Annual Review Debate — In CommitteeText is incorporated into the Bound VolumeAnnual Review Debate — In Committee[Sitting date: 14 April 2016. Volume:713;Page:10638. Text is incorporated into the Bound Volume.]Annual Review DebateIn CommitteeDebate resumed from 13 April.External Sector (continued)The CHAIRPERSON (Hon Trevor Mallard): The House is in Committee for further consideration of the Appropriation (2014/15 Confirmation and Validation) Bill. When the Committee last considered the bill it was debating the reports of committees relevant to the External Sector and the Hon Gerry Brownlee had the call. He has 1 minute and 30 seconds remaining if he so wishes. No other members?Hon Ruth Dyson: Mr Chair.The CHAIRPERSON (Hon Trevor Mallard): External Sector?Hon Ruth Dyson: No no it is the next one.The CHAIRPERSON (Hon Trevor Mallard): Next one—premature.Reports noted.Finance and Government Administration SectorHon RUTH DYSON (Chairperson of the Government Administration Committee): For a moment there I did think that I was going to be mistaken for the Hon Gerry Brownlee and I am very pleased that we avoided that coincidence. It is a pleasure for me to take a call in this debate but it is not a pleasure in terms of the content that I have been considering in relation to this presentation. This is because for the first time in the history of New Zealand the next generation is going to be worse off than the generation that came before it and I think that is something that all New Zealanders should be ashamed of and they should be looking to the Government to see what measures it is considering implementing to address this. So our children and our grandchildren are going to be worse off than we were and our parents were.That is not something that I want as a New Zealander who grew up thinking that we had a fair society that we were better than pretty well any other country because in New Zealand it did not matter where you were born—if you worked hard and did your best you could get ahead in the world. We were very proud of so many things about New Zealand and that pride is seeping away. What we used to call the Kiwi Dream—that you could have a job and a home and you could have something to look forward to; Norman Kirk’s vision—is still as relevant today as it was when Norman Kirk first talked about having a job a home someone to love and something to look forward to. But now what we are seeing is that dream just slipping away. Young people in our country now do not have that to look forward to in the way that we had.So the National Government members are creating an economy that gives less to our children and grandchildren than they had themselves. How can they be proud of that? How can members of Parliament and Ministers be proud of that as their contribution to New Zealand society? Most of us came to this House so that we could improve things for New Zealanders—we all have different ways of thinking we can achieve that and we all have different beliefs—but it is hard to imagine how members of the National Party can be proud of their contribution to making New Zealand a worse society than it was when they came into office. We have got an economy now that is stacked in favour of the people at the highest income level rather than middle New Zealanders and middle New Zealanders are finding it harder each week to get ahead. We have got a housing market that is not for New Zealanders not for New Zealanders who work hard save up get a deposit and are able to own their own home. It is now a place where speculators make big money. That is not the New Zealand that I grew up in and the New Zealand that I want my children and grandchildren to grow up in.We have got a health system where not only the food is rubbish but people who need operations cannot get an assessment let alone get into the hospital for their operation. And the Minister of Health’s response to that is: “Well they might not need an operation; they just think they need an operation.” I do not know a single New Zealander who gets up in the morning and says: “What shall I do today? Shall I go to the beach shall I go to the movies shall I go to work or shall I have a knee replacement?”. That is not the sort of thinking that I am familiar with but clearly the Minister of Health is.We have got a growing gap between people who have got lots of money and people who just cannot get by week after week. Again that is not the sort of society that I grew up in. We always had richer people and poorer people but the growing gap—the growing inequality—is being driven by Government policies and it is not taking any responsibility for that.As we look at this particular review—the review of the Finance and Government Administration Sector—I want to point out to the Committee that I am taking the first call in this debate because I am the chair of the Government Administration Committee. Clearly a lot that comes into this sector is in the mandate of our select committee—not all but a lot of it. As the speeches go on I am sure we will hear more about the specific votes. Before I conclude I want to acknowledge a member of that select committee who was unfortunately deposed from her position as deputy chair. Sarah Dowie was very unceremoniously sacked and I welcome the new member Paul Foster-Bell to that position.Hon MICHAEL WOODHOUSE (Minister of Revenue): I think there is a lot that this Government can be proud of. I am certainly proud of the fact that there are tens of thousands more elective surgeries every year that not a single cancer patient has had to fly to Australia for treatment and that immunisation rates are at record high levels—particularly amongst the most vulnerable and those that traditionally have not had high rates Māori and Pasifika. I am very proud of the fact that our National Certificate of Educational Achievement (NCEA) level 2 rates are now tracking towards the optimal rates because NCEA level 2 is the baseline for getting on in life. I am very proud of the fact that we require our job seekers to seek jobsactually. And I am proud of the fact that this is the first Government in more than 40 years to increase social welfare support for the most vulnerable. So there is plenty to be proud of but there is more work to do.I stand to speak specifically in respect of the annual reviews to the annual review of the Inland Revenue Department. Some might think that that is being a bit masochistic given the 12 days or so of breathless revelations that we have had around matters to do with tax. In fact I have to firstly acknowledge my predecessor the Hon Todd McClay the former Minister of Revenue who said to me in December around the issue of revenue: “You will really enjoy it” he said “being a chartered accountant. It’s quite policy focused—a bit pointy-headed—but it doesn’t get much publicity. One oral question from the