Questions to Ministers

Tax System—Overseas Ownership of New Zealand Properties

1. FLETCHER TABUTEAU (NZ First) to the Minister of Revenue: Is he satisfied with all legislation regarding tax on property sales to foreigners?

Hon MICHAEL WOODHOUSE (Minister of Revenue): Yes.

Fletcher Tabuteau: Given that satisfaction, with the recent array of tax legislation, why are so many foreign buyers speculating in the Auckland housing market yet again?

Hon MICHAEL WOODHOUSE: I would be very interested in the information the member uses to frame that question. I do not believe there has been any material change in that. In fact, if there has been, it has been a slight damping on the interest of overseas buyers in Auckland.

Fletcher Tabuteau: Will the Minister not concede that foreign speculators have seen through the puffery, have dismissed the ineffectual tax legislation, and are now already back in force, with evidence—3,000 foreigners a month being issued Inland Revenue Department (IRD) numbers for the purpose of buying and selling property?

Hon MICHAEL WOODHOUSE: No, I would not. There are many reasons why people from overseas require an IRD number, and, if anything, the process has become more challenging in order to fulfil our obligations under anti-money-laundering legislation and the brightline test that the previous Minister brought in last year. [Interruption]

Mr SPEAKER: Order! Can I just ask that when the question has been asked and the answer has been given, could I have a little less interjection, particularly from New Zealand First members?

Fletcher Tabuteau: Will he at least acknowledge that he will need other more substantive measures to clamp down on this problem, as Auckland has had a high rate of properties being flicked for quick financial gain and, actually, money-laundering purposes?

Hon MICHAEL WOODHOUSE: What that demonstrates is that an irrational rant from a New Zealand First member does not a fact make. There is absolutely no substance—

Fletcher Tabuteau: I raise a point of order, Mr Speaker. I simply take offence at the statement from the Minister. [Interruption]

Mr SPEAKER: Order! The question was asked with quite a lot of—the question was asked in a way where I am not surprised with the answer being given, put it that way.

Phil Twyford: Why has he rejected the overwhelming majority of New Zealanders, who want a ban on foreign buyers, given that his tax rules already, in the words of Colleen Milne of the Real Estate Institute of New Zealand, seem to be having limited effect and the effect is transitory, and in the words of Jonno Ingerson of Quotable Value, saying that foreign buyers are back in the market?

Hon MICHAEL WOODHOUSE: There are three threads to that question. I will start with the middle one first. There is no evidence yet that the policies that have been put in place, which have just commenced, are going to do the things the member claims. The chief executive of Quotable Value did not say what the member has just claimed. To the first part of the question, this party—this Government—appreciates foreign investment. It does not reject people with Chinese-sounding surnames, and it has very balanced policies on investment.

David Seymour: In light of the scandalous influxes, why will the Minister not cut the crap and build a wall?

Hon MICHAEL WOODHOUSE: To the question of scandalous influxes, I remind the member that the number of residencies gained in New Zealand last year was about 15 percent lower than when the New Zealand First leader was the Minister of Foreign Affairs. I see no reason to build a wall.

Fletcher Tabuteau: On behalf of all New Zealanders, whether they were here last year or—

Mr SPEAKER: Order! [Interruption] Order! The member knows the rules. Simply ask a supplementary question. I am quite happy to move on if the member wants us to. Ask the question.

Fletcher Tabuteau: What measures does the Minister have in place to clamp down on money-laundering, given that financial transactions suspected of being linked to terrorism have almost doubled in the past 2 years, with the Auckland property market expected to go haywire yet again?

Hon MICHAEL WOODHOUSE: That goes well beyond the primary question. It is a question best asked of the Minister of Police, I would suggest. But I am satisfied that she has very good policies in place with New Zealand First to deter, detect, and prosecute money-laundering.

Fletcher Tabuteau: What specific legislation does the Minister have in mind to keep dairy land in New Zealand hands, given that the New Zealand Government cannot act to prohibit sales under the Trans-Pacific Partnership (TPP), accepting—

Mr SPEAKER: Order! This is a question to the Minister of Revenue. The question must, therefore, relate to the portfolio of revenue. I give the opportunity for the member to rephrase his question to include something of relevance to the revenue portfolio.

Fletcher Tabuteau: May I speak to your ruling?

Mr SPEAKER: No, you cannot; you can ask your question.

Fletcher Tabuteau: I asked the Minister of Revenue to outline what legislation—revenue legislation—he has in mind, considering we cannot prohibit—

Mr SPEAKER: Order! I have given the member a chance to rephrase his question. He has rephrased it now, asking about revenue legislation.

Hon MICHAEL WOODHOUSE: I am satisfied that tax policies and tax administration legislation are fit for purpose. I am also aware, although it is not within my area of responsibility, that the Overseas Investment Act provides very strong criteria and hurdles to be met before sensitive land, such as dairy farms, is purchased.

Fletcher Tabuteau: Has his Government abandoned farmers to the whims of Fonterra management, thus exposing all New Zealanders, but especially our farmers, to the foreign buy-up of high-quality New Zealand land?

Mr SPEAKER: No, there is absolutely no revenue responsibility in that question.

Prime Minister—Statements

2. GRANT ROBERTSON (Labour—Wellington Central) to the Prime Minister: Does he stand by all his statements?

Rt Hon JOHN KEY (Prime Minister): Yes.

