Questions And Answers Tuesday, April 9 2008

1. Telecommunications—Improvements

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1. H V ROSS ROBERTSON (Labour—Manukau East) to the Minister for Communications and Information Technology: What reports has he received on improvements for telecommunications in New Zealand?

Hon DAVID CUNLIFFE (Minister for Communications and Information Technology) : I have seen many positive media reports on the recently announced approval of Telecom’s operational separation undertakings. Robust operational separation has been a priority for the Government and the Parliament, and it is one of a number of measures to roll out faster, cheaper broadband to all New Zealanders.

H V Ross Robertson: Can the Minister therefore tell the House whether this is the last of the Government’s pro-competitive measures?

Hon DAVID CUNLIFFE: No; operational separation is only a part of the Government’s pro-competitive telecommunications strategy, which includes rolling out the broadband pathway and refreshing the Digital Strategy. In a regulatory context, there are still key issues to be resolved. No agreement has been reached with Telecom in regard to the telecommunications service obligation. I have only just received input from the Telecommunications Carriers Forum on this issue, and I intend to seek further input from other stakeholders. The Government will therefore be further considering the telecommunications service obligation over the next month or two.

Pita Paraone: Tēnā koe, Madam Speaker. Does the Minister have any concerns that the new telecom entities will retain their present monopoly position following separation, and what checks are in place to ensure that competition and fairness remain in the telecommunications market?

Hon DAVID CUNLIFFE: The robust three-way operational separation of Telecom removes both the ability and the incentive for key divisions of Telecom to discriminate between their own retail divisions and competitors. That will create a level playing field at the wholesale level, allowing more players into the retail market and meaning greater choice and lower prices for consumers.

H V Ross Robertson: Can the Minister therefore tell the House how Monday’s announcement that Telecom will be split into three stand-alone business units will help our economy?

Hon DAVID CUNLIFFE: As I said, this is only part of the Government’s telecommunications strategy, and we will be rolling out further policy initiatives in months to come. The operational separation of Telecom will increase competition and boost the number of people able to access broadband-based products throughout New Zealand. I am pleased to say that Telecom is committed to the accelerated roll-out and delivery of advanced broadband services to cities and towns of more than 500 lines by 2012. Telecom expects 84 percent of lines to be capable of a speed of 10 megabytes a second, and 89 percent to be capable of 5 megabytes a second. This will be a win-win for the economy, as broadband is a key driver of productivity and innovation.

I seek leave to table an article from the New Zealand Herald: “Industry welcomes Telecom separation plan”.

 Document, by leave, laid on the Table of the House.
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Hon DAVID CUNLIFFE: I seek leave to table a favourable editorial from the Dominion Post dated 1 April.

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

Hon DAVID CUNLIFFE: I seek leave to table a recent article in the “Business Herald” setting out the basis for Telecom’s three-way operational separation.

 Document, by leave, laid on the Table of the House.
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Hon DAVID CUNLIFFE: I seek leave to table an article from today’s “Business Herald” noting that Telecom will be forced to maintain rural telecommunication services.

 Document, by leave, laid on the Table of the House.
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Hon DAVID CUNLIFFE: I seek leave to table a press release from Telecom New Zealand hailing a new era for telecommunications.

 Document, by leave, laid on the Table of the House.


2. Electoral Finance Act—Reporting of Offences

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2. Hon BILL ENGLISH (Deputy Leader—National) to the Minister of Justice: Is it the Government’s policy that if the Electoral Commission believes an offence has been committed under the Electoral Finance Act 2007, it must report this to the police, unless the commission believes the offence is so inconsequential that there is no public interest in doing so?

Hon Dr MICHAEL CULLEN (Deputy Prime Minister) on behalf of the Minister of Justice: That is the purport of section 111 of the Electoral Finance Act.

Hon Bill English: Is the Minister aware that the Electoral Commission has ruled that Labour breached the Electoral Finance Act by not having an authorisation statement on its We’re Making a Difference to Everyone booklet; if so, does she expect the commission to refer this matter to the police?

Hon Dr MICHAEL CULLEN: I understand the Electoral Commission has determined not to send the matter to the police.

Hon Bill English: Is she aware that the Electoral Commission has not said that Labour’s breach is inconsequential but merely that it is the first offence, and therefore the commission is, in fact, obliged by the Electoral Finance Act to refer this matter to the police?

Hon Dr MICHAEL CULLEN: The Electoral Commission is an independent body and acts independently.

Hon Bill English: What did the Government intend by the use of the term “inconsequential” when the Minister introduced it in her own Supplementary Order Paper to the Electoral Finance Act, and does she think that spending hundreds of thousands of dollars publishing a booklet designed to get people to vote for the Labour Party is inconsequential, or is it inconsequential only when Labour is spending the money?

Hon Dr MICHAEL CULLEN: This pamphlet was prepared last year. It points out things like the fact that in 1999 Labour restored superannuation, it has introduced zero interest on student loans, and the number of young people receiving the unemployment benefit has dropped from 17,514 in 1999 to 990 in 2007. It is true, of course, that these are not inconsequential achievements, but the commission determines its own conclusions.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. It will not be apparent to the public, because often the House noise is not relayed through the microphones as it is inside this Parliament, but, frankly, we could not hear a word of the Minister’s answer, and it is pointless having question time if half of the House cannot hear what is going on.

Madam SPEAKER: Yes, I agree with the member. The voices of Chester Borrows, David Bennett, and Chris Auchinvole were extraordinarily loud in the interventions, to make sure that other people did not hear. If it continues in future, those members will be asked to leave the House.

Hon Bill English: How, when this is, in fact, the second warning the Labour Party has had—the first one being when the Electoral Commission had to correct Labour Party secretary Mike Smith, who misled the public about the advice he had been given, and now it has had another warning on this booklet—does the Minister think it looks to other political parties and to the public that after two flagrant breaches of the Act, there is still no referral to the police of Labour’s activities?

