1. AMY ADAMS (National—Selwyn) Link to this
to the Minister of Finance
What reports has he received on the economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
Emerging evidence suggests that despite the February earthquake the economy has been on track, and perhaps a little stronger than expected, in the first part of 2011. Manufacturing volumes rose by 1.9 percent in the March quarter following a 3.7 percent increase in December. Retail sale volumes rose 0.9 percent in March, wholesale trade was up 2.8 percent, and consumer confidence has lifted. This resilience in the face of adversity highlights the many positives supporting the economy. These include high export prices, strong demand growth from Asia, lowest interest rates for 45 years, and a credible path back to surplus for the Government’s accounts.
What do the latest New Zealand Institute of Economic Research consensus forecasts show?
The consensus forecasts are a blend of forecasts from 11 different forecasting organisations. They show GDP growth over the next year to be about 2 percent, followed by 4 percent in the year following that; a large lift in residential investment, growing by 38 percent in the June 2013 year, reflecting the Christchurch rebuild; interest rates staying low; and the Government’s Budget balance improving.
They are fairly similar. The private sector forecast covered by the New Zealand Institute of Economic Research consensus is quite close to those prepared by Treasury. For instance, it forecasts employment rising by 3.8 percent, and Treasury picks about 3.6 percent. Its average consumer price index forecast for inflation is identical to Treasury’s.
John BoscawenHas the gap between GDP per capita in Australia and GDP per capita in New Zealand narrowed or widened since his Government came to office; or does he not know?
I cannot give the member the precise figures, but in the first quarter of this year it has probably narrowed, because our economy looks like it has grown a bit and the Australian economy has shrunk. However, a quarter-to-quarter measure is almost irrelevant. In the long term we believe that sound policies and careful and considered decision-making will mean that over time we will close the gap with Australia, and the resilience that this economy has shown in recent times is a positive indicator of that.
I raise a point of order, Mr Speaker. The member started by saying that he could not give me a precise answer. I was not asking for a precise answer. I was simply asking whether the gap has narrowed or widened, or alternatively, if the Minister did not know that—
Mr SPEAKERI heard the Minister say distinctly that although he could not give the precise figures, he believed that during the first quarter of this year the gap had probably narrowed. He gave an answer.
I raise a point of order, Mr Speaker. He answered in connection with the first quarter. I specifically said “since his Government came to office”. I was asking whether the gap has narrowed or widened since his Government first came to office.
And he said he does not have those precise figures. The primary question asked what reports he has received on the economy. The member cannot expect the Minister to have that kind of specific, detailed information.
Hon David Cunliffe Link to this
Does he recall replying to a similar question to this primary question, in September 2009: “I have received reports indicating that the economy is showing some early signs of recovery,” or the one in October 2009, to which he replied: “In recent weeks a number of reports have confirmed an early sign of pick-up in business confidence.”, or the one in March 2010, when he replied: “It is important we convert the early start to recovery into a permanent lift,” or the one in July 2010, which turned out to be a year of zero growth, when he said that the economy was “making very significant progress” and the Government was “working to get this economy on its feet”, or is it his habit—
I want to hear the question. It is a bit long. [ Interruption] I apologise to the member. The question is a little longer than usual but there is a pattern to it, and I do want to hear the question, and I want his own colleagues to let him be heard. We will not start the question again.
Hon David Cunliffe Link to this
You anticipated my point of order. Not wanting to miss the punchline, I ask is his habit of counting his chickens before they have hatched one of the reasons why Standard and Poor’s has kept his Government’s credit rating on negative outlook?
I do recall those answers, and I am impressed with what an upbeat and aspirational Government we have been, through some very tough times.
There are always risks to the future prospects of this economy—for instance, this week there are critical meetings in Europe, where they are trying to grapple with the problem of the potential default of Greece, and if that were to occur, then the markets in which we borrow significantly and regularly could be disrupted. There are also risks closer to home. We could undermine recovery if, for instance, half-baked spending promises led to soaring debt. That would be bad for the economy.
Hon David Cunliffe Link to this
Given his aspirational reply to my earlier supplementary question, is it now he who is dancing from cloud to cloud, or has he seen the new immigration report from Statistics New Zealand that shows chippies, plumbers, and other building industry professionals are leaving the country at a rate of 20 a day, and over 4,000 have left since the first Christchurch earthquake, and how will Christchurch rebuilding happen if his Government makes no effort to retain the skilled workforce we need to undertake that work?
I have not seen those figures. In the first place, it is the responsibility of the companies that expect to rebuild Christchurch to ensure that they have skills. Of course it will be tight, because they are competing with very, very large salaries, particularly those in Western Australia where something like $250 billion worth of capital projects are in the pipeline. However, we are confident that we have the resources of both funding and skills to rebuild Christchurch.
Has the gap between GDP per capita in Australia and GDP per capita in New Zealand narrowed or widened since his Government came to office, or does he not know?
I cannot give the member those precise figures, but, as the member knows, the Government wants to close the gap with Australia by 2025. In any given year or two the gap might move one way or the other, as, for instance, in the last quarter it has probably moved in favour of New Zealand. Our policies are focused on a longer-term increase in New Zealand’s growth potential, and we are putting in place policies such as investment in infrastructure, a major tax change, and a very efficient public sector, which will enable us to achieve that increase.
Has the Government instigated any investigation into how South Canterbury Finance was underwritten by the taxpayer to the tune of $1.7 billion, now that its president for life has been charged with over 50 counts of fraud, including theft?
I could not comment, at all, on the matters regarding South Canterbury Finance that are now before the court, but the existence of the guarantee not of South Canterbury Finance but of its depositors, which is a different thing, came into existence in the financial crisis in late 2008. As I recall, the whole of Parliament supported that guarantee being put in place to prevent financial contagion, which could have potentially brought down much larger financial institutions, such as our banks. On reflection, New Zealand is in a much stronger position than many developed countries, because we did not have a banking collapse.