Lotu-Iiga Peseta Sam: Questions for Oral Answer — Questions to Ministers 
Lotu-Iiga Peseta Sam: Questions for Oral Answer — Questions to Ministers 
[Volume:674;Page:20167] 
2. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
 to the  
Minister of Finance 
: How is the New Zealand economy placed to deal with global uncertainty created by debt problems in the United States and Europe? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The Government has taken several steps to ensure that New Zealand can deal with what is likely to be ongoing fall-out from very large debt problems in the US and Europe. Our financial system and our economy are both in better shape to manage these uncertainties than they were a few years ago. Our main focus has been on getting on top of the growth of Government debt by keeping it below 30 percent of GDP. We will be back in surplus by 2014-15. We have pursued policies that have discouraged the taking on of more household debt and households are responding positively to those. We have also taken important measures to strengthen our financial system. 
Peseta Sam Lotu-Iiga 
: What are some of the steps the Government has taken to ensure that New Zealand can minimise any impact from global debt problems? 
Hon BILL ENGLISH 
: It is becoming increasingly apparent that foreign lenders have reduced appetites for lending to countries that want to run up more debt. Since 2008 the Government has turned back 2008 forecasts of never-ending deficits and soaring debt by setting a path back to surplus in 2014-15. This will keep net Crown debt below 30 percent. We front-loaded the Government’s borrowing programme when market conditions were favourable last year and earlier this year. We have introduced the biggest tax reform in 25 years which rewards work and savings discourages excessive borrowing and consumption and significantly tightens the tax rules on property speculation. We have also overhauled capital market regulations and established the Financial Markets Authority to give confidence to investors and thereby encourage more saving. 
Peseta Sam Lotu-Iiga 
: What extra measures has the Reserve Bank taken to improve the resilience of New Zealand’s financial system? 
Hon BILL ENGLISH 
: The Reserve Bank has followed up on changes given the unprecedented steps it had to take around 2008 with the global financial crisis. Non-bank deposit takers—that is finance companies—are now under Reserve Bank supervision and the Reserve Bank is applying minimum capital adequacy and credit rating requirements to finance companies which lost $8.5 billion over the last 4 years. In addition the Reserve Bank has introduced new core funding requirements for our banks which require 70 percent of their funding to come from sources such as retail deposits and long-term wholesale funding. This makes them less reliant on volatile short-term international markets. The Reserve Bank has ensured that in another financial crisis it could supply temporary liquidity to sound institutions. 
Hon David Cunliffe 
: Given that the uncertainty created by the United States debt crisis has been in part caused by the refusal of the Republican Party to compromise on sensible revenue measures why should New Zealanders view his National Government as any different when it refused to enter into bipartisan discussion on a capital gains tax despite authorities such as the International Monetary Fund and the OECD saying that it is an obvious requirement for New Zealand? 
Hon BILL ENGLISH 
: Because as I think is now becoming increasingly clear internationally this country has a stable and sensible Government making sound and considered decisions which means that we are one of the few developed countries now with positive economic prospects and financial stability. That is a considerable achievement in the circumstances. 
Peseta Sam Lotu-Iiga 
: In the current uncertain global environment why is it important that New Zealand continue with sound economic policies that get on top of the debt? 
Hon BILL ENGLISH 
: It is pretty important because as the months tick by and financial markets realise the long-term impact of extremely high debt levels in Europe the UK and the US those lenders have become more nervous about Governments that are running up debt. In fact some Governments are being forced into slashing public services putting up taxes and reducing welfare benefits to the elderly and the vulnerable. This Government has taken a series of balanced and considered measures to keep a lid on spending to get on top of growing debt and to build a faster-growing economy. We certainly will not be advocating policies that mean significant new borrowings over and above those that are budgeted.