1. Question No. 1—FinanceGREG FLEMING (National—Maungakiekie) to the Minister of FinanceQuestion No. 1—Finance1. GREG FLEMING (National—Maungakiekie) to the Minister of Finance: What recent reports has she seen on New Zealand's economic and fiscal response to the COVID-19 pandemic?Hon NICOLA WILLIS (Minister of Finance): I've seen a report delivered to the New Zealand Economics Forum by the Secretary to the Treasury in which she highlighted that effective fiscal stimulus in response to crises should be temporary targeted and timely". She goes on to note in the speech that the bigger concern is the trajectory of spending and that in New Zealand operating expenditure has continued to exceed revenue on an ongoing basis stating "This was the case even through a period in which the economy was overheating and unemployment was at generational lows—normally a time when we expect fiscal policy to be at its tightest."Greg Fleming: What impact has Government fiscal policy had on interest rates?Hon NICOLA WILLIS: Well the same speech goes on to note that fiscal policy has had an impact on inflation with the Secretary to the Treasury noting "Our assessment is that fiscal policy has contributed to interest rates being higher than otherwise." And of course that has an impact on every single family with a mortgage every person with a credit card debt every small business trying to repay a loan. High interest rates hurt and what we know is that loose fiscal policy has contributed to them being higher than they might otherwise have been.Greg Fleming: Why should New Zealanders be concerned about structural fiscal deficits facing the Government?Hon NICOLA WILLIS: Well structural deficits ultimately have a fiscal impact which means that they shift costs to future generations they ultimately reduce Government's ability to provide public services and they add considerably to debt-servicing costs. This year the Government is forecast to spend $8.8 billion just servicing New Zealand's debt. That sum is more than the Government spent combined on secondary schools police and early childhood education last year.Greg Fleming: What action is the Government taking to bring spending back under control?Hon NICOLA WILLIS: The coalition Government has started an ongoing fiscal sustainability programme to embed a culture of responsible spending across Government. The first step of this programme is an initial baseline savings exercise for Government agencies designed to find about $1.5 billion per annum in savings to deliver on our policy commitments and to fund critical cost pressures. This situation brings to mind a cartoon that the Hon Grant Robertson once shared with me in question time; I would like to congratulate him on his foresight and wish him all the best for his future.Hon Barbara Edmonds: Is it the Minister's assessment that the wage subsidy the Small Business Cashflow (Loan) Scheme and other policies to support businesses during the COVID pandemic are redundant and that she wouldn't have supported businesses to hold on to their employees during the pandemic?Hon NICOLA WILLIS: As I've just outlined in the answers to my previous questions I concur with the view of the Secretary to the Treasury which is that targeted and timely responses were warranted during the COVID epidemic. The real challenge that New Zealand is now facing is that the spending never got unwound and that it continued at very elevated levels without driving the kind of value and services that New Zealanders expect and while seeing them endure a cost of living crisis in which they had far less money to spend in their take-home pay."