Annual Review Debate — Economic Development and Infrastructure Sector

Budget 2017 is under a month away, and we have already had a sneak peek at some of it from the Minister of Finance last week, with the extremely exciting announcement about a big capital injection infrastructure package. But the debate this afternoon is, of course, the tail end of Budget 2015, which was a good Budget for New Zealand, and demonstrated a confident Government in charge of an increasingly confident country.

It is my pleasure to take the opening call on the economic development and infrastructure sector. The interesting thing about this theme, I guess you would say, is that there are a lot of committees and a lot of different votes within it. I want to concentrate on three particular aspects of economic development and infrastructure.

The first is in Vote Communications and the investment that the Government is making through the Budget process into Rural Broadband Initiative 2, and also the Mobile Black Spot Fund. The Budget that we are talking about, of course, appropriates more money for both those initiatives. The rural broadband first stage has been extremely successful, and the Rural Broadband Initiative 2 will be successful. I know, having recently been lobbying for an extension of the Mobile Black Spot Fund in the rural part of the Wainuiōmata area, in the mighty fine Hutt Valley, that that is something that is absolutely crucial for rural communities. I know it is something that my colleagues spread out around the country, from Invercargill with Sarah Dowie to Alastair Scott in the Wairarapa, or Todd Barclay, or any of my colleagues—I see Jonathan Young waving his hand up over there. He always makes a very strong bid for this funding. People think that the Hutt Valley is a predominantly urban area, and that is true, but we also have rural areas in the Hutt as well, including down in the Coast Road and Wainuiōmata. I have been supporting the rural residents there for the installation of a cellphone tower to get rid of that mobile black spot. So it is very welcome, the funding in the Budget for that.

The second thing I want to mention is Vote Economic Development. Recently, we have had the extremely exciting news from Statistics New Zealand that business research and development expenditure in the country is up 29 percent. This is something that members opposite, I know, are very interested in. Members opposite like to talk about how we need to build a more innovative economy, we need to invest in research and development, and that we need to diversify our economy. The good news for members opposite is that that is happening right around New Zealand. Right around New Zealand, right around the country, there are hundreds of firms exporting on the world stage, doing battle on the world stage, and diversifying the New Zealand economy in medical technology, in ICT, and in so many different areas.

The good news for members opposite is that the latest Statistics New Zealand report into business research and development in 2016 shows that the Government’s sustained investment over many Budgets into Callaghan Innovation and into some of the black hole tax expenditure changes that we have made—those investments and those changes to the grants programme are starting to bear fruit. There has been a massive 29 percent increase in business R & D between 2014 and 2016—up $356 million since 2014. That is a sizable increase.

We have still got a long way to go. We have got to get that research and development spending up by business and Government as well. We have got to increase it even further, but that is a great start, and I think it is a testament to the changes that successive Ministers of Science and Innovation have made in that space. And, of course, Budget 2016 increases that investment through the Innovative New Zealand package and puts more money into mission-led science, puts more money into contestable science, and spends more money and invests greater Crown resources into growing those start-up businesses that are such a vital part of the New Zealand economy of the future.

The third thing I just wanted to briefly mention in kicking off this debate is the change from New Zealand Trade and Enterprise (NZTE) Focus 500 to Focus 700. I was just reading the report and there was a question asked in the select committee that considered this: why is NZTE making this change from Focus 500 to Focus 700? The answer is because there are more businesses out there in New Zealand that need NZTE support on the world stage. There are more businesses—700 fast-growing companies on the world stage—that need Government support in those offshore markets where they can make a difference and grow their exports. That is why it happened, and that is what is given effect to in the Budget. So it is a pleasure to kick off this debate. I am looking forward to the rest of it.

Well, if that is going to be the quality of the debate going forward for the next 10 hours then the people of New Zealand will know there is only one very clear choice on 23 September, and that is to vote for a change of Government. In fact, Andrew Little and Jacinda Ardern have been travelling this country filling up halls with New Zealanders who are sick to death of this Government, with New Zealanders who are actually looking for a vision, who are looking for a way forward, and who are looking for a new New Zealand—and they are not getting it with this Government. They are hearing a plan when Jacinda and Andrew travel around New Zealand and fill halls. People are finally saying: “Yes, maybe, it is time for a change after 9 long years.”

When I hear Mr Bishop stand up and talk about what is happening in rural New Zealand, what I can say is that in a town in my electorate, Wairoa—which the Minister in the chair, Steven Joyce, knows well because he has been there and seen the most innovative project, I believe, on the books in New Zealand at this point in time, which is Rocket Lab—they are not going to have ultra-fast broadband up there for at least another 5 or 6 years. This is symptomatic of small-town, rural, provincial New Zealand. They have fantastic ideas; they want to be out there taking on the world, and yet the most basic tool that will allow them to do this is so far out of reach that it is unbelievable.

If you do not empower these rural communities then there is no way that they can be the innovative places that they should be. For Mr Bishop to stand up and talk about R & D—the cheek of that gentleman. We have one of the lowest R & D spends in the OECD and one of the lowest—if not the lowest—R & D spends by the private sector in the OECD. Do you know what started this fall? It was when that Government, upon assuming power, took away the R & D tax credit, which Treasury advised them not to do. It was a backward step that has sent us back about 10 or 15 years.

