Appropriation (2015/16 Estimates) Bill, Accident Compensation (Financial Responsibility and Transparency) Amendment Bill

First Reading

I move, That the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill be now read a first time. I nominate the Transport and Industrial Relations Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by Tuesday, 3 November 2015. This will help to ensure that the provisions of the bill, if enacted by the House, can come into effect before ACC consults on levies in 2016. The Government is committed to ensuring that the ACC scheme remains sustainable and effective so that ACC can continue to provide comprehensive no-fault cover to injured New Zealanders long into the future. This bill will amend the Accident Compensation Act 2001 to improve the governance and transparency of ACC funding and the setting of levies. The ACC scheme is a longstanding and critical part of New Zealand’s social and economic fabric. It has served generations of New Zealanders well. The Government is committed to strengthening the ACC scheme for our most vulnerable and for all New Zealanders. We want to reduce the incidence and severity of personal injury. To achieve this we are focusing on better injury prevention, improved disputes resolution for injured people, improved management of our most complex and serious claims, and more consistent and timely decision-making on claims.

In addition to this work, it is also vital that we consider the framework in which ACC funding and levies are set and that we better meet the public’s expectations that ACC should be responsive and transparent. In 2008 the Government inherited a $4.8 billion hole in the ACC accounts. Over the last 6 years we have worked really hard alongside ACC to improve the scheme’s finances. As a consequence, for the first time in history ACC’s three levy accounts hold, or will soon hold, enough funds to meet the expected lifetime of all existing claims. This is a significant achievement that reflects the work undertaken by our Government to turn things round. However, we cannot be complacent. Continued improvement is crucial to maintaining levy stability and avoiding volatility. ACC’s $30 billion balance sheet is subject to frequent shocks, including changes in investment, discount rates, claim numbers, and medical costs. Interest rate movements alone can have a significant impact on ACC’s balance sheet at any one moment. For example, a recent decrease in the discount rate over the period of 1 month was estimated to have increased ACC’s outstanding claims liability by almost $3 billion. These shocks can impact on ACC’s solvency.

As ACC’s accounts have approached full funding over recent years, this Government and officials have been considering how to best manage the inherent economic volatility to which the ACC scheme is exposed. A delicate balance needs to be struck. On the one hand, the public needs to have assurance that levies reflect underlying costs and that ACC will have sufficient funds to pay ongoing entitlements to claimants. On the other hand, volatility in levy rates can undermine public confidence in the ACC scheme and create uncertainty for business and individuals. When levied accounts are at, or approaching, full funding they may appear to have an excess of funding. However, returning to what appears at one particular point in time to be an excess of funds could result in a reduction in solvency and create a need to collect more funding in the following years. As such, we need to ensure that successive Governments have an appropriate range of tools to enable them to make funding and levy decisions in a principled and equitable way and to smooth out the effect of economic shocks over time, to maintain both the solvency of ACC’s levied accounts and provide levy stability.

For these reasons, two of my key priorities for ACC are to create a more financially responsible and transparent levy system and to enable more sustainable and stable levy reductions. The bill represents a significant step towards the achievement of these priorities and addressing the issues that I have just outlined. The bill takes this step through making two key changes to the ACC scheme. The first and most significant change in this bill is to introduce greater clarity and transparency to the approach for funding ACC and the levy-setting process. The bill achieves this through three key measures. First, the bill establishes a robust framework for funding and levy setting. It does this by requiring that levies must be set in accordance with the following three principles: meeting the lifetime costs of claims in a particular year, reasonable stability in levy rates, and long-term solvency of the levied accounts. These principles will promote relatively stable levies that reflect underlying costs.

Second, the bill will require the Government to set the overarching funding policy, which ACC will be required to give effect to when developing and consulting on levies. The funding policy will need to be consistent with the principles of financial responsibility included in the bill. This contrasts with the current approach where the Government’s role generally involves making a decision on levies at the end of the levy-setting process, after ACC develops its own funding policy and presents the Government with levy recommendations based on this policy. Responsibility for setting levies ultimately lies with the Government of the day, as it must for levies of this kind. The mandate for collecting levies has been given to the Government by Parliament and the Government must make the final decisions on levies that the public will be charged. The responsibility needs to be properly reflected in the process for setting levies from the very beginning and outset, not just at the end. The bill establishes a more robust governance structure, where the Government sets the policy and ACC, as the responsible Crown agent, implements and is held accountable for it. Ultimately this will support a closer match between the levies that ACC consults on and recommends and the final decisions on levy rates made by the Government. Taken together these two measures will increase the stability and transparency of the levy-setting process.

Third, the bill increases the reporting requirements for ACC so that the public is better informed about the impact that the new levy rates will have on future levy rates and other aspects of ACC’s funding. More transparency is needed so that we can ensure that the downstream consequences of funding decisions are clear and that both the Government and the public are fully aware of them and that we do not repeat the history of the last Labour Government, with a $4.8 billion hole being handed to this Government. As well as ensuring that levies are set through a robust process, the bill includes the kind of accountability and transparency requirements that already apply to the operation of the Government’s core budget under the Public Finance Act.

The second change in the bill is to ensure that the residual levies are not over-collected, by allowing for their collection to be discontinued sooner than currently required in legislation. It may be helpful to provide the House with some context about this proposal. In 1999 ACC moved to a system of fully funding the lifetime costs of an injury claim. Prior to this, levies covered only the costs of a claim in a given year. Residual levies are therefore required to meet the ongoing costs of historical claims. However, we need to ensure that the payment of residual levies continues only as long as there are outstanding liabilities for residual levies to be offset. This bill provides for residual levies to be discontinued from a set date by Order in Council. This will allow the collection of residual levies to be discontinued earlier than the end date currently set out in the Act, which is the 2018-19 levy year.

Residual liabilities will continue to fluctuate, so a decision to discontinue residual levies needs to be made closer to the time at which it is appropriate to discontinue them. In practice the removal of residual levies will have no impact on the overall amount of levies collected but it will have some impact on the distribution of those levies right across New Zealand businesses. The $500 million of indicative levies announced in the Budget allows for the change in the bill, which could see the collection of residual levies discontinued earlier than the date currently required in the Act. This will allow the actual end date to align with the best estimate of when residual levies will have been fully offset by the change outlined in the bill. Just to be clear: the bill allows the Government to manage only the timing of when the distributional impact occurs, not whether it occurs.

The measures I have outlined form an important part of the Government’s vision for the ACC scheme. It is important to have consistency, transparency, and stability for levy payers, and stability for the hundreds of thousands of small businesses in New Zealand. It is important to continue to strengthen the public’s confidence in the ACC scheme. There has been significant leadership by people like the chair of the board, Paula Rebstock, and the chief executive, Scott Pickering, as was actually outlined today, but there is a need to do more, and it is important that the ACC scheme continues to be fit for purpose and that we support people to be as safe and as healthy as possible. Alongside the Government’s work that is under way, I consider that this bill represents the beginning of a new era of financial sustainability and high performance for ACC. Of course, many fundamental aspects of the levy-setting process will remain in place once this bill becomes law. In particular, when considering changes to levies ACC will still need to consult with levy powers and make a recommendation to the Government on the levies. Certainly, the changes in this bill will complement these existing processes, but more important, the changes in this bill will allow us to realise the benefits of improving the Government’s—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member’s time has expired.

First Reading

I rise to take this call because the ACC scheme is very important to the Labour Party and has been since its inception nearly 41 years ago. It had a long gestation, arising out of the Woodhouse commission. It was hotly contested and hotly debated. It was supported by the Labour Party in Opposition and then by the Labour Party in Government after the 1972 election, which made some very important changes to make it the scheme that it was when it came into force in 1974. This bill prescribes or creates a process that the corporation and the Government of the day can do already. There is nothing in this bill that cannot already happen.

If we have a look at section 6 of the existing legislation—the Accident Compensation Act 2001—and the definition of “fully funded”, we see that that definition encapsulates the very thing that this bill says it is doing. It takes into account the fact that the scheme has to be fully funded and defines what that is, and requires the corporation to take into account that there can be fluctuations from one period to the next. We have this process already when it comes to levy setting that involves the corporation itself, that involves the ministry that gives policy advice—the Ministry of Business, Innovation and Employment—that involves Treasury, and that involves a public process, and it ultimately ends in Cabinet taking in all that advice and making a decision, reflecting and representing that a political decision is taken because ACC levies are so widespread and important to the economy. That is all there at the moment. What this bill does is add a process whereby the Minister gets involved in a preliminary climate setting, if you like, which can happen already, and, indeed, may already happen.

The one thing that this bill will not do, which is actually the most important thing, is stop National Party interference in ACC and levy setting, which is the real problem that we are desperately in need of a remedy for. The Minister’s account of the background and the need for this legislation demonstrates the problem. She cannot even give a straight account today of the history of the issues behind ACC levy setting.

So let us get it straight. In the 1990s the then National Government and the then Minister, Bill Birch, ran down ACC levies. ACC, under its old pay-as-you-go levy-setting process, had built up reserves, as was always intended. You read the Woodhouse commission report and the late Sir Owen Woodhouse was very clear about the way ACC would operate. It was a social insurance scheme, and the corporation was expected to put aside reserves of levies—it would build them up over time—and that is, in fact, what happened under successive National and Labour Governments. And then the 1990s National Government came in, and its members never liked ACC. They hated ACC. That is why they ran it down, precipitated a crisis, and said: “This is no good. We have to hike the levies.”, and then they embarked on the campaign to privatise ACC, because that is what National Governments do. They do not like social providers. They do not like the State being involved in social provision. They ran it down and they mounted the case for privatisation.

But it did not last. The Labour Party, at the time in Opposition, was very clear that when it took Government it would not accept privatisation and it would reinstate the corporation as a proper publicly owned, publicly run corporation, doing what was required to prevent accidents and provide a basis to assist people who had been victims of accidents. Then it was fine, and under the Labour Government of the 2000s the corporation went back on to its steady footing. It maintained the levy-setting process put in place in 1999 precisely so it could build up reserves. It maintained the full-funding model so it could build up reserves, and its reserves were built up. By the end of that Labour Government it was generating surpluses of around a billion dollars a year—modest in the scheme of things, but entirely appropriate to ensure some financial certainty and security for the corporation.

Then there was a change of Government, and then, perhaps, the biggest economic shock to hit the corporation hit in the form of the then Minister, Nick Smith, who could not be relied upon to keep his sticky paws off ACC. He mounted a silly campaign about a crisis. Nick Smith had not realised that New Zealand and the rest of the world were going through a thing called the global financial crisis. It was very interesting that in Minister Kaye’s account of the history of the justification of this bill, she never once mentioned the global financial crisis. Well, ACC, as one of the top-performing managed funds of the country, suffered the same fate as every other managed fund in the country, privately or publicly managed—that is, its balance sheet took a hit. The valuation of equities took a hit and went down. That was termed by Nick Smith and his National Party counterparts in Government as somehow a crisis caused by the previous Labour Government. It was not. It was typical National Party rubbish—nonsense trotted out to justify what National Government members really wanted to do, and that is to hike ACC levies. They either got very poor advice or the advice they got they did not listen to, or they just did not understand how financial markets worked, which is surprising given the Prime Minister and his background. But, anyway, that is what they did.

So ever since that time, for the last 7 years they have left ACC levies artificially inflated, not because it is good for the corporation but to meet their political agenda. The truth is we now know, because we have had the independent research done on it, that ACC is now over-levying New Zealand businesses and workers to the tune of $350 million—$350 million.

💬 Hon Nikki Kaye: Publish it. Where is the Infometrics report? Where is it? You’ve never published it.

The Minister is uncomfortable because she knows that is right. She knows that she has had advice and her predecessors have had advice that they are over-levying New Zealand businesses and New Zealand workers, and she will not do a thing about it. So to give the appearance of doing something, she then contrives this legislation to put in place this extra process so that she can sort of say “Oh no, we want stability of levies and we want to make sure we’re doing it right. It’s going to take us another 2 years before we start doing the right thing by New Zealand businesses and New Zealand workers.” Here is the reality: the Government could do that now. It could do it now—reduce ACC levies. ACC is in a very healthy condition, not because of anything that that Government has done but because ACC has been very good at retaining outstanding financial managers who have made good investments, wise investments, which have built up the reserves, built up the value of the reserves of ACC, to the point where now they are worth over $30 billion.

I look at the title of this bill and it is hard not to break out in a wry smile when you look at a bill called, in part, the “Financial Responsibility” Bill, and that fact that this Government, when the work accounts and earners accounts are funded to the tune of 130 percent, calls it financial responsibility. Well, it is irresponsible to take levies off businesses and workers when you do not need to do so. Then the other word the Government uses in the bill is “transparency”. This is from a Government that cannot be open and transparent about things like its deal with Skycity over the convention centre. It still cannot be transparent over its deal with a Saudi businessman flying sheep around the world at New Zealand taxpayers’ expense. And Government members want us to take them seriously.

This bill looks like it is doing something that is unnecessary. We will consider this bill in the select committee. We will support this bill in its first reading so it can be closely examined in the select committee and so New Zealanders can have their say and can say “Tell us whether this is needed or not.”, and the experts can come in and say “This Government has got its history wrong.” We can do this. We do not want to be overpaying our levies. We just want a corporation that can act properly, ideally independently of the Government, and that can do the job it has been doing: looking after New Zealand workers’ interests when it comes to accidents; looking after New Zealanders’ interests when they are in their leisure time and have an accident; and levy them fairly, responsibly, and properly, which is not what this Government is doing. Let us have a look to see whether this process adds anything. If we are not satisfied that it is going to add anything of any value at all, then we will not support it beyond that. Let us have it examined—let us have it examined—but we will not support yet another convoluted process to protect this Government from the reality of its actions, which are that it is continuing to over-levy and overcharge good businesses and good workers right across New Zealand.

First Reading

Well, just to colour in, perhaps, the historical picture that the previous speaker, Mr Little, spoke about when he referred to, for example, the global financial crisis and the effect that may have had in creating the $4.2 billion hole, the other side of that story is that under Labour the cost of claims increased by 57 percent in 4 years. So there was an opening up of the floodgates of people who came and used that scheme. It was used as a welfare programme rather than an insurance scheme. That is what happened and that was what contributed largely to the hole that we inherited as a Government.

If we can do all that Mr Little says we can do right now, why is it that voices out there in the business community are saying that this piece of legislation will become a breakthrough for ACC in this country? Let me just read out a quote from the chief executive of Business New Zealand, Phil O’Reilly, who said: “While BusinessNZ welcomes the $500 million proposed cuts in premiums to be announced in the Budget 2015, which is positive for businesses, employees and motor vehicle owners, the more important issue is the proposed new ACC Financial Responsibility and Transparency Amendment Bill. This will ensure levies reflect sound insurance principles,”—there it is: not welfare but sound insurance principles—“ and is a major breakthrough …”.

So if we could always do what Mr Little said we can do, why is it that people who look from outside in the business world into what happens here in the House of Parliament, and look at legislation, call it a major breakthrough that ACC levies will now reflect sound insurance principles? So although, yes, we know that the ACC fund can be at times affected by what is happening out there in the equity world, we also know that there needs to be strong principles in order to bring stability to that fund.

He went on to say: “BusinessNZ hopes the bill will receive cross-party support as it proceeds through Parliament, to ensure the public has faith in the principles of the ACC scheme.” I believe everyone in this House believes that ACC is a good thing. In order to ensure that it is stable and continues to offer New Zealanders what it intends to offer in the future, it is important to have stability around that fund. We know what would have happened immediately if Labour had been in power. Yes, it would have taken $350 million out of the levies. We know that that sort of short-term pay-as-you-go attitude is going to contribute to instability. It is important for us to have a long-term view so that we can take an actuarial approach to ACC.

We know, and some members on the opposite side know, that when ACC came to the Transport and Industrial Relations Committee at the beginning of this year to do its annual review, as ACC discussed its equity position it said that it worsened from negative $108 million on 30 June 2014 to negative $600 million by 31 December 2014. And in January this year, for reasons beyond ACC’s control, the asset base diminished by $4 billion and then bounced back by $2 billion in February. Short-term volatility exists around the assets of ACC. We are very thankful for the fine managers of that fund because they work hard for the benefit and interests of all New Zealanders. But we understand that even beyond a global financial crisis there are factors that affect this fund, and therefore we need to take a prudent, careful, and, yes, a transparent but stable approach to how we manage and set those levies. It is very important.

Due to short-term volatility in both the asset value and the outstanding claims for liability, the Government’s approach is that a longer view is essential when it comes to levy-setting. This is what this bill is about. It is good to hear people like Phil O’Reilly, who understands that and calls this bill a major breakthrough.

If I could also read out what Kim Campbell, chief executive officer of the Employers and Manufacturers Association, said: “the $500 million reduction over two years comes at the right time following ACC’s sound financial performance and the solid footing which has the scheme now fully funded.” He says further: “We also like the fact there will be a more transparent levy-setting framework in the future and the Minister’s assurance around more stable levies in the future.” Let me just read his shout-out to the Minister: “We’re also pleased to see that as a new Minister to the ACC portfolio, the Hon Nikki Kaye has quickly come to terms with the issues and made such a positive step in the proposed Accident Compensation Financial Responsibility and Transparency Amendment Bill.” That is worth saying, as well. I think we are pleased to see the way that the Minister is very ably handling a very complex portfolio. I think it is good for all New Zealanders.

I believe there are many components around that that makes ACC stable and strong. When the cost of claims increases by 57 percent in 4 years, you wonder how much sicker we were, how many more injuries we have had over that period of time, and how many more accidents have occurred in our country. I think at that point in time Labour lost ACC’s proper focus on getting claimants back to independence—the independence that they deserve. There seemed to be such a huge flow of increased claims. I believe that over that period of time ACC suffered a $7.2 billion loss in 2 years and levy-setting was divorced from the reality of ACC’s burgeoning costs at that point. ACC’s long-term liabilities over that period of time increased by $15 billion.

