Oral Questions

1. to the Minister of Finance: What reactions has he seen to his announcement yesterday of the Government’s housing package to back first-home buyers?

Those of a positive mind-set have seen the positive aspects of the package, and those with a negative mind-set are yet to see the opportunities presented. The New Zealand Institute of Economic Research says the announcement is “a positive move.”, adding that “The Government is addressing the rate-of-return side of the equation to reduce”—

💬 Hon Judith Collins: We know how accurate those people are.

💬 Hon GRANT ROBERTSON: —“the incentives for investors.” Local Government New Zealand says, “[The] announcement will be welcomed by communities across New Zealand who have been locked out of the home ownership by property speculators taking advantage of historically low interest rates.” Noting the intervention of the Leader of the Opposition, one reaction I haven’t seen is a press release from the National Party, who couldn’t muster one up.

💬 Dr Duncan Webb: What other reactions has he seen to the Government’s move to strengthen the economy by encouraging the building of new homes?

💬 Hon GRANT ROBERTSON: There have been many positive reactions to our moves to encourage the building of new homes. The Real Estate Institute of New Zealand says, “The fact that new builds are to be exempt from the brightline [extension] is welcome news and could go some way to helping to boost the overall supply of housing.” Kiwibank has said that “the changes to the brightline test [to] exclude new builds” is an encouraging move, adding that “nudging investor demand into new builds will help boost supply.” New builds will be exempted from the brightline test extension and the changes to interest deductibility. This will help boost housing supply, which, in time, will help moderate price rises.

💬 Dr Duncan Webb: What reactions has his office seen from members of the public?

💬 Hon GRANT ROBERTSON: We’ve had a number of emails thanking the Government for taking action to address the housing crisis. One of them said, “Thank you, thank you, thank you. Finally a Government who is prepared to tackle housing.” Another said, “I think that the extension of the brightline test and the removal of tax deductibility of interest on mortgages for investors are both game-changers.”

Question No. 2—Prime Minister

2. to the Prime Minister: Does she stand by all of her Government’s statements and actions?

Yes, particularly the Government’s decision to incentivise investment into the construction of new homes and jump-start developments by funding the vital infrastructure like pipes and transport links needed for new housing. New Zealand’s housing crisis, as we’ve said many times in this House and beyond, has been decades in the making, and there is no quick fix. It’s an issue that’ll take time to turn around, but our package of urgent but also long-term changes will increase housing supply, relieve pressure on the market, and, we hope, make it easier for first-home buyers.

💬 Hon Judith Collins: Why is she extending the brightline test despite Treasury advice that this may put upward pressure on rents when, under her Government, rents have already increased at the fastest rate on record?

💬 Rt Hon JACINDA ARDERN: The member ignores the fact that Treasury actually advised extending to 15 or 20 years, and so they were in favour of that. Obviously, we’ve settled on 10 as we believe that that’s more reflective of the reality in the market. The member herself, on occasion, has addressed the fact that if you want to help with the rental market, the best thing you can do is ensure supply. That is why we have done multiple things in this package, by carving out new builds, making them exempt from interest deductibility changes, and also the extension of the brightline, and, on top of that, making sure that we’ve got investment in infrastructure.

💬 Hon Judith Collins: Has she requested advice on the impact that further rent increases will have on her promise to end child poverty?

💬 Rt Hon JACINDA ARDERN: All of the initiatives that we’ve announced yesterday actually are aimed at doing two things: we want to enable first-home buyers to get into the market, but, equally, we’ve constantly had a view to housing affordability across the board, and that means rents. As I’ve already said, if we want to make a difference to rents, we need more houses. We need general housing supply. Someone who’s currently an investor choosing to sell their home doesn’t mean that house is suddenly out of the market, but what we do need are additional stable tenancy options for people, and that is why we are focused on seeing that new supply come on stream. Also, the Minister of Housing is looking at the market when it comes to specific build-to-rent propositions.

💬 Hon Judith Collins: Is she concerned that removing interest deductibility from residential rental properties will result in higher rents being charged to tenants?