Hon Dr MICHAEL CULLEN: I would have thought that the National Party would feel greatly relieved, given that it prepared a DVD last year without an authorisation on it that has been distributed this year, and therefore National has committed exactly the same offence, which, hopefully, the Electoral Commission will make the same decision on. What I think the decision of the commission has shown is that it is very important for parties to err on the side of caution, and to put authorisations on everything they put out, and, secondly, to be very careful about redistributing information prepared last year and re-releasing it this year. By no means is this pamphlet prepared by the Labour Party the only offender, in that regard.

Hon Bill English: Why is it that Labour always seems to get a “get out of jail free” card when it comes to breaches of the electoral law, like it did after the 2005 election, when it promised before the election to count the pledge card in its electoral expenses, then after the election it wrote to the Electoral Commission and withdrew that promise, and despite the fact that the police, deciding there was a prima facie case against Labour, decided not to prosecute?

Hon Dr MICHAEL CULLEN: One might well ask, in response, why a State-owned organisation failed to demand the GST owed to it by the National Party, which got out of jail by giving some money to a charity, and then attacked New Zealand First for attempting to give money to a charity in a similar situation.

Rt Hon Winston Peters: So that we can have some idea of what is reasonable and fair and equal in this business, has the Minister received any reports from the foreign-owned media in this country as to its raving and ranting about the National Party’s actions by way of criticism, or has there been from the foreign-owned media, in the main, a deafening silence on the National Party’s actions, which were, after all, a crime?

Madam SPEAKER: I do not think there is any ministerial—[Interruption] Order!

Rt Hon Winston Peters: Point of order.

Madam SPEAKER: Would the member be seated. I want to be clear. Your question asked for reports. Could you please repeat the question.

Rt Hon Winston Peters: Has the Minister received any reports on the acceptance of the mainly foreign-owned print media in this country in its view of the National Party’s actions, which were, after all, a crime, despite the fact that it paid the money to charity—in short, one has a crime and a charitable payment and the other has a botch-up by Ministerial Services, and we are responsible; what is fair about that?

Madam SPEAKER: The Minister is not responsible for National Party actions.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. Three times in the last 3 minutes Bob Clarkson MP has referred to “you”—“your” this and “your” that. If I were associated with Blue Chip, I would not be saying too much about anybody, at this point in time. He has brought you into the debate three times.

Madam SPEAKER: If the member wants to make his interjections, would he please make them rarely, appropriately, and quietly.

Hon Peter Dunne: I raise a point of order, Madam Speaker. I am sitting very close to the member here, and I distinctly heard him ask, on two occasions, whether the Minister had received any reports about certain circumstances. Do I take it from your ruling that because those circumstances related to, in this instance, the National Party, it is not now in order to ask Ministers questions about whether they have received reports about bodies for whom they have no responsibility? That is the import of your decision.

Madam SPEAKER: Yes, that has always been the case. One can ask for reports, but they must be reports within the ministerial responsibility. Ministers are not responsible for actions of political parties.

Hon Bill English: Can the Minister confirm that the three parties that pushed through the Electoral Finance Act—Labour, New Zealand First, and the Greens—have each so far this year breached the authorisation provisions of the law; so how can it be fair that although Labour has got away with a slap on the hand with a wet bus ticket because it has the first case, New Zealand First and the Greens may well have to suffer referral to the police and prosecution?

Hon Dr MICHAEL CULLEN: The Electoral Commission is independent and makes its own decisions, and I am not going to make comments that predetermine what those decisions should be. I do note that the National Party distributed a DVD this year that has no authorisation on it.

Hon Dr Nick Smith: Produced last year.

Hon Dr MICHAEL CULLEN: So was this pamphlet produced last year, I tell Dr Smith; that is the point. Pots and kettles should get out of this place.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. Mr English made an allegation that we in New Zealand First had breached the Electoral Act but provided no substance or evidence for that; he just got up in the House and said it.

Hon Bill English: That is not a point of order.

Rt Hon Winston Peters: It is a point of order. If he is going to accuse a party of breaching some law, that is likely to lead to disorder when it is demonstrably, palpably untrue.

Hon Bill English: Yes, I think on one day this week I produced actual evidence of billboards that had been put up by New Zealand First in Tauranga, with no authorisation on them, at all.

Madam SPEAKER: These are matters of debate—these are matters of debate.

Hon Bill English: Can the Minister tell the House whether it was the Government’s intention that under “the law of common sense”, as articulated by the Minister of Justice, the Labour Party would be allowed to breach the law three times now this year and suffer no penalty, but everyone else would have to keep the law, and if they break it—even if it is New Zealand First and the Greens—the Electoral Commission will refer them to the police?

Hon Dr MICHAEL CULLEN: If the Electoral Commission refers the National Party to the police on the basis of this DVD, then I suspect that the answer would have to be yes—but it has not done so.

Rt Hon Winston Peters: Is it a fact that because of legislation passed post the 2005 election, there is no money to be paid back to the taxpayer that, if that were the case, would not attract gift duty, which is the reason why some parties have decided to send the money to charity—is that not in fact the legal position, as set out by Tony Molloy QC—

Hon Dr Nick Smith: Yeah, right!

Rt Hon Winston Peters: —not a dumbo like that fellow over there, who is complaining about his defamation costs, and whingeing and whining because he cannot face one case? I have faced nine, and have no trouble with it.

Madam SPEAKER: No, the member has asked his question but his question contained the seeking of a legal opinion. The Minister is not responsible for legal opinions, but if he wants to make any other contributions he is free to do so.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. If a Minister has ushered a piece of legislation through this House, and I have asked a question as to its effect, surely I am not asking for a strictly legal opinion; I am asking what the legislation was intended to achieve. I am asking whether its effect, when passed, is that such a payment is likely to attract gift duty, given that there is no place in our legislation, constitutionally, for that money to be paid to. It is that simple. That is what the legislation, in terms of the opinion of Tony Molloy QC, is in fact achieving. So if the media do not understand that, and if this House is not able to understand that, then, frankly, we are limiting the reason why we have the passage of a bill—so that there is some general understanding by the members of the House and the public as to its effect.

Madam SPEAKER: By the way the question was framed, I think it was framed as though a legal opinion was required on a specific set of facts. That is why I have ruled accordingly.

