Questions for Oral Answer — Questions to Ministers 
Questions for Oral Answer — Questions to Ministers 
[Volume:639;Page:9724] 
Questions to Ministers 
Fiscal Policy—Alternative Approaches 
1. SHANE JONES (Labour) 
 to the  
Minister of Finance 
: What reports if any has he received on alternative approaches to fiscal policy? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I have received one report that suggests that the Government should be loosening fiscal policy by borrowing more from overseas to fund tax cuts and infrastructure investment. I received another report that the Government should be tightening fiscal policy by cutting half a billion dollars from last month’s Budget. The first report was from National’s leader John Key. The second report was from National’s deputy leader Bill English. 
Shane Jones 
: What would be the impact of borrowing more to fund tax cuts and infrastructure investments? 
Hon Dr MICHAEL CULLEN 
: The extra stimulus from Mr Key’s suggestion of a borrow and hope policy would further underpin inflation and drive the currency higher. Mr Key’s plan even within that offset of half a billion dollars from Mr English would inject twice the annual effect of the increased Fonterra payout cited by the Reserve Bank last week as the major reason for lifting the official cash rate. 
Hon Bill English 
: Can the Minister confirm that late last year he issued infrastructure bonds—which is borrowing money for infrastructure—and that the Budget shows he plans to borrow $4 million over the next 3 or 4 years; and is that going to be for health spending or education spending or for the Superannuation Fund or for student loans spending? 
Hon Dr MICHAEL CULLEN 
: Yes indeed—and I thank the member for drawing that to the attention of his leader who clearly was not aware that we were actually issuing infrastructure bonds. However of course the proposed additional borrowing of $2 billion a year over the next 4 years would significantly increase the debt to GDP ratio. Mr Key is quoted as saying that New Zealand is too lightly geared in that respect and that he favours higher debt. 
R Doug Woolerton 
: Is the Minister confident that the intervention yesterday by the Governor of the Reserve Bank can be sustained thus leading to a permanently lower dollar? 
Hon Dr MICHAEL CULLEN 
: As I said outside this House—and I repeat it inside this House—I will not comment on the specific actions of the Reserve Bank in that regard. The Reserve Bank has operational independence and if I start a running commentary on what it does either in this respect or in terms of interest rates then that will obviously infringe upon that independence. 
Corrections Minister—Confidence 
2.  
JOHN KEY (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she have confidence in the Minister of Corrections; if so why? 
Hon Dr MICHAEL CULLEN (Acting Prime Minister) 
: Yes; because he is a hard-working and conscientious Minister. 
John Key 
: How and why can she have confidence in Damien O’Connor when he is responsible for a department that in the last 18 months has seen instances of staff corruption inmates rioting the appalling management of Graeme Burton’s parole the death of Liam Ashley budget blowouts and now a seriously damning report by the Ombudsman? 
Hon Dr MICHAEL CULLEN 
: To take the last point in terms of the recommendations in that report a large number are already agreed or agreed in principle. Some will require further work because there are some conflicts between for example what the report refers to as humane treatment of prisoners and ensuring that they are actually kept secure. 
John Key 
: Is it of concern to the Prime Minister that an opinion poll has shown that two-thirds of all New Zealanders now have no confidence in the Department of Corrections; and is it not about time that she restored confidence in the Department of Corrections by getting rid of the failed Minister Damien O’Connor? 
Hon Dr MICHAEL CULLEN 
: Obviously the Government would wish to see a higher level of confidence in a department than that. I would point out to the member that the number of escapes from prison and from custody in general under this Government is significantly lower than it was under the National Government in the 1990s. 
Hon Phil Goff 
: Can the Prime Minister confirm that in fact escapes are down by 78 percent since National ran its failed corrections policy and that the number of positive drug tests in prisons today is the lowest in 8 years? 
Hon Dr MICHAEL CULLEN 
: Indeed for every one prisoner that has escaped under the Labour-led Government practically five prisoners escaped under the National-led Government. That is what National calls open government! 
John Key 
: Should the people of New Zealand take the answers that the Acting Prime Minister has given as an indication that the Government thinks everything is rosy in the Department of Corrections and will he be making phone calls to Liam Ashley’s parents and to Karl Kuchenbecker’s family to tell them of his feelings? 
Hon Dr MICHAEL CULLEN 
: No the Government does not believe that everything is rosy at all. The Government has already in fact approached the families in both cases in order to express its strong sympathy in that regard. The Government is addressing the issue of how to improve the performance of the department and we are the first Government to take strong action against corruption within the Department of Corrections. The National— 
Simon Power 
: There was no corruption 6 months ago—that’s what the Minister said. 
Hon Dr MICHAEL CULLEN 
: Oh there was no corruption in the corrections system under National! Mr Power will no doubt survive to rue at some point making that remark. 
John Key 
: Is the Prime Minister aware that according to the Ombudsman’s report that has just been tabled in the House in 2005 Chubb wrote directly to the Department of Corrections to point out issues about prisoner safety—concerns that went unaddressed until the death of Liam Ashley? 
Hon Dr MICHAEL CULLEN 
: As members would know I have not had a chance at this point to read the report in its entirety and the recommendations. I look forward to reading the full report. 
John Key 
: If when the Acting Prime Minister has the opportunity to read the report fully he sees in it—as we Opposition members have seen—that Chubb wrote directly to the Department of Corrections pointing out issues of prisoner safety and if he realises after reading that report that those concerns not being addressed went some way towards aiding the death of Liam Ashley will he take the necessary step of firing Damien O’Connor? 
Hon Dr MICHAEL CULLEN 
: If it becomes clear that Chubb wrote to the department and the department failed to draw that to the attention of the Minister then I am sure the Minister will want to follow it up with the Department of Corrections. 
John Key 
: Can the Prime Minister confirm once and for all that the Minister of Corrections on behalf of the Government has issued a formal apology to the family of Liam Ashley? 
Hon Dr MICHAEL CULLEN 
: As far as I am aware Mr O’Connor has indeed done that. Indeed on more than one occasion he has expressed his sincere regret about what happened in that case. 
Carbon Dioxide Emissions—Holcim Cement Plant 
3.  
