English Bill: Annual Review Debate — In CommitteeText is incorporated into the Bound VolumeEnglish Bill: Annual Review Debate — In Committee[Sitting date: 28 April 2015. Volume:704;Page:2925. Text is incorporated into the Bound Volume.]Hon BILL ENGLISH (Minister of Finance):It is good to hear a coherent explanation about the economy from the former Greens spokesman on finance Russel Norman. Actually he will be a loss to the Opposition because there is no one to take his place whether they are from the Greens or Labour. I do not agree with his apocalyptic description of either the New Zealand environment or the New Zealand economy but he does focus on the real issues. He does have a different point of view but you can follow it and occasionally be influenced by it which puts him in a vastly different class from Grant Robertson that is for sure. Grant Robertson is the man who is now campaigning for surpluses in between turning up at protest marches outside Government departments protesting against constraint. Out on the street he is against constraint but when he comes in here he is lecturing the National Government about how we have not shown enough constraint—have not shown enough constraint. So I look forward to hearing from the Opposition parties about which programmes they think should be cut to generate a larger surplus number. That is the bit I want to hear. I suspect I might not.But we have heard a couple of versions of what is going on in the economy that amount to the economy that Labour and the Greens wish they were criticising. There are two features of the current growth rates that stand out. One is the breadth of the base of growth. In fact when members talk about commodity prices what they should be referring to is the way in which the New Zealand economy is showing broad and sustainable growth at a time when the dairy prices are low. That is actually the interesting issue. The question people should be asking themselves is if dairy was so dominant why is it that we are looking at growth of 2.5 to 3 percent over the next 3 to 4 years while dairy prices are low? Well the reason is that a lot of other industries are doing well—even export industries. One should just look at the trade-weighted index which is a measure of the sales of our exports in the currencies that are relevant to those sales. What is rather surprising in the light of the drop in dairy prices is that that trade-weighted index has stayed relatively strong. That is in a context where we have a number of features of the economy that indicate the kind of sustainable growth that will deliver moderate but consistent wage increases to our households.New Zealand households have learnt with the experience of the last few years that simple solutions to the challenge of rising living standards probably are not viable. The most simplistic is the one that the Labour Party suggests is the answer to every single problem and that is tax deductibility of research and development. That is the answer to everything. Well it is not the answer to everything. As the Government has set out in its Business Growth Agenda there are about 300 answers to the question of what needs to be done to support investment by businesses that enables them to employ another person and to grow their business because that is what growth is. It is all set out in the Business Growth Agenda.This debate is actually about the fiscal results to 30 June 2014. That year which now seems somewhat distant prior to the election showed a significant advance in the Government’s books where the deficit peaked at about $18 billion and I think that for the year ended 30 June 2014 the deficit was around $2.5 billion. I will simply reiterate what was said earlier during question time. The Government’s approach to fiscal management is pretty straightforward: what works for the community works for the Government’s books. When we solve a problem in our community and in our families we reduce pressure on the Government budget. I know it is an approach that confuses the Opposition parties; to some extent it confuses the media who think that any Government gets fiscal control by cutting everything. Well actually the key to smaller government is better government. When we do a better job—as these accounts indicate we are and certainly the Budget will indicate a further intensive focus by the Government on doing a better job—that is how we get back to surpluses and get debt repaid.