Douglas Roger: Questions for Oral Answer — Questions to Ministers 
Douglas Roger: Questions for Oral Answer — Questions to Ministers 
[Volume:673;Page:19152] 
12. 
Hon Sir ROGER DOUGLAS (ACT) 
 to the  
Minister of Finance 
: What would the operating balance (before gains and losses) be in each of the next 4 years if real GDP growth averaged 1 percentage point less than forecast in Budget 2011 for each of those years? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The precise amount would depend on which components of GDP were lower but a good indication is provided by Treasury’s downside scenario set out on page 108 of the Budget. This shows that 1 percent lower GDP growth in each of the next 4 years would lower tax revenue by $3.4 billion in 2015. There will probably be additional costs through higher income entitlements. These figures are roughly symmetric—that is a 1 percent higher growth rate would have about the same benefit. 
Hon Sir Roger Douglas 
: Given that Treasury’s growth forecasts have been on average 1.8 percentage points higher than reality over each of the last 6 years what confidence can New Zealanders have in the Government’s growth estimate for 2013 and 2014 when the Government’s main estimates for growth are the same as its downside estimate? 
Hon BILL ENGLISH 
: I think most people will pay perhaps passing attention to Treasury forecasts but they are more likely to make their own assessment of future prospects. The good news is that those assessments are increasingly positive. After all it is the decisions that people make in their households and businesses that create economic growth not Treasury forecast use. 
Hon Sir Roger Douglas 
: Could the Minister explain to the House how he intends to hold expenditure on primary school education constant despite significant increases in roll numbers over the next 3 years when in the previous 4 years roll numbers were static but he deemed it necessary to increase expenditure by over $500 million or 20 percent? 
Hon BILL ENGLISH 
: That is a matter that would need to be clarified by looking through different bits of the Budget. Generally the expenditure on primary schools continues to increase from two sources. One is the increase in the operational grant which is about $22 million or $25 million and the other is a contingency that allows for salary increases. The Government is focused on the same issues as the member. One of the reasons we want to bring in national standards given that we have almost doubled expenditure on primary schools in the last 10 years is that we need to get better results for twice as much money not just the same results for twice as much money. 
Hon Sir Roger Douglas 
: I would like to repeat my question a slightly different way. Over the last 4 years roll numbers in primary education remained static—in other words they did not increase—yet the Minister saw fit to increase Government expenditure by $500 million. Over the next 3 years roll numbers will go up by 17000 yet he will hold expenditure where it is today. How will he do that? 
Hon BILL ENGLISH 
: I do not think that is quite what will happen. I will put the answer in a different way. We could no doubt go through the Budget with the member. Some of the increase in expenditure—in fact most of the increase in expenditure—will be held in a contingency because it applies to salary settlements that have not yet been negotiated.