Annual Review Debate — Finance and Infrastructure

A very fulsome introduction, and thank you for that, Mr Chairman. Look, I’m very happy to report to the committee of the whole House on the reviews as the chair of the Finance and Expenditure Committee, and it’s a real privilege, I must say, to hold that position.

They were very interesting reviews. We took the finance sector as a whole in our report, so we’ve presented to the House an exceedingly long but, I think, useful report, and, as is to be expected in that important committee, it was a pretty robust but, at the same time, cooperative inquiry that we took into the various entities. It was very interesting to have the Minister of Finance in front of us to hear about the financial statements of the Government, and he presented, as always, in his fine attire his excellent and insightful views.

The financial statements of the Government are actually in really good shape. That’s one of the things that came out, and I think everyone in the House will accept that, against forecast, the Government is in good shape, recognising that the economic downturn has been far less severe than forecast. The operating balance before gains and losses deficit was $10.5 billion less than what was forecast, and core Crown revenue was $6.4 billion higher than forecast.

Now, I’ll be honest and say that the questions of the Opposition were focused on debt, and I think that’s quite appropriate. But the interesting thing also was that the strength of the economy was not in particular sectors, but it was broad-based. Some sectors obviously suffered more than others, but, in fact, the economy overall is very strong. Again, there was some focus on cost pressures, strong demand, supply chain disruption, and other factors. More recently, of course, international events have seen inflation, which was quite properly the focus of some attention. Debt levels are increasing and will continue to increase, and the Minister may want to update us on current forecasts, but at the time of the review, debt was expected to get to about 40 percent of GDP.

A good discussion was had about the Public Finance Act and prudent levels of debt, and the fact that what is a prudent level of debt needs to be taken in context. In fact, it was also very clear with Treasury that the appropriate approach and what was prudent—in fact, it was prudent to increase debt in times of crisis to ensure that we didn’t get into a spiral of contraction as well.

There was some discussion around alternative monetary and fiscal policies, and discussion around what the Reserve Bank was doing with large-scale assets. The Secretary to the Treasury stated that without the economy being supported by both monetary and fiscal policy—monetary policy, obviously, the Reserve Bank; fiscal policy, Treasury and the Minister of Finance—there could have been a severe economic contraction, widespread unemployment, and GDP growth remaining very low, and our unemployment alone, of course, shows us that that didn’t transpire. Treasury was also very keen to talk to us about clusters and the way it wanted to increase the effectiveness of the Public Service by using collaboration and strategic alignment across multiple agencies and also to ensure there’s a much longer-term and intergenerational view, and to enhance the value-for-money reporting.

A couple of other things I will touch on in this brief contribution. The Reserve Bank took some time to stress its work around climate change—that was something which we found very interesting—and the need to recognise climate change not just as a very significant environmental question but one that will affect financial stability as it affects asset prices and the economy more generally.

The Inland Revenue Department was very proud of its Business Transformation project. It’s a good example of, under this Government, a focus on effectiveness and efficiency, delivering cumulative benefits by its IT upgrade of $495 million. Also, I want to recognise—and it was focused—the work that IRD and other agencies have done in delivering a whole lot of programmes to relieve the effects of COVID-19.

I’m sure the Minister, through questioning, will have a lot more to say on these great initiatives.

We review these reports in the context of a cost of living crisis, the highest inflation in 30 years, with New Zealanders experiencing their standard of living declining as prices outpace wage growth. In that context, the Government is spending more than ever, and intends in the future Budget to add an additional $6 billion of expenditure.

So I want to focus a few of my questions to the Minister of Finance on a report that I think is very significant, and that is the report of the Controller and Auditor-General, because what that report highlights is it says that the reporting done by this Government, on the way that it spends money, is inadequate. It highlights the fact that, yes, we have financial metrics about how much is spent—and, goodness me, we know a lot is spent; 68 percent more spent than when this Government came to power—but, as the Office of the Auditor-General reports—and I quote—“Increased risk is an inevitable result of the current environment.” When policies are designed in a hurry, for large sums of money or use higher-trust models, they increase risks to probity.

So there’s, first, that set of concerns. So I want to ask about that—what the Minister has done to mitigate that, given we’re still, as far as I know, in the dark about how much of the COVID fund has been spent without public scrutiny of that spending.

