1. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
What steps is the Government taking to consider options for improving New Zealand’s national savings?
Hon BILL ENGLISH
Mr SPEAKERI apologise to the Minister. We are not going to start the week that way. The Minister had not even started his answer before there was a barrage of interjection from, on this occasion, the Labour front bench. That is not in order. Interjections should relate to what a person says, and should not be just a widespread volley like that.
Hon Trevor Mallard Link to this
The point of order goes to whether, in fact, this question should have been accepted, given that it contains irony.
I do not think that the Hon Trevor Mallard has any questions on the Order Paper today, but even so that kind of abuse of the point of order process will not be tolerated. I guess it might have had an element of humour to it, which assisted on this occasion, but I do not accept that kind of point of order.
A focus on national savings is the next step in the Government’s programme for rebalancing the economy towards savings, investments, jobs, and strong economic growth. Today the Government has announced the appointment of an independent Savings Working Group with wide terms of reference. This group will focus particularly on lifting the level of national savings, not just household savings.
Sandra GoudieImproving national savings is so important because of the damage that the previous Government did to it—and it should listen. New Zealand has run current account deficits for a very long time and the difference between investment and our savings has been funded by offshore borrowing. That offshore borrowing was $100 billion in 2000, it reached $170 billion this year, and it is forecast to rise to almost $250 billion by 2014. If we can lift national savings we will not be as vulnerable to overseas lenders as we unfortunately are after 9 years of economic mismanagement.
Hon David Cunliffe Link to this
What did less damage to New Zealand’s saving rate: cutting contributions to the New Zealand Superannuation Fund, cutting KiwiSaver incentives, or borrowing more for tax cuts for wealthy New Zealanders like Ministers?
What did a lot of damage to our national savings and our external deficit was the previous Government. In the 4 years to 2008 New Zealand’s balance of payments deficit averaged—
Hon Darren Hughes Link to this
I raise a point of order, Mr Speaker. My colleague’s question is about 2010. It is about today and the future; it is not about the past. That answer was not about the Minister’s responsibility. The member put to the Minister three different policy options of the current Government and asked the Minister to give an answer based on the current Government’s policies. Instead we get speeches about what previous Governments have done.
Hon Dr Nick SmithNow it is the Hon Dr Nick Smith. It is fortunate that I am in good humour today, because a point of order is being heard and he should not be interjecting. I say to the Hon Darren Hughes that the question asked, from memory, what, out of a list of things, had caused the least damage. It was seeking the Minister’s opinion. It seems that the Minister did not agree with any of that list and added to the list himself as to what was causing damage. When questions seek opinions there is no precise answer. Members may not like the answers but the remedy is in members’ hands—they should ask tough questions and not just seek opinions.
What damaged national savings were the policies of the previous Government. Those policies led to a blowout in Government spending, a blowout in consumer borrowing, and the worst record on balance of payments for decades. The balance of payments deficit averaged over 8 percent of GDP from 2004 to 2008.
The working group will consider further the impact of the tax system on national savings, but it will not be considering capital gains tax or land tax, which the Government has ruled out. It will be considering the role of KiwiSaver in improving national savings, but also the role of Government, because there is not much point lifting KiwiSaver or household savings at the expense of putting the Government further into deficit.
Hon David Cunliffe Link to this
Given the Minister’s fondness for history, perhaps I could rephrase my question. What did the most damage to New Zealand savings stock: cutting KiwiSaver, cutting the New Zealand Superannuation Fund contributions, tax cuts for the wealthy, or Robert David Muldoon’s decision to scrap the New Zealand superannuation scheme in the 1970s?
Did the Minister hear the question? I say to his colleagues that the level of interjection was unreasonable.
What damaged our national savings was economic policy that in the last 9 years delivered a 3 percent increase in after-tax wages. In 9 years under Labour, households had only a 3 percent increase in their after-tax wages, which meant they could not save.
What policies have contributed to the poor performance of New Zealand’s national savings over the past decade?
The policies that would have contributed to higher national savings are economic growth and rising household incomes, which would have given New Zealanders the ability to save. Unfortunately, those policies did not happen. From 2000 to 2009 the average ordinary-time weekly wage after tax and inflation grew by only 3 percent in 9 years. How could people save with an increase in their wages of 3 percent in 9 years?