Urgent Debates — Budget Advertising Programme—Report of Auditor-General

I have received a letter from the Leader of the Opposition seeking to debate under Standing Order 373 a report by the Auditor-General on the Government’s post-Budget advertising programme. This is a particular case of recent occurrence and involves the administrative responsibilities of the Government. I consider the report does deserve the immediate attention of the House, and I therefore accept the application. I call on the member to move the appropriate motion.

I move, That the House take note of a matter of urgent public importance. [Interruption]

💬 John Carter: I raise a point of order, Mr Speaker. I am sorry to interrupt Mr Brash, but that Minister, in particular, starts a barrage of interjection every time that Dr Brash gets on his feet. Before Dr Brash commences his speech, can that Minister please be instructed from the Chair to close his mouth and not to interject in the way that he does.

💬 Mr SPEAKER: No, I do not want any assistance on this matter. There will be no further interjections from that member while this member is speaking. I do not like that sort of interjection.

I appreciate very much the opportunity of speaking to this very important issue, in the form of a report from the Auditor-General to my colleague the Hon Murray McCully, dated today. Some 3 months ago the Government brought its Budget down to the House. Included in that Budget was a commitment to spend $21.15 million on an advertising programme to promote the Working for Families programme, including $11.59 million to be spent in the current financial year. At the time, the National Party expressed extraordinary surprise at that very large expenditure. Let me put it in some perspective. Back in 1993 Helen Clark, the then Labour health spokeswoman, criticised the then National Government’s $2.5 million campaign to promote the health reforms. She said at that time: “The use of advocacy advertising, paid for with $2.52 million of taxpayers’ money in an election year, is a matter of major public concern.” Was it a coincidence, she asked, that the health campaign, an “orgy of advertising”, hit the public 5 months before a general election?

The $21.15 million included in this year’s Budget is a very large expenditure programme, and more than half that programme is scheduled for spending in this financial year, immediately before a general election. That amount of money is more than eight times the spending that Helen Clark described in 1993 as “unreasonably large” and an “orgy of advertising”.

Perhaps it is not surprising that the Government is embarking on a programme of such magnitude. It has collected an extra $34 billion in tax revenue in the last 5 years. The revenue from company taxes has gone up by some 72 percent over that time. The huge flow of revenue has made the Government very casual indeed about spending—hip-hop tours, braying toilets—

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. Notwithstanding the fact that we have a Budget debate still going, the member, as you are aware, has had a letter granted on a case that requires the urgent attention of the House. For the last 3 minutes he has not referred to that, but has talked about the tax take, hip hop, and a number of things that are not relevant to the letter.

💬 Mr SPEAKER: The member must not have been listening. I was.

💬 Gerry Brownlee: I raise a point of order, Mr Speaker.

💬 Mr SPEAKER: I do not want this to eat into the time.

💬 Gerry Brownlee: I do not want to eat into the time, either. But we on the Opposition side of the House are getting sick and tired of the tactics being deployed by Trevor Mallard and other Ministers. They may think that it is enormously clever to break up the Leader of the Opposition’s speeches. They know that they are in trouble, politically, and they do not want the people of the country to hear what he has to say. But we will not sit here in the House and tolerate that sort of behaviour any longer.

💬 Mr SPEAKER: Let me tell the member that I thought I was doing my job pretty promptly on that matter. I do not think it required the member to restate that in what was not really a point of order.

My colleague the Hon Murray McCully was so disturbed about the expenditure that he thought it appropriate to ask the Auditor-General whether he thought the spending of some 8 to 9 times the largest expenditure previously reported was appropriate. Today he received from the Auditor-General a report on that spending, and it makes very disturbing reading, indeed.

The Auditor-General did not seek to make any comparison between the cost of this programme and that of other communications strategies because, as he pointed out, it was difficult to do that. Had he done so, the sheer enormity of the proposed campaign would undoubtedly have been clear. But he did look carefully at the process by which $21.15 million found its way into the Budget. I will quote two or three sections from the Auditor-General’s letter. He stated: “We expected that there would be a detailed and robust analysis to support the Budget bid for a $21.15 million Communications Strategy. Such an analysis would include the nature of the Working for Families package changes, the numbers and demographics of people affected by the changes, the most appropriate means of communicating with these people and other identified target audiences, and the comparative costs of appropriate communication options.” What the Auditor-General found fell significantly short of that. The report went on to state: “… in our view, it should have been possible for the MSD and the IRD to have provided the advertising agency with information about the numbers of people likely to be affected by the Working for Families package changes, and the nature and size of the target audience, without necessarily disclosing specific information about the package. This could have enabled the advertising agency to make a more informed assessment of the communication needs and the likely costs, and resulted in more precise costings to form the basis for the budget bid …”.

The Auditor-General went on to state: “… our primary concern is with the robustness of the process of costing a significantly-sized Budget bid. The approval of the bid led directly to the parliamentary appropriation of $11.59 million for the first year’s funding, in the Appropriation (2004/05 Estimates) Act. The effect of the Act is to authorise the Executive to incur the expenditure. Overall, we would have expected a more robust process to be used, and for more detailed information to be available to support a Budget bid for $21.15 million. The level of scrutiny by the Treasury of the Communications Strategy budget was less than we would expect for new expenditure of this magnitude.” Further on, the Auditor-General stated: “We expected to find a co-ordinated approach, with evidence of the two departments working together to develop a joint Communications Strategy for the Working for Families package, and combining the use of resources wherever possible to achieve the most effective and efficient use of taxpayer resources. In February 2004, the MSD and the IRD decided to have a joint Communications Strategy. They worked together on the Strategy from then until the date of the Budget announcement. Nevertheless, each department during that period took quite different and separate approaches to planning the communications activities they intended to lead under the Strategy.”

The Auditor-General noted that the Ministry of Social Development had told him that it intended to use generic advertising through television and other media “to provide high level ‘brand awareness’ of the Working for Families changes …”. One has to wonder how that “brand awareness” differs from straight political propaganda. Finally, the Auditor-General concluded that: “… in our view, the planning of the communications strategy in the period leading up to the Budget announcement evidences a disappointing lack of consistency. This is particularly clear from the manner in which the departments went about planning for separately produced television advertisements, and the separate and differing approaches to the nature and scale of the specific campaigns to promote the changes that each of the departments would be leading. … this letter has set out our concerns about the robustness of the process of costing the Budget bid, and the lack of consistency in approach. Those concerns mean that it is not possible, in our view, to say that the budgeted costs are a realistic reflection of the likely actual cost of the communications campaign to promote the Working for Families campaign.”

