Estimates Debate — Finance and Government Administration Sector

Members, we come now to the votes in the finance and Government administration sector—volume B.5, volume 5, and the question is that Vote Audit, Vote Communications Security and Intelligence, Vote Finance, Vote Office of the Clerk, Vote Ombudsmen, Vote Parliamentary Service, Vote Prime Minister and Cabinet, Vote Revenue, Vote Security Intelligence, and Vote State Services stand part of the schedules.

It is interesting that on the weekend the National Party held its conference here in Wellington. I read about Paula Bennett, who was like the host of some kind of demented version of The Generation Game, pulling on Jonathan Coleman’s hair to work out whether it was a toupee or not. This was the level of debate and rigour and vision for New Zealand that was emanating from the National Party conference at the weekend. Paula Bennett was taking text messages from the crowd about which member of the Cabinet’s hair she could pull.

Between that and the canapés and drinking the Kool-Aid Bill English stood up and told the National Party conference that it was all OK with the New Zealand economy slowing down, with consumer confidence collapsing, with business confidence collapsing, and with employment confidence collapsing. That was all OK because it came at the right time in the electoral cycle. That is now the extent of the vision for the economy from the National Party. It is governing not in the national interest but in the interest of the National Party. That is the extent of the once-ambitious National Party for New Zealand.

Once upon a time, when there was a massive slow-down in rural New Zealand, with $13 billion disappearing from regional and rural New Zealand communities over a 2-year period, National Party members would have stood up and said: “This is a serious problem.” It was only a few years ago that John Key said: “When the dairy industry gets a sniffle, New Zealand gets a cold.” But not now—not now. It is fine. It is a great thing. It is happening now, and by 2017 along will come the National Party, just as it did in 2010, with a wee package of tax cuts—unaffordable, as they were in 2010. The National Party will come along in 2017 and try to bribe the electorate again.

Meanwhile, people are doing it tough right now in New Zealand, and apparently that is a good thing for Bill English. Apparently it is a good thing that people are doing it tough, that there are 146,000 New Zealanders out of work, and that we have the highest number of people who have not had a wage increase in 5 years. That is a good thing, Bill English told the National Party at its conference. Well, that is a disgrace. It is a disgraceful coming from the Minister of Finance, who stands up and says that a slow-down in the New Zealand economy is good because it is happening now in the electoral cycle.

I thought Bill English was better than that. I thought Bill English was a better person than that. But he stood up at that National Party conference and revealed that it is just about the politics. That is all that matters. A slow-down in the New Zealand economy, people losing their jobs, and communities losing out is a good thing, according to Bill English. That is what he told that National Party conference. That, in my view, is an absolute disgrace. There is nothing in these estimates to say to New Zealanders: “Here’s the plan to get us out of this economic slow-down.” After 6½ years of lazy economic management from this Government, there is no plan in here to say how we will get ourselves, as a country, out of this situation. Instead, what we have in here is a lack of vision.

What we have in this Budget—and let us not mistake this for one moment—is $60 billion more debt than this Government had when it came into office. We have $60 billion more debt. The Government will not pay down, under this Budget, a cent of that until 2019—until 2019. There is nothing in this Budget, nothing in these estimates, to give New Zealanders that sense of hope that there might be some new ideas, that there might be some ideas for adding value to our industries, and that there might actually be a plan to support diversification. Instead, all there is is a continuation of trying to ride the wave of commodity prices. Well, guess what? The wave has broken, and there is no plan B on that side of the House. The wave has broken—$13 billion dollars has gone out of the economy—and there is no plan B.

What these estimates show is a complete lack of vision for the kind of economy New Zealand could have—an economy that supports a good life for New Zealanders in the regions and a good life for New Zealanders in Auckland, and an economy that says we are going to be ambitious about lifting exports. The Government set a great big target for increasing exports: up to 40 percent of GDP. What has happened under this Government? It has gone down, and this Budget sees it tracking down even further.

Let us be absolutely certain. Since this Budget was put on the table it is the downside scenario that is coming through. It is not the great upside scenario of growth of around 3 to 3.5 percent. It is heading downwards—it is heading downwards. There is no sign in this Budget, no sign in these estimates, that the Government has any plan about what happens when its precious, precious plan of sitting there and riding the commodity wave falls apart. I would have thought Bill English, with his seventh Budget, would be able to come to this House with a plan that says: “I recognise confidence is disappearing from this economy. I recognise we’ve got to do things differently. Let’s actually plan.” There is nothing here like that.

Members, I will call the member David Bennett shortly. I need to concede that I should have called him first. I encourage him, when seeking the call, to use the same voice that he uses for interjections. Bearing his last intervention in this debate in mind, I would remind him of the Business Committee’s determination that the role of the select committee chair in speaking in the estimates debate is to set out the major findings of their committee in relation to the estimates. I welcome the call from the member.

It is my pleasure to do that following the previous speech, which did not set out any of the findings of the select committee’s hearing. It was a speech by somebody who has no contact with the real world. He thought that the National Party conference was in Wellington, not in Auckland. He thinks that the beltway that he represents is what it is all about.

