Goldsmith Paul: Public Finance (Fiscal Responsibility) Amendment Bill — In Committee Third ReadingText is incorporated into the Bound VolumeGoldsmith Paul: Public Finance (Fiscal Responsibility) Amendment Bill — In Committee Third Reading[Sitting date: 27 August 2013. Volume:693;Page:12899. Text is incorporated into the Bound Volume.]PAUL GOLDSMITH (National): I note my colleague Mr Cosgrove’s reference to the biography I wrote. He of course is jealous that I would never write one about him. I have written about successful people over the years and so that is the problem there.I am very disappointed—Hon Clayton Cosgrove: How many copies did it sell?PAUL GOLDSMITH: A lot of copies actually. I am very disappointed that the Labour Party has walked away from this bill the Public Finance (Fiscal Responsibility) Amendment Bill. I would like to acknowledge the work of the former chairman of the Finance and Expenditure Committee Mr Todd McClay who worked very hard to get bipartisan support for this bill. We heard a lot of very lengthy monologues from David Cunliffe as he worked his way through this bill. We listened we listened and we listened for hours and hours and there was a lot of talk about just how well he understood all these issues. We listened and we thought as a result of all that that we may have some support across the table for this bill but we were disappointed to find that Labour could not find it in itself to support what in the past has been something for which there has been bipartisan support.I suppose this is part of a pattern that we see from the Labour Party. It is pulling away from coherence and consistency in its support for the Reserve Bank legislation that we have. It has pulled away from bipartisan support for national security and now from support for fiscal responsibility. It is not my job of course to offer political advice to the Labour Party but I would not have thought that leaving the middle ground of politics was necessarily a wise idea.Hon David Parker: I raise a point of order Mr Chairperson. This sounds like a third reading speech not a Committee stage speech. He has not addressed the bill. Part 1 is what he should be addressing.The CHAIRPERSON (H V Ross Robertson): Thank you for bringing that to my attention. The honourable member might like to—relevance; relevance Mr Goldsmith.PAUL GOLDSMITH: My apologies Mr Chair.The CHAIRPERSON (H V Ross Robertson): But it is Wednesday morning—or I should say Tuesday.PAUL GOLDSMITH: Quite right. I want to refer to some of the points that the previous speaker Clayton Cosgrove made in relation to clause 4 of Part 1 which amends section 26G(e) of the Public Finance Act where he talked about efficiency and fairness. It is important to be reminded of these basic principles because we did have aglaring example in the previous administration where the 39c tax rate opened up a gap between the top tax rate and the trust rate which led to massive inefficiency. Suddenly as we saw in the long-term graph of Treasury’s report there was this great blip of people earning $59000.It is that sort of lack of understanding of how tax works that leads to problems and it is why this legislation is here. Legislation is never going to force a Government to act responsibly and it is never going to require political parties to act in a responsible manner but it does lay a groundwork and a framework that can guide people. This legislation is about updating that.The main aspects that are part of this bill are introducing a new principle that will require the Government to be explicit about the interactions between monetary and fiscal policy at different stages of the economic cycle. I think that is a significant contribution. The second principle is that the Government should formulate fiscal strategy in regard to its likely impact on present and future generations. Again we had Mr Parker on his hobby horse about superannuation saying that the world is going to come to an end. “Chicken Little” is running around. Here we have doom and gloom at the prospect that New Zealanders are going to live longer. Oh dear what a terrible thing that is! New Zealanders are going to be living longer and healthier lives but this is apparently something that we need to worry about.Treasury’s fiscal proposal is that the amount that we spend on superannuation—Hon David Parker: Why didn’t you say that the other day at the super conference?PAUL GOLDSMITH: —I did—goes from about 4.6 percent up to about 6.4 percent. Well at the moment we are looking at Germany at 10 percent so I would not have thought that was the end of the world.There is a decent debate about how you measure that. We saw a recent report from MichaelLittlewood at the University of Auckland where he thought that Treasury had overestimated those figures and that around 2030 we would probably be looking at closer to 5.5 percent because GDP will be bigger because people will work longer and live longer and healthier lives. If Labour thinks that that is the big issue that we need to be grappling with well that is fine. You can have that debate. That is indeed what this whole process is about with the Public Finance (Fiscal Responsibility) Bill—that we should be having those debates. I appreciate Labour’s point of view but I happen to think it is wrong on that one. That is why we are working where we are.The third principle if I can just return to Part 1 of this bill is about reporting requirements for Governments to set out the priorities for resource allocation and explain how these priorities are influenced and how they are influencing decisions.Hon Clayton Cosgrove: Wow! Amazing!PAUL GOLDSMITH: It is easy to mock. It is easy to mock but it is an important principle. Thank you.