Willis NicolaNICOLA WILLIS (Deputy Leader—National): The 2022 Investment Statement provides us with an opportunity to think about some of the immediate and long-term risks facing New Zealand. I want to reflect on three key themes. The first is around the effect of the expensive monetary and fiscal policy that we've had over the past two years. The second is New Zealand's debt position and what that means in terms of our risks and exposure. And the final is our infrastructure deficit and how we should be meeting it as a country.On the first point in terms of the expansive monetary and fiscal policy that New Zealand has embarked on in the past couple of years I want to highlight that we are one of the countries in the OECD in the developed world that went on the biggest amount of stimulus both in terms of the amount of bond buying or money printing that our Reserve Bank embarked on and in terms of the amount of borrowing and fiscal stimulus that the Crown embarked on. I think it is appropriate that we reflect on the effects of that because we just had a Labour member—and I find it a kind of rich irony—arguing that that didn't have an impact on equality. Now what we know to be true is that when we had interest rates at record lows over a sustained period that led to extreme asset price inflation such that by one measure New Zealand house prices increased 28 percent in one year. To say that that sort of asset price inflation doesn't have an effect on equality is an interesting kind of maths because I think for those who are outside of homeownership looking in they would argue that that had a very material effect on how equal their wealth was to others'. Similarly when we look at the effect that sustained low interest rates and money printing had on the Crown's balance sheet it's notable I think that a lot of the appreciation that occurred is again a direct result of those low interest rates.The question we have to ask ourselves is: was that a free lunch? Did we get those higher asset prices as something that we will be able to hold on to for ever? And of course we have to examine the cost of that. The cost is a cost of living crisis. We have 7.3 percent inflation in New Zealand today the highest it's been in 32 years and what that means for working people—and I think particularly of those without assets—is that the reality for them is that now for two years for eight successive quarters prices have been rising faster than wages. So the real effect of that is that New Zealanders are going backwards. I bring these points into the debate because I think we should always reflect on the significant measures that the Crown takes and the impacts they have not just the immediate impact of us coming through the crisis but also the consequences today. In simple terms I remember Grant Robertson in the election debates telling us we had an extremely strong economy because of the decisions taken by him and the Reserve Bank. Well if he wants to claim the credit for that strength he must also claim responsibility for the hangover that New Zealand is now incurring.The second point that I want to make about that expansive monetary policy is that it is not without cost to the Crown balance sheet because of course the Large Scale Asset Purchase programme has made the Crown balance sheet a lot more sensitive to changing interest rates. In a real effect that will mean that Treasury needs to shovel between $150 million and $200 million over the Reserve Bank balance sheet each month for the foreseeable future. So the fact that the Reserve Bank embarked on a significant programme of bond buying or money printing—that is not without cost and I highlight that point. The second point I want to dwell on is debt because the speaker previously said Oh look debt is nothing to worry about in New Zealand." I want to lay out the numbers because I think New Zealanders with common sense would listen to these numbers and sit up straight. Going into the pandemic debt was 19 percent of GDP. It then reached 30 percent and it's on its way to 40 percent. That is by anyone's judgment a massive accumulation of debt over a short period. While it is right to say that the ratings agencies have been comfortable with that for now they have also highlighted some significant risk factors for New Zealand because of course the point of not accumulating too much debt is that we want to have enough capacity to borrow if another rainy day comes—if God forbid foot and mouth disease came to New Zealand for example.So the external factors that analysts consider when they look at New Zealand's debt position are the current account deficits which are pretty high relative to other countries; our negative international investment position; our high household and agricultural sector debt and I go back to that housing issue; the lack of diversity in our exports; and the high house prices which create a risk to financial stability in and of themselves because in the event of a correction New Zealand would be exposed. So I would caution members of this House against taking a Holly Golightly approach to our debt. We have high debt and we need to be careful about how we accumulate any more into the future. We need to look at where our future challenges lie. New Zealand superannuation is forecast to rise from currently 5 percent of GDP to 7 percent in 2061 and health spending needed to support demographic change and rising demand is expected to go from 6.9 percent to 10.6 percent of GDP. My point is that we need to ensure we have a resilient enough Crown balance sheet that we can afford these increasing challenges into the future.Finally I want to just make a couple of points about the infrastructure deficit which New Zealand has. Here on the National side of Parliament we are of the view that growth-enhancing infrastructure investment should be supported. We are also of the view that where we have social infrastructure that is not performing well we must invest in improving it. We do believe that when we take on debt for projects that over the medium term will deliver greater returns for New Zealand that is worth doing but it is of great concern to us even if it's not of concern to the member Anna Lorck that Treasury's analysis is that this Government this Labour Government has had a serious delivery problem when it comes to infrastructure. I hold in my hand a report that Treasury released at last year's Budget where they said that over half of the initiatives submitted for funding were not investment ready. Treasury had to caution ministers that funding investments that are not ready will not speed up delivery; rather it will increase the risk of delayed delivery cost overruns and negative impacts on expected outcomes. Treasury commented on the need for Government agencies to improve their delivery performance.This is a theme of course that is pretty consistent across this Government: that it is pretty good at making announcements and expressing aspirations as it has done on infrastructure but when it comes to the delivery and the execution it has been very poor. This is significant when it comes to the Crown's balance sheet because if we are going to accept that borrowing for infrastructure is going to occur we need to be confident that we can look taxpayers in the eye and say we will do that in ways that are efficient we will select projects that are valuable and we will execute well. But the documentation from Treasury suggests that they have very real concerns about the ability of this Labour Government to deliver on those expectations. They have noted again and again that a significant proportion of infrastructure projects that Labour signs off for funding don't even have business cases attached. I think here of the light rail commitment which Jacinda Ardern made in a campaign; it was going to be delivered by 2021. The reason that investment has fallen apart so badly is that Ministers didn't even know what the objectives of that project were.So in closing I say yes we in New Zealand should be prepared to invest in infrastructure but we should do so carefully and we should do so knowing that the debt we take on must be repaid by future generations. We should be very careful indeed with that money."