2 which are the most serious. Those categories might be incidents of death serious injury or serious misconduct which take the majority of the Independent Police Conduct Authority’s time and resources. I believe that something like 80 percent of the authority’s time and resources are given over to those most serious complaints.Having said that the Independent Police Conduct Authority acknowledges that it frequently conducts an extended assessment of any complaint especially when that complaint comes from someone who appears to be perhaps vulnerable to them in one way or another. These people are frequently those very same people who turn up in our electorate offices and their complaint or concern can be in need of independent scrutiny. That is a most valuable function of the Independent Police Conduct Authority. Personally I have had a number of people through my electorate office whose complaints I have referred on to the Independent Police Conduct Authority for further investigation—I am not the judge. It is encouraging that those complaints are taken seriously.Highlights of the year in review include the opening of 47 investigation files on the most serious matters brought to the Independent Police Conduct Authority’s attention. There were 14 public reports released during the year as a result of those investigations. These reports include the major thematic review on the police detention of young people. New Zealand Police has accepted all of the recommendations made in that report and the Independent Police Conduct Authority has set up a review team from within its body and will review progress against those recommendations. That is a really useful and focused approach to these reports which do not merely sit on police shelves. The Independent Police Conduct Authority takes a continuing interest in them as indeed does the Office of the Auditor-General and the Law and Order Committee.There was also a major report on deaths in police custody. Again this is another report authored by the Independent Police Conduct Authority that is being looked at with interest not only by New Zealand Police but also by agencies such as the Law and Order Committee. There have been a number of major reports—12—into individual fatal police pursuits a police shooting and an incident with a member of the public and a police vehicle. Another highlight of the year in review includes the fact that less than 1 percent of complaint files were reopened due to an expression of dissatisfaction with the result of that case. That is a pretty good result.Financially the Independent Police Conduct Authority showed a surplus of $0.106 million. Thank you.Report noted.Privacy CommissionerANDREW LITTLE (Labour):It is a great pleasure to talk on the report on the financial review of the Privacy Commissioner. It has been a difficult time for the Privacy Commissioner. When she spoke to the Justice and Electoral Committee she prefaced her remarks with this I think somewhat cryptic but very telling statement: “It’s obvious to a blind bantam hen of course that there is an awful lot going on on the privacy front …”. We did not get around to asking whom she had in mind as the bantam hen but I do not think it takes too much imagination. We think the bantam hen should be called fully to account for her ongoing blindness.The truth is that the Privacy Commissioner’s office has had a funding freeze for 8 years—5 of those years under this Government—and in the same time it has had a 42 percent increase in the number of complaints it has had to process. That is 8 years—5 years under this Government—of a funding freeze and a 42 percent increase in its workload. Of course the telling thing about the workload is that the nature of the complaints is getting more complex and more sophisticated because they are no longer just single and individual breaches; they are multiple breaches. They are systemic failures and systemic problems and as the Privacy Commissioner herself noted in her report to the select committee they are issues of culture in the workplace.The way she described it in terms of her challenges in the future is that “… the moment has come where we’ve got to very much remember that we shouldn’t go for sort of band-aid solutions.” She is saying that just trying to crimp and squeeze a little more blood out of this very difficult stone is no longer good enough. The problems are too challenging the problems are too great and she needs more support and better resourcing. That is a challenge for this Parliament to get to grips with. When she describes an information and data climate that is now a revolution we have to take seriously the risks of data breaches and privacy breaches that that poses and ensure that our last bastion of oversight and assurance for the general public is properly resourced in order for her to do her job. That remains a major challenge for her office and indeed for the Government.She said in her comments to the select committee: “I have to take a measured approach within my resources and capabilities and assess which of those breaches will require more action.” She is basically saying that she now has regular trade-offs to make about which matters she inquires into and which matters she simply has to let go of. It was interesting the way she described it. The metaphor she used—not to be confused with the bantam hen of course—was: “… I feel a little bit like the little red tugboat that hasn’t got enough fuel: we’re there but we can’t always go out into the harbour and do something about it and help. It’s like MSD or ACC are like big ocean liners full of people’s information and there’s only so much the little tugboat can do.” Well I think that is a very telling metaphor that she has used and it is a cry for help. The very professional way that our present Privacy Commissioner conducts herself is something for which this House should be and I know is particularly grateful.We had in the year under review some major privacy breaches in our Government departments not to mention the private sector but certainly the Government departments. The ACC breach is foremost amongst them. Over 6000 ACC claimants had their information improperly disclosed. We had breaches at Work and Income and at the Ministry of Social Development and the very chilling prospect that somebody can go into a Ministry of Social Development kiosk a publicly accessible kiosk and get information that ought to be confidential—likewise at the Inland Revenue Department.Another I think very frightening and chilling experience was with the Ministry of Justice only this year when a member of the public went through a publicly accessible channel and got access to confidential information about legal aid payments made to lawyers. The Government’s response was of course to accuse the good citizen who revealed that of being a hacker. Not only that but it referred the matter to the police and we now have an MP on this side of the House under a police investigation because we have a Minister of Justice who wishes not to deal with a very serious issue.The CHAIRPERSON (Eric Roy): I note that the Greens are seeking the call. Speaker’s rulings 16/3 and 16/5 expressly forbid the displaying of any slogans in the House and no Green member will get a call while that is there.Hon LIANNE DALZIEL (Labour—Christchurch East):The Privacy Commissioner is one of the Crown entities that is finding itself under increasing pressure as we have heard from my colleague Andrew Little. I think my comments are going to follow on quite neatly from what he had to say. It will not be surprising for the Chamber to know that after the Privacy Commissioner’s reference to the “blind bantam hen” which I think has been appropriately identified by my colleague she went on to talk about the fact that she anticipated that we would be interested in asking her questions about data breaches. She said: “I have to say to the committee that unfortunately the sorts of data breaches that we’ve seen in recent months are actually nothing new. We have data breaches being reported to us all the time right across the public and private sectors. The intense media and public interest is however relatively new.” I think that is because of the scale of the breaches. We heard Andrew Little talk about—what was it? There were 6000 included in the ACC breach. There were 98000 claims affecting 83000 claimants. That was the extent of the breach for which we did not get a snap debate in Parliament. I find that absolutely extraordinary.But anyway the Privacy Commissioner said: “I’ve noted that in terms of Government responses to these breaches there’s an element of resignation perhaps an impression that human error is to blame”—and yes we heard that from both the Prime Minister and the Minister for Canterbury Earthquake Recovery—“and that nothing can be done about that. Of course we cannot eradicate human error.” says the Privacy Commissioner. “That will always be a feature of every incident that involves human beings or human systems. No system can be error-proof and it would be unreasonable for me or the public to expect such a standard from the Government or from business all the time. However I think the answer is bigger than that. It’s not a simple answer. These recent events have formed a cluster. OK some of it arises from intense public and media interest but they definitely form a cluster that we should pay attention to. And I believe it’s inappropriate to blame the staff at the front line in every case.”I just want to comment on that because that is what we got from the Prime Minister and that is what we got from the Minister for Canterbury Earthquake Recovery. They put up the straw man and then they knock it down. Not once ever did the Opposition call for anyone’s resignation from the front line on the breaches of privacy in the Earthquake Commission in ACC or in Work and Income—any of those. We expect Ministers to be accountable for their departments and they are the only ones for whom that call would be made. I just want to make that crystal clear. It is inappropriate to blame front-line staff. Human error always occurs. You cannot have a systems breakdown in the IT sector without human error. The trouble is that human error occurs when you are dealing with computers because computers actually do not do anything that they are not required to do by somebody who is feeding it. It will always be a programmer an analyst a user or any combination of the above that will mean that there will be a breakdown in the systemic operation of the system.The problem is