English Bill: Questions for Oral Answer — Questions to Ministers 
English Bill: Questions for Oral Answer — Questions to Ministers 
[Volume:639;Page:9890] 
2.  
Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Finance 
: What is the reason for the $700 million “Top-down Adjustment to Spending” recorded in the 2007 Budget? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 It is because as with the member things sometimes happen more slowly than they should. 
Hon Bill English 
: Can the Minister tell the House whether this top-down adjustment to spending which reduces his appropriations by $700 million means he has so much money coming through that he cannot spend it in this financial year or does it mean he is taking the Opposition’s advice and trying to slow down the growth of Government spending? 
Hon Dr MICHAEL CULLEN 
: The member cannot have it both ways. It means some anticipated spending is not occurring this year. In relation to capital spending it will tend largely to mean that that will occur next year. This is a normal Treasury adjustment that has actually happened for many many years including those while the member was in Government but this is the first time that the numbers have been made publicly available. 
Tim Barnett 
: What reports has the Minister seen on any other proposed adjustments to Government spending? 
Hon Dr MICHAEL CULLEN 
: I have seen a report that a National Government would cut half a billion dollars from the recent Budget and every Budget thereafter. Of course it has yet to be explained how that would be achieved without cutting into the spending on health education or superannuation. I remind the House again that when the member opposite was last in Government he cut New Zealand superannuation. 
Hon Bill English 
: Pretty desperate. 
Hon Annette King 
: The member was desperate. 
Hon Bill English 
: We know he is getting desperate now. [ 
Interruption 
] What has happened to the therapeutic goods bill? 
Madam SPEAKER 
: Members have had their opportunity to express themselves. Now we will hear the supplementary question from the Hon Bill English. 
Hon Bill English 
: Can the Minister confirm to the House that this top-down adjustment to spending means he is cutting $700 million off the appropriations he made in the last Budget because he cannot spend the money this financial year? 
Hon Dr MICHAEL CULLEN 
: No it does not. Actually it means we are cutting $700 million off the forecast at the half-year update. 
Hon Bill English 
: Can the Minister confirm that that answer means that as recently as December he forecast to spend $700 million more than he can actually spend; and which doctors nurses and teachers is he sacking? 
Hon Dr MICHAEL CULLEN 
: No I leave that part to the member opposite. He is the one who wants to sack doctors nurses and teachers. What it means is firstly we do actually have spending under control. Secondly we have fewer people on benefits than we had anticipated. Thirdly because there is a very tight economy due to the excellent growth we have seen and the very low levels of unemployment some capital spending for example has been deferred. I remind the member—and I will tell him again—that this adjustment has happened almost every year for many many years. It is the first time that the top-down reduction has actually been published. 
Hon Bill English 
: Can the Minister explain why when I suggest in public that the Government spend a bit less of the forward allocation he calls that fiscal lunacy and sacking doctors and teachers but when he actually adjusts the appropriations to take out $700 million of his planned spending he calls that a top-down adjustment? 
Hon Dr MICHAEL CULLEN 
: No I do not call it that; Treasury calls it that. Putting that aside the member has not got it right. This money is coming off this year’s— 
Hon Bill English 
: We’re planning a top-down adjustment— 
Hon Dr MICHAEL CULLEN 
: The member should know about top-down adjustments he has had the odd one in the past. This money is coming off this year’s appropriations and the consequences of that are already built into next year’s appropriations. In order to lower those appropriations one would have to cut out items of spending. The member is being unusually coy about his inability to say where he would cut $500 million from. 
Rt Hon Winston Peters 
: Why on earth would the Minister not follow the National Party’s style of Government which was to rubber-stamp anything and everything that Treasury said no matter how bad it was for the economy? 
Hon Dr MICHAEL CULLEN 
: I believe that Treasury which is an excellent department is there to give me advice. I believe that I am paid a very large salary to read that advice carefully then with my colleagues to arrive at decisions. One can get a rubber stamp for a matter of a few dollars. 
Hon Bill English 
: Can the Minister confirm for the benefit of the House that the top-down adjustment to spending which was in the Budget that he signed off—so presumably he agrees with it—amounts to a situation where he appropriated a certain amount of money in the last Budget he defended every dollar of that as being absolutely needed he confirmed that back in December and now on the books he has cut that allocation of spending by $700 million apparently with no consequence at all in this fiscal year? 
Hon Dr MICHAEL CULLEN 
: No I cannot. 
Hon Dr Nick Smith 
: So much sloshing around. 
Hon Dr MICHAEL CULLEN 
: Indeed far from that money sloshing around as the member notes it is actually gone. That is what a top-down adjustment is; it takes the $700 million out. If it were still there it might be available for sloshing around but it has been drained out of the Budget. The reason for that is simple: forecasts are not always accurate about spending in key areas. I have to note though that Treasury does indeed sometimes get its forecasts wrong and one reason is that it is impossible to forecast accurately the growth rate of the economy and that has a significant impact on the total level of spending. 
Hon Bill English 
: If the Minister is looking after every dollar carefully how is it that his forecasts given just in December last year for the remainder of the financial year have turned out to be $700 million wrong? 
Hon Dr MICHAEL CULLEN 
: I know the member has forgotten that he once was a Treasury Minister but the updates on forecasts are done primarily in March with the March baseline update. Some departments do not fully calculate their appropriations at that point. Some departments have agreements to carry forward expenditure from one year to the next but that is not taken account of in the Estimates document in terms of the detail. That is why a top-down adjustment occurs to allow for that fact. I seek leave as this is highly technical and complex to table a Treasury report on the adjustments to expenses forecast. 
Document by leave laid on the Table of the House.