But the second thing, which is more systematic, is that the Auditor-General expressed concern in this review that current performance reporting about expenditure is completely inadequate. He states specifically that he does not believe current reporting gives Parliament or the public a clear picture about whether spending was worthwhile. And he goes on to say, “Too often, the reporting is focused on what is important to government agencies, instead of what the public or Parliament cares about.”

So my question to the Minister of Finance is, given one of the first gestures of his Government was to remove the Better Public Services targets, which National used as a measure of public sector performance, what is he going to do to respond to what I think are very grave concerns from the Office of the Auditor-General?

Thank you, Mr Chair, and I thank the committee for their consideration of these matters. I note a number of aspects of the Auditor-General’s work over the course of this year around how we can ensure that all New Zealanders get a good level of understanding of the expenditure that is undertaken on their behalf by Government agencies. Early on, the Auditor-General raised some questions around the COVID-19 response funding. In doing so, he acknowledged that the Government was facing a situation where it needed to move extremely swiftly and at a scale that we had not really seen in New Zealand’s recent history. As a result of that, significant amounts of money have been spent. I would note for the benefit of the member asking the question, Nicola Willis, that we now have initiative-level information being published by the Treasury about the COVID funding that is available for people to find on the Treasury’s website.

One of the issues that arose during the exercise of being able to identify initiative-level spending is, of course, the overall structure of public finances in New Zealand. As I’m sure the member knows, with the creation of both the State Sector Act in 1988 and the Public Finance Act in 1989, we devolved down all of that to an individual agency and departmental level, and that is, of course, the process that members are, indeed, participating in today and do at Estimates time as well. Estimates and financial reviews are undertaken at a Vote appropriation level, and there at that point people can see what the individual initiatives are.

I have some sympathy with the views expressed by the Auditor-General over the course of the last couple of years about that, and that does require some significant reform of the way that we do public finances in New Zealand. The Government has begun to undertake such reform, and that includes, as Dr Webb indicated in his opening remarks, the development of the clusters, which is actually to get to the exact point that the member raised, which is it should be about the services that New Zealanders receive, so rather than worry particularly about whether, for example, a family or sexual violence initiative is funded out of Vote Police or Vote Justice or Vote Women’s Affairs, we look at the initiative itself and say, “Has that worked?” That is not how things are structured today, and it does make it difficult for members of Parliament and members of the public to be able to identify that. So it’s the very reason why we’re making some of the changes that we are making.

More broadly, when the Auditor-General refers to the question of performance reporting, we are happily taking that report away and working out how we can develop a better longer-term approach. What that requires is actually boiling things down significantly more than we currently do. So it would require moving away from the approach we’re doing today, away from the appropriation-level approach to actually understanding exactly who is receiving support or is expected to receive support, priority, and sequencing, compared with that work, and the costs and options available to a Government to deliver those services. That is a significant change. I respect the Auditor-General for putting that change in front of us, and I think he would understand that it will take a little bit more work on behalf of all of us to create that kind of system. But it is what lies at the heart of the modernisation of the Public Finance Act that we’ve been undertaking.

Well, that was an interesting commentary from the Minister of Finance, but I am sure that he is aware that there is no legislative impediment to him, as the Minister of Finance, having stringent requirements for the quality of Government expenditure. He doesn’t require a new law in order to ask of his Ministers that when money is appropriated from taxpayers, they ensure that there are clear targets for what the expenditure of that money will achieve, that there is monitoring of delivery, and that in every instance it delivers more results than if that money had been left in the back pockets of New Zealanders. That is the issue here and there has, of course, in the past few months been some troubling evidence that that is not the case with this Minister of Finance. I point, for example, to the $1.9 billion appropriated for mental health, where there was a press release with fanfare, but clearly no delivery plan, and where we’ve now had a report by the mental health commission highlighting that no additional specialist services were delivered as a result, that the expenditure of that money involved poor accountability and poor coordination.

So my question to the Minister of Finance is: has he learnt anything from the failures to deliver that have occurred under this Government, whether it’s KiwiBuild, whether it’s the mental health report, whether it’s the many other instances where results have not aligned with the amount of expenditure that’s occurred; and what will he be doing in future years to ensure a much straighter line between appropriation of New Zealanders’ money and results delivered for it? To make it really simple, I quote the Auditor-General who says he would like performance reporting to be able to answer fundamental questions, such as whether the total health sector funding has improved health overall, and can that Minister tell us today whether he has actually put in place performance measures for his Ministers that will enable him to give those assurances?

