1. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
How will the Budget next month help New Zealanders and their families get ahead in this country?
Hon BILL ENGLISH (Minister of Finance) Link to this
The Budget next month will help to achieve that by focusing on four main goals: lifting the long-term performance of the economy, the reform of the tax system, better delivery of public services, and maintaining firm control of the Government’s finances.
As part of the Budget, how will the Government ensure that it continues to manage its finances in a responsible way on behalf of taxpayers?
The Government will continue to improve public services, funding that from cuts to low-quality spending and from the new operating allowance. We will live within the $1.1 billion operating allowance for new spending and will restrict annual increases from this figure to 2 percent per year from next year. Even with this restraint, core Crown debt is forecast to triple to about $65 billion by 2014, as we borrow to fund the deficits. To turn this round, the Budget will redirect another $1.8 billion of lower-quality spending between now and 2014 into high-priority areas, such as health care, education, and law and order.
Hon David Cunliffe Link to this
Which of the following will make it easier for New Zealand families to get ahead: increasing tax on all the basics, when most people are struggling to pay their weekly bills, or giving tax cuts to those people on the highest incomes and small change to everybody else?
The member will just have to wait for the Budget to see the details. The Budget will be good for the economy, and it will help New Zealand families to get ahead.
There are two main vulnerabilities. First, a Treasury forecast in December predicted a cash deficit of $10.1 billion in the current year to 30 June. Treasury has also forecast that the Government will not return to surplus until 2016. The second vulnerability is New Zealand’s total external debt, including that of households, businesses, and the Government. It has ballooned from $90 billion owed to foreign lenders in 2000 to $170 billion today, and is forecast to approach $250 billion by 2014. Those facts were clearly lost on Labour’s spokesperson on finance, when he said: “New Zealand’s problem cannot be primarily that it has a yawning budget deficit, because it does not.”
Hon David Cunliffe Link to this
Can the Minister confirm that on taking office his Government inherited zero net Crown debt from the previous Government, and that in describing borrowing he has misrepresented the data by claiming that the Government is borrowing $240 million a week, when half of that is rolling over old debt; and can he further confirm that New Zealand’s gross and Crown net debt are around one-third of the OECD average?
I am confused by the member’s claim that there was no debt when he left office, and he said in his second sentence that half of our borrowing is going into rolling over existing debt. The credibility of that analysis is carried through into Labour’s recent promises to put up taxes, spend more, borrow more, and leave it to our children to pay the bill.
I have seen a misguided recipe for borrowing and hoping, taxing and spending, and leaving a mortgage on the future for our families. It comes from Labour’s leader and its spokesperson on finance. The fact is that the current Government is following very sensible economic policy, which is to prevent a rapid rise in our debt, to lift the growth rate of our economy, and to give people incentives to save and to get ahead, and less incentive to spend too much and borrow too much.
John BoscawenWhy will the Government not help New Zealand families by following Australia’s lead today and putting the emissions trading scheme on hold until 2013, especially since John Key promised during the election campaign that “we shouldn’t be the world leader, because that will come at the expense of our economy.”, and that he sees no sense in New Zealand putting export jobs into another part of the world, or does that election promise not matter?
The issues around the emissions trading scheme are complex, and the Australian situation is a bit different from what the member said it was. But I am puzzled by the willingness of that member’s party to promise to honour the property rights of forest owners, who will receive over $1 billion dollars worth of credits. ACT wants the forest owners to keep their credits, but it thinks the taxpayer should pick up all the debits. I am not sure whether he has consulted Sir Roger Douglas about that, but that is very poor public policy.
Hon Rodney HideI raise a point of order, Mr Speaker. I do not believe the Minister addressed that question. We got a long discussion about ACT’s position on it, but the question was quite clear: why would we not follow Australia?
Mr SPEAKER