3. Wind Farm Application—Unison Networks

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3. TE URUROA FLAVELL (Māori Party—Waiariki) on behalf of Dr PITA SHARPLES (Co-Leader—Māori Party) to the Minister for the Environment: What are the “national significance” factors that prompted him to call in the application filed by Unison Networks Limited to establish a wind farm near the Te Waka Range in Hawke’s Bay?

Hon Dr MICHAEL CULLEN (Deputy Prime Minister) on behalf of the Minister for the Environment: The criteria on which I made the decision are listed under section 141B(2) of the Resource Management Act 1991, which includes consideration that the proposal could assist with New Zealand meeting its obligations under the Kyoto Protocol by reducing carbon dioxide emissions overall on a national scale.

Te Ururoa Flavell: What concerns has he received from Ngāti Hineuru and Ngāti Tū regarding the proposed wind farm of up to 44 turbines in the vicinity of the Te Waka Range?

Hon Dr MICHAEL CULLEN: Ngāti Hineuru and Ngāti Tū will be able to make submissions to the Environment Court, because the matter is being referred to the Environment Court. The member will be aware that a previous application was rejected by the Environment Court, and that is another reason why it is sensible not to go through the Hastings District Council again. The council approved it and sought to have the matter called in and referred on.

Russell Fairbrother: Has the Minister seen any comments on approaches to reducing emissions on a national scale?

Hon Dr MICHAEL CULLEN: Yes, indeed I have. Just within the last few days I have seen reports that National’s transport spokesperson—

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. The question that has been asked is well outside the primary question. The primary question was specifically about a wind farm and the resource consent process. The question from Mr Fairbrother is a very generic question about emissions that should probably be directed at the Minister responsible for Climate Change Issues, and it is certainly well outside the primary question.

Hon Dr MICHAEL CULLEN: Supplementary questions may arise out of the answer given by Ministers, and I refer to the phrase in my answer “reducing carbon dioxide emissions overall on a national scale.”

Madam SPEAKER: Yes, I think that that is correct, given the nature of the answer. I also take Dr Smith’s point, however, as the question was phrased. But the Minister is free to give the answer and supplementary questions may come as a result of that.

Hon Dr MICHAEL CULLEN: Yes, I have seen reports and comments that imply, first of all, that global warming is not occurring—indeed, global cooling is occurring, according to Dr Lockwood Smith—

Hon Dr Nick Smith: Not true.

Hon Dr MICHAEL CULLEN: We know that it is not true, but Dr Lockwood Smith does not know that. I have also seen reports that Mr Maurice Williamson refused to comment on climate change; he wanted to stay a member of the National Party.

Te Ururoa Flavell: Is the Minister aware that Unison Networks has already gone through the process of appealing the decision of the Environment Court to the High Court and now to the Court of Appeal on an almost identical application, thereby exhausting local opponents to the scheme; and what leverage does he have as Minister to ensure that the Resource Management Act process is protected from abuse?

Hon Dr MICHAEL CULLEN: Unison Networks is perfectly able to submit a new application and to have that application considered. Calling in an application and referring it directly to the Environment Court, of course, actually reduces costs for those who wish to oppose the project, whereas if the matter had gone to the Hastings District Council and hearings had been there, had perhaps been approved there, and had then gone on to the Environment Court, there would have been two stages at that point, which would have involved both Ngāti Hineuru and Ngāti Tū in terms of additional cost.

4. Taxation—Penalties

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4. Dr the Hon LOCKWOOD SMITH (National—Rodney) to the Minister of Revenue: Does he stand by his statement that “The idea behind the changes is to have tax penalties that reflect the seriousness of the offence, since people comply with the law more willingly when they see it as reasonable”; if not, why not?

Hon PETER DUNNE (Minister of Revenue) : Yes.

Dr the Hon Lockwood Smith: Is it correct that section 141A(4) of the Tax Administration Act, which his department administers, states: “Subsection (3) and section 141B(1B) do not exclude a taxpayer who makes a mistake in the calculation or recording of numbers in a return from being liable for a penalty for not taking reasonable care.”, and does that subsection not essentially mean that mistakes in recording numbers do not excuse people from penalties for not taking reasonable care?

Hon PETER DUNNE: The Income Tax Act and the Tax Administration Act relate to tax returns and the figures that apply in respect of those returns. In that narrow regard, the member is absolutely correct in the point he makes.

Dr the Hon Lockwood Smith: Is it correct that the penalties an ordinary taxpayer could face for not taking reasonable care include a 20 percent penalty for any shortfall, and, potentially, use-of-money interest at 14.24 percent, calculated daily; and does he believe that the Inland Revenue Department took reasonable care in calculating tax revenues for inclusion in the January 2008 Government accounts?

Hon PETER DUNNE: As I said in my previous answer, the provisions of the Income Tax Act and the Tax Administration Act relate to tax returns by taxpayers. The issues that the member is referring to relate to the calculation of figures by the Inland Revenue Department. They are not a tax return. I know that the member was trying to set me up, and I played along with his question. But the point is simply this: the report has been completed and tabled, the recommendations have been made, and they will be implemented.

Dr the Hon Lockwood Smith: Is it correct that the recent report Investigation of an Error in Tax Revenue Numbers shows that the Inland Revenue Department did not follow agreed procedure, had not adequately documented that procedure, and had made the same mistake again and again over a period of 7 months, and also shows that the $592 million error was discovered by somebody other than the Inland Revenue Department; and does he agree that had an ordinary taxpayer made those same errors, the Minister’s department would have treated him or her very differently from the way that it has treated itself?

Hon PETER DUNNE: Can I say again, in response to the member, that he is linking two things that are not related. I doubt that any taxpayer who had a tax bill of $600 million would in any way be described as ordinary.

Dr the Hon Lockwood Smith: Is it correct that full-time equivalent staff numbers at the Inland Revenue Department have increased by over 25 percent since 2002, with departmental funding increasing by 56 percent over that same time period—to just under $600 million a year—and that the department’s latest annual report shows that staff turnover is consistently below the Public Service average; does not this suggest that the recent errors show a lack of prioritisation and attention, rather than a lack of resources?

Hon PETER DUNNE: What the recent errors show is that a very specialised unit of around half a dozen staff had a higher than normal rate of staff turnover. We do need to put better procedures in place, and that point is acknowledged. The report drew attention to that, and it will happen. I do not expect those types of situations to recur in the future.

