Volume 688 Week 37 - Tuesday 19 March 2013 
Text is incorporated into the Bound Volume 
Volume 688 Week 37 - Tuesday 19 March 2013 
[Sitting date: 19 March 2013. Volume:688;Page:8601. Text is incorporated into the Bound Volume.] 
Tuesday 19 March 2013 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Visitors 
Afghanistan—Minister of Foreign Affairs 
Mr SPEAKER 
: Honourable members I have much pleasure in informing the House that His Excellency Dr ZalmaiRassoul Minister of Foreign Affairs from the Afghan National Assembly is within the precincts of this Chamber. I am sure members would wish him to be welcomed and accorded a seat on the left of the Chair. 
His Excellency Dr ZalmaiRassoul accompanied by Assistant Speaker Tisch entered the Chamber and took a seat on the left of the Chair. 
Questions to Ministers 
Economy—IMF 2013 Preliminary Concluding Statement 
1. 
MAGGIE BARRY (National—North Shore) 
 to the  
Minister of Finance 
: What reports has he received on the economy? 
Hon STEVEN JOYCE (Acting Minister of Finance) 
: 
 Today the International Monetary Fund released its preliminary concluding statement on New Zealand. The report concludes that New Zealand’s fiscal reduction path strikes the right balance between limiting debt increases while sustaining economic growth. The report says: “We regard the planned pace of … deficit reduction as striking the right balance between sustaining output growth and limiting public debt growth and consistent with a framework where monetary policy plays a primary role in managing aggregate demand. The benefits of the plan are many.” 
Maggie Barry 
: What does the IMF say are the benefits of the planned reduction in the Budget deficit? 
Hon STEVEN JOYCE 
: The IMF cites four benefits: firstly it withdraws fiscal stimulus at the right time by making room for the expected increases in private sector and earthquake-related construction spending; secondly it reduces pressure on monetary policy— 
Andrew Williams 
: Who wrote this? 
Hon STEVEN JOYCE 
: —thirdly it creates fiscal space to manage increasing age and health-related costs and to cope with negative shocks; and fourthly it helps raise national savings and reduce the current account deficit. And in answer to the member over there it was written by the IMF. 
Maggie Barry 
: What are the key risks the IMF identifies for the New Zealand economy and what are the options for managing those risks? 
Hon STEVEN JOYCE 
: The IMF identifies two main near-term risks to the New Zealand economy. These are potential weaknesses or a worsening in the financial conditions in the world economy. The IMF also identifies risk in the New Zealand housing market noting that supply bottlenecks persist and prices remain elevated. The IMF notes that New Zealand has room to respond to shocks with its monetary policy and the level of public debt leaves room for fiscal policy response. The floating New Zealand dollar is also seen as an effective buffer. The IMF also says that our fundamentals have improved since the global financial crisis. Household and business balance sheets have strengthened and banks have reduced their foreign funding and been assisted by a strong growth in deposits and slower growth in credit. 
Maggie Barry 
: What does the IMF say about the value of the New Zealand dollar? 
Hon STEVEN JOYCE 
: The IMF shares the Government’s view that the dollar is at a high value largely because of factors outside our control. In particular the strength of the New Zealand dollar is determined by the relative weaknesses of other currencies and other economies many of which are printing money. As it says if global monetary policy were to become less stimulatory the exchange rate would likely depreciate over time. The IMF also notes that the Government’s return to surplus is easing pressure on the exchange rate by boosting national savings. 
Hon David Parker 
: Does he agree with the IMF that “… New Zealand has run persistent current account deficits resulting in net external liabilities which are high by international standards. The deficit is expected to widen this year despite relatively strong terms of trade …”? 
Hon STEVEN JOYCE 
: Yes and I would note that those were largely due to the previous Government when the balance of payments deficit rolled out to over 8 percent of GDP. I really think the member should stop this line of questioning because all he does is point out that the Opposition are lousy economic managers. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. The Minister was asked about the future projections so surely he cannot go back to a former Government from 4 years ago and think he can get away with it. 
Mr SPEAKER 
: Order! He referred to the IMF report which talked about persistent current account deficits over many years. I think the question was adequately addressed. 
Education System—Accountability 
2. 
BRENDAN HORAN (Independent) 
 to the  
Minister of Education 
: Is accountability within our education system paramount? 
Hon NIKKI KAYE (Acting Minister of Education) 
: 
 Accountability is paramount in so far as everyone in the education system needs to be accountable for achieving the best results for all New Zealand children. For example national standards provide parents with information as to how their children are doing which helps provide accountability. I am sure the member would support the general concept of parents knowing exactly what their children are up to. 
Brendan Horan 
: Will the Minister show her accountability by revealing to this House the expensive reasons why staff around her are being paid to leave? 
Hon NIKKI KAYE 
: The member will be aware that staffing matters regarding ministerial offices are the responsibility of the Department of Internal Affairs. 
Dr Cam Calder 
: What steps is the Government taking to strengthen accountability for raising achievement? 
Hon NIKKI KAYE 
: Our Government is doing a number of things to ensure every child in New Zealand gets a great education. We have set Better Public Services targets at early childhood education National Certificate of Educational Achievement level 2 and New Zealand Qualifications Framework level 4. We are putting more money into education than ever before and we are clearer about what we want as a result of it. 
Rt Hon Winston Peters 
: Is a sound education and understanding of accountability for other people’s money and assets paramount within our education system and why is that important? 
Hon NIKKI KAYE 
: Yes. It is important because we are all elected by the people of New Zealand and we need to ensure we are accountable as members of Parliament. 
Chris Hipkins 
: If we are all accountable to the people of New Zealand for the decisions we make will the Minister of Education resign her position given the taxpayer now has to fork out $11 million to fix up the mess she has made with Novopay? 
Hon NIKKI KAYE 
: No. When we look at the issue of Novopay we have done a huge amount. The Minister responsible for Novopay Steven Joyce today announced a superb package of support for schools and we are very proud of that package. 
Brendan Horan 
: Will the Minister show accountability and assure the House that as Ombudsman David McGee stated it is unacceptable for there to be any suggestion that a Government department must bypass the Official Information Act and can she guarantee that that will not happen with education in this term? 
Hon NIKKI KAYE 
: The member will be aware that these matters are before the Education and Science Committee and I think that of all the members in this House who care about due process it would be that one. 
Prime Minister—Statements on Solid Energy and Novopay 
3. 
DAVID SHEARER (Leader of the Opposition) 
 to the  
Prime Minister 
: Does he stand by all his statements? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 Yes I do stand by all my statements and in that I include bank statements. 
David Shearer 
: Thank you Mr Speaker. [ 
Interruption 
] 
Mr SPEAKER 
: Order! I want to hear the question. 
David Shearer 
: Does he stand by his statement that one of the three problems with Solid Energy was that it “added gearing to a company that historically had not had gearing” or is Tony Ryall right when he said that debt was not the cause of Solid Energy’s problems? 
Rt Hon JOHN KEY 
: Both are correct. In the case of Solid Energy debt did not cause the collapse of the company but if there was not debt the Government would not have to be in the restructuring process that we are in. 
David Shearer 
: Did his Minister of Finance approve the sending of a letter to Solid Energy indicating his expectation that it would “increase their gearing from current levels”? 
Rt Hon JOHN KEY 
: My understanding is that Simon Power as the Associate Minister of Finance actually sent it not the Minister of Finance—yes. That looks pretty consistent from what I can see with the letter that Mr Mallard sent where he said that the indications were that the gearing should be around about 35 percent and in fact that the dividends should be around about 65 percent of profits. 
Hon John Banks 
: When the Prime Minister said it was unfortunate that Mr Shearer forgot to disclose— 
Mr SPEAKER 
: Order! [ 
Interruption 
] Order! 
Hon Trevor Mallard 
: Point of order. 
Mr SPEAKER 
: I do not believe I need assistance. The Prime Minister certainly has no responsibility for that matter. 
Hon John Banks 
: Supplementary question Mr Speaker. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. Does the ACT Party have two supplementary questions today? 
Mr SPEAKER 
: Well I have ruled that one out. 
Hon Trevor Mallard 
: No no. You have ruled it out. You let him ask it and you ruled it out. At that point it is gone. You did not invite him to rephrase it. 
Mr SPEAKER 
: The ACT Party has one question. The member can seek leave if he so wishes. [ 
Interruption 
] Order! There is one supplementary question. It has been used up. It was ruled out of order. If the member wishes to have another supplementary question he will have to seek leave to do so. 
Hon John Banks 
: I seek leave to do so. [ 
Interruption 
] 
Hon Gerry Brownlee 
: I raise a point of order Mr Speaker. Although it was pretty clear from the few words that the Hon John Banks got out— 
Mr SPEAKER 
: No I have ruled. 
Hon Gerry Brownlee 
: I realise you have ruled. I just want to get a clarification about where we are going from here. Although it was clear that Mr Banks was going to raise a matter that has been of interest in the news recently—and you were quick to then suggest and in fact rule it out assuming that there was no link to anything the Prime Minister had said. On other occasions notably over the last few weeks you have given Opposition members an opportunity to rephrase their questions up to three times. I wonder whether it would be possible for Mr Banks to get similar treatment. 
Mr SPEAKER 
: I thank the member for his assistance. On this occasion I have ruled; we will move on. The questioner an experienced member raised a question that clearly was not going to be in order so he has lost that opportunity. He has sought leave. The House has the opportunity to so decide and has done so. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. This is not to challenge your ruling because I want to discuss the fact that Mr Banks sought leave. If he had gone on to explain that he wanted to talk about the Kim Dotcom affair— 
Mr SPEAKER 
: Order! That is not a point of order. 
David Shearer 
: Can he confirm that the financial performance measures for State-owned enterprises including Solid Energy announced in June 2010 explicitly tell boards that they would be judged according to their gearing ratio and that the Crown expected a gearing ratio of around 40 percent? 
Rt Hon JOHN KEY 
: From memory that reflects—though I do not have the letter—the letter that was sent. I think it is also worth recalling that Mr Palmer the chairman of Solid Energy actually wrote back to Mr Power and made it quite clear that gearing ratios and matters of the balance sheet were the sole preserve of the company and not the Government. 
David Shearer 
: Does he agree with the December 2008 Treasury report that the appointments to State-owned enterprise boards are the single most important lever that Ministers have for influencing State-owned enterprise performance? 
Rt Hon JOHN KEY 
: I am not sure I would say it is the single most important lever. I think it is a very important lever and that is one of the ones that this Government has followed by making I think pretty sound appointments where possible. But there are other levers of course that the Government can pull. 
David Shearer 
: If his Government is so dissatisfied with the board’s approach as he is suggesting why did it reappoint five of the members after 2008 and reappoint the chair John Palmer not once but twice? 
Rt Hon JOHN KEY 
: The member is giving different time-scales on what has taken place—[ 
Interruption 
] Well he gets confused with numbers—I will tell you that for nothing. But anyway— 
Mr SPEAKER 
: Order! 
Rt Hon JOHN KEY 
: There are different time-scales but what is quite clear—[ 
Interruption 
] 
Mr SPEAKER 
: Order! Would you allow the Prime Minister to please answer the question. 
Rt Hon JOHN KEY 
: What is clear is that during a period of time the company—in this case Solid Energy—had aspirations to change the fabric of that company into something far greater and far more audacious than was the case of the Government. In the case of the Government we pushed back on those issues. That did not mean that we did not have faith in the board but what it did say was that we did not agree with the plan it was under. When we ultimately went through the mixed-ownership model and had the scoping study it was at that point that we absolutely determined that there were bigger issues in terms of that company if we were going to go through the mixed-ownership model with that company. 
David Shearer 
: Does he seriously expect New Zealanders to believe that the Government demands that the company increase its debts promises to judge the company on that debt and then when the company’s debt increases by $178 million in a single year says that these are all somehow unrelated events? 
Rt Hon JOHN KEY 
: What is true with Solid Energy is that the board and management have sole responsibility for the quality of decision making that they do in terms of investments. What is also true is that we did not demand an increase in gearing; we followed exactly the same process that Trevor Mallard did which was the recommendations from Treasury and the company made it clear that it would make its own decisions. In the end if the member is wanting—[ 
Interruption 
] Well the member has been running around the country saying that the problem is that we want dividends when for months beforehand he was saying that the great thing about State-owned enterprises is they pay dividends. I mean you cannot have it both ways Mr Shearer. You cannot have an account in New York and an account— 
Mr SPEAKER 
: Order! 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. You earlier ruled out one area of questioning. The Prime Minister started off out of order you brought him back into line and he finished up out of order. I wonder whether Mr Speaker this is an indication of new standards; if so— 
Mr SPEAKER 
: Order! The last part of the Prime Minister’s answer was certainly not helpful to the order of the House. Further supplementary questions? 
Metiria Turei 
: Supplementary—[ 
Interruption 
] 
Mr SPEAKER 
: Order! [ 
Interruption 
] Order! Supplementary question Metiria Turei. 
Metiria Turei 
: Tena koe Mr Speaker. Tena koutou e te Whare. Given the Prime Minister said yesterday that today was not D-Day for Novopay when can New Zealanders expect a decision on Novopay such that they will have confidence that schools will no longer be burdened with this failed system? 
Rt Hon JOHN KEY 
: Can the member please give the date when I actually said that statement? I do not recall saying it. 
Mr SPEAKER 
: Well in the question she said it was yesterday as I understood. Does the member want to repeat the question for the benefit of the Prime Minister? 
Rt Hon JOHN KEY 
: I raise a point of order Mr Speaker. It is not a question of repeating it. I do not believe I ever said it. If the member can tell me when I said it I will respond to it. 
Mr SPEAKER 
: That is a satisfactory answer. 
Hon John Banks 
: I raise a point of order Mr Speaker. You have just asked whether the member wants to rephrase the question— 
Mr SPEAKER 
: No I thought the Prime Minister needed it rephrased. He has said he disagrees with the question. We are moving on. He has satisfactorily answered it. 
Metiria Turei 
: When can principals teachers and families expect from his Government either a thumbs up or a thumbs down on Novopay? It is not too much to ask for some certainty for families. 
Rt Hon JOHN KEY 
: We are working our way through those issues. As the Minister announced today the Government is coming to the party with a significant cash offering to schools to try to help them through the process. 
Hon David Parker 
: What a botch-up. 
Rt Hon JOHN KEY 
: Well that was the botch-up that you guys started actually; we will just tidy it up. But you do not want to hear about that do you “Chippy”? Anyway— 
Mr SPEAKER 
: Order! 
Metiria Turei 
: I raise a point of order Mr Speaker. The Prime Minister did not address my question which was when— 
Mr SPEAKER 
: The Prime Minister very adequately addressed the question. 
Climate Change—Drought Conditions and Government Response 
4. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
 to the  
Minister of Finance 
: Does he stand by his response that human-induced climate change “may well be” real? 
Hon STEVEN JOYCE (Acting Minister of Finance) 
: 
 Yes the Minister stands by his full statement in which he also said: “The fact is that the Government is assisting farmers with short-term emergency-type assistance through a drought. If there is a succession of droughts farmers would need to change their farming practice; Government assistance will not protect them from the consequences of it.” 
Dr Russel Norman 
: Why cannot he simply say yes that he accepts the basic fact that human-induced climate change is happening and that it is causing more frequent and more intense droughts? 
Hon STEVEN JOYCE 
: I think the second part of that member’s question is open to debate actually by a whole range of experts. The point that the Minister was making last week in response to the member’s previous question is that in terms of the current drought the contribution by climate change is not as material as dealing with the drought. I think that is a very fair response. 
Dr Russel Norman 
: Well then in relation to his answer to that question does he disagree with the National Institute of Water and Atmospheric Research when it states: “Droughts are projected to become more frequent and more intense under climate change.”? 
Hon STEVEN JOYCE 
: No. The point that he was making is that the climate has many changes: firstly year-to-year variability and longer-term climate change. These are things that farmers have dealt with since time immemorial. Also farmers deal with other things including economic change and technology change. They no longer for example use horses to pull ploughs which may come as news to the member. But the reality is all these things change and farmers are capable of coping with those changes. 
Dr Russel Norman 
: Does he think that 97.4 percent of climate scientists in an international survey who think that human-induced climate change is real were being far too definite and maybe they should have said it just “may well be” happening? 
Hon STEVEN JOYCE 
: I am not sure which rabbit hole the member is trying to chase the Minister down at this point. There is no issue in terms of the work that is being done by climate scientists around the world. The only questions are firstly whether this particular drought is caused by climate-change and secondly whether the actual cause of it is as relevant at this point as the mitigation measures that are taken to help farmers through it. I think the Minister made the point that it was the mitigation measures that he was focused on. 
Dr Russel Norman 
: Well does he understand—to help the Minister—that the particular hole that I am trying to chase this rabbit down is the hole that says climate change causes more droughts and more intense droughts so the drought that we have just seen is more likely to occur in the future so the Government needs an adaptation plan? Does he have an adaptation plan? 
Hon STEVEN JOYCE 
: The reality is that I do not think anybody yet knows whether this drought is a consequence of anthropogenic climate change or not. The reality is that there is a drought this year. If there were a succession of droughts then obviously there would be further need to adjust. The Government has a number of adjustment measures including a huge amount of work going on in the water-quality space with the farming community— 
Hon Member 
: Irrigation. 
Hon STEVEN JOYCE 
: There are irrigation proposals that are being advanced as we speak and more generally there are also adaptation proposals. The Minister makes the other point that actually people—individuals and businesses—are very good at doing adaptation as well. 
Dr Russel Norman 
: Well then was US President Obama right when he said in relation to this issue: “We can choose to believe that Superstorm Sandy and the most severe drought in decades and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science—and act before it’s too late.”? When will he act? 
Hon STEVEN JOYCE 
: I am not qualified to comment on the President’s view of the Sandy storm but what I would point out is that actually in terms of individual weather events whether it is a drought or whether it is a flood I would very much doubt that many scientists would link those to climate change. What they would link it to is climate change over a period and there is no argument with that. Again I cannot think why the member is wasting all his supplementary questions on it. 
Canterbury Hospitals—Redevelopment 
5. 
NICKY WAGNER (National—Christchurch Central) 
 to the  
Minister of Health 
: What progress can he report on the Christchurch Hospital redevelopment project? 
Hon TONY RYALL (Minister of Health) 
: 
 The first site work on Christchurch’s $600 million - plus hospitals redevelopment project will start before the middle of this year. Cabinet has agreed to set aside around $500 million for the largest and most complex building project in the history of the New Zealand public health service. The rebuild will certainly go a long way to setting Canterbury health services back on their feet after the 2010 and 2011 earthquakes. 
Nicky Wagner 
: What will the Christchurch redevelopment project involve? 
Hon TONY RYALL 
: The work will include 159 new beds for Burwood and Christchurch Hospitals and eight extra operating theatres. Construction of a new facility for older people’s health is being fast tracked at Burwood Hospital with site clearing beginning mid-year and completion in 2015. Christchurch Hospital’s development or redevelopment includes a new expanded intensive care unit and emergency department purpose-designed space for paediatrics eight new operating theatres in-patient wards and new outpatient facilities; and is due for completion in 2018. 
Hon Annette King 
: Will the rebuild of Ashburton Hospital be funded from the $600 million announced yesterday; if not what funding if any has been allocated by the Government for Ashburton Hospital? 
Hon TONY RYALL 
: Ashburton Hospital will be rebuilt. It is my expectation that the funding will be a combination of district health board and Ministry of Health funding as that member has known. She has put out a statement saying the services were not going to be rebuilt— 
Hon Annette King 
: I raise a point of order Mr Speaker. That was a pretty straight question I think you will find and there was no need for the political cant that followed. 
Mr SPEAKER 
: That is true and it was adequately answered. The last part was not necessary. 
KiwiRail—Health and Safety 
6. 
DARIEN FENTON (Labour) 
 to the  
Minister of Transport 
: Does he have confidence in KiwiRail’s health and safety standards; if not why not? 
Hon GERRY BROWNLEE (Minister of Transport) 
: 
 Yes but there is always room for improvement. 
Darien Fenton 
: Has he seen reports that 10 workers could have died of carbon monoxide poisoning during work for KiwiRail on the Kaimai tunnel last year; if so is he satisfied that KiwiRail followed proper safety procedure in this case? 
Hon GERRY BROWNLEE 
: I have seen a report on the incident that occurred in the Kaimai tunnel. I have seen a press release from the Labour Party suggesting that death could have occurred. I think the press release is somewhat alarmist. The people who were in that situation had been given instruction in gas awareness for tunnel work and adequate safety equipment was issued to all persons who were in the tunnel at that time. 
Darien Fenton 
: Is he aware that KiwiRail’s own investigation found some of the group were not trained in tunnel gas awareness as they were supposed to be and there was no KiwiRail staff member in charge to issue safety gear and train the workers as per KiwiRail’s own instructions? 
Hon GERRY BROWNLEE 
: What I am aware of is that the person in charge of the contracted group had just completed tunnel gas awareness training and been certified as competent. The second group of concrete resin injection specialists although not specifically trained in tunnel awareness were under the direct supervision of the trained contractor and they did comply with the rules. At the time of the incident they were trained as was the requirement at the time. KiwiRail has conducted significant investigations into this and all of the recommendations from those considerations are being implemented. 
Darien Fenton 
: Is he aware that the workers were exposed to high levels of gas because they exited the tunnel in the wrong direction and that KiwiRail’s own investigation found this was because the evacuation plan was not created appropriately? 
Hon GERRY BROWNLEE 
: I am aware that there was a section of the track in the middle of the tunnel that was not available to be used and therefore exits had to be at either end of the tunnel and that the KiwiRail investigation does not specifically find that but rather that there could be better plans for the future and those most certainly will be enacted. 
Darien Fenton 
: Given his findings does he believe KiwiRail’s approach to health and safety is adequate; if not what action will he take as shareholding Minister to make sure another incident like this or worse does not occur? 
Hon GERRY BROWNLEE 
: I not only believe that their approach to health and safety is adequate I think it is excellent. You will note or the House can note that on the two measures—time injury frequency rate and medical treatment injury frequency rate—KiwiRail’s statistics have been improving consistently over the past few years. 
Roading—Newmarket Viaduct and Christchurch Southern Motorway 
7. 
PAUL GOLDSMITH (National) 
 to the  
Minister of Transport 
: What progress has the Government made on improving roading infrastructure? 
Hon GERRY BROWNLEE (Minister of Transport) 
: 
 Last Friday the Prime Minister opened the Newmarket Viaduct. The $244 million Newmarket project marks the southern end of the central motorway junction the busiest section of motorway in New Zealand. At its northern end is the Victoria Park Tunnel which was opened in late 2011. The Government’s roads of national significance programme is progressing and these two roads were part of that programme. In between both are a host of other motorway improvements and combined they provide much better transport connections around and through Auckland improving traffic flows between State Highway 1 and State Highway 16 and ensuring freight can move a lot more efficiently in and out of Auckland’s container port. Removing the old viaduct at Newmarket and constructing the new one with only a minimum of disruption to traffic on the southern motorway is a remarkable achievement in engineering and innovation. It also has very good environmental outcomes. 
Paul Goldsmith 
: What benefits can motorists expect from improvements to roading infrastructure? 
Hon GERRY BROWNLEE 
: Although it will take some time to measure completely the improvements that Newmarket’s viaduct will provide significant time savings are being reported thanks to the Government’s opening of the motorways for Victoria Park and indeed in Christchurch as well. Also there is about 3.5 minutes being saved on the Te Rapa bypass and motorists are experiencing that time saving also in the cost of fuel. This is a focus that we think is very very good for the economy. It certainly makes travelling on our roads much safer also. 
Paul Goldsmith 
: Did any other roading improvements report a time saving to motorists? 
Hon GERRY BROWNLEE 
: Yes. Earlier this year I opened stage one of the Christchurch Southern Motorway another one of the Government’s roads of national significance and already truck drivers are reporting time savings of up to 15 minutes between Rolleston and the Port of Lyttelton. This would represent a saving of nearly 10 litres of fuel. The Government is committed to improving our infrastructure and this is demonstrated in the savings and benefits to New Zealanders which are quite obvious. 
Iran Hostage Crisis 1979—Fictional Representation of Role of New Zealand Diplomats 
8. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
 to the  
Prime Minister 
: Does he stand by his reported statement in relation to the film  
Argo 
 that “I think it’s disappointing but I don’t think we want to go too far on these things”? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 Yes. 
Rt Hon Winston Peters 
: Does his statement “… I think we’ve made our point and we should probably move on.” mean that truth does not matter for the Prime Minister when New Zealand’s international reputation and standing are at stake and that his close ties to Hollywood outweigh his responsibilities to uphold New Zealand’s international reputation? 
Rt Hon JOHN KEY 
: No as I said when I made the actual original statement that the member is quoting from the next bit that I went on to say was: “New Zealanders know the role that our diplomats played.” etc. etc. trying to help. But let us be honest this was a fictionalised movie; it was not a documentary. Having now had this debate raging for a while the only tragedy of the movie is that it did not have subtitles because if it did then when the bit came up about New Zealand Winston Peters could have stood up in the movie and held up his sign— 
Mr SPEAKER 
: Order! Order! 
Rt Hon Winston Peters 
: Given that the Prime Minister saw fit to give Hollywood $67 million of taxpayers’ money from New Zealand— 
Hon Members 
: Argh! 
Rt Hon Winston Peters 
: They are not too happy now are they? Just groans now. 
Mr SPEAKER 
: Order! Would the member please ask the supplementary question. 
Rt Hon Winston Peters 
: Well given that the Prime Minister saw fit to give $67 million of hard-earned taxpayers’ money to Hollywood and his mates what measures will the Government take to restore New Zealand’s international reputation of courage not cowardice in the light of the  
Argo 
 misrepresentation? 
Rt Hon JOHN KEY 
: I as Prime Minister of New Zealand am on the record as saying that it is disappointing that this was portrayed in this way. Ben Affleck himself has basically said that he acknowledges those things. But this is a Hollywood movie and I hate to say to the member but if he wants to apply the same rigour to his own statements as he expects Hollywood does to fictionalised movies— 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. The last thing we want is a lesson on truth coming from that man— 
Mr SPEAKER 
: Order! Order! That is not a point of order. The member asked a very political question and he got quite a political answer back. 
Rt Hon Winston Peters 
: Will he consider making a posthumous acknowledgment of the New Zealand diplomats who at great risk to their lives aided Americans in the 1979 Tehran hostage crisis; if not why not? 
Rt Hon JOHN KEY 
: No. It is a Hollywood movie. The member is being a bit precious. I do not know whether he has ever spent a good Christmas holiday reading a book and then— 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. That question was not about a movie. It was about the brave actions of New Zealand diplomats in 1979 and whether they will be given an award—nothing to do with the movie at all. Now please ask him to address the question. 
Mr SPEAKER 
: The right honourable Prime Minister. 
Rt Hon JOHN KEY 
: As I said no. It was a fictionalised movie not a documentary. 
Mr SPEAKER 
: Thank you. 
Auckland Council—Planning and Interaction with Government 
METIRIA TUREI (Co-Leader—Green) 
: 
 Thank you Mr Speaker—[ 
Interruption 
] 
Mr SPEAKER 
: Order! Order! Metiria Turei has a right to have her question heard. 
9. 
METIRIA TUREI (Co-Leader—Green) 
 to the  
Prime Minister 
: Does he stand by his statement that “our plan will allow Auckland’s civic leaders to think regionally plan strategically and act decisively in a way that has not happened for the past six decades”? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 I stand by my April 2009 statement that changes to Auckland governance will allow Auckland civic leaders to think regionally plan strategically and act decisively in a way that was not occurring previously. 
Metiria Turei 
: How does his statement that he wants the Auckland Council to plan strategically and act decisively stand if when it does his Government makes threats to its housing plans attacks its transport plans and refuses to listen to the will of Auckland people? 
Rt Hon JOHN KEY 
: I do not actually agree with the statement the member is making. We are not attacking the council; we certainly as a Government engage with it. We will engage with it because the truth is that the Auckland Council would expect the Government to be a large contributor to many of its plans and therefore it is the responsibility of the Government which is doling out those funds to make sure that they are right. 
Metiria Turei 
: Does the Prime Minister support the threats made by Nick Smith and Amy Adams against the Auckland Council because the Government intends to override local communities whenever they make decisions that he does not like? 
Rt Hon JOHN KEY 
: Neither Minister Adams nor Minister Smith have made threats. They have engaged in dialogue with the Auckland Council. Actually interestingly enough—and this of course is the interesting point is it not—it is the Auckland Council that wants the Government to pass legislation to enact the unitary plan straight away with no input and no opportunity for Aucklanders to express a view yet the member who seems normally to dine out on consultation wants Aucklanders to have no consultation at all. If anything it is the Government that is standing up for consultation with Aucklanders and the Green Party and Labour that are silent as little Lamb Chops. 
Metiria Turei 
: When the Prime Minister said that he believed that the Auckland Council and central government could work together did he actually mean that he expected Auckland to do as Wellington told it and that if it will not his Government is quite happy to steamroll over the democratic rights of Aucklanders from their plan? 
Rt Hon JOHN KEY 
: No we work together with the Auckland Council. As I said before steamrolling over Aucklanders would give them no opportunity to express their views which is actually what the Auckland Council is at one level asking for—no opportunity at all for Aucklanders to express their views on their unitary plan. That is what the Government is doing. We work quite collaboratively with the council on many issues. 
Metiria Turei 
: If the Prime Minister is committed to working collaboratively with the council as he has just said why will he not sit down with Len Brown and Deputy Mayor Penny Hulse after their open letters to him to work out a process that better reflects the requirements of Aucklanders who want to be decision makers over their own city? 
Rt Hon JOHN KEY 
: I sit down with Len Brown at a formalised meeting every I think—it is either every month or every 6 weeks. I happen to be having dinner with him in Parnell. If the member wants to join us I will let her know what table we are going to. 
