3. AMY ADAMS (National—Selwyn) Link to this
to the Minister of Finance
How will the 2010 Budget improve New Zealand’s economic performance?
Hon BILL ENGLISH (Minister of Finance) Link to this
The Budget in 2010 will be another step towards turning round the bad performance of this economy under the appalling management of the previous Government. We need to move from a Government based on consuming too much and borrowing too much to an economy that is driven by investment, savings, and exports; and of course the Budget will continue to bring fiscal discipline to the significant waste of taxpayers’ money that occurred under the last administration.
The imbalances that built up in this economy over the last decade are really quite extraordinary. For instance, in the 5 years to September 2009 the output of our food, beverage, and tobacco manufacturing sectors fell by 15 percent in real terms. Exports of services declined by 18 percent. In the same period, Government spending grew by 12 percent, and this is clearly unsustainable.
These deep-set problems have meant that New Zealand’s economy started to wind down well before the global financial crisis. In fact, in the 3 years to September 2008, GDP grew by less than 1 percent per year. Because the population grew, per capita growth was negative between 2005 and 2008, at a time when the rest of the world was booming. That means that when the rest of the world was going ahead, New Zealand’s income per person actually dropped, and of course that is unsustainable.
We know that many families are paying the penalty for the mismanagement of this economy over the last 5 years, because they have lost their jobs and will have to work hard to find another one. Had the economy grown at the average rate of recent years, the average household would today be about $5,000 a year after tax better off. That is why growth matters to New Zealanders, because it provides new jobs and higher incomes.