Opposition in 2 years and 4 months and it’s really quiet on the media front.” Well it has not been that quiet lately. It has been rather busy on the media front when it comes to matters in relation to tax but I want to acknowledge that department for the excellent work it does.In order to pay for the sorts of social services and supports that Ms Dyson talked about which I am very proud of we need two things. We need a very strong tax policy framework and we need a very strong tax administration framework. In the tax administration space of course the Inland Revenue Department carries out that very important function. In reviewing its performance it takes on two dimensions. It is obviously a very large organisation. It has over $700 million appropriated to it and it employs over 5800 staff. But of course it is also responsible for collecting over $60 billion from the taxpayer and it needs to be able to do that efficiently and effectively. So it is against that backdrop that it is embarking on what can only be described as perhaps the single largest transformation of the way in which a Crown entity does business in this country’s recent history. It is a $1.5 billion commitment of expenditure—at least on the face of it—to an IT system. But of course those who are in the middle of that transformation know that this is much much more than just a computer system. This is about the way in which we engage with the taxpayers particularly the business taxpayers; the way we encourage compliance with our tax rules; and the way we ensure the efficient collection of the funds that we require to provide the health education social services law and order transport and so on in this country.I must say having had the experience of going through the Immigration New Zealand transformation—a much much smaller project—it was a fairly daunting prospect to have a $1.5 billion transformation project under way. I have to say that I am very greatly reassured at the manner in which the Inland Revenue Department and its stakeholder partners and software providers are embarking on this because there are so many risks in this. I think there are things that can certainly go wrong but I have confidence that we have got the right people the right resources and the right programme to be able to deliver that.And it is pretty important now because yesterday we made some very very big announcements about simplifying the process of paying tax for our small-business community and what we know is that more than 97 percent of businesses in New Zealand are small or medium. They employ 50 staff or fewer. That is the backbone of this economy.Paul Foster-Bell: What percentage?Hon MICHAEL WOODHOUSE: Ninety-seven percent—and 90 percent of them employ fewer than 20 staff. So we really do have a large archipelago of small businesses in New Zealand that are the backbone of this economy. They are the farming community the plumbers the carpenters the people who are helping us rebuild Canterbury and so on. So it is important to be able to have a tax framework that fits their needs and not the other way round. For far too long the tax system in this country required the business community and the individual taxpayers to comply with rigid structures that the Inland Revenue Department set for them.The best example of that is in provisional tax. Anybody who has spoken with the small-business community will know that this has been a significant bugbear of its for years. This is because payment three times a year does not fit with a normal business cycle it does not fit the seasonal businesses—many of which are in our primary industries—and it certainly has been difficult to comply with easy to get wrong and quite costly to get wrong. So to announce yesterday that—thanks to this transformation—from 1 April 2018 the business community will be able to pay its income tax as it earns it has been very very well received. And it is a quite simple concept of using its accounting software to fit in with the Inland Revenue Department’s and not the other way around. Having calculated its accounting income a small business will then be able to pay the income tax due on that or claim a refund on it of course if—because of seasonal fluctuations—it produces an accounting loss in that 2-month period. It is already going along with the GST changes that we have announced.As a consequence of that there will be a much reduced burden of use-of-money interest. We have increased the number of small businesses that if they still choose to pay in the traditional provisional tax way will be able to be covered by the “safe harbour” provisions of the uplift. We are removing the punitive monthly penalties for late payment or non-payment which will also be very gratefully received. This is a very smart package but it does require the business transformation to proceed in a timely manner so that we can get to the start line on 1 April 2018 and enable businesses to benefit from it.I want to finish by commending the Inland Revenue Department and all its staff because they have been caught in the crossfire of a political narrative that has been most unhelpful I think and—frankly—untrue. We can be very proud of our tax policies in this country and our tax disclosures. They are policies that were established by Governments including the fourth Labour Government and were endorsed by the fifth Labour Government—particularly by Dr Michael Cullen when he was Minister of Revenue in 2006 and said: “We need a disclosure regime around foreign trusts and will put one in.” And it was fit for purpose.Grant Robertson: It’s a few years on now.Hon MICHAEL WOODHOUSE: Ah I see. So Mr Robertson says it is a few years on now—but it is not time that is the difference; it is who is in Government. Let us be very clear about why this is such a political opportunity for Labour. It is a pity that those members do not understand tax and the fact that foreign citizens earning income in foreign countries have no tax liability here in New Zealand. That seems to be completely lost on them. In fact a lot is lost on them. They are being either very tin-eared or a bit obtuse about what the tax rules actually are.I want to say to the Inland Revenue Department staff and particularly to those working in international tax and multinational base erosion strategies in combination with the OECD that I have confidence in them that I hold them in high regard and that you will not hear me coming to this House and criticising public officials who are doing an excellent job. I think there are members of this Committee who need to reflect as they go through this annual review on the very highly regarded and very good public sector officials that we have—both in the Inland Revenue Department and right across Government—and the excellent work that they do. When we compare ourselves with other jurisdictions I think