The Earthquake Commission (EQC) has increased its estimated Canterbury earthquakes liability by about $4 billion to $7.1 billion, Finance Minister Bill English says.

The new estimate follows an actuarial valuation of EQC's liability, based on available field assessments of damage claims. It includes an increase of $2.17 billion from the 22 February earthquake and $1.42 billion from the 13 June earthquakes and other aftershocks, which were not previously included.

"The Government is committed to rebuilding Christchurch and supporting the people of Canterbury," Mr English says. "Today's announcement will not affect homeowners' claims, which EQC will continue to pay in full. And it will not delay rebuilding in Christchurch.

"EQC can meet most of these costs through the Natural Disaster Fund, which held about $6 billion before the first earthquake. The Government, through its guarantee under the Earthquake Commission Act, will meet any shortfall. EQC also has reinsurance in place to help meet the cost of any future events.

"Despite the increased liability, which will have a one-off impact on the Government's operating balance for the 2010/11 year, the Government remains on track to meet Budget forecasts of a return to surplus in 2014/15 and to keep net debt below 30 per cent of GDP," Mr English says.

EQC's initial liability estimates were based on international models for calculating damage from single events. While these hold for the 4 September earthquake, they were not designed to calculate the effects of multiple events.

"Quite clearly the scale of residential damage from the 22 February earthquake has been worse than initially thought, with more claims, more damage on a house-by-house basis and greater land damage than expected.

"For example, it was initially thought 12,000 houses would have more than $100,000 in damage. As EQC has completed more detailed assessments, this number is now estimated to be about 30,000 houses.

"Damage to land was initially estimated at between $300 million and $600 million. This has increased to $1.8 billion."

The increased estimate breaks down as follows:

Budget 2011 – estimated net claims cost	$3.05 b
Inclusion of 13 June earthquakes and other aftershocks	+$1.42 b
22 February earthquake increase	+$2.17 b
Post-earthquakes re-evaluation of ongoing costs	+$0.35 b
4 September earthquake increase	+$0.02 b
Other	+$0.06 b
Mean estimate of net EQC claims cost	$7.07 b

The new estimated liability will be reflected in the 2010/11 Crown accounts, which will be published in October. Current indications suggest the higher EQC liability will be partially offset by higher than forecast tax revenue and lower than forecast costs in other areas.

Combined, these factors are likely to push the operating deficit before gains and losses up to about $18 billion - $1.3 billion higher than the Budget forecast. However these figures have not yet been finalised or audited.

"We need to remember these are still estimates and EQC and the Treasury will continue to periodically revise the expected liability as more claims are completed and more information becomes available.

"At the time of the Budget, Treasury put the total earthquake damage bill – to all property owners and insurers - at $15 billion, or about 8 per cent of GDP, making it the worst natural disaster in recent memory to hit a developed nation – relative to the size of its economy.

"The Government has asked Treasury to update this estimate based on new information available since the Budget," Mr English says.

Questions & Answers

Q. How much has EQC's liability increased?
EQC’s ultimate net cost of claims (the amount it expects to pay over time) has increased to $7.07 billion from the estimate in Budget 2011 of $3.05 billion. This increase can be broken down into:

Budget 2011 – estimated net claims cost	$3.05 b
Inclusion of 13 June earthquakes and other aftershocks	+$1.42 b
22 February increase	+$2.17 b
Post-earthquakes re-evaluation of ongoing EQC costs	+$0.35 b
4 September increase	+$0.02 b
Other	+$0.06 b
Mean estimate of net EQC claims cost	$7.07 b

 

Q. Will the increased estimate affect EQC's ability to pay its claims?
No. This will not affect homeowners' claims in any way and EQC will continue to pay out claims in full. As at 24 August, EQC had paid out $1.41billion for all claims to date, which is about $4 million per day.

Q. Will this new estimate affect the rebuild?
No. The revised estimate will not delay rebuilding in Christchurch and will not affect homeowners' claims, which EQC will continue to pay in full.

Q. Why was EQC's previous estimate so much lower?
The estimates for the 4 September and 22 February quakes were based on international models for calculating damage from single events and were not designed to calculate the effects of multiple events. As data has become available from actual field assessments, it has become clear residential damage from the 22 February earthquake is worse than initially thought, with more claims, more damage on a house-by-house basis and greater land damage than expected. In addition, the previous estimate did not include the 13 June earthquakes and other aftershocks.