Grant Robertson: How did he get it so wrong in November 2014 when he advised farmers not to worry about the dairy price and that it would bottom out soon, given that he had been told in July that year that there was a 5-year global milk glut?

Rt Hon JOHN KEY: How did the member get it so wrong when he thought he would be the leader twice and lost?

Chris Hipkins: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! [Interruption] Order! I will hear from Chris Hipkins.

Chris Hipkins: The Prime Minister has to at least make some attempt to get vaguely close to the question that was asked. That answer came—[Interruption]

Mr SPEAKER: Order! I remind members that this is a point of order. It will be heard in silence. Could the member please continue.

Chris Hipkins: The point that I was making is that the Prime Minister has to at least get somewhere near the question that was asked by the member. He did not even come close even to addressing the question.

Mr SPEAKER: I will hear from the Hon Gerry Brownlee.

Hon Gerry Brownlee: The Prime Minister responded to some very direct remarks made by Mr Robertson, and it simply serves to point out the vagaries of prediction.

Mr SPEAKER: No, I think on this occasion—[Interruption] Order! On this occasion there must be some attempt to answer the question. I am going to invite the member to repeat the question.

Grant Robertson: How did he get it so wrong in November 2014 when he advised farmers not to worry about the dairy price and that it would bottom out soon, given that he had been told in July that year that there was a 5-year global milk glut?

Rt Hon JOHN KEY: I remain of the view, as I did back then, that the long-term and medium-term outlook for dairy is very strong. But as we always know, it is always possible to not be able to count and to get your numbers wrong from time to time.

Grant Robertson: Does he not think farmers are owed a response from him to serious questions that is better than juvenile politicking when they are facing 44 percent of them defaulting on their loans and farm prices dropping by 40 percent by 2018?

Rt Hon JOHN KEY: Offering a serious view about what I think are the long-term prospects for dairy, it remains that you have got a global opportunity out there emerging in Asia, and the changing markets are very relevant. But if the member now wants to say that he is supporting the dairy farmers of New Zealand, here are a few suggestions: vote for the Trans-Pacific Partnership, because by far the largest beneficiary is dairy; reform the Resource Management Act, because that affects those farmers; take a constructive view to a range of different issues around tax; and do not whack a massive emissions trading scheme on farmers. Coming into this House and claiming that he is the friend of the farmer when he does everything he can to put them out of business is not going to fool anyone.

Grant Robertson: Supplementary question—[Interruption]

Mr SPEAKER: Order! I am just waiting.

Grant Robertson: Does he accept the Reserve Bank’s severe scenario for a payout of $4—10 cents above the current forecast—which would mean 44 percent of farmers defaulting on loans and farm prices dropping by 40 percent in 2018?

Rt Hon JOHN KEY: The member is actually misrepresenting the Reserve Bank. He says that if that was the payout—under $4, and I would point out that, actually, the total payout is still predicted to be above that, at $4.35—those loans would be non-performing. That is quite a lot different from defaulting.

Grant Robertson: Does he think that farmer shareholders should be satisfied with the performance of the Fonterra chief executive officer?

Rt Hon JOHN KEY: I do not have any responsibility for the performance of Theo Spierings, any more than he has any responsibility for the performance for Andrew Little.

Hon Damien O’Connor: Does the Prime Minister still stand by his previous publicly stated position of supporting the opening up of Fonterra to share trading on the NZX as a way of bringing outside equity into the company?

Rt Hon JOHN KEY: Those comments were made a long time ago, but what I did support was trading amongst farmers, and I think, from what I can see, it has worked pretty well.

Grant Robertson: Does he not think he should offer a view to farmers about the performance of the chief executive officer of Fonterra, given Fonterra is having a debt to equity gearing ratio of 49 percent, demanding 90-day terms from its suppliers so that it has actually got some working capital, and changing its payout forecast three times in 7 weeks? Does he not think he owes it to farmers to say what he thinks about that performance?

Rt Hon JOHN KEY: Well, it is not my responsibility whether Theo Spierings does a good job or not. I do not have that responsibility, any more than I have the responsibility for whether a bank chief executive is doing a good job, or the chief executive of Telecom is doing a good job.

Economy—Stability and Growth

3. Dr PARMJEET PARMAR (National) to the Minister of Finance: What steps is the Government taking to support resilience and growth in the New Zealand economy?

Hon BILL ENGLISH (Minister of Finance): A range of steps. We can have some confidence in the economy’s ability to manage through future uncertainty. For instance, the Government is supporting directly innovation through investment in research such as the $170 million Primary Growth Partnership, where primary production industry contributes, and we work together to create new products and increase on-farm activity. Despite the fall in dairy prices, the outlook for the economy is for continuing moderate growth of 2 percent to 2.5 percent, which compares well with most other countries.

Dr Parmjeet Parmar: How is the ongoing expansion in manufacturing helping to support economic growth?

Hon BILL ENGLISH: Earlier this week Statistics New Zealand released its survey of manufacturing for the December 2015 quarter. It shows manufacturing volumes up by 1.3 percent in the quarter and up by 5.1 percent in the year to December. The value of manufacturing was flat over the same period, reflecting in part the fall in dairy prices. This is consistent with the Performance of Manufacturing Index, which has now been expanding for 40 consecutive quarters. Recent indicators also show increasing manufacturing employment. Overall, this suggests that despite difficulties in the dairy sector, the economy is continuing to grow moderately and is rebalancing.

