Parker David: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Parker David: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 30 January 2013. Volume:687;Page:7597. Text is incorporated into the Bound Volume.] 
5. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Finance 
: Is he aware that anticipated Core Crown Revenue for the period 2012-2016 decreased by $13.2 billion between the October 2011 PREFU and the December 2012 HYEFU; if so why has the Government lost $13.2 billion in projected revenue in little over a year? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I think the black hole was what David Shearer is staring into. The other little thing was David Cunliffe getting ready to push him. 
Mr SPEAKER 
: Order! A member is entitled when asking a question to have their own visual aid. There is nothing wrong with that. There is nothing wrong with that at all. The Minister should at least attempt to answer the question before making that kind of comment. 
Hon BILL ENGLISH 
: There was actually nothing on the visual aid that related to the question so I just made my own interpretation of it. In answer to the member’s question first he needs to remember that over the period that he is referring to the Government would expect to collect just under $300 billion of revenue so that puts the $13 billion in perspective. The second thing is that the $13 billion reduction in revenue over that period flows from the forecasts that Treasury did in the Half Year Economic and Fiscal Update which took account of two things: one was lower projections of real growth in the economy and the second was lower inflation. 
Hon David Parker 
: Is it correct that the forecast $13.2 billion hole in Crown revenue would be even worse were it not for the additional $1.5 billion New Zealanders will pay for fuel tax and ACC over the next 4 years as a result of the decisions he announced after Parliament rose at the end of last year? 
Hon BILL ENGLISH 
: Of course there would be less revenue forecast if we were going to be collecting less revenue. But equally the forecast would be worse if we for instance followed that member’s policies and let our spending get out of control or if we went back to some of the crazy holes that that Government left in the tax system there would also be less revenue collected. But it is well known that the forecasts for economic growth softened in the second half of last year and it probably was not expected that inflation would be so low. That of course is a good thing for the cost of living for New Zealand households. 
Hon David Parker 
: Given that as he has already acknowledged Treasury has stated that reductions in tax revenue across the forecast period are a result of a weaker economic outlook does he bear any responsibility for that as Minister of Finance? 
Hon BILL ENGLISH 
: The economy is affected by a number of things. One is a range of external influences over which we have no control and clearly do not bear responsibility for that. The other is domestic policy settings which in the case of this Government are intended to improve the competitiveness of the economy and therefore its growth prospects. Of course we could have gone faster and harder with some of those changes and we take responsibility for that but we believe that this Government has struck about the right balance between encouraging investment and new jobs on the one hand but on the other hand protecting New Zealand households as much as possible through the recession. 
Hon David Parker 
: Does he admit that the $13.2 billion fiscal hole is a measure of his failure to grow jobs in the economy over the past year? 
Hon BILL ENGLISH 
: No. It is actually—the $13.2 billion refers to a reduction in the forecast tax revenue not a fiscal hole. The picture for the Government is pretty straightforward: we are holding expenditure at similar levels this year to last year and revenue continues to grow in line with the forecast growth of the economy. These forecasts will all be redone in the next couple of months in time for the Budget and no doubt we can have this discussion all over again. 
Paul Goldsmith 
: What does the December 2012 Half Year Economic and Fiscal Update show in terms of the Government’s control over its spending? 
Hon BILL ENGLISH 
: There are a couple of factors that the half-year update confirms. It forecasts that core Crown expenditure will fall from a peak of around 35 percent of GDP over the next 4 years to 30 percent of GDP. Secondly it shows that the track to surplus is occurring because the Government is essentially holding its expenditure to quite low or no growth at the same time as revenue is gradually picking up as the economy grows. Of course if the economy grows faster that revenue will pick up faster. If many of the Government’s projects in respect of improving the quality of expenditure come to fruition as some are then we may even see a drop-off in Government expenditure because we are getting better results such as less crime fewer young people going on benefit and a more efficient police force. 
Hon David Parker 
: Do the latest reports and forecasts that he has received show that after a $10 billion external deficit last year the external deficit of New Zealand is projected to grow and is predicted by the International Monetary Fund to be the worst in the developed world in 2013? 
Hon BILL ENGLISH 
: In the first place the Labour Party should not be lecturing anyone about the current account deficit— 
Mr SPEAKER 
: Order! 
Hon David Parker 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I think I can—well I will hear the member’s point of order. 
Hon David Parker 
: I was not lecturing anyone. I was asking him a question as to what the reports showed about his own performance. 
Mr SPEAKER 
: And I think that is a fair point. The Minister should answer the question. 
Hon BILL ENGLISH 
: I cannot confirm whether they forecast New Zealand’s current account deficit relevant to others. What I can say is that New Zealand’s current account deficit in recent years has regularly been a bit better than the forecasts. As I have said to the member before I happen to disagree with the Treasury and Reserve Bank view that the current account deficit will deteriorate to anywhere near the levels at which the previous Labour Government left it. Having campaigned to halve it it ended up doubling it to 8 percent for 3 years—the worst performance ever by the New Zealand economy.