2. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Prime Minister
Does she stand by her statement made yesterday that “my confidence in the management of the Kiwi economy is entirely shared by Standard and Poor’s”?
Does she agree that the Standard and Poor’s report specifically states: “ongoing fiscal discipline is likely to remain the norm, even if there is a change of government at the upcoming election.”, and does she accept that the Standard and Poor’s outlook for New Zealand rebuts directly her ridiculous claims about National’s plan to use some additional Government borrowing to invest in infrastructure?
Hon Dr MICHAEL CULLEN Link to this
There were two parts to the question; yes and no. What the Prime Minister draws from that is that the National Party was telling Standard and Poor’s something different from what it was telling the public at large, which underlines exactly what the Government has been saying about National’s secret agenda.
Does she believe that the Standard and Poor’s outlook for New Zealand indicates that a gross debt ratio in the low 20s does not represent any risk to the economy as is now being claimed by Labour, and will Labour stand by its claims sufficiently to ask Standard and Poor’s to reassess New Zealand’s outlook?
Hon Dr MICHAEL CULLEN Link to this
Labour is not working on the assumption that National will be the Government by the end of this year. Labour is working on the assumption that its fiscal policy is what Standard and Poor’s was primarily looking at, which is why it confirmed our AA+ stable outlook rating. The last time, of course, that Standard and Poor’s downgraded New Zealand’s credit rating was in September 1998 when the then National Government, with Mr English as Minister of Finance, saw a credit downgrade.
Before the Prime Minister made her ridiculous statements about debt levels did she speak to the Minister of Finance—
Hon Dr MICHAEL CULLEN Link to this
I raise a point of order, Madam Speaker. “Before” is not a question word, and we had a rather long exchange on this matter previously.
Madam SPEAKERNow that we have embarked upon this track would members please be conscious of the fact they use a question word to start.
Did the Prime Minister speak to her Minister of Finance before she made her ridiculous statements about debt levels, and ask him about a statement in the 2006 Budget, which was made when the gross debt was 23 percent of GDP—that is, higher than National’s debt target—“Debt has now reached prudent levels”; and why are she and her Minister of Finance now directly contradicting statements made by the Government about a debt level of 23 percent of GDP?
Hon Dr MICHAEL CULLEN Link to this
The Prime Minister speaks to the Minister of Finance frequently, on many, many occasions. But the difference is, of course, that under this Government, the Government has projected in each successive Budget—until the most recent one—a decline in debt levels. The National Party is happy to forecast an increase in debt levels.
Can the Prime Minister answer this question: if the Minister of Finance claimed yesterday in the House that Labour has a large infrastructure plan, and he has said borrowing is stupid, then given that the Government does not have a cash surplus, how will it pay for its large infrastructure plan?
Hon Dr MICHAEL CULLEN Link to this
The member has done his usual trick of making a non-factual statement to preface a question and asking me to comment on the non-factual statement. The question is a stupid question. The Budget this year forecasts borrowing, and as I said in the pre-Budget statement, in my Budget speech, and subsequently, the Government is planning to borrow for infrastructure investments. National members did not listen to that. The National Party has said that it wants to borrow more on top of that, then it wants to borrow more on top of that for tax cuts, and then it is not worried if the forecasts change, because that will make no difference to its borrowing plan. That is truly dumb.
Hon Dr MICHAEL CULLEN Link to this
I raise a point of order, Madam Speaker. “So” is not a question word.
When the Prime Minister said that any idea of borrowing money was ridiculous—I think she said “hilarious”—had she spoken to the Minister of Finance to clarify with him that in the 2008 Budget the Labour Government announced that it will have a cash deficit of $13 billion, and it will finance that with $6.5 billion of borrowing, and $6.5 billion of selling of financial assets owned by the Government; and why does he not just tell the public what he is doing, instead of trying to make up stories about what everyone else is doing?
Hon Dr MICHAEL CULLEN Link to this
Given that that question was pre-prepared, one wonders why the member asked the previous question, which claimed that I said we were not going to be borrowing, because clearly the member knew that the previous question was incorrect. But for a member who said he wanted to sell Kiwibank eventually, then said he mis-stated, and then tried to claim that the tapes have been doctored, that was a particularly rich question.
Would the member like to add anything more to his answer? [ Interruption] No, there were numerous shouts that that was not an answer to the question. I listened to it. I then asked the Minister to repeat his answer. Would the member please address the question.
Hon Dr MICHAEL CULLEN Link to this
What is clear is that the National Party is planning to borrow even more on top, it is planning to borrow more on top of that for tax cuts, and, indeed, it is forecasting rising debt to finance tax cuts. That is dumb.
Rt Hon Winston Peters Link to this
Why, when, which, will, can, could, shall, should, how, and has the Government learnt of reports that New Zealand’s debt levels are about to be imperilled, and by what technology did it learn that?
Hon Dr MICHAEL CULLEN Link to this
As I think most of my colleagues know, I am not exactly the most au fait with modern technology. So I can say that I acquired this from steam television, where I heard that the National Party was planning to increase debt, and indeed that the entire centrepiece of its economic policy, the one conclusion after 8½ years of hard, serious thinking, is that we should increase the level of debt over and above that currently forecast.
Hon Trevor Mallard Link to this
Has the Prime Minister received any reports that give the deputy leader of the National Party credit for consistency in terms of the way in which he is undermining John Key and the manner in which he undermined Jenny Shipley previously?
Hon Dr MICHAEL CULLEN Link to this
I am used to the notion that the job of a deputy leader is to support the leader. Mr English still has yet to get that idea into his head on his second chance of being deputy leader.
Will the Minister confirm for the House that while he is railing about other parties borrowing money to invest in infrastructure and he is saying that it is stupid, he is doing the same thing himself, and that while he is railing about other parties saying they will lift debt levels slightly, his Budget suggests he will do that himself; and when will the Prime Minister stop her nonsense claims and admit that a gross debt ratio of 22 percent of GDP is prudent, that it is lower than Government debt was for every year Labour has been in office, except this year, and that at 22 percent New Zealand would still have one of the lowest Government debt ratios in the developed world?
Hon Dr MICHAEL CULLEN Link to this
One of the problems with the member claiming that the debt ratio National is now aiming for is 22 percent is that we are starting from a position of something under 18 percent of GDP. The National Party has stated that it will lift debt by 2 percent of GDP to fund infrastructure investment. Therefore, Mr English has just confirmed that debt levels will lift by something like 3 percent of GDP to fund tax cuts. I say thank you very much to Mr English.
Dr Russel NormanHow can the Prime Minister be confident in the management of the Kiwi economy when Treasury, the Ministry of Economic Development, and the Reserve Bank are all still forecasting oil prices at about half of what they actually are; and is he certain that the plans of National and Labour to borrow money to invest in infrastructure such as large motorway projects are really wise, given those flawed forecasts?
Hon Dr MICHAEL CULLEN Link to this
The member is out of date, because the forecasts he referred to were committed to some time ago, and quite clearly both Treasury and the Reserve Bank are not using those numbers at the present time. I do note, much to the disappointment of the Green Party, that oil prices are again falling internationally, having been assured that prices could go in only one direction. I finally draw the member’s attention to the fact that already we are seeing major adjustments in terms of fuel efficiency around the world. I invite him to read the motoring editions in our daily newspapers that show that we are now looking forward to cars coming out very soon that will do 3 litres per 100 kilometres. That is significantly better than the Honda Jazz his co-leader drives around in.