Questions And Answers Oct 4

Press Release – Office of the Clerk

1. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister : Does he stand by his statement that “a credit downgrade of that sort would mean lenders would no longer see us as a good credit risk, they would be reluctant to lend us money …
(uncorrected transcript—subject to correction and further editing)

TUESDAY, 4 OCTOBER 2011

QUESTIONS FOR ORAL ANSWER

QUESTIONS TO MINISTERS

Credit Rating Downgrade—Effect on New Zealand Economy

1. Hon PHIL GOFF (Leader of the Opposition) to the Prime Minister: Does he stand by his statement that “a credit downgrade of that sort would mean lenders would no longer see us as a good credit risk, they would be reluctant to lend us money and when they did, they would charge us ever-higher interest rates. I don’t want to see New Zealanders weighed down by that burden”?

Rt Hon JOHN KEY (Prime Minister): Yes, I do. Back in May 2009, when I made that statement, markets were very nervous about lending, and a downgrade could have been damaging. We have just seen Ireland downgraded from AAA to AA+ and their interest rates immediately rose half a percent as a consequence. The global situation is now quite different, and the proof of that is that the bond yields in New Zealand today are unchanged from what they were a couple of weeks ago.

Hon Phil Goff: Who is telling the truth: Bill English, who recently told this House that there is “no doubt” that a credit downgrade would lead to higher interest rates, or the Prime Minister, who said yesterday that it would not?

Rt Hon JOHN KEY: Both of us. The question I was asked yesterday was whether I thought yields would rise, and in the short term I do not think they will. In fact, that is borne out by a graph of bond yields at the moment, which shows it is incredibly consistent, despite the downgrade.

Hon Phil Goff: Is the Prime Minister now saying to the House that the credit downgrade that he did not see coming will lead to higher interest rates, as Bill English has already asserted as recently as Sunday?

Rt Hon JOHN KEY: Over time it might, and that is why New Zealand would always want to strive to have a higher credit rating, rather than a lower one. One of the commentaries, from either Westpac or the ANZ, actually confirms that. Although the short-term impact is unlikely to see interest rates go up, over time they could do.

Hon Phil Goff: Does the Prime Minister still believe his statement to this House that a credit downgrade is “The No. 1 way to see New Zealanders down the road from their jobs”?

Rt Hon JOHN KEY: It would depend on the circumstances. If back in 2009 we had received a credit downgrade in isolation, that would have been more troubling, arguably, than today when we have seen Standard and Poor’s downgrade nine of the last 10 countries, when there is a downgrade taking place because of the international environment and because the downgrade is a result of the fact that that weaker international environment is of concern of the stock of private sector debt. I must say, though, that I would be interested in hearing the view of the Leader of the Opposition about whether he takes responsibility for that large build-up in private sector debt. I am holding a document listing the current account deficits run under the previous Labour Government. That

shows they are incredibly high and that they are often about 8 percent of GDP. I remember Michael Cullen saying that the No. 1 thing he would address was the current account deficit in New Zealand.

Hon Phil Goff: When, for heaven’s sake, will the Prime Minister accept any responsibility for the fact that the downgrading of New Zealand’s credit rating by two agencies last Friday was the first downgrading of New Zealand in 13 years, and came 3 years after he became Prime Minister?

Rt Hon JOHN KEY: With the greatest respect, I am not responsible for what happens in Europe and the United States, nor, technically, was I in Government when there was the enormous build-up in private sector debt. What I can say, though, is that both Fitch Ratings and Standard and Poor’s have taken quite some trouble to actually mention in their press releases that the Government—the books of the Government and the pathway of the Government—is not only on the right track, but if any future Government were to unnecessarily place more debt on the economy, as Labour is proposing, that is likely to be a very bad thing indeed.

Chris Tremain: Has he seen any reports on the build-up in external debt over the last decade?

Rt Hon JOHN KEY: Yes, I have seen two such reports. One shows that New Zealand’s net external debt rose from 64 percent of GDP in 2001 to 83 percent in 2008, because of huge and persistent current account deficits. The other report backs this up and says: “I do not pretend either that our record was perfect, nor deny that there were significant questions unresolved. Our current account deficit was stubbornly high and the savings deficit … was unsustainable. Productivity growth was too low …”. That was a frank and honest assessment, even if it came too late from David Cunliffe, at “Mood of the Boardroom”.

Hon Phil Goff: When did a Government spend $18 billion more than it earned in revenue in a single year, as this Government is doing in this financial year?

Rt Hon JOHN KEY: To the best of my knowledge, never—although I have not checked that. I say to New Zealanders that that is a very telling question from Mr Goff, because half of that deficit was for the rebuild of Christchurch. This party and this Government stand for the rebuild of Christchurch. This party and this Government stand for helping New Zealanders through tough economic times. The Opposition does not, and that is a very telling statement 8 weeks out from an election.

Mr SPEAKER: The House will come back to order.