that is something that we can be very proud of.MEKA WHAITIRI (Labour—Ikaroa-Rāwhiti): It is a privilege to make a contribution in the debate on this Appropriation (2014/15 Confirmation and Validation) Bill and to participate in this annual review debate focusing on the Finance and Government Administration Sector. Can I just make a comment around what the Minister the Hon Michael Woodhouse said—and it is great that the Minister supports his tax officials and ensures that he endorses and follows the advice that they give him. It seems to me that if the Minister has that commitment I wish other members on that side—the Government benches and particularly Minister Brownlee—would also take on some of the advice that officials give. You cannot have it both ways. But that is for another time.I want to focus on the Department of Internal Affairs particularly around local government. But before I get there it is important that we do look at and I guess challenge this Government’s perception of being very good fiscal managers. Fiscal management is not only about what you do with the money but what results you gain from the money. If I may I would like to do a bit of a stocktake on the status of this Government when it comes to their being prudent financial managers. I note that Government borrowing is forecast to be not $50 billion not $100 billion but $116 billion—the highest that we have ever seen. According to the Crown’s own accounts we are looking at having core Crown debt at $1.7 billion higher than forecast for February this year. And I also note that $51 billion of our debt is now held overseas which is obviously creating a very strategic risk to our economy; this has increased by more than $30 billion since National came into power. So I challenge the Government—whose members have got up and talked about how well it is doing and how proud they are of this Government—with that debt hanging over us. The fact that half of it is overseas does I think expose this country to major risk.The second part of the perception was around what has been achieved and let us have a look at what has been achieved. There has been—and I will give credit to the Government—a surplus up until February this year but we have to ask whether that has been achieved through underspends in education justice transport and of course the Canterbury Earthquake Recovery Authority. Our regions are struggling and as the proud member for Ikaroa-Rāwhiti I see it every day when I am out and about in my electorate. In fact when I came into Parliament in 2013 the Minister for Economic Development’s plan for raising regional prosperity in Ikaroa-Rāwhiti was two things: one was to go and explore for oil and the other one was cycle trails. Our economy is much more diverse than that and we do need Government attention if we are going to realise opportunities for people throughout Ikaroa-Rāwhiti. We still have families and children in poverty and there is definitely a shortage of decent housing for all families throughout my electorate.But actually as I said in the opening of my speech I want to turn in the time I have got to local government. When I look at the statement of intent of the Department of Internal Affairs it talks about “Improving the efficiency of the local government system through completion of the Better Local Government Reform programme”. Specifically I want to highlight two of those services that talk about how this is going to be achieved. One is council-led reorganisations and we have got a classic example happening right now with a body in my electorate—the Hawke’s Bay Regional Investment Company which shows all the bad sides of what a council-controlled organisation is capable of. Removed from the owners Hawke’s Bay Regional Council and defiant in the face of ratepayers it invested $6 million into a scheme that has not measured up in terms of the Ruataniwha Dam. And all I say to the Minister when we are talking about doing more council-controlled organisations is that I encourage him to look at the performance of the Hawke’s Bay Regional Investment Company and at what has happened in Kaipara with the waste water. There are many examples Minister for us to ensure that we do not go down the track that some of these council-controlled organisations are presently experiencing.The other one was the note of the Local Government Commission. I again implore the Minister to ensure that when we are giving more powers to an unelected body it is adding value to the local government sector. I am not sure whether the Minister has that quite down pat.PAUL FOSTER-BELL (National): Thank you very much Mr Chair for allowing me to take a call in this annual review debate on the Finance and Government Administration Sector review. I want first to pay tribute to the previous deputy chair of the Government Administration Committee my colleague Sarah Dowie whom I replaced in the last couple of weeks. I am just coming to grips with the wide and varied remit of the committee and so this will be a many and varied speech covering some of the interesting grab bag of departments and agencies that fall within the remit of the Government Administration Committee.The Fire Service Commission a very important institution of State is currently under review and the Government is proceeding with Mr Swain’s recommendations. This is the review conducted by the Hon Paul Swain the new chairman of the Fire Service Commission and a former Minister in the previous Labour administration. We want the structure of the New Zealand Fire Service to reflect the modern realities of the 21st century. The current legislation is based in the 1970s. The Fire Service has an incredibly important job to do but increasingly it is not simply putting out fires; it is rescuing people from car accidents it is conducting valuable training and there are a wide range of both urban and rural fire services. Let me make this clear: the Government will not be reducing the Fire Service in terms of what it is actually providing. This is not about terms and conditions for firefighters who are highly respected servants of this country and often the saviours of members of the community who find themselves in trouble. This is simply a look at the structure and governance of both rural and urban fire services to bring them up to date and to modernise them.In the digital area—delivering digital services to the public—we are making excellent progress with over 50 percent of the top ten services used by New Zealand citizens now conducted digitally online. This makes it easier simpler cheaper and more efficient for people. One example that does fall within the remit of the Government Administration Committee is passports. Increasing numbers of people are applying for their passport online. Going to the 10-year passports has also been a hugely popular success story. People