1. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
What reports has he received on the economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
Treasury yesterday issued its monthly economic indicators for August, pointing to an improved global outlook and signs of a fragile world recovery. It suggested that unemployment would peak around 7.5 percent, compared with 8 percent in the Budget forecasts. I welcome these early signs of recovery, particularly if it helps to preserve jobs, but we have considerable work ahead of us over the next 3 to 5 years to ensure that New Zealand achieves sustainable long-term increases in productivity, and to undo the economic mismanagement of the last decade.
Treasury noted that the composition of growth potentially based on housing and consumer spending is unlikely to unwind our economic imbalances, such as the large current account deficit and high debt levels. I agree with these observations, and particularly that we need to address these structural imbalances to achieve a truly sustainable economic recovery.
Hon David Cunliffe Link to this
In light of his previous answer, and given reports that a potential recovery would be on the back of a return to growth in the housing market and an increase in domestic spending, does he stand by his comment: “Many of the people who are losing their jobs today are the unfortunate victims of policy that built economic growth on borrowed money …”; if so, is this the kind of recovery he planned?
I agree with that member that too many people’s jobs were based on borrowing and consumption. That is precisely why I made the point that we need to work towards a sustainable recovery based on exports and investment, because that will lead to sustainable jobs.
As I said in answer to the previous question, we are looking for a sustainable recovery rather than one that could pick up on the back of housing and consumption but then peter out as people found that, for instance, the cost of servicing their large household debts was growing on them, and they could not afford to go spending or to bid up house prices. The challenge for New Zealand will be to rebalance the economy towards exports and investments, and that is going to take some time because the imbalances have been a good decade in building up.
Hon David Cunliffe Link to this
In light of Treasury’s indications that the economy is beginning to recover, when can those currently unemployed expect to find a job, and when can New Zealanders expect to see the resumption of contributions to the New Zealand Superannuation Fund, the reinstitution of research and development tax credits, or further KiwiSaver incentives?
Fortunately New Zealanders are finding jobs every week, and if the member looks at the unemployment flows he will see that for every two people coming on to the dole, one person is going off it. In respect of the Superannuation Fund contributions, we have said we would contribute again to the fund when we actually have surpluses to contribute. On current forecasts, that is 10 years away.
Metiria TureiIn light of the value of the $20 billion tourism industry to the New Zealand economy, does the Minister believe that allowing for mining in national parks like Mount Aspiring, home of the Routeburn, or in internationally recognised Ramsar sites such as the Awarua Waituna Wetland in Southland, would be good for a tourism industry based on a “100% Pure New Zealand”—“clean, green” brand?
In the first place, the Government is doing a stocktake rather than actually digging mines. Secondly, I am sure that that member was as supportive as she could have been of the Pike River mine, which is an excellent example of the exploitation of a mining resource on the conservation estate. As I recall, that occurred while she was part of the governing coalition.