1. CHRIS AUCHINVOLE (National—West Coast - Tasman) Link to this
to the Minister of Finance
What measures has the Government taken to achieve faster economic growth and to help hard-working New Zealanders get ahead?
Hon BILL ENGLISH (Minister of Finance) Link to this
A comprehensive range of measures. The Government has taken a long-term and vigorous view about fixing this economy after the damage done by the previous Government, and those measures include across-the-board income tax cuts, company tax cuts, investment in roads, broadband, and electricity transmission, cutting red tape, science investment, providing more money for tourism, getting aquaculture going again, trade negotiations, primary sector growth partnerships, controlling debts and deficits, and fixing the Resource Management Act, among others.
The Government has maintained for some time that in an economy that is trying to reduce debt, the recovery will be a bit bumpy and patchy across sectors and regions. This morning the Governor of the Reserve Bank noted that he expected “respectable” GDP growth. The most pressure in the economy currently seems to be on the small and medium sized enterprise sector, which has been expecting New Zealanders to start spending again, but that spending has been slower. The sector is having some trouble, therefore, in raising more debt from the banking sector.
Hon David Cunliffe Link to this
Is he concerned about today’s warnings from economists that the economy is not rebounding as expected, with three consecutive drops in business confidence and very low business investment; and can he confirm that for many New Zealanders the recovery has failed to make its way into jobs and wages?
As I said before, the Government has said for some time that in an economy that is trying to reduce debt, the road to recovery will be bumpy and the recovery will be somewhat patchy. I would, however, refer to the fact that although the Governor of the Reserve Bank has noted that the outlook has softened to some extent, he still expects “respectable” growth of over 3 percent, which is significantly higher than the growth rates in the last 2 or 3 years of the previous Labour Government.
What challenges does the economy face as the Government continues to build the recovery and tilt the economy towards savings, investment, and exports?
I think there are several significant headwinds for the economy as it recovers. The first is that New Zealanders are being very careful with their spending and are not rushing back to the housing market, which means that the recovery will be a bit slower than is often the case after a recession. Secondly, the exchange rate has not dropped when usually it does, which means that our export sector will take a bit longer to get going. Thirdly, the world economy in which we borrow our money and sell our produce is undergoing a somewhat fragile recovery, with risks that it could slow down.
Hon David Cunliffe Link to this
Does he agree that for most New Zealanders this recovery is so bumpy that it has fallen into a hole the size of Gerry Brownlee’s mine—mine with an “e”, not a “d”—and that based on his own forecasts, New Zealanders will face 3 years of price increases outstripping wage increases, leaving New Zealanders further behind their Australian counterparts?
Mr SPEAKERWhat reports has he seen summarising some of the challenges facing the economy, and what are the recent trends in these areas?
I have seen one report that said the economy is unbalanced because we borrowed too much from overseas lenders, building a huge national debt. That is correct. Our total debt to the world has risen from $100 billion in 2000 to $170 billion in 2008. I would like to thank the Opposition spokesperson on finance for pointing out in his blog these major shortcomings in Labour’s economic management, because the imbalances in our economy and the resulting unemployment and slow income growth are partly due to the mismanagement of the previous Government.