1. PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this
to the Minister of Finance
What reports has he received on the nature of New Zealand’s economic recovery?
Hon BILL ENGLISH (Minister of Finance) Link to this
The New Zealand economy is growing again. Real GDP grew by 1.5 percent in the 6 months to March 2010, and annual growth could reach 3 percent this year. However, it has become clear over recent months that the recovery is patchy, due to the uncertain global environment and because New Zealanders are being careful with their spending and paying down debt from a large splurge in spending from 2007 onwards. As a result, because the recovery is not being led by an increase in domestic spending in the housing market, it will need to be led by growth in the export sector, which was severely damaged under the last Government.
It is vital that we rebalance our economy towards growth from the export sector. Too much of our growth over the last 4 or 5 years has come from people borrowing too much, speculating in the housing market, and that being reinforced by a splurge in Government spending. As a lot of Kiwis have found out, that is not a recipe for sustainable jobs, so an export-led recovery is required to rebalance the economy.
Yes. The early signs are that the economy is rebalancing. First, it is evident that New Zealanders are being careful with their consumption and that they are not rushing back to the housing market, either. On the other hand, higher export prices have driven a 6 percent jump in the terms of trade in the March 2010 quarter, which is the largest quarterly rise since 1976. The seasonally adjusted trade balance for the June 2010 quarter was a surplus of $389 million, which is the second surplus in a row and is the first time that that has happened since December 2001. Although commodity prices have slipped back slightly in June, they remain 47 percent higher than a year ago and near the record highs they hit in March this year. The indicators for export-led growth are promising.
Hon David Cunliffe Link to this
What aspect of the Prime Minister’s figures that showed that the wage gap with Australia had increased by $23 caused him to spend the last 3 weeks remassaging statistics to come up with something even more far-fetched?
The figures we have been using are based on the statistics that are used to calculate national superannuation. So, if the previous Government was deceiving superannuitants for 9 years, I would be very surprised. There is general agreement on the wage numbers that are used as the basis for national superannuation; those are the numbers we have been using. I invite the Opposition to make the case that they are wrong, because 600,000 older New Zealanders would be keen to hear about that.
Peseta Sam Lotu-Iiga Link to this
What was the cost to hard-working New Zealanders of allowing these imbalances to build up?
The cost to hard-working New Zealanders of the economic management of the last Government has, for too many of them, been that they have lost their jobs. Unemployment reached over 7 percent because too many of the jobs were based on excessive Government spending and excessive borrowing. They were not real, sustainable jobs. We now have the job of getting through a recovery, which will be quite a challenge, and creating real, new jobs.
Hon David Cunliffe Link to this
What new policies has the Minister announced in the last 3 weeks to create jobs, and would the 159,000 unemployed Kiwis appreciate that he spent that time remassaging figures rather than coming up with an economic plan to get them a job?
The most significant new policy that has come out recently has been the increase in GST and the reduction in income taxes. I have been interested in the Labour Party’s position, which is now to abandon the tax cuts and provide an exemption for rates for GST. I invite those members to campaign across the country on that policy.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. It is not Labour policy to provide an exemption on GST for rates. The Minister well knows it. [ Interruption]
Mr SPEAKERThe member will not interject while I am on my feet. I accept the cause for grievance, and the Minister should not be alleging that Opposition parties have certain policies. That is not within the Minister’s responsibility.
Hon Sir Roger Douglas Link to this
Does the Minister agree that for every dollar the Government spends, the average New Zealander has $1 less in his or her pocket; if so, why did he allow public sector spending to increase from 46.4 to 50.4, or 4 percent of GDP, in the 12 months ended 30 June 2009—an amount of $8,400 million?
Where we would agree with the member is that excessive Government spending when there is too much of it can limit our capacity for growth, because it keeps resources in the less productive Government sector when they should be in the more productive tradables and export sector. However, this Government has chosen considered and consistent change over time, rather than rapidly executed restructuring. We believe that that is the right balance, but we are always open to the discussion with our supporters from the ACT Party.
Hon David Cunliffe Link to this
I seek leave to table linked employer-employee data from the June 2009 quarter, which show that the number of people employed shrank in the year to March 2009 and the year to June 2009.