Tax System—Proposed Changes to Fringe Benefit Tax 
10. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Revenue 
: Why has the Government decided not to change the fringe benefit taxation of employer-provided car parks in Auckland and Wellington but to leave in place proposals to tax cell phones and laptops? 
Hon PETER DUNNE (Minister of Revenue) 
: 
 The reason for the car-park decision was made clear in yesterday’s joint press release with the Minister of Finance. The proposals to review the tax treatment of the use of cellphones or laptops were included in an official issues paper reviewing the wider treatment of employee allowances and other expenditure payments. The Government has made no decisions on any of these issues but is currently undertaking consultation on whether the existing law needs to be updated. With regard to cellphones and laptops I will not be recommending any change to their current treatment unless the consultation process highlights anomalies or inconsistencies that need to be resolved in the interests of fairness and equity. 
Hon David Cunliffe 
: What due diligence was done on the compliance costs of the car-park tax prior to Cabinet approval and his lodging Supplementary Order Paper 167 on the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill and did this concur with independent analysis that showed the compliance costs would be far higher than the revenue gained from the tax? 
Hon PETER DUNNE 
: Consistent with the generic tax policy process that has been in place since the mid-1990s the announcement was made early last year that we were considering such a proposal. An issues paper was released and submissions were invited upon that issues paper. As a result of that issues paper recommendations were made to Cabinet which were included in legislation. The groups that led the campaign that became prominent last week did not make any submissions to any of those documents at any earlier stage. 
Hon David Cunliffe 
: I seek leave to table a letter from the New Zealand Institute of Economic Research where it has identified gaps in the Government’s analysis which prevents the paper from being “required reasonable or robust” and concludes that it is not clear at all from the regulatory impact statement that the proposed solutions are superior to the status quo. 
Mr SPEAKER 
: What is the date of the New Zealand Institute of Economic Research’s letter? 
Hon David Cunliffe 
: The date of that letter is 7 March 2013. 
Mr SPEAKER 
: Leave is sought to table that. Are there any objections? Yes there is. 
Hon David Cunliffe 
: I seek leave to table a document from accounting firm Lock and Partners estimating that the compliance cost of the car-park tax is roughly double the revenue that it would bring in. 
Mr SPEAKER 
: Leave is sought to table an opinion from Lock and Partners. There is objection. 
Hon David Cunliffe 
: What due diligence has therefore been conducted on his next proposal to tax cellphones tablets and laptops and does he expect “even stronger” opposition to this such as the more than 90 percent of Stuff poll respondents who oppose the iPad tax and the proposed campaign by the Employers and Manufacturers Association? 
Hon PETER DUNNE 
: I will answer two of the three questions contained in that. Firstly the quote that the member referred to was mine so of course I stand by it. Secondly with regard to the development of the proposals relating to iPads cellphones etc. they are more to do with the consistency of the application of the tax rules than any revenue gain. The member may not have noticed but technology has moved substantially in recent years and there are anomalies within existing tax law in terms of their treatment. That was what the consultation process was seeking to resolve. As I said in my primary answer if I cannot be satisfied that there will be fair and equitable outcomes as a result of that I will not be recommending any change to the existing arrangements. 
Hon David Cunliffe 
: I seek leave to table an email from the Employers and Manufacturers Association dated 18 March—yesterday—which notes the start of a new campaign against the taxation of work cellphones and laptops. 
Mr SPEAKER 
: Whom is the email to? 
Hon David Cunliffe 
: Sorry? 
Mr SPEAKER 
: Whom is the email to? 
Hon David Cunliffe 
: The email is a circular email to the membership of the Employers and Manufacturers Association. 
Mr SPEAKER 
: Leave is sought to table such an email. Is there any objection? Yes there is. 
Hon David Cunliffe 
: This one is internet-based but not generally available. I seek leave to table a snapshot of the Stuff online poll that shows 90.5 percent of respondents opposed to cellphone tax— 
Mr SPEAKER 
: Order! That is available if members so want it. 
Hon David Cunliffe 
: Does he agree with Prime Minister John Key’s statements immediately before the House today that “There is virtually no chance of [laptop and cellphone tax] going ahead.”; if he does agree with that will he now commit to withdrawing this bizarre tax proposal? 
Hon PETER DUNNE 
: The member should listen before reverting to invective. What I said in my primary answer was that I would not be recommending that this tax proceed unless there were significant issues of fairness and equity that could be resolved as a result of the change. That remains the position I think it is entirely consistent with what the Prime Minister said and it is a proper and responsible way to approach these issues. 
Hon David Cunliffe 
: Did the Prime Minister consult him before ruling out the cellphone tax at 1.55 p.m. today; if so and he was consulted why did he not withdraw the barking-mad tax himself rather than wait for the Prime Minister to do it? 
Hon PETER DUNNE 
: I have had a number of discussions in recent days with the Prime Minister on these matters but I want to make the point clear to the member who seems unwilling or incapable of understanding it. This is not a Government proposal; it is a suggestion by the Inland Revenue Department out there for consultation. When that member was the Associate Minister of Revenue in a previous Labour Government I recall him issuing an issues paper relating to a capital gains tax on people’s offshore savings which I had to tidy up when I became the Minister. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. I seek leave to table—[ 
Interruption 
] 
Mr SPEAKER 
: Order! A point of order has been raised and I want to hear what it is. 
Hon David Cunliffe 
: Thank you Mr Speaker. I seek leave to table a statement by the Hon Dr Michael Cullen that shows that he considered but rejected the same tax the Hon Peter Dunne has just floated on the grounds of excessive compliance costs. 
Mr SPEAKER 
: What date is the statement? 
Hon David Cunliffe 
: The date is 2005. 
Mr SPEAKER 
: No that is not necessary. 
Hon David Parker 
: I raise a point of order Mr Speaker. I do not understand why that was not in order to be tabled. 
Mr SPEAKER 
: Because it was a press release done many many years ago. 
Hon David Parker 
: It wasn’t a press release was it? 
Mr SPEAKER 
: Yes it was. 
Hon Trevor Mallard 
: Point of order Mr Speaker. 
Hon David Cunliffe 
: Point of order Mr Speaker. 
Mr SPEAKER 
: No. Look I can deal with only one point of order at a time. 
Hon David Cunliffe 
: In answer to the Speaker’s question it was an excerpt from a speech given by the then Minister in approximately August 2005. 
Mr SPEAKER 
: Was it a speech given in the House? 
Hon David Cunliffe 
: By the then Minister of Finance and Revenue the Hon Dr Michael Cullen. 
Mr SPEAKER 
: In the House? 
Hon David Cunliffe 
: No in public. 
Mr SPEAKER 
: Listen the easiest way to resolve this is. Leave has been sought to table a speech from Dr Michael Cullen. Is there any objection? Yes there is. 
Mr SPEAKER 
: Question No. 11 Melissa Lee. 
Hon Dr Nick Smith 
: Supplementary Mr Speaker. 
Mr SPEAKER 
: Sorry. Supplementary question the Hon Dr Nick Smith. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. You cannot call a supplementary question when you have called the next question. 
Mr SPEAKER 
: I did not see it. 
Hon Trevor Mallard 
: He wasn’t standing; she was. You called her and once you’ve called her you can’t go back. 
Mr SPEAKER 
: I am going back and I have given the call to the Hon Dr Nick Smith for a supplementary question. 
Hon Trevor Mallard 
: Can we go back to question No. 1 Mr Speaker? 
Mr SPEAKER 
: No but if the member carries on like that he will not be here for question No. 12 I can assure him of that. Right we—[ 
Interruption 
] Order! We have a supplementary question from the Hon Dr Nick Smith. 
Hon Dr Nick Smith 
: What reports has he received on proposals for taxing offshore bank accounts and would they require the disclosure of those bank accounts for those to take effect? 
Hon PETER DUNNE 
: I have not received reports in recent days but I do recall advice at the time I first became the Minister of Revenue regarding a Government discussion paper issued under the previous Government that was in vogue at that stage in the name of the primary questioner which proposed putting in place what would effectively be a capital gains tax on people’s offshore savings. It is interesting to note— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. Two points: first of all I am going to ask you to review on tape your decision to allow that supplementary question to progress and second I invite you to look at whether you should have cut it off when the area the Minister was responsible for had finished. 
Mr SPEAKER 
: I thank the member for his assistance. 
Hon Gerry Brownlee 
: I raise a point of order Mr Speaker. I would never want to stop you from having the joy of watching yourself on tape in the late hours of the evening but I think you should rule on the second part of that question now. It was not out of order. The Minister was asked a fair question related to the primary— 
Mr SPEAKER 
: I thank the member. I have said I will have a look at the transcript tonight and I will. 
Hon David Cunliffe 
: I seek leave to table a copy of the National - United Future coalition agreement a matter now of some— 
Mr SPEAKER 
: No that is available to all members. 
Child Protection—Social Workers in Hospitals and Children’s Action Plan 
11. 
MELISSA LEE (National) 
 to the  
Minister for Social Development 
: How is the Government’s Social Workers in Hospitals initiative making a difference for vulnerable children? 
Hon PAULA BENNETT (Minister for Social Development) 
: 
 The social workers in hospitals initiative was introduced by National in 2009. We now have a Child Youth and Family social worker based in every district health board in the country. When hospitals admit children if staff have care and protection concerns the social worker engages with the family and hospital staff. In the last 6 months of 2012 7386 consultations took place about families they were worried about. As a result 1059 reports of concern were made to Child Youth and Family. 
Melissa Lee 
: What feedback has she received about front-line staff working together to better protect vulnerable children? 
Hon PAULA BENNETT 
: Feedback from health professionals shows that there is a growing confidence about how they can report concerns and Child Youth and Family social workers are a welcome part of the team. Last week I visited Palmerston North Hospital and met with one of our social workers and with health professionals there. You could see—and it was really evident in the relationships they have together—the fact that they can get in earlier when that concern is there make a difference and get the right support in place so that that in many cases very young baby is safe when they go home. 
Melissa Lee 
: What lessons can we learn from this initiative to support the work of the Government’s Children’s Action Plan? 
Hon PAULA BENNETT 
: The Children’s Action Plan which is part of the White Paper for Vulnerable Children is clearly focused on front-line staff—front-line people—and how we get them together with much better coordination earlier in the lives of the children who need our support and help. That is why the Government has also told the chief executives and their equivalents of social development health education justice police housing and Te PuniKokiri that they must work together to have a coordinated response to those vulnerable children who so desperately need them. 
Jacinda Ardern 
: What is the caseload for her social workers in hospitals and does she believe that this number represents a fair workload for these social workers? 
Hon PAULA BENNETT 
: It is different for different district health boards because it depends on how big it is with the Child Youth and Family workers who they have had recently. They do not work long term with families though; they are very much about getting the support longer term. They might refer to an NGO or as I said on to Child Youth and Family and get them better attached there if they have to. 
Teachers and Support Staff Payroll—Measures to Address Issues Arising from Problems with Novopay System 
12. 
CHRIS HIPKINS (Labour—Rimutaka) 
 to the  
Minister responsible for Novopay 
: Is he confident that teachers will now be receiving the correct pay in future pay rounds; if not why not? 
Hon STEVEN JOYCE (Minister responsible for Novopay) 
: 
 No not in the case of all teachers. Can I suggest that the member read some of the 10 media releases I have put out over the last 8 weeks that explain some of the issues with Novopay which are very complex. There will be no quick fix for it and the Government is working quickly on a range of fronts to address those issues. For the member’s benefit I will say that today I released the technical review into this school payroll system. It makes a number of conclusions: that the core software platforms are not currently stable that the system can be made stable with greater effort and capability from both the ministry and Talent2 and that inadequate quality assurance processes have contributed to the issues experienced. The report lays out a number of key milestones that the remediation plan currently under way is targeted to meet—that is dropping the number of complaints and notifications from 2.2 percent in a pay to less than 1 percent and we are making good progress in that respect. There is also a backlog clearing unit that has been set up and is gearing up now with the goal of reducing the backlog workload to business-as-usual levels by the end of June. 
Chris Hipkins 
: Can he give an assurance that no teacher who has been overpaid in one pay cycle and then underpaid in a subsequent pay cycle will be pursued for repayments before they have received all of the money they were due in the first place; if not why not? 
Hon STEVEN JOYCE 
: In terms of overpayments and underpayments the member will be aware that in relation to the Novopay system we have stopped any debt collection processes in regard to that. The debt collection that is going on now is for the 200 or so that were outstanding from the previous system. The whole purpose of the backlog clearance unit is to do exactly what the member talks about which is to progressively clear through those issues and ensure that they are put right for each staff member who is affected. 
Chris Hipkins 
: I raise a point of order Mr Speaker. I asked about people being pursued for repayments. I was not asking about debt collection; I was asking about whether they were being pursued for repayments which is a slightly different take. I wonder whether the Minister could address that. 
Mr SPEAKER 
: Order! The member has further supplementary questions. I think the Minister very adequately addressed your question. You have further supplementary questions. 
Chris Hipkins 
: Is the Minister indicating in his answer that somebody who has experienced a series of pay problems will not be pursued for overpayments—not necessarily by debt collectors; they just will not be pursued for overpayments—until it is known exactly what the outcome of that is going to be? 
Hon STEVEN JOYCE 
: What is happening is that these issues are progressively getting solved. I cannot give the member a particular assurance on a particular method around a particular issue but what I can say is that if the member has anybody in that category or if anybody is in that category then they should contact the ministry and their issues will be addressed. 
Chris Hipkins 
: Did he ask how Talent2 was intending to recover overpayments when he was put in charge of Novopay; if not why not? 
Hon STEVEN JOYCE 
: I asked a whole range of questions—not that particular one but could I point out to the member that in relation to that the system for recovering payments is exactly the same system that has been in place for many years with the same subcontractor and with the same process as has applied the entire time and in fact with the same people doing it. So there has been no change in that process for the last many years. 
Chris Hipkins 
: Given the massive backlog of problems with Novopay that were already evident when he became the Minister responsible for it why did he not think to ask what process was in place for recovering the overpayments and instruct Talent2 that sending debt collectors on to people who were still not being paid correctly perhaps was not such a good idea? 
Hon STEVEN JOYCE 
: I would say that one of the things that was not a good idea was where we started in this whole place in the first place in terms of setting the contract up. Because one of the issues raised by the technical review— 
Chris Hipkins 
: I raise a point of order Mr Speaker. I did not ask— 
Mr SPEAKER 
: Order! The Minister is attempting to answer your question. 
Chris Hipkins 
: No he is not. I did not ask him anything about the contract in the first place. 
Mr SPEAKER 
: If we have a chance to listen to the answer—but if you are going to interrupt the answer we are not going to know whether the Minister has addressed it. 
Hon STEVEN JOYCE 
: The point I was making was that I inherited a situation that has created a whole range of issues that go back very many years including back to when that member was a ministerial adviser recommending in favour of the Novopay deal in Trevor Mallard’s office. The point is that in the 8 weeks that I have had the role I have chased down a whole—[ 
Interruption 
] 
Mr SPEAKER 
: Order! If the member continues with that I will have to ask him to leave the House. 
Hon Trevor Mallard 
: Well tell him to tell the truth. 
Mr SPEAKER 
: Order! It is completely unparliamentary to call anyone a liar in this House. The member will stand and withdraw those comments please. 
Hon Trevor Mallard 
: I withdraw. 
Mr SPEAKER 
: Supplementary question— 
Chris Hipkins 
: I raise a point of order Mr Speaker. The Minister had not finished his answer. He has not actually addressed the question that I asked him in the first place. 
Mr SPEAKER 
: I am going to ask the member to ask the question again. 
Chris Hipkins 
: I do not think I can actually remember completely what the question was. Maybe the Minister could just address it. 
Mr SPEAKER 
: No if the member wants to repeat his question I have given him the opportunity. [ 
Interruption 
] OK. Has the member got further supplementary questions? 
Chris Hipkins 
: Why did he not give Talent2 a clear instruction before last week not to use debt collectors? 
Hon STEVEN JOYCE 
: In fact I did not have to because as soon as the matter came to light while I was still on a plane the Secretary for Education made his own decision that that would not proceed. The fact of the matter is that at that point I think seven people had been approached by debt collectors in relation to the Talent2 system and there were currently 200 people being approached by the previous system. The point is that the secretary acted as soon as it was brought to his attention. 
Rt Hon John Key 
: I raise a point of order Mr Speaker. I just noticed today that the sound system has been very quiet. It has been quite hard to hear the questioners and I wonder whether you could ask the technicians to have a look at it. 
Mr SPEAKER 
: I will certainly do so. There have been some problems with the sound system. I was informed that it was operating but we will certainly have a look at it. I thank the Prime Minister for that. 
Financial Review Debate 
In Committee 
Debate resumed from 12 March on the Appropriation (2011/12 Financial Review) Bill. 
Ministry for the Environment ( 
continued 
)  
EUGENIE SAGE (Green) 
: 
Tena koe Mr Chairperson. One of the major changes that the Ministry for the Environment is working on as part of its policy under this Government is to change the way in which planning is done under the Resource Management Act so that Ministers would have much more power to intervene and direct councils to amend or change their plans. Instead of the ministry developing policy statements and national environmental standards so that we have consistent environmental policy around New Zealand we would have the Minister being able to intervene to pick and choose winners—to potentially direct the Northland councils to promote mining in their plans or Hawke’s Bay to have policies that would make it easier for mega think-big risky schemes like Ruataniwha to proceed or in Auckland for the Minister to be able to smash the metropolitan urban limits in order to allow urban sprawl when the council had specifically put those limits in place to avoid urban sprawl. As prominent Bluegreens member and former ministerial adviser Guy Salmon has said: “This is what they do in China.” 
This is worse than the National Development Act in the Muldoon era. And it is this ministry under this Government that is promoting these substantive changes to the Resource Management Act and also proposing to strip out five of the key environmental principles in the heart of the Act—the purpose section in Part 2. These changes are deeply troubling because they potentially promote the politicisation of the Public Service and the ministry and the potential for more dodgy backroom deals as we have seen with Skycity. When you have a ministry that has got only 280-odd staff and those staff are based in Wellington—the ministry does not have any regional offices in Christchurch or in Auckland any more—it is simply not credible to believe that the ministry would be adding value on the specific challenges that we have on land management water management and coastal management in a particular region by giving these powers to the Minister. The powers will not be promoting— 
Report noted. 
Ministry for Primary Industries 
Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman) 
: 
 A little over 2 weeks ago we had a very revealing document tabled in this House that says more about the Government’s management of primary industries than anything else. It came from the Auditor-General which is probably the organisation with the most credibility across this nation and that document was very revealing. Of course it stated the obvious—that our country is more dependent on biosecurity than any other developed country. It stated: “it is my view that MPI is under-prepared for potential incursions from some high-risk organisms.” The response of the Minister in the chair the Minister for Primary Industries was that since the year 2000 funding for biosecurity has doubled. And do you know what? That is the truth. What he failed to say was that all of that funding occurred under a Labour Government and that the first thing that the National Government did on coming in was to slash $2 million from front-line biosecurity services. 
I will quote part 3 of the document: “The Ministry has lacked a strategic approach to capability. This includes workforce planning and with some exceptions its approach to information and information technology. Both of these areas represent serious risks for the Ministry.” Well they are greater risks for the country particularly when you go over the page where you read again: “The lack of realistic business planning also affected the preparation of new response plans … Insufficient resources have meant that many of the plans have not been completed or tested to ensure that they are fit for purpose.” Each and every day we are under huge threat from biosecurity incursions that could cripple this economy. 
Yesterday the Minister’s department fought the pork industry to allow pork imports from countries that have PRRS—porcine reproductive and respiratory syndrome—a disease that costs the US industry $600 million every year. The ministry fought the pork industry to lower the import health standards to allow pork that might satisfy a few supermarkets and a few pork industry traders. It is simply not good enough that the National Government slashes funding for biosecurity and allows and oversees a ministry that is ill-prepared for these. It states in the report that we are ill-prepared for an outbreak of foot-and-mouth disease let alone the increased risk from things like porcine reproductive and respiratory syndrome. 
It is a shocking indictment on a National Government that claims to be the representative party of the primary producers that it has stood by and ignored the realities of this report which we have known about for some time. It has been slashing funding for biosecurity and for the Minister to get up and say that funding has doubled since 2000 but fail to say that almost every one of those dollars occurred under a Labour-led Government—not National—is an insult to the good people who run biosecurity services up and down this country. They know full well the risks that we incur from visitors from imports and from everyday trade let alone the determination by the Ministry for Primary Industries to allow in pork under reduced import health standards and to allow Australian honey with the diseases that might come from that. 
We have facing us every day an example of the failure of a ministry that gave us reassurance time and time again that it was world class through Psa. We have a kiwifruit industry that has been devastated by Psa and by a Government department that failed and was incapable of assessing the risks. The Auditor-General has said quite clearly that unless something is done to increase the resources—it is stated here in the report—there are insufficient resources to carry out the planning necessary. The Government must put more funding into biosecurity. It must raise the bar because of the increased levels of visitation by people from countries like China or you name it. We have every day coming into this country palm kernel expeller or PKE which is needed for cows. That is understandable as we have droughts and we have shortages of feed. But the ministry is in no way prepared to assess and prepare for the risks that might come through foot-and-mouth disease. 
Hon NATHAN GUY (Minister for Primary Industries) 
: 
 It is an opportunity for me to respond to the member Damien O’Connor who has just resumed his seat because I think that Mr O’Connor wants to play politics with what is a very serious issue. Actually I challenge Mr O’Connor as to whether he has actually read the whole report or just read the executive summary. If Mr O’Connor has read the whole report he will realise that the Auditor-General actually said that we have got a pretty good system and there are seven recommendations that I and the Director-General of the Ministry for Primary Industries have said we will take on board. What Mr O’Connor fails to recognise—what he fails to recognise—is that we do have a world-class biosecurity system. 
Hon Damien O’Connor 
: No we don’t. 
Hon NATHAN GUY 
: Yes we do. The Auditor-General was sitting in the room when we ran the foot-and-mouth exercise called Exercise Taurus last year and as a result of that exercise we are adopting a lot of the learnings from that unlike when that member was last in Government. When that member was last in Government it is worthwhile noting that it ran a simulation on foot-and-mouth. What was interesting was that those recommendations just sat on the shelf. The 2005 recommendations under Labour from running a foot-and-mouth disease exercise were not even adopted. They were not even adopted. How dare that member come down into this Chamber and say that we are sitting on our hands? Because that is not true. We will take these recommendations. We will take them seriously. I say to the member that this is my No. 1 priority—biosecurity. How dare that member come in here and say that we are not prepared? 
I want to raise another issue with him and that is about capability. Last year the Ministry for Primary Industries employed an extra 45 new quarantine inspectors 11 more were recruited in January this year seven detector dog handlers were recruited as well and there are a further four—11 new detector dogs have graduated as well. We take our biosecurity and our border control extremely seriously. 
Importantly what I want to say is that right now the country is under a pretty severe state of drought and it is good that it has rained. It is fantastic. What it will do this rainfall is a couple of things. One it will lift the spirits of rural communities. The second thing is that we will get pasture growing as well which is hugely important. We do not have a shortage of rainfall in this country. We have a storage issue. We need to store rain in the winter months and utilise it in the summer months. It is good for our economic growth. It is good for our environment. It is pretty simple. But when you look at Labour I am pretty sure it is opposed. Here is a question for Damien O’Connor. 
The CHAIRPERSON (H V Ross Robertson) 
: No no. 
Hon NATHAN GUY 
: Does Damien O’Connor support irrigation schemes or not? 
Hon Damien O’Connor 
: You answer the questions Minister. 
Hon NATHAN GUY 
: He cannot answer it. Damien O’Connor is silent because here is what his finance spokesman David Parker said recently: “its ill-considered subsidies that are coming from the taxpayer dollar to irrigation schemes”. That is what Labour thinks. So right now the country is pretty much under a drought—although let us hope it is breaking—and Labour is not prepared to help rural regional communities invest in irrigation schemes unlike this Government. We have said: “Here is $80 million to kick-start some of these regional irrigation schemes.” We would like to see that go to $400 million. We believe we can increase the productivity and look after the environment better with these regional irrigation schemes. There are about 400000 hectares where we can lift our productivity and improve the water quality of our freshwater rivers yet Labour is not prepared to back rural New Zealand—shameful. 
What we are also debating right now out in our communities is a generational change in water and fresh water and also the Resource Management Act as well. This is the once-in-a-generation water reform that we are having pretty good dialogue about across New Zealand at the moment. I wish to acknowledge the Land and Water Forum which has worked hard on this issue over the last 4 years. It has done fantastic work and we need to acknowledge that. The biggest issue that we are talking about up and down New Zealand in terms of fresh water and storage is to do with water quality and water quantity. We are getting very very good feedback. 
Overall water is just one part of growing our economic development. We have a very ambitious target of increasing our exports from 30 percent to 40 percent of GDP by 2025. The primary industry of course we all know plays a huge part—72 percent of merchandise exports. We are a nation of around 4.5 million people and we feed about 40 million people around the world. We export to 160 markets. We are recognised here in New Zealand as a bit of a world leader in innovation and food safety standards. Indeed recently I have just been over to Latin America with the Prime Minister and a business delegation of about 25. It becomes very apparent that we are world leading in our food safety standards. We carefully manage the impacts of our production on the environment. We have a real emphasis on animal welfare as well and looking after our animals. And we have a world-class biosecurity system. 
If you think about where we have come from since the 1980s when we had those big reforms—and that is what happens when we get on the world stage; they want to learn from us what happened in the 1980s and how we adjusted—the important point is that now we are exporting the same amount of lamb meat as we did in the 1980s but from about half the number of sheep. When you get on the world stage they look down on little old New Zealand and think that we are fantastic with our innovation our technology and lifting our productivity. That is why this Government has invested in the Primary Growth Partnership. That is the Government investing side by side with industry. It has been hugely successful. There are 13 projects up and running as we speak and $650 million invested in collaboration with the Government and the industry. That has been extremely worthwhile. 
We think about the Latin American trip. What became hugely important to me when I got into places like Colombia where most of the countries have a huge amount of land that is undeveloped is that they are very keen to foster joint ventures and partnerships with New Zealand because they realise that we have this wealth of experience in innovation and technology. That is going to be the future. We already have a very close working relationship with Chile. Chile is pretty much a cousin of New Zealand. You think about Colombia when President Santos stands up and says they want to see a free-trade agreement with New Zealand. That is absolutely fantastic because of the huge potential for New Zealand in Latin America particularly in Colombia. What we have also signalled that we are keen to invest in in Colombia is $4 million with some aid money to get this technology and expertise to work with their farmers closely. The signal that I have got from Colombia is 150 of their farmers are keen to come down to New Zealand. We can showcase all of the good work that we do in our primary industries. 
 In conclusion New Zealand is extremely well placed on the world stage. It was a very successful trip to Latin America with some deliverables to come from those 25-odd business groups that travelled with us. They had something like 138 meetings and about 42 now have concrete leads that they can follow up to continue to work on joint ventures and partnerships with these countries of Latin America. 
I am very ambitious for the primary industries. We have got a world-class biosecurity system we will adopt the recommendations from the Auditor-General and we will continue to make improvements. This Government is backing rural New Zealand. This Government cares about rural New Zealand. Labour does not care because it does not back irrigation projects. The Greens do not care because they do not believe that irrigation projects are sustainable. Rural New Zealand knows that the Greens and Labour coming together with New Zealand First will mean a capital gains tax and an enlarged emissions trading scheme that will cripple business. This National Government supported by ACT and United Future supports rural communities. The other side of the Chamber I am embarrassed to say does not. 
RICHARD PROSSER (NZ First) 
: 
 I am pleased to rise to take a call on behalf of New Zealand First. It is always a delight to follow the Hon Damien O’Connor and to echo many of his sentiments during this Committee of the whole House stage. Looking at my notes I see I have made mention of the Committee of the “whole Hose” rather than of the “whole House” and I think this typo is rather apt given that a hose is turned on at the tap. And opening the taps is what this Government appears hell-bent on doing when it comes to biosecurity risks facing New Zealand and its apparent willingness to allow them access. 
This Government—this National-led administration—by its own admission accepts and acknowledges that the agricultural sector is the cornerstone of New Zealand’s economy. Three dollars out of every four that this country earns in foreign exchange come ultimately from things that we grow and things that we harvest—farming fishing forestry the sheep farms the beef farms the vineyards the orchards the market gardeners the agriculture industry mussel farming salmon and plantation forests. We have trees for Africa in this country and we harvest and replant them for timber and particle boards pulp and paper and even logs. 
Then there is the jewel in the crown: the dairy industry. New Zealand’s dairy farmers are the best in the world and their cows really are cash cows. One dollar in every four of this country’s export earnings—fully one-third of the $3 mentioned earlier—is generated by hard-working and under-appreciated dairy cockies. One-third of all cross-border trade in dairy products globally emanates from New Zealand as does $3 out of every $4 that this country has to spend on cars and aeroplanes and televisions and medicines and X-ray machines and medical isotopes and magnetic resonance imaging scanners and computers and cell phones and microphones like this one and all the other things that we have to import from overseas because we cannot or do not make them here. Three out of every four of the dollars we have to spend on those things comes from agriculture and one of those dollars—one-third of agriculture’s contribution—comes from dairy the much-maligned dairy sector the sector that gets called dirty. 
The CHAIRPERSON (H V Ross Robertson) 
: I am sorry to interrupt the honourable member. The 4 hours for the financial review debate have expired. 
Clauses 1 to 9 and schedules 1 to 5 
A party vote was called for on the question  
That clauses 1 to 9 and schedules 1 to 5 be agreed to. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan. 
Clauses 1 to 9 and schedules 1 to 5 agreed to. 
Bill reported without amendment. 
Report adopted. 
