2. Hon PAUL SWAIN (Labour—Rimutaka) Link to this
to the Minister of Finance
What reports has he received on the impact of increasing Government debt?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
I have seen various reports calling for an increase in gross Crown debt to 25 percent of GDP. These come from Mr John Key. Lifting Crown debt to 25 percent of GDP would cost an extra $700 million a year in finance costs alone. We would rather spend that money on health, education, and infrastructure than on debt servicing to largely overseas lenders.
Hon Dr MICHAEL CULLEN Link to this
Yes. I saw a report in the Christchurch Press on Saturday from Mr English, which stated that lifting gross Crown debt to 25 percent of GDP “has never been one of our policies”. If raising debt has never been National policy, then Mr English must ask Mr Key to stop promoting it, or perhaps Mr English has simply learnt earlier than the rest of us to take little notice of Mr Key’s pronouncements.
Hon Bill EnglishIf the Minister of Finance is so sure of his record about Government debt, then what does he make of the figures on page 57 of his half-year update that show gross sovereign issued debt excluding settlement cash increasing from $30.89 billion in 2007 to over $33 billion forecast for 2008; if he is increasing Government debt by $2.4 billion, then what is he spending it on?
Hon Dr MICHAEL CULLEN Link to this
That is still below 20 percent of GDP, and, as the member well knows, that is gross and includes, for example, the cash held by the Reserve Bank.
Is the Minister not aware that the half-year update changed the definition to exclude Reserve Bank settlement cash; and can he answer the original question, which was if the Government debt is forecast to rise by $2.4 billion, then is he spending that to fund the company tax cut, the technology fund announced today, or some spending increases that he has not told us about yet?
Hon Dr MICHAEL CULLEN Link to this
What I would like the member to tell us is whether he opposes the Government tax cut or opposes the money going into the fund for primary sector research. What that member has to tell the House is whether $33 billion is less than 20 percent of GDP. Can he do the sums? And the answer is: “Yes, it is.”