Dr the Hon Lockwood Smith: Can he understand why the public could be angered by his department’s low-key response to its own major errors, when a taxpayer who had been released from 6 months’ imprisonment for only 3 weeks was told by one of the Minister’s departmental officials, in a telephone message about outstanding tax returns that was left on the cellphone of the taxpayer’s 18-year-old daughter: “I’m sure you don’t want to go back where you came from, so if you would give me a call …”, etc.; is that the standard for the way that his department now treats the public, and is it consistent with the way that it treats itself?

Hon PETER DUNNE: I think there were five questions in that supplementary question. Let me make this point: I am not privy to an individual’s tax affairs, but the type of conduct that the member referred to is unacceptable, and if he is prepared to share those details privately with me, I will undertake to follow it up. I do understand also the point that there may be a level of public amusement at what has happened. The fact of the matter is that the $600 million sum was identified, the procedures by which that error occurred have been identified, and they are in the process of being corrected. The final point I would make is that no loss was suffered as a consequence of that error. It is not in any way like the situation where taxpayers fail to meet their responsibilities.

Rt Hon Winston Peters: On the issue of public servants’ accountability and responsibility, how does such an action compare with that of another public servant who told the young people of this country that he would get rid of student fees totally, then brought in student loans and called it keeping his promise?

Hon PETER DUNNE: I think that is something Dr Smith should answer, not me. But I do make this point: in this instance, when it first became clear to us that there were some unusual factors relating to these figures, an inquiry was undertaken internally and the mistake was identified, and an independent inquiry has now been held. The consequences of that inquiry will be implemented. There will be a further independent inquiry in 6 months’ time, to make sure all is working well.

5. Superannuation Fund—Value and Current Investment

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5. R DOUG WOOLERTON (NZ First) to the Minister of Finance: What is the current value of the New Zealand Superannuation Fund, and how much of the fund is currently invested in New Zealand?

Hon Dr MICHAEL CULLEN (Minister of Finance) : As at 29 February 2008 the New Zealand Superannuation Fund’s total assets were NZ$13.5 billion; 26.2 percent of total assets are invested in a range of asset classes in New Zealand.

R Doug Woolerton: In light of the Minister’s statement yesterday to the House that the very substantial inflow of foreign money into the economy—around $90 billion in the last 5 years—reflects the “high level of dependence by New Zealand offshore borrowing for its investment purposes”, has the Minister considered increasing the funds invested in the New Zealand economy to reduce our dependence on foreign money?

Hon Dr MICHAEL CULLEN: The fund operates at double arm’s length from the Government. The Minister of Finance is not in a position to start directing the New Zealand Superannuation Fund about where it invests its money. Both the board of the fund and the fund’s appointment of fund managers are designed to ensure that people who are experts in superannuation fund management are operating the fund.

Hon Bill English: Can the Minister confirm that his actions of making a last-minute arbitrary intervention in the bid for Auckland airport had the effect of creating uncertainty for all investors, but particularly for Kiwi mums and dads who thought they were buying a blue-chip stock of good value, only to find the Minister of Finance trashing its value?

Hon Dr MICHAEL CULLEN: The term “blue-chip” is particularly unfortunate at the present time, and I am sure Mr Clarkson feels most embarrassed by the use of that particular piece of terminology. The member is pre-empting whatever the ministerial decision may be around Auckland airport.

Hon Mark Gosche: Has the Minister seen any reports that the Government should consider privatising State-owned enterprises so that there are more companies to invest in on the New Zealand Exchange?

Hon Dr MICHAEL CULLEN: Last week there was a very strange comment from Mr English about safe investments for people to invest in in New Zealand. It seemed to be mentioned in the context of State-owned enterprises and generating privatisation of that. This may explain the rather strange series of meetings that his sleeping partner on the front bench has been having with merchant banks recently.

R Doug Woolerton: Would the Minister agree that if a good part of the interest extracted from foreign investments—around $65 billion in the last 5 years—is not shipped overseas but instead reinvested in the New Zealand economy, as he stated yesterday, then foreign ownership of the economy would only grow as profits increase, and would he agree that increasing the superannuation fund’s investment in New Zealand would help ensure that less of the economy will be lost to foreign investors?

Hon Dr MICHAEL CULLEN: There is a lot of chicken and egg stuff in here. In order to deepen New Zealand’s capital markets, one needs both more savings in New Zealand and a range of others things to be occurring. Of course, one of the things that is true about the New Zealand market is that a very large number of countries do not list on the stock exchange, so the amount of equity value that is available for investment in New Zealand is relatively small, and to a large extent superannuation funds do not tend to invest directly into businesses. That is one of the more surprising aspects of the Canadian pension fund bid.

Hon Tariana Turia: Is the Minister aware that the Guardians of New Zealand Superannuation announced last October that they would divest the $37.6 million they had invested in tobacco stocks from the fund because it was inconsistent with their responsible investment standards, and would he not consider that this provided a precedent for the Government to remind the New Zealand Superannuation Fund about the value of ethical investments?

Hon Dr MICHAEL CULLEN: It is fair to say that there is ongoing conversation about the value of ethical investments. The New Zealand Superannuation Fund has appointed a full-time adviser on ethical investments and is continuing to review all its investments in light of that issue.

R Doug Woolerton: Would the Minister consider encouraging or instructing the New Zealand Superannuation Fund to more actively protect, or outright purchase, strategic assets such as Auckland airport, thereby ensuring that the asset remains in New Zealand ownership and control rather than allowing foreigners to take another slice of the New Zealand economic pie?

Hon Dr MICHAEL CULLEN: The governing legislation for the Superannuation Fund places a limit on the amount the fund can own of any particular business. That, of course, is because once the fund goes beyond that limit it starts to have to become an active part of the governance structures of those individual businesses. It is probably better that the New Zealand Superannuation Fund is not stretched in that way but is able to concentrate on a very broad spread of investments.

6. Election Advertising—Electoral Commissioners

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6. Hon BILL ENGLISH (Deputy Leader—National) to the Minister of Justice: Does she stand by her statement, in relation to whether particular material constitutes election advertising, that “It is the Electoral Commissioners’ view that counts.”?

