Goldsmith Paul: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeGoldsmith Paul: Questions for Oral Answer — Questions to Ministers[Sitting date: 04 June 2013. Volume:690;Page:10629. Text is incorporated into the Bound Volume.]3.PAUL GOLDSMITH (National) to theMinister of Finance: What progress is the Government making in reaching its fiscal targets of returning to surplus in 2014/15 and reducing net government debt to 20 percent of GDP by 2020?Hon BILL ENGLISH (Minister of Finance): The Government is on track to meeting both of those targets. Budget forecasts show a surplus of $75 million in 2014-15 and net debt peaking at 28.7 percent of GDP in the same year before falling to 17.6 percent of GDP in 2021. Taking on more debt over the past few years has been appropriate to support our future economic growth and to cushion New Zealanders and their families from the worst effects of recession. But at the same time as taking on the debt the Government has laid out a path back to surplus and furthermore a path back to reducing Government debt to levels that we believe are prudent.Paul Goldsmith: Why is it important that the Government gets back to surplus and starts repaying debt?Hon BILL ENGLISH: Although the level of Government debt is well below that of many other Governments that we compare ourselves with it is important that we keep Government debt low in order to offset very high household debt and to ensure that we can manage through another recession. Net Government debt is still rising today by around $130 million a week and will reach $70 billion in 2016-17 up from around $10 billion just 5 years ago. That is the equivalent of around $15000 for each and every New Zealander. We simply believe that it would be prudent to return Government debt to lower levels so that we are better able to reduce the pressure on interest rates rising sooner than they otherwise would and reduce pressure on an exchange rate that is already higher than is comfortable for us.Paul Goldsmith: What recent reports has the Minister received on Government finances?Hon BILL ENGLISH: Treasury today issued the Government Financial Statements for the 10 months to 30 April. They show that a stronger economy and the tax reforms of 2010 are underpinning more tax revenue. Combined with the Government’s responsible control over expenditure this has restricted the deficit to less than $4 billion for the 10 months which is $600 million less than was forecast in the Budget just a few weeks ago. Tax revenue is around $3.1 billion higher than the corresponding period last year. This is one of a number of indicators that New Zealanders have some well-earned confidence and optimism about the future.Paul Goldsmith: What are some of the risks to the Government’s improving finances and the brighter outlook for the economy?Hon BILL ENGLISH: There are some risks in the global economy. Europe still has deep-seated and long-term debt problems and productivity problems. The US economy looks to be recovering but it is unclear just how robust that is. China faces risks of both lower growth and problems with excessive credit. In Australia there seems to be a sharper than expected downturn in mining investment which could lead to Australia having lower growth rates over the next couple of years than in New Zealand. So there are global risks and also domestic risks if the Government does not stay on track with this moderate consistent and long-term economic policy.Hon David Parker: Does he agree that his claims to fiscal responsibility are undermined by his refusal to address the superannuation entitlement age well in advance so that people have time to prepare given that costs of superannuation have increased by $3 billion from $7 billion to $10 billion per annum in the last 5 years and that in just 2 years’ time the cost of New Zealand superannuation to the taxpayer will be more than the entire cost of preschool primary intermediate and secondary education?Hon BILL ENGLISH: No I do not agree. Of course no one is proposing changes in the age of eligibility in a way that would affect the costs of superannuation over the next 2 years. The Government has been so busy dealing with the large and rising costs of law and order and welfare which got out of control under the previous Government. Fortunately we are having some success in bringing those long-term costs under control.Hon David Parker: Well then if the Minister does not agree with the Labour Party does he agree with Gareth Kiernan of Infometrics who said: “If Key is genuinely interested in what’s good for the future of the country … [and his] decision-making is not dominated by his own ego he would recognise his mistake about the retirement age and stand down.”; if not why not?Hon BILL ENGLISH: Yes I do disagree with him. The Government made some very clear undertakings. I know that it is not the style of the Opposition parties but we have said that we would not change the age and we will not. At the same time as I pointed out to the member before there are other long-term costs where the failures of the previous Government meant that they have got out of control particularly for welfare and law and order. The Government is implementing a range of innovative and in some cases world-leading policies to bring those costs under control. That of course will help our ability to meet superannuation obligations in the future.