6. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Are the downward revisions in growth forecasts a sign that the Government’s economic plan is not working?
Hon BILL ENGLISHHon David Cunliffe Link to this
So nice of him to wake up! Does he stand by his statement: “I want to stress that New Zealand starts from a reasonable position in dealing with the uncertainty of our economic outlook.”?
In that statement I would have been referring to the level of Government debt at that time, which is now 2 years ago. Since then there has been a series of unexpected shocks, ranging from finance company collapses through to and including a couple of earthquakes. The fact is that, as the IMF said this morning, when we put it alongside the level of private debt held in New Zealand we have every reason to worry about the growth in Government debt.
Hon David Cunliffe Link to this
Given his admission that the Government started from a reasonable position, how did his tax package contribute to the decline in the economy over the past 2 years, which had him admitting the earthquake was a contributor to National’s double-dip recession?
The tax packages the Government has announced have been self-funding—that is, reductions in income tax have been offset by increases in other taxes. In our view, like our investment in infrastructure, our focus on a better performing public sector and our support for better educational standards are all investments in the long-term improvement of New Zealand’s economic performance.
Hon David Cunliffe Link to this
How can the Minister say that the tax package was self-funding when Treasury says that it was $1 billion short over 4 years, and when two-thirds of the money went to the top one-third of income earners?
The member is not correct in those particular facts. The fact is that this economy, under the stewardship of Labour, became severely unbalanced. We set about reducing consumption and excessive housing speculation by increasing taxation on those activities, and encouraging investment, savings, and exports by decreasing tax on those activities. We believe that is in the best interests of the economy in the long run.
Hon David Cunliffe Link to this
Does the Minister stand by his statement in this House last Thursday that “The cost of the earthquake will essentially be borne by the Government’s balance sheet, rather than by cutting operational spending …”, or has that changed since the Prime Minister went on television on Sunday?
As I have pointed out a number of times, the significant costs of the earthquake are being incurred as we speak—for instance, the Government is spending probably up to $150 million in the current month on just welfare support. There is no way we can make significant operational savings in the very short term to offset those costs. So we will be borrowing the upfront costs of the earthquake, and, of course, we need to get back to surplus quickly so that we can get on top of that rising debt.
Hon John Boscawen Link to this
I seek leave to table a statement from the New Zealand Institute of Economic Research on the effect of the earthquake on New Zealand’s growth—
Mr SPEAKERHon John Boscawen Link to this
It is a statement from the New Zealand Institute of Economic Research, released at 12 noon on Monday this week, 21 March.
Hon John Boscawen Link to this
I seek leave to table a statement from Westpac, also dated Monday 21 March, outlining the impact of the earthquake on the Government’s accounts and GDP growth.
Hon David Cunliffe Link to this
I seek leave to table a transcript of Radio New Zealand Nine to Noon on 28 January 2011—
We do not table transcripts. I could see that the House had some unease about the media release of the New Zealand Institute of Economic Research, but it was my judgment that the House should have the benefit of deciding whether it wanted those releases tabled. But we do not table transcripts of recent television or radio programmes, or recent press statements.