Public Finance (Fiscal Responsibility) Amendment Bill — In Committee Third ReadingText is incorporated into the Bound VolumePublic 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.]Public Finance (Fiscal Responsibility) Amendment BillIn CommitteePart 1 Amendments relating to responsible fiscal management and reporting requirementsDr 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.Hon DAVID PARKER (Labour): The issues that David Clark who has just taken his seat referred to were all relevant but I want to hear from the Minister in the chair the Minster for the Community and Voluntary Sector why it is that she thinks this bill the Public Finance (Fiscal Responsibility) Amendment Bill has the credibility to introduce a provision that says in clause 4 new paragraph (g) of section 26G(1): “when formulating fiscal strategy having regard to its likely impact on present and future generations;”.First point: is the Minister saying that her Government until now has not done that? Because if she is saying that well that shows you what an irresponsible Governmentthis is. Secondly if she is saying it has already done it does that not show that this legislation is meaningless? Thirdly if you want an example of irresponsible failing to take into account the effects between generations look no further than the Government’s head-in-the-sand attitude in respect of the age of eligibility for superannuation. The cost has gone from $7 billion to $10 billion per annum since 2008 till this year. That is more than the cost of education within the next—Paul Goldsmith: What are you going to do about it?Hon DAVID PARKER: We are going to increase the age of eligibility to 67 over time.Paul Goldsmith: It doesn’t solve the problem.Hon DAVID PARKER: It does not solve the problem says Mr Goldsmith another Luddite on the other side. What an absurd statement that actually increasing the age of eligibility does not have a substantial effect on the fiscal consequences further down—Paul Goldsmith: Look at the Treasury report.Hon DAVID PARKER: I have read the Treasury long-term report and it says that if the age of eligibility is not put up then unless Mr Goldsmith cuts other services he would have to increase GST from 15 percent per annum to 17 percent per annum. That is what the Treasury report says Mr Goldsmith. So that is the first point to be made.The second point is that it is very very interesting that the genesis of this bill was with the confidence and supply agreement with Mr Banks. I want Mr Banks to take a call to explain how he has got any credibility on fiscal sustainability. When he was last Mayor of Auckland City he tripled council debt—tripled council debt when he was last Mayor of Auckland City. That is quite apart from the extra debt that was taken on as part of the formation of the so-called super-city. A fiscal cap is a nonsense. The Christchurch earthquakes showed that if you had a fiscal cap the Government could not have paid for the rebuild or part of the substantial cost of the rebuild in Christchurch because of a fiscal cap in legislation—what a nonsense. What a nonsense.We have seen the effect of that on things like education services in California. It once had amongst the best State-based education systems in the United States. It had a fiscal cap and as a consequence it could not keep increasing spending for education in the way it needed to and indeed it had to cut its spending on education because it spent so much money on prisons. As a consequence the Californian State-based education system is a shadow of its former self. That is the sort of policy that we get from the ACT Party—ill-thought-out and it would take this country backwards even faster than this current National Government is.The third point I want to make is that in respect of this sort of legislation there should be agreement across the major parties if it is possible. We asked for some pretty minor concessions in respect of this. We thought that the wording around monetary policy was one-sided and showed how ridiculous it has become that Treasury and the Government think that the only thing that is relevant in respect of monetary policy is what the Reserve Bank does. We said: “Well that’s ridiculous.” We think that there are obviously parts of monetary policy that are delegated to the independent Reserve Bank and they should be but there are other parts relating to monetary policy including policy advice that the Government should get from Treasury—Dr David Clark: They don’t believe in contestable advice.Hon DAVID PARKER: Well that might be the case Dr Clark. I cannot understand the Government’s unwillingness at a time when monetary policy is in a state of flux around the world with these enormous trade surpluses in some countries and big trade deficits and current account deficits like New Zealand has—currently the worst in the developed world. Yet the Government will not conceive that in respect of fiscalresponsibility you have to have an eye on that as well because fiscal settings do affect monetary policy and trade balances. But the Government refuses to agree.The second area where we thought we should be making an amendment if the Government wanted cross-party accord on this was something like the Australian equivalent legislation which refers to adequate national savings. Of course New Zealand has nationaldissavings through our current account deficit—the worst in the developed world. So I would like the Minister to respond as to why those issues could not be accommodated.Hon CLAYTON COSGROVE (Labour): I too want to pick up where my colleague David Parker left off. Looking at Part 1 in clause 4 new paragraph (e) of section 26G(1) of the Public Finance (Fiscal Responsibility) Amendment Bill the other interesting thing here of course is that it says: “when formulating revenue strategy having regard to efficiency and fairness including the predictability and stability of tax rates;”. Well again as Mr Parker said is this Government so bereft that it needs a piece of legislation to ensure that it achieves fairness? It may well be that it does given that in the so-called tax switch we know that the top 10 percent of income earners got a massive 40 percent of that tax switch and the bottom 20 percent got 2 percent. So maybe it actually is important that there is a clause in here that reminds this Government that formulating revenue strategy should have fairness should be predictable should have stability of tax rates and should be fair. I am glad the word “fairness” is included in this because of course nowhere in the Government’s tax cuts has there been any fairness.I have got to say coming from Christchurch that the ludicrous idiotic proposal that was originally in this bill—the henchman from Epsom “Brown Bag Banks” trebled expenditure in his time as Mayor of Auckland City as my colleague David Parker said and the biographer Mr Goldsmith who wrote the book about the great man Mr Banks is over there. Mr Banks trebled expenditure in his time as Mayor of Auckland City yet comes to this Committee trying to gain some credibility before his problem with Dotcom and demands a spending cap which is then torpedoed by the other sort of termite-ridden leg of the stool Mr Dunne—who of course has no credibility either—who actually to be fair to him realised that that was a load of bunkum and completely unworkable. You know we had a thing called an earthquake in Christchurch. If you have a spending cap what happens there with a natural disaster? It just shows that this Government is reliant on two rotten piles—rotten piles—in the form of Mr Banks and in the form of Mr Dunne and it plays them off against each other like Tweedledumb andTweedledumber to try to navigate through what it needs.This bill is simply a political pamphlet. If a Government needs a piece of legislation that says it is to ensure the Crown’s resources are managed effectively and efficiently if it really needs a piece of legislation to tell it to do that then something is wrong. But as I say I am pleased that the word “fairness” is in clause 4 new paragraph (e) because those tax cuts were not fair. The GST that the Government put up which it said it would not was not fair to people. So it is good that at least one clause pulls on the small pangs of conscience that one or two of these Government members may have from time to time as they put through their polices that as we know benefit the top end of the street—the “Parnellites” Mr Goldsmith’s people of course—with the top 10 percent getting 40 percent of the tax cuts.Well I do not know. Will that contravene this law that talks about fairness? Because of course the Government defines fairness as that—where the bottom 20 percent gets 2 percent. It is utterly meaningless. If it does not know what fairness is and what inequity is then it should not be there. But oh the top end the one from the North Shore the one from Epsom and Banks’ biographer think—The CHAIRPERSON (H V Ross Robertson): Order!Hon CLAYTON COSGROVE: I said: “Banks’ biographer”. I do not know what you thought I said. I would not go that low—Banks’ biographer. They think that is fair. They think that is fair in a taxation sense.So really this is another John Banks special. This is political piffle. This is like writing down: “I should be a nice person. I should make sure I send Mum a birthday card and a Mother’s Day card. I need to be reminded of these basic human things.” This is piffle. This is political posturing and even Mr Goldsmith should be ashamed of this sort of stuff. We are wasting Parliament’s time on this. If that member and that Minister need a piece of legislation to say that they should manage the Crown accounts effectively and efficiently then they have got a problem. They have got an absolute serious problem. It would be nice if they did manage them effectively and efficiently as we did when we had 9 years’ worth of surpluses and zero—zero—Crown debt. We had zero net Crown debt—zero. That is called managing effectively and efficiently and we did not need a piece of paper—as the Minister scowls at me—that said: “Dr Cullen you need to manage the Crown accounts effectively and efficiently.” We just did it because it is the right thing to do.PAUL GOLDSMITH (National): I note my colleague Mr Cosgrove’s reference to the biography I wrote. He of course is jealous that I would never write one about him. I have written about successful people over the years and so that is the problem there.I am very disappointed—Hon Clayton Cosgrove: How many copies did it sell?PAUL GOLDSMITH: A lot of copies actually. I am very disappointed that the Labour Party has walked away from this bill the Public Finance (Fiscal Responsibility) Amendment Bill. I would like to acknowledge the work of the former chairman of the Finance and Expenditure Committee Mr Todd McClay who worked very hard to get bipartisan support for this bill. We heard a lot of very lengthy monologues from David Cunliffe as he worked his way through this bill. We listened we listened and we listened for hours and hours and there was a lot of talk about just how well he understood all these issues. We listened and we thought as a result of all that that we may have some support across the table for this bill but we were disappointed to find that Labour could not find it in itself to support what in the past has been something for which there has been bipartisan support.I suppose this is part of a pattern that we see from the Labour Party. It is pulling away from coherence and consistency in its support for the Reserve Bank legislation that we have. It has pulled away from bipartisan support for national security and now from support for fiscal responsibility. It is not my job of course to offer political advice to the Labour Party but I would not have thought that leaving the middle ground of politics was necessarily a wise idea.Hon David Parker: I raise a point of order Mr Chairperson. This sounds like a third reading speech not a Committee stage speech. He has not addressed the bill. Part 1 is what he should be addressing.The CHAIRPERSON (H V Ross Robertson): Thank