1. Hon Dr NICK SMITH (National—Nelson) to the Minister of Finance: What steps has the Government taken to responsibly manage its finances and stop the increase in public debt?

Hon BILL ENGLISH (Minister of Finance) : Of course, the Government is committed to attaining surpluses, because that will stop the rise in public debt, but alongside that we also want to achieve a competitive economy and better public services, because in the long run better public services will give us lower costs and a competitive economy will give us more revenue, more jobs, and more growth.

Hon Dr Nick Smith: Why is it so important for New Zealand to get back into surplus and to stop further rises in New Zealand’s level of public debt?

Hon BILL ENGLISH: There are a number of things this country needs to achieve. The most important is a competitive economy, because that will help us to lift incomes by selling more products to the rest of the world at higher value. Alongside that, we need to manage our risks, and one of those risks is the very high level of national debt—that is, adding together public and private debt. It is important to get back to surplus so that the Government can make its contribution to reducing our vulnerabilities by preventing a further rise in Government debt.

Hon Dr Nick Smith: How has the Government’s decision in 2009 to suspend payments to the New Zealand Superannuation Fund helped New Zealand to get on top of its level of public debt?

Hon BILL ENGLISH: That decision in 2009 means that we do not have to borrow roughly $2 billion a year more from nervous overseas lenders to invest in volatile world sharemarkets. We made it clear at the time that we will resume contributions to the superannuation fund when we return to a sufficiently large surplus, and we no longer have to borrow money to add to our fast rising debt. I am pleased that the Opposition now agrees with this policy.

Hon David Parker: Is the best way to reduce the Government deficit and debt to grow the economy, and if so, why has National not grown the economy?

Hon BILL ENGLISH: The economy has grown in 10 of the last 11 quarters, and over the next 12 months is likely to grow faster than those of Europe, the UK, the US, and Canada, and at similar rates to Australia’s. But I just want to clear up one misconception for the member: Governments do not grow economies; it is people and businesses who grow economies, and we want to make sure they can make positive decisions about new investment and new jobs.

Hon Dr Nick Smith: What reports has the Minister seen setting out contrary views over Government contributions to the New Zealand Superannuation Fund?

Hon BILL ENGLISH: There have been a number of reports, and I will use some of these quotes: “deferrals were a big mistake that would leave Superannuitants much worse off in the future.”; and, secondly: “what is the logic behind cutting contributions? The answer is, there isn’t any.” Those came from Labour’s finance spokesman. And, as recently as last week, Trevor Mallard was criticising the Government for not putting money into the Cullen fund. I am pleased his leader made a sensible decision; it would have been good if he had told his finance team that he had made it.

Mr SPEAKER: Order!

Rt Hon Winston Peters: Does the Minister think either he or the Prime Minister, or, for that matter, Cabinet, acted responsibly in allowing the massive blowout—hundreds of millions of dollars—of the underwriting costs of South Canterbury Finance?

Hon BILL ENGLISH: I do not agree with the member’s description, but I do believe that the Government acted responsibly.