Estimates Debate — Economic Development and Infrastructure Sector

on behalf of the Chairperson of the Economic Development, Science and Innovation Committee: Thank you very much, Madam Chair. I’m very pleased to stand in place of our chairperson, Jonathan Young, to talk about the Estimates—the appropriations for Vote Business, Science and Innovation, which fund a very large and a very diverse range of activities. In total, the appropriations sought in this vote amount to $3.852 billion.

There are 10 Ministers responsible for appropriations within the vote, and we held meetings in select committee with a number of those Ministers to talk about their main appropriations. They include commerce and consumer affairs; communications; economic development; energy and resources; infrastructure and regional economic development; research, science, and innovation; and also tourism. In my short contribution, I’m going to cover some of the appropriations and the issues that we discussed with those relevant Ministers.

First up: commerce and consumer affairs appropriations. We discussed with the Minister in our select committee everything from cryptocurrency to wheel clamping to predatory lending. What we found was that, actually, a large amount of that fund is appropriated for the regulatory business environment that’s carried out by the Ministry of Business, Innovation and Employment, or MBIE, and also the work of the Commerce Commission and the Financial Markets Authority. We heard from the Minister the Hon Kris Faafoi, who is responsible for the appropriations.

One of the things—the many things—that we talked about in that select committee meeting was about predatory lending. The Credit Contracts Legislation Amendment Bill is currently being considered by the House, and it looks at strengthening requirements to lend responsibly, to limit the amount of interest and fees on high-cost loans, and also to propose some changes in relation to truck shops, including putting in place a fit and proper person test for those people that choose to partake in that kind of activity. That work is ongoing, but we had a good conversation around the whole idea of loan sharks and predatory lending.

Minister Faafoi is also the Minister for communications, and we spoke with him in his role as the Minister of Broadcasting, Communications and Digital Media, which, in this vote, was responsible for around $41 million in communications appropriations under this Budget 2019. The Minister told us about the work that he’s leading to improve connectivity for very rural and remote parts of New Zealand. He reported that by the time these projects are complete, 99.8 percent of New Zealanders will have access to high-speed broadband. This leaves only around 4,500 of the most remote households around New Zealand without that same kind of access to high-speed broadband.

Also, we spoke to—just trying to cover off as much as I can in the next minute and a half—economic development: the appropriations under that. The Hon David Parker came and presented on his appropriation, which totalled $595 million. A lot of that was, obviously, to fund advice and services designed to promote economic development throughout the country as a whole through using firms, sectors, and regions as well.

We talked a bit about procurement and about the new Government procurement rules, which focus on access for New Zealand businesses, construction sector skills and training, employment standards and health and safety, and also reducing emissions and waste. The rules come into force in October 2019, but we were pleased to hear that agencies that could carry out that work sooner were being encouraged to.

When it comes to energy and resources, the appropriation totalled $182 million, and most of that appropriation was to fund the work of the Electricity Authority and the Energy Efficiency and Conservation Authority, otherwise known as EECA. We talked generally about low-emission vehicles and about the contestable fund that’s been set up—up to $7 million a year—which supports projects that accelerate the uptake of electric and low-emission vehicles. We asked how the fund was tracking towards its goals, and the Minister said that it was making good progress with about 12,000 new electric vehicle registrations up from 8,700 in December 2018.

I think my time is up.

Thank you very much. This debate’s taking place today at a very important time when businesses up and down the country realise the economy is slowing, some commentators are saying it’s faltering, and the Government is in absolute denial over (1) that happening and (2) who’s responsible.

It was interesting, earlier this year, that there was a debate between the Prime Minister and Simon Bridges, not over whether the economy is slowing but over whose fault it is. We continue to hear from the Prime Minister, and we continue to hear from the finance Minister and the Minister for Economic Development, it’s global headwinds.

Well, what we heard in the committee, and what we hear every single day, is that the Government is saying that, actually, our exports are at record levels and export prices have never been so good under this Government—albeit they’re not spending a lot of time overseas talking about trade deals; they’re spending all of their time back here criticising our number one trade partner, Australia, and our number two trade partner, China—or the other way around, depending upon the commodity prices. But, actually, at the same time the Government is saying that the reason the New Zealand economy is slowing, or business confidence is at record low levels—close to global financial crisis (GFC)—is because of international headwinds. Well, I say to the Minister for Economic Development, the business community doesn’t believe that; the economic experts, the commentators, and the economists don’t believe that; and, increasingly, we’re seeing that Kiwis don’t believe that either.

So what exactly is happening with the economy, and why, after two years, has this Government not got an economic development plan? Actually, that’s what business needs. Business confidence will increase—will go up—if there is a plan that businesses can understand. Well, when this lot came to Government, GDP growth was around 4 percent. Now we’re told we’ll be lucky if it’s 2 percent. Around the world, there’s talk of recession; in New Zealand, of negative interest rates. We see the Governor of the Reserve Bank drop the official cash rate (OCR) by a whole 0.5 percent—a whole 0.5 percent—not because he sees that inflationary pressure is there or the economy is doing so well; because he is worried about the economy.

Do you know the only other times the Governor of the Reserve Bank, in living memory, has dropped the OCR by half a percent? Well, it was the GFC, half a percent; 9/11, half a percent; the Canterbury earthquakes, half a percent; Grant Robertson with a Labour Government, half a percent.

💬 Hon Member: All disasters.