💬 Rt Hon JACINDA ARDERN: One of the things that we’ve openly acknowledged is that there is a place for investors in New Zealand’s housing market, but what we want to do is make sure that we are incentivising those investors in the new builds that we need so that we can see that increase in supply. To answer the issue around those who may already own an investment property, we have tried to smooth the removal of the interest deductibility provisions. We learnt from the UK example. They initially proposed interest deductibility changes that came in all at once for those with an existing property and then down the track chose to phase it. We have phased it straight off the bat, and we’re doing it at a time when interest rates are low to try and reduce the impact on those investors who already have tenants.

💬 Hon Judith Collins: Does she stand by her statement this morning to media, in regards to her brightline test changes, “It does not apply to the family home.”?

💬 Rt Hon JACINDA ARDERN: Yes.

💬 Hon Judith Collins: So will her changes to the brightline test mean that a police officer who undertakes a two-year posting in another town could now be subject to tax on their family home?

💬 Rt Hon JACINDA ARDERN: Under the policy introduced by the National Government for brightline, there has always been provision for what happens when someone is not living in and using a home as their primary home. It was, however, quite crude. It used 50 percent as the mark. Our view was that you would have, with that rule still in place, some unfortunate and unfair scenarios. Our view was, with the extension, that we needed to be more specific; we’ve done that. But the change-of-use rule has always been there, as introduced by National.

💬 Hon Judith Collins: Has the law she passed this morning under urgency—

💬 SPEAKER: Order! [Interruption] Order! The member will rephrase the question. She knows that’s out of order.

💬 Hon Judith Collins: Has the law passed this morning under urgency changed the definition of residential property so that farms that include worker accommodation will now be subject to a capital gains tax if sold within 10 years?

💬 Rt Hon JACINDA ARDERN: One of the things that we’ve had—

💬 Hon Judith Collins: Yes.

💬 Rt Hon JACINDA ARDERN: —to address, for instance, is that—

💬 SPEAKER: Order! Order! No, I’m not going to let the Prime Minister continue. If the Leader of the Opposition thinks she’s got the answer, she shouldn’t ask the question.

💬 Hon Judith Collins: Point of order. Mr Speaker, you have long been of the view stated here that people shouldn’t ask questions they don’t know the answer to.

💬 SPEAKER: Well, that might be the case in court. I just live in hope that some time in this House, someone will ask a genuine question.

💬 Hon Judith Collins: Does she stand by her statement this morning that the reason 10 years was chosen was so that the test could apply to “the majority of sales”, and does she consider the majority of rental property owners to be speculators?

💬 Rt Hon JACINDA ARDERN: In answer to the last part of the member’s question, no. What I was reflecting was the advice that we have received, which took into account—and, unfortunately, we don’t have the data that delineates between residential and investor, but we know that we see high churn under 10 years. That was the basis on which we received advice from Treasury to increase. They suggested increasing out to 15 or 20. The reason we chose 10 was based on the evidence that was provided around where that churn was.

💬 Hon Judith Collins: When will she respond to my letter, dated 16 March, outlining my concern regarding the conduct of the Rt Hon Trevor Mallard?

💬 Rt Hon JACINDA ARDERN: I did ask my office to ensure that we had a response to the member—I asked them today to make sure we had a response to the member. So I expect that in the coming days.

💬 Hon Judith Collins: Point of order. I seek leave to table a letter, dated 16 March 2021, to the Prime Minister from myself, including an attachment including a statement of claim.

💬 SPEAKER: I’m just going to ask the member whether that is something that has already been circulated and is on the internet from the member?

💬 Hon Judith Collins: Not that I’m aware of, Mr Speaker.

💬 SPEAKER: Well, I have seen it there.

💬 Hon Judith Collins: I haven’t seen it.

💬 SPEAKER: Is there any objection? There appears to be none.

Document, by leave, laid on the Table of the House.

Question No. 3—Housing

3. to the Minister of Housing: What recent announcements has she made about supporting first-home buyers?

Yesterday, I announced increased support for first-home buyers—

💬 SPEAKER: The Hon Dr Megan Woods!

💬 Hon Dr MEGAN WOODS: Oh, thank you, Mr Speaker. Yesterday, I announced increased support for first-home buyers through the lifting of income thresholds and changes to regional price caps for our first-home products. Income caps to get financial assistance will be lifted from $85,000 to $95,000 for single buyers and from $130,000 to $150,000 for two or more buyers. Regional caps have also been increased in areas where the products were becoming increasingly out of reach for first-home buyers.