you for bringing that to my attention. The honourable member might like to—relevance; relevance Mr Goldsmith.PAUL GOLDSMITH: My apologies Mr Chair.The CHAIRPERSON (H V Ross Robertson): But it is Wednesday morning—or I should say Tuesday.PAUL GOLDSMITH: Quite right. I want to refer to some of the points that the previous speaker Clayton Cosgrove made in relation to clause 4 of Part 1 which amends section 26G(e) of the Public Finance Act where he talked about efficiency and fairness. It is important to be reminded of these basic principles because we did have aglaring example in the previous administration where the 39c tax rate opened up a gap between the top tax rate and the trust rate which led to massive inefficiency. Suddenly as we saw in the long-term graph of Treasury’s report there was this great blip of people earning $59000.It is that sort of lack of understanding of how tax works that leads to problems and it is why this legislation is here. Legislation is never going to force a Government to act responsibly and it is never going to require political parties to act in a responsible manner but it does lay a groundwork and a framework that can guide people. This legislation is about updating that.The main aspects that are part of this bill are introducing a new principle that will require the Government to be explicit about the interactions between monetary and fiscal policy at different stages of the economic cycle. I think that is a significant contribution. The second principle is that the Government should formulate fiscal strategy in regard to its likely impact on present and future generations. Again we had Mr Parker on his hobby horse about superannuation saying that the world is going to come to an end. “Chicken Little” is running around. Here we have doom and gloom at the prospect that New Zealanders are going to live longer. Oh dear what a terrible thing that is! New Zealanders are going to be living longer and healthier lives but this is apparently something that we need to worry about.Treasury’s fiscal proposal is that the amount that we spend on superannuation—Hon David Parker: Why didn’t you say that the other day at the super conference?PAUL GOLDSMITH: —I did—goes from about 4.6 percent up to about 6.4 percent. Well at the moment we are looking at Germany at 10 percent so I would not have thought that was the end of the world.There is a decent debate about how you measure that. We saw a recent report from MichaelLittlewood at the University of Auckland where he thought that Treasury had overestimated those figures and that around 2030 we would probably be looking at closer to 5.5 percent because GDP will be bigger because people will work longer and live longer and healthier lives. If Labour thinks that that is the big issue that we need to be grappling with well that is fine. You can have that debate. That is indeed what this whole process is about with the Public Finance (Fiscal Responsibility) Bill—that we should be having those debates. I appreciate Labour’s point of view but I happen to think it is wrong on that one. That is why we are working where we are.The third principle if I can just return to Part 1 of this bill is about reporting requirements for Governments to set out the priorities for resource allocation and explain how these priorities are influenced and how they are influencing decisions.Hon Clayton Cosgrove: Wow! Amazing!PAUL GOLDSMITH: It is easy to mock. It is easy to mock but it is an important principle. Thank you.A party vote was called for on the questionThat Part 1 be agreed to.Ayes85New Zealand National 59; Green Party 14; New Zealand First 7;Māori Party 3; ACT New Zealand 1; United Future 1.Noes36New Zealand Labour 34; Mana 1; Independent: Horan.Part 1 agreed to.Part 2 Transitional provisionThe question was put that the amendments set out on Supplementary Order Paper 279 in the name of the Hon Bill English be agreed to.A party vote was called for on the questionThat the amendments be agreed to.Ayes71New Zealand National 59; New Zealand First 7;Māori Party 3; ACT New Zealand 1; United Future 1.Noes50New Zealand Labour 34; Green Party 14; Mana 1; Independent: Horan.Amendments agreed to.A party vote was called for on the questionThat Part 2 as amended be agreed to.Ayes71New Zealand National 59; New Zealand First 7;Māori Party 3; ACT New Zealand 1; United Future 1.Noes50New Zealand Labour 34; Green Party 14; Mana 1; Independent: Horan.Part 2 as amended agreed to.Clauses 1 to 3A party vote was called for on the questionThat clause 1 be agreed to.Ayes85New Zealand National 59; Green Party 14; New Zealand First 7;Māori Party 3; ACT New Zealand 1; United Future 1.Noes36New Zealand Labour 34; Mana 1; Independent: Horan.Clause 1 agreed to.A party vote was called for on the questionThat clause 2 be agreed to.Ayes85New Zealand National 59; Green Party 14; New Zealand First 7;Māori Party 3; ACT New Zealand 1; United Future 1.Noes36New Zealand Labour 34; Mana 1; Independent: Horan.Clause 2 agreed to.A party vote was called for on the questionThat clause 3 be agreed to.Ayes85New Zealand National 59; Green Party 14; New Zealand First 7;Māori Party 3; ACT New Zealand 1; United Future 1.Noes36New Zealand Labour 34; Mana 1; Independent: Horan.Clause 3 agreed to.Bill reported with amendment.Report adopted.Third ReadingHon BILL ENGLISH (Minister of Finance): I moveThat the Public Finance (Fiscal Responsibility) Amendment Bill be now read a third time. One of the strengths of governance in New Zealand that is internationally recognised has been the broad political support for the Fiscal Responsibility Act of 1994 and subsequent amendments to it. If I can just remind the House of the essential structure of that Act which we are amending the provisions specify a set of principles for responsible fiscal management in the conduct of fiscal policy. They are principles we often look to. First the principles require Governments to achieve and then to maintain for instance prudent levels of debt; second the provisions require regular public reporting by the Government on the extent to which fiscal policy is consistent with those principles; and third and probably most important the provisions of the current Act provide for regular independent updates from Treasury including a pre-election update and a statement on the long-term fiscal position every 4 years.The provisions are not prescriptive about fiscal strategy—in particular they do not define for instance what a prudent level of public debt is recognising that different levels are appropriate in different circumstances. They essentially require transparency for the Government to set out its objectives and intentions and then report against those. In practice I think successive New Zealand Governments have found that the framework has a pretty good balance of transparency and flexibility—that is on the one hand it is well within the power of the Government to change the fiscal objectives provided that it says that that is what it is doing but on the other hand it does lead to systematic transparency. These institutional arrangements are now recognised and used internationally because of the proven benefits for fiscal management. These amendments that we are debating today and putting through the House are simply improving what is already a well-proven framework.I will pick out just a couple of the amendments because I think they are quite important. One is a new reporting requirement for the Government to look back and assess its performance against its fiscal strategy. Why does that matter? You would think that that is what would happen. Well it does not actually happen. What actually happens is that the Government announces a Budget then over the subsequent 12 months Treasury revises its forecasts for that 12-month period at least twice—that is at the half-year update and then at the following Budget. Treasury adjusts its forecasts for the 12-month period according to the most recent information which means that by the time you get to the end of that 12 months and the public accounts are released the Government is actually comparing the actual out-turn with the most recent Treasury forecast which could be two cycles away from the original Budget.This tends to hide significant variations from what the Budget was. For instance the out-turn for the 2012-13 year will be compared in the first instance under the usual framework with the most recent Treasury forecast which was actually done in May. You can imagine that the forecast done in May will show a much smaller variance against the end-year figures than the forecast done in the Budget 12 months ago. So it hides variation. It also means that the Government is not inclined to look into what actually happened over that 12 months in order to understand what was driving any significant shifts. It is not prompted to do that because the variances look small. In my view just from watching these cycles over the years it is actually quite important that the Government looks back and that we have institutional arrangements that require that to happen because in the absence of those arrangements it simply has not happened.A second feature of these amendments which I think is probably generally agreed is that the Government is a bit more transparent over issues such as the interaction offiscal and monetary policy and the impact of decisions today on future generations. I want to deal with those just briefly. In respect of the effect of decisions today on future generations what we have learnt from I think recent years the last decade or so is that decisions that look relatively small in the short term can have significant long-term outcomes. It is quite telling in my view that every time Treasury has done a long-term fiscal forecast the outcome of that has looked better than the previous forecast and that is going right back to 2000. We now have 12 years or 13 years of these forecasts in different forms. Each one paints a more favourable picture of our ability to manage an ageing population. Some might say that that is false comfort but I think the provisions of this Public Finance (Fiscal Responsibility) Amendment Bill are going to ensure that it is pretty clear what the track is out in the future and that Governments are well aware of the longer-term implications both positive and negative.The other amendment that is part of this bill is around the interaction of fiscal and monetary policy. That is really just codifying I think what has been practised by different Governments over the last 10 years to 15 years. It is pretty clear that it is to everybody’s benefit that the Reserve Bank in taking its positions about monetary policy has a good understanding of what the Government’s fiscal policy is. As far as I can see there has always been satisfactory communication between Governments and an independent Reserve Bank over that issue. So I would not imagine that this amendment is going to make much difference to the practice but it will codify it. This is just adding a couple more tools to the tool kit that New Zealand Governments have to retain prudent fiscal management.If there is an area that I think still needs further work in the future it is the way that Governments deal with capital. Governments have large balance sheets. There is going to be a bit of a tendency I think for the policy focus to shift to capital and the balance sheet away from operational spending because operational spending is now quite transparent. Changes in it have to be made transparent. There is a general public expectation that we should have a Budget in surplus and then make prudent dispositions of those surpluses. That is going to tend to push the political debate to other ways of redistribution other ways of shifting value around in our communities. Those are going to be much less transparent if they are conducted through the balance sheet. I think that might be a fair way to represent some of the current policies of the Opposition for instance but it is not to say that Governments might not be tempted to push in that direction. So getting some greater transparency around