1. Hon DAVID PARKER (Labour) Link to this
to the Minister of Finance
Does he stand by his statement: “It’s essential that we build our road to recovery on investment and exports,”?
Hon BILL ENGLISHHow can New Zealanders take seriously his talk of an export-led recovery, when the Reserve Bank projections forecast that the return to economic growth will see the current account deficit increase to 7 percent per annum as a result of the very consumption pressures he has so often decried?
I think, along with that member, we would share the Reserve Bank’s concerns. There are signs that the economy will recover. In order for that recovery to be sustainable we need improved competitiveness among our exporters and continued recovery in household savings, and there is some doubt about whether either of those things will happen quickly.
How can he defend New Zealand getting poorer to the tune of more than $15 billion per annum over the medium to longer term, and why does he not accept that it is his responsibility to reverse that?
The Government is taking seriously its responsibility to reverse 10 years of misdirected economic policy, which has left this country with two large imbalances: an export sector that has been in recession for 5 years, and Government books that show that it will be 10 years until we have a surplus.
Aaron GilmoreWhat reports has he seen that the Government’s economic programme is helping businesses emerge from the recession and create jobs?
The National Bank’s business outlook survey for August showed that 34 percent of firms expect general business conditions to improve—up from 18 percent the previous month. Any increase in business confidence is welcome, but, of course, those businesses need a policy environment where the Government is encouraging investment and not dragging resources from businesses to put them into ineffective Government spending.
Given the Reserve Bank governor’s statement today that rather than the current account deficit getting better, it will get worse, going to 7 percent per annum, at an annual cost to the country of more than $15 billion, does the Minister accept that his economic prescription for the country is not working?
I agree with the concern the Reserve Bank governor demonstrates about that kind of track for the current account deficit. We have to work on turning round a decade-long build up of imbalances. The current account deficit reached a peak of about 9 percent under the previous Government. It has come back some way. That member might like to explain why it got so big, when over the last 5 or 6 years there were record high commodity prices.