Let us talk about economic development. The high-level numbers do not look too bad, to be honest. But let us dig a little bit deeper into the indicators that really matter to good hard-working Kiwis on the ground in rural provincial New Zealand, as well as the big cities. Unemployment is at 140,000 people—47,000 more than when National took office. There are 90,000 “neets”. These are the 15 to 24-year-olds who are not in education, training, or employment. The interesting thing is that when this Government came into power these young people were aged between 6 and 15. You would have thought that theirs was an aspirational future that they could grab hold of. Instead, 9 years later when these 6-year-olds are now 15, you get a Prime Minister calling them what? What did he call them, Mr Lees-Galloway?

💬 Iain Lees-Galloway: “Pretty damned hopeless.”

“Pretty damned hopeless.” People who were 6 years old are now being called “pretty damned hopeless” when they are 15 by that Prime Minister. I think that this Government has to take serious responsibility for what has happened to these “neets” over the last 9 years. Finally there is a party with a vision and the plan on how to get these young people back into employment and back into contributing to society.

If you look at the Business Growth Agenda—

💬 Hon Michael Woodhouse: What is it?

You will hear it in the next 10 hours, believe me—believe me. If you read about the Business Growth Agenda it sounds really good on paper. The first thing it says in the Business Growth Agenda is: “Develop with key stakeholders a broad, compelling, and flexible New Zealand story that works for a range of exporters and sectors.”

I think one of the worst things this Government has actually done is completely mismanage our global brand. All you have to do is hear Mr Parker talk about the dreadful state of our waterways. We go out there with a “clean, green”, “100% Pure” brand that is just an absolute myth. I know Mr Bishop believes this. In 2005 the then Ministry of Economic Development valued this brand at $20 billion a year, and that Government has devalued it.

Over the next 5 months New Zealanders are going to see a lot more of the vision that Labour has in the economic development space. You are going to hear the plans that we have to grow the regions and grow our communities, to provide real support for small to medium businesses that really want to grow and take on the world, and to provide assistance for those who are ready to take on the world but just feel there is no support from this Government at all. I cannot wait till 23 September.

And I cannot wait for you to sit down. I will just let each side of the House have a smack each way, in order to explain the rules. The deal is that we are doing this in a new way.

This debate is not a wide-ranging general debate, telling us what we are going to hear during the election campaign or telling us about the prolific travels and visitations around the country by leaders and deputy leaders from the parties. It is a very specific debate about entities that are within these themes that we are running—here, the economic development and infrastructure sector—and I am sad to relate that the last speaker, Stuart Nash, did not quote a single one of the reports, and, actually, neither did the first speaker, Chris Bishop. The deal is—it may be boring, but you have got 10 hours of it—when a person chooses to speak on this theme, the person then cites the report and talks about the select committee review of the 2015-16 year, not the 2016-17 year or what they hope to achieve in the 2017-18 year.

That is the deal. That is what the Business Committee has signed you up for, like it or not, so those are going to be the rules the presiding officers will be adhering to. So if you are going to make a speech, make it consistent with the Business Committee’s rulings. Quote the report that you are calling from, and knock yourself out.

I raise a point of order, Mr Chairperson. Just be clear, however, I do not think the Business Committee ever envisaged that the debate would be so restrictive that members had to be quoting page and line numbers of a report. They need to talk about what is in the report, but I do not think the intention of the committee was to restrict the debate so that members had to be so narrow they could talk only about a particular sentence or a particular issue in so far as it is covered in the report. I think that, for example, when we get to the education report, covering the topics that are covered in the Education and Science Committee’s report is sufficient. I do not think the intention was to restrict the debate down so narrowly that you can cover only the exact material in the report, because, of course, select committees hear a lot more material than is reflected in the wording of the report.

Well, I take the member’s point, and I am surprised that he would think that any of the presiding officers would read it that narrowly, because much as it may be painful to have to give a speech like that, it is even worse to have to listen to it. The point is, though, that if members are familiar and au fait with their portfolio area that they are speaking on, they should be able to draw attention to a report. We are not expecting pages and line numbers. We expect it to be colourful and eloquent, and, hopefully, humorous and witty and entertaining, as well.

Mr Chair, I thank you for that assistance and direction as we look at the annual review, and I think it is probably going to be very helpful for the Opposition, in particular, because it appears from that last 5-minute offering from Mr Nash that its only economic policy seems to be the R & D tax credits that it has had for the last three elections.

💬 Hon David Parker: I raise a point of order, Mr Chairperson. I think it is completely inappropriate for the Minister, in his first contribution, to do exactly the opposite of what you just admonished the Opposition and the prior National Party speaker for doing. I would suggest that you call the Minister to order.

The CHAIRPERSON (Hon Chester Borrows): I thank the member for his support. I am not required to call him to order, because he has already had that. Thank you very much.

Thank you, Mr Chair. I will now address my comments in particular to the annual review of Treasury and the financial statements of the Government. I will focus on that, as against the previous speaker, Mr Nash, because that is a very good context for this Committee’s discussion over the next 10 hours.

The Finance and Expenditure Committee’s report made it clear that the New Zealand economy is going very well at the moment—one of the strongest-performing economies in the world since the global financial crisis. It was noted that we have had positive growth now for some years, and, in fact, I can tell the Committee that we have had positive growth in every quarter but one over those last 6 years. It is a very good performance. When you line this country up against countries like the US, like Japan, like Canada, like the EU, and like Australia, we were, in fact, the fifth fastest growing economy in the developed world last year, and that is actually coming in to higher incomes and more jobs for Kiwis.

I would like to report to the Committee, given some inaccurate data reported recently, that the New Zealand employment rate—the rate of employment of adult New Zealanders; everybody over the age of 15—is now at 66.9 percent. That is just under 70 percent, which is our highest rate ever, and, actually, one of the highest in the developed world. We also have a very big margin of employment over Australia currently, and a big margin of full-time employment for New Zealand over Australia. That shows how a strong economy flows through for Kiwis around the country.