Hon Dr MICHAEL CULLEN (Deputy Prime Minister) on behalf of the Minister of Justice: It is clear that the Electoral Commission has a central role in determining what is election advertising.

Hon Bill English: Is it the Government’s policy that political parties should be able to spend taxpayers’ money on election advertisements in election year?

Hon Dr MICHAEL CULLEN: Two different forms of legislation govern this matter. The Parliamentary Service Act governs what members of Parliament can spend money on. The Electoral Commission determines what is election advertising. Matters that are properly authorised as being for parliamentary purposes do not count as election advertising for the returns of expenses.

Hon Bill English: Can the Minister confirm that the Electoral Commission has ruled that the Labour Party’s We’re Making a Difference to Everyone booklet was paid for out of parliamentary funding and that it constitutes an election advertisement, thereby making it quite clear that taxpayers’ money has been used for Labour’s election-year advertising?

Hon Dr MICHAEL CULLEN: As with this DVD, the booklet was prepared last year. It covers and contains simple statements of fact about what the Government has done. I note that a very large number of communications from National MPs to constituents about a range of matters of National Party policy are properly paid for out of Parliamentary Service funding.

Hon Bill English: Is it the Government’s policy that spending on election advertising in an election year should be subject to a cap; if so, can the Minister give any reason why the cost of Labour’s booklet, funded by taxpayers’ money, should not be declared in Labour’s return of election expenses and therefore count towards its election expenses cap?

Hon Dr MICHAEL CULLEN: I wish the member would keep holding up high We’re Making a Difference to Everyone. If he holds it right up, the camera will get a very clear view of it. That is probably why, yet again, Mr Key is chewing his fingernails in the Chamber at the present time. The Electoral Finance Act provides a very broad definition of what electoral advertising is considered to be. Parliamentary purposes, as the member himself pointed out in the debate many times, cover a wide range of activities by members of Parliament. Members of Parliament do not suddenly become non-politicians because it is an election year.

Rt Hon Winston Peters: Has the Minister received, in all of this comparative debate about the parliamentary spending of taxpayers’ money, any reports as to the amounts of money the parties are spending, and which party spends the most?

Hon Dr MICHAEL CULLEN: It is well known that the National Party receives the lion’s share of Parliamentary Service funding. What National members have never told us, because they spent the lot in 2005, is what they spent it on. We know that in 2002 they paid for advertising in newspapers out of Parliamentary Service funding under Mr English. They have never told us what they spent the money on in 2005. It remains a secret, which they keep hidden.

Hon Bill English: Can the Minister confirm that it is Government policy that Government departments and other instruments of the Crown cannot permit public money under their supervision to be spent on election advertisements; if so, how can the Parliamentary Service permit the Labour Party to publish this election advertisement, which I am holding up, out of parliamentary funding, now that we know that it is an election advertisement?

Hon Dr MICHAEL CULLEN: The Parliamentary Service is not a Government department. It is a statutory commission, and all parties are represented on it.

Hon Bill English: Can the Minister confirm that if Labour’s use of taxpayers’ money for this election advertisement, which I am holding up, does not count against the election spending cap, that makes a mockery of the Electoral Finance Act because it means that alongside the election expenses that are tightly monitored there is now a large slush fund of millions of dollars that political parties can spend in an election year on things like Labour’s booklets, just like its pledge card from the last election?

Hon Dr MICHAEL CULLEN: Since the National Party gets roughly twice as much money as the Labour Party out of the Parliamentary Service, I do hope it will spend it on Labour booklets, as he just promised.

Rt Hon Winston Peters: I raise a point of order, Madam Speaker. You made a ruling that members could put the name of the party they belong to on their parliamentary boxes. But I do not think it should extend to advertising in the way that the Māori Party members are doing. Their parliamentary boxes have on them “The Māori Party is 2 meke”, which means that they are too much. They cannot do that any more than the National members can have a sign saying they are too inexperienced, or the ACT members can say they are too absent from the House. I think it is inappropriate, because it abuses the ruling—

Hon Bill English: New Zealand First is on 2 percent.

Rt Hon Winston Peters: It might be now, but I can tell the House that the National members will be climbing over glass to get to us after the election. That is the experience of New Zealand First.

Madam SPEAKER: As the member knows, that is not a point of order. However, it is a matter he may raise with me outside the House.

7. Medicines, Dietary Supplements, and Natural Remedies—Adverse Reactions

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7. SUE KEDGLEY (Green) to the Minister of Health: How many adverse reactions to medicines were reported last year in primary and hospital health care, and how many to dietary supplements and natural remedies?

Hon DAVID CUNLIFFE (Minister of Health) : It is not possible to accurately compare the two areas as, unlike the situation with medicines, there is no formal reporting mechanism for adverse reactions to natural remedies and dietary supplements. These are captured only incidentally through the medicines formal reporting system.

Sue Kedgley: Given the comparatively low risk of natural health care, is he concerned that Medsafe has hired a team of auditors to target manufacturers of natural health products who opposed the Therapeutic Products and Medicines Bill last year, threatening them with prosecution for saying, for example, that lavender oil may help heal burns; and given the recent public admission by the head of Medsafe, does the Minister agree that the purpose of the crackdown is not safety but rather to demonstrate the need for new legislation, and that this looks like a retaliatory strike, or utu?

Hon DAVID CUNLIFFE: I completely reject the last characterisation, but I would say that although Medsafe is a statutory regulatory agency, I would expect it to discharge its responsibilities in a way that is proportionate, appropriate, and well understood.

Lesley Soper: What approach does the Minister expect Medsafe to follow when looking at complementary medicines?

Hon DAVID CUNLIFFE: I would expect Medsafe to adopt a proportionate approach whereby low-risk medicines, such as the majority of complementary medicines, have a lower level of compliance costs than medicines with a greater potential to cause harm. I have made this clear to Medsafe, and I look forward to a further briefing on these matters. In addition, I have invited Medsafe to report back to me on its fees framework, and the level of fees charged to different types of manufacturers. I am advised, however, that the majority of complementary medical producers believe that appropriate regulation is a good thing, and that it is in their interests.