I think the member needs to be clear about the two different things that she’s talking about. So the Auditor-General is looking at the overall way in which we do performance reporting. As I’ve indicated to the member, I have some sympathy with the views that the Auditor-General is putting across and we are working on that. When it comes to the individual decisions, programmes, areas of policy that the Government has invested in, there are a range of measures and targets within those, and I draw the member’s attention, as she’s focused on the mental health spending, to the report of the implementation unit—a unit, I note, that is a new initiative and one that is designed to be able to do exactly the kind of deep dive that the member is asking for into how a piece of policy or a programme might actually be implemented. That indicated that, yes, there were some areas where there were shortcomings, but overall the programme was delivering in the areas that had been proposed.

I know that the member will be aware of the many questions that have been asked in the House over the course of the last few weeks around what has been delivered and the views of Ministers on the mental health commission’s report—and the Prime Minister, indeed, today in the House covered some of the outcomes that we’ve seen as a result of that mental health spending. So, certainly, there’s always improvements that can be made when we are trying to reform a sector that had been grossly under-invested in for a significant period of time, but I believe if you take on board the implementation unit’s work and the work of the Minister himself, you will see that we’re making good progress there.

In terms of the wider point—and we’ll continue to use health as the example—this is one of the issues around Health New Zealand, and the importance of the creation of Health New Zealand and the Māori Health Authority is to make sure that we have a much better outcomes framework developed. One of the most significant pieces of work that we’ve been doing in the design of the health reforms is how to get an outcomes framework that means that not only can we be confident about the amount of money we’re investing and what we get for that but also that wherever you live in New Zealand you will continue to get good quality healthcare and it is not dictated by the postcode in which you live.

So all of those add up to areas where I believe we will be able to get better performance out of the sector. It is a sector, the health sector, that has been under significant pressure, clearly, through COVID-19, and it’s withstood that pressure well. It’s been supported by a Government that has put in more resources to the health sector than we have seen in recent years and particularly in the capital spending area as well. So, yes, there is always more to do in terms of how we can provide information to the public. But I believe those examples I’ve given are ones where we’re improving that.

Thank you, Mr Chair. Minister, the Finance and Expenditure Committee’s report quotes the Secretary to the Treasury saying that fiscal and monetary support has been necessary over the last couple of years to avoid a severe economic contraction, but what she doesn’t seem to say—that’s the Treasury secretary—is how much financial and monetary policy support was necessary. Now, Minister, when you look at families facing a cost of living crisis and prices of everything going up, when you talk to young people who have seen house prices go up 30 percent during the pandemic period, do you say to them, or do you pause for a moment and think, maybe we printed, borrowed, and spent too much money, and stoked too much inflation in the domestic economy and in house prices?

The benefit of governing in hindsight is that one could be perfect and so, you know, when one looks back in hindsight, there will inevitably be things that a Government would do differently. However, we did not have the virtue of hindsight. What we had was the prospect of a global economic crisis far worse than any of us had seen in our lifetimes, and the Government—as all Governments around the world did—took a precautionary approach; made sure that we set aside the funding that we believed would be required to make sure New Zealanders made it through COVID-19 in a good place. And, as I say, while there might be specific things or ways of doing things that would be changed, the outcomes actually stand up very well. So while the member might like to find a range of negative statistics, it’s equally possible to say we’ve got 3.2 percent unemployment; we’ve had annual average growth over 5 percent; we’ve been in a position where our exports have held up. Now, all of these things have happened, in part, because of the very hard work of New Zealand businesses and workers, but also because the Government has stood behind those businesses. So the member can pick things out, but the member might want to pick out whether or not he thinks there should be more support for small business, because I can well recall, during the course of COVID-19, he and his party standing up and asking for more money to be put in place. And so the—

💬 David Seymour: Point of order. Mr Chair, I raise a point of order about the nature of these debates, which are new in their format and evolving. The way it works is that the Minister’s time answering comes off the time allocated to ACT, and we really want to use it to—

CHAIRPERSON (Ian McKelvie): Order! Order! No, that’s not a point of order and it’s not a fact.

