Goldsmith Paul: Questions for Oral Answer — Questions to Ministers Questions to MembersText is incorporated into the Bound VolumeGoldsmith Paul: Questions for Oral Answer — Questions to Ministers Questions to Members[Sitting date: 09 April 2014. Volume:697;Page:17036. Text is incorporated into the Bound Volume.]2.PAUL GOLDSMITH (National)to the Minister of Finance: What progress is the Government making in achieving its goal of returning to fiscal surplus next year?Hon BILL ENGLISH (Minister of Finance):The Budget next month will confirm that the Government remains on track to return to surplus next year. This will be the first of ongoing and increasing surpluses provided we stick to the current programme. The financial statements for the 8 months to February were issued yesterday showing that spending is under control but revenue is below forecast for this year. The deficit for the 8 months was around $880 million larger than forecast in December. Although revenue was 5 percent higher than at the same time last year it was still around $1 billion lower than forecast. This will be factored in to the Budget next month reinforcing the need for ongoing control of Government spending.Paul Goldsmith: Why will it remain important for the Government to maintain fiscal discipline even after the Crown’s accounts return to surplus?Hon BILL ENGLISH: The first reason is that we should not of course be wasting taxpayers’ money and given that this Government has developed much more thoughtful ways of spending Government money we should stick to that. Secondly we want to make sure we do not put extra pressure on interest rates. The Reserve Bank has already started to raise interest rates from 50-year lows towards more neutral levels. Keeping Government spending under control means that over the course of the interest rate cycle interest rates will be lower than they would otherwise be. The Government wants to avoid the mistakes of the previous cycle when a 50 percent jump in Government spending under the previous Labour Government led to first mortgage rates of close to 11 percent. Households and businesses simply could not carry that burden this time.Paul Goldsmith: What will be the Government’s approach to allocating new spending in the Budget next month and in future years?Hon BILL ENGLISH: The Government’s approach is to examine critically each of its interventions and to ensure that any new spending shows a clear pay-off. A good example would be the fairly significant commitment to increasing the quality of teaching with a view that we will gain a clear pay-off of more children reaching national standards and higher levels of achievement in our secondary schools. We have found that if we take that robust approach many propositions that people have simply do not add up to a good use of taxpayers’ money.Hon David Parker: Did he say in 2008 “This is the rainy day that Government has been saving up for.” after Labour ran nine Budget surpluses and reduced net Government debt to zero and can he confirm his Government has since borrowed over $50 billion?Hon BILL ENGLISH: Yes I did say that. What the member left out of his little story is that in the last Labour Budget of 2008 they forecast a surplus of $1.3 billion. What actually happened was a deficit of over $3 billion plus forecasts of a decade of deficits and a blowout in Government debt. We are very pleased this Government has been able to get that financial wreckage under control.Paul Goldsmith: As part of its wider economic programme what progress has the Government made in reducing previous increases in Government spending?Hon BILL ENGLISH: If I could use just one measure of progress following the previous Government’s final Budget in 2008 since that seems to be where Labour members prefer to fight their political battles core Crown expenses jumped $7 billion just in that Budget—just in that Budget. This left a deficit of $3.9 billion in Labour’s last year. Since then under the discipline of the current National-led Government spending has increased by only 13 percent over five Budgets compared with a 12 percent increase in just the one Budget in 2008. We are very pleased to be off that track.