Sue Kedgley: Can the Minister explain why the manufacturer of these herbal teas—which have been used safely for centuries—has received letters from Medsafe saying it is a breach of the Medicines Act to use the words “digestive ease tea for soothing and settling the stomach” on a label, when this wording has been previously approved by Medsafe; and has there been a change of Government policy so that it is now a crime to say that a particular tea can soothe the stomach?

Hon DAVID CUNLIFFE: No and no.

Sue Kedgley: Is he aware that Medsafe is also targeting natural health practitioners and telling them that it is illegal for them to imply that any product they recommend to a client has a therapeutic purpose; and does he agree that if a natural health practitioner cannot recommend a particular remedy, then he or she will not be able to practice; and is this the Government’s intention to wipe out natural health practitioners in New Zealand?

Hon DAVID CUNLIFFE: I am sure that all members of the House share an interest in building genuine understanding of these complex issues in the interests of well-being and safety, and not to fuel misunderstanding of the issues. But I repeat that although Medsafe is a statutory regulatory agency, I would expect it to discharge those responsibilities in a way that is proportionate, appropriate, and well understood.

Sue Kedgley: I thank the Minister for his answer, and ask whether he can also reassure the industry that instead of allowing Medsafe to continue on with its witch-hunt of the natural health industry, he will commit to sitting down with the industry and coming up with a sensible New Zealand - based system of regulation, such as the industry and, indeed, most politicians in this House have been calling for, for many years?

Hon DAVID CUNLIFFE: Again, although I reject the contention of a witch-hunt, I can confirm that I am considering a range of options to engage more directly with the industry. It is important to build a greater level of mutual understanding of this situation.

Rt Hon Winston Peters: Does the Minister think it is ridiculous and totally false of Medsafe to rule out, for example, a claim such as that eating oranges will avert the onset of scurvy, which everyone has known to be the case for centuries, yet it will not allow even that to be said?

Hon DAVID CUNLIFFE: I expect Medsafe to act in a way that is proportionate, appropriate, and well understood.

Sue Kedgley: I seek leave to table some of the letters that Medsafe has been sending to dozens of practitioners and manufacturers around the country.

 Document, by leave, laid on the Table of the House.


8. Housing Affordability—Hobsonville Development

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8. PHIL HEATLEY (National—Whangarei) to the Minister of Housing: How does she reconcile the definition of “affordable housing” in the Affordable Housing: Enabling Territorial Authorities Bill as being “affordable to low and moderate income earners”, with the Hobsonville development’s 500 “affordable homes” that Housing New Zealand Corporation says will “cost approximately $350,000 and be targeted at households earning about $70,000 per year”?

Hon MARYAN STREET (Minister of Housing) : By recognising that there is a range of ways of helping a range of people into affordable homes.

Phil Heatley: How does the Minister expect builders to build affordable houses under her affordable housing bill, when her own flagship Hobsonville scheme cannot do it, even with the economies of scale that it has, without it being propped up by even more Government schemes?

Hon MARYAN STREET: Affordability can be created by a Government that chooses to intervene actively to assist first-home buyers—not by an Opposition whose only solution is, possibly, to propose its self-appointed housing expert, Bob Clarkson, as the gap filler.

Dr Ashraf Choudhary: Has the Minister seen any reports concerning affordable homes in Hobsonville that she finds difficult to reconcile?

Hon MARYAN STREET: Yes; I have seen two reports that describe affordable housing in Hobsonville variously as economic vandalism that should be scrapped and as something to be welcomed. These reports both come from John Key, and I do have trouble reconciling them.

Phil Heatley: Is the Minister going to prop up every single other affordable house in the country that she expects private builders to provide, if she is going to prop up her affordable houses at Hobsonville with compounding shared-equity schemes?

Hon MARYAN STREET: There are ways and ways of addressing housing affordability. One of them is to take initiatives like this—engaging with other providers of housing to assist, in partnership, to provide affordable houses.

Phil Heatley: Are the Auckland councils, Local Government New Zealand, and the Christchurch, Wellington, and Nelson councils all saying her affordable housing bill will “push up rates” and is “pushing Government responsibilities on to councils” because they resent her Government’s 8-year record of falling homeownership, compounding red tape, low after-tax income, and skyrocketing mortgage rates?

Hon MARYAN STREET: If the member got out more, he would discover that a number of territorial authorities actually approve of the intention of the bill, and have said so publicly.

Phil Heatley: Do builders who say that the Minister’s solution to the need to boost cheap houses is unworkable and will “push up the prices of other houses” say that because they resent her Government’s 8-year record of doing nothing about falling homeownership, doing nothing about compounding red tape or low after-tax incomes, and doing nothing about rising interest rates?

Hon MARYAN STREET: There are ways and ways of addressing housing affordability, and I invite the member to watch this space.

Phil Heatley: Why did the Labour Government not do something years ago about falling homeownership, compounding red tape, low after-tax incomes, and rising interest rates, so that it would not have to roll out these roundly criticised fringe schemes in election year?

Hon MARYAN STREET: The Government is proceeding on a comprehensive suite of options to address this issue. I am really sorry that the member continues to fail to get it.

Hon Ruth Dyson: Are the Auckland, Wellington, and Christchurch local authorities that the member Phil Heatley referred to in his previous supplementary question the Auckland City Council, which required central government to buy out its previously publicly owned houses to ensure the security of tenure of the mainly pensioner tenants; the Wellington City Council, which has had a $200 million partnership with central government; and the Christchurch City Council, which just put its rents up 24 percent, saying that that was all right because central government would pay the tenants more in accommodation supplements?

Hon MARYAN STREET: Those are the same local authorities, and I would add the Nelson council to the mix. I would say, beyond that, that my visits to each of those territorial authorities—and I invite the member to do the same kind of legwork—have proven to me that they are very supportive of the intention of, and the mechanism in, the bill.

Phil Heatley: I seek leave to table a New Zealand Herald article that refers to the bill pushing responsibilities on to the councils.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is objection.

Phil Heatley: I seek leave to table a New Zealand Herald article that refers to the bill pushing up rates.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes.

