Urgent Debates — Te Wananga o Aotearoa—Auditor-General’s Report 
Urgent Debates — Te Wananga o Aotearoa—Auditor-General’s Report 
[Volume:628;Page:543] 
Urgent Debates 
Te Wananga o Aotearoa—Auditor-General’s Report 
Hon BILL ENGLISH (National—Clutha-Southland) 
: 
 I move  
That the House take note of a matter of urgent public importance 
. Today the Government backed down on its decision to sack the council of the wananga. There can be no other interpretation of Dr Cullen’s public statement. I might just give the House a little bit of history so it understands just how far Dr Cullen has backed down. As early as April 2002 the Government was aware of significant issues at the wananga. There was a long difficult and sad history of officials knowing exactly what was going on at the wananga but doing nothing about it. Then it came to election year. But back in 2002 the Government had appointed a development adviser to the wananga. That person was Mr Graeme McNally. He earned $127000 in fees and was meant to be overseeing improvements in governance and financial management at the wananga. 
John Key 
: Over what period? 
Hon BILL ENGLISH 
: Over a long period because there was plenty to do. Of course he became frustrated. No one particularly Ministers seemed to be taking any notice of him and therefore a box of incriminating material turned up in Ken Shirley’s office—a member who has now left Parliament.  
Hon Trevor Mallard 
: Are you accusing him of doing that? Go and do that outside Parliament! 
Hon BILL ENGLISH 
: A box of material turned up—[ 
Interruption 
] Well the Minister feels very anxious about the issue. 
The ASSISTANT SPEAKER (Ann Hartley) 
: I ask the member interjecting to stand withdraw and apologise. He cannot insinuate that the member is a liar. 
Hon Trevor Mallard 
: I withdraw and apologise. 
Hon BILL ENGLISH 
: Trevor Mallard feels very sensitive about this issue because he was the Minister of Education for 6 years and in that time he oversaw the growth of the wananga from fewer than 1000 equivalent full-time students when National left office to 35000 at its peak. Trevor Mallard wrote out every cheque. He ticked off every Cabinet decision every year. He was chief banker for the wananga.  
John Key 
: How much was involved? 
Hon BILL ENGLISH 
: Over that 5-year period I am guessing well over $600 million was paid to the wananga by Dr Cullen and Trevor Mallard.  
John Key 
: What a disgrace! 
Hon BILL ENGLISH 
: It was a disgrace. What did he do about it? Well he did nothing until February 2005. [ 
Interruption 
] I would laugh at the member’s efforts too if I were him. 
In 2005 this Parliament saw that box of incriminating material from the wananga and Mr Mallard decided he should do something. He figured out that in election year he had better look like he was kicking the wananga pretty hard. The Government’s strategy was to make as much noise as possible in the run-up to the election then after the election back off. That is what has happened today. I can tell the public of New Zealand that if there were to be an election in a month’s time the wananga council would have been sacked today on the basis of this damning report from the Auditor-General. 
In June 2005 Mr Mallard wrote to the chair of the council: “Notice of preliminary decision to appoint a commissioner”. The letter stated that he had “formed the preliminary view that the council should be dissolved and a commissioner appointed in its place”. So he had decided to sack the council. It was a preliminary view whereby the council was given a bit of time to come back and plead its case—by Monday 11 July a couple of weeks after he wrote the letter. As I recall that letter received quite a lot of publicity. In fact it got the Minister off the hook; he had been under a fair bit of pressure over what was going on with the wananga. 
He was thorough: there were six criteria in the statute that had to be met in order for the council to be sacked. It is my guess that because the Minister is reasonably thorough—about some things but not about the wananga—he sought legal advice. He went through and made sure the council met all the criteria and it turned out it did. He made it clear that the viability of the institution as a going concern was the main serious risk. So there we were—the wananga council had a decision from the Minister that it was going to be sacked and it had 2 weeks to respond. Well after 2 weeks it was given an extension because by that time Labour had figured out how much damage that was doing to its Maori support and all the people who supported the wananga were going to support the Maori Party. So Trevor Mallard decided he needed to back off. 
What excuse did he come up with? Well here it is! Mr Mallard on 21 September about 7 weeks after the deadline was meant to have expired said: “I am waiting for the report from the Auditor-General.” He had not moved to sack the council because he did not have the report of the Auditor-General’s investigation. He said: “I am still waiting for information. I have said it was my intention to decide before the election.” Well he did not do that because he knew that the Maori Party would have won seven seats if he had fired the council. So it was a pretty delicate balancing act. He had to get the Pakeha electorate assured that he was going to kick the Maoris hard enough but not kick them so hard that they would all go and vote for the Maori Party. He was kind of half right. But he has left the Government with a very difficult problem today. Of course he thinks it does not matter because in his own cynical way it does not matter. He did say he was going to sack the council. He said he was going to wait for the Auditor-General’s report. Well ladies and gentlemen today we have the Auditor-General’s report.  
It states that the wananga is “operating according to procedures that are not fit for a public entity.” It outlines unidentified and badly managed conflicts of interest; lack of procedure around large-scale financial decisions such as multimillion dollar purchases of assets; and problems with the credit cards of senior management which go into tens of thousands of dollars. I have had a look through that report to see whether there is anything at all that means there is less reason to sack the council. 
John Key 
: Is there? 
Hon BILL ENGLISH 
: No there are a great deal many more reasons to sack the council and put in a commissioner. 
So what is the hold-up? That is the question Dr Cullen has to answer today. Why has the Government backed down on a well-documented process where it said it would sack the council; where it also said— 
Hon Trevor Mallard 
: You’re just thick. 
