Financial Review Debate — The Treasury and the financial statements of the Government of New Zealand for the year ended 30 June 2011

That is the first 10-minute call I have heard from the Chair for a while. I take a call, referring to page 376 of the reports of select committees on the financial reviews, which does deal with Treasury, and I am interested to hear from the Minister of Finance as to what his latest excuse is for the continual slide or lacklustre performance of the New Zealand economy. Indeed, as the Finance and Expenditure Committee report says, on the second page of its report, in the year we are talking about, the fiscal year ended 30 June 2011, New Zealand’s operating deficit before gains and losses increased from $12.1 billion in 2010-11 to $18.4 billion in the year ended 30 June 2011. It is no coincidence that during that year we also saw National abandoning its promises that it had taken to the electorate in 2008. It was, at that stage, talking about closing the wage gap with Australia, which was one of its promises that it seems to have given up on. It was promising a step change in the economy. That has also disappeared from National’s language, because, of course, every reference we hear to forecasts is that they go backwards rather than forwards. It seems to the Labour Opposition that it is now abundantly clear that the management of the economy by the National-led Government is not all that it cracks itself up to be.

We heard—and I note that we can refer also to current events in this part of the debate—from Treasury recently that the tax revenue is nearly $1 billion below forecasts for this year, as well. This year, Treasury says, it is because GST was down 4 percent, largely because of earthquake-related GST refunds, corporate tax was down 5 percent, and the weak job market pushed direct-source tax revenue—that is, PAYE and the like—down 3 percent. So we have a billion-dollar forecast hole—which is worse than it was just prior to the election, in the pre-election fiscal update—just in the months since the election. So I think it is time for the Minister to say why, on the basis of that, he is ignoring the advice of his own department, which has got some ideas as to how we might turn that round to improve the future of New Zealand by addressing some of the long-term problems.

The briefing to the incoming Minister supported quite a few of the policies that the Labour Party took to the last election but that National still will not embrace, including the need to have a neutral tax signal to the economy so that people are investing for the basis of the profitability of their investment and the success of the business, which will grow our exports better than our current business model, which is predicated too much on the speculative sector, driven in part by the tax advantages that that sector has, compared with other sectors of the economy.

Another recommendation—we have the Government saying that it is going to get these budget things under control in part through welfare reform. Yet it is refusing to deal with the issue of the age of eligibility of superannuation. I would ask the Minister to concede that in the latest forecasts, within 4 years we will be spending more on superannuation than we spend on the total of Vote Education—the total—that is, preschool, primary, secondary, tertiary, and trades training. Yet the Minister says there is no need to change any of that. The Government pretends that its tinkering with the domestic purposes benefit and the unemployment benefit will do the trick. Yet within 4 years, the Government’s own forecasts say, it will be spending more on superannuation than the unemployment benefit—in fact, 20 times the amount, approximately.

This Government will not pull some of the levers that are open to it to improve the economy. We have not rebalanced the economy. Treasury’s own forecasts show that within the forecast period, the current account deficit gets worse. Every year we have a current account deficit. The difference between the cost of our imports and our interest bill and the value of our exports is bridged by more borrowing from overseas, and every year the forecast has it getting worse from here, so that, according to Treasury, by 2016 our current account deficit will be equal to 6.9 percent of our GDP, and between now and then, New Zealand will have borrowed an extra $50 billion from overseas—

💬 Rt Hon Winston Peters: Is that New Zealand?

—that is New Zealand—and in addition to that, we will have sold some of our assets.

If you look at the recent report from the IMF, it says that a continuation of the dollar at the current levels means New Zealand’s already high debt will continue to accumulate at an unsustainable rate. It also says the kiwi could be overvalued by as much as 20 percent. Very shortly this Government will bring into the House another shonky document of the type we saw last year in May, you will recall, where it was going to create 170,000 new jobs in 4 years.

💬 Hon Member: In Australia.