Dr Parmjeet Parmar: What are some of the consequences for the wider economy from the downturn in dairy prices?

Hon BILL ENGLISH: In the first place, there are consequences for the farming operators and farming families themselves because some of them certainly will come under considerable pressure if they have a combination of high debt and high production costs, or, in some cases, investors who are not as committed as they were before. There is no doubt, though, that the industry is capable of adjusting and that it will work constructively with the banks, which continue to be supportive. The Government has long-term confidence in the outlook for the dairy industry.

Dr Parmjeet Parmar: How will increased access to international markets, alongside new initiatives by the Government, support the dairy industry as well as build resilience and diversity in the economy?

Hon BILL ENGLISH: This next period is going to be one where the dairy industry will be looking for support where the Government can provide it. We will certainly be supporting the Trans-Pacific Partnership (TPP), because one of the principal—in fact, the biggest beneficiary of the TPP—is the dairy industry. We would expect the support of the whole Parliament because it is the single biggest thing this Parliament can do to support, particularly, those regions that will be hardest hit by the downturn in dairy prices.

Dairy Industry—Payments to Small Businesses

4. JACINDA ARDERN (Labour) to the Minister for Small Business: Does he agree with the statement made by Hon Bill English in the House yesterday regarding Fonterra’s policy of paying small businesses up to an additional 61 days late, that “these are freely transacting people doing business. Any party to the transaction is able to choose whether the terms are suitable for them, or not”?

Hon CRAIG FOSS (Minister for Small Business): Yes. I also agree with the Minister’s statement in the House yesterday that it would be unacceptable if it was outside the current legislative requirements. But I note for the House that although Fonterra may be meeting its legislative and contractual commitments, it is my expectation that Fonterra and all New Zealand’s large businesses deal reasonably and fairly with New Zealand small businesses.

Jacinda Ardern: Does he believe, as Bill English does, that small businesses currently contracted by Fonterra are genuinely in a position to choose the terms that are suitable for them, without risking losing the work that they have?

Hon CRAIG FOSS: I am not sure whether that member correctly understood what Mr English was saying yesterday, but I do note that companies in New Zealand—Kiwi businesses, large companies—I am sure, value their reputation as fair and reasonable Kiwi businesses. The court of public opinion will, I am sure, judge those businesses on their behaviour in the market.

Jacinda Ardern: Would it be acceptable for a Government department to pay a small business 61 days after receiving an invoice, when in 2009 the then State services Minister, Tony Ryall, directed departments to pay their bills on time or earlier?

Hon CRAIG FOSS: I am sure that that would be the exception, because, across Government, post the 2009 commitment from Mr Ryall, by and large the payments from the Crown to small businesses have improved markedly over that period.

Jacinda Ardern: What action, then, will he take against the Ministry of Business, Innovation and Employment—his own department—responsible for small business, which in 2014-15 paid a whopping 24 percent, or 11,158 of the invoices it received, late?

Hon CRAIG FOSS: The Ministry of Business, Innovation and Employment is not my department, but I understand the member’s question. What is actually more important for New Zealand businesses is the cost of the cash flow that they fund. If the ministry is, in fact, paying some invoices late, it should address that; it should look at that. I am sure that the Minister responsible will be quite interested in that. But what is most important is that the cost of funding cash flows for New Zealand small businesses is probably half of what it was just in 2008, when that member’s party was in Government.

Hon Dr Nick Smith: Did the Leader of the Opposition set a good example—

Mr SPEAKER: Order! [Interruption] Order! The question is not in order.

Jacinda Ardern: What specific action will he take as the Minister for Small Business against the Department of the Prime Minister and Cabinet, ACC, and the Ministry of Business, Innovation and Employment, which have all had significant records in late payment, including the State Services Commission, which issued a letter to all chief executives instructing them to pay on time and model prompt payment?

Hon CRAIG FOSS: As a Minister, as a taxpayer, and as an advocate for small business I would encourage all participants—Government, ministries, agencies, State-owned enterprises—to pay in a reasonable and fair time.

Finance, Minister—Dairy Industry

5. METIRIA TUREI (Co-Leader—Green) to the Minister of Finance: Ka tū a ia i runga i te mana o tāna tauākī mō te ahu miraka kau, “is an industry that’s going to be under pressure”? [Does he stand by his statement that dairy “is an industry that’s going to be under pressure”?]

Hon member: I don’t think that’s right.

Mr SPEAKER: No, I listened to the translation. It was as recorded. Would the Minister of Finance like to answer?

Hon BILL ENGLISH (Minister of Finance): Yes. Clearly, many farmers are doing it tough and there is a lot of uncertainty about the future of milk prices. Farms with high levels of debt and high production costs will come under real pressure. Whereas 6 months ago they may have thought that they could hold on until prices had bounced back up, that looks much less likely now. So it is appropriate that the dairy industry is thinking about reducing production costs, adapting to capital scarcity, rather than waiting for prices to rise.

