Ross Jami-Lee: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeRoss Jami-Lee: Questions for Oral Answer — Questions to Ministers[Sitting date: 09 July 2013. Volume:692;Page:11761. Text is incorporated into the Bound Volume.]2.JAMI-LEE ROSS (National—Botany)to the Minister of Finance: What reports has he received on the Government’s financial position—particularly progress in reaching its target of returning to fiscal surplus in 2014/15?Hon BILL ENGLISH (Minister of Finance):Treasury last week published the Crown Financial Statements for the 11 months to 31 May 2013. They show an improvement in Government tax revenue on the back of a moderately stronger economy combined with the Government’s responsible control over spending. These two factors leave the operating deficit for gains and losses at $3.26 billion for the 11 months. If this improvement continues for the final month of the fiscal year that is to 30 June along with the usual historical patterns of spending then the deficit will likely be somewhere around $5.5 billion for the year rather than $7.5 billion as forecast in Budget 2012 12 months ago.Jami-Lee Ross: What were the main reasons for the improvement in the Government’s accounts for the 11 months to May compared with previous forecasts?Hon BILL ENGLISH: There were two main reasons. Over the past few years the Government has focused on understanding and managing the main drivers of Government expenditure after it had jumped by 50 percent—that is 50 percent—in the 5 years to 2008. Core Crown expenses are forecast to drop to below 31 percent of GDP in 2014-15 and that is down from 35 percent of GDP just 2 years ago. The second reason is higher revenue. The Government is supporting this growth through its comprehensive programme to build competitiveness encourage investment and support jobs. Compared with May 2012 tax revenue is $3.5 billion higher for the 11 months to May this year reflecting wage growth and an increase in the effective tax rate on sole traders’ trusts and other individuals as a result of the Government’s tax reforms in 2010 which appear to be collecting more tax even at lower rates.Jami-Lee Ross: What implications can be drawn from the Government’s latest financial statements in terms of its target of returning to surplus in 2014-15?Hon BILL ENGLISH: These accounts confirm the Government is on track to return to surplus in 2014-15 but also to achieve a deficit in this last financial year around $2 billion lower than we budgeted which is a significant tribute particularly to the Public Service which has really applied itself to managing the drivers of Government spending. Bear in mind that the deficit was $18.4 billion just 2 years ago. Of course when we get to surplus we will have choices about repaying debt or investing in more public services for New Zealanders.Jami-Lee Ross: What contribution is the Government’s Better Public Services programme making to the improvement in the Government’s finances?Hon BILL ENGLISH: We believe that effective public services and good performance in the public sector is the key to getting back to surplus and managing the Government’s finances. Yesterday Ministers issued the first annual progress report on the 10 Better Public Services results which set out to address some of New Zealand’s most challenging issues. It confirms that we are making good progress in areas such as reducing crime reducing long-term welfare dependence and improving educational achievement. In several areas the Government is making significant upfront investment to achieve better results. For example it is investing more than $470 million over two Budgets to support more New Zealanders off welfare and into work. We are making that investment because we believe it will lead to less welfare dependency and therefore less fiscal cost in the long term.Hon David Parker: Is the Minister of Finance ready to concede that he has failed in his objective to rebalance the economy towards exports and export jobs given that there is significant house price inflation significant debt-fuelled speculation in housing and the IMF says that we will have the worst current account deficit in the developed world this year and every year through to 2017?Hon BILL ENGLISH: No I do not concede that at all. In fact a principal component of the rebalancing is to shrink the excessive Government spending that the previous Labour Government got involved in and as I have pointed out Government spending will shrink from 35 percent of GDP to 31 percent in a couple of years’ time. Secondly I simply disagree with the IMF over its view about New Zealand’s current account balance.