Oh my gosh—all disasters. So it’s no wonder that the ANZ business confidence index is telling us it’s minus 44 percent. Minus 44 percent tells us that businesses are not confident and they are not investing.

GDP growth is very important. It’s much more important than how people feel. Well, the problem that we’ve got is that with no economic development plan, businesses can’t be confident, and, if they’re not confident, they’re not investing, they’re not growing the economy, and GDP growth will fall. When GDP growth falls, do you know what this Government does? They decide they need to borrow more—we’ve heard that—or tax more. So what are they saying to New Zealanders and what are they saying to businesses? Well, they’re saying, actually, that they’ve got new taxes or cancelled taxes, and that’s the economic development plan. Businesses should grow by being taxed more. They’ve cancelled National’s tax relief, there are three new fuel taxes, there’s a regional fuel tax on top, and they’ve got the brightline test. It’s tax after tax after tax, and at the same time those big, big surpluses that they inherited—didn’t grow themselves for an economic development plan; they inherited—are running out faster than Winston Peters’ knee after he comes back out of hospital. They’ve said they are going to have to borrow.

I saw something on Facebook the other day. It was a meme, but it was the smiling face of the Prime Minister, and above it it says, “We intend to borrow enough to get us completely out of debt.” That’s the problem we have when a Government has no economic plan after two years, when they say business confidence is not important, the Prime Minister pays more attention to consumer confidence—and now that’s fallen as well—and they blame everything on global headwinds. No wonder businesses are so concerned.

The final bit here is we need a Government that actually is paying attention to all of the small things as well. Why are there not enough workers in the New Zealand economy? Because they can’t process visas for skilled workers or unskilled workers in our economy. They should actually stop making excuses and they should just do their job.

The previous speaker, Todd McClay, had a singular focus on GDP growth. Let me quote something he said: GDP growth is much more important, he said, than how people fare—GDP growth is much more important than people. What an astonishing thing to say. What an absurd thing to say. The purpose of people is not to serve the economy; the purpose of the economy is to serve the people, and that is the fundamental difference between that side of the House and this side of this House. On this side of the House, we care about the people. On this side of the House, we know that the purpose of the economy is to help the people, not the other way around.

Now, we know that when we came into Government, there were some big long-term issues facing New Zealand, and we are tackling those problems. Particularly, we are tackling them in this set of portfolios around economic development. We have got long-term plans in there that are looking 30 years ahead, not just to the next three. Let me give you an example of one of these, taken directly from what this set of portfolios is concerned with. Let me talk about the Infrastructure Commission—the Infrastructure Commission. What is that about? It is about setting out the longer-term plans for how we intend to develop infrastructure in this country, from roads to rail to power generation, setting it out in a long-term, structured way so that businesses in the construction industry know where their work is coming from—not just for the next 18 months, not just for the next three years, but for the next 30 years. That is the sort of long-term planning that this Government is involved in in respect of economic development, and that gives businesses the certainty they need.

Let me talk of another issue that is concerned within this particular portfolio. In particular, I want to talk about how we get businesses growing in New Zealand. Now, we know already that it’s a fairly easy place, New Zealand, to start up a business. We know that people can get going with businesses, but we also know that there is a gap in taking a good idea, a good business that is starting to grow, and helping it to really expand on to the world stage. There’s a funding gap there, and it’s really hard for businesses to make that leap. So one of the actions that this Government is engaging in to ensure that those businesses can get ahead is setting up a venture capital fund. The New Zealand Venture Investment Fund will come under the New Zealand Superannuation Fund, and we’ll be taking some of that money and using it to support New Zealand businesses. That’s long-term action. That’s the sort of long-term action we need in this economy. You know, it’s a start. We’ve got to do a lot of work in this space. We can’t do it all straight away, but we are getting started and making some really good progress. This venture capital fund is one of those items of good progress.

Let me talk about another one—again, all coming out of the action that this Government is undertaking—and that’s to do with research and development, a long-known problem in our economy, that there simply is not enough expenditure on research and development. This Government, this far-sighted Government that planned for the long term, is putting in place a research and development tax credit to ensure that firms can get access to support for R & D—critical to our success. In the process of doing that, we have adjusted that R & D tax credit to ensure that the help really does reach the firms who need it.

So when we talk about which Governments are responsible, which Governments are doing the work that is needed, I say that that work is being done on this side of the House, and it is being very clearly done in these economic development portfolios, where we have a plan to address the problems that New Zealand faces in a changing and unstable world and a plan that will do its best to give certainty to business so that business can operate successfully, so that our economy is successful, and so that our economy serves the people of this country.

Thank you, Madam Chair. Thank you—it’s a good choice. I’d like to start off by actually responding to the comments made by the honourable member from across the House Deborah Russell, who actually began her contribution by saying that this Government cares about the people and how people feel is a better indicator of New Zealand’s growth than the GDP. I have to say, maybe let’s see how the Labour Government actually feels about these numbers. When National left the Treasury benches at the last election, National left a strong and growing labour force. There was an average of 10,000 new jobs a month in our last two years of governance of this country, and job growth has more than halved under this Labour-led Government. How does this Labour Government actually feel about those statistics? Wages grew twice as fast as cost of living under the National Government, whereas this Government has resulted in more and more people sitting on the dole queues instead of getting a job. Job seeker numbers are up by 14,000 in the last 12 months. I wonder how Labour actually feel about that. They say making people feel good about it is how this Government measure their performance. Well, let me tell you that New Zealand certainly isn’t feeling good about this Government.