The good news is that the forecasts are that this will continue. The Secretary to the Treasury was talking to the select committee about the prognosis for the New Zealand economy, and I too had my opportunity to speak to the committee and lay out the Reserve Bank predictions for quite solid economic growth—an average of 3 percent over the next 4 years. Why is that happening? Well, we did traverse that at the committee, and the committee itself traversed it, and New Zealand’s economic growth story is driven by a number of things: firstly, the strong fiscal performance and fiscal policy of this Government; the orthodox monetary policy that this Government adopts—and I think New Zealand has shown that it is important that monetary, fiscal, and microeconomic policy work well together if you are going to get a good result for Kiwis; and a number of things that this Government is particularly focused on.

Firstly, there is trade. We have made a particular emphasis on taking advantage of the opportunities of the big growth in middle-income consumers through Asia. We have a trade-friendly Government that is encouraging companies to export with organisations like New Zealand Trade and Enterprise and Callaghan Innovation, and, despite the dairy decline over the last few years, New Zealand’s exports have in fact grown.

Secondly, we have seen an increase in growth in our working-age population. That is actually really important, because we have got a lot of companies that want to grow, currently, and in order to grow they need to keep hiring skilled people. We have the opportunity, because not only is our education system delivering more graduates but our immigration system is encouraging skilled migrants to come to New Zealand to work for our companies.

Thirdly, New Zealand firms are becoming more innovative. I am not sure, again, why the member of the Opposition picked on this, because, actually, the story of New Zealand’s R & D is one of growing research and development. In fact, the example that Mr Nash raised is of a company called Rocket Lab, which is indeed the beneficiary of this Government’s R & D investment policies, alongside Callaghan Innovation. So it is slightly ironic for the Opposition to raise that in criticism.

Also, we have seen active encouragement of private sector investment in this country, which is important, and, finally, the public infrastructure that we need for growth—and we talked about that in the House earlier this afternoon. This Government is delivering strong economic growth.

Thank you for the opportunity to take this call and, in the main, reply to the contributions already from the Government members. Mr Bishop, for example, spoke about—I think the 2015-16 Budget was called a plan that is working. What we are seeing from the debate today is a large number of appropriations that show exactly the opposite. He spoke about the glaring success of business research and development. He claims Government success from the growth in research and development from business of 29 percent. Of course the National Government claims that that is its success, despite the very same statistics Mr Bishop referred to telling New Zealanders and highlighting to this Government that over the same period since 2014, Government contribution to R & D has gone up by only 5 percent in that entire time. I want to point out to those Government members across the aisle there that this is a race, that this is a competition with the rest of the world, and that they are not holding up their end of the bargain.

So, Mr—I keep forgetting your name—

💬 Tracey Martin: Hudson.

Hudson. Mr Hudson, how do we measure the success of R & D by Government and business? Let us ask what a simple way is of measuring that. I put it to the Committee that a simple way of measuring that is the amount of external trade this country undertakes as a percentage of its economy. Well, the measure is a simple one, and its outcome is that trade as a percentage of this economy is absolutely, undoubtedly, going backwards—undoubtedly going backwards.

💬 Hon Steven Joyce: No, it’s not.

As a percentage of GDP, Minister, it is going backwards.

The Minister of Finance spoke about positive growth and a wonderful economy going on, but then he failed to mention in his analysis that that is not true as a measure per capita. Our economy per capita has been stagnant, or, if we concede and give some ultra-right interpretation of the statistics, it has grown marginally per individual. What does the implication of that mean? Because he is right—the economy has grown. But where has that gone if it is not being spread out evenly amongst New Zealanders? It means that the rich are getting richer and the poor are getting poorer.

In fact, the Minister quoted OECD statistics. He quoted the OECD as a measure of how well this economy is doing. Well, let me quote the OECD back to the Minister, and highlight the fact that it was the OECD, in a formal report to all its member nations, that said that New Zealand, as a member, has one of the highest inequality data sets in the developed world. In fact, we are bordering on Third World numbers in comparison, in inequality. That means that the OECD itself—completely ignored by the Ministers here—has shown to New Zealand and to that Government that inequality is huge. It is growing, and those members opposite are not doing anything to address that—certainly not through the appropriations.

I asked the question before—I think this Budget was called a plan that is working, and, in conclusion, I just want to highlight to the members opposite that there is no plan. There is no plan. The former Minister of Finance was diametrically opposed to the Government doing anything meaningful in its Budgets, hence this rigmarole around appropriations and trying to move money into places where it is needed. Economic development and infrastructure, which are the topics we are focusing on, are inexorably linked. For 9 years this Government has done nothing meaningful in terms of infrastructure development.

I have got only 30 seconds left. I have got example after example of opportunities missed, but the reality is that this Government has cost this nation. It has cost businesses and it has cost our Kiwi households in terms of homelessness, just as one example of its lack of action, its lack of spending, and its lack of leadership. Thank you.

There are lies, there are damned lies and statistics, and then there is Fletcher Tabuteau’s rubbish that he has just been speaking over there. What we know from the documents we are actually here debating and from the OECD reports—actually, from all the metrics you will get from the banks, and so on—is that that guy over there is talking alternative facts. All of the real facts show that this is an economy that is at the top of its game and is, in comparison to the rest of the Western World, doing very well. It does not mean it is perfect, but it is doing very well. It is growing GDP exports per capita. GDP is going very well. We are winning the race, Mr Tabuteau, that you talk to.

