2. PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this
to the Minister of Finance
How is the New Zealand economy placed to ride out the current economic downturn?
Hon BILL ENGLISH (Minister of Finance) Link to this
The economy starts from a mixed position. It has some long-term strengths, including a flexible exchange rate and labour markets, a banking sector that has remained healthy, and relatively low debt and unemployment levels. However, this week’s statistics will show that the balance of payments deficit for 2008 is in the order of 9 percent of GDP, one of the worst in the OECD, and this week’s GDP statistics will show that output declined in the December quarter to a level of around 2 percent lower than a year earlier—that is, the economy will have contracted by about as much as that. The pre-election fiscal update showed ongoing fiscal deficits, and the outlook has worsened considerably since then. So New Zealand faces a challenge of chronic twin deficits as a result of 10 years of mismanagement, chronic fiscal deficits, and balance of payments deficits.
Peseta Sam Lotu-Iiga Link to this
What steps has the Government already taken to improve the ability of the economy to ride out the downturn?
We cannot deal immediately with the chronic twin deficits that we have inherited, but we have taken action on a wide front to improve the position. This includes—so far—successfully maintaining the orderly operation of the banking system, a range of packages that were focused on assistance to small and medium sized businesses, and an early start to infrastructure spending. We have also engaged actively with the unions and business via the Prime Minister’s Job Summit—and more announcements will be following on from that.
Hon David Cunliffe Link to this
Can the Minister confirm why, if the IMF has expressed concern over New Zealand’s current account deficit, he has gutted KiwiSaver—a scheme that makes a critical contribution to reining in the same current account deficit?
In the first place, there is no evidence that KiwiSaver is achieving that, or would achieve it. Secondly, KiwiSaver has not been gutted. The Government in this fiscal year will commit something around a billion dollars of subsidies to KiwiSaver. We are effectively still subsidising savings when the Government is in considerable debt.
Hon David Cunliffe Link to this
Can the Minister confirm that IMF mission chief Ray Brooks stated recently that New Zealand’s macroeconomic policies, particularly monetary and fiscal policies, have been very sound in recent years, and that he also praised the low level of Government debt and the strength of the Government’s accounts, and said it was the prudent fiscal management of the previous Government that should be credited for this?
If he said that, I disagree with him. In fact, the current Government is working, day after day, to try to bring under control the loose and reckless decisions on spending made by the previous Government.
Hon Sir Roger Douglas Link to this
Will the Minister explain to the House and the public of New Zealand how paying people to do nothing 1 day in 10 will help grow the New Zealand economy?
The 9-day fortnight is a measure designed to cushion the effects of significant restructuring that may occur as a result of the downturn. It is not intended to be a growth measure. Along with the Restart package, which cushions the effects of redundancy for people who lose their jobs, it is part of the Government’s programme of protecting people from the sharpest edges of the recession while we take longer-term measures to get us through this recession and grow the economy to replace the jobs that are currently being lost.
Hon Jim AndertonCan the Minister of Finance tell the House which of the Government’s highest economic priorities he thinks will make the greatest dent in the effects of the global economic crisis on New Zealanders: the bicycle lane; the 9-day fortnight, which not one business has signed up to; or privatising the prisons?
As I pointed out to that member before, we went to the shed to get the “jobs machine” when we became the Government, and found that even when the economy was growing, his “jobs machine” could not create jobs.
Hon Darren Hughes Link to this
I raise a point of order, Mr Speaker. The Hon Mr Anderton asked the Minister of Finance a pretty straight question. He gave him three options in a question with regard to what would create jobs. Instead, he got a political answer from the Minister of Finance that had nothing—[ Interruption] The point I am trying to make is that it was not a political question. It was not loaded. [ Interruption] Mr Speaker, are you going to let them interject during my point of order? I have had two interjections on my point of order from Government members.
Mr SPEAKERHon Darren Hughes Link to this
We are trying to comply with your ruling, which is that we should ask questions of the Government that contain facts. Mr Anderton did that. He did not put in a little flick to the Minister, but the Minister, in response, just made an attack on Mr Anderton. That did not help the economy, at all.
I think the member has made his point. I understand the member’s point. I think he heard the impact of the assertion he made that it was not a political question. The member who asked the question realised that it was very much a tongue-in-cheek question, and he got a similar kind of answer. I cannot judge the quality of the answer but I would not call the member’s question a straight question.
Hon David Cunliffe Link to this
Can the Minister of Finance confirm that if this is the rainy day that we have been saving for, then it was the Labour Government that did the saving, contrary to his own advice to spend more on tax cuts for the rich, and does that explain why his boss is so keen to see him replaced by Mr Steven Joyce in his current role?