I’d like to acknowledge Tamati Coffey, who actually got up and talked about some of the things that the Economic Development, Science and Innovation Committee discussed during the Estimates hearing. One of the things that I have to actually say is that I was actually quite floored by the performance of one of the Ministers. It was actually Minister Shane Jones, the Hon Shane Jones, who came to the select committee. Often, when Ministers turn up to select committee, they come with huge numbers of support people from the ministries, and he came, you know, for the estimates on infrastructure and regional economic development. I have to say that when the Minister was actually asked lots and lots of questions, there were many questions that he could not answer, and yet he would not let any of his officials answer them at select committee, saying that he’d rather the Minister actually have a personal relationship with the select committee and actually answer the question.

But the problem was he could not answer them. He actually asked us to write it down and send it to the officials, so that the officials could respond. What an appalling performance by this Minister and very, very arrogant. And how dare he say that the select committee should not be asking the officials to answer the questions. I was absolutely floored by that Minister, I have to say, and I’m sure that members opposite—the Government members—would have been absolutely floored as well, but they just could not say that because they’re in coalition with that Minister’s party.

One of the things that I have to actually say is that often when we talk about growth, growth in unemployment—I have to say that during question time when the Hon Louise Upston asked the Minister in charge of social development, the Hon Carmel Sepuloni, one of the excuses that she uses for the number of those in unemployment, people on the dole, and everything that goes up she actually blames the population growth. Population growth in two years—how soon do new children who are born to new mothers end up on the dole queue? How does the Minister actually use population growth as an excuse? I am just really appalled by that kind of response from Ministers who absolutely have no clue about their portfolios.

And the other one is immigration. Do we actually have an immigration blow-up in this country?

CHAIRPERSON (Hon Anne Tolley): I have to interrupt the member. It’s very interesting, but we are actually on commerce and consumer affairs.

What I’m getting to is that—thank you, Madam Chair. What I’m actually getting to is that this is actually about estimates of this select committee which is about economic development, science, and innovation.

CHAIRPERSON (Hon Anne Tolley): Good to mention it.

Those are important to this country for the economic growth of New Zealand, and some of the details that we actually discussed are very, very important indeed, and that’s what I was actually getting to.

Thank you, Madam Chair. I’d just like to start my contribution off—in fact, I’d actually written down a point to say that I actually really enjoy the Economic Development, Science and Innovation Committee. For the most part anyway, Melissa Lee, I think we get on very well. That was a bit of an outburst from you, but I think you must be living in a parallel universe, because, in actual fact, I sat through all of those estimates and I thought the Minister answered those questions exceedingly well. I thought he was very robust and very forthright and Goldsmith was struggling to get some points made that he tried to make in the House.

💬 Hon Members: Who? Who?

CHAIRPERSON (Hon Anne Tolley): Full name.

Mr Goldsmith. Anyway, so my point is this: look, it was a very good interaction. There’s a huge vote coming under economic development, science, and innovation of $3.8 billion.

Of course, transport sits in there also, which is another very large vote of $5.79 billion. We’ve heard over the last weeks about this Government over this side from the Leader of the Opposition referring to no spending on roading, nothing going—no infrastructure. Yet we’ve had a 2.7 percent increase on infrastructure spending, particularly on transport, of which 65 percent is going into roads that they haven’t spent money on in the past. If we wanted to talk about ghost roads and ghost highways and ghost bridges, I think we’ve had nine years of ghost leadership from the previous Government because we got nothing in return. And we’re doing a great job of tidying up the underspending that we’ve seen after nine years of neglect.

What was absolutely fantastic was when the Minister Mr Jones came in to our select committee and talked about rail specifically: a $1.1 billion boost into rail, that has been underfunded for a generation almost. Where money has not been spent by the previous Governments—certainly for the last nine years—now we can actually see some things moving forward. We’re getting connectivity with some of our most provincial, rural, and exposed areas. Hawke’s Bay, for example—they had the rail lines breakdown and $5 million that the previous Government would not spend on it now has gone through. Thank you very much to the Provincial Growth Fund. Thank you very much for a Government that’s absolutely committed on coming up with some solutions that we’ve not had before for some of the transport issues.

The benefit that we’re talking about here is taking this traffic, the heavy traffic, off our roads, particularly those containers and logging trucks, and putting them back on to rail. We’re using ships better than we’ve used them in the past. We’ve coming up with initiatives to invest in our coastal shipping again, making sure that funding is allocated so we can make our roads safer. We can actually get longevity out of the construction of our roads because they’re just being used for cars and lightweight vehicles as opposed to the heavy trucks that we’ve been seeing, with no solution from the previous Government.

But with this contribution I cannot get away from the Provincial Growth Fund and what an economic powerhouse that has become for the provinces of New Zealand.

💬 Hon Member: How many jobs?

Oh, thousands and thousands of jobs. But 873 jobs; not the 65 that you’ve talked about or the 32—

💬 Hon Paul Goldsmith: 54.

Fifty-four now, is it? The number changes all the time, Mr Goldsmith. Now, the reality is it’s going to create thousands of jobs, but you can’t just say, “We’re going to spend some money and we’re going to miraculously make appear thousands of jobs.” They will come as those businesses grow and develop.