Phil Heatley: I seek leave to table a document from the Property Council that refers to the housing bill pushing up the price of other houses.

Madam SPEAKER: Leave is sought to table that document. Is there any objection? Yes, there is.

Hon MARYAN STREET: I seek leave to table a press release from the Waitakere City Council welcoming the initiatives in the affordable housing bill.

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

9. Taxation—Charitable Donations

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9. RUSSELL FAIRBROTHER (Labour) to the Minister for the Community and Voluntary Sector: How will the tax changes introduced on 1 April 2008 support the community and voluntary sector?

Hon RUTH DYSON (Minister for the Community and Voluntary Sector) : Changes to tax rules on charitable donations will be a real boost to charities and other non-profit organisations. New Zealanders are already generous with their time, money, and in-kind donation. These changes support and encourage that generosity. Our community organisations provide valuable services and support in a wide range of areas. This is another way in which our Government is working in partnership with the community and voluntary sector to deliver the best possible outcomes for our individuals, families, and communities.

Russell Fairbrother: What else is the Government doing to support the community and voluntary sector?

Hon RUTH DYSON: The Labour-led Government is rolling out a new funding model for these community organisations, which provide essential services for vulnerable families, children, and young people. Under that new model we are investing $446 million additional funding over 4 years in community organisations. The new model will support early intervention, working together, and a clear focus on outcomes for families.

Paula Bennett: Can we now assume that the Government no longer holds the view that National’s policy on the tax treatment of charities is Tory charity, given the Government’s decision to adopt National’s policy that was first announced in February 2007, or is this just the cut and paste Government?

Hon RUTH DYSON: No, the member should not assume that, in the same way she should not have assumed that full funding was the same as the policy announced by John Key, which was to encourage community organisations to put in a bid in a competitive tendering round at a full-funding level, knowing full well they would never be granted that contract if they followed that process.

10. Culture and Heritage, Ministry—Confidence

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10. Dr JONATHAN COLEMAN (National—Northcote) to the Minister for Arts, Culture and Heritage: Does she have confidence in the Ministry for Culture and Heritage?

Hon JUDITH TIZARD (Acting Minister for Arts, Culture and Heritage) : Yes.

Dr Jonathan Coleman: Does she agree with Dr Cullen, who told a broadcasting conference last week that Trevor Mallard needs to look at accountability issues with regard to Television New Zealand (TVNZ), because as Dr Cullen said: “They receive funding for their charter programmes, but at the moment it’s not clear where the money goes.”?

Hon JUDITH TIZARD: Yes.

Dr Jonathan Coleman: How can that answer mean anything other than that the Minister has been failing to do her job, given that accounting for TVNZ charter money is a specific responsibility of her ministry; and is not the confusion and mess around the spending of charter money the result of her not doing her job properly?

Hon JUDITH TIZARD: The Ministry for Culture and Heritage answers to five Ministers, and the confusion is in that member’s mind. What Dr Cullen clearly said was that Trevor Mallard as Minister of Broadcasting is responsible for portfolio matters relating to broadcasting, including the monitoring of the charter. There is deep confusion—a bit like Dr Brash not knowing about the Exclusive Brethren spending on his advertising.

Darien Fenton: Has the Minister seen any reports on the great work that the Ministry for Culture and Heritage is doing?

Hon JUDITH TIZARD: Yes. This is a wonderful ministry, which does an enormous amount of work. It was recently reviewed by the Government Administration Committee, which had no matters to bring to the House’s attention. In addition to that, the ministry monitors and supports over 19 agencies, and does work on a wide range of sports, cultural, heritage, and other issues, including digital and book-form publishing. It is a wonderful ministry that is doing a lot of good work.

Dr Jonathan Coleman: How can her answer to the first supplementary question mean anything other than that she is failing to do her job, because she cannot agree with Dr Cullen that the funding is not being monitored, then turn round and say that her ministry does monitor the funding; and is Labour not hopelessly confused on the issue of charter funding and broadcasting in general?

Hon JUDITH TIZARD: No. What Dr Cullen actually said was: “Broadcasting Minister Trevor Mallard needed to look at accountability issues with TVNZ.” What we do in this Government is look after our own portfolios.

Dr Jonathan Coleman: Would the Minister say whether TVNZ is wrong when it says Dr Cullen is “confused” and his comments are “interesting, given that TVNZ has commercial dividend obligations to the Government”; if TVNZ is actually wrong, what does that say about the confused relationship between this Minister, TVNZ, the TVNZ shareholding Minister, and the Minister of Broadcasting?

Hon JUDITH TIZARD: I would say that TVNZ spokeswoman Megan Richards was wrong when she said Dr Cullen was confused. What he was talking about was charter funding; what she was talking about was Te Māngai Pāho funding. I think she is deeply confused, and TVNZ should, indeed, in my view—and, I believe, in Dr Cullen’s view—be doing more about Māori broadcasting other than through Te Māngai Pāho funding, using its charter funding.

Dr Jonathan Coleman: Would the Minister explain to the House just exactly what the difference is in the television content on our screens after the charter compared with that before the charter; and how will it be different again after the so-called revised, redrafted charter, which is currently being worked on, is adopted?

Madam SPEAKER: I am searching for the ministerial responsibility, but we can have a general answer, perhaps.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. I ask you to apply some consistency. Earlier in the questions in the House you allowed questions of the Minister of Revenue about student policy of over a decade ago, you allowed questions from a Government member to another Minister in respect of issues that were well outside his ministerial responsibility, in respect of an energy question that was actually about a different area, and now when it comes to a question from a National member there is a different set of rules. I simply ask for some consistency.

Madam SPEAKER: No, I am sorry Dr Smith. As I said, this is a difficult area, because there are several ministerial responsibilities. I have allowed all the supplementary questions so far, though they have strayed over the boundaries, because I think it is important that answers are given. But the last supplementary question was specific to TVNZ and broadcasting. I also said that the Minister could give a general answer, but she is not responsible for that particular area.

Dr Jonathan Coleman: I raise a point of order, Madam Speaker. The Minister for Arts, Culture and Heritage is responsible for monitoring charter funding. That is what this whole question is about, and all those supplementary questions have been relevant and directed to that Minister.

