Tuiono Teanau; Smith StuartANNUAL REVIEW DEBATEIn CommitteeCHAIRPERSON (Teanau Tuiono): The House is in committee on the Appropriation (2022/23 Confirmation and Validation) Bill. This is the debate on the financial position of the Government and the annual reviews of departments Officers of Parliament Crown entities public organisations and State enterprises as reported on by select committees.This is a 10-hour debate. The time for this debate has been allocated to parties on a proportional basis. New Zealand National has three hours and 59 minutes. New Zealand Labour has two hours and 46 minutes. The Green Party of Aotearoa New Zealand has one hour and 13 minutes. ACT New Zealand has 54 minutes. New Zealand First has 39 minutes. Te Pāti Māori has 29 minutes.Standing Orders 356(2) and (3) have been set aside so there will be no sector-specific debates. Instead specific Ministers will be available each day to respond to specific portfolios. The Government has indicated that the Minister of Finance the Minister of Climate Change and the Minister of Health will be available today to respond to members' questions. Each debate will be led off by the chairperson or another member of the committee that considered annual reviews most closely related to the Minister's portfolios. The Minister is here for one hour to respond to members' questions.The question is That the report of the Finance and Expenditure Committee on the annual financial statements of the Government for the 2022-23 financial year be noted.FinanceSTUART SMITH (Chairperson of the Finance and Expenditure Committee): Thank you Mr Chair. It's a great pleasure to speak on the annual review of the finance sector. We started on 1 February with the Minister of Finance the Hon Nicola Willis who was before the Finance and Expenditure Committee with Dr Caralee McLiesh the chief executive of Treasury for 45 minutes. A few weeks later on 26 February we followed with a three-hour annual review of Treasury which I'd have to say the select committee found very useful. I was quite concerned that we wouldn't fill three hours up but actually we did it with ease and we probably could have gone longer. The feedback from Treasury was very good as well. I think they found it very useful.The structured agenda that we had which the Auditor-General's office assisted with was very helpful for everyone to guide us through that debate so it was very ordered and we got through quite a lot. So I'd like to thank all those involved with that.The Government accounts for 2022-23 showed an increase of revenue to $153 billion but it also showed an increase in expenditure from $151 billion to $161.8 billion which I think is quite concerning and the operating balance before gains and losses (OBEGAL) underlined that when it showed a $9.4 billion deficit which is $2.5 billion larger than the Budget had projected. That is a concern to everyone I think. Structural deficits are a real problem. We asked the Treasury about that. In their view they were quite concerned about structural deficits. While our debt level is relatively low internationally we are subject to quite significant shocks on an ongoing basis and we are a small economy and that puts us in a unique position where comparing ourselves to larger economies is not that useful. One of the things that we were quite concerned about was that structural deficit and the ongoing shocks but we also were really concerned about some of the things that had gone on with the Reserve Bank which we came to later. But just before that we did like to note and we found quite useful the Parliamentary Commissioner for the Environment's attempt at teasing out expenditure based on the agencies that the money goes to. I think that's a really good thing for us to focus on in the future because it's not just about measuring the money that goes out the door; it's about the effectiveness of it and whether there's actually been double-up in the expenditure. That's something we should be very concerned about.We asked the Treasury about the Reserve Bank running or tightening the official cash rate (OCR) at the same time as running or continuing the funding for lending programme. The official cash rate is raising interest rates to slow the economy down whereas the funding for lending programme is giving banks cheaper access to money and effectively having the opposite effect of the OCR and we wondered about the wisdom of that. I think that while they were quite measured in their response they were concerned about it. I do note that we also asked the Reserve Bank about that. The answers we got were a little bit unsatisfactory I felt.I do note and I've since found out that my colleague and friend the Hon Andrew Bayly had asked the Reserve Bank about whether they had a contract with the banks to continue that funding for lending programme. The Reserve Bank Governor's response was that well they didn't have a contract per se; they had a moral contract. Well my question had I known that before would have been: well what about the moral contract with the taxpayer? Because it's the taxpayer that it's costing. It's costing people with higher interest rates now than they would have needed to be had the Reserve Bank not continued to have one foot on the accelerator and the other one on the brake. I think that was pretty poor management on their part and it was a concern shared across the committee that this would occur. So we now know that it wasn't a contract; it was a very concerning aspect for us. So I'll leave it at that for now but it was a great pleasure to undertake the annual reviews. Thank you.