Hon BILL ENGLISH 
: Ah so we are thick! We do not understand! That is a bit like David Benson-Pope’s staff member—he did not understand that if he did what the Minister told him he would get sacked. He did not understand that. Well I tell Dr Cullen that we do understand and we want him to tell the House why he has backed down. I suspect there is some deal in the background and it probably goes like this: if the new council sacks Rongo Wetere then the Minister will leave the council in place. I think that is probably the deal. 
When the Minister gets a chance to speak I want him to tell the House which of six criteria do not now apply. The wananga met six criteria—it met every one of them—for getting the council sacked. If we believe Dr Cullen today the Auditor-General’s report tells us that that is no longer the case that somehow the wananga is in a better condition than it was. 
Well if that is the case then the Auditor-General’s report is I suppose Dr Cullen would say completely out of date. Is that what he will tell the House—that the Auditor-General’s report has nothing to do with what is happening in the wananga? Yes I think that is what he will get up and say. He will say that 5 years of massive growth financial mismanagement and deals for family members have all been cleaned up in the last couple of months that they have all gone—there are now no concerns at all. Well it is possible he might believe that because he has believed everything that officials told him over the last 5 years when they kept saying: “We have to tread softly here. We have to take our time. We have to take it easy.” What did happen over that time is that Trevor Mallard and Steve Maharey had over 50 briefings on the problems at Te Wananga o Aotearoa including 2003 weekly briefings in 2003. 
John Key 
: What did they learn? 
Hon BILL ENGLISH 
: That is a question Dr Cullen could give us the answer to. When we read the Auditor-General’s report we see it says a whole lot of things that are in a report that was given to the Government in 2002. 
John Key 
: That can’t be right. 
Hon BILL ENGLISH 
: It can’t be right? Well it is right. The same statements about arrangements with family members financial mismanagement and difficulties with governance are in a report dated April 2002. It was not in late 2002 but in April 2002. 
This is where we come to the issue of accountability. Who is going to be accountable for the 6 years during which the Labour Government poured hundreds of millions of dollars into this institution knowing that that public money was being badly managed? They knew in April 2002. There is nothing new in the Auditor-General’s report. All the same things that are being said now were said then. Hundreds of public officials saw the arrangements among the family members. 
John Key 
: Didn’t like it. 
Hon BILL ENGLISH 
: I do not know whether they liked it. Maybe they reported to Ministers; maybe they did not. If they did report to Ministers what did the Ministers do about it? If as recently as June 2005 the Auditor-General was still able to report one of those spaghetti diagrams that shows everyone in business with everyone else and they are all related then Dr Cullen when he gets up in this House should tell us who will be held accountable. Is it the Ministers? Is it the officials? Is it him? Is it Shane Jones who sat on the audit and finance committee of the wananga for a couple of years? Mr Shane Jones is the man they brought in to tidy it up. He knows all about it. So why do they not let him get up and speak? Why does he not explain the fees that he collected to oversee what the Auditor-General has described as “an organisation with procedures not fit to be a public entity.”? So the burden of accountability falls heavily on the front row today: Dr Cullen who has backed down today by not sacking the council; Trevor Mallard who wrote out every cheque for hundreds of millions of dollars knowing where that taxpayers’ money was going; and Shane Jones who was brought in to clean it up and by all accounts probably made it worse according to the Auditor-General’s report. I look forward to hearing three fine speeches from them saying: “We were responsible.” because it is the Labour Cabinet that is responsible. 
Hon Dr MICHAEL CULLEN (Minister for Tertiary Education) 
: 
 Is it not wonderful that in a 15-minute speech on the wananga Mr English in that failed leadership bid managed not once to mention Rongo Wetere or the Wetere family. It is me who took over only a few weeks ago who is the Minister responsible for what happened in 2002 2003 and 2004 not Rongo Wetere! That is not what the Auditor-General’s report says. 
What did Mr English say when he was crawling around a Maori Television programme with Willie Jackson? What did he say about the wananga on 13 June 2005? I assume it must have been a Friday as it was the 13th given the quotes. He said that what Mr Mallard needs to do now is to stop trying to run the wananga. [ 
Interruption 
] That is right. I think the speech we just heard said the exact opposite. “Apply the same kind of criteria that he is meant to apply to all the other tertiary education institutions and let them get on with the job.” Let Rongo get on with the job of making sure his family gets rich out of Te Wananga o Aotearoa. Why? Because Rongo Wetere is a paid-up member of the National Party. Rongo Wetere said that he was looking forward to the National Party getting back in office because it meant they would be looked after by Mr English and his mates. That is why when his mates all turned up outside Parliament a few weeks ago the National Party was there to meet them. My goodness me! There is a big “h” word for all of this and outside the House I will be tempted to use it on a number of occasions. 
But he said more than that. He said that as much as Labour talks about wanting to help people at the bottom it is much more interested in preserving institutions like polytechs than—listen to this—helping or letting an institution like the wananga have its head. Today of course he has demanded that we should have had their heads collectively. He has missed an important point. I told him three times during question time but Mr English does not ever listen to the answers given in question time. I do not know why Ministers even bother to address questions let alone answer them when Mr English is asking them because he never listens to the answers. I told him that in July after Mr Mallard had written to the council saying he had formed the conclusion that they should be dismissed and a commissioner sent in six members of that council resigned by resolution. The five persons left on the council have not been supportive of the Rongo Wetere regime. Indeed Mr Wetere has been on leave throughout most of that period. They have been moving to address the questions and to do what needs to be done to put the wananga on a sound financial governance and management basis because as Mr English rightly said it has courses that do have value and that do reach a lot of people. 
