Robertson GrantHon GRANT ROBERTSON (Minister of Finance): It's great to have an opportunity to speak today to the 2018 Investment Statement: Investing for Wellbeing. I think it's important to start at the beginning here because we haven't had this debate—as you yourself noted Mr Speaker at the beginning—for well ever in fact and this is an important document. I want to make sure that all New Zealanders who are watching or listening know what we're talking about because it's easy when you say It's an Investment Statement that measures the value of our assets" to not even know what that is. So for the sake of those following along at home an asset is defined here as: "Government's assets are the things the government owns. They include buildings infrastructure and land as well as funds to support our accident compensation and superannuation schemes." So it's very important that we're not just talking about physical assets per se but about the net wealth and well-being that we have in our country. So on that score New Zealanders when we compare ourselves to the rest of the world can be justifiably pleased about our relative standard of living which is not about any one particular Government but over time is about the fact that New Zealanders have been able to build up a pool of assets that support everything that we do in the country. This value amounts to $65000 in assets and $41000 in liabilities for each New Zealander. So that's quite an interesting number to mention because I could have said "We have $314 billion of assets and $197 billion of liabilities." but if we actually bring it down to an individual person's level we're in net positive territory and that is a good thing. That's something that all New Zealanders should be pleased about. But the trend over a period of time has been that our liabilities have grown from time to time and our assets have generally trucked along at around about the level per person that they are now—obviously growing in dollar terms but proportionate to one another. So we can be pleased overall that as a country New Zealand has a relatively high net worth but we've always got to be careful about the management of the assets that make up that net worth. What the Investment Statement largely does—it does two main things and I'll talk about both of them in the time that I speak today. The first of those is to assess the performance of the Government's investment across a range of indicators and then to look at it across—as Michael Wood said in his intervention—the longer-term intergenerational issues as demonstrated by the Living Standards Framework. Then in the second half of the Investment Statement it goes into specific sectors and areas and looks at how we're doing at managing the assets there and what the future path might be and I will return to a couple of those towards the end of my contribution because they are quite illustrative. So the areas that the Investment Statement measures our assets on are their effectiveness efficiency sustainability resilience and adaptability. It then does that by looking at two parts of our assets portfolio: the social portfolio and the financial portfolio. The social portfolio includes all of the sectors that you would imagine would be in there—justice health education the Department of Conservation Housing New Zealand and so on—and it obviously draws a number of conclusions from those. If we just look at the first of those measures which is that of effectiveness this is where in the story of perhaps scratching just below that level that makes us pleased—the fact that we have a positive net worth—some questions have to be answered. So when we look at page 48 of the report on how does the social portfolio of assets stack up on the efficiency graphs well this is where we have some real concerns because in four sectors representing $62.77 billion or 38 percent of the social portfolio's assets they have aged assets that—to quote the report—"adversely impact performance:". It will not come as a surprise to members of the House that for example in our social housing area the housing portfolio is aged with approximately 40 percent of assets greater than 50 years old. This is the issue that New Zealand and this Government on coming into office have had to face up to—that our social housing is old and aged and needs urgent updating. That's why among other things we're continuing to invest in making sure that we improve the quality of that housing and that we add to that housing stock—that we add to that asset base. But if we don't take a long-term intergenerational view of the assets that we hold then this will continue to be a problem for us. At the very heart of the Living Standards Framework and well-being approach—which this report goes on to talk about—is that we cannot just manage for the three-year cycle. We have to manage beyond that and do long-term sustained investment and housing is a critical area of that. But the next area that the report goes on to talk about in terms of efficiency in the social portfolio is in healthcare and this obviously has had quite a lot of attention in recent times. What the report tells us is that district health boards are reporting that around 19 percent of assets are in poor or very poor condition. That is the nub of the problem that we see played out at places like Middlemore Hospital where we've seen the issues around the mould in the walls or places like Dunedin Hospital where people have to wear hazmat suits to go inside functioning parts of the hospital. That is the situation that New Zealand now finds itself in where we have a previous Government that failed to invest in these areas and it is the very reason that in Budget 2018 we have invested $750 million in new capital spending for health because we've got to start to get on top of this. The comparable figure in Budget 2017 was $150 million. That is how we end up with assets in the position that we find them in today where nearly 20 percent of the assets in our health system are in poor or very poor condition. We cannot allow that to go on. The only way of resolving that is long-term sustained investment in our assets. Then in the education portfolio for school buildings 38 percent are 50 years old or older and the report goes on to make the point that inconsistent maintenance across the portfolio has resulted in some assets being in poor condition. Again not having enough information has been a major issue about that but this will require a long-term sustained investment in our school buildings to ensure that they are of sufficient condition. So that's just one example of what the report tells us about the state of our assets. It's all very well to look at the high-level indicators and say "Yep we're doing OK." but only one step below that is a definition of the state of our social portfolio assets that I believe many New Zealanders would be very concerned about. I don't have a lot of time to go into the other half of the analysis around the financial portfolio but I do just want to lift out one of those and that is—actually I'll try and do two if I've got time. One of those is the New Zealand Superannuation Fund and one of the very first things that this Government did was restart Government contributions to the New Zealand Superannuation Fund because the value of that asset to New Zealanders has diminished as a result of the previous Government deciding that for nine years they would put no Government contributions in at all. Some $20 billion approximately has been missed out on for future generations of New Zealanders because of a short-sighted policy that was all about making sure they made it into surplus rather than investing for the long term which is what this asset management approach that we are advocating here would do. So actually with regard to the Superannuation Fund—now that we are getting on with it—around $7.7 billion of Government contribution is going in over the next four years. That is projected to see the value of that asset grow to $63 billion by the time we reach the end of that forecast period—$63 billion. That's the kind of difference we can make when we look to invest in the long term and that is the approach that underpins the well-being approach the well-being Budget and the Living Standards Framework that is in here. So I welcome this report from the Finance and Expenditure Committee. I welcome their endorsement of that well-being approach. I say to all members of the House that these kinds of debates are a good opportunity for us to look to the long term—look past year-on-year Budgets even—and look to what will make the biggest difference in the well-being of New Zealanders. To my mind that is long-term sustained investment in our social capital and in our physical and our natural capital. We can do that if we make that a priority and that is what this Government is doing."