💬 David Seymour: Well, Mr Chair, it is a fact that the time that he’s just spent speaking comes off ACT.

CHAIRPERSON (Ian McKelvie): No, no, it does not. It does not.

💬 David Seymour: It’s not? Well, that’s fantastic. Well, then he can carry on; I don’t mind at all.

Thank you, Mr Chair. As I said, if only it were true that time came off ACT, but it isn’t. On this side of the House, we understand it was important that we backed businesses. It was important that we backed households. When I look at the breakdown of the spending that we did undertake, the bulk of it, $24 billion was in the wage subsidy scheme, the resurgence support payments, the small business cash flow scheme—actually that’s in the $11 billion that’s through Vote Revenue—and $7 billion, nearly $8 billion in this period of time that we’re covering here in Health. These were areas that required us to support New Zealand to get through COVID-19. And when we stack it up against how we’ve done against the rest of the world—economically and from a health perspective—it stacks up well.

Thank you, Mr Chair. I think people who are watching at home can say the answer to that last question was a yes. Then, because Labour’s got a lot of time and not much to talk about, he kept on going. But I want to ask another question: this Government came in with a Wellbeing Budget. Jacinda Ardern sat on the stage with Bill Gates and said, “We won’t just focus on one thing any more—it won’t just be GDP. We’ll focus on people’s overall wellbeing.”

Now, Minister, you’re responsible for the Treasury. Are you confident in the quality of advice the Treasury’s given about balancing all the needs of New Zealanders’ wellbeing through COVID? And I mean missed operations. Has there been any reporting on the cost of kids missing school due to the use of lockdowns? Have we weighed up the mental health of small-business owners against lockdowns in the COVID response? Are you confident that your Treasury has really reported in the spirit of a wellbeing Budget? Or is it the case that, really, it’s just all been COVID and so many other aspects of New Zealanders’ wellbeing have been forgotten when your Government’s been making those decisions?

The short answer—and I know the member likes a short answer on these matters—to that question is yes, I am confident in that. Two aspects of that I’ll draw out. One of those is that, consistently, while the Government has been making decisions about issues such as lockdowns, alert levels, the traffic light system, the Treasury has continued to provide advice during that period of time about the overall wellbeing impacts of those decisions. I think, again, most New Zealanders would say that the fact that we have got ourselves through to this point in the pandemic with such a low death rate—with actually fewer days off work, fewer days off school than many, many other countries around the world—shows that the overall wellbeing of New Zealanders has been upheld.

If the member cares to refer to the Wellbeing Outlook report in the Budget last year, the member will see survey work undertaken there via Statistics New Zealand that actually showed that New Zealanders’ overall wellbeing improved during COVID, and that’s because they had trust and faith in one another—that’s called social capital, and that’s an important part of the wellbeing approach—and they felt well supported through economic interventions like the wage subsidy, and that’s part of financial capital, which is also part of the wellbeing approach. So I welcome the member’s interest in the wellbeing approach and his conversion to its importance within the Budget process. And the answer to this question is, indeed, yes.

E te Māngai, tēnā koe. I’d like to refer to three core themes and ask the Minister three questions to that effect in my contribution to this debate this afternoon. The first is with regard to a review into the economic response to COVID-19, the second is about the relationship of monetary and fiscal policy, and the third is around debt targets that the Minister has been alluding to.

With regard to the review into the economic response to COVID-19, members can see, as reflected in this report tabled in the House today, that it has been the case that I, as the Green member on this committee, have been calling for a review into the economic response into COVID-19 for quite a long time now. And I might say that we’ve had support from members on this side of the House, interestingly enough—not a corner that I’m used to particularly collaborating with—but for whatever given reason, we’re all very interested in lifting the lid on some of those metrics and some of those trade-offs that the Government was making in coming into COVID-19.

To that effect, I’d actually just like to challenge the contribution of the Minister earlier when he said that hindsight is of course 20/20, because of course that is the case. But as we have traversed in many of these annual reviews, it is in fact the case, as Official Information Act (OIA) documents from Treasury and the Reserve Bank of New Zealand (RBNZ) have revealed, that as was projected at the beginning of the lockdowns in 2020, if there was an overreliance on unconventional monetary policy, we would see what they called these distributional impacts, which we’re now seeing in the case of that massive redistribution of wealth to those at the top end of town. So my first question is to the Minister: given that the Government has indicated that we are now entering a new phase of the pandemic, will he now finally instigate an inquiry? Or are we likely to see some Labour members support that move in that motion, which has been on the table for a long time now?

