Dean Jacqui: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeDean Jacqui: Oral Questions — Questions to Ministers[Sitting date: 03 March 2016. Volume:711;Page:9369. Text is incorporated into the Bound Volume.]2.JACQUI DEAN (National—Waitaki) to the Minister of Finance: What steps has the Government taken to move its books from an $18 billion deficit in 2011 back to surplus?Hon BILL ENGLISH (Minister of Finance): The Government has taken a lot of steps because before this Government’s first Budget in 2009 Treasury was forecasting never-ending deficits and net debt blowing out to over 60 percent of GDP over twice the level that it currently is. This was because of a combination of a financial crisis and the huge spending built in by the previous Labour Government which included no consideration—Mr SPEAKER: I apologise to the Minister. I have a point of order from Grant Robertson.Grant Robertson: I raise a point of order Mr Speaker. You have ruled several times in this House that Government questions from its own members to Ministers should not be used to attack the Opposition. That was a primary question being used for that purpose.Mr SPEAKER: I do not agree at all that the primary question was set down for that purpose. It was to inform members of this House. It was a legitimate question that was accepted. There was a huge amount of interjection coming from two particular members and if the Minister then takes the opportunity to respond to that interjection that is legitimate as well.Hon BILL ENGLISH: Just to finish off the answer in the last seven Budgets of this Government the annual cost of new initiatives has averaged around $600 million. In the seven Budgets up to 2009 the average cost of new initiatives was around $3 billion per year.Jacqui Dean: What are the Government’s fiscal priorities now that it has delivered on its election promise and made a surplus in 2014-15?Hon BILL ENGLISH: The focus now is on paying down debt. Governments have previously been able to get on top of debt because they relied on tax revenue windfalls helped by 4 to 5 percent inflation as occurred in the first decade after 2000. With inflation now at 0.1 percent we cannot rely on fast-growing tax revenue to achieve debt reduction. So we have to continue with tight management of our spending. We are doing this by better management of the Government’s huge asset base of $250 billion and also addressing the long-term drivers of our biggest area of spending and that is in social services health education welfare and justice through our programme of social investment.Grant Robertson: In light of his answer that his priority is paying down debt is it correct that he will not begin to pay down a single cent of debt until the 2020-21 financial year?Hon BILL ENGLISH: The measure of debt that we use as previous Governments have is debt as a percentage of GDP. That is peaking about now but certainly paying off nominal debt will require quite strict fiscal discipline because we cannot rely on high inflation to deliver big bursts of tax revenue. We have actually got to do what every household and business in New Zealand does and that is work to the real income that we can earn.David Seymour: Has the Minister identified a level of surplus at which he will cut taxes?Hon BILL ENGLISH: Not a particular level of surplus—this Government has done a tax switch in 2010 actually when we had a deficit because we were able to cover the cost of income tax reductions with increases in GST and property taxes. The Government is committed to moderate tax cuts over the next few years if fiscal conditions allow and we have yet to see whether fiscal conditions will allow it.Jacqui Dean: What benefits will paying down Government debt bring to New Zealanders?Hon BILL ENGLISH: Holding and paying down debt will allow New Zealand to be resilient particularly to changes in the global economy that might have a negative effect on us. To do that we need to keep a tight rein on ineffective spending. If we can pay down debt we will also be in a better position to deal with long-term spending pressures such as superannuation. Our current public pension costs around 5 percent of GDP; by 2050 the cost will increase to 8 percent of GDP. But to keep that in perspective in the last 4 years we have managed to reduce Government spending as a proportion of GDP from 34 to 30 percent. So the reduction in Government spending as a proportion of GDP in the last few years has been greater than the projected increase in national superannuation through to 2050.Jacqui Dean: What implications does a focus on paying down debt have on the way the Government manages its books?Hon BILL ENGLISH: Now that the Budget is broadly in balance and there is a stronger focus on debt we are not so concerned about small positive or negative fluctuations in the Budget balance. This is particularly true for the monthly Crown accounts the next of which will be released tomorrow because month to month the accounts can fluctuate depending on timing effects. The Government manages the books by getting better results from our spending. That is we are willing to spend more where we can get results but if we cannot get results then we are not willing to spend money—for instance on large-scale new tertiary education entitlements because there is no evidence that that will make any difference to anybody.