Q. What are the main factors behind the increase?
There are two main reasons for the increase. The first is a $2.17 billion increase in the estimated residential damage of the 22 February earthquake from $3.98 billion to $6.15 billion. Because this increase is above EQC's level of reinsurance for the earthquake, which covers the cost of claims between $1.5 billion and $4 billion, EQC bears all of the increase on its own books.

The second reason is the inclusion of the 13 June 2011 earthquakes and other aftershocks. They were not included in the Budget estimate, published in May. Together they add another $1.42 billion to EQC's estimated liability.

Q. What are the implications for the Crown's finances?
EQC's increased liability will have a one-off impact on the Government's operating balance for the 2010/11 year. Despite the higher EQC liability, the Government still expects to return to surplus in 2014/15 and to keep net debt below 30 per cent of GDP. This is because the higher liability will be fully accounted in the 2010/11 accounts and will not affect operating balances in the years beyond.

The full 2010/11 Crown accounts will be published in October. Current indications suggest the higher EQC liability will be partially offset by higher than forecast tax revenue and lower than forecast costs in other areas. Combined, these factors are likely to push the operating deficit before gains and losses up to about $18 billion - $1.3 billion higher than the Budget forecast. However these figures have not yet been finalised or audited.

Q. Can you rule out the figure changing again?
No. These are still estimates based on available assessments and EQC and the Treasury will continue to periodically re-estimate the expected liability as more claims are completed and more information becomes available. EQC won't know the final cost of all the Canterbury earthquakes until all claims have been assessed and settled. EQC is aiming to complete its assessments of buildings and settle all contents claims by the end of December 2011.

Q. Who pays if the Natural Disaster Fund (NDF) is used up?
The Natural Disaster Fund managed by EQC held about $6 billion before the first earthquake on 4 September 2010. Based on the latest estimate the shortfall is $829 million. However due to the expected timing of claims assessments and payments, the eventual shortfall is not expected to exceed $500 million. Under Section 16 of the Earthquake Commission Act 1993, the Government would honour its guarantee if there is a shortfall, but the final form of this payment, if it is required, has not yet been established. In the meantime, this figure will be reflected in the Crown accounts as a small increase in forecast net Crown debt.

Q. Who pays if there is another event?
EQC has renewed its reinsurance, which means EQC has reinsurance for another two events the size of the 4 September earthquake. If the NDF could not cover EQC’s share of costs from a future event, the Government would honour its guarantee under the Earthquake Commission Act.

Q. What does this mean for the overall earthquake damage bill?
At the time of the Budget, Treasury estimated the total cost of damage – to all property owners and insurers – for the 4 September and 22 February earthquakes at about $15 billion, or about 8 per cent of GDP, including $9 billion for residential property damage. The Government has asked Treasury to update this estimate based on new information available since the Budget.

Q. What does this mean for the Government's share of the earthquake damage bill?
In Budget 2011, a six year $5.5 billion Canterbury Earthquake Recovery Fund (CERF) was established to provide certainty for rebuilding Canterbury.
A further $3.3 billion cost was forecast to meet the Government's share of costs, including EQC and ACC costs (a total of $8.8 billion). With rounding, the increased EQC liability takes the Government's total estimated share of earthquake costs to $12.9 billion.

Q. Will the Canterbury Earthquake Recovery Fund be enough to fund the recovery?
The current Canterbury Earthquake Recovery Fund ($5.5 billion) excludes cost associated with meeting EQC's insurance liabilities. The Government is committed to funding its share of rebuilding Canterbury and the fund is still expected to cover those costs.

Q. What audits/checks have been or will be done on this actuarial estimate?
The actuarial estimate and report has been considered by:
• EQC’s internal risk committee
• External auditors (Deloitte) on behalf of the Office of the Auditor General.

Q. What is the Government doing to allay any concerns reinsurers might have about writing cover in New Zealand?
Canterbury Earthquake Recovery Minister Gerry Brownlee will lead a government delegation to London and to the Rendez-Vous de Septembre in Monte-Carlo, Monaco on 10-15 September. Mr Brownlee will give a presentation on the Canterbury earthquakes and meet several major reinsurers including Swiss Re, Gen Re and Munich Re.

Q. What does the new estimate mean for insurance in Christchurch?
Several major insurers are not currently writing new insurance cover in Christchurch as continued seismic uncertainty makes it difficult for them to accurately price risk. This response follows the pattern seen in other countries following a significant natural disaster. However, as the changes to EQC estimates do not fundamentally affect the risk profile of Christchurch, they are unlikely to significantly affect future insurance.