Secondly, getting to the issue of monetary and fiscal policy and the relationship between the two—this is, of course, one of the crucial areas that a review into the economic response would look at. But we also have seen here in this report today that the Reserve Bank, over 2020 to 2021, conducted significant monetary stimulus, including the LSAP, or Large Scale Asset Purchase programme, which the Treasury now estimates will cost around $5 billion, after initially estimating that it would be cost neutral. To that effect, my second question to the Minister is: does he accept that greater fiscal stimulus during this period, as also noted in that OIA advice from Treasury and RBNZ at the beginning of 2020, could have taken pressure off the Reserve Bank in their need for monetary stimulus, which in turn could have meant that we had better directed economic support to those at the bottom end of town?

With regard to the issue of debt targets, the Government’s debt target since COVID has been to stabilise net debt by the mid-2020s and then look to reduce it as conditions allow. Net debt, though, has already been stabilised far below the levels that the Pre-election Economic and Fiscal Update (PREFU) in 2020 suggested that it would be. The PREFU had net debt going to 56 percent of GDP, whereas we’ve stabilised at around 35 percent of GDP. So my final question to the Minister is: the Labour Party went into the last election, saying that the PREFU 2020 debt trap was balanced and responsible. Doesn’t that mean in this current context, then, that we now have about $40 billion extra to invest in critical infrastructure to address things like climate change—

💬 Hon Members: Spend it.

💬 Hon Member: Spend up large.

CHLÖE SWARBRICK: —and inequality?

I’m pleased that the member’s contribution elicited such excitement across the House. I’ll endeavour to answer all three of her questions. In terms of the review, the position that I personally have taken on this is that the very people you’d want to be undertaking reviews were people who were working extraordinary hours through the period of time of COVID, and that, while we were in the middle of a response, stopping to then do the review would not be a good use of their time, nor would it necessarily provide us the insights that I think the member is looking for when we’re so close to it. In the fullness of time there will definitely need to be a review of many aspects of the Government’s response, and I’m sure the economic ones will occur at that point.

In terms of the second point that the member raises around monetary and fiscal policies, I mean, firstly, I’d say, with the Large Scale Asset Purchase programme, yes, obviously the member’s correct around the difference in terms of the overall cost. I think it’s really important, though, for members to remember the unique way in which central bank holdings are measured in New Zealand compared to the rest of the world. So because they are all on the same balance sheet, actually while it’s a transfer, as it were, between Treasury and the Reserve Bank, it doesn’t change the overall state of the Government’s books. And so it’s important that we understand that in terms of cost to New Zealanders per se, that isn’t there.

The member’s question, though, was around whether there should have been a greater fiscal stimulus as a result of that. I think those watching the debate will be aware that we’ve now had two quite different perspectives on this in the House today. We think we got the balance about right from the point of view of the Government’s role in this. The COVID-19 Response and Recovery Fund, initially set at $50 billion, has had to be added to over time. We have provided significant support to not only businesses but also to individual households and workers, those who aren’t working as well, over the course of the life of the COVID-19 Response and Recovery Fund, and so we think the level of fiscal intervention is about right. Mr Seymour quoted in the House recently its comparison to other countries; it was a larger fiscal response than many other countries comparable with the likes of the US, as a percentage, but clearly a significant one. So my view is that we got the balance about right where fiscal policy is.

The other thing I would note, however, in terms of the member’s third question, which relates a little bit to that one, is that I have consistently said that we need a different conversation about public debt in New Zealand, because public debt is very, very low in New Zealand relative to the rest of the world, and I have a view that it is important that New Zealand keeps its public debt relatively low when compared to the rest of the world, as a small country prone to natural disasters, prone to the effects of economic shocks. That is an important part of our fiscal strategy. But having said that, if a prudent level of debt, which is what the Minister of Finance is required to uphold, in turn means an under-investment in infrastructure that restrains productivity, makes New Zealanders’ health outcomes worse, and makes New Zealanders’ education outcomes worse, then that really isn’t a prudent level of debt. So it is a valid conversation more generally to ask New Zealanders what we think is the right debt target.