💬 Anahila Kanongata’a-Suisuiki: How many people will benefit from these changes?

💬 Hon Dr MEGAN WOODS: As a result of these changes, based on modelling, we expect to see 9,300 additional couples and 3,700 additional singles currently renting now qualify for first-home products. This builds on the 51,518 first-home grants and 4,256 first-home loans that we’ve given out since November 2017. Our focus is on ensuring that first-home buyers are given a better shot at owning their own home, and these changes will go a long way to overcoming the deposit barrier.

💬 Anahila Kanongata’a-Suisuiki: What impact, if any, will these changes have on Māori and Pacific families?

💬 Hon Dr MEGAN WOODS: Increasing income thresholds and changes to the regional price caps will support more Māori and Pacific families into homeownership. Changes to income caps will also support multi-generational households, which are often Māori and Pasifika families. This builds on the change during the Government build reset in 2019, when the cap on multiple buyers was removed to allow family and friends to pool deposits and still access first-home products.

Question No. 4—Finance

4. to the Minister of Finance: Does he stand by his statement that “What we are committed to is making sure that houses are more affordable”; if so, does the Government have a position on what ratio of median house price to median household income would mean we have affordable housing in Aotearoa?

I do stand by my previous statements. Given the multiple factors that determine both house price changes and income growth, I don’t want to put a single number on what the right ratio is, but I am clear that it is important that we continue to see incomes lift and we do not see the unsustainable house price rises that we have seen in recent times.

💬 Hon Julie Anne Genter: What rate of income growth and what rate of house price growth does he think is realistic?

💬 Hon GRANT ROBERTSON: As I said in my primary answer, we do want to see wages increase, and we have seen wages increase under this Government, and that is important. We will continue to push on that. We have information that comes to us via Budget forecasts about where Treasury thinks that will go, and it’s been in the order of 3 percent to 4 percent recently. We want to keep that going as much as we can. In terms of the house price rises, we will have to see how this package lands, but we are confident that it will lead to a stopping of the unsustainable house price growth that we’ve seen. But that’s why we can’t give an exact figure, because we haven’t yet seen where the package will land.

💬 Hon Julie Anne Genter: Can he confirm that when the Government says we need sustained moderate growth in house prices, it’s saying we need to wait decades, if we have 4 percent increases in incomes, to get back to the level of affordability that we had in 2001?

💬 Hon GRANT ROBERTSON: No. The phrase “sustained moderation” is one that we have used to highlight the fact that we cannot continue with unsustainable house price rises in the 20 percent area. On the other side of the coin, we also know that for most New Zealanders, their home—their family home; the only home they own—is their primary asset, and we do not want to undermine the value of that to an extent that would actually lead to further economic shocks to the country.

💬 Hon Julie Anne Genter: Does he disagree with the New Zealand Herald editorial which says, “House prices need to fall—and sooner rather than later”?

💬 Hon GRANT ROBERTSON: As we’ve said many times, our goal here is to stop the unsustainable house price rises that we have seen. We know—all New Zealanders know—that the situation over the last year does mean that we are seeing first-home buyers locked out. We have announced a package of initiatives that will make sure that things are more affordable, but also we have to recognise that this is a big, complex, longstanding challenge that will require sustained action in order to be able to achieve more affordable homes for New Zealanders.

💬 Hon Julie Anne Genter: So if, as he hopes, house prices don’t fall from where they are right now and incomes continue to grow at an elevated rate of 4 percent a year, is his Government happy that it will take at least half a century to get back to the affordability we had in 2001?

💬 Hon GRANT ROBERTSON: The point that I’m making is that houses prices and where they go are the function of a number of factors, some of which the Government has some control of, some of which the Government does not have control of. So it’s not, in my view, fair to characterise it in the way that the member did. What we are working towards is an environment where first-home buyers get a fair go, where we make sure that we encourage investment in new builds, where we make sure that we do have an environment where renters can live in warm, dry, safe housing. All of those things will take time. I acknowledge that, but I wouldn’t characterise our policy the way that the member has.

