Bishop Chris: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeBishop Chris: Oral Questions — Questions to Ministers[Sitting date: 14 October 2015. Volume:709;Page:7193. Text is incorporated into the Bound Volume.]1.CHRIS BISHOP (National) to the Minister of Finance: Does he stand by his statement that the Government’s top fiscal priority is “returning to surplus this year and maintaining surpluses in the future”?Hon BILL ENGLISH (Minister of Finance):As I said in an answer to a similar question yesterday from Labour’s finance spokesman yes it does remain one of the Government’s top priorities. And as I said yesterday in the sense of an economy it does not matter that much whether there is a small surplus or a small deficit—it is the fact that Government finances are headed broadly in the right direction.Chris Bishop: What reports has he received confirming that the Government has achieved its target of reaching fiscal surplus this year?Hon BILL ENGLISH: I have seen the recently released financial statements of the Government of New Zealand for 30 June 2015 which I know all members read. Those statements confirm that the Government posted a surplus of $414 million in 2014 which means that the Government met the target it set in 2011 despite some scepticism. I want to acknowledge the efforts of my parliamentary colleagues and also the tens of thousands of public servants who through the last 7 years have produced better public services for the same or less money.Grant Robertson: Is it correct that the financial statements that he has just referred to include an underspend in the health budget of $52 million an underspend in the education budget of $235 million an underspend of $96 million in the law and order budget an underspend of $304 million in the transport and communications budget and an underspend of $97 million in the housing and community development budget?Hon BILL ENGLISH: Can I thank the member for his generous acknowledgment of the achievements of New Zealand’s public services. I know that as the spokesman for overspends he finds underspends deeply offensive.Chris Bishop: How does the surplus in 2014-15 compare with fiscal forecasts inherited by the National-led Government when it took office in 2008?Hon BILL ENGLISH: The update of the 2008 Budget forecast a decade of deficits. The 2008 Budget forecast a small deficit which turned out to be over $3.5 billion. If the spending track had continued we would have had Government net debt blowing out to 60 percent of GDP. That was partly a result of the fact that under the previous Labour Government from 2003 to 2008 Government spending increased by 50 percent at the rate of almost $3 billion per year. For the past 7 years it has averaged just around $600 million extra per year.Grant Robertson: Is it correct that the last time there was 3 percent growth which was under a Labour Government there was a surplus of $7 billion and unemployment was under 4 percent compared with this small surplus of just over $400 million and unemployment reaching 6 percent?Hon BILL ENGLISH: I am happy for the member to campaign on the fiscal record of the previous Labour Government because the three elections since showed three times what the New Zealand public thought of that fiscal record.Grant Robertson: I raise a point of order Mr Speaker. I asked the Minister whether the statement I made comparing those two figures was correct. I did not get an answer to that question.Mr SPEAKER: I got an answer that satisfied me. I was very tempted to rule the question out because it was such a long question. I was very generous to the member. The question has been addressed.Darroch Ball: Is making cancer sufferers pay for a monthly doctor’s certificate to confirm that they still have cancer one of his strategies to save money in order to get to surplus?Hon BILL ENGLISH: I am not aware of that particular process but I can tell the member that alongside many other strategies one of the strategies to save money is precisely to address the long-term health and mental health needs of the 70000 people who are on a benefit and who under previous Governments did not enjoy the active interest of a Government that wants to get them out of that situation and become more productive members of the community. Under our social investment approach that is what we will be doing.Rt Hon John Key: What previous reports has the Minister seen on the prospects of the Government achieving its surplus target this year?Hon BILL ENGLISH: Actually I can refer to one report from earlier this year where a member of the House got up and said that the failure of the Government to reach a surplus was one of the biggest political deceptions in a lifetime. Actually I think the biggest political deception was that Grant Robertson did not tell Andrew Little that it was just the forecast. Actually the real result has come out today. It is a surplus and it does not quite rate up there with the Watergate scandal.Rt Hon John Key: Now that the Government is back in surplus can I have more money for my cycleways?Hon BILL ENGLISH: Well—[Interruption]Mr SPEAKER: Order! I am interested in the answer.Hon BILL ENGLISH: Like other Ministers the Prime Minister is prone to exaggerate the benefits of the particular project and bid for more money than he actually expects to get. And because that is what he usually does I usually say no.Fletcher Tabuteau: What impact will an additional $160 billion to $200 billion of direct foreign investment by 2025 announced by Mr Joyce today have upon the current account deficit?Hon BILL ENGLISH: Because that investment would come only because it is productive investment that can generate a return in excess of the cost of capital it would be positive for the current account.Julie Anne Genter: Does the surplus of $414 million announced today mean that his