Madam SPEAKER: I have given my ruling, Dr Coleman.

Hon JUDITH TIZARD: I think these questions indicate the extraordinary lack of experience that that member of Parliament has about how the Government operates. He does not understand, for example, that the Ministry of Economic Development does consumer affairs, commerce, tourism, and telecommunications, and it does not answer to one Minister for all of those areas, just as the Ministry for Culture and Heritage answers to the Minister for Arts, Culture and Heritage, to the two Associate Ministers for Arts, Culture and Heritage, to the Minister for Sport and Recreation, and to the Minister of Broadcasting. Responding to ministerial portfolios is a very normal Government operation.

Dr Jonathan Coleman: I raise a point of order, Madam Speaker. What this question actually illustrates is the Minister’s complete confusion about her responsibilities, and it is reflected completely in the confused broadcasting policy that the Government has.

Madam SPEAKER: Well, that may be the member’s view, but the ministerial responsibilities are set down in a sheet, as I understand it, for members to refer to.

11. Pacific Island Communities—Government Policies

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11. SU’A WILLIAM SIO (Labour) to the Minister of Pacific Island Affairs: Has she received any reports on how Pacific Island people in New Zealand are benefiting from the policies taking effect from 1 April 2008?

Hon LUAMANUVAO WINNIE LABAN (Minister of Pacific Island Affairs) : I have seen reports that show a number of significant initiatives that have come into force just this week are delivering for our Pacific Island communities. The date 1 April marked the commencement of employer contributions to KiwiSaver, and the tax credits for employers that go with them. We are supporting our Pacific Island people to develop a culture of savings and a plan for the future. Pacific Island workers are also benefiting from the ninth increase in 8 years to the minimum wage, and the company tax rate has been cut for the first time since Labour was last in office. Those developments, combined with the research and development tax credits, which also came into force on 1 April, allow businesses, including Pacific Island businesses, to invest more in their workers and in their long-term success. All these policies were opposed by National.

Su’a William Sio: What other reports has she received on the effectiveness for Pacific Island people of Government policy?

Hon LUAMANUVAO WINNIE LABAN: I have received the latest Ministry of Pacific Island Affairs report on the effectiveness for Pacific Island people of Government policy. It shows that as a result of initiatives, including the Work and Income Pacific Wave strategy, there has been a 47 percent decrease in the number of Pacific Island people receiving unemployment-related benefits in Auckland in the year to June 2007. The report—and this is really good news—also shows growth in Pacific Island tertiary level achievement, with the number of qualifications completed at Bachelor of Arts and postgraduate qualification levels between 2001 and 2005 increasing by 27 percent. The number of Pacific Island employees participating in industry training also increased, by over 11 percent, to June 2007. These people now have a more secure future, because of improvement in skills and training—[Interruption] Come on, get off the deficit thinking, you lot!

12. Social Development, Ministry—Commercial Contracts

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12. JUDITH COLLINS (National—Clevedon) to the Minister for Social Development and Employment: Is she satisfied that all commercial contracts awarded by the Ministry of Social Development provide good value for money?

Hon RUTH DYSON (Minister for Social Development and Employment) : Yes, I am satisfied that the Ministry of Social Development has policies in place for awarding contracts that are consistent with the Government’s rule and best-practice guidelines. This includes meeting the Government and public expectation of accountability, transparency, and value for money.

Judith Collins: Why does the Ministry of Social Development still outsource so much communications, public relations, and media management work, when it has more than doubled its in-house communications, public relations, and media staff from 23 in 2001 to, now, a whopping 54?

Hon RUTH DYSON: It seems to me that there are two parts to that question. The first is on the numbers of staff, and the second is on the outsourcing. In relation to the first part, it has been a very clear focus of our Government to ensure that people are aware of their entitlements, and a large part of that is involved with communication of those entitlements. In regard to the outsourcing, I do not have any difficulty with that work being outsourced, where there are short or fixed-term contracts required in specialist areas or in other areas of expertise that are not core functions of the ministry. That is unlike the Government in 1999, which spent $50,000 outsourcing a contractor to write the briefing to the incoming Minister. That, I would have thought, was core departmental business.

Sue Moroney: What are the principles for contracting social services, as set out in the guidelines for social services contracting?

Hon RUTH DYSON: The guidelines that are set out are to ensure that there is a limit on the amount where our open tender process is not required. There are exemptions, including the procurement of public health education and welfare services, and, as I said in answer to the primary question, the Government and public expectation of accountability, transparency, and value for money must be ensured.

Judith Collins: Why is the Ministry of Social Development still spending so much on consultants for communications, public relations, and media, when it spent $4 million on its own in-house spin doctors last year, just 6 years after Helen Clark said: “One is tempted to suggest that if some spent as much on core analysis as they do on public relations, the public interest might be better served.”; is Helen Clark not right, in that case?

Hon RUTH DYSON: I am satisfied that a large amount of time, expertise, and funding ensures that the majority of New Zealanders are now aware of the entitlements they are able to receive, and the support they can receive, from a social security agency.

Judith Collins: How can the Minister be sure that taxpayers are getting value for money with these contracts, when the Ministry of Social Development paid, for example, $99,226 to one consultant for a mere 6 months’ worth of communications advice, especially when there is no competitive process for awarding these contracts?

Hon RUTH DYSON: In the same way that the Audit Office is satisfied with the level of accountability. Given that that member is a member of the select committee where the financial reviews and estimates are considered, I would have thought she could have relied on the Audit Office process, as well.

Judith Collins: How can the Minister be sure that taxpayers are getting value for money when another consultant received almost $50,000 for 3 months’ worth of communications advice, and yet another received $50,000 for something called “strategic communications advice”—why is her ministry spending so much taxpayer money on spinning her message?

Hon RUTH DYSON: This is not about spinning a message, although if the member would like to ensure that the majority of New Zealanders—the 510,000 people, for example, who are getting an increase in their superannuation—are aware of the fact, I am enthusiastic about that, as well. People on benefits know that this year, as on 1 April every year, their benefit was adjusted to reflect the cost of living price increase. We did not need that communication in the 1990s, because the level of superannuation did not increase and the level of benefits did not increase

ENDS

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