Norman Russel William: Financial Review Debate — In Committee 
Norman Russel William: Financial Review Debate — In Committee 
[Volume:671;Page:17457] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 This is a very strange debate we are having in the Chamber this afternoon. It is a very strange debate because the Government has no clothes. The Government is presenting itself on this occasion as being fiscally responsible. Actually the Government is not being fiscally responsible. If we look at the options that the Government has in terms of paying for the Christchurch rebuild we see that there are three basic options: to cut spending to borrow more or to raise more revenue. The most responsible approach would be to raise more revenue because that would protect the Government’s books. If members’ concern is fiscal responsibility then money should be raised to cover the costs of the rebuild. In fact the Government plans to borrow the money. This is a borrow-and-hope Government. 
Of course the presentation of the National Party—and this is what is core to the National Party—is that it is the fiscally responsible party. It wants to present itself to the world as the party that will safely look after the books in Government. In fact we have many quotes from the Minister of Finance where he talks at some length about the problems of increased borrowing. Just recently on 1 February Mr English said in relation to the Labour Party plan which he claimed would lead to $5 billion worth of more borrowing that $5 billion worth of more borrowing would almost certainly lead to credit rating downgrades for New Zealand thereby putting up interest rates for Kiwi families and businesses and costing jobs. Well that is a fair statement from the Minister of Finance. 
The question then is why the Minister of Finance and the Government are proposing to dramatically increase borrowing to pay for the rebuild in Christchurch. The most fiscally responsible thing to do is strike a temporary levy. If the Government wants to pay for the rebuild it should reach out to fellow New Zealanders who actually want to contribute to the rebuilding of Christchurch and strike a temporary levy so that everybody in New Zealand who can afford it would contribute to the rebuild. At the end of that process we would not have Government debt to pay for it because we would have paid for it out of a temporary levy. We would not have had to cut spending as this Government is proposing to do. 
When we look at what options the Government is choosing we see it is going down the path that will increase borrowing and cut spending quite savagely. The Prime Minister’s comments at the weekend for anyone who was paying attention are very very scary. The Prime Minister said that there will be zero new spending in nominal terms. That means a very significant cut in real terms. If inflation is running at 5 percent—we will see what the price of oil does—then there needs to be a 5 percent increase to keep things where they are. The health budget tends to run higher than general inflation so there needs to be a higher increase just to stand still. So if the Government is proposing that it will keep nominal spending flat then it is talking about a savage cut in real spending. Those are the kinds of cuts we have not seen since 1991. This will be a “black” Budget. We have not had a “black” Budget in New Zealand since 1991. If the Government does what the Prime Minister told the country on the weekend that he plans to do we will have a “black” Budget this year because the cuts in Government spending will be savage. 
If people think that that is pretty bad because there will be very significant real cuts on top of that the Government has said that it wants to put more funding into health and education even while keeping a cap on nominal funding overall. If $600 million to $800 million is being transferred out of the rest of the Budget to be put into health and education that means the cuts in the rest of the Budget will be even more savage. Not only does the funding have to be cut because in real terms it is dropping given that inflation is not being accounted for but on top of that another $600 million to $800 million has to be found to transfer into the health and education budgets. It means that we are looking at multibillion-dollar cuts maybe in the order of $4 billion in the rest of the Budget. Those are very very significant cuts. 
People who think that it is easy to find that money—just to snip a little bit here and snip a little bit there—are kidding themselves. If we cut Working for Families for everyone earning above $100000 then we might save $20 million or we might save $50 million depending on how we calculate it. That is peanuts compared with the $4 billion worth of cuts that the Government is now talking about. It is not easy to find multibillion-dollar cuts in the Government’s Budget outside of health and education.