The report from the Auditor-General is profoundly disturbing. Though couched in the careful language of the Auditor-General, it suggests that there has been a complete breakdown of proper process—a cavalier disregard of the processes that should guide the spending of more than $20 million of taxpayers’ money. What will the advertising actually achieve? Will we see the programme highlight the fact that a solo mother on welfare, who is working between 10 and 20 hours a week, will face a 92.2 percent marginal taxation rate if she works another hour? Will the campaign highlight that fact? I suspect that there is not a chance of that. We know, because it has been highlighted in this House, that a whole raft of families will face 80 percent, 90 percent, and nearly 100 percent marginal taxation rates from this Budget. We know that the Government claims that this Budget is about encouraging people to get off benefits and into work. We know that it will not do that.

Ministers need to take responsibility for this serious lapse in process, even if they cannot take responsibility—or will not take responsibility—for the contents of the Budget itself. It is particularly serious when there is a growing disregard for past conventions on taxpayer-funded advertising. When Prime Minister Jenny Shipley was in office in the 1990s, she instigated quite specific rules that required the careful use of taxpayers’ funding in advertising and, particularly, she required approval by the Auditor-General for such situations. That has been quite deliberately ignored by the current Government. In just these last few days we have seen produced—not by parliamentary funding, but by ministerial funding—a brochure that has in it undeniably political campaigning. It is undoubtedly political campaigning. There is no way that it could be dressed up as anything other than blatant political advertising, and, as a consequence, we have referred that 1-page document to the Auditor-General for his report. This document does not comply with the standing procedure for the use of taxpayers’ money on advertising to the public.

The report received by my colleague Mr McCully is a serious indictment on the way that this Government spends $21.15 million of taxpayers’ money. I think it is high time that this Government took some responsibility in spending that kind of money.

Recently, the speeches of the member who has just sat down, Dr Don Brash, were described by one leading commentator as having some major problems. Those major problems were listed as follows. Firstly, Fran O’Sullivan said that Don Brash’s speeches insinuate things but never prove them. Secondly, she said that he has a tendency to rely on inadequate facts. Thirdly, she said that he pumps issues up as if there is a doom-laden situation in front of us, when there clearly is not. If ever anybody wanted to see a speech that illustrated the ongoing failure—apart from the boredom factor—of Dr Don Brash’s speeches, it was the insinuation, the failure to give facts, and the way he went about saying there was a crisis, when there is not.

💬 Gerry Brownlee: I raise a point of order, Mr Speaker. This is a debate on a matter of urgent public business. It is a debate about the disgraceful misappropriation of $21.5 million by the current Government for its own political purposes, and that Minister needs to get back on to the topic and face up to his Government’s own frailties in this matter.

The ASSISTANT SPEAKER (H V Ross Robertson): Can I just thank the honourable member for his contribution, and refer him to Speaker’s ruling 43/3. A member is entitled to react to the previous speech, but he then has to come to order.

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think you probably did not hear the core part of that complaint from the member. He talked about the Government misappropriating money, which is theft. That is an entirely unparliamentary comment, and I ask for it to be withdrawn and apologised for.

The ASSISTANT SPEAKER (H V Ross Robertson): Yes, I think the member makes a very good point. I think the term is out of order, and I would ask the member to desist.

I simply wanted to establish at the beginning of the debate that members are having a debate based upon insinuation, a failure to fully document the case—as is usual—and the usual doom-laden speeches that we are now familiar with from Dr Don Brash.

Let me just walk through the facts of the matter. The Working for Families package, which is $2.7 billion over 3 years—$2.75 billion over 3 years, to be exact—has attached to it a $21 million plan to communicate what we are trying to do. The package takes place over 4 calendar years. [Interruption] I know the facts are difficult, I say to Mr Brownlee, but he should listen to them, as they are quite useful. We will be spending $2.75 billion over 4 calendar years on family income assistance, the accommodation supplement, and childcare assistance. We will see around 300,000 families—61 percent of all families—in this country gain access to more assistance. Low to modest income households will gain assistance so that they gain more money, and, most crucially, when they move into work, the work will pay. I know that the member who has just sat down supports that.

The package needs to be communicated effectively, so that people who are eligible for that large amount of money actually apply for it and get hold of it. I direct the member’s attention to paragraphs 14 and 15 of the Auditor-General’s letter. “In our view,” states the Auditor-General, “it is appropriate for there to be a communications strategy to ensure that people are aware of their entitlements under the Working for Families package, … particularly … when people will not receive a benefit to which they are entitled, unless they make a formal application.”

💬 Dr Don Brash: I raise a point of order, Mr Speaker. At no point did I contest the need to advise the public about the nature of that package—at no point did I contest that. I pointed out that the Auditor-General had made the point very clearly that the process by which the $21.15 million was appropriated was improper.

The ASSISTANT SPEAKER (H V Ross Robertson): I tell the member that that is a debatable issue.

Learn the Standing Orders! That is a debating point. The member made his point; I am making my point—that is how the debate actually works, I tell him. I know that he is new, but that is how it works.

I know that he does not like it, but paragraphs 14 and 15 of the report state that communications are entitled to be taking place, and that it is important to have communications, because unless people apply they do not get money. The Auditor-General says that the Working for Families package contains changes that “affect up to 300,000 families—including current beneficiaries and significant numbers of people who do not currently receive benefits (and will not do so unless they apply).” OK, point No. 1 for Dr Brash is that the Auditor-General agrees that the package should be communicated, because otherwise people will not get the entitlements they are entitled to.