can not only have the greater convenience of getting a longer duration out of their passport but also save themselves significant costs. I have some comparisons to make. A 10-year Australian passport costs A$250 whereas our 10-year adult passport if applied for online costs only NZ$180 including GST. This is an average saving of over NZ$90 compared with the system that had been in place under the previous Government.The digital uptake generally is shooting ahead. We are up 6.6 percentage points over the last year compared with the same quarter in 2014. We have now got a 52.9 percent uptake of those most common transactions. This puts us well on track to our target of 70 percent of all of New Zealanders’ common online transactions with the Government being conducted in the online space by 2017. This is a very positive result and it reflects the work not only of the Department of Internal Affairs but across all agencies—everyone from the health sector through to the police playing their part to ensure New Zealanders have simple easy and affordable access to online services.We have heard from the Minister of Revenue about the changes—the massive business transformation being conducted in the Inland Revenue Department—and there are many other transformative things happening within the sector that will directly contribute to New Zealanders being wealthier better off better paid and enjoying better lifestyles.Tourism contributed $10.6 billion to the New Zealand economy in 2015 which is a 5 percent increase on the year before and a significant addition to our GDP. Within the Wellington region we had our best-ever year for bed nights. I would attribute this in part to the work of the Government as well as the hard work of individual businesses. There was an increase in the Tourism New Zealand budget from $83.8 million to $115 million—a significant extra investment in the promotion of New Zealand as a destination. But film co-production agreements and film tourism have also been significant additions to our market here in Wellington along with the air services agreements that are being concluded. I am very interested to see the negotiations with Qatar and how they will result in the addition of extra services into Wellington. Wellington Airport is doing very well and visitor numbers grew around 20 percent over the last 5 years. There were over 200000 Australians who spent at least one night in Wellington. I personally believe—this is my own view—that any enhancement of the service at Wellington Airport will be of further benefit.CLAYTON MITCHELL (NZ First): Here we are on the annual review debate for the Finance and Government Administration Sector and I am going to be speaking this afternoon on the New Zealand Fire Service Commission. I was very pleased that the honourable member across from me Paul Foster-Bell started his contribution by talking about the Fire Service. I even sat forward at my desk—something similar to Simon Bridges when he got all excited—waiting to hear some absolutely captivating information with regard to this review that is currently under way. However nothing much further than just a mention of the review came from Mr Foster-Bell so it was a little bit disappointing.Hon Simon Bridges: Oh it’s a conspiracy.CLAYTON MITCHELL: The reality is that this is the 17th review in 22 years Mr Bridges—the 17th review in 22 years. We are not hearing anything other than “We’re going to shuffle the pieces of paper around on our desk a little bit more everybody” because there is nothing that is going to really significantly change the funding model of the New Zealand Fire Service. The only thing that is really going to be implemented is the inclusion of our urban search and rescue teams. When I look at the National Government’s motto for the 2014 general election it was “Working for New Zealand”. But I think its motto should have been “operatur in nobis privata agenda”. That is: “Working on our private agenda”. Certainly when you look at what is going on in New Zealand to do with our most honoured and highly recognised and respected organisation the New Zealand Fire Service its motto could actually be “postulatum auxilium Magis et minus”. That means in translated English: “More demand and less help.”Last night I spoke for the Department of Conservation and it is in a very similar situation to the New Zealand Fire Service when it comes to its funding model because there is a huge expectation from this Government that the people of New Zealand volunteer themselves to go out and fix this problem of lack of funding. Under-resourcing was the key feature in last year’s Budget and we are expecting the same nonsense coming out when the Minister starts talking for his Budget debate next month.For those people in this House who may not be aware and certainly for some of the people back home I have to bring our attention to just how large and important our New Zealand Fire Service is. It has 13900 people working for it. However only 1730 paid firemen and women are on the books plus another 600 administration staff. There are 8100 urban volunteers doing the job because this Government will not fund them adequately to enable them to get full-time paid employment in the Fire Service. There are another 3500 rural firefighters who have to go and do fund-raising to get equipment updated not to mention the absolutely nonsensical approach to the buildings that are not up to scratch and that are in serious need of repair. We have got fire stations in Christchurch that have still not been repaired and replaced. As it was pointed out by the honourable member across from me Paul Foster-Bell this is an organisation that does not just put out fires. This organisation comes to the aid of New Zealanders when it comes to severe weather incidents. It helps out with flooding and helps out the councils it attends car accidents emergency rescues and when there are gas leaks or when there are issues to do with hazardous substance releases. In fact we have got a case where a small rural town policeman needed some assistance to arrest somebody and who came to his aid? It was the New Zealand Fire Service.We need to get real. This Budget needs to include some severe support and funding for one of our most treasured organisations which is on its knees. We have got an urban search and rescue team that has been qualified in the top group of the world in relation to what it is delivering on and we have not even got an ability to get these people to the locations overseas to actually help them out when they need them like these countries did for us in our hour of need when we had our Christchurch disaster. We could not organise ourselves because we do not have the right transportation we do not have the right make-up and the right set-up and this current review that is under way is just nothing more than a paper