Q. What is the size of this disaster compared to other disasters?
This is New Zealand’s largest natural disaster. EQC has received more than 388,000 claims for the earthquakes since 4 September. The previous biggest event for EQC was the Gisborne earthquake in 2007 with 6224 claims.

The Canterbury earthquakes are likely to rank as the fourth most costly global event for insurers since 1970 after the Northridge earthquake in California in 1994, the 9.0 earthquake and tsunami disaster in Japan in March this year, and the Kobe earthquake in Japan in 1995.

At the time of Budget 2011, Treasury estimated the combined cost of 4 September and 22 February earthquakes to be equivalent to about 8 per cent of New Zealand’s GDP. Damage from the 1995 Kobe earthquake in Japan was just over 2 per cent of Japan’s GDP. Hurricane Katrina in 2005 cost about 1 per cent of US GDP, and March’s Japanese earthquake and tsunami disaster was an estimated 3-5 per cent of Japan’s GDP.
Q. What progress has been made in the earthquake recovery process? Progress so far includes:

• EQC has paid out $1.41 billion on claims to date and completed about 52,000 full assessments since 22 February. It is on track to complete all its full assessments by December 2011. EQC is working towards completing all contents claims by the same deadline.
• A new government department – the Canterbury Earthquake Recovery Authority - has been set up to lead and co-ordinate the recovery.
• A Royal Commission of Inquiry has been established to find answers to why so many people lost their lives on 22 February and is due to provide an interim report in the next few months.
• More than 23,000 emergency repairs have been completed by contractors employed by Fletcher Construction to make homes damaged by the earthquakes safe, sanitary and weather tight.
• More than 10,000 heat pumps or solid fuel burners have been installed or repaired in homes whose primary heating source were damaged by the earthquakes.
• A total of 363 buildings have been demolished in the CBD since 22 February, with 600 demolition contractors working in the CBD each day to bring down the rest of the 1000 estimated buildings that need to be partially or fully demolished.
• A draft recovery plan for the Christchurch central business district has been developed and released for public consultation, and will be submitted to the Government in December 2011 for consideration and approval.

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In this edition of Plain English I talk about the effect weather has been having on Southland, my post-Budget survey, what I've been doing in the electorate - and what the Government has been doing on a wide range of fronts since my last update to you. Read full article

@NZJon Jon Pawley asked:

>>Tell me @HonBillEnglish, how does a low interest rate help savings? #nzpol (Actually, I wont hold me breathe for a response from Mr English)<<

@honbillenglish responds:

They don't. But they are low because NZers are borrowing less, consuming less and saving more, which economy needs. http://bit.ly/mQoPa1

Ask your question! Follow @honbillenglish on Twitter.

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Two issues papers released today for public consultation continue the Government’s focus on ensuring fairness in the tax system, Finance Minister Bill English and Revenue Minister Peter Dunne say.

The issues papers, which were announced in Budget 2011, provide options for making the tax system fairer in two areas:

Livestock valuation - this paper presents options for fairer rules covering livestock valuation elections. Mr Dunne says the current rules appear to be too loose, allowing farmers to switch between valuation methods providing an unfair tax advantage.

Mixed use assets - this paper provides options to address unfairness in the tax treatment of assets such as holiday houses used for both private and income-earning purposes.

Mr Dunne says unfairness arises when some owners claim their house is available for rent during the significant periods of the year the house is empty.

“This provides them with a basis for claiming tax deductions for expenses relating to the period the property is empty. Claiming these deductions could be regarded as unfair, particularly if the owner holds the asset primarily for private enjoyment,” Mr Dunne says.

Officials are also working on a third issues paper focusing on the tax and social assistance treatment of salary traded off for other benefits. This will be released separately once policy analysis is complete.

“Tax dollars are needed for a wide range of government services such as health, education, justice, lowering the road toll, reducing family violence, immunisation programmes and conservation,” Mr Dunne says. “Taxes also pay for work in Christchurch on roads, hospitals, schools and emergency recovery.

Mr English says it’s important that everyone pays their fair share of tax.

“By tightening the rules around property investment, aligning the top personal and the trustee tax rates and by ensuring greater fairness in social assistance programmes, Budget 2010 had a strong focus on fairness and integrity of the tax system.

“Today’s announcement continues that focus,” Mr English says.