Yes, it was hard work and, yes, it was at times controversial, but getting this scheme back into the strength that it presently has is very, very important for what it offers New Zealanders. It is a 24-hour, no-fault scheme that is the envy of many countries in the world. It is really important for us to have cross-party work on this, because it is such an important scheme for New Zealanders.

By way of background, in 1999 ACC moved to a system of fully funding the lifetime costs of an injury claim. Before this, levies covered only the current costs of a claim—that is, the Government looked at the current costs to ACC and set the levy to meet those costs as they currently occurred. What this scheme now offers is the ability to fund a person for the entirety of their claim. There are residual levies that are paid because of those claims that happened prior to 1999. But as those claims are finally paid out, there is obviously not a need for those residual levies. What this bill does is enable the timing for the cessation of that to be determined closer to the mark when we come to that point.

I have got to say one more thing before I finish my speech. Next month New Zealanders are going to see a significant reduction in the registration costs of their vehicles. I had a look at mine today. I have to say I have the oldest car in my street, but it is a good old car—a 2006 Holden Calais. My registration cost is going to reduce by 50 percent. Is it not fantastic that this Government has got ACC under control, fully funded, strong and stable, and that people right across our country are going to receive the benefit of that in their back pocket?

I am very happy to commend this bill to the House.

First Reading

This is a do-nothing bill from a do-nothing Government. It is what we have come to expect from this Government. When it comes to accident compensation, there are so many things the Government should be doing that this bill does not do. Andrew Little is absolutely right. There is nothing in this bill that the Government cannot do already, or that the Accident Compensation Corporation cannot do already and, in fact, does not do already. Instead we have got this do-nothing bill from this do-nothing Government.

Why does this bill not do something to address the $350 million that that Government is overcharging every worker and every business in New Zealand every single year, because of its determination to ignore the recommendations from ACC, using exactly the criteria this legislation now codifies? The truth is that ACC already has to have levy stability as one of its criteria. It already has to take account of full funding. It already has to do forecasting to make sure that the levies it recommends to the Government every year do all of those things that the Government is now pretending it is bringing forward for the first time in this bill. Nothing here is new.

Mr Young, when he spoke, talked about the corporation coming before the Transport and Industrial Relations Committee this year. He is absolutely right. When its representatives came before our select committee, I asked them whether they already met every single one of the criteria that are outlined in this bill, and they said yes. They told the select committee that they had already factored every single one of those things into account in formatting their recommendation, which they have given to that Government and which that Government has routinely ignored. The Government has kept the levies artificially high, but for what reason?

💬 Hon Nikki Kaye: That’s not true.

Well, Judith Collins told us the reason, Minister. Judith Collins said: “We have to get to surplus.” That is the reason that the Government has kept the levies artificially high—we have to get to surplus. Every single New Zealander is scratching their head and saying: “Sorry? We thought the point of ACC levies is to pay for the costs of injuries and accidents, not to help that Government to fail again in getting to surplus this year.”, which is, in fact, what has happened.

That Minister should be extremely disappointed, and angry, in fact, that her Government has put her in the position where she has had to overcharge every worker and every business in New Zealand their ACC levies in order to try to make Bill English’s surplus look a bit better—the surplus that never was. Even though the Government has trumped up and overinflated the ACC levies for at least 2 years now, Bill English still could not get the books to balance. He still could not get the books to balance even though the Government had cards up its sleeve. The cards up the sleeve in that poker game were actually ACC levies being overcharged to every worker and every business in New Zealand to the tune of $350 million every year.

Does this bill do anything about that? Does this bill do anything about that sleight of hand, with those cards up the sleeve in that poker game? The answer, Minister, is no. It does nothing to address that issue. In fact, all it does is codify the current situation. It does not require the Government to listen to ACC’s recommendations. It can continue to ignore the recommendations from ACC. It can continue to overcharge businesses and workers. It can continue to use this bill for the wrong reasons.

For that very reason, the Labour Party will be bringing forward a Supplementary Order Paper at the correct time in the passage of this bill, to ensure that we do something about the sleight of hand that this Government has put in place. We will be bringing forward a Supplementary Order Paper that absolutely clarifies, without anyone being in doubt, that the Government cannot use ACC levies for any other purpose but paying for injuries and accidents in New Zealand, and injury prevention. That is not what this Government has been using it for. It said that the ACC legislation allows it to use ACC levies for anything it damn well pleases. It said that that is in the public interest. Well, we will bring a Supplementary Order Paper forward that ensures that levies can be used only in the public interest with regard to accidents and injuries, and not for propping up Bill English’s failed attempt to get to surplus. That, by the Government’s own admission, is what it had been using it for, and it is not what our precious ACC system was set up to do.

Another thing this bill could do but does not is restore to injury prevention programmes the funding cuts that that Government has governed over since National came into office. The truth is that the best thing we can do with ACC is actually make sure that no one ever needs to use it, because we are managing injury so well. That is my dream. It is my dream that we actually get to a situation where we are working so well with health and safety in our workplaces and we have got this so well under control that, actually, not many people have accidents and injuries that mean they have to rely on ACC for the rest of their lives. I can tell this House that that is not a very pleasant experience at all. But what did that Government do? It cut ACC funding for injury prevention programmes. How short term is that? It does not want to prevent injuries. It does not want to prevent injuries; it just wants to keep them happening, and it has no plans to do anything about that.

💬 Chris Bishop: That’s wrong.

Well, Christopher Bishop does not think that ACC should have anything to do with preventing injuries. He thinks that what his Government has done in cutting the funding for injury prevention programmes is the right thing to do. I can see that Minister Kaye is briefing the next speaker, Alastair Scott. The Minister is briefing the next speaker to say: “Actually, we’ve started restoring the funding cuts.” The injury prevention programmes are still not up to the level they were in 2008 when Labour left Government. They are still not funded to the level they were in 2008, and that is a disgrace. That is what this bill could be doing—restoring the funding cuts for injury prevention programmes—but it is not doing that. In fact, it is not doing anything that cannot already be done.

I want to spend a few minutes speaking about the name of the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. In the midst of “flying sheepgate”, which we have got happening on that side of the House, there are distractions those members are trying to bring about to distract us from “flying sheepgate”, like there suddenly being another ghost ship full of refugees on its way to New Zealand waters. The New Zealand flag referendum obviously is not distracting people enough from the issues that matter. This Government is claiming that it is bringing forward a transparency bill with regard to accident compensation. Well, I challenge that Government. I will challenge that Government when we bring forward a Supplementary Order Paper that actually does require transparency from that Government to support it.

The Minister has finally admitted, after two oral questions fudging the issue and two written questions fudging the issue, that she did not even seek any Crown Law advice on whether or not the Government had the legal right to overcharge ACC levies to prop up Bill English’s failed surplus. Why would that be? The only reason that a Minister would claim she has the legal right to raise ACC levies to pay for the Government’s failed surplus bid, but not even ask Crown Law whether she is right or wrong, is if she knows in her heart that what the Government has done is fundamentally wrong and probably without any legal foundation. If the Minister believed it was with legal foundation, she would have sought advice from Crown Law and acted on that. But the Minister did not even seek Crown Law advice on an issue that is deeply dodgy, and that is the overcharging of ACC levies to every worker and every business in New Zealand.

All of those businesses know that if they had had that $350 million, or their proportion of it, in their businesses, that would have grown the economy. They would have used it to create jobs and do research and development. That would have been a better way to grow the economy and get the books truly into surplus.

First Reading

The last speaker, Sue Moroney, was obviously a little confused, a little bit concerned. She thought that the levies relating to ACC were related to the Budget surplus or deficit, or the books. This is exactly why the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill is being put in place—to remove confusion, to increase the transparency, to increase the governance, and to strengthen the framework under which ACC levies are calculated. It is necessary because, as an employer myself, I get bills from ACC. They are often not explained. It is difficult to work out where they come from and why the increase or the decrease has come about. This bill will increase the transparency and understanding for employers. The bill will improve the governance around the levy structure and this is so that we can continue to have fully funded accounts. Most of the accounts are almost fully funded and that is a good thing because it reduces the volatility in the levy setting when it is year to year. Some of the confusion comes about from a year-to-year levy setting or finalising, as we heard in the select committee just recently. There was a strong debate on how the levies were calculated and whether they should be higher or lower. As I say, that is a very good reason to bring this legislation through.

The Government does not always go with the ACC recommendations. ACC recommended much bigger increases, in fact, in 2010-11 and again in 2011-12. Had we accepted those increases, they would have cost levy payers $630 million more. We chose not to accept those recommendations. Again, the reason for this legislation is to make it clear what the parameters are, what the levy-setting characteristics or prerequisites have to be before levies can be changed. That, again, is important for the employer, because employers are budgeting for their businesses. They need to know their costs. They need to look ahead and understand what the cost of ACC, what the cost of having staff, will be, and ACC, particularly in businesses where there is a higher risk of injury, is significant.

I am pleased just to clarify that injury prevention investment by ACC has increased by $10 million. That is for some of the stuff that the ACC is doing in injury prevention. There is also legislation that is not so much a parallel piece of legislation but rather health and safety law reform going through the House as we speak. If we can get that right, and we encourage people to take greater responsibility for their own health and safety—again, we will have fewer injuries, fewer long-term injuries, and fewer deaths in the workplace. We know that New Zealand does not have a great record when it comes to health and safety. That piece of legislation will aid, encourage, and support businesses and individuals to protect themselves and their families in the workplace. Again, that can only be good for putting more pressure on a lowering of ACC levies, simply because there will be fewer injuries in the workplace.

There is another piece of this legislation that relates to the residual levies. It is a bit of a tidy-up, I guess, because at the moment those levies must continue to be collected until 2019. This piece of legislation allows those levies to be cancelled, or rescinded, or discontinued, at an earlier date. When that liability diminishes, so the liability to ACC diminishes, and that can be terminated prior to the current cut-off date of 2019. That is a good thing.

I just want to make a couple of points around the volatility of these funds, and why it is important to consider and understand these fully funded assets. The current asset base of the ACC is over $30 billion. That is bigger than the Government’s superannuation fund—or, as it is affectionately known, the Cullen fund, which is around $26 billion - odd. So we are talking big numbers here. That has risen from 2009, when it was $10 billion. That fully funding programme—and we are just about there—has created this nest egg, if you like. But the swings and roundabouts of interest rates—with, we know, and as the Minister for ACC mentioned herself, a $3 billion swing on a 1-month interest rate variation—are huge. So you can see the need to think well ahead of just this year, to set your levies. You cannot say that we are down 10 percent, so we need to increase the levies to recover the $3 billion loss that is just as a result of the interest rate fluctuation. That would be ludicrous. That would be unaccepted by the general public and the ACC levy payers. This governance and this governance framework will ensure that consideration is given to the long-term view, the long-term understanding of the marketplace, the interest rates, and the term structure of interest rates, as well as things that are going on in the public arena.

I have mentioned health and safety law reform. That is just one thing. We are going to have safer cars, for example. Again, all these things, in the long term, will reduce accidents. We continue to invest in speed reduction, in drug and drinking and driving programmes. All these things continue to educate the public and continue to reduce the burden that is the responsibility of ACC. That long-term approach is what is required. Currently, as we have already heard from the other side, there is this debate, this argument, and misunderstanding of how levies are calculated. That is not good. That is not a good thing, and that is why this legislation is here, to support the transparency and the strengthening framework of the legislation so that people can plan ahead, so that there can be discussion and transparency. That is why I am pleased to support this piece of legislation.

We have already heard of the $500 million planned reduction in ACC levies over the next few years, and that will continue. We have talked about the reduction in the motor vehicle levy, and that is a good thing. We will continue to see improvements in reductions in levies as those assets are managed in a more financially responsible manner. We will have increased transparency so there is less confusion about how the money is raised, where the money is spent, and where the money is invested, and there will not be the confusion that was exhibited from one speaker, at least, on the other side. I commend this bill to the House.

First Reading

I rise to take a call on the first reading of the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. We support this bill because, while it does not come anywhere near close to the Green Party vision for a fairer, more transparent, and people-focused ACC, it does take a few tiny steps in that direction. I will start by looking at the things that we like—the positive aspects. We like that the bill improves the framework for determining ACC’s levied accounts. The changes provide improvements on the current models, ensuring that the levy-setting process is more transparent and reducing the shock caused by sharp fluctuations in levies. We support the provision to adjust the dates to avoid the over-collection of the residual claim levy by removing the fixed state that is in the current legislation.

We also support the policy objective of the bill to improve the governance process by setting levies through the requirement on the Government to set a funding policy in line with the statutory principles. As well as supporting improving the transparency of the levy-setting process, we also support the objective of the bill to ensure that the public is better informed. Better reporting makes for a better-informed public, and policy makers have more information as well.

Although we do acknowledge that the bill has some positive changes, we regard the funding model of this scheme as fundamentally unfair and flawed. Furthermore, we think that this bill is a lost opportunity. We could have been a lot more ambitious.

So what would the Greens do? What would our solutions be? As my colleague Kevin Hague has outlined numerous times, our vision for ACC is where it continues to be a world-class service and honours the social contract it was founded on. We want an end to the shift towards a profit-driven insurance model, a shift that this Government brought in through the abolition of the pay-as-you-go system and when it shifted to this one.

In 1974 New Zealand broke new ground with the introduction of the no-fault Accident Compensation Act. It created a social contract embodied in the five Woodhouse commission principles that the scheme was founded on, and I remind the House that those five principles were community responsibility, comprehensive entitlements, complete rehabilitation, real compensation, and administrative efficiency.

In the 41 years since that original legislation was passed, we have seen successive Governments tinker with our law. Since its inception in 1974 there have been five substantive legislative changes to the Accident Compensation Act, and as a result many of the original principles have been undermined and people’s rights have been eroded.

We have seen, under this Government, a transition away to a profit-driven insurance model, away from an ACC that served the public good. There have been countless incidences where the access to ACC has been restricted, and these have been well-exposed in the papers over the last few years. In 2012, in what could serve as a warning to the Minister of Health about the social bonds policy that he is introducing, my colleague Kevin Hague exposed how ACC managers’ pay was linked to the number of long-term claimants they were able to remove from the corporation’s books.

We hear more and more stories from people who should receive compassionate and equitable service from ACC but are wrongly denied compensation. That includes last year when claimants were denied access to the scheme because they refused to sign privacy waiver forms that were eventually found to be illegal by the courts.

When the focus is on the bottom line, the social-good aspect of ACC is completely ignored and lost for ever. We believe that we could have an ACC scheme that is fair, comprehensive, efficient, transparent, and more people-focused. If given the chance, we would guarantee that all people who have genuine work-related, gradual-process injuries, diseases, or infections, including occupational overuse injuries and chemical poisoning—people like the sawmill workers from Whakatāne who were poisoned over three decades ago and are still having to fight for compensation—could obtain ACC cover. We would ensure access to specialist assessors to ensure that people can receive full entitlements. We would revoke co-payment requirements. We would establish an independent ACC ombudsman to improve accountability against abuses. We would also support specific risk-based levies to encourage injury prevention where appropriate. That would have a huge impact on health and safety in agriculture, construction, and forestry.

We would fund ACC through an equitable mix of levies on employers, employees, motor vehicle usage, and general taxation. We would ensure the maintenance of a rigorous ethical ACC investment policy that would prevent ACC from investing in enterprises that provide products or services that significantly increase rates of injury, illness, or otherwise significant adverse social or environmental aspects. I think ethical investment is something that we should be looking at a lot more closely.

We would also support and strengthen ACC’s focus on injury prevention, including integration with broader preventative health programmes and interventions in communities, in workplaces, in schools, and in homes. We would fix ACC by reverting to a pay-as-you-go model. It was a working model that produced a different culture in ACC—one focused on rehabilitation and care. ACC is not an insurance scheme.

There are many reasons for going back to a pay-as-you-go system—sound economic reasons, outlined specifically by an expert from the University of Auckland business school, Michael Littlewood. He suggested and has assured us that the pay-as-you-go model has less volatility on investment returns and has less uncertainty than the current actuarial calculations. He also says that the flawed nature of applying actuarial assumptions is intended for a private market rather than a Government one, and a pay-as-you-go system is cheaper to administer—and I guess this Government is all for wanting to reduce the expense of bureaucracy. There is also the increased transparency of a pay-as-you-go system, due to the ease of understanding it. Mr Littlewood concludes his research by saying: “A PAYG approach to levy-setting should be simpler, more transparent and less risky financially. It would also lower the investment risk for New Zealand.”

We support this bill because it is a small improvement to the inadequate status quo, but New Zealanders deserve an ACC that tries to maximise the well-being of our people and its clients, not one that relentlessly pursues the financial bottom-line.

First Reading

I do actually stand in support of this piece of legislation. It is the first reading, and it is definitely a piece of legislation that needs to go through this stage and into the select committee process because, as noted in the stated objectives within the legislation itself, we do need a higher level of transparency and accountability. There does seem to be an element of debate—and I would actually agree with my previous colleague’s position—about a level of redundancy in regard to the legislation itself in its entirety. As section 6 of the Accident Compensation Act does point out, decisions around these areas can be made already, the scheme has to be fully funded, and it does give account to the fluctuations already in terms of the levy itself. So I do worry that the bill, as insinuated earlier, actually kind of gives another level for the Minister to come in with this legislation where it is not necessary and it just adds to the complexity and takes away from that transparency and accountability that we were talking about.

However, the stated intent of this bill is “to improve the framework for determining how ACC’s levied Accounts are funded so it is clearer, more transparent, has a longer-term focus, and supports more stable levies:” and, very important, “to ensure that the residual levy is not over-collected.” I stand here on behalf of New Zealand First and say that those goals and those stated aims are to be highly commended. If that is what we are seeking to do with this piece of legislation, then New Zealand First could not be more supportive.