Look, $20 million—just under—has just been invested into Rotorua, for example—a great investment into tourism. It’s going to unlock $350 million of potential private funding and private investment into Rotorua for our tourism industry. Now that’s not going to happen overnight to create those jobs. But, like Pantene, it definitely will happen. Hawke’s Bay’s received $70 million looking at water, looking at jobs, looking at employment opportunities, and also developing roads.

Now my favourite town, my favourite city—Tauranga. Just last week, we had the Minister from the Provincial Growth Fund, Shane Jones, come through and speak to us, and he’s just unlocked a huge potential there by announcing $980,000 going into our tourist hub. Now this is an essential piece of infrastructure because Tauranga is one of the ports in the world—and certainly in the Pacific—that is one of the most highly regarded. We get $91 million of revenue coming in from 223,000 passengers a year with over 115 ships that are coming into Tauranga, and now we’re going to have a beautiful facility which will be a feeder facility sending people to the Waikato, and sending people to Rotorua to look at our beautiful landscape in and around the Bay of Plenty. So it’s a great thing.

Things are looking up, and I have to finish off with some great words that were spoken by another great leader that certainly the members across will be talking about, where John Key himself spoke about the economy: “It’s going in the right direction. It’s not doom and gloom. Things are looking up. Put your sunglasses on. It’s very bright.”

Thank you, Madam Chair. It is a great pleasure to speak here on the debate around infrastructure, in particular. We’ll all be aware that the Reserve Bank Governor has been out there sort of saying—massively cutting interest rates. People are a bit worried about that: what does that portend; what does that point to in the future? But his other message has been that the Government needs to spend on infrastructure in order to bolster supply and investment in the economy.

The only problem is that the Government—as we heard from Shane Jones, the Minister for Infrastructure, when he came before the Economic Development, Science and Innovation Committee—of course is investing less in infrastructure than they expected to. So this Budget that we’re talking about, the Budget 2019, shaved $3 billion off the infrastructure spending over the next five years in just six months since the previous estimate at the end of last year. So in six months, they’ve shaved $3 billion off what they expected to spend on infrastructure. And why? Why—because they can’t get their act together.

What they did when they came into Government, this Government, was to say, “We’re going to stop a whole bunch of projects that were ready to go.” Some of them were ready to go. Most of them were in the pipeline. They were road projects. They were in places like going north from Tauranga to Katikati—and we’ve just heard from the previous speaker how wonderful it was that Shane Jones came into Tauranga last week and promised them $980,000 for a tourist hub, but in the meantime they’ve completely cancelled the road that everybody needs in order to get out of town and to get around. So it makes no sense whatsoever.

So Winston came to Katikati and he promised it; they’re not happening. So the road going north from Tauranga through to Katikati—cancelled. The Mill Road going south out of Auckland—postponed to the never-never. The East-West Link—cancelled. Going north up to Northland—postponed to the never-never. All these things—so what they did was they cancelled and postponed a whole lot of projects, some of which were ready to go, and replaced them with a bunch of projects that aren’t ready to go and won’t be ready to go for quite some time, including the infamous light rail project that has been suggested.

Anybody who lives in Auckland will be struggling with the concept that the number one priority for transport in Auckland is a slight improvement to the public transport down Dominion Road. That is what this Government is suggesting: that they’re going to spend $4 billion or $6 billion. Shane Jones, I think, doubled the price of the potential light rail. He thought it might have been somewhere around $6 billion or $8 billion that it would cost. He didn’t in any way suggest he was up for it, but that is what the Government is talking about.

We’ve also been talking about the higher fuel taxes that New Zealanders are paying. Unfortunately, they’re getting less for it.

One of the most outrageous suggestions that we’ve heard about the light rail project in Auckland—the main justification for it now—is that it’s an urban regeneration project. So nobody believes that it’s going to the airport any more. It’s not going there because the most obvious thing to do if you want to go to the airport is you go down the electric railway to Puhinui and then jink across a few kilometres to the airport—so nobody believes it’s about that. Now, their only justification is urban regeneration. But hang on a moment, they’re taking fuel taxes from motorists, out of their pockets, and making it more difficult for Kiwis to get around in order to fund an urban regeneration project. That’s not what the fuel taxes are about.

So you’re paying higher taxes and getting less for it, and, in terms of infrastructure actually being built, there’s going to be less of it than we expected in the next couple of years because they’ve cancelled a whole lot of things that were ready to go and replaced them with a whole lot of things that aren’t ready to go. That, I think, is one of the reasons why the Reserve Bank Governor is worried about the impetus coming into the economy over the next little while.

Then we’ve heard about the Provincial Growth Fund. Mr Jones—he’s out and about. He’s spending all this money, apparently. He’s allocated $1.7 billion. The last figure that we heard of money actually going out the door and into the hands of people, it was about $50 million. He might have got it up a bit in the last couple of months, but not very fast.

The main theme that we hear about this Government is that they’re great at announcing things and they think that’s all we have to do. You just announce that you’re going to spend a whole lot of money and that’s all you have to do. But, actually, when you get to deliver and actually see some improvements from the money that is spent, that’s a very long way off, and they haven’t delivered much at all. It’s a gonna Government—“We’re gonna do this, we’re gonna do that, we’re gonna do this, but we never quite get round to it.” At the moment, they haven’t built the roads. So it’s deeply disappointing, because this is a time when money is cheap and we do have an opportunity to invest in quality infrastructure in order to make this economy grow faster, and to improve people’s lives and to get them home on time, safely.

