1. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Minister of Finance
Has he discussed his forthcoming Budget with the Reserve Bank; if not, why not?
Hon PHIL GOFF (Associate Minister of Finance) Link to this
Madam Speaker—[ Interruption] When they have finished over there—
Madam SPEAKERNo, it is not the Minister’s normal practice to brief the Reserve Bank on the contents of the Budget. However, as always, Treasury has discussed the Budget’s fiscal parameters with the bank, and it was able to assure the bank that the fiscal stimulus in the current year is substantially less than was forecast in the half-yearly update, and that for the next 2 years it is roughly the same as was forecast.
Has the Minister therefore seen the Reserve Bank’s published advice that his spending plans over the next few years are causing problems for monetary policy; if he will not take that advice, why would he take advice on monetary policy from the Finance and Expenditure Committee, whose expertise is considerably less than that of the Reserve Bank?
In fact, the Governor of the Reserve Bank has pointed to a number of factors that he believes are responsible for the level of inflation. When that member asked the Governor of the Reserve Bank in the select committee to name the most important factor, he said it was housing. Housing was the very issue that the Governor of the Reserve Bank wanted to discuss with Mr Key and Mr English, along with Mr Mallard and Dr Cullen, but, of course, those talks were sabotaged by Mr English.
R Doug WoolertonCan the Minister inform the House whether a common currency with Australia will be announced in this year’s Budget; if not, can he inform the House of any reports to this effect?
Of course, I cannot predict what will be in this year’s Budget, but I would not be letting any secrets out by saying that this Government has rejected the concept of a common currency with Australia, as proposed by John Key. If one really wanted to put our exporters under pressure, one would align New Zealand’s currency by adopting the Australian currency, which is mineral driven. That would put our exporters into a much worse position than they are in—but, then, what would Mr Key know?
Charles ChauvelWhat recent reports has the Minister seen calling for a looser fiscal position, which would put more pressure on monetary policy?
I know that the Opposition spokesperson on finance, Mr English, keeps calling for a tighter fiscal position, but every day in this House, and every day outside this House, we hear National Party spokespeople calling for more expenditure. Yesterday Mr Ryall asked us to train another 80 to 100 doctors a year. Today Mr Key is out there saying that the Government should be putting more money into broadband. It seems that Bill English does not talk to his colleagues, because they are saying mutually inconsistent things.
Why is the Minister trying to give the impression that monetary policy can be run differently, when he has had 8 years of advice from Treasury and the Reserve Bank and two major reviews of monetary policy by world experts, and he himself has not proposed any particular change to the framework but persists in giving the impression that it could all be done differently from how it is done if only I had agreed to that?
In fact, this Government has run a very tight fiscal position. If the member who asked the question recalls the select committee hearing, he will know that Dr Bollard said he had not seen a need to intervene through most of the period. What amazes me is that although this Government has run big surpluses, last year we had John Key saying we should put $11 billion of the tax surplus back into the economy, which is absolutely the opposite of what Mr English, the co-leader—or is it the competing leader—is saying. The National Party just cannot get its position together.
I just remind members that when they answer questions they should address the question, and not introduce any superfluous comments of a personal nature.
What sort of claim can the Minister make to being a manager of the economy, when his response to the severe pressure on some exporters is to do nothing himself, blame the Opposition, and send the problem to a committee?
I totally disagree with the allegation made by that member. If he reads the Minister of Finance’s speech to the manufacturers in Canterbury today, he will see just that. This Minister of Finance has run a very sensible policy, including policy in areas that will assist in the growth of the economy—like the superannuation scheme, which was opposed by the National Party until last year, and like KiwiSaver, which was opposed by the Opposition when it was introduced in legislation last year. But I suspect that those members will come around on both of those issues, because they know that that is the exact direction in which economic policy should be going.
Hon Paul SwainCan the Minister confirm that the Finance and Expenditure Committee is made up of senior, intelligent, and capable members whose intelligence knows no bounds, and that if there is one committee of this House that could look seriously and intelligently into this matter, that committee would be it?
I partially agree with the first statement. On the second statement I think that it is sensible, if we are looking at adopting a position that all members in all parties in this House can contribute to, to hold such an inquiry, so that some of the issues that some members in the House are too scared to address—or run a mile from, after agreeing to discuss them—can be discussed rationally. [ Interruption]
I have asked members, including those who made the interjections that I heard—although I did not interrupt the answer—not to make comments of a personal nature or of abuse across the Chamber. Obviously, members are entitled to interject and intervene, but could they please cut out the personal comments that have become, unfortunately, a little too common.
Instead of further reviews, committees, and crocodile tears, can the Minister tell the House and the public one serious proposition he has made for changing the monetary policy framework?
I am answering the member’s question, if he shows a little patience. What the Minister has done, of course, is to sit down with other members of the House—including that member—to discuss some of the options that have been put up by the Reserve Bank. It was interesting that John Key responded very positively to that. It was regrettable that that member did not do so. I would refer the member to seven successive Budgets that have seen this country have a higher level of growth than almost any other country in the OECD, to a policy that has seen the creation of 330,000 jobs, and to a policy that has seen 70,000 kids taken out of poverty. All of those things are excellent examples of what the Minister of Finance has done to promote an economy that supports a fair and decent social system.
Does that answer mean that the Minister of Finance, after 8 years of advice and two major reviews of monetary policy carried out by world experts, does not have one single proposition to change monetary policy that can be taken seriously; if he does not have one single change, why should the Finance and Expenditure Committee waste months on coming up with something that he will ignore, anyway?
In terms of international reports, I know that that member has embraced the OECD report and its propositions that GST should be increased and that the age of eligibility for superannuation should be increased. But I can assure the member that this Government does not intend to do either of those two things—unlike what that member is promoting.
Given the Minister’s pathetic political responses to serious issues, can he tell the House what sort of mess the Government is in when the Prime Minister told the Trans Tasman newsletter last week: “This will be a big macroeconomic Budget with major initiatives on business, including tax credits for export development and R and D.”, and today, right at the end of the Budget process, Dr Cullen has announced that he has ditched one of those major initiatives—namely, the tax credits for business?
What the Minister has said is that there will be in this Budget approximately $1 billion in business tax cuts, through one form or another. That is something I warmly applaud, in terms of encouraging investment and further growth. I am particularly disappointed that that member has said he opposes such cuts, but let me say this. The member alleges a crisis in policy. This is the sort of crisis we have. We have company tax returns that grew on average by about 20 percent a year through much of this term. More Kiwis than ever before are in jobs—2.1 million; there are 330,000 extra jobs. We have job growth and rising incomes, and we have better public finances than in practically any other OECD country. Those are the facts. The allegations made by the member are quite wrong.
Rodney HideHas the Minister followed Helen Clark’s example and discussed the forthcoming Budget with John Key, as, after all, these days it is hard to see the difference between National and Labour on policy, and who knows, he might get National’s vote?