Metiria Turei: Does the Minister take any responsibility for the enormous pressure dairy farming families are under, given that his Government has encouraged them to convert to dairy, to take on more debt, and to intensify their farms, and now 5,000 families could lose their farms because of it?

Hon BILL ENGLISH: I would be very surprised, if the member spoke with any of those families, if their business decisions were made by what they read from press releases from the Government. These people are capable, competent people who weigh up the business risks and decide what risks they take. Some of them might have overextended themselves, and I would be surprised if they blamed anyone else for that.

Metiria Turei: Does he accept that the Government’s goal of doubling food exports by 2025 and subsidising irrigation was an encouragement to farming families to increase their debt and intensify their farms?

Hon BILL ENGLISH: No. One would only have to look at the range of debt across farms in the dairy industry, or any other industry, and you would find that some of them have no debt, some of them have moderate debt, and a few—probably a very few—have levels of debt that are now turning out to be higher than is comfortable. The Government has made no apology for supporting primary production through its investment in science and innovation, its investment in biosecurity, and getting alongside them in the development of large-scale irrigation schemes into which we have actually put only quite small amounts of money.

Richard Prosser: Will the Minster’s Government support New Zealand First’s Receiverships (Agricultural Debt Mediation) Amendment Bill, which will provide our dairy farmers with a similar level of regulated debt mediation support to that enjoyed by farmers in Australia and Canada; if not, why not?

Hon BILL ENGLISH: No, we will not, because we believe that the parties involved in that debt are capable of working their way through it. The large banks have lent money to the industry in full knowledge of all the risks and with a deep understanding and history in the industry. We believe they are committed to the long-term future of the industry—that it is in their interests that, for instance, the land price is maintained at reasonable levels and does not drop rapidly, and therefore they and the farmers will be able to work through whatever stress there is.

Metiria Turei: Has the Minister received any advice on how many families in the wider rural communities, not just farm owners but farm labourers and contractors as well, will have financial problems because of his Government’s failed dairy strategy?

Hon BILL ENGLISH: No. It is a bit galling to hear from the Greens concern for people whom they have branded for the last decade as reckless capitalist polluters—suddenly they are very worried about them. I find it a wee bit hard to find that the Greens are serious.

Richard Prosser: Given his previous answer, what contingency plan does his Government have, in the likely event of widespread farm foreclosures, to support unsecured creditors and their staff and families in the heartland communities who support the dairy industry and rely on it—feed suppliers, fencers, silage and hay contractors—

Mr SPEAKER: Order! Bring the question to a conclusion. [Interruption] Order! The question is too long.

Hon BILL ENGLISH: There is no evidence—no good reason—to believe that there will be widespread farm foreclosures. The Government believes that the industry is resilient and the financial services sectors that support it have an interest in its ongoing success. If that member wants to do what farmers would regard as showing strong support for them, then he and his party would vote for the Trans-Pacific Partnership (TPP) and vote for Resource Management Act reforms—and I am sure if they went around the regions saying that, they would be welcomed with open arms.

Metiria Turei: What will the Minister do to prevent more of our productive land being sold off to overseas buyers when farming families are suffering huge debt burdens and are forced to sell their farms?

Hon BILL ENGLISH: Any offshore buyer who wants to buy the farms has to go through the Overseas Investment Act process, which includes, I think, 15 separate tests. It has been subject to court action in recent years that has raised the thresholds, and the Government has every intention of leaving that in place. The member needs to keep in mind that those families who do have higher levels of debt probably incurred that from paying fairly large amounts for the farm that they have moved into recently. I think the industry would expect that they have the opportunity to work through their stressful situation with the banks.

Metiria Turei: Given that the Minister has no advice on how many farming families will suffer as a result of this, does he think he ought to go and get that advice, and does he intend to act on any advice he is given about projects or initiatives to support those farming families who will be—

Mr SPEAKER: Order! Bring the question to a—[Interruption]. Order! It is question time, not speech time.

Hon BILL ENGLISH: You do not need to get advice to know that there will be a significant number of farming families distressed. This is not a new kind of phenomenon in farming communities. I myself recall a number of years, actually, of fairly intensive stress in the late 1980s and early 1990s in the sheep and beef industry over the same sorts of issues. We have a lot of confidence in this farming community to be able to adapt to difficult circumstances and to get through those on the basis that the outlook for the dairy industry is quite strong in the light of ongoing global demand for protein.

Rt Hon John Key: Does the Minister believe that actions speak louder than words, and, if that is the case, would the farmers of New Zealand expect political parties that claim to be standing up for them to vote for the TPP that would reduce hundreds of millions of dollars of tariffs against them, or will they see through all of this—

Mr SPEAKER: Order! Again, the question was too long. The first part can be addressed.

Chris Hipkins: I raise a point of order, Mr Speaker. I thought you would probably rule the question out of order. The Minister of Finance has no responsibilities for how other parties vote in the Parliament.

Mr SPEAKER: Order! No. The first part of the question, in my mind, was in order, in that it simply asked for—it did not talk about Opposition parties; “other political parties’ support: wouldn’t that be the best thing for farmers?”. I think, in view of the circumstances of where the discussion has been, that the question is in order. It can be addressed by the Minister.

