Lee Melissa: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeLee Melissa: Oral Questions — Questions to Ministers[Sitting date: 12 May 2016. Volume:713;Page:11046. Text is incorporated into the Bound Volume.]2.MELISSA LEE (National) to the Minister of Finance: What reports has he received on the outlook for the New Zealand economy in the lead up to Budget 2016?Hon BILL ENGLISH (Minister of Finance): The economic context for Budget 2016 is reasonably positive. For instance although the dairy sector is struggling New Zealand has a diversified economy and total exports increased by almost $2 billion last year despite the fact that dairy exports decreased by $3 billion. The labour market is relatively robust with over 200000 new jobs in the last 3 years and the annual average wage rose 2.3 percent in the last year to $58000. These factors are among the many signs of sustainable solid economic growth which in turn supports the Government’s finances.Melissa Lee: How will Budget 2016 reflect the Government’s continued commitment to responsible fiscal management?Hon BILL ENGLISH: The member will just have to wait till Budget day to see the details but the House can expect the Government to continue to build on the significant progress so far: an $18 billion deficit in 2011 was turned into a small surplus last year and we are working to maintain and grow surpluses. We also want to focus on reducing debt to 20 percent of GDP by 2020.Melissa Lee: What steps will the Government take in Budget 2016 to repay debt?Hon BILL ENGLISH: The new spending allowances we set out last year for 2016 and 2017 have been rearranged. A portion of spending previously earmarked for Budget 2017 has been brought forward and another portion of spending previously earmarked for Budget 2017 has been used to reduce debt. These changes to the allowances will reduce spending by around $1.2 billion over the next 5 years helping to further reduce debt and meet the Government’s debt target.Grant Robertson: When he said today that additional investment will be funded by “reprioritising within the Crown’s large balance sheet” what does that actually mean?Hon BILL ENGLISH: It means that where we have capital that we do not believe the Government can manage to best effect or should continuously own including—Phil Twyford: Like State houses Bill. Is that right?Hon BILL ENGLISH: —well including State houses—financial instruments the Government is willing to free up capital from those assets to spend it on necessary infrastructure.Grant Robertson: In light of that answer can the Minister of Finance assure New Zealanders that he will not be selling off any more State houses?Hon BILL ENGLISH: No—in fact probably the opposite because we believe that having thousands of houses of the wrong size in places where they are not needed is not a good use of taxpayers’ money. We focus on meeting the needs of tenants not holding on to—[Interruption]Mr SPEAKER: Order! [Interruption] Order! Mr Twyford a little interjection is acceptable but when it is a barrage like that it is not.Melissa Lee: How do the changes in Budget allowances affect the Government’s priority of reducing taxes?Hon BILL ENGLISH: Lowering income taxes remains a Government priority. In particular we want to address the higher marginal - tax rates faced by low and middle income earners as this economy continues to deliver moderate but sustained increases in incomes. However as we have always said tax reductions remain dependent on fiscal and economic conditions. With continuing tight fiscal conditions we do not currently have an explicit provision for tax reduction in the fiscal forecast. However we will consider these either in Budget 2017 or after as and when the fiscal situation improves.