the use of the Government’s balance sheet and changes in the value of that balance sheet driven by policy decisions is probably one of the next challenges in the further evolution of our Fiscal Responsibility Act.I commend this bill to the House. It takes us further along a track that has been good for New Zealand. It has had broad support and I hope that that support will be reflected in the House.Hon DAVID PARKER (Labour): Can I begin by thanking the Minister of Finance for his speech and saying that I agreed with much of what he said in his speech. The Labour Party agrees that it is appropriate that we have fiscal responsibility legislation. We think that New Zealand has done well since having the high levels of debt it had when National’s the Rt Hon Mr Muldoon left office. New Zealand at that time had amongst the highest Government debt in the world. One dollar in five of the tax that was collected off New Zealanders was being spent on interest and that amount on the then track was heading to one dollar in four if the New Zealand Government’s finances had not been brought under control.I also agree that one of the strengths of the fiscal responsibility legislation is the obligation on Treasury to produce for the Minister to sign off a pre-election fiscalupdate. I also agree that we should be striving to do better on all of these things over time. I think it would be wrong if I did not note what I thought was a pretty sloppy piece of work by Treasury at the last election in respect of allowing the Government to book the proceeds of asset sales in the Pre-election Economic and Fiscal Update without accounting for the loss of revenue that would flow to the Crown as a consequence of the dividends flowing from those assets that were sold going to someone other than the Government—that is Treasury allowed the Government to book the proceeds of asset sales without making any allowance for the loss that would accrue to the Government following the sale of those assets.It was not until subsequent Budgets that Treasury was forced to admit for the first time that the loss from the sell-down of the State-owned enterprises would increase the Government’s Budget deficit by about $100 million per annum because the capped rate at which those shares were sold was higher than the cost of Government borrowings so that the money that was saved through avoided borrowings or debt reduction was less than the profits and dividends foregone.I think that is still a pretty shameful episode in respect of the fiscal responsibility legislation. In fact I know of no more glaring error made worse by Treasury and the Government by the fact that when that was pointed out by the Opposition including me during the election the Government denied it and Treasury stayed mute. I think that that was pretty poor governance in New Zealand under the existing fiscal responsibility legislation.Having said that it is basically good legislation but at one level it is motherhood and apple pie. We used to have all these books around. I think they started withDOS for Dummies thenWindowsfor Dummiesand thenExcel for Dummies and it looks like this bill is a bit like “Fiscal Responsibility for Dummies”.Does a Government really have to be told that we have to take into account the effect of Government finance decisions between generations? The prior Labour Government did not need to have that written in legislation in order to set up the Cullen fund to help pre-fund the future growing cost of superannuation.The prior Labour Government did not need to be told that in a time of plenty you should run Budget surpluses even if the National Party then in Opposition was opposing those surpluses as being too high. We knew that that was the proper thing to do and that is why we reduced gross Government debt from 38 percent to 18 percent of GDP and net Government debt to zero. We knew that that was the right thing to do. The fiscal responsibility legislation reminded us of that but there was no need for us to be told that we had to achieve fairness in the tax system or fairness between generations because we knew that that was a duty of the Government. Any Government that does not know that is not fit to govern. I think even this Government knows—Maggie Barry: Well you’re not; no argument there.Hon DAVID PARKER: Oh we have got Rusty on the other side there chipping in and suggesting that the prior Labour Government did not understand that. We concede that the current Government understands that. It is just not credible to suggest that either side of this House does not understand those basic duties of Government. They do not need to be set out in amendments to this legislation.I want to address a couple of other issues. I was disappointed that in the Committee stage in respect of the pretty minor alterations that the Labour Party side wanted in respect of this legislation the Minister in the chair the Minister for the Community and Voluntary Sector did not address why the Government could not move on that in order to get cross-party support for this legislation. The Minister of Finance in his contribution did not address any of them either. The reality is that those requests were reasonable and principled.We heard Mr Goldsmith say in his contribution that the future cost of superannuation growing as it is and Government spending on superannuation will exceed education expenditure within 2 years. It already exceeds all welfare benefits for the unemployed and the unwell plus the accommodation supplement plus the Working for Families tax credits. Superannuation already exceeds those in total and he said that issue does not need to be addressed.Well I was at a meeting on superannuation the other day and Mr Goldsmith was there. The same question was put to us from the audience and he was very careful in his words. He did not completely dis the Government but nor did he make a fool of himself in front of that audience. What he said was that some future Government will have to address the issue—just not National; just not National. So his head is in the sand and he is denying what is probably the biggest cause of increasing Government expenditure outside of health. Health costs are more unavoidable and harder to change than the age of eligibility for superannuation. So I thought that there was an example of where Mr Goldsmith thumping his chest in this House was unnecessary. But when he was speaking to actuaries people from the savings and superannuation industry who know these issues as well as he and I do if not better he took a different tune.Another issue that Mr Goldsmith raised in his contribution was that because of the prior Labour Government putting up tax to 39c in the dollar for higher-income earners there was a tax wedge between the trust rate and the highest income tax rate. That wedge led to tax avoidance and that had not been fixed by our Government. Both of those propositions are true. I accept both of those propositions but you fix that by not letting trusts be used for tax avoidance. Trusts have got a very proper role in society but it should not be as a tax avoidance vehicle. The answer for this Government in respect of all of these things is just to cut taxes for the wealthy. That is not a solution. The wealthiest people were avoiding tax through trust structures and those loopholes should have been closed. It should not have been the case that it cut the highest tax rate giving 40 percent of its income tax cuts to the top 10 percent of the population as the Government did. It should have addressed the problem of tax avoidance through trusts.We had advice from Treasury officials in respect of fairness between generations that it would not affect the Government’s decision not to address the age of eligibility for superannuation. As the Hon Clayton Cosgrove said in his contribution that shows you that this legislation is pretty meaningless. It is window dressing.David Bennett: Oh shocking.Hon DAVID PARKER: Oh here we have David Bennett. He made a similar intervention during the second reading. At that time I had said that the proposed spending cap that was originally a part of the confidence and supply agreement with ACT—and that was the progenitor of this bill—was nonsense. I said that those sorts of fiscal caps were ridiculous and caused problems overseas and he said that I was talking rubbish. Well I will remind him as I did then that the country that is probably the exemplar of how caps as a percentage of GDP are wrong is the United States. California in the United States used to have one of the best State education systems in America. Then it introduced a fiscal cap and it could no longer properly fund education. As a consequence the education system in California has gone from being one of the best State education systems to one of the worst. That is what happens when you have inappropriate fiscal caps. If we had a fiscal cap like National agreed to in its confidence and supply agreement with ACT we would not as a country have been able to properly fund the Christchurch rebuild.In respect of capital spending I agree with the Minister’s statement that there is more work required to better and more transparently deal with the capital spending and capital assets of the Government. My last point is on monetary policy in New Zealand.We think that the amendments we had to the wording would have made that better. We also think that there should have been a reference to national savings. Neither of those was agreed to by the National Government and that is why we are opposing this bill.PAUL GOLDSMITH (National): I am very disappointed that Mr Parker and the Labour Party have found a reason to not support this Public Finance (Fiscal Responsibility) Amendment Bill this very important bipartisan bill that has usually been held to by all parties in the House. It is unusual to find the Greens and New Zealand First certainly being more responsible on such a matter. We tried hard during the Finance and Expenditure Committee process. We listened to Kevin Rudd—I am sorry I mean David Cunliffe—making long speeches in the select committee working on all the details and huffing and puffing. We listened to all that and we thought we had made something that everybody could agree with and Labour did not support this bill. That is very sad for the country given that that glue that holds us all together in our agreement over basic fiscal responsibility has been weakening as we have seen Labour losing its way I think. It used to be the party for the workers and it is no longer. I think National is the party for the workers these days for the people who look after themselves who look after their families who work hard and who are involved with their community.We recognise that the world does not owe us our living standard that it is not written in stone that New Zealand will always be one of the rich places in the world and that we have got to go out in the hard world and make a living. Mr Parker says that what is being talked about in this fiscal responsibility legislation is all motherhood and apple pie. Well you can look at plenty of countries around the world that have not understood that motherhood and apple pie idea. They have not understood that you have actually got to spend less than you earn and that Governments have to be responsible over a long time. New Zealand has been very fortunate that broadly speaking parties have all understood that. I do acknowledge that for a long period the previous Labour Government did hold a basically responsible approach. I criticise it in the sense that it left us at the end of its 9 years with a whole lot of spending projections and a whole lot of decisions that were leaving the country pregnant with debt which was going to be building up over the next 5 years.Having said all that we have had a tradition. It is a very important tradition and I think we should be reinforcing it not finding excuses not to be supporting this fiscal responsibility bill. The Western welfare States all around the world are having to face up to the fact that we have to change—[Interruption]The ASSISTANT SPEAKER (H V Ross Robertson): Order!PAUL GOLDSMITH: I am sorry Mr Assistant Speaker.The ASSISTANT SPEAKER (H V Ross Robertson): That is all right. I think someone is using a telephone in the House—PAUL GOLDSMITH: Oh right.The ASSISTANT SPEAKER (H V Ross Robertson): —and this is not a call centre. This is a debating chamber.PAUL GOLDSMITH: Indeed and these are grave matters that we are debating. So Western countries are facing up to the challenges and the good news in all this is that New Zealanders can adapt. They can see that the world is changing and that we cannot just expect to have an entitlement culture dominating the way that we see the world but we have to go out and work hard and make a living. So it is about controlling expenditure and this Government has a very good record on controlling expenditure. Nobody believed that we would be back in surplus next year but we will be. We are reforming the welfare State that we have inherited for the first time in seven decadesand getting some practical boundaries around the welfare State and that is going to make a big difference.Just drawing in on the bill itself I think that one of the more important aspects of it is the tweaking that it has done in the reporting requirements for the fiscal strategy reports and in particular I want to make note of requiring fiscal strategy reports to be clear about what the Government is trying to achieve and how its management of the Crown resources contributes to its goals. I think that puts its finger on the issue. I would be interested to hear from Labour speakers because Labour increased spending on health by 50 percent for example. But that is not an end in itself. Just because you have increased spending by 50 percent it does not automatically make the world a better place so what were the outcomes that it actually achieved with that 50 percent increase in spending? That is the thing that we need to be focusing on and that is how this Government has turned things round and has focused on asking: “Well OK what are we trying to achieve in health? What are the results that we want to get in terms of immunisation and in terms of access to surgery and those things?”. Increasing the results in that area is the important thing. When you shift that focus and concentrate on results you get a far more disciplined approach to spending. So that ultimately over time will be one of the great contributions of this Public Finance (Fiscal Responsibility) Amendment Bill. On that basis I commend this bill to the House.Hon CLAYTON COSGROVE (Labour): That speaker Paul Goldsmith talked about the need to be fiscally responsible which as my colleague David Parker said is something that is agreed on in this House. You would have to say reading this sort of lightweight stuff in here in this Public Finance (Fiscal Responsibility) Amendment Bill that the Government sort of needs its own wee guidebook to be fair to be equitable to take account of future generations in its expenditure to “formulate fiscal strategy with regard to [the] impact on future generations” and to “ensure the Crown’s resources are managed effectively and efficiently.” It needs a wee guidebook apparently to ensure that it adheres to basic fiscal principles.We over here do not need a guidebook. It is sort of in our DNA—it is how we were brought up. But to the member Mr Goldsmith who apparently has a monopoly on representing the working class all the way from Parnell to Epsom—the man who was John Banks’ biographer and who apparently has a monopoly on representing the working class—I just make this point. Is it fiscally responsible—David Bennett: Harvard. Herne Bay. Working class—where does that fit in?Hon CLAYTON COSGROVE: What was that “Billiard Ball”? Is it fiscally responsible for a Government to borrow hundreds of millions of dollars a week to put in place a tax cut where the top 10 percent get 40 percent of that tax cut and the bottom 20 percent get 2 percent of it? I just put that question. Is that fiscally responsible? Is that within the parameters of this “political pamphlet” full of piffle in here? Is that fiscally responsible? I would argue—Dr David Clark: Could be fairness.Hon CLAYTON COSGROVE: Maybe it comes under fairness my colleague Mr Clark says. I think he is saying it tongue-in-cheek—I know he is—but it does not sound fiscally responsible to me to borrow hundreds of millions and its peak I think it was $300 million - plus per week.And those members talk about borrowing! They say that we were fiscally irresponsible. Well what the genius from the Waikato over there forgets of course is what his Government did inherit from us which was net Crown debt at zero—David Bennett: Oh recession.Hon CLAYTON COSGROVE: —net Crown debt at zero. The recession—I mean maybe Mr Bennett lives in a very myopic little world and does not realise that there issomething called globalisation and an international fiscal crisis. Maybe he thinks that New Zealand initiated the whole global collapse you know in his own little world out the back in the bush in the Waikato but the deal is that these people—this Government—inherited 9 years of surpluses and net Crown debt at zero.As I have said previously in this House I remember as an Associate Minister of Finance being pilloried along with Michael Cullen by one Bill English the shadow finance Minister and I never thought in the history of my time in politics or when reading about it as a kid that I would hear a National Government attacking a Labour Government for being too tight and not spending a lot. I never thought in my wildest dreams that I would ever hear that from this crew over here but what they wanted was for us to spend the lot. They said we were mean. Remember the “block of cheese Government”—the mean awful Labour Government that would not go and tax and spend and borrow and hope? That is exactly what these geniuses over here have done for the last 5 years: borrowed given a tax cut to their mates and been propped up by every other person sort of 80 percent of the people who has had to prop up their mates to pay for it. They have been borrowing $300 million a week. So I just ask them is that responsible? Mr Bennett was interjecting about debt. I say to Mr Bennett that I am happy for him to get up and have a crack. Is borrowing $300 million a week fiscally responsible? Oh hang on the boy from the Waikato is suddenly silent. He has lost his tongue—lost his tongue. Oh yes.The second thing I would say in terms of fiscal responsibility—because this bill is some sort of National Party bible; National needs an instruction book as to how to be told to be fiscally responsible—is about selling assets. Today we hear with regard to Meridian Energy that $140 million worth of divvies is not going to 4.4 million people; it is going to those shareholders who had a lot of money and could afford it. Is that fiscally responsible? We also know that the money raised from the Mighty River Power deal is not going into hospitals and schools; the money is going into giving advice on risk management to the Department of the Prime Minister and Cabinet. I suppose there is some value in resourcing the Prime Minister’s department given its recent track management on risk management but that ain’t a school or a hospital or a road or a bridge the last time I checked.The money of course the millions of dollars going into free shares to pay for the free shares the giveaway or the bribe to people in the Mighty River Power deal the incentive scheme—where was that paid for? Out of the Future Investment Fund we know because those figures are in Mr English’s Budget. Is that fiscally responsible? We now have the Meridian Energy share deal which is you know you get a free lot of shares. It is “Buy now pay later. Next stop a set of steak knives.”—whatever it takes to get it off the deck. Is that fiscally responsible? Is it fiscally responsible to have hundreds of millions of dollars flowing into the pockets of those who live in New York and London and Tokyo and Zurich and other places rather than it being ploughed into the infrastructure that those members say—and we agree with them—this country so desperately needs in respect of hospitals and schools and roadways and transportation and all those good things. Is that fiscally responsible?Maybe they should actually take this bill away and rewrite it because they talk a lot. Mr Goldsmith got found out of course by Mr Parker over superannuation. He is a lion in this Chamber—a lion in this Chamber—when saying that nothing needs to be done in terms of securing superannuation for future generations.Hon Maryan Street: Put him up in front of an audience.Hon CLAYTON COSGROVE: How do you secure it? You have got to reform it. You have got to make it sustainable. But oh put him up as my colleague Maryan Street says before an audience. Oh what does he say? “Yes there will have to bereform but that is for another Government—that is for another Government and another time.” He says “another Government” so what he is really saying and what Mr Hayes of course signed up to is that those members know it has to be done. They know that their grandkids and their great-grandkids deserve—here Mr Goldsmith is now—superannuation and should be entitled to and should get New Zealand superannuation. I do not buy the argument that many of my generation had which is that nothing will be left for us because you know it is just the way it is. No there should be superannuation for my generation and for generations beyond.The way you secure that is to tell people the truth to bite the bullet and to put in the transitional provisions for people like the building site person whose knees have gone—John Hayes: Who yougonna vote for?Hon CLAYTON COSGROVE: —Mr Hayes’ knees have gone for other reasons but we will not go there—so that they can actually progress and perhaps retire a little early because the body’s given up. The way to actually secure that is to be truthful with people and say that people of my age—43—may have to work a bit longer and we will to provide for others. Mr Goldsmith is a lion in this Chamber but he says that it will be up to a future Government. It will be up to a future Government.What that tells us is that this bill is simply political propaganda. This is just designed to tell people whatever they want to hear and when these guys slither out of this place in the next election—slither over to this side of the House—then it will be up to as it always is a Labour Government to fix it to be fiscally responsible as we were with the Cullen fund and to be fiscally responsible as we did with KiwiSaver. All of which National railed against. It said it was communism it said it would repeal it and what has it done? Nothing. We hear record profitability for the Cullen fund today—and it should be officially named that I reckon. That is called fiscal responsibility. That is called not just talking about providing for future generations and assessing the impact of Government policy in line with its impact on future generations.We do not need a guidebook—a level 101 book for dummies on how to be responsible. We do not need that because we did it. We did not need anybody to tell us. We set up superannuation mechanisms—KiwiSaver the Cullen fund—because we knew that they would have a positive effect on future generations. [Interruption] The man from Waikato is opposed to it. The man from Waikato I believe in one of his election campaigns went around and campaigned against it. I bet he would not do that next time. I bet he would not go on the stump in the Waikato and say: “I’m going to repeal the Cullen fund and I’m going to ditch KiwiSaver.” Oh he will not say that this time because he knows that people understand it. That is called fiscal responsibility.We do not need half a dozen pages of drivel. The best argument the Government can come up with is that the Labour Party not supporting a bill because it is piffle means we do not believe in it. Well we do not need somebody to write down that you have got to look after future generations. We do not need a clause in this bill that says you must formulate revenue