Robertson Grant: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeRobertson Grant: Oral Questions — Questions to Ministers[Sitting date: 13 October 2015. Volume:709;Page:7117. Text is incorporated into the Bound Volume.]9.GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he stand by his statement that the Government’s top fiscal priority is “returning to surplus this year and maintaining surpluses in the future”?Hon BILL ENGLISH (Minister of Finance): I stand by my full statement from Budget 2015. The Government has five priorities: returning to surplus and maintaining surpluses in the future—that is this year 2014-15; reducing net debt to 20 percent of GDP by 2020 including repaying debt in dollar terms in 2017-18; further reducing ACC levies; beginning to reduce income taxes from 2017 with a focus on low and middle income earners; and using any further fiscal headroom to reduce debt faster.Grant Robertson: Is it correct that the first line of the Minister’s letter of expectations to the Earthquake Commission is “Returning to surplus is a key priority for 2014-15.” and is this what led to the $2 billion that was set aside to meet the Earthquake Commission’s shortfall mysteriously shrinking to $500 million in the 2014-15 accounts?Hon BILL ENGLISH: No it is simply not possible to politically direct the Earthquake Commission on its assessment of liabilities. The fact is when you have 400000 claims in Christchurch including many very complex claims the commission is continuously re-estimating its liabilities. It turns out that it was fairly conservative to start with and we took the hit at that time. If the liability is dropping that is good news not bad news.Jami-Lee Ross: What was the state of the Government’s finances when National first came into office in 2008?Hon BILL ENGLISH: The projected numbers were pretty awful including never-ending deficits. But what was worse is that the Labour Government’s attitude to spending had permeated the Public Service which believed it should get money for any purpose it could think of with no accountability. We have now changed that.Grant Robertson: Was Judith Collins correct when she said that ACC levies were not lowered “because we need to get to surplus and we’re very honest about that.”?Hon BILL ENGLISH: The decisions about ACC levies have been made in order to be assured that ACC is in a sound financial situation. Ms Collins was quite right that we were fairly conservative about the reductions in levies but now that we have achieved over $1 billion in reductions and levies—and the motor vehicle registration levy for instance is now consulting on a reduction from $330 per car just a couple of years ago to $130—we think that is progress.Jami-Lee Ross: What progress is the Government making towards its target of returning to fiscal surplus this year?Hon BILL ENGLISH: Most of the progress has been based on the Government being active in restraining spending. Four years ago the Government showed an $18 billion deficit around 9 percent of GDP following the global financial crisis and the Canterbury earthquakes. That deficit was halved in 2012 halved again to $4.4 billion in 2013 and reduced to just around $3 billion in the year to June 2014. It is clear that the return to surplus was always a stretched target as evidenced by the fact that Treasury’s last forecast showed a deficit for 2014-15. So regardless of whether the annual accounts tomorrow show a small surplus or a small deficit the overall trend is in the right direction because the Government is making sure that public money is used effectively—that is to make sure children learn at school prisoners who leave prison do not reoffend fewer children are abused and we get rid of some scourges in our community such as rheumatic fever.Grant Robertson: Is it not correct that the small surplus for 2014-15 that he will announce tomorrow was created by accounting fudges ripping off the people of Canterbury and making New Zealanders pay more for their ACC than they should have and that it will actually be the only surplus he will achieve in three terms in Government?Hon BILL ENGLISH: We have yet to see what the annual accounts will show but I can confirm for the member that the Government has been able to run small increases in expenditure—around half a billion per year on a $70 billion spending base—and achieve better public services. I know that is what really makes the Labour Party angry because it thought the National Government would slash and burn and the social sector in particular would support the Labour Party. But in fact it does not. It is supporting our efforts to do a better job for New Zealanders with the money that we have.Jami-Lee Ross: What progress has the Government made on its other fiscal priorities?Hon BILL ENGLISH: Quite good progress. In Budget 2015 we signalled another $500 million reduction in annual ACC levies on top of the $1.5 billion reduction in annual levies since 2011. The Government’s net debt is projected to fall to around 20 percent of GDP in 2020-21 and according to the IMF we now have one of the lowest net debt levels in the developed world. Any further fiscal headroom including from positive revenue surprises would be used to get debt down sooner.