What should not happen here is that we throw the baby out with the bathwater and in some blind attempt to wind up the Pakeha vote we are back to the National Party’s classic bit of Maori kicking so that we can try to win some votes—except of course when one is talking to the Maori Party trying to form a Government we offer them everything. In terms of some of the things that were being offered in the talks between the National Party and the Maori Party they would have been offered a wananga on every street corner just about. 
It was the National Party that set up the wananga. Long before Dr Smith needed his pills National set up and uncapped the wananga in 1999 and ensured therefore that it could grow. It was the National Party that was cosied up to the wananga for the last 2 or 3 months and Mr Wetere made it clear that they had given—[ 
Interruption 
] Because the council which was threatened with dismissal is not the council in place now. That is the fifth time of answering for poor Mr English. If he would take the sheepskins out of his ears he might be able to hear what is being said in question time in the House. 
The report is not about the Government it is about the governance and the management of Te Wananga o Aotearoa. There was poor decision-making and practices in respect of significant expenditure. They have buildings to which they do not have title on leased land. Under common law that means the landowner can walk off with the building if he or she wants to. Who owns the land? The Aotearoa Institute. Who is connected with that institute? Rongo Wetere and the rest of the family. It is disgraceful. It is a disgraceful situation but Mr English does not condemn it at all. All he wants to do is sack a council that had sacked itself in July of this year. 
There has been inadequate identification and management of conflicts of interest—not small; we are talking $70 million between the various elements of the family. This is a small family business that has turned into a 63000-strong institution and is still behaving like a small family business. I do need to add that Mrs Susan Cullen is no relation of mine. There are only four people with my surname who are related to me and she is not one of them. But even she is telling her father that it is time to resign for the good of the wananga and to move on so that change can occur as the current council and the current Crown observer and manager are in fact planning and I have been in close contact with them. 
There were unacceptable practices in senior management. We are told of course by Mr Wetere that in fact information was not provided to the Controller and Auditor-General. That is not true. When the information was collected he was still the chief executive in 2004. So if it was not given he was the person who did not give it. That excuse on radio this morning will not do. He claimed he had no direct involvement in the conflicts of interest. There are 10 major circumstances listed in the report where Mr Wetere had direct involvement in the conflicts of interest including massive elements such as the Mahi Ora joint venture. These are not small conflicts of interest these are massive conflicts of interest that actually occurred. 
This report is not just hard; it is also sad. People talk about “the wananga” but there are two others which have been in no strife or difficulty at all. Even this wananga has performed many good things and done very very good things particularly with many Maori people who have not successfully been through their first chance in education and have been reconnected to education and skills and thereby to the workforce. 
The issue now is ensure the long-term viability of te wananga on the basis of proper governance and management. There are still legal arguments before the court. Mr Wetere has a legal argument about his employment status. There is an argument still about whether the council in fact has been acting legally since July. There is of course the Waitangi Tribunal case which is finished but has yet to be reported on in terms of its conclusions. 
There has been an attempt to argue that we misunderstand tikanga Maori in taking a hard attitude to these matters and that there has been Crown bullying. Well Mr English complained that there has been no Crown bullying. As for tikanga Maori it does not mean $70 million of contracts going out to members of one’s family without proper processes. If it is then it needs to change—but it is not. The other wananga are not engaged in these activities and the current council is dominated by Maori who do not approve of those practices and have dissociated themselves from those practices. That I say to Mr English is why I do not need to sack them. But circumstances may change. There are things that can happen— 
Hon Dr Nick Smith 
: Why did you back down? 
Hon Dr MICHAEL CULLEN 
: I did not back down. The council backed down by six of its members resigning leaving in place a majority that in fact supports the Government’s efforts to reform Te Wananga o Aotearoa. But of course big brave Dr Smith will take the pills charge in there and say: “We know you’re on our side but we’re going to sack you anyway because we want to show that we can beat up Maori even when they are doing it properly. We can beat them up because we’re just big tough Pakeha boys.”—and by God are they boys and they have shown that again this afternoon in this House in the way that they have behaved. It is not Crown bullying to say that an institution receiving hundreds of millions of dollars of Government funding must have proper accountability processes must have proper governance and must have proper management on behalf of the people that it is working for. At the present time we have a process in place. That process has been quietly working for months. 
Hon Dr Nick Smith 
: Years. You were told in 2002. 
Hon Dr MICHAEL CULLEN 
: There is no information in this report I say to Dr Smith that—[ 
Interruption 
] There is nothing in this report about events since July 2005. All the events referred to in this report are in 2002 2003 and 2004. I say to Dr Smith that he has to add on a year to get to the present time. There is nothing in this report about what is happening at the present time and no amount of bluster from the member or from Mr English is going to change that particular fact. 
A Crown manager has been in place since March to handle the financial affairs of the wananga. The wananga is on a very tight financial leash. Its current loan has been turned over for a few weeks and expires again on 15 December. They are not going to be let on to a long financial leash for some time yet—until I am fully satisfied. 
It is possible that things may change. If for example other people come back on to the council and there is an attempt to revert to the previous practices I will have no hesitation but to move. I repeat what I said in the House this afternoon. I am ready to move at any stage and notify the council that if necessary we will appoint a commissioner. We have already in the last few weeks investigated the issue of a statutory manager and if certain things change we will be able to move on that if need be. Finally—and sorry I say to Dr Smith; he does not have one of his member’s bills ready—I have already got a bill ready to send commissioners into te wananga if necessary. If events change that bill will be activated if that seems the most desirable option. But I guarantee that if we do those adolescents on the other side of the House will once again find a reason to oppose it. They will say that it is too little too late or too much too early or too much too little too late too early or whatever other reason the National Party always finds to say no. 
