3. DAVID BENNETT (National—Hamilton East) Link to this
to the Minister of Finance
What recent reports has he received on the economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
Today’s Statistics New Zealand release of the GDP figures for the December quarter shows that the economy grew by 0.8 percent. That is the third consecutive quarter of growth. The data suggests that the recession, which began in early 2008, bottomed out in the first half of 2009, and since then the economy has grown again at a moderate rate. This is consistent with a range of other indicators, and broadly mirrors the pattern of New Zealand’s trading partners. The lift in the economy will create jobs, though it is likely to be some time before we see a sustained drop in unemployment. That is why it is important we convert this early start to recovery into a permanent lift in growth rates.
Despite some early signs of recovery, the economy faces numerous challenges. These include a fragile global recovery, serious imbalances in our own economy that have built up over recent years, and an operating balance that remains in deficit. There are early signs of rebalancing: the last two quarters of last year were the first since 2003 when our internationally tradable sectors grew faster than our domestic sectors, and, for the first time since March 2000, Government administration has not grown over a full year.
Stuart NashGiven that this Government has said that it stands for fairness and equity, how will tax rate alignment and a significant reduction in the top marginal rate for the 8 percent of Kiwis earning over $70,000 directly benefit the 70 percent of New Zealanders earning under $40,000?
The member should wait to see how the tax package comes together. I reiterate a point I have made earlier in the House. The Government is looking to extend the tax base to raise more tax from property. By and large that property is owned by higher-income New Zealanders. It is not yet clear whether higher-income New Zealanders as a group will end up paying more tax in total when we include extra property taxes.
One way we have been tackling the growth in Government administration is to put a lid on Government spending, and I am pleased that that is showing through in the figures released today, which show that the balance of the economy has shifted slightly in that the productive and export sector actually grew in the last 6 months of last year and the Government sector shrank somewhat.