This is the time when we could be investing and we should be investing. A National Government would be investing, and we would be continuing on with a clear pipeline of projects in order to get this country moving and for New Zealanders to get around. But, instead, we’ve been overtaken by Phil Twyford, who thinks we’ve over-invested in roads, and Julie Anne Genter, who doesn’t want to give in to the car fascists in any way, shape, or form.

Thank you, Madam Chair. Firstly, I want to say, from my perspective, my commiserations to you for having to listen to 11 hours of this debate. I know, from when I was sitting in your Chair, I would often wonder when this would be over, so my commiserations to you. I’m going to try to make this as light as possible to alleviate you of any pain. I can’t guarantee I’ll be witty, but I’ll do my best.

I really enjoy being a member of the Economic Development, Science and Innovation Committee. It’s a great committee. There are some real characters on it, and we have some really lively debates. It’s ably chaired by Jonathan Young, and he brings a certain level of decorum to our discussions, and so it’s in that vein that I wish to make my contribution today.

I want to kick off by just perhaps addressing a couple of the issues that have been raised by previous contributors: firstly, in terms of the rate of unemployment. Melissa Lee made a comment about the lack of job growth and the like, and I just want to remind the committee that in 18 months in Government, we have achieved the lowest rate of unemployment in 11 years. Not only that, but we have managed to lift wages by 4.4 percent. Those numbers don’t lie, so I just wanted to put that in perspective.

The other thing I wanted to say too was that in terms of the previous contribution, there is just our investment, really, in terms of looking at new and innovative ways of moving people, goods, and services around our nation. We are taking an approach that’s about the 21st and 22nd centuries, and not about the 1950s. Our future does not lie in roads; it actually lies in other ways of moving goods and services around not only this country of ours but into the world. I just want to assure the Opposition that we are taking a future-looking approach at this situation, so they don’t need to worry. We’ve got this in hand. So, you know, just leave it to us for the next—I don’t know—nine, 12 years or so, and we’ll be fine.

I just want to talk about—

💬 Brett Hudson: You can’t do much from Opposition, Poto.

What was that? Sorry, Mr Hudson, I didn’t catch it.

💬 Brett Hudson: I said you won’t be able to do much from Opposition.

That’s why we’re doing it from Government, and we will do so for several terms. Thank you for your vote of confidence, Mr Hudson.

Today, it was interesting. We got a question at question time about the competition market study report into the drivers of the petrol prices. I think it’s really interesting, because when the Minister came to the Estimates discussion, we did have quite a lively conversation about the value of market studies, or, as I think the Opposition wanted to describe them, they didn’t see any value in market studies at all. It’s clear that we are actually now able to identify where we can target some changes, because there’s no doubt that today’s market study has proved invaluable to us and that we are, as a nation, being overcharged in terms of our petrol prices.

But, in the greater scheme of things, the other work that’s being undertaken, of course, is the work that we are doing around ensuring that we transition from carbon-based energy into other forms. In April 2018, the announcement was made that we were going to stop issuing permits for offshore oil and gas extraction, and a gasp was heard when that happened. But a year later, when we returned to Taranaki to talk about what that would mean, we found an industry that was actively engaged in the discussion of being future-focused. It was wanting to engage in this discussion and wanting to ensure that jobs were protected and created, so that we move from what is, essentially, driving huge issues of climate change into a future where our energy is much more sustainable.

So I am enormously proud of the work that we are doing on this particular select committee. I think we have some great discussions. We have a breadth of discussions, from cryptocurrency right through to the Provincial Growth Fund. It’s fascinating to be part of this discussion. Thank you very much, Madam Chair.

Thank you, Madam Chair. It’s a pleasure to speak in this part of the Estimates debate. Just before I move on to the general theme, I just want to point out to the member Poto Williams, who’s just resumed her seat, that, actually, it was the National-led Government that put together the legislation that included the powers for the Commerce Commission to undertake market studies. We introduced that, we did the work on that, and they simply had the good fortune to be able to put it through the House.

We entered these Estimates hearings with the backdrop of a softening economy. Whereas economic growth had been running at around 4 percent under National, it’s now at about barely over 2 percent under this Government. Incidentally, looking for the causes of what might bring that about, given we’re running record or near-record trade export receipts, it’s not international conditions which are creating the slowing in the New Zealand economy. It’s actually the measures the Government has put in place that are reducing business confidence, eroding investment within New Zealand, and, ultimately, creating fewer jobs and reducing growth.

The point Ms Williams made about the unemployment figures are quite startling, actually, because at a headline level, in percentage terms, it looks like the lowest rate of unemployment in New Zealand in some years. But look inside. If one lifts the hood and has a wee look underneath, why would that be the case when we know that job creation is slowing under the policies of this Government? In fact, in the first quarter of this year, job growth was negative, so how is it possible then that unemployment can be at the so-called lowest level in many years? It’s because this Government has removed the obligation for those who are able to work to be seeking work.

In fact, if we use the words of the Minister of Finance, it’s “Those who want to work should be able to work.”; it’s not that those who can should have to. So in the media, when the latest unemployment figures were announced, the commentary was noted—I believe it was newsroom.co.nz; it was one of the one of the major media outlets—that the principal reason why the unemployment rate had reduced to the level that was reported was that 6,000 fewer people were reporting that they were seeking employment. And they don’t have to—they don’t have to seek employment under this Government. They’ve changed that rule. So why do we have a softening economy, a headline unemployment rate that looks good, but reduced job creation? Because this Government’s policies are simply undermining Kiwi businesses, people that invest and risk their own capital—it’s undermining their confidence to invest in new plant, to invest in growth and to invest in hiring additional people.