He did not say it was going to be in Australia; he said it was in New Zealand. Mind you, that was the pre-election Budget of last year, and there was an election coming. Here comes the gloom, post-election, for the Budget in 2012. We are a trading nation. We live or die by our exports, and right there is the IMF telling the Minister of Finance that he does not know what he is doing with an export-led economy or a country that is dependent upon exports. The Government runs economic policies that hammer our exporters, encourage the importers, and hand the last of our thriving enterprises over to foreigners. This is supposed to be a Government for the people of New Zealand. Instead, it is a Government for foreign interests, for currency traders, and for overseas-owned banks. And the National Party—I cannot say it has not got courage or that it is scared—does not have, to use that classic old phrase, the fortitude to do what is right by its own country and the mass majority of its own supporters. Despite the fact that National claims to be a mass-membership party, it is concerned about the few and the very few, or as the famous American President Roosevelt once said: “These overmighty subjects.”

For 20-plus years we have had this economy being run for those sorts of people, and the signs of what is to come are already in the Prime Minister’s predilection of saying that this will be a zero increase Budget. It has reached the stage where even tonight we have perhaps the greatest industry we have ever had and Fonterra being opened up for a raid by outsiders, some insiders, and some people awfully close to the National Party. It is not because they believe in its ideas or its philosophy but because it is the conduit or the elevator for them to massively increase their private wealth whilst they dupe the National Party into thinking this is good for the country.

That is what the last debate was about, on the dairy industry. It is supposed to be a farmers’ Government, but it is really a Government of Wall Street traders and dairy interests, even though it is controlled by the communist State of China. But that is no surprise, of course, because former National Party apparatchiks and operatives, and even Prime Ministers, now work for those companies that are controlled by the communist Government of China. How low can you go? That is what this debate should be about tonight, and we are going to make sure that New Zealanders become more and more aware of how it is they thought they could trust a Prime Minister—and a Minister of Finance, who was opposed by him, of course—because of all things he came from Wall Street. Does anybody not understand what has happened on Wall Street in the last 28 years? They ripped apart the ownership and confidence of business after business in their country and elsewhere. Banks, for example, no longer lent money; they lent a mortgage, then had that mortgage flogged off so that the payment of that mortgage was the last thing the banks were concerned about, with all these financial instruments. This is what this Government intends to do again in New Zealand in this Budget coming up in 2012.

Thousands of jobs have been lost since the Minister of Finance boasted that 170,000 new jobs were being created over the next 4 years. Thousands—record levels—are heading across the Tasman. The “Minister of Employment” for New Zealand now is a man called Swan, who is the Minister of Finance in Australia. If you ask people who have gone to Australia, they invariably say that the Government there looks after people. This Government cares nothing for people. It is only for the few and the very few—and the rich, in particular. The Government pretends to care, but it is all form and no substance. The Minister of Finance does things, for example, like fobbing off the Māori Party.

I am very pleased to be able to speak on the Appropriation (2010/11 Financial Review) Bill for the year coming up to 2011, and a remarkable year it was. Who would have thought that this country would be borrowing $18 billion in a deficit for that year? I spent a lot of time researching the New Zealand economy over the years, back in the 1970s and 1980s, when Winston Peters, the previous speaker, was in Parliament—way back then, when we had deficits. I never thought we would have the same size and significant deficits again. Yet, here we are.

Why did we get in this situation? Well, firstly, obviously the global financial crisis has hit a number of countries around the world, and economies have been knocked sideways by that and are having to stimulate their economy. Secondly, we have been hit by the earthquake in Christchurch, which we all know was one of the most substantial natural events in the modern economy, in a developed economy. But, finally, the main reason that we have had this large deficit also has been the settings inherited from the Labour Government in 2008, when National inherited an economy pregnant with 10 years of deficits on the books. The Labour Party had abandoned discipline in the last 3 years, particularly, of Government. It had turned the taps of spending on, and left this Government with 10 years of prospective deficits that we had to rein in. So there is no easy task for this Government in trying to restore some order to the books, and that is what the last 3 years have all been about. We need to pay our way.

It is not written in stone that this country will always be a rich country. It is not given to us as of right. It is not something that will happen automatically. Every generation, in every year, has to go out and earn it, and we will earn that only if we have an economy that is dynamic, where people want to save. You do not get a dynamic economy when the Government is soaking up all the capital and all the resources, and that is why it is so essential that we bring down the deficit as quickly as we can, and why I am pleased to be part of a party that has a clear plan to get back to surplus by the 2014-15 year. It is not going to be easy. It is difficult. It is much harder to turn off the tap than it is to turn on the tap, but I am sure we will be getting there soon.

