Foss Craig: Financial Review Debate — In Committee 
Foss Craig: Financial Review Debate — In Committee 
[Volume:661;Page:9468] 
CRAIG FOSS (National—Tukituki) 
: 
 This session is certainly off to a scintillating start. I look forward to seeing a translation of whatever the speaker from the Green Party was talking about earlier because with respect to that member I had absolutely no idea what he meant. I would like to thank the members and officials who helped and assisted us to prepare the various financial reviews that we have in the report before us today. I think it goes for all members that we thank the people who produced these reports. I also join with the spokesperson on finance from the Opposition David Cunliffe in congratulating Mr English the Minister of Finance on the improvement in the accounts and in the forecasts which the Opposition spokesperson alluded to earlier. It is true that there is no longer a forecast of a decade of deficits; in fact it is 6.5 to 7 years at the moment. I will come back to that matter later. 
The accounts clearly demonstrate the need for accountability responsibility and transparency and to have a line-by-line expenditure review because if the accounts had continued to straight-line in the way that they had been doing in the previous 5 years or so this country would be in dire dire straits. I again congratulate the Minister for at least putting the brakes on some of the negative impacts of the accounts such as a potential blowout of the debt to GDP ratio. Budget 2009 began that clean-up process and Budget 2010 will start to bring some fairness and equity back into the economic system of New Zealand particularly with regard to the taxation field. If I have time I will touch base on that matter because some of the comments of previous speakers with perhaps just one eye open were totally and patently wrong. 
These accounts show a deficit of $10.5 billion from a positive $2.5 billion balance in the year before. Much of that deterioration comes from the recession and the global financial crisis to be fair but also much of it was locked in stepped up expenditure booked up by the previous administration. For example many Public Service salaries had been locked into 5 percent annual increases over 5 years which is 25 percent. That is before compounding the increases so they are obviously higher than 25 percent. So much of the problem with the accounts comes from having straight-lined expenditure increases yet variable or decreasing revenue as members have alluded to to be fair. 
If we run a deficit it means having debt. It means we have to borrow funds. It means we have to fund that borrowing. That money is quite simply not available for other services within the economy. It is not available to pay for health or education. It really surprises me that the Opposition goes on about more and more spending increases—I think of up to about $7 billion which would actually mean $7 billion worth of more borrowing. Well as other members have said that is a theft from or a tax on future generations which is simply not fair. To listen to earlier speakers one would think the problem was all over. It is not as bad as it had looked to be; that bit is dead right. But the issue is all about confidence and eliminating the deficits; it is not about pretending they are all over with a bit of a snapshot. 
One point to note is that the commentary says the previous administration did not pay off 1c of debt. The ratio of debt to GDP improved somewhat but that Government did not actually pay off 1c of debt. I invite members to look at the numbers. 
I would like to point members to page 13 of the transcript because the Opposition spokesperson on finance had a bit of difficulty with some of the issues there. He questioned the Minister about the percentage changes. If we want to show a percentage change between year 1 to year 2 we need to have two columns. We compare the two and we get one percentage change over 1 year. The Opposition spokesperson kept questioning the Minister of Finance who had produced a press release. It had six columns in it that produced percentage changes over 5 years. The media that were present were flabbergasted. Everyone around the table was flabbergasted because the most important issue for that member at the time during the review was how many columns the Minister of Finance had produced in a press release and even then the Opposition spokesperson got it round the wrong way. As I said if we want to show the difference between 1 and 2 years we need two columns of data. Again that may to be seem trivial but that is what the Opposition spokesperson on finance said; it is on page 13 of the report. 
One further thing I will say is in respect of superannuation. Basically the Opposition spokesperson on finance was essentially saying the more one borrows the more one makes. Supposedly we should have borrowed more funds in order to put more money into the New Zealand Superannuation Fund. I think we put in $250 million not the $2 billion that we would have needed to borrow in order to put into that fund. Members should look at the returns. They will see the returns are still not above the water. But the more one borrows the more one makes according to the Opposition member. Thank you. 
Report noted.