I tell you this: in the 5-minute speech by the Opposition spokesperson on finance, I found only one number. You would expect a speech on economics and finance to be full of numbers, to talk about Budget surpluses, to talk about economic growth, and to talk about the things that we talked about in the estimates hearings. There was only one number used in that whole speech, and that was when that member described the Minister as having made his seventh Budget. That was the only number that was actually remembered by the member opposite.

Never was there any talk of the things that we talked about in the estimates hearings—revenue, tax gains, what has been largely looked at in the tax field, trying to look at getting more tax revenue for New Zealand, and appropriate tax revenue—nor was there any talk of the numbers used in Vote Canterbury Earthquake Recovery. Was there any mention of the numbers used in Vote Finance, the Fiscal Strategy Report, or the Budget Economic and Fiscal Update? This is where we talk about things like the Budget surplus and where we talk about things like economic growth. None of those things were mentioned by that member—none of them.

That shows that that member is totally out of touch with his portfolio. He has no understanding of economics. He is purely a Wellington beltway official who is now in the political realm. That is a disgrace. He talked about things like bribing the electorate. This is from Labour, which gave free student loans and 20 free hours’ early childhood education. Labour is the bribing party if ever there was one.

💬 Hon Annette King: Did you get rid of them?

Annette King is here. She is the top briber. She is the greatest briber you will ever see.

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Chairperson. Two points—the first point is that I do not think it is appropriate for anybody to be accused, as an individual, of bribery. I think you will find that that is out of order. Secondly, I fail to see what the last 1½ minutes have had to do with anything in the estimates.

The CHAIRPERSON (Hon Chester Borrows): The points are well made. It is over to the individual member to take offence if that is the point that is believed to have been made. Having said that, the point was underlined to the speaker at the beginning of his speech, when he was called, that the Business Committee has allocated special calls to committee chairpersons for the purpose of setting out the committee’s major findings on the estimates. I challenge the member to live up to the expectations of the Business Committee.

I was merely responding to a previous speech that had started this debate, and I could not let it go without referring to it.

If we look at Vote Finance, what does it say in Vote Finance? Under the economic and fiscal outlook, it says that there is an average growth rate of 2.8 percent in New Zealand—

💬 Brett Hudson: How much?

—2.8 percent over the next 4 years—2.8 percent. That is one of the highest growth rates that you will find in the Western World. That is in New Zealand, and it represents good economic management. When we talked about Treasury’s Budget and the Economic and Fiscal Update, that was one of the key things that came out of it—that is, the strong growth rates in New Zealand going forward. Unemployment is expected to drop below 5 percent in the next 2 years. Unemployment dropping and higher growth rates—that is good for New Zealand going forward.

When we look at the Budget, we actually look at what was considered as the Budget surplus or deficit. It is always a bit of a moving feast at this stage, because when you look at the numbers, they are quite small in comparison with the overall spend and the total tax take. But when you look at a Budget surplus or deficit—in this case, we are looking at losses of about $684 million in 2014-15, followed by a surplus of $176 million in 2015-16, and increasing surpluses after that—it shows that New Zealand is on the right track. It shows that the economic management of this Government is on the right track. I bet that we will actually be in surplus this year, a bit earlier than anyone expected, and that shows even better economic performance by the New Zealand—

💬 Hon Clayton Cosgrove: The economists are hanging on every word.

Is that something Mr Cosgrove is saying, is it? Mr Cosgrove was a member of that Finance and Expenditure Committee, but apart from his abusing the officials, nobody actually remembers what he said. But he was there.

Achieving a Budget surplus was a key part of the finance estimates, and many members from the Opposition asked questions about that. Of course, they were interested to see New Zealand achieving a surplus, which is something they do not want for New Zealand and were quite keen to make that point in the estimates hearings when the Minister was quite clear that that is his focus. So it was disappointing for those Opposition members to find that—

That member, David Bennett, reminds me of the Edmonds cookbook, where you used to have to buy a desiccated coconut, and what you would get with a desiccated coconut is that they would break the coconut open and hollow it out. That is what that member reminds me of.

That member asked for numbers. Well, if he cared to have a look at Vote Revenue, it is on page 138. We will go through a few numbers. I know that Todd McClay, who inherited the revenue portfolio—poor soul that he is—from Mr Dunne, cannot take absolute responsibility for the massive overspends in this portfolio. The member wanted some numbers. Well, let us give him some numbers. In the Finance and Expenditure Committee report it talks about the child support reforms. They were originally estimated to cost $30 million, but, because of delays, the budget was revised to $210 million and then, after Mr McClay came in like the nightwatchman to clean up after Mr Dunne, he bodgied a few figures and revised it down to a blowout of $163 million. So there, for the desiccated coconut in the corner over there who has just spoken, are some numbers.

We will also turn to a couple of other numbers, shall we? Look at the Business Transformation project, on page 139 in the Estimates—$100 million has been spent to date, and what have we got to show for it? Do we have a computer program? We have got some reports and we have got a few piles of paper, but do we have one keystroke banged on a computer keyboard? No. And the first $100 million has been spent—

💬 Brett Hudson: The difference—that’s because we plan to succeed, not plan to fail.

