1. AMY ADAMS (National—Selwyn) Link to this
to the Minister of Finance
What challenges are there in the economy to creating permanent and sustainable jobs?
Hon BILL ENGLISH (Minister of Finance) Link to this
Firstly, the economy has to grow in order to create jobs. Treasury projects that there will be a resumption in growth, with the economy growing at around 3 percent for each of the next 4 years and 170,000 net new jobs being created. The composition of the new jobs also matters. There is little point in having the job creation that occurred under the previous Government, based as it was on a temporary property boom, or a backroom bureaucracy that the economy does not need and cannot afford. That gave many New Zealanders false hopes, which have been dashed. That is why we are working on creating better-quality jobs in an economy focused on saving and exporting.
In recent years, jobs in the export-related industries have shrunk, while most new jobs have been in Government-related sectors. For instance, since 2004 half of all new jobs have been in public administration, health, and education. Although these are important sectors, they have grown by more than 20 percent, which is over four times the growth rate of other sectors. Over the same period, employment in agriculture, forestry, fishing, and manufacturing fell. We simply have more workers in the mostly public sector industries, and not enough employment has been generated in the more productive parts of the economy that support the public sector.
Hon David Cunliffe Link to this
Does he concede that inflation is forecast by Treasury in the Budget documents to reach 5.9 percent next year, while wages grow by only 2.6 percent?
Treasury is forecasting inflation somewhere at that level, which is just slightly higher than it was in 2008 when that member was in Government. At that time, there were no compensating tax cuts; this time, there are.
The Government is intent on creating sustainable jobs, as opposed to what happened in the last 4 or 5 years. We have initiated a multibillion-dollar investment programme in productive infrastructure, increased funding for science and research to flow into wealth creation, and taken a range of measure in the Budget to re-orientate the economy towards saving and exporting, and away from Government spending and property speculation. It is pleasing to see that over 20,000 new jobs were created in the March quarter, and pleasing to see that there are forecasts of 170,000 new jobs being created over the next 4 years.
Hon David Cunliffe Link to this
If the Minister is so confident that New Zealanders will be better off, why did he not include the full 5.9 percent inflation increase in the online tax calculator and let Kiwis decide for themselves?
As I have explained to the member a number of times, trying to incorporate that calculation simply is not logical. What the tax calculator does is to show that with the increase in GST and the reduction in income tax rates, almost all New Zealand earners are better off.
Is the Minister aware of any policy options that would prevent the economy from creating permanent jobs?
Yes, I have heard some suggestions. They include increasing Government spending whenever anyone asks for a bit more of it, and crowding out job creation in New Zealand’s productive sectors. I have also seen suggestions that we should borrow a lot more money from overseas, recklessly running up more debt, and that we should increase the number of Wellington-based bureaucrats. None of those things would result in sustainable jobs. They are all suggestions of the Labour Opposition.
Dr Russel Norman
Mr SPEAKERI apologise to the honourable member. Both sides of the House are too noisy. I cannot hear Dr Norman.
Does he agree with Lloyd’s of London in its report from earlier this year, in which it stated: “We are heading towards a global oil supply crunch and price spike”; and what steps is he taking to prepare the New Zealand economy for such a price spike?