Goldsmith Paul: Supplementary Estimates — Imprest Supply DebateText is incorporated into the Bound VolumeGoldsmith Paul: Supplementary Estimates — Imprest Supply Debate[Sitting date: 26 June 2013. Volume:691;Page:11306. Text is incorporated into the Bound Volume.]Supplementary EstimatesPAUL GOLDSMITH (National):It is my pleasure to speak on this Appropriation (2012/13 Supplementary Estimates) Bill and I would be keen to bring the debate back to the matter before us which is the Budget that was delivered by Bill English. The fifth Budget that he has delivered confirms that New Zealand is on the right track. We have forecasts of economic growth more jobs rising wages and a return to surplus by 2014-15.In talking to business people up and down the street there is no doubt that this is still not an easy time to be in business particularly if you are in retail. We have had 5 years now of the global financial crisis and difficult times—headwinds—that many business people and families throughout New Zealand have struggled with and struggled against combined with the devastating Christchurch earthquakes which have made for a particular challenge for New Zealand. But although these challenges remain the economic recovery here in New Zealand is gaining momentum driven by low interest rates investment and strong export prices.Economic growth at 2.4 percent for the year to March 2013 is almost the same as Australia’s. If we cast our eyes at the traditional countries that we compare ourselves with we are looking at 2.5 percent in Australia so that is just a fraction above in Australia. There is 1.8 percent GDP growth in the United States 1.4 percent in Canada 0.2 percent in Japan 0.6 percent in the United Kingdom and minus 1.1 percent in Europe. So when you compare New Zealand’s progress with those countries you have to say that all in all this Government’s financial management has been very effective and it has done well.In the meantime wages are growing the cost of living increases have been modest and interest rates are at 50-year lows. Household income has risen 20 percent in the past 4 years and it is expected to rise by almost 20 percent more in the next 4 years. With regard to the fiscal outlook as we have heard many times and as we have indeed heard people on the other side of the House commenting on we are on track to be back in surplus by 2014-15. People might say that that is all very well and good. I have heard in the past Labour members saying: “Oh yes we would have done that as well if we were in Government.” Well Labour’s track record certainly does not indicate that. Yes it is true that the Labour Party ran surpluses while it was in Government but it was bequeathed a very well-organised Government by the 1990s National Government and it continued in a reasonably fiscally prudent manner in its first 6 years. Labour should be congratulated on that but the problem was not what it did during the first 6 years; it was what it did in the last 3 years in particular bringing in a number of decisions and new spending areas which meant that although Labour managed to maintain surpluses while it was in Government when it left the projections for the next 10 years were of continued deficits. The projection was that this country was going to have 60 percent of its GDP in debt by 2020 if we had carried on in the way the Labour Government was going. No right-minded Government or country would want to be putting itself in that position.So we did have to make substantial changes. To go from a position where we were running a deficit of $18 billion only 2 or 3 years ago because of a combination of wanting to maintain a level of support for the most vulnerable in our society dealing with the Christchurch earthquakes and having a massive deficit to a position now where next year we will be back in surplus is I think an achievement that everybody in this Government can be proud of.Chris Auchinvole: Hear hear—laudable.PAUL GOLDSMITH: Thank you. That is not to say that we have solved all the issues facing New Zealand. Government spending is still large. Total Government spending is equivalent to about 43 percent of GDP and that is too large in my opinion.I might add that we hear a lot about the Opposition saying that we should be worried about the current account deficit and somehow we need to increase savings in New Zealand. I agree that both of those things are an issue although I am intrigued to know what precisely Russel Norman is suggesting we do about it because ultimately although the Government is getting itself back into surplus individual New Zealanders in their homes or in their businesses make decisions about whether they want to borrow money invest offshore or bring in fresh capital. That effectively underlies the current account deficit. It is people making free decisions. I do not know what Russel Norman is suggesting—whether he is suggesting that somehow we should stop people making free decisions. What precisely he is proposing to do to stop or to change the current account deficit issue which has been around for 40 years I do not know.It seems to me that the only way you can really solve the issue over the long term is to grow the economy substantially—and everything that the Greens suggest is generally against growing the economy—and to increase savings. That is why I am always left puzzled when I am told that we should increase savings but the two overwhelming themes of Labour and Green Party policy tend to be to bring in a capital gains tax. Well if you are trying to encourage people to save why would you then increase taxes on the result of saving which is capital? If you save all your life and you put your money into your house or your business they are now saying that they will introduce a capital gains tax in order to—Chris Auchinvole: Take it off you.PAUL GOLDSMITH: —take it off you and somehow that is going to encourage saving. I have never quite understood that logic. It is interesting. It is a bit like the Greens always understanding the logic of needing to increase taxes on cigarettes in order to stop people from smoking but they refuse to accept the same logic when it comes to the point that you do not increase the taxes on working and income because that may discourage work. The logic seems to depart from their understanding at that point. Then when it comes to saving if you are trying to encourage people to save why you would increase taxes on saving through a capital gains tax is beyond me.The other theme of their policy always seems to be about saying that just a little bit more inflation would be a good thing as well so we always have to push away the Reserve Bank of New Zealand Act and somehow soften our line there focus less on inflation maybe print some money—no they are not quite sure whether they want to do that any more. Again that does not fit very well with the idea of increasing savings because when inflation robs the savings of the thrifty and when money can no longer be relied upon as a store of value particularly if you are into quantitative easing then savings and investment are undermined. So if you are talking about increasing savings while at the same time you are undermining the value of money then you are going backwards and forwards at the same time which is in essence what they seem to be talking about.Just to carry on—where I see the challenges for this country is still in what is forecast as relatively modest growth for New Zealand. I think we have done very well through difficult times but we could be doing better still. How do you increase growth? Well there seem to be two areas really. You increase your use of resources and the Government is working very hard in the oil and gas area on trying to encourage us to make a living in this country and that is important. I am glad to see that one or two people on the other side agree with that. The other area is about increasing productivity innovation and entrepreneurship in our businesses and our communities. That is what the Business Growth Agenda is all about. Some features of this Budget that I could mention briefly are the $100 million a year being put into an internationally focused growth package providing extra research and development assistance to businessesadditional funding for tourism and more resources for marketing New Zealand to international students. Those are the sorts of things that I think will make a difference in terms of encouraging innovation in those important sectors.Let me look at the package for science and innovation funding which has increased by $50 million. We are investing millions and millions of dollars into research and development in this country. That is designed to help New Zealand businesses grow and create genuine jobs that will build the savings and ultimately will solve some of the issues that the other side are talking about. I also want to mention the ACC levy cuts which will see another $300 million being freed up by reducing ACC. That is a result of effective management of that system. The reality is that the New Zealand economy is built by a host of small businesses and those small businesses struggle very hard with ACC levies. You feel like you have got on top of things. I remember it well. You feel like you have got on top of your business that you are doing well and the next thing you know a huge invoice comes from ACC. I think the best thing we can do to encourage businesses around this country is to reduce those levies. I am very proud of this Budget on account of that basis. Thank you very much.