No, no, you keep quiet over there. The first $100 million has been spent—[Interruption] The old tumbleweed in the corner over there—you keep quiet.

💬 Mr DEPUTY SPEAKER: Order! I will just remind the member on his feet that his nicknames for various members of the House have got him in the brown stuff before. I would suggest that he refrain from using those nicknames and tend to refer to members by their proper names.

I take the point, Mr Deputy Speaker. I do not understand the first technical point, but I am sure we can have a chat about it afterwards.

If we can look at some numbers on the Business Transformation project, as I have said, there was $100 million spent. The latest estimate for this amorphous beast is $1.3 billion to $1.9 billion.

💬 Brett Hudson: It’s called planning, Mr Cosgrove—planning and design.

For the new member at the back, Mr Hudson—I do not know where Mr Halls is, but Mr Hudson, although he was not a member here, may remember that we had a thing called INCIS. There are a number of members who are here in this Chamber—it was the police project, remember? That was put down to what they called spec creep at the time. That project rolled out at a couple of hundred million dollars—I think the final bill for it was well over $1 billion, from memory. Like that member, I was not in the House. I was working in Parliament, but I well remember that one. So I wonder whether Mr Bennett will come back and maybe take another call, and whether, as he is fond of addressing numbers and those sorts of things, he will address some of those.

The final point I want to deal with is what was foreshadowed in the Budget, which is the infamous land register for overseas interests—if I have time. This is an absolute doozy. This is a cracker. This is a Bill English special. After Bill English, along with Dr Nick Smith, said that a register of foreign ownership in residential land, or any type of database, one, would be a complete waste of time; two, would be totally unworkable; and, three—to quote Dr Smith—would cost millions of dollars, what did they do when their feet were put to the fire and they needed to look as if they were doing something about the foreign ownership issue? Well, they came up with a land register. Then we found out that it will not be universal. It will not cover the main home. You will not have to provide an IRD number for your main home. Why? Because it would be a financial and compliance burden to you for somebody to ring up and ask: “Where’s your IRD number? Can we get it?” Also, we find out that it may well be possible—I do not know whether Mr McClay knows this—to have two main homes. So this register—

💬 Hon Members: You can’t have two main homes.

Oh yes. Oh yes, according to the Inland Revenue Department officials at the select committee.

Ernst and Young could not find a reason why people should not universally provide their IRD number, regardless of whether it is their main home or a second residence, or whether they are a domestic or foreign purchaser. In fact, Ernst and Young got up and said: “There is no compliance cost. There is no financial burden or other burden to people doing that. But what it would do, if you made the register universal, is it would give you high-quality statistics and a real register, if you really, as a Government, wanted to know what is going on.” So I look forward to the debate over that, and I bet the Minister whatever he likes that we will be back here inside 12 months amending and patching up that piece of legislation.

It is designed as a piece of political propaganda so that the Government can appear to be worried about foreign ownership in residential property, but it is putting together a regime that you could drive a bus through. Even Mr Bennett, in his own limited and weird way, may be able to find a way around that—I think he might. Even Mr Bishop nods in agreement.

I would like to take a call in relation to Vote Finance appropriations, initially. I just wanted to agree with some of the comments that were made by Grant Robertson earlier in the evening, when he said that his sense was that, looking at the appropriations, it demonstrates, really, a lack of vision on behalf of the Government in relation to how to create a sustainable, long-term economy. When this Government was campaigning for office in the mid to late 2000s, it talked about trying to create an economy that was built on savings and investment rather than on debt, consumption, and spending. What has happened over the course of this Government is that the economy has actually become more about speculation than about investment, despite a number of things that the Government has been spending money on to try to nudge it in a different direction.

One example of that is the research and development grants, which have kind of shuffled money around in terms of how we try to encourage innovation. We did some research recently that showed that despite everything the Government has been doing in that area, New Zealand’s spending—not the Government’s, but New Zealand’s—on research and development and innovation is about the same now as it was in 2008. In other words, we have been trying to do some different things and yet we are getting nowhere, which, in my view, looks very similar to the Government’s approach on a number of fronts, which is to be seen to be doing something without actually doing anything at all.

There has been a real failure to diversify the economy and this has left us, of course, very exposed. I will also reference the 13 percent fall in the global dairy trade option prices recently, which has left the economy very exposed. I just want to call out Steven Joyce on this issue, who, when we recently questioned him in the House on the risk to the New Zealand economy from the fall in dairy option prices, said: “Oh, well, don’t worry about it—dairy is only 5 percent of our overall economy. It doesn’t really matter.” Of course, it might be 5 percent of the overall economy, but it is about 40 percent of our exports. I completely agree with Todd McClay, who said earlier that we do not get wealthy by trading with ourselves. So the fact that dairy is such a massive portion of our export market is really important. When you try to minimise the fall in dairy prices on the basis of the overall economy rather than the trading economy, that is being completely disingenuous. When dairy struggles, so does the rest of New Zealand, because so much of the domestic economy is actually built around providing products and services to the dairy industry.

