1. CHARLES CHAUVEL (Labour) Link to this
to the Minister of Finance
What recent reports has he received on New Zealand’s sovereign credit rating?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
I am pleased to report that Moody’s Investors Service reaffirmed New Zealand’s AAA credit rating and highlighted its view that the New Zealand Government’s management of the finances of the Crown is a significant factor underpinning that assessment.
Did Moody’s offer any investors any other advice on possible changes to New Zealand’s investment climate?
Hon Dr MICHAEL CULLEN Link to this
Yes, the report goes on to note that the National Party is likely to be more favourable to selling off State assets. I think National needs to front up on whether it is telling the public one thing and international credit-rating agencies another, when it comes to asset sales.
Hon Bill EnglishCan the Minister confirm that the conclusions he has just quoted from the rating agency directly contradict one of his main arguments against tax cuts, where he has repeatedly said in the past that multibillion dollar tax cuts would increase debt and jeopardise our credit rating; if that was the case, why did he go ahead with multibillion dollar tax cuts that increased debt but apparently did not jeopardise our credit rating?
Hon Dr MICHAEL CULLEN Link to this
That is because Moody’s has consistently praised the Government, during very strong growth years, for running large surpluses and knows that we are running down some of the cash surpluses we acquired during periods of good times. Had we in fact spent the money in the good years, we would not have the money left to carry us through the bad years—like this year.
Rodney HideCan the Minister explain to the House and to the people of New Zealand how it was for 9 long years that economic conditions were such that we could not have decent tax cuts, only tax hikes, and then, suddenly, 2 weeks out from a desperate election that Labour faces, economic conditions align and we can have a tax cut?
Hon Dr MICHAEL CULLEN Link to this
My understanding is that the tax cuts were passed on 23 May. The 2 weeks have long since passed, at this point in time.
Rt Hon Winston Peters Link to this
Is it possible to effect tax cuts by way of State asset sales, and how long would such a policy last?
Hon Dr MICHAEL CULLEN Link to this
Yes, indeed, and of course in 1998-99 the then Government engaged in a major asset sale programme around Auckland airport and Contact Energy. As a result, of course, we also had tax cuts at that time. The trouble is that by selling State assets one also reduces one’s long-term revenue, and when the proceeds of the sale run out, we have something of a problem.
Hon Dr MICHAEL CULLEN Link to this
Yes. One of the main reasons to oppose State asset sales is strategic. It is important to realise just how expensive the process can be. I was able to reveal at the Finance and Expenditure Committee this morning that, when last in Government, Mr English spent over $47 million in 1 year on consultants to help him sell State assets.