Bishop ChrisDEBATE ON BUDGET POLICY STATEMENTChris Bishop (Chairperson of the Finance and Expenditure Committee): I move That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2017. What does this Budget Policy Statement which was presented to the Finance and Expenditure Committee last year show? It shows four very important things.Firstly it projects growth of 3.5 percent for the next 2 years and 3 percent over the next 5 years. In the New Zealand context this is extremely good—far ahead of the long-run rate of average growth in New Zealand. Economic growth provides more opportunities for the Crown accounts it provides more opportunities for New Zealand families and it gives us choices as a Government.Secondly it projects more jobs—150000 more jobs by 2021. At the moment our employment rate is the third-highest in the OECD. It shows our labour force participation rate as one of the highest in New Zealand history at over 70.5 percent. Those are some of the key metrics that determine the long-run future prosperity of a country.Thirdly it shows rising wages. It projects that the average annual wage will hit $66000 per year by 2021. We had 1.6 percent wage growth in 2016—far ahead of inflation. It is these kinds of moderate sustained increases in New Zealanders' real take-home pay that drive higher living standards.Fourthly—and I know members of New Zealand First really do not like this—the Budget Policy Statement shows that people want to live in New Zealand. It shows that New Zealanders do not want to leave New Zealand any more. It shows that New Zealanders overseas want to come home to New Zealand and it shows that people around the world are choosing New Zealand as the destination of choice because our economic outlook is far superior than many countries opposite.What the Budget Policy Statement shows is a set of numbers that are the envy of the developed world. They are a set of numbers that any developed economy would love to show. That is why people around the world look enviously at New Zealand.What does the Budget Policy Statement show about superannuation? What it states is that the Government will resume contributions to the New Zealand Superannuation Fund when net debt starts to decline below 20 percent of GDP. We have had this debate in the last few days since the Government's announcement on Monday about the gradual progressive rise in the superannuation age from 2037 onwards. We have had this debate about whether or not this is appropriate. The Government did stop borrowing to invest in the Superannuation Fund in 2009. We maintain that this was the right decision. Borrowing money to invest in global equities is like a household putting money on the credit card to invest in the global share market. We know that when the Cullen superannuation fund was set up in 2000 by Michael Cullen it was set up to invest surpluses. Michael Cullen was extremely clear about this. He said Labour was setting up the fund to fund the long-term cost of superannuation by pre-investing surpluses—not borrowing money and whacking it on the credit card but investing surpluses. As members opposite are so proud to proclaim very often there have not been many surpluses in the last few years. Now we have got the books back into the black and we have got these choices.The other thing that members forget is that the Labour Party and the Green Party have done a flip-flop on this issue as well. It was David Shearer in 2013 who actually decided that the Labour Party was going to agree with the National Government and not start contributions to the Superannuation Fund while the Crown books were in deficit. I can quote no more learned commentator on this particular subject than the former Green Party finance spokesperson Russel Norman who said in 2013 that he welcomed the Labour Party's backtrack that the National Government was right to stop contributing to the Superannuation Fund while it was running a deficit—it was always very strange that [the Labour Party] wanted to borrow money to put it into the Cullen Fund and I'm glad that they have seen common sense on it."So the now sadly lamented departed leader and finance spokesperson of the Green Party actually agrees with exactly the position that the National Government has advanced consistently for 8 years which is that it makes no sense to borrow money to chuck it into the Cullen fund—into the New Zealand Superannuation Fund. Members opposite often say "Oh well look at the returns; look at the returns." and the returns have been great but it is very easy to look back in hindsight and say: "If only we had done this." Of course investing in global equities and investing in the global sharemarket—just because you put money in it there is no guarantee of future returns. These things do have risk. Members opposite have no concept no understanding of the concept of risk.It is a bit of a thought experiment but it does beg the question: if we had continued to borrow this money and put it into the Cullen fund and we were sitting around today and the size of the fund had actually decreased by $15 billion what would members opposite be saying now? Well they would be standing up and they would be saying: "That was a crazy decision of the Government; you should never have borrowed money at a time that you were running fiscal deficits to invest in the global sharemarket because look at the consequences. Look what has happened. You have destroyed New Zealand's future. You have mortgaged young New Zealanders' future." That is exactly what they would be saying and they would be right. We would have been doing that. We would have been doing that. So it is all very well to look back on the past and say we should have done that but it ignores the concept of risk. It ignores the fact that the fund could have gone down.The other thing about this argument about the Superannuation Fund when it comes to raising the age of superannuation entitlement is that it would have required the Government to borrow $13.5 billion more than we were already borrowing. Again I point out that members opposite often like to stand up and talk about how the Government is borrowing too much money the Government has borrowed more money than Rob Muldoon and we cannot possibly borrow any more money—neglecting of course to mention their own profligate and extravagant spending plans. So I just point out the interesting contrast there. They often try to imply when it comes to dealing with the long-term costs of superannuation that if we just funded the Cullen fund that would have dealt with it. Nothing could be further from the truth. By 2040 the Government's plan which the Prime Minister outlined on Monday saves the Crown $4 billion a year. If we had borrowed all that money and put it into the Cullen fund it would have probably saved the Crown about $1.4 billion a year by 2040. So the big question for Labour and the Greens is: where is the other $2.6 billion coming from? What the Government announced on Monday is a sensible move. I am 33. I do not know anyone my age or of my generation who thinks that superannuation at the age of 65 with the generous system that we have is sustainable in its current form. That is because at the moment there are four workers for everyone over the age of 65. By the time we hit 20 years' time there will be two workers for everyone aged over 65. The long-term costs of superannuation are going up. It is projected to treble in 20 years from $11 billion a year to $36 billion a year. This fiscal earthquake is not something that is unique to New Zealand—it is why Australia is doing what we are proposing; it is why Denmark and other countries are doing it as well. It is time that the Labour Party went back to its policy—its admirable policy—of the 2011 and 2014 elections and got on board with this because there are a litany of quotes from senior Labour Party members about the long-term costs of superannuation.Andrew Little said the one thing that scares the bejesus out of him—very old-fashioned word—is the long-term cost of superannuation. David Parker used to go up and down the country to business audiences talking about raising the superannuation age being the very epitome of fiscal responsibility. Well we agree. The much-vaunted new deputy leader of the Labour Party Jacinda Ardern said we need to ask whether the universal age of superannuation is set at the right place and there are a series of quotes from her about that. Well she is right; Andrew Little in 2014 was right; David Shearer in 2013 when talking about the superannuation age was right. Parties opposite are playing populist politics on this issue and they need to get on board with what this very fine Budget Policy Statement laid out by the Government provides which is a great set of numbers that sets New Zealand up for long-term prosperity.I just want to end my speech by talking about that because actually the hard work is just beginning. We have done a very good job of getting through the Christchurch earthquakes we had the fiscal headroom to get through the Kaikōura and Wellington quakes we have got the books back into the black after the profligate spending years of the last Labour Government and now we have choices. I for one am looking forward to campaigning later in the year on the choices that the Budget Policy Statement provides."