I want to turn to this market studies thing—quite important. Ms Williams talked about this as a great and new innovation. Well, actually, the draft report shows that the Commerce Commission have identified nothing new in the fuel market study, because, in 2017, the Ministry of Business, Innovation and Employment issued an independent report that identified wholesale markets, among some other elements, as being a potential pressure point where greater competition could potentially be achieved in the retail fuel market. The Commerce Commission has simply restated what they already knew in 2017, but along the way they’ve spent. If we take the Commerce Commission’s own submission on the legislation that empowered them to do these studies, they said that a budget of $1.5 million a year would only permit them to undertake a single study. So by the time we get to December, for somewhere between $1 million and $1.5 million, the Commerce Commission will issue a final report that has shown that they have learnt nothing new, despite the expenditure of that much money, but it instead spent 12 months talking about stuff they already knew, whereas both they and the Government could have taken action at the end of last year to actually reduce the pain of petrol prices in the hip pocket of New Zealand motorists on that side by simply removing or forestalling the taxes they had imposed or had planned. On 1 July this year, another 4c a litre went on in fuel excise. They’ve legislated for a further 4c a litre from 1 July next year, just beyond this current financial year. All up, that is going to amount to an impost on Kiwi motorists, if they live in Auckland, of 24c a litre, and, if they have the good fortune not to live in Auckland, of about half that.

So we’ve got a combined effect of Government policies which are eroding investment in business, which creates fewer jobs, and people who don’t want to work don’t have to look for it, and now the Government’s also increasing costs on those same people. Is it any wonder, therefore, that we’re sitting in—[Bell rung] Madam Chair?

CHAIRPERSON (Hon Anne Tolley): Are you taking a second call?

Am I able to, Madam Chair? I don’t know that I’m able to, actually. I think I’ll sit down, just in fear I might overstep the mark.

Madam Chair, thank you very much. I’m quite glad, for one, that member did choose to sit down. Madam Chair, kia ora. Ngā mihi nui ki a koutou, kia ora. I rise to speak in support of the Estimates debate. It’s a privilege to sit on this committee. I’d like to acknowledge the chairperson, Jonathan Young, and all the members of the Economic Development, Science and Innovation Committee. You know, when you look at the energy component of this report, it’s a time of incredible change in all sectors, actually, and the report just before the energy section deals with issues the committee heard from blockchains, the internet of things, artificial reality—these are all technologies rapidly transforming the energy landscape in New Zealand.

I guess I’d like to start by pointing out it has to change. You know, as a dad, it’s something I feel viscerally. Any time I’m on social media, with the latest news from around the world—I mean, this month we’ve seen the Arctic is literally on fire; Greenland has melted 55 billion tons of water in only a five-day period, and, in fact, 50 years earlier than climate forecasts; and we see damaging heatwaves literally killing people today around the world. So we need things to change, and, when you look at what’s in this report, it’s a road map and a foundation for change, because what we’re seeing is a huge opportunity to electrify our industry and transport in New Zealand. This is not only an opportunity to reduce carbon; it’s an opportunity to reduce the $6 billion to $9 billion of annual fuel imports we have and to produce our products more productively, more efficiently, cheaper—actually helping people’s bottom line. The fact is it is a time of rapid change. We need it to change and it is changing. When you look at the information contained in this report, we’ve got action on electric vehicles, zero-carbon Act legislation coming through Parliament, a Green Investment Fund being established, a just transitions unit established within the Ministry of Business, Innovation and Employment (MBIE), and a clean energy research centre in Taranaki—a vision for 100 percent clean energy.

Here I’d like to acknowledge the Minister, because she came to the committee and pointed out that New Zealand has already seen $656 million in renewable investments over the preceding 18 months. We’re blessed—we’ve got a wealth of renewable energy opportunities in New Zealand. So if we do want to electrify our industry and transport, if we do want to get closer to 100 percent, we’re one of the countries most fortunate, with a range of choices from wind, geothermal, and solar. I guess that’s my vision for energy going forward. It’s not just drilling holes in the ground; it’s actually creating jobs by installing insulation under roofs and solar panels on top—and the Minister pointed out that we’re seeing a rapidly reducing price for renewables. Back in 2011, the world saw a tipping point where more money was invested in renewables over fossil fuels. For decades previously, the world had always gone down a nuclear or fossil fuel path. The global ship has literally turned around, and we see those rapidly dropping costs in New Zealand. I mean, just across my lifetime, the cost of solar panels has dropped 99 percent per watt—phenomenal—and continues to drop. So we have a vision for getting close to 100 percent clean energy: insulating homes, people being able to produce their own power—and for New Zealand, we’re never going to be exporting electricity across a cable to the Islands or to Australia, but we have a tremendous opportunity to be exporting intellectual property: the software, the services, and the smart ideas the world is crying out for.

However, though, if you listen to the National members’ questions in the debate, or what we hear tonight—or, in fact, today, in their response to the Commerce Commission’s report into fuel prices—National is focused on last century’s economy. They’re focused on more fossil fuels, more resource extraction. Now, it’s incredible—when the Commerce Commission’s come out saying that the fuel companies’ margins doubled under the previous tenure, who on earth do you think National would come out to bat for? Incredibly, they chose today to come out and bat for the oil companies.