Hon Phil Goff: Is it correct that New Zealand’s credit rating with those two agencies is now the same as Spain’s—a country that National has constantly derided as being an economy in trouble?

Rt Hon JOHN KEY: I cannot confirm that. It may well be; it sounds logical. But let me quote this from Fitch Ratings: “New Zealand remains well placed amongst the world’s highly-rated sovereign credits, with its creditworthiness supported by moderate public indebtedness, fiscal prudence, and strong public institutions.” But I will say this: when Standard and Poor’s was giving a meeting in New Zealand about a month ago, what it did say was that there was about a 30 percent chance that we would be downgraded. That is what happens when one is on a negative outlook. It did go on to say, though, that if there was a change of Government, that downgrade would be much more likely.

Mr SPEAKER: The Hon John Boscawen. [Interruption] How can the member at the back of the House be heard asking his question?

Hon John Boscawen: If the Prime Minister is not responsible for what happens in the United States and Europe, does he accept that he and his Government are responsible for public policy settings in New Zealand; and if so, how does he reconcile Standard and Poor’s statement that one of the reasons for its lowering New Zealand’s rating was “emerging fiscal pressures associated with an ageing population” with his statement from the 19 September that “All of our forecasts, all our models build in a retirement age at 65. On the calculations we have it is affordable”?

Rt Hon JOHN KEY: Yes, and yes.

Hon Phil Goff: Was it part of National’s strategy to avoid a credit downgrade by imposing 20 percent more tax on New Zealanders’ spending, as Bill English suggested on Q+A; if so, has it worked?

Rt Hon JOHN KEY: One of the policy initiatives that came out of the rebalancing of lowering personal taxes and increasing GST was actually to give New Zealanders much greater choices to save, to pay off their mortgage, or to do whatever they want to do. The answer is yes, it has actually worked, because, funnily enough, New Zealanders are saving more at the moment.

Hon John Boscawen: Does he agree that increasing the retirement age beyond 65 would ease the emerging fiscal pressures associated with New Zealand’s ageing population, as cited by Standard and Poor’s; if so, does he think New Zealand’s credit downgrade proves that his policy to not touch the retirement age is short-sighted?

Rt Hon JOHN KEY: In terms of the latter part of the question, no. I think it is quite clear from all of the statements made by both Fitch Ratings and Standard and Poor’s that the reason for the downgrade was that the international environment is more fragile, and that New Zealand had high levels of private sector indebtedness. In terms of the former, the Government is comfortable that the retirement age at 65 is affordable. It is modelled to 2025, and that is about as far out as we need to go.

Hon John Boscawen: I seek leave of the House to table a statement by Standard and Poor’s in which they state that the emerging fiscal pressures associated with the ageing population has led to New Zealand’s credit downgrade”.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection. Document, by leave, laid on the Table of the House.

Hon John Boscawen: I seek leave to table a statement from the Prime Minister on 19 September—

Mr SPEAKER: Is this a press statement, or a statement published by the press?

Hon John Boscawen: It is a statement from Mr Key, as quoted on the 3 News website.

Mr SPEAKER: On what site?

Hon John Boscawen: On the 3 News website.

Mr SPEAKER: We do not table statements off websites of the media.

Credit Rating, New Zealand—Present Compared with Previous Credit Rating

2. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Finance: What is New Zealand’s credit rating and how does that compare with previous ratings?

Hon BILL ENGLISH (Minister of Finance): Following last week’s changes, the long-term foreign currency credit ratings are AA from both Standard and Poor’s and Fitch Ratings, and Aaa from Moody’s. The local currency ratings are AA+ from Standard and Poor’s and Fitch Ratings, and Aaa from Moody’s. All ratings are on a stable outlook. New Zealand’s rating was AAA up to the early 1980s. It then dropped down to AA- through the late 1980s and into the early 1990s. We steadily improved over that decade, and it is disappointing to see that the misjudged economic policy through the last decade has led us to the situation of a further ratings change.

Hon David Cunliffe: To the Minister—

Mr SPEAKER: Wait a minute; I have not called any member yet. I had better go to the usual practice and go to Peseta Sam Lotu-Iiga for the first supplementary question.

Peseta Sam Lotu-Iiga: What are the main factors that have put the credit rating under downward pressure?

Hon BILL ENGLISH: The ratings agencies have stressed for some time that their view of New Zealand is determined by New Zealand’s large external liabilities, most of which is private debt. It has built up gradually over several decades, but in the time from 2000 to 2008 we had record

excessive Government spending. We had a current account deficit of over 8 percent for 4 years, which is almost a record for any country. During that time New Zealand households were spending about $1.11 for every dollar they earned and the tax system was encouraging rampant, debt-fuelled property speculation. Since then the Government has taken several measures to change these dynamics in the New Zealand economy, with some success, but because of the deteriorating global outlook, ratings agencies have become more sensitive to what are now lower external debt levels.

Hon David Cunliffe: Who was the Associate Treasurer when New Zealand’s credit rating was last downgraded by Moody’s on 24 September 1998?