that the spin doctors want to take it away from the reality and that is that there has been inappropriate and inadequate attention paid to the culture of privacy. That is what the Privacy Commissioner went on to say: “What’s become clear following the ACC inquiry which was a very useful case to look at is that human error is more likely to occur in an environment where privacy is not given the weight or attention that it deserves. There needs to be a culture of privacy through every organisation. Staff need the tools the systems the support required to protect them and the personal information they work with every day. We need leadership we need good management we need good technology and good systems at every level to protect citizens’ data and the customers’ data in the private sector.”And I believe that that statement from the Privacy Commissioner is what is unprecedented about our consideration of this matter. It is a criticism of the Government because that Government is responsible for ensuring that there has been no leadership that there has been poor management and that there has been hopeless technology and systems which the Privacy Commissioner has to address.JAN LOGIE (Green):In a lot of the annual round-ups for 2012 privacy was at the top of the list of items of importance for this country. The Privacy Commissioner plays the critical role in terms of this country’s basic protection of privacy. So it has been very disturbing in this financial review to hear so directly and so clearly from the commissioner herself of her concerns about the Office of the Privacy Commissioner’s ability to fulfil that role. The office’s baseline funding has remained static as has already been said for the last 8 years and it has been told to expect it to remain static for a while longer. It has funding of around $3.5 million a year to fulfil all its functions except that it has told us that it cannot. It has told us that it does not have the capacity to do everything and that it is having to prioritise protection of our basic privacy. That I think is something that most people in this country would not want compromised or not prioritised.While in office this Government has had the oversight of multiple significant privacy breaches within Government departments—namely the Inland Revenue Department ACC Work and Income the Ministry of Justice the Immigration Service the Ministry of Education and the Earthquake Commission. If you think about the people whom those different departments deal with it actually occurs to you that that is potentially pretty much everyone in this House. It is pretty much everyone in this country who has potentially had their own private information shared inappropriately or their privacy breached. That is quite an extraordinary situation. The Privacy Commissioner has noted that there has been a 42 percent increase in complaints to the office. We have been told of course that it is about human error and front-line staff but the Privacy Commissioner herself—a very very diplomatic woman—said that it was inappropriate to blame staff that the answer is bigger than that and that there are systemic issues.People require a sense of security if they are to feel comfortable within this society. One important facet of security is the capacity to control information about oneself. If we cannot control information about ourselves it is very difficult to operate in this world and therefore the principles of privacy as a means of controlling that information are vital contributors to an individual’s sense of security and to our collective well-being. The Privacy Commissioner also pointed out that it is incredibly important for our economic development and security because business is increasingly being done online. There is an element of business and information sharing that happens in that engagement and we need somebody with the resources to be overseeing that to protect us and our economy.So what has this Government’s response been to what I think can pretty fairly be said to be a systemic crisis of privacy systems? Well it has decided to continue to freeze the funding to the Office of the Privacy Commissioner to our knowledge; it has introduced new legislation with increased legislative responsibilities for the Privacy Commissioner without an increase in funding; and it has decided to establish a new Government data hub. The new legislation you could say may have some good elements to it and may increase the protection of privacy but unless there is somebody who is resourced to be able to actually secure that you really have to question what the value of it is. You could say that a Government data hub is a great idea on lots of levels—and there was discussion on this just this morning on Radio New Zealand National—but if there is no resourcing of the commission to properly input into that process to ensure that the systems are secure and that privacy is central in this process then again we have to question whether our rights and our information are being adequately protected.ALFRED NGARO (National):The wonder and the beauty of select committees is that you get the checks and balances of the different views and I want to acknowledge the view of Mr Little who is over there. I did not quite hear the story about the blind bantam hen though I did hear the comment about the little tugboat that said: “I know I can. I know I can.” I think he might have been recanting his own story and journey around defamation but we are talking about the Office of the Privacy Commissioner and what is important is that we know that the fact is that information is important.The Privacy Commissioner talks about personal data becoming a critical area for business and for the Government. We know that Opposition members were interested in the Office of the Privacy Commissioner because they possibly would hear some meaty stories which they could use in a press release about all the things the office was doing wrong. But what the commissioner said was quite clear. In fact she actually started off with the comment that what we have is equivalent to an ecosystem that is mutating and multiplying constantly before us. She was talking about the whole aspect of information technology and the challenges that it faces to us.The Privacy Commissioner also said—and I want to put this in context—that data breaching of confidential information is nothing new. As the Hon Lianne Dalziel said it is nothing new. In other words it has been happening for a long time. What is new—and the commissioner is correct in saying this—is the intense scrutiny from both the media and the public. We are really clear about the fact that we like the Privacy Commissioner believe that it is important to protect information and to ensure there are rights and responsibilities in terms of protecting information. But at the same time data sharing is important in terms of the needs that are out there and in terms of ensuring there are opportunities for services.The other question is about the aspect of funding being static for over 8 years. In fact what the commissioner actually said is that over consecutive Governments—it is not one Government to blame in one sense—there has been no increase in funding. But what there has been is an increase of 42 percent in applications—8465 inquiries from members of the public and organisations seeking advice on privacy matters and 1142 complaints. That is an increase of 42 percent. But here is the statistic that the Opposition does not quote and it is in commissioner’s the annual report. The Privacy Commissioner said that 95 percent of complaints have been closed—Simon O’Connor: How many?ALFRED NGARO: —within a period of 9 months—95 percent. How do we judge an organisation on its efficiency and its effectiveness? We ask whether it meets its outcomes. [Interruption] Ninety-five percent Mr Little is what the Office of the Privacy Commissioner declared to us. So it does meet its outcomes. It is meeting the needs that it sees.Look when you ask an organisation whether it needs more money whether it would like more money of course it is going to say yes. But what the Privacy Commissioner said was that the fiscal constraints have been positive. This is what the Opposition does not say. The Privacy Commissioner said—and this is what the Opposition does not say—that the fiscal constraints have been positive as they have allowed the commission to focus on its core business. And she said they are doing the business with a completion rate of 95 percent.It is quite clear that the commissioner also commented about information technology. It is a revolution as she said. It is a global ecosystem that is both multiplying and mutating with incredible speed so what we need to do is to take into account and be cognisant of the needs that we face in this. She also talked about—again which you will not hear from the Opposition—shared responsibility and accountability. While the Opposition was looking for somebody to blame and was looking for someone to hold to account she was saying that this is about shared responsibility and shared accountability.Andrew Little: It’s our job. It’s our job to hold you to account.ALFRED NGARO: She wants a culture—and you are absolutely right Mr Little—in New Zealand whereby when we find information that does not belong to us we return it to its rightful owner and where there is a sense of integrity about this. [Interruption] You will not talk about this but it is about shared responsibility and shared accountability.What we heard from the Privacy Commissioner was actually a balanced view. It was not all about the sense of concern—the horses were not getting frightened outside; there was no issue there. However we also share the concern about the vulnerability of people’s information. That is highly important to us. So what we are doing working with the commissioner is ensuring that she is focusing on her core responsibilities and that she is meeting her key performance indicators—a 95 percent completion rate. She is also working with us on the Privacy (Information Sharing) Bill and on the other legislation that we are putting through. We have confidence in the Privacy Commissioner.Report noted.Genesis Power LtdHon SHANE JONES (Labour):Rest assured that I have no slogans that might earn your ire. I want to point out to the Committee that this is actually a sad evening for this company Genesis Power. It is a company that has enjoyed an improvement in its turnover. It is a company that holds strategic holdings in gas. It is a company that has a vested