Goldsmith Paul: Debate on Budget Policy Statement 
Text is incorporated into the Bound Volume 
Goldsmith Paul: Debate on Budget Policy Statement 
[Sitting date: 02 May 2012. Volume:679;Page:1863. Text is incorporated into the Bound Volume.] 
PAUL GOLDSMITH (Deputy 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 2012 
. The Finance and Expenditure Committee considered the Budget Policy Statement in March and I acknowledge the work of the members of the committee under the then chair Simon Bridges.  
I want to begin by congratulating the Minister of Finance on his efforts to steer the New Zealand economy so successfully through such a challenging period. The economy may not be growing as quickly as we would like but it is growing. It has now grown for 10 of the past 11 quarters which is more than much of what the developed world can boast. We are expected to grow more strongly over the next 2 years than the Euro area the United Kingdom Japan the United States and Canada— 
Mr SPEAKER 
: Order! I apologise to the honourable member. I say to other members of the House that it is noisy. I know members are leaving the House but it is unfair to a member right at the back of the House for there to be so much noise that it makes it difficult to be heard. I just ask for a little courtesy to be extended to the member. 
PAUL GOLDSMITH 
: —thank you Mr Speaker—despite a number of challenges including the ongoing European debt crisis the Canterbury earthquake and a high exchange rate. Let us not forget that what this Government inherited in late 2008 was an economy that had been in recession for almost a year forecasts of never-ending deficits and ever-rising debt. Against that we have been helped along by the fact that our terms of trade have been good and that our two largest trading partners Australia and China are forecast to maintain relatively high growth rates. So that bodes well for the coming years.  
The Budget Policy Statement 2012 sets out the Government’s plan for Budget 2012 and future years. All members of the House will be familiar with the priorities that the Government has outlined. These are responsibly managing the Government’s finances building a more productive and competitive economy delivering better public services within tight financial constraints and rebuilding Christchurch. These priorities are well known because this Government has been consistent and steadfast in its purpose. As the Prime Minister has said we are sticking to a plan that is working. Members should not underestimate the importance of that solidity and clarity of purpose shown by this Government. Strong and stable leadership is a rare commodity in the world at this time.  
Going through the four areas let us focus first on building a more productive and competitive economy. There is no magic here. We are not entitled to anything. This world does not owe us anything. In fact the rest of the world does not care about us at all. Some people are interested in the products that Kiwi men and women have on offer thankfully and some want to invest their money in our economy and it is our task as a nation to keep them interested in the face of strengthening global competition.  
The Government’s main role is to set a policy framework that gives individuals and businesses the confidence to invest and to create products new jobs and new wealth and the Minister of Finance has recently outlined some key initiatives to increase our productivity. We can talk about the tax package of the 2010 Budget which increased taxes on consumption and property speculation and reduced taxes on work companies and savings. It is a very important measure. We can talk about changes in regulations—for example in the Resource Management Act area building laws and industrial relations laws—and our multibillion-dollar investment in infrastructure through rail roads electricity transmission and ultra-fast broadband. We can also talk about the focus on changing the incentives around welfare and work. Looking ahead the Government’s business growth agenda will continue that momentum more of which we will hear about in the Budget no doubt.  
Of course we have heard endless criticism from the other side of the House and from some of their supporters. Their approach seems to be to say no to everything except of course spending more and borrowing billions of dollars more. They appear to want to close the country to foreign investment or at least to investment from some countries when since 1840 if not before this country’s economic growth has been based on foreign investment. I stand for internationalism and an outward-looking economy and society. New Zealand has nothing to gain from demonising foreigners and turning inwards.  
Opposition members are opposed to a moderate proposal to sell minority stakes in our energy State-owned enterprises in order to strengthen New Zealand’s shallow capital markets and to bring the disciplines of private sector ownership to these companies as well as to reduce our borrowing requirements. We have heard some economic nonsense there. In another committee I am on the Local Government and Environment Committee they are opposed to moderate legislation for New Zealand’s massive exclusive economic zone that would balance economic growth alongside environmental effects. “Don’t do anything.” is the Greens’ basic message. Well I am sorry we have got to make a living in this country. We cannot just dream up one new trick such as green technology and expect that it will do for us. Our prosperity requires continuous and relentless improvement in the things that we currently do well as well as using our creative talents and brains and it also requires looking for additional natural resources.  
 Although some New Zealanders may be happy with having lower living standards than those in Australia most people are not including the ambitious next generation coming along and hoping to make their way in the world. That is why this Government is focused on economic growth.  
As for responsibly managing the Government’s finances the Budget Policy Statement has underlined the size of the challenge in returning to surplus by 2014-15. Last year the Government’s operating deficit before gains and losses was $18 billion or 9 percent of the gross domestic product about half of which was devoted to the earthquakes. The Budget Policy Statement that we are debating today forecasts that our deficit will be around $12 billion in the current June year before roughly halving in each of the subsequent 2 years to return to surplus.  
Last week the Minister revealed a $1 billion deterioration in the preliminary forecasts of the operating balance before gains and losses in 2014-15. This is due to such factors as the impact of lower global growth on short-term New Zealand growth forecasts and downward revisions to expected New Zealand Superannuation Fund revenue and State-owned enterprise profits. We are also expecting a rise in some finance costs and higher earthquake costs. So we have a wider gap to bridge and as the Budget Policy Statement says this Government has shown that it is capable of delivering Budgets within tight fiscal parameters. The 2011 Budget introduced a new zero operating allowance in an election year and the Prime Minister has indicated that we will run close to a zero Budget again this year.  
None of this is easy. This is a massive rebalancing of the nation’s finances. It would be politically easy for the Government to find excuses to put it off for a few years and to kick the can down the road but that is not our intention. Households and businesses up and down the country are doing it finding savings and ways to make the same amount of money go further and there is no reason why this Government should not also do it.  
If we turn to rebuilding Christchurch all of this has been made much more difficult by the need to rebuild Christchurch which we remain absolutely committed to do. I spent time down there over the adjournment and I continue to be amazed by the scale of the disaster. More than 100000 homes or half of the housing stock in Christchurch are damaged; 7000 homes are red zoned; and 3000 to 5000 businesses in the central business district have not been replaced.  
I also want to mention the fact that the Budget Policy Statement reported on the Government’s determination to deliver better public services within tight budgets. We do not have the option of pouring more and more money in like the Government of the previous decade did. In any case more money does not always lead to the results expected. As the Government sector is such a large part of the economy it is crucial that it is as focused on productivity improvement as the rest of the economy is.  
In conclusion this National Government has been taking a moderate and balanced approach to managing the Government’s finances. We have made the hard decisions to reprioritise spending towards the things that work and we also have a firm focus on results rather than just on inputs. We have had the guts to prepare this year to see our second zero Budget as we chart a course back to surplus. It is this combination of disciplined fiscal policy and a willingness to make trade-offs—having a plan to rebuild and strengthen the economy and sticking to it—that will give New Zealanders the confidence to invest in this country and in the brighter future that we all aspire to. Thank you.