The closing date for submissions is 30 September 2011. The two issues papers and fact sheet are available on the Inland Revenue policy website at: http://taxpolicy.ird.govt.nz/publications/year/2011
 

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Good Morning.

It’s a pleasure to address you today as part of the John Key-led National Party team. You have sent to Parliament competent motivated ministers and a disciplined hard-working caucus. It’s a steady stable team making sensible decisions.

And don’t we need that in these uncertain times.

In the past week we've seen the world's largest economy downgraded, turmoil on international markets and social unrest spreading to the UK.

John Key's Government has provided for New Zealand what New Zealand knows it needs - responsible economic management, strong leadership and stable government.

New Zealanders know what needs to change in this economy and they trust John Key to change it.

As we approach this year's election voters face a stark choice.

They can choose a sensible pragmatic National Party which will take New Zealand forward, or the Labour Party who will take us backwards with more spending, more tax and more borrowing. Those policies choked our economy in good times and they are downright dangerous in bad times.

The global outlook

The last few weeks have seen a stream of bad economic news from Europe and the United States.

I say, get used to it – this is how the world will be, on and off, over the next decade. That is because the underlying problems driving this week’s events are getting worse not better.

Most of the developed world has very high levels of government debt. This is a combination of the huge bailouts of the financial sector that occurred in 2008, and governments spending more than they earned, particularly over the last decade.

Lenders are starting to get worried about whether they will get all their money back. They used to regard governments as a no-risk customer, but this week they have been jolted by the first ever credit downgrade for the US.

That puts every country under the microscope. Are their debt levels acceptable? Are there plans to contain debt and get it down? Do the government's policies help or hinder economic growth?

There are only two ways to deal with excessive debt – pay it off or write it off. Neither is happening in these countries. No amount of shuffling the debt around can hide the fact that in the US and Europe, and to a lesser extent in the UK, debt continues to grow.

Because it's government debt, finding solutions to stop the growth of this debt is in the hands of the politicians, and there are no easy political solutions.

It's not easy to cut pensions, benefits and public services, or to lift taxes. It's no wonder the politicians are struggling, and financial markets are losing faith in them.

We had our own milder version of this problem through the 1980s and 1990s and it was a long painful process. In fact it took until 2006 to get net debt back to where it was in 1972 as a proportion of GDP.

New Zealand's position

So where does New Zealand fit into this sobering picture in 2011?

In terms of the immediate impact, it’s a mixed picture. On the one hand these large economies may grow more slowly than expected and prices for our exports may come down. That isn’t unexpected given export prices are the highest in 50 years.

On the other hand, indebted countries are being sorted into the strong and the weak. The weak are paying higher interest rates on their debt. New Zealand is among the stronger countries that are paying lower interest rates.

So we are well positioned to remain a stable economy with prospects for higher incomes and more jobs.

We have taken a number of measures to make our economy less vulnerable. 

We are two years into a large long-term infrastructure investment programme that will help lift efficiency and productivity. 

In 2010 we put better incentives into the economy through a tax switch that increased taxes on consumption and property investment and cut tax on income from work, savings, investment and exports.

In 2011 we absorbed the costs of the Christchurch earthquake and still managed to put the Government's books on a track to surplus by 2014/15.

At the same time we've cut red tape, raised education standards and continued to reform the public sector, while improving frontline services.

And we've continued to invest more in science and innovation despite a tight budget.

There are signs the economy has now turned a corner. 

It has grown in seven of the last eight quarters and this year it is likely to grow faster than Australia. 

Our exporters are generally profitable despite a high exchange rate. 

New Zealanders have got the message on debt, which is barely growing. 

In 2007 New Zealanders spent $1.11 for early dollar they earned. This year it could be 99 cents for every dollar earned. That would be the first positive household savings rate in 11 years, helped by the lowest interest rates in 45 years.

We have avoided the harsh choices many governments face, because of the 20-year effort through the 1980s and 1990s to reduce government debt and a series of considered decisions by this Government to bring spending under control.

We have avoided the huge costs of banking collapses. Our housing market has drifted down, unemployment peaked at 7 per cent and is dropping, and 43,000 net new jobs were created in the last year.

So we managed to get through the recession in reasonable shape. 

Of course we face risks from global events as the economy begins to pick up. But we also face the best opportunities in a generation.

We borrowed too much of our increased wealth in the last 10 years, and in the next 10 years we will have to earn every dollar of it. 

So it's good news that the opportunity to earn higher incomes and create more jobs is better than it has been for a long time. We need to take that opportunity.