interest in the transmission of that gas. I am disappointed to hear very little from it in public about the security of that transmission capacity but that is another matter because this company will soon disappear from New Zealand control and New Zealand’s strategic oversight.It may not be known but in the actual Tainui settlement the iwi of that area hold a concession over the Huntly power station in the sense that the owners are obliged if they do decide to move on from that site to offer it back to the iwi. But it will never come to that because very few people in this Parliament will ever exercise a level of oversight and control which is a key part of the sovereignty of our House over such strategic assets.But I want the Committee and the various members of the public listening to these presentations this evening to know that this side of the Chamber will never ever resile from making a step forward and intervening in markets where there is failure. Whether that market represents the social negative impacts of gambling or whether it represents the imperfect market that we call the wholesale electricity market this side of the Chamber will not be cowed by threats from merchant bankers or future owners of this energy company and it will ensure that this House and future Governments from this side are never hobbled in having the ability to use the democratic basis and tools of governance that we have by dint of being in a position of privilege called a position of a parliamentarian. We will never ever tolerate a small narrow group of Genesis owners in the future seeking to prevent this side of the Chamber passing regulation and fashioning rules and laws for public weal purposes. That is a broad principle that lies at the essence of our constitution.Although Genesis Power may seem to be somewhat unrelated to these deep principles it is a reflection of how seriously we treat the role and the oversight responsibilities. The oversight is going to be weakened in relation to Genesis Power but I can tell you that it will be non-existent as a consequence of that foul deal entered into today that actually strips New Zealand parliamentarians of their right as a consequence of the Prime Minister entering into that deal but that is another matter. Let me come back to Genesis Power.Customer-oriented technology is something that is boasted about by Genesis Power. There will be no customers. There will be only commercially enslaved marginalised users of this essential service called energy because in the future although we are keen to effect an operational separation we know that a consequence of selling off this valuable asset will be to surrender a large degree of the control and power that it is the inherent right of us as parliamentarians to exercise.Without a doubt once this company is dismembered once it joins others on the chopping block—we will continue to fight against that but it will represent a very bleak day in our role in relation to parliamentary oversight.This company ended up with some assets in the South Island. It was a kind of a deckchair rearrangement believing that it would lead to more competitive prices. The only thing that is going to lead to more competitive prices in the context of Genesis Power and its soon to be Australianised sibling companies—whether it is Mighty River Power or whether it is Meridian Energy—will be the unstinting focus from this side of the Chamber to ensure that with a clever regulatory intervention gouging and other sort of profit-orientated—Report noted.Mighty River Power LtdGRANT ROBERTSON (Deputy Leader—Labour):When the Commerce Committee did its report on Mighty River Power it was owned 100 percent by New Zealanders. As I stand here today we know that only 2.5 percent of New Zealanders have bought into the shares of this company.Hon Dr Nick Smith: Rubbish.GRANT ROBERTSON: Nick Smith says “Rubbish.” This asset sale is one of the greatest transfers of wealth away from all New Zealanders to Nick Smith and his mates. That is what this is all about—taking away from New Zealanders an asset that has been built up over generations and putting it in the hands of a small minority.Mighty River Power is a company that can be proud of its record. It is a company that has done good things in its time as a State-owned enterprise and has returned significant dividends to New Zealanders. This National Government says: “We will take that. We will take that out of the hands of all New Zealand taxpayers and put it into the hands of 2.5 percent of New Zealanders”. Do not let anyone say that if the National Government could have got away with it it would not have been a 100 percent sale. Of course it would have been a 100 percent sale. We know that is what the National Government wanted. It could not get away with it so it has gone for selling off 49 percent of what all New Zealanders own and giving it to those 2.5 percent.We have seen from the Mighty River Power chief executive officer Doug Heffernan some interesting behaviour both in the select committee itself in the financial review—John Hayes: Oh what a diatribe.GRANT ROBERTSON: What was that? Mighty River Power actually failed to answer the questions that had been put to it by the select committee—and that is just the beginning because we know that under the model that this Government has put through there is no role now for the Official Information Act with these companies. There is no role for the Ombudsman. New Zealanders might think that they have still got some say in this company but no this National Government has taken that away and said that there will be no transparency anymore for these companies. It is absolutely disgraceful and we saw the beginning of that from Doug Heffernan.Doug Heffernan is paid over $1 million a year to be the chief executive of Mighty River Power—$1.5 million a year. He came out when Labour released its New Zealand power policy and described it as socialism. He was running the National Party’s lines. That is not what we would expect of a chief executive. But what is more it is so wrong because if the National Party actually believes that it is saying that all the states of America that have a single buyer model are socialists. That is what the National Party is saying. What the National Party does not want to acknowledge is that currently Mighty River Power has been part of an uncompetitive electricity market in New Zealand. There is no competition in the New Zealand retail market. We have the generator-retailers that dominate the market. We have the super-profits that have been taken out time and time again and there is no competitive market.So when the Labour Party says it is time to introduce some proper competition—and we know that that will happen; we know that there will now be competition in the retail sector and consumers will now come first—the National Party says no. The National Party says it does not want a bar of consumers having lower power prices. I will tell you that on this side of the Chamber that is our priority to give New Zealanders a fair go when it comes to their electricity system to be able to say that we can actually lower power prices for consumers and for small businesses—by 5 to 7 percent for small businesses. That will help generate wealth in this country. That will help generate jobs in this country. The National Party does not want a bar of it. It wants to keep power prices high. I challenge any member over there to get up and tell me whether under the current settings for the electricity industry power prices will come down. Because the answer is no they will not. They will keep tracking up and New Zealanders will keep having super-profits gouged out of them by companies.What we want on this side of the Chamber is a fair rate of return. Companies like Mighty River Power will still be able to get—John Hayes: Communist!GRANT ROBERTSON: —a fair rate of return. But what they will not be able to do is get the super-profits. John Hayes says it is communist. Well I want John Hayes to go to the state of Virginia and to the state of Texas and tell those people that they are communists because what they have is a single-buyer model for power that actually puts consumers at the centre and says that electricity is important. Electricity is something that everybody needs and there is no choice in that. We need to make sure that consumers are getting a fair go instead of having super-profits ripped out from under them. National does not care about high power prices. Labour does and we will be reducing them.Hon Dr NICK SMITH (Minister of Conservation):I have to take on the economic lunacy that we have just heard from the deputy leader of the Labour Party. Let us first nail him on the facts. He just claimed that only 2.5 percent of New Zealanders now own shares in Mighty River Power. Well let me tell the member this: 14 of the 17 KiwiSaver managers bought shares in Mighty River Power. That is 1.7 million New Zealanders. Why is it that the Labour Party opposes hard-working New Zealanders involved in KiwiSaver being able to own shares? I will tell you why: because it wants a dependency culture. It cannot stand the idea of ordinary New Zealanders investing in their own country.The second point I want to make is this and this is really important: everybody needs to understand that for the New Zealand economy we need to broaden the investment base and we need to broaden it so that we do not invest just in residential property. I have heard Labour speaker after Labour speaker acknowledge that fact about our economy and yet we see them now in an exercise of sabotage against the economic interests of this country. I have been in this Parliament for 24 years and never have I seen an Opposition directly act against the interests of this country such as what I have seen in the last fortnight and it is truly disgraceful.Hon David Cunliffe: I raise a point of order Mr Chairperson. I take offence at that questioning of our integrity as an Opposition. Whatever the member may feel about the policy in question there can be no question of disloyalty to the country.The CHAIRPERSON (Lindsay Tisch): No no no. This is a robust debate and there was nothing untoward in what the Minister was saying.Hon Dr NICK SMITH: And then I heard the deputy leader of the Labour Party say that the Labour Party is very concerned about power prices. Well how come they went up by 72 percent in the 9 years that you were the Government Mr Robertson? Seventy-two percent—absolutely disgraceful.Here I want to come to the true economic lunacy of Grant