1. MICHAEL WOODHOUSE (National) Link to this
to the Minister of Finance
Why is it important that the Government returns to Budget surplus?
Hon BILL ENGLISH (Minister of Finance) Link to this
Although it has been appropriate for the Government to borrow significantly through a recession to protect New Zealanders from the sharp edges of that recession, we do not want to leave a large legacy of debt for future generations, so we need to constrain our deficits and return to surplus. Secondly, we do not have many choices about where to spend to increase the welfare of our community until we have surpluses. The sooner we get there, the sooner we can choose more services, lower taxes, or less debt.
The Budget will continue the Government’s balanced and considered approach to managing the Government’s finances. It will further outline reprioritising—
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I thought that the use of irony was not allowed in the House.
Mr SPEAKERThe Budget will show further reprioritisation of existing spending, from the kind of wasteful back-office spending the Labour Government specialised in, to high-priority public services.
Michael Woodhouse Link to this
How will the Budget help increase New Zealand’s level of national savings?
As the Savings Working Group noted, one of the most important ways a Government can lift national savings is to get its own finances in order, because the Government represents around one-third of the economy. Therefore, the Budget will outline the next steps in the Government’s programme to reduce the need for extra borrowing, and, over time, repay debt. That will help to keep interest rates lower than they otherwise would be, and with interest rates currently at a 45-year low, that is leaving hundreds of dollars a month in the pockets of households across New Zealand. We would like to continue that for as long as possible.
Hon David Cunliffe Link to this
Can the Minister confirm that under Labour the Crown’s 2008 net financial balance, including New Zealand Superannuation Fund assets, was in credit by 7.2 percent of GDP, but that today we are back in net debt by around 13 percent of GDP under his Government; if so, can he advise the House when he will stop making excuses and take responsibility for policy choices, including the $23 billion of unaffordable tax cuts that have driven this country to the brink?
No, I cannot confirm that. But if the member was concerned about this Government moving into deficit as it has done, I cannot understand why his party continues to promise to borrow very large amounts of extra debt, over and above what has been the bare necessity that this Government has followed.
Michael Woodhouse Link to this
What was the outlook for the Government’s finances when the National-led Government took office in November 2008?
The Pre-election Economic and Fiscal Update in October 2008 forecast Budget deficits for 10 years—for 10 years. By the time of the December 2008 update, just a month or so after National was elected, the forecasts had deteriorated further, and on the basis of the policies of the previous Government we were looking at permanent Budget deficits pushing Crown net debt to 50 percent of GDP, and never falling. We have spent the last 2 years cleaning up this mess.
John BoscawenHow can New Zealand ever hope to catch Australia by 2025 when the Labor Government there has committed to a retirement age of 67, or does he consider Julia Gillard to be a right-wing extremist?
The Hon Julia Gillard is admirably conservative in some respects. For instance, her education policy makes all of us here look fairly left wing. But in respect of catching up with Australia, the Government is pursuing a programme of infrastructure investment, lower taxes, better regulation, improving educational standards, and lifting the performance of the public sector, which we believe will, in time, help to close the gap with Australia.