1. Hon Sir ROGER DOUGLAS (ACT) Link to this
to the Minister of Finance
Is he aware that successive increases in Government spending over the last 13 years mean Government expenditure is today $30 billion higher per year having allowed for population growth and inflation, and what does he intend to do about it?
Hon BILL ENGLISH (Minister of Finance) Link to this
As I pointed out last week, core Crown spending in the year ending 30 June 2009 is expected to be $63.5 billion, up $21.6 billion—or 50 percent—in the last 5 years alone, during which time the economy grew by 23 percent and tax revenue grew by 24 percent. The Budget on 28 May will reprioritise low-quality spending, reduce the rate of spending increase, and set out a credible plan for getting the Government’s finances in order.
Hon Sir Roger Douglas Link to this
Does the Minister agree that tax cuts are good for growth; and, given that ultimately the tax burden is what the Government spends, does he agree that cutting Government spending is an essential element in any programme to boost economic growth?
Yes, I agree with the member that tax cuts are good for growth and I agree that the very high rates of spending increase under the previous Government have to be brought under control—if only because a lot of that spending increase did not lead to better services for the public.
Hon David Cunliffe Link to this
Further to the Minister’s answer, does he agree that tax cuts misdirected to those least likely to need them and least likely to recycle them through spending are an inappropriate attempt at stimulus; if so, can he confirm that if the Government does not proceed with its earlier proposed tax cuts in 2010 and 2011 it will rebalance this year’s tax cuts to benefit all New Zealanders and particularly those with below-average incomes?
If the member was genuinely concerned about New Zealanders getting the benefit of fairness in tax cuts, his party would have given some tax cuts in the 9 years that the Government had large surpluses.
Hon Sir Roger Douglas Link to this
Is the Minister comfortable with the fact that the growth in Government expenditure over the last 13 years is equivalent to $7,567 for every man, woman, and child in New Zealand, compared with a reduction of $300 over the previous 12 years; and how will the Government’s forthcoming Budget demonstrate the Government’s willingness to cut low-quality Government spending?
I agree that much of that increase in expenditure has not led to better, smarter public services. The Budget will take the first steps towards controlling that rapid rate of growth, which is now unsustainable, and focusing on better, smarter public services for the money we are spending. We do not believe more spending is the measure of success; we believe better services are the measure of success.
Hon Jim AndertonHas the Minister seen the Prime Minister’s comment that Government debt will track down after the Budget; if so, is he aware of any other developed country that is responding to the global economic crisis by reducing Government debt?
I have seen the Prime Minister’s comment. It is the objective of this Government to get on top of sharply rising public debt and bring it down. If we do not do that a whole generation of New Zealanders could end up carrying the burden of a large debt. That member should remember as well as anyone the pain this country went through to get the last mountain of debt down.