Appropriation (2019/20 Supplementary Estimates) Bill

Thank you, Mr Chair. So anyway—

💬 Hon Tracey Martin: What’s happened to your hair?

Well, I don’t know. I don’t know what’s happened to my hair. So the original situation in the Supplementary Estimates was, as I’m trying to clarify, that we were going to spend $344 million less on KiwiBuild than we anticipated, and I can only assume that’s because that policy has been a monumental flop and a good example of the difference between intentions, announcements, and delivery. But we’re not debating that. Is that what you’re saying?

💬 Hon Grant Robertson: It’s an SOP.

Right, OK. So one thing that we would be debating, then, would be the change from this single page 31, where we have just one line. We’ve got this long list of spending—and the people of New Zealand will be fascinated to know the speed with which money is spent in this place. So there was a line that was $12 billion—a nice round figure—for the wage subsidy, business support subsidy COVID-19, which the National Party was broadly supportive of, and that’s been increased to $15.2 billion. So the question that I have for the Minister as we just kick things off is: how much does he think is actually going to be spent of that $15.2 billion? What’s his latest intelligence on that at the moment?

I thank the member Paul Goldsmith for the question. So the member is right in saying that it is the nature of—it’s in the name. It’s in the nature of estimates that they are estimates of spending. The $12 billion was the amount put aside for the first phase of the wage subsidy scheme. Around $11 billion of that was spent—slightly over $11 billion. The additional sum of money is the estimated required money for the wage subsidy extension.

Now, it will not all be spent in the period, in my view. I think at the moment we’re just under a billion dollars for that. I would need to come back and let the member know. We’re somewhere between $700 million and about $900 million that has been already allocated in the wage subsidy extension. When Treasury did their estimates on the wage subsidy extension, they thought that it would support around 900,000 employees. So far, it’s supporting around 230,000 employees. Arguably, this is a good sign. It’s that businesses are not in the situation of having that 40 percent reduction in turnover in the previous month, and so therefore they aren’t requiring it. But we need to see a little bit more time before we can be absolutely sure of that. So what this reflects is the cost of the original scheme and the estimated cost of the extension, which was $3.2 billion, as the member will recall. It may be that we don’t spend that in the end. That is the nature of estimates.

I’ve got three brief questions to the Minister of Finance, and the first one is quite specific to clause 4, and it is clause 4 “Overview”, and the fact that this must meet the requirements of the Public Finance Act 1989. Earlier this afternoon, we had a lengthy debate around the amendment to the Public Finance Act, which, as I said in the House, I thought was fairly fluffy sort of stuff, bringing in the wellbeing framework. I just want to make sure that the Minister, in his competence, has taken into account that now the Public Finance Act has been amended since he put the Supplementary Order Paper (SOP) before the House—or is in the process of being amended, because we covered off the second reading earlier.

The second point I want the Minister to comment on—and I certainly don’t do this just to embarrass him—is we’ve got the bill before the House and then we’ve got Supplementary Order Paper 513. Again, specifically to clause 4, when I look at it, the only addition has been to clause 4(c), section 8 and Schedule 3, and it’s the additions of the words “and Offices of Parliament”. I just wonder whether the Minister could tell us why that is included in an SOP and wasn’t included in the original bill. I assume it’s an afterthought. I’ve gone through the papers and I can’t actually find any detail of it at all, so I’d be grateful if the Minister could tell us why the amended SOP is before the House, specifically to the inclusion of the words “Officers of Parliament”.

My third question relates to the additional appropriations in the supplementary Supplementary Estimates to the Ministry for Primary Industries. Of course, I do this because of my previous association with the ministry. It’s the $10.245 million additional Supplementary Estimates in the Supplementary Order Paper. When I spoke of this earlier in a contribution, the Hon Shane Jones interjected and said it’s all for extension services. I said to Mr Jones that I don’t think it is, and I invited him to turn to page 12 of the additions to the Supplementary Estimates information. There’s a whole lot of pork industry processers who have received money—Freshpork, for example, $1.760 million; Wilson Hellaby, $1.054 million. I’m just interested in what happened here. What was the reason why we’re suddenly having to find $10 million of taxpayer money to support what looks like some sort of support to the pork industry and why it was specifically required for the pork industry and not for any of the other red meat producers in New Zealand. I assume it has something to do with lockdown and the ability of pork producers to get their produce processed adequately. But if the Minister could elaborate on that, I’d be grateful.

