3. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
What reports has he received showing new jobs are being created as New Zealand continues to build its economic recovery?
Hon BILL ENGLISH (Minister of Finance) Link to this
Statistics New Zealand, in the latest household labour force survey, reported that total employment increased by 22,000 or 1 percent in the March quarter. This was driven by an increase in full-time employment, and is the largest quarterly increase in jobs since before the global financial crisis began. The Budget forecast also shows that the economy is expected to create 170,000 jobs over the next 4 years. It is pleasing that the economy is beginning to create new jobs, after a recession that began under the previous Labour Government in early 2008.
How does the employment growth in the March quarter compare with recent trends in the employment market?
Previous job creation has mirrored the basic imbalance in the economy: too much growth in the domestic and Government sectors and not enough in the tradable or income-earning sector. Since 2004 over half of all new jobs created have been in public administration, health, and education. By contrast, combined employment in agriculture, horticulture, forestry, manufacturing, and transport declined by over 40,000—that is, 40,000 fewer jobs on the earning side of the economy. There is a need to create more jobs in the tradable sector to earn the income to support the jobs we have in health and education, which grew four times faster than job growth in the rest of the economy and now make up about a third of all jobs.
Hon David Cunliffe Link to this
Why is the forecast for employment forecasting only half as many new jobs as under the previous Labour Government; and of those, why is Treasury saying that only 5.7 percent of them have anything to do with any measure in his Budget?
One of the reasons that we are not creating as many jobs as we could is that we have to undo the damage done by the previous Government. Since 2004, as I said, half of all new jobs were created in the health and education sectors. This Government simply does not have the option of pumping up jobs with debt-funded growth in public spending. We are going to create jobs on the earnings side of the economy, which unfortunately shrank by about 40,000 jobs under that Government.
How did Budget 2010 help position the New Zealand economy for faster growth and the creation of more jobs?
First of all, the Budget focused on growth right across the economy, not just in the Government sector, which had been the problem in the last 4 or 5 years of the previous Government. Treasury forecasts show steady economic growth of about 3 percent per year. That shows that there will be about 170,000 new jobs and that the incomes of the average household are expected to rise by about $7,000 over the next 4 years. We do not have the choice of creating a whole lot of new Government-funded jobs, because the Government has significant deficits. In this respect, we are in the same position as Governments all around the world. We have to grow our economy this time by growing the tradable and the income-earning side of the economy, not the spending side of it.
Hon David Cunliffe Link to this
Following on from that statement, given that the Minister said that New Zealand’s external liability was our largest single vulnerability, what measures are in the Budget to address that; or were commentators right when they said there was nothing?
I think the member will be familiar with the measures in the Budget. One of the reasons that we focused on a tax switch from direct to indirect taxes was to increase the cost of consumption and to make it less attractive for people to borrow for speculative property investment. On the other hand, we want to encourage savings, investment, and new jobs. We believe the Budget will achieve that, and in the long run it will have some impact on the net international investment position.
What were some specific measures the Budget took to help New Zealand’s most vulnerable to improve their skills and to secure jobs?
The Budget continued a couple of schemes that have been focused particularly on our young people. One is the Job Ops scheme, which provides an employment subsidy. The anecdotal evidence is that a significant proportion of those young people are going into jobs at the end of the scheme. There is also the Community Max scheme, which, again, appears in anecdotal evidence to have been relatively successful. We have also allowed for more places in tertiary education, focused on our younger people. But, most important, we are trying to build the confidence of businesses to invest and to employ, because unless a business decides to create another new job, there are no new jobs.