The next point is that the development of the estimates of the cost of the communications campaign, of necessity, was done under Budget confidentiality. So only limited information went to the advertising agency when it was seeking an estimate of costs. What does the Auditor-General say about that? I refer to the Auditor-General’s conclusion: “The estimated costs of the proposed Communications Strategy in the Budget 2004 bid are consistent with the cost information supplied to the MSD and the IRD by the advertising agency, based upon the limited information provided to the agency.” The Auditor-General also notes: “… a need to observe confidentiality requirements of Budget 2004 in regard to that information.”, and notes that under longstanding Cabinet financial delegations “… further approvals will be required from the responsible Ministers before any advertising expenditure of more than $100,000 is actually incurred.” He goes on to say, on the question the member is so excited about—$21 million over 4 calendar years, driving a package of $2.75 billion, as the Auditor-General notes—“… the MSD and the IRD are continuing to revise and tailor the detail of the Communications Strategy as part of their ongoing assessment of the communication needs for the Working for Families package. As the detail—in particular, the mass media advertising campaign, which is at the early stage of requesting proposals from advertising agencies—has yet to be finalised, the actual cost of the Communications Strategy is not yet certain.” He goes on to say there is potential for cost savings. We will know about such cost savings when those details are in, and we would expect, of course, that there will be cost savings.

For my next point, I go to the Auditor-General saying that the Audit Office was consulted prior to the Budget about the intention to have the communications campaign—in particular, the information on the Working for Families package that was released on Budget day—and satisfied itself it complied with Cabinet guidelines for Government advertising. I go back and ask myself what the Cabinet guidelines say about that. They say the following things: “Governments may legitimately use public funds for advertising and publicity to explain their policies, and to inform the public of government services available to them and of their rights and responsibilities.” The Auditor-General is of the view that the Working for Families communications campaign is consistent with that statement. [Interruption] There we go again.

Let me take it back here. The Audit Office will be consulted about all future elements of the communications campaign, and has recently cleared the advertising campaign about the 1 October changes to the accommodation supplement, and the 4 October changes to childcare assistance. Let me repeat that: we have already had two elements of this campaign go to the Auditor-General—as all of them will—and they have already been cleared by him. I want to take that across, to extend it to say this: the Auditor-General found that “In February 2004, the MSD and the IRD decided to have a joint Communications Strategy. They worked together on that Strategy from then until the date of the Budget announcement.” To which I can add that the two departments—from the chief executives down—continue to work closely together on those matters.

I want to stress that for many families this package will be the first time they have qualified for assistance of any kind. As the Auditor-General says, “Families who become eligible for assistance for the first time need to apply for it, as neither Inland Revenue or the Ministry of Social Development hold information which would enable them to identify newly eligible households.” Payments are unable to be backdated; families have to apply for them when the families become eligible.

There is much more that I could say about the insinuation, the failure adequately to choose the facts that fully tell the story, and the way that that member has come into the Chamber predicting yet another crisis when there is no crisis. This is a properly documented piece of spending—$2.7 billion of money going to low and modest income New Zealanders—driven by a package of up to $21 million properly accounted for dollars that will go out during this period of time. That is what is going on here; that is the full story. Yes, we had to make sure that, under Budget secrecy, we did not have the full, costed details of the package, but, yes, all of it goes to the Auditor-General, and, yes, it rolls out in tranches, which allow it to be controlled. How do we prove that to people like Mr Prebble? Two packages have already gone to, and been approved by, the Auditor-General. Those packages were rolled out in the normal way. This is a policy that the Auditor-General will be consulted on all the way through. We are happy with that, and we will ensure that it happens.

The very final point I would make is that the National Party may not want low and modest income families in this country to know about their entitlements. That is the real story. In the 1990s, did the National Party Government tell people that they could have a benefit, that they could have an accommodation supplement, that they could gain anything from that Government? No! When Labour came to power, we had to clean up the student support system and introduce a full entitlement policy, because the National Government would not pay people their entitlements. National hates people who need support from the Government. That is what this is about. It hates them, and it wants to make sure that people who are entitled to assistance get nothing. That is what it is about. Dr Don Brash, who was used to his half-a-million-dollar salary at the Reserve Bank, cannot understand why ordinary, everyday New Zealanders, who are trying to raise their kids in difficult circumstances, should be told about $2.75 billion worth of new spending on them and their kids and on making work pay. Well, I am looking forward to being on the hustings and arguing about that. National can take it away from them; we will make sure they get it.

The Controller and Auditor-General, in his report on the Working for Families communications strategy, considered the need for the communications strategy, the process of costing the strategy, the development of the joint communications strategy, and whether the budgeted costs for the communications strategy are reasonable. New Zealand First is very concerned at the amount of money being spent on the advertising campaign. As we looked at the report and at the amount of money being spent on the communications strategy, we saw that it totals up to $21.15 million, to be allocated over the 3 financial years from 2004-05 to 2006-07 inclusive.

The communications strategy budget is divided between two votes and 3 financial years as follows—I am reading this from the Auditor-General’s report for a specific purpose. First, in the 2004-05 financial year, $7.65 million is allocated in Vote Social Development and $3.94 million in Vote Revenue, which totals up to $11.59 million. That is an enormous amount of money to be spent on advertising in just 1 year. But, wait, there is more, as they say in the infomercials. In 2005-06, $2.81 million is allocated in Vote Social Development and $3.38 million in Vote Revenue, which totals up to $6.19 million. Last but not least, in 2006-07, $2.25 million is allocated in Vote Social Development and $1.12 million in Vote Revenue, which totals up to $3.37 million. That comes to an absolutely ridiculous and outrageous total cost for advertising—which basically comes down to Government propaganda—of $21.15 million. That is an absolute disgrace. When I think of what people could do with that $21.15 million, I get very sad and frustrated.

💬 Pita Paraone: House more Māori families.

That $21.15 million could house more Māori families and address their health needs. It could help fund alternative education centres within the Auckland area whose funding the Associate Minister of Finance who is also the Minister of Education has cut back. It could also help to fund better roading in the Rodney area, where I come from, like the Albany to Pūhoi realignment B2. There are a lot of extra things that $21.15 million could be spent on. It is a huge—enormous—amount of money to be spent on advertising. It is not being used to help Māori families into housing, which my colleague Pita Paraone mentioned. It is not being used to increase alternative education funding, which the Government is cutting back on. It is not helping the school in Hobsonville, nor is it being used in other communities where it would really help out. It is an incredible amount. It is an enormous amount of money that could go a huge way to help to improve the lifestyle of people in local communities around this nation. But what is the Government spending it on? What is that money going to? It is going into Government propaganda. It is an enormous amount. It is amazing how much of a cesspit of advertising the Government has created, when it could be helping out so many young people, so many families, and so many health initiatives around this country.

💬 Hon Member: Student loans.

Students loans are another very good example. There is an enormous need amongst our young people and tertiary students.