My predecessor Brian Talboys was the Minister of Trade and Agriculture in the 1960s and 1970s. He spent years travelling to Europe to plead for access for our products to markets that did not want them. 

Today's trade ministers will have secured free trade agreements by the end of next year that cover over half the world's population.

In the next decade we will be selling to fast-growing markets who want our products. While the middle class is static or shrinking in our traditional markets, China, India and the rest of the Asia Pacific have a rapidly growing number of affluent consumers.

More countries are joining the China club, and a number of them are markets we haven't properly explored yet, like Indonesia, or Vietnam.

The Food and Agriculture Organisation at the UN has just produced a study showing the world supply of protein is unlikely to expand as fast as demand, and that means stronger prices for New Zealand products.

So our opportunity to grow our incomes by growing our exports is limited only by our ability to organise ourselves to take advantage of it. 

So it's time to shift our focus.

The Government's economic plan

Up until now we have focussed on getting through the recession, dealing with the earthquake and natural disasters, while laying the platform for future economic growth.

Now it is time to look ahead. A re-elected National Government will focus on growing New Zealand’s tradeable sectors and taking more advantage of our connection to the world's fast growing economies, including Australia, so we can lift incomes and create more jobs at home.

We need to build a competitive economy to lift incomes and support success in our export markets.

It's about doing the basics and doing them well.

If we are re-elected National will lock in and extend the policies we initiated in the last three years.

We will build a tax system that allows workers to keep more of their hard-earned income and encourages savings, and channels investment to productive jobs.

We will build an efficient public sector that delivers better services to the public, value to taxpayers and doesn’t crowd out the internationally-competitive parts of the economy.

We will build the infrastructure New Zealand needs, and manage existing infrastructure better to lift productivity and unclog our economic arteries.

We will build on our successful ambitious free-trade agenda to link us into more of the world's fast-growing economies.

We will reorganise government so that New Zealand Inc can support business better to take the opportunities created by our trade agreements.

We will refocus the regulation-making parts of government to help business to be competitive and efficient.

We will insist on standards in our schools to help produce competent citizens and a skilled workforce.

And we will persist with limiting government debt, to keep our interest rates lower for longer and to reduce our reliance on foreign lenders, and to build a buffer against future economic shocks.

The Government has made significant changes in all of these areas since coming into office.

There are three particular areas where we can achieve significant success for New Zealand in another term in office.

Building momentum on savings and investment

It will be particularly important to build on the momentum of more savings, and more productive investment.

Over the last few years, many New Zealanders lost faith in investing their hard-earned savings in the businesses that will grow our economy.

Investors lost $8.5 billion in the finance company melt down – after taking bad advice to invest in unsound businesses.

By the middle of next year, a re-elected National Government will complete the job of re-regulating financial markets from top to bottom, so investors and KiwiSavers know they won't be ripped off.

But New Zealanders also need better opportunities for investment than in shaky finance companies.

So in keeping with our undertakings in the 2008 election, we've said that if re-elected we'll extend the mixed ownership model to four energy SOEs and reduce the Government's stake in Air New Zealand – while retaining majority stakes.

In every case the Government will ensure New Zealanders are at the front of the queue to buy shares.

If we want to rebalance our economy towards savings and exports, we need dynamic investment markets that offer attractive options for savers and enable local businesses to access the capital they need to expand.

Extending the mixed ownership model will provide attractive investment opportunities for Kiwi mums and dads and capital for the Government to reinvest in social infrastructure like schools and hospitals - reducing our borrowing requirements.

That is just one part of the Government's job we can do better.

We will continue to focus on a more efficient public sector and we will get the results you expect for your contribution to the welfare of all New Zealanders.

We can achieve success that’s good for people and good for the economy. For example, in 2008 we took over a dysfunctional and failing ACC. We have turned this performance around and ACC is now proposing cutting levies for households and businesses - keeping half a billion dollars a year in their pockets.

And there is more to come. We've told government chief executives to find $1 billion in savings and we've started looking at which agencies can be merged, or can work more closely together, to reduce costs and improve services.

If we stay on track we can drop ACC levies further, reduce crime rates and prison numbers, lift standards in all schools and give more people better health care – those are results worth fighting an election for.

Finally in a growing economy we will need everyone who can work to be in work. Unemployment among those aged 25 and over is already down to 4.5 per cent, with an ageing population leaving the workforce in increasing numbers.