Now, something I’m incredibly proud to see is that this Government’s winding back the subsidies that the previous Government put in place to promote more fossil fuel extraction in New Zealand. Under the previous Government, over the last 10 years we saw $237 million of taxpayers’ money go to fossil fuel extraction subsidies in New Zealand. We saw support for resource and development, for data packs, for hosting conferences, and for special sponsorship. I still remember the time Phil Heatley spent a cool quarter of a million dollars just hosting 11 oil executives for four days. So what you’re seeing is those subsidies being wound back, a vision for the future being articulated, real support on the ground—be it the research energy centre in Taranaki or the just transitions unit. This is New Zealand’s future, looking towards the future, where the future is low carbon. It is investing in intellectual property and innovation. It’s not just kind of like the Beverly Hillbillies, hoping that OMV find something, you know, off our coast. It’s about making our own way in the future, looking at those global trends, and this is why I’m glad to say in this Estimates report there’s a huge amount of support for clean energy, not just fossil fuels.

Thank you, Madam Chair, and it’s a pleasure to be speaking on these, the Estimates. I’ve been a member, a former deputy chair, of the Economic Development, Science and Innovation Committee, and it is a good committee, but I prefer my time on the Transport and Infrastructure Committee. It’s certainly a hard-working committee, and it’s got—I see the chair’s not here, but I’ll mention Darroch Ball for his leadership and the work that he’s putting together on the agenda, which is the coalition Government’s agenda, where we are tackling the big, long-term issues. He’s doing a good job at that.

Look, a previous speaker spoke about the Commerce Commission, and those on the other side got quite like, “That’s our work. We did all that work around petrol.” The reality is that that report, that work, had not even been introduced into this House—that’s a fact. But I digress, and I want to focus on a more important issue, and, again, a colleague here talked about the establishment of the New Zealand Infrastructure Commission / Te Waihanga. That brings back memories, good memories, of the Ministry of Works, where we had one single ministry. People laugh—people laugh—but we’ve spent 29 years since that disestablishment with a poor apprenticeship scheme—disestablished, actually, by the other side because we were told that privatisation of this workforce was going to be our saviour. In fact, in local government I remember somebody telling me that there won’t even be a rates rise on anything to do with roads—that side’s passion—because the private sector’s going to look after us.

Twenty-nine years later, what a shemozzle we’ve been left with after nine years’ worth of neglect. So, luckily, we’ve pulled this together and said, “Let’s set this commission up. Let’s get those projects working into a pipeline, because that’s what the Ministry of Works used to do.” When I spoke on this, I gave one example in my electorate around the Chatham Islands—a real victim of having no pipeline and a piecemeal approach. This is going to be the solution in terms of bringing local and central government together with the private sector to fix some of these things that have been the result of hoping that the private sector will fix it. It hasn’t. This will, and this will be a big step towards achieving that.

I want to say, as a member of the Transport and Infrastructure Committee, we heard from our two Ministers: the Hon Phil Twyford and the Hon Julie Anne Genter as the Associate Minister. I have to say this: the members on the other side were quite complementary. They were quite good. We heard about our rail investment—not too many fusses around that. In fact, there were lots of nods, particularly around the City Rail Link. On road safety—in terms of the prioritisation for this Government and where we are heading—there wasn’t a bad word. Unless people were at a different committee to me, it was a positive response.

When I look back to the work that was done on the GPS—and it went live on 1 July last year—this Government’s priorities and the transformation of that plan and the signals that we were sending, they got the thumbs up. They got a green tick around making sure that we had a safer transport system free of death and injury, accessible and affordable transport, reduced emissions, and, of course, value for money. I think there’s no better example than the announcement earlier in this year in mid-May around Let’s Get Wellington Moving. It’s a great title because it sat there for nearly a decade—

💬 Stuart Smith: Release the letter, Paul.

—nearly a decade. I’m not getting into letters. The only letter I like is a green one and it’s got a light on it saying, “We got the tick.” That’s all I need to see, because after a decade of delay, on this side of the House, I know that my young boy will be able to catch light rail, to get around, and to enjoy a second tunnel at some point within the next decade, and Wellingtonians are going to be very, very happy with this side of the House.

Thank you, Madam Chair, for the opportunity to take this call. As the spokesperson for research, science, and innovation, I feel quite frustrated to see that the Government doesn’t understand how to increase business spending on research and development. So they campaigned on their R & D tax credit policy, and, yes, they have implemented their R & D tax credit policy, and that’s a different story that, actually, the bill passed after the policy was already implemented. That clearly shows how inefficient this Government is, because they couldn’t even stick to their own time line.

So they believe this policy is going to do that big magic of increasing business spending on research and development to 2 percent of GDP. Last year, we heard that this is going to be achieved in 10 years. Again this year, we hear that this is a long-term goal and this is a 10-year policy that will be achieved in 10 years. I really hope they understand that it started in 2018—their 10 years—and the countdown has already begun. So this year it should be nine years, not 10 years. Maybe the Government realised that they are not going to be able to achieve this target as in this Budget the Ministry of Business, Innovation and Employment (MBIE) officials have clearly stated that the Government of the day needs to invest around $150 million a year to reach that target of increasing business spending on research and development to 2 percent of GDP. The Government has failed in this very second Budget to meet that goal—that is, of public investment to reach the target of 2 percent of GDP.