ACC itself just recently re-evaluated the liability of the three accounts that it manages, and so we know that the specified amounts defined by the Acts are, actually, no longer relevant. New Zealand First believes that the objectives are on track, like I have just said. This legislation, in its stated aim, is doing the right thing. We would insist, though, that the residual levies on the earners account, the motor vehicle account, and the work account should be collected only until the costs of shifting to the lifetime cost model are absolutely required and, obviously, no longer. In undertaking this legislative change, ACC and the Minister will be required to be more transparent and consultative in the way the current levy regime is set. New Zealand First suggests that the more the public and those who are involved or affected by ACC can be involved, the more seamlessly this process will work.

But there are several issues to consider, and it has been spoken about tonight already about putting ACC as a whole in context—a recent history, if you will. The other is to ensure that going forward this Government actually chooses what we would consider to be the right option and not any option to facilitate these changes. The Government has a very poor record when it comes to ACC. It has abused the ACC system, ignoring good advice, and subsequently has overtaxed New Zealanders by stealth.

The average New Zealander, especially small business, has borne the brunt of this deliberate inaction. Mr Foss, for example, has a small-business development group, whose purpose is to advise the Government on small-business issues, but he has not had the ACC conversation with it. The reality is that the burden that business has had to bear because of this Government’s inaction has been huge. Further, he admitted to this House that he has not advocated a reduction in levies with this Government’s Cabinet. Broadly speaking, everyone in this House knows—and ACC has stated unequivocally for some time now—that the levies paid by businesses, especially the self-employed, need to be reduced.

It has taken far too long. There is no doubt that reducing red tape and improving cash flows are critical issues for small business. The Government has sat on this opportunity to help small businesses for far too long. That refusal to budge has been costing businesses and individuals thousands a year. The frustration out there is palpable. New Zealand First insists that these changes not only in terms of the general levy but the residual levy are well past due, and our New Zealanders have been paying into ACC at too high a level for far too long.

Additionally, this Government is well aware that over-collection, especially in the work account, is creating distributional consequences that create constraints on the equity and the incentives for some of our businesses. The Government knows that there is no justification for creating this distortion, given that the repayments are actually now well ahead of schedule. The Minister for ACC needs to be reminded that the residual portion of the work account is spread across businesses based on risk relativities that are actually now 10 years old in their calculations.

The identified problem is a large one. Given a legislative stop date of 2019, by current rates of collection, the Government will have over-collected $852 million from the work account, $155 million from the earners account, and $468 million from the motor vehicle account. I do not think that anyone in this House would agree that this should be allowed to happen and I acknowledge that that is why we are here today.

Let us be very clear: there has been next to no time for this consultative process, especially around the residual levy collection. It has been put to this House that the residual levies be discontinued by Order in Council, but New Zealand First wants to point out the reality of the Government going down this path—that is, if we actually acknowledge that some of the debate tonight has been fair and relevant, because it is still in debate whether, in fact, this legislation is needed in the first place. But that is what consultation is about, and I acknowledge that from here, we go to a consultative phase.

New Zealand First disagrees in principle with these council structures and legislation. I have stood up many times and spoken out against this method of consultation and interference with the process with Government entities, State-owned enterprises, and the like. It gives too much power to the Minister and his or her chosen few. Give the Minister the power to make this decision and, unsurprisingly, it has been stated in the consultation that there are concerns around additional risks on transparency and certainty.

Putting these calculations and dates into legislation now would actually achieve the goal as set out by this Government, which New Zealand First does applaud. Continuing to collect the residual levies given in the legislation cannot be justified because it would be a disincentive to businesses that are working to lower their operational risks. But because the residual levy component is so high as a proportion of the total levy collected, any discounts that businesses are entitled to are actually barely noticed when they do their job right. At the moment, because the residual levy is such a high proportion of the total levy counted, it takes away the incentive to make those changes. The incentives are not there yet. So in bringing the residual collection date forward, we actually support and reward businesses for undertaking their business in a safe and professional manner. Making this change in legislation would mean it would be debated in the House and would be offered to a select committee round, and, therefore, the implications would be made clear through the debate and submission process.

Business needs certainty to operate. We need to be certain about what it is that this Government is hoping to achieve, and New Zealand First puts it to the Minister, and to this Government, that the best way to do that is actually by legislating the date now. Do not give the power to the Minister to act ad hoc. It is even noted that in doing so, the time line may in fact be pushed out. We support this bill through to the select committee. Let us have the debate. Let us see whether this legislation is actually needed, and New Zealand First reserves the right to consider the opinion of businesses and New Zealanders from that point. Thank you.

First Reading

It is great to be able to talk on this Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. It is interesting listening to the debate. It is full of misunderstandings and misinformation, in my view. I just want to acknowledge, at least, that New Zealand First is supporting the proposed bill. Also, I want to acknowledge the Greens for being positive, although there are times when I could not quite understand what the previous Greens speaker was saying, particularly when she made the point that she could not understand that ACC was not, in fact, an insurance scheme. To date, I think the most disappointing of all the contributions has been from Labour. It showed a significant lack of understanding, and I am hoping that we are going to get some further input over time.

This bill must be seen in the context of the outstanding financial result that has been achieved over the last 6½ years. I think credit is due not only to the board but also to the management team. The board, of course, is led by Paula Rebstock and the chief executive, Scott Pickering. They have done an outstanding job of turning this organisation round. Do you know, when this Government came to power 6½ years ago, the state of ACC’s accounts was appalling. In the year to June 2008, the corporation reported a deficit of $2.4 billion and it had assets worth a mere $9.6 billion. With good financial management, ACC reported a surplus of $2.1 billion in the year to June 2014—as opposed to a deficit. That represents a $4.5 billion turn-round in income for the corporation. Not only that, its assets have grown to $27 billion—$27 billion. That is, basically, a $17 billion increase over the past 6½ years.

As a result of this performance, the Government has already announced decreases in levies totalling $1.5 billion, made up of some changes to levies, effective on 1 April 2014. First of all, the work account levies have been reduced from $1.15 to 95c for every $100 of liable earnings, and, in respect of the earners account, a further reduction has been made, from $1.48 down to $1.26 for the same $100 of liable earnings. In addition to that $1.5 billion, we have announced more recently a further $500 million of savings, with $375 million commencing in the year 2016-17 and a further $120 million in the year thereafter. These are great outcomes, and this is about sharing some of the benefits with all New Zealand businesses and with hard-working New Zealanders also. These savings are large, they are significant, and they are welcome.

What I find most exciting listening to what ACC is about is that during 2013-14, it had four key focuses. First of all, it wanted to reduce road injury, and it was putting in place a whole range of prevention programmes. It was about reducing public injury, and, again, it was introducing a whole raft of prevention programmes around that. It had a specific thing around preventing falls. Fourthly, and this is probably the most important to many of us, ACC was about preventing workplace injury and working alongside WorkSafe New Zealand. To do that, it has introduced a whole raft of new investment approaches for injury prevention.

💬 Sue Moroney: Cutting funding for programmes, you mean.

This is about ACC designing and implementing more successful programmes. Unlike what is being said by the Opposition member from Labour, who is quite incorrect, the level of investment in this area has increased from $22 million in 2013 to $34 million last year. But that does not even take into account the other investment that has been made alongside organisations such as WorkSafe. Not only is it about the money, which—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair for the dinner break.

Sitting suspended from 6 p.m. to 7.30 p.m.

As I was saying just before the dinner break, ACC has been investing $34 million in injury prevention schemes, which is a great thing. That, taken with the other entities involved in that area, including WorkSafe, is contributing to a large focus on reducing injuries in New Zealand. That is why I believe the Opposition is wrong in making the assertions that it has been making with regard to this issue.

It is also interesting to note that in 2013-14 new claims increased by just under 5 percent, taking the total to about 1.8 million new claims assessed that year. Despite the pressure of these additional claims, 93 percent of all these claims resulted in people going back to work within 9 months. I think that is an admirable achievement by a well-run ACC. Also, at the end of June 2014 the difference, in terms of the assets of the commission, had narrowed to just over $100 million. Again, we were talking about that before. That substantial improvement was due, in large part, to a $2.1 billion surplus and also to improved investment returns. Although this is all good, what most people do not appreciate is that the decreasing investment returns and the changes in discount rates have a significant impact on the returns that ACC reports.

The volatility is due to two things. Firstly, ACC is required to assess on a mark-to-market basis the market investments held under its investment account, which means that every year it has to go through and look at the current valuation. Secondly, when it comes to assessing liabilities, it adopts Treasury’s view on an appropriate discount rate. Here we have an independent body, Treasury, determining what an appropriate discount rate is—in terms of assessing its future liabilities. As noted by the chair of ACC at a recent Transport and Industrial Relations Committee hearing, changes in the discount rate can be substantial. She noted that it had a $4 billion impact in that year. The essence of what we are trying to do with this bill is to provide a framework for determining how ACC’s levied accounts are funded, while having regard to this issue of volatility.

I hear Opposition members claiming that ACC accounts are over-funded and, therefore, the corporation should be paying out more in terms of reduced levies. In my view, Opposition members are wrong, as they misunderstand the real situation. Just to be clear, in the annual report in June 2014, the work account was funded at 138 percent, the earners account was funded at 131 percent, and, actually, the motor vehicles account was slightly underfunded at 99 percent.

💬 Sue Moroney: Ah! So how come the levies got cut there?

What the good member across the way does not appreciate is that the valuation of the liabilities that I spoke of before takes into account only 75 percent of the assessed fee. That is an approved rate but it does not take in the full liability. What the chair of ACC said to us is that the commission’s No. 1 concern is to make sure that we have got levy stability and to ensure the long-term viability of the scheme. That is what this bill is about. It will improve the framework for determining how ACC levies accounts, it will make sure that the way that is being determined is clearer and more transparent, and also it will make sure that the residual levy is not over-collected. We have spoken about this before, where we have got this residual amount that needs to be dealt with—$3.4 billion—and this bill is going to address that in a comprehensive way.

I think what is being proposed, particularly in new section 166A, which is inserted by clause 5 of the bill, is, firstly, to deal with the cost of claims and to make sure that they are fully funded by offsetting adequate asset returns around those; secondly, to make sure that the levies also meet the lifetime costs of claims; and, thirdly, if an account is in deficit, to set out a framework to make sure that we can get to a point where there is an appropriate return. I believe this is a great bill, and I strongly commend it to the House.

First Reading

Indeed, that is a hard act to follow, but I will do my best. I rise to take a call in this first reading of the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. The Green Party is supporting this bill. It is a short and straightforward bill. Its objectives are to improve the framework for determining how the ACC’s levied accounts are funded, so that it is clearer, more transparent, has a longer-term focus, and supports more stable levies, which all sounds great.

The current legislation requires that the residual claims levy, which is the additional levy that is charged towards the full funding of the ACC, be collected until 2019. However, it appears quite likely that some, if not all, of the ACC accounts will be fully funded before then. The provision contained in this bill to adjust that date seems quite sensible in that it will ensure that there will not be an over-collection of that residual claims levy resulting in the fixed date in the current legislation.

We are, of course, willing to support these measures, because they do make tiny improvements to what we believe, sadly, is a corrupted system, but they are improvements nevertheless. We are deeply disappointed, however, if not at all surprised, that the Government is only tinkering with a system that is so regularly and systematically failing to deliver on its original intent for New Zealanders. This bill tutus with the completely unnecessary and corrupting fully funded ACC system, which has seen a multibillion-dollar surplus while everyday New Zealanders are denied compensation, denied access to the support they need, and as a result, in some cases, lose almost everything they have and almost everything that they have managed to acquire over a lifetime of working, because of that lack of compensation available to them and their inability to keep up with their costs.

The Green Party believes a private insurance model is inappropriate for the ACC. We are certainly not alone in this. The fact that the ACC worked very well on a pay-as-you-go basis for over 20 years would, I believe, tend to support our view of that as a workable system. We do not support the false crisis that was created by this Government as a way of saying that it needed to have all the money there on the books to be able to pay out for any imagined potential liability. We absolutely believe that the ACC needs to cover its costs and have enough in reserves to be able to cope with any unexpected spikes. That has done us well for decades. We did not need this fully funded system. This fully funded system, which allowed the Government to increase levies, which it is now reducing partially, and to reduce services—prevention, compensation, and rehabilitation—makes future privatisation and competition more viable. We think that is a dangerous thing.

The Green Party in Government would listen to the experiences of New Zealanders who have been denied appropriate care because of these changes. We would reassert and restore the social contract envisioned in the five Woodhouse principles that the ACC was founded upon: community responsibility, comprehensive entitlements, complete rehabilitation, real compensation, and administrative efficiency. This Government has privileged administrative efficiency almost to the point of exclusion of all other principles. The stories of people with injuries tell us of the harm of that approach. But we will support this bill.

First Reading

Can I just start off my 5-minute contribution by remembering Sir Owen Woodhouse, the architect of accident compensation—a great New Zealander, who died this time last year at the age of 97. Sir Owen was the driving force, really, the intellectual architect, behind what I believe is one of those institutions in New Zealand that we should be immensely proud of. I believe that it is one of those things like high quality universal public education and like our public health system that allows everybody to get a decent start in life. It is there to pick you up after an accident, after an injury, and to ensure that you can get on with your life, and get back on your feet, and it spares people the huge expense and the lottery of private litigation that is the alternative in so many other countries around the world. For those reasons I think ACC is incredibly important. It is a bedrock part of Labour’s belief in the fair society and in the basic equality that we accord to all individuals living in this society.

That is why the debates over ACC get so heated in this House. On this side of the House we stand for that equality, we stand for active Government, and we stand for all those things that Kiwis can do together to make this society work better. On that side of the House, they have over the years systematically undermined and privatised ACC. They do not believe in it because they are fundamentally uncomfortable with social provision. The hallmark of this National Government’s management of ACC is two things: the rorting of the ACC levies in order to prop up the surplus that never ever arrives and, secondly, it instituted from the day it was elected a culture of disentitlement. Any electorate MPs in this House will know that one person after another has come to electorate offices—that is, if they are the kind of MPs who actually have an open door to people in the community who have problems—saying that they have had the door slammed in their face by ACC. The reason is that under this Government everything is a degenerative disorder—including ethics. That is the culture of disentitlement that this Government has introduced into ACC.

I want to make two points in my contribution. The first is that this is basically an example and an exercise in political butt-covering. It is a public relations exercise and, as with so much of what this Government does, the purpose of this bill is simply to convey the impression of the things that it talks about in the title of the bill—about financial responsibility, about transparency—but nothing could be further from the truth when it comes to this Government’s management of accident compensation. The second point I want to make is that this bill, as Andrew Little said, will not stop National’s interference with and manipulation and rorting of ACC and the ACC levy-setting process. So, as I said, this bill is basically about giving the appearance of propriety and of creating an impression of stability.

As previous speakers—my colleagues Sue Moroney and Andrew Little—have pointed out, all of the things that this bill talks about can be achieved under the legislation. It is all there. They do not need this bill. The members opposite have not once yet cited something that this bill enables them to do that the legislation otherwise would not do. The Government already has to take account of levy stability as a key criterion—full funding. It has got to forecast levies to ensure that levies meet all the requirements under the Act. The second thing I wanted to say is, really, to quote Alice in Wonderland, Lewis Carroll’s book, in which Alice says: “I give myself very good advice, but I very seldom follow it.” This bit of legislation is a classic example of that. The bill talks about transparency and yet the deceit of this Government, in Nick Smith’s manufactured crisis, in 2009 is a classic example—in fact, it is a classic example of almost everything that Nick Smith does—and in the cynicism of the way Bill English has rorted the levies to prop up his Government accounts for the last 7 years. National members do not need to give themselves this advice. They just need to change their ways.

First Reading

Thank you very much for the opportunity to speak on this first reading of the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. It is always an honour to follow such an eloquent speech by my colleague Mr Andrew Bayly, who has this wonderful knack of being able to expel financial sums and figures and use them in his speech.

💬 Hon Member: What about Phil?

Well, it still is very nice to follow Mr Twyford and I will probably come to that later, but it is also very apt and fitting that I should take this call at this time and I will come back to the reason shortly. This scheme has now turned 40 years old and is a critical and integral part of our society in respect of our social sphere and economic sphere—a no-fault, 24/7 coverage scheme for residents and visitors, covering injuries whether they be at home, with a motor vehicle, or at work. I do not consider myself clumsy and I do not consider myself uncoordinated, but I am, while I take this call, injured—injured just on Sunday, in fact. I was at a child’s birthday party with my daughter, where I lifted her off an extremely heavy, solid rimu stool. As I brought her forward to meet me, the stool decided to topple over and land on my toe—the very toe that is responsible for my bipedalism—and it was crushed and it was broken. We all know how fortunate it is to be rushed off to the emergency department and seen by some fantastic front-line staff. I give my thanks to the nurses and the X-ray people. I am not sure what the technical term is for X-ray—

💬 Clare Curran: Technicians.

X-ray technician—oh, that is handy. They were very compassionate and I am very thankful for their expertise. Hopefully, I will be covered by ACC in respect of my treatment, because I want to get healthy. There is nothing more exhilarating than running down the corridors of Parliament while the bells are ringing to get here to address you, Mr Assistant Speaker. So that is my personal story about the ACC compensation scheme.

But, as we know, this bill is about levied accounts. It is about the levied accounts of workers, earnings, and motor vehicles. If we look at some of the background, as we heard in prior speeches, in 1999 ACC moved into the premise of fully funding the lifetime costs of an injury claim. Before this, only current costs were covered by levies. The legislation as it stands states that ACC must continue to collect residual levies until 2019. That is some 4 years out. What this bill will provide is an updated framework. It will improve it. It will make it more transparent, implementing a more comprehensive set of principles for the funding of accounts through levies.