I make another point, which is straight from the Auditor-General’s report. He said: “The $21.15 million for the Communications Strategy includes the costs of research, creative development,”. Well, New Zealand First wonders what kind of creative development is necessary for advertising that lets people know what they are entitled to. What would it include? What kind of creative development is used in this whole area to tell people they are entitled to some extra money? It is actually quite a basic package.

💬 Hon David Cunliffe: No creativity.

Even a Minister is saying that no creativity is needed to advertise this package; that is what I think he is saying. Why on earth has the cost of research been included in that amount? How on earth has the cost of research been included in that amount of $21.15 million? It should have been included in another estimate. Research should be included in another estimate. This is just a big charade. No research was done on the $21.15 million that is being spent. There was probably no research on this $21.15 million whatsoever. Why is it there? Because the Government has to create something, because it has to say that this $21.15 million was used for the really good purpose of research, creative development, and all those flowery, neat, nice, and fluffy words to make it sound better. But at the end of the day—

💬 Hon David Cunliffe: I raise a point of order, Mr Speaker. The member’s use of the word “charade” is unparliamentary. It implies misappropriation, and that has already been ruled on by your good self.

The ASSISTANT SPEAKER (H V Ross Robertson): “Charade” is a debatable issue. I ask the member to come to the point.

I was speaking to the point. The figure of $21.15 million was straight from the Auditor-General’s report.

💬 Dail Jones: They can’t take the facts.

My colleague Dail Jones is right in saying that they cannot take the facts. They cannot take the truth. Why? Because the truth will set one free, and the truth hurts. That is exactly what is happening to this Government.

I want to read again from page 9 of the Auditor-General’s report, which states: “… in our view, the planning of the communications strategy in the period leading up to the Budget announcement evidences a disappointing lack of consistency. This is particularly clear from the manner in which the departments went about planning for separately produced television advertisements, and the separate and differing approaches to the nature and scale of the specific campaigns to promote the changes that each of the departments would be leading.”

💬 Dail Jones: He’s very quiet now.

He is very quiet now, and the reason is that those are the Auditor-General’s own words. He has been critical of the way in which money has been spent in this area. New Zealand First is very concerned about the amount of money that was to be spent on this campaign, and we express our disgust at it. That $21.15 million—about $11 million just in this financial year—could have been spent on other programmes, like alternative education projects, or health initiatives around this country. I say, and New Zealand First says, that it is a diabolical disgrace to spend $21.15 million in this way. It just comes down to plain Government propaganda—that is all it is.

I am looking forward to Dr Brash putting his money where his mouth is. I am looking forward to Murray McCully telling us how much money his National Party Government spent on a whole string of propaganda exercises when he was a Minister. I think it is time for all political parties in this House to clean up their act when it comes to spending taxpayers’ money on advertising. The last National Government, from my recollection, was far worse at exploiting the public purse than the current Government is. Let us just remember back to Mrs Shipley’s so-called code of social responsibility. How much did that propaganda exercise cost the taxpayers of New Zealand? How many people did it upset? How many families and parents did it make feel guilty about doing a good job trying to bring up their kids, when the Government of the time was not giving them an adequate income to bring up a family in decency? How much did National’s dob-in-a-beneficiary 0800 number cost, at a time when National was basically pitting neighbour against neighbour, getting people to rat on the people next door because they may well have had somebody visiting them who was a close family friend? That National Government was trying to undermine our society and tear our social fabric apart. Where is Dr Brash’s admission about what that National Government did? Well, he was not around in those days; he is a new boy on the block. Where is Mr McCully’s admission about what the then National Government spent?

How about Dr Brash himself? He is very keen to jump up and down today and tell us how much the Labour Government has spent on communications—and I will turn to the Labour Government in a minute. Dr Brash admitted in a press release on 29 June that 10.3 percent of the National Party leader’s budget was spent on communications in the last financial year. Imagine if the Government spent 10.3 percent of its budget on propaganda, trying to con the New Zealand public about what it is up to!

Dr Brash even went so far, with the $221,643 he spent on communications, to send the letter I have here to the former owner of the house in which I live in Wellington. It is a shame she died a few years ago; she was a lovely lady. Dr Brash is busily telling her what a terrible Government we have, and that it is forcing through politically correct legislation. I must thank him for this next phrase in which he says that thanks to Labour and the Greens the bulldozers are being stopped from being started. I am very proud of the fact that we have stopped bulldozers from forging roads through some of our most beautiful coastline and bush country, and instead are promoting public transport. But how much did it cost Dr Brash to send that letter to all of the people in Wellington Central? It is not even an electorate that he represents. I suspect that he sent this letter over the whole country, or, at least, everywhere the National Party does not have a constituency MP, and, let us face it, there are not many electorates where National does have constituency MPs these days. So how much did National spend on this letter?

If we look at the questions in this letter, we see it is just a cheap way of polling. The letter asks which party people support. In fact, it is not actually a cheap way of doing polling, because it is the taxpayers of this country who have paid for this market research for the National Party. The taxpayers have not just paid the $221,000 that National has spent on its communications budget; the Freepost number back to Parliament that is on the letter does not come out of Dr Brash’s budget. It is on top of what Dr Brash gets to spend on advertising out of the taxpayers’ fund.

I am looking forward to Mr McCully saying that he is keen to change the rules that apply to Parliamentary Service budgets. I have to say that so far his colleagues on the Parliamentary Service Commission have been next to useless. I have been trying for years to get the rules tightened around advertising, but who blocks the rule changes? It is Mr McCully’s colleagues on the Parliamentary Service Commission. Mr McCully should come along to the Parliamentary Service Commission and join me in getting these rules tightened up. The first one that has to be tightened is the Freepost rule. Parties should be paying for any Freepost number out of their own budget, not out of an uncapped budget.

Not only that; there should be greater transparency about what money is spent, so that all significant advertising has to declare that it is from a political party, which political party it is from, and the fact that it is paid for from Vote Parliamentary Service.

But we have to go beyond that, which is why I am pleased that the Auditor-General has written to all parties trying to get our cooperation in rationalising the rules, because there are now three sets of rules. There are the rules that apply to Government departments, the rules that apply to Ministers, and the rules that apply to the rest of us back-bench MPs—particularly those of us in Opposition parties. There are a lot of inconsistencies in those rules and they need to be sorted out. Rather than our wasting 1½ hours of the time of the House on an urgent debate, I hope the National Party, the Labour Party, and every other party in this House put 1½ hours of decent, constructive time into looking at how we can improve the rules so that we can lift the image that parliamentarians have in the eyes of the public. At the moment our image is pretty damn poor because of the sorts of things we do. One of the worst examples was poor old Bill English’s attempt to save his leadership of the National Party. He plastered billboards up and down the country at the cost of tens of thousands of taxpayers’ dollars, but it made no difference in the end, because he was still rolled.

