10. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Does he stand by his statement on Radio New Zealand this morning “New Zealand weathered the global financial crisis partly because of the strength of the Government’s finances”?
Hon STEVEN JOYCE (Associate Minister of Finance) Link to this
Yes, and, as the member notes, the key word in that statement is “partly”. Although our debt position was low by historic standards, we inherited a range of problems that increased our exposure to the global financial crisis. They included an economy that had already gone into recession ahead of almost every other advanced economy; a forecast—
Mr SPEAKERThe Minister will resume his seat. He may have noted that the question just asked whether the Minister stood by a statement. The Hon David Cunliffe may have a supplementary question.
Hon David Cunliffe Link to this
Can the Minister confirm that when he took office net debt had already been reduced by Labour to zero percent of GDP, for the first time in New Zealand’s history?
In theory, net debt was close to zero, but concentrating on that indicator reveals a range of other problems that the previous Government left behind, including over a billion dollars in unfunded rail commitments, a $1 billion insulation fund for which no money had been set aside, a $2 billion hole in accident compensation funding that had been hidden before the election, a $320 million write-down of KiwiRail, plans for an unaffordable $3 billion Waterview tunnel, and a range of other unfunded commitments, the cost of which stretches to several billion dollars.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. There are other supplementary questions to come, but first let me traverse a matter that I have previously raised with you in a point of order. I simply seek a reiteration of your earlier ruling. In response to similar questions, Mr English has employed the similar tactic of deliberately confusing and terming unfunded liabilities matters—
No, the member must resume his seat now. The member is seeking to litigate an answer. He cannot do that by way of a point of order. He can ask further supplementary questions; if he disputes the information that the Minister has just given the House, he can ask further supplementary questions about that information, but he cannot litigate it by way of a point of order.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I confess to some degree of confusion in light of your most recent ruling, because I was simply referring to an earlier ruling that you had given. My new point of order is whether I am to take it that you have overridden your earlier ruling and are saying that it is now permissible for a Minister to deliberately confuse something that is bound by statute—that is, the difference between a quantified or unquantified fiscal risk and an unfunded liability?
The member is now getting into the detail of the matter. I can absolutely assure the honourable member that I have been consistent right the way through in these matters. Points of order cannot be used to litigate an answer, or even to question the quality of an answer. The Minister gave certain information to the House that was perfectly fair given the supplementary question that he had been asked. If the member disagrees with that information, he is perfectly at liberty to question the Minister more closely on some aspects of it. But I have called Amy Adams to ask her supplementary question.
Amy AdamsThe Government inherited many problems after the election, including an economy that had already gone into recession ahead of almost every other advanced economy, a forecast decade of deficits, out-of-control Government spending that grew 50 percent in the 5 years to 2009—twice as fast as the economy or revenue—and very low productivity growth over the previous 9 years.
Hon David Cunliffe Link to this
Can the Minister therefore confirm that upon taking office his Government inherited an economic environment where unemployment had dropped to the lowest rate—3.4 percent—in 21 years, and that GDP growth was well above the OECD average of 2.6 percent?
I can confirm that GDP growth was negative when the Government took office, as the result of a recession that had begun at the start of the year.
Hon David Cunliffe Link to this
Will the Minister confirm that the cost of his 1 April tax cut was $1.2 billion per annum, which is the same amount as the deterioration recorded in the Crown accounts released yesterday; and does he now think that it was premature to introduce a tax cut predominantly for high-income earners while delivering very little to hard-working Kiwi families and blowing out Crown debt?
The blowout in Crown debt was caused by unsustainable growths in Government expenditure, and this Government is very clearly focused on creating jobs and growth. In order to do so, we have to do a number of things, including providing incentives through our tax system to reward hard work across the tax range. The tax changes this year helped to achieve that.
Hon David Cunliffe Link to this
Does the Minister agree with the statement by John Key that he would pay for tax cuts by running “lower surpluses and increasing debt”, and will he confirm that had a tax cut been given then, in 2005, it would have added an additional $10 billion to the Government’s debt today?
No, and I think this illustrates the fundamental difference between this Government, and Mr Cunliffe and the Labour Party. This Government strongly believes that the best people to spend their money and help grow the economy are the people who themselves make the income, whereas those members believe that it is all about increasing Government expenditure at the expense of everybody else.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I submit that the Minister has not addressed the question, which asked whether he agreed with the statement of his Prime Minister. Instead, we got a homily on Philosophy 101 from the neo-conservative—
I have been very patient with the member’s points of order, but he abused the point of order system then by seeking to abuse the Minister. He cannot do that under a point of order, and I will not put up with it. The member has claimed that the Minister did not address his question, but if the member looks at the various components of the question he asked, he will see that the Minister was disagreeing with one of the parts of his question. One of the parts of his question related to tax cuts that had been talked about in 2005, if I recollect correctly, and the impact they might have had on the deficit announced the other day. The Minister was disagreeing totally with the assertion the member had made. That is a perfectly acceptable answer to the question.
Hon David Cunliffe Link to this
I seek leave to table a transcript of an interview with the Minister of Finance, Mr English, this morning, and also with BNZ economist Craig Ebert, who notes the significant impact on the Government’s fiscal balance of the big tax cuts—
Leave is sought to table a transcript from this morning’s Radio New Zealand National broadcast. Is there any objection? There is objection.