Robertson. He said that Labour will base the power price on a fair return on the historic investment—a fair price on the historic investment. Well let us apply that logic to housing. Let us say that I have got a house that was built 30 years ago and cost $4000 to build. What Labour is saying is that you base the rent on it being worth $4000 from all those years ago. Could a housing market possibly work like that? That is what your policy is. That is what these members somehow believe is sensible. It is lunacy.The last point I would make is this: in the 9 years that Labour was in Government there were three occasions on which it had to come to this House because of problems with security of supply. Interestingly last year we actually had a dryer year than any of the last 20 years. What members opposite are being reckless and irresponsible about is in terms of security of supply. I say this to the Committee: there will be absolutely no investment in new generation under this economic lunacy and if we want to compromise the future of New Zealand you go down that track of reducing investment in power. The policy is lunacy. Labour is playing politics. It conducted an act of economic sabotage. Those members should lower their heads in shame.Hon DAVID PARKER (Labour):You know the National Party is on the wrong side of an argument when Government members stand up and say that the only way that capital markets can succeed in New Zealand is if we let them trade what the Government created. That is the National Party’s economic plank for these 3 years—sell off what the Government has created in order that the capital markets can succeed and trade.Dr Smith has had 24 years in politics and 15 of those years have been since his colleague Max Bradford intervened in the electricity market. Since then electricity prices have gone up every year by twice the rate of inflation and National is still doing it. Dr Smith sits there and still defends it as if it is correct. What the Government says is: “Oh look Labour you should have kept these plans to yourself. You should not have told New Zealand investors. You should have actually done that. If you wanted to do it just do it in the future.” Because to do it now according to Dr Smith is economic sabotage. What that would have been doing would be underhand. We have actually been open to people and we said: “Look enough is enough.”What have the commentators said? New Zealand Herald Bernard Hickey says that robber barons in the power industries are not going to get away with it this time. What have the other commentators said? A lot of them have acknowledged that we have not got a competitive electricity market. We know that. What is this Government trying to do? It is trying to cement in these excessive profits from the old hydro stations by capitalising them into the balance sheets of the likes of Mighty River Power. That is what we are discussing right now. What does the National Business Review say in respect of Might River Power’s future profits Dr Smith?Hon Judith Collins: Who cares?Hon DAVID PARKER: What does it say? “Who cares?” says the National Party. Well I care because if Mighty River Power’s profits go up it implies yet more increases in the price of electricity. So what did the National Business Review say last week on 10 May: “Mighty River Power projects in its prospectus a jump in its profitability in the current year to $94 million up from $67 million last year. In the 2014 year it’s predicting those profits go up to $160 million.” Well there are a couple of points there. If this is so fantastic why is it that we have got to give that to the private sector that the Government has created and secondly—Simon O’Connor: Labour hates profits. They hate the private sector.Hon DAVID PARKER: Actually I do not hate the private sector. I actually want to do lots of things that improve the private sector. I want to have a decent investment signal into the economy through a capital gains tax so that we have less speculative investment in Auckland housing that the Government tickles along. It really likes it really. I want to have a neutral investment signal so that we have investment in productive enterprises not in speculation. I want a universal KiwiSaver so that we have deeper capital markets. I want to change monetary policy so that we can actually earn our way in the world from our exports with the currency. But National does not want any of that—no no no.National has got this old-fashioned merchant banker view of the world. We should not be surprised; that is what John Key is—he is a merchant banker. He is not interested in growing jobs or growing the real economy. He could not care a toss about that because he looks at the world through his merchant banking lens that is the same as it was 20 years ago which is what led to the global financial crisis and yet what have we got the Government doing? Here we go: the answer to New Zealand’s woes is to sell off what already exists. It does not want to increase New Zealand’s output one iota. It is not worried that New Zealand has now got the biggest current account deficit in the developed world—bigger than Greece’s. Is that not an atrocious thing? Last year this year and according to the IMF not just next year but the year after that and the year after that. We have the worst current account deficit in the world and the Government’s central economic plank for these 3 years is to sell off Mighty River Power Meridian Energy and Genesis Energy.What a pathetic narrow vision this Government has. No wonder since National took office we have had 200000 people going to Australia. “Wave Goodbye to Higher Taxes. Not Your Loved Ones.” is what National said and what have we had instead? We have had 200000 people going to Australia. We have got incomes—except for the people at the top—dropping as shown by what has happened with the Inland Revenue Department’s PAYE figures and all those members say is “Flog off Mighty River Power and put up power prices.”KANWALJIT SINGH BAKSHI (National):The Commerce Committee reviewed the annual report of Mighty River Power. Mighty River Power had a total revenue of $1.5 billion in the year 2011-12 with an after-tax profit of $67 million. The Office of the Auditor-General issued an unmodified audit opinion which was very good and no improvement was required.I would like to share a quote from Baroness Margaret Thatcher: “The trouble with socialism is that eventually you run out of other people’s money.” This Government does not believe that it should keep on borrowing money from overseas volatile markets and persist in adding debt to our future generations. We are doing better than other countries but even in New Zealand over the next 3 years the Government’s net debt will be about $70 billion up from $10 billion 4 years ago. The debt is growing and we cannot afford for that to continue to happen. This is the formula of the Opposition parties towards growth but not for this Government.In 2011 when the National Party went out to campaign for the general election it was made clear that we would sell minority shares in some of the State-owned entities. We also made it clear that the Government would hold the majority shareholding and would not lose the control of these entities. Every 3 years at the election the public gives a mandate to the policies of the party that they think is in favour of the country and such a mandate was given to the Prime Minister John Key to form a Government to govern this country and implement this policy.What this Government is doing is rearranging its assets. It is investing the rearranged money in hospitals schools and infrastructure.Let us talk about the Mighty River Power share float. One hundred and thirteen thousand investors secured the opportunity to invest in Mighty River Power making this the largest share registry on the New Zealand Exchange. Over the weekend I met a young entrepreneur who was very excited that his family went together for their applications which were all accepted. He told me that his family had invested about $40000 as they felt it was safe to invest in that company in comparison with the private finance companies.Another interesting fact I would like to share with this House is that apparently 77000 investors did not have a common shareholder number which indicates that they all were first-time investors. This Government has given an opportunity to small investors who have small savings and want to invest but do not feel it is safe to invest anywhere else. This is one of the opportunities for such small investors to invest in companies that have track records.The Government has banked $1.7 billion which will be invested in a Future Investment Fund and we do not have to borrow this money. Let me reiterate: the Opposition does not have any plan for economic growth. The National Government led by the Prime Minister is focused on attracting new investments and that will benefit this country whereas Labour and the Greens have plans exactly opposite to this.MOANA MACKEY (Labour):I do want to respond to some of the extraordinary comments made by the Minister in the chair in his very animated contribution to the Committee. I think you know you have really touched a nerve and you are on the right track when you get those kinds of speeches from the Hon Dr Nick Smith. It is kind of like our canary in the coalmine. If the Hon Dr Nick Smith looks like he is going to blow we are on the right path. Certainly that was the tenor of the response we got from the Minister. Well the Hon Dr Nick Smith and the National Government can continue to drink the Kool-Aid if they want and try to convince themselves that we have a competitive electricity market but they know that that simply is not true. It simply is not true.I want to concur with the comments made by my colleague David Parker in terms of the announcement of our policy. I assure you that the screaming and the hysteria would have been far worse if we had held off announcing this policy until after the float than it was announcing it beforehand so that investors could know exactly what they were going to get at the change of Government next year.Let us be clear: 2.5 percent of New Zealanders bought shares in Mighty River Power—2.5 percent. One hundred percent of New Zealanders owned that company in the year that we are discussing—100 percent. That is not going to be the case in the future and that is a tragedy.Mighty River Power owns nine hydro stations on the Waikato River. It has five geothermal stations in the central North Island and a