The other thing that that comment really shows is a sort of callous approach, actually, to a core National Party constituency, which is the rural and farming community. The sheer numbers of farmers who are leveraged up to and past the hilt is now at the point where huge numbers of them are actually at risk, having gone through the process of making those conversions, so that the price that they are getting at the gate means that they are barely covering the cost of production, let alone servicing their debt. I know that the Government says that the price will recover fairly quickly, but, actually, there have been some big shifts in the global market. The Americans, for example, have changed the way that they subsidise their own farmers, which is encouraging huge amounts of production in the American market, causing a glut. So I think there is actually some risk that prices are going to stay low and as low as they are, if not even lower, for quite some time. So this does present a real risk to our economy.

Successive Governments—not just the current Government but previous Governments—have failed to address property speculation, which has got worse and worse, to the point that since 2009 Auckland property prices have gone up 79 percent, which is pretty staggering. I accept the Government’s argument that there is a supply side problem. Obviously, people do not speculate when there is a glut; they speculate on the basis that there is not that much supply. But it is also a demand side problem. There is both a supply side problem and a demand side problem. Because of this Government and—

It is good to hear the Greens bring to the Opposition part of this debate a little bit of logic. I do not agree with everything the co-leader of the Greens said, but he made a lot more sense than Grant Robertson did. I could follow his argument. It was starting from some wrong premises, but, nevertheless, you could see where it was going. You know that even if you disagree with their critique of Government policy, the Greens have an alternative view of the world and, in its own way, on its own planet, it has got some coherence. You cannot say that about the Labour Party—you cannot.

Just before I come to that I just want to correct one or two of the things that the member James Shaw said. He has the benefit of being a new leader. Therefore, he is not responsible, I suppose, for the positions previously taken by the Greens, but I have to say that the Greens’ crocodile tears for the dairy industry would be slightly insincere from anyone else in their caucus, with their having spent the last 10 years kicking the dairy industry as the destroyer of the planet. It creates the only type of pollution that is almost as bad as people, in the Greens’ world. So that is one thing he does not have to take too much responsibility for, but I accept that the Greens now have a much more balanced view about the role of the dairy industry in the New Zealand economy, which is that it produces jobs, exports, incomes, increments in wealth, and the opportunity for the Government to take some of that in tax and pay for other things. So I hope the Greens are going to stick to that position. At least it is more coherent than the Labour Party one.

The other area where he was a bit more coherent was around the issue of consumption and expenditure versus exports and investment. That certainly is a challenge for the New Zealand economy. The Labour Party ought to listen, because the co-leader of the Greens—and he is not even the finance spokesperson—seems to be able to articulate that kind of logic without sounding like he is a student politician trying to impress a bunch of first-year students in a lecture hall in their lunch break to see whether he can get them out on a protest about student loans, which is what the Labour Party still sounds like. It still sounds like that.

Mind you, it must be difficult being a spokesman for the Labour Party. I mean, at least the Greens are against free trade. They like fair trade—I am not exactly clear why, but they do—and they are against free trade. Well, it must be hard to represent the Labour Party’s position because it is for it and against it, and, interestingly, that does not seem to create much tension for Grant Robertson. It does not seem to matter that those members are totally contradictory, just like they are for and against migration. I have finally figured out the Labour Party formula: those members are all for having migrants from China as long as they stay homeless. That is fine. As long as they are homeless migrants, they are most welcome, as Labour members stand up in front of the Chinese New Year celebrations to acknowledge the role that this ethnic community is playing in the economy of New Zealand.

I mean, the fundamental problem with the contribution from the spokesman from the Labour Party—and we have pointed it out before in the House and I have yet to hear Labour address it—was this: dairy prices being high was bad for the New Zealand economy. We put up with that for years. Those members said that dairy prices being high meant we were not diversifying, it meant that there was too much pollution, and it meant that there were rich farmers on the pig’s back, getting their carbon credits subsidised. So I thought: “Would it not be great if dairy prices dropped? That would solve all those problems.” Oh, no. Now that dairy prices are down, that is bad as well, even if it achieves all the things that the Labour Opposition said should happen.

That is the fundamental contradiction at the heart of Labour’s approach. The Greens are at least consistent. Labour does not believe in prices. Those members think that politicians should decide just to have a bigger part of the economy here and a smaller part over there. Well, I look forward to the finance spokesperson for the Greens turning up again—Ms Genter—because I do not think it will take her very long at all to establish her credibility as the leading Opposition spokesperson on finance in the House.

What an interesting contribution we had from Mr Robertson earlier. It was a revealing insight into Mr Robertson’s state of mind. What did he say at one point? He said that the National Party will take to the 2017 election a plan to bribe the electorate with tax cuts. Well, I personally hope we do take a tax cut package to the next election, but what a revealing insight into what Mr Robertson thinks about New Zealanders with their own money. He said that giving them tax cuts is a bribe. I think that that is regrettable.