Appropriation (2011/12 Financial Review) Bill 
Third Reading 
Hon NATHAN GUY (Minister for Primary Industries) 
 on behalf of the Minister of Finance: I move  
That the Appropriation (2011/12 Financial Review) Bill be now read a third time 
. 
A party vote was called for on the question  
That the Appropriation (2011/12) Financial Review) Bill be now read a third time. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan. 
Bill read a third time. 
Minimum Wage (Starting-out Wage) Amendment Bill 
In Committee 
Part 1 Amendments to principal Act 
DARIEN FENTON (Labour) 
: 
 I am privileged to be the first to stand from the Labour Opposition to strongly oppose the Minimum Wage (Starting-out Wage) Amendment Bill. I want to start by just reminding listeners and the people who have taken a great interest in this debate exactly what this bill does. What this bill does is return us to youth rates of a kind we have not seen since last century. For 16 and 17-year-olds starting out in their first job they can be employed on 80 percent of the minimum wage. Fair enough you may say. But the problem with this bill is that if they go on to another job while they are still 16 or 17 they can be employed on 80 percent of the minimum wage again and again and again. So the experience that they gain as young workers—even leading up to their time of being 16—at the age of 16 and 17 counts for nothing if they leave their job and go on to another job if they are fired under the 90-day no-rights bill and if there is no reason given as there does not have to be under this Government’s handiwork. 
What it means is that it is basically a revolving door youth rate. It is not a starting-out youth rate. If the Government were serious about starting out it would have stuck with the provisions that were already in the bill that apply to only 16 and 17-year-olds for 3 months or 200 hours whichever is the greater. That applies only once. So all of the arguments that have been put across the House about how this gives a young worker a chance how they need to have time to gain experience and so on are just rubbish because no one can convince me that someone who works for 6 months in a job at 80 percent of the adult wage at $11 an hour does not gain experience and then deserves to have their pay cut if they move on to another job. 
We want and the Government says it wants to see 16 and 17-year-olds in study. We want to see them at school at polytech at university or in apprenticeships. The National Party says that is what it wants to see. If that is the case many of them will be working part-time in part-time jobs. So they will have a job in the holidays in between times. They will have a job after work perhaps. But those jobs will be jobs that often are temporary that do not carry on for 6 months and so those people those young people who are trying to get ahead by studying will be in the situation where every time they start a new job while they are 16 and 17 they are going to have go back down the ladder to 80 percent of the adult wage. 
The second thing this bill does is bring back youth rates for 18 and 19-year-olds which we have not seen in New Zealand since last century. We have not seen them in New Zealand since last century. What this bill means is that 18 and 19-year-olds who have been on a social security benefit for 6 months can be punished for having been on a benefit by being able to be employed at 80 percent of the adult wage. We are not talking about just unemployed young New Zealanders. By the way I need to correct Mr Banks and I will have some other things to say about his contribution the other day. But he was talking about young New Zealanders of 15 on the dole—15 and 16. They do not get the dole. They do not get the dole. Social security benefits in this bill cover the whole gamut of them all including the unemployment benefit but also things like the invalids benefit the sickness benefit and—what is it called Jacinda? 
Jacinda Ardern 
: The independent youth benefit. 
DARIEN FENTON 
: The independent youth benefit. It covers all of those and also young parents who are 18 and 19. So they will have been on a social security benefit. They drag themselves up to Work and Income get offered a job and it is at 80 percent of the adult wage. They say under this bill: “Oh I’m sorry Work and Income. I cannot manage on 80 percent. I can’t manage on $11 an hour.” But what this bill will allow is that if Work and Income has deemed that job to be satisfactory on its terms—and we all know how tough it has become recently how unfriendly and what an awful experience it is for so many people—it can then say to that 18 or 19-year-old: “Well I’m really sorry but you have to have a stand-down of 13 weeks.” So they get doubly punished—first of all by dragging themselves off a benefit. Most of them will have been on a social security benefit through no fault of their own. They will have tried hard to get a job. They apply for a job and when an 18 or 19-year-old says that they cannot afford to live on $11 an hour and they want to look for something else they get told by Work and Income that they are being sanctioned and they are going to be punished by having a stand-down for 13 weeks. 
There are other issues around this bill that have not been answered and were not answered satisfactorily in the Transport and Industrial Relations Committee. There are all the issues around discrimination for young people and I will put those aside for now and come back to them perhaps later in the debate. But on the issue of work discrimination discrimination on the basis of employment there is very strong advice from the Human Rights Commission that employers should not discriminate against people on the basis of their employment status—in other words if they have been or are on a social security benefit. 
What I think this Government is doing is leading employers down the garden path to believing that when someone comes to apply for a job an 18 or 19-year-old they will be able to ask them whether they are on a social security benefit. They will be able to ask them that because they want to be able to offer them 80 percent of the adult minimum wage—in other words $11 an hour—and then they are able to discriminate against those workers because they are able to find out the information and then the worker can say: “Well I’m sorry but I don’t want the job.” or the employer can say: “Well I’m sorry I don’t want you because we don’t want people who have been on a benefit.” There are real privacy issues involved in this that have not been satisfactorily answered. 
My question to the Minister in the chair is why we are doing this. Well I think we know the answer to that. The answer is that the National Government has no ideas about how to address our crisis in youth unemployment. Two years ago David Bennett that member over there stood up in this House and passionately opposed youth rates. There is a bookload of quotes from him about how they were inappropriate and I am looking forward to reciting them. We even heard from Simon O’Connor some quotes from the Catholic Church. I know the Catholic Church talks about the dignity of work and about respect and the dignity is about the way people are treated and how they are rewarded for their work. It is not about just having a job. 
Simon O’Connor 
: It was Mr Little who was quoting Pope Francis—your colleague behind you the one smiling. He quoted Pope Francis. 
DARIEN FENTON 
: And you quoted it back Mr O’Connor—you did. 
Simon O’Connor 
:  
Rerum 
Novarum 
—you should read it. 
DARIEN FENTON 
: Yes that is right. I have got many. I have read at length the various encyclicals of instruction from the Catholic Church because I have been engaged in having those debates with the Catholic Church about their workers over many years. But the Catholic Church and the church generally does not support the dignity of work if it means people are not fairly rewarded for their work are not fairly treated are not able to earn a living are not able to build a decent life and are not treated with respect. That is what this bill does. 
The other excuse is that this is somehow going to create jobs. That is the other excuse. As my colleague Andrew Little has so rightly pointed out cutting wages does not create jobs. There are no jobs unless there is work to be done. Employers do not take people on as some kind of beneficiary. They do not do it out of the kindness of their hearts. They do it because there is work to be done. And the workers who come along and do that work have a right to be respected and paid properly rewarded properly for the work they do. 
This bill not only will impact on 16 to 19-year-olds but also will impact on older workers. I have had many of them express concern to me about creating a market of young workers who are cheaper who are on $11 an hour and who will displace older workers. Indeed that has happened in the past. 
The worst thing about this bill is that we have tried these methods before in New Zealand. This is not a new idea. In fact it is a very very old National Party idea. It is a very old ACT Party idea that if you cut young workers’ wages it creates jobs. Just go back to the last time we had real youth rates in this country in the 1990s. When youth rates were $4.50 an hour when people were getting paid $4.50 an hour we had some of the highest youth unemployment that we have ever seen in this country. So this bill is not going to deliver on its stated aims. 
Dr CAM CALDER (National) 
: 
 It is an absolute delight to be called thank you very much. I spoke on the Minimum Wage (Starting-Out Wage) Amendment Bill on Thursday last week and I drew the attention of the House to my first experience in the labour market. I outlined the excitement I felt when I went downstairs and my mum had bought a new Kingfisher Briggs and Stratton lawnmower. It was the first step of my becoming self-sufficient and learning to save and learning the value of work and the reward one can achieve from work not just financial but spiritual and the dignity therein. 
The next job I had was with Mr Brown on his milk round. We would get up at about 4.30 in the morning—and I must say it is no easier getting up at 4.30 in the morning now than it was then—meet up with the truck and then we would get the trolleys out load them up with the crates and the bottles in the crates and we would hurtle around the streets of Westown picking up tokens from the bottles money sometimes and delivering them for the full bottles. I must say I have a certain amount of nostalgia for the fact that we no longer get milk at our front gate but there we go. 
It is all about the dignity of work and this is what the Minimum Wage (Starting-Out Wage) Amendment Bill is all about. It is about giving young people—young people who may be entering the workforce for the first time lacking skills lacking experience or may be coming off a benefit or undertaking an industry training course—an opportunity to get the foot on the rung of the employment ladder. It is an opportunity for them to get their feet on the rung of the employment ladder. This is the ages of 16 to 19. Why are we doing this? We are creating an environment that encourages economic growth more jobs and higher wages. We know that there is a plethora of research particularly from the UK about the benefits of work the health benefits of work. There are a number of studies that have come out showing that work is extremely beneficial to one’s physical health and one’s mental health. Work is good for health. 
We know that long-term periods of unemployment lead to a host of bad outcomes and where better to intervene but with our young people. This is why we believe that the Minimum Wage (Starting-Out Wage) Amendment Bill is a very good piece of legislation. It is very interesting that Labour replaced the youth minimum wage with a so-called new entrants wage—that reminds one a little bit of infant school does it not—which provided the same rate of pay as the starting-out wage. You may think that that is interesting and ask why Labour members are opposing it now. 
Jacinda Ardern 
: For how long? 
Dr CAM CALDER 
: It lasted for 3 months in answer to your question or 200 cumulative hours. The feedback we have had from employers is that it was not long enough that it is too complicated impractical and the 3-month period is too short. So apparently feedback from employers suggests they need to calculate a new worker’s entire work history on the new entrants wage before hiring them under its conditions. How many do we think use it? Very very few. So although Labour’s policy provides the same rate of pay as the starting-out wage the conditions are unworkable virtually and unattractive for not only the employers but the employees. 
Just to recapitulate the starting-out wage will be set at 80 percent of the minimum wage and it is available for 16 to 17-year-olds in their first 6 months of work with a new employer; 18 and 19-year-olds can also benefit from this starting-out wage if they are coming directly off the benefit that they have been receiving for 6 continuous months; also the benefits can apply to 16 to 19-year-olds in training in a recognised industry training course involving at least 40 credits a year. This is a reduction as you may recall of 20 credits from the current scheme. 
So it is a very good piece of legislation. What is its possible sequelae? Well the Ministry of Business Innovation and Employment suggests that the starting-out wage could create up to 2000 new jobs for 16 to 19-years-olds in the next 2 years. 
Hon PHIL GOFF (Labour—Mt Roskill) 
: 
 What a typical approach by this Government. It has got a problem with youth unemployment. We know why it has got a problem with youth unemployment. It is because it has got no vision for growing the New Zealand economy. John Key who decried 25000 teenagers being out of work in 2008 his big achievement has been to increase the rate of youth unemployment by a further 5000—to 30000. If you take the people who are 20 to 24 years old make that another 90000 young people out of work. And what is this Government’s answer? What is its vision to deal with unemployment? Its vision is to cut the starting rate for 16 and 17-year-olds and some 18 and 19-year-olds by 20 percent. You know what these people in the National Party are proposing. They are proposing that young people working at the same rate with the same productivity doing exactly the same job in exactly the same way as an older person can be paid $11 an hour—$11 an hour! 
Simon O’Connor 
: So experience means nothing? 
Hon PHIL GOFF 
: That is not even enough for the member over there to pay for his gin and tonic at a local bar and he wants young people to live on $11. Why I want to know from that member should a teenager making hamburgers in the same way at the same rate with the same efficiency as a 25-year-old be paid a whole lot less? Will that create new jobs? No it will not. The evidence is there that it will simply displace older workers who are currently doing the job. So the poor guy or woman who is older and working making those hamburgers is not going to have a chance because the boss is going to sack them or not employ them in the first place in order to get cheap labour at $11 an hour—$11 an hour! 
Will this work? Well let me quote the authority the Minister for Social Development if you can call her an authority. She opposed youth rates just 2 years ago. This is what she said: “we are not convinced it would reduce youth unemployment plus it would be a distraction from the really important work of improving productivity and growing the economy in order to create long-term jobs which will keep young people in New Zealand.” That is what Paula Bennett Minister for Social Development was saying 2 years ago about Roger Douglas’ bill. So what is with the change in mind? And Jackie Blue: “National has not seen any evidence to show that young people are losing their jobs because of youth rates. We are not convinced that this bill will reduce youth unemployment.” How is that for hypocrisy: against youth rates one day and for them the next? And why are National members for them? It is because they have run out of ideas. They have no vision for New Zealand other than it being a low-wage economy. 
What is the problem with New Zealand? Why did we lose 53000 New Zealanders to Australia last year? It was because the jobs are not in New Zealand and because we have low wages. So this Minimum Wage (Starting-out Wage) Amendment Bill is a bill to increase the flow of Kiwis across the Tasman so they can put their energy and their taxation into the Australian economy. This is a Government that has no vision about creating jobs. This is a Government that has no vision about upskilling New Zealanders for high-paid jobs. Why is it that the number of apprenticeships is down 20 percent from when this Government got into office—down 20 percent? Why is it that in one Budget it slashed $53 million out of the skills training budget? Why is it that in Christchurch on Sunday on St Patrick’s Day the bars were full of Irish workers imported to do the work because this Government had no plan to upskill New Zealanders to rebuild Christchurch? That is an absolute disgrace—an absolute disgrace. This is not only counterproductive because it is not about increasing skills and increasing jobs but also unjust and unfair. 
What this Government is doing is saying that young people are out of work because it is their fault we are paying them too much; not that they are out of work because this Government has failed utterly in its economic management. So what does it say? It says: “We will put our young people on $11 an hour.” That is a bit rich coming from those people the Cabinet Ministers and MPs who gave themselves a big fat increase in income by cutting the tax rates for the top income earners. That is unfair. It is not on that this is a Government that will reward the most wealthy people in the country but will continue to hit the people who are at the bottom of the heap. 
Why is it that Lesley Longstone is getting $1000 in severance for each day she worked—$425000? That is what it will hand out to the people at the top: $425000 of New Zealand taxpayer money given to Lesley Longstone because Hekia Parata could not get on with her. So it will reward the rich. Why is it that Don Elder the former chief executive of Solid Energy right now retains his salary at a rate of $1.3 million a year while he is at home doing the garden? The Government will reward the rich but its answer is always to cut the income of people at the bottom. 
So the brave new world for the National Government is to have our young people leave school and go out to work at $11 an hour. That will not solve the unemployment problem amongst young people. They know that. The last speaker from the National side Cam Calder said that the bill will create 2000 jobs for 16 and 17-year-olds. What he forgot to tell the Chamber was that it takes 2000 jobs away from the people who are 20 25 35 or 45. This is about job displacement. This Government has no ideas about job creation. It brought in the Youth Guarantee scheme. That was going to get lots of people into jobs. I saw a withered pumpkin that was produced under one scheme. This Government wasted millions of dollars on a scheme it then scrapped. It talks loudly about the Limited Service Volunteer scheme. That has its good aspects but the truth of the matter is that 40 percent of the young people going on to that scheme go back on to the benefit and go back into unemployment. What this country needs is a genuine answer for upskilling our young people so that we can be an innovative high-growth high-skill and high-tech economy. It does not need a Government that says the answer is to force wages down to $11 an hour and that is what it is doing. 
This Government has no ideas. We had a job summit. Remember the jobs that were going to be created out of that? That was 4 years ago. Where are the jobs? [ 
Interruption 
] Let the next National speaker rise up on his or her hind legs and tell us how many jobs were actually created. Do you know Mr O’Connor what the answer is? Fewer than one in five of what John Key promised. It was a job summit that was about rhetoric. It was not about creating jobs. Now in desperation the Government comes to the Chamber and says: “If there’s youth unemployment it must be the young people’s fault and we will hammer them.” 
There is one thing in the legislation that I will support and that is Darien Fenton’s Supplementary Order Paper 193 which talks about lifting the minimum wage to $15 an hour. Why would I support that? Because it is wrong that 40 percent of the kids living in poverty in this country right now come from working families—40 percent of the kids living in poverty come from working families. I have got an electorate full of people where mums and dads take it in turns they do shift work one goes out during the day and one goes out at night and they cannot produce enough income on the minimum wage they get paid—including cleaning those members’ offices—to have a living wage. 
I grew up in a New Zealand where people said that if you do an honest week’s work you get a living wage for that week. I want one member—one member—of the National Government to stand up and say why people working hard doing an honest week’s work are not entitled to a living wage. I want one member to stand up and say that he or she could live on $13.75 an hour which is the minimum wage. It is not a living wage. Most particularly it is not a living wage in the city that I represent Auckland in Mt Roskill. That money does not give you enough money to feed your kids properly to clothe them and to give them the opportunities that most other kids have. Why is that at my low-income schools some of the kids have never got to the beach? They have never been away on a holiday—that is asking too much. Mum and dad cannot afford even to put shoes on their feet. And this Government says: “We’ll pay them $13.75 an hour—but hang on if you’re a young person we’ll pay you $11 an hour.” How generous! What a decent Government! What a Government which can reward itself with big fat tax cuts but cannot give people a living wage and which now says that the answer to youth unemployment is to cut the wages of those young people doing the same work as the people next to them— 
MIKE SABIN (National—Northland) 
: 
 I think the previous member the Hon Phil Goff was following the philosophy that if you say it loud enough it must be true. He also alluded to the fact that this bill the Minimum Wage (Starting-out Wage) Amendment Bill is a disgrace. I will tell you Mr Chair what is a disgrace. 
The CHAIRPERSON (H V Ross Robertson) 
: Order! Do not bring the Chair— 
MIKE SABIN 
: I am telling you Mr Chair what is a disgrace. What is— 
The CHAIRPERSON (H V Ross Robertson) 
: No no you must not bring the Chair into the debate. 
MIKE SABIN 
: I will say to members and also the Chair what is a disgrace and that is making members of the New Zealand public beholden to the Government to ensure that it can make its way to the next election and secure itself a place on the Government benches. That is what happened across 9 years of the Labour administration. 
We have also heard words coming from the other side about punishment and about discrimination. This is not a disgrace it is not punishment and it is not discrimination. This is about creating opportunity. If you go out there and talk to employers they will tell you that they want to employ young people. But they will also explain that when you consider the total remuneration of any employee it is not about just the hourly rate. It is also about sick leave it is also about annual leave and it is also about ACC levies. When you consider all of that in the mix there are a number of businesses that simply cannot afford to take on a young person who has low skills and a lack of experience and arguably there is a disconnect between them and what is required by the employer. That has cost some 9000 jobs since 2008 when the youth minimum wage was removed—over 5 years a 42 percent reduction in the number of 15 to 19-year-olds in employment. That is what is a disgrace here. 
What this bill sets out to do is actually challenge that and find the settings that will marry employers and employees back together in particular those in the youth area who we know if they do not find their way at that age into some form of training or meaningful employment have a very high likelihood at the age of 18 of transitioning on to an adult benefit and likely staying there for some period of time. 
This bill is specifically aimed at ensuring that employers have the settings that they need to take a chance on the young person. Certainly even yesterday in my constituency office two people came to me literally pulling their hair out wanting to employ local people in particular young people and give them a chance. But they cannot get those young people. They cannot get those young people because those young people are disconnected from a work ethic. They are disconnected from the sorts of skills—[ 
Interruption 
] This is what they are telling me. If those members want to come and sit in my electorate office and listen to employers in Northland who want to employ young people local people they will hear this for themselves. Those young people are disconnected from what employers need. It is not that the employers are not trying to reach out to them. This bill is about providing the appropriate incentives and platform for employers to seek out those opportunities with the young people. It is not compulsory; it is an arrangement between the employer and the employee and it is over a 6-month period. 
We have heard comments about the fact that this will displace other workers. Well I can also tell you that employers very quickly identify the value in an employee and those employees are valued by the employer. There is an intrinsic relationship in a successful business between the employer and the employee. Good employees who show initiative who are given a chance and who demonstrate ability advance their way through that business. The business relies on good employees. So this is not about displacing; it is about providing opportunity and an entry point. That is the distinct difference. 
But time and time again we hear in particular from the Labour Party that this is about punishment it is about discrimination and it is disgraceful. Well it is the entire opposite to those things because when members here actually take the time to step out from behind their parliamentary desks and talk to employees and employers what they will find is that it is about providing the opportunity and backing these young people and giving employers a chance to see whether or not those young people can make the grade. It then goes to the employee to show that they can but they need the chance. Nine thousand jobs across 5 years is unacceptable. 
DENISE ROCHE (Green) 
: 
 We seem to have this attitude that we are a benign country that we love our kids that we will help our kids. But actually what we are hearing from this Government and with this bill the Minimum Wage (Starting-out Wage) Amendment Bill is that we will not. What we are hearing with this bill is that we think our young people are worth less than others. With this bill we are saying that young people are worthless. Mr Sabin who just spoke earlier actually said that he has heard that young people have no skills—they have no work skills. Well if that was the case then they would not be employed in the first place—no young person would be—but they are. They certainly are. 
We are not investing in our young people. In these sorts of circumstances what we are trying to do is we are trying to give them the worst starting-out work experience we possibly can. We are putting them into places where the employer has an incentive to employ them certainly and to pay them less than any other worker to pay them at a wage that they can hardly live on. We are saying that that is OK if we pass this law. 
Forcing young people into dead-end jobs just because they have been on a benefit is designed only to get them off the benefits so the unemployment statistics look better when we know that the way you address unemployment is to create jobs. This bill is not going to create jobs. We have seen no evidence of that and we have seen it in the past as well. Reducing the wages for young people does not create jobs. There seems to be no other reason for forcing the wages of young people down except to make them cheaper—except to make employers able to exploit them easier. 
I find it interesting that we are doing this to young people. We are focusing on them having lower wages but we never ever seem to attack those who are much older who are also on benefits. When you consider that we have a universal benefit that is applied to people over the age of 65 where they get 66 percent of the average wage and that this Government never attacks that one has to think why. I suspect that it is because those who are over 65 are well organised and they tend to vote for this existing Government actually. 
Tracey Martin 
: Not all of them. 
DENISE ROCHE 
: No some of them do not. A lot of them vote for New Zealand First. But if you think about it young people have as many expenses as older people. They do not eat less food. They do not use less electricity. They do not wear fewer clothes. They do not pay less for their expenses in transport. They are paying the same so why should they be penalised? 
Already 16-year-olds 17-year-olds 18-year-olds and 19-year-olds are able to be paid a training rate. We have already got that in legislation. They can be paid a training rate for a total of 3 months. This bill does not allow a sensible relationship between an employer and an employee. What it allows is for a worker to be employed at lower rates for up to 6 months with no guarantee that they will continue their employment. Then they go to the bottom of the scale again when they are re-employed by another employer if they get another job. This opens up young people to being exploited. 
We believe that if we are sensible and if we are serious about addressing youth unemployment there is a lot more that we should be doing in terms of education and investment in youth. There is a lot more we could be doing in terms of training. There is a lot more that we could be doing in terms of getting them to a point where they are work-ready. We are not seeing that type of compassionate approach with this Government. This bill certainly does not go any of the way there. 
We believe that the same work should be valued the same. We have been through this discussion before with women. 
CHRIS AUCHINVOLE (National) 
: 
 I rise to speak in this Committee stage of the Minimum Wage (Starting-out Wage) Amendment Bill in the name of the inspirational Minister of Labour the Hon Simon Bridges. 
Hon Member 
: Eschatological—we need to get that word in. 
CHRIS AUCHINVOLE 
: Indeed—indeed. We can all agree that it is important that young people are given opportunities to engage in training in their chosen industry but it is also important that young people generally are given a go. It is the New Zealand way for goodness’ sake! But in respect of the earlier comments that we have heard employers have so far indicated that they are not using the training minimum wage created under Labour and Labour really needs to consider why that might be the case. 
We as a Parliament do need to address the serious issue of youth unemployment. We would be derelict in our duties if we did not. This bill through the creation of a wage for 16 to 19-year-olds entering the workforce and coming off a benefit—that is the biggest thing of all—or undertaking an industry training course will do a great deal towards giving people a go. Speaking for myself I have never had to have a benefit in terms of an unemployment benefit. 
Hon Phil Goff 
: He could be on a vicar’s stipend. 
CHRIS AUCHINVOLE 
: No it is not skiting. It is— 
Hon Phil Goff 
: No I said a vicar’s stipend. Isn’t that a benefit? 
CHRIS AUCHINVOLE 
: Oh I see what you mean. I thought you said I was skiting. But the reality—and Mr Goff will know because although I am sure he is not as old as I am we have been through various stages of New Zealand life together at the same time. Certainly when I came to New Zealand as an immigrant it was remarkably well not easy to get a job but there were plenty of jobs and plenty of opportunities—plenty. Modern youth is not quite in the same place so we have to work harder to give them opportunities. 
We also have to provide as this bill does opportunities to encourage employers. I would have to say that I am disappointed with the expressions of attitude that I hear in the debate thus far from the Opposition parties as if employers are some sort of dreadful Dickensian characters who are going to exploit young people at every opportunity. That has not been my experience in talking to employers. [ 
Interruption 
] No it really is not. When I think of the employers whom I meet on a daily basis from one end of the West Coast - Tasman electorate to the other they are without doubt proud of their staff. They actually like their staff. They have trained them after they have selected them they have watched them develop and they are extremely pleased to have the association with them. I would like to remind the House that this starting-out wage is voluntary. Employers and employees must agree together on whether it will apply. It will improve a currently flawed system greatly. 
If we do agree—and I hope we can agree on some points—that youth unemployment levels are far too high and that there is a need for young people to gain opportunity experience and reasonable financial compensation then why is it that the Opposition arguments seem to want to match young workers fresh in vision and enthusiasm but with briefer curriculum vitaes less experience and more potential risk to the employer against the older employees whose experience and position are valuable and entrenched? Or do I see lurking in the mind of Andrew Little the Amalgamated Engineering Printing and Manufacturing Union banner which wants to protect the members of unions against the oncoming workforce that could threaten the jobs there? I cannot see it. I cannot see why Mr Goff says this is a displacement exercise to get rid of older and experienced workers and bring in young ones. 
Hon Phil Goff 
: Because that’s the experience in the past. 
CHRIS AUCHINVOLE 
: Well I do not see it. I cannot imagine it happening to any great extent. There might be the odd one. But the same apprehension was voiced by Labour when we introduced the— 
ANDREW LITTLE (Labour) 
: 
 You know the most disappointing thing about that speech from Chris Auchinvole is that at the end of last week thousands of young gay men and women who had never before heard of him were uttering the name Chris Auchinvole as somebody who had offered a progressive vision. This was a member who unbeknownst to him had trended on Twitter when he did not even know what that meant because of such a fantastic address that he gave. He gave hope to many young people in this country last week. And now he has shattered the illusion because now we have seen the truth. 
If there is one thing that this bill the Minimum Wage (Starting-out Wage) Amendment Bill does it is that it very accurately and very emphatically explains the difference between the National Party on the one hand and the Labour Party on the other. National is a party that does not recognise the opportunity for exploitation when it sees it does not see it in the laws that it enacts and creates and does not understand how the labour market in this country and indeed most free countries properly works. It does not understand that changing laws does not create work and does not understand that to create work of value—of value not only to the employer but to the worker—it needs active investment understanding and innovation. It does not happen when you cheapen the price of labour and there is only one thing that this bill will do and that is cheapen the price of labour. It so happens that it will cheapen the price of the most vulnerable labour our youngest and the new entrants to our workforce and those who have had difficulty finding work and who even at their tender teenage years have perhaps had a period in the workforce then out of it for a 6-month or longer period and are then trying to get back into it. They are the ones who will be badly affected. 
It will not create work. Phil Goff is absolutely correct. Measures like this do not create work. What it does is give an opportunity to employers to say: “Aha! Here we go. I don’t have to pay $13.75. I can get away with $11.80.” or whatever it is. 
Hon Phil Goff 
: $11. 
ANDREW LITTLE 
: Eleven dollars. It is not even $11.80—$11. “I can get away with paying even less so I will.” Actually that is the way many employers think. If Mr Auchinvole is right when he asks why employers would do this because they value their workers—well they will not be looking to this law. The good employers in this country do not look at laws like this because they respect working people— 
Mike Sabin 
: It’s an option; it’s not compulsory. 
ANDREW LITTLE 
: —they want to pay the best and they want to do the best. But there are employers—and it might be a surprise to Mr Sabin to know this—who will work at the edges of the law because they know they can get away with it. That is how they run their businesses and that is the nature of their business. They are marginal businesses of low value and they do not actually value the work people do. It may come as a surprise but there are employers like that. I know. I have met them. I met one of them once with Max Bradford just after the Employment Contracts Act was passed. Max Bradford was shocked to find that there was an employer who told a young worker that he would sign him up on an apprenticeship if he could pay him $50 a week. I might remind members that even in 1993 $50 a week was an absolutely paltry sum. This young worker never got his apprenticeship never got his training but was paid $50 a week. When Max Bradford found out about that employer with me we visited him. He was absolutely shocked. There are employers like that. They will exploit this law and they will make it worse. 
This law will do no good. It will do no good for working people—young working people. It will actually do no good for the labour market at all. It will do no good for the good employers who are looking for good young people and who want to offer them the best but who are competing with the exploitative the underminers and the employers who have nothing to offer. That is the National Party approach. It is not interested in creating work. It is interested in reducing the cost of labour because that is what its mates tell it they want. That is what its mates tell it they want. They said: “Make it easier for us. We will employ young people. Just make it cheaper for us.” Actually the truth is that the people who talk like that and who talk to their National Party mates in Parliament are not interested in young people. They are interested just in getting a job done as cheaply as possible and that is what this bill will do. That is why we are opposed to it. That is why we will support Darien Fenton’s Supplementary Order Papers to provide for a minimum wage of $15 and to at least take the 18 and 19-year-olds out of it because by that time if you are not fit for school if you are trying to look for something different and you are in the workforce why—by the time you get to 18 and 19—should you go backwards? 