We've already been busy in the skills area. Youth Guarantee places will rise to 7,500 next year, we have the highest number of core university and polytechnic places ever, we've opened eight trades academies and we are driving better results out of industry training.

We will be working to support as many people as possible into the labour market - skilled migrants, school leavers, and our biggest pool of lost potential, tens of thousands on long term welfare.

The Prime Minister will talk more about those policies tomorrow – better welfare policy is as important for our economy as it is for our community.

Conclusion

In the next few months, in the run-up to the election, we'll release new policies.

They will be policies that press ahead with our well established programme to build faster growth, more jobs and higher incomes.

They will be policies that make our economy and our businesses more competitive.

They will be policies that keep our debt low and support a stable investment environment with relatively low inflation and interest rates.

They will be policies that promote savings and support our exporters to make the most of the opportunities ahead.

And, most of all, they will be policies that give hard-working Kiwis the opportunity to get ahead here in New Zealand.

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08 August. Finance Minister Bill English talks about the US economy, the global debt problem, what it means for New Zealand and why our economy is relatively well-placed to weather any shocks in the pipeline.

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Deputy Prime Minister Bill English and Maori Affairs Minister Dr Pita Sharples today announced the 12 appointees to the Constitutional Advisory Panel.

The Government confirmed last December that it would conduct a wide-ranging review of New Zealand’s constitutional arrangements – including the size of Parliament, the length of the electoral term, Maori representation, the role of the Treaty of Waitangi and whether New Zealand needs a written constitution.

It was the start of a considered process that would take place over three years.

The Constitutional Advisory Panel is an independent group that will lead public discussion on constitutional issues that are under review and will then report to the Ministers.

The Panel will be co-chaired by Emeritus Professor John Burrows and Sir Tipene O’Regan, of Ngai Tahu. The other members are:

• Peter Chin
• Deborah Coddington
• Hon Dr Michael Cullen
• Hon John Luxton
• Bernice Mene
• Dr Leonie Pihama
• Hinurewa Poutu
• Professor Linda Smith
• Peter Tennent
• Emeritus Professor Ranginui Walker

The Panel will begin work shortly on a plan to inform public debate on New Zealand’s constitutional arrangements.

“The panel has a broad range of skills, including constitutional expertise and experience with community engagement,” Mr English says. “It will lead a forum for New Zealanders to develop and share ideas on constitutional issues, which we expect to be in place in 2012.”

“An important part of the review process will be consultation with Maori, particularly on the place of the Treaty of Waitangi in our constitution,” Dr Sharples says. “The members of this group are well placed to seek out and understand the perspectives of Maori on these important issues.”

The Panel will report to the Ministers in September 2013, identifying areas of broad public consensus and where further work is recommended.

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Biographical information:

Emeritus Professor John Burrows QC (Co-chair): Professor Burrows is currently a Law Commissioner. He has extensive legal expertise and has written a leading text on statute law in New Zealand. He has led or jointly led Law Commission reviews of the Presentation of New Zealand Statute Law, Privacy, the Official Information Act 1982, Tribunals in New Zealand, and Private Schools and the Law.

Sir Tipene O’Regan (Co-chair) (Ngai Tahu): Sir Tipene has extensive academic, governance, Treaty negotiations and Maori leadership experience. From a background in tertiary education he became Ngai Tahu’s chief Treaty claim negotiator. In more recent years he has led debate on developing iwi economic structures and modernising iwi governance models. He is currently the Upoko (traditional head) of one of the 18 constituent regional runanga of Ngai Tahu. Over the past 40 years he has served as a director or trustee of a wide range of commercial and non-profit enterprises in the public, private and Maori sectors.

Deborah Coddington: Ms Coddington is an experienced journalist and author. Ms Coddington was a Member of Parliament from 2002 until 2005.

Peter Chin: Mr Chin is currently a consultant with Webb Farry Lawyers. He has expertise in community engagement and representation (including as a former Mayor of Dunedin), and over 40 years’ legal experience. Mr Chin is a highly respected member of the Chinese community.

Hon Dr Michael Cullen: Dr Cullen is currently the Chairman of NZ Post and Principal Treaty Claims Negotiator for Tuwharetoa iwi. Dr Cullen has experience of machinery of government and Treaty of Waitangi/Crown-Maori relations. Dr Cullen was a long-serving member of Parliament, including as Deputy Prime Minister, Attorney-General, Minister in Charge of Treaty of Waitangi Negotiations, Minister of Finance and Leader of the House.