strategy having regard to efficiency and fairness including the predictability and stability of tax rates. We did not set up a tax regime where the top 10 percent got 40 percent and the bottom 20 percent got 2 percent. We did not do that. We did not need anybody to define for us to tell us to give us a definition for what was fairness. We knew because unlike them it is in our DNA. It is what we were brought up with. It is our value base. It is in our DNA. I do not know what is in Mr Goldsmith’s DNA—I hate to think—but we do not need a guidebook. This bill is a political pamphlet it is piffle and it is a waste of taxpayers’ money. It is irresponsible that we are spending taxpayers’ money and time on debating this tripe.Dr RUSSEL NORMAN (Co-Leader—Green): I rise on behalf of the Green Party to speak on the Public Finance (Fiscal Responsibility) Amendment Bill in its thirdreading. The Green Party supports this legislation. It is essentially a good bill. What I think is quite interesting about this bill is that the Government is essentially hoist on its own petard because when you look at the principles that the Government wants to introduce into the Public Finance Act those principles are completely at odds with the Government’s own fiscal strategy. Let me give a few examples. The Government wants to introduce a new paragraph into the principles of responsible fiscal management in section 26G of the Public Finance Act in clause 4: “when formulating revenue strategy having regard to efficiency and fairness”. I think that this is a very sensible introduction of a principle into the Act.However what you have to ask yourself is how on earth it can be fair that the Government as part of this cycle after 2008 gave away very large tax cuts to the wealthiest 10 percent of New Zealanders. How can it possibly be a fair revenue strategy to introduce as this bill rightly does the principle of fairness when putting together revenue strategy to give the wealthiest people in New Zealand very large tax cuts while increasing GST of course for those who are on lower incomes? When you look at the impact of the Government’s tax cuts it is the wealthy who did extremely well out of those tax cuts and the poor who got very little indeed from those tax cuts. How could that be considered introducing an element of fairness into the tax system? It seems to me that this is a good principle but where is the fairness in the Government’s own revenue strategy?To consider another issue what about a capital gains tax? We know that New Zealand is one of the very few OECD countries if not the only OECD country not to have a capital gains tax and the Greens have supported for many years a capital gains tax excluding the family home. The reason why this is an issue of fairness is that the very wealthy get most of their income from capital gains. So when you look at where people get their income from you will find that most people get their income from wages and salaries and they pay taxes on those. That is what the PAYE system is—pay as you earn. You pay taxes in income taxes on your salary. If you get income from capital gains—so if you own large numbers of shares those shares are worth more this year than they were last year and let us say you sell those shares and you make a big capital gain when you sell those shares—you do not pay tax on those capital gains. That is tax-free income.Why is it that we have a tax system whereby the primary kinds of income for the very wealthy—which is capital gains because they do not get most of their income from wages—pay no tax? Why is it that those on that kind of income pay no tax whereas it is ordinary working people who have to pay the bulk of the tax which they pay through their wages and PAYE taxes? It seems to me that if you were to develop a tax system based on this principle of fairness that the Government wants to introduce in this bill and which I think is very sensible surely a fair tax system would also tax capital gains so that the very wealthy who make most of their income from capital gains would in fairness pay tax on those gains.There is another principle that the Government is proposing to introduce here which I think is a very good principle: “when formulating fiscal strategy having regard to its likely impact on present and future generations;”. I think it is really important that we have a long-term horizon when developing fiscal strategy. In this respect I think we need to ask ourselves the question of why New Zealand does not have a proper carbon tax or a proper price on carbon. We have the joke of the emissions trading scheme which is just the pretence a fig leaf of some kind of price on carbon and which has very little effect whatsoever on a real price on carbon. But if we had a proper price on carbon whether through a carbon tax or an effective emissions trading scheme then that would be good for future generations. Very shortly I will be attending an event puton out the front by Generation Zero that is exactly about the issue of climate change. Climate change of all issues you would have to say is going to have a massive effect on future generations. Human-caused climate change is accelerating and of course New Zealand’s greenhouse emissions are at an all-time high and this Government has removed most methods to control it.One method to control it is to put a proper price on carbon so that those who are emitting carbon would need to take into account the fact that they have to pay a price on it. For example right now Fonterra is talking about digging a new coalmine in the Waikato in order to use the coal in its production. It could equally replace that coal with say woodchips or alternative methods that have lower greenhouse emissions or carbon emissions but it is choosing not to do that because there is no price on carbon. It has no economic incentive to look at the alternatives to digging a dirty great coalmine as part of our clean green image—not. If under this principle that the Government is introducing we considered the impact of fiscal strategy on present and future generations then it seems to me a compelling reason to introduce a price on carbon so that future generations will not face the kinds of problems that they are very likely to face as a result of climate change.Let us remember that New Zealand is a very small emitter by global standards so we are entirely dependent on the rest of the world saving our bacon on climate change. New Zealand is entirely dependent on the big emitters making cuts but we cannot ask the big emitters to save us if we ourselves are not willing to take any action on climate change. We cannot protect future generations as this clause within the bill proposes if New Zealand itself does not take action on climate change. We cannot ask the big emitters the big polluters to save us which is essentially what has to happen with climate change if we ourselves are not willing to take any action on it. So I think this is a very good clause to introduce within the bill.One could likewise make the same argument about the tax cuts that put a huge hole in the Government’s fiscal position and of course became the justification for asset sales for the Government—that is it cut taxes for the wealthy and then it said: “Oh dear! There’s a big hole in the Budget. We’re going to have to sell assets in order to pay for schools.” But more of that later.The other issue of course that the Labour Party has drawn attention to is in clause 4 amending section 26G(1) and the introduction of new paragraph (f): “when formulating fiscal strategy having regard to the interaction between fiscal policy and monetary policy;”. I would have to say that I do not share the concerns that the Labour Party has raised in this respect. I think that the new paragraph is fine and I really do think that Labour has got that wrong.There is another part of this bill that I think is really good which is the introduction of the investment statement. This of course has been a useful innovation and it is important to understand how this would work. For example under the investment statement clauses basically the Government is required to present an investment statement which would look at the value of the Crown’s assets and liabilities to the House of Representatives. Let us look for example at the issue of asset sales within the context of the investment statement. The Government has just gone through with the Mighty River Power privatisation or partial privatisation and we got the annual results for 2012-13 from Mighty River Power within just the last couple of hours. What they show is that total shareholder return for Mighty River Power was 11 percent over the financial year 2012-13. Total shareholder return includes both the increase in the value of the equity and the dividends paid out. That was an 11 percent return from Mighty River Power. The cost of borrowing to the Crown over the same period was 2.9 percent.Let us remember that the Government told us that we had to go down the privatisation path to avoid debt. It had all sorts of nefarious reasons that did not really make any coherent sense but let us consider that particular argument. In order to avoid debt of 3 percent the Government sold shares in an asset that was returning 11 percent. I mean think about the business case. Here you are you have got this asset that is earning 11 percent and you say: “Well I want to sell this asset earning 11 percent in order to avoid debt that would cost me 3 percent.” What kind of business manager would come to you with a proposal like that? It is the kind of business manager whom you would immediately sack. It is the kind of business manager who should not be in the practice of providing advice around business.And of course Treasury documents and the Budget Policy Statement outlined exactly this case where they said that asset sales would increase the operating deficit because you would be selling assets with very good rates of return in order to avoid debt that has got pretty low cost. In this case we know now because we have got the actual numbers and we can quantify it that basically the sale of 49 percent of Mighty River Power is costing the taxpayer $2.3 million a week. That is the difference between what we could have returned on that asset the 11 percent as it has told us just today versus the 3 percent cost of debt. So because we privatised 49 percent of Mighty River Power—or rather the National Government did—it means that the Government’s position which would come up under the investment statement is $2.3 million a week worse off. That is why I think it will be very useful to have this investment statement and that is why we support this bill in order to make it clear what a terrible economic manager National really is.MAGGIE BARRY (National—North Shore): I rise with pleasure to speak to the Public Finance (Fiscal Responsibility) Amendment Bill. As the Minister of Finance reminded us at the beginning of this reading the structure of the legislation that we are amending does need amendments. It is all about improving the Public Finance Act 1989 which is a piece of legislation that for many years has served us well as successive Governments and as New Zealand taxpayers. What this bill does is make the public reporting and transparency provisions of that Act stronger than they have been. We need to keep the focus on maintaining low Crown debt levels.These amendments as Minister English said at the outset will add a new tool to the tool box to help Governments manage finances more responsibly. What is the problem with that? The Greens say that they support it but they are doing a dollar each way because they are also criticising us unfairly on a number of other levels as is their wont—nothing new there. But the principles of this amendment are absolutely sound—the third principle in particular. We will have regular independent updates from Treasury; a pre-election update so that the public know what they are voting for and so they know where we are at; and a statement every 4 years because unlike the people on the opposing side we recognise that things