English Bill: Appropriation (2008/09 Estimates) Bill — Third Reading Imprest Supply Debate 
English Bill: Appropriation (2008/09 Estimates) Bill — Third Reading Imprest Supply Debate 
[Volume:649;Page:17790] 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 What is in the National Party’s DNA is sound and fair management of the New Zealand economy. That member of course should be slightly more humble about the enormous benefits he enjoyed from the extensive work National did in getting this economy into shape in 1990—work started by his party when Dr Cullen was a member of Cabinet and continued by National. It was politically controversial work that led to a change in the electoral system. But Dr Cullen has been the person who has benefited most as the Minister of Finance from the hard work done turning this economy into one that could hack it in the global environment. 
Of course Dr Cullen needs to account for some of the things he has been saying. On Monday he was saying that John Key’s plan for more infrastructure was terrible because it meant increasing borrowing from foreigners. I thought that that sounded a bit odd. Dr Cullen actually figured out it was a bit odd because today when Standard and Poor’s put out its credit outlook for New Zealand now the problem is that National is going to “flood the market with New Zealand denominated debt”. Well they cannot both be right. On Monday the Minister of Finance in charge of this economy says that the big problem is borrowing from foreigners then today the big problem is borrowing from New Zealanders. He cannot make up his mind. So I went and looked at his record on borrowing from foreigners which apparently is really really bad. Dr Cullen accuses other people of borrowing from foreigners while he is doing the same thing himself. Every year he has been the Minister of Finance the portion of our debt borrowed from foreigners has gone up. Every year it has gone up. The one thing we know about Dr Cullen is that he will always accuse people of doing something that he is doing himself. 
Here is a simple question for Dr Cullen. He has just told the House in question time that Labour has the biggest infrastructure investment programme the country has had in 30 years. In fact he just mentioned it in his speech. He has spent the last week or so saying it is absolutely reckless to borrow for infrastructure. Here is a simple fact: the 2008 Budget shows that the New Zealand Government is short of cash. So how is Dr Cullen paying for his big infrastructure— 
Jill Pettis 
: National’s borrowing for tax cuts. 
Hon BILL ENGLISH 
: I will come back to that. How is Dr Cullen paying for his big infrastructure projects if the Government has no spare cash? He is doing it in two ways. One is by borrowing and the other is by selling assets. 
Dail Jones 
: Oh! 
Hon BILL ENGLISH 
: The member from New Zealand First does not realise what is happening. What Dr Cullen has been doing and has not told anybody about is this sequence of events. Labour has opposed tax cuts relentlessly for 7 years because it said that anyone who cuts taxes is reckless. I think at one stage Dr Cullen said that people who make such suggestions should be taken out and drowned. When Dr Cullen was not cutting taxes he had big surpluses. He had so much cash he did not know what to do with it. Then in the 2008 Budget he decided to cut taxes. Now a curious thing happened when he decided to cut taxes. It turned out that the Government was going to be short of cash and was going to have to borrow. Are these coincidences? I do not know. Dr Cullen said that taxes should not be cut in case we had to borrow. If we read the 2008 Budget we see we are $12.8 billion short of cash over the next 3 years and we are going to borrow half of that. So he had the tax cuts and now he is borrowing. Did Dr Cullen know that was happening or does he just pretend he is not doing it when he says everyone else is borrowing for tax cuts? 
Let us come to the other half of the story. He is selling assets. The Government is $12.5 billion short of cash. It is going out to borrow $6 billion of it. That is in the Budget. That is what Dr Cullen is doing— 
Jill Pettis 
: We’ve just bought back the railways. 
Hon BILL ENGLISH 
:—whether or not that member likes it. The other thing he has done is that during the times of large surpluses the Government accumulated short-term financial assets. Now it is selling them. 
So let us get this clear. The Government has got a tax cut programme. That is in the Government’s books and it says: “We are selling $6 billion worth of financial assets.” That is what the Budget says. It does not matter how moralistic and worked up Dr Cullen gets it is pretty simple. The Government has a big tax cut. It has an infrastructure programme. It is $13 billion short. It is borrowing $6 billion of it and it is selling $6 billion of assets. Dr Cullen had the choice of putting that spare cash into reducing debt and he did not. He did not do it; he chose to keep it as an asset because he knew that if he had tax cuts he would have to borrow a whole lot more money. So he hid it in the Government’s books. 
Let us get it clear: there is an infrastructure programme and there are tax cuts under Labour. Labour is borrowing $6 billion and it is selling $6 billion of assets. That is the accounting reality; that is in the Budget. When Dr Cullen goes on about reckless borrowing I just have to laugh. It is like the thief who goes around saying everyone else is a thief to make sure they are not looking at what he is stealing; that is what it is like. 
Let us come to the next issue which is prudent debt levels. The Labour members will I hope read the Standard and Poor’s outlook for New Zealand’s credit rating. We have had discussion with Standard and Poor’s—it is the responsible job of an Opposition party because it is an international credit-rating agency—and we have talked to it in general terms about the plans that National has. Its verdict for the outlook for New Zealand is that it does not matter whether the Government changes the fiscal management will be responsible. I think that is very generous to Labour—very generous—because it is promising to live on a Budget of about a half in fact less than a half of what it has lived on for the last 4 years. It makes it absolutely clear that the public debt levels in New Zealand which are among the lowest in the developed world are reasonable and prudent. 
It does not matter how much the new great economist Helen Clark says she is talking rubbish. I will tell her what her 2006 Budget said. I ask members to remember that John Key has advocated 22 percent of GDP as a prudent and conservative debt level. That will allow us to borrow a bit more money—in the middle of a recession for Lord’s sake—to get a few things up and going and unclog the arteries of this economy. He advocates 22 percent of GDP. In 2006 the debt level was 23 percent of GDP and this is what the Government said: “Our assessment is that gross debt at 23 percent of GDP has now been reduced to prudent levels.” So in 2006 it was a triumph of fiscal management that our debt “has now been reduced to prudent levels”. Yesterday Helen Clark said it was hilariously reckless. Why would we believe her? What would she know? I bet she did not read the 2006 Budget. Then the Labour Government said this: “We came to this view because we believe that gross debt is no longer a constraint on the capacity of fiscal policy to ‘look through’ temporary economic shocks;”. What does that mean? It means that when debt was 23 percent Labour thought it was sufficiently prudent that if we were hit by an economic shock it would not be a problem. 
Well we have got a shock—it is called the recession. In Wanganui it is a recession in Hamilton it is a recession and in Auckland it is a recession; that is Labour’s gift to New Zealand. That is why National has plans to get this economy up and running again. We believe that with prudent and conservative debt levels— 
Jill Pettis 
: Why do you need to be borrowing more then? 
Hon BILL ENGLISH 
: It is because it is at the level that Labour said was prudent. I ask the member to read the Budget—that is the problem—I ask her to read the damn thing. What it actually says is that a debt level of 23 percent of GDP is prudent and we can withstand an economic shock. National agrees. I agree with what Dr Cullen says about public debt in his official documents not in his rants in the media. I agree 100 percent with what he says about public debt in his Budgets. National’s plans are prudent and reasonable but more important they show a bit of vision when this country is plunged into recession.