Clark David: Public Finance (Fiscal Responsibility) Amendment Bill — In Committee Third ReadingText is incorporated into the Bound VolumeClark David: Public Finance (Fiscal Responsibility) Amendment Bill — In Committee Third Reading[Sitting date: 27 August 2013. Volume:693;Page:12894. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): Kia ora Mr Chairman. Thank you for the call. I rise to speak to this bill the Public Finance (Fiscal Responsibility) Amendment Bill. Labour will be opposing this bill and we do so with some concern given that generally there is a history of bipartisan conversations on these bills and given that it is about the long-term health of New Zealand’s finances. We had hoped that an agreement could be reached between the two sides of the House which have over many years shared concern for fiscal responsibility.I have a number of questions for the Minister in the chair the Minister for the Community and Voluntary Sector so I hope that she will take a call on some of the finer aspects of the bill. They relate directly to Part 1 because that is the part that we are now debating. Part 1 lays out the principles of responsible fiscal management. These principles in one sense are motherhood and apple pie. It seems to me to be a complete nonsense to say that past Governments have not had an eye or regard to these issues.I can hold up this graph to the Committee. I am not sure whether members will be able to see it and whether you would be able to see it from there Mr Chair but it is a graph of New Zealand’s debt track. It has a particular cut on it and I might like to cut it differently but the general trend shows that the National Government in the early 1980s had brought New Zealand’s debt very high up. It dropped down over time as the Labour Government intervened in the 1980s and the National Government of the 1990s brought the debt down a little further. Of course we know that the last Labour Government ran 9 years of surpluses and really brought New Zealand’s debt under control. Then at the end we have this flick in the tail where we see the global financial crisis kicking in. We do not blame the Government for all of the irresponsible borrowing that has gone on. Some of it in fact was quite responsible and as Bill English said of the Labour Government’s efforts this was the rainy day that we werewaiting for. This is why we saved—so that we could indeed spend when we were in a difficult spot.That spending though seems to have gone on without a real plan for the economy and we do not see the growth that we might have expected from it. But it seems to me a nonsense that these principles in Part 1 were not considered by the previous Governments that brought this debt track down—Governments of both stripes actually. I mean the real concerns that we have are at the beginning with the National Government of the 1980s throwing the debt up and the current Government throwing the debt up both without a real plan for the economy. But it is true that in between there was one National Government that was more responsible in terms of the debt track and two very responsible Labour Governments.These principles as we read here in clause 4 include from new paragraph (e) of section 26G(1): “formulating revenue strategy having regard to efficiency and fairness”. We can debate whether efficiency and fairness are being adhered to and what precisely those words mean. That would be a political debate I suspect because I would not find that the tax cuts in 2010 were particularly fair. Forty percent of the value of the tax cuts that the Government brought in went to the top 10 percent of earners and those at the bottom—the bottom 20 percent—got just 2 percent of the value of the tax cuts and then all that was swallowed up in the cost of living and GST increases. We all remember GST going up to 15 percent after the Prime Minister said it would not go up. So we can debate what efficiency and fairness mean in new paragraph (e) but these same principles were being I am sure debated by various previous Governments as we observe in that debt track including the predictability and stability of tax rates.This current Government may be an exception and it may be that Treasury with this legislation and other drivers of this legislation is trying to rein in the current Government. It may have concerns behind the scenes and it may be trying to impose a little discipline on this populist Government by saying: “Look if you are going to spend this money you must have a forward picture. You must”—not you Mr Chairman but this Government—“have a forward picture in respect of the predictability and stability of tax rates.” Let us move through to the next principle in new paragraph (f) which states: “formulating fiscal strategy having regard to the interaction between fiscal policy and monetary policy:” and particularly the principle about the impact on future generations in new paragraph (g). I think that what perhaps sits behind this wording is actually a concern from Treasury as to how this Government is performing. That is wonderful and ironic but I do not think this piece of legislation will stop that.The provision about having likely regard to the impact on present and future generations is a genuine concern that we in the Labour Party share. However again this Government has taken some calls on superannuation. The Prime Minister has said that he will not increase the superannuation age while he is the Minister in charge of the Government. That is appalling—that is absolutely appalling. We know that the cost of superannuation is overtaking the cost of education in our country and that is education before school education in the compulsory sector and education in the tertiary sector. It will soon cost more for our superannuation requirements.We need a superannuation scheme in this country that is affordable and has longevity. On this side of the House we are concerned that everybody can have a fair retirement where their basic needs are looked after. We encourage other people to save more—there is no doubt about that—but we have a regard to the long-term impact on future generations. This current Government ironically seems to be the one that does not and that is why I say that maybe this legislation is an attempt by Treasury to rein it in. We used to talk about the debt anchor when I worked at Treasury—the idea that Government debt would go down through 20 percent and the last Government prettymuch got there and left zero net debt for the current Government. So there is some irony that these are the objectives being put forward by the current Government.I would ask the Minister in the chair for her view on whether these particular principles have been ignored by past Governments because I think facts suggest that they have not and I think this legislation brings nothing new. In fact the Government is using parliamentary time to pass legislation that does not add much that is new and that does not have agreement across the House. That to me seems wrong. That does not seem like what we should be doing here as parliamentarians. It ought to be in my view that we can agree a long-term strategy for the health of the country in order to take this forward.The other thing that needs mentioning certainly in respect of this is that part of the proposal—in terms of the sustainability of spending over time that the Government was bringing along with its support party ACT—considered putting in a spending cap across Government finances. That spending cap should it be implemented would have devastating consequences. I am very pleased that that was thrown out along the way as a ludicrous idea. I am sure that it was considered further at the Finance and Expenditure Committee but I am glad that it has not made its way back into the bill because that type of cap has been demonstrated overseas to lead to a lack of investment in infrastructure education spending social infrastructure and those other things that are actually about that long-term sustainability. I am sure the Minister in the chair would agree that that long-term sustainability does not warrant that kind of spending cap or at least I hope she would. It does seem possible though that there is an expediency thing here. Peter Dunne was the man who stepped away from that clause. It was something that National and ACT had agreed before the election in their proposed arrangements the confidence and supply agreements. So again there is a bit of an irony in these principles sitting here when the kinds of suggestions that have been put forward by the Government in its confidence and supply agreements would undermine these exact principles. So that covers the principles that are there.The last principle is in new paragraph (h) which states: “ensuring that the Crown’s resources are managed effectively and efficiently.” Well who would disagree with that? I do not think anyone in this Committee would disagree with that. I do not think again that the previous legislation would have precluded such a thing from taking place. I think that that is again what this graph I held up earlier for members demonstrates—that various Governments of different stripes both Labour and National have had concern for the long-term debt track of New Zealand. Of course the National Governments that have sent us in the wrong direction outnumber the Labour ones that have sent us in the right direction I would argue. But I am not making a blanket statement here. I am saying there are good National Governments and bad National Governments and that it does not matter what has been in the past legislation—that has still happened.So with those thoughts I will take my seat and look forward to what the next speaker has to say.