1. Dr RUSSEL NORMAN (Co-Leader—Green) Link to this
to the Minister of Finance
Does he agree with 57 percent of New Zealanders who, according to a recent UMR poll, support the introduction of a temporary earthquake levy to pay for the rebuilding of Christchurch?
Hon STEVEN JOYCE (Associate Minister of Finance) Link to this
Paying for the rebuilding of Christchurch is not a simple choice of either introducing a levy or funding it through debt, which was one of the choices that was put to respondents in the poll. The Government is, in effect, already borrowing to pay for demands such as the welfare needs of Christchurch residents, and to ensure rebuilding can begin quickly. So the Government has to borrow initially; then the question will be how the money is paid back. What we do agree on is that New Zealanders want to see the burden of rebuilding Christchurch shared, not fall only on Christchurch residents. I note that when the question was put in a different way to respondents in the same poll, 40 percent of respondents favoured the Greens’ levy plan, whereas a total of 51 percent of respondents preferred that the Government borrow to fund rebuilding, or make cuts in expenditure.
In light of yesterday’s financial statement to the Government showing that the Crown is in a worse-than-expected fiscal position, will he take the opportunity to reconsider a levy, rather than going further into debt to pay for the rebuild?
The reality is that we have to go into debt, because the money needs to be spent now; then the question will be about paying it back later. I also point out, though, that the Government has decided it will have a strong focus on its own expenditure and making sure that it is all spent well, taking into account whatever reprioritisation is possible, rather than imposing a levy.
Is he concerned that a big increase in Government debt could lead to a credit downgrade; and does he agree that a credit downgrade will add significantly to households’ mortgage payments?
Of course the Government would be concerned if there was a blowout in Government debt, and that is why it is very important to get the Budget right—to make sure that we prioritise all our expenditure properly and minimise the impact on our overall debt.
Does he agree that every dollar raised by a temporary earthquake levy is $1 less in borrowing, and every dollar less in borrowing reduces the risk of a credit downgrade and hence higher mortgage payments for New Zealand householders?
I have some trouble with the member’s premise. He seems to think we should just ignore what we are spending already, and just get people to write us cheques for more money. The Government is taking the view that it should make sure it gets the absolute best from the expenditure it is already doing. I understand that the reality is that if we do the exercise on the Greens’ proposed levy, it shows that the levy would raise, at best, around $600 million a year, which would mean that people in Christchurch would be waiting a long, long time before we would be able to afford the rebuild.
Does the Minister share the concerns of many economists that severe Government spending cuts at a time when the economy is already fragile could result in a renewed recession?
I reject the characterisation of “severe” spending cuts. The Government will be prioritising its expenditure. We are doing it carefully, and members will have to wait to see the Budget.
Amy AdamsI understand that the proposal from the Greens is to raise the income taxes of those earning above $48,000 a year. Even ignoring the damage that that would do to economic growth and the erosion of the tax base, it would raise a total of around $600 million per year. At that rate it would take about a decade to fund the direct costs of the quake. That is notwithstanding the fact that the amount of interest on top of the debt would also have to be borrowed in the meantime. So such a levy could hardly be called temporary.
I seek leave to table a copy of the Greens’ proposal, which shows that the levy would raise $1 billion per year.
Mr SPEAKERWhy is the Government ignoring the compassionate offer of New Zealanders to chip in to pay for a levy at $1 billion a year, which is a much more fiscally responsible approach, and one that avoids the risk of a credit downgrade due to increased borrowing, and that also avoids the risk of inducing a new recession if there are big spending cuts in the Budget?
I note that it is a compassionate offer by the Green members on behalf of a whole bunch of New Zealanders they do not speak for. I think that is largely what is going on here. That is cool and everything, but the reality is that the Government believes strongly that we can reprioritise expenditure. As I have said, the Budget will be out in the middle or at the end of May, or something like that, and the Greens will have a chance to see how the Government will do that.