💬 Hon Julie Anne Genter: Does he consider affordable housing, in terms of both house prices and rent, to be a human right?

💬 Hon GRANT ROBERTSON: Sorry, I just missed the end of that.

💬 Hon Julie Anne Genter: Does he consider affordable housing, both in terms of rent and house prices, to be a human right?

💬 Hon GRANT ROBERTSON: I certainly believe that—on behalf of this Government, we believe that—every New Zealander should be able to live in a warm, dry, safe, and affordable home.

Question No. 5—Social Development and Employment

5. to the Minister for Social Development and Employment: What reports has she seen about employment in the construction sector?

One of the highlights of last month’s household labour force survey was the year-on-year increase in the number of people employed in the construction sector. There are now 278,000 people employed in this sector—an increase of 21,000 people since December 2019. This increase shows that not only has the construction sector weathered COVID19; it has rebounded and it is providing more employment opportunities for New Zealanders.

💬 Glen Bennett: How has the Ministry of Social Development (MSD) worked with the construction industry to prepare job seekers for opportunities in the construction industry?

💬 Hon CARMEL SEPULONI: Through MSD’s industry partnership, MSD has worked closely with employers, including in the construction industry, to identify what skills are needed for new employees. Through the Construction Skills Action Plan and construction accord launched in 2018, MSD aim to support 4,000 training and employment places to prepare people to work in the construction industry. We’ve delivered early on that target, supporting more than 9,300 people taking up education or employment opportunities in the construction sector to date.

💬 Glen Bennett: What help is available for employers in the construction industry who need staff?

💬 Hon CARMEL SEPULONI: Through the Apprenticeship Boost initiative, employers can access a subsidy of $1,000 per month for first-year apprentices and $500 per month for second-year apprentices. Last week, Minister Hipkins and I announced a four-month extension to this support. Flexi-wage is another important initiative, which subsidises employees’ wages to give employers confidence to take on and train people as well as to help sustain and grow their business. On top of this, last week I announced a $5.5 million boost for providers as part of Māori trades and training. Through working together with industry, we are seeing positive steps forward to ensure we have a workforce ready to meet the demands of the future.

Question No. 6—Finance

6. to the Minister of Finance: Does he stand by all of his statements and actions?

Yes, including my answer to the member’s identical question yesterday.

💬 Andrew Bayly: Why did he tell Mike Hosking this morning that his property tax changes are “a reaction to a very specific set of circumstances”, and does this mean he thinks housing has only become unaffordable in the last six months?

💬 Hon GRANT ROBERTSON: In answer to the second part of the question, no. In answer to the first part of the question, the member may not have seen the reports throughout 2020 that people expected that the effect of COVID-19 would be a significant reduction in house prices, and the opposite occurred.

💬 Andrew Bayly: Was he aware, when he made his promise not to change the brightline test six months ago, that house prices had already increased $160,000 since he had been finance Minister, and is he seriously trying to justify his broken promise by claiming it wasn’t a problem last September?

💬 SPEAKER: Answer the question—it’s not worth arguing about.

💬 Hon GRANT ROBERTSON: What I can tell the member is that I think on about 14 or 15 September, Treasury released the Pre-election Economic and Fiscal Update, which projected that house prices would be declining.

💬 Andrew Bayly: Why did he tell renters that they could “look elsewhere” when their rents went up, and what is his response to Michael, who told the New Zealand Herald that it was easier to find a job rather than a flat in Wellington?

💬 Hon GRANT ROBERTSON: Well, I think the member is mischaracterising what I said. What I said was, in response to a question about somebody increasing rents by $150 a week as a result of the Government’s announcements yesterday, that, actually, there would be a number of factors in what constructs a rental price. That includes supply and demand and people’s ability to pay. What interests me in the response of Mr Bayly and the National Party to this package is that they’ve clearly chosen their side, and that is the side of speculators.

💬 Andrew Bayly: When he said he was “too definitive” when he promised not to extend the brightline test, what other definitive promises should New Zealanders now expect him to change his mind on?

💬 Hon GRANT ROBERTSON: None.

Question No. 7—Prime Minister

7. to the Prime Minister: Does she stand by her statement regarding the Government’s housing policy, that it will “tip the balance in favour of first-home buyers through our demand measures”?