No. 1, levies for each account must meet the lifetime costs of claims in relation to injuries that have occurred in that year. No. 2, what the bill will do if an account is in deficit—for example, it cannot meet those costs—or, alternatively, has a surplus, is that both must be corrected by the setting of levies at an appropriate rate for subsequent years. Finally, large changes—the real peaks and troughs that we have seen in the past—must be avoided, and this will provide greater flexibility and stability in levy setting. This bill will provide better guidance in how to manage this while balancing the needs of injury costs with levy collection.

It is interesting to note, following on from Mr Twyford’s contribution, that the 2014 performance improvement framework review of ACC also identified such weaknesses, noting that there is no overarching legislative framework that establishes the objectives to be met, or principles to guide, the annual levy-setting process. This is an issue that the Minister, the Hon Nikki Kaye, seeks to address in the bill through those three premises. So not only does this bill increase transparency but it makes sense fiscally. We want to make sure the scheme is well funded and can withstand the volatilities of the market place. But we have a duty to ensure that levies are kept as low as possible. So the bill also introduces stronger reporting requirements regarding account solvency and ACC funding, and it takes care of the over-collection of levies.

This is a Government that is committed to making sure that ACC remains sustainable and effective. In 2008, as we have heard previously, this Government inherited a $4.8 billion deficit in ACC accounts. The Government and ACC have worked very hard to dig us out of this hole, but not just that—ACC has worked extremely hard on the way it treats the injured and has focused on its clients’ needs. I am fortunate to sit on the Transport and Industrial Relations Committee. We heard from ACC about some of the measures it has put in place to raise the bar in respect of customer services in-house. I commend those officials and case managers for making it a priority to increase their compassion towards the injured, in terms of updating some of their systems and making sure that reviews and other administrative processes are carried out in a timely function. That adds to the trust of those clients who deal with ACC.

As of March 2015 ACC’s investment portfolio had reached $31.5 billion. Although ACC’s financial performance is still subject to short-term volatilities, the performance of ACC as a scheme has definitely improved. This Government’s excellent management has led us out of that $4.8 billion hole that Labour left us in, and since 2012 we have made levy reductions. New Zealanders have saved about $1.5 billion, benefiting businesses, workers, and motor vehicle owners. That has saved our families’ money, which goes directly back into their savings, and, obviously, they are best to know how to put that money to good use. I also note Business New Zealand’s approval of this bill and the introduction of it. As an electorate MP who has her doors open to her constituents, I also note the public’s approval of this bill, of our management of the ACC levy, and of the reductions that can go back into their back pockets.

We are now looking, as part of Budget 2015, at an average ACC motor vehicle levy falling from approximately $330 to $195 per year from 1 July, and we are looking at an average cut of $75 for vehicles, and, over 2 years, a 20c reduction in the average work account levy, and 6c in the earners account levy. So this bill is about fiscal responsibility and transparency. This is a clear, results-driven bill, and hence I commend this bill

First Reading

This bill is an admission by the National Government that it cannot be trusted. All the instruments that this bill introduces are actually available to the Government right now. It could use any of the measures it is legislating for in this bill right now as a Government. What it is doing by bringing this bill in is requiring itself to meet the provisions in this legislation.

So Government members know they cannot be trusted to plan ahead, to set levies appropriately, and to not overcharge people on their ACC levies. They know they cannot be trusted just to do that as a Government as a matter of course, so now they are having to legislate to do it. It is no wonder that the public apparently are overjoyed at this. I do not know where the National Party gets its information about the public being overjoyed. I think that the public probably have absolutely no idea that this legislation is going through, but certainly Phil O’Reilly has said he is pleased, and I bet Phil O’Reilly is pleased, because he is probably sick of the organisations, the businesses, that he represents being overcharged on ACC levies by this Government. So it is an admission by the Government that it cannot be trusted on ACC levies.

I have heard a lot about how we need to have a levy-setting process that takes into account the volatility of the market place, the volatility that can impact ACC’s investments. That is not an argument to be taken lightly. It is an argument that is valid and worth considering. If our ACC accounts, particularly the work account and the earners account, were only 100 percent funded, then there might be some validity in the argument that the Government is making, because we could see those accounts drop below 100 percent and we could see them rise up above 100 percent.

The volatility that can occur would certainly be something that we would need to worry about if the accounts were only 100 percent funded. But they are not. These two accounts are more like 140 percent funded. Therefore the volatility that may cause them to go up or down is going to cause them to go down to maybe 120 percent funded or up over 150 percent funded. We are not talking about whether or not we have enough money in the bank to meet the full lifetime costs of the claims, we are talking about how overfunded those accounts actually are.

I reject the argument from the National Party that this legislation is required, or even that that volatility and the long-term viability of the accounts have not been taken into account by ACC. In fact, members opposite have told the House that we on the Transport and Industrial Relations Committee have heard from ACC that when it makes its recommendations about where the levies should be set it takes into account the long-term costs and the volatility that can occur over time. That is happening right now.

What I find most bizarre is that the Government has been trumpeting the fact that the account that is having its levies reduced the most is the motor vehicle account. That is actually the one account where we do need to increase the reserves, because the motor vehicle account is barely fully funded. In fact, the volatility that members opposite have talked about has impacted the motor vehicle account and pulled it back down below 100 percent funding at times. In fact, it has very rarely been at 100 percent funding. There is more work that needs to be done on the motor vehicle account, but, bizarrely, that is the account where the Government is cutting levies the most. You might wonder why that is. I think there is a pretty straightforward reason—it is just pure politics. There is nothing fiscally responsible about this at all. It is pure politics.

The fact is that most people pay their motor vehicle account through their vehicle registration. So they actually have to go along to New Zealand Post and make a payment. They notice that money coming out of their bank account, whereas the earners account levy, in particular, comes out of your account before you even see the money. It comes out of your pay before you even see the money, so people do not notice that as readily as they do the motor vehicle account.

So this is just pure politics. The Government has cut the levy that people will notice the most, even though it is the levy that actually least requires cutting, out of all of them. Others probably could be cut a lot more. The work account and the earners account certainly could be cut more. This Government is overcharging workers and employers by $350 million a year, yet that is not where it makes the cuts. It makes the cuts where they will have the most political impact, not where they actually make the most sensible and responsible impact.

We have heard a lot about the supposed $4.8 billion hole that existed in ACC some 6 years ago. Well, the fact is that ACC’s reserves are invested and, just like every other major investor, ACC suffered in the global financial crisis. Yes, its accounts fell and the amount that it had in reserves was much less than it required for full funding, but, actually, at that point, ACC had never met full funding because the process of achieving full funding was something that was being undertaken by successive Governments and had been under way for about 9 years at that point. It was something that was started in 1999, and was carried on—

💬 David Bennett: Your policy was to remove it.

Oh, David Bennett says that our policy was to remove it, but here are the facts, David Bennett. The process towards full funding carried on right through the entire period that the last Labour Government was in Government. That was what occurred.

💬 David Bennett: Tell the truth.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

David Bennett can say whatever he likes. He just needs to look at the facts—

💬 David Bennett: Tell the truth.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

—and see that what happened was—[Interruption]

💬 David Bennett: Tell the truth.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I regret that I have to interrupt the member Iain Lees-Galloway. I did warn Mr Bennett twice—I called him to order twice. He will desist.

The member is encouraging me to tell the truth. I am talking about the facts. I am talking about straight facts. Those might be a foreign concept to the member David Bennett over there, but I am talking about the straight facts.

In 2009 the Government seized on this supposed hole in the ACC accounts, to do what—to push ACC levies up. There was one purpose for that, and it was to make the private insurance companies that the Government wanted to use to privatise the work account and other accounts able to compete with ACC, because those private insurers simply would not have been able to compete with ACC when its levies were set at a reasonable level.

The result of shoving up those levies was twofold. One was that we have reached full funding much faster than was originally envisaged, by overcharging New Zealanders. The whole idea of the progress towards full funding was that it would be done in a measured fashion that would not overcharge New Zealanders. We have reached full funding, and I note that the removal of the residual levies is one aspect of this legislation, because full funding has been reached far earlier than was ever originally envisaged.

The other thing, of course, is that the Government soon realised that this additional income that was coming in was very helpful for it in its attempts to reach a surplus, so it maintained its levies at an artificially high level in an effort to reach surplus, which it still has not done. It is overcharging New Zealanders by $350 million, which is far more than the surplus that is budgeted for in this year’s Budget. So in the absence of that overcharging of levies for ACC there would be no budgeted surplus, as unlikely as it is that the Government will hit its budgeted surplus, just like it failed to meet it this year.

There needs to be some honesty from the Government about the way it has treated ACC and what is behind this legislation. The truth is there is nothing in this bill that the Government cannot do right now. What it is doing with this bill is demonstrating to business that even if it cannot be trusted as a Government to operate ACC appropriately and to set levies appropriately, it is going to put it into legislation. But actually, really, it is smoke and mirrors because even with this legislation in place it will still be able to overcharge on ACC levies.

We will support this legislation because it does not appear to do any harm, but also because we think that further down the track it is a vehicle through which we can propose amendments that might actually make some real difference. We are looking forward to the select committee process, and we are looking forward to the progress of this bill, but in its current state it ain’t going to do much.

First Reading

Thank you for the opportunity to speak in the first reading of the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill. The aim of this bill is to amend the Accident Compensation Act—the ACC Act—to reform the mechanism of setting levies and to ensure that residual levies are not over-collected. ACC is there to support injured people to get back into work and to get back into their routine lives as soon as possible. ACC also has a role in stopping injuries happening in the first place. ACC is accountable to all New Zealanders. Everyone contributes to ACC, and everyone wants value. Until 1999 ACC used to operate on a pay-as-you-go basis, which was to collect levies to cover the cost of claims coming in in that particular year, but then it changed to a fully funded operating model, which means that levies are collected to cover the cost of full lifetime claims coming from injuries happening in that particular year. Sometimes people have to rely on ACC for a very long time in their life. It could be 10, 15, 20, 30 years, or even more, so significant reserves of funding are required to cover those claims. The money collected is invested and the interest is also used to pay for the cost of claims. This fully funded model of operating is seen as fairer for levy payers because future levy payers do not have to pay for injuries that happened in the past.

This bill inserts certain principles for setting ACC levies for the work, earners, and motor vehicle accounts—the levied accounts. The work account is the one that covers claims for all work-related injuries. As a result of the legislative change in the Accident Compensation Act in 2010, the work account was merged with the residual claims account. The earners account is for levies paid by people who are in the paid workforce. The non-earners account is funded by the Government using money collected from general taxation. The motor vehicle account is funded by a levy that is included in petrol prices and motor vehicle licensing fees. This bill makes provision for setting levies, so that levies derived from each account are able to meet the lifetime cost of claims in relation to injuries that occur in that particular year. If an account is accumulating a surplus or if an account is in deficit, then in order to meet the cost of claims that surplus or deficit needs to be corrected by setting levies appropriately in subsequent years. At the same time we want to make sure that changes to levies are not drastic. We want to avoid big changes to levies.

The ACC scheme is critical to us because it provides 24/7 coverage for motor vehicle, work-related, and non - work related injuries. Since the National Government got in in 2008, the ACC scheme has been doing much better than before, but there is more that needs to be done. Also at the same time we want to make sure that the levies are as low as possible. It is important to have consistency and stability for levy payers because that helps to build public confidence in the ACC scheme. Through the Working Safer package of workplace health and safety reforms, our Government is committed to reducing workplace injuries by 25 percent, especially serious and fatal injuries, by 2020.We also have an interim target of reducing claims by 10 percent for people staying away from work for more than a week.

As I mentioned, the ACC scheme has been doing much better under this National Government since 2008. That is specifically because from 2004 until 2008 there was a period of significant deterioration of the scheme, especially in its financial performance and outcomes. That translated into outstanding claims liabilities. This was because there was no transparency and also levy rates did not increase to keep pace with claims expenses. This led to the situation in 2008 when the National Government got in. What we got was a big hole in the ACC account—a big hole of $4.8 billion. There are various reasons for that big hole in the ACC account but I believe that the main reason was the poor management of the previous Labour Government. [Interruption] Yes, it was the poor management of the previous Labour Government. So that is why, in 2008, what we inherited was this big hole in the ACC account of $4.8 billion and also a scheme that was heading in the wrong direction, because there was this significant funding shortfall and rising claims costs. So this Government and ACC have been working hard for the last 6-plus years to improve the scheme’s finances and also to deliver better outcomes for people who need the ACC scheme.

Our focus is to keep improving our ACC scheme so people can get into work as soon as possible and people can get back into their routine life as soon possible, and to return claims rates and costs to sustainable levels. The work, earners, and motor vehicles accounts—the levied accounts—are now at or approaching full funding. Also, this National Government has put back $1.5 billion back into New Zealanders’ pockets since 2012. This is through levy reductions, as we have heard from my colleagues from this side. This Government is working hard to achieve that appropriate balance between keeping that financial performance of the scheme and also delivering better outcomes for New Zealanders. We want to do more for injured people so that they get appropriate help, but at the same time we want the scheme to be transparent. We want to make sure that there is visibility for levy payers. We all have high expectations from the ACC scheme: we want the ACC scheme to provide meaningful injury prevention, we want the ACC scheme to provide better and faster dispute resolution, we want the ACC scheme to provide consistent service, and we want to make sure that complex issues are also resolved as soon as possible. At the same time we want the ACC scheme to be financially responsible. We want the ACC scheme to provide levy reductions that are sustainable and also we want the scheme to be transparent.

Continued improvement is important to maintain levy stability and avoid unpredictability. Although the scheme’s overall performance, including financial performance, is going really well under this National Government, there could be some short-term unpredictability, for example, for reasons like sudden population growth. There is no overarching legislative framework that establishes the objectives to be met or the principles to guide the process of levy setting. That is why this bill is required, because it will give us that sound and responsible approach to setting levies. The application of the principles in the bill will see that levies are stable and that they are reflecting underlying costs in the absence of economic shocks or large swings in ACC claims performance. Most important, transparency is needed—that is, for the Government and also for people who are paying levies, and it will also help us calculate downstream consequences of funding decisions.

This is about improving accountability of the scheme. As I said, the ACC scheme is accountable to all New Zealanders so we want to make this scheme more accountable. This bill will help us achieve a more sustainable and transparent ACC scheme. This is very important for New Zealanders, so I support the bill and I commend the bill to the House. Thank you.

Bill read a first time.

Bill referred to the Transport and Industrial Relations Committee.

First Reading

I move, That the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill be reported to the House by 3 November 2015.

Motion agreed to.

When I was making my first contribution to the Budget speech on Thursday—it is obviously going down a treat this afternoon as everybody is leaving, but never mind—I was talking about the contribution of the Minister the Hon Amy Adams to bringing in a world-class broadband network, which so far as a Government we have invested $1.5 billion into, and enabling economic development in the regions. I focused my contribution at that time on regional development and noted that in this Budget an extra $360 million has been set aside to deliver on the Government’s promise of high-speed broadband and rural broadband.

I was particularly noticing the impact not only on the education sector and on hospitals but also on the economies of the regions. In particular, for the lower half of the South Island, it is generally around agriculture, it is around IT, but it is also around education. I want to turn to that because I was very interested and very proud to hear the Minister of Education, Hekia Parata, explaining to the House that this Government has invested more in education, year on year, than any Government previously. I was also very pleased and proud to hear the Minister talking about the fact that to date, this year, this Government has invested $10.8 billion in education. That includes—

💬 Melissa Lee: How much?

$10.8 billion dollars in education. That is investing in our future. That is investing in our young people, right from early childhood education. The Budget also made some announcements around early childhood education for our youngest New Zealanders, and where is the benefit going to lie? Well, again, because I am so focused on the regions and the health of the regions, I can say that we are, of course, going to see the benefit of that in the lower part of the South Island. We are going to see our young citizens going through an excellent school system, enhanced absolutely by rural broadband.

I can even go as far as talking about my own home town, which is 100 percent wired up for broadband, as are a number of towns around New Zealand.

💬 Hon Maurice Williamson: You’d better name this town.

I have named this town, and I will happily do so here. It is called Ōāmaru. It is the coolest little town, and the sharpest little town, and broadband will be a great benefit to the schools, the hospital, and the businesses all around the region. I would also talk about Wānaka, which is a town that came fifth in the Gigatown competition and which is a hub for business start-ups.

Small businesses are now being attracted out of the cities and business people are being attracted out of Dunedin. I know of people coming down from Auckland. There is a trend to go southward from Auckland into places like Wānaka. Why? Because they are innovative and they have wonderful infrastructure that includes broadband, but most particularly, I am so proud of this Government’s investment in education. Thank you.

The current Government’s Budget has the byline “A plan that’s working”. Most New Zealanders will be asking “Working for whom?” because it is certainly not working for the vast bulk of New Zealanders who go out, work hard every day, try to get ahead, and get pushed back down by the current National Government. It is certainly not working for future generations of New Zealanders, who are going to inherit mountains of debt—the highest mountain of debt that any Government has ever clocked up in New Zealand’s history. It is not working for that same generation, who cannot get a foot on the property ladder because this Government has done nothing about runaway house prices. It costs nearly a million dollars to buy a house in Auckland, and it will top that figure very soon. This Government is not doing anything for the future generations who are burdened by student loan debt.

It is not doing anything for the future generations of New Zealanders who are seeing the funding for early childhood education frozen for the entire duration of this Government. What does it mean when it is frozen? It means that in real terms it is going backwards. It means that those early childhood centres are getting less money now than they did when this Government came into office. It means that schools, which are seeing their funding eroding away, are not able to deliver the curriculum that they want to and that they are required to. It means that we are seeing schools cancelling, for example, field trips or experiential learning, so practical experiences in the classroom are being pushed aside because schools simply do not have the resources, they do not have the time, and they cannot afford to deliver the curriculum as it is intended to be delivered. That is what is happening under this National Government.