Subsequent to that, I have a number of other questions for the Minister.

I thank the member very much for his questions. On the first point, I think he answered his own question in his contribution, which is that the changes to the Public Finance Act are only at second reading at this stage rather than any further on in our work, but the member can rest assured that we applied the wellbeing lens to all of the proposals that were in front of us, in particular looking at how the populations that are already the most disadvantaged have been affected by COVID-19, and ensuring that we had spending that went in that direction. So it was certainly part of our thinking.

And I do note, although the member perhaps uses pejorative language to describe this framework, I invite him to read the speech of his new leader last Sunday, who actually endorsed the framework—

💬 Rt Hon David Carter: Sunday before.

Yeah, Sunday before, and endorsed it. I don’t want to create another division inside the National caucus, but I just invite him to read that.

On the matter of the Officers of Parliament, that was included not because of an oversight at all, in fact, but that the Officers of Parliament Committee received specific requests from some of the officers for increased expenditure as a result of restrictions from COVID-19. So it was actually a very specific instruction for the Officers of Parliament Committee, which I don’t think the member currently serves on, but I know has served on in the past.

The matter of pork is one that all Ministers who were members of the COVID-19 Ministerial Committee will be able to talk at great length about. The issue that arose here was an animal welfare issue, essentially, around the fact that, because we weren’t able to export pork products or we weren’t able to see them processed in the way that we wanted to, there was the risk of a wholesale slaughter of a lot of pigs in a way that we would not, in this House, deem appropriate, and so decisions were taken to support, as much as possible, that pork to be processed and got to supermarkets, got to food banks, and so on, but the cost on those suppliers needed to be met from somewhere, and that largely was an animal welfare issue to ensure that they were processed and humanely dealt with.

Oh thank you, Mr Chair. My interest in Supplementary Order Paper (SOP) 513, not surprisingly, is in respect of Vote Health, and the amendments that have been made to it since the bill was introduced on Budget day—which takes the supplementary appropriations to district health boards to over $389 million. And they’ve, effectively, all gone up since the bill was increased on Budget day. I’m presuming the Minister can just clarify this, that the supplementary appropriations were the meat and drink, really, of the announcements that the Government made, I think, on around 17 March, as part of the extra funding that was announced at that time to support the health response.

What was interesting about that announcement, which probably had something in the region of about $450 million overall, was that not all of that funding—

💬 Hon Grant Robertson: 495.

Thank you, 445, was it? Thank you.

💬 Hon Grant Robertson: 495.

95, was it? Gosh, I must’ve missed some.

Not all of that, actually by my reading of the announcement, would have been funding that would have gone directly—sorry, channelled through DHBs in order to get to the end user. So it seems to me that these increases, totalling nearly $400 million, seem much, much higher than the DHBs would have needed in order to be able to give effect to the announcements that were made on 17 March.

My second question is around whether or not we’re going to actually get there. Because one of the extraordinary aspects of that was, for example, there was a quite big dollop of money for the increasing and the purchase of influenza vaccines, which were needed right then. What I couldn’t understand was why we waited a whole month to actually place the orders for that, particularly when there was so much interest in actually getting the flu vaccines. That is an anecdote, not a question.

The question, really, is, given that we’re now only seven days from the end of the 2019-20 financial year and this is an updated SOP, one would presume that the numbers are accurate. Except it seems to me that we’re going to struggle to spend this money, if the example of the flu vaccines is anything to go by. So why is all of the money being channelled through the DHBs when some of it was going to public health units and other healthcare services that weren’t being managed by the DHBs, and is this all necessary?

The flu vaccine’s not covered by this. So that’s clear—that was an already appropriated sum of money that was being spent.

In terms of the member’s question, I can be very specific of the increase of $495.85 million—$350 million of that was to purchase additional stocks of personal protective equipment. That was, as the member will recall, distributed via DHBs, so it was the subject of some controversy at the time, but let’s be fair that that is the structure that we have in the health system. It also includes $58 million on a matter that the member is most interested in, which is the cost of providing managed isolation or quarantine facilities: $51.85 million, which was a mixture of purchasing of additional ventilator and respiratory equipment and meeting some of the costs for providing additional ICU facilities as well. Obviously, the good news is we were not required to expend all of that, although we had to manage the cost of that, including with private hospitals which, again, the member will be aware of.