Hon BILL ENGLISH: I am sure that distressed farming families would take some notice of the outpouring of sympathy they are getting from Opposition parties, but, knowing farming people, I think they would regard actions as more telling. They will be surprised to know that those expressing the strongest sympathy today have said they will vote against Resource Management Act reforms that will assist that industry and vote against the most recent free-trade agreement, of which the dairy industry is the biggest beneficiary. They might be surprised, having heard the words today.

Metiria Turei: Can the Minister confirm that the Trans-Pacific Partnership (TPP) agreement promise of a tariff reduction of just 1.3 percent by 2030 is not going to help the 5,000 farming families who are facing the loss of their farms today, because of his Government’s failed dairy strategies?

Hon BILL ENGLISH: No, I disagree with that. The dairy industry, I am sure, would be pleased to see any expression of real economic support from this Parliament and, secondly, that agreement includes significant benefits for other members of their communities—people in the beef industry and in the horticulture industry. Actually, dairy farmers care about those people and they care about their communities. They would expect the Greens to change their mind and vote for the Trans-Pacific Partnership agreement.

David Seymour: Does the Minister agree with the following quote from the valedictory speech of outgoing Green MP Russel Norman: “Let’s just say it—we have too many cows.”?

Mr SPEAKER: Order! I do not think there is any need for that question. I am going to rule it is out of order.

Rheumatic Fever—Rates

6. SIMON O’CONNOR (National—Tāmaki) to the Minister of Health: Can he confirm that rheumatic fever rates have dropped 45 percent since 2012?

Hon Dr JONATHAN COLEMAN (Minister of Health): Yes, and it is encouraging to see this latest significant drop in the rates, which continues progress towards the Better Public Services target of reducing rheumatic fever rates by two-thirds by the end of June 2017. This shows that the Government’s $65 million investment to prevent rheumatic fever is making a real difference to the children, families, and communities most at risk.

Simon O’Connor: What progress has been made in reducing rheumatic fever rates in Māori and Pasifika communities?

Hon Dr JONATHAN COLEMAN: Rates for Māori have more than halved since 2012, down 54 percent. There has also been a drop of 27 percent for Pacific people. More than half the national reduction was in the Northland District Health Board and the Counties Manukau District Health Board. Part of the success can be attributed to the Pacific engagement service, which has engaged with more than 39,000 Auckland and Wellington Pacific families, through home visits and community events, to raise awareness of rheumatic fever and what can be done to prevent it. However, there is still much left to do.

Simon O’Connor: What initiatives have the Government put in place to tackle rheumatic fever?

Hon Dr JONATHAN COLEMAN: Healthy homes initiatives in all high-incidence areas are offering packages of housing-related interventions to more than 3,000 families each year. There are over 300 drop-in clinics, and more than 40,000 high-risk young people have accessed these sore throat drop-in services. Children are also being assessed and treated for sore throats through school-based services in 200 North Island schools. There is also a national rheumatic fever awareness campaign aimed at young people, as well as the parents and caregivers of children and young people most at risk.

Student Achievement—Literacy and Numeracy Skills

7. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education: Is she satisfied that students completing NCEA qualifications have the basic functional literacy and numeracy skills they will require for further study or employment?

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. Yes.

Chris Hipkins: Was the recent Tertiary Education Commission report, which found that up to half the students meeting National Certificate of Educational Achievement (NCEA) literacy and numeracy requirements are not functionally literate or numerate, based on a student sample who had predominantly attained the literacy and numeracy requirements for NCEA, under the new rules?

Hon HEKIA PARATA: My understanding is no, because the new rules were implemented in 2012 and therefore the results of those new rules were not taken into account by the Tertiary Education Commission report, which was based prior to the introduction of those. So when you say “recent”, although it was published in December last year, it used data from 2012.

Chris Hipkins: In light of that answer, why does the report specifically state that the vast majority of students within the sample completed their NCEA literacy and numeracy requirement under the new rules?

Hon HEKIA PARATA: I cannot speak to that, because I am not at the Tertiary Education Commission and I did not write the report, but given that the strengthening of the literacy and numeracy requirements and the increasing of the credits from eight to 10 became compulsorily implemented from 2013, it is by definition impossible for a 2012 report to use those results.

Chris Hipkins: Was the report wrong when it stated that under the new rules it is possible to obtain the 10 achievement standard credits required to meet the literacy requirement for NCEA by completing standards where “the focus … is varied and there is not necessarily any direct assessment of students’ literacy and numeracy skills”?

Hon HEKIA PARATA: No, the report is not wrong in that literacy can be assessed in subjects other than English, and that the quality assurance of those assessments is overseen by the New Zealand Qualifications Authority. I stand by its process, as opposed to an incidental report from the Tertiary Education Commission.

Chris Hipkins: So how can parents, employers, and anybody else be confident that students who obtain NCEA have basic functional literacy and numeracy, when it is possible to meet the literacy and numeracy requirements without ever having their literacy and numeracy actually assessed?

Hon HEKIA PARATA: That is not what I said. Literacy is assessed, but it is not assessed only in English. It is assessed in a range of subjects, whether it is physical education, whether it is science, or whether it is maths. Literacy is required across all of those subjects, and assessments occur in all of those subjects. As to the second part of your question, which is how parents and employers can have confidence, they can have confidence because a number of reports have been published on the quality of NCEA. They include the 2012 report by the Auditor-General, the 2013 report by the New Zealand Council for Educational Research, and the 2014 report by an independent panel of academics, principals, and the New Zealand Council for Educational Research. I am happy to table, for the member’s ease of reference, references to all of those reports that are publicly available.

