2. Question No. 2—FinanceNANCY LU (National) to the Minister of FinanceQuestion No. 2—Finance2. NANCY LU (National) to the Minister of Finance: What does the Half Year Economic and Fiscal Update say about the state of the New Zealand economy and what steps is the Government taking to respond?Hon NICOLA WILLIS (Minister of Finance): Our Government has inherited challenging economic and fiscal conditions. Inflation and interest rates remain high the economy is contracting and unemployment is beginning to rise. The forecast or so-called surplus in 2026-27 has been eroded to a wafer-thin $140 million. Treasury has identified $7.2 billion of fiscal cliffs although we expect that figure to grow in the coming weeks and months. In response to the cost of living crisis Kiwis have tightened their belts. Today the Government tightens ours. My message to Kiwis is that after six years of economic mismanagement our Government is presenting a new chapter.Hon Kieran McAnulty: Point of order. Thank you very much Mr Speaker. Yesterday and on a number of occasions last week you warned Ministers about using Government questions to make commentary or to attack the Opposition. Now particularly in light of the Opposition being unable to debate this today because the Government declined leave I think we should be particularly vigilant about that with this question.SPEAKER: Question time is a time for the Government to be accountable for itself and answers should not refer to what are perceived political failings of any other parties in the House.Rt Hon Winston Peters: Point of order Mr Speaker. With respect this is meant to be a debating chamber where the issues of the day should be discussed and argued not some antiseptic Chrysler ad. It is about real issues—in this case who's responsible for them—and to think that an Opposition who arrived there only a few weeks ago and who were in control don't want to have their record examined belies democracy and question time itself.Hon Grant Robertson: We can't have a debate—Rt Hon Winston Peters: Well you can have a debate on those matters and we knew you were never going to get an urgent debate—we knew you'd try—because inexperience is what you were famous for. But the fact is that this matter will be discussed next year as well.SPEAKER: So I am bound by Speakers' ruling 181/3. I am simply saying that there are lots of ways you can say things without it being an open attack.Nancy Lu: What economic challenges are outlined in the half-year update?Hon NICOLA WILLIS: As high interest rates bite the economy is set to stall and unemployment is set to rise. Inflation is expected to finally come back into the target range in the second half of next year but will remain a challenge in coming months. That's why our Government is moving quickly to get inflation back under control by getting Government spending under control with a programme of fiscal sustainability and unshackling businesses from the red tape that has been slowing them down. There is much more to do on rebuilding New Zealand's economic engine but today's announcements are a good start.Nancy Lu: What fiscal challenges are presented in the half-year update?Hon NICOLA WILLIS: Government spending this year is around $15 billion higher than forecast just two years ago. That's the product of loose fiscal policy with spending vastly outstripping any growth in revenue. The results of this if left unchecked are more debt more inflation and a delayed return to surplus. Looking forward to next year the Government faces at least $7.2 billion of fiscal cliffs with funding for a number of initiatives set to expire. That is why we are kicking off a fiscal sustainability programme to ensure New Zealanders can have confidence that their money is being spent responsibly and so that we can deliver effective and efficient services for them to rely on.Nancy Lu: What savings have been finalised by the Government to date?Hon NICOLA WILLIS: Since being sworn in just a couple of weeks ago the Government has finalised $7.5 billion worth of savings and revenue initiatives which were announced earlier today. Those savings reflect a series of decisions made by Cabinet to stop work on broken programmes like light rail and Lake Onslow but also to lock in the reprioritisations required to deliver tax relief next year. After years of watching Government grow and grow and grow with little positive impact for real people our Government is reining in wasteful spending so New Zealanders can keep more of what they earn.Nancy Lu: What future steps is the Government taking to restore fiscal discipline? Hon NICOLA WILLIS: Fiscal sustainability isn't a one-off exercise; it's about delivering a long-term culture of discipline and responsibility. That's why we are setting out more savings to be delivered heading into the Budget next year with an initial baseline exercise delivering an annual savings of $1.5 billion and further work on new revenue measures and other efficiencies from Government programmes. In 2017 the outgoing Government inherited much better conditions than we are facing. Today we face high inflation high interest rates large deficits a recessionary economy and rising unemployment. This is the result of poor economic management and it's why we are so committed to getting the books back on track.Hon Grant Robertson: Can the Minister confirm that in the half-year economic update unemployment is projected to peak at 5.2 percent—lower than had been projected at the pre-election fiscal update? Hon NICOLA WILLIS: The member is correct. However unemployment is rising from where it is today according to these forecasts and I am conscious—and I hope the member is conscious—that that percentage represents real people who due to the state of our economy are set to not have jobs. That is of concern to me.Hon Grant Robertson: Can the Minister confirm that the Treasury on page 6 of the Half Year Economic and Fiscal Update have indicated that issues such as tax revenue declining represents a risk to whether or not the Government's decisions will be fiscally neutral and in fact this means New Zealanders may see a worse economic outlook as a result of her tax cuts? Hon NICOLA WILLIS: The member can be assured that Treasury knows the greatest risk to the Government's book is a big-spending ineffective Government and that chapter has closed. That is why the Treasury on page 6 state that it is anticipated that under this new coalition Government once combined with the other signalled commitments in the Mini Budget"—i.e. our tax plans—"[that are] expected to be agreed in the future the overall impact would be broadly neutral over the forecast period." Hon Grant Robertson: Can the Minister confirm that the paragraph after the one she just read out said that "Once the Mini Budget decisions and other commitments are reflected into the forecasts there will be changes in the composition of some key indicators … there is a risk that once decisions are fully reflected into the economic and fiscal forecasts the overall fiscal impacts may not be neutral"? Hon NICOLA WILLIS: That is why we are working to ensure that our tax package is neutral and I do have to say that being lectured by someone who broke every spending limit they ever set themselves—I can't really take it that seriously. Given the state that member left the Government books in he should stop lecturing about fiscal responsibility. Not only will we spend better but New Zealanders will have more money in their bank accounts and we'll be proud to deliver. Rt Hon Winston Peters: Could I ask the Minister of Finance as to whether she's concerned about the potential serious underlying unemployment as a result of the colossal figure of 128000 immigrants being brought into this country at the end of October this year by the Labour Government?Hon NICOLA WILLIS: I have two concerns. The first concern is that after a period of extremely restrictive immigration settings the Government then moved so swiftly to reopen immigration settings that it has failed to put in place adequate controls and we've seen that with the evidence of migrant exploitation and we are seeing that we are currently experiencing levels of immigration that are unsustainable. That is why the Minister of Immigration is looking very carefully at the ill-disciplined systems that were left to her by the outgoing Minister. I also have another concern—if you'll let me Mr Speaker—and that is that the previous Government allowed the jobseeker numbers to grow so significantly even during a period of low unemployment and our Government is committed to getting more people from welfare into work."