6. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Has the economy improved in line with his prediction on Q+A in February 2010 that the economy would “get better” over the next 12 months?
Hon BILL ENGLISH (Minister of Finance) Link to this
Yes, but my prediction that the member would get better has not.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. Do you feel that he may have addressed the question, or might he have another go?
Mr SPEAKERI must say that the member has a legitimate grievance, in my view. The question was answered—and it was a perfectly fair question. It asked: “Has the economy improved in line with his prediction on Q+A in February 2010 that the economy would “get better” over the next 12 months?”. There was nothing political in the question, and the last part of the answer was gratuitous. The member has a legitimate grievance about that, and I ask Ministers, when answering straight questions like that, to avoid that kind of gratuitous comment.
Hon David Cunliffe Link to this
Has GDP growth in each of the last three quarters following his February 2010 prediction got stronger or weaker?
As the member will know, GDP growth has fluctuated through the year. I think that the first quarter might have been about 0.6, and the September quarter was slightly less than zero. The economy did not grow in 2010 as quickly as most people anticipated, and I think the reasons for that are pretty well understood. New Zealanders are saving rather than spending, and the engine of growth that came from fast growth in credit and house prices simply has not kicked into action in the last 12 months.
Chris TremainThe distinct feature of the recession was that it was, to a large extent, a financial recession—that is, dominated by excessive debt. So New Zealanders have set about the business of clearing or reducing that debt, and increasing their savings. Although in the short term it means that there has been a bumpy road to recovery, in the longer term it is laying down a stronger foundation for future growth. New Zealanders will have got their debt to reasonable levels and will then be ready to spend and invest in a more measured way.
Hon David Cunliffe Link to this
Do recent official statistics that show that total retail sales for the December quarter went backwards by nearly half a percent make it more or less likely that New Zealand has now entered a double-dip recession?
As the member will know, it was discussed at the select committee last week. There may or may not be a technical recession—the change is about 0.1 or 0.2 percent above or below zero. But I think the retail figures simply confirm the story we know, which is that New Zealanders are not spending. They are trying to get their debt back to reasonable levels, and they are not feeling as wealthy because their house prices have stopped going up.
Hon David Cunliffe Link to this
If the Minister considers that negative growth is a good thing because it shows New Zealanders are saving more, why does he not go all out and drive the economy into, say, minus 10 percent growth so they can save even more?
What is happening is the result of hundreds of thousands of New Zealanders making their own choices. We believe that is quite a good way to run the economy. They have correctly figured out that if they are careful with their spending and if they support a Government that is pursuing plans for a stronger economy in the future, then they can expect to get the pay-off in higher incomes.