We have heard a lot about a space and rocket lab. Well, actually, this year New Zealand will be—I think it is either the seventh or the ninth country in the world to send a rocket into space, and do that commercially. That is a result of the economic development portfolios, the votes, and the R & D grants that we have in this country. We should be really proud. It is but one example of the diversification in this economy and what that is doing to keep us growing strongly, which, ultimately, means better lifestyles and standards of living for New Zealanders.

We have come from being in a difficult situation, actually—with the global financial crisis, with earthquakes—to a position where we are growing strongly, where our books are back in surplus. We have a primary sector in good health that is diversifying into a number of very exciting areas. Today I met with New Zealand Winegrowers, a remarkable story of growth—up to $1.7 billion of exports. That is directly relevant to what we are talking about here, when we talk about economic development and what we have got to do. We are doing it in our economy—in the primary sector but also in technology and in services. Whether you are talking movies, films—“Wellywood” is actually No. 2 in the world behind Hollywood as a place to make movies; it is a very vibrant sector—whether it is companies in ICT and software like Xero and like Push Play; whether it is in services such as tourism, where we have had massive growth, or international education, this is an incredibly strong economy that people are seeing the benefits of, by and large. All of that means that we have got choices, and none of that happened by accident; it happened because great businesses, big and small, are getting in and doing it, and a good Government is giving them the confidence to do that through its policies.

Infrastructure is what we are here to talk about as well, and those surpluses and the growing New Zealand economy, which business and the Government share the credit for, mean we can invest more in infrastructure than ever before: $11 billion over the next 3 years. Let us just talk about ultra-fast broadband (UFB), about internet connectivity, because that is something that has come through in these reports and also in the speeches. In fact, in New Zealand we have gone from the back of the queue of the OECD—that is, the so-called wealthy countries in the OECD—to much closer to the front of the queue. I believe we can do even better besides, as recently we have seen decisions made to provide another 151 towns with UFB, and as we go further, even, from there, as is my aspiration as communications Minister.

Talking about infrastructure and the New Zealand Transport Agency—which, again, is part of this—just in the last couple of weeks the Government has made very important decisions in infrastructure. We have seen $812 million announced as going to the rebuild down there. It is something we can do to make New Zealand more resilient and, as a result, a resilient economy under this National-led Government. Whether it is the western ring route talked about in Parliament today in question time—over $2.4 billion of investment, which is a game-changer for Auckland; whether it is down to smaller projects like Waterview Road in Napier, with $25 million worth of work started; whether it is our preferred routes , which have been made quite clear in the last couple of weeks, from Mount Messenger to Awakino; whether it is the ring route in Palmerston North or State Highway 1 and 29 in my area, which will be four-laned at a cost of several hundred million dollars—economic development and infrastructure are at the heart of this Government and its programme for New Zealand.

The Minister of Finance, in his contribution, spoke about New Zealand’s growth rate and about it being the fifth-highest in the OECD. It is true that our growth rate is 3.4 percent, or around 3.5 percent, and that looks very impressive—until you dive into the numbers. People who are trying to feed their kids, put a roof over their home, or get their kids to school do not really care about a growth rate of 3.4 percent. They want to know whether they have got a job.

We have got an unemployment rate of 5.2 percent, and it is increasing under this National Government. We have got 90,000 young people who are not in work or education, and we have got the lowest rate of homeownership since the 1950s. A statistic that I found staggering is that in 1991 one in four 25-year-olds in New Zealand owned their own home. Today it is one in 20.

These are the figures that really matter. These are the things that make people’s lives more or less comfortable, that give people an opportunity to get ahead or not. So the Minister can crow as much as he likes about the growth rate, but the truth is that for far too many New Zealanders—a growing number of New Zealanders—life has gotten progressively tougher under this Government. Now, why is that? If we have got such an amazing growth rate, why is it that people are struggling so much? Well, the fact is that if you look at GDP growth per capita it is anaemic, and that is the nicest thing I can say about it. At 0.4 percent, growth per capita is not delivering improved lives for ordinary Kiwis.

The only thing that is making our economy grow at the moment is population growth. We have got more people, therefore the economy is bigger. But on a per-person basis, in terms of what the economy actually delivers for people—have they got a roof over their head, have they got food on the table, have they got a job to go to—this National Government fails to deliver, year after year after year, and it is only getting worse.

We have to address the elephant in the room around population growth, because the thing that is driving population growth is immigration. Immigration has always been important to New Zealand. When new migrants bring skills that help make New Zealand more prosperous, everybody wins. When we get those skills and we grow our economy and we grow innovative businesses that pay higher wages, people are better off. Unfortunately—the Minister in the chair at the moment, Michael Woodhouse, is responsible for this, as is Bill English—we have got an immigration system at the moment that is being completely abused by the National Government. It is using it to bring in vulnerable workers who are exploited by poor employers. This Government is subsidising bad employers by giving them the opportunity to employ migrant labour and then failing to enforce basic employment law, allowing new migrants to be exploited—not getting them paid properly, not getting them paid for all the hours that they work, not getting their holiday pay, and not getting fair terms and conditions around health and safety. Under National, rogue employers exploit migrant workers and they get away with it, because we simply do not have a labour inspectorate that is sufficiently and adequately resourced to be out there in the areas that use a large amount of migrant labour, to ensure that basic employment law is being adhered to.