shuffle.Just to finish off we can see that our fire levies are the major contributor to how this gets funded and we have just outlined the fact that that does not fit in with the model that we are currently using because the services of the fire department mean that a much wider broader approach is required.GRANT ROBERTSON (Labour—Wellington Central): No choice this time you have to give me the call. The Minister of Revenue the Hon Michael Woodhouse stood up—or at least I think he stood up—and cried a series of crocodile tears for the plumbers and the carpenters and the small-business people who are sitting around doing their tax returns and doing the right thing. He stands there and says that to this Chamber at the same time that he sits on his chuff in his office and fails to do anything about closing the loopholes around tax avoidance and tax evasion in this country. It is all very well to praise the efforts of the hard-working staff of the Inland Revenue Department (IRD) but it is in the mirror that the Minister should be looking when it comes to what is going wrong in the tax system of New Zealand.Have we not had a window on the soul of the National Party in the last 2 weeks when it comes to what has been happening with the Panama Papers? John Key’s very first reaction—his very first reaction—was to leap to the defence of his old mates the mega-rich around the world who hide their money. They were the first people whom John Key thought of. He did not think of the taxpayers of New Zealand who work hard and pay their fair share and he did not think of the taxpayers of countries around the world who work hard and pay their fair share; he leapt to the defence of the greedy. He leapt to the defence of the people who make it their mission not to do the right thing—that is who John Key is on the side of: the mega-rich the people at the very top not the middle New Zealanders working hard every day who do pay their fair share. That is what we have seen from the National Party over the last couple of weeks. And now Bill English decides to add to it: he says that working people in New Zealand are “pretty damned hopeless”. We are hearing from the National Party what it really thinks: Bill English when he is talking to his mates in Federated Farmers and John Key when his first reaction is to defend the people who rip off the system.You know the National Party is very quick to get into people who they say might be bludging somewhere if it is in the welfare system. Well Simon Bridges what about the bludgers at the top? What about the people at the top who go out of their way to make sure that they do not pay their fair share? Michael Woodhouse should have been on his feet today saying: “We won’t stand for that. We are finally going to listen to the advice that the National Party has been given time after time.” What Chapman Tripp said about the changes made in 2010 and 2011 by the National Party that made it tax-free—tax-free—for investment funds in New Zealand that are owned by foreigners was: “This puts us on a par with Luxembourg and the Cayman Islands.” John Key might be a bit disappointed about that because he wanted us to be the Jersey of the South Pacific an ultimate tax haven—it has actually gone bankrupt now—or the Switzerland of the South Pacific because that is all about where those people who are the mega-rich make their money. But the National Government was warned. It was warned that its changes were going to make a big difference. And they have—nearly doubling the number of foreign trusts that we now have operating out of New Zealand—and they do not even want to look at that.It has set up a sham review rather than the full public inquiry that we need because New Zealanders need the multinationals that operate here in New Zealand to pay their tax. We know that there are multinationals that are avoiding that. We are out there on the world stage saying that we want that so that New Zealand working people only have to pay their fair share. But our credibility in going out to the world and saying that we want multinationals to pay their fair share is undermined when we have a Government that will not respond to the huge loopholes in our tax system. The Government was told in 2013 by the Inland Revenue Department that our foreign trust rules continue to attract criticism including claims that New Zealand is now a tax haven in respect of trusts and that to protect our international reputation it may be necessary to strengthen our regulatory framework for disclosure and record-keeping.If Michael Woodhouse wants to respect the officials from the IRD he should listen to their advice. That is what they told Michael Woodhouse in 2013 and he ignored it. His Cabinet colleagues the Prime Minister—they all ignored it. John Key is donkey deep in tax evasion—John Key - deep in tax evasion. That is who he is that is who his friends are and that is whom he stands up for.Well New Zealanders deserve much better than that when it comes to our tax system. We need a fair tax system. We need a tax system that is simple and easy to understand. Fundamentally we need a tax system that allows New Zealand to hold its head up high on the world stage—not a morally bankrupt Government that thinks that those at the very top are those who deserve their support. We need a Government that is for all New Zealanders not the mega-rich.KRIS FAAFOI (Labour—Mana): It is an absolute pleasure to speak in the finance and government administration part of this debate. [Interruption]The CHAIRPERSON (Hon Trevor Mallard): Order! I will sit the member down. I will start his time again. Mr O’Connor I would appreciate it if your coaching of the Chair ceased. Thank you.KRIS FAAFOI: Thank you very much Mr Chair and thank you for doing a great job.There are many examples of the visible arrogance of the Government—and we have seen the arrogance of the Prime Mnister in the last couple of weeks around his inability to tackle foreign trusts—but there are some invisible signs of the Government’s arrogance that I want to talk about during this section on finance and government administration. It is the total lack of respect that the Government has around the Official Information Act. For the Official Information Act to have any integrity a Government has to abide by the letter of the law. But we have seen time and time again over the Government’s last 7 years occasions on which it completely and utterly played the Official Information Act and in some respects completely and utterly did not abide by the Official Information Act.The Official Information Act is very important to make sure that the decisions this Government makes are transparent that it adheres to the rules that govern it and that it is not pulling the swifty behind the scenes for New Zealanders. But there have been many instances where the Government has been