National is still a party hopelessly mired in an Opposition mentality with middle-aged ex - young men facing the prospect of being elderly before they have any chance of being in Government again. They know very well that when they talk about the wananga they are simply playing the race card yet again when what needs to be done is to do exactly what we are doing—quietly working with the reconstituted council working with the Crown manager and Crown observer keeping our options open and ensuring that this institution can be reconstructed in terms of its governance and management on a sound and secure basis. But of course that is not what the National Party wants. What the National Party wants is Maori failure. The one thing National members cannot stand is Maori success because that is not part of the world view that people like Mr English and Dr Smith have though it is part of the world view of some of the new back-benchers who came into the National Party for their first term this year. We have nothing to apologise for at all but there are people out there associated with the previous governance of this institution who have a great deal to apologise for and it is time they did so and faced up to their responsibilities. 
METIRIA TUREI (Green) 
: 
 It is certainly true that the report of the Controller and Auditor-General is a bad report. It does not exonerate Rongo Wetere. The conflicts of interest which are set out in the report were extensive and over a long period of time and the financial transactions that were involved and integrated into those conflicts of interest reached the many millions of dollars. It shows in our view a very clear failure on the part of those who were managing te wananga at the time to manage properly the public funds that were set for a very critical public function. We believe that the management including any of the Government appointees and all the Government-associated organisations that were involved with the wananga over that time—all of them—must take full responsibility for their part in these failures. They should do this because they should protect the tauira who are the real point of the wananga’s existence.  
There has been considerable criticism about the roll growth at the wananga and what this has actually demonstrated is the desperate need for an institution like this. Sixty thousand students have found a supportive and responsive environment; obviously one they could not find anywhere in the tertiary sector. The report alongside its more damning comments notes that the wananga attracts a very high proportion of mature students Maori students and students without previous qualifications. Here lies the real strength of the wananga its intention and what it is really good at doing: providing support and education for those people. The wananga fills a gap that has been left by decades of a State education system that has failed generations of Maori and Pakeha alike. Its roll growth is a clear example of that.  
I have seen some of the restructuring proposals by some of the people currently involved with the wananga sharing how they will restructure the wananga so that it is effective and continues to deliver for the students and staff. These restructuring proposals support the core business of the wananga are clear about the functions and the fundamental purpose of the wananga’s existence support the students in the sorts of services they want to see provided by the wananga and support the staff who in some ways are the most affected and the most voiceless in these circumstances.  
I know of a number of courses in Dunedin being run under the wananga and a number of marae—particularly north of Dunedin on the coast—that run wananga courses for things like weaving for example and other courses. These are small marae working for their community. They provide inclusive courses for their community which are not for Maori only as the Government seems to insist—an obviously discriminatory and exclusive system—but are an inclusive means for these people to come together to learn new skills and ideas and to share them with their community.  
These marae are community focused and they provide a focal point for community action. Because they are small and marae based they support the students and staff in a wide range of areas not just in the skills that they are working on at the time. With some of them—and with one in particular just north of Dunedin on the coast—there is extraordinary success for those tauira in developing artistic skills in particular. This has led to a number of those tauira participating in very prestigious exhibitions in Dunedin alongside polytechnic and university fine-art students’ work. It clearly shows that there is a role for the wananga in providing these services. People need them and the wananga is able to get to the smallest possible communities and provide that support.  
We cannot allow the tauira and the staff to suffer any more uncertainty than they already have in the political debacle that has surrounded the wananga. Politicians in this House—particularly those from National and ACT—should also take full responsibility about their role in driving up that uncertainty which makes it more and more difficult for staff and students to continue to operate within the wananga environment given the extraordinary support that the wananga can provide for them.  
Finally I urge those responsible for the mismanagement of the wananga—and it is clear that there has been considerable mismanagement—to think first and foremost about the students and staff and to take the action they need to take. If that means resigning then they should resign. They should take full responsibility for their failures so that those students and staff can have a sense of being able to continue with their work and have some security about what they are doing. I urge the Government also to take responsibility for its failed management of which there have been considerable examples—of course it always seems to get away with not taking that responsibility—for its refusal to provide the settlement funds that it was supposed to provide and continues not to; for its failure in its policy that allowed for the rapid expansion in the number of students for its failure to constrain in its policy framework that rapid growth; and for the failure of the Government appointees and all of the Government agencies that have continually reviewed and looked at the wananga over a number of years to manage the situation effectively. In fact the Government could have done a lot more to make sure that the wananga did not get to this point. It failed to do so—why I do not know—and therefore has contributed considerably to the failure of the wananga and needs to take full responsibility for that.  
In the end our concern is for the staff and students of the wananga. We strongly support the wananga’s intention and its purpose. We believe it provides a very good essential service to a large number of members of the community that no other institution is able to provide and we hope that in the future the wananga will continue to provide those services to its people. 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 Just before we came into the House today Dr Cullen issued a press release stating: “I believe it would be in the best interests of the wananga if Rongo Wetere listened to some of those closest to him and stood aside as chief executive.” Such a statement is hardly surprising when we turn to the report of the Controller and Auditor-General which focuses heavily on Rongo Wetere and members of the whanau while acknowledging that they were not solely responsible for governing and managing Te Wananga o Aotearoa. We are not here to make judgments on either Mr Wetere or his whanau. Our role is not to usurp the role of the judiciary the police the Auditor-General or any other statutory body that takes on this role but we are here on behalf of our constituency to ask questions about the basic standards of justice and fair treatment before the law.  