Hon BILL ENGLISH: I am not sure, but it might have been me, and I am very pleased that that was during a period when New Zealand made considerable progress in productivity growth, export growth, and employment growth. That was all squandered by the Labour Government that came afterwards.

Peseta Sam Lotu-Iiga: How has New Zealand’s financial position changed over the past 3 years?

Hon BILL ENGLISH: We have focused on getting through the recession while encouraging more saving and exporting and discouraging excessive property speculation, out-of-control Government spending, and too much debt. By every measure the outlook has improved over the last 3 years. The balance of payments deficit, which was 8 percent for 4 years under Labour—almost a developed-country record—has now halved, households are now saving again, and we will have positive savings rates for the first time in 20 years next year. Government debt will peak at less than the projections when we took office, and our foreign liabilities have fallen by $16 billion over the past 2 years. In the context of a global recession, a New Zealand recession, an economy mismanaged by the previous Government, and the Christchurch earthquake, that is a pretty good result.

Peseta Sam Lotu-Iiga: What policies will continue to improve New Zealand’s financial position?

Hon BILL ENGLISH: Two straightforward policies. One is to ensure that the Government gets to surplus, that its debt stops rising in the next 2 or 3 years, and we begin to pay down that debt. The second is that we develop further our capacity to earn a living by selling goods and services—

Hon Members: Selling assets.

Hon BILL ENGLISH: —to the rest of the world, rather than speculating and buying houses from each other. It is disappointing to hear that the Labour Opposition does not understand that and has so far trotted out—

Mr SPEAKER: Order!

Hon BILL ENGLISH: —spending promises—

Mr SPEAKER: Order!

Job Creation—Number of New Jobs by 2013

Mr SPEAKER: Question No. 3, the Hon Annette King. [Interruption] Question No. 3, the Hon Annette King.

Hon ANNETTE KING (Deputy Leader—Labour): Just giving some instructions to the Minister of Finance.

Mr SPEAKER: Order!

3. Hon ANNETTE KING (Deputy Leader—Labour) to the Minister of Finance: In light of the Minister for Social Development and Employment’s answer to Oral Question No 2 last Thursday when she said 170,000 new jobs was a “Treasury prediction”, what is the Government’s assessment of the number of new jobs which will be created by 2013?

Hon BILL ENGLISH (Minister of Finance): The projection that the Minister was referring to came from the Budget update, which is prepared by Treasury using its best professional judgment. The Government does not make independent forecasts. However, we think that the Treasury

projections look feasible. They are currently finalised in the pre-election update, which will be released this month. I do not expect the projections will be greatly different from those in the Budget.

Hon Annette King: What evidence has he seen to support the Treasury projection of 170,000 new jobs, when other Treasury projections have failed to materialise—such as the 4.7 percent growth promised in the 2010 Budget, which ended up as 2.3 percent growth?

Hon BILL ENGLISH: Of course, it is hard to find evidence for things that are going to happen in 2 or 3 years’ time, but the evidence at the moment is that the economy is in a phase of moderate growth. There is reasonable business confidence, there is some increase in investment, and we have an export sector that has had probably its best year in 10 or 15 years. All of that is leading to a moderate but steady growth in employment.

Hon Annette King: Why, if we are on track to create 170,000 new jobs, were almost 800 people made redundant from jobs in the Alliance meatworks, the Department of Conservation, Tangiwai mill, Canterbury Leather International, Housing New Zealand Corporation, the Warehouse, and the wood processing industry in the last month alone?

Hon BILL ENGLISH: Well, that is part of the ongoing process of the necessary restructuring of the economy. Of course, losing a job is very difficult for any family that goes through that experience, and the best thing we can do for them is to build an economic environment where they have the hope and the probability of getting a new job. That is what we are focusing on.

Hon Annette King: As he has already seen next month’s Pre-election Economic and Fiscal Update, will Treasury’s projections of 170,000 new jobs over the next 3 years be revised downwards; if not, why not?

Hon BILL ENGLISH: The member will just have to wait for that. I have not seen all the detail of the forecasts, but the indications are—and as was set out in the Reserve Bank forecast just 2 or 3 weeks ago—that the economy is roughly on track from where it was with the Budget, subject to two qualifications: it has performed a bit better than expected in the short term—a bit more growth and a few more jobs—and looking out 2 or 3 years, because of the downturn in our trading partners, it looks a bit softer.

Hon Annette King: Does he agree with the Prime Minister, who said most countries would trade their right arm for our position; if so, which countries have offered a limb in exchange for our almost 30 percent youth unemployment rate, which is one of the highest ratios of youth unemployment in the OECD?

Hon BILL ENGLISH: In reference to offers to swap positions, I can tell the member that in discussions I had, I think last week, with the chair of the Board of Governors of the Federal Reserve System, Mr Ben Bernanki, at one stage he said: “Would you like to swap jobs?”.