It’s really appalling to see that this is their very second Budget, and in their very second Budget they can’t keep up with what they should be doing to reach that goal. During the select committee process, the Minister very conveniently said that “It’s a long-term goal, so we are looking at long-term objectives.” That’s fine, because any Minister can sit here and set goals for the 10, 15, or 20 years when the Minister is not able to deliver in just one term in their second Budget. So, clearly, the Minister has failed in delivering in their very second Budget on what should have been delivered to reach to that goal.

During the select committee process during the Estimates hearing process, of course, we talked about business confidence, which is sliding down. We talked about GDP growth, which is sliding down. As this is linked to GDP, as it is done internationally—that is how business spending on R & D is measured—I asked if the Minister is feeling quite relaxed about her goal of increasing business spending to R & D to 2 percent of GDP given that GDP growth is sliding. Of course, the Minister felt agitated, but that is the reality. So every Government member stands up and talks as if this is a big goal, when they haven’t delivered in their very second Budget what they should have. MBIE officials clearly told the Minister in March—this is well before the Budget—that this is the minimum appropriation that is needed under the research, science, and innovation portfolio, which the Minister couldn’t deliver.

The other interesting point which I hear again and again from Government members is that growth should not be measured in terms of GDP. So I’m really glad that business spending on R & D is still being measured in terms of GDP, because that is how internationally it is measured. I hope that the Minister doesn’t change that measure also because GDP growth is not working in their favour, as other members, very conveniently, keep changing their argument, saying that GDP growth is not the measure of growth or wellbeing.

Not just that, the Minister put forward 15 initiatives for research, science, and innovation. Out of those 15 initiatives, only six were within the scope. Six were in line to achieve that long-term goal of increasing business spending on research and development to 2 percent of GDP. So that clearly shows me that the Minister is out of her depth. She doesn’t understand what kinds of initiatives are needed to reach to that goal. So through this, what they have done in their very second Budget is they have sent a very wrong, very negative signal to the business community and to the scientific community as well, because, sadly, we know that research and development investment is seen to be high-risk investment.

The Government has a very important role to play here. MBIE officials said clearly that $150 million per annum is needed, and Government didn’t invest that kind of money in this Budget, which has sent a negative signal to the business community and scientific community, because, if they see that the Government is not willing to invest their share, then why will they invest? That creates that impression that there is something not very good in the environment for investment in research and development. So I don’t have any confidence in this Minister of Government’s ability to increase business spending on research and development.

Thank you, Madam Chair. There’s been a lot of talk this evening about a whole lot of intentions and so on, but I want to actually talk about issues that have been caused by not consulting, particularly with the business sector, before making some of these changes. Some of the changes that were discussed during the select committee process were around the oil and gas ban leading to the 100 percent renewables target by 2035. Had they, in fact, consulted with business and more widely in general, they would not have got in the position that they did. By having an oil and gas ban, that puts at risk our electricity supply so that we are now having to burn more coal—a record amount of coal, in fact, this year in electricity generation. Since 2013, this is the most that’s been imported and used by the energy sector. So international energy consumption is 84 percent delivered by fossil fuels. Yes, as the member for the Greens said, there was a lot of money invested in renewables in the last year, but that percentage is going to take a very long time to change.

We’re at the point now with renewables where there are only incremental gains to be made. In terms of solar, we’re getting pretty close to what the theoretical actual energy output from solar is, because no one has found a way to make the sun shine at night yet and generate some energy from that. There is a theoretical limit also for wind generation, and the technology is approaching that limit. So there are no Moore’s law gains or orders of magnitude in change; there are only incremental levels of change. One of the big hopes there for the renewables sector was, in fact, to get viable batteries, but they are approaching the limits of the laws of physics. In fact, the lithium ion batteries have quite a few problems with them, and now the hope is that redox batteries might be the answer, but they are a long way off yet as well. All of these things are just out there, just out in front of us, and they have been for decades, and so these things aren’t going to change quickly.

Then, when we look at that 100 percent goal, that has been completely undermined by their own climate commission, which went through that and pointed out the failings with that policy, in that we would end up with significant increases in electricity prices: 14 percent for households above what it would’ve been otherwise, and 39 percent higher for industrial users. So the Government has backed off from that, and I welcome that decision, but that actually brings us right back to where we started, with the oil and gas ban putting us at risk because we have a limited supply of gas and we need more of it, actually. The US dropped their emissions quite significantly because they moved away from coal to gas generation of electricity, and so that’s something that we should be looking at as well just to keep our system running.

The Germans—who have gone, of course, very hard at their renewable electricity—in fact, have increased their emissions in order to match the power supply. When the percentage goes up with renewables, you have to keep these peaker plants ticking over to be able to kick in as the wind dies and it clouds over and you lower your solar generation. Something has to pick that up or the whole system falls over—as we saw in South Australia, leading to a massive blackout.

We also heard about science and innovation around genetic modification, and we have the high metabolisable energy grass, which we aren’t allowed to test here in New Zealand. It’s being tested and field-trialled over in the States. It grows 50 percent faster, and it has 23 percent less methane—one of our key emissions—so we should be doing everything we can to fast-track that, to have it as a tool in our valuable tool box to lower our emissions, and yet the Green Party, according to Chlöe Swarbrick in a debate I was with her on last week, is taking a precautionary approach on that. That means do nothing, I think, because we’ve been taking a precautionary approach because of the flawed Hazardous Substances and New Organisms (HSNO) Act. The changes around genetic modification in the HSNO Act were really a compromise that should not have been made.