change. We need to be up to date and we need to constantly reflect on our performance measure it and ensure for the sake of the taxpayers and the voters as well as ourselves that there is a clear pathway and that we understand what is going on despite the sorts of changes that might occur to derail the best intentions.We have heard a lot of stuff and nonsense and some thundering from the Labour Opposition benches about how this bill is absolutely not needed. To me that speaks volumes about where those members are coming from and their inclination to resist scrutiny. “Trust us.” they say. “It’s in our DNA.” they say—the former member for Waimakariri thundered that in his effortlessly unpleasant way. These are not things that we believe because we do not believe those members. We do not trust them and neither do the public of New Zealand which is why those members polled so badly inthe last election and continue to poll badly. No matter who leads them they still remain people who are deluded into thinking that people trust them.Phil Goff was the chief cheerleader back in the 1980s when they introduced GST. Let us look at the track record of these people because basically what they did was that they campaigned on one thing and they transformed all of that. They changed it. They flip-flopped. They told the people of New Zealand to vote in one way and then when they got into office they went from being a socialist party to somewhere further to the right of Genghis Khan.Hon Phil Goff: We did what Muldoon never had the guts to do and you know it.MAGGIE BARRY: Phil Goff who is piping up quietly says: “Yeah we learnt from our mistakes.” Well actually they never have.There is that delusion and I guess that culture and mind-set that they know best—nanny State. Remember the shower heads? Remember the lights that we were told we needed because that Government knew best? We were told to trust them because they knew what they were doing. Well actually the people of New Zealand are not fooled by that nonsense. A piece of legislation like this brings Governments into line and makes sure that they are held accountable and are transparent. That is why Labour members are not supporting it because something of that kind really is anathema to their culture.So from my point of view when I look at this legislation I see that it provides things that are absolutely necessary. The fiscal strategy report is basically a report card for taxpayers. It will include an assessment of the extent to which the fiscal performance of the Government is consistent with its own published fiscal strategy. What on earth is wrong with that? Taxpayers want to accurately measure what is going on with Government expenditure. They have the right to know and it is a mystery to me—although having said what I said about my knowledge of Labour going back to the mid-1980s I am not surprised at those members’ duplicity. They even manage to fool themselves that they think they know what they are doing and that they are able to be trusted when firmly they are not.The public want to know what is going on. They need that transparency and they deserve it and that is what this bill does. Fiscal responsibility means managing the Crown’s finances prudently and it also means making sure that New Zealand’s fiscal institutions and practices remain fit for purpose. That is what this bill is all about and that is why I support it unreservedly and commend it to the House.ANDREW WILLIAMS (NZ First): I take a call on behalf of New Zealand First. Perhaps this Public Finance (Fiscal Responsibility) Amendment Bill would have been better to be called the “Public Finance (Bleeding Obvious Fiscal Responsibility) Bill”—the “Public Finance (Bleeding Obvious Fiscal Responsibility) Bill”. At the end of the day what this bill is doing—and I have looked back through the previous two readings of this bill—is basically just putting into words what should already be happening with this Government.In particular the bill sets out three new principles of responsible fiscal management. It says that the Government should “formulate fiscal strategy with regard to its interaction with monetary policy.” Well surely this is the case anyway. All this is doing is confirming what should already be in place. The second part of the bill says that Governments should ensure that “resources are managed effectively and efficiently.” Well if the Government is not managing our economy and the Government books effectively and efficiently it is not doing its job. So basically again this is only putting into words into the Public Finance Act something that should already be taking place.The third part of the bill says that the Government should “formulate fiscal policy with regard to its likely impact on present and future generations.” Well again certainlyyou would expect that any Government of New Zealand whether it be a National Government or a Labour Government or any other form of Government would always be looking at the impact on present and future generations. If they are not doing so if they are thinking only of the short term the myopic what is happening right now looking only at what is happening in terms of the polls looking only at what is happening in terms of their voter response then certainly that is not how this country should be run.In that regard again it is a little bit of a nonsense that we are having to put this legislation through for what is as again I say the bleeding obvious. New Zealand First pointed out in the first reading that we thought this was a bit of an irrelevance that there were 64 other bills on the Order Paper and that other bills had a far higher priority to get on with the business of the Government and of this Parliament. At the time we said we were opposing the bill because we thought it was simply a waste of time. We will now support the bill but when we say that we now support it we support it on the basis that it can do no harm. It can only improve things surely. It can only improve what should hopefully already be happening in the Government. We would hope that as a result of just these extra words amending the Public Finance Act things would be done to an even better standard than should already be happening.But in regard to this perhaps the bill needs to be thought about in a much wider context. Previous speakers have referred to other initiatives that the Government should be looking at. If it is looking at the third purpose of this bill which is that the Government should “formulate fiscal strategy with regard to its likely impact on present and future generations” then maybe superannuation should be one that it should really really be looking at.At the present time this Government and many other parties are putting their heads in the sand in relation to superannuation. New Zealand First has come out with a scheme in the last 6 months. It is a pro rata scheme that would see people receive superannuation at 65 years of age but on the basis of how much they contributed over their working lives in New Zealand in the 45 years between the ages of 20 and 65 how long they were here how long they worked for and how long they contributed to this great country of ours New Zealand. If they had been here through that whole period they would be entitled to 100 percent of their superannuation. However if they had spent a considerable amount of time overseas it would be a pro rata amount that they would then receive on retirement in New Zealand but in doing so they could bring retirement funds from offshore from wherever they may have been working or living to help support them here in New Zealand.It means that New Zealanders who have worked all their lives in New Zealand and have contributed here whether it be working for money working for their families working in volunteer situations or whatever they have done in New Zealand get the full payout at 65 and are not subsidising those who just jump on the boat later in life come to New Zealand and then get the full payout as a result of hard-working New Zealanders having contributed to the scheme all their working lives.These are the sorts of things that any Government if it was looking at the Public Finance Act and looking to formulate fiscal policy with regard to the likely impact on present and future generations would be seriously looking at. We certainly hope that that third purpose does see the light of day and that Governments do look along these lines.Similarly my Affordable Healthcare Bill says that seniors withSuperGold cards who are 65 and over should receive a discount and should receive a rebate if they continue private health insurance after they retire to assist them to retain their health insurance. Again that would mean that far fewer of our seniors would drop their health insurancedrop out of the private health system and suddenly go into full 100 percent dependence on the public health system which would then load up our public health system to a higher level. With an ageing population we need to be looking at this far more. We need to be working out how we can keep people who may have had private health insurance on those private health insurance schemes.Similarly my Affordable Healthcare Bill talks about taking fringe benefit tax off companies’ contributions to health insurance. Why should companies have to pay fringe benefit tax to help provide for health insurance which reduces the impact and the burden on the public health system? Again we should be looking at all these wider-picture ideas as to how we can help the New Zealand economy how we can be more fiscally responsible and how we can make the New Zealand taxpayer’s dollar go further on behalf of the 4.5 million people who live here.New Zealand First will support this basically administrative bill—it is very much a technical bill—but we would say again to the Government that again this is tinkering around the edges. This is taking the deckchairs on theTitanic and just shuffling them around so that the window dressing looks a bit better but at the end of the day this bill does not do a huge amount. Get down to basics. Get down to finding ways to create more employment and regional economic development improving the opportunities for our young in this country and helping New Zealand grow this country not just tinker around the edges with minor little administrative bills such as this.Hon KATE WILKINSON (National—Waimakariri): I rise to take a very brief call in support of the third reading of the Public Finance (Fiscal Responsibility) Amendment Bill. This bill is a sensible responsible bill. It is about strengthening our fiscal responsibility. To say that strengthening our fiscal responsibility is irresponsible is just pure nonsense and political posturing. This bill is about more transparency. It is about ensuring that the Crown’s resources are managed effectively and efficiently. It proposes three new principles which previous speakers have already alluded to. This is a good bill. It is a sensible bill. It is a responsible bill. Any opposition to it is just pure nonsense and political posturing. I commend this bill to the House.Dr DAVID CLARK (Labour—Dunedin North): In reference to the previous speaker Kate Wilkinson I rise actually to oppose this bill the Public Finance (Fiscal Responsibility) Amendment Bill. The previous speaker made a number of unfounded allegations in her very short contribution but it is fair to say added nothing of substance to this debate.The Public Finance (Fiscal Responsibility) Amendment Bill is a bill that paints by numbers fiscal responsibility. As I said in the Committee stage of this debate I strongly suspect that it is an attempt by Treasury to rein in the current spending pattern of the Government—an attempt to pull it back from this $300 million-a-week habit of borrowing borrowing borrowing with no real plan for the economy.Our economy is struggling. It is not working for ordinary New Zealanders. Unemployment in my home region in Otago is at its highest level in 22 years. Last time the numbers were this bad Ruth Richardson was the finance Minister. I think that is a sad