For goodness’ sake, in Marlborough, where we have one of the highest concentrations of low-skill, low-paid migrant labour in New Zealand, there is an absolute paucity of labour inspectors. In Blenheim, there is not one—there is not one. We have got vulnerable, exploitable migrant workers crying out for an opportunity to actually raise their concerns about their employment situations, but there is nobody there to actually deal with it, and that is deliberate from this Government because it helps keep wages down. It helps keep conditions at work down. That is not just bad for the migrant workers but it is bad for everybody else.

It is time that we get our immigration system back on track, focused on the skills that will grow our economy, grow our innovative businesses, and create opportunities, not just for our new migrants but for everybody in New Zealand. We also need to make sure that our population growth is at a sustainable rate that our infrastructure can keep up with. The fact that we do not have enough houses, the fact that we have a transport system that is absolutely clogged up, and the fact that people cannot get into the hospital or into schools is the fault of the Government, because it has failed to invest in infrastructure, but it is being caused by our population growth. It is time to take a pause and get our immigration system back on track.

As Minister of Immigration, and as one who was going to speak in this debate, I think it behoves me to respond to the contribution of Mr Lees-Galloway. I think it is important that we do have a robust but sensible conversation about migration and immigration. I want to offer a slightly different perspective on that, because Mr Lees-Galloway’s thesis is that the only reason GDP growth is occurring is because of population growth.

Now, I think there are two quite big categories of visa where there is a contribution to the economy and GDP, and those are in international education—our second-largest service export earner by value, and an employer of 32,000 people—and, to a degree, in tourism. In fact, we have seen very strong growth in the number of working holidaymakers who are coming. There are presently around 64,000 visa holders in that category, but they all go home again. They earn a bit, and they spend a bit. I think if we were to go to places like Queenstown, Wānaka, Rotorua, and the Coromandel and say that we were going to arbitrarily pull the plug and substantially reduce, perhaps by tens of thousands, working holidaymakers, it might have quite a significant negative economic impact.

But there are a number of people who are in New Zealand on what are called essential skills work visas. That is where it is necessary for there to be a test of whether a New Zealander can do the job. Here is the inconvenient truth for the Labour Party: when it was in Government, the number of essential skills work visas that were issued by that Government was about a third more than is currently being issued right now. About 40 percent fewer essential skills visas are being issued—

💬 Iain Lees-Galloway: What was total inward migration? Come on, what was net migration?

Yes, that is right, what was net migration? Let us talk about net migration under Labour. New Zealanders were fleeing the country. They were leaving in their tens of thousands, and the fact is that under a growing economy New Zealanders are staying home and coming home. If Labour wants to say that that part of net migration is a bad thing, then good luck explaining that to the electorate in the next 4 months. This Government has a very balanced approach, a demand-driven approach to migration and immigration. I challenge Labour, in its claim to want to reduce immigration by tens of thousands—

💬 Alastair Scott: 50,000.

I think Mr Little did say 50,000, and then he recanted that. But 50,000 is tens of thousands—

💬 Iain Lees-Galloway: No, he didn’t, actually.

Oh, I will accept Mr Lees-Galloway at his word: he has not recanted it, so it is 50,000. OK? So I would like the Labour Party, in this debate, to explain which 50,000 visas it is going to refuse. Is it going to be the nearly 100,000 international students who study here and have a few work rights, who contribute $4 billion to this economy? Is it the tens of thousands of working holidaymakers, who are pretty much a net neutral contributor because they earn it, then they spend it, then they earn it, then they spend it? Or is it going to be the about 12,000 overseas workers who are helping us rebuild our second-largest city following the Canterbury earthquakes? Are they going to go to Blenheim and say to that fantastic, world-leading viticulture sector, which is selling to the world record numbers and value of wine: “That’s it, it’s all over.”?

💬 Brett Hudson: They want to turn the tap off.

That is right. Are they going to go to the Western Bay of Plenty and say that the kiwifruit needs to rot on the vine? Because I, for one, want every single willing, able Kiwi to be in work right now.

I challenge those people who are on jobseeker support, who claim that they are ready, willing, and able, to go out there and find one of the 121,000 new jobs that we are going to be creating in the next 4 years—to get to the front of the queue, because this Government will back them. It is working harder than any Government previously to make sure that they are at the front of the queue, and that is as evidenced by the reduction in those labour market - tested work visas over the last 8 years. But if the Labour Party wants to turn down the tap, if it wants to say that immigration is the only contributor to population growth, it needs to reveal its plan to the electorate now.

I want to address the annual review as it relates to transport, and especially rail. What we saw as a result of the Kaikōura earthquake aftermath is that we actually have a fragile transport system. It also showed, of course, the value of a good coastal shipping service, especially from port to port, and the need for a much more resilient railway system. What we actually see from the reports is under-investment in transport and, most particularly, in New Zealand’s railway system. We have often heard about National’s RONS—roads of national significance—because National really cares only about roads. That is a forlorn strategy, as has been shown overseas, because roads alone will not actually fulfil New Zealand’s transport needs.

Of course we do need a good State roading system—we know that—but rail in New Zealand is grossly underfunded and neglected, and that is in terms of both capital expenditure and gross under expenditure in the maintenance of the system as it now is. The reason for that, I think, is that National sees roads as an essential public service, but it only sees railways as just another business, whereas New Zealand First would wish to see investment in the full redevelopment of our run-down railway system.

We have a policy that we call railways of national importance—RONI instead of RONS—because New Zealand’s railway network is an essential public service that must have the quality and capacity to take a much higher proportion of New Zealand’s long-haul freight requirements, along with, of course, coastal shipping. We see it as essential that there be a large, long-term reinvestment in the railway system. That is essential. It is essential to optimise its role in support of New Zealand’s economy, and for an efficient, cost-effective, multi-modal, well-integrated transport system, and that is something we do not have, but should.