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
 to the  
Minister responsible for Climate Change Issues 
: He aha tanawhakautu ki ta te Ropu Kaitiaki o te Riu o Waiareka I ki “piki atu ki te kotahi mirionatonehauha ka puta ia tau mai I te wheketereraima o Holcim” a natenei ka kitea “te tinihanga o ngakorerowhakau a ngaroputorangapu e rua e whakahekeanaraua I ngatukunga o te hauha ki te rangi”? 
[ 
What response can he make to the Waiareka Valley Preservation Society’s claim that the “Holcim cement plant will release up to one million tonnes of carbon dioxide per annum.” which “makes a mockery of the commitment by both leading political parties to reduce emissions of carbon dioxide.”? 
] 
Hon PETE HODGSON (Acting Minister responsible for Climate Change Issues) 
: The member makes a very good point which is why New Zealand must make progress towards emissions trading so that the full cost of cement including the environmental cost is reflected in the cost faced by the consumer. 
Hone Harawira 
: Tena koe Madam Speaker. What strategies are in place to remedy the heavy metal contamination from the Holcim Cement plant which places market organic and home gardens at risk as well as impacting on the health of the Kakanui River which is only 5 kilometres from the plant? 
Hon PETE HODGSON 
: Issues around heavy metals sulphur coal or whatever it is to be—there are various issues around this particular project—are issues that will be dealt with if any consent is lodged in favour of that plant. That is the proper place to deal with those issues. That is why we have the Resource Management Act. 
Steve Chadwick 
: What reports if any has the Minister received on parliamentary support for Government policies to reduce greenhouse gas emissions? 
Hon PETE HODGSON 
: I have received a report that a senior member of this House has called Kyoto “not a good idea for the people of New Zealand” and I have received a second report in which the same member said he would honour Kyoto. Of course the member responsible for yet another climate change flip-flop is John Key. National needs to come clean on where it really stands on climate change. 
Hon Dr Nick Smith 
: Will the Minister responsible for Climate Change Issues be recommending that the Prime Minister officially open Genesis’ new E3P gas turbine at Huntly which is being fired up as we speak given that it is the biggest new generating station built in New Zealand in 20 years and that it is 10 times the size of Meridian’s White Hill farm that she opened last week or will this commissioning be kept as low key as possible noting that it will emit 50 million tonnes of carbon dioxide over its life and will continue the decline in the portion of power that is produced by renewables under this Government? 
Hon PETE HODGSON 
: I am afraid I do not know what the Prime Minister’s diary is in respect of E3P. However if she has the chance to open E3P my personal view is that it would be great. The reason is this: every time another megawatt is produced from E3P is the time that another megawatt is not produced from a coal-fired power station not far away. There is a net advantage to New Zealand’s carbon dioxide footprint from E3P and the member needs to do his arithmetic. 
Metiria 
Turei 
: Can the Minister assure taxpayers that they will not end up footing the bill for polluters such as Holcim which reportedly could be as much as $20 million a year; and when will his Government get policy up and running so that businesses are encouraged to invest sustainably rather than in poisonous and climate-destroying projects such as the Holcim Cement plant? 
Hon PETE HODGSON 
: I cannot give the member an assurance because I cannot control the 121 votes in this House. I can say that the Government is progressing on emissions trading as an option and that if we are to proceed with emissions trading we will need legislation. I look forward to the support from all members of the House for any such initiative. 
Te Ururoa Flavell 
: Kia ora tatou. Is the Minister aware of the United States’ Environmental Protection Agency rules around the management of toxins from cement plants which have been introduced in light of research that proves that emissions cause respiratory and related problems such as asthma—illnesses in which Maori are overrepresented; if so what actions will he be taking to manage the risks at Holcim? 
Hon PETE HODGSON 
: I just might gently repeat to the member as I did to his colleague that that is why we have the Resource Management Act—to deal with issues of that ilk. I am aware that there are suggestions—I live not far south from this plant—of heavy metal pollution and also that there might be too much sulphur in the coal and so on. These matters need to be thrashed out at a consent hearing. That hearing is open to all players who have an interest. 
Hone Harawira 
: Tena koe Madam Speaker. Is the Minister aware of Holcim’s 2006 annual review which shows that in 2006 Holcim retained just $6 million in New Zealand business while returning $26 million to Switzerland; if so does he believe that the failure to retain profits in New Zealand accompanied with the lack of sustainable processes jeopardises the company’s financial ability to protect the environment? 
Hon PETE HODGSON 
: Straightforwardly there is no particular link between environmental emanations and the degree of overseas ownership. But it is worth pointing out that this Government has very recently announced KiwiSaver Plus  announced legislation and passed legislation to proceed with that and the reasons for doing so were manyfold. One of them was so that we could progressively own more and more of our own country. I hope the member was supportive of that because that is exactly where this KiwiSaver initiative will lead us. 
Corrections Department—Confidence 
4.  
SIMON POWER (National—Rangitikei) 
 to the  
Minister of Corrections 
: Does he have confidence in his department; if so why? 
Hon DAMIEN O'CONNOR (Minister of Corrections) 
: 
 Yes but there is always room for improvement. 
Simon Power 
: Can the Minister confirm that Chubb wrote to the Department of Corrections in September 2005 expressing concern about the inability of prisoners in Chubb vans to communicate with its staff and the implications of that for a medical emergency or an assault as there were no departmental guidelines on this matter yet the department had still not responded to those concerns by the time Liam Ashley was tragically killed and in fact according to the Ombudsman’s report tabled today has still not responded? 
Hon DAMIEN O'CONNOR 
: I can confirm that that is what is stated in the report. The report also identifies other areas where there was a breakdown in communications. The department has been working on changes since the tragic death of Liam Ashley starting with the separation of any person under the age of 18 years and working through a vast range of changes as identified in this report. We accept the recommendations in the report and we are working through implementing many of them to ensure that we run a robust and practicable prisoner transportation system. 
Simon Power 
: How can the Minister still have confidence in a department that has no national standards for prisoner transport because a year after it had tried to prescribe standards in March 2004 it found it could not source some of the materials but it did not tell staff for another year and a half that due to an oversight that had occurred—a process that the Ombudsman has described as “unacceptable”? 