Chris Hipkins: Can a student meet all of the literacy requirements for NCEA solely from studying physical education?

Hon HEKIA PARATA: I am not absolutely sure about that, but I can—

Chris Hipkins: Yes. The answer is yes.

Hon HEKIA PARATA: —get that report. Well, the member is asking questions that are redundant.

Chris Hipkins: When employers are saying that students with NCEA do not necessarily have the literacy and numeracy skills they need, when Business New Zealand is saying it, when universities and polytechnics are saying it, and when even school principals are saying it, why will she not take action to review the system to ensure those getting NCEA actually have functional literacy and numeracy, or is she worried that doing so means the Government will not hit its 85 percent target?

Hon HEKIA PARATA: I can point to specific reports that are in the public domain that attest to the robustness of our NCEA. The member using general references to general people who may or may not have a view does not stack up against the robustness—

Chris Hipkins: Pretty specific study.

Hon HEKIA PARATA: Yes, the member is referring to one principal, and there are a few, but what the New Zealand Council for Educational Research said in its report of 2013 was that 95 percent of all principals are confident in the NCEA. It would be helpful if the member actually shared that confidence in our national qualification system.

Rheumatic Fever—Housing Conditions

8. MARAMA FOX (Co-Leader—Māori Party) to the Minister of Health: Following the recent release of the rheumatic fever statistics, what steps is he taking to address the rate of rheumatic fever amongst whanau living in overcrowded housing conditions?

Hon Dr JONATHAN COLEMAN (Minister of Health): This Government, with support from the Māori Party, has invested $65 million in the Rheumatic Fever Prevention Programme over the last 6 years. A feature of the programme is Healthy Homes services, working in all 11 high-incidence district health board regions, and it is making good progress delivering a range of different interventions to families. We are now seeing real results, with rheumatic fever rates for Māori down 54 percent since 2012. I would like to acknowledge the work and support of the Māori Party in championing this cause.

Marama Fox: Given the prevalence of rheumatic fever amongst whānau living in overcrowded, substandard homes, what is the Minister doing with his colleague the Minister for Building and Housing to build larger, warmer, safer homes to further reduce the rates of rheumatic fever.

Hon Dr JONATHAN COLEMAN: Ministers are working together on these important issues, including the housing Ministers, and they are best placed to answer questions relating directly to the building of houses. The Healthy Homes services have a number of initiatives to reduce overcrowding and make houses warmer and safer.

Marama Fox: What further specific measures will the Minister take to ensure the 75 percent reduction by 2017, identified in the Māori Party initiative in 2013, is achieved?

Hon Dr JONATHAN COLEMAN: We will continue with the initiatives that are delivering success: the 300 drop-in clinics, the 200 school-based services, and the national awareness campaigns, to name but three of them.

Marine Protected Areas—Kermadec Ocean Sanctuary

9. SCOTT SIMPSON (National—Coromandel) to the Minister for the Environment: What new details of the Kermadec Ocean Sanctuary have been announced and how will these help protect the 620,000 square kilometres of the Pacific Ocean covered by this initiative?

Hon Dr NICK SMITH (Minister for the Environment): Yesterday the Government announced the details of the bill to create the sanctuary that was announced by the Prime Minister at the United Nations in September. The bill provides for a new conservation board with responsibility for the Kermadec Ocean Sanctuary, as well as the existing Kermadec Marine Reserve and the nature reserves on the five Kermadec Islands. This integrated approach makes good sense, and given the size of this area being twice that of New Zealand’s land, it makes sense, with its unique challenges for management, to have a dedicated board. The second change is that we have tightened the dumping prohibitions and adjusted the scientific research provisions to maximise the protection, while also making sure that it is compliant with New Zealand international law of the sea.

Scott Simpson: What feedback has he had, both domestically and internationally, to the new Kermadec Ocean Sanctuary?

Hon Dr NICK SMITH: The sanctuary has been widely welcomed, and the Prime Minister’s announcement was noted very positively in both the European and the North American media, partly because of the sheer scale of it being an area larger than the land area of France. The Pew Charitable Trusts, which has advocated for ocean sanctuaries globally, has noted that New Zealand has set the gold standard with the Kermadecs and it is a powerful international example. I have also welcomed the support of key organisations like Forest and Bird and World Wide Fund for Nature. They have acknowledged that it is a very significant global initiative and an extraordinary achievement for nature. The sanctuary increases New Zealand’s area protected from 0.4 percent of our ocean space to 15.4 percent—i.e., this single sanctuary is 35 times larger than the existing 44 marine reserves that we have.

Scott Simpson: What particular species and special features will benefit from the protection of this new ocean sanctuary?

Hon Dr NICK SMITH: The sanctuary is home to 6 million seabirds of 37 different species; 35 species of whales and dolphins; three species of sea turtle—it is the only area where sea turtles are found in New Zealand waters, all of which are endangered—as well as 150 species of fish. The extraordinary nature of the area is due to it being deeper than Mount Everest is tall, and having the longest chain of underwater volcanoes anywhere in the world. The combination of the undersea volcanic activity and the extreme depths means that there are life forms and ecosystems found nowhere else on the planet, but that will be protected in perpetuity by this bill.

