Russell Deborah; Willis NicolaHon Dr DEBORAH RUSSELL (Labour): Thank you Mr Chair. Minister Willis I'd like to draw your attention to a considerable discussion that was had in the annual review of Treasury about sustainable public finances. This is an ongoing concern which I know was addressed in the Treasury's briefing to the incoming Minister pointing out that we have a structural problem between the amount of Government revenue that's collected and the actual expenditure we're committed to. Now there's a lot of expenditure we are simply committed to such as New Zealand's superannuation and the like. So what I want to understand from the Minister—given that we're looking at personal income tax cuts which we've been told are coming up in this current Budget—how over time the Minister is going to ensure not just that the Budget is balanced in this current year which we've heard already is going to be done through a combination of borrowing and cuts but what plans the Minister has for ensuring that we have a sustainable structure to our public finance over a long term.Hon NICOLA WILLIS (Minister of Finance): I thank the honourable member Dr Deborah Russell for her question. The Government's goal as we set out in the Budget Policy Statement is to return the books to an operating balance before gains and losses (OBEGAL) surplus in the forecast period. The way that we will achieve that is through an ongoing programme of driving greater value for money for the amount of Government expenditure that already occurs.What we saw over the past six years was an alternative approach which saw Government spending increase 80 percent in just six years and yet didn't see value delivered for those extra dollars. We saw an art form created where money could be frittered away on the most useless of projects whether it be I think the $1.2 billion—am I correct members?—that was invested on the three waters reform programme that went absolutely nowhere; the tens of millions of dollars that were wasted on a failed TVNZ-RNZ merger; the more than $100 million that was spent on an Auckland light rail fantasy that was dead on arrival; or a jobs tax proposal that had millions upon millions invested in its development only to be trashed latterly by Prime Minister Hipkins. Oh we had the industry transformation plans upon which millions and millions were spent; the hundreds of millions of dollars that went across the board into initiatives that didn't deliver results for everyday people.So the answer to the member's question is this: our Government is going to get better results out of the dollars that are already spent. Those actually are dollars that belong to taxpayers which we as Ministers take custody of on the proviso that we will deliver a better outcome with those dollars. What that means is that every Minister in our Government knows it is not just their job to come up with a press release with a nice headline saying Look how much money I'm spending"; it is their job to look at the spending that is already happening and guarantee to New Zealanders that they are every week working harder to drive better results and more value from that spending. Only through that concerted discipline only by taking the step to reduce back-office spending to get rid of low-value programmes will we over time remove that structural deficit.I thank the member for her question but I wish she had asked Grant Robertson that question three or four years ago so we didn't have such a big hole to dig ourselves out of now.Hon Dr DEBORAH RUSSELL (Labour): I do want to pursue this a little further because the Minister seems to think that she can cut her way to sustainable public finances. But we are committed to about $30 billion of expenditure on health every year. That's what health costs us every year. Education costs us about $20 billion a year. Now here's the thing New Zealand super costs us about $95 billion a year. There's a whole lot of expenditure which people expect in this country. They want a decent health system they want a decent education system they want the welfare system there in place. So the problem remains with the sorts of expenditure that the New Zealand public expects: there is an expectation that Government will find a way to get sustainable public finances.Now the Minister has promised tax cuts but personal income tax delivers about 52 percent of our tax revenue at the moment. What is she going to fill the gap with in order to deliver the services that New Zealanders demand? It's going to take a substantial effort to balance the books. When is she going to address the structural problems that are predicted to go out to 2060—that are sitting in the briefing to the incoming Minister that is now her responsibility? When is she going to address that?Hon NICOLA WILLIS (Minister of Finance): Well I thank the member Dr Deborah Russell for her new-found interest in fiscal sustainability. What a shame that interest was missing in the past six years of Government. I think what I take from the honourable member's comments is that her view is that Government spending inexorably grows and is completely out of the control of Ministers in their daily decisions. It is simply a growing mass over which they have no control and so the only answer is to tax people more and more and more and more. What I would say to the member is that if that's your view of Government—that the costs will just rise so you've got to sweat the workers harder and harder and harder—then I will tell the member what that leads to. What that leads to is a shrinking economy in which no one faces an incentive to invest to innovate to work to grow because they know that their dollars will be taken by Deborah Russell and her merry band of mates to waste on programmes that are not delivering the value that those New Zealanders could generate in their own homes and businesses.So what we have here is a fundamental philosophical divide in which we believe on this side of the House that the Government should hold itself as accountable every day for driving more value from Government money in respect of the hard-working people who generate it and what that member seems to represent is a view that those who work hard for their money should only ever expect to pay more and more of it out the door to an ever hungrier Government.Well our view is yes the health system will continue to need more funding but the health system should also be innovating and coming up with new ways of delivering more and better services that use new technology new approaches new efficiencies to deliver better results for people.The education system will continue to need more funding and we must invest more in it but we are kidding ourselves if we believe that money alone is what will educate our kids better. Actually they need structured literacy being taught in their classrooms so that they can read and write properly. Actually they need to be attending school. Actually they need teachers who are equipped with the skills to impart knowledge to those children.So the member is completely wrongheaded in her view that the answer to every problem is more tax being paid by hard-working people.We on this side of the House understand that we are custodians of other people's money and it is our job to generate the maximum value possible with that so that New Zealanders have a little bit more money each week—a little bit more money each week—to meet the costs they face in their own families and their own households. The member spits out the words "tax relief" as if it is dirty. There is nothing dirty about working people wanting a bit more money to pay for the swimming lessons a bit more money so they can afford a pack of chocolate biscuits a little bit more money so they don't need to worry about whether they can afford shoes for their kids this winter. I'm proud to stand with the party that trusts them to make those decisions in their own home and respects them by offering them overdue tax relief."