I was glad that Mr Peters referred to the IMF in his speech, because the IMF did have something very relevant to say. It said: “In our view, [the Government has struck] the right balance between the need to limit public debt increases, while containing any adverse impact on economic growth during the recovery.” So in other words, in what is a very difficult environment, this Government not only has struck a good balance between the need to maintain the dynamism of the economy through spending but also is setting a clear path so we can get back to a more sustainable position.

We cannot continue to keep borrowing billions on volatile global markets, as we have done for the last couple of years. We have been privileged in the sense that we have had relatively low Government debt levels over the last couple of decades, and that has given us the room that we have to move in the last couple of years, but we cannot keep on doing that indefinitely. So the figures and the plans that the Government has to get back into order quicker, rather than later, are well worthwhile.

Finally, before I finish, I just want to talk about why the economy is so important. We hear particularly from the Greens that somehow all this focus on economic growth is materialism gone mad and misplaced. But the reality is that constantly we hear talk about people going to Australia. Why do the people want to go to Australia? Often they want to live in dynamic, exciting economies and cities, with the opportunity to do well.

What I am in politics for, and what we are all here in politics for, is to do what we can to create that dynamic environment, and that requires a strong economy. It means not saying no to every opportunity that comes our way as a country. It is being open to making use of our resources. It is being open to understanding the needs. It is actually private enterprise that creates wealth. It is people risking their livelihoods and their own capital to create jobs and to create products that people want to voluntarily buy on the markets, not things that the Government does, that makes all the difference.

Kia ora, Mr Chairperson. Ngā mihi nui ki a koutou. Kia ora. I rise to take a call on the Appropriation (2010/2011 Financial Review) Bill. In summary, the Government has been a poor manager of the economy. In the 2011 year-end Budget, what we are seeing is a deficit of over $18 billion—the largest in New Zealand’s history. That is poor economic mismanagement. In 2010-11 Crown debt rose by $13.4 billion to over $40 billion—again, that is poor economic mismanagement. With economic activity that is stagnating just above the technical recession level, we are again seeing poor economic mismanagement. The mismanagement of the economy is being characterised by poor decisions that have benefited the few but are paid for by the majority.

What I want to talk about in this financial review is the narrative of this Government, which as we saw led to tax cuts for the wealthy that we could not afford, which led to a budget deficit, and which led to cuts in spending. What we are now seeing is the third act of this narrative, which is raising revenue by flogging off the State assets. When you go back to 2010 and the tax cuts, what we saw was the big gains being delivered for the wealthiest New Zealanders. We saw the head of Westpac getting $5,000 a week. What we had to do to respond to that was see increased borrowing for tax cuts to pay for tax cuts that were targeting the wealthiest. That is both reckless and immoral. But in addition to the inequity, what we have also seen is that the tax switch, which was not fiscally neutral, was a fiscal blunder—another case of poor economic mismanagement.

On the expenditure side what we have seen is this Government throwing $2 billion per year at the motorways. Meanwhile traffic is down, petrol is up, and public transport grows through the roof. We are seeing this Government throw $1.2 billion annually at polluters in New Zealand through its amended emissions trading scheme. We are seeing this Government sell our assets to fund $400 million worth of irrigation—again, what we are seeing under this Government is it says it does not pick winners, but when it comes to irrigation it is surely picking winners. When it comes to Skycity, it is picking winners. When it comes to Warner Bros, it is picking winners. What we are seeing is we are picking winners in the old style economy, which has harmful social and harmful economic impacts on our country.

But on the revenue side, this is where the Government has failed to make up the books. To balance the books it is requiring the third act in this narrative, which is to flog off the State assets. The Government turned down the Green Party’s sensible and popular proposal for a temporary earthquake levy for Christchurch. That could have raised over $1 billion per annum, which would have helped with the $9 billion costs that Treasury estimates will be projected to be spent by the taxpayer. Rather than putting the cost of the earthquake on the taxpayers’ credit card, we could have shared the cost more fairly across all New Zealanders and not put the burden on the many again. A comprehensive tax on capital gains would not have affected the family home. The Tax Working Group predicted that it could have brought in $4.5 billion in a year, and would have helped move our economy to a more productive footing. A charge on commercial water use would have raised $500 million a year.