To this end, New Zealand First wants to see the cost of development of new tracks and services, of electric reticulation through the whole of the main trunk, and of reopening several closed lines to be met not just by the revenue generated by the railway system but by a combination of land transport funding and Crown grants. Also, New Zealand First wants to see a review of the structure of New Zealand railways so that we could get full separation of the infrastructure and engineering divisions from the freight and passenger divisions. Infrastructure and engineering must become funded as a public service, and freight and passenger services, as a business, funded partly from charges and partly from the Land Transport Fund. Also, other freight businesses should have access to the railway infrastructure to run their own railway services. We would also like to see the Hutt and Hillside facilities reopened so that electric locomotives and wagons could be refurbished and built within New Zealand, using New Zealand labour and skills.

One of the biggest needs of a redeveloped railways service is the need for more maintenance staff, and many more highly-skilled maintenance staff, to enable the system we speak of to be upgraded so that it can operate to its full potential. With a modern system to replace the Third World system we now have, we are going to need a lot more investment and, in particular, to reduce travel times between Auckland, Wellington, Christchurch, and Dunedin. That is achievable, along with a programme of full electrification, which is needed, and also a new Cook Strait rail ferry—something we do not now have, and that is rather sad.

The absence of adequate funding is a serious problem, and one of the glaring gaps in the Government’s programme of investment. New Zealand First wants to see that rectified, and the sooner the better.

I refer to the report on the annual review of the Ministry of Business, Innovation and Employment. On page 4 it speaks of the Regional Growth Programme, which is very, very important for New Zealand, because out in the regions, as we know—us regional MPs—there is huge opportunity for growth and there are massive resources that are enabling this economy to prosper.

Just following the previous speaker, Denis O’Rourke, speaking of the virtues of rail—well, our businesses and our freight forwarders use rail where rail is efficient and cost-effective for them. But often they need to also utilise road transport, because it is a cost to businesses to offload from a factory to a rail head and then back to a truck, to be able to get their product to market. They need to find efficiencies around that, and I am sure the bright people at KiwiRail will work and create some innovations.

When it comes to regional New Zealand, I want to talk a little bit about the $135 million being invested into State Highway 3 and why that is important. It comes on the back of a very successful Government that has been able to enable this country and this economy to grow. We have surpluses that we are able to reinvest into our economies—$11 billion over the next 4 years, and some of that is going to State Highway 3, which you, Mr Chairperson Borrows, will be very familiar with because, no doubt, yourself and other members of Parliament from Taranaki go up and down that passage of road quite often.

But what travels that road in great numbers is the road transport industry, because it carries freight in and out of Taranaki over that road. We know that when there are closures to that road—as there often are because of the terrain and the weather, elements that we cannot control—and those vehicles need to go south, up through Feilding and up State Highway 1, for every trip that those trucks take to either bring produce and food into the region or take exports out, it is an extra $1,000. That is a huge cost to the people of Taranaki, a huge cost to business. It is speaking not only about the resiliency of that road but also the safety of it, so what we see is a Government that, through its good management of the economy, is able to afford an infrastructure spend of $11 billion over the next 4 years, and the people of Taranaki appreciate that.

Looking at regional growth—in fact, New Zealand is covered in regions, 15 regions. There are metropolitan centres with large amounts of population, but then there are regions. Over this last year 137,000 jobs have been added to the New Zealand economy, and many of them are in the regions. Just last week I was in the Hawke’s Bay, meeting with Business Hawke’s Bay, and it said that over the next year it was anticipating 4,000 new jobs. This is a horticultural area, very much the same as Gisborne, which, over the next few years, is looking at another 1,200 jobs. There are jobs available for New Zealanders. There are jobs available in highly profitable businesses, and many of those jobs are high-paying jobs as well. We encourage New Zealanders to seek out those jobs.

But one of the great steps that this Government has taken, with the action plan in Gisborne, is to fund a job coordinator. Those businesses are so hard at work doing business that managing a mobile workforce through many orchards and horticultural plants is quite difficult, because they work hard. So there is coordination to recruit, to train, and to enable those new employees to come into those positions. But that is great news, is it not? It is great news to see these people finding employment. We know that up in those regions, 10 months out of 12, they need those workers there. It is great to see that these regions are succeeding, and this Government is supporting them through the Regional Growth Programme. Thank you.

When Simon Bridges got up to trumpet the things that the Government might do in the future, such as delivering the next stage of ultra-fast broadband to New Zealand, he neglected, as so many Government Ministers on that side of the House do, to tell us about the 130,000 New Zealanders who will not get that better connectivity for up to 7 years—up to 7 years. But they should be happy now—they should be happy now. That is one example of the regional development progress that the Government talks about that actually is not a reality; it is just a myth.

My comments relate to the 2015-16 annual review of the Ministry of Business, Innovation and Employment. What that report says—it has got increased spending on contractors. There is no focus on local procurement as a lever for regional development. It trumpets the Government’s export goals of 40 percent of GDP by 2025, but guess where that target is now? It is nowhere near 40 percent. It is 30 percent and going backwards. That is just one example of the myth-making that this Government does.

The previous speaker talked about the regions—New Zealand’s regions. Well, I want to talk about the region that I am part of and that I represent, which is Dunedin, which is part of Otago, and the disinterest that this Government shows in significant regions in our country. On 16 February Dunedin was rocked by the news that its 80-year-old efficient, agile chocolate factory, Cadbury’s, now owned by multinational Mondelez International, was to close, with the loss of nearly 400 jobs. A month later—yes, it took a month—Prime Minister Bill English paid a flying visit to Dunedin and said the closure of the Cadbury factory in Dunedin will be a huge thing for affected workers, who may prove to be more resilient than expected. That was it.