Turning to this Labour Party campaign, the $21 million may be excessive—I would be interested to see the full breakdown of that spending—but we support communicating to the people of New Zealand what their entitlements are under the family package. The problem with the old rules is that at least half of those who were entitled to some taxpayer support did not receive what they deserved, because they did not know what they were entitled to. National should not be so mean-spirited as to stop the Government from communicating to the people who have missed out, because, of course, under National many, many people missed out for many years on what were their fair entitlements. So we support some of this money being spent. We are not sure it should be $21 million.

Where the Labour Government has crossed the line is that the 0800 number that it used for its departmental advertising through the Inland Revenue Department and Ministry of Social Development is the same 0800 number it used for its blatant propaganda: “You’re better off with Labour.” That is crossing a line, and the Labour Government should stop doing that. It should pull down all those posters that it has put up around the country. “You’re better off with Labour.” is so close to “Vote for Labour.” that there is hardly a sliver between the two messages. But, more to the point, Labour should not be cross-marketing like that and using a Government department to receive calls for what is in effect party political advertising.

I look forward to Labour facing up to that and cleaning up its act. I look forward to all political parties in this Parliament cleaning up their act. I also look forward to our cooperating with the office of the Auditor-General in the research that it is doing into Government parliamentary advertising and publicity. It is beholden on us all to do a much better job on behalf of the taxpayers, whom we are here to serve.

The granting of an urgent debate by the Speaker for a debate of this sort is not common. As one of the Ministers pointed out, when there are budgetary matters on, it is uncommon. We then have to ask why the Speaker thought that this is an issue that the House should look at. When we look at the Standing Orders we can see that it not only has to be an important matter, but it has to be a matter that requires the attention of the House. When we read the report we can see why. I realise that this is written by the Auditor-General, who writes in the bureaucratic language of that office. I guess one has to be a member of Parliament to realise that this is a damning report.

💬 Hon David Cunliffe: Rubbish!

One has a fear that that means the Minister will not take any notice of the Auditor-General’s report.

💬 Hon David Cunliffe: Will the member read paragraph 14 of the report?

Let me read him this paragraph: “However, this letter has set out our concerns about the robustness of the process for costing the Budget bid”. That means that there was no proper analysis before $21 million of taxpayers’ money was decided on. It also refers to “the lack of consistency in approach”. I guess what it means by that is that this is a huge over-the-top expenditure. The report goes on to state: “Those concerns mean that it is not possible, in our view, to say that the budgeted costs are a realistic reflection of the likely actual costs of a communications campaign”. What the report is actually stating is that the Government just picked up and guessed a figure.

I am a bit concerned that the Auditor-General did not go further. The Auditor-General said: “We have not sought to compare the costs of this communications strategy with other government-funded public information campaigns.” The Auditor-General did not have to do that. The Auditor-General could have asked how this compares with the cost of selling McDonald’s, KFC, or Air New Zealand, the biggest purchasers of television advertising. I can tell the Government the answer. This is the biggest advertising campaign. There is no one who is proposing to spend $21 million promoting a single product, because that is what this is. This is a single product—the Government’s Budget. It is the biggest advertising programme in the history of New Zealand.

💬 Hon David Cunliffe: What percentage of the cost is it?

If the Minister would like to go back and check he will find that the Government of New Zealand was able to spend less money informing the public about GST than it is spending now to sell this Budget. In fact, the Government spent less money telling us all about decimal currency than we are now being given to sell this Budget. I will tell the Minister the reason why. When one has a Budget that one says is helping people to go back to work, then finds that solo mothers who accept the Government’s advertising and go back to work will pay 92.2 percent tax, I have to say to Mr Cunliffe that I do not think $21 million will cut it. I do not think he would be able to persuade solo mothers that this is a great package when they actually work out that when they go back to work they will pay the Government $92 for every $100 they earn.

I can tell Mr Cunliffe how this Budget came about, and how the spending came about. It was not done, as the Auditor-General was told. No, before the Budget, when a group of senior Labour Party Ministers realised how complicated and how unsaleable the Budget was, they panicked.

💬 Hon David Cunliffe: Yeh, right!

I tell Mr Cunliffe that they had a meeting and he was not one of them.

💬 Hon David Cunliffe: Yeh, right!

They had a meeting with a number of senior officials from the Beehive—political officials, no civil servants—and they panicked. They said they would need the mother of all advertising Budgets. Then they went and spoke to their friends in the advertising industry, who said: “You’re going to have to spend more money on this campaign than anybody has ever spent in the history of New Zealand.” I will say that again: “more money on this campaign than anybody has ever spent before”.

💬 Pita Paraone: And why?

I will tell the member why. A solo mother, under this package, who accepts the propaganda and goes back to work, will find that the Government will take $92 out of every $100 she earns. Of course there is another maxim that the advertising agency did not draw to the public’s attention. If one has a bad product and a big advertising budget, one just goes bankrupt faster. That is the real problem.

The advertising agency also forgot another maxim, which is that good government sells itself. But this Government knows that it cannot persuade ordinary working New Zealanders that this is a Budget for ordinary working New Zealanders. When one analyses it, it is a welfare Budget, and 300,000 people will benefit, the majority of whom are welfare beneficiaries. What is the importance of that? Well, that goes to a point that the Auditor-General also makes in Auditor-General - type language, so I will have to explain it. The Auditor-General is basically saying that he thinks they ought to review “generic television advertisements to promote the package as a whole.” What does “generic television advertisements” mean? I will give members an example.

💬 Hon Murray McCully: Propaganda.

