3. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Does he agree with JP Morgan investment bank that “the recovery in New Zealand effectively has stalled”?
Hon STEVEN JOYCE (Associate Minister of Finance) Link to this
No, the Minister does not agree with that assessment, because it is incorrect. Some people, of course, thrive on a negative headline—including, perhaps, some not too far from where I am standing—but the facts are that the economy has grown for five consecutive quarters—
Hon Darren Hughes Link to this
I raise a point of order, Mr Speaker. I am not sure whom the Minister was referring to, but he was clearly trying to insult somebody in his answer to the primary question that my colleague had asked. I think the people of Rodney have had very dignified representation for many years, and if he is the alternative, I am quite worried.
Mr SPEAKERThe member went one step too far with that comment—[ Interruption] A point of order is being considered and members on both sides will be silent while that is the case. In fairness to the Minister, I think he was away from the House when there was a ruling from the Speaker on Ministers not employing gratuitous comments when answering a straight question. This question was a straight question: does he agree with JP Morgan investment bank? The Minister answered that question; I think he said he did not. That is a sufficient answer to the question.
Hon David Cunliffe Link to this
What response does he have to the comments of TV3’s Duncan Garner that “National’s economic plan, if there is one, doesn’t appear to be working.”?
Although acknowledging, of course, Duncan’s role as a pre-eminent economist in New Zealand, I would have to respectfully disagree with “His Eminence”, because the Government has a very comprehensive plan, as the member is aware. The plan includes investment in infrastructure; the taxation package; investment in education and skills, business innovation, and trade; improving productivity in the public sector; and simplifying and improving regulations to ensure that businesses can succeed in this country. In fact, there is one example that the House will have an opportunity to consider this afternoon to ensure that filming of the Hobbit movies takes place in New Zealand.
Hon David Cunliffe Link to this
In light of that answer, which part of the following further summary from Duncan Garner does he disagree with, if any: “Alan Bollard says the economy is fragile. English can’t rule out the cash deficit blowing out even further. He says ‘recessionary factors’ are still at play. There are no signs of new jobs. … National’s economic plan seems to be to cross its collective fingers and dare I say it -‘borrow and hope.’ ”?
As I said before, I do of course respect the eminent “Professor” Garner’s economic assessments, but, of course, the world has just come through the global financial crisis. It is important to point out to the member opposite that the Government’s fiscal deficit this current year is something like $13.3 billion, so the Government is basically, on behalf of taxpayers, investing to keep the economy going to the degree that it is. But the reality is that if the member thinks we should do more, then he is actually talking about lifting the Government debt even further, and I think he should come out and say that.
John HayesWhat measures is the Government taking to ensure that the economic recovery is sustainable, and how will this differ from the period between 2005 and 2008?
The Government is taking several steps with its six-point plan to achieve faster and more sustainable economic growth. One such measure was the very well-received tax package on 1 October, which provided across-the-board income tax cuts and left the vast majority of New Zealanders better off. The switch between income tax and consumption tax is the latest step in the Government’s programme to move the economy away from the borrowing, consumption, and housing speculation of the past decade. The Minister is pleased to see reports that show that households and businesses are moving away from that spending and borrowing, which became features of our lopsided economy from about 2005.
Hon David Cunliffe Link to this
How does he respond to the Reserve Bank’s comments that show that the only glimmer of any economic activity over the coming year is in the form of high export prices and repairs in Canterbury, neither of which the Government can claim credit for?
Selective quoting has its limitations. I would suggest a couple of other things that Dr Bollard says in the recent Reserve Bank annual report, when he points out that the global financial crisis “highlighted New Zealand’s external imbalances, demonstrated by our deficit in the balance of payments on goods and services, and our negative net investment income position. These deficits are now … improving.” For example, the current account deficit averaged about 8 percent of GDP over the last 4 years of the previous Government; the current account deficit is now just 3 percent, and is forecast to remain below 5 percent. Dr Bollard also noted that “Households have been reducing mortgage debt where possible, and have been … cautious about re-entering the housing market—attitudes that have been reinforced [positively] by recent tax changes.” All these things, and other things that the Reserve Bank governor has said, have pointed out that the rebalancing this economy needs so much is occuring.
The Minister noted yesterday that the National Bank’s latest business outlook survey showed that business confidence has picked up in October. A net 24 percent of respondents expect general business conditions to improve in 12 months’ time, up 10 points on the previous month. These surveys, of course, continue to fluctuate, and, as I have said, the economic conditions remain challenging for many businesses as the economy makes the necessary adjustments away from debt, consumption, and housing speculation towards saving, investments, and exports.
Hon David Cunliffe Link to this
When he told the Finance and Expenditure Committee yesterday that “This is not the typical recession where we come out of it aggressively.”, did he deliberately choose his words to directly contradict and undermine his leader, who had predicted exactly the opposite?
Of course, I cannot verify the exact comments the Minister of Finance made at the select committee yesterday. I point out to the member that the Prime Minister’s full quote from March 2009 is that “by the end of 2009 early 2010 this time next year we’ll be starting to come out of that and I think actually starting to come out of it reasonably aggressively, I’m more optimistic about 2011 than 2010 but nevertheless I think 2010 will be positive.” The reality is that those statements were proven entirely correct. We started to come out of recession by the end of 2009, 2010 will be positive, and 2011 will see a considerable improvement. In terms of aggressive growth, the House should note that the New Zealand economy has actually grown more in the last 9 months than it did in the whole 4-year period before that.