1. JOHN KEY (Leader of the Opposition) Link to this
to the Prime Minister
Does she stand by the statement she made yesterday, in relation to debt to GDP ratios, that “over the forecast period of the Budget that the Labour Government has delivered these debt to GDP ratios are consistently falling”; if so, why?
Rt Hon HELEN CLARK (Prime Minister) Link to this
I stand by the fact that over the forecast period the ratio falls from 17.6 percent of GDP to 16.8 percent of GDP.
Can the Prime Minister confirm that net core Crown debt, which is the key measure of the Government’s debt position, will actually rise from 1 percent of GDP to 6.2 percent of GDP over the forecast period, which means it is going up?
Rt Hon HELEN CLARK Link to this
I find it interesting that the member is not interested in the net core Crown debt position, including the New Zealand Superannuation Fund financial assets, because, of course, the net position on that score moved into positive territory in 2007, and, further, stays in a very good net positive position of around a 6.2 percent ratio, right through the forecast period.
That is correct; it is going up from 1 percent to 6.2 percent. Can the Prime Minister further confirm that the Fiscal Strategy Report shows net debt rising as a percentage of GDP every year from now until 2016-17, at which point it will have reached 12 percent?
Rt Hon HELEN CLARK Link to this
The member well knows that it makes no sense to use a figure without including the New Zealand Superannuation Fund assets, which shows a net position. This Government has moved the Crown into a very positive net position.
Does the Prime Minister recall that the Labour Government of which she and Michael Cullen were Ministers increased net debt from 31 percent of GDP in 1984 to 49 percent of GDP in 1990, and that it was the subsequent National Government that did all the hard work and brought the net debt down to 20 percent?
Rt Hon HELEN CLARK Link to this
I do not think time would permit me today to give the lecture that would be necessary on the follies of the Muldoon Government and the big-borrowing programmes.
Hon Dr Michael Cullen Link to this
Can the Prime Minister confirm that the fiscal position was so bad in 1984 that the then National Government could not write a Budget; that when the first Budget was presented, the Government at the time was, in fact, running an operating deficit of 8 percent of GDP; that debt servicing was rising to $1 in $4 of tax revenue; that, in fact, that was the position that had to be brought under control; and that that was under the Prime Minister that Mr Key admired in his adolescence as the great Prime Minister of New Zealand?
Rt Hon HELEN CLARK Link to this
I remember the events very, very well. I remember the calling of the “gin and schnapps election” by a Prime Minister clearly under the influence of certain substances at that time. It is correct, therefore, given the National Party’s new position of borrow and hope, to truly call Mr Key “Muldoon’s mokopuna”.
If the Prime Minister is taking a step down memory lane, does she remember that in 1989-90 she was Deputy Prime Minister of New Zealand, and not only did she undertake asset sales of $4.9 billion but also, for the record, when she left office Labour told the country that the surplus was $89 million—from memory—and it actually turned out to be multiple billions; but I guess that is the way Labour undertakes economic management?
Rt Hon HELEN CLARK Link to this
I well recall the spin that Jim Bolger and the previous National Government put on the Crown accounts. I am aware that that spin led them to do things they never told the truth about to the electorate. I remember “No ifs no buts, no maybes; the surcharge will go.”, and they put it up. I remember the cuts to benefits, the charging for going to the public hospital, and the market rents for State houses. I remember all those things, and what I say to Kiwis is to be afraid—be very afraid—when the National Party says one thing in private and another thing in public.
Hon Dr Michael Cullen Link to this
In the light of that last answer, can the Prime Minister confirm that she has seen a report stating that the reason Mr Key is so sensitive today is that Mr English and Dr Lockwood Smith have been caught out telling the truth?
Rt Hon HELEN CLARK Link to this
I suspect that that is right, and that, of course, is what is leading to the billboards going around, stating: “We won’t sell Kiwibank. Yeah, right!”.
Can the Prime Minister confirm whether she thinks that a debt to GDP ratio of 22 percent is prudent; if she does not think it is prudent, can she just explain why her Minister of Finance thought for a very long time that ratios much higher than that were prudent?
Rt Hon HELEN CLARK Link to this
What I do not think is prudent is borrowing for tax cuts, which is clearly the member’s intention. He cannot be borrowing for infrastructure, because he has not been able to list a single piece of infrastructure that is in his programme.
Rt Hon Winston Peters Link to this
Can the Prime Minister confirm that even during the Asian currency crisis in 1997-98, when we were losing 60 percent of our markets, we still got debt down, and where else in the world would we find a conservative party, with any idea of its ideology, talking about increasing debt?
Rt Hon HELEN CLARK Link to this
I think the answer is that it would be very hard to find anyone else in New Zealand apart from the National Party wanting, at a time of global economic uncertainty, to quite deliberately stake out a debt to GDP ratio that is significantly higher than our Government’s, because they know they would have to borrow for tax cuts, which is plain crazy.
If the Prime Minister is so confident about her economic management, why does she not just name the election date, and we will have this debate in front of the country?
Rt Hon HELEN CLARK Link to this
As I said yesterday, the revelations about the National Party’s secret agenda mean that the Leader of the Opposition is interested in a later date rather than a sooner date. But can I say that my confidence in the management of the Kiwi economy is entirely shared by Standard and Poor’s, which has confirmed today the very strong credit rating it gives New Zealand.