Well, it is propaganda, and I thank the member. But I like to give people an example. There are new things called “PHOs]primary health organisations. The Government is now spending millions of dollars, and I have seen the ads on television—and I do not watch television very often, but I must have seen it half a dozen times—where a charming young lady appears and says she is acting on behalf of the Government, and as a result of these new primary health organisations general practitioner visits will be cheaper. I am sure she did not realise she was lying—she was paid to read out a script—but we all know that that is a lie. We all know that, in fact, as a result of these primary health organisations, and the extra bureaucracy—because the General Practitioners Association has explained it—the cost of general practitioners has gone up. Has the Government withdrawn that advertisement? No, it has not. Do we all belong to primary health organisations? No, we do not. But the Government thinks that it is necessary to have “generic television advertisements” promoting its changes to the health system. The Government is now going to spend money on television to tell us all that we are benefiting somehow from the Budget, when, as the Auditor-General points out, only 300,000 of us are being so targeted. The Auditor-General also knows that the Government actually does know the name of every beneficiary—I know that some of them are fraudulent names, but they do know the names and the addresses.

Do members know that a letter to each beneficiary explaining that he or she will be paying 92.2 percent extra in tax can be sent for $300,000? Of course the Auditor-General wants to know why the Government does not do that, instead of spending $21 million on the most expensive advertising campaign in New Zealand’s history, the biggest ever done by a Government; greater than the amount of money needed to tell us all about GST, greater than the amount of money to tell us all about decimal currency, and of course it is going to 3.7 million New Zealanders who do not actually benefit at all. But we are going to be told, just as we are told in the advertising for primary health organisations, that the cost of medical visits is going down, when we actually understand that they are going up. That is why one has to spend more money. If one is going to tell a lie, one has to tell it often, and tell it many times. But I have to tell the Government that $21 million will not cut it.

💬 Hon Trevor Mallard: This is a most experienced member.

It most certainly is. I can remember that Government doing the Rub Out the Crim campaign. I can remember the Access scheme. Those programmes look mild compared with this. Actually, rubbing out crims is not a bad thing. But this Government spends $21 million to try to persuade the majority of New Zealanders that a 92 percent tax rate is a good thing for solo mothers.

I would like to begin by congratulating the Hon Murray McCully and, I guess, the National Party research team on, first of all, spotting the fact that this $21.15 million was going to be spent on communicating the Working for Families package; and secondly, I would like to sincerely congratulate him on having the good sense to write to the Auditor-General and ask for the matter to be examined, and examined in detail. The other thing I want to do is to congratulate the Speaker on having the good sense today to allow this debate to occur, because I think it is a very, very important debate, and one that in some ways is overdue.

I say that because the current Government has gained a reputation as being very good at spending other people’s money. There is a maxim, of course, that Governments do not have any money unless it is first taken off the citizens of the country. So first of all it should clearly be understood that this $21 million has been collected from the people of New Zealand, and then spent on an advertising campaign. A minute ago when Richard Prebble was speaking I thought he was going to say that he knew where the money was going to go, and I thought he was going to say “into the pockets of the advertising agents”. Because that is actually where the money is going to go. I think we need, from time to time, as a House, to say: “Hang on a minute, this is money that belongs to the citizens of the country. Are we being good stewards? Are we doing the right thing in spending the money in this particular way?”. After all, in a sense, any Government really becomes like the trustee for its citizens, and one of the obligations on any trustee is to ensure that money is spent prudently.

When I looked at the Auditor-General’s report I asked myself a few basic questions, maybe from my business background. The first question I asked myself was why this money was being spent. The report states, in one place, that 300,000 families will receive the Working for Families assistance. But I draw the House’s attention to the fact that attached to that report is schedule No. 1, which, under the Ministry of Social Development part of it, states that the forecast number of new clients is actually 37,000. Under the part relating to the Inland Revenue Department, it states that the number of new clients is 48,000. If those figures are added together, it means that 85,000 expected new clients will come into the Working for Families package. The other 215,000 are already getting certain entitlements. They already have a relationship with the Ministry of Social Development or the Inland Revenue Department. Because we already have the postal address of those people we can simply send them a letter stating that that is the deal. That can be done in a multiplicity of languages and that will be no great problem. However, the strategy of the bright people who have put this campaign together is not to hunt down those 85,000 people, but to blast the whole 1.9 million families of New Zealand with mainstream, repeated, generic advertising that will be spread across 3 years.

💬 Steve Chadwick: Because it’s so good.

Great, we all want to sit in our lounge every night and hear the same message for the next 3 years! Get real! That package is for 85,000 families out of 1.9 million.

I shall say a bit more about this. My colleague Judy Turner and I have sat here and done a bit of creative thinking. If the goal is to get a message to 85,000 families, how should it best be done? I have some suggestions to put to the House. First, I suggest that the Government prints its material in all the different languages used in this country: Samoan, Māori, English, and some of the other major language groups, and send a letter to every family—1.9 million families—in the country. The cost at $2 per letter, which would include all the printing, the language, and preparation of material, would be $2.8 million, and I think that would be a very generous allocation.

💬 Hon Trevor Mallard: Do we know where they live?

Well, we would send the letter to every family in the country—1.9 of them—and all it would cost is $2.8 million. The next step would be that we would tell families that if they qualified for those new packages we want them to let us know by filling in the form in the letter and sending it back to us. If it turned out that that family qualified we would send it $100 in the mail by return. The cost for 85,000 tickets would be $8.5 million. So for a cost of $11.3 million, we would get the job done and get it done well. So Judy Turner and I in the space of about 15 minutes have just saved the taxpayers of this country $10 million. We have just done that while the speeches have been going on. We asked ourselves, if we were doing this, what would we do, and that is our answer. I think that would be far more effective than the crazy $21.15 million generic advertising campaign on all television channels, with separate advertisements from the Inland Revenue Department and Ministry of Social Development, and not even bothering to coordinate that. The strategy is very poorly thought through and it is poorly targeted.

I have seen the Inland Revenue Department do much better than this. Before I came to this House I was the financial administrator of the Catholic Archdiocese of Wellington. At that stage the Inland Revenue Department wanted to get in touch also with all of those families who were entitled to the current family support package. The department made up a number of multilanguage brochures, sheets, and so forth that went out to all the churches in the country. It said to Samoan churches: “You’re in touch with the Samoan community. Could you get one of these to every person who comes to your church on Sunday?”. The Samoan churches said that they would do that. The department did the same with Catholic churches and other churches. It did it with other big charities. We all participated in getting that information to the families that we knew were needy and therefore would qualify.

A strategy like that could probably be more effective, and that whole thing for 85,000 people, with 200,000 bits of information, could be done—and I have been very generous here—for say, $3 million. If that will do the job, in this debate we have saved the taxpayer not $10 million, but $18.15 million. I make those points just to illustrate that this $21.15 million strategy is really not a good use of public money.