It is not a plan that is working for all of those people. It is not a plan that is working for the New Zealand Police, which is seeing its funding cut. There is a lot more to come on that. It is not a plan that is working for regional New Zealand, which sees jobs disappearing, which sees its roads deteriorating, and which sees its public services being diminished or disappearing altogether. This is not a plan that is working for the vast bulk of New Zealanders.

Of course, it is a plan that is working for the merchant banks, which now get the opportunity to step in and deal with people with mental health problems. Merrill Lynch is lining up to deal with people with mental health problems in New Zealand. It is a plan that is working for the casinos, which get to build convention centres off the backs of problem gamblers. This is probably a plan that is working for them. Of course, it is a plan that is working for the Saudi millionaires, who get to have sheep flown from New Zealand over to their farms in Saudi Arabia at a cost of tens of thousands of dollars per sheep. Goodness me! I hope they got a meal with that. I hope they got a lie-flat bed and they got to check in their luggage. Actually, most New Zealanders could not afford to pay that for their own travel, let alone spending tens of thousands of dollars per sheep to transport sheep to Saudi Arabia as Murray McCully has done in his facilitation payment deal, which most New Zealanders would look at and regard simply as a bribe.

This is not a plan that is working for the vast bulk of New Zealanders. It is a plan that involves broken promises right, left, and centre. Unfortunately, I get only 10 minutes in this debate so I cannot catalogue all of them, but let us look at a few of them. Back into surplus, John Key promised New Zealanders before the last election. He did not just promise he was going to do it; in fact, he promised that he had done it. Then, after the election, what do you know? The surplus disappears. He says it was only ever an artificial target and it was like landing a 747 on the head of a pin. So how much was that deficit? It was $684 million. That was the deficit. National did not even come close. I am not even sure how that could possibly square up with John Key’s comments. Then, of course, we do not even know whether it is going to deliver a surplus next year. He promised to create 150,000 extra jobs. Will the Government deliver on that promise? No, it will not. He promised to increase average wages from $55,000 to $62,000 a year. Has it delivered on that promise? No, it has not. He promised it would not cut KiwiSaver. Has it delivered on that promise? No, it has not. It cut the $1,000 kick-start from KiwiSaver. He promised no new taxes. Has it delivered on that promise? No, it has not. It is going to be introducing a capital gains tax. It whacked up the levies on broadband. It introduced new taxes on people travelling through airports. It promised to improve our export performance. Has it delivered on that promise? No, it has not. This is a Budget that is littered with broken promises.

This Government got a bit of a pass when it came into office 7 years ago because the global financial crisis was going to put whoever was in Government under a bit of pressure. So the Government got a bit of a pass. It got a bit of leeway. Seven years on, things are getting worse, not getting better, and New Zealanders can rightly say this Government is not delivering. This is a Government that has simply lost its way—a Government that made bold promises that it did not deliver. John Key says we are on the “cusp of something special”. Where have we heard that before? Could it be David Cameron, saying that “we are on the brink of something special”? He clearly got the Crosby/Textor memo. Tony Abbott, of course, did not. He said that the Australian economy was on the brink of devastation. He obviously was not quite so on-message there. But, of course, we know that actually the Government’s promises are all about campaigning, not about delivery, because they are all delivered by the same people who are promising the same things around the world.

We have got in Australia, for example, Tony Abbott promising the “foundations of future growth and prosperity”. That was Tony Abbott’s promise to the Australian people. David Cameron, of course, talks about the fact that they have “laid solid foundations”. You can see a similarity of language here. And what does John Key say? He says “growth … based on the solid foundations”. He is not even that creative when he rips off the other leaders from around the world, David Cameron and Tony Abbott. John Key cannot even change the words; he just quotes them verbatim. That just shows how out of touch and how much the Government members have lost their way when all John Key can do is pick up off the shelf the speeches being delivered by David Cameron and Tony Abbott and deliver them as if they were his own ideas because the Government has not got any ideas of its own. That is why the current New Zealand economy is stagnating under this Government and the books are going backwards.

Of course, it all starts to pile up on John Key and his Government members. They start to get found out. What do they do? Normally, they would turn to a debate about the flag but that is already going through a referendum, so they cannot do that. So what is the next off-the-shelf crisis that they can create? What is the new diversionary tactic? There is a boat coming! There is a boat coming! Therefore, goodness me, there is a crisis. We have heard this before when there was a boat coming to New Zealand, so the Government had to go into urgency and push legislation through Parliament. The boat did not come anywhere near New Zealand. It went round the other side of Australia. It came nowhere near New Zealand, but this is John Key’s diversionary tactic. It shows how desperate the Government is when it goes and pulls that particular card off the shelf. It shows that Government members really have nothing else to talk about and all their broken promises are coming home to roost.

The education sector is struggling under this Government. We have seen teachers who have basically had next to no pay increases for 7 years under the National Government. Schools’ funding is not keeping up with the rising cost of education. Hekia Parata said in the House today that the Government did not base its school funding decisions on an arbitrary figure; it based it on what schools actually spend and what the costs of delivering the curriculum are. I challenge her at any point to produce the figures that show that, because we know that the cost of delivering education is going up and up, the technological costs that schools face go up and up, the pressure that they face goes up and up, and the funding is simply not keeping up with that. In the early childhood sector it is criminal what is happening at the moment. Increases in participation are a good thing but that is masking the fact that on a per child basis early childhood education funding is going backwards. The result is going to be more cost for parents or lower quality education or, in the worst case scenario, both. That is simply not good enough.

This was a Government that said it was aspirational for New Zealand. Where did that aspiration go? Where did that aspiration go? It has disappeared. This is a Government full of hollow promises, hollow rhetoric, and spin, and when it cannot get away with that it then resorts to smear and it does not deliver what it promises New Zealanders. Government members are simply content to sit there on the Treasury benches and not deliver for ordinary, everyday, working New Zealanders who are happy to work hard to get ahead, but they do not have a Government that is going to back them despite the promises for aspiration and despite the promises about getting ahead. This is a Government that is simply not delivering.

It is a pleasure to rise and speak in this Budget debate. May I first congratulate the Minister of Finance on another outstanding Budget, his seventh Budget in a row and one that actually speaks to most New Zealanders.

We are a country that is on track economically, we are a country that is on track fiscally for surplus next year, and we are a country that is on track to deliver help where it is needed most. I would just like to state upfront that in terms of delivery we have delivered in this Budget $790 million to help children in our poorest households—help children in our poorest households. Mr Hipkins might ask why we are not delivering, but I do not hear Ms Ardern complaining about this Budget in terms of $790 million being spent on the poorest households.

What does it look like? Well, it looks like 160,000 of our lowest-income families. Some of those families are in my electorate of Maungakiekie. I know they are in Mr Ngaro’s electorate of Te Atatū. We are helping those families who really need some assistance around their benefit—$25 a week. If they are low-paid families they get up to $12.50 a week in most cases through Working for Families, for those with incomes under $36,000.

It is also about providing more childcare support. It is an extra $1 per week per child. So for different children that is $50 per week. I challenge members opposite who complain about this to show me a family that would not take $1,300 in 1 year—show me one family that would not take that money. I do not believe you can come up with that sort of family. I know Ms King brings families to this House—little examples of people who are not doing well—but you bring one family, Ms King, to this House who would not take the $1,300.

How do we know that this Budget is successful? How do we know? We held a Budget workshop—Mr Ngaro and I, and Mr English—in Manukau, in the heart of so-called Labour country, last Friday morning. And what positive feedback we received about this Budget from Pacific community leaders, from academics, from workers, and even from unionists, dare I say it. Those people were saying to us: “We believe in what you’re doing. We believe in what the National Party is doing. We want to see more jobs, we want to see more opportunities, but we think we’re doing well under the National Government.”

What does that look like? It looks like this, in terms of Pacific communities. The current statistics show that over 123,000 Pacific people are currently employed in New Zealand. That is more than at any other time in our history. I notice that members opposite have their heads down. They do not want to hear the truth. They do not want to hear the facts around how Pacific communities are doing very well under the National Government. That number is up 17,500 from this time last year.

We are doing well in our health statistics. Immunisation rates for Pacific people are in the mid-nineties. In fact, they are doing better than most of the rest of the population. So we are doing well in terms of immunisation. We are doing well in terms of jobs. In terms of education, we now have National Certificate of Educational Achievement (NCEA) level 2 pass rates for Pacific people in the mid-seventies. What was the pass rate under Labour, can I ask? The heads are down again. It is OK. They are not proud of their record, but I will tell you what it was. It was 51 percent under the Labour Government.

Although they rail over there about the amount of spending that goes into education, they do not look at the outcomes. The outcomes are quite clear. The pass rates for NCEA level 2 are up by 25 percent. Graduation rates are up by 50 percent. Early childhood education participation rates are up by 20 percent. I hear members opposite groaning, whining, and moaning, but the outcomes do not quite fit with the rhetoric and the misleading representations that are made opposite.

This Government has put in place more measures to address the housing problem across this nation than any other Government. Yes, we know about the HomeStart package that subsidises our first-home buyers. Yes, we know about the release of land, and we are working alongside the Auckland Council, with the Auckland Housing Accord. We have special housing areas, and we are releasing large tracts of land. But in this Budget we also came up with a plan around releasing more Crown land for development. That goes alongside the extra money we are putting into rent top-ups as part of our housing reforms, in order to have the income-related rent subsidy for those who are impoverished.

We are about providing the community housing sector with the opportunity to actually get alongside the Government and provide some of the housing. I am proud of the announcement that the Tāmaki area will get a $200 million injection. Admittedly, it sort of started under the Labour Government many, many years ago, but we are now implementing that plan to release more land, to work alongside communities. At the launch of that plan we heard from a local early childhood education teacher who was talking about how the Tāmaki community was being empowered and given the opportunity for self-determination, and to work out their own aspirations and their own goals, and that can only come under a National Government. We believe that the answers to our social ills lie in our communities. That is why we support Whānau Ora, that is why we support the Tāmaki redevelopment, and that is why we support schemes that empower our communities and give them the ability to determine their own successes.

This Budget is also about health. Ms King over there is a former health Minister, but what she did under her reign was she doubled the spending, but the outcomes diminished.

💬 Hon Annette King: Not true.

The outcomes actually got worse under her reign. I like Ms King, but her record is poor. She cannot stand on her record. [Interruption] I really admire her but her record is poor. What we have done in the health portfolio is increase spending. We have got immunisation rates up. We have got health outcomes really doing well. I say to members opposite that they should look at our track record. They should look at what we have done in health, in education, and in housing.

I also really admire what our Government is doing in the transport sector. We have funded the electrification of trains in Auckland. We have given some targets around the inner city loop and how we can achieve those targets, and where we are going in terms of public transport. But what we have also done is we have invested in highways that actually promote economic growth to our regions. That is what is critical here—economic growth.

We know that tourism numbers are up. We know that jobs are being created in the tourism sector. When I make my business visits locally in Maungakiekie I know that the IT sector is actually thriving. We also know that in terms of local manufacturing—and Maungakiekie is the hub of light manufacturing in the country—we have companies like Compac Sorting Equipment and we have companies like Coca-Cola that employ thousands upon thousands of locals. We know that that economic growth is important for our people.

This Government has created over 170,000 jobs in the last 4 years. We are about to create another 150,000 jobs in the next 4 years. We are a Government that is clearly on top of our game—creating jobs, providing for the needs of our less able, and for our vulnerable kids. That is what is at the heart of this Budget. I am proud of that. I am proud of the fact that we are helping people who really are at the poor end of the scale. We are helping them lift up and improve their aspirations and their dreams by getting off welfare and into jobs. This Budget is another stellar Budget by the Hon Bill English. It is a Budget that I am supportive of, and I commend it to this House.

Budgets are not just about the year’s plan and what is going to happen in the next 12 months; they are about vision. They are meant to set out where the Government wants to take the country over the course of a term, or, if it is indeed being visionary, beyond the next political cycle. That is what Budgets are the opportunity to do. I have sat through what feels like more than my fair share of National Party Budgets, and I am yet to see any evidence of that visionary kind of statement—the kind of thing that we actually need as a country. We do need it, because we are facing challenges that are not challenges on a yearly cycle—they are not even challenges on a term of 3 years; they go well beyond that. This time around I wanted to see a Budget that acknowledged the hard decisions and that acknowledged that doing what is right is not always about doing what is popular. In fact, if any Government worth its salt is going to address the issues that are right but that are not necessarily popular, it should be doing so in the first Budget after an election year. It should, but that is not what we have seen in this Budget.

Labour always tried to look ahead. Of course, we will always be criticised by members on the opposing side, because that is what they do. But we did endeavour, ultimately, to look ahead. Our policies demonstrated that. Working for Families was, essentially, about trying to address what we recognised in Government as the inequality that was emerging, and that was emerging most for our families and our low-income families. It was a very tightly crafted attempt at redistribution. Working for Families has endured as a mechanism because it has been, to date, the most successful attempt that a Government has made to achieve that redistribution. That is why National has not got rid of it. We brought interest-free student loans into play because we saw the emerging inequality and growing debt for the next generation, and we saw the impact that that was having on them and their ability to own a home, to become debt-free, and to become contributing citizens. That is what interest-free student loans were all about.

We established the New Zealand Superannuation Fund because we could see that we had baby boomers who were moving into retirement, that there was growing debt, and that we were going to have a spend in the superannuation space that would soon outstrip education—and we were simply not prepared for it. That is what the New Zealand Superannuation Fund—then known as the Cullen fund—was all about. We stopped calling it the Cullen fund when the National Government stopped contributing to it, but that is why it was established. And, of course, that is why KiwiSaver existed. We knew that the universal superannuation scheme that we had was a bare minimum and that if anyone retired without owning a home, they might, potentially, experience poverty in their retirement. That is why we brought in KiwiSaver. And the nine surpluses? Well, those were because we could see down in front of us that there was the potential for a global financial crisis and that we would hit on hard times. Dr Cullen prepared New Zealand for that, and that is why we ran nine Budget surpluses. I remember all the criticism from the other side of the House for the fact that we did that and for not entering into a lolly scramble with tax breaks at that time.

In contrast, what have we seen from the National Government? Not one surplus yet. For all its criticism of Labour in Government, we are still yet to see one surplus. During our entire time in Government, despite the planning that we put in place and all of the thinking ahead about the big challenges that New Zealand was facing, the one label that the National Party could come up with was “nanny State”. That was the argument we kept getting—that somehow all the planning we were doing made us a nanny State. If that made us a nanny State, then National is, in contrast, the babysitter who is now absent—the absent babysitter. And not just the absent babysitter; it is the babysitter who nicked the petty cash and left the kids home alone. That is the kind of government we have seen from the National Party. Our nation’s debt is beyond $86 billion, and it is debt that we will all carry. Unfortunately, as this Budget highlights, some will carry that debt more than others. In fact, it seems that the very people on whom Labour focused its Budgets, because of the inequality that we saw, are the very people who will now carry more of that debt under National’s Budgets.

Let us start with the next generation. Student debt continues to be an issue, but it is not just about dealing with student loans. We now have a National Government that will not even allow students who are, for instance, in a course of study that requires them to be in university for more than 7 years to be able to access student loans. Medical students cannot afford to complete their degree programmes under a National Government. That is just wrong, and we will be paying for that in the future when we do not have enough people in the field who are ready and trained. The next generation is going to be paying for the fact that the kick-start payment for KiwiSaver has been wiped out. In fact, under National Budgets, we have had eight changes to KiwiSaver since National has been in Government. If there is one thing that I have heard, particularly from the business sector, and even the banking sector, it is that the constant changes to KiwiSaver are undermining the scheme and are becoming genuinely problematic. So I beg the National Government: no more changes to KiwiSaver. We need consistency, particularly for the next generation.

What else have we done to the next generation? Well, if they live in Auckland, there is no way that they will be purchasing a house any time soon. We have put multiple ideas to the Government because we simply cannot wait for the next election in order to implement the changes that we need. We have put forward ideas for what we need the Government to do, and unfortunately they have still not been adopted and houses continue to earn more than people. The next generation needed this Budget to focus on jobs also. There is almost no mention of any kind of mechanism focused on job creation. Small businesses—the ones that produced 41 percent of our jobs last year—what did they get in this Budget? If I am being generous, I might point out that there is some funding that has been put aside for the New Zealand Business Number, but that is about it, actually. That is it, actually. So, as much as Craig Foss comes down to this House and trumpets how much his Government cares about small business, that is mere rhetoric until the Government does anything meaningful, and there was certainly nothing meaningful in this Budget.

It is not just about the next generation; it is also about the next generation of children who are living in low-income families currently. We know that children who grow up in poverty bear the effects of that poverty in their adult life, even if they get beyond that poverty themselves. Its effects manifest themselves, unfortunately, in terms of their health outcomes. Yes, we on this side of the House welcome absolutely the $25 increase to those families who are living in benefit households, but I do want to point out that it was not the first increase in 40 years—far from it. Like the National Government, Labour targeted families living on benefits with Working for Families. The family tax credit went to families on benefits. That was the last big increase for beneficiary families with children. You were not in the House, Jono Naylor, so perhaps you do not realise that.

💬 Tim Macindoe: Order—

He was not elected—not absent, Mr Macindoe—so that is why he perhaps was not aware of that fact. So we will be generous to that side. Perhaps the Government might have been able to make that claim if it had made a generic increase to benefits, but the National Government has not. The increase is targeted to beneficiary families with children, which is what the family tax credit did.