There was $37 million to undertake the purchase of equipment for laboratory testing, $14 million to implement the COVID contact tracing action plan, and a small $1 million fiscally neutral transfer to allow aspects of the Pacific community response package to be dealt with. There was an offset involving the primary healthcare strategy and some money moving across there, but that is the detail of that expenditure. As the member notes, there were some criticisms of the DHB’s ability to get PPE to where it was needed, but that was the mechanism that was used.

Thank you, Mr Chair. I thank the Minister for that explanation, and I mention this not by way of an attempt to catch him out, but the attachment that went with the press release on 17 March specifically said that “the remaining funds are earmarked for future announcements, as required, such as ensuring New Zealand has sufficient medicines, flu vaccines, face masks, and PPE”—so flu vaccines were included in that.

I just would like one last clarification on this, because the Minister mentioned managed isolation, which, as he rightly points out, has been in the news quite a bit. Because the overwhelming majority of the managed isolation services are being provided in the Auckland and Counties Manukau district health boards regions, it seems to me that certainly the principal costs of accommodation are not covered by this appropriation, and it wouldn’t be actually that fair—it doesn’t appear to be part of the calculations that the agency nursing and healthcare assistance staff or the testing costs are actually falling on those two DHBs alone. So it would be helpful to understand quite which costs for managed isolation are falling on the DHBs and, if so, which ones.

I will get some further advice on that very specific point from the member Michael Woodhouse.

While he is focusing on the DHB costs, I would note that, if he looks a little further on, there are increased costs around areas of the national services, if you look on the next page. So I am going to make the assumption at this point that, actually, if he and I sat down and did the maths, we would probably discover that the majority of that was being delivered through national services costs rather than through DHBs.

Thank you, Mr Chair. I’m just interested to hear from the Minister in the chair, Grant Robertson: we had, as we were talking about before, this increase in the business support subsidy to $15.2 billion estimated spending—probably one of the largest single items of expenditure in the history of the country—and then we have, also with social development, investigation of overpayments and fraudulent payments has increased by $1.3 million. I’m just interested in that. There haven’t been any changes in the supplementary, so it sort of appears that the Government has been happy to spend the $15.2 billion but has not really made any extra allowance for any attempt to ensure that any investigation of overpayments and fraudulent payments were looked into.

There was an element of controversy around this: there was reported—and maybe it was incorrectly reported—that the Minister’s office wasn’t interested in that side of things, and the Minister has said that you were interested. I suppose people on the streets are recognising of the importance of the wage subsidy to help cushion the blow, as has been said, to get businesses through, but they do want to have—and there was a sort of rough and willing readiness, acceptance that the first tranche of these payments was on a high-trust basis, but there, I suppose, is slightly less sense of accommodation to the sense that for the second lot, having had two or three months to figure out the plans, there would be a bit more thought put into ensuring that that money gets to the right people and the right people only. So I just wanted to just test with the Minister: had any thought been given to putting more resources into policing it than what appears to have been provided there—or maybe I’ve missed something.

Mr Chair, I’ll just take one more call and get some further information, and then we’ll understand, I’m sure. In fact, all members will understand that the Budget’s a very large document. What I can tell the member is an interim response to his question, that the audit function is covered by both the Ministry of Social Development (MSD) and Inland Revenue. There are 104 auditors who are employed to look into the wage subsidy scheme. We’re just going to get a little bit of information from the member on the split of that. Also, because MSD is a very effective and efficient agency, they will have been doing a significant amount of this work from baseline expenditure as well. So I will get a little bit more detail for the member on that, but I can confirm that there are 104 auditors, if my memory serves me right, from some paper that I saw earlier today. I think there’s been around 6,000 audits undertaken for the wage subsidy scheme—so that’s a significant sample—and around over $150 million repaid.