So just how resilient should we be, Mr English? There was the closure of the Hillside railway workshops, with the loss of hundreds of skilled manufacturing jobs, and the decimation of a vibrant engineering hub in Dunedin; the gutting of the Invermay agricultural research facility, with the loss of nearly 100 jobs; and the glacial progress on the rebuild of Dunedin Hospital, and the erosion of health services for those who are trying to get an appointment with a specialist, let alone get on to a waiting list for an operation.

And then there is the consensus building in the city that the lack of affordable rental properties is reaching or has already reached crisis point. Dunedin rents are up 16 percent in the last year. If you are on a low income and your lease ends, finding an affordable house is really hard. Once upon a time there used to be State houses for those who found it hard to afford those rents, and if household incomes were going up, that would not be such an issue. But they are not. In Otago last year the average household income actually fell 1 percent. There are more than 100 people on the waiting list for State houses, meanwhile 53 lie empty. There are 160 on the waiting list for Dunedin City Council community housing. It is the longest it has ever been.

Families are in motels, just like everywhere else around the country. But this is what is happening in our city right now—living in cars and in garages. To get a State house in Dunedin you have to be prepared to speak out publicly. The Minister sitting in the chair, Michael Woodhouse, knows it. Winter is approaching, and Bill English wafts into town and observes how resilient we all are.

So if you ask Dunedin people what their top-of-mind issues are, the rebuild of Dunedin Hospital, the lack of affordable housing, and worry about jobs are the top three. This Government’s and Bill English’s view about resilience—it is like he has taken Dunedin into the wilderness and left us there to survive on our own. That is his view of resilience. He is doing nothing and he has got no vision. It is time for a fresh approach, from a Government that actually cares about provincial New Zealand.

I am taking this opportunity because on Friday it was Workers’ Memorial Day, which is the time when we should all reflect on the number of people who go to work and actually never come back. In fact, in the previous 3 weeks seven people have died on the job.

In my contribution to this debate I want to talk about the annual review that we did with WorkSafe New Zealand, which, I have to say, is working incredibly hard to try to turn around what was quite a huge number of people who were dying at work—to turn that around.

In the review period that we were looking at—2015-16—there had been 59 deaths at work. But since 2012, in the targets that WorkSafe has been setting, that has actually been trending downwards, and it should be congratulated. Unfortunately, there were something like 230,000 ACC claims at the same time for work-related injuries, and that has been trending upwards. On top of those injuries and deaths at work, there was also between 600 and 900 deaths from work-related illnesses, most of which were airborne.

When we look at that and we look at the fact that our economy runs on our workforce, we need to be looking at what sort of an investment we are putting into ensuring that that workforce is safe. I have to say that this Government has taken a very cavalier approach to industrial relations, which is how workers have traditionally maintained safety on the job. I guess we just have to look at the 29 deaths in the tragedy at the Pike River mine to look at how cavalier things can become when unions are not on site and are not as active, and when there is limited monitoring and compliance.

That, I guess, is the crux of the matter. The health and safety inspectors that we have are pressed to the max. If you think about the number of small workplaces that we have in this country, and we are looking at tens of thousands—I think I saw something like 78,000 in one area alone—if you look at those worksites and you look at the ability for health and safety inspectors to actually monitor the conditions there, it is just totally impossible. We have seen, through the labour inspectorate, which has been visiting smaller worksites, particularly in the agricultural sector, which has the highest fatality rates, that there has been a real breach of minimum employment standards right across the board, in terms of minimum pay, hours of work, holidays, sick leave, record-keeping—just basic standards not being met.

If you think about those small worksites in the agricultural sector, maybe in farming, what you have there as well is a high prevalence of workers who are originally not from this country—people who have come here who obviously are contributing to our economy but are frequently in an isolated situation where they are vulnerable to exploitation. We see this time and time again, and this is something that we definitely need to be keeping an eye on, particularly when we are looking at our immigration policies.

That is the difference between this country and lots of other countries. Here in New Zealand you are four times more likely to die at work than if you are a worker in the UK. Australia beats us as well; you are twice as likely to die here in New Zealand than if you are a worker in Australia. And it is just not acceptable, because we could be investing more in our people, more in our businesses, to ensure that people are safe at work, and that they are getting the minimum rates of pay and conditions. What we need to be doing is we need to be ensuring that our unions are able to take their part in ensuring that our workers can participate in health and safety—and that was the thing that was gutted in the health and safety Act that was enacted in that 2015 year. So this is a missed opportunity. We could be doing much better, and I hope we will.

I speak in respect of the report on the Ministry of Business, Innovation and Employment (MBIE)—particularly that conducted by the Commerce Committee. At that meeting, among a number of things, we talked about our programmes and progress around research and development growth.

I particularly want to speak in relation to some points that Mr Fletcher Tabuteau of New Zealand First raised just a wee bit earlier in this debate. Mr Tabuteau acknowledged that private sector business contribution to research and development in the last 12 months or so had grown by 29 percent. That is very true—29 percent. You would think that would be something to be proud of, and to raise and laud as something good for the country, but Mr Tabuteau did not. That might come as some surprise, but you know that New Zealand First members are often known to defy common sense and logic, so it possibly did not come as too much of a shock to members on this side of the Chamber. What it did show is that Mr Tabuteau does not understand this Government’s R & D plan, nor does he understand the R & D objectives of any countries in the OECD.