Hon DAMIEN O'CONNOR 
: A head office review has taken place. I expect changes to occur in both culture and communication within the Department of Corrections. In regard to squabs the department was not prepared to accept squabs that were not safe and that provided a risk to prisoners in that they could destroy them and use the material to harm themselves or others. That is why that recommendation was not implemented. 
Simon Power 
: How can the Minister still have confidence in a department that responded to the concerns about prisoner transport expressed by the Ombudsman back in 2004 that it had established standards and had already started upgrading vehicles when clearly that was untrue leading the Ombudsman to state today: “We have been most disturbed … that our expectations were not met and have still not been met.”? 
Hon DAMIEN O'CONNOR 
: I too am concerned that that was the situation. Changes are being made and we will have a robust practicable and cost-effective prisoner transportation system. 
Simon Power 
: Can the Minister confirm that his department renewed its contract with Chubb in 2004 and at any time had the power to vary that contract but did not vary the actual description of services until 28 April 2007 and has started to update the contract to reflect the Corrections Act 2004 and the Corrections Regulations 2005 only since the tragic death of young Liam Ashley? 
Hon DAMIEN O'CONNOR 
: Yes I can confirm that following that tragic death changes have been made and will continue to be made to improve the system. In spite of what that member says the Ombudsman points out: “In all the circumstances we are satisfied that the contract even before Variation No. 3 required legislation for the time being to be observed by Chubb.” 
Simon Power 
: You can vary it at any time. 
Hon DAMIEN O'CONNOR 
: That did not affect the outcome of this terrible tragedy but we are making changes to ensure that it will not happen again. 
Simon Power 
: How does the Minister respond to the Ombudsman’s conclusion today that it was “saddened to find a theme of lack of communication between National Office and front-line staff” echoing the Ombudsman’s earlier report into the department in 2005 which talked about “the gulf that emerged between … the Department’s National Office and its staff in the prisons.”; if that is not a sign that his department is dysfunctional what is? 
Hon DAMIEN O'CONNOR 
: Upon realising that problem I issued an instruction that there should be a head office review and that the department should actively engage with people at the front line to ensure that they do know what is happening in any area of operation of the Department of Corrections and that will continue. 
Ron Mark 
: Has the Minister read page 93 of the Ombudsman’s report and specifically the comment: “We find an echo of our remarks in the 2005 Report of our ‘ 
Investigation of the Department of Corrections in relation to the Detention and Treatment of Prisoners 
’ where we said: ‘A major concern is the conflict between the understanding of National Office of the Department as to certain areas of difficulty and the perceptions of the Department’s staff at the front line …’ ”; and is not that actually the core of the problem that exists in the Department of Corrections and despite the over 100 analysts consultants and business advisers at head office it still gets it so basically wrong? 
Hon DAMIEN O'CONNOR 
: That is why we have had a head office review. That is why we have an active programme of improving the culture from top to bottom in the Department of Corrections—to ensure that we can reduce the chances of mistakes being made. However I could not in all honesty stand in this House and say that mistakes will never occur in the department or indeed in any other Government department. We accept the recommendations of the Ombudsman’s report and are working through implementing each and every one of them. 
Navy—Multi-role Vessel 
5.  
DIANNE YATES (Labour) 
 to the  
Minister of Defence 
: What will be the role of the Navy’s new multi-role vessel the HMNZS  
Canterbury 
 which is being commissioned today? 
Hon PHIL GOFF (Minister of Defence) 
: 
 The  
Canterbury 
 is the first of seven new ships being commissioned into the Royal New Zealand Navy over the next year. That will give an unprecedented boost to the navy’s operational capabilities. The principal role of the  
Canterbury 
 is that of an amphibious sealift vessel and it will succeed in that whereas National’s efforts with the  
Charles Upham 
 the “ 
Chuck-Up 
” failed completely. It is able to deploy 250 troops 57 light armoured and operational vehicles stores and equipment in military and peacekeeping operations. But it also provides enormous capability in the areas of disaster relief and humanitarian support if and when needed in the Pacific in South-east Asia and for that matter in and around New Zealand. 
Dianne Yates 
: What special capabilities does the  
Canterbury  
have in terms of deployment and disaster relief? 
Hon PHIL GOFF 
: I think its special capabilities come into play in areas where there is no port access. It carries two 23-metre landing craft that can carry from ship directly to shore. In areas—for example in the Pacific—where there is a reef it has the capability in its hangars for four NH90 helicopters and a Seasprite helicopter. An NH90 for example can pick up a truck off the deck of a boat and deposit it on the land. Obviously those capabilities would have been incredibly valuable in the situation that pertained in post-tsunami Aceh and in disaster relief following periodic hurricanes around the Pacific. At the other end of the Pacific with an ice-strengthened hull the  
Canterbury  
will provide greatly enhanced capability for patrolling the Southern Ocean. 
Dianne Yates 
: What will be the role of the other six vessels that will be commissioned into the Royal New Zealand Navy over the next year? 
Hon PHIL GOFF 
: The other six ships consist of two 85 metre - long offshore patrol vessels and four 55 metre - long inshore patrol vessels. Their role will be in support of national security tasks particularly in conducting multi-agency operations. That will include for example border patrol working with the Customs Service and the police; control over our exclusive economic zone working closely with the Ministry of Fisheries; counterterrorism operations; and search and rescue. There is no doubt that the boost given to the Royal New Zealand Navy by the addition of these seven ships is the biggest enhancement of its capabilities in the history of the Royal New Zealand Navy. 
Reserve Bank—Currency Intervention 
6.  
Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Finance 
: How much funding does the Reserve Bank have for currency intervention and how is it financed? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 The bank has the capacity to intervene for two purposes. The first is in relation to crisis intervention capacity and for that the bank maintains a portfolio of approximately NZ$7 billion equivalent of foreign currency reserves for use in a foreign exchange crisis. These reserves are normally financed via long-term foreign currency denominated loans. Secondly the bank has the capacity to intervene on its own account for monetary policy purposes. The total of potential intervention possible for monetary policy purposes is market sensitive and is thus confidential. 
Hon Bill English 
: Has the Government set any limits on how often the Reserve Bank can intervene what risks the bank can take and how much taxpayers’ money is available to spend on currency interventions? 