I stand by my full statement in the House yesterday, which was “the Government’s decision to support more first-home buyers with a deposit on their first home, tip the balance in favour of first-home buyers through our demand measures, incentivise investment in newly built homes, and jump-start developments by funding the vital infrastructure like pipes and transport links needed for new housing. New Zealand’s housing crisis has been decades in the making, and there is no silver bullet [or] quick fix. It’s an issue that will take time to turn around, but our package of … urgent and long-term changes will increase housing supply, relieve pressure on the market, and make it easier for … home buyers.”

Brooke van Velden: If the housing market is being rebalanced towards first-home buyers, who is it being rebalanced away from?

💬 Rt Hon JACINDA ARDERN: You can see by what we’re trying to do on the demand side that we are trying to reduce some of the demand we’ve seen by those who are operating in a speculative way, and you can also see that from the recent data, we have had an additional proportion of the housing market taken up by those who identify as investors and by those who have multiple homes already—so that, in the last quarter, my recollection is, was making up about 40 percent of the market. So we expect that some of our demand side measures will have an effect there, and that will make it easier for those who are purchasing their own homes.

Brooke van Velden: Will the changes to the brightline test result in any people who own a single home being taxed?

💬 Rt Hon JACINDA ARDERN: The purpose of the brightline test as it was introduced by National was to always make sure that if it was the primary home, it was exempt from the brightline test, and so that is the way it was designed. We are continuing with that. We have put extra clarification around the change-in-use test, which is, essentially, when someone is no longer using it as their home.

💬 Nicola Willis: How many more first-home buyers does she expect will buy homes over the next 24 months as a result of the policies she announced yesterday, or would she prefer not to be held accountable to any specific target?

💬 Rt Hon JACINDA ARDERN: Obviously, there are going to be a range of factors that will affect the number of first-home buyers that are entering into the market. What I can tell the member is that the estimates for just one element of the package, which is the change in caps and income tests for our first-home buyer products, will have, roughly, 9,300 additional couples who will be eligible and up to 3,000 singles who will be eligible. So those are the numbers that we have on just one element of the package.

Brooke van Velden: Is she concerned that changes to the brightline test will result in fewer homes for sale?

💬 Rt Hon JACINDA ARDERN: As we’ve already heard the revenue Minister talking about previously, if someone is choosing to no longer be an investor in the market, that’s not removing the number of houses that are available. The quantum remains the same. What we want to do is get additionality, and that’s where we’re using incentives to try and encourage those who may want to enter as an investor to buy a new build, and that may of course then free up, if you’re going to an auction or you’re in the market, the amount of competition that is in the market already between investors, speculators, and first-home buyers.

Brooke van Velden: What are the key differences between the brightline test and a capital gains tax?

💬 Rt Hon JACINDA ARDERN: I refer back to the National Party’s references at the time. I believe John Key said that a capital gains tax would be applied to a property no matter when it is sold, after how long it is sold for, and so on. I would also add capital gains taxes, as they have been proposed in this country, have been comprehensive. They include small businesses and the like. Finally, what I’d also add is that they certainly don’t have the level of exemptions that we have, including around new builds.

💬 Hon Dr Megan Woods: Has the Prime Minister seen reaction from the property industry, such as Wendy Alexander from the Real Estate Institute of New Zealand, who said, “However, the fact that new builds are to be exempt from the bright-line test is welcome news and could go some way to helping to boost the overall supply of housing.”?

💬 Rt Hon JACINDA ARDERN: Yes. I’ve actually seen a number of quotes from different representative bodies supporting the packages we announced yesterday. I would add to that the president of Local Government New Zealand, who said, “Today’s announcement will be welcomed by communities across New Zealand, who have been locked out of the home ownership by property speculators taking advantage of historically low interest rates.”

Brooke van Velden: Why is she rushing tax changes through Parliament without consultation but unable to deliver immediate changes to help boost housing supply?

💬 Rt Hon JACINDA ARDERN: Two things I’d quickly say on that. On the legislative changes that help create housing supply, the close example, of course, would be things that we can do to planning and resource management. We actually have already created a fast-track process already. That is in place, we are utilising that, and the member sitting next to you already knows of a housing development in his area that is the subject of that fast-track process. When it comes to the decision yesterday to put changes to the brightline test through, we are very aware that changes in this area can cause extra heat in the market. We wanted to avoid that, so both interest deductibility and brightline changes will apply to houses purchased after 27 March. But on interest deductibility, we are consulting on some elements of that to make sure we get the definitions right for new-build exemptions.

