Parties on the left like to think the government is the answer to most problems.
Hon KATE WILKINSON (National—Waimakariri) to the Minister of Finance: What will be the focus of the Government’s economic programme going into the election on 20 September?
Hon BILL ENGLISH (Minister of Finance): The Government will focus on building on the recovery that is now under way to support New Zealand households and businesses, to create more jobs, and to earn higher incomes. Now that we have been able to manage through a very significant recession and the impact of the earthquake, and clean up some of the damage done by the last Labour Government, we will look forward to helping New Zealanders organise the capital and the skills required to take advantage of the very substantial opportunities offered by a growing Asia- Pacific region.
Hon Kate Wilkinson: What progress is the Government making with its economic programme and how is this helping households and businesses?
Hon BILL ENGLISH: First of all, the recovery in the economy is principally the work of New Zealand’s households and businesses, supported by Government. Government policy that has helped to support that has been to get the Government finances under control and get back to surplus; and to focus on all those areas across the economy that support growth, such as better infrastructure investment, a tidier, more effective, and more efficient system for giving young New Zealanders skills, reducing welfare dependency, re-regulating the use of our natural resources so that we can be a prosperous economy as well as a clean, green economy, and, of course, there are many other ways we have been supporting New Zealand households and businesses.
Reducing the burden of government is one of the bests ways to help people and businesses.
Hon David Parker: Why is he claiming that everything is going swimmingly when the $1 billion deficit to 31 January in his Government’s accounts is $637 million worse than he forecast in just December?
Hon BILL ENGLISH: As I have pointed out regularly in this House, we can control expenditure to a significant extent but revenue can fluctuate. In this case—
Hon Members: Ha, ha!
Hon BILL ENGLISH: Well, bear in mind that in the previous financial year we finished about $3 billion ahead of budget. On the most recent figures in this year tax revenue is about $800 million
behind budget. The people who should take the most notice of that are the Opposition parties, because it makes it pretty clear there is not room to splash cash everywhere in election year.
Hon Kate Wilkinson: What are some of the ongoing economic challenges the economy faces, and how will the Government work to overcome them?
Hon BILL ENGLISH: Probably the main economic challenge is to manage our way through the next growth cycle, avoiding the excessive damage created during the last growth cycle under the last Labour Government. For instance, it is inevitable that interest rates will rise some time this year, according to decisions of the Reserve Bank. We want to make sure that interest rates are not driven to 10.5 to 11 percent by bad Government policy and excessive Government spending. That is probably one of the best things we can do to support New Zealand households.
Government spending has a significant influence on interest rates.
Labour’s profligacy was a major cause of high interest rates, National’s Presbyterian approach to other people’s money has helped to keep them low.
Hon David Parker: Is it correct that having inherited close to zero net Government debt he is soon to clock over $60 billion of borrowings; and is this more than any other Minister of Finance in New Zealand’s history in nominal terms and the worst in real terms since Muldoon?
Hon BILL ENGLISH: No, but it is another symptom of “Planet Labour”, a place where the global financial crisis and the Christchurch earthquakes never happened. Voters will increasingly see a party marooned on “Planet Labour”—1970s Fabianism at its worst.
Hon Kate Wilkinson: Going into the election on 20 September, what economic policies will this Government reject because they would impose costs on households and cost jobs?
Hon BILL ENGLISH: It is pretty clear from lessons learnt from the last cycle through the early 2000s up to 2008 what policies to avoid. One of those is a sharp increase in Government spending, because that will push interest rates up much faster than they need to go. The second one would be imposing a costly emissions trading system, which is guaranteed to put power bills up by around $500 per year and, in combination with a single-buyer electricity authority, would make household electricity bills significantly more expensive, not cheaper, as the Opposition claims.
Labour and Greens both plan to tax us more, directly and indirectly, and then splash the cash around.
Not only will that leave us with less of our own money, it will fuel interest rates and inflation.