Hon Dr MICHAEL CULLEN 
: The criteria for intervention are not those outlined by the member. They relate in effect to the following: the exchange rate must be exceptionally high or low it must be unjustified by economic fundamentals intervention must be consistent with the policy targets agreement and conditions in markets must be opportune to allow intervention a reasonable chance of success. The Reserve Bank independently determines when those conditions are met and without reference to the Minister of Finance. 
Hon Bill English 
: Does the Minister agree with the assessment of his Minister of Foreign Affairs Winston Peters who says New Zealand has “a currency crisis which is killing off our growth potential” and does he take Mr Peters’ warnings seriously enough to adjust his own spending policies to take some pressure off the high dollar? 
Hon Dr MICHAEL CULLEN 
: As I outlined in my first answer the Reserve Bank has the capacity to intervene for two purposes. That is in relation to a foreign exchange crisis and the second is in relation to monetary policy purposes. Clearly yesterday’s intervention was in relation to monetary policy purposes but clearly the member’s and his colleagues’ policy of an additional $2 billion a year of demand pressure in the economy would have placed significant further pressure upon the exchange rate. 
Hon Bill English 
: Does that answer mean the Minister does not agree with Winston Peters’ assessment that New Zealand has a currency crisis and that therefore he is not taking Mr Peters’ warning about future growth prospects seriously enough to adjust his own economic management? 
Hon Dr MICHAEL CULLEN 
: That answer means that it is clear the Reserve Bank intervened yesterday in relation to monetary policy purposes. In its view there was not a foreign exchange crisis. 
Hon Bill English 
: Does he agree with the Reserve Bank’s recent assessment that “Government spending is expected to increase substantially over the next few years and this is projected to add to inflationary pressures” or does he disagree with that? 
Hon Dr MICHAEL CULLEN 
: Clearly the fiscal position is looser than it was in the current year or last year. That extremely tight fiscal position was consistently criticised by members opposite and on the same day last week the member announced a half-billion-dollar reduction in spending by National while his colleague continued to promote a $23.5 million loosening through tax cuts. That is a $2 billion a year fiscal loosening compared with the current position. 
Hon Bill English 
: Did Mr Peters discuss with the Minister Mr Peters’ views about monetary policy prior to the Government’s signing up to an unchanged policy targets agreement with the Governor of the Reserve Bank just 3 weeks ago? 
Hon Dr MICHAEL CULLEN 
: I have always disliked the term “prior to” because I am not quite sure how long a period it covers. Certainly Mr Peters has discussed with me monetary policy over a long number of years. He has a clear interest in that matter. One of the many reasons why I signed up to an unchanged policy targets agreement was that it seemed to me that in light of the select committee undertaking its inquiry it would have been quite inappropriate to change the policy targets agreement at that point in advance of such an inquiry. 
Hon Bill English 
: Is the Minster of Finance now telling the House and the public that despite 12 months of complaining about how monetary policy did not work and despite intensive political debate over whether there should be supplementary instruments he decided to sign up to exactly the same unchanged arrangement with the Governor of the Reserve Bank and that it is now the Finance and Expenditure Committee that is really in charge of monetary policy? 
Hon Dr MICHAEL CULLEN 
: No. The member clearly does not understand even after all these years what the policy targets agreement is. The policy targets agreement is “What is the target for inflation?”. The target is 1 percent to 3 percent over the medium term. That is what the policy targets agreement says. The policy targets agreement does not say what the instruments available to the Reserve Bank are nor does it say what the other matters that relate to it might be; for example the issue of perhaps ring-fencing property investment losses against other income which both Mr Key and I believe would be a useful addition to the operation of monetary policy. But until Mr Key can convince his colleagues of that we may not be able to pass legislation. 
Hon Bill English 
: If the Minister believes that there are more effective tools than currency intervention and if he believes he should keep collecting the Minister of Finance’s salary why does he not make some recommendations to the public and to the Parliament about what other tools should be used besides currency intervention? 
Hon Dr MICHAEL CULLEN 
: I thank the member. I now remind him that in my office in December last year he and his leader and myself and Mr Mallard agreed to explore supplementary tools. One of those was a mortgage interest rate levy. Mr Key thought it was a very interesting idea. As soon as Radio New Zealand slipped it into the public arena Mr English dobbed on it as fast as he possibly could. The fact is that no changes can be made in these areas without a majority of Parliament supporting them because they require changes to legislation. [ 
Interruption 
] In response to the squeaks from Dr Smith I say that the Government does not pass legislation on its own. 
Energy and Climate Change Policy—Cost-Benefit Analysis 
7.  
HEATHER ROY (Deputy Leader—ACT) 
 to the  
Minister responsible for Climate Change Issues 
: Does he stand by the reported statement in Saturday’s  
New Zealand Herald 
 that the “Government [is] undertaking cost-benefit analyses on proposed energy and climate change policy.” and that he “envisaged a scheme covering all the greenhouse gases and all sectors of the economy.”; if so on what date will the cost benefit analyses be publicly available? 
Hon PETE HODGSON (Acting Minister responsible for Climate Change Issues) 
: 
 In the full context yes I do. As the member will be aware the cost-benefit analysis in the form of a regulatory impact statement will be prepared if legislation is proposed. 
Heather Roy 
: When the Minister says he envisages a scheme that covers all sectors of the economy does that include agriculture; if not why not; and if so will the cost-benefit analysis assume that agriculture will be taxed or brought into the carbon credit trading regime in advance of taxes imposed by our international competitors and trading partners? 
Hon PETE HODGSON 
: Cabinet is yet to make decisions on the detail of climate change policy but the fact of the matter is that all sectors will have to do something. 
Hon Marian Hobbs 
: What other reports has the Minister seen on the costs and benefits of climate change policies? 
Hon PETE HODGSON 
: I have seen any number of reports. I think I could probably point to today’s announcement by Pacific Blue which said that its carbon offset scheme for customers is yet another step to drive this nation towards carbon neutrality. It was announced today—the first time this has been announced by any airline in New Zealand—that Pacific Blue intends to source customers’ offsets from the Projects to Reduce Emissions programme which was set up under this Government. 