Thank you, Mr Chair. I just wanted to look at the housing and urban development component. Obviously we’re very concerned, as all New Zealanders are, about the homeless and those who are dispossessed and struggling to find housing. So it’s with some alarm, I suppose, to see a reduction in this—and I’m trying to understand and would be grateful if the Minister could help me, because obviously we haven’t had the analysis around this. But the transitional housing component has dropped from just on $60 million down to $41 million, so that’s a $10 drop.

Then there’s been also a reduction in the public housing by a much smaller amount, but none the less a reduction. So given the environment we’re working in, and I understand a lot of homeless people have been put into accommodation—particularly hotels and motels—and are enjoying a much better lifestyle as a result of living in hotels, I just somehow wonder why there would be a reduction in that component, or whether, in fact, the transitional housing relates to some of the new initiatives. I presume that’s an operating cost, not a capital cost, and therefore how does that relate, because I know the Government has a very ambitious target around transitional housing? I presume it’s not the KiwiBuild, which is only 380 houses, but this must be the social housing component. So if you could elaborate on that reduction of roughly $10 million in this appropriation it would be very helpful. Thank you very much.

The member—who is a member of the Finance and Expenditure Committee—I know went through these matters in some detail with Treasury officials last week, and I am in possession of the same paper here that went in front of him, and if he looked at page 12 of that, he would understand. And I did try to explain this a little bit in my first comment about what the numbers in the Supplementary Order Paper (SOP) actually refer to.

So, if I can help the member here—and it might help other members as well—in that paper, the transitional housing original estimates were in the Budget 2019-20, and were $138 million. There was then the change in the original Supplementary Estimates which would have added $59 million, but in eventuality it was $41 million, not $59 million, bringing a total of $180 million. So, rather than being a reduction, it is a more accurate assessment of the additional amount of money that’s required in the Supplementary Estimates on top of the normal Estimates. So, yes, only $41 million of $59 million was spent, but the total amount of money—the $180 million—I suspect is probably a record spend in that area, I imagine. But that’s what I was trying to explain before; you’ve got to add up all of both the original Estimates, the original Supplementary Estimates, and now the SOP caused by the fact that we have these extraordinary circumstances. And I’m sure the member will now recall that from his studious approach, that I know he takes, in the committee to the matters that were brought in front of the committee last week.

Thank you, Mr Chair. Another question that is a little bit puzzling, and I’d just like to have a bit more clarification on, is around the revenue for the initial fair value write-down relating to the small-business cash-flow scheme. So there are two, sort of, figures here. One is the $5.2 million set up for the scheme—

💬 Hon Grant Robertson: What page you reading from?

Page 30—page 30. So, first, you’ve got $5.2 billion allocated for the small-business cash-flow scheme, and then you’ve also got $3.4 billion for the fair value write-down, which is presumably a reflection of the interest-free elements for it if it’s paid, but bringing a total of over $8 billion.

I’d be keen to just get a bit of a sense of—obviously, that, again, is an estimate and depends on how much is being picked up, and my understanding was it’s about a billion or so that’s been lent so far, but that may have changed in recent times. I’d be keen to just get a sense of, again—I know there aren’t officials here with the Minister; I’m not quite sure why not—what progress has been made in that way in order to help with small-business cashflow.

For the member’s benefit, there are two different categories of expenses. So if the member looks on page 29, just above that, you’ve got the non-departmental expenses, and then, when you go over, it turns into the non-departmental capital expenditure. As I’m sure the member knows, when we talk about loans, just as we do with the student loans scheme, things appear as assets on a book because they are repayable loans. That is the estimate—the $5.2 billion. I think we’re all aware that it’s very difficult to estimate the number of businesses who will choose to draw down on a loan, and so the member is correct in his first statement about the write-off relating to the interest-free component, but the whole book value of the loan has to appear until such time as we can get a more accurate assessment of it, and, obviously, this was done at the time at which the scheme was created.

In terms of his specific question, again, the member’s probably been keeping up with where we’ve got to. It was about $1.3 billion the other day. We are continuing to see demand. It’s around nearly 90,000 businesses that have drawn down on that loan, so it’s certainly achieving the goals we wanted. Making those estimates of exactly how much people will borrow was, obviously, very challenging. That is the nature of the Estimates process.

House resumed.

The Chairperson reported progress on the Appropriation (2019/20 Supplementary Estimates) Bill.

Report adopted.

The House adjourned at 9.56 p.m.