pulling swifties and it has gone out of its way to conceal that by not obeying the letter of the law around the Official Information Act. I think that in this country of New Zealand where we hold on to democracy and transparency of that democracy maintaining the integrity of the Official Information Act is extremely important. I would like to put on the record my thanks to the new Chief Ombudsman Peter Boshier for the remarks that he has made since he has been appointed to that role. I think the Government is going to find it much much harder with Mr Boshier at the helm of the Office of the Ombudsman to pull this swifty on New Zealand as it has for the last 7 years.I would like to give you an example of where the Government tried to pull the swifty on my office when I put in an Official Information Act request around the costings of its Homestart Housing New Zealand package. I wondered whether or not the Government was just using its Homestart roadshow as a bit of a publicity stunt where its MPs could use a platform to go out and talk about the apparent success of the Government. When I asked them for the costings and what was going on behind the scenes there was quite a lot—and I think the people at home can see that on this document I am holding—that was blanked out. It was about how these Homestart roadshow meetings were being organised and what was going on behind the scenes.On this page here you can see that Housing New Zealand Corporation has ruled this part here to fall under section 9(2)(g)(i)—which in English means it is out of the scope of the request that I have made under the Official Information Act—and it has blanked that out. Interestingly enough the words preceding the blanking or the redacting say “National MP Parmjeet Parmar has also expressed a strong interest in holding a roadshow” and then it goes on to say in the famous words of the Hon Annette King “blankety blank blank blank blank blank”. I wanted to know what was going on and why this says “blankety blank blank blank blank blank”. Why would the officials say that I cannot have that information because it is out of scope? Well thankfully somewhere else in that document someone forgot to “blankety blank blank blank” blank out the details after those words. And I have got it here on the record that it says: “Parmjeet Parmar has also expressed a strong interest in hosting a roadshow”—and here comes the blanked-out part—“because she is keen to raise local profile in Mt Roskill in the case of a by-election”. Why would the Government not want the people of New Zealand to see that? Is it because it is illegal to use taxpayer money to campaign and that it might cause the Government huge embarrassment? I would hazard a guess yes.I want to know why the Government is so arrogant that it thinks it can “blankety blank blank” its way to completely and utterly disobeying the Official Information Act. That is complete and utter arrogance and being out of touch. The Government knows that if the people of New Zealand saw this “blankety blank blank blank blank” approach that the Government is taking they would be disappointed.Dr DAVID CLARK (Labour—Dunedin North): What a hard act to follow. I mean I think Mr Faafoi has put his finger on something there that warrants further consideration. It does feel like the Government has been involved in a cover-up here. I know he has put it up for debate but just from the cheap seats it does feel a little like there might be something that is not quite above board going on there.I want to speak about the State Services Commission a little and about the way it has investigated the Ministry of Business Innovation and Employment payroll fiasco and other associated fiascos. Here is a little bit of background. We found out in the last month or so that the ministry’s payroll system has not being paying people appropriately for a number of years.Hon David Parker: Which Minister?Dr DAVID CLARK: That is Minister Joyce’s responsibility. He is the Minister for Economic Development who is responsible for the Ministry of Business—Hon David Parker: Is that new—“Novo new”?Dr DAVID CLARK: Ha ha! My colleague asks whether it is “Novo new”. The Minister is responsible for fixing a few things around the place and appears not to have done quite as diligent a job as one might hope from a Government that has been here now for going on 8 years. What has transpired—what has come to light—is the way in which the Ministry of Business Innovation and Employment has not been paying their staff correctly despite being the very organisation in New Zealand that is responsible for making sure that everyone else pays their staff correctly. The Ministry of Business Innovation and Employment’s payroll system has not been working we learn since the ministry was set up—since a couple of ministries were taken together and a new payroll system created out of the merger of several payroll systems—and since that time staff have not been paid correctly. Police had a similar issue and they have now paid we are told over $30 million in back-pay—$30 million because they were not paying their staff correctly. They have admitted the error; they have looked into it.The State Services Commission said that it started looking into these and similar issues in 2014. My questions and my concerns are whether the State Services Commission has been doing its job correctly whether it has been resourced correctly to do that job and whether it is competent from here on in to deal with the fallout that has been and is being created on an ongoing basis because we have seen very little action from the Minister Steven Joyce who has now said that he understands the problem that his department has. What he has not said—6 months on from being advised that his department had set up an inquiry into this matter—is that he has no estimate none whatsoever of what this is going to cost the Ministry of Business Innovation and Employment. Six months on and he has none—he has no idea. He does not know whether it is going to be $30 million like it was in Police or less or more. And what is worse until his ministry gets it right it is very hard for it to then go around waving its finger at others.We have since learnt that Fonterra—a little outfit called Fonterra—and another one called McDonald’s in New Zealand are both investigating their payrolls in case they have similar errors. We know that New Zealand Post went through the court system to address similar errors all the way to the Court of Appeal. The Government does not seem to have made any estimate of how widespread the problem that it is overseeing is.The State Services Commission does not seem to be resourced sufficiently. When the State Services Commission was asked whether it had confidence that all Government departments were complying with the law and that it had sought and received assurances