What else did Grant Robertson say? Well, he accused the Government of lazy economic management. Oh, the irony—the irony—of Mr Robertson accusing this Government of being lazy. The guy who is spending 2 years on the future of work—2 years gallivanting up and down the country and offshore, no doubt, to the United Kingdom and Canada, to talk to all of his left-wing mates—is accusing us of laziness. Well, that is just deeply ironic.

You see, the Labour Party is really at sixes and sevens at the moment because its Chinese demonisation campaign, I think it is fair to say, has been an utter disaster. So—

💬 Hon Annette King: What do the polls say, Chris?

The polls have not moved for Labour, but, not only that, all of the Labour Party’s best activists are flooding Twitter and Facebook and resigning. So the very people whom the Labour Party relies upon—

💬 Sue Moroney: How many, Chris?

The people whom Sue Moroney relies on in her continual, and perennially failed, Hamilton West and Hamilton East and Piako and Port Waikato campaigns to put up her hoardings, which were frequently reused in the last campaign—all those activists are resigning from the Labour Party. Why? Because the Labour Party has been revealed not as the progressive force for enlightenment and tolerance and for welcoming migrants and foreigners to the country, but as a party that is prepared to play the race card for base political purposes. And, not only that; it failed. So it is really at sixes and sevens.

It is really at sixes and sevens about the issue of free trade as well. Actually—and this is really sad—only one party in this Parliament now stands up for an open and tolerant—[Interruption]

The CHAIRPERSON (Lindsay Tisch): Order! Actually, I would like to hear what is being said. [Interruption] I am on my feet; the member will be silent. That was not necessary. I ask the member to come back to the substance of the estimates debate, please, on this one.

Thank you very much, Mr Chair. I do want to talk about the estimates, but I want to respond to the point that Grant Robertson made about the dairy price and to the point that Mr Shaw made, as well. What these estimates contain, particularly with finance and Government administration—Vote Finance—is the diversification that is occurring in the New Zealand economy, and it is actually quite regrettable that the Labour Party thinks that this is not occurring. What this Government has set out to do over the last 7 years is grow the innovative parts of our economy through things like Callaghan Innovation, through things like new rules for research and development, and through things like information and communications technology graduate schools. We have sought to do that and, actually, that is increasing.

I just want to pick up on the point that James Shaw made before. He said that the amount of research and development that is going on in the economy is not increasing. Well, I think you could probably argue about the numbers, but it is true to say that as a percentage of GDP, the amount of research and development that is going on in the economy has not increased at the rate that we would like. I think that it is also fair to say that the development of things like Callaghan Innovation and some of the new tax rules that we are introducing have not flowed through into some of those statistics yet. The numbers that he was talking about were for 2014. Some of those developments came in only in 2013 or 2014, so these things take a while to turn round.

But what is true is that the number of firms in New Zealand that are engaging in research and development is increasing and the amount of money that is being spent is increasing in real terms. As a percentage of GDP, I think it is true to say that those numbers are flat, but why is that? Why is that? Because our GDP has been growing, and our GDP has been growing at one of the fastest rates in the developed world.

So Mr Shaw made a good point, but I think it is true to say that these estimates contain a range of measures that are going to increase the amount of innovation occurring in the New Zealand economy. It was a sage speech by Mr Shaw. It is unfortunate that we cannot say the same about Mr Robertson’s contribution.

I want to speak in the debate at the moment around revenue. I do want to say that when the Hon Clayton Cosgrove was speaking I did particularly enjoy his interventions. The challenge was that very little—in fact, nothing—he said there was correct. It was very unusual, because he is a wise man. He does get very excited when it comes to speaking, particularly when David Bennett interjects. I would say it reminded me of when I saw him earlier today down at the gym, beside the cycle. His little legs were going as fast as they could, there was sweat on his brow, and there was a very, very serious look on his face. Then I suddenly realised he was just trying to get up on the seat. It was very much like his speech here in the House, because he was very excited, but there was not very much relevance in it.

The Government has under way a very large and ambitious project for the Inland Revenue Department to transform and modernise, and to modernise and simplify, tax administration in New Zealand. It is as straightforward and simple as this: our desire is to find ways to make it easier for New Zealanders to comply with their tax obligations, to reduce the administrative burden upon them when it comes to paying tax, and to modernise the tax system so it works for them, and certainly so it works for the Government and it works for the Inland Revenue Department.

This will be broken down into a number of chunks. We have just had two green papers that we have put out where we had more than a thousand interactions with the public. Very significant when it comes to taxation was members of the public and businesses telling us what they thought we may do to improve tax administration. A very important part of this was around provisional tax—making provisional tax simpler and making it easier.

We put out a green paper and we said to the public: “We want to hear from you. Put in a submission.”, and after the submission date closed, all of a sudden the Leader of the Opposition came out with a policy around provisional tax. He said: “PAYE for businesses.” The problem with that was it was less a policy and more of a late submission on our green paper, because, actually, that was what was in the green paper. In the green paper it said: “What about PAYE for businesses, to reduce the burden upon them?”. It is good to see that the Leader of the Opposition, Mr Little, put in a late submission supporting the Government’s proposal. We thank him for that. I have another green paper on tax coming out soon. If he just waits, he could actually put in a submission on that as well. If he only asks, we can extend the deadline if he cannot get the work done.