Question No. 8—Revenue

8. to the Minister of Revenue: Why is the Government exempting new builds from changes to the bright-line test and interest deductibility rules?

on behalf of the Minister of Revenue: Labour’s housing plan will incentivise investment in new-build homes, driving development and ensuring more houses are being built. This means that if someone invests in a new-build property, they’ll be exempt from changes to the brightline test and interest deductibility policy. This will make investing in new builds a more attractive option for investors and drive demand for new houses, which will help ease the pressure on first-home buyers and, ultimately, help build more houses.

💬 Barbara Edmonds: What feedback has he received regarding the Government’s new-build exemptions?

On behalf of the Minister, the Minister has received many positive responses to the new-build exemptions. People are recognising that the Government has made a deliberate decision with our demand side measures to tilt the balance towards supply by exempting new builds to encourage investment in building new homes. Kiwibank’s chief economist, Jarrod Kerr, has said that “Rather than try to get rid of investors entirely, they recognise the fact that they’re the ones that do the development. Pouring more resources into new dwellings is incredibly important right now.”, and even the Real Estate Institute has said that “the fact that new builds are to be exempt from the bright-line test is welcome news and could go some way to helping to boost the overall supply of housing.”

💬 Barbara Edmonds: Will new builds built for the purpose of renting be exempt?

On behalf of the Minister, it is important to clear up some of the misinformation that is being spread by some members in this House. Property developers building new homes or purchasers of new builds will be exempt from the 10-year brightline test and the interest deductibility changes, regardless of what the home is used for. This includes new rental builds purchased—

💬 SPEAKER: Order! Order! Order! The member’s not only addressed the question; she’s answered it.

Question No. 9—Housing

9. to the Minister of Housing: Does she stand by her response to concerns that the First Home Grants and Loans caps are too low, “so for the lower quartile, the fourth quartile of that, that is the median point of houses currently that had been sold in March in 2021”; if so, how many homes at this price point will the Housing Acceleration Fund aim to get built in the next 24 months?

Thank you, Mr Speaker. I stand by my full response for determining the increase to First Home Grants and Loan caps. They are based on prices in the lower quartile part of the market, which is where many first-home buyers are purchasing. I will remind that member that the package has two distinct components: demand measures and supply measures. The member is confusing our Government’s help for first-home buyers with the supply side component of our package. In answer to the second part of the member’s question, the intent of the $3.8 billion Housing Acceleration Fund is to increase supply by creating build-ready land for housing to be built on. This is something that councils and developers have told us is missing from the system, and we are acting on it. This fund is there to enable houses to be built. Within the fund, there is an allocation as part of the Land for Housing Programme to focus on non-market outcomes such as pace and affordability. The Housing Acceleration Fund will begin making investments in the second half of this year, and work will commence within the next 12 to 18 months. By the end of June, I will take the final design, including criteria, to Cabinet, and I expect the criteria will include a performance framework to measure its success.

💬 Nicola Willis: What did she mean when she said on Radio New Zealand last night, “So what I’m saying is it’s based on the data. So what we know is what the four quartiles of housing are. So for the lower quartile, the fourth quartile of that, that is the median point of houses currently that had been sold in March in 2021. So it’s based on evidence and it’s based on data.”?

💬 Hon Dr MEGAN WOODS: What I meant is exactly that. What I meant is that what we are seeing is that we are rolling out an increase to our first-home loan products that are based on the lowest quartile of housing prices. This has always been the case with these products. What I am incredibly proud of is the fact that our Government has been delivering over 16,892 First Home Grants a year. This compares to National in Government, who were only delivering 6,275.

💬 Nicola Willis: Does she agree with analysis based on Real Estate Institute sales data that only an additional 487 houses would have qualified for the adjusted First Home Grant scheme had it applied last year, and, if not, what is the number?

💬 Hon Dr MEGAN WOODS: What I can tell that member is just before I came down to question time, there were over 1,400 homes below the price cap available in Auckland alone.

