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: 22 May 2012. Volume:680;Page:2226. Text is incorporated into the Bound Volume.] 
6. 
Hon DAVID PARKER (Labour) 
 to the  
Minister of Finance 
: Does he stand by his Budget 2011 statement that the amount of new debt raised by the Government on a weekly basis in 2012 “will fall by more than two-thirds to around $100 million”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes on a net basis that was the estimate of required net borrowing for the 2011-12 financial year. 
Hon David Parker 
: Would the amount borrowed have been less if the economy had grown faster? 
Hon BILL ENGLISH 
: Well that is possible but then you never know because even if the economy was growing a bit faster and there had not been an earthquake we might have borrowed less. 
Hon David Parker 
: If the economy had grown by as much as he projected in his 2009 Budget as much as he projected in his 2010 Budget and as much as he projected in his 2011 Budget how much less would the Government’s borrowing be this year? 
Hon BILL ENGLISH 
: The economic growth was not a long way from the projections in those years but I would have to go and check up the detail about all that. I think the point though in answer to the member’s question is that there were events going on then that certainly made it hard to do forecasting accurately: a thing called the global financial crisis which on “Planet Labour” never happened and a thing called the Christchurch earthquake which on “Planet Labour” never happened. 
Hon David Parker 
: Would the amount borrowed be lower if total wages had grown as his previous Budgets projected and fewer New Zealanders had fled to Australia? 
Hon BILL ENGLISH 
: Well again it is a fairly hypothetical question. What I can tell you is that if we had continued with any of the policies of the previous Labour Government the borrowing would have been massive. 
Hon David Parker 
: In light of his answers that he has been borrowing more than he projected in his Budgets and the economy has grown less than he projected is that what he meant when he and the Prime Minister say that they are sticking with a plan that is working? 
Hon BILL ENGLISH 
: The member is actually wrong. We have been borrowing about the amounts that have been projected in the various Budgets and actually growth rates have not been significantly different from what was projected in the various Budgets. What is more important is the long-term plan to lift New Zealand’s growth prospects and that is not about forecasting; it is about substantive changes like tax reforms like changing our regulatory environment like better public services and like long-term investment in infrastructure and higher skills levels—all of which the Government has invested in over the last few years. 
Dr Russel Norman 
: Does he stand by his earlier comments that the net international investment position is one of the major problems facing the New Zealand economy; if so is he concerned that Treasury is predicting that the net international investment position is going to get much worse? 
Hon BILL ENGLISH 
: We are concerned about that measure and any other if they indicate an increase in New Zealand’s vulnerability. The net international investment position can deteriorate for a number of reasons. In the last decade it deteriorated because of excessive consumption and household debt. It is likely to deteriorate over the next few years driven primarily by a lift in business and residential investment. New Zealanders do not save quite enough to finance all that investment so it has to be financed from offshore. That is a positive reason for the international investment position to deteriorate because once that investment is locked in place and delivering economic growth the position should improve. 
Dr Russel Norman 
: Does he accept that if some of the shares from the asset sales programme were to go to overseas owners the flow of dividends to those owners would increase our current account deficit and that that is a significant problem for the New Zealand economy? 
Hon BILL ENGLISH 
: If the member is referring to the Business and Economic Research Ltd analysis of the asset sales I might need to point out to him that the analysis depends among other erroneous assumptions on the assumption that the buyer of the assets would pay nothing for them. The Greens are working on economic credibility so I am a bit surprised that they let that one slip past. It is the sort of nonsense I would expect from the Labour Party. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. It was a very straight question. The Minister made no attempt to answer any of it. He talked about the Business and Economic Research Ltd report—that is fine but I did not ask about that report. It was a very straight question about the current account deficit and asset sales. He did not address any of it. 
Mr SPEAKER 
: If I remember correctly the member’s question asked were part of the asset sales to end up in the hands of foreign owners whether that would lead to a worsening of the current account position. I acknowledge the Minister of Finance did refer to the Business and Economic Research Ltd report but he pointed out that were that to be the event that report had priced the assets on sale to those foreign owners at zero and therefore the analysis of the impact on the current account was impossible from that position. That is basically what I understood him to be saying. I accept it is not exactly the question the member asked but the member because of previous events does have a lot of supplementary questions available to him and I think he could probe that one a bit more deeply. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. In your own ruling you just said that was not the answer to the question that I asked and that therefore I should ask further supplementary questions. Surely he should answer the question I did ask which was a very simple question. It was not about the Business and Economic Research Ltd report. 
Mr SPEAKER 
: Where I have some sympathy with Dr Norman’s position is that the Minister in responding referred immediately to the Business and Economic Research Ltd report which is a report prepared for the Green Party. I think he should in fact in answering have provided some answer before making any reference to that report because the question did not require that. What I will do is invite Dr Norman to repeat his question. 