Hon Dr Nick Smith 
: What changes is the Government making in the process for developing climate change policy when the last 7 years have seen seven major policy debacles—notably the billion-dollar bungle over New Zealand’s Kyoto balance the failure of the animal emissions levy the failed 2001 energy efficiency strategy the launch and then the scrapping of negotiated greenhouse agreements the announcement and then the abandonment of the Projects to Reduce Emissions the removal of climate change from the Resource Management Act and then its putting back in and the failed carbon tax—or will the same errors be repeated in developing an emissions trading system? 
Hon PETE HODGSON 
: As the member wants to course through a history of climate change policy I remind him that in 1992 the National Government signed up to the United Nations Framework Convention on Climate Change  and that right through the 1990s there were consultation programmes. I can remember one of them called “WOGOCOP” on emissions trading. I can remember Bill Birch taking to Simon Upton time and time again throughout the 1990s— 
Hon Dr Nick Smith 
: Point of order— 
Hon PETE HODGSON 
: Oh the member cannot take it eh—cannot take it? 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. The Minister has chosen to give a recital of history from the 1990s. My question asked what changes the Government was making in the process for developing climate change policy in respect of the emissions trading system. He has made no attempt to address that question. 
Madam SPEAKER 
: I think that the original question did make reference to other matters and the Minister is in the process of getting to the answer. 
Hon PETE HODGSON 
: Why do I not just skip the rest of National’s stuff-ups on climate change right through the 1990s and say that we are making really good progress in developing climate change policy including the possibility of emissions trading. I contrast that with National’s current policy which is to reduce climate change emissions by 50 percent by 2050. That is a “kick for touch” 43 years from now by which time its author John Key will have turned 90 and will himself have become carbon dioxide. 
Hon Dr Michael Cullen 
: Would the Minister expect that somebody who claims to be an expert on climate change emissions and the environment would know how to wear a nuclear-free badge the right way up; if so would he draw the attention of Dr Smith to the fact that he has his upside down? 
Madam SPEAKER 
: I am not sure whether that is very relevant. 
Hon PETE HODGSON 
: I had noticed that but I did not think it was polite to draw attention to it. 
Peter Brown 
: Is the Minister aware that the Howard Government in Australia has just released a comprehensive report compiled by an independent task force on climate change which makes sound recommendations on how to proceed and on a reasonable time frame; if he is aware of such a report does he not see advantages in New Zealand proceeding in tandem with Australia; and if not why not? 
Hon PETE HODGSON 
: As it happens I am a little familiar with developments in Australia on climate change. They are not in my view as well advanced as those in New Zealand but I think that the change of position within Australia is to be welcomed. I do hope that the various effects of climate change—that is to say serial drought followed by heavy floods—abate for that nation. 
Rodney Hide 
: How will the cost-benefit analysis that is being proposed by the Government establish the benefits to New Zealanders of any regime that New Zealand will implement when in fact whatever New Zealand does is so small in its effects on the global climate that it will have no impact? 
Hon PETE HODGSON 
: That is the argument that is always raised I think by those who prefer to do nothing—saying that because we cannot achieve everything it would be irresponsible for us to make a start. That is not the position that this Government holds. It never has been and it is has never been the position of the international community which realises that in order for there to be a contribution that is realistic everybody has to do something. 
Rodney Hide 
: I raise a point of order Madam Speaker. I take you back to the question which was actually about the cost-benefit analysis. That was the primary question; it was not about the policy. I was asking the Minister how the cost-benefit analysis proposes to handle that matter. The question was not about whether the policy was a good idea or not. The Minister chose to just skip the question and answer something completely different from it. 
Hon PETE HODGSON 
: I am sorry if I have offended the member. Let me just put it to him this way: the benefits from reducing the impact of climate change include a reduction in drought a reduction in the severity of drought a reduction in storm events including storm surges a reduction in ecological effects a reduction in economic dislocation and various other things. 
Peter Brown 
: Is the Minister aware that the British newspaper the  
Financial Times 
 has identified major flaws in the European emissions trading scheme and if he is aware of that does it not lend strength to the argument that proceeding in less haste as the Government is intending to do now but going along the same lines as Australia which is planning for a 2 or 3-year intervention to address the issue makes more sense than the European scheme? 
Hon PETE HODGSON 
: I am afraid I am not aware of that but I am not surprised by it. Emissions trading was always going to be difficult to get running which is why a few years ago this Government chose instead of emissions trading to pursue a carbon tax prior to moving to emissions trading when we had made some more progress as a globe. In the event some parties in this House including the party the member belongs to decided they did not want a carbon tax and that is why we are looking at emissions trading. 
Peter Brown 
: I seek leave to table the executive summary of the report of the Australian Government’s task force on emissions trading. 
Document by leave laid on the Table of the House. 
Heather Roy 
: I seek leave to table the article in the  
New Zealand Herald  
from Saturday which states that the Government is undertaking a cost-benefit analysis on proposed— 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Capital and Coast District Health Board Deputy Chair—Conflicts of Interest 
8.  
Hon TONY RYALL (National—Bay of Plenty) 
 to the  
Minister of Health 
: When he appointed Ken Douglas as deputy chair of the Capital and Coast District Health Board did he make any checks as to potential conflicts of interest; if so what were those checks? 
Hon PETE HODGSON (Minister of Health) 
: 
 Yes I did make some checks. They are the same ones I always make on the advice of the ministry. 
Hon Tony Ryall 
: What precisely are the potential conflicts of interest involving Ken Douglas that have required the Capital and Coast District Health Board to seek legal advice from its lawyers? 
Hon PETE HODGSON 
: Mr Douglas is a member of a company called HealthCare of New Zealand Holdings Ltd which has a bunch of interests in the health sector. My advice is that Mr Douglas considers it appropriate and prudent for him to withdraw from both the district health board and the board of HealthCare during any contracting processes that might arise between them. 
Lesley Soper 
: Do any members of other district health boards have a conflict of interest or a potential conflict of interest; if so what does the law say about that? 
Hon PETE HODGSON 
: There are I suspect as many board members with a conflict of interest—or a potential one—as there are without. The issue is not the conflict of interest in law; it is the honest declaration of that conflict and its subsequent management. That was the problem identified in the High Court decision on the Auckland laboratories; the conflicted board member did not tell enough of the truth soon enough to allow for proper management. 
Hon Tony Ryall 
: To what extent was Ken Douglas—a director of HealthCare the biggest provider of home-care services in the country—involved in any way whatsoever in pushing promoting or considering proposals for the Capital and Coast District Health Board to contract out its community services a contract that could be worth tens of millions of dollars to HealthCare? 
