2. SHANE JONES (Labour) Link to this
to the Minister of Finance
What reports has he received on economic growth in New Zealand?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
I received a report in January of a prediction that New Zealand was “almost certainly headed for recession”—that is, the March quarter figure would be negative. The actual out-turn for the March quarter was growth of 0.7 percent, which is just below the assumed long-term sustainable rate of growth, despite Dr Brash’s attempts to talk it down.
Hon Dr MICHAEL CULLEN Link to this
I have seen reports suggesting that the misguided prediction of a recession was based on assumptions around business confidence. But those too have been proven wrong, with two recent reports showing business confidence coming off the very low base of late last year in both Auckland and Wellington.
R Doug WoolertonWhat would have happened had the Minister put in place an across-the-board tax cut, as proposed by the National Party?
Hon Dr MICHAEL CULLEN Link to this
In the short term, there would have been much further pressure upon demand, and therefore on the current account deficit, and therefore a credit rating downgrade, which the former Reserve Bank governor would have died to avoid when he was in that position.
John KeyHas the Minister seen the report from Westpac, which states that the rebound in first-quarter GDP growth is something of a false dawn and should not be read as an underlying recovery, that trend growth in GDP is only 1 percent a year, and that that trend rate is likely to persist or even weaken further through 2006 and 2007, as the fundamental drivers of slower growth remain in place?
Hon Dr MICHAEL CULLEN Link to this
Yes, but I did not need to see that, because I said exactly the same thing myself in response to the quarterly figure.
Jeanette Fitzsimons Link to this
Is the Minister satisfied that the growth assumptions underlying Treasury’s statement on New Zealand’s long-term fiscal position take adequate account of the economic consequences of accelerated climate change, ecological collapse of the oceans, loss of productive soils, and pollution and depletion of fresh waters—none of which are priced or recognised in current markets?
Hon Dr MICHAEL CULLEN Link to this
Yes, I am satisfied that a number of those factors have been taken into account. Although some of them, I think, are slightly less serious than the member implies with that somewhat catastrophic scenario over a 50-year time frame, we look forward to working with a united Green Party on those issues.