But instead of taking these smart, common-sense alternatives, this Government—because it has got tax cuts for the rich, because it has got a Budget blowout, and because it is borrowing too much money—now has got to sell the assets. The problem is, though, when it comes to selling the assets, the economics do not even stack up there. Our energy assets are getting a very good return at the moment—in fact, more than repaying the debt is costing at the moment. Treasury’s Budget Policy Statement 2012 quantifies this amount. It shows that if the Government proceeds with the partial privatisation, it will cost $94 million a year. Selling assets to reduce debt costs the Government money. That is the key message we have got to take to the country to stop this mindless selling of assets, and the mindless arguments justifying it.

The conclusion is that when you have got this destructive narrative affecting our economy, we need to get into a good story. The good news is that there is a hero in the story. It is a smart, clean economy. This is what we can deliver that is going to lift our kids out of poverty, and it is going to see actual work coming to New Zealand. Take the “drill it, mine it” approach this Government has got to economic development and the resource sector—there are hardly any jobs for Kiwis; hardly any royalties, because we have got one of the fourth-lowest royalty rates in the world; and hardly any tax income, because we have got so many tax exemptions. But what we are seeing is the profits go offshore. If we were investing in sustainable, clean energy and if we were driving export growth through our international champions—these State-owned energy assets that at the moment are selling our expertise on geothermal energy around the world—we could be delivering prosperity for Kiwis and we could be growing the economy so we can lift those Kiwis out of poverty, and actually give our kids a good start in the future. That is the path the Green Party will be focusing on. Thank you.

When we look at the Financial Statements of the New Zealand Government for the year ended 30 June 2011, and Treasury, we need to take a good look at what we inherited from the previous administration, and that was an economy in recession. We got an economy in recession before the rest of the world. That was what we inherited from the Labour - New Zealand First coalition. It was an economy in recession. Since then we have managed to turn that round. In the most difficult of economic times we have turned that round. Not only have we turned that round but also we have set up the infrastructure and the economic platform for New Zealand to grow.

Today we had a question in the House from the Green Party about the roads of national significance. The Green Party was wondering why we should have them. Well, that is investing in the future growth of New Zealand.

💬 Sue Moroney: Ha, ha!

That is investing in the future of this country. Sue Moroney there is laughing. I would like to see her go to the people of Hamilton and laugh at them when they see those roads being built around their city. They will link us to Auckland and grow our city. That growth is imperative and important for New Zealand going forward. National has delivered that infrastructural growth in the most difficult of times.

Not only have we delivered it but also we have set up structures so that New Zealanders have the right signals and incentives out there. If you get a good education and if you work hard, you are going to get some rewards. That is what we want. We want New Zealanders to know that if they work hard and they get an education, the future is theirs. The other side would rather take from people and try to redistribute it to make everybody equal and, therefore, control them. That is the party of the Opposition. That is how it has always been and always will be. The National Party has a different vision, and it is a vision that we have enacted in the most difficult of times. It is a vision that is working.

New Zealand is doing as well as any country in the Western World has done in these difficult times. Would you rather be in Europe or America? Well, the Opposition would not want to live in Europe or America; those members want to be in New Zealand. It is all right for the New Zealand First Party to come into this House and try to put down the Chinese, but the Chinese Government and the Chinese economy are saving us by buying our dairy products. It would be interesting to see, if we did not have that market, how smart people in the New Zealand economy would be. This is a Government that understands economic fundamentals. That is the difference between the Government and the Opposition. We understand what you need to do to build a strong economy, and we are doing that. At the same time, we have delivered the social services that New Zealand people need. We did not scare the horses. We did not go out there and cut social services. At a time when we could have done that, we did not. We maintained those social services. We maintained the integrity of the New Zealand social welfare system. We had to borrow to do that, but we did it.