Hon PETE HODGSON 
: I will just say again that Mr Douglas sought advice from the chair of the Capital and Coast District Health Board as to the appropriate level of abstention he should exercise in relation to matters involving HealthCare. Mr Douglas considered it appropriate and prudent for him to withdraw from both the district health board and the board of HealthCare during any contracting processes between them and I am assuming that is what happened. 
Hon Tony Ryall 
: Would it be wrong for a board member to be shaping board thinking or policy on the contracting out of particular services when that board member is a director of a company that will bid for those contracts? 
Hon PETE HODGSON 
: The member forgets that Mr Douglas was elected a member of the board by the public at large some time ago—I am not sure just when—and has been involved as an ordinary board member since then. What has happened is that in recent weeks I have made him the deputy chair of the board. I imagine that all of the things the member is referring to have got nothing to do with my appointment of Mr Douglas as deputy chair so much as with management of conflict of interest within the Capital and Coast District Health Board in general. I might just say— 
Hon Tony Ryall 
: Answer the question. 
Madam SPEAKER 
: Please be seated. Ministers are to be given an opportunity to answer questions. When they are in the process of doing so to constantly interrupt them does create disorder. Would the Minister please address the question. 
Hon PETE HODGSON 
: Just to conclude the member may be interested to know that earlier this month the Ministry of Health sent out new guidelines which actually are a repetition of New Zealand law to all the district health boards so that they could keep themselves abreast of New Zealand law. 
Hon Tony Ryall 
: I raise a point of order Madam Speaker. I ask you to reflect on the answer the Minister gave because it was lengthy it solicited one additional comment from me during it but he did not actually answer the question. The question was whether it was wrong for a member to try to shape board policy when he was a director of a company that would benefit significantly. That goes to the heart of the concerns that I am sure Dr Aitken raised directly with Ken Douglas because he was probably doing that. 
Madam SPEAKER 
: I think the Minister did address the question but if he wishes to add to it and to go over it again then I am sure the House would be appreciative. 
Hon PETE HODGSON 
: I simply say that schedule 3 of the New Zealand Public Health and Disability Act 2000 includes a very lengthy legal treatment of how conflicts of interest must be managed. The fact that conflicts of interest exist is accepted and I said earlier that I think many people on district health boards have a potential or real conflict of interest. That is not the point; the point is how they are managed. 
Hon Tony Ryall 
: Has he sought any assurances or had any comments from the chairwoman of the Capital and Coast District Health Board that have assured him that Mr Douglas was not using his position in any way whatsoever to encourage the board to contract out those community services for which HealthCare New Zealand would in fact be one of the bidders; and has the Minister met Mr Douglas recently to discuss these issues? 
Hon PETE HODGSON 
: Management of the conflict of interest is the job of the board; that is its job. The chair of the district health board said—I read it in the newspaper—she thought she needed some legal opinion on that. She will have no doubt sought it; no doubt Mr Douglas will have too. My advice from the Ministry of Health is that Mr Douglas does have a serious conflict of interest and it should be managed properly. There is no suggestion that it has not been managed properly. 
Dalai Lama—Prime Minister 
9.  
KEITH LOCKE (Green) 
 to the  
Prime Minister 
: Will she be meeting with His Holiness the Dalai Lama when he visits Parliament next Tuesday; if not why not? 
Hon Dr MICHAEL CULLEN (Acting Prime Minister) 
: 
 I am advised that the Prime Minister’s programme for next week is under consideration. 
Keith Locke 
: Does the Prime Minister know that when a similar controversy blew up in Australia after Prime Minister John Howard said he would not meet the Dalai Lama the public outcry quickly convinced him to find a place in his diary; and why is it so hard to make room for the Dalai Lama in the Prime Minister’s itinerary? 
Hon Dr MICHAEL CULLEN 
: I think the member should check his sources again. That is a misreporting of what Mr Howard did. 
Hon Peter Dunne 
: Can the Prime Minister give the House a categorical assurance that whether she meets with the Dalai Lama has not been the subject of representations from the Chinese embassy and if such representations have been made that the Prime Minister will make up her own mind and not do as the Chinese embassy tells her? 
Hon Dr MICHAEL CULLEN 
: I am sure that if any representations are made—and I would not be surprised if the Chinese embassy made representations on such a matter—the New Zealand Government will still make up its own mind about what it does. 
Keith Locke 
: Can the Prime Minister assure us that in principle she is quite happy to meet the Dalai Lama when he visits here as a political leader of his people and discuss with him his proposals for a peaceful middle-way to give the Tibetan people their full rights within their part of China? 
Hon Dr MICHAEL CULLEN 
: My understanding is that the Dalai Lama has himself stated that this visit is as a religious leader not as a political leader and indeed that he himself has said he is now in semi-retirement and that Tibet has elected political leaders to carry on the struggle of autonomy. 
Keith Locke 
: I seek the leave of the House to table a section of the Amnesty International Report 2007 on China which describes the many Tibetans detained or imprisoned. 
Document by leave laid on the Table of the House. 
Climate Change—Deforestation 
10.  
Hon Dr NICK SMITH (National—Nelson) 
 to the  
Minister responsible for Climate Change Issues 
: What impact will the almost 13000 hectares of deforestation in the year to March 2006 have on climate change and how does this compare to previous years? 
Hon PETE HODGSON (Acting Minister responsible for Climate Change Issues) 
: 
 Some time ago I received the 2006 Deforestation Intentions Survey which has long been available on the Ministry of Agriculture and Forestry website. I am advised that the deforestation that occurs this year will have only minimal effect on New Zealand’s emissions during the first Kyoto period from 2008 to 2012. 
Hon Dr Nick Smith 
: Why will the Minister not just come clean and admit that in every year since Ministry of Agriculture and Forestry records began in 1951 New Zealand’s forest estate has grown until 2002 and that after his Government decided to nationalise those credits a chainsaw massacre of over 8 million trees has unfolded in New Zealand amounting to additional carbon emissions of 25 million tonnes; and if this Government is not responsible for this environmental disaster who is? 
