2. Question No. 2—FinanceSTUART SMITH (National—Kaikōura) to the Minister of FinanceQuestion No. 2—Finance2. STUART SMITH (National—Kaikōura) to the Minister of Finance: By how much has Government debt increased in recent years?Hon NICOLA WILLIS (Minister of Finance): In 2008 net core Crown debt—a measure which includes Government financial assets as well as financial liabilities—was 5 percent of GDP. Despite the global financial crisis (GFC) both the Key-English Government and the following Labour Government at least initially had a goal of keeping net debt to 20 percent of GDP or below. In 2019 it was 19 percent. What is it now? Net core Crown debt according to the latest forecasts—[Interruption] Members opposite laugh but I think most New Zealanders would be interested in this grave number. They don't think it's very laughable—Rt Hon Chris Hipkins: Point of order Mr Speaker. Previous Speakers have ruled very clearly that Ministers can't ask themselves questions and they particularly can't ask themselves questions when they're in the process of answering one.SPEAKER: That's quite true but I think in this case the question that was asked was being paraphrased. I'm taking a generous view on that. We will have the answer with the appropriate brevity.Hon NICOLA WILLIS: Net core Crown debt according to the latest forecasts is now 44 percent of GDP—44 percent—a considerable increase in only five years. To put it in perspective members 44 percent of GDP is the highest that net debt has been as a proportion of the overall economy in 30 years comparable only with the period from the late 1980s to the mid-1990s.Stuart Smith: What has caused debt to increase so quickly?Hon NICOLA WILLIS: Well COVID-19 was a big reason that net core Crown debt increased so quickly but Government spending outside of COVID has also increased significantly with Treasury advising me that the previous Government left us with a structural operating deficit of around 2 percent of GDP. The result is that net core Crown debt increased from around $59 billion in 2017 to $183 billion this year an increase of more than $100 billion in six short years.Stuart Smith: Has she seen any other explanations for the recent increase in debt?Hon NICOLA WILLIS: Well yes I have seen reports that the reason debt increased so much was that the previous Government was making so many high-quality infrastructure investments. In particular one not exactly impartial observer recently said that increasing debt has enabled us to invest more in transport into health and education capital more into the things we need to underpin the kind of society and economy we want". I have searched for evidence of such high-quality investment but amongst the wreckage of light rail the Auckland harbour cycle bridge—SPEAKER: That'll be enough—[Interruption] That's enough. Can I just remind the member asking the question that you can't use the question process to attack the Opposition. You can of course ask it in a way that is reflective of what conditions Ministers may find themselves in.Stuart Smith: Should the Government borrow for productive investments?Hon NICOLA WILLIS: Absolutely. That is one of the reasons the Government should borrow: to fund high-quality investments that provide benefits to New Zealanders over time including those that increase the productive capacity of the economy. But I would add one important note of caution: economic shocks push up debt quite considerably. We've seen this recently with the global financial crisis and with COVID. After a shock Governments have to either bring debt down again as a percentage of GDP which necessarily requires constraint or let debt settle at a higher level. New Zealand has seen public debt ratchet up like this since 2008. I would invite members to engage in a little thought experiment where we went through the GFC and COVID with a starting point for net debt of 50 percent of GDP rather than 5 percent; so Governments should always be thinking about the next shock that's around the corner not just maxing out the credit card today.Stuart Smith: Has she seen any commentators arguing for higher debt?Hon NICOLA WILLIS: Well yes. I have seen a report saying that a future Government would consider taking on more debt despite New Zealand's debt being the highest for 30 years despite us having little to show for it and despite interest costs rising to $8.8 billion this year. I'm disappointed to hear that coming from a member of this House Barbara Edmonds. Hon Barbara Edmonds: Does she agree with the Treasury chief economist who has stated "Our key point is that current debt levels in New Zealand are well within the range that we would consider prudent."?Hon NICOLA WILLIS: I agree that that definition of "prudent" is met. What I question is whether New Zealanders can see $123 billion worth of value generated by that Government for the $123 billion worth of debt that they have saddled this and future generations with."