Hon John Luxton: Mr Luxton is currently an agribusiness entrepreneur, company director and consultant. Mr Luxton has expertise in government, governance, Crown-Maori relations and community connections. He is a former Minister and electorate MP. Mr Luxton has experience in co-management (as co-chair of the Waikato River Authority) and representing farming and other interests alongside Maori interests.

Bernice Mene: Ms Mene is currently a TV presenter on education and netball programmes. She has a strong public profile, project management experience and the ability to connect with the community. Ms Mene has represented New Zealand in netball and is a member of the New Zealand Order of Merit. She is also a qualified teacher and has represented New Zealand at OECD education forums.

Dr Leonie Pihama (Te Atiawa, Nga Mahanga a Tairi, Ngati Mahanga): Dr Pihama is a senior Maori researcher in Maori and Indigenous education with a focus on Kaupapa Maori. She has lectured in policy analysis, Maori women’s issues, and representation of indigenous people, and was the Director of the International Research Institute for Maori and Indigenous Education at the University of Auckland. Dr Pihama is a staunch advocate of Kaupapa Maori, and has also been involved in film and media production, and served on the Maori Television Board during its establishment phase.

Hinurewa Poutu (Ngati Rangi, Te Ati Haunui a Paparangi, Ngati Maniapoto): Ms Poutu is a doctoral student at Massey University and a teacher at Te Kura Kaupapa Maori o Mana Tamariki. She is a graduate of kura kaupapa Maori, with an academic and work record in studying, researching and teaching te reo Maori. Ms Poutu also has journalism experience and has worked as a Maori language media consultant.

Professor Linda Tuhiwai Smith (Ngati Awa, Ngati Porou): Professor Smith is currently Pro Vice-Chancellor (Maori) and a Professor of Education and Maori Development and the University of Waikato. Professor Smith is an internationally renowned author, and authority on Maori and Indigenous research and education. She has worked as a Treaty negotiator for Ngati Porou, and was Deputy Chair of Te Wananga o Awanuiarangi. Professor Smith is also a member of the Marsden Fund Council and the Health Research Council.

Peter Tennent: Mr Tennent is a former Mayor of New Plymouth. He trained as an accountant and spent much of his life as a hotelier and in public life. As Mayor of New Plymouth, he emphasised community involvement and encouraged public engagement. Mr Tennent was nominated for World Mayor in 2010, and judged to be in the top 10 world community leaders.

Emeritus Professor Dr Ranginui Walker (Whakatohea): Dr Walker is a member of the Waitangi Tribunal, and well known Maori author and academic. His groundbreaking book Ka whawhai tonu matou, struggle without end has become a reference text for the history of the modern Maori renaissance. He has organised many Maori leadership conferences on urbanisation, gangs, Maori land, Maori fisheries, Maori educational development and Maori representation in Parliament, and is widely published on Maori anthropology, education and development.

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Frequently asked questions

What constitutional topics will the Constitutional Advisory Panel consider?

Electoral matters:

• The size of Parliament.
• The length of terms of Parliament and whether or not the term should be fixed.
• The size and number of electorates, including the method for calculating size.
• Electoral integrity legislation.
• Cown-Maori relationship matters:
• Maori representation including the Maori Electoral Option, Maori electoral participation and Maori seats in Parliament and local government.
• The role of the Treaty of Waitangi within New Zealand’s constitutional arrangements.
• Other constitutional matters:
• Whether New Zealand should have a written constitution.
• Bill of Rights issues.

How were Constitutional Advisory Panel members selected?
Constitutional Advisory Panel members were selected based on their expertise and specialist skills in areas such as constitutional matters and community relations, and their ability to relate to a wide range of New Zealanders.

When will the public have their say?
The Constitutional Advisory Panel will establish a forum to develop and share ideas on the constitutional topics. It will seek the views of New Zealanders on these topics in 2012 and 2013.

Is the Constitutional Advisory Panel independent of the Government?
Yes, the Constitutional Advisory Panel is an independent group. It will be supported by a Ministry of Justice-led secretariat and will provide regular updates to the responsible Ministers (the Deputy Prime Minister and the Minister of Maori Affairs) and to the Cross-party Reference Group of Members of Parliament.