But do you know why I think Mr Little did that on that Friday? It was because earlier in the week Mr Twyford had made a great error of judgment. He had got some dodgy numbers, he had put a few names together, and he had decided to beat up on a very important constituent group in New Zealand, the Chinese community. But, actually, he did not beat up on the Chinese community; just on a whole lot of people with Chinese-sounding names. At the end of that week I think that this announcement that the Leader of the Opposition made around provisional tax, which I had already released some months earlier, was to divert attention away from the horrible, horrible things that Mr Twyford had said about Chinese New Zealanders—well, actually, New Zealanders with Chinese-sounding names.

The other part of business transformation that we are going to look at during the course of this year is secondary tax, because the system does burden hard-working New Zealanders. You will see some changes around the PAYE system and GST announced this year that will make it easier for people to comply with GST, and, actually, our focus will be around small to medium sized enterprises, as well as others. We want to reduce the economic burden upon them. Business transformation, as I said to the Finance and Expenditure Committee, will go across a number of parliaments—it has been here for two already—and I have extended an invitation to the committee to make Inland Revenue Department officials available to it to work through some of the detail so that, actually, Parliament as a whole can focus on what is best for our business community and taxpayers. Maybe that will help Mr Cosgrove, with those fast little legs going, to get it right when it comes to business transformation and the work that we are doing.

The other important thing that has just happened is around property tax compliance. We heard from Mr Cosgrove about all the problems in the current consultation. Again, actually, unfortunately, he is wrong. As a Government we have given the Inland Revenue Department a lot of extra money in successive Budgets to focus on property tax compliance, and that move brought in hundreds of millions of dollars of additional tax from people who should have been paying it, based upon the properties that they bought and sold.

Well, indeed, we announced a brightline test to focus more clearly on this to make it easier for people to understand their obligations. That is out for consultation as well. Mr Little should send his policy in now rather than make a late submission afterwards, but we are working in the right direction.

Thank you for the privilege of speaking tonight, and tēnā koutou to the Committee this evening. Can I just take this opportunity to reply to some of the words from the Minister of Revenue tonight. I actually say good luck with what you are trying to achieve with the tax system and good luck with the outcomes you hope to achieve, because if what you are hoping for actually works then New Zealand First will probably agree that, actually, that will be great for small New Zealand businesses, because we are talking about the lowering of the cost of compliance. But what the Minister and what this Government in particular probably will not concede is that although on the one hand they seek to lower compliance costs in terms of tax conformity or performance, on the other hand we are about to debate a piece of legislation in regards to health and safety reform where the cost of compliance to New Zealand’s small businesses will be horrendous.

Already the discussion is taking place where small businesses are coming to us and saying: “How can we cope with these costs of these safety regulations?”. The irony of that is that, actually, if this Government had left the legislation alone but had simply funded adequately the oversight of the safety legislation as it stood previously, we would have had an adequate health and safety system. Instead, we are changing the law, in a large and extreme manner, actually, and then we are funding oversight—$8 million a year for the next 3 years—to actually ensure that we are complying with health and safety. It seems a bit backwards. So although I commend the Minister for what he seeks to achieve, on the one hand this Government giveth and on the other it taketh away.

The Minister of Finance spoke in quite some detail about trade. He spoke about the benefits of trade. New Zealand First, as a party, needs to repeat as often as possible that we are a party that supports trade. We believe in the benefits of trade, and we understand why trade is important. Those members over there deliberately claim ignorance. I am not calling them ignorant; I am saying they deliberately claim ignorance. They deliberately claim it because it makes their conversation, or their debate, easier. The reality is trade is good, but in those same trade agreements we have the likes of certification. More important, I presented a member’s bill to this Parliament to try to remove the investor-State dispute settlement provisions from our trade agreements. That is not anti-trade; that is pro - New Zealand.

So what this Government says to us is that in order to have trade we must remove our sovereignty. We must disempower this very Government that members sit there representing tonight. The investor-State dispute settlement provisions allow large international corporates to sue this Government, not in New Zealand law, and not in international law, but in secret tribunals. This is what this Government is advocating. It just makes no sense. Those tribunals are not transparent, they have no right of appeal, and they make decisions that we cannot investigate, and we cannot understand how they came to those decisions because they are made in secret. So New Zealand First stood up in this Chamber just last week and said: “We cannot accept that in our trade agreements. Let’s use a transparent legal system. Let’s have judges. Let’s have transparency. Let’s have an appellate system where we can actually appeal the decisions, and, conversely for once, the Governments could actually hold the international corporates to account.”

On Budget day I said to this Government that it was wearing rose-coloured lenses. The assumptions that this Government made when it wrote this Budget were bordering on the ridiculous—bordering on the ridiculous. The appropriations were made given a set of rose-tinted assumptions, and the Government said: “This scenario is very unlikely. Everything will be rosy and our Budget will be accurate if only a few things come to pass.” Well, nothing that this Government used to create the appropriations was actually accounted for in that Budget.