If the Government is genuinely focused on raising children out of poverty, why are there no numbers on how many families are being lifted out of poverty by this measure? Why are there absolutely no numbers that have been prepared by the Ministry of Social Development or Treasury? I imagine that Jonathan Boston’s quote illustrates perhaps why we have seen no numbers or calculations. He said: “With the exception of beneficiary families who secure income from paid employment for part of any specified period, the changes to benefit rates announced in the Budget will not reduce rates of child poverty measured on the basis of family income.” They will not reduce the rates—and why? It is because the gap for those families has become so large that $25 will not do it. The reason I know that is because when we formulated Best Start, I did the calculations myself. You need, at least, something like the Best Start payment, which was $60 per child, not per family, if you genuinely want to make a difference. So I lay down this challenge to the National Party members: if they are serious about changing child poverty, amend the bill to make the $25 payment per child. Tell us how many families will be lifted out of poverty, and try to do something that is genuine, not token. Then I may genuinely believe that you are doing something visionary.

I was so wrapped up in that speech by Jacinda Ardern that I thought it was going to keep on going for ever. As the member so rightly pointed out, this is the first Budget that I have been able to participate in and it has certainly been a great experience. Last week when we went into urgency, again it was the first time that I had been in the House when we had urgency, I had a member opposite smugly come up to me and say: “I think we are enjoying this more than you guys.” I could not help but think that every minute that we were there during urgency was a minute we were getting closer to passing really, really good legislation that was going to help this country and benefit New Zealanders, and it was certainly an exciting time. I thought I would rather be in our shoes, where we knew what the outcome was going to be, and the outcome was going to be positive, rather than being a little bit cocky about how long the process could be drawn out.

But turning to this roughly 15 hours—and we are getting to the conclusion now—of the Budget debate, I guess that I expected something different from the other side of the House. I expected to hear alternative plans. I expected to hear alternative options. I expected to hear alternatives in some respect, so maybe that is a little naivety on my part, it being the first time I have been here for the Budget debate. But I have heard nothing. I have heard members dwelling on the past, like the previous speaker who has just talked about what happened in Labour Governments gone by, of which she herself was not actually a member anyway. We have heard all this kind of talk about what has been done in the past but we have heard no alternatives. All we have heard from the other side is a couple of things.

Firstly, we have heard claims that there is going to be a new capital gains tax. Well, we all know that there is nothing new about the capital gains tax. It has always been there and all we have announced is that we are going to get better at catching out those speculators. So it is not a new tax. Also, all we have heard from the other side is people getting really, really excited about whether or not we have met our surplus targets this year. Basically, for just about every speaker who has got up, that is all they have managed to talk about.

I want to reiterate something that the Hon Nick Smith referred to in his speech. He did a bit of an analysis of the last 20 years’ Budgets, and on average each of those predictions of every Minister of Finance was 4 percent out in their calculations when they were looking at it, going forward. This year it looks like we are going to be 1.4 percent out. So, on that basis, we can draw from that analysis that this Minister of Finance is doing a better job than any of the other Ministers of Finance that we have had in the last 20 years.

But, of course, you do not measure the success of a Budget simply on surplus or not getting surplus by a small margin. You might measure it by whether the country is experiencing economic growth, whether or not there are jobs being created, and whether or not there are other factors being achieved like the planned decrease that we are going to see in ACC levies. What we have seen from the other side of the House is a complete fixation with money. Well, on this side on the House we are fixated with the people of New Zealand. We are focused on ensuring that we are taking people off welfare and into work, that we are raising academic achievement, and that we are investing where it is going to make the biggest difference. So, we are going to be putting in the package, which so many people have talked about, to increase benefits for families with children. What we know is that two-thirds of children who are experiencing material hardship are in families with people on a benefit.

We are not leaving it at just that. There is also going to be an increase for those people who are on Working for Families. We are going to see an increase to the childcare subsidy, which is going to make it easier for people to be able to go out and get more work, if they need that work, to make ends meet for their families. But we have got to remember that these are the new announcements and they ride on the back of everything else that this Government has been talking about over the last little while.

And let us not forget that this is in the context, over the last little while, of also increasing parental leave to 16 weeks. It is in the context of us making free GP visits available to under-13s. It is in the context of the HomeStart loans package, which means that younger people, in particular, who are buying their first homes will be able to access more money through their KiwiSaver contributions, and also all the other contributions that have been made to their KiwiSaver account, in order to get into their first home. It is in the context of us increasing the immunisation rates amongst our young children. It is in the context of us having warmed up 300,000 homes and of us seeing early childhood education participation going up. That is the kind of commitment that this Government has had to families in New Zealand. This Budget is in the context of that, and is simply adding to the great work that has already been achieved.

But this Budget is not simply about welfare and it is not simply about what we are doing directly for children and for families who are experiencing hardship. It is a well-rounded Budget. It is one that is committed to the regions and we are seeing that through the $25 million that has been set aside to establish new regional research institutions. Living in Palmerston North, I can tell you that the benefits that those types of institutions bring to a place are incredible, because you have money coming in that is actually multiplied. You have people working in those areas who are often well qualified and well paid—and well educated too, I might add—who are contributing positively to our communities, and so there is a flow-on effect from that. So we are going to see more of those being established in New Zealand.

We are seeing an increased contribution to the ultra-fast broadband roll-out. Again, in Palmerston North, I can say that we are currently the third-fastest community in New Zealand to take up ultra-fast broadband in the home. I was speaking recently to a business that is doing international IT work with all sorts of people, from the big manufacturers of hardware, to people like Google, and working with DreamWorks Animation, and all sorts of places like that. That business can do that because of the connectivity it has. When its staff members need to work from home, they can do that because ultra-fast broadband is available to them. That is what these kinds of things can deliver for New Zealand. That is the kind of process that we are working on with these types of initiatives.

We are seeing a further $80 million going into research and development. We all know that if we are going to move ahead, and if the economy is going to move ahead, we need to continue to be more innovative. We need to ensure that those companies that are on the edge of that innovation are getting the assistance they need, and that is what we are doing. Again, in my home town of Palmerston North we see the impact of that research and development funding going not just to the institutions but also to private businesses.

As I said, it is well-rounded Budget. We have got help for families, we have got help in terms of promoting economic growth, and of course the very big thing that New Zealand has faced over the last little while has been the rebuild of Christchurch. This Budget continues to invest in the rebuild of Christchurch. Last Friday I was fortunate enough to be in Christchurch and I witnessed firsthand some of the great work that is being done down there by the Canterbury Earthquake Recovery Authority and the things that are being achieved there. Despite the fact that Christchurch has had such a devastating last few years, what we are now seeing growing up out of the ruins is what is going to be a state-of-the-art city—something that the people of Christchurch can be proud of, and something that the people of New Zealand can be proud of. I am really looking forward to seeing what is going to rise up from the rubble, so to speak. That is the kind of commitment that we have, going forward.

In summary, I just want to add that I believe this is a balanced Budget. It is a Budget that is working towards great things for all of New Zealand. It is going to target those people who need our help the most and ensure they get it. We are not simply going to talk about what has been done in the past. We are looking forward. We are looking forward to seeing New Zealand have a future. We are looking forward to seeing people come out of poverty and into work, and make their own way in the world. We are looking forward to an ongoing growing economy here in New Zealand as a result of the great work by this Minister of Finance with this Budget. Thank you.

Following on from the last National Party speaker, Jono Naylor, I just want to refer to what he said. He referred to the fact that the National Government has not reached surplus for the last 7 years, and then said that Labour is fixated on money. As a default position because the Government has failed, 7 years in a row, to reach surplus, he said that that is because National cares about people. There is something wrong with that whole picture. It is not that difficult to reach surplus. This side of the House did it for 9 years straight—9 nil; 9 nil. I think that those members need to be reminded of that because they have proven for the last 7 years that they cannot responsibly manage this country’s economy. That is not what I wanted to focus this speech on, but I could not help but refer to it after Jono Naylor’s speech.

What I want to concentrate on is that the Budget really is a continuation of the Government’s plan to experiment with some of the most vulnerable members of our society—namely, sole parents and mental health beneficiaries. What has really upset me from the beginning is the way the Government refers to sole parents and mental health beneficiaries. Under its investment approach, it refers to them as a “high liability”—not as people who are vulnerable and need help but as a high liability. That is how it refers to people.

Under this most recent Budget, the Government is trying to introduce an experimental and untested system of social improvement bonds for mental health beneficiaries. We have very real concerns. We do not even know what the outcomes or results are from the mental health employment and sole parent employment trials, which have cost taxpayers a total sum of $5.9 million over the last 2 years. These trials involved the contracting-out of case management, which would otherwise have been undertaken by Work and Income. It involved support for employment placements to 25 private sector providers, two of which—APM WorkCare and Mental Health Solutions Ltd—received almost $1 million each. But where are the results? Where is the so-called return on investment from these trials?

According to the social development Minister, 3,377 individuals were referred to the mental health employment services trial, in which only 998 individuals were enrolled as at the end of February 2015. As at the end of February 2015, 414 of those individuals had been placed into employment, of which 63 individuals exited the service after achieving 12 months’ continuous employment. One hundred and seventy-one of those individuals were still in the service, having achieved 6 months’ continuous employment, and 180 individuals were still in the service and yet to achieve 6 months’ continuous employment. What happened to the other 2,379 individuals who were referred as part of the trial?

Our concern is that that same model will be carried over to the social impact bonds. Who will these providers or organisations choose to take on? What does it mean for those who are not taken on? What does it mean for the 2,379, out of 3,377, who were not picked up by these providers to place in employment? What were the criteria for trying to place them in employment? Who do we think the providers would have chosen? They would have chosen the people who were experiencing mental health difficulties or mental illness, but who were the most employable. Why? Because they wanted to see their outcomes attained. So that Government is going to use that kind of measure to say that the private sector is better at doing this than the State, but it is jigged—it is a complete jig-up. We can see that just from the employment trials that have been undertaken for those who are experiencing mental illness.

Further, the Ministry of Social Development has said that it does not hold information in relation to the roles and qualifications of staff from contracted providers delivering either trial. So here it is, contracting providers to work with some of the most vulnerable—we are talking about people with mental illness—but these providers have no qualifications or no experience that the Government knows of to be able to work with people who have mental illness. That is irresponsible. Going back to the Government’s own language—that these clients are high liability—well, I just want to say that I think the only liability for this country is the National Government.

When we look at sole parents, we see that sole parents and their children will bear the brunt of this Budget. We hear from that side of the House that it is giving $25 to sole parents or to beneficiaries. This is not per child but per family. It is something but it is not enough. As the Children’s Commissioner has said, it is a surprise but it is not a plan. It is not a plan to address the issue of poverty, which we are facing as a country. Under this Budget, yes, the Government has said that it will give an additional $25 per family, not per child, on benefit, but we have also seen the work obligation extended for sole parents from 15 hours a week to 20 hours a week.

I have had lots of constituents contact me with their concerns about this. The major concern is that what the Government is not taking into consideration is that what is subsidised is 20 hours, and even those 20 hours cannot always be accessed. The Government has not taken into consideration that not only do the parents need to put their children into early childhood education but they need travel time to be able to get there to drop their children off and then pick them up. Many of these parents are saying that 15 hours a week, if they can access the subsidy for 20 hours, is just enough because it includes the time they need to work as well as the travel time for getting their children to the early childhood centre and then picking them up afterwards. That was not taken into consideration.

On top of that, sole parent support beneficiaries have to reapply for their benefits every year on that anniversary. They also have to go back to work when their child turns 3, as opposed to 5. Some of us women in caucus talked about this amongst ourselves. Some of us had gone back to work, but circumstances are very different for different people in terms of the work they go into. Some of us have flexible working arrangements. Some of us are able to because of the amount of money we earn, but that is not going to be the case for every parent. What also does not seem to be taken into consideration by what the Government announced in its Budget is the number of children these sole parents have. If you are looking at a sole parent with one child, maybe—just maybe—it is more possible for them than for a sole parent who has two, three, four, or five children. It becomes more and more difficult when you look at the number of children. So just to have this kind of blanket approach to things is actually really irresponsible and not fair to the parents we are talking about.

The change that the Government is looking to introduce is going to affect 70,373 sole parents. I just want to point out, actually, that approximately 90 percent of those parents are women. They are women raising children by themselves. What does that say about the way that the Government thinks about those women or addresses the needs of those families? What does it say about Government members? It says they do not really care. They are punitive, they are judgmental, and they are just saying “We don’t care about your circumstances. Get out and work, regardless of how things are for you.”

There was a lot in this Budget, from a social development perspective, to be concerned about. Looking at the reprioritisation of funding to the social sector and the impact that will have on NGOs is another big issue. We already see this with the demise of Relationships Aotearoa, and we know already that there are NGOs out there that have very, very good reputations in their local communities and have served their local communities and vulnerable people for decades, many of them; and yet they are feeling the brunt of this Budget as well. They are concerned about what this Budget will mean for them and their ability to continue doing the important work they have been doing for many, many years.

This Budget is not about people, unlike what Jonathan Naylor has said; it is not even about money. The National Government has failed on both fronts in this Budget, and it will not take long for the rest of New Zealand to see through that.

It is a pleasure to speak to Budget 2015. There were many highlights in Budget 2015 and one of them was clearly the $25 increase in benefits. I want to focus on this for a moment and allay some of the fears of the previous speaker, Carmel Sepuloni. I want to focus on the benefit increase because, in fact, many more will benefit. In fact, maybe 100,000 beneficiary households are going to do even better than the $25 increase, some by as much as a further 30 percent or, on average, $8, up to $33 a week. The reason for this is that it turns out that a majority of beneficiaries also own motor vehicles. They will also benefit from the good work of Nikki Kaye and her team, with the ACC reduction on the motor vehicle and petrol levy, which is decreasing by an average of $135 a year. This will apply to 100,000 beneficiary households.

So let us look at that a little bit more closely. Let us see who and how they will benefit. If we look at New Zealand households and household income from the last census, the smallest household income category is $20,000 or less. There are 146,000 households in this category. It is highly likely that a household with $20,000 or less has a number of beneficiaries in it, so we could reasonably call that a beneficiary household. When you analyse the data for beneficiary households, it turns out that 70 percent of those households across New Zealand also own motor vehicles—54 percent own one motor vehicle, 12 percent own two motor vehicles, and 3 percent own three motor vehicles. The 100,000 beneficiary households will therefore receive the direct Budget benefit of $25 per week and the indirect benefit from the motor vehicle ACC levy reduction. It will be an indirect benefit because unlike the core $25 it will not go directly into their account. It is an indirect benefit because it is a cost they will no longer have to bear; therefore, their annualised weekly costs will go down.

If we put some numbers around this and add the direct $25 benefit increase and the indirect ACC levy benefit, what we actually see is this: 78,954 beneficiary households with one vehicle will receive an increase of another $3 a week to $28 a week; 17,545 beneficiary households with two vehicles will benefit by $5 a week to $30 a week; and 4,386 beneficiary households with three motor vehicles will benefit by $8 a week, increasing to $33. For this group, that is a 30 percent increase over the core Budget announcement of $25. If we look at that last group—the group with three motor vehicles—a little bit harder and extend that thinking, it gets even more interesting. The household income for a beneficiary household with three vehicles—and, again, there are 4,386 of them—is less than $20,000. Well, it is probably unlikely that one person is driving all of those three vehicles. You could reasonably say that there is one person per vehicle and, therefore, there are three beneficiaries in that household. There are a few assumptions there. If we work through those assumptions, what it means for those 5,000 households is this: three benefit increases at three times $25 is $75; three ACC levy improvements at three times $8 is $24. If you put those two together, that is a $99 per week increase for 4,386 beneficiary households. That is a number. This Budget is good for beneficiary households and the data holds true.

In fact, Whangarei and Northland will do even better because Whangarei and Northland have a higher vehicle ownership ratio than the average across New Zealand. So they are going to do better. In fact, the New Zealand average for one vehicle—just to focus on that—is 54 percent, in Whangarei it is 58 percent, and in Northland it is 59 percent. So the indirect benefit from the ACC levy decrease is going to disproportionately advantage Whangarei and Northland. That is a good thing for them. The motor vehicle levy decrease will continue to contribute in outgoing years because it is projected that there is going to be a further drop to $120, down from $195, in the outgoing years.

The data speaks and people speak and they are saying this is a good Budget. People such as those in the Whangarei Child Poverty Action Group, which had its post-Budget lunch on the Friday, said what others are saying—that this is a significant start but there is work to do. I get it; we get it. There is more work to do, but this is a significant start. I have focused on benefits, but there are other things, of course, in the Budget that are helpful and useful.

Transport—Northland is benefiting from the Akerama curves realignment and the loop road to Smeatons Valley. The road changes there, the transport changes there, are significant. Millions of dollars are pouring into Northland there. What was also announced pre-Budget was funding for the Northland cycle trail. A further $3 million will fund the Pou Herenga Tai—Twin Coast Cycle Trail. That is going to allow the development of the cycle trail from Hōreke in the Hokianga to the Bay of Islands. That will be a total contribution of $7 million.

There are so many things in this Budget. I have focused on the benefit increase and made the point that it is going to be way more. In fact, it is almost a hidden number—another 100,000 are going to benefit more. I make my point again: the data speaks and the people speak. This is a good Budget, I believe it is a good Budget, and I think Northland and New Zealand are going to do well from it. Thank you.

I am pleased to take this call with my colleague who spoke earlier, Ria Bond. However, it is not very pleasant to speak about the Budget because there is nothing pleasant about this Budget.

Just last week we had a visit to Rimutaka Prison. We were hosted by the prison manager, Chris Burns, and his great team. Chris Burns and his team are doing a great job there. They have a very dedicated rehabilitation team and their officers know what they are doing. They are doing a great job in keeping those prisoners within the wire. They are keeping them safe. They are also implementing programmes and courses that help prisoners to rehabilitate. We also visited the drug treatment unit, which is one of a kind in the country, and, although small, that unit is doing a great job. We do not think there is any need to privatise the hard work that Chris Burns and his colleagues are putting in. This is not about cost cutting; it is about the rehabilitation of New Zealanders—New Zealanders who have gone off the track. Chris Burns and his team are doing a good job to bring them back into mainstream society. However, privatisation of their work does not help the prisoners, nor does it help the corrections system in our country.

