4. PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this
to the Minister of Finance
What steps did the Budget take last month to achieve faster economic growth based on higher savings, exports, and productive investment?
Hon BILL ENGLISH (Minister of Finance) Link to this
The Budget set out several more balanced steps. In the Government’s programme we tilted the economy towards exports, savings, and investment. In particular, the Budget mapped out a faster path to a healthy Budget surplus by 2014-15, while continuing to protect the most vulnerable New Zealanders but encouraging the shift of people and capital from the domestic sector and the Government-funded sector to the export sector.
Peseta Sam Lotu-Iiga Link to this
How will Budget measures that reduce future Government borrowing help to support jobs and faster growth?
The Government has been willing to grow its borrowing through the recession to help protect New Zealanders from the sharpest edges of that recession and maintain consistent investment in infrastructure and public services. However, too much debt can be a bad thing. In the future, reducing the need for Government borrowing will support jobs and growth by keeping interest rates lower for longer. For instance, floating mortgage interest rates are at their lowest levels for more than four decades. This has put hundreds of dollars a month extra into the pockets of hard-working New Zealanders. Of course, in the economic cycle interest rates are likely to rise, but good Government fiscal policy could keep them lower for longer.
Peseta Sam Lotu-Iiga Link to this
Following the Budget, what reasons are there to be optimistic about the outlook for the New Zealand economy?
There are many reasons to be optimistic, in addition to the achievements of the Government. Our terms of trade are at 50-year highs. Our exchange rate with Australia is at a 20-year low. Households are increasing their savings. Because of significant tax reform, we now have a highly competitive taxation system. We have been promoting a continuous improvement in our regulatory systems. The public sector is becoming more efficient. We have almost completed the reregulation of our financial system, so that investors can have confidence in it. All of those factors will help to underpin a growing economy.
Just more good news on that front. Probably the most impressive reports were mentioned in this House last night, when the Hon Nathan Guy read out the vox pops from the Kapiti Observer, which were without exception positive about the direction of the Budget. This backs up the business confidence surveys, which have become quite positive in the last few weeks. I have to say I am more cautious than the bounce in business confidence is, but it is promising.