Despite the reservation that governance and management did not reside solely with Mr Wetere the report suggests that it was not necessary to name the other individuals whom it states “play important roles in its governance and management”. The report stated further that although the council and senior management of Te Wananga have been so heavily involved: “Rongo Wetere has not had adequate help and advice from those around him”. On 9 May this year the Minister of Education described Te Wananga o Aotearoa as being in a very very serious financial governance and managerial situation. So began the unprecedented pursuit of one man and his family. The question we have always asked is why the focus was not put on those for whom oversight of those activities was their responsibility. A serious financial governance and managerial situation is surely something that needs a comprehensive analysis of all factors including the Crown watchdogs—the nature of the support made available by Crown resources and its early warning systems.  
Can anyone in this House recollect a situation when an organisation a flagship of Aotearoa was losing over $1 million a day as a result of poor decision-making practices for significant expenditure? Indeed this organisation has experienced the biggest financial loss in New Zealand’s corporate history. So severe was the loss that the Minister of Finance Michael Cullen handed over a taxpayer loan of $550 million at commercial rates conditional upon a satisfactory outcome of due diligence. The $550 million was not enough; another $300 million was required from Brierley’s and Singapore Airlines to get this flagship into a situation of profit again. We are not talking about Te Wananga o Aotearoa here; this is Air New Zealand the so-called national symbol of the country’s airlines with many of the top commercial brains in the country.  
Four years ago Dr Cullen was happy to bail out this flagship with taxpayer money without an inquiry such as the one Te Wananga o Aotearoa has had to endure. If further action needs to be taken now then we would encourage the Government to take it. If crimes have been committed then we would support natural justice following its course. The $20 million suspensory loan that has been represented as being a generous offer by the Government should have been made available last year. Moreover it should have been a capital grant not a loan. If this were done the shortfall between the wananga’s capital funding and that of other tertiary institutions would still be substantial.  
I want to raise one further issue at this point of inquiry. The settlement agreement was made not to exclude students but to allow for the growth of Maori numbers in tertiary education. That growth has exceeded all expectations. Ministry of Education statistics reveal that Maori participation in tertiary education almost doubled from 1999 to 2003 from 32825 to 62574 students. But so too has the growth of non-Maori participation. Why then would any thinking Minister want to inhibit such healthy racial interactions as those provided at the wananga? This country’s largest tertiary educational institution Te Wananga o Aotearoa has single-handedly created a Maori tertiary education market. In 3 or 4 years it has achieved what successive Governments have promised decade after decade but have failed to deliver. The Maori Party wonders therefore whether the real agenda by exposing Te Wananga o Aotearoa to successive inquiry upon inquiry is because of the Government’s own inability to adequately monitor and give advice to all tertiary institutions including polytechnics and universities. All those organisations have difficulty with managing budgets which is why they regularly increase their fees to their students. Indeed the Government has had to bail out some of those organisations—just as it should. Tertiary education is after all very important for this country in going forward.  
What Te Wananga o Aotearoa has to offer students many of whom are experiencing tertiary education for the first time is also important for this country in going forward. To undermine the wananga’s existence would be a blight on our society. 
JUDY TURNER (Deputy Leader—United Future) 
: 
 The inquiry by the Controller and Auditor-General into Te Wananga o Aotearoa is an interesting situation because we have always known that failure is a good teacher. Possibly the failure in this case was the failure to deal appropriately with what appears to be phenomenal success. During the Address in Reply debate I said that I had some concerns regarding our response to the crisis faced by the wananga. I was concerned that we did not develop a knee-jerk reaction and throw the baby out with the proverbial bathwater because the interesting thing for me as someone with an education background is the amazing success that we have had with the wananga in terms of second-chance education. People who have gone into that institution lacking a huge amount of confidence and who have lacked belief in themselves that they could improve their lot through education have been given the chance through some courses that are confidence-building. Such courses might not result in great employable skill levels but they start people down the road towards tertiary education. There is huge anecdotal evidence that the wananga has delivered well on those courses. 
However the institution seems to have failed to manage that growth. Let us have a look at what we are talking about. The wananga moved from having just over 1000 students in 1999 to having up to 63387 students by the year 2003. That equates to 34280 equivalent full-time students—a phenomenal and rapid growth. The wananga ended up with 1232 staff at that same time. I believe that it failed to consolidate that growth at any stage and to upgrade its procedures and accountability around that growth. I have some sympathy with that. I imagine that it is very difficult to put brakes on what is compelling demand that meets real needs.  
In the brief time I have to speak on this I want to feature the lessons we need to learn when things are going well. Sometimes it is more difficult to manage success than it is to rectify failure and I think that that is probably the situation we are facing here. The issues that have been highlighted by the Controller and Auditor-General are not small matters. There have been poor decision-making practices particularly around the issue of significant expenditure. There have been inadequate identification and management where there are clear conflicts of interest. Good practice is well established for how conflicts of interest are managed and identified but these principles have all seemed to be lost in the wash of success. There have been unacceptable practices in senior management expenses particularly concerning international travel and credit card expenditure. Yet in the middle of all that we must not lose sight of what second-chance education has meant for literally thousands of New Zealanders. So my concern today is that as we address this issue and encourage those who should have been more watchful and supportive—those who should have been asking questions a lot more and those who should have been responding when asked serious questions—let us make sure that as answers are found we are watchful also of other initiatives where success is enjoyed into the future and learn from them. Let us not arrive back here again on another issue. 