The visit was very educational, and that enforces the danger of assumptions. This Government has assumed that outsourcing is a viable way ahead for our prison system. We believe it is not. It is wrong on many levels. Our call is to invest in the likes of Chris Burns and his team, and not in Serco. Serco is a large corporate and it is all about profits. It is a matter of public record that prisoners were removed from prisons like Rimutaka and certain other units, such as Tongariro/Rangipō and Manawatū and those units were closed to create the business case for the $400 million Serco-run corrections facility in Wiri, a South Auckland corrections facility.

Given the housing issues in Auckland, we wonder how many houses could have been built there on that 17-hectare site that is accommodating the Serco-run corrections facility. This, according to us, is an opportunity lost for us. There was no need at all for that prison, and there was no need to close down the units, which were working perfectly fine, with dedicated officers and rehabilitation case managers there.

Serco is a foreign corporate managing Wiri. Serco also runs the UK’s Yarl’s Wood immigration detention centre. I recommend that members google the Channel 4 investigation as Serco has run that facility since 2007. Just last Saturday we were told that a violent offender escaped from a Serco-managed facility in the UK. He just walked out, just testing the system. He claimed that he was just testing the system, and Serco, in this test, has failed miserably to keep those prisoners inside the wire.

This is the nub of the issue for us. Serco may appear to be a great operator this year, and even next year, but Yarl’s Wood revealed true abuse 8 years in, and that is not the only problem that Serco has, given it has written off over £1 billion worth of contracts in its latest financial year. Then again, given the approach of this Government, with the holiday tax, it would not surprise us to see it also sell the Customs Service to Serco next. We keep wondering what is going to happen next. Is it going to privatise the police? It is going to privatise the whole judicial system? Where will it stop?

💬 Barbara Stewart: Mental health system.

And the mental health system, as my colleague here says. This Government has a strong desire to shed itself of the core responsibility of governance. Corrections is a core responsibility for any Government. It is what the taxpayer expects from our justice system. They do not want overseas-owned, publicly listed corporates to make margins off their taxes while Kiwis get laid off.

New Zealand First is also puzzled about how an ice cream top-up in Budget 2015 will do anything to stop offending. It is very easy for the so-called financial wizards to calculate, but there were 8,303 prisoners in our system last week. The additional $6.5 million that was allocated for rehabilitation in the Budget—it calculates down to $2.02 per prisoner per day. That is the cost of a scoop of ice cream. We do not expect people to change their behaviour for the sake of a scoop of ice cream. We can do better than that, I think. But, no, this Government just believes in giving ice creams to Kiwis and millions to Serco. That is what it is.

We do not believe that prisons should be sold off to the highest bidder, when that bidder has less than a savoury reputation, as Serco regretfully does. Just $2.02 a day extra for each of the 8,803 prisoners will make a scant impact unless the plan is managed—the decline of our prisons that Serco will magically fix. I do not believe in conspiracies, but there is a plan to sell off our prisons. This goes against the claims of the Minister of Corrections, Peseta Sam Lotu-Iiga, that rehabilitation is a key focus of the National Government. How could it add $2.02 a day extra—how can we fix the system with $2.02 a day? This goes against the claims that the Minister has made. Unlike England’s Moeen Ali, who I hoped would drop Trent Boult in the first test the other day, this Minister has dropped the ball on corrections big time, as has this Government.

Coming back to the cost-cutting in prisons, we demand that the likes of our own people, our own corrections staff and rehabilitation set-up get more funding, and not Serco. Thank you.

Tēnā koe, Mr Deputy Speaker. Tēnā tātou katoa. Before I make my contribution, can I first extend my congratulations to the new co-leader of the Green Party, Mr James Shaw. Congratulations, I look forward to your contribution in this House.

I am happy to take a call on the Appropriation (2015/16 Estimates) Bill. I have been listening since the Budget was announced last week and all through the debate, listening attentively for some offerings that I, as a representative of Ikaroa-Rāwhiti, can honestly say will make a difference in my electorate. I also say, as a former senior public servant and a chief executive of the third-largest iwi, that long-term and medium-term planning is critical. I was also listening for the plan—the big plan—that is going to take this nation forward. I was disappointed on both accounts that there was nothing in the Budget that could address the pressing issues of the people of Ikaroa-Rāwhiti, which I will touch on shortly—namely, housing and employment.

Listening to the contributions from members on all sides of the House, I think that this Budget is clever politics. It has no plan to address the long-term challenges facing New Zealand and it is a Budget of squandered opportunities. When Labour becomes Government in 2017 we are going to invest in diversifying the economy and prepare for the future. We are going to ensure that the gains of economic growth are shared among all New Zealanders and not just with the few.

💬 Scott Simpson: Who will be leader?

Do not you worry; you will be surprised. Much has been said about the Labour Party’s inability to manage the economy. I have heard speakers on the Government side talk about celebrating that this is the seventh Budget delivered by the Minister of Finance, the Hon Bill English, and they are very happy about that. But my issue is this: how can you be happy with a Budget that continuously gives deficit announcements in this House? You cannot be proud to say that you want to belong to a party that has not delivered an ounce of surplus in the Budget in this House.

We on this side, as has been heard by previous speakers, have delivered—how many, people? Nine surplus Budgets—nine surplus Budgets—in this House, and, yet, we hear members on that side of the House talk about Labour’s history of poor management. But bring on one surplus—just bring on one—and then we may have a debate around whether we are even in the same ballpark. But 9-0, as a former sporting person, is a loser, in my part.

Let us turn to the Budget. We on this side commend the $25 extra payment for working families. Clearly—as commentators have announced since the Budget was announced—that is equivalent, probably, to two extra meals in the House per week. But we applaud the Government’s move in that way. When Labour is in Government we are going to raise it to $60 per week, but, you know, we will work with $25.

This Budget also fails to deliver on housing. Releasing Crown land for housing is a no-brainer, but the Government cannot tell us how many houses will be built or whether any will actually be affordable. The Government must commit to all of the houses being affordable, and the best that Mr Nick Smith can offer is that they will be affordable for someone.

Cutting KiwiSaver demonstrates the short-term thinking of this National-led Government, which I alluded to earlier. This move will hurt our national savings rate and reduce future investment in our productive Kiwi businesses.

Surplus—the Government broke its promises for surplus despite making it its No. 1 election campaign promise last year. Its promise of a surplus next year based on rising dairy prices is fiction. Not reaching surplus means not paying back any of the $88 million—I say that again, $88 million—of debt we currently have. A $7 billion hole was caused by a drop in dairy prices and the Government has failed to react and diversify the economy. It is out of ideas, clearly.

The $30 billion looming superannuation cost—the Government has not addressed this issue either. It is irresponsible, short-term thinking. Labour has a strong record in pre-funding the cost of superannuation through the New Zealand Superannuation Fund and in ensuring Kiwis have a retirement nest egg with KiwiSaver.

In terms of the issues that I mentioned I would raise in this House around the benefits, or the not-so-benefits, for Ikaroa-Rāwhiti, can I mention that in Gisborne and Hawke’s Bay, turning to the issue of housing, there is no emergency housing available in Napier or Hastings, despite being the fifth-largest metropolitan area in the country—zip, zero, not one emergency house in Napier or Hastings. There is no emergency housing available in Gisborne, despite increasing inquiries to the Gisborne Citizens Advice Bureau. The nearest emergency housing to Napier is in Palmerston North, 2½ hours away. It is approximately a 5-hour drive if you live in Gisborne.

Homelessness is up in Ikaroa-Rāwhiti. We are probably at about 15 people, but those are just the people who come down to us. Kiri Swindell from Napier’s soup kitchen was reported as saying in Hawke’s Bay Today on 22 May 2015: “This shortage of emergency housing is putting pressure on council and State social housing, which in turn sends more people to the private rental market and pushes up rents for everybody.” The situation in Hawke’s Bay reflects the sad state of affairs across the country. Provision of emergency housing is random, patchy, and far below what is needed. National’s State house sell-off, which is already under way with large numbers of State houses being sold off locally, will only make matters worse, and asking about how many are being sold in my electorate is like trying to get blood from a stone.

Labour believes that the level of homelessness we are seeing now is unacceptable in New Zealand in the 21st century. Our policy when we are in Government in 2017 is to commit $5 million-plus a year housing from Housing New Zealand to house 1,000 homeless families and individuals per year in support of emergency housing. People who are homeless will be housed. The funding will be used to pay social service NGOs and to provide wraparound services to help homeless people get their lives back on track and then find sustainable long-term housing. We will also undertake a ministerial commission working with the community to develop a New Zealand strategy to eliminate homelessness. [Bell rung]

Those 8 minutes have gone way too fast, but I do want to acknowledge the Minister for Māori Development, the Māori Party co-leader, when he spoke in the House in his speech about being happy to deliver goodies to the people of New Zealand. I want to commend the Hon Te Ururoa Flavell for the work that he has done in securing the budget he has for our people, but I would not call them “goodies”. It is giving on one hand and it is definitely taking on the other hand.

Under Labour you will see a return to surplus Budgets. Under Labour we will fix New Zealand’s housing through KiwiBuild. We will invest in our regions to grow real jobs and we will restore the impartiality of the public service. We will also invest in and value our NGOs and communities to deliver fairer and more detailed social services. Kia ora.

Alfred Ngaro—a 5-minute call.

I thank you for the call and look forward to having this call in this Budget debate, even if it is only 5 minutes. I just want to commend the previous speaker, Meka Whaitiri, because when she was talking it was actually the first time I have heard the strategies coming from the Opposition and from the Labour Party. She was talking about the things that they will actually do, rather than just opposing us. So I can commend her for putting up the strategies. I do not always agree with all of them, but I think it is great that, actually, we are hearing strategies that are being put forward.

What I want to talk about is this Budget of 2015 and the responses, not from the House but, actually, from the community, from the heart of the people who are out there, and from the people who work every day with our communities and with our families, whether it be in business, tertiary training, education, health, or other forms of services as well.

On Friday we were with the Deputy Prime Minister, the Minister of Finance himself. We were in South Auckland at the Auckland University of Technology at the Manukau campus, and we were holding a post-Budget forum with the Pasifika community. What was encouraging were the comments that came afterwards, and also when the Deputy Prime Minister spoke. He said: “This Budget tries to move forward.” It makes changes, for instance, in regard to the baseline of benefit changes and the increases that are there. Seven hundred and ninety million dollars over a period of 4 years is significant, and though it has been said that that $25 is not much, that increase has not happened in 42 years, so that is significant as well.

💬 Kris Faafoi: And it won’t happen for 10 months.

The reason why there are comments about 10 months—let us talk about that, just really briefly. Part of that process, as the honourable member Mr Faafoi will know, is that first of all you have to go through legislation. Then you have a process—and this is for the listeners out there to hear—and then there are submissions to be heard over 3 months. After that, the legislation comes back into the House, has its second and third readings, and then after that it then goes through the administration changes after the Royal assent. And so therefore 16 April is an appropriate date. It is no different from the GP visits for under-13s legislation. We announced this measure in 2014 and it was enacted in 2015. It is appropriate because we need to make sure we have the administration side and we have the commitment there to achieve that, so it is actually no different from that process as well. We believe that process is appropriate, it is adequate, and it is meeting the needs. Like we said, when you have not changed something for 42 years you have got to do it right. You cannot say: “Why is it taking 10 months?” when you have not done it—even in Labour’s time—in 42 years. I think that is quite significant, and we think that it is important, as well.

What is not often talked about—and I just want to make some comments about this—is that the economic growth forecast is at 2.8 percent, and that is significant. We have heard others, in the Opposition and even internationally, call it the rock star economy, but we know that our Minister of Finance has said it is a rock-solid economy. Therefore, we are not trying to be flashy and we are not trying to pretend that we know all things. However, we are making sensible and stable decisions, hence the reason why even in the latest poll from Television One 48 percent still prefer National as a Government. That is significant as well and so that is important. The deficit of $684 million is forecast for 2014-15 and will move to a surplus—and a question was asked about a surplus—of $176 million in 2015-16, growing to a $3.6 billion surplus in 2018-19. We think that is quite significant. We think that is really important, as well.

I also want to just talk about how average wages are expected to rise to $63,000 a year by mid-2019, at an increase of 12.5 percent. That is significant because we still know, and we are still clear, that the average wage increase is above inflation. That is significant, as well, because we know that what is important to our families and to our homes is to ensure there are enough resources coming in. Unemployment—Mr Faafoi was actually talking and asking questions about that. Unemployment is forecast to fall to below 5 percent in 2016. There are 194,000 new jobs that are there. It is nearly 23,000 more than what was forecasted by Treasury, which talked about 170,000. We think that is significant—194,000 jobs are significant to what we are talking about.

In the remaining moments that I have, I just want to talk about—just finally, in wrapping up—for vulnerable children, the other part of the Budget that is part of the $790 million child hardship package proposal, the $36 million to support the Children’s Action Plan, including for new and existing Children’s Teams. We know they are out in Whangarei; we know they are in Rotorua. We have seen that the Children’s Teams have begun to work. It is an intersectional sort of collaboration that is making a difference for the children—for the young people and their families—and we know that this $36 million is important. In the Budget there is $23 million to bolster the work of Child, Youth and Family, and $8 million to help vulnerable students to participate more in education or training, and to lift achievement. These things are absolutely significant and important, as well. We have been talking about early childhood education in schools. We see the total spend is $10.8 billion.

💬 Scott Simpson: How much?

$10.8 billion by 2015-16 on early childhood, primary, and secondary education—and, at the moment, there is $74.9 million for early childhood education to enable more children to be able to attend. We know that when children go to school they are well-equipped and prepared by their being in the early childhood education sector. We have increased the participation rates to up to at least 25 percent from what they were before. We think it is making a difference and it is quite significant.

The other one—which is dear to my heart—is there are 300 extra trades academies places being added to support students to achieve National Certificate of Educational Achievement level 2. This is a great opportunity to be able to—[Interruption] Sorry?

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member can keep going if he wants to, for a little while yet. I will tell him when to stop.

Thirty seconds.

In the brief moments that I have, then, Mr Assistant Speaker, I just want to touch on a couple of things, and they are particular to health. I think that these things are quite important. There is an additional $1.7 billion for new public health services, which over the next 4 years will increase the Government’s total health investment. I think that is important. I am a member of the Pacific Prostate Cancer Foundation, and getting health messages out to our community is critical. I know issues around non-communicable diseases are also placing an important burden upon a number of our communities. Therefore, I believe that the health spend is significant in the primary care space—that it is important. So there is $320 million per year to district health boards, and $1.3 billion over 4 years for extra services to help meet cost pressures and population changes. I could go on, but I will not, I think.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Consider it a challenge.

Consider it a challenge—would you like me to continue? Thank you very much. I commend this Budget, this excellent Budget, to the House.

I could listen to my admirable colleague Alfred Ngaro all day and, in fact, for a while I thought I was going to. But I do want to commend him for a very fine address, which I know he spent a considerable period of time preparing late this afternoon.

We have come into the home straight of the debate on an excellent Budget, which started 15 hours of debating time ago. This is a Budget that is exactly right for the times in which we live. This is a Budget that justifies the faith that New Zealanders resoundingly put in the John Key - led National Party at the polls last September. It also reflects the considerable plaudits that some very distinguished international commentators have uttered about the work of the New Zealand Government in recent years.

💬 Scott Simpson: Tell us about them.

Particularly—Mr Simpson—the IMF, and some of the leading economists who write in very reputable journals and who have said that New Zealand is following a pathway and has set a model that many other countries should follow. Most important, in my view, this is a Budget that is really, genuinely helping our families, that is helping those who most need help from a Government, and, in particular, that is working for New Zealand.

As we are nearly at the end of a debate that has focused fully and widely on all of the key provisions that were announced by the Minister of Finance just under a fortnight ago, it is really time for the adjudicators, I think, to deliver their verdict, and, of course, they are the public of New Zealand. The public of New Zealand, who have been watching—and who, no doubt, are watching in great numbers right at this moment—will note the cohesion of the Government team in this debate and acknowledge, as I do, the strong contributions of our confidence and supply partners, the Māori Party, United Future, and ACT. Each of those parties brings a fresh perspective to the table, and each has secured in this Budget, and, indeed, over the last 7 years, some significant wins in their areas of influence. I want to applaud them and thank them for their contribution. They play a vital role in this Government.

The public of New Zealand—the adjudicators of this debate—will have looked across the House throughout the last 15 hours and followed with interest the contributions respectively of the Green Party, New Zealand First, and the Labour Party. I am sure that they will share my views that the Greens often bring an interesting perspective to our debates in this House. At times, I have to say, it really does feel as if they occupy a different planet from the rest of us, but even though they also have a long way to go before their aspiration of advancing economic credibility can be achieved, they do bring something of value to the table.

They were not helped, of course, at the start of this debate by a very poor opening gambit on Budget day from Metiria Turei, who delivered a speech that she had clearly written 3 days earlier in order to lament the things that were not going to be in the Budget, and then did not have the wit to think on her feet and acknowledge that, actually, most of those things were there. Instead, she could have delivered a much more complimentary speech, saying “Thank goodness.”

This is the first Government in a very long time that has really substantially delivered for the people she keeps on talking about day after day in this House. But there were some considered speeches from many of her colleagues. I acknowledge that they do have the ability to articulate a theme and, in most respects, to develop it in some consistent detail. So I think that the adjudicators of New Zealand might give the Greens seven out of 10 for their performance in the 2015 Budget debate. And could I just briefly, as others have done, acknowledge today the election of James Shaw to the co-leadership of the Green Party. I congratulate him on that and wish him well. I also want to acknowledge and commiserate with Kevin Hague, Gareth Hughes, and Vernon Tava.

