1. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
What challenges does the Government face in putting together Budget 2011?
Hon BILL ENGLISH (Minister of Finance) Link to this
Many challenges, not least the ongoing job of undoing the damage done by the previous Labour Government. More recently, the February earthquake and lower-than-expected growth in the first part of the year have made the outlook more challenging. In the absence of decisions that will be outlined in the Budget, we would have been expecting to return to surplus probably around 2016-17 and net debt to peak at 35 percent of GDP.
We are keen to lay out a credible path to surplus, while meeting the very significant extra costs of rebuilding Canterbury. We want to get to surplus as soon as possible, because it is only surpluses that give Governments policy choices and provide a buffer against further unexpected economic events.
The Government has hinted at a number of those changes. We will take responsible steps to ensure that large-scale programmes such as KiwiSaver, Working for Families, and student loans are bettered targeted, deliver better value for taxpayers, and have growth that is controlled. The Government will also seek a greater level of savings from the public sector, to help to fund improvements to critical front-line services. Some of these changes will be legislated for immediately after the Budget, but none will take effect before the election. That will give voters the opportunity to make clear choices between what will be a responsible and balanced programme from the Government, and some other kind of programme from the Labour Opposition.
Hon David Cunliffe Link to this
Does he agree that increasing the private savings rate is a challenge for the Budget; if so, does he agree with the warning from Standard and Poor’s analyst Kyran Curry that moves to strip KiwiSaver incentives without providing offsetting measures may take the country in the wrong direction?
No. The Government has said for some time that the focus of this Budget is not just on private savings. It is on national savings, because it is our overall and total liabilities to foreign lenders that make our country so vulnerable. As the member knows, we have amongst the highest levels of debt to foreigners, of any country in the whole world. So we are focusing on national savings, and the member can wait for Thursday to see just where KiwiSaver fits in that picture.
It has been evident since 2008 that this economy needed to be rebalanced away from excessive consumption and housing speculation funded by debt, and towards savings, investment, and exports. So Budget 2011 will be broadly similar to Budgets 2009 and 2010, because we are following the same plan.
Hon Trevor Mallard Link to this
Can the Minister assure the House that all savings booked in the Budget will identify which vote, and which line of that vote, will be reduced?
The Budget will meet all the standards of transparency for savings that have been required. But I have to say the Government decision-making process will be much more transparent than that of the previous Government, which got into the habit—
Mr SPEAKERThe member should have been aware that I was getting to my feet. That was a pretty straight question about whether votes would show savings. It is a technical question that is capable of having an answer, and it did not deserve that last bit to be added. Had the question been a political question, there would have been no problem, but it was not. Under the circumstances I will invite the member to repeat his question, and let us hear an answer without the unnecessary bit being added at the end.
Hon Trevor Mallard Link to this
Can he assure the House that all savings booked in the Budget will identify which vote, and which line of that vote, will be reduced?
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. It was a very straight, albeit slightly technical, question, but that reply did not answer or even address that question.
Well, it did, in so far as the Minister said the Budget would meet all the standards of transparency that Budgets are expected to meet. It is difficult for me to insist that the Minister give a more precise answer, but a further question could follow to ask whether that means—
Hon Trevor Mallard Link to this
Further to the Minister’s reply, does his reply relating to transparency mean that all savings booked in the Budget will identify which vote, and which line of that vote, will be reduced?
The reason I referred, in answer to the question, to the general standard of transparency in the Budget is simply that I have not tracked every single saving to every single vote. Some things may be going on within votes that represent savings in the Budget, so I would not want to misrepresent that by saying every dollar is tracked in exactly that way, but I think that it is most likely that that is the case.