I’m pleased we came into COVID-19 with a 19.5 percent net debt, which the Labour Government reduced from what National had left us with. I’m pleased we were in that position, but I do think we need to see that in a much wider context. So I welcome the member’s contribution around what net debt should look like.

I’ll just bring the committee back to a discussion the Minister of Finance was having earlier. He’s very proud of his Implementation Unit, which is designed to ensure we actually get performance and delivery out of Government expenditure. Now, I’m old-fashioned. I personally think that every single Minister should have that accountability and responsibility—that is actually what their warrant is about—but he’s got his Implementation Unit. So my question is: what specific areas of shortcomings in Government delivery and spending has the Implementation Unit identified?

The Implementation Unit does its work on a programme-by-programme basis, so it identifies issues as it works through each of those. The mental health report, as I mentioned to the member, is publicly available for her to look at. It identified some weaknesses around the multi-agency nature of that programme and the fact that there was diffuse accountability as a result of that, and that needed to be improved. There were some issues around reporting, which we’ve already covered. It varies, though. In other agency reports, such as those around Jobs for Nature, different issues have arisen, particularly around the relationship with others who deliver, as opposed to the Government—we fund others to do the delivery. So there’s a number of cross-cutting issues there.

I will just note, as I’m about to resume my seat, and noting the time, I will now take the approach perhaps of not answering each individual question but stacking a few up in order that members get their opportunity.

Thank you very much, Mr Chair. I want to take the Minister to his infrastructure portfolio because two years ago, it was a big day for infrastructure in New Zealand. The Hon Phil Twyford, now sadly departed from the transport portfolio, and Shane Jones announced the Infrastructure Reference Group process to identify so-called shovel-ready projects, and they said that they would start within six months and the Government was going to spend many billions of dollars starting a range of difference projects. And, of course, now we are two years on, and as I go through the quarterly Infrastructure Reference Group update—this is to the end of last year, 31 December 2021—I see a huge number of projects that have been funded but not many that have been completed, and, in fact, some that have not even started two years on, after the projects were announced.

I see an extraordinary number of projects in Northland: 32 projects alone in Northland, and I think many members of the House will know why that is. So my question is to the Minister: is he satisfied in the administration of the shovel-ready project list? In particular, is he satisfied that only three of the 32 projects in Northland have been completed, four of the 25 in Waikato have been completed, three of the 18 in Auckland have been completed, and zero in Gisborne—five projects approved; zero projects completed in Gisborne? And I could go through the list, but members, I think, get a flavour of the underperformance of the shovel-ready project list. Is the Minister satisfied with how the shovel-ready projects are going, and if he’s not, what is he prepared to do to fix the problems?

Thank you, Mr Chair. I’m just getting over the rash assertion or question from the Greens member saying that Mr Robertson should spend more money. I think most people realise that Mr Robertson is a spendaholic. Actually, he needs a lot more constraint.

💬 Hon Scott Simpson: He’s addicted to it.

Addicted—that is right. So the first question I suppose I’d like to ask the Minister is, how much of the COVID fund is actually left? I see that at May 2021, there was only $6 billion left of the $62 billion fund. So it would be useful just to get an update from the Minister on, actually, how much of the $62 billion he’s blown, because it is a lot of money.

And then, of course, on top of that there’s the imprest supply issue that he put through the House—another $24 billion, just mild amounts from the Minister who just keeps ramming this stuff through. And, of course, it is big, chunky amounts of money. So it’d be good if we did get an update on the COVID spend and also to what extent he’s accessed the imprest supply account.

The other issue I’m very keen to ask him about is—he was talking about how it’s very easy to be smart after the event, in response to Mr Seymour’s question about the nature of the spend and whether it was good quality spend. I suppose the big issue we have with the COVID fund is that, as the Minister’s pointed out, $24 billion was spent towards supporting businesses, and quite rightly so. In fact, some would argue that even now, many businesses are struggling and we have many Government servants and council staff still not back at work, or, if they were back at work, they would be supporting our businesses a lot more. That would certainly underpin the economic performance, particularly of those in retail, cafes, etc. That is a question as to whether, in fact, the Minister’s ever going to require people to come back from work, certainly within the Government sector.

