Source: New Zealand Parliament – Hansard
ORAL QUESTIONS
QUESTIONS TO MINISTERS
Question No. 1—Finance
1. DAN BIDOIS (National—Northcote) to the Minister of Finance: What recent reports has she seen on Government finances?
Hon NICOLA WILLIS (Minister of Finance): The year-end financial statements for the 2023-2024 financial year show net core Crown debt of $175 billion, which is 42.5 percent of GDP. The good news is that this is lower than the Budget forecast. The bad news is that over the past six years, Government debt has skyrocketed. Some of this, of course, was due to COVID, but Government spending outside of COVID also increased significantly. Overall, net debt has gone from 19.4 percent of GDP to 42.5 percent, which, in dollar terms, colleagues, is an increase of $118 billion over six years, and the cost of financing that debt has also risen to $8.9 billion a year.
Dan Bidois: How much did net debt increase in the year 2023 to 2024?
Hon NICOLA WILLIS: Net core Crown debt at the beginning of the year was $155 billion. Over the course of the year, an extra $6 billion was borrowed to cover the cash deficit from core Crown operating activities. This is what’s known as borrowing to pay for the groceries. Another $13 billion was borrowed for investments. These include capital expenditure, for things like roads and schools; advances; contributions to the Superannuation Fund; and there was a $1 billion fair value movement in financial assets and liabilities. That adds up to a $20 billion increase in net debt over the year.
Dan Bidois: What are the Government’s objectives for debt?
Hon NICOLA WILLIS: Core Crown operating cash-flows have been negative since 2019-2020, meaning the Government has been borrowing for the groceries for five years straight, and, obviously, that is not sustainable. Debt should be used to fund investments and deal with economic shocks, not to fund operating activities. The coalition Government also has an objective to stop the rise in net debt as a percentage of GDP, put it on a downward trajectory towards 40 percent, and eventually keep it below that level, subject to shocks.
Dan Bidois: Will the Government need to borrow for tax relief?
Hon Members: It already has!
Hon NICOLA WILLIS: This is an answer which members opposite should listen to. The Government will not need to borrow at all for tax relief. Tax relief is fully funded. Neither has tax relief added to inflation. Let me remind members that there were some in this House who stood up and declared that tax relief will lead to higher inflation for longer, and they must feel so embarrassed now that annual inflation is down to 2.2 percent. Don’t trust the economic forecasts of the team opposite.
Hon David Seymour: Has the Minister seen any recent reports that the debt could be approximately $860 million lower had the previous Government adopted the new Government’s model for delivering the healthy school lunch model at half the price, and, if so, does the Government have more plans to do things smarter; bring business, Government, and civil society together; and deliver better results for less money?
Hon NICOLA WILLIS: Yes, it is correct that the Minister is not just delivering butter chicken; he’s delivering savings, too. He reflects a sentiment that the Government is very much attached to, which is that the whole reason for managing the books well is so that we can deliver better services to New Zealanders. We do not presume that doing things the way they have always been done is the best way, and we will always be on the lookout for opportunities to drive better value for money.