At the same time let us not undermine the very good work that has happened through the wananga. I believe that courses have been on offer that have stretched the bounds of good second-chance education. There have been loose arrangements around what was acceptable and what was not and those do need to be corrected. I have been concerned at times to hear members of this House mock some of the ice-breaker activities that have obviously been run on some of those courses yet ice-breaker activities are common even on corporate courses where a group of people needs to be pulled together to build some team spirit for the short-term purpose of a course. Some sort of silly activity is run to break down those barriers so that people can participate quickly and overcome the natural social boundaries that often exist between people who are new to each other. I have heard members of this House ridicule and mock the content of some of those courses—content that included silly ice-breakers that are common to many courses. Such sarcasm has undermined what have been actually quite worthwhile courses that have seen those who participated go on to some really significant qualification courses. They needed to start with that ice-breaker course which members have often taken time to mock in this House. People needed to start somewhere where they were safe where they could achieve and where the measuring of their success was such that it built their confidence and not repeated in them that sense of failure they were often left with from their primary and secondary education. 
As I finish this speech I want to caution the House and ask for us to be really careful. Let us ask the hard questions let us hold people to account and let us make sure we learn the lessons that need to be learnt. Let us make sure that those who need to put up their hands and make changes do so but let us not do that at the expense of people who have relied on Te Wananga o Aotearoa who have gained huge benefit from its courses and who have gone on to be extremely productive. They are the people of whom the wananga is proud to say: “ They went through our institution and look what they are achieving now.” I think we should be supportive of that. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 This Auditor-General’s report brings into very serious question both the credibility and the competence of this decaying rotten Government that we have. I will firstly deal with the issue of credibility.  
We have a letter from the previous Minister of Education Trevor Mallard dated 20 June stating that the council of Te Wananga o Aotearoa should be fired. That is what he stated in June but was it fired? No it was not. That was a cute pre-election exercise to try to pretend to the public of New Zealand that the Government was all about action when in fact there was nothing but inaction. Then during the latter stages of the election campaign Trevor Mallard said that the decision on firing the council would be made before the election. Well did that happen? Was that promise of that Government Minister followed through on? No it was not. [ 
Interruption 
] Just after the election I tell Mr Hodgson Mr Mallard said that the decision would be made when the Auditor-General's report was tabled. Well the Auditor-General’s report was tabled yesterday. Do members know what Government members now say? They say it is has been too long since the Government agreed to fire the wananga’s council to follow through on that. This situation is just like that of David Benson-Pope. We cannot believe what Ministers say any more. The credibility of Ministers in this Government cannot be believed.  
Then we come to the issue of the council of the wananga. That body is legally responsible for over $600 million of hard-earned public money. Dr Cullen has said to us that we should not be concerned because members of the council have changed—that even though we are sitting on a damning report about the wananga we should not be concerned because there have been changes. Well let us hang on a moment because Mr Craig Coxhead is still the chair of the wananga council. 
Hon Pete Hodgson 
: What did the courts say about this man? 
Hon Dr NICK SMITH 
: Government members do not want to talk about the wananga; they will make every possible diversion.  
Darren Hughes 
: What did the High Court judge say? 
Hon Dr NICK SMITH 
: I challenge Mr Hughes who is piping up to talk about the wananga. Who takes responsibility for this report from the Auditor-General and for the $600 million of public money?  
Let us go back to the public record. We can go back to a report to the full Cabinet—Mr Hodgson was there—dated April 2002. The Ministry of Education reported to Ministers that there were gross issues of accountability and serious issues of governance that needed to be addressed. The report went on to state that there were significant audit concerns about the wananga. When was that report released? It is dated April 2002. Members on the Opposition side of the House ask why Ministers sat on advice given in April 2002 with the result that 3½ years later the Auditor-General states that the problems still have not been fixed and tens if not hundreds of millions of dollars of public money have been wasted. We ask the Government who is accountable. Who is accountable for this damning report from the Auditor-General? 
Hon Trevor Mallard 
: The Auditor-General.  
Hon Dr NICK SMITH 
: The former Minister of Education Trevor Mallard says that it is the Auditor-General. I say to the Minister that when I left the position of Minister of Education in 1999 the wananga was receiving $5 million per year. Under Mr Mallard’s watch that funding increased to $239 million per year. Who in this House was accountable for Vote Education? Trevor Mallard was responsible for it in that period. Why have we not heard Trevor Mallard take some accountability in this debate for the huge issues raised in the Auditor-General’s report?  
Let us look at some of the things the Auditor-General stated about the wananga in this report. The report states that there was a loose policy in respect of credit cards being used to pay for international travel. What does that mean? It means that there has been globetrotting at taxpayers’ expense while young New Zealanders who should have been receiving a quality education were not doing so. The report states that there were gross conflicts of interest in terms of the financial management of arrangements made between people at the wananga and their close relatives. That is nepotism in a Government-funded organisation that is receiving $239 million of public money. What do Government Ministers say? They say that nobody is accountable. Has any Minister stood up and said he or she is the Minister responsible for the huge increase in funding and that he or she accepts a share of the responsibility for this damning report from the Auditor-General? We get absolute silence.  
We can then ask Minister Trevor Mallard when he first became concerned about governance and financial management at the wananga. Do members know what Mr Mallard has said? He has said it was when he first became the Minister. Well that was in 1999. If we take him at his word that he was concerned about the wananga in 1999 then I have a simple question for him: why did he increase the funding from $5 million per year to $239 million per year if he had concerns about the financial accountability of that organisation from day one?  
