Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:671;Page:17528] 
4. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: Why did he announce on 17 March 2011 that the Government would carry all the costs of earthquake reconstruction on its balance sheet with no reduction in operating spending when the Prime Minister said just 3 days later that new operating spending would be reduced to zero? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The member is not correctly describing what was said. In the speech I gave on 17 March I made it quite clear that the Government did not have the choice of cutting spending to pay for the earthquake bills because we are incurring those right now. We made it clear that we would be borrowing money to pay those bills. At the same time and because of the extra debt we would be laying out a credible path back to surplus by 2014-15 and the Prime Minister’s statements about a zero Budget reinforced the Government’s clarity about that direction. 
Hon David Cunliffe 
: Was he correct when he said “debt is the appropriate response” to the need to fund the rebuild of Christchurch because “It allows the burden to be borne over time just as the benefits to rebuilding Christchurch will be permanent.”; if so why is he now considering meeting the cost of the rebuild by cutting services to low and middle income earners? 
Hon BILL ENGLISH 
: Well the member needs to think through what will actually happen with the Government’s books. We are taking on more debt—we have to. The Government is in the middle of spending a couple of hundred million dollars right now over this 4 to 6 week period just on income support for 56000 people in Canterbury. So we are incurring a debt. However we do need to get back to surplus and if we get back to surplus by 2014-15 we will still have a higher amount of Government debt because of the earthquake and that will be paid off over time. 
Hon David Cunliffe 
: If the Minister’s overriding objective is to balance the Government’s books without regard to the wider economy what advice has he received on the negative impact on jobs incomes and future tax revenues of a real-terms cut in expenditure in Budget 2011 and did he advise the Prime Minister of these negative effects before he announced savage Budget cuts on  
Q+A 
 on Sunday? 
Hon BILL ENGLISH 
: I wish we had the problem that the member said we had—that is that we were bringing a Budget under control too quickly. In fact this year we are looking at running a Budget deficit of 8 to 9 percent of GDP which will be the largest Budget deficit ever run by a New Zealand Government as far as I can see. If large Budget deficits were the key to economic growth we would be booming with growth of 6 or 7 percent. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. The question asked what advice he had received and whether he advised the Prime Minister of that advice before the Prime Minister’s announcements. He did not go near to addressing those questions Mr Speaker. 
Mr SPEAKER 
: I will allow the honourable member to repeat his question. If he wants an answer then he should make sure he asks just one question. 
Hon David Cunliffe 
: What advice has the Minister received on the negative impact on jobs income and tax revenue of a real-terms cut in Budget 2011 and did he advise the Prime Minister of that advice before he announced savage Budget cuts on  
Q+A 
? 
Hon BILL ENGLISH 
: It is—[ 
Interruption 
] Does the member think I should answer it? 
Mr SPEAKER 
: The Minister will answer please. 
Hon BILL ENGLISH 
: The advice I have received is that in this current financial year ending 30 June 2011 we will run the largest Budget deficit ever. The Opposition has been saying that the economy is flat because we are cutting Government spending. In fact we will have one of the largest Budget deficits ever and if the Opposition’s theory was correct the economy would be growing at 6 or 7 percent. I have advised the Prime Minister of the advice I have received. 
Hon David Cunliffe 
: Is it now the Government’s policy to let the earthquake permanently reduce New Zealand’s potential output so that a real-terms cut in Budget 2011 is needed to reduce aggregate demand to match that reduced output? 
Hon BILL ENGLISH 
: No.