4. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
What does he consider to be the main strategic changes required to the economy that Budget 2011 will address?
Hon BILL ENGLISH (Minister of Finance) Link to this
I am pleased to see that the member is back from his parachute-packing class.
Mr SPEAKERI am on my feet, and the House will be silent. That was an unacceptable way to commence the answer to a perfectly fair question. The question was absolutely fair.
Hon Clayton CosgroveWhat a good idea. The Opposition has just gained an extra supplementary question; I will make the record 225.
The main strategic choice for this economy in this Budget is the same as it has been for the previous two Budgets, which is to rebalance the economy away from debt, finance, consumption, and housing speculation to savings, exports, and investment.
Hon David Cunliffe Link to this
If the main challenge is the same as it was in the previous two Budgets, will the prescription be the same—namely, further cuts to superannuation pre-funding, and unaffordable tax cuts overwhelmingly directed to people who do not need them?
The prescription in the first Budget was to get hold of public finances, which were at the time out of control because of the stewardship of the previous Government combined with the effects of the global recession. Last year the focus was on changing our tax mix to get right the incentives in the economy, and favouring savings and investment over consumption. This time the focus will be on building savings, and getting the Government in particular to control its own borrowing and spending so it can contribute to national savings.
Hon David Cunliffe Link to this
Does the Minister stand by his recent earlier statement that the centrepiece of Budget 2011 will be to promote savings; if so, does he agree with the member sitting next to him that the best idea the Government can come up with is reversing the cut to the default contribution that they themselves made not a year ago?
Yes, I do agree with what the Prime Minister said. This Budget has to focus on getting the basics of the Government’s finances in order. I think the New Zealand public understand that. They are concerned, for instance, that over the last 12 months we will have ended up averaging borrowings of, I think, $380 million a week. That is far too high and must change.
Chris TremainThere are a number of benefits that we hope will flow not just from this Budget but from the accumulation of the last two: lifting growth back on to a stable path; reversing the decline in productivity, which is a critical component of economic growth and higher incomes, to help revive the export sector, which actually shrank through the latter part of the last decade; and redirecting Government resources in a way that is much more effective.
Hon David Cunliffe Link to this
Does the Minister agree with Steven Joyce that KiwiSaver is a pyramid scheme, and will he be offering Mr Joyce lessons in the basics of finance so that Mr Joyce can learn the difference, or has that job already been done by Dr Brash?
Mr Joyce, in his usual very insightful way, was referring to the phenomenon whereby the Government borrows money off Asian central banks and pension funds in Europe and puts that money into individual KiwiSaver accounts, and we call it savings. Borrowing is not saving.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. The Minister, with the best of intentions, may have misheard the question. I was referring to KiwiSaver—
No, no. The member’s question was a pretty provocative sort of a question, and the nature of that question will never get a precise answer.
Hon David ParkerI raise a point of order, Mr Speaker. With respect, the member’s question was putting a quote from Mr Joyce about KiwiSaver. The Minister did not address KiwiSaver, at all; that is not provocative.