Government could have ensured that every hungry child had a school lunch giving them their best chance at a good education?Hon BILL ENGLISH: Mr Speaker it was a bit hard to hear. I am not sure—Mr SPEAKER: Could I ask the member to repeat the question for the benefit of the Minister.Julie Anne Genter: Does this year’s surplus of $414 million mean that his Government could have ensured that every hungry child had a school lunch giving them their best chance at a good education?Hon BILL ENGLISH: As the member will know the surplus has arisen after the decision made by the Government to increase benefit levels for the first time in 43 years by $25 a week for families with children starting on 1 April 2016. We hope that it will contribute towards achieving the kinds of things that the member has mentioned. Can I also acknowledge a more sensible question than that of the Labour finance spokesperson.Mr SPEAKER: Order! That last part is just completely unnecessary and will create disorder. Further—[Interruption] Order! I certainly do not need the assistance I am being offered from my left-hand side.Julie Anne Genter: Could the Government have afforded an additional $11 million this year to ensure that every hungry child in New Zealand got a school lunch in addition to raising benefits?Hon BILL ENGLISH: A Government can of course afford any particular decision at the margin if it thinks that it is a worthwhile and effective decision. We just do not happen to believe that the school lunch programme that the member is advocating would achieve what she says or that it is the best way to achieve it.Julie Anne Genter: Did cutting taxes in 2010 from 38 percent to 33 percent for those earning over $70000 a year have a positive or a negative impact on the Government’s ability to return to surplus?Hon BILL ENGLISH: I believe that it had a positive impact not only on our ability to achieve surplus but also on income equality across the range of incomes. Tax revenue as a proportion of GDP has risen since that time and people on higher incomes are paying a higher proportion of the tax take than they used to. So yes I think that the tax package was well worthwhile and positive for the Government’s accounts.Julie Anne Genter: Does he have specific evidence that the tax cuts for top income earners did result in more people working a greater tax take and greater equality in the distribution of incomes in New Zealand?Hon BILL ENGLISH: Yes there is evidence for those propositions. You can actually see what proportion of the tax take is paid by different income groups—that is measurable. With regard to equity I believe that the efficiency gains from the tax changes mean that we collected more revenue and that has enabled us to make decisions like the $25 a week for New Zealand’s lowest-income families.Chris Bishop: What particular challenges has the Government faced in getting back to surplus and how has the Minister managed those challenges?Hon BILL ENGLISH: I think the two biggest challenges were the global financial crisis and the Christchurch earthquake and in both cases the team of Cabinet and caucus and a large number of public servants applied themselves to dealing with some of the more fiscally challenging times that New Zealand has seen in a long time. The good news is that the economy is growing again at a reasonable level and the costs of the Canterbury earthquake have been dealt with in a very effective and responsible manner particularly under the charge of Minister Brownlee. We can now look ahead to setting different fiscal parameters for managing the Government’s books in better circumstances.Julie Anne Genter: Would implementing a revenue-neutral carbon tax to put a price on pollution support his goal of maintaining surpluses in the future cutting taxes and future-proofing the economy?Hon BILL ENGLISH: In concept yes. In fact when we set the target back in 2011 that was the expectation—that at $12.50 per tonne the Government would collect something like a billion dollars of revenue from the emissions trading system put in place to a large extent under the influence of the Greens. As it turned out the oil price dropped and we collected almost nothing. But as that price rises the Government will benefit from revenue from that scheme which would help either to maintain surpluses or to offset other taxes.Julie Anne Genter: Can he confirm that it is possible to invest in services to ensure that there are no kids going hungry at school that we are reducing carbon pollution through a meaningful price on carbon and that the books balance but that it just has not been National’s priority?Hon BILL ENGLISH: Yes it is possible to do those things and of course it is politically arguable which ones you actually concentrate on. With regard to children we have not set ourselves the objective around school lunches; we have gone for other targets that we actually think are a bit more challenging like reducing the number of assaults on children and the number of children with rheumatic fever. But the general idea of investing wisely and achieving a clear impact is one that is at the heart of the Government’s management of Government expenditure.Grant Robertson: Is it correct that the underspend of $235 million in the education budget includes funding that was to be directed towards special education meaning that the most vulnerable children in our system have been ripped off by this Government?Hon BILL ENGLISH: If the member did his homework he would know that there is a difference between an underspend and a rip off. Underspends arise when the money has been allocated—actually in this case to special education. For various reasons across the $70 billion they just have not got to spending it yet. So it is not a rip-off and the member should study the system a bit more so that he knows the difference.