Foss Craig: Debate on Budget Policy Statement 
Foss Craig: Debate on Budget Policy Statement 
[Volume:653;Page:2060] 
CRAIG FOSS (Chairperson of the Finance and Expenditure Committee): 
 I move  
That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2009 
. The Finance and Expenditure Committee heard evidence on the Budget Policy Statement on 18 February. I would first like to acknowledge those who submitted on the Budget Policy Statement particularly the Business Roundtable Federated Farmers chambers of commerce and others. I do acknowledge the tight time frames that they had for submissions—the deadline was 18 February at 8.30 in the morning—and a lot had changed since the release of that particular Budget Policy Statement on 18 December 2008. Once again I acknowledge and publicly record my thanks for the hard work and resources that those organisations put into preparing those statements and their submissions. They all go into the mix.  
The statement is of the intentions for Budget 2009. It is quite simple: it outlines the Government’s intentions for Budget 2009. This coming Budget will take a responsible reasonable and fair approach to the position that we have inherited. I will speak to that a bit more in a moment. It will set out a credible plan for the medium to long term for New Zealand. This comes hot on the heels of the execution of National’s 100-day plan of action—of doing not just talking of passing legislation and of doing the things that matter. I will contrast those announcements with what has already been achieved—what National said it would do before the election what it placed before the public and was elected on and then what it did post-election. I will then line that up with the various economic reports that have come through over that time. I will contrast that with the plan of Labour’s spokesperson on finance David Cunliffe. He said that a plan would be released by his party some time before the next election. The election is still 3 years away but I guess Labour has plenty of time on its hands. Perhaps he was talking about a mini-Budget which that party had said it would release if—unfortunately—it won the previous election. 
So what did the new incoming National Government inherit? Quite frankly it inherited a total shambles. It inherited a set of books that are somewhat questionable as shown by events that have unfolded. I will refer to the accident compensation scheme I will refer to the rail purchase and I will refer to the various contingent liabilities that were in the previous Budget. 
This new Budget in May 2009 will be true fair and transparent. It will have the risks in it and the contingent liabilities wherever possible will be qualified and quantified so that New Zealand will have a true and fair view of the state of this country’s accounts. It became very very apparent as reports came out from Treasury and various organisations that what New Zealand was led to believe was the state of New Zealand’s fiscal accounts was in fact nothing like the reality. Dr Smith has told us a lot about what has happened with the accident compensation scheme and I will come back to that in a minute. 
What did the National Government inherit? Well there had been mismanagement of our economy. If members want some evidence they can see that some things have changed. There has been mismanagement of our economy through some of the best commodity priced economic times in living memory—the last 9 years in particular. As a result of that mismanagement Kiwis left New Zealand in droves. Just the other day we saw the latest statistics: Kiwis are coming home. Did Opposition members not notice that? I wonder what has changed. 
Hon Members 
: Ha ha! 
CRAIG FOSS 
: Opposition members do not like it do they? They do not like the evidence. Things are starting to turn. I wonder what has changed. Perhaps there is a better outcome and a better outlook for New Zealand. 
What else has happened? What else did the National Government inherit? The previous Labour Government talked about a mini-Budget. The Labour Government had announced some tax cuts to be fair but given its track record no one was particularly confident that it would follow through on them. We all still want to know what was in the mini-Budget that Labour Government members talked about. In that mini-Budget was the previous Minister of Finance going to declare the true state of the accident compensation scheme? Was the previous Minister of Finance going to declare the true cost of the rail purchase? Or was he simply going to cancel the tax cuts? Speech after speech from members on the other side of the House has tended to reveal the true colours the election result deniers are showing. 
The May 2009 Budget will include all lines of funding—for example the $26 million hole in the budget of the Ministry for the Environment which no one was really told about because previous Budgets and accounts up to that time were full of smoke and mirrors. New Zealand was not shown the true state of our accounts. The May 2009 Budget will show the true state of the health budget. We inherited probably a $150 million deficit in the health budget. I note that the Labour finance spokesman when he was the Minister of Health sacked the Hawke’s Bay District Health Board for something like a $3 million deficit and now across this country the deficit is $150 million. It raises some interesting questions I guess. 
The National Government inherited announcement after announcement after press release after press release but without the lines of funding. There is $250 million of capital expenditure on district health boards that has to come due in the next year and $400 million is coming up for next year. Where is the money? The money is not there at the moment because the previous administration mismanaged the economy over the best period we have had for a long long time. 
Let us cast our minds back for a moment to the May 2008 Budget. The rot had set in perhaps 8 years prior to that I guess but we must note—because members opposite constantly talk about debt and constantly try to put this fear about State asset sales or something like that—that $6.4 billion of extra borrowing was announced in that particular Budget. At the time gross sovereign-issued debt was about 18 percent to be fair but in that same Budget $6.4 billion of State financial asset sales were also announced. There was $13 billion of deterioration in the Government accounts at that moment. The clock starts ticking for this National Government when Budget 2009 is released in May. That is the start of the accounts because that is when they will be true and fair and every line of funding that should have been in previous Budgets will be in there. 
I spoke earlier about contingent liabilities. In the May 2008 Budget there was a contingent liability that alluded to the shambles of the buy-back of rail from Toll Holdings. The amount was something like $500 million from memory and there was a line that stated that this may have to be revalued up or down depending on the valuation of this asset/liability. We have now learnt that only now are the accounts in a true state with the purchase of assets/liabilities having been valued—only now. Scarily and sadly we are finding from the various press release announcements by the previous Government that the commitments totalled something like $3 billion. It is $3 billion that is not there and has to be borrowed somehow if in fact that is followed through on. We have member after member on the other side of the House essentially asking where the money is: “Where’s the money? We want more money.” 
The previous Minister the Hon Ruth Dyson was asking questions about hospital spending and health spending. How can those members look each other in the eye when they have deliberately produced accounts after accounts that have not in my opinion shown the true and fair view of New Zealand’s economy? It started with May 2008 when we had the first deterioration. 
In the May 2008 Budget there was $13 billion of net deterioration in the accounts. With the Pre-election Economic and Fiscal Update we started to get the decade of deficits. Do members remember that? That is when it first came out. In the decade of deficits we were getting about 30 percent of GDP borrowing at that time. Then we have the Budget Policy Statement right here which the Finance and Expenditure Committee has examined. Sadly we started to have to put the sunlight on to the accounts and the accident compensation fiasco and debacle was starting to be revealed. There is nothing like a bit of sunlight on to the accounts. Unfortunately disgracefully and sadly for our country and our economy the previous administration made an awful mess of the accounts which this new Government has inherited. We will be up front and honest and outlay everything that should be outlaid. 
I am looking forward to the Budget because it is the starting point and it is when the time starts ticking on how this National Government will be measured on its success. The success of this National Government will be measured after the May 2009 Budget. The clock did not start ticking at the May 2008 Budget. There has been a massive deterioration in the accounts and in the economy since that time and the previous administration was in charge right through that period. Thank you Mr Speaker.