gas-fired station in Auckland. If you look at those hydro stations these are assets that were built by the taxpayers of New Zealand—built by the taxpayers of New Zealand. They have been paid off in full so why is it that New Zealanders are not getting the benefit of cheap hydroelectricity generation? We have one of the highest levels of hydro generation in the world. Why is that not reflected in our power prices to consumers and to small and medium sized businesses? Why? In a time of flattening demand a surplus of generation and a collapsed carbon price why are power prices continuing to go up? If there was ever a time that you would consider—Paul Goldsmith: Transmission.MOANA MACKEY: It is not transmission. Paul Goldsmith says it is transmission. That is the go-to response. It is completely untrue—completely untrue—that transmission and line charges have been responsible for the driving up of electricity prices. It is the wholesale electricity market. You only have to look at the report in 2007 that confirms that. All the evidence confirms that it is not transmission and line charges that have driven up electricity prices; it is the wholesale electricity market and that continues to be the case to this day. I am very pleased that Paul Goldsmith raised that so that I could—[Interruption]; do not tell people that—absolutely refute the single biggest fallacy in this debate which is that it is transmission charges that have driven up electricity prices. It is not.So when it comes to Mighty River Power I pose the question again. Electricity prices for consumers and households went up on 1 April. Within weeks of that the chief executive of Contact Energy was saying that they were going to go up again. If power prices do not go down when we have flattening demand a surplus of generation and a collapsed carbon price when are they ever going to go down? Silence. The answer is that we do not have a competitive market. It is interesting that the chief executive of Mighty River Power Doug Heffernan came out and said that it is socialist. Apparently he thinks that a mechanism that will deliver an actual competitive retail market is socialism and he defends the status quo—Simon O’Connor: No he said it’s communism.MOANA MACKEY: Communism—no he actually said socialism. To be fair to him he said it was socialism. So this is defending an uncompetitive market which is what National is doing and what the chief executive of Mighty River Power decided to do. Well Labour’s policy will deliver real competition and choice in the retail market. We will still have competition in generation. We will still have competition in the retail market. That is what the mechanism will deliver. This is not regulating right across the board. This is a system that is used all around the world like in the United States of America. Does the National Party think that the United States of America is communist? Because that is what National is out there telling the people of New Zealand. The United States of America Mr Hayes is where this model is also used and I do not think any of us would claim that it is—Hon Dr Nick Smith: No it’s not true.MOANA MACKEY: Well the fact that Dr Nick Smith says “No it is not.”—this is the wonderful thing about Nick Smith. He just shakes his head and says no to things that are absolutely factually correct hoping that people will believe him.The reality is power prices are too high. Yes they went up when Labour was in Government. That shows that the model does not work. The Bradford reforms have not provided the decrease in power prices that were promised at the time. It has failed. As I said the National Party can continue to drink the Kool-Aid if it wants and pretend that it has not failed—Report noted.New Zealand Railways CorporationRICHARD PROSSER (NZ First):I am pleased to rise on behalf of New Zealand First to call the Minister for State Owned Enterprises to account with regard to the performance of KiwiRail. Rail is a critical part of New Zealand’s infrastructure. Some of us in this House—some no small few I would contend—will remember KiwiRail from the days when it was known as New Zealand Railways Department when it was its own Government department when sober administrations from both sides of the political divide took it seriously and afforded it the respect and the resourcing that reflected its importance to the nation and the economy. Even today the shadow of its former self that KiwiRail has become still employs some 4100 people. That number does not take into account the many people in support industries who owe their jobs to rail. But the National Government has made it clear that it does not care about the livelihoods of those people just as it does not care about rail.We can see this in a number of decisions that KiwiRail has made under the Government’s Turnaround Plan. The Minister for State Owned Enterprises Tony Ryall admitted last year that KiwiRail was unlikely to find the $3.85 billion needed from its own operating budget to finance the plan itself. This is why it has had to cut 300 jobs. This is why the Hillside railway workshops in Dunedin have been starved of work run down and hocked off while the Napier-Gisborne rail line has been mothballed. The Government has an obligation to stump up with the capital if KiwiRail is unable to fund itself. The Government simply cannot cut and run when the going gets tough—not when an essential service provider like rail is at stake. There needs to be an emphasis on regional development and jobs not simply bottom-line savings. The Government’s approach is reckless. It has no regard for the public good or social cost. This is a Government that would flog off the railways again if it could. It has an ideological disposition towards profit over people.Some of the $158 million of extra spending on tourism in Budget 2013 could have gone to financing KiwiRail instead. Bringing in ever more tourists is all well and good but we have to have ways of transporting them as well. Rail is the only sensible alternative we have to the ridiculously costly process of upgrading the Third World goat tracks that pass for State highways in this country. Some of the $158 million could have gone a long way to resolving the seemingly endless issues KiwiRail has with its Cook Strait ferries which were bought on the cheap and are riddled with problems. Last week all three of them were laid up with breakdowns at the same time—three lame ducks all in a row.That $158 million will deliver no benefit to the people of the East Coast or Northland where vital rail links are being mothballed. These are some of the most depressed regions in the country and they need all the help they can get. Even in their depressed state these regions are making a contribution to the economy to our foreign exchange earnings and that contribution needs to be recognised by the Government through investment in KiwiRail. The Napier-Gisborne line alone would have cost only $4 million to repair. The community and businesses on the East Coast have voiced support for the rail link and they say they would be able to increase the amount of freight carried on the line in the future. Why not listen to the people who would be most affected by this decision?The Turnaround Plan has also led to the compromising of public safety standards. Rotten sleepers from South America and rotten rolling stock from China—that is what this Government’s penny pinching has given us. Poor finish second-rate welding steel that if rumour is to be believed does not always even meet international standard ISO 9000 specifications and wheel gauges that are not the right size and that are flogging out the inside of the tracks themselves—it is probably only a matter of time before someone dies as a result of it. What will they say then?The decision to source locomotives and wagons from overseas has also been short-sighted in that it has cost the country hundreds of jobs and associated economic benefits. Documents obtained under the Official Information Act show that the closure of Hillside could have been avoided if only the Government had chosen to put New Zealand jobs and industry first. A difference of $6.4 million pales in comparison to the somewhere between $232 million and $250 million that Business and Economic Research says it would have added to New Zealand’s GDP. Quite apart from the inferior quality of locomotives and freight wagons imported from China’s Government-owned slave-labour sweatshops when compared with the high standard that our own engineers and tradesmen produce and the fact that the lower cost is a false saving—because these cheap nasty imports will wear out and break down and have to be replaced many years sooner than their local counterparts—no one in Government seems to have calculated the cost of not building KiwiRail’s wagons in Dunedin. There will be unemployment. There will be the loss of skilled tradespeople who will disappear to Australia never to return. There is the loss of yet more of our wealth-generating manufacturing base.KiwiRail is a shambles. It is poorly run poorly managed poorly resourced and poorly regarded by a poor Government. New Zealand First’s report on KiwiRail is not a “Must do better.”; it is a “Go back and start again.” We sincerely urge the Minister to take this lesson on board and change track accordingly. Thank you.JULIE ANNE GENTER (Green):We heard from KiwiRail at the Transport and Industrial Relations Committee and looking at its financial report is very very interesting. What we can see is that KiwiRail’s business is actually very sound. Freight volumes moved by rail have been increasing rapidly even though overall freight has not increased over the past few years. So we have not had an increase in freight volumes moving around the country or into and out of the country as was anticipated but on the rail we have seen a massive increase. This is good for our exporters. Recently I actually visited the Fonterra dry-store and cool-store at Wiri. Forty percent of Fonterra’s exports move through this store and 95 percent of what moves through there comes in and leaves by rail. So rail is incredibly important for our exporters.What also became very clear during the financial review is that KiwiRail is simply not able to deliver the full transport benefits that it could deliver because the Government is not providing it with sufficient capital although it has through the turn-round plan agreed to $250 million a year for a couple of years. But let us look at the transport budget. We have over $1 billion a year each year