But the plot thickens. Do members know who was on the wananga’s audit and risk committee during the period covered by this damning report from the Auditor-General? It was Mr Shane Jones. Who is Mr Shane Jones? Is he not the new star light and saviour of the Labour Party? I would like Mr Jones to make a contribution in this afternoon’s debate. He has been paid public money to keep an eye on the $600 million of public money that has been paid to the wananga by serving on the very audit and risk committee responsible for that and we have not heard one jot from him. I ask the next Government member who speaks to tell us why the Government is so keen to damn some people but Mr Shane Jones’ name has not been mentioned.  
Then we can question just what was going on in the Government. We know that back in 2003 Ministers Maharey and Mallard were getting weekly briefings—not just briefings but weekly briefings—on the wananga.  
Hon Trevor Mallard 
: No they weren’t.  
Hon Dr NICK SMITH 
: Well Mr Mallard pipes up.  
Hon Bill English 
: That’s what the papers state.  
Hon Dr NICK SMITH 
: That is what the papers state.  
Hon Bill English 
: Maybe he didn’t turn up to them.  
Hon Dr NICK SMITH 
: It is quite likely that as my colleague Bill English said the Minister did not turn up to the meetings. But the papers state that Mr Mallard was receiving weekly briefings.  
Hon Trevor Mallard 
: Tell the truth. 
Hon Dr NICK SMITH 
: The Minister says I should tell the truth. Let me look at the papers. I see I have a briefing paper to the Minister of Education who was Trevor Mallard dated 23 April 2002. It states that the auditor reported a number of significant concerns related to management governance and huge increases in enrolments.  
Hon Trevor Mallard 
: He doesn’t make a weekly briefing you fool.  
Hon Dr NICK SMITH 
: The Minister says he has never had a weekly briefing. He did have these papers; he did nothing. The Government poured millions of dollars more into the wananga. We now have a damning audit report and the Government says that it is not at fault.  
We on the Opposition benches say to Mr Mallard and Mr Maharey that they are accountable. They are accountable for the mess and for the damning audit report. We want to know why the chair of the wananga council remains the same and the chief executive of the wananga remains the same. No Minister is accepting responsibility. The taxpayers of New Zealand deserve some answers as to who is responsible for this damning report on $600 million of public money that has been so poorly spent by this Labour Government.  
Hon TREVOR MALLARD (Minister for Economic Development) 
: 
 It is interesting to watch as a debate goes on. After one has been around this place for some time one notes that a degree of shrillness comes into members’ voices at the point when they see their futures disappearing. 
Hon Bill English 
: Why did you back down? 
Hon TREVOR MALLARD 
: I will get back to the member’s many errors soon. The member Nick Smith realises probably along with Bill English that he must do something soon about the position of the National Party. People have been in the House long enough to know that National members had so many opportunities to attack the Government today yet they did so badly. That is why the level of shrillness keeps going up and up. I do not always agree with my ministerial colleague Winston Peters but I think he got it absolutely right today when he pointed out how badly the National Party has done in Opposition. Unlike this party which is a very reasonable group—even to the point of sharing each other’s water on occasions; I will have a new one please— 
Hon Dr Nick Smith 
: Six hundred million dollars and you’re talking about the water! 
Hon TREVOR MALLARD 
: Here we go. The member should hold his for a while. The member opposite is getting very very shrill because he knows that by the time the National Party is next in Government he will no longer be a member of Parliament and he certainly will not be in consideration for a Cabinet position. He knows that and he is beginning to panic. 
Hon Dr Nick Smith 
: Why don’t you talk about the Auditor-General’s report? 
Hon TREVOR MALLARD 
: Well that is the member who punched the former chief whip. He is trying to say: “Have a balanced approach to life.” but his approach is to go around beating up his colleagues when he gets a bit tired and emotional. That is the approach of Nick Smith.  
But we go back to Bill English. He tries to be balanced to be fair to him. He says one thing to Pakeha and another thing to Maori. I saw Willie Jackson in the Gallery—I can see him again—he knows what Bill English said on his radio programme. He said: “Let the wananga have its head. Let it go. Mallard should not control it.” That is what Bill English said but what did he do today? He came into the House and said that I should have controlled it more.  
There has been a really delicate approach to this matter. It is clear that we are dealing with a chief executive who through a council started a very small business had it converted to a Crown entity and never grew the proper systems in order to continue to do the work that was necessary. 
Hon Dr Nick Smith 
: So why did you give them more money? 
Hon TREVOR MALLARD 
: The only decision that was taken by a Government to give them more money was when Nick Smith was the Minister of Education in 1999 because unlike the National Party this Government does not decide course by course and institution by institution how much money tertiary institutions should get.  
We are having a lot of interjections from a very tired and shrill Nick Smith. [ 
Interruption 
] I would not even say strident. No “strident” involves some sort of control. One has to know what one is doing to be strident and Nick Smith cannot do that.  
The key is that Rongo Wetere never developed the systems for a Crown entity. 
Hon Pete Hodgson 
: Who are his political mates? 
Hon TREVOR MALLARD 
: He is clearly a National Party member. I want to know in fact how much of the $42000 that was taken out in cash actually went to the National Party. That would be one of the questions for that National Party member. How much of that $42000 of unaccounted cash which was taken out of cash machines by Rongo Wetere ended up in the pockets of Don Brash and his mates for their campaign? He is a National Party member. He campaigned for the National Party. He was told by Don Brash inside that he had Don Brash’s support. Of course when Don Brash went outside in his normal way he said something else but that is one of the things that is done in the National Party.  