What will be the outcome of the Constitutional Advisory Panel’s work?
The Constitutional Advisory Panel will deliver a final report to the responsible Ministers (the Deputy Prime Minister and the Minister of Maori Affairs) by the end of September 2013, identifying areas of broad consensus where further work is recommended. Its work should be seen as part of a long conversation about New Zealand’s constitutional arrangements. The responsible Ministers will report to Cabinet by the end of 2013, and the Government will have six months to respond. The Government has acknowledged that constitutional change should not be undertaken lightly and will require either broad cross-party agreement or the majority support of voters at a referendum.

Where can I find more information?
More information on the Consideration of Constitutional Issues, including the Terms of Reference, can be found at: www.beehive.govt.nz and www.justice.govt.nz.

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The Government has taken several steps to ensure New Zealand can minimise any fallout from the United States’ ongoing debt problems, Finance Minister Bill English says.

“Despite a compromise deal being reached in Washington, there is no doubt the situation in the United States is serious – both for the US itself and for the global economy,” Mr English says.

“However, New Zealand is relatively better placed than many other countries to manage in what will remain a pretty uncertain global environment. We’re getting on top of debt by keeping it below 30 per cent of GDP and we will be back in surplus by 2014/15.

“Over the next few years, we have an opportunity to build on solid foundations for faster growth and more jobs.

“Our financial system and our economy are both in better shape than a few years ago to manage global market uncertainties. This reflects improvements in market regulations and an economy that is growing, with households, businesses and the Government less dependent on debt.

Since 2008, the Government has:

• Turned back 2008 forecasts of never-ending deficits and soaring debt by setting a path back to budget surplus by 2014/15. As a result, net Crown debt is expected to remain below 30 per cent of GDP.
• Front-loaded its borrowing programme during favourable market conditions, which will cover the Government’s obligations over coming months should markets seize up as they did in late-2008.
• Introduced the biggest reform of the tax system for 25 years, which rewards work and savings, discourages borrowing and consumption and significantly tightens tax rules on property speculation.
• Overhauled capital market regulations and established the Financial Markets Authority, giving investors confidence in market rules and enforcement.
• Brought non–bank deposit takers under Reserve Bank supervision, with minimum capital adequacy and credit rating requirements.

In addition, the Reserve Bank has:

• Introduced new core funding requirements for banks, which require them to have 70 per cent of their funding from stable sources such as retail deposits and long-term wholesale funding.
• Ensured that in another financial crisis, the Bank can supply temporary liquidity to sound institutions.

“Having cushioned New Zealanders from the recession, we have taken responsible decisions to restrict the build up in government debt, get spending under control and put the Government’s finances in order,” Mr English says.

“We are also building solid foundations for faster growth and more jobs based on savings, exports and productive investment. The Treasury forecasts the economy will grow by an average 3 per cent a year over the next four years and create 170,000 new jobs.

“The high Kiwi dollar is undoubtedly a headwind for New Zealand exporters – reflecting weakness in the US dollar as well as a perception in financial markets that New Zealand remains a safe place to invest.

“It means we need to do everything else we can to build on the resilience and higher business confidence we’re seeing. That includes keeping on top of debt and building a faster-growing economy.”

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Original question: From Lindsay McClean (@Kobe24888 on Twitter):  Hi Bill Do you intend to reduce the GST rate back to 12.5% or lower when circumstances allow?

Response: Q&A with @Kobe248888 No. We put up GST and cut income tax to encourage NZers to spend less and earn and save more. More info: http://bit.ly/rk32IZ

If you're on Twitter, ask your questions!

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Finance Minister Bill English today welcomed a largely positive review of the Government Superannuation Fund Authority (GSFA).

The independent review, which is required every five years, was carried out by JANA Investment Advisers and tabled in Parliament today.

It is the second review since the GSFA was set up in 2001 to administer the Government Superannuation Fund (GSF), which manages superannuation entitlements for about 68,000 current and former civil servants.

"The Government Superannuation Fund has $3.3 billion invested, so it makes up a significant part of the Crown’s balance sheet. It is important those assets are well managed," Mr English says.

"The reviewers found the GSFA meets best practice in all essential areas, has effective board and management oversight, appropriate policies and practices, strong risk management and effective decision making.

"This is reflected in recent GSF results which show it achieved its performance benchmark for five-year returns.

"The review identified some opportunities to improve policies and practices, particularly around the level of information provided to the GSFA board on investments. The review notes these recommendations should be seen in the context of an overall positive report card.

"The Government will discuss these recommendations with the board," Mr English says.

The review is available at:
www.treasury.govt.nz/publications/reviews-consultation/gsfa

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