Credit Rating Downgrade—Effect on Home Mortgage Interest Rates

4. Dr RUSSEL NORMAN (Co-Leader—Green) to the Minister of Finance: What will be the additional weekly cost of borrowing for someone with a $300,000 home mortgage should interest rates increase by 0.3 percent as a result of the recent double credit rating downgrade?

Hon BILL ENGLISH (Minister of Finance): If mortgage interest rates increase by 0.3 percent for any reason, then the cost, I think, would be about $17 a week. Of course, what has actually happened is that floating mortgage rates are at a 45-year low. Back in 2008 the fixed mortgage rate was, I think, over 10 percent and now it is about 6 percent, and that is worth some $200 a week in benefit to the average New Zealand household.

Dr Russel Norman: So does the Minister of Finance accept that if there is an increase in mortgage rates of, say, 0.3 percent, someone with a home mortgage of $300,000 will be paying an extra $17 a week in order to service their mortgage?

Hon BILL ENGLISH: There is a mathematical calculation about the figure of 0.3 percent, which equals $17 a week. But two things are happening with interest rates. One is that around the

world interest rates have been dropping, so that is a downward pressure on interest rates—for not very good reasons, I might say. The conventional wisdom is that a credit rating downgrade would push up interest rates; we have not seen any evidence of that yet, but on any given day one does not quite know where the floating interest rate will come out.

Dr Russel Norman: Has he seen Standard and Poor’s statement saying that the responsibility for the downgrade lies in part with the Government, because “the country’s fiscal position has been weakened by Christchurch earthquake-related spending pressures …”; if so, does he accept that his decision to borrow to pay for the rebuild, rather than striking a temporary levy, has led in part to the downgrade?

Hon BILL ENGLISH: I do not think so, although I understand the proposition the member is putting forward. The fact is that the levy, as he proposed, I think, was a 10-year levy, and it simply would not have raised the cash needed now to meet the welfare requirements, the payouts—for instance, for the red zone—the ongoing funding of infrastructure rebuilding, and the ongoing operation of the Earthquake Commission, which is now very large. We simply would not have raised the cash in time. There will, of course, be effective levy increases as a result of the earthquake; people who are renewing their insurance premiums right across New Zealand are finding that, and it is likely the Earthquake Commission levy may have to increase significantly as well.

Dr Russel Norman: Does he accept that a temporary, targeted earthquake levy, raising $1 billion a year, as the Greens proposed, would have reduced the fiscal pressure on the Government, hence reducing the likelihood of a credit downgrade by Standard and Poor’s?

Hon BILL ENGLISH: I do not think it would have made much difference. The reasons the rating agencies have talked about are, I think, quite familiar: the build-up of external debt to the rest of the world, which accelerated through the first half of the last decade, and the Government’s fiscal position being a bit weaker because, through the recession, we continued to fund public services. This levy would not have made enough difference to the earthquake funding to change anything about the credit rating.

Dr Russel Norman: Does he appreciate that a person on the average wage with a $300,000 mortgage is better off paying an earthquake levy of about $1 a week than paying $17 a week extra as a result of increased mortgage costs that have come, or may come, with the downgrade?

Hon BILL ENGLISH: I do not think any prospective levy could have been that low. The Government has made a decision about Christchurch that has enabled us to demonstrate a very strong and clear commitment to the rebuilding of that city, and we have no reason to rethink that decision.

Dr Russel Norman: Is he concerned that most New Zealanders will now be paying higher interest rates to foreign-owned banks as a result of the double credit rating downgrade, rather than paying a targeted levy that would help pay for the rebuild of Christchurch?

Hon BILL ENGLISH: I do not see that those are explicit trade-offs. I understand the point that the member is trying to make, but that is not how the Government sees the issue. We have made decisions about funding the earthquake and about the levy, which we do not think would have made any difference to the credit rating outcome.

Dr Russel Norman: Does he stand by the answer he gave when I questioned him in March about the risks of a credit downgrade in relation to borrowing to pay for the Christchurch rebuild: “We are very conscious of the risks of a downgrade and believe that we are making the right considered choices to deal with those risks.”? Does he now accept that his considered choices were not the right ones, that we need a new plan to limit Government borrowing, and that an earthquake levy could be part of that plan?

Hon BILL ENGLISH: In answer to the first question, no. In answer to the second, we have a plan to limit Government borrowing, and we look forward to the support of the Green Party, which is displaying a lot more economic logic than the Labour Party, as we put that plan into place.

Credit Rating Downgrade—Effect

5. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he stand by all statements he has made on the effect of a credit rating downgrade?

Hon BILL ENGLISH (Minister of Finance): Yes.

Hon David Cunliffe: Why did he concede to the Dominion Post that Friday’s double downgrade would impact New Zealanders’ interest rates and home mortgages, and how does he reconcile this statement with that of the Prime Minister in the New Zealand Herald today that that is unlikely?

Hon BILL ENGLISH: What I have said about interest rates is that, first, conventional wisdom says a change in the credit ratings could push interest rates up, and that, secondly, the best estimate we could find of that was about 0.1 percent. I might say that since the announcement about the credit rating there has been no sign of an increase in interest rates. I think that is because the market at large is focused on much bigger and more concerning issues around Europe and the US, and because it regards New Zealand’s position favourably.