I also take this opportunity to mention one other thing. As members are probably aware, I am a member of the Finance and Expenditure Committee. The Auditor-General comes before the committee once a year and we talk to him about various matters. This year I asked the Auditor-General whether the Government dispensed money in this country at the moment to non-Government organisations without a requirement for those organisations to produce audited accounts. He said yes, the Government did that.

If an organisation in this country applies to the Lottery Grants Board, it cannot get a grant without producing audited accounts. By the way, the Finance and Expenditure Committee reported back to the House that that issue should be addressed. That is extremely poor stewardship. I have written to the Minister for Sport and Recreation on that issue, because it includes grants being disbursed through Sport and Recreation New Zealand, which see huge amounts of money being dished out to all sorts of organisations that do not have to produce audited accounts in return. I can go to the health budget and tell members that the same sort of thing is happening.

It is time that this was brought to an end and that we established proper standards of accountability, because at the end of the day we are spending the money that we, in the first instance, have taken away from our citizens. We should be good stewards with that money, careful with it, and bring to an end—what is the right word—the prodigal methodology that this Government has adopted of scattering money around like confetti. We would not have all those hip hop scandals and those other things, or trouble with one of the members of this Parliament, if we adopted the simple procedure: “You don’t get money from us unless you produce audited accounts.”

The letter that the National Party received today from the Auditor-General contained no good news, and indeed contained quite a lot of criticism, for a number of parties associated with the Government. There was criticism for the Ministry of Social Development and for the Inland Revenue Department, there was a smack across the knuckles for Treasury, and of course, in appropriately guarded and diplomatic language, there was a decent-sized serve for Cabinet. Each of those parties failed, in the view of the Auditor-General, to discharge the obligations they have under the Cabinet rules. Let me start by making it clear that the Auditor-General’s report today was not about the programme we have seen at vast taxpayer expense, under the slogan “You’re Better Off with Labour”. That is a completely different, additional matter, where this Government has used taxpayers’ funds to try to secure its re-election. The Auditor-General is on to that, too. He has embarked upon another inquiry, and that will be a topic for discussion in this House on another day. This report is about the $21.15 million that is to be spent by the Ministry of Social Development and the Inland Revenue Department on telling us what a good Government we have and how lucky we all are.

First, let me be clear that the National Party has no quibble with the notion that those who are entitled to some form of benefit from the Government, and that those who are to have something done to them by the Government, are entitled to be told about it. Over time we have made it clear that that is a legitimate use of taxpayers’ expenditure, provided it is done within the Cabinet rules and provided it meets the test of the Auditor-General’s office. My leader Dr Brash made it clear that that was a process committed to in earlier times. There are two things that are different about the programme the Auditor-General wrote to us about today. First of all there is its scale. This is $21 million of taxpayer expenditure. That $21 million dwarfs most of the major brand advertising campaigns, as Mr Prebble told the House this afternoon. Secondly, there was a lack of process about this programme—a process that normally involves informal consultation with the office of the Auditor-General. That is why the Auditor-General has told us today in very clear terms that this programme has not met the test of the Cabinet rules, and has not met the test of his office. He has told all the parties to go back and do the job they should have done in the first place, and has predicted that the figure that will ultimately be spent will be somewhat less than $21 million, in the event.

As Mr Prebble has told us, this is a damning report. It comes many, many weeks after the matter was first raised with the Audit Office by the Opposition parties, and many, many weeks after the Auditor-General’s office said that it would report. I want the House today to know the reason for that. It is because the highly paid lawyers of the Inland Revenue Department and the Ministry of Social Development have been pointing their bazookas in the direction of the Auditor-General’s office, and trying to get this report watered down. I would love to have seen the first draft of the report that came down today; it would have been a ripper. For weeks, those highly paid lawyers have been trying to negotiate down the scale of the wording that is ultimately in the report made available today.

As Mr Prebble said, after making allowances for the diplomatic language and the careful wording of the Auditor-General, let us just have a look at what he has told us. The Auditor-General has stated that at the time of the Budget some people in the Government sat down and decided to have a very substantial advertising campaign. He has told us that they had some consultations with an advertising agency. He does not tell us in his letter whom that advertising agency was, but I will tell the House today that it was Clemenger BBDO Ltd. On the basis merely of some conversations with that agency, a figure of $21 million was devised as being an appropriate level of expenditure for a public advertising campaign. Mr Prebble has also told the House that a number of Ministers were involved in that process. Noting the sheepish look on the face of Mr Mallard, I would say that he clearly was one of them. Clearly, Mr Cullen was one, as were a number of other senior Ministers, and no doubt “Minister Simpson” was involved in that process. Then those Ministers handed the project over to their senior public servants.

On the basis of that work, we were told on Budget night that an advertising programme, the largest by many times ever embarked upon by a Government in this country and costing $21.15 million, would be embarked upon to tell us how lucky we are to have this Government. We were told that this advertising programme would last for 3 years, but miraculously much of the money would be spent at the time most useful to the Government: during the coming election year. On the basis of that announcement, this House passed legislation that handed over the cheque for this year’s amount of 11.5 million bucks. That money, as the Auditor-General has told us today, has been approved by the Parliament, handed over to the executive, and can be spent by the executive, notwithstanding that the whole premise on which that figure was arrived at was wrong. None of the tests that should properly have been applied were applied, and none of the justifications that the departments were required to produce could be produced. That money was handed over by Parliament in breach of the rules, because the Government used its majority to require Parliament to hand over the cash.

The Auditor-General tells us that there will now need to be some additional processes engaged in to second-guess that process and to double-check it. On the basis of that double-checking, the Auditor-General states that we will not need $21 million. He does not know how much the cost will be, but he knows that Mr Mallard should have known that before he came to Parliament with the Budget, and that the Government should have known that before it asked Parliament to pass the bill. The Auditor-General states that it is too late now for a costing, but we should do the programme anyway, and that it will cost less than $21 million.

We also know that the activities of the Ministry of Social Development and the Inland Revenue Department do not stack up. But let us be clear about whom the major culprit is. It is the Ministry of Social Development—Mr Maharey’s ministry—which, clearly acting under his direction, has put aside almost $10 million for so-called generic advertising. That is not for communication, in terms of sending a letter to people that tells them what their entitlement is and asks whether they want to access it, but is highly paid television advertisements that tell us, in propaganda terms, how lucky we are to have the Government. All that money is to be spent in a way that will benefit this Government, at a critical time in an election year.

