Income Per Capita—OECD Ranking

What does she think of the recent stagnation of the New Zealand economy, with a real risk that we are already in recession and with the virtual certainty of very poor growth over the next several years—so poor that our economy has been described by one major bank as being “in the cack”? What does she think that recent stagnation and very poor prospects will do to our ranking in the OECD?

I am sure the member is praying for exactly such an outcome, but I have much more faith in New Zealanders and our economy than he does.

Can she confirm that, unlike in 1997 and 1998, there is no Asian crisis currently under way, that there have not been successive years of drought, and that, therefore, in the absence of major external shocks, the Government has managed to bring us to the brink of recession all on its own?

Cullen Hon Dr Michael Cullen Link to this

There is an old saying that one swallow does not make a spring. This country has just gone through something like 20 consecutive quarters of strong growth. The member is well aware that when the exchange rate of the dollar goes high and impacts on exporting, there is a period of rebalancing. That is exactly what the economy is going through.

Contrary to the claims made in the last question, can the Prime Minister confirm that during this Government’s period of office, there have in fact been 2 years of drought, that we have had a massive outbreak of international terrorism, a war in Iraq—

Mallard Hon Trevor Mallard Link to this

I raise a point of order, Madam Speaker. Both after I had been called for a point of order and during the asking of that supplementary question, the relatively new member who sits on the front bench of the Opposition was running a series of interjections. I know that the Opposition supports the principle of one law for all, and that principle should be applied to him, as well.

Cullen Hon Dr Michael Cullen Link to this

It is early in this particular session. Members are all on their final warning today, and that includes one for the level of barracking. It was at the maximum level in response to the last question. So would all members please get on and let us have a question time where we can hear both the questions and the answers.

I will repeat the question. Can the Prime Minister confirm that contrary to the assertions made in the previous question, we have experienced 2 years of drought under this Government, plus a number of serious floods, a major terrorist attack that led to an international crisis around terrorism, a war in Iraq—

Hughes Darren Hughes Link to this

I raise a point of order, Madam Speaker. I am sorry to interrupt my colleague, but Mr Smith interjected twice during Dr Cullen’s question.

Smith Hon Dr Nick Smith Link to this

I know he did. I am sorry, Dr Smith, but I specifically did not take action the time before when the question was being asked. I put everyone on a final warning, so would you please leave the Chamber until the end of question time.

Point of order—I apologise.

Cullen Hon Dr Michael Cullen Link to this

I am frequently accused in this House of not upholding the Standing Orders. I try to be as fair as I humanly can, to enable a robust debate to take place. The matter was raised before. I gave a final warning, and you interjected twice, Dr Smith. It is not a question of an apology; it is a question of in fact obeying the rules. So I ask you to please leave the Chamber. You may, of course, come back if you have a primary question, and certainly you are permitted to come back at the end of question time.

Hon Dr Nick Smith withdrew from the Chamber.

As I was saying, can the Prime Minister confirm that contrary to the assertions in the previous question, there have in fact been 2 years of drought, a number of floods, a major outbreak of terrorism, a war in the Middle East, in Iraq, and that oil prices have risen from about $20 a barrel to over $60 a barrel, which is a far higher increase than occurred during the late 1990s?

I can indeed confirm that under the Labour Government there have been some 20 consecutive quarters of strong growth, despite all those conditions—circumstances that I consider far more difficult to deal with than the Asian crisis was, which the then National Government exacerbated by cutting spending.

Given that Dr Brash has put at issue the response to the Asian crisis of 1997-98, which, in the Government’s view, as it points to the future, was the appropriate action: the then Treasurer ensuring that there was significant liquidity and a greater social welfare, health, and education expenditure, or Dr Brash tightening the currency at that critical time?

Madam Speaker—

I think I understand your point of order about whether that is a responsibility and whether it is within the question. Would the member care to relate the question to—

Gerry Brownlee Link to this

I raise a point of order, Madam Speaker. Dr Brash put at issue the Asian crisis and response of 1997-98—

I raise a point of order, Madam Speaker.

The member should sit down. I am speaking.

Mr Brownlee, you must allow the member to finish and then you can have your say. Would both members please sit down. As I understand it—and I may have misheard—when the member Winston Peters rose, I assumed he was taking a point of order. I hesitated before the Rt Hon Prime Minister responded, because I was reflecting on whether the question was, in fact, in order. I will take the Rt Hon Winston Peters’ point of order and then Mr Brownlee’s point of order.

My point of order is that Dr Brash put at issue the response to the Asian crisis of 1997-98. What is important with regard to that is that one needs to know what a Government’s likely response would be should such a thing happen again: the response of the then Treasurer to ensure that liquidity in the market and confidence were retained in New Zealand, or the very opposite response from Dr Brash—the then Governor of the Reserve Bank—to tighten liquidity, which is all a fact?

So the question asks for an opinion on a situation.

Jeanette Fitzsimons Link to this

I have no hesitation in backing the then Treasurer’s approach on that. Dr Brash was known for high interest rates, which crushed the economy regularly.

Has the Prime Minister seen the report in The Economist of 6 February that the OECD itself is increasingly criticising GDP as a way of measuring well-being because it ignores inequality, pollution, and the depreciation of natural and built capital, and does she agree that we should instead aspire to a high ranking in social, environmental, and cultural well-being?

The member is right in saying that GDP rates per capita are not the only indicator of well-being, although they are significant. Of course, average rates can also disguise very great polarisation between the very wealthy and the very poor.

Is the Prime Minister aware that in 1999 New Zealand ranked 20th out of 30 OECD countries, and that the latest figures show we are still ranked 20th out of 30, and does it make her despondent to think that even during a period of strong international prices and good growing weather, we have not been able to get even close to No. 19?

No, I do not have that sort of despondent personality. I know this economy has been growing for 20 quarters on end, which is a far better result than Dr Brash—with his crushing policy on exporters—had for this economy, which he jolly nearly wrecked.

Does the Prime Minister think we will ever meet the objective of getting to the top half of the OECD, when although the Minister of Finance has said that the first step in doing so is to raise our sustainable growth rate to 4 percent, Treasury has said that our sustainable growth rate in the future will only be around 3 percent?