Then we go to New Zealand First. Well, New Zealand First got off to a slow start and there certainly was not a lot of depth evident in its contributions. Clearly, it is missing the intellectual grunt and leadership that Le’aufa’amulia Asenati Lole-Taylor gave it in the previous Parliament. But, like the Greens, New Zealand First too can actually advance and develop a theme, even though it depends too greatly on populism, xenophobia, and Luddite economics, rather than on clear principles and an understanding of contemporary challenges and solutions. Most of the New Zealand First MPs gave it a reasonable shot and some of them would have held the public’s attention. I think, overall, New Zealand First scraped together a creditable pass mark of five out of 10.

But what of the hapless Labour Party? Clearly, it got off to an appalling start when its current leader delivered the worst Budget reply speech by an Opposition leader in at least 50 years. The pained expressions on Labour members’ faces when that ordeal was over spoke volumes, and the public definitely noticed. Yet, incredibly, things seldom improved for them over the 13 hours of Budget debate that have followed. Labour’s woes are numerous, readily apparent, and well documented. To be sitting at 25 percent in the polls nearly 7 years after they were ejected from the Treasury benches must be devastating for those members and their dwindling band of union backers and party members, yet they need only reflect upon their lamentable contributions in this Budget debate for compelling reasons for their continuing decline in public estimation.

Unlike the Greens and New Zealand First, the Labour members have failed to grasp a theme, or even a few connected ideas, and stick to them. Although the leaders of the Greens and New Zealand First made less than memorable speeches, the speech of the current leader of the Labour Party was memorable, but for all the wrong reasons. In the months and years to come he will, no doubt, look back on that contribution as the beginning of the end of his brief tenure as leader of the Labour Party.

Despite being well into their third consecutive period in Opposition, Labour members have no more idea today than they did nearly 7 years ago of how to improve their performance. In this debate Labour speaker after Labour speaker has failed to grasp what it is actually about. New Zealanders know that it is about the responsible management of our economy; reducing debt; delivering better public services—boy, we are, and that is one of the things that I am most proud of as a National MP; standing by Canterbury, which I am very proud of too, given the challenges there; and doing more for our most vulnerable families.

That is why New Zealanders are saying that this is another great Budget from the National Government. Labour members do not know how to deal with that. They have substituted volume for persuasiveness throughout this debate. They have also tried to substitute clichés for substance. Well, that will not cut it. That will not reconnect them with the public of New Zealand. That will not even inspire their own members, let alone the public, who are waiting to be swayed. I have to say that I think the New Zealand public, if they were being charitable, would give the Labour Party two out of 10 for its performance in Budget 2015. And that is why we are seeing in both the Greens and New Zealand First, day after day, emerging leaders of the Opposition. I predict that one of those two parties will be the main party in the Opposition after the next Parliament unless this Labour Party, which is doing so badly, can actually start to learn why it is doing badly and turn things round. Labour members need only look further down the Chamber to get a few clues of how it is done.

Let me finish today by saying that as the MP for Hamilton West I am very, very proud of what this Government does—in particular, to help our vulnerable families. I represent a marginal electorate. It is good to see you, Mr Assistant Speaker Mallard, smiling at me, because you too know what it is like to represent Hamilton West. We have a microcosm of New Zealand. There are many families in New Zealand who have done it tough through the recession. There are many who need some support. There are many who have struggled to make ends meet during the global financial crisis and the domestic recession. So I want to say that I am deeply proud, not only of the fact that as a National Government we have perhaps confounded the punters and delivered something that a lot of people did not expect, but that we have acknowledged the fact that there are people who are doing it tough who need some extra support.

As has been acknowledged by many on this side of the House, we have in this Budget delivered the first real increase—a significant increase—in incomes for people at the bottom of the heap in a very long period of time. But, of course, it is part of a much wider overall package. We saw other measures designed to help families last year in the Budget and in previous years. The reform of the tax system, despite the bleatings of members opposite, is genuinely fairer for everybody and gives people more hope, to the point where the vast majority of taxpayers in my electorate—more than three-quarters of them—are paying less than 20 percent in income tax. That is a terrific incentive to them. But these measures that the Minister of Finance has announced in this Budget are making a huge difference and will make a huge difference. [Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member does not need to wake up the House.

As you have just rightly said, this speech is so riveting that no one needs to be woken up. But I am really proud of what this Budget does for families. I want to say that I believe that this Minister of Finance will go down as one of the greatest Ministers of Finance of our lifetime. I want to say that I will go to my grave immensely proud to have been a member of the John Key - led National Government, because we are delivering the things that matter to New Zealand, because we are making real improvements across the board, because people will be better off, because things are getting better, because things are getting fairer, and because our achievements in health and education and across a range of areas are clear for all to see.

That is what being in Government is about. That is why this Budget continues a very impressive record since the National-led Government came into office. That is why John Key and Bill English and their Ministers can all hold their heads up high. I say to them “job well done”, and in a few minutes’ time I will have great pleasure, on behalf of the Government, in giving the confidence vote an emphatic expression of support, because I know that it is felt not only on this side of the House but, overwhelmingly, throughout the country.

It is a pleasure to speak as Labour’s last speaker in this Budget debate. I would like to thank Tim Macindoe for two things. The first thing is that he realised that well within 8 minutes of his own speech he would be asleep, so he set himself an alarm. He set himself an alarm. He fell asleep, but with 2 minutes to go Tim Macindoe’s alarm went off. That tells you the story of this Budget. This is a tired Budget from a tired Government that has fallen asleep, not only just at the wheel but at the chief whip’s speech. Eight minutes into it he had enough. He had to set an alarm, and that speaks volumes for this Government and this Budget. I would also like to thank Tim Macindoe and wish him well for his career post the 2017 election as a standby judge for Dancing with the Stars—as a standby judge for Dancing with the Stars. Because with his performance of scores out of 10—inaccurate, by the way; inaccurate—that is pretty much all the chief whip for the House has got.

Accuracy is something that is very important to me. I want to be accurate in the way that we have described this Budget. Some of my colleagues have said that this Budget lacks vision. I do not think that is quite precise. If your vision is that you can tax it, you can sell it, you can charge for it, and you can make a profit out of it, then this is the Budget for you. I thought I had seen everything in this Budget, but to wake up this morning and to hear about this Government with its plans for social bonds, I thought “This has gone too far.” This is a serious issue. This is a Government that wants to help people make profits out of the treatment of mental health patients. I have thrown some accusations at the National Government before, but to think that this is not a good old-fashioned Tory Government when it wants to charge or help companies make profit out of mental health provisions in our communities—it shows you just how true Tory this Government is. It shows you just how true Tory this Government is.

Where is the vision in this Budget for children in my electorate of Mana to dream to succeed? For those children who are vulnerable, for those children who come from Housing New Zealand homes and private rental homes where their families are struggling, there is no vision in this Budget. Let us look at those many thousands of constituents of mine who live in Housing New Zealand houses. Where is the vision for them? There is none. The only vision for those families is that this Budget allows this Government to sell off swaths of Housing New Zealand homes. I came from a State home too, just like the Prime Minister who sits over there. I am proud to say I grew up in one. That State home let me get here. It was an anchor in my community. But that Government over there wants to take that away. That Government wants to take that away—to take that opportunity away from many of those families, from many of those children who want a good, affordable, warm house to live in. Those members sit over there and they are quite happy to do that.

Where is the vision for helping our families save? Well, there is none. It is the eighth time in this Budget that this Government has taken a crack at KiwiSaver—the eighth time. All those 2.5 million people saw the benefit and the incentive of the $1,000 kick-start that is now gone for anyone who has not already signed up. I made the point during the Budget debates that some of the members across the House have already signed up to KiwiSaver. I know we are not allowed to read speeches but for the purposes of accuracy I want to read the roll of honour of people who voted for getting rid of the KiwiSaver kick-start but who have probably already taken that $1,000. So here it is: Amy Adams, Todd Barclay, Maggie Barry, Andrew Bayly, Chris Bishop, Simon Bridges, Gerry Brownlee, David Carter, Matt Doocey, Sarah Dowie, Te Ururoa Flavell, Craig Foss, Paul Foster-Bell, Marama Fox, Paul Goldsmith, Jo Goodhew, Joanne Hayes, Brett Hudson, Nikki Kaye, Nuk Korako, Barbara Kuriger, Melissa Lee, Tim Macindoe, Todd McClay, Ian McKelvie, Mark Mitchell, Todd Muller, Jono Naylor, Alfred Ngaro, Simon O’Connor, Hekia Parata, Parmjeet Parmar, Alistair Scott, Scott Simpson, Stuart Smith, Lindsay Tisch, Nicky Wagner, Maurice Williamson, Michael Woodhouse, and Jian Yang.

Those people have already signed up to KiwiSaver. They have signed up to KiwiSaver and they have got their $1,000, but they are going to deny future generations of this country their incentive to start their KiwiSaver programme. They have taken your $1,000—they are all sweet, they are good, but they are not going to let future generations of Kiwis sign up to KiwiSaver and have their incentive to start their savings regime from a very young age. My simple message that I will continue to say to that side of the House is “Give it back.” Give it back. Give it back. If you are quite happy to sit in this House and say that we do not need this anymore—that is not an incentive. There is not an incentive anymore to sign up to KiwiSaver. Give the money back. Give the money back. There is a deafening silence from that side of the House. There is a deafening silence.

Is it not a strange, strange coincidence that the first year of savings from getting rid of the KiwiSaver kick-start is about $175 million? What is Bill English’s proposed surplus for the next financial year? It is $176 million. So with one fell swoop, getting rid of that KiwiSaver kick-start, the Government has landed itself on a surplus. But hold on a minute. We have been here before. The Government has said that we will get to surplus. Again, this is a Government that has said we are in surplus. It is a complete and utter fallacy that this Government has ever delivered a surplus. Again, for the records and for accuracy, it is not 9 nil; it is 9 negative 7. The Government has been there for 7 years and has not delivered one surplus. Government members sit over there saying that they are the great economic managers of New Zealand and this Government is working for a better New Zealand, but they have not managed to deliver one surplus. This Government has not delivered one surplus. So, in the interests of accuracy, it is not 9 nil. I want it put into Hansard that the last Labour Government delivered nine surpluses and Bill English has not delivered one. In fact, he is on negative 7—that is how bad this Government is.

We were told just before the election that there would be no new taxes. Well, in this Budget there are three new taxes. If you are going to go overseas and come back, you are going to get charged a new tax. Of course, the Government calls it a levy—let us google “levy”. Let us take the chance to google “levy”, as the Prime Minister said. Is it a tax or is it not? Well, that was the debate. Google “levy”—bang! It is a tax. If you go through the airport, you are going to get charged $22. Were Kiwis told about that? No. If you have got a broadband internet connection or you are a mobile user, you are going to be paying a levy or tax on that. Also, we can go into the debate about a capital gains tax. The list member from Palmerston North has already said it is a capital gains tax when the Prime Minister and the Deputy Prime Minister said it was not.

This is a tired Government. This is a tired Budget. It is a tired Budget from a tired Government that has fallen asleep at the wheel. I want to thank Tim Macindoe. We had to wait 15 hours to get to the truth, and his alarm went off because he himself had fallen asleep. That is what happened 8 minutes through the speech—I think he was probably asleep for 15 hours, especially through his own members’ contributions. This is a Budget that lacks vision. It is not tackling the real issues that matter to Kiwis. They are around housing—and if you want to know our plan, make sure you do something about investing in Housing New Zealand and building some houses. Nick Smith would not know a thing about that. I would love to go to one of Nick Smith’s consent-warming parties, because that is all he has delivered. That is all he has delivered. In education we are seeing Government members crowing about extra investment. The Government cut the education budget. What we have seen today—and this is a serious issue—in health is where this Government’s real DNA lies. It wants to help people make profit out of looking after people with mental illness. Is that the kind of Government that New Zealanders want? I do not think so. We know what is going to happen there: the easy cases get taken and the profit gets made, and those that are too hard get left and nothing is done with them. That is the real DNA of this Government. This is a tired Government. It has run out of ideas and is asleep at the wheel, and Tim Macindoe’s alarm clock absolutely confirmed that.

That speech was better than Andrew Little’s. It was energetic by comparison. It had a lot of insight and vision by comparison. And it had more support in the Labour caucus by comparison.

It is a pleasure to be able to stand and wind up this Budget debate. What a good Budget it was. I want to acknowledge the National Party team and our coalition partners, because that team put together, in somewhat trying circumstances, a Budget that many New Zealanders are pleased with. In the last week or so, I have been out giving speeches and presentations about the Budget, and, actually, it did not matter whether I was speaking to iwi, Pasifika, businesses, the social sector, the education sector, or the finance sector, they all thought the Budget was good—the whole lot! They all thought it was good, even when they disagreed with us, because even when they disagree with us, they can see that the Government is grappling with the broad economic and social challenges that they think a Government should be dealing with, and they pay us the respect of engaging and giving us alternative arguable propositions—not just whingeing. The Labour Party should be worried because a lot of those people are, on the face of it, Labour supporters and Labour voters. I want to come back to that.

As we have said for some time, the outlook for the economy is positive in this Budget, with moderate growth, consistent job creation, and increases in incomes year on year—2 to 3 percent; moderate but sustained. And the Government’s economic policy, some of which is expressed through further measures in the Budget, is to support the sustainability of that economic growth. There are some potential imbalances—the housing market in Auckland, for instance—but there has been a series of measures over the last month that take the Government’s efforts further towards achieving a balance between supply and demand.

In the Budget, the Government has laid out further its progress on how to control Government spending, which amounts to a view that if the Government does its job better, then it will need to spend less. We do not measure the Government’s success in its own business by the fact that it spends more all the time, because more Government expenditure is often a signal of failure, not of success. It happens because the last 15 programmes did not work.

In the face of that Budget, the Leader of the Opposition got up and gave one of the worst Budget reply speeches that we have heard.

💬 Hon Paula Bennett: The worst.

Well, no, to be fair, some of the others, of the four previous Labour leaders, were pretty bad. Honestly, they were. The real question is: why was it such a bad speech? He made one mistake among many—probably the biggest mistake—and that is—

💬 Hon Maggie Barry: Standing up.

Well, standing up—that was a bit of a problem, but at least he got to sit down at the end. That fixed that problem. No, his other big mistake was listening to Grant Robertson. It really was, because Grant Robertson—

💬 Hon Paula Bennett: Other leaders have too.

Well, other leaders have made the same mistake, and look what has happened to them. In fact, Grant is probably surprised how quickly his strategy is working. It has worked three times before, and they are all on the bench over there, and there is room for one more, I am sure.

One of the reasons why he gave such a bad speech is actually that Labour members do not have anything to say. Look, it is not what the Government says about Labour that is most devastating for Labour members, it is what they are saying about Labour. Here is a question that every heartland Labour supporter is asking: why did the Labour Government not put benefits up when it had the biggest surpluses a Government has ever had? Why did it not? Why did it not put benefits up? Every Labour caucus member was asking themselves that question. It is not our doubts about Labour that are going to be so hard on this Labour Party through a long cold winter; it is Labour’s doubts about Labour. Because if Labour could not put benefits up for the poorest when it had the money, what is Labour for? The conclusion that we came to long ago—which Labour voters are starting to come to now—is that it is not for anything in particular.

I will give them one reason why Labour did not put benefits up: it was because the political judgment of its previous leadership was that no one trusts Labour on welfare. They see the Labour Party as a one-way cash machine. It takes the money—the fruits of successful capitalism—and uses it to buy political power. That is the modern Labour Party and how it is perceived, and the previous Government leadership was right. That is why it did not put benefits up. It knew that Labour would lose votes if it did. And now we have the irony of a National Party that can put benefits up, and we will win votes because we have. We will win votes. Why? Because we do not treat the lowest-income people like meat to be ground in our political machine. Most of them do not vote, or will not vote, and certainly will not vote for us.

But the New Zealand public trusts us with their money. That is what it comes down to. People who are working in the cold weather today, who at the end of the week pay over their PAYE, will vote National because they know that we will use that money responsibly, and when we are alleviating hardship in the lowest-income families, we will treat those families with the respect of creating some kind of reciprocal obligations. We will think about requiring them to turn up to a work test, because we think they are capable of work. The Labour Party never thought that they were capable of work. It treated them as if they were helpless. The public knew that and believed that if Labour gave them more money through their benefits, it would make dependency worse, not better. And that is the question that Labour members are asking themselves. What are they for if they could not lift the incomes of the lowest-income New Zealanders?

It is summed up in their argument against social bonds today. There is not an enterprising, innovative, lefty in the developed world who is not excited by the possibilities of social bonds. If you are a social enterprise, if you are green, if you know about Grameen Bank, if you have been in the development unit of some UK local council, you are pumped up and wanting to do it. One group of left-wing politicians in the whole world is against it.

💬 Hon Steven Joyce: Who are they? Who’s that?

The New Zealand Labour Party. It simply sums up the political time warp that they are in. This lazy Labour Party, this uninspiring Labour Party, this Labour Party that sucks hope from those who need it most has been waiting around to be able to say “The nasty Tories cut everything. Vote for us; we’re kind and caring.” It is not happening, so they are marooned. They do not know what else to do. They have not done any of the intellectual work to test themselves, so they have nothing to contribute to the issues—more tax deductibility for research and development credits, or something, is about their only policy; and they have had that same policy for six elections. It is not just about the broader economy; it is worse than that, because they have nothing to contribute in areas where they are supposed to be the experts. They are meant to be the defenders of low-income New Zealand. They have nothing to say about social investment except “Don’t do it.” They have nothing to say about social bonds except “Don’t do it.” They have nothing to say about the reform of State housing except “Don’t do it.”

The time for this debate has expired. The question is that the amendment in the name of the Leader of the Opposition be agreed to.

The member will resume his seat. I just want to remind members of the very good ruling last week from my colleague Assistant Speaker Tisch, as to what happens to members who interject during party votes.