We have also delivered a rebuild programme for Christchurch after the major natural disaster there. That city will be rebuilt. Those people know that this Government stands behind them. They know that this Government is here for the people of Christchurch, unlike the Opposition, which will come into this House and try to pull down the regrowth of that city just for political purposes. That is not good enough. New Zealanders expect more from their Government, and they have got more. They have got good leadership, they have got an economic plan that will be successful and will work—

💬 Grant Robertson: Where? Where? Show it.

The Labour Party asks where this economic plan is. Well, we want to see what David Shearer has got to say. He has not said anything in 4 months, has he? Grant Robertson has said more than David Shearer has said in the last 4 months, and he is not even the leader. He might want to be the leader, but he is not. The Labour Party has not got a plan. Its members know that it has not got a plan. They look across to us and see that we have got a plan. We have got a direction. We are investing in that infrastructure. We are investing in education. We are telling our people: “If you make the right decisions and you work hard, then the opportunities—”

The CHAIRPERSON (Lindsay Tisch): Order!

💬 Rt Hon Winston Peters: I raise a point of order, Mr Chairperson. Is your stopwatch going? That speech seems a whole lot longer than 5 minutes.

The CHAIRPERSON (Lindsay Tisch): I am very mindful of the time. I just remind the member that on numerous occasions you have brought the Chair into the debate. You cannot do that. Also, focus back on what this debate is. We are looking at the Finance and Expenditure Committee’s financial review. That is what we are concentrating on.

We are on the financial review, and those Financial Statements show that this Government is making the right decisions to take New Zealand forward. It is investing in the infrastructure, it is investing in that social spending, but at the same time it is recognising the demands on this economy and the demands on this Government going forward in these very difficult times. We have had to borrow under those Financial Statements to get through these difficult times, but that was the right decision for New Zealand going forward, and nobody would dispute that. I would imagine that if the other side had been anywhere near the chains of power, those members would have borrowed a lot more, and that would have sent this economy spiralling into disaster. We did not. We borrowed what was prudent for this economy going forward, and we have delivered at the same time the right investments with that borrowing. We have not spent it on silly things. We have spent it on the things that count, giving the right incentives.

What a pleasure it is to rise this evening in this Chamber and speak after Mr David Bennett, the member of Parliament from Hamilton East. That was one of the best speeches I have heard from that member in quite some time. Can I say to members opposite that that did not seem like a long 5 minutes to us on this side of the Chamber. I could imagine if one was not enjoying it on the other side, then it would have seemed like a long period of time. But Mr Bennett, who is well known for drinking very large glasses of clean Waikato River water, was in full flight talking about the wonderful things that his Government has done and the important things New Zealanders have asked us to do.

What have we heard from the other side of the Chamber so far in the debate? We have heard the politics of envy. We have heard from those members that everything is wrong in New Zealand, that they are depressed that nothing is going right for them, but actually, after a lot of puff, there was not a single good idea between them: a few things they spoke about back in 2008, regurgitated to the electorate in 2011. What happened in 2008? The largest single vote under MMP for any party.

What happened in 2011, when they said everything had gone so wrong? Again, the largest vote for any party under MMP. Was it for the Labour Party? Was it for the Green Party? It was for John Key’s National Party, and it was for John Key’s National Party because New Zealanders resoundingly wanted a brighter future—not the slogan that was stolen by members opposite, but a brighter future. They wanted direction, they actually wanted hope, they wanted to recognise the good things that happen in this country, and they wanted to do more for themselves, for their family members, and for others.

I heard members opposite say earlier when Mr Bennett was speaking that it was 4 years ago when we went into recession, a recession that was the steepest New Zealand had faced in 60 years. The world’s economy was failing. But when we came into Government we inherited books that had debt growing and a forecast of debt into the future that was spiralling. The members opposite say: “That is the past. Why are we talking about that?”.

If you do not know where you have come from as a country, it is hard to know where you have gone to, and what I have got to say is that over the last 3 years the National-led Government has provided the reasonable economic management that New Zealand was in such need of after 9 years of Labour mismanagement of this economy. I can see why they do not want to talk about those 9 years, but it is a reality. It is a fact. New Zealanders cast their judgment on that not only in one election but also in two elections. I can understand why those members would not want to look at that.