going on new capital expenditure just on new State highways. The problem with these duplicating links in our State highways is that they have diminishing marginal returns. We already have a State highway network. It is working pretty well. We could have some cost-effective safety improvements that would result in great benefits but putting in a duplicate link is not going to have a very good benefit for the transport system.The problem for KiwiRail and the problem for New Zealand is that the National Government does not understand how a transport network works. If you invest in the rail network that directly affects how the road network is used. In fact our transport network is entirely full of cross-subsidies. So the line that we often hear from the Government that roads are user-pays and rail does not pay its way and is subsidised is completely erroneous and does not take into account the fact that we have massive cross-subsidies going on. This is clearest in the Government’s capital expenditure priorities. So the highways that it is prioritising like Transmission Gully could never be paid for by direct user charges. That is the reality. If you tried to fund them through direct user charges the tolls would never cover the cost. So it is road users all over New Zealand who will be paying for a road that is used by only about 10000 people in the case of Transmission Gully so that is a big cross-subsidy. But if we were going to take an economically rational approach to the transport network what we would do is put the money in the projects that have the greatest benefit and the next dollar that we spend on transport infrastructure would be on rail because it allows more efficient use of the entire transport network.So for example already rail freight is paying for itself despite the massive capital investment that is needed in New Zealand’s neglected railway system because of 10 years of privatisation. But the passenger service is making a very tiny loss of about $3 million a year. To put that into context $3 million is probably the cost of one intersection or one roundabout. It is a tiny amount of money that might be put into the State highway network to get some safety benefits—supposed safety benefits. But if we were comparing it on an equal footing and treating rail as part of the transport network we would take into account the safety benefits of moving more freight off the roads and on to the rail network. It has benefits for consumers it has benefits for exporters and it has safety benefits. It is an entirely economically rational approach that most countries around the world are taking.If you look around the world most countries are investing significantly in rail because it makes economic sense. It is highly energy-efficient and it would reduce the amount of money that the transport sector has to spend on oil to move things around. We are spending $8 billion a year on oil that we are importing which is bad for our current account deficit. So investing in the rail network is good for our current account deficit it reduces the dependency of our freight sector on oil and the vulnerability to high oil prices and it reduces the amount of money that we have to spend on maintaining and improving the safety on the road network. This is an economically rational approach to transport that we do not see coming from the National Party and it is really a lost opportunity. The Green Party would invest in rail.SIMON O’CONNOR (National—Tāmaki):We have just heard a supposed discussion or lecture on economic rationality but I am struggling to see either the rationality or the economics in it. We have heard from the Green Party tonight that we just need more money in rail and that they will find it somewhere. An earlier speaker was talking about the Privacy Commissioner and saying we just need more money and they will find it and put it in there. We heard from others in the Opposition that one way we will reconcile some of the economics is to move into a monopsony approach towards the electrical market because that will be good.Paul Goldsmith: Monopsony?SIMON O’CONNOR: Monopsony. Have you not heard of a monopsony? We have to give you some education. It is a great word. On the one hand we have got all these extra expenses—[Interruption] Monopsony—yes it is a great word. We have got all these ideas of all this extra spend and yet we are hearing all these anti-approaches. We hear from New Zealand First that we have got to invest more and then—Jonathan Young: It’s not their money.SIMON O’CONNOR: Exactly. It is not their money as my colleague points out. It is someone else’s money. It has been photocopied. It has been taken off someone. It is the “bribe people with their own money” approach which we have seen before. We heard then from New Zealand First that we have got to put money in and then pursue uneconomic approaches. So we are going to buy rail systems be it carts or whatever. We are going to build lines that are uneconomic. And somehow that is rational economics—we are just going to keep putting more money in.What I think is important is to move into context because this Government has invested over $750 million—$750 million of New Zealand taxpayers’ money—into KiwiRail over the last 3 years. This Government has shown a very strong commitment to the rail network over 10 years to turn it round and to put it on its feet. Those of us who were there at the review heard that the board of the New Zealand Railways Corporation is working constantly readjusting its numbers to move KiwiRail into a position where it can stand alone.I suppose that is an element of where the National Party comes in because we heard from Labour and the Greens that they want a hands-on Government. I said it before in another speech—they really want their hands on your wallet and around your throat. National wants to empower KiwiRail to be able to stand on its own two feet. You would think the Greens would be all about actually wanting to stand on your own two feet because that is what National is all about—standing on your own two feet. Is that not good for the environment? [Interruption] They want to stomp on other people’s feet as the honourable Minister points out. It is just crazy crazy economics.As I said $750 million has been invested into KiwiRail and this is investment we have not had for over 50 years. The board came before us and discussed what was occurring. The board noted in respect of buying the new trains and the new locomotives in 2010 which the Government facilitated that it was 35 years—35 years—since such things had been bought. This is a Government committed to building up and strengthening KiwiRail and we have got some great successes.We know that freight is up. Julie Anne Genter is right. It works really well in some places. It works really well when the rail line runs past your business. But in this modern-day economy—not some sort of socialistic or communistic utopia—we live in a “just in time” dynamic where importers and exporters want to be able to move their products just in time. It means they want their product off the ship and brought to the supermarket just in time. They do not want it to be stored in warehouses waiting for a rail network to go in that direction. It works well for elements of Fonterra. I notice actually that New Zealand Rail is working I think towards Darfield to put in a rail line there. It is responsive. But once again we are coming back to a fundamentalism around the rail network—the idea that this is the only way that things are done. That is not the way the economy operates.But I come back to the $750 million that has been invested in KiwiRail. We were told at the Transport and Industrial Relations Committee that we have seen a growth of freight in KiwiRail of over 25 percent. We have noticed that about 17 percent of the income for KiwiRail is through its Interislander service and that is an increase of about $5 million in the last year. KiwiRail is building its capacity it is building its strength and it is doing that on good rational economics. It is not making things up and it is not engaging in economic or transport fundamentalism. It is good economic policy. You invest and then you allow the board and its individuals within the company to work their best for all New Zealanders.Report noted.Solid Energy New Zealand LtdHon DAVID CUNLIFFE (Labour—New Lynn):It is a pleasure to take a call in this Crown entities debate on the very serious situation in Solid Energy Ltd. Firstly may I compliment the members of the Commerce Committee in particular my colleague the Hon Clayton Cosgrove who cannot be in Parliament today on the quality and thoroughness of the report that we have before us. It makes for very sobering reading because it is an absolutely textbook case of how not to govern and manage a State-owned enterprise.If this National Government does not believe in the State-owned enterprises model—quite obviously because it is trying to privatise many of them—it is because it considers itself incapable of exercising the proper governance over it. The Government has been asleep at the wheel of Solid Energy. It has built up $400 million in debt it has cost to date over 400 lost jobs and it has seen a once-proud and innovative company brought to its knees.Let us consider how this occurred but firstly can I just comment on behalf of my colleagues on the difficulties that the Commerce Committee had in bringing Solid Energy to account. Indeed my colleagues believe that Solid Energy misled and obstructed the committee in regard to the availability of Dr Don Elder the former chief executive of the company to be able to testify to the committee. As I understand it from the committee report it was only when Dr Elder’s lawyers wrote to Solid Energy instructing it that if he was not able to appear the company must declare that he was available to appear. Only then did the company relent and allow him to perform his constitutional duty and testify to the committee. By all reports he did so with a straight back as did the outgoing chairman John Palmer.That leaves us with a riddle to solve—a riddle that is very important to New Zealanders because they want to know how come this Government oversaw the loss of half a billion dollars of their taxpayers’ money. Half a billion dollars is a lot of money in real New Zealanders’ terms but this Government—[Interruption] There goes the chairman. There goes the chairman of the Commerce Committee. He is a decent bloke but he was encouraged to stand aside from this hearing because of a potential