Adams Amy; Rurawhe AdrianHon AMY ADAMS (National—Selwyn): Thank you Mr Chair. During this stage of the debate obviously we are addressing not only the annual reviews from the finance and Government administration sector but also the financial statements of the New Zealand Government. That's where I want to start probably not surprisingly and that of course is annexed I guess you would say to the annual review of Treasury which I'm going to come back to. But if we start with those financial statements of Government I think it's actually quite a telling snapshot of where the finances of this Government have come from where they were obviously at 30 June last year and actually pretty tellingly where they're going. What we see in the statements is the story of a Government that inherited actually very good healthy surpluses based on a good well-performing economy and in fact the statements themselves show that. So for the guffaws on the other side this is exactly what the report of the Finance and Expenditure Committee has recorded that the Government had very good surpluses that it was working with. But what we've unfortunately seen is a legacy of those surpluses being frittered away on poorly targeted poorly thought-through—I won't even say investments because they're certainly not—spending that has delivered almost nothing in real benefits for New Zealand. So whether you want to talk about $2.8 billion on that failed first-year-free policy whether it's the KiwiBuild monstrosity that my colleague Judith Collins will talk about we have a legacy of those big surpluses that these financial statements record as being frittered away. What makes that even worse is that the Government hasn't put the attention into the growth machine that generates those surpluses. You only have surpluses if you have a Government that focuses on and understands the importance of the private sector and business in the economy. And when business is telling the Government as they were all through this period and are continuing to that they're not confident they don't want to invest they don't want to grow and they're not feeling good about employing people—instead of listening and thinking Actually that's something as a Government we should care about." you've got the Hon David Parker saying "Well it's all junk. Why would we care about any of that?" So the tale that the accounts tell is a very sad one of wasted opportunities of a Government that has spent the hard work of New Zealanders over the previous decade to get into a good position and in fact of an economy that is slowing down very quickly. In these statements we have some rather sad statements in hindsight from the Minister where he stated for example that he thought New Zealand's economic growth was becoming more sustainable. Well what a tragedy that is when we now have Treasury saying that our growth in the first part of this year is down to 2.0 percent. So while the Minister is sitting there singing his little Pollyanna tune about everything was sustainable and coming up roses the economy was going backwards and he was too deluded to notice to pay attention or to do anything about it. We also noted in these reviews that both Treasury and the Reserve Bank were telling the Government that the only thing that was holding up the books was population growth and spending. You cannot build a sustainable economy on the Government spending other people's money. Labour Governments have tried to do it time and time again and it doesn't work. What we've seen is exactly what we're seeing now which is an economy in a sharp decline the private sector retrenching putting away the cheque book and jobs growing far more slowly than population growth and yet we have a Government that refuses to accept any of that. The Minister told us back in those hearings—and again it's almost laughable to look at it now—that he was confident that the Government's programme would lead to strong per capita growth. Well I'm sorry Mr Robertson. Per capita growth has been zero over the past six months. An economy in absolute stasis going absolutely nowhere under this Government—on a per person basis totally stagnant. Now a similar thing is happening in the cash side of things. Again this is a Government that is spending like a drunken sailor as most left-wing Governments do. And yet these financial statements record that those big surpluses I talked about have now gone back $4 billion. So when you look at the residual cash deficit of this Government—and that for members on the other side who don't know their way around financial accounts that well clearly is the actual cash flow—from the numbers here to where we are just in what Treasury put out last week: a $4 billion decline in just the last nine months. That is the sort of negligent handling of the economy that we're seeing from this Government. They have wasted the hard work of New Zealanders. They have thrown money away on coalition fripperies for their partners-to-be in Government. They have done nothing while the economy is in free fall and as a result the numbers are going back and going back sharply. The other thing that these financial statements showed us was a Government that is so desperate to try and paint within the lines that it set for itself around Budget rules. They've hidden $6 billion in off - balance sheet debt that costs taxpayers considerably more to finance than it would have done if they'd borrowed it through normal channels. Now Treasury told them not to do it and it's costing taxpayers more to do it but because Grant Robertson wants to measure himself by his own stick he's moved that debt somewhere else. Never mind that it's more taxpayers' dollars incurred. If it works for Grant he doesn't much care about how it affects taxpayers. Now I wanted to mention some of the other comments that came up in our review of Treasury because there were some quite concerning comments out of the—well I was going to call him the recently departed secretary but that makes him sound somewhat like he's dead and I certainly don't want to imply that. The Secretary to the Treasury made us some reasonably concerning comments—that actually this is a Treasury department that is significantly under-resourced and they acknowledged that they were under a lot of pressure thanks to the new Government and would have to be discussing priorities with Ministers. Now anyone who's been a Minister knows that's code for "We're spread too thin. We can't do our job well." and I'm sorry but the performance out of Treasury in recent times when we've seen them playing with sun and moon cards instead of focusing on the health of the economy it just shows the sort of attention that this Government is putting on to things like managing something as unimportant to this Government as the economy. I will just say in passing one thing that I was particularly disturbed by which was to see Treasury tell us that a quarter of their own bills are not getting paid on time. When the financial managers of this Government can't pay their own bills on time and leave generally private sector suppliers out of pocket because they can't get themselves organised I blame that on the Government and their failure to properly oversee the pretty simple core business of Government. Now in the time left in this contribution I want to also focus on the annual review of the Reserve Bank because again there is a story here of significant and serious under-resourcing of one of our core financial agencies. I hate to say it but there is a very clear theme developing of this Government being so uninterested in the economy and the private sector and the thing that actually pays the bills that they are under-resourcing Treasury they are not getting Treasury to focus on their core work and we're seeing the Reserve Bank telling us that they are significantly short in their prudential supervision staff and in fact they told us they were at least 15 key people short of being able to do their job well. Now the Reserve Bank is an agency that has paid a dividend to the Crown last year of $456 million—$456 million. So the Crown is using them as a cash cow but are they properly resourcing them to do their job of looking after our banks looking after our insurance sector and managing our currency risks? No they're not. So you've got the Reserve Bank having to go cap in hand and apparently being turned away by the Government and telling the select committee—which is pretty serious; in fact I haven't seen it—that they were significantly under-resourced and therefore not able to fulfil their full regulatory responsibilities. That is a serious issue and I would suggest to this Government that they should at the very least have due regard to these important institutions of Government so that they do ensure that they are in a position to be able to properly do their job. Just one final comment on the Reserve Bank while I'm here and that is around the stress testing of New Zealand banks given the issues that are currently being discussed with capital adequacy. I would point out to the bank that they told us that their stress tests have found the banking system is resilient and the banks hold enough capital and liquidity buffers. So given those comments I think it is important—and I certainly hope the Government is having these conversations—that there is serious reflection going on as to whether the significant constraints on capital the significant extra costs that will fall on borrowers from these massive jumps that the bank are now proposing in capital adequacy if they're to proceed—given that the bank told the Finance and Expenditure Committee that our banks are resilient and will withstand. CHAIRPERSON (Adrian Rurawhe): I call the Hon Judith Collins."