English Bill: Questions for Oral Answer — Questions to Ministers 
English Bill: Questions for Oral Answer — Questions to Ministers 
[Volume:640;Page:10383] 
8.  
Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Finance 
: Is Government spending in the 2007 Budget more than that signalled in the Budget Policy Statement released in December 2006; if so by how much? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 Yes because there was additional headroom due to higher revenue. The increased spending was largely because of the introduction of further KiwiSaver elements and particularly a significantly large increase in capital spending on infrastructure and the like. Between the two capital and operating the increase compared with the Budget Policy Statement was $1.045 billion against a projected revenue increase of $0.967 billion so that the actual fiscal out-turn was very close to that in the Budget Policy Statement. 
Hon Bill English 
: Can the Minister confirm that the recently released Budget papers show that despite Treasury’s warnings that “any additional spending compared to the intentions announced in December would risk further rate increases and a higher exchange rate” he and his Cabinet went ahead and spent hundreds of millions more anyway? 
Hon Dr MICHAEL CULLEN 
: What I can confirm is that we introduced very significant changes to KiwiSaver which will drive a stronger savings culture within New Zealand. That is in the long-term interest. We did not abandon the proposals around the business tax package because that is seen as part of investing for stronger growth in the future. I can confirm further that the tax revenue increase above forecast almost entirely offset the increase in both operating and capital expenditure and the Government has no plans unlike his colleague for a massive increase in debt to fund tax cuts. 
Shane Jones 
: Has the Minister seen any reports on the main drivers of inflationary pressures in the economy? 
Hon Dr MICHAEL CULLEN 
: According to the most recent statement by the Reserve Bank the main driver remains the housing market. The governor also noted the impact of a marked increase in dairy prices. Yesterday’s quarterly figure of course was heavily influenced by the increase in oil prices which accounted for 40 percent of the 1 percent quarterly increase. The remainder of the increase in prices was actually within the target band. 
Hon Bill English 
: How does the Minister think homeowners feel when they are told by everybody except him that Government spending is one of the factors driving their interest rates to the highest in the developed world and when Dr Cullen then gets up in the House and says it is OK because the Government is collecting more tax than it expected from those homeowners so they should think it is all right? 
Hon Dr MICHAEL CULLEN 
: I would say they would look at a Government where the revenue increase has pretty much weighed up against the expenditure increase. They will compare that with an Opposition whose leader is promising $2.5 billion a year of tax cuts promising local government whatever it wants and promising every interest group whatever it wants and Mr English is going to cut the rest of expenditure by only $500 million a year and they will say to themselves: “Bill may be grinding away but John is still hopping from cloud to cloud.” 
Hon Bill English 
: When will the Minister show some leadership in his economic management and tighten his belt and the Government’s belt the way that homeowners have to because they face the highest interest rates in the developed world and because if they are on the average wage they now pay 15 percent more of their wage in tax because of fiscal drag which is what is financing his big spend? 
Hon Dr MICHAEL CULLEN 
: I thank the member for finally confirming in absolute black and white terms that his position is that Government spending should be cut. Given that the growth in Government spending has occurred in infrastructure in health in education and in law and order and that Government reductions in spending have occurred in welfare payments which have gone down by 2 percent of GDP under this Government I want Mr English now to tell this House which of those big spending areas he would cut given Mr Key’s promise not to touch anything in all those major areas. 
Hon Bill English 
: Can the Minister confirm that it is now Labour’s position that all of the burden of fighting inflation caused partly by the Labour Government must now fall on exporters who face a record exchange rate and on homeowners who face the highest interest rates in the developed world and none of it will be carried by this big-spending Government? 
Hon Dr MICHAEL CULLEN 
: No. What I can confirm is that this Government has run extremely strong surpluses for the last 3 or 4 years and has been attacked in every one of those years by the National Party for running excessively large surpluses. Indeed their mouthpieces described them as obscene in some of the media; yet Mr English now says that the surpluses should be even larger. 
Hon Bill English 
: If Dr Cullen believes that so many New Zealanders have total faith in his economic management why is his own caucus suggesting he should stand aside so that either Mr Goff or Mr Mallard can take his job? 
Hon Dr MICHAEL CULLEN 
: Unlike that member I can count the numbers in caucus. That is why I have been the deputy leader of the Labour Party for 11 years and Minister of Finance for nearly 8 years—and will continue to be so—and did not decide as that member did to say: “Let’s allow John Key to bounce from cloud to cloud while I grind away in the background and run the policy.”