McClay Todd: Annual Review Debate — In CommitteeText is incorporated into the Bound VolumeMcClay Todd: Annual Review Debate — In Committee[Sitting date: 28 April 2015. Volume:704;Page:2944. Text is incorporated into the Bound Volume.]Hon TODD McCLAY (Minister of Revenue):It is a pleasure to take a call in this very important debate. Can I say to the previous speaker in this debate Andrew Bayly that I particularly enjoyed his speech. I have not had an opportunity to hear him for a little while. In particular the parts that I think were most relevant were those statistics because it is hard to argue with the cold hard facts. Our economy grew by 3.5 percent in the calendar year 2014—the best performance in the economy since September 2007—and we expect average growth rates of about 3 percent over the next 5 years. When one compares that with many other countries of the world that we have close relationships with and with countries that we trade with—indeed countries that New Zealanders were going to in significant numbers in 2007 and 2008 but we now find that they are returning home—we are doing extremely well. So better growth rates are projected than in the euro area the US the UK Japan Canada and of course Australia.Annual core Government spending has increased by just 14 percent now compared with when we came into office 6 years ago. Indeed over the 9 years of the previous Labour Government the increase in spending was around 50 percent. So that means hard-working New Zealanders were getting out of bed every day going out to work going to their jobs paying their taxes and not spending anywhere near as much on their own households on their families on their children on the things that we want them to do and the Labour Government was ramping up expenditure—a 50 percent increase. Well the Prime Minister and Bill English have very very clearly focused on this and a 14 percent increase in Government spending—Stuart Nash: What was the net debt?Hon TODD McCLAY: —I am coming to that in a moment—under extremely difficult financial circumstances when one considers the global financial crisis and the many other challenges that not only the world’s economy faces but New Zealand’s economy faces is I think a testament to their focus.We are approaching a surplus with net core debt to peak at 27 percent of GDP. A member opposite asked earlier what the debt was back then. Well it is actually about the state that the books were left in when we came to Government and the great challenge that went on around the world. Treasury came out and said to us that if we kept on the reckless spending direction of the previous Labour Government—something that the members opposite sound very proud of; you know ramp up spending let the economy get carried away with itself do not worry too much about many of the macroeconomic indicators—by 2020 debt would be at 60 percent of GDP. It would be a whopping 60 percent of GDP.Through the focus and hard work of the Government over the last 6 years on making sure that we are spending money only where we are able to and by focusing on public services and a better delivery of public services not only have we been able to get back on the track to a surplus and restrict our debt to GDP to only 27 percent but also at the same time we have been able to spend more money in the areas that are important for all New Zealanders. These are in health and in education and certainly by way of a very big investment in the social sector particularly around social development—helping New Zealanders to help themselves much more than was the case previously and would be the case today if there had been a change of Government at the last election.Very interesting and important is the fact that 80000 jobs were created last year—217000 more people are employed than was the case 5 years ago even though we have gone through very challenging and difficult circumstances. The unemployment rate today is 5.7 percent—5.7 percent. It is still too high but when one compares that with what is happening in other countries and with our very close neighbours—and our economies are fairly closely interlinked—well Australia is moving in the other direction at 6.1 percent unemployment. The most interesting thing here is that the labour force participation rate has gone up to a record of 69.4 percent. When we came to Government 6 short years ago—Sue Moroney: Six long years.Hon TODD McCLAY: —New Zealanders were voting with their feet. Ms Moroney knows this because she stood in the seat of Hamilton and most of her supporters deserted and went all the way off to Australia. Do you remember the photographs of football fields stadiums full of New Zealanders going to Australia? Well they are coming back in great numbers. Net migration is up now and those New Zealanders are coming back to work because unemployment is holding its own in going down and the participation rate in employment is on its way up.