8. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
How much lower will the growth forecast be for the year to March 2011 in the Half Year Economic and Fiscal Update compared with the Budget 2010 forecast?
Hon BILL ENGLISH (Minister of Finance) Link to this
The member will have to wait and see. We have signalled that growth forecasts are likely to be lower—I think that anyone out in the street could tell us that. However, the figures are likely to be better than those of 1988 and 1989 when, apparently, that member was the Minister of Finance. [ Interruption]
Hon David Cunliffe Link to this
How does he reconcile not John Key’s assertion of the presidency of the United States but John Key’s prediction of an aggressive recovery with the latest economic data showing that corporate tax flows have collapsed a staggering 28 percent below 2010 forecasts?
The Prime Minister was correct when he was referring to the economy turning round from the bottom of quite a sharp recession, which bottomed out in early 2009 and turned round from shrinkage of something like 2 or 3 percent to growth of 2 percent. That was an aggressive turn-round. In respect of company tax, as the member will know, it is one of the more volatile tax bases that we have. It tends to drop fast in recessions and rise fast in recoveries. On balance, other tax revenue from other sources is offsetting those losses to some extent, although overall tax revenue is down about a billion dollars on what was forecast.
Hon David Cunliffe Link to this
Which of his Government’s initiatives most contributed to the Government deficit growing by almost $2 billion more than he expected in just 6 months since his last Budget, and does he, in light of that, now wish that John Key had got his wish and become leader of the Labour Party?
Well, the Canterbury earthquake was not an initiative of the Government, but it has had a significant impact on our books. I am interested that the member might be criticising a deficit being a bit larger than expected when he spent most of the last 2 years telling us we should be spending more to stimulate the economy more.
Hon David Cunliffe Link to this
In light of the Minister’s passionate desire for stimulus, in how many of the last six quarters has annualised GDP per capita fallen according to Treasury data released this week?
I cannot answer that question directly, but I would not be surprised if in a recession, where the population has been growing and the economy has been shrinking, there would be some quarters where it was negative. What is very surprising is that through the period 2005 to 2008, when everyone thought we were having a boom under the previous Government, per capita real GDP incomes actually dropped, which is really quite startling given that they were the best economic conditions in a generation.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. The Minister has raised an interesting conundrum for us. He seems to have data about the previous Government but not his own.
Mr SPEAKERThat is not a point of order. The Minister answered the question in that he said he did not have detailed information about the successive quarters that the member asked about. I think that is the end of that matter.
Peseta Sam Lotu-Iiga Link to this
How will the updated forecast compare with the actual economic performance achieved in the 3 years to 2008?
Although the updated forecasts may not be as strong as they were at the Budget, they were still a lot better than the 3 years to 2008. In the 3 years to 2008 per capita GDP actually declined, before the global crisis and while the rest of the world was booming. The first task of this Government has been to stop the rot of a severely unbalanced economy. These forecasts will show at least some progress in people reducing their appetite for debt, being careful with their spending, increasing their savings, and increasing exports. That is the kind of change that the economy needs.