1. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
What is the Government doing to address the current account deficit?
Hon BILL ENGLISH (Minister of Finance) Link to this
The near-record balance of payments deficit is a symptom of 9 years of poor economic management by the previous Government. At the start of the decade the balance of payments was relatively balanced. It has grown steadily to between 8 and 9 percent of GDP, and has been there for 3 years—one of the worst in the developed world. Many factors contributed, including out-of-control Government spending, households encouraged to borrow excessively, and an export sector that struggled with policy that made it difficult to be an exporter. The Government’s strategy is to reverse all that bad management, and to focus future growth on exports, quality investment, and jobs that are sustainable, not jobs based on borrowing, like the job growth under Labour.
Hon David Cunliffe Link to this
Why, when 88 percent of New Zealand’s current account deficit is made up of the investment deficit, would the Minister want to liberalise the Overseas Investment Office rules, or does he think that flogging off more of our land and infrastructure amounts to a sustainable strategy for growth?
The Overseas Investment Office rules have become bizarre, and it is taking up to 6 months for people to get approval for industrial sections next to a small creek. So, as with a lot of the other things Labour did, we have to get all the nonsense out of the process so that we can get decisions. Our main focus is on sustainable jobs and dealing with all those people who are suffering the pain of dislocation because they thought they had secure jobs, but because they were based on excessive borrowing and Government spending, they have now lost those jobs.
Hon David Cunliffe Link to this
Why, if the Minister is concerned about the current account deficit, did his Government axe the research and development tax credits and reduce funding for New Zealand Trade and Enterprise, both of which would have assisted New Zealand firms to innovate and gain new export markets?
The previous Government had the mistaken notion that a Government could buy its way out of economic problems by applying taxpayer subsidies to whatever the problem was. Actually, those days are over. Overseas lenders will not lend us the money to do that. From here on, New Zealand has to earn a living, not pretend it is earning a living by buying it with taxpayer subsidies.
Peseta Sam Lotu-Iiga Link to this
What imbalances did the Government inherit that contributed to the high current account deficit?
After 9 years of bad economic management, the imbalances in our economy have been severe. The public sector was growing rapidly, at the expense of the private sector. Over the past 5 years, core Crown spending grew by 50 percent, whereas the economy grew by 25 percent. The tradable sector has been in recession for 5 years. That is no way to run an economy. Unfortunately, thousands of New Zealanders are suffering the pain of dislocation because of those bad policies.
Metiria TureiWhy does the Minister’s Government continue to invest heavily in new motorways when, as today’s current account figures reinforce, New Zealanders are leaving their cars in their garages; and would it not be better in the immediate term to spend transport money on public transport services, thereby relieving the overcrowding on our buses and trains?
The Government shares the Greens’ objective of an efficient transport system. We are investing in better roads because, actually, buses need roads. We are also investing extensively in rail.
Hon David Cunliffe Link to this
Why, if the Minister is now ready to govern and if he is concerned about the current account deficit, did his Budget reduce tourism promotion funding; or does he think it proper to build a cycleway, even though there are fewer funds to promote it, just so that John Key can show him who is boss?
That is a bit rich coming from a member of the previous Government, which in 10 years of record fiscal surpluses did not increase tourism promotion funding.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. It is an inevitable point of order. The Minister in response to the primary question and all three supplementary questions spent at least the lion’s share, if not all, of the answers rehearsing his take on the previous Government, and hardly any part of them talking about his own policies. It may be that he does not have any policies, but New Zealanders would like to give him the benefit of the doubt—
Mr SPEAKERI have listened to the honourable member on his point of order and taken it seriously, but I invite him to reflect on the supplementary question he just asked and on whether it was a fairly political question. When he asks a fairly political supplementary question, he is likely to get a fairly political answer. I fear I cannot assist him on this occasion.
Tourism, like other export sectors, has suffered from 9 years of a Government that had no understanding of business, that buried businesses in red tape, and that collected their taxes and wasted them on ineffective spending.
Hon Trevor Mallard Link to this
What effect does overseas ownership of New Zealand companies have on the current account deficit, and did the Government take that into account before inviting Mark Weldon to brief State-owned enterprise chairs on Government plans to privatise State-owned enterprises over the next 2 to 5 years, which is what he did at Treasury yesterday?
As usual, no one can rely on what that member says. Mark Weldon did not brief any seminar on Government plans. Whatever he said about partial privatisation—
Hon Darren Hughes Link to this
I raise a point of order, Mr Speaker. Mr Mallard put a question pretty directly to the Minister of Finance, and, rather than answer the substance of Mr Mallard’s question, the Minister indulged in a personal attack on the member.
I listened carefully to the question asked by the Hon Trevor Mallard. Indeed, the first part of the question was a very straight question. The second part contained an allegation about a person, Mark Weldon, addressing a seminar yesterday. In his answer the Minister has disputed that. I believe that is a fair answer to the question. The Minister is disputing the information that the Hon Trevor Mallard built into his question. I think that is a direct answer to the question. He does not have to answer the whole lot. He is picking on the second part of the question, which he is entitled to do, and I believe he is answering it quite directly.
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I think that you have suggested that Mr Weldon’s addressing the meeting was an allegation. Both the Minister of Finance and I know that it is a fact, and he confirmed it.
Points of order should not be used to raise issues about the quality of the Minister’s answer. I heard the Minister specifically address the issue of Mark Weldon addressing some seminar. That was in direct response to the member’s question. I believe, to respond to the point of order raised by Darren Hughes, that that was absolutely within the Standing Orders. The Minister specifically answered the second part of the question, and I believe that it was a good answer.
Hon Darren Hughes Link to this
I raise a point of order, Mr Speaker. The Minister started his answer by saying that as usual the member’s word cannot be relied upon. That is an insinuation, and we had that discussion earlier in the week. Maybe I did not put my point to you as clearly as I should have. The Minister has been asked a straight question about asset sales, and he is free to answer about the substance of that. We do not need all the extra political stuff.
I hear the specific point the member is making. I ask the Minister in replying to this question to desist from that kind of comment.
The member’s statement is incorrect and he knows it is incorrect. Whatever statements Mr Weldon made were in his capacity as the chief executive of the Stock Exchange. It is not surprising that he would like to see partial privatisation.
Hon Trevor Mallard Link to this
Was the Minister of Finance briefed by the Prime Minister before Mr Weldon undertook a briefing yesterday in which he indicated that State-owned enterprises should change their strategic planning to prepare for privatisation over the next 2 to 5 years?
I seek the leave of the House to table a release from J P Morgan entitled “New Zealand’s current account deficit narrows due to plummeting imports”, which makes it clear that petroleum and petroleum products and motor vehicle components experienced the largest decline in imports. It is dated today, 25 June 2009.
Hon David Cunliffe Link to this
I seek leave to table Statistics New Zealand’s report on the balance of payments and investment position for the March 2009 quarter, which was issued this morning and shows a continued deterioration in the international investment position.