💬 Nicola Willis: How can we trust this Minister to deliver for first-home buyers when, in December 2018, the previous Minister of Housing made changes to the First Home Grant and Loan scheme, promising it would fund an additional 230 grants per year, but between then and now the number of First Home Grants approved each year has decreased by more than 2,000?

💬 Hon Dr MEGAN WOODS: I’ve already informed that member in answer to a previous supplementary question that this Government has been performing at nearly three times the rate of giving out First Home Grants than the previous National Government. We are a Government that have prioritised first-home buyers and are doing everything to support them—nearly three times more than the previous Government did.

Question No. 10—Foreign Affairs

10. to the Minister of Foreign Affairs: What recent announcements has she made about supporting the COVID-19 response across the Pacific?

We’re ready to extend manaakitanga across the Pacific if and when called on during these challenging times. We’ve recently provided support to the Government of Papua New Guinea as they confront an outbreak of COVID-19. The New Zealand Defence Force delivered personal protective equipment (PPE) to Port Moresby last Saturday. Those kits included hand sanitiser, googles, biohazard bags, sterilising tablets, shoe covers, sharps boxes, infrared thermometers, swabs, gloves, gowns, surgical masks, and face shields. We’re also making funding available to the New Zealand High Commission in Port Moresby to respond to the needs on the ground as requested by partners in Papua New Guinea.

💬 Dr Anae Neru Leavasa: What other support has the Minister provided to support the COVID-19 response across the Pacific?

💬 Hon NANAIA MAHUTA: As we observe the increased challenge of response across the Pacific, we’re aware that Timor-Leste has experienced its first outbreak of COVID19 in the community during the past week. To help the response to escalating health needs, the New Zealand Air Force delivered four tonnes of PPE on Tuesday. We’ve also made emergency funding available to enable the New Zealand Embassy to respond to locally identified needs associated with the outbreak, and these contributions are additional to the COVID-19 - related assistance that we provided to Timor-Leste last year, which included the provision of PPE and grants for NGO initiatives to raise community awareness of the disease and reduce lockdown impacts by strengthening food security.

💬 Dr Anae Neru Leavasa: What has been the impact of COVID-19 more generally across the Pacific and what is New Zealand planning to do to support our Pacific neighbours?

💬 Hon NANAIA MAHUTA: Our whanaungatanga link to the Pacific means that we are particularly mindful of the economic impact of COVID-19 in the Pacific. While most of the Pacific has avoided the health impacts of the pandemic, economies have been seriously damaged and development gains have been stalled by the closure of borders and the collapse of the tourism industry. There is worrying data and analysis which highlights stark economic vulnerabilities that have been heightened by COVID-19—closed borders, a drop in tourism—impacting sector-dependent businesses. Declining living standards and deepening inequalities will have flow-on effects for the region’s long-term resilience. Going forward, we will work alongside Pacific partners to support a resilience strategy, as we make further Official Development Assistance announcements in the near future.

💬 Golriz Ghahraman: Is her statement regarding the Pacific that “We need to look beyond our own borders in the fight to eradicate COVID-19.” consistent with the Government’s decision not to support relaxing World Trade Organization (WTO) rules to enable affordable, fair, and equitable people’s vaccine to the Pacific and globally?

💬 Hon NANAIA MAHUTA: Yes. We are committed to supporting the Pacific. That is why we’ve committed, with Australia, to roll out vaccines across Pacific countries. Our whanaungatanga to the Pacific reinforces our duty of care to ensure that there is the provision of vaccines across the Pacific, and that’s why we’re working to ensure widespread coverage between us. We’re still discussing the Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver to the WTO. New Zealand is engaging in this discussion fully and we’re working with countries around the world to broaden the discussion in the WTO to urgently address the manufacturing and distribution of vaccines.

Question No. 11—Research, Science and Innovation

11. to the Minister of Research, Science and Innovation: Does she stand by the Government’s research and development policies; if so, does she agree with PricewaterhouseCoopers’ Research and Development National Director that, with the new funding system, businesses would have no choice but to delay projects, in the worst-case scenario cancelling them altogether, “and actually having to get rid of highly-skilled [staff] … It’s the complete opposite effect of what was intended”?

