6. STUART NASH (Labour) Link to this
to the Minister of Finance
In what way is New Zealand “better placed to withstand” a financial crisis than 3 years ago given that before he came in to office the Government was running a surplus and core Crown net debt was just 1 percent of GDP and now the Government is running record deficits and net debt is 20 percent of GDP?
Hon BILL ENGLISH (Minister of Finance) Link to this
The member has a somewhat rosy view of the situation when the Government came into office. In fact, the forecasts published just before the election showed 10 years of deficits and ever-increasing public debt, based on the policies of the previous Government. At the time we had mortgage interest rates of over 10 percent, exports actually shrinking, inflation at 5.1 percent, the New Zealand economy having gone into recession well before the global financial crisis, and people losing jobs.
With that in mind, is the Crown’s credit rating now on negative outlook, and was this the case when he took office?
I think it is on negative outlook, and that is remarkably better than the downgrade we would have faced if we had not changed the damaging and wasteful policies of the previous Labour Government.
I cannot give the member the exact figure, but I can tell him this: if the member looks at the last Budget, he will see a page of tables that show that around 2004-05 this economy went badly off the rails, well before the global financial crisis. Debt blew out, Government spending blew out, and our export sector actually started shrinking. We have had to deal with the legacy of the previous Government’s policies, as well as the global recession. In the circumstances, we have done reasonably well.
Dr Cam CalderWhich of those problems he noted the Government inherited 3 years ago that left New Zealand poorly positioned to withstand the financial crisis has the Government addressed and fixed?
We have addressed all of them. We have fixed quite a few of them, but some of them were the result of 10 years of damaging economic policy and they will take 10 years to fix.
Has he seen the Government financial statements showing that net debt has risen by $36 billion since he came to office?
Yes, I have, and if the Government had not imposed some tight spending constraints, that figure would be much worse. I know that the Labour Party has opposed every single decision this Government has made to restrain spending. I am not surprised.
Since the facts clearly show that the country’s economic position has deteriorated since his Government took office, when will he present a real plan for the economy like Labour’s, or is his only plan to sell State assets in a falling market?