It is what Bill English does. When he is addressing brown people he is very supportive of them and when he goes outside he attacks them. When he comes here he attacks the wananga in such a way that if he did it outside it would be described as racist. But what does he say when he is on Willie Jackson’s programme? He is totally supportive of the wananga on Willie Jackson’s programme but when he comes into the House he is critical of it. One of the things you will find out Bill English is that you get caught. 
Hon Bill English 
: I raise a point of order Mr Speaker. The member is not allowed to refer to you as part of the debate. You should bring him to order for doing that. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I thank the member. If I brought all members to order when they used the word “you” during the course of this debate we would not even have a debate. But the member is quite correct. 
Hon TREVOR MALLARD 
: In the interests of clarity I make it clear that I want to talk to Bill English and make it clear to him that this Government is disgusted by people who say one thing inside the wananga who say the same thing on Willie Jackson’s radio programme but who go on National Radio and come to this House and say exactly the opposite. There is a word for people like Bill English. One is not allowed to use that word in the House because it is not parliamentary. It is one of the reasons that John Key not Bill English will be the leader of the National Party in 12 months’ time. 
Hon Dr Nick Smith 
: I raise a point of order Mr Speaker. I note that the former Minister of Education has now spoken for 7 of his 10 minutes. We are supposed to be debating the Auditor-General’s report on Te Wananga o Aotearoa and its financial difficulties. I have listened very carefully to the Minister and I think those hard-working taxpayers who have contributed the $600 million would actually like some answers. We have heard all sorts of personal abuse of members of the Opposition and anybody else but I just wonder Mr Assistant Speaker whether you would be able bring the Minister back to the point of the debate which is the Auditor-General’s report into the wananga. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I thank the member for his contribution. I have been listening at length and the member has referred at times during his speech to the wananga. But I ask him to continue to do so for the last 3 minutes. 
Hon TREVOR MALLARD 
: All I ask for is that National Party members be consistent. Let us be consistent. Let us say the same thing inside the wananga and the same thing outside it rather than as Bill English does time and time again saying one thing when he thinks only brown people are listening and saying something else when he thinks only white people are listening. 
Hon Bill English 
: I raise a point of order Mr Speaker. After what must be the fifth or sixth repetition of the member’s accusations I take offence and ask him to withdraw because they are not true and they are offensive. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member is taking objection under Standing Order 116 “Personal reflections”. I ask the member to withdraw. 
Hon TREVOR MALLARD 
: I withdraw. I will be very clear. When that member speaks on Willie Jackson’s programme which is heard by Maori people he says one thing and when he comes into this House he says something else. I make one thing clear: the members have repeatedly asked what changed. 
Hon Bill English 
: What happened to your $600 million? 
Hon TREVOR MALLARD 
: The member cannot even add. In July six of the wananga council—a majority of the council—resigned. That meant— 
Hon Dr Nick Smith 
: What about the chairman? 
Hon TREVOR MALLARD 
: The chair did not resign. The chair is a man of incredible integrity unlike the member. The man has an amazing amount of integrity. 
Hon Bill English 
: I raise a point of order Mr Speaker. Parliament is a robust place where people can say many things but they are not allowed to question the integrity of another member as Mr Mallard did quite directly just then. He should have to withdraw that remark. 
Hon TREVOR MALLARD 
: Speaking to the point of order there is an obvious approach that needs to be taken. If Nick Smith to whom the point was addressed wants to take offence of course I will withdraw. One cannot take offence on behalf of another member. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I remind members that under Speaker’s ruling 39/4 “Words or phrases used robustly in debate but which do not impugn the honour of a member will not be ruled out of order.” Unless someone takes personal exception to his or her integrity or courage being challenged then we will continue with a robust debate. 
Hon Dr Nick Smith 
: I raise a point of order Mr Speaker. I have put up with all sorts of personal abuse from the Minister during the course of the last 8 minutes. His latest statement is out of order. He said that the chairman of the wananga who has been responsible during this appalling Auditor-General’s report has far more integrity than I do. I think that is a poor reflection on my own integrity; I take offence—as my colleague said he said that I had none. That is clearly a breach of the Standing Orders. I take offence and I ask him to withdraw. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member has now taken offence under Standing Order 116. I ask the member to withdraw. 
Hon TREVOR MALLARD 
: I withdraw. The point that I would make is that six out of the 11 resigned. The majority went and therefore I agreed to let things run until we got the Auditor-General’s report. It is very clear that if things go off the rails then the commissioners are on their way. The members opposite know that; they have known that for months unless they are absolutely stupid. [ 
Interruption 
] No I did hope to make the decision before the election—absolutely right. Do people know why? The reason was that the Auditor-General’s report was due in May. When did we get it? It was today. That is why the decision could not be made and if those members are so slow that they do not understand that it is about time some of the bright members from the back of the House came down the front. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I raise a point of order Mr Speaker. Again I listened very carefully to the 10-minute contribution from the previous Minister of Education who was responsible for that period but not at any time did I hear reference made to the very serious concerns raised in this report. I also note that we have two speaking slots including one from New Zealand First that have not been taken up. I think the House should give leave for at least one Government Minister actually to address the issues that have been raised in the Auditor-General’s report and I seek leave in order for that to take place. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member is right on one count—that there is a speaking slot available. It belongs to ACT which has chosen not to take it. As for the other issue a member cannot seek leave on behalf of someone else. 
The debate having concluded the motion lapsed.