But in terms of the quality of the spend, other than the $24 billion that we believe is appropriate, very much so, there still remains the question of poor-quality spend and lack of delivery of outcomes from that. The Minister will be well aware, you know, part of the total of the $62 billion: a modern approach to night classes, $16 million over four years; Jobs for Nature, which the Auditor-General picked up, $874 million; Radio New Zealand baseline. There’s a whole page of spending here that no one really knows why it was included in the COVID fund and not under the sectors, where it should have been allocated; and, why, in fact, this was actually a priority during the COVID period when the Government is basically taking our debt from $60 billion to $120 billion. There’s just big chunky amounts of money.

Of course, the Minister will recall that we wrote to the Auditor-General and the Auditor-General was pretty clear that parts of this expenditure should have been much more clearly identified, wasn’t, and made it clear—for instance, the National Wilding Conifer Control Programme said that “In our view, this initiative should have been included in the New Policy Initiatives … We have contacted the Ministry for Primary Industries about this, and the Ministry acknowledges that there was an oversight in providing information on this initiative.” There’s a whole stack of these types of issues. The issue we’ve got is the poor quality that was rammed through in a slush fund called the COVID fund, to help Mr Robertson spend more money to make people feel good but actually deliver very little real, tangible benefits to New Zealand.

So please tell us how much of the $62 billion is left; how much of the imprest has been used; and whether, in fact, we might expect to see some tangible results out of some of this wasteful spending that’s been put forward.

Thank you, Mr Chair. I want to ask the Minister, in light of enormous spending, inflation which he accepts—even if he thinks its imported—and the pressure that people are feeling on the cost of living, what can the Government now do, given the results of the last year, for people who are actually net taxpayers? I don’t mean handouts, I don’t mean extra benefits, and I don’t mean extra tax credits. I mean what sort of relief is the Government going to put in place so that people who are net taxpayers can handle some of the pressure that is being put on the cost of everything they consume?

💬 Simon Court: Mr Chair?

💬 Simon Watts: Mr Chair?

CHAIRPERSON (Ian McKelvie): I call Simon Court.

Thank you, Mr Chair. It’s true, there are many Simons in this House, but there is only one Simon Court. To the Minister of Infrastructure: Minister, in reply to a question I asked you, written question No. 9773 (2022), the Minister states that “PPP (public-private partnership projects) are privately financed so the private partner has skin in the game and only gets repaid after 25 years if the asset performs.” So will the Minister call for more public-private partnerships so that projects like Mill Road, Penlink, four-laning from Whangārei to Port Marsden, and three waters assets which, when delivered, allow communities to thrive; and if not, why not?

I thank all members for those interesting and insightful contributions that they’ve made. In terms of answering Mr Bishop around the Infrastructure Reference Group, broadly speaking my answer to the question is yes. Crown Infrastructure Partners manage the Government’s portfolio of projects within the Infrastructure Reference Group. They are undertaken then in turn mainly by a combination of local government, private sector entities, and some Government entities. There is a role in there for Ōtākaro down in the South Island, helping to manage those projects, and also Kānoa—the regional development unit.

So overall, yes, I am satisfied with what’s happened there. The member is well aware that decisions were taken after that momentous day on 1 July, when Mr Jones and Mr Twyford announced this, where we did rephase some of those projects. Obviously, COVID-19 was the cause of the fund being created but equally has caused significant issues in construction generally, which I’m sure the member is well aware of. The quarterly reports, as he notes, are available. I did suspect that the member might ask me some questions about this, so I did go and check to see if there was any update from the quarterly report. Obviously, the next quarterly report will be out shortly but I can inform the member that around 208 of the 233 projects have started construction; 42 have been completed.

I would note that, again, we rely upon partners for the delivery. The funding’s there, the Government’s approvals have been done—with the exception of one project—but the remaining of them, all have been done from our end. The construction environment’s a challenging and difficult one. I do note that the member’s colleagues right around the country are delighted to attend the openings of various aspects of the Infrastructure Reference Group’s projects.

In answer to Mr Bayly’s question, he’s correct. The exact number is $61.65 billion. What happened there is, members will recall, we allocated an additional $7 billion around the time of the Delta outbreak and then a further $5 billion around the time of the Omicron outbreak. As at the Half Year Economic and Fiscal Update (HYEFU) cut off, we’d allocated $52.7 billion of that. It’s obviously increased as we’ve managed the current COVID support payment and significant additional costs for the health system, particularly around the issue of vaccines and making sure that we’ve got enough testing kits and so forth available.

