Huo Raymond: Public Finance (Fiscal Responsibility) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeHuo Raymond: Public Finance (Fiscal Responsibility) Amendment Bill — Second Reading[Sitting date: 25 June 2013. Volume:691;Page:11261. Text is incorporated into the Bound Volume.]RAYMOND HUO (Labour):Having listened to the Minister for Courts and other parliamentary colleagues I would like to raise my concerns by focusing on some specific clauses. If we look at the purposes of this bill the Public Finance (Fiscal Responsibility) Amendment Bill the new principles would require the Government to formulate fiscal strategy with regard to its interaction with monetary policy. That is contained in the proposed section 26G(1)(f) in clause 4. Secondly it would require the Government to formulate fiscal strategy with regard to its likely impact on present and future generations. Thirdly it is to ensure that the Crown’s resources are managed effectively and efficiently. One existing principle would be amended to require revenue strategy to have regard to efficiency and fairness including the predictability and stability of tax rates.The proposed section 26G(1)(f) “formulating fiscal strategy with regard to its interaction with monetary policy;” is neutral enough to have little effect. However if its intent is to subordinate fiscal policy to monetary policy which are totally different things that could significantly limit a Government’s social and economic options if the policies followed by the Reserve Bank were in conflict with the Government of the day. For example a Government wishing to raise wage rates by various mechanisms could find its wishes neutered or undermined by a Reserve Bank that considers such efforts inflationary.Treasury’s and the Government’s reading of this particular monetary policy in paragraph (f) is too narrow. We believe that the wording in paragraph (f) should be “formulating fiscal and monetary policy with regard to interactions between them” but this proposed change was rejected by the Government which has said that fiscal responsibility legislation should not influence monetary policy. If that logic were applied consistently then fiscal responsibility legislation should not refer to effects on economic efficiency either which this bill does exactly.Secondly the proposed section 26G(1)(g) “formulating fiscal strategy with regard to its likely impact on present and future generations;” is sensible as long as “impact” includes a full range of considerations whether economic social environmental or otherwise. Much has been reported in the media with regard to the age of eligibility for superannuation for example. But it is clear from advice from the officials that an amendment would have no enforceable effect at all on National’s refusal to address the age of eligibility for superannuation despite this being the most obvious example of Budget settings that have an effect between generations. Superannuation costs rose from $7.3 billion in 2008 to $10.2 billion in 2013. This is already more than the cost of all welfare benefits combined. Within 2 years superannuation exceeds the amount spent by the Government on all education including preschool primary intermediate secondary and tertiary. The proposed amendment has no effect on this.Further the proposed section 26G(1)(h) “ensuring that the Crown’s resources are managed effectively and efficiently.” should also be concerned about whether they are managed in a way that is consistent with the living standards framework. For example as argued by the Council of Trade Unions assets such as schools hospitals parks and State-owned enterprises have the potential to impact most of the living standards framework’s dimensions. Judging whether they are managed effectively and efficiently requires explicit analysis being made along the living standards framework’s dimensions.Moreover the investment statement contained in new section 26NA in clause 8 focuses solely on the value—I can only assume that “value” refers to the financial value of the Crown’s assets—and omits all mention of aspects such as social value and social returns. The same can be said of environmental value and other aspects of the living standards framework yet most of the Government’s physical assets are held primarily for non-financial purposes such as education health research economic development enhancing the efficiency of the rest of the economy conservation or recreation. So to ignore those aspects and focus on financial values reduces those assets to financial ones and thus makes it easier to justify their being sold on the basis solely of financial considerations. This is misleading and unbalanced.To conclude this piece of legislation is poorly drafted and will do nothing to improve fiscal responsibility. Based on the debate particularly from this side of the House it is concluded that this piece of legislation is poorly drafted and is a waste of Parliament’s time. It is accordingly opposed by the Labour Party members. Thank you.