perceived conflict of interest. His sister had been appointed to the board by the previous Labour Government—a very bipartisan manoeuvre. He was invited to consider and he took advice on whether he should stand aside. He chose not to. That does not mean he is in a position to shout down the Opposition on this matter.Here is the riddle: a company that had a billion dollars’ worth of projects in the pipeline and was carrying less than 35 percent debt suddenly found itself in the situation where the Government was encouraging it to up its debt levels at the very same time that the coal price was plummeting to historic lows. How was that possible? Well it so happens that Treasury was in fact intensively monitoring Solid Energy at the time but Ministers did nothing. Indeed Ministers insisted that the gearing be increased so that the dividend could naturally be increased. And that is like a sailboat sailing into a storm not sheeting its sail but putting up more sails more debt even though it was getting rougher and rougher.It was not bad enough to load up the company with debt at the Government’s behest but the company completely lost control of costs. Do not take our word for it. Here are the facts: $1.8 million was spent on overseas travel—$1.8 million which is more than the Cabinet—in 2011-12 and there was $336000 spent on advertising over a million dollars on communications nearly $200000 on spin doctors and public relations and one that really gets me $200000 on private investigators to run investigations on ecological campaigners. That is a travesty and all at the time—[Interruption] Yes and it reflects this Government’s view of civil rights: “Got a problem with spying? Change the law. Got a problem with sleazy deals? Bind future Parliaments.” Members may smirk. It is not going to take long before the public has a gutsful of that carry-on.JONATHAN YOUNG (National—New Plymouth):Following that speaker the Hon David Cunliffe it is very important to understand that through this process there have been a lot of numbers bandied about. We know that Solid Energy ended up in February in a situation where $390 million of debt was carried on its balance sheet yet we hear from the previous speaker that no it is $400 million and then within seconds it is half a billion dollars. How can we trust anything that comes out of those members’ mouths when such exaggeration takes place in debates like this?Page 5 of the report of the Commerce Committee says: “We asked Dr Palmer whether during his time as chair of Solid Energy the Crown had requested that Solid Energy increase its gearing. He confirmed that it had and that the aim of doing so would have been to ‘ensure that there was more cash available … which would ultimately increase the dividend yield.’ ”—through a process. “We asked Mr Palmer ‘Has ever a shareholder asked you to borrow to pay the dividend?’ He replied ‘No. There was no request for that.’ ” The next sentence says: “Labour members do not accept Mr Palmer’s explanation.” So even when it came out of the horse’s mouth these guys would not accept it.We know from further on that they ignore the international economic context. They want to lay all the blame at the Government’s feet. They want to do all of that. They said in their minority view report: “The brief amount of time given to the appearance of the current management of Solid Energy as well as that given to Dr Elder and former chair John Palmer meant that many questions about Solid Energy were unable to be asked by the committee.” They went on to say: “The hearing of just two hours of evidence meant that many questions from committee members were not able to be addressed”. We have the recorded transcripts which show that we had 3 hours of hearings yet Labour members put in their minority view that there were only 2 hours. Answer that.There were “many questions from committee members [that] were not able to be addressed in full.” Listen to this. How many questions do you think the Labour members submitted to the Commerce Committee to be sent to Solid Energy in that review? Two hundred and eighty-five.Hon Member: What?JONATHAN YOUNG: Two hundred and eighty-five. This was the thickest biggest longest select committee report of a financial review probably ever in the history of this Parliament and we had tremendous answers. Yes a straight bat yet the members of that committee from the other side of the Chamber distort the truth. They distort the facts. They come up with all sorts of things that make it unclear for New Zealanders to know exactly what happened.After Mr Palmer and Dr Elder talked about the international global situation regarding coal prices the lead member of the committee from the Labour side said: “Now I want to ask you some substantive questions.”—after we had understood all about shale gas from the United States of America and how that had caused coal companies to collapse after we had heard everything about how in China a 33 percent reduction in steel milling had taken place and after we had heard all about how coal companies in Australia had lost 50 percent of their value when the stock market had increased and how in the United States 42 percent of the value of coal companies had dropped when the Dow increased at the same time. We understood that there are significant global pressures around the price of coal how this had affected the market and how everybody around the globe was taken by surprise at what happened yet all of this is completely ignored—all of this is completely ignored—and we have a tremendous lot of information put in that report from those members’ point of view that is incorrect. I would say that we have seen a very biased attitude and that we have not seen an attitude from some members of this committee who have wanted to look at the facts and report justly so.I think that we need to understand that Solid Energy has been and is going through some very difficult times. I believe that the Commerce Committee has sought to serve this Parliament well in presenting a very thorough report with the exception of those instances that I have raised of blatant inaccuracies and blatant refusals to believe what the former chair brought to the committee. Why? Because it did not suit those members’ agenda. Their agenda was to try to lay—Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman):If you ever want a perfect case study of incompetent National Government oversight then this is it. In 1998 when the last National Government was in power it was determined to start selling off State-owned assets. It indicated to Solid Energy that it wanted it sold and this company was brought to its knees. It was bailed out by the Government in 1998. Labour came in in 1999 the Labour Government said “Get on with the job of mining.” and this company became an export leader with prizes and recognition for its export growth. And 5 years into the next Tory Government this company is on its knees because the Tory Government the National Government refused to provide proper oversight.Yes there are challenges in the coal industry. There are a number of coalmines operating profitably surviving on the West Coast but not Solid Energy. The problem with it is that the miners are the ones who have paid the dear price for the incompetent oversight by the National Government. We had a company running around like a bunch of drunken sailors spending money all over the place—bonuses for example—when there were clear indicators of challenging times in the international coal market. This is a classic case of Tory oversight.Bonuses were offered to employees—a fact that was told at the Commerce Committee. Where did that money go? Well $1.3 million went to employees on collective agreements. Who are they? They are the miners risking their lives day in and day out. What about the $9.7 million that went to employees on individual contracts? The managers the people sitting on their chuffs in the palace in Christchurch got the $9.7 million and that Minister and the National Government approved that and signed it off. No wonder the company is almost $400 million down the gurgler because the Ministers were asleep at the wheel.We had the chairman of the Commerce Committee quoting Mr Palmer and Mr Elder on what they told us at the select committee. The only reason they were there is that the Labour members on the committee insisted that they turn up. It was Mr Ford and Mr Diack who came along to the committee first up and said that Mr Elder did not want to come along. That was a lie. That was a lie and the Labour members do not accept the explanations given. Mr Palmer also said that they were not setting up Solid Energy for any sale process. Well clearly in the documents that was one of the objectives of the shareholding Government and Ministers and Mr Palmer has been a long-time champion of part-privatisation. I like John Palmer and I respect him and he has been out on the front foot in the media championing part-privatisation. I do not believe for a moment that that objective was not part of the problem that Solid Energy got itself into.It was trying to do two things. Firstly the Ministers insisted on gearing the company up so they could get a greater dividend which put pressure on a mining company. That is not traditionally the way you run a mining company. The board objected the Ministers insisted and so the gearing went up. At the same time it was trying to—had been told to—set the company up for part-privatisation. That formula was disastrous. The chief executive and the company were trying to diversify at a time when again the National Government stepped in and took off the mandatory obligation of biofuels and undermined what could have been a good initiative. It was admitted by the chairman the former chairman and the chief executive that biodiesel might have worked if the mandatory obligation had not been taken away by the National Government.There was $400 million down the gurgler. Almost 500 miners have lost their jobs on the West Coast and a few managers have lost their jobs. In fact the last announcement was 109 people. Half those people lost their jobs in the regions of New Zealand where they mine. Only half of those about 59 lost jobs in Christchurch. I feel sorry for those people but the reality is that the West Coast and the miners the people who risk their lives in Spring Creek Mine and all the other mines were the people who were not getting the bonuses. They were the people who got kicked out of work—[Bell rung]—and the chief executive and—The CHAIRPERSON (Lindsay