4. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Does he agree with reports from NZIER consensus forecasts that show that on current policy settings growth will remain negative for the next 2 years, with the beginnings of recovery not expected until 2011?
Hon BILL ENGLISH (Minister of Finance) Link to this
I am not sure whether the member has correctly understood the forecasts. They are prepared on a March year basis. The 2 years they are referring to are the year to the end of March 2009—and it is now 25 March—and the next year, to March 2010. In fact, forecasts indicate the economy may start recovering in 2010, rather than 2011.
Hon David Cunliffe Link to this
What advice has the Minister therefore given to the Prime Minister, who as recently as last Sunday told television viewers on Q+A that he expected the recovery to commence in 2009, or is the Prime Minister perhaps taking his advice from Steven Joyce and not that Minister?
As the member will know, the Prime Minister has a positive outlook for the New Zealand economy. In fact, I think it could be described as upbeat and aspirational.
David BennettNew Zealand has a particular vulnerability with its high balance of payments deficit. I might say that the previous Minister of Finance made much of setting out to fix that when he went into Government, and if the result in 2008 was a measure of success, then he and the Labour Government utterly failed. The consensus projections show an accumulative increase in net foreign liabilities of $42 billion in the 3 years to June 2011. That is uncomfortably large and not a level that the Government can be comfortable with.
Hon David Cunliffe Link to this
Does the Minister consider that upbeat and aspirational action is now needed in New Zealand, when US stock markets rose nearly 7 percent in recent days on the back of such intervention by the US Obama administration, or is he instead using this recession as political cover to undertake a preordained agenda of privatisation, gutting KiwiSaver, the Superannuation Fund, and accident compensation, and, to boot, hobbling regulators like the Commerce Commission and Overseas Investment Office?
It may well assist the Labour Party if it stops trying to rerun its terribly failed 2008 election campaign and actually pays some attention to the economy. I am very pleased that the New Zealand Government does not have to put a trillion dollars into stabilising the banking system—it is probably about the third or fourth attempt the US Government has made. I acknowledge the efforts made by the previous Government to help to stabilise the banking system; we are continuing with those, and I hope we do not have to follow the course of the US Government.
Hon David Cunliffe Link to this
Does the Minister further acknowledge, therefore, that of the approximately $13 billion of stimulus that he claims he has injected into the New Zealand economy, nearly all of it results from Labour’s policies in the 2008 Budget and Labour’s planned business tax reforms, or does he consider cycle lanes just a stimulus, even though his Government has just removed funding from such non - State highway transport classes; or is this just another example of his leader being aspirational—
Mr SPEAKERI am pleased that the combination of tax cuts on 1 October, which occurred under that member’s Government, and tax cuts on 1 April, which we campaigned on, along with significant cuts in interest rates, is putting cash in people’s pockets and helping to protect New Zealanders from the sharpest edge of recession. However, these policies come at a cost. That cost is increasing debt, and this Government is determined to get on top of that rising debt problem.