1. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
What does the latest GDP data show about New Zealand’s recent growth performance?
Hon BILL ENGLISH (Minister of Finance) Link to this
Revised GDP data up to the September quarter of 2009 was released just before Christmas. It revealed that the economy had, for a number of years, been growing more slowly than was previously reported. In fact, GDP output in 2009 was barely above the level 4 years before—that is, 2005. In the 3 years to September 2008 the economy grew, under the revised figures, by less than 1 percent per year through the third term of the last Government and before the impact of the global crisis.
The years 2005-08 were the best of times internationally, and we should have done much better than 0.9 percent growth per year. Inflation was low, our terms of trade were high—
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. I sat back because I thought you might have intervened. The question asked: “How should the economy have performed over this time?”, and that is something for which that Minister has no responsibility whatsoever.
Hon Rodney HideIt is quite clear that the present Minister of Finance had no responsibility for that, and I do not think he would want to have it. I can also see Trevor Mallard’s point—trying to avoid responsibility. But the question was about the reports that were received, and the obvious supplementary question is what the Minister of Finance, having received those reports, thinks about them. It follows directly from the primary question.
Mr SPEAKERWhen a point of order is being considered, the House should be silent. The point of order raised by the Hon Trevor Mallard is marginal. I will be carefully listening to make sure that the Minister of Finance does not get into criticising or commenting, in particular, on the policies of the previous Government, for which he has no responsibility. He does have some reporting responsibility for what happened during that period, so he can comment on what happened and what maybe should have happened, but I do not want to hear criticism of the previous Government’s policies.
During that period the economy should have grown at the same rate as the economies of other developed countries did, but it grew at less than half the growth rate of Western economies. It should have grown at the same rate as Australia’s economy did, but it grew at less than one-third the rate of Australia’s. To deliver so little growth through that period of such favourable times was a remarkable underachievement.
Hon Jim AndertonCan the Minister tell the House whether the GDP growth of New Zealand has caught up to or passed that of Australia over the 15 months under the National-led Government, or has it fallen further behind?
It has not caught up, and that is not so much because of the global crisis—everyone has had to suffer from that—as because the New Zealand economy was in such a weak and lopsided position when the global crisis came along.
In the first case, it is important to understand that the revised GDP figures show that an economy that we thought had been performing poorly was actually performing very poorly. For instance, at that time Government spending rose by 50 percent over 5 years, causing persistently high interest rates and depriving our export sector of the resources it needed in order to thrive. The result is that we have a very anaemic export sector, which has been in recession for 5 years.
The Prime Minister’s statement last week laid out a comprehensive plan to lift economic performance and to shift economic growth towards savings and exports, and for there to be less reliance on borrowing and consumption. In recent years the New Zealand economy has been far too dependent on spending more than we earn and borrowing to fill the difference, and we have an export sector that has now been shrinking for the last 5 years.