from them it was not willing to go that step further and say that it had itself examined those payrolls to see that they were complying with the law. So we have the deeply hypocritical if I can say situation where the ministry responsible for overseeing the law has itself been in breach of that very same law. And this points to a Government that is in disarray. It points to a Government that if it does not believe that is a real issue is out of touch with ordinary and middle New Zealanders.It has been revealed that this Government—which has not estimated that cost—has known about the problem since 2010. The Minister Michael Woodhouse admitted that in 2010 a group was set up to try to resolve this issue—to work through complications created by payroll systems that made it difficult for employers to comply with the law. But it seems that nothing has been done since 2010 and since that time the Government has been in breach of the law.Reports noted.Health SectorSIMON O’CONNOR (Chairperson of the Health Committee): I am absolutely delighted to take this call. The Heath Committee has been working incredibly hard this year including work on the annual reviews. Can I start by thanking all the members on that committee right across the various political hue and spectrum—it is a huge array of work.It is really in that spirit of thanks though that I want to focus a bit of my initial time in these 5 minutes. It is on those who are actually working hard within the health sector. Through the annual reviews we have heard primarily from the district health boards—a representative number of them—we cannot see all of them for obvious reasons. In meeting with the various district health boards those from the Health Research Council and other agencies you realise and continue to appreciate the great work that they do. So I want to take this opportunity rather than highlighting the particulars of their activities just to say thank you to each and every person who works in the health area. I was going to fall into the trap of talking about doctors nurses and hospitals—but as everyone in this House will appreciate it is much much wider than that. That came through in the select committee process as the various board chairs chief executives and others were talking to us and sharing what they do. In a sense on the record I want to say thank you to them and to all those working in the sector.We heard a number of positive elements coming through at the select committees and through the annual reviews. I am going to leave much of that to other speakers both from the Opposition and the Government to share. It is oft-repeated—and I am all for good news stories but I am not going to use my time there bar one example—and that is what is coming out of the Health Research Council. It got a new chair recently Dr Lester Levy the new chief executive in Professor Kathryn McPherson—both of them doing a tremendous job. One of the reasons I want to highlight what they do is that the work of the Health Research Council is often not well known. Often it is the researchers themselves or other bodies that get the thanks. But actually the moneys through the Crown and invested via the Health Research Council bring about amazing results.We heard about one example at the select committee; in fact those of us who were at the Royal Society last night heard about this as well. We heard about some of the research that is being done and led by the likes of the Deputy Chair of the Heath Research Council Professor Richard Beasley. Basically it is looking at the efficacy of saline—in other words water and salt—with other physiological products. In other words can you make a product with all the other compounds and elements into well a drip that may be more effective?Grant Robertson: I would not use that word.SIMON O’CONNOR: Well we could not use it if we do not want to offend the Opposition. But the long and the short of it is that the Health Research Council found that there is no greater efficacy—or benefit if you will—of using these new amazing products that may replicate human blood plasmas and so forth. It found actually that saline in and of itself is just as effective. And saline costs effectively a couple of dollars whereas these other physiological products cost hundreds of dollars. Here was a great example of the Health Research Council funding some research that is saving not only New Zealand taxpayers but also people across the world hundreds of thousands—if not millions—of dollars because ultimately we do not need to invest in these more expensive products because they are not bringing out the same set of results. So I thought it was just one small example but a relatively positive example of what is happening in the health space.We have heard from a number of other groups before the Health Committee that were highlighting in small ways the activities that are going on. One of the themes actually that was coming out—and I am sure my colleague from New Zealand First Barbara Stewart acknowledges it—was the importance of oral health. It was something that is always coming before us. I think it is one of the really strong announcements in recent days by Minister Coleman in particular and obviously Minister Dunne that is actually looking to change where the decisions around the fluoridation of water occur: moving it out of local government and into district health boards which makes absolute sense because actually this is a health issue. I think it is a really good example of how voices in the community are heard through the annual review process and can begin to make a change. I think it is just absolutely fantastic and I want to thank the Minister in the chair Jonathan Coleman for his leadership in this role.Hon ANNETTE KING (Deputy Leader—Labour): I am so glad that Minister Jonathan Coleman has joined us for this debate because one of his colleagues Minister Woodhouse was in the chair a moment ago and he talked about how proud he was of this Government’s record in health—Chris Hipkins: Positively puffed up.Hon ANNETTE KING: Positively puffed up—the Hyacinth Bucket of the Parliament. I have to say that I listened to some of the things that he said and I was questioning them—I have to say Minister—because he said there are 50000 more operations that have been done under this Government. I know for a fact Minister that you are counting 12000 of Labour’s operations done under the 2008-09 Budget—counting it dishonestly as operations done by the National—Hon Simon Bridges: No.Hon ANNETTE KING: Oh yes they are—12000 of them.The CHAIRPERSON (Hon Trevor Mallard): I will just freeze that. I will just warn the member that accusing a Minister of being dishonest—Hon ANNETTE KING: I did not say that he was dishonest Mr Chairman; I was very careful.The CHAIRPERSON (Hon Trevor Mallard): I think the member will now sit down. I