Hon PETE HODGSON 
: I am advised that many factors influence forestry planting not the least of them being tax treatment and the international price of pulp at the time of planting. 
Russell Fairbrother 
: Do we have more forest cover in New Zealand now than existed at the change of Government or do we have less? 
Hon PETE HODGSON 
: That is a good question. We have more. We have more forestry in New Zealand now than we had in 1999. One would not think so listening to the endless litany and chainsaw massacre language coming from the opposite side of the House but yes we have 69000 hectares more than we had at the change of Government. That is more not less. 
R Doug Woolerton 
: Does the Minister agree with New Zealand First’s continued calls for incentives to plant more trees in order to assist soaking up carbon emissions; if not why not? 
Hon PETE HODGSON 
: That policy option is under active consideration. 
Hon Dr Nick Smith 
: Can the Minister give a simple yes or no answer as to whether if I or others were to plant a commercial forest of trees like this seedling they will be eligible for the carbon credits noting that the annual planting season for trees is in June July and August? 
Hon PETE HODGSON 
: Under the Permanent Forest Sink Initiative yes the member will be eligible for credits. What is more to the best of my knowledge the Permanent Forest Sink Initiative in New Zealand is the only scheme to— 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. This is a very important issue for foresters and I quite explicitly asked the Minister about the planting of commercial forests. The Minister immediately changed my question and referred to permanent forests. I ask whether he could he make the situation plain for the planting of commercial forests. 
Madam SPEAKER 
: If the Minister is just allowed to complete his answer I am sure he will get to it. 
Hon PETE HODGSON 
: Let me start again. Under the Permanent Forest Sink Initiative yes. To the best of my knowledge the Permanent Forest Sink Initiative is the only scheme that gives Kyoto Protocol forestry credits to landowners anywhere in the world. That is my understanding. Then the question is what would happen if the member wanted to chop the tree down again. The answer to that is: it depends on whether the member wants to chop down a little bit of tree or a lot because if one wants to clear-fell then it ain’t permanent but if one wants to harvest sustainably then it is. 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. I note that after I raised my point of order the Minister assured the House that he would clarify the position in respect of commercial forest plantings. It really is important that he does that because there are thousands of nurserymen and forest planters who want to know whether by planting commercial forests they will be eligible for the carbon credits. 
Hon PETE HODGSON 
: Everyone on this side of the House gets the answer but let me try again. If the member wants to plant a tree or a whole lot of trees and then chop them all down that is not a permanent forest so the member will not get a credit under the Permanent Forest Sink Initiative. If on the other hand the member wants to produce a forest that he then manages sustainably decades on according to the rules of the Permanent Forest Sink Initiative then yes he can chop the tree down and he can sell it. It is therefore commercial. 
Jeanette Fitzsimons 
: Does the Minister agree that the forest credits New Zealand might earn internationally for those 69000 extra hectares which some claim are a property right of those who have planted since 1990 will not exist at all if rapid deforestation of older forests is allowed to continue; and does he then further agree that it would be sensible to use some of the value of any forest credits we do earn to provide a replanting incentive for those older forests? 
Hon PETE HODGSON 
: It is astonishing just how large the range of expertise in this House is on this matter. The member is right on both counts. If we deforest enough of pre-1990 forests we do not have any Kyoto forests. That is why the National Party’s idea of having no cap on deforestation is not a very good idea—like having a “cap and trade” policy but no cap. Furthermore the incentives idea which is the same issue raised by New Zealand First is under active consideration by this Government. 
Hon Dr Nick Smith 
: How can the Minister excuse the appalling deforestation figures of 5000 hectares in 2004 11000 hectares in 2005 and 13000 hectares in 2006 on the basis of international commodity prices beyond the control of the Government when in the same 3 years Australia has increased its forest area by over 200000 hectares; and do these figures not make a mockery of this Government’s criticisms of Australia’s climate change policies given how important forestry is in the climate change balance? 
Hon PETE HODGSON 
: Let me refer the member to a  
New Zealand Herald 
 article of just last month in which a big bank—the member can look it up and find out which one—is looking to put into New Zealand $275 million to help landowners branch out with the Permanent Forest Sink Initiative. That is to say it is afforesting New Zealand land that seriously needs afforestation. In the view of the journalist who wrote the article it stated: “Under that scheme the Government will pay internationally tradeable carbon credits to landowners who establish permanent forests on marginal erosion-prone land. As well as combating global warming it has local benefits: less silt in waterways less risk of flooding downstream and more places for birds to live.” This is the only such scheme in the world and the member should start acknowledging it. 
Hon Dr Nick Smith 
: I seek leave to table the Ministry of Agriculture and Forestry’s official figures on forestry showing the loss of 8 million trees under this current Government. 
Madam SPEAKER 
: Leave is sought to table that document. Is there any objection? There is objection. 
Hon Dr Nick Smith 
: I note that the Minister of Forestry said that the figures had already been tabled. These figures were released only during the adjournment period and could not have been tabled during that period. So I again seek leave to table them. 
Madam SPEAKER 
: Leave is sought. Is there any objection? There is objection. 
Hearing—Screening in Newborn Children 
11.  
MARYAN STREET (Labour) 
 to the  
Minister of Health 
: Has he received any reports on changes to screening for hearing loss in newborn children? 
Hon PETE HODGSON (Minister of Health) 
: 
 I was pleased to see a report yesterday on the front page of the  
New Zealand Herald  
on the success of the newborn hearing screening programme piloted at Waikato District Health Board. This is an exciting joint programme with the Ministry of Health and the Ministry of Education working together to screen newborn babies’ hearing and where necessary to refer them early for specialist treatment including language and educational development. The programme is starting from 1 July in the Waikato District Health Board the Tairawhiti District Health Board and the Hawke’s Bay District Health Board and will be rolling out across the country over the next 3 years. 
Maryan Street 
: Assuming that newborn hearing screening will cause a surge in the need for cochlear implants for some children what arrangements has the Government made to meet that surge? 
Hon PETE HODGSON 
: Last month’s Budget has $8 million set aside for additional cochlear implants not only to meet the surge for the children that the member refers to but also to increase adult implants. Getting an early diagnosis of deafness in a child really matters. We now know that providing profoundly deaf young children and newborns with a cochlear implant gives them the chance to hear speak and develop on a path very similar indeed to that of other children. 