When we took the reins of office and the financial crisis had reached its peak in the New Zealand economy in that year, the economy had shrunk by 3 percent, topping off 5 years of historically low growth. I can remember back then reading newspapers about the wonderful things the Opposition had said were happening in the economy. But the important part of our economy, the part of our economy that produces things, the productive economy—the businesses that invest their own money and that produce things to sell them, export, reinvest that money, and employ New Zealanders—had been in a recession long before the rest of New Zealand’s economy got there, long before the rest of the world, and it was going backwards.

We were losing competitiveness, and thank goodness that New Zealanders woke up and said they wanted a change. They wanted new direction with John Key. They wanted a finance Minister, Mr English, who would get Government spending under control, who would move New Zealand in a more productive direction, and who would say to our ministries that they must deliver more for New Zealanders with the resource that they are given, the taxpayer resource—not more money, but more hard work for that.

Every day New Zealanders work hard for their money. Why should not the Government and our ministries do the same thing? Well, on this side of the Chamber, that is important to us, and you know, to New Zealanders it is important, as well. They told us that in the last 3 years when they went to vote.

Can I say to you that we have done a number of things—a raft of things—that helped New Zealand become more competitive and more productive. We have looked at the tax system and we have changed it to encourage work and savings. That is very important to New Zealanders. Over 9 years we did not hear about that. All we heard about were handouts and borrowing—handouts and borrowing.

You know, it does not matter whether it is you in your home, in a business, in your local government, or in your Government, if you spend more than you earn every single—

The CHAIRPERSON (Lindsay Tisch): Order!

If one spends more than they earn every single year, then sooner or later you have got to pay the piper. Well, in this case, Governments do not have to do that. Governments just keep putting up tax, keep taking your money, and keep spending it, or at least that is what New Zealanders saw over 9 years of a Labour Government. Well, we came into Government and we made one of the most important—

It has been interesting listening, because the one thing we should have heard, and still have not heard, is Labour apologising for the damage it did to the New Zealand economy. These estimates cover just the cost of another year of this National-led Government trying to undo the wreckage, disentangle the wreckage of an economy that used to be a proud exporting economy. But here is one simple fact, for those who profess to care about jobs: in 2009 there were no more jobs in exporting than there had been 10 years earlier—10 years earlier. So after 10 years of the great moderation, of a global economic boom with, unfortunately, a Labour Government in charge, there were no new jobs in the New Zealand export sector—none. Our capacity to earn had not increased in 10 years.

But what about our capacity to spend? Well, there were jobs everywhere, jobs everywhere—public servants, real estate agents, finance companies. That is what went so wrong with the economy, and that is why the Labour Party should apologise. Until Labour apologises, the public is not going to listen to it on the economy. The public rightly thinks it is still the same old nasty big government taxing, spending Labour Party.

Changing the leader does not make any difference. There is no change of heart. There is no discussion tonight about respecting the people who invest, take risks, and create jobs, the people who show up to work every day and do not want to be taxed out of their pocket so that they cannot pay their bills. No, there is no indication from the Labour Party that anything has changed from “Helen-omics”. At least when Michael Cullen was running economic policy, it was reasonably sound. But in about 2004 that stopped. The left took over. It blew the Budget, wrecked the economy, and it is still in charge. That is why the New Zealand public—well, the New Zealand public hope that if Grant Robertson is the leader, he will apologise. Phil Goff certainly would not. David whatever-his-name-is thinks he—well, I do not know if he thinks he should or not, because he does not really say much. I was hopeful. I was hopeful. I thought David Shearer might get up, clear the decks, and say: “We’re sorry we made a mess. We understand why our vote keeps going down.”—and it went down again in the last election—“We are sorry.” But, no, he cannot bring himself to do it. But Grant Robertson probably can, because I think he might have the ruthless streak. And the rest of the caucus just have to get used to the idea that when he becomes the leader, he will apologise. I do not think he believes he should; I just think he believes that is probably what you need to do if you become the next leader of the Labour Party and you want to get the public’s vote and win.