SUE MORONEY (Labour) 
: 
 Labour is opposed to this bill the Minimum Wage (Starting-out Wage) Amendment Bill and for all the right reasons. From the Labour Party’s perspective the vision we have for New Zealand is a high-wage high-skill economy not this race to the bottom that is promoted by this bill by that Government. 
The front page of the  
Waikato Times 
 yesterday I think said it all with its big banner headline “Jobless fight for work”. That was the headline on the front page of the  
Waikato Times  
yesterday and in there it documented the very real world—not the pretend one that we hear about from the other side from the Government but what is actually going on out there. The  
Waikato Times 
 documented that in Hamilton the Earthquake Commission has advertised 120 jobs at the Hamilton office since it opened last year. One thousand and thirteen people have applied for those 120 jobs. At the burger chain Wendy’s which is moving into Hamilton shortly it had 100 applications for just six management positions and it is expecting to have 500 or more people apply for just 50 minimum wage crew jobs. The Mexico Group is moving into Hamilton. These are not exciting jobs by the way. This is not the brighter future that that Government promised. These are all minimum wage jobs. Two hundred people had applied for 25 jobs at that restaurant in Hamilton. That restaurant is going to be opening next month. 
That is the real position that is happening out there. Small numbers of minimum wage jobs are becoming available and large numbers of people are lining up for them. It is in that environment that this National Government decides that the best thing to do for the future for New Zealand is to lower wages and to lower wages for 15 to 19-year-olds because it does not believe in that group. The Government has actually given up on 15 to 19-year-olds. It has given up on them in terms of their being able to do a good job at a decent rate of pay. What this bill says is that the Government does not believe that those people those 15 to 19-year-olds are up to a decent wage. It believes that those people need to have a law put in place that actually lowers their wages so that they can get an opportunity. It does not believe in young people. 
Government members have also given up on arguing as they did just last week in this House that this bill creates jobs. Of course it is ridiculous for them to even have pretended—as the Minister of Labour Simon Bridges did last week—that this piece of legislation somehow creates jobs. In fact it does the opposite. I want to go through that so that people understand why it does the opposite. When wages are lowered spending power in our communities is actually diminished. When spending power in our communities is diminished that actually means fewer jobs not more—fewer jobs—because jobs are created by work not by cutting wages. 
Jobs are created when there is work to be done because employers are not charitable organisations as Mike Sabin would have us believe. They are not going to just go out there and employ people when there is no work to do. Those employers who were supposedly sitting in his electorate office last week were not there saying: “Mike I’ve got no work that needs to be done but I would just really love to employ some young people to put some money in their pockets.” 
Mike Sabin 
: Trust me—they’ve got the work. 
SUE MORONEY 
: That is not what they were there saying. They were not there saying that at all. They were saying: “I’ve got work to do and I want to employ the cheapest people possible.” That is what they wanted from that member. 
The work is there. This legislation will not create one extra job. What it will do is lower wages. I warned New Zealanders last week and I will warn them again if they think that the lower wages agenda from that National Government is just going to be targeted at young workers they need to think again. This is the slippery slope. This is where lower wages start but it is not where they stop. In this environment which I just described before—that situation happening in Hamilton where there is a small number of minimum wage jobs available and large numbers of desperate unemployed people going for those jobs—it is a haven for employers if they wish to exploit people because that gives the employer all the cards. They hold all the cards in that situation. 
I want to go through—for the benefit of the members opposite because they do not seem to get this—the reality of what actually happens in this scenario. Mike Sabin and Chris Auchinvole both said: “Oh look it’s all right because it will be voluntary.” Voluntary for whom? I will go back to the burger chain Wendy’s. There were 100 applications for six jobs. What is going to happen in that situation? Let us apply this bill to that situation. The Wendy’s chain manager decides that they want to employ a person who is let us say for argument’s sake an 18-year-old and they fit the criteria set down in this bill. Is that Wendy’s burger chain manager really going to say to that young person: “Look by law I can pay you as low as $11 an hour. Would you like that or would you really rather be paid at $13.75 an hour? Your choice. You choose. You tell me.” Do members opposite really believe that that is the discussion that is going to happen when Wendy’s fills those six jobs that those 100 people applied for? They have all gone quiet opposite because they know the real answer. The real answer is that the Wendy’s burger chain manager is going to say: “Eleven dollars—take it or leave it.”. Take it or leave it. 
That is what the National Government believes is a voluntary situation. They believe that that is giving freedom of choice—remember that from Bill Birch—to that 18-year-old because they will be able to say: “No. Thanks very much but I’ll just leave your job.” They will have stood in that queue of 100 people and mysteriously the National Government members opposite believe that they are going to voluntarily say no to that job because they will not accept $11 an hour. That by anyone else’s standards is compulsory. It is not giving freedom of choice to those young people and it is certainly not going to bring about the high-wage high-skill economy that we need to get this economy going. That is what we need in this country not these endless bad pieces of legislation that this Government keeps bringing forward which actually get us in a downward economic spiral. 
This is yet another piece of legislation that will actually take our economy down. It will be felt in the regions. It will be felt in the provincial cities like Hamilton where those jobs—that small number of jobs—are driving those very long queues. And in those very long queues there will be people from a range of age groups. Andrew Little is right: it will be the bad employers who take advantage of this. The good employers do not need this legislation. They do not want this legislation because they will be prepared to pay a decent wage for a decent day’s work. 
What this bill is encouraging employers to do is to go below a decent wage. In New Zealand we have already determined that. The Government actually has determined what it thinks a minimum wage is. It thinks it is $17—$13.75. Gosh I wish it was $17 but it thinks it is $13.75. It thinks that is a minimum wage. But when it comes to young people it does not think they are worth even that. It thinks that they should not be getting a decent wage for a decent day’s work. That is fundamental to what I understand to be the sort of fairness that most Kiwis believe is right in this country—a fair day’s pay for a fair day’s work. This bill is undermining that very sacred Kiwi value. It is coming from the National Government because it has always come from the National Government. It has always been its solution. It does not matter what part of the economic cycle we are in—recession or not—whenever there has been a National Government in place— 
TRACEY MARTIN (NZ First) 
: 
 Kia ora. Thank you Mr Chair. I rise to take a call on the Minimum Wage (Starting-out Wage) Amendment Bill. I will address a couple of issues that Mr Sabin and Mr Auchinvole raised. 
First of all Mr Sabin with the story that he graced us with in regard to employers coming to see him to say that they were unable to employ young people with the skills that they required to gain employment inside their industry. I recognise Mr Sabin’s point. I recognise the points of those employers. However his answer—this Government’s answer—is completely misguided. If this Government truly wanted to support those local employers to employ local young people then why would it have removed the funding from places like Otorohanga where you have a massively successful model where the community has come together to train local young people with local skills for local employment where the Mayor of Otorohanga has brought together those employers and said: “What are the skills you need guys? What are the skills we need for our young people to actually be able to get out there and gain work just down the road from where they live?”. That is what happened. Employers came in and they highlighted—in this instance in the Wintec prospectus—which of those skills were the ones that were needed. Local government worked with Wintec and said: “We will give you a building with zero rent—zero rent—so that you can actually come here and train our young people in only the skills that will gain them employment.” That is something that would actually work not paying somebody less to do the work. Where is the incentive for young people? I ask Mr Sabin how many 16 17 18 and 19-year-olds he has consulted in his constituency about this policy which he stands by and says is the answer for us. 
I also want to pick up on the comments made by Mr Auchinvole. I am not sure whether Mr Auchinvole was here in the country in the 1990s—whether he was here the last time we had a youth wage actually put into place. I am not sure whether Mr Auchinvole is aware of the statistics around what happened the last time a youth wage was brought into this country and the displacement that Mr Goff talked about. I can send to Mr Auchinvole’s office some of the suicide statistics for older males from about that time when they were laid off through the recession when they found their companies and employers going into receivership and they were trying to pay their mortgages. They were trying to feed their children and they could not get a job at the local gas station pumping gas because they were undercut every single time by a young person who could be paid less. Those are real statistics. I can send them to Mr Auchinvole’s office if he would like them. This is going to create the same difficulty and it will create no more jobs. 
Recently the Ministry of Social Development and the Minister for Social Development pulled back funding from the community answers around youth employment into major centralisation particularly inside of Auckland with only four deliverers. Again we have been down this pathway before. It is not a new idea. It was not a good idea then and it is not a good idea now. We have young people who need to be able to support themselves particularly at age 18 and 19 yet we are going to put them on something that none of us in this House would work for. None of us would take that job yet we say to them “You will.” and we have combined it with some legislation inside the social development portfolio that will force them to do so. To have the word “choice” used at any time around this issue when speaking to 16 17 18 and 19-year-olds is a fallacy. I would say again Mr Sabin: how many 16 17 18 and 19-year-olds have you spoken to? I would suggest very few Mr Sabin. 
Mike Sabin 
: Well I’ve got plenty of young constituents I’ve talked to actually. 
TRACEY MARTIN 
: Well that would be lovely Mr Sabin. Go out into your schools. Go out into the schools up there Mr Sabin and let us see when they actually get the vote whether they would keep you there. These are the voters of the future. The fact that you will pass this legislation before these young people have any way shape or form to either keep you in office or take you out of office is disrespectful. This is a group of people who are without power inside this legislative chamber and we are taking advantage of them. Your party is taking advantage of them— 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 I am happy to carry on from the previous speaker Tracey Martin and to respond to some of the calls from members on the other side talking about how they talk to young people and how their constituents are unemployed. One of the things that Chris Auchinvole outlined very well is that there is something that we can all agree on in terms of this legislation the Minimum Wage (Starting-out Wage) Amendment Bill and that is that we have a massive problem with youth unemployment. It is actually really good to hear National finally admit to that point because we have been saying it for many years that we are at a crisis point when it comes to our young people and their ability to find work. What we have had from members on the opposite side of the Chamber this afternoon are crocodile tears around the rates of youth unemployment and talking about the lack of engagement of young people. 
But this bill is the only solution they have got to put up. Slashing young people’s wages is not a solution to youth unemployment. It will accomplish absolutely nothing. What we are having as my colleague Sue Moroney pointed out in her very fine speech are members opposite give up on even advancing the arguments that this legislation will do anything to create jobs. Instead what we are having are members falling back on telling us: “Don’t worry employers do not have to do it.” This is their one great solution and they are reassuring the nation that it is OK that it is voluntary and that employers will not have to do it. It is just ridiculous that this is all they have got when we are at a time of national crisis in terms of youth unemployment. We have 90000 young New Zealanders who are not in any form of education employment or training and the best that Government members have got is voluntary wage slashing as a solution to it. It is absolutely no wonder that the Salvation Army gave this Government a D—a fail—in its recent report when it came to youth unemployment and its ability to deal with this pressing national problem. 
This is a Government that is failing. This is a Government that has absolutely nothing to offer on what we have which is a crisis point of massively high rates of unemployment in New Zealand. Forty-five percent of these people are aged between 15 and 24. The unemployment rate for 15 to 19-year-olds is 30.9 percent. We are getting up there with the worst countries in Europe in terms of this age group and unemployment. This is not something that we can sit back on and say “Well this is all we’ve got but don’t worry you don’t really have to do it. It is only a voluntary piece of legislation anyway.” Youth unemployment is at a point where it requires a real solution. 
It is not only we on this side of the Chamber who believe this. It is quite interesting to read back over National members’ comments in previous debates on this question in this Chamber. If we go back to Paula Bennett in March 2010 she said in response to an oral question: “we are not convinced it would reduce youth unemployment plus it would be a distraction from the really important work of improving productivity and growing the economy in order to create long-term jobs which will keep young people in New Zealand.” Fine words Ms Bennett. We agree with you entirely. 
Then we come to the chair of the select committee that heard submissions on this bill the Transport and Industrial Relations Committee. There were 61 submissions and 54 of those were opposed— 
Darien Fenton 
: 531. 
Dr MEGAN WOODS 
: There were 531 but overwhelmingly— 
Darien Fenton 
: Only nine in favour. 
Dr MEGAN WOODS 
: Only nine out of all those submissions—thank you Darien Fenton—were in favour. But if we listen to what the chair of that select committee David Bennett has previously said on the ability of youth rates to address this real crisis we have in New Zealand he says: “We should be promoting to them”—that being young people—“the need to get education and training not encouraging them to take the easy option of temporary employment which may provide some financial gain at an early age but will not deliver long-term benefits for them as we go forward as a country.” Then we had David Bennett again in April 2010: “It is important that we do not set the bar too low in the sense that our young people who work hard must not find that they get no reward for their efforts.” Well these are fine words from the chair of the select committee from only 3 years ago. It would be great to hear him address some of these matters more fully on this and to take a call and address some of these matters because the fact of the matter is that we have a Government that has done very little. In fact it has done nothing and it has got a fail mark. 
We had money set aside in 2011 by this Government to train young New Zealanders. In November last year only $8 million of that Skills for Canterbury money had been spent. We lost two crucial years of training our young people to work in the rebuild of Canterbury and what do we see now? We see Christchurch being flooded with migrants coming in to do that work instead of our own young people being 2 years into their training. We have a Government that is not committed. It is not backing education throughout New Zealand. We have rural polytechnics all over this country that are in real danger. Taking away the foundation-course funding from them has made many of our polytechnics be in a precarious state. Labour knows that if we are going to address this real and pressing issue of youth unemployment where 45 percent of all those who are unemployed in New Zealand are youth and where we have youth unemployment rates of 30 percent then we have to do something other than offer voluntary legislation in terms of slashing wages. We have to do something to create jobs and that is what Labour is committed to doing. Labour is committed to being a hands-on Government that will get out there that will back young New Zealanders and that will say to young New Zealanders: “You have a future in this country and you can stay here.” 
In September last year we had the Prime Minister make this great announcement about how he was going to write personally to 175 employers and ask them to take on the graduates of the Limited Service Volunteer scheme where we have only an 80 percent completion rate. We have very low completion rates on the Limited Service Volunteer courses anyway but the Prime Minister made grand gestures. I think there were some unemployment figures released around the time and the Prime Minister wanted to be seen to be doing something. The Prime Minister promised to keep doing this—to follow up. As of the beginning of February this year he had not done one further thing on this. The Prime Minister had not followed through on his commitment to young New Zealanders. He had written to zero further employers asking them to take on the graduates of our Limited Service Volunteer courses. 
 This all just goes to show that this is a Government that has no solutions when it comes to our young people. It has no solutions to tackle the real thing. All we have is insidious legislation that is intent only on cutting wages. It is asking our young people to live on not even the minimum wage or a living wage—it is below that. We are at a point in our history when we are debating what it takes someone to live on. We are talking about $18.40 an hour and we are asking that our young people get paid $11 an hour. This is not the kind of New Zealand that Labour wants to offer to young New Zealanders. Labour wants to offer young New Zealanders a real reason to stay here and slashing the wages of young people will do nothing to create employment. Government members opposite have even themselves given up on that argument. We have not heard it today and all we are hearing is a chorus of “Oh don’t worry. It’s only voluntary.” They do not believe in their own legislation. They know it is not going to work and all they have got to offer now is to tell us “Don’t worry not all employers will need to do it.” Labour is not supporting this legislation. It is opposed to it. We want to see real solutions to the very real problem of youth unemployment not legislation like this coming before this House. 
Hon PHIL GOFF (Labour—Mt Roskill) 
: 
 Some of the arguments have been brought out very clearly by the Opposition as to why this bill the Minimum Wage (Starting-out Wage) Amendment Bill should not proceed. I think the critical argument is that this bill is a bill with a low-wage vision for New Zealand when any New Zealander knows that our future depends on being high-skilled high-waged and high-tech. This idea that we can compete with the world by continuing to slash the wages that we pay to our people is absolutely discredited—absolutely discredited. 
I tell the members opposite to read what the departmental regulatory impact statement says about this bill. This is what the Ministry of Business Innovation and Employment advised the Minister of Labour. The first thing it advised the Minister was that it had not considered the options. Why had it not considered the options? Because the Minister had said: “This is what you are going to do.” So the ministry says right up front: “This might not be the best way to go but we have no choice. This is what the Minister insisted on.” Then it says that on balance it thinks that “the proposed starting out wage will have positive employment impacts for the targeted groups.” What it says later on is that the targeted group might see a little bit of job creation—maybe a few hundred—but that will be at the expense of other groups which will be displaced. It says that quite explicitly. That is likely to mean in particular that some 18 and 19-year-olds without much work experience and people aged 20 and over and on a benefit may be less attractive to employers than the 16-year-olds or 17-year-olds on the starting-out wage. So you try to address the problem with unemployed 16-year-olds and 17-year-olds by making more 18 19 and 20-year-olds unemployed. 
Then there is the Ministry of Education. What does that ministry say about this bill? It says that it is not the right thing to do that it is not consistent with the goal of getting more young people to stay at school to increase their skills and that it is encouraging unskilled young people to drop out of school and to go into a job that they will get because they are paid peanuts. We do not need more unskilled 16 and 17-year-olds leaving school to go into the workforce. We need more 16 and 17-year-olds staying at school and improving their educational qualifications. 
David Bennett 
: Come on Phil it’s not an election campaign. 
Hon PHIL GOFF 
: We need more young people to get skilled trades and I put it to Mr Bennett—oh I am very glad to see Mr Bennett here. Let me remind Mr Bennett what he said about this bill when it was in Roger Douglas’ name. David Bennett said on 21 April 2010—not even 3 years ago; Mr Bennett remember this—“The fundamental proposition this bill puts up is that we need to pay people less to get them in their first job so that they can have an unskilled future.” Mr Bennett is that what you said—really? And you went on to say: “That is what this bill essentially will do to New Zealanders. We see a different future for New Zealanders. We want those young people to get into training and skills so that they are not talking about getting the lowest-paid job they possibly can but instead they are looking to get the best-paid job they possibly can.” Mr Bennett you were right then and you are wrong now. You could not be more wrong. 
I say this to the Government: what about Labour’s suggestion? We know that we are short of skilled tradespeople. We do not have the people to rebuild Christchurch. We do not have the people who will be needed if a Government ever had the imaginative policy of creating more houses in Auckland. What we need to do is get young people off the dole and into skilled training and what better way than what Labour was proposing at the last election: to actually pay the first year’s unemployment benefit to the employer in order to encourage the employer to take on additional apprentices? Get more young people into genuine skilled opportunities. Get more people into apprenticeships not Mr Bennett slash apprenticeships by 20 percent as this National Government has done and not as this Government has done cut $53 million out of skilled training two Budgets ago when what we actually need is for more young people to have skills to contribute to this country. 
Do you know what a low-wage vision is for this country? It is a one-way plane ticket for more and more New Zealanders to fly to Australia. Why are they going to Australia Mr Bennett? They are going to Australia because your Government has not created job opportunities here— 
DAVID BENNETT (National—Hamilton East) 
: 
 I move  
That the question be now put 
. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 Who remembers that fateful night when the sword finally fell on Don Brash and John Key moved as swiftly as possible to see Bill English off at the pass? He came out and he announced that he was ambitious for New Zealand. He was ambitious for New Zealand. Well where has all the ambition gone? Where has that ambition gone? Because this Government has lost its focus its ambition on getting people into jobs and making sure people are paid well for those jobs. There is no job strategy. There is no strategy for growing jobs. There is no strategy for growing our economy. The only thing it can think of to try to get young people into work is to cut their wages. 
Well David Bennett knows. David Bennett knows that that is old thinking. That is thinking from the past because David Bennett said when he was speaking against this exact proposal when it was proposed by Roger Douglas: “It is looking at things in a historical perspective. Well the world has moved on.” Well in fact the world has moved on but all this National Government can do—so bereft of ideas that it is—is to look back into history for failed examples of ways to try to get people into work. It failed before and it will fail again. David Bennett knew that. He still knows it and yet for some reason he will be voting for this bill to carry on today. Under National’s watch 72000 young Kiwis aged between 18 and 30 have headed to Australia looking for better job opportunities. What else are they looking for? Better wages of course because in Australia they do pay a decent wage. They will get a decent wage and there is actually a strategy in New Zealand to get more people into higher-skilled better-paying jobs. 
This Minimum Wage (Starting-out Wage) Amendment Bill is a bill that simply reflects National’s absolute loss of ambition. It has no plan to get young people working. It has no plan to get young people into apprenticeships. It has no plan to get people higher skills. It has no plan to develop a high-skill high-wage economy. What does it have instead? This meagre pathetic bill which absolutely lacks any sort of ambition. But do not ask me. Do not ask me; ask David Bennett. Ask David Bennett who said: “We are denying them their success by holding them at a lower rate than their ability shows as individuals.” and that actually is why Labour fundamentally opposes this bill. It allows a form of discrimination that absolutely is not justified. It says to a young person that because of their age and their age alone they can be discriminated against. [ 
Interruption 
] Mr Sabin? 
Mike Sabin 
: I said that member would just hate to see any growth in job numbers. 
IAIN LEES-GALLOWAY 
: Ah! Mike Sabin says that we would hate to see any growth in job numbers. Mr Sabin where are the jobs? Where are the jobs Mr Sabin? There are no jobs. That is exactly what this Minimum Wage (Starting-out Wage) Amendment Bill reflects. If there were jobs for people to go to there would be no necessity for this bill at all. If there were jobs then there would be proper competition in the market for wages and people would be working. This will not create new jobs. This will simply shift older people out of the workforce because employers will be able to take a job that they offer to someone who actually qualifies for the full adult rate and give that job to a young person who does not qualify for the full adult rate. It does not create new jobs. The only way a young person will get a job as a result of this bill is if somebody else is pushed out of the labour market Mr Sabin. 
Mike Sabin 
: Rubbish. 
IAIN LEES-GALLOWAY 
: That is the only way. 
Mike Sabin 
: Nonsense. 
IAIN LEES-GALLOWAY 
: Mr Sabin can sit there and say “Rubbish.” and “Nonsense.” as much as he likes but he knows it is not true. He has not actually come up with a single argument in favour of this bill. 
Mike Sabin 
: There’s plenty of employers who want to give a young person a chance out there clearly. 
IAIN LEES-GALLOWAY 
: If plenty of employers want to give a young person a chance why not pay them for the work that they will do? Why not pay them the rate that they deserve Mr Sabin? We are not talking about a charity here. We are talking about paid employment—the dignity of proper paid employment where a young person can go to work and know that they will be treated in the same way as anybody else in that job. That is the dignity that we are talking about not about saying to young people that they are second-class citizens and do not deserve to get the rate of pay that anybody else in that workplace would be getting. This bill reflects a soft lack of ambition from the National Party that wants to trap young people in low-skill and low-wage jobs. 
SIMON O’CONNOR (National—Tamaki) 
: 
 We have had great theatrical speeches from the other side on the Minimum Wage (Starting-out Wage) Amendment Bill but I think I want to draw some of this to a conclusion at least in my own thinking. What we are hearing here is fundamentalism fundamentalism at its best. It is fundamentalism that takes one point and overemphasises it at the point and against everything else. So let us give this a little bit of context and let us give this a little bit of consistency shall we? 
The first is context. We have heard a lot of things about what this Government is not doing and so forth and somehow that this young person’s wage is a terrible affront because nothing else is happening. There is an enormous amount that this Government is doing around jobs supporting the economy and so forth. Of course we are talking about 16 to 19-year-olds and a lot of them are in education. We can just look at the continuing results that are coming out of the education sector. I have been visiting schools recently and those young people studying there. Of course we have been rebalancing things around student loans and allowances. We are increasing funding into people doing engineering and science. This is a Government committed on a broad front. 
The Opposition will sit here and wax boring if I might say—not lyrical wax boring—on a whole lot of elements here that it thinks “Oh it is terrible.” It sits in a context. The Opposition says that the Government is not doing anything for jobs. Well let us talk about  
The Hobbit 
 let us talk about Skycity let us talk about Callaghan Innovation and let us talk about mining. Let us remind ourselves that the Opposition there said no to all of that. Context is incredibly important. The Opposition is a policy platform of “no” sayers. It is a naysayer to all of those activities—the mining Skycity Callaghan Innovation the funding for education and science—and it says no to this opportunity for young people for a minimum wage. 
I want to turn as well to the question of consistency because actually there has been a great lack of consistency from the Opposition. They are yelling out: “Oh my Lord this is a matter of principle.” We heard it from the Greens. We have heard it from Labour. It is a matter of principle. But of course the Labour Party does have its own youth wage as well. Employers said it was unworkable. It did not work very well the same rate as the youth minimum wage. We have heard it from the Opposition “Oh that is fine that is fine. This is different.” It is not actually principled. So to those listening in and those in the Chamber to the Opposition as it attempted a principled response—but it is not principled itself—one only needs to look at effectively the youth wage that the Opposition held. 
Also we have been talking about the living wage that somewhat arbitrary figure. Then you look at Supplementary Order Paper 193 here where $15 is being touted which of course is not the living wage. So we have got two levels of arbitrariness there. Then if you really want to push the inconsistency $15 is actually 80 percent of the living wage. So once again the Labour Party is getting all its numbers muddled up—all very inconsistent. It is a bit like a bank account that you might have overseas and you forget it is actually there. Why be consistent? Why be consistent? 
For me really I come back to where I started—great theatricalness and great fundamentalism: “We just want to talk about the minimum wage and ignore all the good things that this Government is doing.” Context is incredibly important. And the final aspect here is that employers are not ogres OK? How many people in the Opposition have actually run businesses? Businesses want to employ people. They are encouraging to employ people. They are not out there to screw every young person down on wages. These are Kiwis just like all of us. They are Kiwis like ourselves wanting to give young people opportunities. If this House is serious about looking after young people providing opportunities—that dignity of work Ms Fenton which  
Rerum 
Novarum 
spoke about; the dignity of work—we will do all within our powers to help young people into work. 
I want to pick up finally on Mr Sabin’s point as someone who holds an electorate as well. It has been interesting that those who do not have been pontificating to us. When the young people come into our offices or we are talking in the schools they want opportunities. If this is going to help them then why not 6 months at 80 percent? But I come back finally: theatricalness from the Opposition a lack of principle certainly no desire for context and no consistency in its thinking. Let us move on. 
CAROL BEAUMONT (Labour) 
: 
 It is a great pleasure to rise to speak for the first time in this 50th Parliament. But of course the matter we are debating is not one that is a great pleasure. It is one that Labour opposes and I proudly join my colleagues in opposing this Minimum Wage (Starting-out Wage) Amendment Bill because it is discriminatory. At its very essence this is discrimination. 
I want to note the point that my colleague Dr Megan Woods made about unemployment and youth unemployment in particular. There is no doubt that there is a crisis in New Zealand around youth unemployment. It is part of a wider economic crisis we have in our country of low incomes of high unemployment and of high levels of underemployment. People want work and they want a decent standard of living. We have a crisis because we have a Government without any ideas. So what does it revert to? It reverts to type of course: straight-out discrimination. It is wrong for young people to be paid less for doing the same job. That is precisely what this bill does. 
Age is not a proxy for skills or experience. As the others have said there could well be 18-year-olds who have more experience than a 24-year-old doing the same job. Youth and age are not proxies for skills and experience. Why should it be that a young person working at a supermarket at the busiest time of the week gets paid less? So often in our supermarkets and anybody who does any shopping knows this—maybe across the other side of the Chamber people do not know about this—if you go in at a busy time in the evening or weekends you will see a lot of young people and that is also the busiest time. Our supermarkets are relying on their labour. Why should they be paid less at the busiest time? It is actually a double whammy. It is ridiculous. 
This is a discriminatory piece of legislation. It also has a nice little twist about punishing youth beneficiaries to boot. I just think this is an absolute disgrace and that the consequences of this are going to be some very negative effects. There are going to be displacement effects. The Government’s own research says this. Even if there are jobs created it will be at the expense of someone else. It will be replacing somebody with somebody who is cheaper not because people want to employ young people per se but because they will be able to employ somebody cheaper. 
What happens to young people when they become eligible for the full rate? Well of course they could well be replaced by somebody who is cheaper so older young people will be disadvantaged. In fact in combination with the wonderful “90-day No Rights at Work Act” you could see people on an endless treadmill of never reaching the full rate. 
The effects of this in tandem with other Government policies are really very troubling. I know for example that organisations like the National Council of Women are worried about the displacement effects for part-time women workers. Women workers who are in the workforce in part-time jobs—again maybe in industries like retail and hospitality where they can get the part-time hours because they need to balance their family responsibilities and their responsibilities in the paid workforce—will be replaced potentially by cheaper young people. So they are concerned about it from the point of view of women part-time workers. That is a displacement effect as well. 
 What about the hardship impact on young people? That is also an effect of this piece of legislation. Often now young people’s incomes are a vital part of family income so we are actually reducing family income. Often young people are also working to save to study—something that we would all applaud. We want young people in tertiary education. But again we are going to make it harder for them to get the money that they need or it will mean that in fact they have to rack up even higher student loans than they currently do—again another negative impact of this legislation. 
But what underlies this—and I want to acknowledge the contribution made earlier by Phil Goff on this—and what this is really about is the typical National Party approach to our workplaces and to workers’ rights which is actually around reinforcing the idea that cheapness is what is really at effect here that workers are actually expendable commodities and that we do not want to be ambitious about lifting incomes in New Zealand. We do not want to create better-quality workplaces. We do not want to have workplaces where in fact workers are treated with respect and where their ideas and innovation are what drives productivity. No we want to continue to have an approach that has been National’s approach now for decades— 
MIKE SABIN (National—Northland) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan. 
Motion agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 189 in the name of the Hon Simon Bridges to Part 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 60 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 3; Mana 1; Independent: Horan. 
Amendments agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 193 in the name of Darien Fenton to clause 4 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 60 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 3; Mana: 1; Independent: Horan. 
Noes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 192 in the name of Darien Fenton to new section 4A(1)(a) and 4A(1)(c)(i) in clause 4 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 60 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 3; Mana 1; Independent: Horan. 