I would like to take another call in relation to the finance and Government administration sector appropriations, this time in relation to the appropriation for Vote Ombudsmen, and turn attention to the Office of the Ombudsmen, to its revenues, and to this Government’s attitude towards transparency and openness. I am delighted to see the Attorney-General is in the Chamber to have a discussion on this.

I note that the Vote Ombudsmen appropriation for the year 2014-15 was $12.278 million, and in 2015-16 it has increased to $12.387 million. So there has been an increase of $110,000, approximately, to cover the increased costs of investigation and the resolution of complaints. A hundred and ten thousand dollars will buy you perhaps one more staff person and their associated costs. What we know is that the Ombudsmen’s office is completely inundated with thousands of requests for assistance—thousands of complaints every year—because this Government is suppressing information and abusing the process to an extent that is unparalleled since the Official Information Act was created.

I am not saying that it is the behaviour of this present Government only. It has been sliding towards this over the course of the last couple of decades, but things have got to the point now where, essentially, the system is now broken and the Government is using the underfunding of the Office of the Ombudsmen to supress the effectiveness of the Official Information Act. In the Finance and Expenditure Committee report, we note that there was an extremely high staff turnover in the Office of the Ombudsmen. They are amazing people, they are good lawyers, and they are extremely good public servants, but the burnout due to the sheer weight of the complaints that each of them has to handle, the fact that they are not as well paid as they would be in the general market or even in other parts of the Public Service, and the repetitive nature of the work of dealing with this enormous volume of complaints means that it is extremely hard for the Office of the Ombudsmen to hold on to its staff. This, of course, also means that the office is losing institutional knowledge as that turnover occurs—$110,000 is not going to cut it in terms of solving those kinds of problems.

We note, and the select committee report also referred to this, that when documents are released now under the Official Information Act, some as late as a year as opposed to the 20 days that are specified under the Act, often they are so full of redactions that they are basically completely meaningless. So there is a huge problem here.

The problem is not to do with the Act itself. The Act is in extremely good condition. It is not to do with the Office of the Ombudsmen. They are working extremely hard under very trying circumstances.

But this Government has turned the art of obfuscation into a really fine art, an absolutely high art, as demonstrated some time ago by the fact that the Ministry for Business, Innovation and Employment has got more PR people than it has health and safety inspectors, which gives you some idea of where its priorities are. The priorities are on spin and public relations, and not on actually getting the job done. When the cracks show, in not getting the job done, the Government relies on the spin to get it through, and when the Opposition tries to do its job of holding the Government to account and speaking truth to power, that obfuscation and abuse of the Official Information Act are the order of the day.

This Government is using the constant underfunding of the Office of the Ombudsmen as a way of ensuring that it can stay unaccountable so that the Office of the Ombudsmen is unable to deal with the volume of complaints to do with the complaints that are coming through about that. So there are a couple of ways to fix this. We can increase funding to the Office of the Ombudsmen, and I accept the Government’s position that it is operating within an extremely tight fiscal envelope at the moment, but this is to do with the nature of our democracy. The other thing is to start acting in accordance with the Act, because that will obviously put less pressure on the Ombudsmen—to actually live in accordance with the Official Information Act and to live within its spirit.

E te Tiamana, tēnā koe. We have been treated tonight to some speeches from the Opposition—treated, mistreated, choose your language. Opposition members seem to be confusing their own opinions with the facts, whereas the facts are quite simple. The economy has been growing at around 2.6 percent. Over the last 4 years, 192,000 jobs were created; a further 150,000 are forecast over the next 4 years. Over the same time period, unemployment is forecast to reduce to under 5 percent. The economy is doing very well. Interest rates are low. Inflation over the last quarter was just 0.3 percent. New Zealand businesses and New Zealand families are being treated to a lower cost of living and lower costs of debt, helping to provide incentives to businesses to grow and helping Kiwis to feel more secure in the paying of their home mortgages.

But what, instead, have we heard? In the face of those facts, what have we heard? Well, firstly, we had from Mr Robertson wild assertion after wild assertion and, as my colleague David Bennett pointed out, none of them were underpinned by numbers. His was a very special speech. It is known as a Burger King speech—just one whopper after another. And he got confused, in the process, on taxation and what he referred to as bribery. As my learned colleague Christopher Bishop pointed out, he does not seem to understand what taxation is. I would like to take just a moment to help to put him straight. Some years ago a New York newspaper—I think it was the New York Times—ran a competition where, if you could change a single consonant or vowel in a word and create a new one, there would be a prize. Some chap came up with the word “intaxication”. Intaxication is defined as the mild sense of euphoria you feel upon receiving a tax refund, before realising it was your money to begin with. Mr Robertson thinks giving your money back is somehow a bribe.

