Robertson Grant: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeRobertson Grant: Oral Questions — Questions to Ministers[Sitting date: 10 December 2014. Volume:702;Page:1324. Text is incorporated into the Bound Volume.]4.GRANT ROBERTSON (Labour—Wellington Central)to the Minister of Finance: What impact will Fonterra’s revised forecast payout have on the Government’s 2014/15 surplus?Hon BILL ENGLISH (Minister of Finance):I will give him the same answer that I gave to the leader of New Zealand First who not unsurprisingly was quicker out of the blocks on this issue.Mr SPEAKER: Order! Just answer the question.Hon BILL ENGLISH: The impact is likely to be negative but we need to keep it in perspective. The dairy industry represents about 7 percent of the economy; the other 93 percent is in reasonably good shape. But there is no doubt that the drop in commodity prices has the effect that the tax base is not growing as fast as was expected.Grant Robertson: What advice has he had on the impact on farmers and rural communities of the $4.70 payout given that Dairy New Zealand has estimated that a quarter of farmers could struggle to meet interest payments and expenses on a payout below $5?Hon BILL ENGLISH: I have seen that advice along with other advice that I think is pretty predictable and that is that the significantly lower cash flow will have an impact on the servicing industries in rural and provincial areas. The question really is how long is that going to last and whether they are in shape to handle that and in our view they are relatively resilient but some of them are in for a bit of a tough time.Grant Robertson: In light of that answer does he agree with John Kuyf managing director of the rural service business Rakaia Engineering Ltd or REL Group who said that the effect of a reduced payout will be “quite severe” and that “Even if you live in Auckland if you naively don’t believe it will affect you it will. We won’t come out of this overnight.”?Hon BILL ENGLISH: I think that the sentiment of those words is roughly right but again we have got to keep it in perspective—93 percent of the economy is in reasonable shape and the growth projections are pretty solidly around 3 percent for the next 2 or 3 years. The dairy industry which has had an absolutely record year announced yesterday a payout that is just a little bit below the average for the last 10 years. So it is not a horrifically low payout but it certainly is down from the last couple of years and it will be a bit of a struggle for the industry but I think it is up to it.Rt Hon John Key: Given that the dairy payout is reducing what impact would it have on dairy farmers if they faced a higher minimum wage if they faced a capital gains tax on their farm if they faced an emissions trading scheme that was far more expensive if they faced more charges if they faced a water tax if they faced—Mr SPEAKER: Order! We get the gist of the question. The Minister can now answer it.Hon BILL ENGLISH: One measure of it—at least my impression of how dairy farmers voted in the election—is that even at an $8.40 payout the dairy industry could not afford a Labour Government so imagine how bad it would be at $5.Grant Robertson: Is he seriously suggesting that a $6 billion hole in the economy and a flow-on reduction in revenue to the Government’s books will be filled by other sectors of the economy?Hon BILL ENGLISH: What I have said consistently is that the negative impact of the lower dairy prices will be offset to some extent by the relative strength of the rest of the economy. That is not naive optimism; that is just looking at the fact that the dairy industry is 7 percent of the economy and the other 93 percent is in reasonable shape. I do not know why the member is so set on the idea that the drop in one commodity price—Hon Member: It’s a crisis.Hon BILL ENGLISH: —is a crisis. Those members are determined to have a crisis which means it must start turning round soon.Grant Robertson: Does he take any responsibility for the billion-dollar deficit in today’s Government accounts—$260 million more than expected—and will he finally admit that there will not be a meaningful surplus in his Budget?Hon BILL ENGLISH: Yes of course we take some responsibility for the public accounts—I think my signature may even be on them—and of course that means we also take responsibility for the fact that after 6 years of pretty tight Budgets the public perception of public services is more positive than it ever was under the Labour Government. We are delivering more value to more people with more to come and we also take responsibility for that success.