Noes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Amendments not agreed to. 
The CHAIRPERSON (Eric Roy) 
: Darien Fenton’s amendment to new section 4A(1)(c)(ii) set out on Supplementary Order Paper 192 is out of order as it is inconsistent with a previous decision the Committee has taken. Darien Fenton’s amendment to new section 4A(3)(a)(i) set out on Supplementary Order Paper 192 is also out of order as it is inconsistent with a decision the Committee has made. 
The question was put that the amendments set out on Supplementary Order Paper 192 in the name of Darien Fenton to new section 4A(5) and 4A(6) in clause 4 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 60 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 3; Mana 1; Independent: Horan. 
Noes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Amendments not agreed to. 
A party vote was called for on the question  
That Part 1 as amended be agreed to. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 60 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 3; Mana 1; Independent: Horan. 
Part 1 as amended agreed to. 
Part 2 Miscellaneous provisions 
DARIEN FENTON (Labour) 
: 
 I stand to take a call in Part 2 clauses 6 and 7 of the Minimum Wage (Starting-out Wage) Amendment Bill. I just wanted to start with a comment really that has bemused me during this debate which is how come increasing pay motivates bosses and chief executive officers but cutting it is supposed to motivate young workers? How come? I would really like the Minister in the chair the Hon Michael Woodhouse to attempt to answer that if he would or at least a speaker from the other side because I do not get it and nor do the thousands of young workers who are affected by this bill—who see day in and day out huge salaries being paid to chief executive officers huge amounts of compensation given to various people like Solid Energy’s Don Elder with $1.3 million to sit on his couch at home doing nothing—yet they are supposed to be feeling grateful because this Government is cutting their pay. 
They are supposed to be buying into the narrative that we hear again and again from this Government that work is somehow a charitable act and that employers are offering a charity. I found it astonishing that Mike Sabin could assert that employers would create a job for someone because they could pay them $11 an hour. If there is no work to be done and there is no job they are not going to do it out of charity. But what we hear from the National Government is that workers and young workers should be grateful. They should be grateful for the opportunity even though they are going to be paid less for doing exactly the same work and they can be sacked within 90 days with no reason given. 
 Why should young people be grateful? 
Mike Sabin 
: The good old socialist mantra—that all employers are evil. 
DARIEN FENTON 
: No it is not actually. It is about treating young people— 
Mike Sabin 
: The good old socialist mantra. 
DARIEN FENTON 
: I am looking forward to Mike Sabin getting on his feet and answering my first question about why it is OK to pay lots and lots of people and some people’s chief executive officers large amounts of money. That is supposed to motivate them and that is the justification we hear that young people are supposed to be motivated by this bill. 
I have a couple of things I want to say about Part 2. In the first part clause 6 I just want to check with the Minister in the chair that I am right about this but the way I read it is that it amends the Accident Compensation Act so that young workers will get 80 percent of 80 percent—is that right? So that instead of getting 80 percent of the adult minimum wage as they do under the current Act unless they are on the 300 hours or 200 hours they will get 80 percent of $10.80. I want the Minister to look at that. Otherwise I do not see the point of that amendment. So what it seems to be saying is that people young workers who go on accident compensation are going to have their pay cut even further. 
We have already heard today and we have already talked about how young workers are going to be forced off the invalids benefit and the sickness benefit otherwise they will be sanctioned. They will be stood down from their benefit for 13 weeks. They will be punished if they refuse to accept the job that Work and Income deems to be acceptable. What happens if they get injured on the job? Remember these are young workers going into often dangerous situations; it can be very dangerous in some of these jobs. They are worried about raising issues because they can be sacked in 90 days. They could have an accident and then they find themselves on $10.80 an hour. So what this Part 2 does is reduce the pay for young workers even more if they are injured on the job. That is so unfair and I would appreciate the Minister addressing that and explaining why the Government thinks that that is fair and that young people should be forced to take another pay cut should they be injured on the job and have to go on accident compensation. 
I want also to address clause 7 which is the transitional and savings provision in relation to the minimum new entrant rate. Again I want to remind the Committee what the new entrant rate was. It is in fact what exists now but it will go out of existence on 1 May. What that meant was a young worker in their very first job a 16 or 17-year-old in their very first job could be paid 80 percent of the adult minimum wage for 3 months or 200 hours on a one-off basis. So that was on the basis that they would learn the job within 3 months or 200 hours and from then on they would be paid the adult rate. 
Of course what this bill does is remove that. It says that 16 and 17-year-olds have to learn the job and it takes them 6 months to learn the job so they are on $11 an hour and then they go to another job and they have to learn it all over again so they go back to $11 an hour. They never get ahead while they are 16 and 17. That is so unfair. As we have heard in this debate 16 and 17-year-olds are often doing the work the same job as other workers. It is not about their output or their abilities. If it were the Government would not be changing the existing provisions that allow for a training period for a worker in their very very first job. 
What this bill does is punish 16 and 17-year-olds. It is not 6 months. It is 6 months again and again and again. If they happen to lose that job when they are 18 and go on to a social security benefit then if they get a job they can be punished again. So not only can they have youth rates all the time during the period they are 16 and 17 but it carries on until they are 18 and 19. 
What I do not get about all of this is the lack of understanding from the Government about how discriminatory this is and how unfair it is that people doing the same job can be paid less because of their age. We have not had that kind of discrimination on the basis of gender on the basis of race and on the basis of a whole range of other issues over the years for many many years. That would be intolerable. We would not say to an older worker who is say over 65: “Well you’re not as productive as that worker so you’re going to get paid 80 percent.” That would be unacceptable because there are rules about discriminating against older people and people on the basis of age. But somehow because these are younger people because they are working and contributing they can be picked on by this Government. They can be picked off by this Government. 
I go back to what I said at the beginning. For some reason the National Government thinks these workers are going to be grateful for this. Well I can tell that National Government that they are not. I have had many contacts. I do not know about Mike Sabin about who he talks to in his area. I was interested in Tracey Martin’s contribution because she lives in the same area so I was very interested in what she had to say about it. I talk to a lot of young people. I am in touch with the Same Work Same Pay movement which was out the front only a couple of months ago protesting about the fact that this bill discriminates against young people who are trying to get ahead and who are doing the same job. 
It is unfair and it is discriminatory. But worst of all this is not going to make a damn bit of difference to youth unemployment. It is not going to help young people get a job. If there is no work there is no job and employers are not going to perform charitable acts by giving young people a chance because they can pay them less. That is so dopey. That is such a dopey notion. Yet we have heard it again and again. 
We all know there is a crisis in youth unemployment and some of my colleagues have talked about Labour’s solutions and Labour’s ideas on that. I cannot fail to come to the conclusion that this bill demonstrates the absolute dearth of ideas from the National Party when it comes to dealing with our young people. Unfortunately our young people are going to keep going on the plane to Australia to better jobs to a place where they get treated with respect. 
David Bennett 
: The almighty Labour Party owns the young people; that’s right. 
DARIEN FENTON 
: David Bennett should probably just not say too much given the speeches he made 3 years ago saying he did not support youth rates. David Bennett probably should keep quiet. 
David Bennett 
: Come on; let’s have it again. 
Mike Sabin 
: Has he explained yet? 
DARIEN FENTON 
: I am looking forward to the member taking a call and explaining why he thinks he got it wrong why he got it right and why he is wrong now. That would be very very interesting. 
I was also quite fascinated too that John Banks gave one of his very rare speeches in the House. The ACT Party seems to get very excited when it comes to cutting young workers’ pay. I remember Roger Douglas did it. I remember Roger Douglas did it and I remember saying: “Is this why you came to Parliament Mr Douglas?”. It seems with Mr Banks that that may be the case too. I hope that one day all of those members in the Government can stand up and explain to young people why they think this bill is a good idea. 
SUE MORONEY (Labour) 
: 
 In rising to speak to Part 2 of the Minimum Wage (Starting-out Wage) Amendment Bill I think we may be getting to the crux of what this bill might be about. What we are clear about and I think both sides are clear about this now—that side was not last week but we are clear now—is that this bill clearly is not about creating jobs. It does not create one job. I think the Government now accepts that. It did start out saying it was going to create something like 2000 jobs but that is clearly a nonsense because as we have clearly demonstrated on this side of the Chamber pieces of law do not create jobs. A piece of law like the 90-day bill did not create one job. Cutting wages under this bill does not create one job. I think the Government has clearly now got that because it has stopped using that argument. I think the Government has actually understood that it is a bit of a nonsense to say that this bill creates jobs. 
But what my colleague Darien Fenton just referred to with regard to the amendment to the Accident Compensation Act that we are considering under Part 2 of this bill is in fact correct. We are now debating paying young injured workers 80 percent of 80 percent of the adult minimum wage which I believe is what the amendment in this part does. I think we might have got to the real motivation for this bill from this Government. If this Government can get away with paying less in terms of ACC payments it will do exactly that. We may have got to the bottom really of what the Government’s motivation is here because this would reduce the money that the Government needs to pay out in ACC payments if the amendment in Part 2 is passed. This is a saving to the Government’s books. 
Why is this important? Because the Government is desperate to save money in all sorts of inappropriate ways to fulfil its promise that it made to get back into surplus by next year. One of the ways in which this Government is trying a smoke-and-mirrors approach to doing that is that it has kept ACC levies artificially high. It made an announcement at the beginning of this year—Judith Collins made the announcement—that despite the fact that both ACC and Treasury had advised her to reduce the ACC levies and that that would actually keep our very precious and important ACC system very well in place Judith Collins refused to do that. The John Key - led Government is keeping ACC levies artificially high and in doing that—Mr Chairperson this is with regard to Part 2 because Part 2 amends the Accident Compensation Act and I just want to explain to people the context of this because this is something that the Government is going after. It is trying to make the Government books look better by— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! This part is about the payments and consequential amendments to the Accident Compensation Act. It is not about levies. It is not about ACC levies; it is about payments. I will ask the member to come back on that. 
SUE MORONEY 
: The connection is that what the Government pays out in ACC payments—if it can save money on that at the same time that it is keeping levies artificially high then that increases the surplus that ACC makes. The reason why the Government is doing that is that it is trying to make it look like the entire Crown accounts are reaching surplus. But the nonsense of that is that the ACC surplus cannot be used for any other purpose but to pay for accidents and injuries. It cannot be used for any other purpose so it is a complete smoke-and-mirrors type of argument for the Government to make it look like the Government is getting back into surplus when in fact what it is doing is using bills like this to reduce its costs in terms of ACC in this instance with regard to 15 and 19-year-olds in order to create a bigger surplus in the ACC accounts in order to make it look like it is reaching surplus in the Crown accounts. 
It is actually those young people those young working people who will pay the cost. They will pay the cost for that Government’s smoke-and-mirrors approach because the young workers will be on 80 percent of the adult minimum wage to start off with and if injured at work they will be on 80 percent of 80 percent. I do not know what the experience of members opposite is like of living on the minimum wage—I would suspect that not many of them have had to do that—but here we are talking about an injured worker being on 80 percent of 80 percent of the minimum wage. 
I would ask the members opposite to reflect on how they think they could make ends meet if they were a 15 to 19-year-old and they were working and trying to live on $10.80 per hour and if they were that worker whom I was talking about earlier in the debate who has been forced really into accepting $10.80 to work for Wendy’s in Hamilton. They will not have an option. It will not be voluntary. They will be told: “Take it or leave it. The job is yours but only at the rate of $10.80.” There will not be a freedom of choice about that. They will be forced into that situation. They either say no to the job and then face sanctions by that very same Government or they accept $10.80 an hour. So there will not be a voluntary aspect in that at all. But if they are in that Wendy’s burger joint that is coming to Hamilton and they get forced into accepting the job for $10.80 an hour and they have an accident or an injury is suffered at work—it could be I do not know hot fat? Those are actually quite common sorts of injuries in that industry. I remember when I was working in that industry that hot fat from those fryers was unfortunately quite a regular sort of injury that was suffered by workers. If they actually suffer that type of injury they will be on 80 percent of $10.80 and that will be those workers—those 15 to 19-year-olds—paying the price for this Government’s promise to return the books to surplus by next year. They will be paying the price because the Government actually gets to save money here. 
So this is not about employers or workers or opportunity or job creation or any of those myths and legends that the Government opposite has tried to tell us about. It is actually about spending cuts from the Government’s perspective as well as cutting wages. And the folly of that whole strategy is that cutting wages will actually lead to fewer jobs—not job creation but fewer jobs—because if wages are cut in this way all of those 15 to 19-year-olds will have less money to spend and when they spend less money there is an effect on our entire economy. This bill demonstrates a complete lack of financial and economic management from this Government. It shows that it has not got a clue what it is doing. 
I hardly ever agree with David Bennett—we come across each other quite a lot in Hamilton and I hardly ever agree with him—but he said in 2010 in a speech on this very issue about youth rates: “We do not feel that it is helpful in keeping the focus on growth and growing the economy which is needed to create jobs and which this Government has made a top priority for this year.” That is what he said in 2010 about the prospect of cutting wages for young people. He actually said that it would not be good for the economy. He was right. I agreed with him then. But I do not agree with him now because what he is telling us now by the way that I expect he is going to cast his vote shortly in this Chamber is that it is no longer a top priority actually for the Government. He said back in 2010 that it was going to be a top priority—creating jobs was going to be a top priority—but he also said back in 2010 that it was “important that we do not set the bar too low in the sense that our young people who work hard must not find they get no reward for their efforts.” That was David Bennett in 2010. In 2012—2013 sorry; I am going into a bit of a time warp there. It is not even—actually it was on 21 April to be fair so almost 3 years later David Bennett now seems absolutely happy to sell those young people down the tubes. It is frightening that in not even 3 years he and his Government have lost faith in these young people. They have given up on them and— 
MIKE SABIN (National—Northland) 
: 
 I will pick up on the point from the previous member Sue Moroney immediately. It is quite the opposite actually. This Minimum Wage (Starting-Out Wage) Amendment Bill is about a Government that actually backs these young people and is prepared to ensure that the environment exists for them to be given a chance. I want to come to Part 2 the transitional provisions. There is one important point I want to make there but I want to just comment briefly on some of the points that have been lobbed across the floor. People would think that this bill is according to the Opposition nothing more than rich capitalist bosses exploiting poor workers and displacing them. That is entirely inappropriate and simply not the case. 
The point was raised by Opposition member Darien Fenton around what the incentives for young people are in this equation or that if the incentive is that somehow the boss will be pocketing this extra money where are the incentives for the young people. Well the incentives for the young people are that the opportunity that they have been looking for will be presented to them more actively. This was something that was related to me by a constituent last week when I was out working on a kumara farm harvesting a few kumaras being taken through the packing shed and packing some of those sweet delights. I was talking with that employer who employs up to 1000 people on a casual basis through the cropping season about the importance of the right settings for him to be able to employ casual workers who would otherwise be sitting on a benefit and not have that opportunity. At $15 an hour he said he would not be making a dollar. At $16 an hour he would be out of business. Ninety percent of the country’s kumara are grown in Dargaville. That is a very good example of the reality versus the sort of socialist ideology that employers are out there to get rich at the expense of the poor worker. This is about getting those settings right. 
This is not a bill about creating jobs. This is a bill that provides the appropriate economic settings around the relationship between the employer and the employee. What we are doing to create jobs—because that seems to be something that has entertained the Opposition—is providing a range of economic strategies and policies through a Business Growth Agenda which I think is quite unprecedented. 
Dr Rajen Prasad 
: Come on mate—evidence. 
MIKE SABIN 
: It is a language that Opposition members do not really understand; I am probably wasting my breath for those across on the other side of the Chamber. Quite simply they cannot stand there and oppose all those moves and then turn around and say: “Oh but there’s no jobs.” 
Sue Moroney 
: It doesn’t create jobs. It actually reduces jobs Mike. 
MIKE SABIN 
: Members on the other side of the Chamber can rest assured that the jobs are there and this is about meeting employers and employees in the middle with the opportunities. 
In coming to Part 2 in terms of the transitional provisions I think it is important to note that where someone is captured in their entry into the workforce in the transitional part of this bill becoming an Act those who are caught in the middle if you like will get the higher of the two positions which ensures that they are not penalised through that transition period. Obviously there will be a transition because this is a bill that would have employees working at this rate for 6 months. So there will be that period and Part 2 simply covers off the importance of getting that transitional balance and the ingredients right. I think in clauses 7(2)(a) and 7(2)(b) it quite clearly states that the better of the two rates will be available to the employee. 
Many people—certainly in my electorate and for the constituents both employers and employees—have raised with me the real anxiety that they feel in a tight labour market that the opportunities are not there. This bill provides a platform to ensure that they are given a chance. The idea that a 16-year-old will somehow displace someone in their mid-twenties who has been in the workforce for 8 or 10 years who has developed a good work ethic and who has developed skills and experience in that business is an absolute nonsense. 
PHIL TWYFORD (Labour—Te Atatu) 
: 
 I want to start by commenting on clause 7(2) which includes the transitional provisions that Mike Sabin was just referring to. My comment is that actually clause 7(2) is probably the only sensible clause in the entire Minimum Wage (Starting-out Wage) Amendment Bill because it offers a modicum of reasonableness in allowing workers who are caught between two stools if they have already started on the old new entrant rate a kind of grace period of 3 months or 200 hours to be paid “as if this Act had not been passed”. Well I have got an idea for a new amendment that we could put on the Table: how about we treat the whole damn bill as if it had not been passed? 
This odious pathetic bill brought to Parliament by the National Government illustrates the poverty of failure. It is not the poverty of failure that is a blight on communities all up and down this country—the youth unemployment crisis—it is the poverty of failure that this Government demonstrates by the fact that it is bereft of ideas it is bereft of vision and it has no ideas about what to do about the job crisis. The best it can do for young people in this country is to bring to this House a bill that cuts their wages. 
Whichever way you slice it this bill is unfair. It is discriminatory. I ask Mike Sabin who loves to stand up and say that the Opposition is obsessed with all this socialist ideology and is demonising employers why he does not bring to this House a bill that would actually provide a step up into the employment market for a group of people in this country who disproportionately suffer high rates of unemployment. I am talking about the people who live in the far north. The people in Northland suffer very high unemployment so I challenge Mike Sabin to bring to this House a bill that cuts the wages of people in Northland. Why not do that? It is exactly the same principle. If that member is consistent and he cares about unemployment in Northland then he should bring to this House a bill that cuts the wages of people in Northland. Let us have a starting-out rate for people who live in Northland Kawerau Murupara or Gisborne. Let us cut the wages of people who live in high-unemployment areas. There is no reason under the logic of the National Government that we should not cut the wages of the people who live in Northland. 
How about another group of people who suffer high rates of unemployment and find it very hard to get into the labour market? How about people who have physical disabilities and mental disabilities? They find it really hard to get a job because an employer will not take a chance on them. I say to members on that side of the Chamber: let us cut their wages to $11. Actually why not cut the rate lower than $11? Let us cut it to $10 or $9 an hour because that would give people with disabilities a leg-up into the labour market and that is what they need. So let us cut the wages of people with disabilities. 
There are other groups around in society who suffer high rates of unemployment: Maori people Pacific people new migrants and refugees. They all find it really hard to get into the job market. They all suffer disproportionate rates of unemployment. So following the logic of the National Government let us cut their wages. There is no earthly reason why the same logic that underlies this bill should not be applied to disabled people ethnic minorities or people who live in Northland Murupara Bluff or the West Coast of the South Island. There are lots of people who are disadvantaged in this labour market and why should they not be the beneficiaries of the same Tory charity that is cutting the wages of young people in this country? The members on that side of the Chamber are silent because they know that that analogy illustrates the absolute poverty of imagination and vision that is behind this bill. 
Simon O’Connor got up and talked about the fact that there is a sort of fundamentalism on the Labour benches that is behind our opposition to this bill. Well it is not fundamentalism Mr O’Connor. It is a belief in basic ideas of human dignity decency and the equality of all citizens in our democracy—basic ideas that that member and his colleagues do not seem to have any idea about. Secondly— 
Hon MICHAEL WOODHOUSE (Minister of Immigration) 
: 
 I want to take just a quick call on Part 2 of the Minimum Wage (Starting-out Wage) Amendment Bill in respect of the questions that were raised by members Fenton and Moroney. In fact Ms Moroney I think is quoted as saying that the bill shows a complete lack of awareness about the issues facing young people. I suggest to the Committee that that member shows a complete lack of awareness of either this bill or the Accident Compensation Act. It is not 80 percent of 80 percent; the present schedule to the Accident Compensation Act— 
Sue Moroney 
: Could have said that from the start. 
Hon MICHAEL WOODHOUSE 
: Well you see this is a really good example I think of where the members on the other side assume something and then spend half an hour criticising the Government for a policy that simply does not exist in the bill. 
Sue Moroney 
: If you’d take a call and clarify it. 
Hon MICHAEL WOODHOUSE 
: It does not exist in the bill. Well I was just letting the tether get a little longer before hanging the member with it. 
Darien Fenton 
: It took you half an hour to work it out. 
Hon MICHAEL WOODHOUSE 
: I was not on the Transport and Industrial Relations Committee. If as a member of that select committee someone was doing their job diligently one should have asked the question if it were that important to the member rather than wait to the Committee stage and expose her own shortcomings in a lack of knowledge about the bill. The Accident Compensation Act at the moment already prescribes for the new entrant rate which Labour put in place. And bear in mind with all of this ranting and raving about the fact that a starting-out wage is such an evil thing that Labour in fact put one in place for 3 months. So when the Government does it for 6 months it is something awful but when Labour does it for 3 months it is something noble. I certainly get an inconsistency on that. In schedule 1 of the Accident Corporation Act anybody who is in that new-entrant rate now who is injured is paid 80 percent of the adult minimum wage. 
Sue Moroney 
: So why are you amending it? 
Hon MICHAEL WOODHOUSE 
: It is not being amended. The description of schedule 1 is being amended to reflect the new nomenclature in the Minimum Wage (Starting-out Wage) Amendment Bill that will be put into the Minimum Wage Act. The same thing will apply if effectively they are earning as the member said 80 percent of the adult minimum wage and they are injured. Then their weekly earnings are calculated on the adult minimum wage and weekly compensation will be calculated on 80 percent of that. Therefore their effective take-home income will not change during a period that they are injured. 
DENISE ROCHE (Green) 
: 
 I just want to direct my attention to Part 2 of the Minimum Wage (Starting-out Wage) Amendment Bill. I guess what I would like to concentrate on is the fact that the transitional arrangements—I agree with Mr Twyford—are probably the only sensible bits in the bill. The transitional arrangements are about protecting those workers who are aged 16 and 17 who are already on the training rate for a period of 6 months. I would like to note and I would like to have it noted that this training rate was the price that was paid to get rid of youth rates which a previous National Government had brought into legislation in the 1990s. It was Sue Bradford a former Green MP who actually brought the bill to the House to get rid of youth rates in their entirety. In order to get agreement across the House that it could apply as a training rate this is what happened: 16 and 17-year-olds were able to be employed if they were being trained for a period of 200 hours or 3 months at that lower rate of 80 percent of the minimum adult wage. 
We are not suggesting that this should continue throughout our employment and industrial relations arena and we certainly do not think that it should be applying to 18 and 19-year-olds. I agree with Supplementary Order Paper 192 from Darien Fenton that to implement this bill and to allow the reduction in the hourly rate for 18 and 19-year-olds is a huge step backwards back to the 1990s. I thought we had moved on from then and that we were treating our younger people—or starting to treat them anyway—with a bit more respect as they enter the workforce. 
I do think in answer to Mr Sabin’s questions about our seeming to think that employers want cheap labour that yes they do. If you look at the unemployment statistics with 160000 people unemployed at the moment and more being forced off benefits and being turned into job seekers and you add to that mix 16 17 18 and 19-year-olds who will be forced off benefits as well and into the workforce at cheaper rates then you are looking at a glut—a glut—of available low-paid workers and that will force wages down. It will not add anything to the economy—it will not. When you keep wages low you actually keep spending low and my colleague Sue Moroney across the Chamber has already mentioned this. You keep wages low you keep spending low and therefore you keep jobs and wages low and you keep jobs scarce. It adds no creative thinking towards creating jobs. 
This Government seems to think that young people are worth nothing. We have heard from previous speakers that this is about doing them a favour in getting them into work. Well they will get into work if we invest in them by giving them training by giving them education and also by creating jobs. The only kinds of economic strategies that we hear from this Government around creating jobs is the usual “Drill it mine it and sell it.”—the usual sort of short-term thinking. 
But I come back to Part 2 of this bill. I have already touched on the transitional arrangements which is the only sensible part of the bill. I do respectfully say to the Minister of Immigration that the equation of 80 percent of 80 percent is correct. Any person who has an injury at work gets 80 percent of what their weekly earnings are. If you are already earning 80 percent then that means a young worker will be paid 80 percent of 80 percent. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 Clause 7 in Part 2 of this bill the Minimum Wage (Starting-out Wage) Amendment Bill reveals why this piece of legislation is actually absolutely unnecessary or should be absolutely unnecessary if this Government was actually doing its job. Clause 7 as other members have referred to establishes the transitional period or the transitional effect for those workers who are already on the 3-month starting-out provisions that are already available. The Government says that this bill is about giving young people a chance to get into the workforce. It says that the way to do that is to have a period of time in which they can be paid less. Well not that we are entirely comfortable with it but that situation already exists. So the answer to the Government’s question of how we can get more young people into work has already been answered. But of course what this bill does is extends the period of time from 3 months to 6 months and extends the number of people who will be affected by the legislation from not just 16 and 17-year-olds but 18 and 19-year-olds as well. Therefore we need the transitional effect of clause 7. Why? Well the only answer can be that this Government has failed to create jobs because what we have got now is the situation where these young people who will be impacted by this piece of legislation are competing for low-wage and low-skilled jobs with an older population who used to occupy the high-skilled high-wage jobs that no longer exist in New Zealand. That is the answer to getting more young people into work—creating more jobs so that people who qualify for the full adult rate actually have decent work to be applying for. 
But no people in their 20s their 30s their 40s their 50s and their 60s are competing with teenagers to work at McDonald’s. That is the situation that this Government has created that is why young people cannot get into work and that is why the Government needs to pass this legislation so that young people can compete with older people for the jobs that only young people ought to be doing. The only reason we are in that situation is that this Government has failed to create jobs. This Government has lost its ambition. This Government has lost its way. This Government has no plan. 
I would like to refer to some comments made by Mike Sabin whilst debating Part 2 because they contradicted an interjection that he made earlier on while my colleague Sue Moroney was speaking. He got up and said that 20-year-olds are not going to be chucked out of their jobs so that a 16-year-old can come in. 
Mike Sabin 
: A 25-year-old. 
IAIN LEES-GALLOWAY 
: Oh 25-year-olds even—look that is probably true. But what Mike Sabin did say in an interjection was that if there is a job it is more likely to go to a young person than it is to an older person which actually accepts the fact that firstly young people— 
Mike Sabin 
: A new job. 
IAIN LEES-GALLOWAY 
: Well first of all where are the new jobs Mike Sabin? Where are the new jobs? If they are in McDonald’s and Burger King and Wendy’s then that is a sad indictment on this Government’s efforts in getting our economy going again. If that is where the new jobs are if those are the jobs that people are competing for then what does that tell you Mr Sabin about this Government’s failure to get the country working again? Sixteen and 17-year-olds are not going to be competing for engineering jobs. They are not going to be competing for research jobs. They are not going to be competing for teaching jobs or for medical jobs or for nursing jobs. They are competing for low-wage low-skill fast-food supermarket kinds of jobs. The only reason why they are competing with older people is that all the other jobs that people should be doing have gone and that is because of this Government’s failure. It is no wonder so many New Zealanders are opposed to this piece of legislation and Labour is happy to represent them. 
SIMON O’CONNOR (National—Tamaki) 
: 
 I move  
That the question be now put 
. 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 I am happy to take a call on Part 2 of the Minimum Wage (Starting-out Wage) Amendment Bill. In particular I want to talk about the transitional provisions in there and the rates that are going to be paid. I want to talk about those rates and what they mean and about some of the consultation that happened with other Government departments. If we have a look at this I think what we find embedded in the regulatory impact statement which lays out what other Government departments had to say about this is the real agenda here and how the rates that we see set out in this piece of legislation are not intended to stop with young people. They are not intended to be just youth rates. It is quite alarming to read through these when we look at what these rates might be. 
If we have a look at Treasury’s comment on this piece of legislation and the youth rates that are in here Treasury said that it “supports the introduction of a starting out wage but considers that extending eligibility to a wider group of potential employees who face labour market entry barriers would boost the employment impacts of the policy and also be better aligned with the Government’s welfare reform agenda.” So there we have it in very bold type from Treasury in terms of its comments on this. This is not a piece of legislation that is about giving young people a start in the work force. First it will not work—we know that; Government members have even given up arguing that it might achieve that. This is a piece of legislation that is about driving down wages. This is a piece of legislation that is nothing to do with raising wages raising the standard of living and raising the kind of life that New Zealanders can have in New Zealand. 
Then we had the Ministry of Education’s comment in the regulatory impact statement. Let us remember that this is a Government that talks big about an innovation-led economy and about how we are going to have a future that is based on investment. Well let us have a look at the stark reality of what the Ministry of Education had to say about youth rates. The Ministry of Education notes that “the starting out wage may impact on the incomes of students who are working part-time while studying or working full-time during school or tertiary holiday periods. This may impact on students’ ability to finance their current or future tertiary study.” 
This stuff is really worrying to us here on this side of the House. This is not the way to have the better New Zealand we want to have. If we put this together not only with the welfare reforms that Treasury pulled our attention to in the previous comment but with this Government’s lack of commitment to us having an innovation-led economy in terms of postgraduate allowance how are the rates that are prescribed in this legislation going to allow someone to undertake full-time postgraduate study with no access to an allowance having to supplement their loan but only able to earn $11 an hour? 
