Wood MichaelDEBATE ON BUDGET POLICY STATEMENTMICHAEL WOOD (Chairperson of the Finance and Expenditure Committee): I move That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2019. I am very pleased to present to the House the report of the Finance and Expenditure Committee on the Budget Policy Statement (BPS). Before I commence my comments I wish to thank those members of the committee who attended the hearings the Minister of Finance and the Secretary to the Treasury for presenting to the committee and all of the submitters who took the time to give to the committee their views on the priorities that should be within the Budget Policy Statement which of course has a significant bearing on the Budget that will be delivered and on the well-being and the future of New Zealanders. The Budget Policy Statement is an important part of the Budget cycle. It is a means by which the Minister of Finance and the Government directly signals its intentions in terms of the priorities in the forthcoming Budget to the Parliament and in doing so it is a way by which the Minister and the Government is accountable to the House for the priorities that it is setting as a part of the Budget. It was notable to the select committee this year that the Budget Policy Statement before us was quite different from BPSs that have been presented to previous Finance and Expenditure Committees. This was a Budget Policy Statement that wasn't just focused on the fiscals and that wasn't just focused on how Government will be spending money although that is an important part of the Budget of course. It was a Budget Policy Statement that was focused on the Government's belief that lifting the well-being of people and communities is what really matters. The way that this has been explained to the committee over a range of engagements about the well-being Budget and the living standards framework that sits in behind it is that while it is very important that the economy is well managed that we have economic growth and that the Government's books are run well those things are not ends in themselves. The things that really matter to New Zealanders are things like having a good house having access to good health and education services having a sense of well-being and safety within people's communities and being engaged with the community and our society. The things that we do as Government should be about supporting those different kinds of well-being: the well-being of people the well-being of communities and the well-being of the environment. One of the things that the Minister of Finance noted in his presentation to the committee was that actually this is not a revolutionary concept. If you were to pick up the annual report of most major New Zealand companies or most major organisations in our country and you read through that report you would not just be confronted with tables of figures about how that organisation is spending its budget. The front of the report will generally focus on the purpose of the organisation what it is there to achieve and the difference that it wants to make and that was certainly the case—and this was noted by the committee—with the Budget Policy Statement this year. The purpose of the Government in delivering the Budget was stated at the outset of the document as being about improving the well-being of New Zealanders. In this sense what we saw in the BPS was a more holistic set of objectives than in previous Budget Policy Statements. There was a particular quote that is referenced in the Budget Policy Statement report from the Minister and it spoke to what has been observed when the Government has been assessing the Living Standards Framework and the issues that arise when we consider the well-being of New Zealanders. He noted that New Zealanders do generally have high living standards and that's something that we would all feel good about but there are challenges and disparities to address. He said Too many people are being left out and left behind." One of the things the Budget Policy Statement did this year—and again this is quite different from what we've seen in the past—is it actually made an assessment of where New Zealand is at in all of those important areas. So in areas like human capital there are objective and evidence-based assessments about how New Zealanders are faring in respect of mental health issues. In the area of social capital there is an objective and evidence-based assessment about New Zealanders' trust in Government and public institutions. In the area of natural capital—and this will be of interest to members who represent provincial and rural parts of the country—there's an assessment about the state of soil erosion a critical factor in delivering long-term prosperity and well-being in our rural communities. In the area of financial and physical capital there's an objective and evidence-based assessment about the percentage of housing costs that New Zealanders face as a proportion of their income. So the well-being Budget as was explained to the committee focused on looking at where New Zealand is at and where the gaps and the deficits are and then how we can best address those to increase people's well-being. In respect of this it was explained to the committee that the Government in the Budget has decided on five key priority areas. These are creating opportunities for productive businesses regions iwi and others to transition to a sustainable and low-emissions economy; supporting a thriving nation in the digital age through innovation and social and economic opportunities; lifting Māori and Pacific income skills and opportunities; reducing child poverty and improving child well-being including addressing family violence—that one was quite notable because it was pointed out during the hearing that the Government's original Budget priority didn't include the language around addressing family violence. It was on the advice of the sector and of science advisers to the Government that the evidence is very strong that if you want to address issues around child poverty and child well-being you absolutely have to be addressing and prioritising those issues around family violence as well. So that was quite a good example I think of the way in which an evidence-based approach engaging the science advisers and sectors has actually helped to shape the priorities of the Budget for the Government and I thought that was very very encouraging. It was very notable that across the 66 submissions received by the Finance and Expenditure Committee the vast majority of those submissions were extremely supportive of the direction of the well-being Budget and of the upfront focus on the well-being of people and communities. While unfortunately we were not able to have formal oral hearings of submitters Government members of the committee have had informal meetings with a range of the submitters and those submitters have appreciated their opportunity to have their say. What those submitters have noted is that some of those deficits are very real in their experience. Many of those submitters have pointed to deficits and gaps that have built up over a number of years that have not been addressed and they have been supportive of the Government in addressing those well-being issues but have really been keen to drive us forward in terms of the specific measures that will help to improve well-being in the identified areas. One of the other things we heard was about the way in which the well-being Budget has changed the way in which Government Ministers have been engaging with the Budget process. So instead of simply putting in individual bids which focus on an output at a departmental level Ministers have been asked to work collaboratively to deliver outcomes that actually make people's lives better and this is leading to more linked-up holistic decision-making that should have better outcomes for people and communities. At the level of the committee there was very good discussion about the well-being framework. I would note at this point that this has been a matter that the Finance and Expenditure Committee has been engaging itself with over a number of months in preparation for the first well-being Budget and we've had briefings from a range of people across civil society to make sure that we are informed on these matters. One of the discussions at the committee—and this came up during the hearings—was a discussion about the extent to which we are developing a well-being framework that is unique to New Zealand and takes account of the particular way in which we live our lives and live and work together in this country. I was certainly assured by the comments both from the Minister of Finance but also from the Secretary to the Treasury Mr Makhlouf that significant effort over the last five years—during which time the Treasury has been developing the Living Standards Framework—has gone into making sure that we have a framework that is internationally comparable because that's important if we want to ensure that the framework is robust but also ensure that the framework does take account of the way in which we live our lives in New Zealand. In particular we had a good discussion on the committee and at the hearing about ensuring that a Te Ao Māori world view is incorporated into the Living Standards Framework and the well-being Budget. I said before that the well-being Budget focuses on well-being but sitting in behind that are of course the fiscals as well and what the Minister of Finance made very clear in the hearing that we had is that yes this is a Budget that is about the well-being of people and communities but we also do need to ensure that we're running the books well so that the Government has choices and has the ability to make the investments that do enhance well-being. In that respect he confirmed that the Government remains committed to its Budget responsibility objectives and he also confirmed that largely the Government is on track in those areas. Growth in the Budget Policy Statement is forecast to track at around about 3 percent; wage growth over the next few years at around about 3 percent; and net debt is forecast to fall below the Government's target of 20 percent of GDP by 2021. So certainly the indication from the Budget Policy Statement is that the Government is on track to meet those objectives. My concluding comment is this. In my observation as a constituency MP our families our communities our faith and our community groups all understand the concept of well-being—that we are all better off when the people around us are better off and have the ability and the capability to improve their own lives and reach their potential. It is encouraging that this Budget Policy Statement confirms that those are the objectives of the Government as well. Thank you."