3. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Does he stand by his statement: “we came into office with a very sound plan to lift New Zealand’s economic performance”?
Hon BILL ENGLISH (Minister of Finance) Link to this
Yes, I do stand by that statement. I could outline the six pillars of that plan, but what I will say is that there are some early promising signs for the economy. Over the past 2 years we have seen five successive quarters of economic growth, real after-tax wages have grown by more than twice the amount they did over the previous 9 years, the balance of payments deficit has fallen from 8 percent to 3 percent of GDP, tax rates have reduced to the extent that two-thirds of New Zealanders now pay 17.5c in the dollar, and over 40,000 jobs were created in the past year. These are early and modest gains, and we suspect we will build on them with real strength over the next few years as our plan for the economy has more impact.
Hon David Cunliffe Link to this
Which part of his “very sound plan” delivered the decline in business tax revenue in the last quarter, which is more than 20 percent below the forecast amount, and cut the total number of businesses by 1.7 percent for the first time in 9 years?
In case the Opposition finance spokesman has not noticed, there was a recession for the first time in 9 years, starting in 2008, well before the global financial crisis. A lot of New Zealand businesses had to deal not just with that recession but with the build-up of red tape and misjudged economic policy over the last decade. This Government is moving as quickly as possible to undo the red tape, invest in infrastructure, make the public sector more productive, reduce tax rates, increase education and skills, and revamp our innovation system.
Amy AdamsI will give only a selection of the large range of problems. When we became the Government New Zealand was already in its third quarter of recession. The export sector had been in recession for 5 years. In this great little export-earning country, the previous Government had had the export sector in recession for 5 years. The fundamental problem was that that Government was fantastic at spending and hopeless at earning, and we have to turn that round.
We have reduced personal taxes across the board, we have got Government debt and deficits under control, we have reprioritised $4 billion that the previous Government was wasting on back-office bureaucracy and moved it to the front line, we have introduced national standards for reading and maths, we have cut red tape, we have injected hundreds of millions of dollars into research and innovation, we have invested $7 billion in productive infrastructure, we have maintained New Zealand’s high tax rating, we have streamlined the Resource Management Act, we have reduced taxes on savings, and we have streamlined employment law. The result is that real after-tax wages have been growing.
Hon David ParkerWhy, then, will the Government not even belatedly include in its plan to lift New Zealand’s economic performance meaningful milestones upon which New Zealanders can judge National’s success or failure in meeting its election promise to close the wage gap between New Zealand and Australia, which even the 2025 Taskforce report notes is growing?
Because New Zealanders are smart enough to know that if their jobs are more secure and their incomes are rising, then this economy is going somewhere. We are very happy to be judged, day by day, by the voters, who threw out that party’s Government because it did so much damage to this economy.
Hon Clayton Cosgrove Link to this
Will he rule out selling State-owned assets, as proposed in the 2025 Taskforce report, and will he rule out campaigning to do so in next year’s general election?
The Government’s position has been quite clear on that matter. The Government promised that there would be no asset sales in its first term of office, and that if it changed that position, it would campaign on that change. But I will make this general point. The Government owns $200 billion of assets, and that party’s Government left the asset management system in a shambles. So we have been working flat out to try to improve the effectiveness of how we use $200 billion of taxpayer-owned assets, and we are starting to do a pretty good job of it.
Hon David Cunliffe Link to this
Was the Prime Minister correct when he admitted this morning that the Government has “no plan” to deal with the high New Zealand dollar; if so, how much more damage will the volatile dollar have to do before he will act to protect struggling exporters?
A couple of countries fix their exchange rate, and they have two characteristics. One is that they have several hundred billion US dollars in the bank. Well, the previous Labour Government made very sure that we did not have several hundred billion dollars in the bank; in fact, we have a $150 billion debt to overseas lenders. The other thing is that those countries tend not to be democracies. That was also a trend under the previous Government, but without $200 billion in the bank it is actually pretty hard to fix one’s exchange rate.
Mr SPEAKERA point of order has been called. [ Interruption] I say to both the deputy leader of the Labour Party and the senior Government whip that they will not carry on interjecting when a point of order has been called.
Hon David Cunliffe Link to this
My point of order is that the Minister did not address the supplementary question. At no time did the question mention fixing the exchange rate, which of course is not our position; it asked when the Prime Minister or the Minister would act to assist exporters.
I am not sure that the member did ask whether they would act to assist exporters. I clearly remember the member, in his question, talking precisely about the exchange rate. The Minister, in my view, answered that.
Hon David Cunliffe Link to this
We did mention the higher dollar, but at no point did we suggest fixing the dollar. So what the Minister is doing is painting us in a position we do not hold.
I do not think the House should take further time on this particular question. The member asked a question in respect of, if not fixing the exchange rate, taking some action in respect of it. The Minister answered in respect of one aspect of managing exchange rates, where he expressed a view that was not very supportive of it, and I think the House should not take more time on a question that was not very precise in the first place.