Kuriger Barbara: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeKuriger Barbara: Oral Questions — Questions to Ministers[Sitting date: 23 September 2015. Volume:709;Page:6919. Text is incorporated into the Bound Volume.]1.BARBARA KURIGER (National—Taranaki - King Country) to the Minister of Finance: What steps is the Government taking to better position the economy to manage future uncertainty?Hon BILL ENGLISH (Minister of Finance): The Government has focused on stabilising the Crown’s net debt position. This is a ratio of debt to national income at around 26 percent. Back in 2009 we said we would try to keep it under 30 percent and we want to get it down to 20 percent by 2020. Twenty-six percent net debt is low relative to most other developed countries. It means that we are reasonably well positioned to cope with unexpected future shocks. This has been achieved through careful control of expenditure through better control of new capital spending and significantly through the very successful part-sales of the Government’s electricity generators. We remain focused on understanding the value and drivers of operating spending and through improved discipline around asset management.Barbara Kuriger: What progress is being made in other areas to improve economic resilience?Hon BILL ENGLISH: There has been significant strengthening in New Zealand’s overall net debt to the rest of the world since 2008—our net external liability position. Statistics New Zealand recently reported that the gap in the country’s net international investment position—that is the difference between our assets and our liabilities offshore—is now 62 percent of GDP down from 85 percent in 2009 and is currently at the lowest level since 1990. This is a pretty important measure for New Zealand because it is one of the measures that credit ratings agencies use. Our external resilience of course is also assisted by robust institutions such as a flexible labour market and a floating exchange rate.Grant Robertson: Is it correct that under his current Budget net debt will not reduce in nominal terms until the 2018-19 fiscal year?Hon BILL ENGLISH: I think that is a position outlined in the 2014-15 Budget. Of course it is ironic that we get criticised by Labour Party members for that because they opposed—deeply—the asset sales which led to a significant reduction in our net debt position.Barbara Kuriger: How are improved capital reserves in the New Zealand banking system supporting the economy?Hon BILL ENGLISH: I think most developed economies learnt from the global financial crisis that having a resilient banking system is pretty important to the sustainability of our households and our businesses. Banks registered in New Zealand hold more capital now than they did prior to the global financial crisis. Most banks are exceeding regulated minimum capital ratios. There has been a significant increase in bank deposits and banks now finance more of their funding needs from New Zealanders and less of them offshore. The Reserve Bank’s stress testing of the banking system last year showed New Zealand banks are well-positioned to withstand external future shocks such as a significant drop in dairy prices.Barbara Kuriger: How have the Government’s tax policies helped to deliver improved resilience to economic shocks?Hon BILL ENGLISH: In two ways. By focusing on a broad-based low rate tax system we have ensured we have been despite economic downturn able to collect sufficient tax to meet our needs and to significantly reduce our deficits. Secondly the 2010 tax package has now been shown to have increased labour market participation supported household savings to higher levels than they would otherwise have been and thirdly that tax package has shown that people on higher incomes are now paying a higher proportion of the tax take than they were before we cut the top tax rate.