Let us have a look at the people who might be doing it. Postgraduate students are very likely to have families to support very likely to have other people whom their income is going to need to support. This legislation is going to undermine our ability to have more and more people gain qualifications that will make us a better country that will deliver us higher-paying jobs and that will lift the aspiration above minimum wage jobs which the Government seems obsessed with. The Government thinks that it is only minimum wage jobs that young people should aspire to. Well we here on this side of the House actually want something better for our young people something better than the $11 that is prescribed in this bill. Let us continue through the regulatory impact statement. Let us have a look at some more of what the Ministry of Education had to say. 
Simon O’Connor 
: What’s this got to do with Part 2? 
Dr MEGAN WOODS 
: The Ministry of Education is “concerned that the starting out wage”—i.e. the rates described in Part 2 of this bill—“proposal is at odds with the Government’s Better Public Services targets of increasing the proportion of people attaining NCEA level 2 at school and also the proportion of the population with at least level 4 qualifications aged between 25 and 34.” Again how does this tie in with the great rhetoric we hear from this Government? It does not because this is a Government that is not about raising the standard of living of ordinary New Zealanders. This is not a Government that is about getting more people into work. This is not a Government that is about backing our young people. 
Mr Sabin seems to think he can meet with a couple of his constituents match them up with an employer and hey presto we have solved the problem of youth unemployment. Well Mr Sabin 41500 young New Zealanders are unemployed and 90000 young New Zealanders are not in any form of education employment or training. You cannot solve this in your electorate office. This requires a political solution one that this Government is failing at because it is out of ideas and has nothing to offer except for the youth rates that it is offering in this bill. 
What we have is a Government that will not face up to the fact that it has not put forward any solutions. And then we have a look at what the Ministry of Business Innovation and Employment came in and said. This is the one piece of advice that the Government has latched on to. National has latched on to this and claimed that based on these rates that are prescribed in Part 2 of this bill the starting-out wage will create 2000 new jobs for young people over 2 years. This is based on the modelling and the estimates that the Ministry of Business Innovation and Employment gave National. But it does not take into any kind of account the kinds of jobs and at what expense. This is probably the same kind of modelling that is coming up with this number of 2000 jobs the same model that perhaps told us that we were going to have 177000 new jobs which this Government has failed to deliver on. 
This Government is willing to preside over increasing unemployment and more shockingly and disturbingly preside over increasing youth unemployment. We are at the level of Greece Spain and Portugal when it comes to youth unemployment. For 15 to 19-year-olds we are at 30.9 percent. We on this side of the House will not bury our heads in the sand. We know we have to do something about that. You need real solutions. Tinkering around with the rates such as are prescribed in this piece of legislation is going to do nothing to fix that. It is an absolute disgrace that this is all that this Government can come up with. 
Then if we turn to clause 6 of this piece of legislation which is around the Accident Compensation Act and how it interacts with this all this legislation is doing is it is a cost out model. Workplace health and safety training is going to be put at risk under this legislation. We are setting up an employment model that encourages employers to have a high turnover of employees. Put it together with the 90-day legislation and you have all the incentives in the world for employers to keep turning and churning through young employees and paying youth rates. One of the things that this Government needs to own up to is that this is a perpetual piece of legislation for our young people. They do not get subjected to youth rates just once. This is not a starting-out wage; this applies until the day you graduate in age to an adult wage. This is not about giving young people a start. This is not about— 
Sitting suspended from 6 p.m. to 7.30 p.m. 
The question was put that the amendments set out on Supplementary Order Paper 189 in the name of the Hon Simon Bridges to Part 2 be agreed to. 
Amendments agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 190 in the name of Darien Fenton to insert new clause 8 be agreed to. 
The CHAIRPERSON (Eric Roy) 
: Order! It is very hard to hear. I am not sure whether that conversation is inside the Chamber or being picked up from somewhere else.  
A party vote was called for on the question  
That the amendment be agreed to.  
Ayes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan. 
Noes 63 
New Zealand National 59; Maori Party 2; ACT New Zealand 1; United Future 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 2 as amended be agreed to. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 59 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 2; Mana 1; Independent: Horan. 
Part 2 as amended agreed to. 
Clauses 1 to 3 
DARIEN FENTON (Labour) 
: 
 I rise to take a call on clauses 1 to 3 of the Minimum Wage (Starting-out Wage) Amendment Bill which are the title commencement and principal Act parts of the bill. I think we can probably have quite a lot of debate on the title of this bill the Minimum Wage (Starting-out Wage) Amendment Bill. It is very interesting that we have got “Wage” twice in the same heading. I would be interested to know how often that happens actually in titles of bills. 
But I think it says it all really in the title—“Starting-out Wage”. It is such a misnomer because actually this is not a starting-out wage amendment bill. This is not a bill that allows people to start out on a wage and gives them an opportunity as the National Government has said repeatedly to be paid $11 an hour and be given a chance. This is a bill that starts people out on $11 an hour and if they are 16 or 17 it means that they can be returned to $11 an hour after 6 months if they change jobs. So it is kind of a starting-out and starting over and over and over again kind of bill. 
In fact in my first reading speech I referred to it as a “Snakes and Ladders Bill” because what happens is that 16 and 17-year-olds start—if they get a job—on $11 and they work for 6 months and then if they are with the same employer they go on to the adult minimum wage. But of course we all know that the kinds of jobs we are talking about under this bill are not going to be the kinds of long-term jobs where young people are working their way up the ladder working their way up the skill ladder so that after a period of time they will get recognised for their experience and so on. The truth is that the sorts of jobs that are going to be created under this bill and under the title of this bill are low-wage jobs low-skill jobs and actually temporary jobs and high-turnover jobs where the truth is that most workers will find themselves in 6 months looking for a new job. They have worked their way up the ladder after 6 months to get to the adult minimum wage and then when they get a new job they go back down the snake—or is it up the snake and down the ladder; I forget which but anyway—and back they go. Back they go. They work their way up and after 6 months they start a new job and they start all over again. So it is not starting out; it is starting—in fact the title of this bill could be the “Minimum Wage (Starting-out Over and Over and Over) Amendment Bill”. 
Just to give the Committee an example of what the consequences of this bill may be I have been talking to the people involved in collective agreement negotiations with two of our major fast-food companies at the moment. Immediately that this came back on the agenda immediately that the National Government put this bill in the House those two fast-food companies which employ large numbers of not only young workers but older workers have said they want to have youth rates. I remember a time—it was not when the Green member Sue Bradford actually brought the removal of youth rates bill to the House—when those companies were actually at the forefront of saying that they did not want youth rates; they were going to do away with them. They got a lot of publicity—a lot of positive publicity—for that. But now they have got the opportunity—well they are going to have the opportunity because of this Government—to reintroduce youth rates. 
What I can tell you is that things have moved on during those years since those two major fast-food companies first introduced adult rates for everybody. Actually it has become a lot more unionised. What I am told is that there will be a push-back from the workers. So this is not going to go quietly. Workers who work in those fast-food companies—thousands of them—are not going to quietly accept an agreement with their employer that allows the reintroduction of youth rates. Having fought for it those few years ago they are not going to easily give up on it. 
There are other things too. There is another title we could have for this bill. I think it could be called the “Minimum Wage (This Government Hasn’t Finished Yet) Amendment Bill” because we do know that this Government has not finished with cutting wages. We know from the regulatory impact statement that Treasury has suggested that there may be other so-called disadvantaged workers who could be eligible. The language of this bill is horrendous—“eligible”. That actually means workers who could be “forced on to youth rates”. 
But what we also know about this Government is that it has an agenda that goes way beyond just cutting the pay of young workers. We are expecting to see that any time now with the new bright young Minister of Labour whom everybody on the other side was praising. We are expecting to see in this House in the next month or two some Draconian legislation around employment relations that will not only cut the wages of young people but cut the wages of many thousands of New Zealanders. So this bill I think comes with a very strong warning that this Government has only just started on its intention of cutting wages because fundamentally it believes that cutting wages is the way to create jobs and as we have discussed endlessly in this debate because it has no other ideas. 
And so because the Government has no other ideas this could be called the “Minimum Wage (We Don’t Know What to Do About Youth Unemployment) Bill” because that is the truth of the matter. We have heard in this debate no ideas from the National Government about addressing the crisis in youth unemployment. We have heard plenty of ideas from speakers on this side of the Chamber about Labour’s ideas for addressing youth unemployment but we have heard nothing from members opposite except this narrative which we have referred to before that somehow if you cut wages young people are going to be so grateful and employers are going to invent jobs that do not exist because they can pay them nearly $3 an hour less. 
I think that what this whole debate is demonstrating is that we have a crisis in youth unemployment and that we have a Government that has no idea how to address it and is reverting to the very old-fashioned ideas of last century—ideas that we know have failed—and hoping that they are going to make a difference. We know they will not. 
Also some of the dialogue and some of the contributions that we have heard from National Party members tonight and during other parts of the debate is this whole idea that young people are just sitting out there waiting for someone to offer them a job and because the wages are going to be cut by nearly $3 an hour they are going to suddenly get a job that does not exist there is going to be work created that does not exist and so they should be grateful. Actually they should be really grateful to this Government that it is creating jobs that do not exist. So we could call this the “Minimum Wage (Grateful for Any Job) Amendment Bill”. 
The information on the regulatory impact statement from the Department of Labour or whatever it is called now— 
Dr Rajen Prasad 
: We’re guessing—we’re guessing. 
DARIEN FENTON 
: It is guessing. It said very clearly that it cannot tell. It does not have the information to be able to measure the impact of this and that goes to the heart of the Labour Party’s concerns. We are introducing a measure that will have an impact on 16 17 18 and 19-year-olds and this Government does not know the impact of that. It does not know whether it is a good impact or whether it is going to have any benefit. What we do know is that the Ministry of Business Innovation and Employment says that it will create between about 400 and 1000 jobs but that is before it takes into account the impact of displacement of older workers. So it is crazy stuff. It is really crazy stuff. 
My last contribution in terms of what this bill could be called is that it could be called the “Minimum Wage (How Low Can You Go) Amendment Bill”. We heard a very good contribution from Phil Twyford before the dinner break about all of the other examples of workers throughout New Zealand—disabled workers people who work in small parts of towns people who work in Northland and so on—for whom you could make an argument that you could cut their wages to create employment. The problem with that is that it is a race to the bottom. That is a race towards getting back to the kinds of conditions that we had in the 19th century in this country. I really do not believe that Mike Sabin and others in this Committee think that that is the right thing to do. They need to get real and understand that this idea that young people can voluntarily agree to a youth rate is madness because it is simply not going to happen. This bill will not deliver. 
KANWALJIT SINGH BAKSHI (National) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 63 
New Zealand National 59; Maori Party 2; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan. 
Motion agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 59 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 2; Mana 1; Independent: Horan. 
Clause 1 agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 59 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 2; Mana 1; Independent: Horan. 
Clause 2 agreed to. 
A party vote was called for on the question  
That clause 3 be agreed to. 
Ayes 61 
New Zealand National 59; ACT New Zealand 1; United Future 1. 
Noes 59 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Maori Party 2; Mana 1; Independent: Horan. 
Clause 3 agreed to. 
Bill to be reported with amendment presently. 
Student Loan Scheme Amendment Bill (No 2) 
In Committee 
Part 1 Amendments to principal Act 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 It is a pleasure to take a call or—who knows—a couple of calls on the Student Loan Scheme Amendment Bill (No 2) in its Committee stage where we are discussing Part 1. I wish to reaffirm that the Labour Opposition will be supporting the bill at this stage and I would like to acknowledge the work of the Finance and Expenditure Committee and indeed the Minister of Revenue in bringing the bill to the House. 
The bill does two relatively straightforward but relatively minor jobs to the student loan scheme. Firstly it broadens the definition of “income” so that it includes income from trusts companies superannuation schemes and so forth in calculating eligible student or family income. Secondly it allows information sharing between the Customs Service and the Inland Revenue Department so that the Inland Revenue Department can track students who are in serious default of their repayments when they go overseas. 
The bill however is notable not so much for what it does do but for what it does not do. Although it does save the Crown approximately $7.5 million over the next 5 years it ignores a total of $2.67 billion—that is $2.67 thousand million of accumulated student debt. There are no solutions for the student loan debt crisis in this bill nor are there any solutions for the longer-run and just as important issue of the intergenerational unfairness between the generation represented by most but not quite all members of this House which is the baby boom. I do not personally have the pleasure of being part of that generation because I just squeak into Generation X I am happy to say— 
Hon Members 
: Oh! 
Hon DAVID CUNLIFFE 
: Thank you members opposite. I know that there is a certain amount of jealousy there from the backbench of the Government benches. I may give Alfred Ngaro the benefit of the doubt but I most certainly will not be giving that member from Hamilton too much benefit on that call. It is also somewhat interesting— 
David Bennett 
: Are you going to make your speech about what I said 5 years ago? 
Hon DAVID CUNLIFFE 
: That is all right—settle down gentlemen settle down. It is also pretty interesting that the Minister in the chair the Minister of Revenue has got this bill to the Committee stage today being the day that the second of his two tax measures the cellphone tax has been torpedoed by the Prime Minister following as it does yesterday when his car-park tax was similarly torpedoed. There is of course a common theme between those measures which the Government is now seeing reason on and the measures in this bill. The common theme is that this is the “Minister for Small Changes”. The Minister has made small things happen while ignoring much bigger problems. In the tax area of course it is the gaping chasm created by a lack of a capital gains tax. We are one of only three countries in the OECD not to have one. Of course we need one says the IMF says the OECD but we do not have that debate today. 
Of course we need to have more fairness in the income tax system. Of course we need to fill in major avoidance loopholes. Those are huge jobs; they are just jobs the Government is not tackling. 
Here in the student loan scheme there are two principal strategic issues. The first is that the scheme is costing the taxpayer an arm and a leg and the debt is mounting. That debt is now to the tune of billions—$2.67 billion according to the latest information—and it is growing. This bill shaves off over 5 years perhaps $7.5 million which is not quite $1.5 million a year of cosmetic trimming to the cost of the scheme but in the meanwhile it does nothing much to address the inherent unfairnesses. 
I see that the member Holly Walker has resumed her seat. She gave a very good speech in the first reading of this bill where she drew attention to those intergenerational problems and said that the student loan scheme is putting at great risk a generation of students who are working hard playing by the rules and learning as fast as they can but who are starting their working life with a mortgage even though they have no house. 
In my first reading speech I used the example of two hypothetical people Old Peter and Young Peter—one was hypothetically the age of the current Minister and another was one of today’s students—and compared the situations faced by both of them. The results were based on some pretty straightforward calculations—for example at a minimum of $172 per week living costs and a study year of a conservative 40 weeks Young Peter would have racked up $34500 by graduation. Including fees his debt would be $64500 before he starts trying to graduate get a house get a mate or feed a family. That is the burden that today’s young people are growing up with and what we want them to know from the Labour perspective is that we understand their plight and that we are going to work tirelessly—not just through this bill but through a number of measures that we will be working on and bringing to the public before the election—on that issue of intergenerational fairness. 
We think for example that a capital gains tax and an active housing policy that provides more affordable homes for young New Zealanders is an important complement to measures like the affordability of tertiary education. We certainly do not like the arbitrary 5-year limit on receiving student loans which is essentially putting postgraduate study beyond the reach of all but those who were born with the proverbial silver spoon. 
It is interesting is it not that in the current Government there are one or two poster children for social mobility: the Prime Minister it is often said—although that is a carefully crafted narrative—and indeed the Minister for Social Development. But the difference between this side of the Chamber and that side of the Chamber is that when members on this side see someone climbing the ladder they want to make sure the ladder is there for the next generation. The difference between us and the Government is that it has made rather a nasty habit out of pulling the ladder up after itself to save money from its own tax bill and damn the torpedoes of the implications for the next generation. This bill—although we support it because it does nothing wrong and it takes minor steps towards making the scheme slightly fairer—is a bill of two small things while the elephant in the room is a scheme that is foundering under the weight of debt and foundering under a growing and pressing problem of intergenerational unfairness. It is time that the Minister responsible for the student loan scheme the Hon Peter Dunne stood up and took responsibility for those major issues just as he should stand up and take responsibility for the major issues in the revenue portfolio. 
New Zealand does not need just tinkering. We do not need more of the same. We do not need lipstick on the pig that is the New Zealand economy. What we want is a step change. We want vision we want strategy we want “go forward” and we want jobs for hundreds of thousands of New Zealanders currently without work so that they can get ahead so that they can make the best— 
Mike Sabin 
: Lipstick on pigs is not something I’d be bringing up. 
Hon DAVID CUNLIFFE 
: —of their potential and in this context Mike Sabin so that they can pay off their student loans because if they do not have a job they cannot pay back their loans. It is well known that we face— 
Andrew Little 
: Step change not a small change. 
Hon DAVID CUNLIFFE 
: It is a step change not a small change—well put Andrew Little. Unfortunately we have got the “Minister for Small Change not Step Change” in the chair—the “Minister for Small Change not Step Change”—and we need a step change. It is well known that in the next few weeks hundreds or possibly thousands of workers in one of New Zealand’s largest telecommunications companies—many of them smart young people on good wages—are going to lose their jobs and the question is where are the replacement jobs when hundreds of telecommunications company workers hit the streets? What about the jobs for the smart new graduates from the business school and the engineering school who would like opportunities like that which will not exist? And what about those like Young Peter who start work with a mortgage of greater than $60000 because they are similarly burdened by debt? 
Mike Sabin 
: Where’s that aspirational positive attitude we’ve come to see? 
Hon DAVID CUNLIFFE 
: Well the member over there talks about aspiration. I have aspiration for my children and that is that they can get a good tertiary education that I can help them and they can pay the balance and that they will get a job when they finish and they will maximise their potential and thereby their contribution to this country. When we have a small change not a step change we are leaving a generation out in the cold. Those people deserve better. They deserve these small changes but they deserve a whole lot more besides. 
HOLLY WALKER (Green) 
: 
 I would like to thank the previous speaker the Hon David Cunliffe for raising the issue of intergenerational equity in relation to the student loan scheme because it is indeed the elephant in the room when we look at this Student Loan Scheme Amendment Bill (No 2). I am speaking as probably one of the few speaking on this bill who has a current student loan and who is therefore qualified to speak about the provisions in this bill so I would like to thank that member for raising that important issue. Indeed it is for many people of my generation a significant detriment to starting their lives to beginning their lives as families to considering the prospect of homeownership and to starting their adult lives with the equivalent of a significant mortgage hanging over their heads. 
Where I differ from the Hon David Cunliffe is that in the Green Party’s opinion there actually are some things wrong with this bill and that is why we oppose it and will continue to oppose it. We see this bill as part of the gradual erosion of the fairness of the student support scheme and I think we have seen under this current Government in the last 5 years or so a very damaging trend of gradual amendments to the student loan scheme that harm students and graduates disincentivise tertiary students from studying—particularly those from low incomes—and incentivise graduates to move overseas. 
In my contribution I would like to look at two elements of Part 1 of the bill that are of concern to the Green Party. The first of these is one of the two major changes that this bill makes and that is the provisions for greater information-sharing with the Customs Service. The Green Party has no problem per se with encouraging overseas borrowers to keep up with their student loan repayments but the big problem it has with the provisions in this bill that make it easier for information to be shared with the New Zealand Customs Service and to track down graduates at the border to ensure that they are meeting their repayments is that it comes in the context of the reduction of the repayment holiday from 3 years to 1 year. I note that the Minister of Revenue who is in the Chair introduced the 3-year repayment holiday and it was a very good idea and one that we were very happy to support. 
The reason we supported a 3-year repayment holiday is that we think provisions in the student loan scheme need to reflect how young New Zealanders spend time overseas. What we know is that the average young New Zealander who goes on an OE or travels and works overseas for a period of time does so for more than 1 year. That is the typical New Zealand OE experience. While doing that they gain skills and experience which they bring back to New Zealand when they return. There is a net gain to New Zealand of their return to New Zealand. However there is a big “if” over that: the “if” is “if indeed they do return to New Zealand”. 
Our concern with bringing in these punitive provisions to allow the Customs Service to share information and track graduates down at the border as this bill does in the context of only a 1-year repayment holiday is that it makes it significantly more likely that many graduates will be pinged with penalties and interest because they do tend to be overseas for more than 1 year. This creates a real disincentive for them to return to New Zealand. If their student loan bill is racking up penalties and interest there is a real disincentive for them to return. We know from talking to New Zealanders overseas who are in this position that many worry about the size of their student loan when they return. That is why the 3-year repayment holiday was such a good idea when this Minister introduced it. But now that it has been reduced to only 1 year we in the Green Party think that it will make it very difficult for graduates to meet their repayment obligations when they are overseas. The Green Party cannot support provisions that make it more punitive and more difficult for graduates and easier to track them down in the context of only a 1-year repayment holiday. It was a very short-sighted decision and for that reason we cannot support those provisions in Part 1 of the bill. 
The second part of Part 1 I wish to address in my contribution in this Committee stage is the transitional provisions and regulation-making powers inserted by the Finance and Expenditure Committee. These provisions added at the select committee allow the Inland Revenue Department to administer the changes in this Student Loan Scheme Amendment Bill (No 2). But what we have seen—and as I have mentioned this bill comes in the context of a trend of small but punitive adjustments to the student loan scheme over a number of years—is that there have now been so many small and complicated changes to the student loan scheme that the Inland Revenue Department’s computer systems and administrative systems are groaning under the weight of them. There is a real question mark about whether those systems are sufficient and are able to actually administer the changes that are being made in this bill. We have seen a similar difficulty recently with the same systems with the changes to child support. Clearly the IT at the Inland Revenue Department is in urgent need of an upgrade. What we have seen is a student loan scheme that has been tampered with so many times that that system can no longer cope with the complicated array of amendments it is expected to administer. 
The Government’s answer to this and this is the provision that has been inserted by the select committee is to introduce wide-ranging regulation-making powers to allow for transitional provisions or any changes that need to be made at the Inland Revenue Department to administer these changes to be made by Order in Council . We have a real concern in the Green Party with this model of lawmaking. We think that it represents a trend that we have seen in this House since the introduction of the Canterbury earthquake recovery legislation of introducing wide-ranging regulation-making powers under Order in Council. When there are tricky issues for a Government to administer or deal with instead of bringing them back to the House for the proper parliamentary scrutiny and due process it is easier just to shove in an Order in Council provision and deal with it that way. That is a real problem. We think the changes in this bill are representative and these transitional provisions and regulation-making powers in Part 1 inserted by the select committee are symptomatic of that approach. It is a very concerning approach that we have seen from this Government. I note that the Labour members of the select committee also expressed their reservation about this at the select committee and I am sure we will hear from them about that. But it seems to me to represent a very concerning model. 
Those two changes the transitional provisions and the information sharing with the Customs Service and tracking down borrowers at the border are the two parts under Part 1 I wish to address in this contribution. As I said at the outset of my speech the elephant in the room of course is the $12 billion of debt that is now on the backs of the people of my generation who had to pay for our education and take out a student loan. Instead of taking the opportunity to enhance the fairness of the student support system—and there are many ways to do that—this bill contributes to a gradual erosion of the fairness of that scheme and a damaging trend that will harm students and graduates disincentivise tertiary study and incentivise those graduates to move overseas or to stay overseas if they are there already. 
TRACEY MARTIN (NZ First) 
: 
 Kia ora. I rise on behalf of New Zealand First to speak in support of the Student Loan Scheme Amendment Bill (No 2). But before I begin on the statements I wish to make around the first part of the bill I just want to pick up on the fact that David Cunliffe mentioned intergenerational fairness and Holly Walker mentioned intergenerational equity. I think on behalf of New Zealand First I would like to express our disappointment that we have lost the goal of actually returning to a time when the debt that is recognised by our young people through the provision of education is the debt of their time their skill and their commitment to their country as opposed to a financial debt. I think it is a shame that it appears that Labour and the Greens have decided to move away from that being a goal that New Zealand First still holds through greater income across the whole of the nation so that we can support our young people more. 
With regard to the Student Loan Scheme Amendment Bill (No 2) I would like to spend the moments that I have addressing the Supplementary Order Paper 184 amendments to clause 10 in Part 1 which I have on the Table. I mentioned these at the first and second readings and I apologise for the fact that I was not on the Finance and Expenditure Committee so I was unable to bring this comment to the select committee at the time but I have now brought the amendments to the Committee. 
Supplementary Order Paper 184 in my name seeks to address the concept of fairness. It is a word that is used in the preamble of this bill and we have already heard it several times this evening. I want to be clear around why the amendments to the two clauses that I have placed on this Supplementary Order Paper should be supported by all members of this Committee to address the fairness for New Zealand based borrowers. For New Zealanders with student loans who choose to stay at home who choose not to troop overseas but to remain in the country paying their taxes both direct and indirect and using their skills to benefit the nation my Supplementary Order Paper seeks to address the fairness of the repayment holiday. Right now there is no recognition that New Zealand - based borrowers can find themselves in circumstances of financial stress. 
For example let us take a hypothetical New Zealand two-parent two-child family residing in Gisborne. Both of the partners have pursued higher education and they carry student loans. In the last 3 months the company with whom partner A was employed has shifted its production lock stock and barrel to Melbourne Australia. Partner A now through no fault of their own has found themselves without income. Obviously under the current legislation partner A is not required to keep up their loan repayments as their personal income has fallen below the repayment threshold but what about partner B’s income? This family is now totally dependent upon partner B’s income. This family has been able to go to their bank the one holding their mortgage and gain recognition of their financial difficulty and gain a mortgage holiday from that institution. My Supplementary Order Paper would allow this New Zealand family to take the same set of difficult circumstances to their Government via the Commissioner of Inland Revenue and gain a 1-year repayment holiday while they rework their finances. That is the first part of my Supplementary Order Paper 184. 
The second part of Supplementary Order Paper 184 is to shift the 1-year repayment holiday limit from the individual to the loan. It is another small yet practical step to address fairness. Let us take the case of a 25-year-old engineering student who has completed her degree and has been lucky enough to find employment in her chosen field. While at university she met the love of her life and went on to purchase a home here in New Zealand and begin a family. Let us imagine that this young woman is actually partner B in the previous example. If my Supplementary Order Paper passes the commissioner would quite rightly recognise the financial difficulty that this young family had and would grant this young woman a 1-year repayment holiday from that initial loan. Under current legislation this would have completely used up this citizen’s repayment holiday entitlement. This young woman goes on to repay her student loan in full after that 1-year repayment break. 
Fast-forward 20 years. That young woman is now a confident 45-year-old. Her children have grown and now as a lifelong learner she returns to university to upskill to enhance her ability to add value to New Zealand. She needs to avail herself of another student loan to complete that study. Thankfully she is only 45 not 55 or she would be totally out of luck but that is another story. Now she completes that study and once again takes up full employment. Within 4 years she and her family suffer the loss of her partner through an accident. This event obviously has a substantial effect on this lady’s life in many ways. One of these ways is her ability to meet the financial commitments they made jointly. My Supplementary Order Paper 184 would recognise that this New Zealand - based borrower has not had a repayment holiday on this particular loan. It would recognise that she met all her previous repayment obligations in respect of her previous loan and there should be no impediment for this New Zealand - based borrower to gain another 1-year repayment holiday due to hardship. 
I believe that cost could be or will be used as an argument to suggest that my Supplementary Order Paper should be voted down. I would argue that just as the Minister cannot predict how many students with loans will seek a repayment holiday on the basis of travelling overseas in any given financial year nor can he expect a flurry of applications from New Zealand - based borrowers or predict such a flurry should this Supplementary Order Paper become part of the amendment bill. So I contend that this particular argument should be dismissed especially considering that the commissioner would have the ability to grant these repayment holidays under a set of criteria unlike the ability of overseas-based borrowers to leave the country without any required clearance. We come back to fairness so I ask all the parties in this Chamber to support my Supplementary Order Paper 184 for the fairness of New Zealand - based borrowers. Thank you. 
PAUL GOLDSMITH (National) 
: 
 I am very pleased to take a call on this bill the Student Loan Scheme Amendment Bill (No 2). I was intrigued to hear from the Greens spokesman Holly Walker that apparently the Government is being punitive in what it is doing with the student loan bill—punitive—which is amazing to me because the New Zealand student loan scheme is amongst the most generous in the world. If you look at some of the figures here—I have got figures from the latest distribution of public spending on student financial aid—New Zealand spends about 42 percent of its tertiary education budget on student financial aid. That is much higher than any of the other countries here. Australia spends only 32 percent Canada only 15 percent the United Kingdom 30 percent and the United States 20 percent. As a result as a part of our overall tertiary education budget we spend very very heavily on student financial aid primarily through the student loan scheme. 
It has been a very generous scheme and the previous Government in my view was reckless in its approach. It was just one of the many things that that previous Government did that left the country pregnant with financial deficits for the next 10 years because of all the promises and all the looseness and laxity that it engaged in. So although it might be a seductive notion to be generous with other people’s money it is not at all a worthwhile thing to leave the country heading on to an endless line of deficits. This Government had to do something about it. It has been working in all sorts of areas of the economy but the student loan scheme has not been left out. This Government has set about getting some realistic boundaries around the student loan scheme. Previously we reduced lending to borrowers who are less likely to repay loans. It makes good sense. We have introduced academic performance requirements for borrowers requiring students to pass 50 percent of their full-time courses over 2 years—again perfectly good sense. We have stopped lending to students who are in default on previous student loans. My goodness why would you not do that? We have limited borrowing to 7 full-time studying years. Well given the fact that every dollar that has been loaned out has been costing everybody else in society around 50c it is not an unreasonable thing to put some limit around the time. 
