2. DAVID BENNETT (National—Hamilton East) Link to this
to the Minister of Finance
What steps is the Government taking to improve its financial performance?
Hon BILL ENGLISH (Minister of Finance) Link to this
The Government is taking steps to improve its management of capital expenditure. Total assets of the Crown have trebled over the past decade to more than $223 billion at June 2010, yet the means by which those are funded and the way that the capital is used is not transparent to the Government, let alone to the taxpayer. Yesterday the Government released the first annual portfolio report, which is a concise summary of the financial performance of Crown financial institutions, State-owned enterprises, and Crown research institutes. Next week we will release the Crown’s first investment statement, which will show in full the Government’s balance sheet and its investment intentions over the next 5 years.
The portfolio report sets out the performance of, in particular, State-owned enterprises. Excluding the rail and post enterprises, State-owned enterprises earned $500 million and declared dividends of $386 million. Crown financial institutions collectively returned 12.8 percent last year, following 2 years of losses. By the end of the year the Crown had $40 billion invested in financial investments, and the Crown has around $700 million invested in the Crown research institutes.
The investment statement will show the quantity of Government assets and the ambition of the Government’s investment programme to 2015. Net Crown assets are expected to grow by some $35 billion over the next 4 years, and total investment is around $70 billion of fresh capital investment over the next 4 years. About half of that relates to services such as schools, hospitals, rail, broadband, roads, and the electricity network. There is also a substantial accumulation within the Crown’s investments funds, which are expected to grow by about $20 billion of investments through to 2015.
Hon David Cunliffe Link to this
How can he claim to be improving the Government’s net financial position when his deficit has increased in the last quarter alone by almost $2 billion more than forecast?
In the first place, the figures I have been talking about are the asset values of the Government, whereas the deficit relates to our operating expenditure. But the member does make a fair point that the Government cannot continue to run very large deficits. This year it could be somewhere up to $11 billion. We have set out a path to reach a surplus by 2015. That will take some very significant fiscal discipline, which I know the member is opposed to, but it is the only way we will get there.
Hon David Cunliffe Link to this
Further to the Minister’s answer to question No. 8 yesterday, when he said he would not be surprised if there were some quarters in the last 2 years when annualised real GDP per capita had fallen, can he now confirm that, in fact, annualised real GDP per capita has fallen in every single quarter since his Government took office, meaning that average New Zealanders have consistently gone backwards, and are still earning less today, on average, than on the day he first took office?
No, I disagree with the member’s last point. But as I pointed out yesterday, in a significant recession one would expect real per capita incomes to drop. The Government has set out a plan to turn that round. However, we are dealing with the legacy of a Government that managed to have negative growth in real per capita incomes even when the rest of the world was not in recession and the rest of the world was growing strongly. I do not know how he managed it.
Hon David Cunliffe Link to this
I seek leave to table the statistical table from page 8 of the monthly economic indicators published by Treasury, which shows that real GDP per capita has fallen every single quarter since the Government took office up until—
Mr SPEAKERBecause we are dealing with the legacy of 10 years when the previous Government spent large amounts on new capital. Much of that was spent ineffectively. The attention paid to it by the Public Service has been just about zero, so we are going through a significant exercise to make sure taxpayers get value for the $230 billion of assets that they own.