In answer to the first part of the question, yes. In answer to the second part of the question, no.

💬 Hon Dr Nick Smith: Was it the Government’s intention that 250 software development companies, like Orion Health, will have cuts of 90 percent in their support for R & D from 1 April as a consequence of her policy changes, as stated by NZTech’s CEO Graeme Muller?

💬 Hon Dr MEGAN WOODS: As we went through the design phase of the R & D tax incentive, between the initial proposals that were put out and the final design that was legislated, we worked extensively with the software sector. I think what we do have in New Zealand is a gold standard for an R & D tax incentive for what is permissible in terms of software development. What we will be funding is the creation of new knowledge. What we won’t be funding is business-as-usual coding activities.

💬 Hon Dr Nick Smith: Is it the Government’s intention to cut by 90 percent research and development in the tech sector; if so, how can that be consistent with the need for strong economic recovery after COVID?

💬 Hon Dr MEGAN WOODS: No.

💬 Hon Dr Nick Smith: How is it that when the sector raised issues with the definition of R & D support in 2018, did so again with submissions before the select committee; Callaghan Innovation raised these issues last year—

💬 SPEAKER: Order! Order! A question please.

💬 Hon Dr Nick Smith: Why, three years after proposed, is this policy in such a mess?

💬 Hon Dr MEGAN WOODS: I reject the premise of the question, but in answer to one of the many questions that the member asked, actually there was significant shift between the initial policy that was proposed because of engagement with the tech sector.

💬 Hon Dr Nick Smith: What did she do to fix the problem when the specific briefing from Callaghan Innovation said to her last year that digital businesses will lose significant R & D support from 31 March 2021—what specifically did she do—

💬 SPEAKER: Order! The member’s finished his question.

💬 Hon Dr MEGAN WOODS: As I’ve told that member across multiple of his supplementary questions, between the original proposal that was set out and the final design that was legislated, there was significant shift in the definition of what software activities could be covered. That is because we listened to the sector.

Question No. 12—Transport

12. to the Minister of Transport: Is the Government helping to keep New Zealand connected with trade partners and maintaining international passenger services; if so, how?

Yes. Earlier this week, I announced the Maintaining International Air Connectivity scheme, which will run through until the end of October to help keep New Zealand connected to trade partners and to maintain international passenger services. After the global pandemic hit in 2020 and international passenger flights, effectively, shut down, the Government moved very quickly to establish the International Air Freight Capacity scheme, which has been critical in supporting our economic recovery and the flow of goods to and from New Zealand, including time-critical goods like medicine. The aviation market will likely start to rebuild later this year, so we’ve changed and restructured the scheme to focus on recovery. The new Maintaining International Air Connectivity scheme allows for support levels to reduce as passenger numbers rebuild and has a strong focus on maintaining air links which will support the recovery of our tourism sector.

💬 Helen White: What has the scheme meant for New Zealand and for our Pacific partners?

💬 Hon MICHAEL WOOD: As we stand, air freight capacity is currently at 90 percent of pre-COVID levels, thanks to the scheme that has been in place for the past year. Since May last year, that Government support has enabled over 6,000 flights carrying 120,000 tonnes of air freight in and out of New Zealand, worth $8 billion. More than 60,000 people have returned to New Zealand on flights supported by the scheme—60 percent of the total number of people to pass through quarantine facilities. The scheme has also maintained a critical lifeline for our Pacific partners. There would have been no flights to Tonga, Samoa, Niue, or the Cook Islands without it.

💬 Helen White: What reaction has he seen to this announcement?

💬 Hon MICHAEL WOOD: There has been a very positive response from the broader sector—exporters, importers, air freight carriers, and airports. A few of the examples include the executive director of the Board of Airline Representatives of New Zealand, Justin Tighe-Umbers, who said that his members are grateful that the Government is introducing a scheme that allows airlines to rebuild passenger numbers through freight once borders open. I also note the comments from Lewis Gradon, chief executive of Fisher & Paykel Healthcare, who said that without that support over the past 12 months, his company would not have been able to bring in the raw materials and equipment needed to manufacture. Finally, Andrew Tilby, managing director of GVI Logistics, says the scheme has been vital for both exporters and importers.