5. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
What reports has he received on the New Zealand economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
I have seen reports that before the global recession hit, New Zealand had a record current account deficit, ballooning fiscal deficits, and a business sector smothered in red tape, overseen by a Labour Government that is now reduced in Opposition to making ridiculous allegations of corruption in this House that Labour members should be ashamed of.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I am afraid that I must take objection to the latter comments made by the Minister. Out of courtesy to you I did not interrupt your ruling when perhaps there may have been a mishearing. What I did allege was that—
Mr SPEAKERNo, we will not go back to the previous point of order. The member will resume his seat. I have heard his point of order. I say to the Minister of Finance that the question asked was a perfectly straight question. The question has no political overlay in it. I am cautioning the Minister of Finance that that kind of attack on the questioner is unacceptable. It is not in keeping with the dignity of this House. The question was a perfectly straight question. I invite the Minister of Finance to reflect on that as he answers further.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. During the time you were on your feet there were two interjections, one from the Minister of Finance who replied to you with “So?”, and before that there was an interjection from Mr Phil Heatley who indicated that you should sit down. If members on this side interjected directly to you while you were ruling they would be in serious trouble.
I did not hear the Hon Phil Heatley and I apologise for that. But I do caution the Minister of Finance that his final comment to me was totally unacceptable. He will watch out as he answers further questions.
Hon David Cunliffe Link to this
Has the Minister of Finance seen reports that the Manufacturers and Exporters Association has expressed real concern about the extreme volatility of the New Zealand dollar, and, to quote its chief executive officer, John Walley, people are putting away their cheque books and are not investing in the real economy and in jobs as a result?
Yes, I have, and I share the concern of that organisation, because under the previous Government it suffered the longest period of a high real exchange rate since the Second World War because of Labour’s economic mismanagement. The effect of that is that the export sector has been in recession for 5 years. In the whole decade that Labour was in charge there was no jobs growth in the export sector. That is a shameful record for what was meant to be one of the best periods of economic prosperity in decades.
Aaron GilmoreWhat reports has the Minister seen about trends in building activity as a result of the Government’s substantial investment in infrastructure?
We have seen some reports that building activity is picking up. I am confident that as the $7 billion infrastructure programme rolls out, by early next year there will be a very significant pick-up in building activity through a large investment in roads, a large investment in electricity transmission, and the biggest capital programme in schools that the country has ever seen.
Hon David Cunliffe Link to this
Does the Minister agree, in the post Woodstock era, with Employers and Manufacturers Association head Alasdair Thompson, who said: “The fluctuating dollar isn’t helping manufacturers.”, and with Brian Gaynor of Milford Asset Management, who said: “Our currency is one of the most volatile, and for businesses operating in an environment where you have a very volatile and speculative currency, it does make it difficult for companies.”?
Yes, I do agree with them, and I agree that Government policies can make that better or worse. Over the last few years, when Labour was in power, those exporters had to deal with an exchange rate at record high levels. The effect was that the export sector has been in recession for 5 years. In the last 10 years there has been no jobs growth in the export sector. The new Government is willing to take on the challenge of growing our export sector and growing sustainable jobs.
Hon David Cunliffe Link to this
Since the turn of the century, has he recognised the link between artificially high interest rates and high volatile exchange rates; if so, why did the Government use its majority to block the proposed banking inquiry today at the Finance and Expenditure Committee, and does that not make him look at best ridiculous, when he was calling for interest rate cuts to be passed through by the banks only 3 weeks ago?
What happens with the inquiry is up to the committee. It has made a decision. If anyone thought that an inquiry by backbenchers would change the direction of the economy, then we would have done it months ago.
Hon Trevor Mallard Link to this
Is it the view of the Minister of Finance that the current level of the New Zealand dollar is too high, too low, or about right, and is it his view that it is appropriately stable, or too volatile?
I do not take any particular views about the exchange rate, but I do know that I have seen reports that show that under the previous Government exporters struggled with the highest exchange rate episode in 50 years. The previous Government left the export sector flat on its back. The export sector has been in recession for 5 years, and there has been no jobs growth in the export sector in the last decade. This Government will fix those problems.