2. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
What reports has he received on New Zealand’s economic performance?
Hon BILL ENGLISH (Minister of Finance) Link to this
In recent weeks a number of reports have confirmed early signs of a pick-up in business and consumer confidence. For instance, the New Zealand Institute of Economic Research’s October survey of business opinion, and the National Bank’s National Business Outlook, confirm that most companies expect better times ahead. We have yet to see whether this upsurge in confidence will translate into more investment and more jobs.
In the first place, it could well take some time. These are indications that the economy has stopped contracting, and promising signs that it may start growing. However, unemployment is likely to increase for a number of months yet. In fact, most economists forecast that it will increase well into next year. All of these businesses will need a Government that is creating the best possible environment so that they are willing to invest and create new jobs, because 60,000 people are on the dole.
Hon David Cunliffe Link to this
Does the Minister therefore agree with statements that there is an opportunity for a once-in-a-generation reorientation of the tax system and that substantial economic reform is required, supported by fiscal consolidation far greater than outlined in the Budget—the proposal for a flat-tax system that was included in papers that he signed and delivered to Cabinet?
I think there has been a misreading of those papers. In fact, there is nothing in them about flat tax. There is advice in them about aligning tax rates. Treasury has been telling Ministers of Finance for years that there is a once-in-a-generation opportunity and they have to take it.
The Government is working with overseas investors because over the next 4 years we have to borrow about $40 billion. The indications are that those investors are positive about the New Zealand economy. Although we think that we are not performing that well, compared with many other developed countries our economy is coming out of this recession stronger than many others.
Hon David Cunliffe Link to this
Does the Minister favour the flat-tax proposal he took to Cabinet, which was rejected by the Prime Minister this morning; if not, why did he not rule it out last night when asked about it by reporters?
I saw a comment that reads: “We cannot simply wish away the implications of reduced taxes or rising debt. We must insist on value for money from the public sector. The state must play its part in stewarding limited budgets and targeting resources to those who need them most.” I agree with those comments, which came from David Cunliffe just before Budget 2009.