Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
Cosgrove Clayton: Questions for Oral Answer — Questions to Ministers 
[Volume:626;Page:21127] 
3.  
CLAYTON COSGROVE (Labour—Waimakariri) 
 to the  
Minister of Finance 
: To what extent is the Government prepared to borrow for capital spending over the next 4 years? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 To the extent consistent with our capital investment requirements and with the objective of maintaining gross debt at around 20 percent of GDP. This translates into anticipated net borrowings averaging $1.9 billion a year between 1 July 2006 and 30 June 2009. 
Clayton Cosgrove 
: Has the Minister seen any proposals to borrow more for capital spending; if so why is the Government not adopting these proposals? 
Hon Dr MICHAEL CULLEN 
: Yes particularly from the National Party. The Government will not go down this path because the effect would be to put pressure on inflation and interest rates—on inflation by exacerbating capacity constraints in the economy by feeding more demand in and on interest rates as the Reserve Bank responds to those inflationary pressures the Reserve Bank being concerned at the moment about the level of inflationary pressures within the economy. Furthermore a good many parts of any Government’s capital expenditure including those parts most called for by some Opposition parties do not necessarily contribute to long-term GDP growth. 
John Key 
: Would it be useful for me to remind the Minister that in Opposition Helen Clark made dozens of comments about the virtues of using debt including the statement: “The Government is putting an undue emphasis on debt repayment at the expense of our failing services and infrastructure in New Zealand.” and am I correct to assume that what she meant when she made such comments was that there is quite some virtue in using debt to fund badly needed infrastructure? 
Hon Dr MICHAEL CULLEN 
: It is true that the largest single reduction in debt in the last 15 years occurred during 1 year under the National Government. What the member seems to ignore is that there is a difference between borrowing on average over the cycle—which the Government is proposing to do and proposing when the economy has been running very strongly and is in capacity constraints—and borrowing in such a way that one feeds inflation and demand. I invite the member to read the various statements from the Governor of the Reserve Bank and instead of simply acting like another foreign exchange speculator as he used to be he might concentrate on sound fiscal management. His colleague used to have some knowledge in this matter before he became an old man in a hurry. 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. Standing Order 370 makes it very plain that answers are to be concise and to answer the questions and it states quite specifically that answers are not allowed to make any references to other members of Parliament. Why did you not intervene on this question or on any other answers from Annette King or do we somehow not follow the Standing Orders these days in the House? 
Hon Dr MICHAEL CULLEN 
: There is no requirement under Standing Order 370 to make no references to any other member of Parliament. It states: “discreditable references to the House or any member of Parliament”. If one could make no reference to any other member of Parliament in a question or an answer this would become an extraordinarily silent process at the start of Parliament each day. 
Hon Dr Nick Smith 
: Speaking to the point of order— 
Madam SPEAKER 
: No I do not need any help. Thank you very much. I certainly would like the questions and the answers to be concise and to the point. I live in hope and if I pulled up every question and every answer then we would not get very far. But I think it is timely that the member has raised this for the House’s attention. 
Hon Dr MICHAEL CULLEN 
: I raise a point of order Madam Speaker. Given that ruling could I ask for some further clarification? When a Minister is giving an answer and there is a barrage of interjections asking further questions is the Minister actually allowed to continue to answer the questions further being raised by the members opposite as they go along in a kind of stream of angry consciousness? 
Madam SPEAKER 
: I thank the member for that observation. Certainly those who interject should not expect no response. It is a matter of judgment. If you interject you are likely to get a response. Let us just keep this within the bounds of question time and the Standing Orders. 
Peter Brown 
: If the Minister knew with some certainty that there would be huge economic gains from investing in a particular segment of our infrastructure would he allow a State-owned enterprise to borrow against future income in order to advance those gains? 
Hon Dr MICHAEL CULLEN 
: Yes indeed which is why the Government has already authorised the issuing of debt for the financing of the Albany to Puhoi realignment project. 
Clayton Cosgrove 
: How indebted is the household sector in New Zealand and what implications does this carry for the Government’s fiscal management? 
Hon Dr MICHAEL CULLEN 
: New Zealand’s household debt is amongst the highest in the OECD at 80 percent of GDP. Total debt including Government debt is already at over 100 percent of GDP. Clearly if it continues to rise the interest-rate premium New Zealand pays would also rise pushing up interest rates for households and businesses over the long term.