That is one of the reasons why the Government is able to continue with a credible economic programme that sets out to achieve some pretty straightforward objectives: to get back to surplus and to rebalance this economy. By that I mean to get people and capital back into the income-earning side of the economy. We will not be able to borrow our wealth in the next 10 years like we did in the last 10 years; we will actually have to earn it. That is what these estimates cover: the continued, considered, and consistent economic strategy that the Government is following. It is taking the public along, making significant change where it is warranted, careful change where that is what is required, and dealing with the unexpected events like the earthquakes—not complaining about them; just getting on with it. That is why the programme of the Government is starting to earn the respect of entities like the IMF as being a sensible programme.

Revisionist—

💬 Hon Bill English: Apologise!

Well, “Apologise!”, says Mr English, having criticised the election result of the Labour Party at the last election. He seems to conveniently forget that in 2002 he presided over the worst defeat ever—worst defeat ever—of the National Party. What did he get? Twenty-one percent! But, of course, he is not very good with figures, this Minister of Finance, because he overlooks that. He overlooks that.

Similarly, Mr Bennett’s contribution to the debate was to say: “Be thankful we’re not Greece.” It is a similar line to that run by Mr English. He says we are not as badly off as Greece. Well, why is New Zealand not as badly off as Greece? Because the last Labour Government ran surpluses, every one of which was opposed by Mr English when he was Leader of the Opposition, by Mr Key when he was Opposition spokesperson on finance, and by Mr Brash. All of them opposed the surpluses of the Labour-led Government, which were supported by New Zealand First and the Greens, and at one stage the United Future party. Those surpluses were all opposed by National.

Mr English, you even forget the comments that you made shortly after the 2008 election, when you had the good grace to concede that “This is the rainy day that Government has been saving up for.”, because your Government—sorry, the National Government—inherited amongst the lowest government debt in the Western World. In fact, net debt was zero. Net debt was zero. Gross debt was 17 percent. Even after all of the problems of the earthquake and the global financial crisis, New Zealand should be back in surplus in 2014-15. It should be and I think we will be, or close to it. Even National cannot so mismanage our affairs that we do not get back to surplus by then.

Even then New Zealand’s government debt will be amongst the lowest in the developed world. But we still will not have cured our fundamental problems, which relate to imbalances in the economy. Mr English talks a good game when it comes to rebalancing the economy, but he has not done it; he will not pull the levers that are open to him to cause the economy to change. That is clear from the Government’s own projections. The current account deficit goes up every year. Far from having cured this deficit, being the difference between the cost of our imports and our interest bill and the value of our exports, it gets worse from here. Treasury says that by 2016 New Zealand’s deficit will be out to 6.9 percent of GDP and by then New Zealand will have added $50 billion worth of overseas debt, mainly private debt—$50 billion extra of debt. That is the reason why we were downgraded last year. It was misrepresented by the Prime Minister at the time as the ratings agencies saying it would have been worse under Labour. Subsequently that was denied by the ratings agencies. They downgraded New Zealand because of private debt, in the main, not government debt. Private debt gets worse every year from here on, because it keeps growing under an unbalanced economy that this Government failed to change.

These phoney promises are backed by no plan. In response to the fact that the Government was hurting because it did not have a plan, it came up with this hare-brained scheme to sell off our State-owned enterprises, which makes the Government deficit worse. It makes the Government deficit worse to the tune of $94 million per annum. We are around $100 million a year worse off because, of course, the interest saved is less than the profits and dividends forgone.

The Government is getting distracted by scandal after scandal at the moment, whether it is ACC or the Ministry of Foreign Affairs and Trade or mistakes by Treasury monitoring the Crown Retail Deposit Guarantee Scheme, causing hundreds of millions of dollars of costs. The economic credentials of this Government are being slowly eroded as the public sees that it is mismanaging it. It is too distracted. It is looking after the people it likes, whether it is Mr McElrea being put in charge of the Broadcasting Commission or insiders of the National Party getting preferential treatment from ACC. This Government is more about looking after its insiders than it is about taking care of New Zealand’s serious economic problems.

Reports noted.

Office of the Controller and Auditor-General