Dr Russel Norman 
: Does the Minister accept that if some of the shares from the asset sales programme end up in overseas ownership the dividends paid to those owners will add to New Zealand’s current account deficit? 
Hon BILL ENGLISH 
: No because anyone offshore who bought the asset would of course be paying for it and that would be an inflow much bigger than any subsequent outflow of dividends. The Government has pointed out that we would be ensuring that by far the majority of these shares are sold to Kiwis so the issue does not arise. In fact it would allow us to pay dividends to New Zealand shareholders rather than interest— 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. There is only one answer to that question if he wants to be honest— 
Mr SPEAKER 
: Order! 
Rt Hon Winston Peters 
: Can I finish? 
Mr SPEAKER 
: Order! No. 
Rt Hon Winston Peters 
: Well he is not answering the question. 
Mr SPEAKER 
: But it is not a point of order. 
Rt Hon Winston Peters 
: I want to explain why. 
Mr SPEAKER 
: Order! No it is not a point of order. The member is disagreeing with the Minister’s answer. I must say I am a little surprised by the Minister’s answer but it is his answer. Whether it is right or wrong is another matter but that was not a point of order. The questioner may have expected the Minister to say “Yes if that were to happen—if dividends went out to overseas owners—that would on balance probably increase the current account deficit.” but there may be some reasons and the Minister knows better than us why that may not happen. And from the Minister’s answer it would appear that that is the case because he said no at the start of his answer. I hope the Minister has thought a bit carefully about that because there must be other matters involved in this that are not so immediately apparent to mere mortals like the Speaker. But that was his answer and it is not a matter of order whether it is right or wrong. That was his answer. He said no and there is no point of order about whether or not that is a right or wrong answer. The Minister stands on his answer and it is not a matter of order whether or not it is right or wrong. That matter can be pursued through further questions. If the Minister was asked that in a primary question and gave incorrect information in answering a primary question it would be a matter of some seriousness. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. Let me rephrase my point of order. It is not that I am disputing that he gave some sort of answer but he did not answer the question. He explained it twice. First of all he said that the capital payment on the buying of the asset would affect the figure that Mr Norman is seeking—namely the current account deficit.  
Dr Russel Norman 
: It’s not part of it. 
Rt Hon Winston Peters 
: It is not part of it; that is the point. He is a longstanding Minister of Finance—twice now. 
Mr SPEAKER 
: Order! The member is disputing the answer given. The question was asked and the answer was no: that it would not increase the current account deficit. That is the Minister’s answer. Whether members like that answer or not is totally irrelevant to the matter of order at the moment. The Minister gave an answer to that question and he must—I can see the member is surprised by the answer. But the Minister obviously had his reasons for giving that answer. Further supplementary questions can elucidate more of those reasons—why the Minister answered no—in certain circumstances to find out more. That is what supplementary questions are all about.  
Hon Trevor Mallard 
: Is the reason why the current account deficit is not affected by the dividend payment the fact that in fact it counts against the current account deficit when the profit is made not the dividend paid? 
Hon BILL ENGLISH 
: We could get into a lot of details about the different flows around the current account. The fact is the Government has stated that it is going to sell the majority of the shares to New Zealanders. As I have pointed out that will enable the Government to pay dividends to— 
Mr SPEAKER 
: Order! The question asked on this occasion was an absolutely straightforward question—one that a Minister of Finance should be capable of answering. The question asked whether the data entering into the current account entered at the point the profit was made or at the point the dividends went offshore. That is capable of a perfectly clear answer. There is nothing complicated about it at all. I think the House deserves to have the Minister of Finance answer that question. 
Hon BILL ENGLISH 
: The member can check with the department of statistics about exactly where it recognises the cash flows if he wants to. It looks— 
Hon Trevor Mallard 
: It’s not a cash flow; it’s the current account deficit. 
Hon BILL ENGLISH 
: The member can check with the department of statistics if he wants to check exactly where those flows are recognised. One would assume that it is to do with profits rather than actual cash dividends. But he can talk to the department of statistics about it. 
Hon Trevor Mallard 
: Is the Minister telling the House that he does not know when something counts against the current account deficit in these circumstances? 
Hon BILL ENGLISH 
: I am quite happy to acknowledge to the House that I do not know how the statisticians exactly count the flows from foreign investments in New Zealand. I suspect the member does because he is well known for spending all his time studying— 
Mr SPEAKER 
: Order! That is not fair—[ 
Interruption 
] Order! I am on my feet. There will not be further comment. We do not need to go down that track. 
Dr Russel Norman 
: Is the Minister of Finance aware that the payments for the shares are not part of the capital account and if the Minister of Finance is not aware of the components of the current account deficit then are we to be worried about his management of the economy? 
Hon BILL ENGLISH 
: No.