How has the Government’s economic plan over the past three years laid the foundations for a more competitive economy based on savings, exports and productive investment?
The Government had to set out to lay some foundations, because the economy that we inherited was in very bad shape. It was dependent on excessive Government spending, it had high levels of household debt, it was providing new but unsustainable jobs, and we had become less competitive with the rest of the world. We have debt under control; we have changed the incentives for people to work, to save, and to export; we have cut red tape; we have built infrastructure; we have raised educational standards; and we are increasingly focusing the economy on what we are good at, which is trading with the rest of the world.
Because I accepted that in answering the primary question the Minister of Finance gave some attention to the matters that the Government inherited, which was not absolutely necessary to answer that primary question, out of courtesy, rather than going as normal to the primary questioner for the first supplementary question, I went to the Opposition to give the Opposition the chance to question the Minister of Finance in those circumstances. But to start the supplementary question in that way makes the Speaker look stupid for having departed from the normal practice, because that is not the appropriate way to start a question and it just makes it difficult in the House. I accept that the Minister of Finance did not need to mention the economic situation that the Government inherited in answering that primary question, and that is why I came to the Opposition to ask the first supplementary question. I would like a supplementary question to be asked.
Does the Minister recall, in December 2008, saying that he had inherited Government books that were in reasonable shape, and was that because Government net debt, including the assets of the New Zealand Superannuation Fund, had been paid off to zero in the year preceding the election?
Yes, Government debt was relatively low, but all the forecasts showed it was about to expand in a never-ending, almost geometric fashion as the accumulated mistakes and damage of the Labour Government built up over time to create damage to this economy. One of our mistakes, I suppose, early on was to underestimate just how much damage Labour had done to this economy.
How did the Government’s tax package last year help to tilt the economy towards savings and exports, and away from excessive borrowing and property speculation?
The tax package back in 2010, which had a total value of around $4 billion, cut taxes on work, on savings, on exporting, and on investment across the board, and increased taxes on consumption, with an increase in GST and tax on speculative property investment. This is going to have a benefit for the economy, not over 1 or 2 years but, we believe, over 4 or 5 years, because it fundamentally shifts the incentives in the economy in a way that will strengthen economic growth.
How is the Government’s multibillion-dollar infrastructure programme helping to build a more competitive economy?
These are remarkably good questions. The multibillion-dollar infrastructure programme was an effort by the Government to ramp up investment—even in the midst of a recession—in New Zealand’s long-term productivity. That means we will have, within a few years, an upgraded electricity grid, ultra-fast broadband rolled out around the country, an upgraded rail network, and, of course, we will be most of the way through a very significant roads of national significance programme.
What benefits has the Government’s wide-ranging economic programme delivered?
—over 400 questions, and giving a handful of very good answers—the benefits have been wide ranging, but I want to focus on just some. One benefit is that, despite a recession, New Zealanders have had small real income increases, and I think that is a fantastic achievement. Secondly, in the past year this economy has added 43,000 new jobs. Thirdly, our households—New Zealanders deserve congratulations on this—now have positive savings for the first time in more than a decade.