That has led to some significant progress over the past three Budgets. We have been able to reduce the costs to the Government of student loans from 48c in the dollar to about 39c today which is a very significant achievement. What that means is that every dollar that we loaned out was immediately written down by 48c in the dollar when we took over but now it is down to 39c which is still very significant but at least somewhat more affordable. This is another demonstration of National delivering on one of our key priorities—to responsibly manage the public finances. 
What does this bill do? As we have heard in the previous readings this bill contains three main elements. Firstly the definition of income has been broadened for student loan repayment purposes to align more closely with the income that we have used for determining Working for Families tax credits. So if you are based on an income you need to have a realistic view of income including trusts and so forth. That makes good sense. We have also introduced some information matching between the Inland Revenue Department and the New Zealand Customs Service and we have heard lots of whining from other parts of the House about that being unreasonable. How can it be unreasonable? If you are living overseas you are a New Zealander and you have been in default on your loans—i.e. you have been given money by New Zealanders and you are refusing to pay it back—how can it be regarded as unreasonable for the New Zealand Customs Service to share some basic information when you seek to come back to New Zealand or to renew your passport and so forth? I think that is something that New Zealanders would be shocked to discover we have not been doing. I absolutely agree that we should be doing that in this bill. Thirdly amendments are being made to revisit aspects of the design of the student loan scheme to ensure that its administration is as efficient as possible. 
So all in all I think National is making the student loan scheme sustainable into the future. We do believe that it is important to support students and we do believe that the sooner they pay back their loans the better it is for everybody not just for the nation which is lending the money but also for those students so that they can get on with their lives and we can prepare students for jobs in the future. We do have one of the most generous schemes in the world. 
Just in conclusion I think the best thing we can do is encourage students to borrow only very carefully and to pay it back very quickly. Thank you. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I want to start with a small correction if indeed I heard correctly Tracey Martin from New Zealand First—normally an incredibly scrupulous and careful MP—say that both the Greens and Labour were moving away from the goal of collecting moneys from students. I want to say that that is not true. Certainly in our case we are supporting the Student Loan Scheme Amendment Bill (No 2). 
Tracey Martin 
: No that’s not what I said Mr Clark. I said you’re moving away from a free education for all. You’re moving away from that goal. 
Dr DAVID CLARK 
: “Moving away from the goal of a free education for all.” says Ms Martin. That I would also dispute. I do not think that is true. Labour certainly wishes to have free education for all and that is something that we intend to move towards over time as it is an affordable policy. That is something we certainly will not rescind from. 
We have concerns about the bill although we will be supporting it because we support the effort to collect these moneys that are due to the taxpayer. When money is given in good faith to support an education it is right that the Government collects it back. That is the principle that we start from. 
In one of my previous lives I had the privilege of being the warden of Selwyn College in Dunedin— 
Tim Macindoe 
: Not a bad college. 
Dr DAVID CLARK 
: —which I am proud to say is regarded by many and rightly so as New Zealand’s finest college. The member opposite may beg to differ but I credit him certainly with having attended New Zealand’s second-finest college and that is saying something. In that role I had the opportunity to see many students who were striving earnestly to study and to make the most of their opportunities. I have to observe that since I was a student myself times have become more difficult. It is a lot harder for students to pay their way through their studies. They now either require a generous benefactor or must work every hour and more of a 40-hour week through the summer holidays beforehand as well as some time during term time in order to pay their fees in an establishment that feeds them and provides accommodation. That is not a good state of affairs because it can distract from the efforts of study. Many students are not reaching their potential at university now because they are forced to work to supplement their studies to a level that was not the case certainly when people of my generation were students. The student support scheme in those days was far more generous. Unfortunately inflation has eaten that away. 
The point that I am wanting to develop through my discussion as you will hear is about the sustainability of the scheme which is a point that goes to the heart of this bill—part of the reason why we support it and part of the concerns we have with the bill. The preservation of the scheme was touched on also by Mr Goldsmith who made some claims about it costing 50c in the dollar and patting his Government counterparts on the back for drawing that cost in. I want to point out to the Committee and to those watching at home that much of the so-called reduction in cost is in fact based upon accounting tricks. The fact that moneys are written off and then later re-included is a strange treatment in the student loan scheme that is not seen in other loan schemes so one must be very careful with the statistics that are used. They are used for convenience in my observation by the Government when it wants to make it sound a far more expensive scheme than it actually is because it is not in favour of this scheme. 
We know that National introduced the loan scheme. Labour later followed up with an interest-free scheme because we believed in reducing the costs of education moving towards that free education system that Ms Martin also spoke of. We took a step in that direction. National of course subsequently has introduced interest again on that loan scheme and that tells you the direction that it wishes to take it. Certainly Mr Goldsmith is advocating for an understanding of the scheme that it is far more expensive than the reality and that probably also hints at where he would like to go with the scheme—if one did not get that from his maiden speech in Parliament. 
One of the things that is challenging in this bill certainly for the Government is the fact that it contains a good deal of U-turns. It is a bill that pulls back from policy previously passed through this House. Mr Dunne in the chair may be becoming more accustomed to U-turns as recent days would illustrate. However there is— 
Hon PETER DUNNE (Minister of Revenue) 
: 
 One of the themes that has come through from just about everyone I think who has spoken in the debate so far has been sustainability and that is a critically important aspect of all of the changes over a period of time that have been made to the student loan scheme. I want to take just a little bit of time to recount some of the background and also to deal with one or two of the issues that have arisen in the Committee so far. When I became the Minister in 2005 there was very little control in place on the way in which the scheme was administered who was eligible and how repayments were chased. We did not even know at that point how many overseas-based borrowers there were let alone how many were paying their student loans off and how many had just simply gone into hiding or oblivion. So what we did in 2006-07 during the term of the previous Government was have a process whereby we sought to identify the numbers overseas as a proportion of total New Zealand borrowers so we could then start the process of tracking those people down and making sure they met their responsibilities. The attraction of the interest-free policy meant that there was more pressure on the scheme even then and the priority had to be to make sure in terms of its sustainability that we sought repayment. 
We carried on with that policy once the change of Government occurred and in 2010 we began the process of chasing defaulting student loan borrowers in Australia where the bulk of our overseas-based student borrowers are followed by the United Kingdom and various other parts of the world. What we know from the information is that domestically based borrowers on average repay their loans in around 3 to 5 years whereas the overseas-based borrowers take three to four times as long. So our focus is very much on those overseas-based borrowers for two reasons. Firstly there is a basic fairness issue. I am amazed every time I am interviewed by journalists on this subject usually young journalists with a student loan how at a certain point in the interview the journalists will always say: “These people get me angry because here am I paying off my loan and they are getting away scot-free.” It is a real gut reaction from a lot of people in this country who are genuinely seeking to make their repayments. When you see some of the examples from offshore borrowers about their arrogance in assuming that because they are offshore they are out of sight out of mind I think it really reinforces from the sustainability perspective the need to put pressure on those borrowers to repay. 
That brings me to some of the measures that are contained in this bill the Student Loan Scheme Amendment Bill (No 2) and it would be wrong to see this bill in isolation from the suite of measures that have been introduced over the last 4 or 5 years because it is one part of a continuing programme. One of the members spoke about concern about information sharing at the border. The point here is that we need to be able just as we do with recalcitrant child support payers to track down people who leave this country with a debt and actually get them to make some commitment towards repayment. That is why we introduced previously the concept of a nominated person and that is why we have started the campaigns in Australia in particular and will be extending those more broadly to other countries to physically contact those people and get repayments from them. The results we are getting so far are quite dramatic. Just recently we hit $1 million a week in repayments. That is an extraordinary achievement. It is a goal to be proceeded with in the future. I do not share the concerns about information matching and it is certainly not for any sinister purposes. It is to get a better record of where people go with debt so we can follow them and make sure they meet their obligations for repayment. 
The member Holly Walker also felt that there was some concern about the capacity of the Inland Revenue Department’s technology to cope. The system can cope with these changes. They have been designed in such a way to ensure that that is the case and the transitional provision that the Finance and Expenditure Committee has prudently inserted I think which is in the Supplementary Order Paper is designed to ensure that we can deal with some cases that have arisen—and there were some a year or so ago—quite swiftly without having to delay the issue of repayment even further. 
So I just wanted to take a call at this stage to make the point that there seems to be common ground on sustainability being a critical issue here. There is a conflict because at one stage members talked about a generous scheme. It would be great to have a generous scheme. We already do by world standards but that generosity brings you up against the sustainability argument very quickly. What we have to do in the interests of the current generation of borrowers and future borrowers to come is ensure that the scheme is sustainable. We do that firstly by prudent management of it and secondly by ensuring that people who enter into loan commitments are under some legitimate pressure to make their repayments because it sends all the wrong signals to simply let them go scot-free. So that is why this bill deliberately focuses—[ 
Bell rung 
] Mr Chairman if I can take just another few seconds. 
The CHAIRPERSON (Eric Roy) 
: Peter Dunne. 
Hon PETER DUNNE 
: If members will indulge me. I am not going to take a full 5 minutes. That is why this bill really focuses on making changes to ensure that we can track those people more responsibly. 
I acknowledge the support of other parties for this legislation. They may dismiss it as a small step. It is one of a series of continuing steps to ensure that our loan scheme remains viable that our borrowers can continue to take advantage of it and equally important that we expect them to make their repayments when they fall due. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I will not take more than a couple of further calls at this point. With your indulgence I turn to where I was at when the Minister of Revenue took a call—and I am glad that he did because I have to say it is very good to have a Minister responding from the chair. We do not always get it in this Chamber. When we have questions it is good for the Committee to debate them fully so I commend the Minister for engaging in the debate. 
Where I was getting to before was to point out just how humiliating this bill the Student Loan Scheme Amendment Bill (No 2) really is for the Government. It does achieve some good things and we will be supporting it for the fact that it is an attempt to make sure that the collection of student loans is fairer. It is an attempt to make sure that those struggling to pay off their student debt in New Zealand are aware that those overseas are equally obliged to pay off their debt as Mr Dunne has made clear. 
But what the bill also does is smuggle through a range of changes that are actually back-downs on previous policy. This Government deemed that to be policy that was good enough to take up the House’s time to be debated fully and then to be implemented. At that point the Government then realised that it was incapable of actually implementing it. 
This is a problem that has become a theme at the Inland Revenue Department. We know that the computer system there is over 20 years old. The computer system at the department existed well before Facebook—10 years before Facebook came into existence—and well before Google. In fact it existed well before the internet as we know it today. This Government has failed to upgrade that system. The current Minister of Revenue has been the Minister in that role for I think more than 7 years and we have a computer system that is not up to the task of delivering the policy that this Government would want to implement to make sure the student loan scheme was fairer and that is a disgrace—that is a disgrace. 
Part of what we have to debate here today is withdrawing things that this Government has deemed would make the scheme fairer peeling back those steps forward. It is using the Committee’s time to debate those issues again and to try to argue that they are no longer as important as they once were now we have realised just how ruined—I was going to use another less polite word—the Inland Revenue Department’s scheme is. 
We know for example that that is illustrated in the 70000 phone calls that went unanswered in the GST filing period in July last year. That shows a department under stress. There are over 1 million unprocessed returns. There is over $7 billion in outstanding tax to be collected. We know that the Inland Revenue Department is a department under pressure. We know that the computer system is struggling and yet we have seen no credible plan from this Government to address that issue. We have seen no credible timeline no credible plan for building a replacement system. It has spent tens of millions of dollars on consultants—Capgemini lead amongst them—and this means that we should expect to wait to be able to implement this legislation. 
I have grave concerns that the data matching as outlined in this bill will not be able to be implemented by this Government. I have serious concerns. Perhaps the Minister in the chair may take another call to outline a credible plan for making sure this happens. The Government has I have to say put a little clause in there which we have opposed that would give it free rein to withdraw any further things and to change the details of how things are implemented or the time frames. It has put in what is commonly known as a “Henry VIII clause”. This is cover for future humiliating back-downs and it may be the case that everything we are debating here today is unable to be implemented by this Government. That is a ridiculous position to be in. 
Hon Trevor Mallard 
: What’s Parliament for? 
Dr DAVID CLARK 
: We wonder what Parliament is for at that point if it is not to debate the changes that are going to be made to all of our public services over time. We are here debating these but we have no idea whether they can be implemented and the historical evidence is that in the past they have not been able to be implemented. 
So I would like the Minister in the chair in a future call to stand up and to explain a credible time line for repairing the tax system. We know that the tax take dropped 4 percent during the previous terms of this Government—only 1.5 percent of that was estimated to be from the global financial crisis and a great chunk of it was from policy changes by this Government the tax cuts for the wealthy—and since then the Government has been revising down its tax forecasts. It has a problem. It has a tax hole problem— 
RAYMOND HUO (Labour) 
: 
 Thank you Mr Chair— 
Hon Trevor Mallard 
: Did you call? 
RAYMOND HUO 
: Yes I did— 
The CHAIRPERSON (Eric Roy) 
: Raymond Huo has the call. 
RAYMOND HUO 
: —I did. You made the right observation during question time because I watched the tape again and it proved Mr Trevor Mallard was correct and the Speaker was wrong but that is a different matter. 
The Minister of Revenue talked about sustainability but from a historical perspective the Student Loan Scheme Amendment Bill (No 2) is not a good example of sustainability. Instead the Government is tinkering to fix its previous tinkering attempts which have gone wrong. 
My colleague Dr David Clark has just covered the issue regarding the “Henry VIII” clause and I apologise for interrupting his good speech. Although Labour supports the overall intent of this bill we are opposed to clause 39(4) which inserts an unnecessary regulation-making power. There is a very good opinion article by Professor John Burrows regarding this particular issue. I reckon that all the members should have a good look at this article to appreciate the nature and scope of this regulation-making power because any unnecessary regulation-making powers should be approached with caution. 
I also note the Finance and Expenditure Committee’s view that the changes the bill would make to the 2011 Act are complex. They involve amendments to previous amendments that have not yet come into force the repeal of provisions that were to come into force in the future and interrelationships between provisions that would be amended or appealed at different points in time. There is also the challenge of ensuring that the Inland Revenue Department’s computer system implements the amendments accurately. There is a relatively high risk that unforeseen issues or unintended consequences may emerge in the transition to this legislation creating a need for regulations. I am very pleased to hear the Minister just confirm that in terms of technology the department could cope with those issues. But this seems to confirm what the Hon David Cunliffe just said in his previous speech which is that this bill was introduced by the “Minister of Small Changes”. 
Some of the other select committee recommendations focus on inserting new provisions to correct errors made in previous student loan scheme legislation passed by National. Not only is the Government tinkering around the edges of the major student loan issues with this bill but now it is using tinkering to fix its previous tinkering attempts that have gone wrong. For example under the Student Loan Scheme Act 1992 repayment obligations under $20 were not collected and were written off. The 2011 Act changed this so that small amounts remain part of a borrower’s loan balance for future collection. However because the department has not been able to update its computer system chasing such small loans would actually end up costing it more than it would save. The select committee therefore recommended amending clause 22 of this bill to reinstate the old provision. This bill was introduced not only by the “Minister of Small Changes” but also by the “Minister of Tinkering”. 
JOHN HAYES (National—Wairarapa) 
: 
 I move  
That the question be now put 
. 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 I would just like to back up what many of my colleagues have said in the Chamber tonight on the Student Loan Scheme Amendment Bill (No 2)—that Labour is supporting this bill because we think that the changes will make the repayments of student loans fairer. But I would like to also underscore the point that my colleagues have made that this is a bill that does not do very much. It tinkers around the edges and it does not address the fundamental problems of what the student loan scheme is meant to do. 
The student loan scheme is about access to education. When we put allowances and loans together it is about how it is that ordinary New Zealanders access tertiary education in this country. What we have is a Government that is really moving the balance between loans and allowances and shifting this. We have seen an attack on both of these by the present Government. We have seen that postgraduate students are being denied access to student loans and we have heard members opposite during their calls tonight—I believe it was Mr Goldsmith—saying that what National was doing was limiting it to 7 years of study. Well this is not the full story because it is not just about limiting the student loan access to 7 years. The changes that National brought in in its last Budget explicitly excluded postgraduate study: Master’s degree and PhD. So any postgraduate study beyond the Bachelor’s degree with Honours level has been explicitly excluded. This is a very worrying trend in our education system in this country. It is yet another example that this is a Government that talks big on the rhetoric of innovation. It talks big on the need for us to have an innovation-led economy. Well these things do not happen by magic. They require really skilled New Zealanders and really educated New Zealanders in there. Limiting the access of people to do postgraduate research is just counter to that. 
Paul Goldsmith 
: Let’s not waste money. You’re leaving it overseas. Let’s not waste it overseas and not get it paid back. 
Dr MEGAN WOODS 
: This pretty much sums it up—we have Mr Goldsmith over the opposite way calling this a waste of money. That is the difference between Labour and National. Labour believes that postgraduate education is to the betterment of New Zealand—that this is the way that we will get ahead. That is the kind of thing that this Student Loan Scheme Amendment Bill (No 2) does nothing to address. Postgraduate education—my colleague David Cunliffe is quite right—is an investment. It is an investment in our country and it is an investment in our future. 
What we have seen also is a tightening up of access to loans for various people by this Government over the last 4 years. We have those over 55 now being denied access to the student loan scheme. This is something that we view with a great deal of concern. We put this in the context of the economy that we currently live in and we see that there are a number of people who are losing their jobs yet still have a number of years in which they need to earn an income and actually some retraining would be the best way for them to go about that. So we do not think it is particularly fair what this Government has done in terms of limiting access to this. 
What are the other things in terms of access? We have to remember that when Steven Joyce did take the reins as Minister for Tertiary Education 2 years ago it was made very apparent that National was going to introduce a series of cuts to student support in the area of both loans and allowances in an effort to do what it called “dampen demand” for tertiary education. So we see in Budget 2010 that part-time students can no longer borrow from the student loan scheme for course-related costs. This has real ramifications. My colleague Dr David Clark talked about being a warden at Otago University and seeing the change from when he was a student to when he had responsibility for caring for students in that environment. I also observed that change in my time from being a student to teaching at the University of Canterbury. By the time that I finished teaching at Canterbury it was not unusual for undergraduate students to be working 30 hours a week. 
This is simply not the way that you get a university education. University education is about immersion in learning. It is about being able to devote yourself full time to that and about having the time the energy and the focus to devote yourself to that. What we are seeing this Government introduce in terms of access arrangements is really damaging to the experience and the benefit that students can get from the scheme. I guess there is a number—and a growing number—of us now in this Parliament who stand here with student loans being not just a theoretical issue— 
MAGGIE BARRY (National—North Shore) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 71 
New Zealand National 59; New Zealand First 7; Maori Party 2; ACT New Zealand 1; United Future 1; Independent: Horan. 
Noes 49 
New Zealand Labour 34; Green Party 14; Mana 1. 
Motion agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 185 in the name of the Hon Peter Dunne to Part 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 105 
New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Maori Party 2; ACT New Zealand 1; United Future 1; Independent: Horan. 
Noes 15 
Green Party 14; Mana 1. 
Amendments agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 184 in the name of Tracey Martin to clause 10 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1; Independent: Horan. 
Noes 63 
New Zealand National 59; Maori Party 2; ACT New Zealand 1; United Future 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 1 as amended be agreed to. 
Ayes 105 
New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Maori Party 2; ACT New Zealand 1; United Future 1; Independent: Horan. 
Noes 15 
Green Party 14; Mana 1. 
Part 1 as amended agreed to. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairman. I would like to draw to your attention a matter that relates to the judgment as to whether or not a closure motion should be taken. I know that it is a matter entirely for your discretion but I would want to point out that this bill the Student Loan Scheme Amendment Bill (No 2) is actually a significant piece of legislation that Part 1 was a very big part and that we had less than an hour’s debate on it. I just want to say to you Mr Chairman that it is the view of Opposition members—a number of whom including the deputy leader of the Labour Party had just come down to speak on it—that we were very much short-changed. 
The CHAIRPERSON (Eric Roy) 
: I note the member’s comments and I do not think that I could be accused generally of curtailing speaking in the Chamber. 
Hon Trevor Mallard 
: No no you’re generally pretty good. 
The CHAIRPERSON (Eric Roy) 
: I am. At the time I took the closure every single person who was seeking the call had spoken—every single person had. I measure very carefully what has been said. I think the member knows that I am on the case. 
Part 2 Amendments to principal Act that apply for 2013-2014 and later tax years 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 Part 2 of the Student Loan Scheme Amendment Bill (No 2) is the part that introduces the “Henry VIII” clause into the legislation. It is the part with which the Labour Party has the biggest problem. We think this clause is entirely unnecessary. It is a clause that is perhaps appropriate in a situation like that of the Canterbury earthquakes. We note that the Labour Party joined in supporting giving Gerry Brownlee powers that became known as those of an earthquake tsar. We can debate hither and yon about how well those powers have been applied but what seems clear is that in such an emergency situation having powers beyond those that would normally be at the discretion of Ministers is entirely appropriate and the judgment of Parliament is that it is appropriate in those circumstances to give “Henry VIII” powers to make law essentially without reference to Parliament. In the bill we are now debating we have clause 39(4) which inserts a regulation-making power and gives the Minister of Revenue discretion to implement or not implement legislation according to any technical hitches. 
The officials who serviced our Finance and Expenditure Committee were excellent I have to say and they did a very good job of servicing our questions of answering our queries and of trying to come to grips with the concerns of members in the committee. If I take one example we had great concerns about where overseas borrowers were located. We wished to know where they might be and what the likelihood of collecting tax from them was. I will come back to that point. One thing the officials shared with us in response to our inquiries about the “Henry VIII” clause was that indeed it was primarily there as a backstop should the computer system not be able to implement legislation. That is a huge admission. That is a huge admission—admitting that a problem had previously been spotted that a problem with implementing other legislation had come to notice. In fact that the bill currently enables the repealing of previous decisions that could not be implemented is right there in front of us. It was something that was unavoidable to debate. The officials told us that really this clause ensures that should further technical issues come up the Minister has at his discretion the ability to revoke decisions made by Parliament in order to ensure that the thrust of this legislation is implemented fairly. 
That is where we really come to the point of debate. We in the Labour Party will probably have quite a different view from the current Government about what is the thrust of this legislation. We believe that it is the duty of Parliament to debate these issues to resolve them and to pass law that has been overseen that has been scrutinised by parliamentarians on behalf of the taxpayer. That is what we are paid to do as our jobs to make sure that the best possible law is created. This clause although entirely appropriate in an emergency situation where Parliament would not have time to sit and meet seems entirely inappropriate in a situation where there is no particular hurry. The Government could come back to this House should it wish to in order to repeal yet more of its decisions. It could bring them to Parliament and explain that it has been unable to implement them as it has done in this legislation and come back with a different set of recommendations that it could implement and that it thinks are roughly in line with the original intention of the principal Act. 
The overarching point I am making here is that there are different ways and means of repealing legislation. What we have here is a Draconian measure inserted into a piece of law where it is not needed—in fact where it is inadvisable. We had the legal advisers also at the select committee warning us that this is an unusual but increasing trend in Government legislation. It was a very rarely used measure in days gone past and is increasingly being used by this Government as it passes legislation and runs up against troubles particularly in the area of student loans and particularly in the area of tax collection. 
I wanted to touch just briefly also on the potential gains from this bill which is despite our grave concern about that clause that we will be opposing why the Labour Party will support this bill. It goes back to the comment I made on the first part of the legislation which was around the frustration that many New Zealand borrowers feel when repaying their loans as they look across the Tasman and further afield and see that their compatriots abroad are not paying their fair share. We asked officials to supply some estimates of the amount of money that could potentially be collected overseas if there was appropriate compliance and we heard from Mr Dunne earlier about how low the compliance is currently. The estimates we got back were that if there was 100 percent compliance we might expect to see an extra $110 million collected in the March 2012 tax year which would indeed be very good. If there was a compliance level similar to New Zealand’s—a 96 percent compliance level—we might expect to see $106 million returned to the taxpayer. A more likely figure of 70 percent compliance was also provided which would see $77 million returned to the taxpayer. 
There is a real paucity of information about where overseas borrowers are and this is something else that was brought to be understood by the committee. Borrowers with an unknown place of residence number 50 percent of those who are overseas—32 percent are known to be in Australia 12 percent in the United Kingdom and 6 percent in other countries. These borrowers who make up the bulk of those overseas are borrowers for whom there is a “no address” recorded of their overseas residence. The Government has attempted through various means to begin tracking down these people and trying to make sure that they meet their obligations. 
This is something the Labour Party supports. We believe in the importance of full student support. Indeed there is good international evidence that we should be providing more student support particularly to those from low-income backgrounds who would find a lack of student support a barrier to their participation in tertiary education. I recall many years ago working on a project at Treasury where I had the opportunity to look at Canadian studies which showed that people from wealthier backgrounds overestimate the costs of education and underestimate the benefits of education manyfold—manyfold. That is people from wealthier backgrounds. Those from poorer backgrounds underestimate the benefits by a factor of 10 or more because people fail to understand compound interest and overestimate the costs because they are perceived as a huge barrier. There is Nobel Prize - winning research that suggests that for talented students from lower socioeconomic backgrounds in fact the State should pay the whole amount of their tuition because not only is that better for the individuals concerned— 
Paul Goldsmith 
: It’s not the State. 
Dr DAVID CLARK 
: —but also it is better for their families and better for society as a whole because GDP goes up Mr Goldsmith and we are all better off because of that if we grow the economy. This Government is so unfamiliar with growing the economy that this may be a challenging concept to wrap one’s head around on the other side of the Chamber. But it is true that if we grew the economy we could afford better social services and we could continue to move towards providing free education from which we all benefit not only economically but also socially. So the paucity of information is something that definitely needs to be addressed and I believe that the measures in this bill if they can be successfully implemented will go some way towards improving that situation and towards collecting money that the taxpayer has loaned in good faith not necessarily all to people from modest backgrounds in order to retrieve it. 
There is no doubt that the Government will struggle to implement this bill. It would not have needed or felt the need to put a “Henry VIII” clause in if it thought it was something that could be implemented— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! Can I just remind the member that we have actually passed clause 39. That was in Supplementary Order Paper 185. 
Dr DAVID CLARK 
: It’s in Part 2. 
The CHAIRPERSON (Lindsay Tisch) 
: No it is not; it is Part 1. Most of your first call was actually on Part 1 and now you are coming back to Part 1 again. We have dealt with Part 1; we are now on Part 2. 
Dr DAVID CLARK 
: Well I’m very briefly— 
The CHAIRPERSON (Lindsay Tisch) 
: No. In fact the member’s time has expired. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Firstly may I record my agreement with the substantive points made by my learned colleague Dr David Clark. It is a matter of procedural nicety that the earlier Part 2 was inserted by Supplementary Order Paper 185 into Part 1 of the Student Loan Scheme Amendment Bill (No 2) as it were at the last moment and thus the offending “Henry VIII” clause has been embedded in Part 1—just for the benefit of the listeners. 
The CHAIRPERSON (Lindsay Tisch) 
: Let me just reply to that. We have actually dealt with Part 1 so let us just concentrate on Part 2. 
Hon DAVID CUNLIFFE 
: I move to the substantive Part 2 which is a collection of transitional provisions relating to other parts of the Student Loan Scheme Act 2011. Unlike the offending “Henry VIII” clause which delegates from the legislation a regulation-making power that is thus not subject to the oversight and supervision of Parliament or to the full measure of the democratic process these clauses are in fact in some cases perfectly sensible ways of handling the transition. 
If I might draw the attention of the Committee to clause 55 of Part 2 it says that it replaces a fixed nominal interest rate which is the late-payment interest charged on an unpaid amount which was in section 139(2)(a) and (b): “replace ‘0.843% of’ with ‘the late payment interest rate multiplied by’.” New section 139(3) makes clear that “late payment interest rate means the base interest rate plus 4% calculated as an equivalent monthly rate expressed as a percentage and truncated to 3 decimal places.” That is extremely useful for us to know because what it does is provides a living mechanism whereby the legislation sets the rule which is then automatically updated as the base interest rate and thus the late-payment interest rate which is the base plus 4 percent changes over time. That is an example of how to do a transitional provision without offending either the Regulations Review Committee or the estate of the late great Henry VIII. It is not delegating an opaque broad regulation-making power; it is delegating only a very specific numerical formula that replaces a formerly static number that of course became less and less meaningful over time because of the time value of money and inflation. 
It is a matter of some interest that the Minister in the chair the Minister of Revenue has presided over this piece of legislation which in one place offends the best principles of parliamentary scrutiny—as you say Mr Chairman quite rightly now vested by amendment in Part 1 of the bill—and here in Part 2 has other clauses that do not so offend the Standing Orders the Regulations Review Committee principles or the best practices of parliamentary democracy in the Westminster system and that would leave McGee for example perfectly comfortable with the mechanism being followed. The question is why the Minister has a bob each way in two different parts of this bill. If it was good enough to do it properly in Part 2 why did the Minister feel the need to insert an offending clause by amendment in the middle of Part 1? 
Mr Chairman I guess that brings the Committee back to matters that were the subject of debate before your colleague Mr Roy departed the Chair which was that this bill is a tinkering bill. Although on the face of it in general the Labour Opposition supports it because it does act toward the principle of fairness in a very small way it is mainly a bill of missed opportunities. 
We are tinkering with a student loan scheme that is bedevilled by two fundamental flaws. One is that it is building up a mountain of billions of dollars of debt much of which will not be repaid because the students concerned have become exiles overseas in what is the second-highest diaspora after Ireland of any country in the developed world. 
The second problem is that it is perpetuating by its inaction an intergenerational unfairness or inequity that has seen people of the Minister’s generation benefit from a free subsidised State education all the way to postgraduate level without having to take out huge student loans and getting paid a bursary just like I did whereas today’s students if they have the courage to take on the debt to get their way through tertiary education finish with a mortgage and no house—a mortgage and no house. 
