Tremain Chris: Questions for Oral Answer — Questions to Ministers Questions to Members 
Tremain Chris: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:653;Page:2136] 
3.  
CHRIS TREMAIN (National—Napier) 
 to the  
Minister of Finance 
: What reports has he received on New Zealand’s economic and financial performance? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 This morning I received a report from Statistics New Zealand that the current account deficit for the year ended December 2008 has increased to over $16 billion or 8.9 percent of GDP. The deficit has now been above 8 percent of GDP for 4 successive years. The cumulative increase in New Zealand’s net foreign liabilities during this period is in excess of $57 billion. 
Chris Tremain 
: How does this report compare with the position 10 years ago? 
Hon BILL ENGLISH 
: Ten years ago the previous Minister of Finance Dr Cullen made a huge deal about how the current account deficit proved that all the economic policy for the preceding 15 years had been a failure. At that stage it was just $4 billion or 4 percent of GDP. That was before Labour embarked on a strategy of import-led growth which has led to a doubling of the current account deficit. 
Hon David Cunliffe 
: Can the Minister explain why given the growing current account deficit the Government has cut KiwiSaver which encourages savings deepens capital markets and reduces the gap in the current account and would that not make just about as much sense as—I do not know—appointing Rodney Hide to oversee the Commerce Commission? 
Hon BILL ENGLISH 
: The Government is committing somewhere around a billion dollars to KiwiSaver as incentives. But New Zealanders are changing their savings habits now. They are pulling back on consumption and increasing their savings in a way that is nothing to do with KiwiSaver but all to do with an adjustment that needs to occur in this economy. 
Chris Tremain 
: What are the consequences of the deterioration in the external accounts over the past 10 years? 
Hon BILL ENGLISH 
: First there should be an adjustment so that those export sectors where New Zealand is genuinely competitive can prosper. Second we need to be mindful of debt levels and the ratings agencies are reminding us of that. The net result of this blowout in the current account deficit is that now almost one-twelfth of New Zealand’s output accrues to foreigners. 
Hon David Cunliffe 
: Given that innovation increases productivity and reduces the current account deficit why has the Minister cut the Fast Forward fund and the research and development tax credits; and why has the Government dismissed the findings of the Finance and Expenditure Committee’s monetary policy review when manufacturers and exporters have been— 
Mr SPEAKER 
: The Hon Bill English. 
Hon Annette King 
: Oh let him finish his question. 
Mr SPEAKER 
: Well as a matter of fact if the Deputy Leader of the Opposition is interested I tell her that he did not actually start to ask a question. I thought the speech had gone on long enough. 
Hon BILL ENGLISH 
: I raise a point of order Mr Speaker. The member is meant to start a question with a question word. 
Mr SPEAKER 
: I was going to allow the Minister to answer anyhow because the member did get on to a question eventually. But maybe we had better have a question. Could the member ask a question please. 
Hon David Cunliffe 
: I would be happy to rephrase the question Mr Speaker— 
Mr SPEAKER 
: No—if the member would just ask one. 
Hon David Cunliffe 
: Why has the Minister cut the Fast Forward fund and the research and development tax credit and why has the Government dismissed the findings of the Finance and Expenditure Committee’s monetary policy review when manufacturers and exporters are being killed by exchange rates that bounce around like yo-yos? 
Hon BILL ENGLISH 
: The reason the Government has got rid of the Fast Forward fund is that the fund amounted to the Government borrowing money to put into the fund to go and invest in the Government bonds that it had borrowed in the first place. It was a nonsensical money-go-round of $700 million set up simply for branding purposes in election year. 
John Boscawen 
: What plans does he have to act on the advice of the Inland Revenue Department which in its briefing to him as incoming Minister reaffirmed that a broad based - low rate tax system as provided for in National and ACT’s confidence and supply agreement is “fundamentally sound”? 
Hon BILL ENGLISH 
: The Government has acted on those principles probably prior to the advice from the Inland Revenue Department. Tax cuts will come into effect on 1 April and they will move us further in the direction of a broad based - low rate system. We announced a small to medium sized enterprise package just a few weeks ago which has made a number of changes again in line with the principle of a broad based - low rate system. Over the next 4 or 5 years when revenue is going to be very tight it is important—in fact it is vital—that our tax system is as efficient as possible.