2. AMY ADAMS (National—Selwyn) Link to this
to the Minister of Finance
What reports, if any, has he received on imbalances in the New Zealand economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
I have received a number of reports on this issue. The economy was in recession from the first quarter of 2008, and the global recession has shown up some fundamental imbalances. For instance, the tradable sector of the economy, including manufacturing, the primary sector, and export of services such as tourism, has been in recession for the last 5 years, while the non-tradable sector, which has been about consumption, housing, and Government spending, has grown remarkably fast over those 5 years.
At least one cause of these imbalances was the previous Government’s policy over the last 5 years of having significant increases in Government spending, but without much focus on its effectiveness. Core Crown expenditure grew by 50 percent over those 5 years. That put upward pressure on interest rates and the exchange rate, and meant that the export sector, which we generally rely on, has been in recession for 5 years.
Hon David ParkerGiven the Minister’s criticism of the level of investment in the export sector over the 5 years, which he expressed at the Finance and Expenditure Committee this morning, does he agree that keeping initiatives such as Labour’s $700 million Fast Forward Fund in agriculture, the research and development tax credit, and improvements to KiwiSaver would have signalled to New Zealanders that the Government really was committed to an export-led recovery?
There is no clear and obvious way to reverse these trends quickly. However, we will focus on getting better value from Government spending and in obtaining better and smarter public services for the same or less money, rather than recklessly increasing spending levels as the previous Government did. We will also move to get rid of widespread problems with red tape that hold back business investment.
What Treasury reports has the Minister seen about the imbalance resulting from the decade of deferrals to the New Zealand Superannuation Fund in last month’s Budget, given the Secretary to the Treasury’s reported comments on Radio New Zealand National on 10 June that “We’ll have to give something up.”; and why does the Minister not openly admit, what is obvious to others, which is that future cuts to superannuation are part of the Minister’s long-term plan?