English Bill: Financial Review Debate — In Committee 
English Bill: Financial Review Debate — In Committee 
[Volume:671;Page:17459] 
Hon BILL ENGLISH (Minister of Finance) 
: 
 It is good that the Greens have got a position of some principle on the Government’s fiscal position and that the co-leader of the Greens has set out the fact that there are some choices; they are quite legitimate choices and the Government will get to weigh them up one way or the other. As explained in question time the Government has decided that it would be better to reduce spending when it is low-priority than to put on a levy. It is quite possible that another Government would make a different decision. That stands in stark contrast to Labour whose views on this are— 
Craig Foss 
: Forming! 
Hon BILL ENGLISH 
: —forming perhaps—still fluid. Labour’s views are certainly impossible to describe to anyone else who is not part of its own little internal squabbles over economic issues. 
Hon John Carter 
: And then they don’t know either. 
Hon BILL ENGLISH 
: Well I do not think those members do. It is a bit like the position on the GST increase when the Government went through a public debate. There was a high degree of understanding in the public mind about the increase in GST well before it was announced—which was not the style of some of our former Ministers of Finance in this place who just announced all the big packages on the day—so people understood the increase. Labour members understood what the Government’s position was but even with the time since the 2010 Budget those members still cannot make up their minds whether they are for it or against it. They took the bus out in the “Axe the Tax” campaign but after a couple of stops no one would get on it so they started taking the axe to each other instead of to the tax. But we hear the axe coming back again with the worry about the—well Labour almost lost the Mana by-election. That was meant to be about campaigning to get rid of GST but Labour still almost lost a safe seat. I do not blame the candidate completely; I think it was the Labour Party rather than the candidate. So those members still cannot make up their minds. 
Hon John Carter 
: Aren’t they for and against it? 
Hon BILL ENGLISH 
: Well they are for and against it. I think they are for and against income tax cuts and I think they are against a GST increase; they are just not going to do anything about it. 
I suspect it will be the same with the discussion about how the earthquake rebuild is financed. Labour will be unable to make up its mind about whether it supports the reductions in expenditure and the more strongly controlled Government expenditure that will be required to get the New Zealand Government’s accounts back to surplus. But we are certainly aiming to do that. The earthquake has made the job more challenging. If it had not been for the earthquake with tight Government expenditure we may have been able to get back to surplus perhaps as early as 2013-14. We will never quite know now. The Government set out on the path early in the year to control expenditure more tightly then the earthquake came along. We have to meet the earthquake costs. They are not choices in the way a lot of our Government programmes are choices. The earthquake costs do not amount to choices but we will aim to get back to surplus. 
Of course the fiscal discipline will not end as soon as we get back to surplus. By that time the New Zealand Government will have a higher stock of debt which will sit alongside a very high stock of private sector debt. Both the private sector and the Government will face a challenge over the next 10 years or so to try to get their stock of debt down. 
Why do we worry about that? It is simply because of the kind of events we have seen go on in the last 6 months which none of us would have forecast 6 months ago: a large-scale earthquake in Christchurch and a disaster on an even grander scale in Japan which may affect us through its impact on the Australian economy if not directly on our economy where it is a relatively small trading partner. So we are at the edge of our comfort zone. In fact we are probably past the edge of our comfort zone with the amount of debt the Government will be racking up over the next couple of years. 
The Government accounts that we have been debating and the Budget we will be debating in this House in a few months are focused on getting the Government’s books back in order at the same time as rebalancing the economy to where it is going to earn more than it spends through growth in the tradable sector and relatively speaking a shrinkage in the non-tradable sector. I have to say that it will be a fairly long job.