We went from wild assertions and complete misunderstanding of the taxation system to the Green Party and James Shaw, who obviously does not know about Daniel Patrick Moynihan, because that member most certainly was thinking that he could have not only his own opinions but his own set of facts. Mr Shaw tried to tell us that dairy makes up 40 percent of our exports, while acknowledging that it makes up 5 percent of the overall economy. Well, that is a very interesting assertion on its own, because tourism is now worth 7 percent of our economy. So, based on his maths, that would mean that tourism is in the order of 60 percent of our exports on its own. That would leave no room for the $2.85 billion of international student education, which is itself an export and equates to around 1.3 percent of the economy, which the maths tells us is roughly 10 percent of exports. So we have got to 110 percent of exports already. Nor would it leave room for the wine industry, which contributes $1.37 billion worth of exports—up 8.2 percent over the past year. Nor would it provide room for the exports in the information and communications technology sector, which contributed about $930 million and which overall as a sector, both domestically and in exports, is around 1.7 percent of our economy. But Mr Shaw would have us believe that dairy is a far greater proportion of exports than it truly is.

What those numbers tell us and what those facts tell us is that we do have a diverse economy, because although I mentioned wine, I mentioned information and communications technology, and I mentioned international students, I did not mention meat. I did not mention forestry. I did not mention fisheries or oil and gas or minerals or kiwifruit or any of those other products that Kiwi businesses export around the world, which, I guess, must take us up to—I do not know—130 percent of exports. Using James’ numbers, who can be sure? What it does show us is that we have a very strong and vibrant economy, and a very strong, diverse set of export industries across New Zealand. Although dairy might not be performing at its traditional or recent highs, the other parts of our export economy are performing very solidly indeed. They are contributing to those continued good, strong growth numbers that match up with any country in the OECD, that are continuing to provide jobs for Kiwis, and that are continuing to provide confidence to New Zealand businesses and New Zealand families in their future. The country is headed in the right direction.

I am happy to take a call on this debate. Although I am not on the Finance and Expenditure Committee, it is a great opportunity to be able to take a call. I have to say that in an appropriations debate I was shocked to see the Labour economics spokesperson, Grant Robertson, get up and spend the first half of his speech talking about the Hon Jonathan Coleman’s hair and the Hon Paula Bennett’s texting habits. If he is going to talk about the Hon Paula Bennett, talk about doing the reverse bungy—she is very good at that.

💬 Iain Lees-Galloway: He’s in team Bennett.

That is right. I can testify, I assure you.

The third thing is that he was obsessed with the National Party conference—he should have just bought a ticket and come along—and the Hon Bill English’s speech. I think the reason why he spoke about the Hon Bill English’s speech so much is that that is where he gets all his information. That is where he actually learns what is going on.

Because it is an economic debate, I would like to take it back to my own electorate, Rodney, because we have been talking about how much diversification we do have in the New Zealand economy today—and we do. We do have other industries that are doing very, very well. We have a dollar that has weakened, and, of course, in any economy there is always an upside and a downside to that. But one of the upsides that we experience, of course, is for our exporters. Being a trading nation and a nation that relies heavily on exports, that is actually a very good thing for our economy.

I want to recognise and speak about Southern Paprika. It is a business up in the north of my electorate, just outside of Warkworth. The owner of the company is Hamish Alexander, a business leader in our electorate. Southern Paprika is diversifying. It is using technology. It is forming partnerships around the world. It has formed a very strong partnership with a Dutch company where now it is starting to grow product and get into the European market, and it is starting to be a real force to be reckoned with over there. It creates jobs. It is creating more jobs. Yes, it went through a bit of a tough time when our dollar was as strong as it was, but it adapted and it found a way to keep trading and to keep growing. Now that the dollar has come back a bit, that growth is accelerating; it is getting faster. Southern Paprika is diversifying into new products. It is investing in avocado. It is buying more land. It is creating more jobs. It is an exciting business, and it is another very strong piece of our economy.

I would like to talk about the Honey Merchant out of Matakana. I hope that Minister Coleman visits our markets up there and gets to experience some of the honey from the Honey Merchant.

💬 Chris Bishop: Good honey.

It is outstanding honey. The reality of it is that this business is growing. We were very lucky last year to have a visit from a delegation from China that signed a contract with it.

💬 Chris Bishop: Where?

China—a very good delegation from China that is forward-looking and sees the opportunities that New Zealand also presents in terms of business partnerships, joint ventures, and being able to grow another very strong part of our economy. This is a part of our economy where we are leading around the science, where we are developing new strains of honey bees that are placid and that are very hard-working, and that is making a massive contribution to another very strong sector in New Zealand. These industries are creating jobs. They are creating jobs.

This is actually something that I think is pretty good: a lot of young people in my electorate are taking an interest in the honey industry. They want to get an entry into the honey industry, and so we have got an industry in Rodney that is leading in science, is leading in technology, and is now starting to train and bring young people into the industry. They need to learn the science. There is a lot of science associated with it. They are in the process of buying and identifying more land. There is even mānuka starting to be replanted around areas in my electorate. It is an industry that is growing.

The reason why I wanted to talk about these two examples is that the reality of it is that we do have a diversified economy. We do have some great little industries and some great New Zealand products that are growing and that are being traded and exported around the world. Thank you very much.