3. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
What reports has he received on the recent performance of New Zealand’s export sector?
Hon BILL ENGLISH (Minister of Finance) Link to this
Statistics New Zealand data show that, month on month, the value of New Zealand’s exports has increased by about 15 percent in the past year. This is largely due to record-high commodity prices, which have risen by about 16 percent over the last year. The challenge now is to increase the volume of our exports, to take advantage of these high prices. That is why the Government is focused on policies that shift resources from the less-productive non-tradable sector into the high-productivity tradable sector.
How have New Zealand’s domestic and internationally competitive sectors performed respectively over the past decade?
There are different ways of measuring that, but between 2003 and 2009, the non-tradable sector, which includes housing and retailing—the domestic part of the economy—grew by about 20 percent, mainly fuelled by borrowing. In the same period the export sector shrank by 6.3 percent because of poor Government policy settings, rising interest rates, and a fairly high dollar. That means that our internationally competitive industries went into recession from about 2005.
From 2003 to 2009 non-tradable jobs grew by 270,000, so we had strong job growth in the domestic part of the economy, but that was fuelled by unsustainable borrowing and unsustainable Government spending. By contrast, the export sector lost 55,000 jobs over the same period. So this Government has the task of crafting an economy that produces new jobs and job growth from the export sector, because the domestic part of the economy is not growing very fast.
Fortunately, job growth is starting to look more balanced and positive. In contrast to the period up to 2009 export sector jobs are now growing—in fact, they have increased by 25,000 in the last year and a quarter, or by about 6 percent. Of those new jobs, 17,000 are in the manufacturing sector, which has been doing reasonably well because Australia is in good shape and it is our biggest market for manufactured products. Job growth in the non-tradable economy is pretty flat, and it will probably remain so because the housing market is flat, the Government is not growing nearly as fast as it was, and people are being careful with their retail spending.