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Economy—Future Policy

Thursday 6 October 2011 (advance copy) Hansard source (external site)

Boscawen1. Hon JOHN BOSCAWEN (Leader—ACT) Link to this
to the Minister of Finance

Is it the Government’s plan, if successful at the coming election, to run the economy like they have for the last three years or to run it differently; and why?

EnglishHon BILL ENGLISH (Minister of Finance) Link to this

The issues for the economy will not have changed, so the plan would not change if the Government was re-elected. We have been working on rebalancing the economy more towards savings and exporting, and away from a reliance on debt and Government spending. A newly elected National Government would be committed to getting the Government’s books back into surplus. On the one hand there are some who say we should have slashed expenditure, and on the other hand there are others who say we should have borrowed a lot more money to stimulate the economy. The Government will continue to take a sensible middle course. But I can confirm we have no plans to legalise marijuana.

BoscawenHon John Boscawen Link to this

Does the Government plan to allow public finances to continue to, in the word of Fitch Ratings, “deteriorate”; if not, what concrete plans does he have to improve them?

EnglishHon BILL ENGLISH Link to this

No, public finances will not be allowed to continue to deteriorate, except maybe in the circumstances where there was another earthquake, perhaps. The earthquake has had a big impact on the Government’s finances. The plans to get back to surplus were laid out in the 2011 Budget.

BoscawenHon John Boscawen Link to this

Does the Government plan over the next 3 years to improve the New Zealand Government’s credit rating, or does the Government expect to keep it where it is or to have it deteriorate further?

EnglishHon BILL ENGLISH Link to this

We believe that if we were re-elected and continued with a sensible plan to get back to surplus and grow our capacity to earn an income from the rest of the world, so that we can lift incomes here and start paying off the mountain of debt we have, we would tend to have ratings agencies view us more favourably.

BoscawenHon John Boscawen Link to this

What does he believe the Government has to do in the next 3 years to achieve a credit upgrade?

EnglishHon BILL ENGLISH Link to this

I can tell the member what a re-elected National Government would focus on, and that would be to improve the competitiveness of this economy so that we can earn more from the rest of the world, to lift our incomes and create more jobs, and to get the Government’s finances under control, with a track back to surplus in 2 or 3 years’ time, when we can start repaying debt. In terms of the rating agencies, the threshold that at least one of them has set is a sustained positive current account balance. That is a huge challenge for a country that has not achieved that in the last 30 or 40 years, but we are up to that challenge.

CunliffeHon David Cunliffe Link to this

Does the Government plan to continue to increase the current account deficit and the net international investment deficit, as forecast in his 2011 Budget for the next 4 years, and does the Government plan to continue to reduce real median incomes by a further 16 percent in the next 3 years?

EnglishHon BILL ENGLISH Link to this

The Government plans to continue progress on both of the figures that the member mentioned. We have made significant progress on the net international investment position; it has improved. There are some forecasts that say it will deteriorate; we just regard it as a challenge to turn that round. On the current account deficit, thankfully it is half what it we inherited when we became the Government, just as interest rates are much lower than when we became the Government, and we want to continue with that progress.