Schools—Junk Food 
12.  
KATHERINE RICH (National) 
 to the  
Minister of Education 
: Does he agree with the statement of Judy Hanna President of the New Zealand Principals Federation on the Government’s announced changes that will force schools to stop selling junk food that “This is regulation for the sake of regulation … This latest change by the Government is a slap in the face for all our schools and their efforts so far.”; if not why not? 
Hon STEVE MAHAREY (Minister of Education) 
: 
 No because I agree with the editorial in today’s  
New Zealand Herald 
 which states that the response of Katherine Rich to this announcement “took insufficient notice of both the seriousness of the obesity epidemic and many schools’ contradictory approach to it. It makes no sense for students to be taught good nutrition and healthy eating as part of the health curriculum and then immediately afterwards to queue at a tuck shop that serves mainly pies or other fatty sugar- or salt-laden food.” 
Katherine Rich 
: Why when the new school guidelines—clause (5)(iii) of the National Administration Guidelines—clearly state that boards are “required to where food and beverages are sold on school premises make only healthy options available.” was the Minister within a few hours back-pedalling at a rate of knots and personally listing products like pizza sausage rolls pies chocolates and burger rings as being OK for tuck shops? 
Hon STEVE MAHAREY 
: I think I may have missed out the burger rings. I ask the member to do what I do not think she had done when she made her comments which is to read the material. When she does so she will find that on the third page of the material there is a frequently asked question which is how to arrive at what sort of food might be available. The answer is to go through the Food and Beverage Classification System from the Ministry of Health which will set out the kind of food that might be seen as “every day” and food that might be seen as “sometimes” and “occasionally”—all of which makes up a good healthy diet. 
Hon Brian Donnelly 
: Does the Minister agree that the types of food and drink sold in the school tuck shops are part of the hidden curriculum and that if schools are offering a diet of unhealthy products they would not be complying with the health and physical well-being curriculum so that any further directions to schools are simply inflammatory and redundant? 
Hon STEVE MAHAREY 
: I certainly hope the health curriculum in schools would be consistent across the tuck shops as well. I just take the member back to the  
New Zealand Herald  
editorial again. “Nobody should pretend that healthier tuck shop food is more than a small part of the solution to obesity. As critics have pointed out pupils will still be able to obtain pies and so on from neighbouring shops. Yet that is no argument for schools supplying this food as well. … it is reasonable to expect schools to set an example of healthy eating for all of society.” 
Sue Kedgley 
: Is he aware of a recent Green Party survey which found that more than 80 percent of schools are selling sausage rolls pies fizzy drinks and so forth as a staple diet; and does he agree that it is time to put the health and well-being of New Zealand children ahead of the profits of the school tuck shops? 
Hon STEVE MAHAREY 
: Yes I am aware of the survey conducted by the Greens that had that result. I just point out that a lot of schools have already made the shift to more healthy options and they are finding they are getting the returns and profits that they require as part of their selling of that food. 
Katherine Rich 
: Can the Minister confirm the wording of clause (5)(iii) of the National Administration Guidelines which states that boards are “required to where food and beverages are sold on school premises make only healthy options available.” and explain how that wording can be reconciled with the long list of junk foods he personally exempted yesterday which included pies sausage rolls pizza chocolate and burger rings? 
Hon STEVE MAHAREY 
: I didn’t do the burger rings. 
Katherine Rich 
: You did so! 
Hon STEVE MAHAREY 
: I can do so quite easily because I know that the member still has not read the material. When she does so she will see that the way that schools will interpret this national administration guideline is that healthy options will relate to the Ministry of Health’s food classification. The member also said the guidelines were to do with other bits and pieces which is completely wrong. Schools will have nothing to do with what comes to school in the child’s lunch. They will be able to serve a snarler at the gala. They will be able to have a hangi. They will be able to fund-raise through things like chocolate. What they are being asked to do however is to use the food classification system to ensure that an overall healthy diet is served at the schools. As the  
New Zealand Herald  
said what is wrong with that? 
Hon Brian Donnelly 
: Can the Minister confirm that the devolution of school decision-making to local boards of trustees through the Tomorrow’s Schools reforms was the progeny of the previous Labour Government; and is not the centralisation of decision making such as which foods can or cannot be sold in tuck shops nothing more than educational infanticide? 
Hon STEVE MAHAREY 
: That was tremendous! The member will know because he has been a school principal that there are a number of guidelines for schools. This one fits into the safety and health part of one of the guidelines and therefore it is already consistent with what goes on. 
Katherine Rich 
: Why does the Minister continue to say that the new guidelines do not ban certain types of food when they explicitly state that boards are required where food and beverages are sold on school premises to make only healthy options available—does he not understand the phrase “only healthy options available”; if so how does he reconcile the long list of junk food that he personally exempted yesterday? 
Hon STEVE MAHAREY 
: I say to the member that I do not know what her diet is like but I think most people would accept a mix of food of the kind that goes with the Ministry of Health’s food classification which would say some food—like salads for example—are best eaten frequently; other things like fish and chips are best eaten infrequently. Part of a healthy diet can include all of that. That is why I know that the member will want to go home and say to her schools that they can still have for example a barbecue with a sausage at it. It explicitly states in the guidelines that they can do that so she can relax. 
Katherine Rich 
: Why is the Minister attempting to confuse the issue by referring to other guidelines such as the food and beverages guidelines and the Mission-On guidelines when the National Administration Guidelines are the guidelines that schools must comply with? Clause (5)(iii) of the National Administration Guidelines clearly states that the sale of junk food on school premises will not be permitted and schools have been told that only healthy options are being allowed—how does “only healthy options” include pizza sausages pies chocolates and burger rings? 
Hon STEVE MAHAREY 
: I have to say to the member that it is really important to go back to the office and read the whole document which is available. It sets out for example that schools will have nothing to do with what lunches are in the lunch box that a child brings to school and that schools can have a hangi or a barbecue. The document states—which is why I am using it—that the food classification system for the Ministry of Health will be the basis of what constitutes healthy eating options. It says it in black and white and I will send the member a stack of these so she can have a good study of them. 
Katherine Rich 
: I seek leave to table the actual National Administration Guidelines that schools have to follow. 
Document by leave laid on the Table of the House.