1. CHRIS TREMAIN (National—Napier) Link to this
to the Minister of Finance
What level of public debt does he consider prudent?
Hon BILL ENGLISH
Mr SPEAKERThe Minister will resume his seat, right now; I am going to deal with this matter. The member is being unnecessarily unruly. He may not have liked my previous ruling, but I have ruled and the member must accept that. It is totally unacceptable for him to bellow across the House like that. I have called the Hon Bill English to answer the question, and he will do that. I have ruled on this matter. I warn the honourable member that he will be out of the House for the rest of this day if he challenges my ruling.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I am in no way challenging your ruling; you ruled absolutely correctly. It was the Government that turned down the leave, and it is losing the cooperation—
That matter has been dealt with, and that is not a valid point of order. The member had better watch his behaviour.
The ideal level of debt is one where debt levels are low enough to allow a Government to borrow during a recession in order to support the economy, and where interest costs are not a significant burden. What constitutes prudent debt has changed numerous times over the years, and in the present circumstances it is appropriate that the Government tolerates an increase in debt. We will ensure, though, that as the recession passes, debt returns to lower levels so that New Zealand is well positioned for future recessions. This will not be the last recession.
Hon David Cunliffe Link to this
Would the Minister agree that gross debt levels of 17.5 percent of GDP and net debt levels of 0 percent, which were achieved under the Labour Government, are prudent; and can he confirm that New Zealand’s gross and net sovereign debt is far less than that of either the UK or the US, and than the OECD average, prompting Moody’s Investors Service to rank New Zealand as having amongst the least indebted Governments of the world?
The figures are correct. But the member needs to remember that the reckless spending of his Government, particularly in the last 3 years, is what will be giving rise to the rapid rise in public debt over the next 5 years.
No. The Government is breaking with the previous Government’s habit of making unfunded commitments. All initiatives—
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. You have previously ruled on the Government’s use of the phrase “unfunded commitments” in this House. You have ruled in line with the Clerk, who has prevented—quite rightly—such language from being set down in prepared questions, because, firstly, it is without justification on the facts, and, secondly, it bears no resemblance to the Budget practice used in the past by the Labour Government—
The member has made his point; he will resume his seat. There is nothing inherently unparliamentary about the term “unfunded”. No one has ever ruled it out.
No. This Government will break with the practice of the previous Government of making unfunded commitments. All initiatives announced tomorrow will be charged against Budget 2009. This will apply, for example, to the scheme to insulate New Zealand homes, which will be outlined in the Budget tomorrow. The previous Government promised a billion-dollar scheme, but not one single dollar was committed to that scheme.
Hon David Cunliffe Link to this
Does the Minister agree that the cost of the unemployment benefit is $793 million per annum at 7 percent unemployment, rising to $1.019 billion at 9 percent unemployment, based on Pre-election Economic and Fiscal Update forecasts; does he then agree that rising unemployment poses a significant fiscal risk; and can he clarify for the House the levels of unemployment that he considers to be prudent?
What I can clarify is that unemployment is rising, and that this Government will do every single thing it can to offer to those people who have lost their jobs the hope that they can get a new job.
Jeanette Fitzsimons Link to this
Does the Minister see any prudential difference between increasing debt to fund more consumption and debt to fund investment in a more resilient economy with lower carbon emissions, less dependence on oil, and more ability to withstand future price shocks; and if he does see a difference, will the Government be putting forward a plan to transform the economy in that way?
As has been stated in the media in the last 24 hours, the Greens have made a significant contribution to the Government moving in that direction.
Hon David Cunliffe Link to this
I seek leave to table an article by Moody’s Investors Service entitled “How far can Aaa Governments stretch their balance sheets?”, which rates New Zealand as being amongst the least indebted countries of the world.