Source: New Zealand Parliament – Hansard
Question No. 5—Finance
5. Hon GRANT ROBERTSON (Minister of Finance) to the Minister of Finance: Does he agree with the Prime Minister’s assessment about the Budget 2023 operating allowance that “in terms of increasing costs that are likely to be seen by some of our agencies and departments, we’re looking at somewhere in the range of $3.5 billion that will be required to continue to operate as we stand”; if so, does $2.5 billion remain in the Budget 2023 operating allowance following the pre-commitments made in this year’s Budget?
Hon GRANT ROBERTSON (Minister of Finance): In answer to the first part of the question, I’ve always found agreeing with the Prime Minister to be a sensible approach. The Prime Minister is correct in noting the high level of cost pressures that Government departments are facing. Elevated rates of inflation result in increased costs for the Government, as well as households. In response to the second part of the question, the member is making an incorrect comparison between two numbers. As part of the public finance modernisation work that the Government is undertaking, a number of areas of the Budget have shifted to multi-year funding. As a result of that change, the health budgets and the budgets associated with the two new budget clusters now have greater certainty in their level of funding in the coming years. The estimate of $3.5 billion of cost pressures at Budget 2023 includes some of the areas that are subject to multi-year funding—for instance, the $1.3 billion investment in health cost pressures that we have committed for Budget 2023. Those areas of the Budget that are now on multi-year funding tracks will not be drawing upon the rest of the Budget 2023 operating allowance when we get into the next Budget cycle.
Nicola Willis: Isn’t it the case that the Budget documents printed by the Treasury advise that the operating allowance he has committed next year falls a billion short of what would be required to maintain existing services?
Hon GRANT ROBERTSON: No. As I explained both to the member at select committee this morning and, indeed, today—
Nicola Willis: No, you didn’t.
SPEAKER: Order!
Hon GRANT ROBERTSON: —and, indeed, right now, is that the member is not counting, within that number, what we’ve already funded for cost pressures through the multi-year allowance.
Nicola Willis: Has the Minister seen page 46 of the Budget Economic and Fiscal Update in which Treasury warns that there are only three ways that he can meet the spending track he has committed: reprioritising existing services, increasing tax, or increasing debt?
Hon GRANT ROBERTSON: Yes, indeed, I’m very familiar with page 46, and that’s, in fact, where the member could look to discover that, in fact, we’ve already funded the health budget for Budget 2023 and the clusters. There is sufficient funding available for us to be able to meet cost pressures as they’ve been articulated. But also, as we discussed this morning, it is not uncommon for the Budget allowance to change between when it’s set. In fact—
Chris Bishop: It’s very common with this Government. It always goes up under this Government.
Hon GRANT ROBERTSON: —one occasion, for Mr Bishop’s benefit, was in the 2015 Budget Policy Statement, where the operating allowance for 2016 increased to $1.6 billion, and Bill English, a Minister that Mr Bishop might be familiar with said “A higher allowance in Budget 2016 means the Government can invest in public services, addressing the long-term drivers of social dysfunction to reduce long-term spending pressures.” Wise words.
Nicola Willis: Can the Minister identify a single occasion when he has not committed more spending in a Budget operating allowance than he said he would in the prior year’s Budget—a single occasion?
Hon GRANT ROBERTSON: Again, as we discussed at select committee this morning, the Budget allowance is set through the Budget Policy Statement, normally about five months before a Budget is given out. How it is arrived at is a result of where we want to land on debt or on deficit. On every occasion, we have come out better in terms of our debt position and better in terms of either our surplus or deficit position on the basis of the operating allowances that we’ve done. I repeat: it’s not uncommon. It wasn’t just 2016; it was 2017 and it was 2013, as well, that the previous National Government was above their operating allowance.
Nicola Willis: Can we take it, then, that the Minister is today confirming that in next year’s Budget, he will allocate more than the $4.5 billion he committed to in this Budget and that he knew that when these documents were published, but has no regard for the importance of the operating allowance as a fiscal management tool?
SPEAKER: Any one of the three questions.
Hon GRANT ROBERTSON: Absolutely not. What this Government will remain committed to is keeping a careful balance on what we do, between keeping a lid on debt, making sure that we return to surplus a year earlier than the National Party did, and making sure that we make up for the nine long years of neglect in public services.