We all know that New Zealand’s earning rates for graduates vis-à-vis say Australia are around one-third lower. They were 30 percent lower when the current Government came into office but the current Government promised New Zealanders it would close the gap with Australia and so of course inevitably it got wider. My latest understanding is that it is now about 37 percent different on a GDP per capita purchasing power parity basis. In other words in common English it is getting worse. The gap is getting wider and the implication is that more and more of our graduate students are leaving in order to be able to repay the student loans that are the millstones round their necks. That is a perverse consequence that this House is going to have to spend a whole lot more time on in the term of the next Government working together because the Minister in the chair is not prepared to do step change. He does only small change and all the Committee has today is small change. 
Let me draw the attention of the Committee to clause 53 which replaces section 119. It replaces the former meaning of “excess repayment”. It contains a number of subsections and paragraphs—(1)(a) (b) and (c) and (2)(a) through to (d)—which cover in some detail the penalties and obligations apportioned to excess repayment. There is a certain irony in this clause. How many of today’s recent graduates or current students are capable of so-called excess repayment? Excess repayment would be a fine thing when they can barely feed themselves or pay for the rent while they get their first jobs straight out of university with the millstone of a huge debt round their necks. And it is because of their inability to repay because of forces beyond their control like the fact that we are 270000 jobs short in this country and we have a Government that is doing precisely nothing to fix it—those are factors beyond their control—that there will not be much excess repayment under this clause in Part 2. 
Clause 56A amends section 145 which is about the application of different types of relief for borrowers. Well that sounds interesting. Perhaps it is a neck and shoulder massage. But no we see in the proposed new section 146 that the commissioner may grant relief from late-payment interest. That in our view is a very sensible provision to include in this bill because it gives the commissioner discretion to look at individual life situations on a case by case basis. Why is discretion important in the law? Because no two lives are the same and it would take volumes to try to write prescriptively all the criteria that a sensible and worthy commissioner should take into account if trying to decide every case off some fantasy rule book. Better to have a well-trained commissioner subject to proper principles and oversight and to delegate appropriate discretion. The same does not apply to “Henry VIII” clauses as have been vested by the Minister by amendment in Part 1. 
Summing up all in all the transitional provisions currently contained in Part 2 of this bill are somewhat underwhelming. They are for the most part sensible. They do not for the most part—in fact I do not think at all—offend the principles of Standing Orders such as that clause now vested in Part 1 which delegates a regulation-making power because the Government could not think its way properly through legislating. That is the problem. The problem is that as with the rest of the bill worthy though most of it is it is a bill of small changes whereas what we need is a step change. It does not address the yawning chasm of billions of dollars of student debt by any more than $7.5 million over 5 years—barely enough it might be said to cover the cost of Parliament’s time the implementing officers’ time and the compliance costs associated with the measure. It certainly does not solve a billion-dollar problem. Secondly it does nothing to resolve the intergenerational equity issues that have bedevilled today’s students. 
HOLLY WALKER (Green) 
: 
 I will begin in Part 2 of the Student Loan Scheme Amendment Bill (No 2) where the previous speaker David Cunliffe left off looking at clause 57 which replaces section 146 and looking at the discretion given to the commissioner to grant relief from late payment interest. We agree that it is very sensible that the commissioner has that kind of discretion to grant relief to borrowers who are charged late-payment interest and penalties on their student loans. As we have heard those can be significant and it is sensible that the commissioner has that kind of discretion. It would be good if the commissioner still had the same discretion through the 3-year repayment holiday provision which is being repealed and shortened to 1 year to grant relief from late-payment interest and penalties to borrowers living overseas who are there for more than 1 year as most New Zealand graduates are. It is an example of the inconsistency between some of the sensible provisions of this bill and the series of very damaging changes to the student loan scheme that have been made over a number of years by this Government. 
Indeed I think the kind of discretion described in replacement section 146 in Part 2 is the kind of discretion that my colleague Tracey Martin was talking about earlier in the debate when she talked about the discretion for individual circumstances including borrowers living in New Zealand who may become learners at different stages throughout their lives to have the ability to take a repayment holiday for example from their student loan. Those are sensible provisions similar to what is proposed here and yet not supported by this Committee. 
While I am on the subject of the contribution from my colleague Tracey Martin earlier I think it is important to correct the record. She questioned the commitment of both the Green and Labour parties to free tertiary education. I was very pleased to hear my Labour colleagues reiterate the Labour Party’s commitment to free tertiary education. Of course the Green and New Zealand First parties are quite aligned on this matter. Like New Zealand First we stand for a universal student allowance we stand for the reduction of tertiary fees and we stand for exploring a debt write-off and bonding options under the student loan scheme so we have a lot in common. Of course our concern about the financial burden that students and graduates such as myself are dragging around does not detract from our commitment to that principled stance on tertiary education. 
I want to briefly turn my attention to the contribution from the Minister of Revenue earlier. I was pleased to hear him say that it would be wrong to see this bill in isolation from the suite of measures introduced over the last 4 to 5 years. 
The CHAIRPERSON (Lindsay Tisch) 
: Sorry to interrupt the member. That was in Part 1. We are now on Part 2 so just confine your comments now to Part 2. 
HOLLY WALKER 
: Thank you Mr Chair. Indeed the changes in Part 2 should not be seen in isolation either from the suite of changes that have been made to the student loan scheme over the last 4 to 5 years. 
I would like to review for the Committee what some of these changes are because they are very concerning. We have also heard in the debate on Part 2 mention of the lifetime limit of 7 years of equivalent full-time study so you cannot borrow under the student loan scheme if you have been studying for more than 7 years. That was a change introduced in the last 4 to 5 years by this Government and it is a very punitive change. It means that a student who has completed a 4-year Bachelor’s degree with honours and then starts a Master’s degree and then moves on to a PhD would lose access to their student loan part-way through their doctoral study. Similarly students who are medical students who have been studying for 7 years but are doing an 8-year course would lose access to their student loan before they have completed their medical degree. Similarly students who undertake bridging courses to prepare themselves for tertiary study then find that that has contributed to their lifetime equivalent full-time study limit and are unable to borrow later on in their degree. Those kinds of changes are very detrimental to those students and they are part of that suite of changes that we have heard about which is very concerning. 
As I began this contribution on Part 2 with the observation that the commissioner under this part has the discretion to grant relief against financial penalties and late payments similarly as I have mentioned we have seen a similar discretion be removed—the ability to grant a repayment holiday for 3 years and for that repayment holiday to be reduced to only 1 year. Under Part 2 that kind of discretion is given to the commissioner and yet it is removed by some of those other changes we have seen in the last few years. We have also seen a reduction of the academic requirement that a borrower must have passed at least half of the previous 2 years of study in order to continue qualifying for a student loan—a manifestly unfair measure that was abolished in 1993. We have seen the restriction of access to students over 55 so that they can no longer borrow under the student loan scheme. That nonsensically makes it more difficult for older people to upskill and retrain during a period of global economic recession. We have seen the Government make it more difficult for new immigrants to qualify for the student loan scheme. We have seen the Government restrict part-time students from being able to borrow for course-related costs. We have seen an increase in the administration fee of the scheme from $50 to $60 per year and we have seen the introduction of an annual $40 Inland Revenue Department administration fee for graduates who are paying off their loans. As I have mentioned we have seen the 3-year repayment holiday reduced we have seen the 10 percent voluntary repayment bonus abolished which is also referred to in Part 2 of this bill and we have seen the student loan repayment rate increase from 10c to 12c in the dollar. 
I think what is really important to keep in mind when we are looking at the amendments in this part of the bill and the bill as a whole is the question of who are the people affected. I think this House has a habit of thinking that bills that make amendments to the student loan scheme are about students alone. Actually most of the time bills that amend the student loan scheme including the parts in Part 2 are actually about graduates who are paying off their loans. These are people who have finished studying and who may not have studied now for several years. These are people who are grown-ups; graduates are grown-ups. They are employees. They are taxpayers. Many of them are aspiring homeowners. They are parents. In fact most of the people affected by this bill are your typical “mum and dad” New Zealanders—and I put quote marks around that because I hate that phrase. But actually that is who we are talking about. I know that many members of this Parliament like to think of students as being free-loading slackers and that this bill tightening up provisions around the student loan scheme just makes a very generous scheme fairer for students. It is actually not about current students; it is about graduates and they are your “mum and dad” New Zealanders. 
I think the Government in its continued slow erosion of the scheme and in making things harder for those graduates—making them pay their loans back at a higher rate for example—is actually putting a lot of pressure on everyday “mum and dad” New Zealanders. You know they are the people like the journalists whom the Minister spoke to who say they are angry with overseas borrowers. They are also angry about their increased repayment rates. I think the Government ignores that at its peril. 
The CHAIRPERSON (Lindsay Tisch) 
: I call Dr David Clark. Part 2. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 Part 2. I am delighted to speak directly to Part 2 of the Student Loan Scheme Amendment Bill (No 2) and in particular the broadening of the definition of “revenue” which is so crucial to the actual measurable impacts of this bill. I mentioned earlier the excellent work done by officials in servicing the Finance and Expenditure Committee. One of the pieces of work that they did was bringing back to us some figures that I have mentioned earlier around what might be collected from overseas borrowers if obligations were met. 
The definition of “revenue” is touched upon in many of the clauses in Part 2. I note for example in clause 51 there are a number of additional definitions inserted that describe the meaning of an unpaid amount: “an amount that must be paid by a borrower in accordance with a written notification under section 52;” is new paragraph (f) “a late filing penalty:” is new paragraph (g) “a student loan shortfall penalty:” is new paragraph (h) and “an underestimation penalty” is new paragraph (i). These are all broadening the definition of “revenue” presumably in response to some tricky situations or some technical situations that have been faced where a borrower has disputed whether indeed the revenue was appropriate to be collected. 
The officials gave us an estimate of the additional revenue that would be collected through the broadening of the definition of “revenue” and that estimate was $1 million a year from 2015-16. We know that putting legislation through this Parliament costs more than that so some of us in the committee were quite concerned and those of us who were concerned raised concerns that we did not have clear estimates of how much additional revenue would be collected as a result of this bill. I raised earlier my concern that some of the substantive parts of the bill might not be able to be implemented because of challenges with the computer system. So we are left with the definition of “revenue” being the substantive and substantial amount that can be quantified and it has to be said in tax terms and in terms of the time of this House and in terms of the priority of the Government that a $1 million tax grab is actually a little on the small side. 
The Minister in recent days canned a car-park tax that was aimed at gathering $17 million which is 17 times the amount that we know for sure will be collected by this tax. We have had the paper boy tax and there is talk of an iPad tax although that looks like it will be hit on the head as well. We have a Government that is trying to through small measures broaden the tax base. The general effort to broaden the tax base we of course support because we believe that everyone should pay their fair share. But it does seem that a lot of these measures could be brought together in one bill rather than being debated over a lengthy period of time when we know that these are small measures and also the ones that look more substantial are not yet certainties for implementation and certainly on past record may not be possible. 
The broadening of the definition of “revenue” goes into much detail in this provision and I will not debate all of that simply to say that a lot of it is around small matters of wording. We also have some discussion around late payment interest and the ability of the commissioner to grant relief. Look we support those kinds of things because as my colleague David Cunliffe has previously pointed out the intent to specify every single case where relief may be granted goes a step too far and indeed in some cases it is appropriate that there is discretion for the commissioner. 
In closing this short contribution I want to say that Labour supports the bill as a whole. We have already outlined our concerns with the “Henry VIII” clauses. We are concerned that there really is not a clear picture about how much revenue this will collect and it is not even clear to us and became increasingly worrisome in the committee that this could not already be accurately collected through the Customs Service compulsorily requiring some details to be provided. Thank you. 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 I just want to build on what some of my colleagues have said in relation to Part 2 of this Student Loan Scheme Amendment Bill (No 2). In particular I will speak to clauses 50 through to 62A in terms of the transitional arrangements that are going to occur in here. I think that what we see is the complexity of the phasing in of these changes. The transitional arrangements that we are going to have to have in order to implement the changes that are embedded in this legislation really speak very much to the tinkering that is going on in this legislation and to how it really is fiddling around the edges and not addressing some of the bigger issues around access to tertiary education in this country through loans and allowances. 
I just want to reiterate what my colleagues who have spoken before me have alluded to in terms of the shifting of the “Henry VIII” clause into Part 1 of the legislation. What we are seeing is that a lot of the concerns that were there really do need to still be there in Part 2. If we have a look at these transitional arrangements—and to pick up on the point that Holly Walker made—when we are thinking about this we do need to think that this is not just about students who are currently studying but also about graduates. I was saying in my last contribution—before I was cut off in my last contribution on Part 1 of this bill—that I am one of the growing number of parliamentarians in this place for whom student loans are not a theoretical issue. I have a student loan and I list it on my pecuniary interests as a growing number of parliamentarians here do. 
These are not just small little changes that you fiddle around with. I know that for many members of my peer group people who are my friends and who are my age these kinds of changes about how things like this are phased in—how it is done and the fairness and equity in terms of how these changes are made—are really some of the do or die factors of whether or not they stay in New Zealand; whether they stay here and contribute to our country and use their skills their training and their education which could be for the betterment of all New Zealand if they do choose to stay here and do that. I think this is something that we do have to bear in mind all the time when we are looking at how we bring in these measures. 
My colleague David Cunliffe went through some of these transitional arrangements in quite a lot of detail. If we have a look for example at clause 57 of the bill it states when it is that the commissioner may grant relief from late payment interest and how it is that that is going to be used. What we are trying to achieve in this legislation is a fairer student loan system by saying that everybody who borrows should be paying back their student loan and Labour supports that element of the bill. But what we do not want is any provisions in this bill to be an impediment to people coming back to New Zealand or to their being able to face up to their loan and to make the payments that are needed. So we do need to make sure that we have fairness and that we have equity in how we are implementing these transitional arrangements because they do make a difference. These are not theoretical situations. These are the very kinds of rules on which every day young New Zealanders who have left to live in other countries make their decisions about whether they stay or go. 
The other point I would like to know about in terms of the complexities of the transitional arrangements and in terms of the implementation of this is the infrastructure that is going to be needed to implement it. What we are going to have is a whole lot of different rates and offsets that are going to operate for a period of time while we phase in these changes. That is inevitable with any piece of legislation and we are supporting this legislation. But the point that Labour would like to make is that we do have some questions around the technology that is going to be needed to implement this legislation—about whether it will be in place and about whether we will be able to phase in these changes in the way in which this legislation sets out in these transitional arrangements in Part 2 of this bill. 
I think what everybody in this Committee is after is a way in which to make this scheme fairer and that is why Labour is happy to support this legislation. But what we would like to see is a scheme that did actually go to more fundamentally addressing these issues of access to tertiary education in New Zealand and that we do have a way in which New Zealanders can access our polytechnics can access our universities and can access training and education at all levels. We do not want to see this limited and we want to see all New Zealanders given this opportunity. We would not like to see any impediments in terms of how this legislation is going to be implemented put in there. 
My colleague Holly Walker spoke in relation to Part 2 of this bill. She spoke about how it is that we have seen an attack on student access by this Government throughout this term and the previous term. She said that there really has been an agenda to dampen down demand in terms of transferring people from student allowance in terms of borrowing it and being saddled with that debt in terms of student loans. This is something that we do need to bear in mind. We need to be creating systems whereby more New Zealanders want to be part of our future—to stay here and to have the skills and the education and the training to stay here and to be part of it. We just want to make sure that that can be implemented in a transparent robust fair and equitable way. Thank you very much. 
The question was put that the amendments set out on Supplementary Order Paper 185 in the name of the Hon Peter Dunne to Part 2 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 105 
New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Maori Party 2; ACT New Zealand 1; United Future 1; Independent: Horan. 
Noes 15 
Green Party 14; Mana 1. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 2 as amended be agreed to. 
Ayes 105 
New Zealand National 59; New Zealand Labour 34; New Zealand First 7; Maori Party 2; ACT New Zealand 1; United Future 1; Independent: Horan. 
Noes 15 
Green Party 14; Mana 1. 
Part 2 as amended agreed to. 
Part 3 Amendments to principal Act that apply for 2014-2015 and later tax years 
The CHAIRPERSON (Lindsay Tisch) 
: We now come to the debate on Part 3. This is clauses 63 to 68 and schedule 3. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take a short 20-minute call on Part 3 even if I have to read it several times in order to satisfy that criterion. I draw the Committee’s attention to clauses 63 to 68 of the Student Loan Scheme Amendment Bill (No 2) situated as they are on pages 46 and 47 of the bill as amended and reported back to the Committee and not the original printed version of the bill which was on the Table earlier and which I think it is fair to say did give rise to more than a little confusion having as it did the old Part 2 in Part 2 which now resides in Part 1—[ 
Interruption 
]—none of which is relevant to the interjections coming from that unruly mob known as the National backbench. You know the extraordinary thing about that mob is that it will bray when there is something to talk about and it will bray when there is nothing to talk about and I venture to suggest that we are in the latter category now. 
Clause 63 is a very important clause. These are the amendments to the principal Act that apply for the years 2014-15 and later tax years. There is something we all know about the tax year 2014-15 is there not colleagues? That will include the first year of the next Labour-Green Government and it may well be with the New Zealand First Party in coalition. And it will be the first year in Opposition for members opposite—the first of their next 10 years in Opposition. They may think I am kidding but no. In fact I am deadly serious on this matter because we are now in the inner entrails of this bill. We have gone beyond the transitional provisions we have gone beyond the all-powerful “Henry VIII” clause we have gone beyond the transition in Part 2 and we are down to the transition of the transition of the transition in Part 3 and it is really quite something. 
If I read clause 63 for the benefit of the Committee and those riveted to their screens while the Committee is occupying itself with this matter of import clause 63 says: “Section 4 amended (Interpretation)—In section 4(1) repeal the definitions of ‘annual gross income’ ‘annual total deduction’ and ‘pre-taxed income’.” That definition right there raises some very important issues because the first one “annual gross income” is something that a lot of New Zealanders are lamenting because the median annual gross income has declined in both nominal and real terms since the current Government took office. So if there is one thing that New Zealanders in the middle of the heap know about annual gross income it is that it is going down. They are worse off and that is one reason why the 2014-15 tax year to which this refers will be the first year of the next Government. 
Similarly “pre-taxed income” is in this clause. It is a very important phrase as it brings to mind the doings of the last 2 days: one failed tax has been shot between the eyes by the Prime Minister on each of the last 2 days. That is something of a record. We are holding our breath for tomorrow to see whether there will be a veritable trifecta of skeletal taxes lying slain upon the floor of the House a mere flash in the pan of revenue history rather like the reputation of the current Minister of Revenue who has presided over these small tinkering taxes where the grey hand of the State is inserted ever deeper—ever deeper—into the wallets of New Zealanders. It may be a laughing matter to the collector of dairy farms over there on the back row of the Government benches. That dairy farm collector may not trouble himself with small matters such as car-park— 
HOLLY WALKER (Green) 
: 
 I apologise to my honourable colleague. Perhaps he will get to fill in the other 15 minutes of his 20-minute call shortly. I would like to address clause 64 of Part 3 which is the clause that gives effect to one of the more significant changes in this Student Loan Scheme Amendment Bill (No 2) and that is the alignment of the definition of “net income” in the student loan scheme with that used in Working for Families. That is one of the two probably more significant changes amongst a raft of very minor technical amendments in this bill. 
We feel in the Green Party that this alignment and this new definition of “net income” with that used by Working for Families is a sad missed opportunity to correct what is a very unfair element of the definition of income currently used under the student loan scheme and indeed for Working for Families. This unfairness I think became apparent at the time when the Government introduced the increased repayment rate under the student loan scheme from 10 percent to 12 percent so that graduates now pay their student loans off at 12c in the dollar when they earn over the threshold which is less than the full-time equivalent of the minimum wage. At that time what became apparent looking at the definition of “net income” used for both the student loan scheme and for Working for Families was that Working for Families entitlements are calculated based on the household’s income before student loan repayments are deducted. That is significant because as I mentioned in my previous contribution when we are talking about who is affected by the changes to the student loan scheme we are talking about graduates. Graduates are grown-ups who have lives jobs homes and families. Many of them are eligible for payments under Working for Families the definition of income for which this bill aligns. 
Many young families have student debt and the changes therefore impact directly on families and on the mum and dad New Zealanders I talked about earlier. What this means and what is now in practice under the current regime is that the higher repayment rate for student loans of 12c in the dollar essentially operates as a tax. It operates as a higher tax or a tax increase on those families because they get no corresponding increase in their Working for Families entitlements but their income is less each week because they have higher student loan repayments. So they are actually out of pocket every week by a significant amount. 
If we are talking about aligning the definition of Working for Families income with income under the student loan scheme in our submission that needs to be aligned after student loan repayments have been taken into account. It is all very well to align them as this bill does but what this bill could have done and fails to do is correct that unfairness that Working for Families entitlements are calculated before student loan deductions have been removed. For many families this actually has had a significant impact in their weekly budget. 
The second point I want to address on this point of aligning the definition of Working for Families income with the student loan scheme income is that they are not actually 100 percent aligned by this bill. The reason for that is that by definition the student loan scheme income is always calculated on the individual level because it is the individual borrower and their individual debt. But actually Working for Families calculates income at the household level because it is looking at household and family entitlements. What I would have liked to see is the Government explore that a little further before making the changes made in clause 64 in Part 3 of this bill to actually explore whether it would be possible or practical to align the definition of income for student loan purposes with household income. I believe that that would make it easier—or allow for an amendment that would make it easier—for couples to help to pay off each other’s loans. 
If I can just explain a little bit of what I mean by this. I believe that this would help to eliminate a significant gender inequality in the student loan scheme. What we know is that women tend to take much longer to pay off their student loans and over their lifetime they have higher student loan debt because of the length of time they take off to raise children and because of the penalties and interest that they have in many cases accrued before student loans were interest free. 
An amendment such as the one that I am suggesting here which again I think is a missed opportunity that this bill did not take is that if you calculated student loan income at the household level you could allow an amendment to take place that would make it easier for partners to assist each other to pay off their loans. For example if a woman or even a man has taken some time out of the workforce to care for children their partner could continue to pay 12 percent of their income although it should be lower towards the student loan debt of their household but they could split it between their own loan and their partner’s loan so that the woman—or indeed the man but in most cases it is the woman—does not accrue a higher student loan debt over their lifetime. I think that would help to eliminate what is one of the significant gender inequalities in the student loan scheme. It could be achieved through what this clause here is trying to achieve in aligning the definition of income for student loan purposes with that used for Working for Families. 
The bill actually does not go all the way. It goes part of the way to aligning that definition of income but because it does it only at the individual level and does not contemplate doing it at the household level I think it is a significant missed opportunity to eliminate that gender inequality. It would be a complicated change to make and I acknowledge that. We have had a number of complicated changes already to the student loan scheme but I think it would have been great if the Finance and Expenditure Committee or indeed the Government had explored this opportunity in a little bit more detail because for the purposes of the bill—aligning the definition—it would actually achieve that to a greater extent. It would make it easier for partners to help each other to pay off their student loans. As a partner who is about to pay off mine and considering helping my partner to pay off his I think that would be great. 
Both of these changes I think highlight the effect that I talked about in an earlier contribution which is that although the Government and the members opposite like to talk about changes to the student loan scheme as if they will affect only those greedy selfish current students who never had it so good in fact the people affected by the changes in this bill and the other changes to the student loan scheme that have been made by this Government over the last several years are graduates who are grown-ups who are living their lives who are homeowners who have families and who indeed may be voters potentially for this Government. 
I think it ignores that group of people at its peril and that it continues with these punitive changes at its peril instead of looking at some smart amendments like those I have just outlined which could actually make life and the weekly budget easier for those families who are struggling to make ends meet but working very hard working to pay off their loans and working towards owning their own homes. There are changes we could make to the definition of income in the student loan scheme that would make things easier for those families. Sadly the clauses in Part 3 here are a missed opportunity to do that. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 In Part 3 of this bill the Student Loan Scheme Amendment Bill (No 2) as my colleague the Hon David Cunliffe was saying there is a variety of broader definitions of income descriptions much the same as in Part 2. Here also there are definitions that are about broadening income descriptions. He mentioned the annual gross income and made the point that New Zealanders know a lot about that because it has been dropping in real terms under this Government. Wages in this country are indeed a big issue for New Zealanders in the light of rising costs and a Government that is not growing the economy. 
Clause 65 provides the new definitions of income and they are broader. That is indeed the intention of the legislation—to broaden the definitions of income to collect the extra million dollars per annum of revenue from 2015-16 onwards which is captured in Part 3 of the bill “Amendments to the principal Act that apply for 2014-2015 and later tax years”. That is where we see this really taking effect albeit—again as has been pointed out by numerous members of this Committee—they are very small piecemeal measures. In many ways it is a lost opportunity. 
The other point I have made is that in this bill we see many measures that are repealing earlier decisions taken by this Government measures that in most cases have been repealed because they have proven too difficult to implement or too costly to implement when faced with an aged computer system that was built 20 years ago and for which the Government has not yet outlined a credible plan to rebuild. I am still hoping the Minister in the chair the Minister of Revenue will at some stage address our concerns about the ability of the Government to implement these changes and will outline a credible time line and plan for replacing this aged decrepit system that is proving incapable of implementing Government policy. It is a serious concern that could see billions of dollars in Government revenue not able to be collected in the future. 
 Further on in Part 3 we see also some amendments relating to the repeal of provisions on the 10 percent bonus. This is something that we have seen also debated in the House previously where this Minister having introduced the 10 percent repayment bonus for students has discovered that it was not a very effective policy and has repealed it latterly—yet another U-turn. 
We see in these U-turns—on the car-park tax the upcoming one on cellphones the ones in this bill relating to measures that cannot be implemented and indeed the repealing of provisions around the 10 percent bonus—a pattern emerging of two steps forward three steps backwards. That is no way to run a Government. That is no way to run a Government. We need to see a Government that is taking bold measures in the tax area and instead of debating how we are going to collect the extra million dollars is considering the bigger issues that are facing our economy—for example around the investment signal for export-led growth the kind of change that a capital gains tax would make for the benefit of our economy to see our economy grow and to see it compete with overseas countries whereas right now we are one of very few countries in the OECD that do not have such a measure. 
I come back to the provisions in the bill because I think it is very important to stick to the clauses that are before us in this particular part of the bill. I am sure that you Mr Chairperson will agree with me on that. We see that in clauses 67 and 68 we have clauses relating directly to that repeal of the 10 percent bonus provisions another failure on the Government’s part to implement policy. It is being forced here through this legislation to withdraw it again. 
 All of these measures that are ultimately positive we support. That is why overall Labour will support the bill because we believe that the changes in here that are substantive will make the repayment of student loans fairer. We recognise that it is pretty humiliating for the Government to be having to pass a good deal of measures that are repealing earlier measures that it brought through the House thinking that they were improvements. We of course have made a little sport of that but we have concern that Parliament is wasting time where it could actually be making bigger and better decisions for New Zealand. 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 Part 3 of this bill the Student Loan Scheme Amendment Bill (No 2) and in particular clause 64 which I am going to speak to here is where it really becomes clear what this legislation means for individuals. It is where we get to these definitions of adjusted net income and are replacing them in terms of gross income. We have heard speakers prior to me talk about this in terms of the impact that this has in terms of everyday life. We have seen earlier from this Government an increase in the student repayment amount from 10c to 12c which effectively makes the marginal tax rate of a graduate very high. I think that is something we need to consider in a very careful way and it is in clause 64 in Part 3 of the bill that this becomes very clear. 
This is something that we have to give real thought to because it is effectively this marginal tax rate these very definitions we are seeing here that is often the thing that drives young New Zealanders offshore to go and live in other countries and contribute to the development of and make contributions to societies other than our own. 
We hear a lot of rhetoric from the Government about the income benefit that someone with a tertiary qualification gets in New Zealand. I think that a few facts need to be put around this claim that we are hearing all the time from members opposite because what we are seeing in terms of OECD countries is that the benefit you get from having a tertiary qualification in New Zealand in terms of income is much lower than in many other OECD countries. Our wages are lower and there is a whole raft of reasons—which probably fall outside Part 3 clause 64 of this particular piece of legislation that we are looking at—as to why it is that we have these lower wages in New Zealand but we have to face this reality. 
I think that the New Zealand University Students Association gave a very useful submission to the Finance and Expenditure Committee on this piece of legislation. The association provided some facts around what an average student income looks like. An average student leaves a tertiary institution after some study with a mean debt of $17176 and a median graduate income is $42120. I will talk a bit more in a couple of minutes about how this is calculated. The average time to repay this debt is 5.2 years with the real value of the loan repayments being 92 percent. What we see is that these 5 years the very years when someone has finished their tertiary study might be a time when they are looking hopefully be able to buy a home and maybe start a family. 
These are the things that actually get in the way and it is these kinds of numbers that make individual New Zealanders make decisions every day to get on a plane and leave New Zealand. If we have a look at what I am talking about—and the mean debt and median repayment time is for a domestic borrower; I just want to make that clear. As the submission says these figures are: “Based on: mean debt and median repayment time (for a domestic borrower) from the 2011 Annual Report on the Student Loans Scheme graduate income (less than one year’s experience) from NZ Immigration Service with 5% annual growth a discount rate of 3.5% (reflecting borrowing cost + 0.5% risk).” I think it is really important to think about what numbers like this actually look like—living in your street shopping at the same shops that you do and going to the same schools that your children are going to—because these are the experiences of a generation of New Zealanders. A generation of New Zealanders now have student loan debt and it is their children who are about to enter tertiary education so what we have is a generation— 
House resumed. 
The Chairperson reported the Minimum Wage (Starting-out Wage) Amendment Bill with amendment progress on the Student Loan Scheme Amendment Bill (No 2) and no progress on the Reserve Bank of New Zealand (Covered Bonds) Amendment Bill. 
Report adopted. 
The House adjourned at 9.56 p.m.