[Sitting date: 09 May 2012. Volume:679;Page:2076. Text is incorporated into the Bound Volume.]
Hon DAVID PARKER (Labour) to the
Minister of Finance: In dollar terms, what is the shortfall in the tax-take for the nine months to March revealed in yesterday’s Financial Statements compared to October’s pre-election update?
Hon BILL ENGLISH (Minister of Finance)
: In dollar terms it is $1.57 billion lower than forecast. On the other side of the ledger, core Crown spending is $1.75 billion lower than expected. Just to keep it in perspective, the Australian economy, which the member is quoting, last year forecast a deficit of $12 billion, and it ended up with a deficit of $40 billion—some $28 billion astray. We are looking at a $400 million or $500 million difference.
Hon David Parker: What made the greater contribution to the shortfall: his inflated pre-election claims about the rate at which National would be able to grow the economy, or his failure to deliver the actual growth itself?
Hon BILL ENGLISH: As the member ought to know, the pre-election forecasts are done by Treasury, not the incumbent Government.
Hon Annette King: Blame Treasury.
Hon BILL ENGLISH: Well, that is a matter of fact, and as the member may well know by now, the second half of last year was softer than most people expected. However, we are confident of moderate growth that will be higher than in the US, the UK, and the whole of Europe, and probably as high as in Australia.
Hon David Parker: Rather than blaming Treasury, would he agree that tax revenue would be higher if the economy was growing faster; if so, does he accept responsibility for his failure to grow the economy faster?
Hon BILL ENGLISH: Well, of course, if there is lower growth, there will be lower revenue. The Government, of course, has set out to assist the growth of the economy by, for instance, getting a convention centre in Auckland, expanding our mineral and resource programme, and supporting our agricultural industries to grow. The Labour Party is against all those things, so how does it think it could grow the economy?
Hon David Parker: Did the Pre-election Economic and Fiscal Update state that every percentage drop in GDP growth result in half a billion dollars less in tax revenue, and therefore does his $1.5 billion less tax revenue announced yesterday mean the economy is going even worse than the worst-case scenario in the Pre-election Economic and Fiscal Update?
Hon BILL ENGLISH: No, it does not.
Louise Upston: What is the impact to the Crown’s finances of the Government’s tax changes since the 2008 election?
Hon BILL ENGLISH: Of course, the main reason for the tax changes have been to improve the incentives in the economy, so we incentivise less borrowing too much and speculating on housing, and incentivise more exporting and saving. Of course, that change is under way in the New Zealand economy. The total effect of the very sensible tax changes we have taken to close loopholes, reduce personal and company tax rates, and increase the taxation on consumption and on property has been, actually, a net gain in tax revenue compared with the policies we inherited.
Hon David Parker: I raise a point of order, Mr Speaker. I would invite the Minister to table an official document if he is quoting from it.
Mr SPEAKER: Can I check with the Minister—was he quoting from an official document? He was not.