will say that it has been ruled many times that accusing a Government or a ministry of doing something is the same as accusing an individual member of it especially the member in charge of it. So I am just asking you to take more care.Hon ANNETTE KING: Let me just rephrase: it is a very misleading claim by this Government that it has done 50000 more operations—counting 12000 done under the 2008-09 Budget. Will the Minister deny that? I will table it and show that is correct. I find that very misleading.He then went on to say that we are sending no patients to Australia for cancer treatment. Well I am glad we are not because I had to in 2000 and 2001. Does anyone know why I had to? It was because they received a report from the National Government in 1998 and 1999 that said our cancer services were in dire straits: we did not have enough linear accelerators we did not have enough staff and we could not provide this service. Do you know it took me months to get that report out of that Minister? I asked for it; they did not have it. They had never heard of it and denied it. I knew it existed because I did have a copy. I was testing the Minister and his ministry about being honest about cancer treatment.What I think is happening in this health sector is that there is $1.7 billion missing in the health budget. If you look at the budget and you look at the track that it has been on $1.7 billion is missing because the Government has not covered costs and it has not covered all of the demographic growth. That is not coming from Labour; that was independent work done by Infometrics. The Government has denied denied denied but we are now starting to see the impact of those missing dollars and we are seeing it in research that has been provided over the last few weeks. The Minister of Health may want to deny this research but it has been done by the University of Otago Faculty of Medicine. It is proper research printed in the Medical Journal and it has said something I think is very significant. I do not think the Minister has read it. It says “Patients undergoing primary elective total hip and knee replacement in Otago in 2014 are more severely disabled than between 2006-2010. Patients currently being returned to GP would have qualified for publicly-funded surgery during that period.” This paper confirms that the increasing demand is not matched by the increase in supply. “The problems we describe are likely to becoming increasingly widespread across New Zealand.”—that is proper research given to the Government which was denied by the Associate Minister of Health last week and continues to be denied by the Minister himself.We also now know because of data received from the Ministry of Health that we have eight district health boards that have been unable to provide the number of elective surgeries that they were expected to provide going right back to 2011. Two thousand one hundred and eighty one hip and knee procedures were supposed to be provided and were not provided during that period. I have to say to the Minister why were they not provided? Of course we know what he thinks. He said patients only think they need surgery; they do not actually need surgery—it is all in their minds. I challenge him to go and tell Grey Power that when they are asked whether they believe they need surgery because they are in pain and they cannot walk and they cannot go out and they are now housebound or whether it is all in their mind. Have a listen to what they may say.Hon Dr JONATHAN COLEMAN (Minister of Health): Well there is so much to correct in that speech that I do not think we have got enough time to do it quite frankly. There was so much fiction there. I mean for starters an extra 50000 operations were provided under this Government. In Labour’s last year in Government it did 118000 operations; we did 168000 last year. That is a fact. But I will tell you what—you know Mrs King talked a lot about the Southern District Health Board and actually we could do better on hips and knees there. We raised the rate by 10 percent over our time there but we have got to keep on doing more and that is the answer to unmet need. But the really embarrassing thing for Mrs King and the reason actually she asked questions about food rather than operations during question time is that while she was Minister of Health she delivered 420 fewer operations in the Southern District Health Board. It was absolutely shameful.Hon Simon Bridges: Oh here was me thinking it was just because she was hungry.Hon Dr JONATHAN COLEMAN: Yes. So when you get to a situation when question No. 1 in question time is about the Southern District Health Board’s food in reality I think that means we are covering off the big issues pretty well. But I will tell you what: there has been a signal achievement this week announced by this Government and that is moving the decision rights on the fluoridation—Hon Annette King: Yeah and that was pretty gutless.Hon Dr JONATHAN COLEMAN: —of water from local government through to district health boards. Mrs King says that is “gutless”. Well I will tell you what. She had—and this was a dental nurse—The CHAIRPERSON (Hon Trevor Mallard): OK the member will resume his seat. I was going to let it pass but again there is a long history of calling members “gutless” and that being ruled out. The member will desist from saying that word and the Minister will not respond to it.Hon Dr JONATHAN COLEMAN: Sure sure. I think actually this great achievement of announcing the movement of decision rights to the district health boards is something the whole Parliament could join together to celebrate. I would love to see Labour—especially with the Opposition spokesperson being a former dental nurse who actually had 9 years to do this herself—issuing a supportive press release saying: “Let’s put aside the petty bickering over you know the minor bits and pieces. Let’s actually celebrate what is a major achievement.” When you look at fluoridation of water that is one of the 10 greatest public health achievements of the 20th century. When you look at 35000 children having a tooth extracted last year that makes the point that this is a really important public health move. So if you look at 40 percent of our kids having a tooth go rotten before the age of 5—up to 60 percent in our young Māori kids under the age of 5—we had to do something about that and that was a very important move.Another great public health achievement under this Government has been the extension of free general practice visits to children under the age of 13. Much to Mrs King’s disappointment that was taken up by 99 percent of practices—99 percent of practices. That is going to be a huge contributor to ensuring the good health of a whole cohort of children—free general practice visits now for 750000 New Zealand children.Progress reported.Report adopted.