indictment on the current Government which inherited zero net debt—zero net debt—just 5 years ago and in the meantime has driven our economy away from the responsible path it was on. Under this Government we now have the greatest gap between rich and poor and we have a growing Government debt. It is outrageous that the Government should suggest that this is something that is necessary for Parliament in order to direct it on the right course. It is specifically the choices of this Government that have put us in the wrong direction. This Government is the one that passed those tax cuts in 2010 that saw 40 percent of the value go to the top 10 percent of earners. This Government—Hon Nanaia Mahuta: How much?Dr DAVID CLARK: Forty percent—40 percent of the value went to the top 10 percent of earners. Outrageous that is what it is—that is what it is. And the bottom 20 percent of earners got just 2 percent of the value of those tax cuts.Hon Nanaia Mahuta: How much?Dr DAVID CLARK: Just 2 percent. That is an outrage. That is not responsible. In this legislation here we have reference to fairness. Well if this bill will change the Government’s attitude to these issues that will be a wonderful day but I very much doubt it—I very much doubt it. If these are the guiding principles this Government wants to put in place and that is what it means by them New Zealanders will be very very very suspicious about what this legislation will achieve.This legislation also talks about the likely impact on future generations in respect of Government fiscal policy. Well that is coming from a Government that will not address the issue of superannuation and making our superannuation a sustainable scheme. There is no issue that is more important to New Zealanders in terms of their future well-being than whether they will be able to enjoy a retirement scheme that is sustainable. This Government has put its head in the sand on that issue.The other crazy thing that was in this bill and I am very glad it has been taken out was something to do with the Government’s confidence and supply agreement with John Banks. This bill as it was originally drafted promised that a spending cap would be implemented. Unfortunately no one asked the independent MP Mr Dunne what he thought of that. On this occasion he was very frank and described it as part of an unnecessary right-wing agenda and inconsistent with constitutional principles. National and ACT did not have the numbers to pass it but that is what they actually wanted in here. They wanted a spending cap—the same type of spending cap that you have seen in Colorado and California. Those examples should be instructive to New Zealanders.If we look across to Colorado and what happened there we see that Douglas Bruce who was in fact the prominent advocate of a spending cap there ended up in prison for tax avoidance. That is a whole other story but it shows you the kind of mind-set that wants to push for this kind of legislation. It is the type that is mean-spirited and does not have the wider public good in its frame and it is all about making the numbers look good on paper.In Colorado the infrastructure rotted. It is the 48th state in terms of education spending and the 44th in terms of road spending. It had previously been a proud state with good social infrastructure and good physical infrastructure and that all deteriorated. There is a whole lot of economic literature on this bad experiment. I am very glad on this occasion that Peter Dunne stood up to the others in this corrupt—well not corrupt Mr Assistant Speaker that would be a step too far. I am glad he stood up to others in this regime which has a number of unsound ideas that it is trying to bring to this Parliament. I am very glad that on this occasion Mr Dunne labelled the spending cap for what it is—part of an unnecessary right-wing agenda and inconsistent with constitutional principles.The provision for the spending cap was taken out of the bill but that is what was sitting behind this in the National Government’s mind. It wanted to bring in legislation that would reduce and restrict the options of future Governments. If we had such a fiscal cap in place we would not have been able to make the Canterbury earthquake response that we made as a Parliament. I ask New Zealanders to think about that. That is the kind of short-term thinking this Government wants to bring to this Parliament. It wants to restrict future Governments from dealing with crises. It wants to restrict future Governments that find themselves in a tight spot from helping out the citizens of thiscountry. Fortunately that part of the legislation fell over but it speaks to the intent of this Government.This is hollow legislation. It is thin legislation. It describes motherhood and apple pie. It describes what responsible Governments have done over the ages and we can see that New Zealand Governments have done different things. We know that the Labour Government in the 1980s brought spending under control. To some extent the 1990s with National continued that pattern. The 2000s had an exemplary Government which brought net Government debt down to zero and ran 9 years of surpluses in a row. How many surpluses has this Government generated Mr Bennett?David Bennett: How many?Dr DAVID CLARK: “How many?” the member asks. Zero—none; this Government has not generated one Government surplus in its entire time in this Parliament. Yet all we hear about from Government members is responsible financial management. This is a Government that knows how to talk responsible financial management—David Bennett: Oh come on!Dr DAVID CLARK: —but does not know how to put it in place. Mr Bennett says: “Come on.” Well the facts speak for themselves. The rhetoric does not stack up.This is an irresponsible Government. It is passing legislation that it did not get bipartisan agreement on. It failed to consult properly with the Opposition to get to an agreed position. In this area historically there has been an agreement across the House. It has been the effort of past Governments to make sure that everyone gets to have their say because the whole point of this sort of legislation is that you have a long-term plan for the country.We think there should be a reference to adequate levels of national savings in this document. There is silence across the floor. Over there they do not believe in an adequate level of national savings because it is not in the interests of the big end of town. That is whose interests they are looking out for. They do not address issues like a capital gains tax which would be about a fair tax system and about pro-growth tax reform. They do not address issues about universal KiwiSaver. They are not interested in making sure New Zealanders are well prepared for their retirement. They are more interested in driving down wages and making sure that the interests of the 1 percent are looked after. They do not address monetary policy issues. They are still committed to the hands-off policies of the 1980s. They do not want to update fiscal policy. They do not want to update financial policies. They are a hands-off Government. They are not addressing the housing issue. They are not addressing the affordability of power. They are not addressing the big issues.This Government has its head in the sand and that is why we oppose this bill. It does not address the big issues. It is a lot of piffle waffle and empty words. It is tinkering and it is not a bill that is worthy of this Parliament’s time. Therefore Labour will oppose this bill through the rest of its time in the House.JOHN HAYES (National—Wairarapa): Thus spoke the “Red Reverend” from Otago. What a misleading purveyor of facts that man is.Jonathan Young: What facts?JOHN HAYES: Well he said that we have got the greatest unemployment in his electorate that this country has ever seen. Well I would like to take issue with that because I can refer him to the ANZ Business Outlook survey for July which confirmed that overall business confidence has increased by 3 further points in the month with a net 53 percent of respondents expecting better times ahead. This is the highest level of business confidence since April 1999. Then there is the Ministry of Business Innovation and Employment’s Jobs Online report for July—last month—which showedthat vacancies increased by 8.3 percent per month. “Red Reverend” you have been telling porkies. The month of July took the annual increase to 13.2 percent. The household labour force survey shows that unemployment has fallen—not increased “Red Reverend” but fallen—from 6.8 percent to 6.4 percent over the past year. It also shows—Dr David Clark: I raise a point of order Mr Speaker. I am not sure what my remedy is to this but the member is quoting statistics and saying the Otago numbers have dropped and they have not.The ASSISTANT SPEAKER (Lindsay Tisch): No no. That is a debating point.Dr David Clark: It’s a fact.The ASSISTANT SPEAKER (Lindsay Tisch): It is a debating point which can come up at another time.JOHN HAYES: Thank you Mr Assistant Speaker. The “Red Reverend” does not like the truth does he? Well let us go to the household labour force survey. It shows that unemployment has fallen from 6.8 percent to 6.4 percent over the past year. I say to the people of Otago that they are being misled by their member of Parliament the untruthful “Red Reverend”. It also shows that there have been 46000 more people employed in the past 6 months. That man cannot lie straight in bed.I am also totally perplexed as to why the Labour Party will not support this Public Finance (Fiscal Responsibility) Amendment Bill which provides huge common sense and a tremendous improvement in the way that future Governments are going to have to manage this economy. Although I have heard criticism from the co-leader of the Greens this morning and also from “Captain Cliché” of the New Zealand First Party I would like to say that the National Government’s responsible economic management is helping the country grow and is lifting confidence. Under this Government’s strong economic management we are on track to return to surplus in 2014-15. Dr Clark said we have never run a surplus. We never claimed we could in the middle of a global recession but we said we would be back in surplus by 2014-15 and we will “Red Reverend”.The ASSISTANT SPEAKER (Lindsay Tisch): Order! There is a Speakers’ ruling 28/1 that I would ask the member to look at. You must refer to people by their names. It has been mentioned a few times across the House. I just remind members of Speakers’ ruling 28/1—refer to members by their correct names.JOHN HAYES: Thank you Mr Assistant Speaker. By 2014-15 New Zealand will be one of the few developed countries not increasing public debt. Our economy continues to grow: 2.4 percent in the past year which is faster than most other developed countries and members of the OECD.I come back to the comments made by the Green co-leader. He was talking in a very misguided and untruthful way about Mighty River Power’s performance. He omitted to understand that running a surplus helps keep mortgage rates lower for longer. It gives the Government choices about how to invest your taxes. In ensures our economy is stronger and more stable in case of future economic shocks—for example if Wellington suffered a big earthquake. What I can tell this House is that Standard and Poor’s has just affirmed New Zealand’s AA+ credit rating saying that the rating reflects the country’s fiscal and monetary policy flexibility economic resilience and public policy stability in the finance sector. This follows earlier comments by theIMF’s managing director ChristineLagarde who said that the IMF is very supportive of what is being done by the Government. So if you look at the numbers whether for growth employment inflation or debt overall they are very stable and they are also very promising. It is certainly a lot better than what we see in most other parts of the world and it is infinitely better than the situation that would arise if those economic miscreants on theother side of the House were to take over running this