Clayton Mitchell: How does the Government plan to feasibly protect the 620,000 square kilometres of proposed Kermadec Ocean Sanctuary effectively when there is only one frigate and three Orions, which, at best, could fly over once a week, not to mention the one lonely Department of Conservation worker working on Raoul Island?

Hon Dr NICK SMITH: Firstly, the member is incorrect about the number of Department of Conservation staff who are on Raoul Island and in the Kermadecs. Secondly, this is a Government that has actually, under Gerry Brownlee’s leadership, invested in the sort of defence capability that enables New Zealand to be able to secure an area of protection like the Kermadecs.

Marama Fox: What consultation has there been with the two iwi with a statutory acknowledgment over their interests on the Kermadecs, and what changes have been made to the proposals as a consequence?

Hon Dr NICK SMITH: I have had extensive discussions with both Ngāti Kurī and Te Aupōuri, who have for many years supported the establishment of the sanctuary. Both with their input and the input of the Māori Party, we have provided for both those iwi having direct representation on the conservation board. I have also had representations that there are other iwi in New Zealand who have an interest in the Kermadecs, and so, with the work of the member’s colleague Te Ururoa Flavell, we are providing for him to be able to also appoint someone to ensure that that broader and very deep historic interest that Māori have with the Kermadecs is also provided for in the way in which we are putting this unique area into permanent protection.

David Seymour: By what quantity will this announcement change the total allowable catch under New Zealand’s quota management system?

Hon Dr NICK SMITH: I am advised that there are about 20 tonnes of fish per year that are taken in the Kermadecs area. Obviously, that will be banned from the time—it will be an area of full protection from all forms of fishing. Secondly, there was an application for deep-sea mining in the area, and the Government’s view has been that the area will also be fully protected from mining activities.

Business, Innovation and Employment, Ministry—Payroll

Dr DAVID CLARK (Labour—Dunedin North): My question is to the Minister: on what date did he first become aware of payroll problems at the Ministry of Business, Innovation and Employment and what action did he take?

Mr SPEAKER: I did not hear the first part—was it addressed to the Minister concerned?

Hon Steven Joyce: He didn’t address it to anyone.

Mr SPEAKER: Well, would the member just do the question again.

Dr DAVID CLARK (Labour—Dunedin North): To the Minister of Business, Innovation and Employment—[Interruption]

Mr SPEAKER: Order! [Interruption] Order! Sorry, I am just making sure the member is given due consideration. He can start again.

Dr DAVID CLARK: To the Minister of Business, Innovation and Employment—[Interruption] Would you like me to go again, Mr Speaker?

Mr SPEAKER: Yes.

10. Dr DAVID CLARK (Labour—Dunedin North) to the Minister for Economic Development: On what date did he first become aware of payroll problems at the Ministry of Business, Innovation and Employment and what action did he take?

Hon STEVEN JOYCE (Minister for Economic Development): Firstly, I have been updated a number of times on payroll as the Ministry of Business, Innovation and Employment has been brought together, particularly with the four payrolls being brought into one. With particular regard to the issues that have been publicly discussed in recent days, I was first advised on 5 October last year that the Ministry of Business, Innovation and Employment was establishing a payroll team to identify and address non-compliance and historical issues associated with entitlements to holiday pay. I supported the Ministry of Business, Innovation and Employment’s actions at the time, and I have asked to be kept fully updated on its progress, along with expressing the expectation to the chief executive that this issue be resolved as quickly as possible.

Dr David Clark: Can he confirm that the issues that he first became aware of in October last year around the Holidays Act and payroll compliance were known to his Government in 2010?

Hon STEVEN JOYCE: No, I cannot. In relation to this particular payroll the time line is as I described last year. The labour inspectorate has had broader concerns about public and private providers complying with the Holidays Act, going back some time, possibly back to 2010, but the issues in relation to the Ministry of Business, Innovation and Employment were identified to me in 2015, in October last year.

Dr David Clark: The Minister didn’t know.

Hon STEVEN JOYCE: No, you are wrong.

Mr SPEAKER: Order!

Dr David Clark: During the 2012 Ministry of Business, Innovation and Employment merger, did his Government ensure the payroll system complied with the law?

Hon STEVEN JOYCE: In the Ministry of Business, Innovation and Employment merger in 2012 a decision was taken to merge the four payrolls together, including the former Department of Labour payroll, which had been used right back, I believe, until around 2000. It was, of course, anticipated, that that payroll, which had been in place for many years, would meet the requirements, particularly given that the Holidays Act had been passed with its changes in 2003. Unfortunately, from the period 2003 onwards there had been no attempt within the Government to ascertain that the payrolls were actually following the Holidays Act as it was laid down in 2003.

Dr David Clark: Is he confident that his department has been providing correct advice to the private sector, given that his department has failed to implement its own payroll system correctly?

Hon STEVEN JOYCE: For the member’s benefit, the labour inspectorate operates at arm’s length from the operation of the agency, particularly in relation to payroll matters, because the labour inspectorate has a responsibility to monitor the Ministry of Business, Innovation and Employment’s payroll as well as other public and private sector payrolls. As I said to the member in answer to an earlier question, the inspectorate has had concerns for some time about payrolls generally, and that matter has been discussed with the State Services Commission. This particular issue, though, was raised in 2015.

