Foss Craig: Supplementary Estimates — Imprest Supply Debate 
Foss Craig: Supplementary Estimates — Imprest Supply Debate 
[Volume:655;Page:4539] 
CRAIG FOSS (National—Tukituki) 
: 
 I am looking forward to speaking on the Appropriation (2008/09 Supplementary Estimates) Bill and the Imprest Supply (First for 2008/09) Bill which form part of the “road-to-recovery Budget” as read by the Hon Bill English on 28 May. I have a few notes to speak to but I cannot resist picking up on some of the points the previous speaker made. Excuse me if I do not quote her exactly but I think it was that now is the time to invest. [ 
Interruption 
] To borrow? Well I will come back to that in a minute. I think it was to borrow funds to invest. It is very interesting because under the previous Government’s watch last year the superannuation fund lost $5 billion to $6 billion accident compensation lost about $3 billion to $4 billion and the National Provident Fund lost about $1.5 billion to $2 billion. Those members are now trying to give us investment advice. 
They should think it through think what the legacy of the—[ 
Interruption 
] I am more than happy to call it the Cullen fund when it is doing that. That does beg the question and I know that another speaker said this on the reading of another bill along the way: “Tell us what you would invest in.”. I say to those sages give us some advice! Should investment be on shares currency or in fixed interest and should it be in New Zealand or outside New Zealand? Would that previous Government have continued to invest in Australian infrastructure with the superannuation fund? Or would it start to invest in New Zealand? What would it have done? Where is the advice? Labour should remember that it lost about $10 billion to $11 billion of net worth off the balance sheet in the last year. Those members should not stand up and try to give investment advice. Please! They should not even attempt to do that. They can talk about the generics but do not say that now is the time to invest without coming up with something they think is worthwhile for the taxpayers of New Zealand to invest in. 
Opposition members keep forgetting the other side of the balance sheet. I will come back to that again. Under the current set of accounts—the accounts as Labour left them and the accounts as they deteriorated after Budget 2008—in May whatever the case the previous Government would have had to borrow and to continue to borrow. It is worth mentioning that in that Budget State financial asset sales of $6.7 billion were announced and an extra borrowing of $6.7 billion was announced. When members on the other side get up and start to claim that it is a new world or there are new accounts the previous Minister of Finance had the numbers right in his hot little hand. 
It is very interesting and somewhat questionable I guess how fast and rapidly the accounts deteriorated post-Budget 2008. Interestingly in that Budget there was hardly any reference at all to the KiwiRail purchase other than a mention in the contingent liability of a potential write-down which I will come back to again. As we know the negative asset of KiwiRail was paid for at about $1.2 billion all up and is now worth $350 million. Basically in the space of under 8 months that supposed asset ended up as something that Wall Street New York would be proud of. It was bought by the previous administration but $800 million - odd has been knocked off its value. Members opposite should not dare get up and ask questions about why there is no money for this that and some other proposal. They should not dare to get up and pass on investment advice when in fact under their Government’s watch we lost billions upon billions. 
New Zealand entered a recession about a year before the rest of the world. We led the world in beginning the global recession so a number of reasons contribute to the fact that this Budget has to be in the shape and form of a “road-to-recovery Budget”. It is a Budget that is right for these times and it is a pragmatic Budget. 
We did not take on board the unfunded spending of the previous Government but we did have to take on board its spending. Some hard choices were made. That is quite correct. Some reprioritisations had to happen. Almost all of them were uncomfortable to do but we are quite proud that we have stepped up and been honest and transparent. If we look at the forward track of this Budget we see the results of a very strategic Budget as read by Mr English. As I noted page 1 of the Budget has the debt graphs. If the previous administration had stayed in office and if their policies as in their press releases and as announced had continued then the debt to GDP ratio which was already nudging 70 percent would have continued to go north over the next 4 or 5 years. In fact we now see the curve coming down. It will go to about 37-odd percent of GDP. 
From that simple graph and those statistics came New Zealand’s upgrade in our credit rating. I will come back to that again because members opposite do not seem to comprehend one iota how important that is to New Zealand. I was very surprised that their leader a former Minister of Foreign Affairs and Trade who I thought had knowledge of these things had no idea embarrassing himself on national TV on  
Breakfast 
 the day after the Budget saying that it did not really matter. Not long after that his finance spokesman had another version of events but again we will come back to that. 
I will show members the quick statistics because some members opposite keep saying it is all a surprise about what the Budget shows today. Budget 2008 forecast a surplus of $1 billion. Before the last election remember when Labour was still in Government the figure came down to negative $1.7 billion which was a deficit. The deterioration was obvious. We have seen it happen around the globe and the situation was rapidly deteriorating. At that stage the bad scenario from the Treasury forecast looked pretty much where we are now. The December Economic and Fiscal Update showed a deficit of $4.1 billion. As announced in this Budget unfortunately but realistically we have a $7.7 billion deficit. No that is not good. No we do not enjoy that fact but we are being up front honest and open. We are showing New Zealand what has to be done to start the recovery from the previous 9 years of unfocused unaccountable non-transparent unmeasurable announcements that the previous Government made which had core spending going up and up whilst core revenue was always very vulnerable and deteriorating down. 
That brings me to a very interesting point. A previous speaker the Hon Shane Jones kept asking where the revenue boost is and where the hike is. That spoke volumes about that party because what is revenue? It is an increase in taxes. Right there he alluded to what would be in the supposed mini-Budget after the election if his party had unfortunately managed to get in. Actually that party was going to hike taxes because of its concentration on just that side of the ledger which again speaks volumes because it is not just about one side of the ledger. It is not just about revenue. There is expenditure the funny old thing that has put New Zealand in the situation we are in right now where expenditure is compounding up and up and core funding is going down. It just shows where members opposite concentrate their thinking: “There is a problem. I know let’s raise taxes.” I guess they are being truthful because between 2004 and 2009 tax revenue went up about $20 billion per annum. 
There has been a lot of attention given to the Government’s reprioritising of spending on adult and community education. I fronted a meeting yesterday. About 70 or 80 people were there and we discussed it. We all agreed on the unfortunate situation as to why we have to reprioritise so much in the accounts. We gave the example of KiwiRail. We talked about the $1 billion that had been written off and was not available for education health or the small little courses that these people had been signing up to and attending whether they were hobby courses personal growth courses or whatever they were. That is the bit that members opposite do not get. There is the net worth. There are two sides to the Budget and it comes down to this number I am pointing out. It is a big negative. We inherited one big negative in a decade of deficits. 
Hon Darren Hughes 
: That’s not cash Craig and you know that. 
CRAIG FOSS 
: Does the member want to discuss it? I say step outside and we will discuss it sir. 
Where does the cash come from? It has to come from borrowings. It was in the previous Government’s Budget. It started the borrowings. So there are assets liabilities net worth and cash. It speaks volumes again that members opposite are confused about this particular matter. 
I will come right back to where I started to the sage investment advice from members opposite who talked about how it is time to invest! Basically they are saying we should go out borrow money for the superannuation fund and invest it in something because all investments make money. Goodness gracious me! A final point is that when the superannuation fund was set up by the previous Minister of Finance the entire construct was made to allow for movements and fluctuations in cash in the economy. It is stated there and I have quotes from the previous Minister of Finance if necessary. Thank you.