Hon David Cunliffe: Does he stand by his claim that the double downgrade will add only 0.1 percent to mortgages, a $170 million-a-year bill to households, and on what basis is this current estimate so much lower than previous official Treasury estimates of 1 to 2 percent, costing the Government $600 million a year—estimates which Treasury has not since rescinded?

Hon BILL ENGLISH: As I said, Treasury tells the conventional wisdom about it. The evidence is that the market seemed to regard New Zealand’s position as being pretty favourable. Claims about the cost of that are a bit rich, coming from a party that oversaw interest rates that were around 10 percent, rather than 6 percent, when it was in Government. Labour did not seem concerned about the impact on households then.

Hon David Cunliffe: Does the Minister now regret denigrating the rating agencies like a jilted suitor in comments today, saying they do not run the country; if he does, why is he shying away from responsibility for the high level of private debt and low savings that have so concerned them, when he himself cut KiwiSaver and the pre-funding of New Zealand superannuation?

Hon BILL ENGLISH: I think what I said was that we do not run the country for the ratings agencies. What we do is make the best decisions, we believe, for the benefit of the New Zealand economy, and the ratings agencies are free to form their opinions about that. I would have expected that that is what most New Zealanders would expect of a New Zealand Government. We are here to increase incomes and create jobs for New Zealanders, and if the rest of the world gets into economic trouble we will continue to make the considerable progress that we have already made.

Hon David Cunliffe: Does he stand by his statement that a downgrade in the middle of a financial crisis would have been quite devastating, but we are in better shape now; if so, what part of the financial crisis in Greece, Portugal, Spain, Italy, the eurozone, and the United States has passed him by?

Hon BILL ENGLISH: Well, the member may recall that back in 2009 the lending markets were closed to New Zealand banks—completely. That is not the case now, and I think the reaction to the change in the ratings demonstrates that the market does regard New Zealand’s position as being pretty favourable. The Government has had a huge challenge to undo the enormous damage done by Labour to this economy, and I am pleased with the progress that we have made.

Mr SPEAKER: I have called Amy Adams, and I say to members at the front of the House that members at the back cannot hear me or whom I am calling, and that is not fair.

Amy Adams: Has he seen any other assessments of factors that have weakened New Zealand’s credit rating?

Hon BILL ENGLISH: Yes, I have seen one particular comment that says “there were significant questions unresolved. Our current account deficit was stubbornly high, and the savings deficit … was unsustainable. Productivity growth was too low”. That was a statement made by the Opposition finance spokesman, David Cunliffe, in one of those rare moments when he sounded almost as economically logical as the Greens. But since then he has gone backwards.

Crime Statistics—Reports

6. NICKY WAGNER (National) to the Minister of Police: What reports has she received on the level of recorded crime in New Zealand?

Hon JUDITH COLLINS (Minister of Police): I am very pleased to report that the rate of recorded crime dropped 7 percent per head of population in the fiscal year to 30 June. The rate of crime dropped in all police districts, with the biggest falls in Canterbury, Southern, Tasman, Central, and Waitematā districts. I am also pleased to report that the murder rate is the lowest since fiscal year reporting began in 1986. It is also good to see a drop in recorded family violence and acts intended to cause injury. The police are to be congratulated on the outstanding work they have been doing to make our communities safer.

Nicky Wagner: What advice has she received on the reason for the fall in the rate of crime?

Hon JUDITH COLLINS: The continuing fall in the level of crime in New Zealand is very encouraging. It shows that crime can be brought under control when the police are backed by the Government and given the tools to get on with the job. It also reflects the strategies being implemented by the police under the Policing Excellence programme. A greater focus on prevention, and initiatives such as neighbourhood policing teams, are starting to make a real difference in our communities. Although the drop is encouraging, it does not mean that we will be taking the pressure off criminals. This Government will continue to back the police in the excellent work they are doing.

Rahui Katene: When will she recognise that crime in New Zealand will never drop to a satisfactory level as long as there is prejudice against Māori in the justice system; if she has already come to that realisation, when can we expect the Māori Party’s justice policy of reviewing the justice system to happen?

Hon JUDITH COLLINS: My focus is always on victims, actually. I think it is important to recognise that although Māori are overrepresented in the crime statistics as offenders, they are also overrepresented as victims. Frankly, focusing on someone’s race is not going to make it any better. We have to bring down crime, deal with offenders, and, in fact, prevent victimisation.

Credit Rating Downgrade—Prime Minister’s Statements

7. Hon DAVID PARKER (Labour) to the Prime Minister: Does he stand by his statement that “if we get downgraded, I personally would be very disappointed and very surprised”?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Yes, in the context of which it was made, which was just before the 2009 Budget.

Hon David Parker: Which of the following does the Prime Minister think was the more significant reason behind the rating agencies’ decision to downgrade the rating of New Zealand: his Government’s consistent failure to meet its own growth forecasts, or the projections of everincreasing international debt?