The Auditor-General tells us further that Treasury was asleep on the job and failed to run its ruler over the programme, and he gives it a whack across the knuckles. Finally, he tells all the parties that they must now go back and do the job they should have done before Budget day. He states to those departments and Ministers that they must now claw back the amount of money that does not meet the test of the Cabinet rules or the Audit Office scrutiny. He makes it clear that the Audit Office will watch that process with some care. On that basis, maybe we will see the brakes put on the high-spending, high-living ways of the Government. The Prime Minister, who talked about an “orgy of advertising” when a few hundred thousand dollars of expenditure was being embarked upon in a previous age, must now live with the fact that her own orgy of taxpayers’ expenditure is about to come to an end.

Is it not ironic that the second person—and I will give him some credit, because he is the first live person to give a speech for the National Party today—

💬 Hon Murray McCully: I raise a point of order, Mr Speaker. I am disappointed that I have to raise this matter with you, but clearly the Minister is halfway through making a reflection on the leader of the National Party, who spoke earlier in the debate. I want you to ask yourself whether you should ask the Minister to desist from that line.

The ASSISTANT SPEAKER (H V Ross Robertson): That is a matter for debate. I cannot know what the member will say. If that should occur, then it is something that the Speaker will look at.

I agree with Mr Speaker. It is a matter for debate as to whether the previous speaker from the National Party was alive. It was a pathetic—

💬 Hon Murray McCully: You can’t call someone dead!

I think it is really important that the member stays and listens to me, because let us remember he was the person who caused the Cabinet rules to be written. He was the person who was caught with his hand in the taxpayers’ jar, taking big wads of advertising cash out and putting it into his mates’ pockets. Who did that? Then we think about the Tourism Board. Do members remember that scandal? Who was responsible for that? It was Murray McCully, who has the cheek to come here to the House—although, as I said, he did give a better speech than the Leader of the Opposition. At some stage, the Opposition will give up having puppets in the job and have the puppeteer there, instead.

I want to get back to the essence of the debate. I do want to refer again to Mr McCully and to an area that he had responsibility for, which was housing policy. I want to refer to the accommodation supplement. I ask members whether they can remember the percentage of people in work who were eligible for the supplement that got it, after the advertising programme on the scale that the National Party gave it. Do people remember? Was it 80 percent? No, it was not. Was it 50 percent? No, it was not. Was it 25 percent? It was 19 percent. More than four out of five people who were eligible for an accommodation supplement, and who were in work, did not get it. They were poor people, who did not respond very well to a flier in the letterbox, with all due respect to our friend from United Future.

I want to make it clear that this money is designed to make an enormous difference to the poorer people in New Zealand. Often they have jobs, although some of them are beneficiaries. It is designed to lift their incomes and for many of them, especially those with children, to lift them out of the poverty trap they have been in. I can tell members that the best way to create awareness around that is not by writing to those people.

💬 Brian Connell: What a boring speech.

It is not a matter of writing them a letter. I hear the intellect from—

💬 Brian Connell: Is this member alive?

Asperger’s syndrome? Is that the member’s problem? The member from Rakaia is interjecting. People in his electorate are disgusted with their representation. They are disgusted with people who say that poor people should not be allowed to have a bit of extra cash for their kids, and that they should not find out about it. Those people from Rakaia who know they have a new member of Parliament—most of them think the member is still Jenny Shipley—are very, very disappointed in Brian Connell. At least when Shane Ardern drove a tractor up the front steps of Parliament, people from his electorate knew there was a new member of Parliament. It took 5 years, but they knew he was here. In the case of Brian Connell, no one from Rakaia has worked that out yet.

I will make a serious comment, and I do this with some care, because it is not my practice, generally, to criticise Officers of Parliament. But I think that parts of the Auditor-General’s letter are, frankly, shoddy. I think his suggestion that there should have been a breach of Budget secrecy, and that the nature and size of the target audience should have been described to persons outside the Government, is wrong. In my view, to breach Budget secrecy on something of this scale before a Budget is announced would be wrong. I know that was the practice of the previous Government, but this Government has higher standards than that. [Interruption] There is Nick Smith, the member who says he did not come to Parliament to shag spiders. He has obviously had a bit of a problem since he has been here.

💬 Hon Dr Nick Smith: I raise a point of order, Mr Speaker. The phrase that the member has chosen to use—he does not like interjections about his speech—is not appropriate language to use in Parliament, and I would ask you to consider that. I think that the term “shag” is not appropriate language to use in Parliament and I think you should give careful consideration to that sort of contribution from that grubby member.

Speaking to the point of order, Mr Speaker, those words are a direct quote from Nick Smith. I offer to table the North and South article in which Nick Smith says words to the effect that he did not come to Parliament to shag spiders.

💬 Simon Power: I raise a point of order, Mr Speaker. You will recall that at the start of this parliamentary session a similar ruling was called for in respect of a word that was ruled unparliamentary—it was a word in that case, as opposed to a phrase in this case. At the time, a member of the National Party put the case to the Speaker that because the word was a quote from a document, the member could not be held accountable for the coarseness, or otherwise, of that language. My recollection is that at the time that word was ruled out of order, despite the fact that it was a direct quote. I would ask you to apply the same standard with regard to the matter raised by my colleague the Hon Dr Nick Smith.

The ASSISTANT SPEAKER (H V Ross Robertson): I say to the member that quoted material should be as free of unparliamentary language as the member’s own words, as is referred to in Standing Order 115. I ask the member to come to the point.

The point I am making is that this Government is spending $21 billion—

💬 Hon Dr Nick Smith: On trying to win the election.

We will win the election anyway. The member is giving the leader advice. We will clearly win. Even though, as the member says, he has a certain relationship with the Leader of the Opposition—

💬 Hon Dr Nick Smith: What is he implying there?

I am not using the exact word for the activity that the member indulged in, because I am not allowed to use it. Even though he has a particular relationship with the Leader of the Opposition—I think the member would have been safer had I been allowed to quote him, but I was not allowed to do so.

This Government is spending $21 billion on poorer people. About 1 percent of that will be spent on explaining to them how they can get their money. What can be wrong with that?

The debate having concluded, the motion lapsed.