English Bill: Appropriation (2011/12 Estimates) Bill — Third Reading Imprest Supply Debate 
English Bill: Appropriation (2011/12 Estimates) Bill — Third Reading Imprest Supply Debate 
[Volume:674;Page:20489] 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I move— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I thought we were also going to do the second reading of the Imprest Supply (Second for 2011/12) Bill with this bill and that has not yet been called. 
Mr SPEAKER 
: The Minister is about to move both of those. 
Hon BILL ENGLISH 
: I am about to do that. 
Mr SPEAKER 
: The Minister is about to do that. 
Hon Trevor Mallard 
: The bill that’s on the Order Paper hasn’t been called. 
Hon BILL ENGLISH 
: The Government order of the day has been called. 
Mr SPEAKER 
: The Clerk has called Government order of the day No. 1 and that covers both of these bills. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. At the moment the Order Paper states that this bill may be taken with an Imprest Supply Bill. It does not have to be. I would have thought that for a bill to have a reading it must be called. 
Mr SPEAKER 
: I just a moment ago set the bill down for second reading forthwith. That is why the Minister is now about to move that both bills be read. 
Hon BILL ENGLISH 
: I move  
That the Appropriation (2011/12 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2011/12) Bill be now read a second time. 
 As we get to the end of the Budget process it is probably the right time to recap just what the main features of the Budget were although so much has happened in an economic sense both positive and negative since late May that one could be forgiven for thinking that because circumstances have moved on maybe the debate should move on. But in fact a feature of this Budget is that it continues the considered and consistent decisions that the Government has been making since it came to office in 2008 with a couple of particular objectives in mind. 
The first objective has been to protect the vulnerable through tough times and over recent Budgets that has included the Government continuing to spend maintain and grow public services in order to maintain and grow income support to those who rely on it. The second objective has been to lay the platform for undoing the imbalances that built up through the first decade of the century and to lay the platform for higher incomes and more jobs for New Zealanders through a better-performing economy over the next 10 years. 
Those decisions have taken account of the way in which the world has changed even since the middle of 2008. I just remark on that in passing because in my view we will continue to see episodes of volatility concern and occasionally a crisis in international markets and that is driven by the fact that there is a fundamentally simple issue underlying the pressures we are seeing. Certainly through the last decade and years previous to that many developed countries built up large amounts of debt. The crisis of 2008 shifted a lot of that debt from the private sector to Government balance sheets. But the debt continues to grow and as long as that debt continues to grow it will continue to cause disruption. The only way to deal with debt is to write it off or pay it off and neither of those things is happening at the moment. 
Even then as Governments get on top of this fast-rising debt they will have to try to get it down from dangerously high levels and that is just as politically difficult maybe even more so than trying to stop it rising. At least when debt is rising the public can see that with some alarm and can understand the need for action. So the Government is always taking a longer-term view of these risks. The fact that the crisis of 2008 receded in its immediacy into 2009 and certainly by 2010 did not mean that the fundamental imbalances had been dealt with and that is what we have taken account of in Budget 2011. 
Back in Budget 2009 the main feature of it was to clean up the loose ends from the previous Government but in particular to initiate a longer-term and significant investment in infrastructure. The previous Government had begun that process but the Government in Budget 2009 set out productive infrastructure as one of the fundamental building blocks of a productive economy. I am pleased to say that 2 years on the programme is well under way adequately funded and well understood. We are getting very good value for money from an infrastructure industry that can see the Government programme that can invest appropriately and that has 6 7 or 8 years of work ahead of it. 
In Budget 2010 the main focus was the tax switch. We took the opportunity—probably a unique opportunity—presented in 2010 to shift the balance of the longer-term incentives in this economy in a way that many advisers have advised over the years but the opportunity had never quite arisen. It was focused on a pretty simple idea that there were aspects of imbalance in the economy that could be influenced by changes in tax rates. So we increased tax on consumption and the effective tax rate on property investment. We cut tax rates on income and on the return on savings and investment. That was quite a considerable package which was broadly fiscally neutral and measured in a number of different ways on equity showing that it had really no particular impact on the distribution of income. In light of recent discussion about tax issues I point out that a number of measures related to investment in property will collect in this financial year somewhere between $800 million and $900 million effectively increasing the tax rate on that form of investment. 
Budget 2011 focused on getting the Government’s books back in order and doing that at a time when we have to face the very significant challenge of helping to fund the rebuild of Christchurch. Alongside that we must continue to work towards higher national savings and I will deal with that issue first. 
The most important driver of savings actually is not Government policy although that can influence it; it is the attitude of wage and salary earners and business owners towards saving. There is no doubt that the global financial crisis sent an unambiguous signal to New Zealanders that more debt is not a good thing—it makes one’s country and household and business vulnerable—and more savings would be a good thing. In fact one of the reasons that growth in this economy over the last year or so has been lower has been that people have taken that message to heart more than we might have expected and they are saving more. An indication of that change is that in 2007 New Zealanders spent about $1.11 for every dollar that they earned. This year it may well reach 99c—that is New Zealand households spend 99c for every dollar that they earn. Therefore we will have a positive savings rate for the first time in about 20 years. 
This Budget also includes essentially the pre-funding of the Christchurch rebuild. It was the Government’s view that it was vital there was no question over the Government’s willingness or ability to make its contribution to the Christchurch rebuild. As those who have been close to the process will know there have been question marks over the willingness and ability of other payers to fund that rebuild. One case involves AMI Insurance. This Budget demonstrates that the Government has effectively borrowed its share of around $5.5 billion out of a total cost of $8.9 billion in addition to Earthquake Commission funding and that money has been ring-fenced as the recovery fund. We will account for that money as we go but there is no doubt of the Government’s commitment to it. 
Of course this Budget also shows the continued fiscal consolidation that the Government has gone through in a considered and consistent fashion with a strong focus on maintaining public services but reducing the costs of providing those public services. I must compliment the Public Service on the way it has adapted to a dramatically changed world—not just a change of Government but a change in revenue expectations. The leadership of the Public Service is getting to grips with that and some of them have done a very good job of taking a longer-term view of how to invest in their people and their technology and in new models for service so that they can continue to do what they most want to do which is in a professional and competent manner provide excellent public services to New Zealanders. I think over coming years we will be increasingly seen as a country where we are doing a good job of that when others are struggling with the burdens of debt slashing services and experimenting on a grand scale with how a developed country can support the common good with a lot less resource. We will learn from those experiments but the Government is not following a radical path in this respect; it is working with the Public Service to make improvements over time. 
I commend Budget 2011 to the House. It has been the appropriate Budget for the times and it has continued the process of balance and considered judgments from the John Key - led National Government which is enabling New Zealand to build on the strengths that it has and to build on the resilience many New Zealanders have shown through these difficult recessionary times and the now unpredictable environment for economic growth. We have in that respect come through in pretty good shape and we expect that we will be able to lift incomes and provide more jobs.