Hon BILL ENGLISH: The most significant factor has been the fact that the global economy is facing increased volatility and lower growth prospects. That has made ratings agencies, banks, governments, and everybody much more sensitive to debt. So despite the fact that New Zealand’s position is better than it was in 2008, we have been put under the microscope and rating agencies have decided that even with a lower level of external liabilities, we are not as credit worthy as we were.

Hon David Parker: Which of these indicators of his Government’s performance over the past 3 years does he think drove, or most drove, the double downgrade: 56,000 more unemployed; real GDP per capita down 3.6 percent; real wages down 3.2 percent; the wage and GDP gap with Australia up; Government spending up from 31 percent to 36 percent of GDP; net Government debt up 1,700 percent; or 100,000 immigrants to Australia and an $18 billion deficit?

Mr SPEAKER: Before I call the Minister to answer that, whoever is holding those signs in the gallery will take them down immediately or they will be removed. They will be taken down immediately. Thank you.

Hon BILL ENGLISH: None of them.

Hon David Parker: Given the Minister’s acknowledgment in the first supplementary answer that the greatest problem was New Zealand’s increasing international debt, when will he be introducing substantial policies to grow our exports, and is he willing to consider a capital gains tax to properly direct investment into the export sector?

Hon BILL ENGLISH: I think that the member might have missed the large tax package that the Government put in place in the Budget last year, which is, I think, taking about $800 million this year out of the speculative property sector. The Government is committed to rebalancing the economy to grow exports, and we do not believe that new taxes, more spending, and $7 billion worth of more borrowing are the ways to do it.

Hon David Parker: Is the Minister telling New Zealand that National rules out ever introducing a broad capital gains tax?

Hon BILL ENGLISH: That is the case, and I think that both of the people who turned up to that member’s meetings recently would agree with us.

Bowel Cancer Screening Pilot—Waitematā District Health Board

8. Hon TAU HENARE (National) to the Minister of Health: What reports has he seen about the bowel cancer screening pilot, which is set to start at the Waitemata DHB this month?

Hon TONY RYALL (Minister of Health): New Zealand’s first bowel cancer screening programme is being run at the Waitematā District Health Board. It is about to invite the first 500 people to join the programme. Of cancers, bowel cancer is the second-biggest killer in New Zealand, and the $24 million pilot, which was promised for years by the failed party opposite, will run over 4 years and inform us about the costs and benefits of rolling out a full national bowel cancer screening programme. It has been reported that this is the first State-funded cancer screening programme to include men.

Hon Tau Henare: What has Waitematā District Health Board been doing to prepare for the pilot?

Hon TONY RYALL: The district health board is setting up a dedicated endoscopy facility at Waitakere Hospital in west Auckland—another new facility there—to provide colonoscopies for people in the screening pilot who return a positive test result. It has also been working to reduce waiting times. The number of people in the district waiting for a colonoscopy was around 950 earlier this year; it is now down to 550 and it is on track to be around 200 by the end of the month. Ireland, the member may be interested to know, has recently announced a delay to the start of its bowel cancer screening programme because it did not have the capacity to deliver colonoscopies, but the Waitematā District Health Board is very confident it will be able to deliver this long-awaited service.

Auckland District Health Board—Te Whetu Tawera Acute Mental Health

9. GRANT ROBERTSON (Labour—Wellington Central) to the Associate Minister of

Health: Does he stand by all the answers he gave on behalf of the Minister of Health to Oral Question No 8 last Tuesday?

Hon Dr JONATHAN COLEMAN (Associate Minister of Health): Yes.

Grant Robertson: Did he or his office receive an email last Monday from Auckland woman Jo Heighton that said that she and her husband had “nearly been killed” after an attack by a patient who had been released from the Auckland District Health Board acute mental health unit; an attack that left her husband with two skull fractures and 65 stitches, and had traumatised her family?

Hon Dr JONATHAN COLEMAN: I raise a point of order, Mr Speaker. I refer you to Standing Order 111. This is a matter that is currently before the courts. I know you have discretion as to whether that question can be asked, but I cannot answer relating to that matter for the very reason that it is not in the public interest and it may prejudice the case.

Mr SPEAKER: It is perfectly within the Minister’s rights to make that decision. He does not need my approval if the matter is, in the Minister’s view, not in the public interest to be answered because it is before the courts. That is perfectly reasonable.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I know that there is an absolute discretion here, but it is certainly not under Standing Order 111. The question was nothing to do with any matter before the court; it was: did he receive an email? Whether a Minister received an email cannot possibly affect a judicial decision.

