6. Hon DAVID PARKER (Labour) Link to this
to the Minister of Finance
What is Treasury’s most recent forecast for unemployment and when did he receive this forecast?
Hon BILL ENGLISH (Minister of Finance) Link to this
Treasury’s latest full set of economic forecasts was presented in the Economic and Fiscal Forecasts December 2008. The central forecast showed a peak in the unemployment rate of 6.5 percent midway through 2010.
Has the Minister seen criticisms from both business and union leaders saying that the Minister should have been seeking more frequent forecasts on unemployment; and how can he make the best decisions without this crucial information in these extraordinary times?
Treasury does its forecasts; it is beginning another forecast cycle. I expect I will find on my desk some preliminary estimates from that forecast cycle. It is important to understand that there is a difference—and the member, perhaps, does not know this—between forecasts and updates. Forecasts are when Treasury goes through its cycle to make its own judgments about where unemployment will get to. Probably every day, and certainly every couple of days, information comes across my desk that tells us what is actually happening to unemployment, and we monitor that closely.
Amy AdamsWhat updates on developments in the domestic and global economies does the Minister of Finance receive from Treasury?
The updates that I receive are openly shared with everybody. In fact, Opposition members can go to Treasury’s website and they will see regular and full monthly updates on the current situation of the New Zealand economy, including what is going on with unemployment. I also receive regular briefings on developments worldwide, as well as ad hoc briefings from the Reserve Bank and any number of other organisations that send me their information.
Why has the Minister been so cavalier about New Zealand unemployment forecasts when he knows that rising unemployment will cause misery for thousands of New Zealand families?
That question is typical of the nonsense we expect from Labour members, who think that getting forecasts fixes the problem. Well, it does not. We all know, and I will tell the member in case he does not know, that every unemployment forecast shows unemployment rising to around 7 percent in the next 18 months to 2 years. The Government is spending a lot more time on the measures that it needs to take to protect existing jobs and to replace those jobs that will be lost. It was typical of the Labour Government that it spent more time ordering forecasts so it could announce them than actually doing anything.
How does the Minister reconcile his position at the Finance and Expenditure Committee that he is not preoccupied with all the details, and has not been getting more regular Treasury forecasts on unemployment, with his Prime Minister’s statement that the Government constantly gets updated advice, and that “that is what you would expect a prudent and conservative Government to do”?
I reconcile them by giving exactly the same explanation I just gave to that member. Doing a full round of economic forecasts is an expensive and time-consuming activity. Treasury did one in December, and it is starting on one now for the Budget. That is the forecasting activity. Alongside that we receive regular updates on all measures of unemployment, day by day and week by week. I would have to say that the trend is obvious and the need for action is obvious. Whether a forecast changes by 0.2 percent is of less interest than the actions that need to be taken to protect jobs and get on with creating new jobs.
Do the answers the Minister gave to these questions apply the same logic he uses to assert that he inherited a poor position from the last Government yet go ahead with higher total tax cuts, weighted to those who are already better off; and does he think this is why commentators like Fran O’Sullivan are already questioning his judgment?
If the member is asserting that the new National Government took over an economy in fine shape, he is wrong. We took over an economy with a record balance of payments deficit, record household debt, and growing Government deficits. It will be a big challenge to turn around those problems. Since then the global financial crisis has started to have an impact on the economy, and that doubles the urgency with which the Government needs to move. That is why we do not sit around ordering more forecasts for what we already know is a difficult situation.