country and we cannot put this at risk.Here in New Zealand we are seeing a growing mood of optimism being recorded in business sentiment surveys retail sales data house sales and the ability of businesses and consumers to pay their bills on time. The most recent BNZ-Business New Zealand Performance of Manufacturing Index increased 4.3 percent to a seasonally adjusted 59.5 percent. I would ask the people of Otago to keep that fact in mind when they consider the comments of their member in this House this morning. It raises further questions about the Opposition’s irresponsible attempts to manufacture a manufacturing crisis in this country. It simply does not exist. This is a very good piece of legislation. It helps the Government consolidate its sound management of this economy and I support it without reservation. Thank you.The ASSISTANT SPEAKER (Lindsay Tisch): I understand the next call is a split call.Hon DAVID CUNLIFFE (Labour—New Lynn): I rise to take a brief call to oppose this bill the Public Finance (Fiscal Responsibility) Amendment Bill. Being lectured to by the National Party about fiscal responsibility is a bit like being lectured to by I do not know John Hayes about probity advice or something—Hon Maryan Street: Idi Amin on democracy.Hon DAVID CUNLIFFE: Idi Amin on democracy—many things come to mind. In its last two Governments Labour has never run a fiscal deficit. There were nine surpluses out of nine. How many fiscal surpluses has the National Government run? None zero zilch zip nada never. It has never run a fiscal surplus and it is some sort of jealousy factor that it is trying to elevate fiscal restraint as an overriding aim over all other objectives of economic policy through this legislation. I am going to briefly tell you why I think that is a very bad idea but firstly the history of the bill.This bill came out of the confidence and supply agreement with the ACT Party. It was the price of coalition. It was the ridiculous notion ditched everywhere else in the world that the best way to restrain public finance was to put on a strict cap. Of course that stupid idea went down the river and it was to have been replaced with a genuine process of multiparty consultation that would have led to an updating on what has hitherto been a bipartisan bill. But unfortunately the scrum got screwed—the scrum got screwed—and the draft before us is none of those things.Let me just turn the attention of the House to what it actually says. This will come as a surprise to the National backbench who no doubt have not read it. Firstly it elevates monetary policy above fiscal policy. The Labour Party argued that it would be fairer to have that as a two-way street—to have the Reserve Bank making monetary policy with regard to fiscal settings and Treasury advising on the fiscal stance having regard to monetary policy. That is what all well-managed developed economies do but it was not good enough for the National Government. For the Government it is a one-way street. It is that No. 2 The Terrace—the Reserve Bank—and the Governor run the Government. Well that is ridiculous. It is an outgrowth of Milton Friedman’s monetarism. It has gone the way of the Ark in most places except under John Key’s National Government.The second point is to “formulate fiscal strategy with regard to its likely impact on present and future generations”. Look that sounds good but you have got to be careful. It sounds good because we do want intergenerational fairness. We do not want the young people of today being screwed because of greed by the old people of tomorrow. But that is not as simple as it sounds. Is it not ironic that the National Party’s leader has said that he would resign before he addressed the problem of superannuation eligibility? Before he touched that he would resign his office. The grey-rinse brigade has nothingto worry about from John Key. Where is the fiscal responsibility in that? Just ask “Gabs”Makhlouf Secretary to the Treasury who says there is a $220 billion problem by 2050.The third point is to manage the Crown’s resources “effectively and efficiently”. It sounds innocuous enough. Where is the word “fairly”? Where are the words “fairly” and “justly”? Where is the reference to equity? Where is the reference to closing the inequality gaps that mean a quarter of a million kids in this country are growing up without their warm bellies full and with no shoes on their feet? Where is fairness? I will tell you where it is—JULIE ANNE GENTER (Green): I rise on behalf of the Green Party to speak in support of this Public Finance (Fiscal Responsibility) Amendment Bill. Although I acknowledge that the bill had a very unfortunate political genesis luckily the very worst aspects of that original billACT’s spending cap have been dumped and what has been left is actually a pretty good bill requiring greater transparency from the Government. The principle that it introduces when considering a revenue strategy—for example taking into account efficiency and fairness—is quite a good principle. The Green Party can support that principle. Having regard to the impact on present and future generations is extremely important and I would say that it is very much in line with the Green Party’s philosophy on economics and monetary and tax policy. However if this bill was implemented now it would become quite clear to everyone that what the National Government is doing is quite the opposite of this.There are many examples of National policy that have reduced the efficiency and reduced the fairness of the tax system. We have growing inequality in New Zealand and that in part is due to the lack of a capital gains tax which would be a very fair and efficient way to broaden our revenue base. It is also because when National came into power in 2008-09 it introduced regressive tax cuts which gave a lot of wealth to those who already had a lot of wealth. Basically it is a wealth transfer from those who are the least well off the most vulnerable in our society to those who have the most. But of course aspects of this bill like the investment statement are not going to come into force until 2017 by which time of course this National Government will have long since moved into Opposition and will not be required to be held to account to these good principles of efficiency fairness transparency and taking into account the capital position of the Government—not just looking at debt and at GDP.The Green Party would say that this bill does not go far enough. A move to having a more clear investment statement that has a medium and long-term outlook is quite a good move—that is in line with Green Party principles—but it does not take into account the natural and social capital that is essential for the long-term prosperity of New Zealanders. So we have a challenge and we have an opportunity in the 21st century. We are coming to grips with resource depletion climate change and rising inequality. All of those things do not serve the greater interest of the people of New Zealand. The global financial crisis is a crisis but it is also an opportunity to revisit some of the assumptions that have been operating since the 1980s.What the Green Party fundamentally recognises is that the economy is a subset of our society. It does not reflect all of the unpaid work that enables New Zealanders to have enough to eat and to have a high quality of life in New Zealand. The economy is just one subset of our human activities that we take part in as part of society and society is a subset of the natural environment. We cannot have ongoing economic growth if we are drawing down non-renewable resources and increasing the carbon pollution in the atmosphere. It is simply not possible.In order to have the ability for New Zealanders to have a high quality of life well into the future to enjoy the benefits that come with living in a place that has water that issafe for swimming and safe for drinking and that is going to be available to future generations—not just the people who are currently in business today—and to be able to have the benefit of a stable climate we need to start taking all of these things into account. We need to live within our means and we need to look after the fairness and opportunities for all New Zealanders if we want to have a fair society that enables future generations in New Zealand to thrive. This bill makes some small changes that we hope will increase the efficiency fairness and transparency of Government revenue strategies and the Government’s long-term fiscal strategy. Thank you.DAVID BENNETT (National—Hamilton East): I just want to take a short call on the Public Finance (Fiscal Responsibility) Amendment Bill. It is very encouraging to see the Green Party supporting this bill for once and I thank them for that and New Zealand First for its comments as well.Hon Tau Henare: Showing real leadership.DAVID BENNETT: I think that is really just as Mr Tau Henare just said an indication that the Green Party is changing tack. While Labour is trying to work out where it stands on many things the Green Party is seeking to take back some of its ground as it has successfully done over the last couple of years. The Labour Party has made a number of comments in regard to this bill that are just plain incorrect. It is very disappointing to see a party that had such a proud history being in such a position now of weakness and also now having to make such silly comments in regard to a bill like this.One of the comments that came through in its members’ speeches and through their speech notes which they obviously had to follow was that they needed to say that there had been 9 years of surplus in a row under the previous Labour Government. Well that may be the case but you lived in the most economically prosperous times of that generation. You did not have to deal with rebuilding your second-biggest city. You did not have to deal with a world recession. This Government has dealt with those issues—dealt with them successfully—and got New Zealand back into surplus within a short period of time. I think that is something that we need to be incredibly proud of as the National Party and the public of New Zealand are as well.One point that Labour members did not leave you with was that the Labour Government set up the recession in New Zealand before the world went into recession. The Labour Party’s policies led to New Zealand being in recession before the world went into the global recession. That is how poor an economic manager it was. That is the reality that the public needs to be aware of not some line about 9 years of surplus in a row. The reason it put New Zealand into recession is that it is a poor economic manager that set up New Zealand with some poor economic policy. It does not want a bill like this because New Zealand will stop having poor economic policy. [Interruption] What is that Damien O’Connor?Hon Damien O’Connor: How much have you borrowed?DAVID BENNETT: How much have we borrowed? Damien O’Connor does not want to see Christchurch rebuilt. Damien O’Connor does not want to see people keep a standard of living through this recession. The reason that the Labour Party is against this bill is that it knows that the bill will control it doing that silly economic management that it did last time when it put New Zealand into a recession before the rest of the world. Bills like this are here to stop the kind of silly economic activity that you saw from the Labour Party last time it was in power.Hon Damien O’Connor: Irresponsible managers.DAVID BENNETT: Irresponsible managers—that is what Labour members are. You are right Damien O’Connor. Labour members are irresponsible managers. Theycannot even manage themselves. They will never manage the New Zealand economy properly. This bill is good for New Zealand.A party vote was called for on the questionThat the Public Finance (Fiscal Responsibility) Amendment Bill be now read a third time.Ayes85New Zealand National 59; Green Party 14; New Zealand First 7;Māori Party 3; ACT New Zealand 1; United Future 1.Noes36New Zealand Labour 34; Mana 1; Independent: Horan.Bill read a third time.