Barry Maggie: Questions for Oral Answer — Questions to Ministers Questions to Members 
Text is incorporated into the Bound Volume 
Barry Maggie: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Sitting date: 14 November 2012. Volume:685;Page:6575. Text is incorporated into the Bound Volume.] 
3. 
MAGGIE BARRY (National—North Shore) 
 to the  
Minister of Finance 
: What progress is the Government making in getting back to surplus and reducing future borrowing? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The financial statements for the year ended 30 June 2012 showed an operating deficit before gains and losses of $9.2 billion. This compares with a deficit of $18.4 billion in the previous year about half of which was due to Canterbury earthquakes. Excluding earthquake costs the operating deficit for 2012 was $7.3 billion compared with $9.3 billion the year before. It has been important to support New Zealanders in difficult times through borrowing money and spending it through income transfers and public services but of course that cannot continue for ever. The Government has laid out a track to surplus in order to get on top of debt. 
Maggie Barry 
: What are the benefits of returning to surplus and minimising debt? 
Hon BILL ENGLISH 
: I think one of the benefits assumed is that if we got back to surplus we could then have a spend-up in the fashion that the previous Labour Government did. But that is not actually correct. When we get back to surplus in 2014-15 it will allow the Government to start repaying debt resume contributions to the New Zealand Superannuation Fund and target more investment at priority public services. There is also another benefit to households and that is when the Government does have a credible track back to surplus and good management of Government expenditure all New Zealanders benefit from lower interest rates than would otherwise be the case. 
Maggie Barry 
: Since 2008 how has the outlook for future Government debt and expenditure improved? 
Hon BILL ENGLISH 
: It has improved quite significantly despite the fact that we have had a recession and a slow recovery. Treasury forecasts showed in 2008 that New Zealand was on a track for never-ending deficits and Government net debt would reach 50 percent of GDP by 2020. In this year’s Budget Treasury forecast net debt in 2020 to be under 20 percent. So instead of being 50 percent of GDP decisions the Government has made will reduce that to 20 percent. Also Government expenditure as a percentage of GDP is forecast to fall from 35 percent of GDP in 2011 to 30 percent of GDP by 2016 allowing New Zealand households and businesses to make their own decisions with more of their own money. 
Maggie Barry 
: What is the global outlook for growth and how does this affect New Zealand? 
Hon BILL ENGLISH 
: That is a very good question. The consensus for global growth forecasts for 2013 has been revised downwards in the last 8 months for virtually all of our trading partners including Australia. For instance the IMF revised its growth expectations for the world economy from 3.9 percent to 3.6 percent for next year and in the euro area growth fell from 1.6 percent to 0.2 percent—a very significant reduction in the outlook for Europe. These kinds of reductions are likely to have some impact on the New Zealand economy. 
Hon David Parker 
: In light of the highest level of unemployment in 13 years will Treasury be revising its unemployment forecasts for the Half Year Economic and Fiscal Update; if so will it also have to update its growth forecasts and tax revenue forecasts downwards? 
Hon BILL ENGLISH 
: I would expect that Treasury will take into account the current circumstances and how they might affect the future outlook. The world economic outlook is a bit weaker as I have pointed out and the New Zealand economic outlook has been a bit weaker in this second half of the year but the member will have to wait and see like I will as to how that is reflected in the forecasts.