I do believe this is an important fund and one that’s served New Zealanders extremely well. And I don’t believe that Mr Bayly can actually point to much within the fund that at various times his colleagues have not asked for us to spend more money on. As at the HYEFU date that I mentioned before, it was $24 billion through Vote Social Development, $11 billion through Vote Revenue, $7.3 billion through Vote Health, $5.4 billion through Vote Business, Science and Innovation, $4.7 billion through the Housing and Urban Development, $2.2 billion through Education, $1.8 billion through Transport, $1.6 billion through Building and Construction. All of that information is available for members on the Treasury website but I think in all of those sectors, New Zealanders have benefited significantly from that funding.

In terms of Mr Seymour’s question, we’ve covered this material a bit in the House. The most obvious example is the fuel excise duty and the road-user charge changes, which have actually made a significant difference for New Zealanders: for some of them between around $12 or $15 per tank—so 12 or 15 bucks a week that they are saving as a result of that. More broadly than that, those New Zealanders benefit from properly funded health and education systems and making sure that they have good quality public services in front of them.

In answer to Mr Court’s question, the Government has said consistently that when it comes to particularly transport projects, we’re certainly open to the idea of public-private partnerships. We’ve looked at different ways of those being financed and the special purpose vehicles that are enabled under the Infrastructure Funding and Financing Act are a good example of that and there’s a couple of really interesting projects in the Tauranga area that are designed to have a robust public-private partnership - type approach using the special purpose vehicles.

However, the member will be aware that we are rightly cautious about the widespread use of public-private partnerships, having had the pleasure in the last couple of years of overseeing the end of the work with Minister Wood on Transmission Gully. I can inform the member there that the $400 million or so blowout on that project is going to cost New Zealanders day after day after day because of the appallingly designed and negotiated public-private partnership that the National Party put in place for Transmission Gully.

Under this Minister and this Government, Crown debt has grown significantly. So what I want to know is whether the Minister still stands by his statement that he mentioned in front of the committee that the cost of borrowing is manageable in the context of the international pressure around interest rates growing significantly over the next couple of years. The other question I have is around comments made by the Treasury noting the shortage of labour within the economy and that high levels of turnover in the labour market are expected soon.

So I’m wanting to understand, in terms of the levers the Minister’s got at his disposal around allowing more labour into the market, which has been completely blocked by this Government to date, what he is going to do in order to provide some relief in terms of those constraints on the labour market. Lastly, I quote—the Auditor-General said, “I have concerns on how Government is accountable to the public and this Parliament.” So I’m interested in terms of his comments around that statement.

I thank the member for those questions, and given the time I have available, my answer to at least this one will be relatively brief. In terms of debt levels I remain very comfortable with where New Zealand’s ended up. I didn’t quite answer Chlöe Swarbrick’s full question on that. Yes, it is true that the forecasts as we were dealing with here in these documents, saw us peaking at 40 percent. The member quoted our current debt levels, which have settled on the monthly accounts a little under 35, but they are still forecast to reach 40 percent. I believe that it is an appropriate response, and certainly, for the benefit of the member, compares extremely well to the rest of the world.

If I look at the IMF’s comparable measure for the 2021 year, New Zealand’s net debt was 14.8 percent; Canada, 34.9; Australia, 38.1; the United Kingdom, 97.2, and the United States, 101.9. So I do believe that we have done that well relative to the rest of the world.

In answer to the member’s second question around labour, he’ll be well aware, with the opening up of the border and the bringing forward of those dates, that we will be seeing significantly more people coming into New Zealand. We’ve obviously got the working holiday visa system open. We’ve got the 2021 work visa available to people here to regularise that. I absolutely recognise the pressure that the closed borders have had on the labour market. What I would say is that at the same time, our investment in training New Zealanders during that period is bearing fruit, as the Minister of Education indicated today with tens of thousands of people taking up apprenticeships, and an unemployment rate of 3.2 percent shows that the labour market has had more flexibility. But I do know that employers will look forward to that point coming in. I can’t quite remember the member’s third question, but I’m out of time anyway.

Members, our time with the Minister of Finance and for Infrastructure has ended. The Minister of Police is now available for 30 minutes to respond to members’ questions.

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