You see, it is the intention of small developing countries, or large and advanced countries, for the private sector to bear a greater burden of the R & D investment. There are generally two things that countries are looking to achieve. Generally, they want to grow their R & D expenditure to around 2.5 percent or more of GDP, and they want business to have the lion’s share of that. In New Zealand—and if Mr Tabuteau had actually sat on the Commerce Committee, instead of just pontificating from his seat over there, he would know that the report from MBIE shows—the level of Government R & D investment in New Zealand is considered very strong within the OECD, particularly given that we are considered a small advanced nation, of course, and not one of the larger ones.

So when we have a situation where the private sector business investment in R & D is outstripping the Government investment in R & D, that is actually a good thing. It is a good thing because it shows that we are getting closer to the objective of not only growing overall research and development expenditure but having the private sector contributing a greater amount towards that. So, overall, the news we got from MBIE around that was that it is pleased that there is a greater propensity or a greater willingness for business to invest, but we still have a way to go. Another area that MBIE pointed out we have a way to go in is the commercialisation of that R & D. We might then note that the change of the chief executive of Callaghan Innovation is to someone who has got proven experience in the private sector and has been brought on to help companies in New Zealand to exploit that R & D investment further.

The other part I would like to touch upon is in one of the other reports. New Zealand Trade and Enterprise (NZTE) came to talk to us. As a small trading nation at the bottom of the world, to which no one owes a living, we are wholly dependent on exports for the prosperity of New Zealanders. So when we are trading with other nations, it is not actually about commodities or goods or services, it is actually about jobs and income. That is because the more trade avenues we have and the fewer barriers we have for our goods and services to be traded overseas, the more jobs we create in New Zealand and the higher incomes are raised for the workers in those areas.

We heard from NZTE, whose job is to help Kiwis act upon and exploit the free-trade agreements that people like the Hon Todd McClay work so hard to put in place around the world. I would acknowledge the work that Mr McClay has been doing to put, in perhaps a new form—but to salvage some very positive trade outcomes from all of those Trans-Pacific Partnership negotiations and the progress that was made up until the very late part of last year. It is NZTE’s job to help New Zealand companies to actually capitalise upon those. It particularly has been doing a lot of work around a group of 700-odd companies that are actually not the largest enterprises in New Zealand—companies that have less than $500 million revenue—and it is helping them to actually engage in those markets, to grow their opportunities, and to convert those free-trade agreements into jobs and higher incomes through the provision of more products and services. It has been doing an extremely good job. In fact, NZTE officials were saying to us that they were engaged in about $1.5 billion worth of overseas activity. It is great work all round in the economic development sector.

It gives me pleasure to speak in the appropriations debate, and I will be particularly referring to the annual review of Treasury to June 2016. It is very interesting that the Opposition members do not like to hear what reality is. They do not like to acknowledge that we as a country are performing extremely well. We are one of the easiest places to do business, we are way down on the corruption rankings, we are massive on the social investment—that, particularly, hurts the Opposition when the analysis of the critics is done. We have, as has already been mentioned, one of the highest employment rates in the OECD. This is no coincidence. This is because we are a stable Government, and I am going to talk about infrastructure.

Mr Joyce has already mentioned that the party of infrastructure is National, and despite the cones that are around the electorates, particularly in Auckland, holding up traffic, we are spending billions and billions and billions on roads, rail, and broadband. The other thing we are doing is repaying debt. Mr Joyce mentioned a new target of 10 to 15 percent of net debt to GDP by 2025. That is a new target, that is an aggressive target, and one might ask where we get this money from, where we find this money to invest in the infrastructure, and where we find this money to pay down debt. Well, we get this from the families, the communities, the people of New Zealand who pay their taxes, and that is as a result of a strong, growing, vibrant economy. That is the end of it; that is the beginning of it.

It is a strong economy, which is a prerequisite that enables us to invest in the infrastructure as we have talked about. It is a strong economy that allows us to repay debt aggressively, and that is important because we need to be in a position by 2025 to have between 10 and 15 percent of net debt to GDP, because who knows what is around the corner? Who knows what other crisis might happen? It is all about resilience, setting up New Zealand to face another inevitable earthquake. It is not a matter of if; it is just a matter of when we suffer another earthquake in the Shaky Isles of Aotearoa New Zealand.

The economy is permeating—not just in Auckland, not just in Wellington and Christchurch—through the whole country, through all of the regions. In the South Wairarapa District Council there are 200 new housing consents right now on the table. That may not sound a lot to Auckland MPs, but that is a big number and that will make a difference as people move to the regions. Why are they moving? It is because there are jobs, there are opportunities. The connectivity of ultra-fast broadband makes a difference. You do not have to be sitting in an office in Wellington or Auckland to conduct business internationally. All of our schools are connected to the internet. That connectivity is making the world a smaller and smaller place, more accessible to our young people and future generations from every community, from our regional as well as our city communities.

Rural Broadband Initiative 2 is out for tender right now. Those results will be coming out soon, I would imagine, and that, again, is going to increase the percentage of New Zealanders who are going to have high-speed internet, no matter where they might be situated—whether it is the west coast of the Wairarapa, which is remote, difficult to access, and has a low population, or elsewhere. Those people will be connected to the rest of the world, like the rest of us, and that gives those people the opportunity to succeed.

The Opposition does not like good news. There is going to be more and more of it over the next 10 hours, and I look forward to hearing more of it from my colleagues on this side of the Chamber.

Reports noted.

Education Sector