Mr SPEAKER: It is up to the Minister to decide whether answering that question may compromise it. Whether it is believed that bringing the Minister into the issue could compromise the case, it is not for me to determine. Obviously, other members and the public will judge the Minister’s judgment in terms of whether it is not in the public interest to reply, but the Minister has indicated that in his view it is not in the public interest to reply to that question, and I must respect that.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I am now at somewhat of a loss, because I think there has been an understanding reached between National and Labour with regard to changes to the Standing Orders, some of which go very close to this particular question and certainly go to a question of trust. I do not think anyone believes that a judicial decision could be changed by that. For a Minister to claim that it could be is something that could well upset the acceptance by this party—

Mr SPEAKER: No, no.

Hon Trevor Mallard:—of a unanimous report—

Mr SPEAKER: Order!

Hon Trevor Mallard: —of the Standing Orders—

Mr SPEAKER: The member will resume his seat. Members do not get into threats like that when a Minister—it is not becoming. The Minister, in his view, believes that the circumstances are such that it is not in the public interest to answer the question. Others will judge that. Further supplementary questions can be tested. We will just have to see whether the Minister considers any of them to be in the public interest to answer. But, at the end of the day, the people heard the question and they heard the point of order the member made. They will judge the Minister’s judgment on whether he should be answering the question in the public interest.

Grant Robertson: Can he confirm the report in the Herald on Sunday this past Sunday that Jo Heighton sent an email to his office last Monday saying that she and her husband had “nearly been killed” after an attack by a patient who had been released from the Auckland District Health Board acute mental health unit; an attack that left her husband with two skull fractures, 65 stitches, and had traumatised her family?

Hon Dr JONATHAN COLEMAN: As I said in my answer to the first supplementary question, I am not going to comment on this case because it is before the courts.

Hon Trevor Mallard: Did his office receive an email as described in the last supplementary question?

Hon Dr JONATHAN COLEMAN: See answers to supplementary questions Nos 1 and 2.

Grant Robertson: In light of the email that Jo Heighton told the Herald on Sunday she sent the Minister last Monday, why did he say in the House last Tuesday that there had been “a marked improvement in the … way that patients are managed.” at the Auckland District Health Board acute mental health unit, an answer that Jo Heighton said sounded like the Minister was wiping his hands clean of dealing with problems at the unit?

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I think that question falls well short of Standing Order 371(1)(b). [Interruption]

Mr SPEAKER: Some senior members may be leaving this Chamber unless they start behaving. A point of order was raised by the Hon Gerry Brownlee, who is one of their senior colleagues. I am taking it seriously, and other members of the House would be wise to do so as well. The member has referred to Standing Order 371(1)(b). The issue in Standing Order 371(1)(b) is that questions should not contain “arguments, inferences, imputations, epithets, ironical expressions or expressions of opinion,”. The questioner cited a newspaper story in respect of a supposed email being sent to the Minister’s office, and asked the Minister why the Minister told the House that he believed things were improved—or whatever—in this mental health unit. I do not see how that question is ruled out by Standing Order 371(1)(b), because the questioner has not inserted any of his own opinion; he has just cited a newspaper story. That is how I heard the question. If I am wrong, I am happy to be corrected. I think the questioner, Grant Robertson, is entitled to ask that question.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. My point is that the question was couched in the words “In light of”. That immediately leads to the statement in the newspaper being a fact that the member is now expressing as part of his opinion in asking that question. I think when you consider the whole context of the nature of the questioning and the response from the Minister to three previous supplementary questions, then it can be construed only as just another way of trying to get at exactly the same stuff. I think that you would have to say that it does contain an expression of opinion, because the member is asserting that what was in the newspaper article was, in fact, the case, when there has been no confirmation of that in the House today.

Hon David Parker: It is quite in order for Mr Robertson to put that question. It is also quite in order for the Minister, if he denies it, to say it is wrong. I put it that the question is quite proper, as you have already ruled.

Mr SPEAKER: The point raised by the Hon Gerry Brownlee is a relevant issue. With supplementary questions we do need to be careful. I tend to allow them because Ministers are free to refute expressions of opinion or statements of supposed fact that are inserted into questions. I do not rule them out, even though some of them may be out of order. In this particular case, though, the member is allegedly quoting a newspaper, and newspaper stories can be used to validate even primary questions. I obviously cannot ascertain whether the newspaper does contain this claim, but I basically have to take the member at his word that there is a newspaper story that makes this claim. It is up to the Minister. If the Minister considers it not in the public interest to answer the question, the Minister is perfectly at liberty to say that. The public interest can be judged only by the Minister, not by the Speaker. Reference to the particulars of a case is certainly not in order. General principles involved have traditionally been able to be discussed in this House without being a breach of our normal consideration of matters before the court. So I invite Grant Robertson to repeat his question, and the Minister knows it is his judgment as to whether it is in the public interest to answer it.

Grant Robertson: In light of Auckland woman Jo Heighton saying in the Herald on Sunday last Sunday that she sent an email to Mr Coleman’s office, why did he say in the House last Tuesday that there had been a marked improvement in the way patients are being managed at the unit, an answer that Jo Heighton said sounded like the Minister was wiping his hands clean of dealing with problems at the unit?

Hon Dr JONATHAN COLEMAN: I said that in the House last week because it is backed up by an independent report, and I am quite happy to table that report in the House today for that gentleman’s edification. I seek leave to table that report.

Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.

Grant Robertson: I know that you do not approve of the seeking of leave to table newspaper articles, but I think that in the circumstances—

Mr SPEAKER: No, no—the member is quite correct. We do not table articles from recent newspapers. The member will note that I accepted his question as being in order on the basis of what was in the newspaper. I think he has had the Speaker reasonably supportive of the question he was asking.

Childcare—Out of School Care and Recreation Programmes

10. JONATHAN YOUNG (National—New Plymouth) to the Minister for Social

Development and Employment: What changes are being made to Out of School Care and Recreation?

Hon PAULA BENNETT (Minister for Social Development and Employment): We have committed an additional $2.8 million for assistance grant funding for out-of-school care and recreation providers, and from November we plan to introduce a simplified set of standards for approval in order to reduce significantly that compliance for out-of-school care and recreation providers. We have had a huge increase in the number of providers. The fund was capped so they were getting less money, so we have topped it up by $2.8 million this year.

Jonathan Young: How will these changes support those organisations providing out-of-school care and recreation?

Hon PAULA BENNETT: These changes will ensure that we maintain and expand the supply of out-of-school care and recreation provision while also reducing the bureaucracy and compliance for organisations providing these services. Changes to standards include reducing the number of standards from 11 to six, trusting providers more and monitoring compliance less, making it easier for new providers to establish, and enabling home-based care for after-school care, as well.

Video Camera Surveillance (Temporary Measures) Bill—Justice and Electoral Committee

Recommendations

11. CHARLES CHAUVEL (Labour) to the Attorney-General: Does the Government support changes to the Video Camera Surveillance (Temporary Measures) Bill recommended by the Justice and Electoral Committee?

Hon CHRISTOPHER FINLAYSON (Attorney-General): Yes, and I hope the House does too.

Charles Chauvel: Does he intend to seek or make any further amendments to the bill when it returns to the House for debate?

Hon CHRISTOPHER FINLAYSON: No.

Charles Chauvel: Why did it take him 17 days after the Supreme Court decision in R v Hamed to advise other political parties of his intention to introduce urgent legislation, and can he assure the House that he will approach his job in a less leisurely fashion from now on?

Hon CHRISTOPHER FINLAYSON: When the—[Interruption] I have been told to be nice. When the judgment was released some time was required so that certain aspects of it could be redacted, and then I immediately got on to the task in my usual sedulous manner.

Charles Chauvel: Does he now regret the fact that he and his colleagues failed to take up Labour’s offer, made a year ago, to progress the Search and Surveillance Bill, and will he give the House an assurance that from now on he will be an advocate for expediting the provisions of that bill?

Hon CHRISTOPHER FINLAYSON: As to the first part, no. As to the second part, as I have said, the Government accepts the recommendations of the Justice and Electoral Committee that after the new Parliament is formed everyone will have to get their skates on to deal with the issue of the Search and Surveillance Bill.

Rahui Katene: Does he agree with the assessment of lawyer Robert Lithgow QC, as told to the select committee, that “The Crown want to win when they lost.”, and what are the implications to

our legal system when the Crown makes the non-criminal criminal through retrospective legislation?

Hon CHRISTOPHER FINLAYSON: No, I do not, because I think everyone in this House agrees that those who actually succeeded in the appeal should have the fruits of their victory. Quite frankly, I do not know what that gentleman is talking about.

Leaky Homes, Repair—Progress

12. TIM MACINDOE (National—Hamilton West) to the Minister for Building and

Construction: What progress has been made in getting leaky homes fixed faster?

Hon MAURICE WILLIAMSON (Minister for Building and Construction): More good news. Since the Government passed the weathertight homes resolution service financial assistance package just a couple of months ago, several thousand homeowners have made applications to sign up to the assistance package where the Government will pay 25 percent of the repairs, the local authority 25 percent, and the remaining 50 percent will be paid by a loan from the banks with an underpinned loss-sharing agreement. Many homeowners have waited a long time to get this sort of assistance to get them out of the trap they have been stuck in, where they have had zero or negative equity and could not move forward. What the Government has put in place gives them a fantastic future.

Tim Macindoe: What has been the uptake by owners of leaky homes to the financial assistance package so far?

Hon MAURICE WILLIAMSON: The uptake has been spectacular—more than 200 homeowners have already put their applications in and qualified. That represents about $23 million of subsidy paid out already—$18 million from the Government and $5 million from local authorities. In addition, a remaining 684 claims are currently under process. They represent 626 stand-alone homes and 58 multi-unit buildings. For members’ interest, here are some demographics: 70 percent of all the eligible claims come from Auckland, 20 percent from Tauranga and Wellington, and the remaining 10 percent are from—and I know that Mr Power will be interested in this long list—Christchurch, Whangarei, Hurunui, Taupō, Kapiti, and Rodney.

QUESTIONS TO MEMBERS

Question No. 1 to Member Question postponed.

ENDS

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