Dr David Clark: Why did he fail to follow the advice on his ministry’s website about “calculating annual holiday pay”, which appears under the tab headed “Get the basics right”?

Hon STEVEN JOYCE: That is a question that could be asked right back to 2003, I believe, because the holiday pay calculation is recognised as a complex calculation, because it requires providers to assess the greater of the average wages of the person and the regular-time wages of the person. Just because you are a bad Opposition MP who yells all the time does not mean you cannot just listen to the answer to the question.

Science and Research—Benefits for Children and Young People

11. Dr JIAN YANG (National) to the Minister of Science and Innovation: How is the Government using science and research to help the development of children and young people?

Hon STEVEN JOYCE (Minister of Science and Innovation): Recently I launched the tenth in a series of National Science Challenges. A Better Start is a challenge using science to tackle some of the biggest issues facing New Zealand young people. A Better Start is receiving funding of up to $34.7 million over 10 years for research aimed at solving some of the complex problems that are faced by New Zealand children and young people as they start out in life. It focuses on predicting, preventing, and treating mental health issues and obesity in children, as well as improving how children learn. It will work to develop new methods for detecting and supporting young children with developmental and behavioural disorders. This work and other research taking place across the research sector will have a significant impact on young people’s well-being, employment prospects, and of course, ultimately, on the New Zealand economy and society.

Dr Jian Yang: What research projects will the A Better Start National Science Challenge be supporting?

Hon STEVEN JOYCE: The proposed initial research for the A Better Start National Science Challenge is about understanding biomedical conditions and social behaviour that influence how children grow up. The challenge will bring together medical researchers to work with educationalists on projects like: investigating the way environmental factors and biology influence child obesity and what can be done to help children achieve and maintain a healthy weight, trialling interventions to help children at risk of literacy problems succeeding in their first year at school, and developing new tools to detect common mental health problems like depression and anxiety in teenagers. The A Better Start challenge is hosted by the Liggins Institute at the University of Auckland, in collaboration with the universities of Otago, Canterbury, and Waikato, Auckland University of Technology, Massey University, Victoria University, and AgResearch.

Freshwater Management—Water Quality of Rivers and Lakes

12. CATHERINE DELAHUNTY (Green) to the Minister for the Environment: Has he received any advice that New Zealanders would prefer to wade rather than swim in our lakes and rivers?

Hon Dr NICK SMITH (Minister for the Environment): No, and it is Government policy for as many water bodies as practically possibly to be swimmable. When we came into Government in 2008 there was no national freshwater policy or standards, and we have been systematically strengthening those. These requirements do not stipulate that every water body be swimmable all the time but they do require councils to maintain and improve water quality and to identify those rivers and lakes that should be swimmable.

Catherine Delahunty: Given that answer, will the Minister commit to the goal of making New Zealand lakes and rivers swimmable, with exceptions for issues that he has previously stated, including during high rainfall events, areas where birds colonise, rivers tainted by volcanic ash, and other natural phenomena that may prevent swimming?

Hon Dr NICK SMITH: We are doing a consultation at the moment, which I started last night, about improvements in the national policy statement. I am open-minded about strengthening the provisions around swimmability but it is my view that we need to ensure that they are practical and that in that process of setting the standards we do take into mind the issue of costs. I give the member a practical example in Auckland: Lucas Creek would cost $150 million to bring it up to a swimmable standard—a cost that would translate to about $10,000 per household for a stream that nobody has ever wanted or tried to swim in. So, yes, we want more water bodies to be swimmable but we also want to make sure that the provisions are practical.

Catherine Delahunty: Given that Landcorp can cut the proposed Wairākei dairy conversions by 50 percent to protect the environment, will he include in his Next Steps for Fresh Water document a moratorium on dairy conversions in sensitive catchments?

Hon Dr NICK SMITH: Indeed, that has taken place. So, for instance, in an area like Canterbury, where there were no limits on expansion of dairying, the commissioners have done a very good job of actually creating red zones and of setting limits on nutrients, and that is happening right throughout the country. What I would welcome from the Green Party is support for that national policy statement and the requirement to set limits. I would remind the member that prior to this Government coming to office there were no limits anywhere in New Zealand on nutrients.

Catherine Delahunty: I raise a point of order, Mr Speaker. My question was specifically on whether the Minister would include in the Next Steps for Fresh Water a moratorium on dairy conversions.

Mr SPEAKER: I invite the member to go back and rehear the answer. The Minister said they were achieving it in another way, and addressed the question for the benefit of the member.

Catherine Delahunty: What rivers has the Minister waded in recently and did he enjoy it as much as actually putting his head under the water?

Hon Dr NICK SMITH: I regularly swim—only at the weekend, I was swimming with my family in the Maitai River. But I would point out to the member that, actually, contrary to the Green Party view that this is all farmers’ problems, if you take the Maitai River, the key swimmability challenge there is actually the standard of our town sewerage scheme in Nelson. Like in many urban areas of New Zealand, some of those pipes are old and need upgrading and there is a significant cost for ratepayers in upgrading those systems, and that needs to be taken into account.

ENDS

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