Questions and Answers – July 3

QUESTIONS TO MINISTERS

Economic ProgrammeInterest Rates 1. Hon PHIL HEATLEY (NationalWhangarei) to the Minister of Finance: How will the Governments responsible fiscal management help to ensure interest rates will remain lower than they were in the previous economic cycle?

Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of the Minister of Finance: The Government will continue to responsibly manage its finances by being careful with its spending and focusing on delivering better results to New Zealanders. It is important that we do not allow interest rates to increase to levels seen in 2007 and 2008, when homeowners were paying almost 11 percent on their floating mortgages. That would be irresponsible. So we have stuck to our very tight operating allowances for new spending and revenue initiatives for 2014-15, and that allowance will increase marginally to $1.5 billion in the 2015 Budget. Treasury has confirmed that this is around the upper limit of new spending before it starts to materially affect interest rates, and it is well below the enormous $7 billion operating allowance under Labour in 2008.

Hon Phil Heatley: What are some of the benefits of the Governments responsible approach to carefully managing its finances?

Hon STEVEN JOYCE: There are a number of benefits. Firstly, the Government remains on track to return to fiscal surplus in the current financial year. Secondly, the latest Budget projections indicate that net Government debtand I stress that is excluding the New Zealand Superannuation Fundwill have fallen to around 13 percent of GDP by 2023. In dollar terms that will be about $150 billion less than Treasury projected before our first Budget in 2009. Thirdly, we have been able to redirect taxpayers money to where it achieves the best results, such as the $500 million package for families and children, which we announced in Budget 2014. The Governments responsible fiscal management is delivering many benefits to New Zealanders.

Hon Phil Heatley: What other examples[Interruption] Mr Speaker, the crowds are cheering; I cannot hear myself.

Mr SPEAKER: Order! Just get on with the question. Otherwise we will move somewhere else.

Hon Phil Heatley: What other examples can he provide of the Governments responsible fiscal management delivering better results for New Zealanders?

Hon STEVEN JOYCE: There are many. I could just give one example: my colleague the Minister for Tertiary Education, Skills and Employment has released figures today showing the Governments strong focus on results in tertiary education is delivering for New Zealanders. In 2013 a record 25,800 domestic students completed Bachelors degrees, which is 24 percent higher than those who graduated in 2008. Overall, the number of qualifications achieved in 2013 by all students was 20 percent higher than 5 years ago. Also, the performance of Mori and Pasifika students is improving dramatically. The number of Mori students who have completed Bachelors

degrees has increased by 62 percent since 2008, and the number of Pasifika students has increased by 56 percent over that same period. Back in the 2000s, the previous Government threw more and more money at tertiary education and the number of people achieving degrees stayed static at the 20,000 mark. With a focus on performance and results we are lifting achievement and delivering a more skilled economy.

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Questions and Answers - July 3