Tremain Chris: Questions for Oral Answer — Questions to Ministers 
Tremain Chris: Questions for Oral Answer — Questions to Ministers 
[Volume:653;Page:2697] 
2.  
CHRIS TREMAIN (National—Napier) 
 to the  
Minister of Finance 
: What would be the impact on public services if no measures to restrain public debt were taken? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The latest projections show that if the Government continued with the rate of spending growth that occurred under the Labour Government gross debt would rise to 73 percent of GDP which would lift finance costs to $15 billion per annum. That amount would be enough to fund all of New Zealand’s superannuation entitlements almost enough to fund every district health board and sufficient to fund tertiary education several times over. That is why the Government is determined to change the direction of spending that built up under the Labour Government in order to prevent debt from accumulating rapidly to levels that are unsustainable. 
Chris Tremain 
: Why is public debt projected to rise? 
Hon BILL ENGLISH 
: The primary reason that public debt in the preliminary Budget forecast was projected to rise to 73 percent of GDP was the undisciplined and reckless increases in spending under the previous Government. 
Hon David Cunliffe 
: Does the Minister agree with the recent New Zealand Institute report that states: “The loading of New Zealand’s net stimulus package into tax cuts is notable internationally and one of the likely reasons that New Zealand’s fiscal position is expected to continue to deteriorate while those of countries such as Australia and the UK are expected to recover … As a share of GDP New Zealand is giving the largest personal income tax cuts of any OECD country.”? 
Hon BILL ENGLISH 
: No I do not agree with the New Zealand Institute. But at least it knows what it thinks in contrast to the Labour Party where the leader of the party is for and against tax cuts and the spokesperson on finance is against and for them. 
Hon David Cunliffe 
: Does the Minister therefore agree with Moody’s that New Zealand’s debt challenges are limited only and are not as severe as other countries and does he agree with the IMF’s chief economist that what is needed is forceful action on both the macroeconomic and financial fronts; if so why is his Government a global outlier in believing that it can deregulate and tax cut its way out of this recession? 
Hon BILL ENGLISH 
: I tend to agree with a number of things that Moody’s has said and with a number of things that the IMF has said. However this Government makes up its own mind about what is appropriate policy for New Zealand. That policy is focused on lifting this economy out of recession as quickly as possible. 
Chris Tremain 
: What has been the previous New Zealand experience with high debt levels? 
Hon BILL ENGLISH 
: Gross public debt peaked at 75 percent of GDP in 1987. At that point finance costs consumed 20 percent of all Government spending. As members may remember it required a monumental effort to get debt back down from that level. This Government has no intention of allowing the benefits of two decades of hard work by parties on both sides of the House to evaporate just because of the recklessness of the previous Government.