2. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
How much has core Crown expenditure increased over the past 5 years?
Hon BILL ENGLISH (Minister of Finance) Link to this
Since June 2004 core Crown expenditure has risen from $41.9 billion to $63.5 billion. That is an increase of 51 percent over the last 5 years. In that time the economy grew by just 23 percent and tax revenue by 24 percent.
Most public expenditure programmes bring benefits to the community. However, over the next few years we will have to carefully weigh up the benefits of increased expenditure with the benefits that that expenditure would have to the community. The burden of extra expenditure falls on all taxpayers, and taxpayers will want to know that it is all used productively. That is why the Government is going through a process of prioritising its expenditure.
Hon David Cunliffe Link to this
Can the Minister confirm that his answer to the first question mixed real and nominal numbers, and thereby misled the House and the public?
The answer is no, but it is quite clear that Government expenditure cannot continue to grow significantly faster than the growth of the economy.
The consequences of expenditure growing significantly faster than the economy—and particularly when revenue is dropping—would be an unacceptable level of debt. This Parliament needs to keep in mind, as the Government does, that every dollar borrowed now will have to be repaid with interest by some future taxpayer, and every time the Labour Opposition complains about the Government reprioritising, taxpayers need to remember that more expenditure simply means more debt.
Hon David Cunliffe Link to this
Does the Minister agree with the Prime Minister, John Key, when he encouraged G20 leaders “to recognise that not every country, even those”—like New Zealand—“with low initial public debt,” and so on and so forth; and does he concur with his leader’s recognition that he is extremely fortunate to have inherited an economy with such sound public finances?
If the public finances were as sound as that member believes, then we would not be facing the prospect of a probable doubling of public debt over the next 3 years. The fact is that in the last 3 years under the previous Government, with its shambolic and directionless policy, billions of dollars of extra expenditure was built into our baselines that was of low quality.
Hon David Cunliffe Link to this
Has the Minister seen reports from Business and Economic Research stating: “The middle of a recession was not the time for a ‘balancing of the books’ exercise. Growing signs of a cavalier, ‘across-the-board’ Razor Gang approach to culling government spending leaves one with a sense of déjà vu. The risk that the current Government will repeat the mistakes of the early-1990s would not only add to the gloom, but also further exacerbate the blow-out in the fiscal deficit.”, and does he, therefore, accept that his instructions to cut 10 percent of the Public Service are misguided?
There was no such instruction. The majority of the redundancies in the Public Service are due to the fact that the previous Government planned drops in spending in the Ministry for the Environment, the Inland Revenue Department, and other Government agencies. The redundancies are due to the fact that Labour made commitments that it did not fund.
John BoscawenWould the Minister agree that although the previous Labour Government created the shambolic and directionless mess we are now in, it is his job to fix it, and when does he intend to start to do so in a meaningful way?
Yes, I agree that it is the job of the National Government to fix it, and I think that is why the public overwhelmingly voted to change the Government. We have set about doing that in a meaningful way by reprioritising the Government’s spending, dropping all the unfunded commitments made by the previous Government, dropping the programmes that are not working, and allowing the Civil Service to give us its best professional advice and to start exercising responsibility, instead of its public servants being treated like children, as they were under the previous Government.