2. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
What will be the focus of Budget 2011 and the Government’s wider economic programme this year?
Hon BILL ENGLISH (Minister of Finance) Link to this
Today I have announced that Budget 2011 would be presented on Thursday, 19 May. It will focus squarely on taking further measures in the Government’s programme to build New Zealand’s national savings, increase investment, create jobs, and lift incomes, as well as reducing our vulnerability to foreign debt.
In Budget 2009 we had to get on top of spiralling debt, which was out of control as a result of a recession and very poor management by the previous Government. In Budget 2010 the Government changed the incentives in the tax system to reduce the incentive for excessive spending and borrowing, and to increase the incentive for savings, and we will continue along that line in Budget 2011.
Rahui KateneIs the Minister aware that in 2008 Treasury observed that the last recession, from 1988 to 1993, had had adverse social and economic effects on Māori that lasted for at least a decade, and what will he be doing in Budget 2011 to prevent the same scenario from reoccurring?
The Government has moved to prevent that scenario from occurring again by supporting the economy through this last recession, and this year we are borrowing $300 million a week to pump into the economy to maintain transfer payments and income support, as well as to underpin publicly funded jobs. In Budget 2011 we will have a strong focus on investment—that is, getting businesses to invest their money so that they can create new jobs and lift incomes, and that will certainly benefit Māori.
What specific measures will the Government consider to ensure that it contributes to improving New Zealand’s national savings?
The Government needs to carry some of the weight of improving national savings. Households are doing their bit, because they are being careful with their spending, paying off debt, and increasing their savings—in fact, they are doing that faster than we expected. However, at the moment the Government is driving up our external debt. We need to get hold of Government spending in the first place, to improve its effectiveness and focus, and we need to get back to surplus as quickly as we can, so that the Government is not driving up New Zealand’s already very high level of foreign debt.
Hon David Cunliffe Link to this
Given that the Government’s books have deteriorated on the Minister’s watch from a surplus of $8 billion as at election day to a debt now of $40 billion, and given that he has just admitted that the Government may be taking the country into a double-dip recession, will he now admit that his programme has failed and he has no new ideas for jobs and growth?
Metiria TureiWhy will the Minister not increase the minimum wage to at least $15 an hour, saving around $1 billion in Government social services spending?
The Government has made a balanced decision about the minimum wage. On the one hand we do not want to take measures that will lock young people, particularly, out of the labour market. On the other hand people on the minimum wage need to be able to deal with the rising cost of living. So the Government has announced about a 2 percent increase in the minimum wage.
A number of measures have been proposed that would significantly increase the need for New Zealand to borrow in financial markets that are increasingly reluctant to lend, particularly to countries with already high levels of total debt. So we have rejected the $1.3 billion cost of a tax-free threshold of $5,000, we have rejected the idea of taking GST off fruit and vegetables at a cost of a quarter of a billion dollars, and we are not going to be borrowing another $400 million to add to early childhood education spending.
Is the Minister of Finance, like John Key, proud of the 5 percent cut in full-time public sector jobs, given his concern about young people and jobs; if so, why?
The Prime Minister has outlined his concern to ensure that we provide better public services and do so with fewer resources. Every other business in New Zealand has gone through that process, and most households in New Zealand have gone through that process; the Government has not. We will be investing in improved public services. In some cases that may mean there are fewer jobs but in many cases it will mean a better service.
Grant RobertsonCan the Minister confirm that the grand plan for lifting New Zealand out of economic recession is based on the merger of the Ministry of Fisheries into the Ministry of Agriculture and Forestry; if so, will it generate more savings than the $165,000 a year being saved by merging Archives New Zealand and the National Library into the Department of Internal Affairs?
The Government is focusing on considering on a case by case basis how to provide better public services for less cost. In that case, the industry has suggested that such a merger would reduce the levy on the fishing industry. That would help it employ more people, grow more exports, and lift incomes across the New Zealand economy. So the Government is going to play its part.
Why is the Minister of Finance effectively subsidising the wage bills of large corporates like Foodstuffs and Burger King, rather than supporting families who need just a decent job with a living wage?
When the Government came in, despite the fact that we faced significant deficits for a long time we maintained the Working for Families programme with only minor changes because we believe that those families need the certainty of the income support, particularly through a recession. Whether or not income support is a subsidy on wages is an old argument, but we believe that, regardless of what one thinks of that issue, those families need cash support, and this Government is borrowing $300 million a week to help ensure they get it.