Tisch): Order! [Interruption] Order! Otherwise the member will take another call.Report noted.Learning Media LtdCatherine Delahunty: Mr Chair—The CHAIRPERSON (Lindsay Tisch): From my reckoning the Green Party has used the four calls it has been allocated in this 3-hour debate. If you are getting a call from another party that has been allocated to you by negotiation that is fine. But at this stage your party has had four calls.Metiria Turei: I raise a point of order Mr Chairperson. Yes I understand that we have been allocated calls at least from Mana and our records indicate that we are entitled to five at this stage—and Brendan Horan’s call.The CHAIRPERSON (Lindsay Tisch): Is that five—Metiria Turei: Six including Brendan Horan’s.The CHAIRPERSON (Lindsay Tisch): Well I have four including Mana’s call so I will look at that. At this stage if you were to take the Mana call I would accept that if Catherine Delahunty wishes to take the call. Before you start we will check out whether you actually have six in total including Mana’s call but at this stage I call Catherine Delahunty.CATHERINE DELAHUNTY (Green):Thank you Mr Chair. The Green Party is keen to support this organisation Learning Media who came before our Education and Science Committee and indicated that it was having considerable difficulty with the new environment in which the Government had placed it.In order to place this in context I think it is important to remember who Learning Media is. It is part of a jigsaw of support that provides us with excellent educational materials including one of the most iconic ones the School Journal which is 106 years old. It was quite concerning to hear at the select committee that Learning Media is facing some considerable difficulty. Up until 12 September last year it had what is known as a preferred provider arrangement and it was actually doing a fine job particularly in targeting some of those who have been identified as some of our more vulnerable learners. It has been providing extremely good support to schools through what it calls “deliberate design principles” including catering for the diversity of students in New Zealand schools supporting Māori students to achieve success as Māori enabling alignment between texts and student needs building student capacity supporting reading and writing and many other things. It is very well known in the education sector as being a highly successful model.So it really was unfortunate to hear that after 12 September last year Learning Media had been forced to enter into a new contested environment. Through that contested environment it is competing with a whole lot of people who do not have its overheads. This State-owned asset has proved its worth not only through the School Journal but through many other educational materials that it has provided. It has made a particular feature of recognising that Māori students and Pacific students benefit from very specific and culturally responsive programmes.But no the market must dominate. Unlike Solid Energy it was not that it was spending millions of dollars on bonuses and it was not that it had been over-rewarding its top echelon in a random and unacceptable manner. The people at Learning Media have worked very hard to adjust to the changes that Government keeps requiring but unfortunately they are actually suffering from this new competitive model. The model means that Learning Media is no longer able to guarantee that it can do what it was set up to do. So basically what is happening is it has been forced to produce all its work in a whole new expensive layer of business. Everything has to be directed towards pitching for contracts. So instead of doing the job and using the expertise that it has accumulated over many years of practice as a State-owned asset it now has to compete. It now has to direct time energy and resources into pitching for contracts.Interestingly and this is actually relevant I was at a mayoral forum the other day in the Waikato region near my home and some of the mayors were talking about how they had discovered that constantly contracting out everything that they do is costing them more money than they are able to justify and they are taking contracts back in-house for a range of issues. Obviously that is not education; that is other types of issues but the contracting culture they had realised does not always work.If you want a sustained quality in education and this applies to the Education Amendment Bill as well which we debated in the House this afternoon the Government needs to commit to State-owned assets that are capable of providing that consistency. Throwing it to the wolves and asking it to be part of a contestable environment has not worked for Learning Media. It is not in huge debt it is not collapsing but it is finding that it is not able to focus. If it spends all its time trying to get contracts competing with organisations with hardly any overheads and who have flavour of the month ideas but do not have a sustained commitment then our children are going to lose out. That is what this is supposed to be about. It is about an educational provision that is going to work.It was with great concern that we heard what we heard from Learning Media because we think that allowing this to disintegrate in a hands-off way is going to be a disservice to children. Generations of Kiwi kids grew up reading the stories of many great authors. If we know anything about it it is that these authors have relied on the School Journaland the School Journal has relied on them. There has been a tradition of attracting quality because those people at Learning Media who are providing it know what they are doing they know why they are doing it and they know how it works. Having had conversations with some of the people at Learning Media—offline if you like—outside the select committee what I heard was a very deep commitment to Māori and Pacific learners. It would be a disgrace if Learning Media does not survive this. It is part of an overall belief system that contracting and competing—Report noted.New Zealand Qualifications AuthorityTRACEY MARTIN (NZ First):Kia ora Mr Chairman. Just with regard to the report for the 2011-12 year I would like to address my comments to outcome 3 which is about the preserving of and building on New Zealand’s reputation as a high-quality education provider and increasing the portability of qualifications gained here which will make New Zealand a more attractive place for students to come to and study in. I also want to address key initiative No. 6—enhancing the international recognition understanding and portability of New Zealand’s qualifications.The New Zealand Qualifications Authority was charged with key outcome No. 3 in the year under review. We recognise that the authority is in the somewhat unenviable position of having to try to uphold the integrity of the international reputation of New Zealand qualifications while at the same time having its Government market and kick open a door to everybody on the planet as if to say: “Come here come here. This is the goose that lays the golden egg. A free-for-all—our education system is up for sale.” So the authority has been flooded with international students and it is its job to maintain the integrity and the international representation of our qualifications. One of the things that we have seen in the last few days is the side effect of a lack of resources for the authority—a lack of time and resources—with which to create and enforce those systems needed to protect our international representation so that the goose itself does not end up cooked.The Government was aware over 2 years ago of the current issue around cheating in the period that we are talking about because it was in 2011 that the authority was given the powers to prosecute anyone advertising or providing cheating services. At this stage the authority has not used those powers. We are not surprised that there have been no prosecutions of individuals or organisations that have advertised cheating services because although these organisations might be crooked they are not stupid. But the review has highlighted that although the authority has these powers it does not necessarily have the resources to properly investigate such cases or pursue such cases through the courts.New Zealand First believes that a recent article in the Sunday Star-Times probably sums up the risk that we are looking at through the failure to have resources appropriately allocated to the authority to address the risks that these fraudsters represent to the New Zealand education system. It said: “The students who handed in work that was not their own have [fleeced] not only our universities but … other students who have worked diligently and honestly to get their degrees.” Particularly that has lowered the status of all degrees awarded to the international students. It went on to say: “The real damage is to New Zealand’s tertiary education sector. This story should [send shock waves around] our universities and raise red flags over the Government’s drive to bring in more Chinese and other Asian students here to study. If nothing is done to rectify the blight of this cheating all we’ll get is more students with phoney degrees and a greater degree of distrust about our education system.” Sadly as the Sunday Star-Times sources said New Zealand is now widely known in the Chinese community as the easiest place to get a Bachelor’s degree or a Master’s degree in any Western nation.Although we take on board those comments we also want to acknowledge that the Chinese embassy is working very closely with the New Zealand Qualifications Authority and Education New Zealand to investigate this matter. It recognises just as we do that all students are at risk of having their education and degrees not valued at the level that they should be and particularly it risks the reputation of the honest and hard-working Chinese students who are in our tertiary institutions.So we will be looking to see that in the next reviews that we will do at the Education and Science Committee around the New Zealand Qualifications Authority. We will be putting a particularly close eye on the mechanisms the affordability and the investment that it is making to work out solutions to this problem. It is probably timely to do so.House resumed.The Chairperson reported progress on the debate on the performance and current operations of Crown entities public organisations and State enterprises and no progress on the Immigration Amendment Bill.Report adopted.The House adjourned at 9.56 p.m.