Economy—Statement

Well, does the Prime Minister, then, agree with Michael Cullen’s assessment today that a recession cannot be ruled out as the New Zealand economy struggles against weak housing markets, a drought, the international credit crunch, and various other factors; and how does she reconcile that frank and stark statement by the Minister of Finance that New Zealand might be heading for a recession with her own comments that everything is holding up just hunky-dory, thanks very much?

I think it is important to quote people accurately, so I will quote the Minister of Finance, who said: “it would be foolish to rule out the possibility that there could be two successive quarters of very small negative growth at some point in the next year or so.” That would not detract from the Treasury advice we are getting that the economy will continue to grow over whole year cycles.

Why, if a recession cannot be ruled out, did the Prime Minister say yesterday that her Government “is not planning to change its policy settings” in the face of a worsening economy; and does she not think that New Zealanders who are reeling from very high petrol prices, very high mortgage rates, and very high food prices, and who are generally struggling to make ends meet, deserve a break from the massively increasing spending budgets that her Government keeps rolling out?

Again, I think it is important to quote people accurately. What I said at my press conference yesterday was that the Government was not planning to change its economic policy on the back of one front-page article quoting one economist of the Bank of New Zealand that happened to appear in the Dominion Post a couple of days ago. If the Leader of the Opposition knows how to reduce oil prices, if he wants to reduce international dairy prices, and if he has an answer to the US credit crunch, we are all ears. But I note that today National could not even tell people what its policy was on KiwiSaver, let alone any of those things.

Given the fact that we remain an export-dependent economy, with our primary products holding up, and with the recent initiative that the Government has announced with regard to research and development to invest further in these industries, when will the Government address the highly inflated dollar held up by the settings behind the Reserve Bank of New Zealand Act?

The Reserve Bank, of course, has not actually lifted the official cash rate for some time. But banks themselves are lifting their rates, because they are experiencing the flow-on effects of the credit crunch from offshore.

Is it not just the case that Michael Cullen is quite prepared to admit that there might be a recession—[ Interruption]; well, it might be funny for Michael Cullen but it is not funny for New Zealanders; I can assure him that they are really struggling out there—but is not prepared to do anything about it in terms of reining in waste or reining in Government spending, and that there is one reason for that, which is that her Government is locked and loaded in a programme of large spending in a desperate attempt to buy a fourth term, and it will not work?

Jeanette Fitzsimons Link to this

I do recall when a previous Government ran into some economic heavy weather—1998. That Government’s response was to cut New Zealand superannuation and sell one of the jewels in the crown of the State-owned enterprises, which was Contact Energy. I can assure members that the Labour-led Government’s response to international market volatility will not be to sell State-owned enterprises, and it will not be to cut the pension. On the contrary—on 1 April New Zealand superannuation goes up, and it goes up by $34 more than it would have if National’s policy had stayed in place.

When the Prime Minister said at her post-Cabinet press conference yesterday that New Zealanders would not want to lose the perceived benefits to the economy of the China trade deal over human rights issues, was she aware of the Television New Zealand (TVNZ) poll showing only 39 percent of New Zealanders were of that view, and will she apologise to the other 61 percent whom she has accused of believing that growing New Zealand’s GDP is more important than torture and human rights abuses in other countries?

For every poll the member quotes, I can quote another. I can quote the poll that the Minister of Trade has referred to today, which was taken around the same time period as the Television One poll and asked: “Do you generally approve or not approve of a free-trade agreement with China?”. The result was that 44 percent said yes, they did generally approve of it, and 35 percent said no.

Can the Prime Minister not understand that New Zealanders are not expecting miracles from the Labour Government—they have long since given up waiting for those—and all they want is a fair go; they are sick of seeing their money wasted on a massive build-up in the bureaucracy and they are sick of seeing a Government that puts pressure on interest rates; all they want is enough money to be able to pay the mortgage, pay for a block of cheese, and fill up the car but, sadly, they will have to wait a long time under a Labour Government to be able to afford to do that?

What New Zealanders want is prudent economic management. If this Government had followed Mr Key’s advice 16 months ago and cut taxes by $11.5 billion, we would be heading for Crown debt of 50 percent right now. That is why we would never follow his advice.

Given that there is about a 24 percent spread between those two polls—which would be the kind of result in any self-respecting democracy that would bring the polling industry to meet and examine its methodology in order to ensure there is some sort of science about this, rather than the viewing of entrails, which seems to be the case with the TVNZ poll—when will she join New Zealand First’s demand that there be no polls 28 days out from the election so the people of this country can make up their minds, without—[ Interruption] Before the election. It will not matter in that member’s case, before or after.

The question is very, very wide of the original question. Although polls were raised in a supplementary question, they were specific to a free-trade agreement, which was within the context of the economy, not generally.

I raise a point of order, Madam Speaker. With respect, what New Zealanders think about the free-trade agreement with China is a rather important political matter. I do not think there is any politician in this House who would dispute it. All I am saying is that if we are going to have polls on what the people think, let us employ some science behind this, not a bunch of people who arrogantly say: “That pollster is wrong; I am right.”, and never bother to meet and sort out their methodology, which I advocate TVNZ does.

That is a matter for another question.

Well, if New Zealanders want prudent economic management, as the Prime Minister has just pointed out in her answer, why does her Government not start delivering it, instead of increasing expenditure by 30 percent more in its last Budget, despite the fact that Michael Cullen knew, because Treasury had told him, it would increase interest rates, it would keep them up higher for longer, and it would keep the exchange rate higher for longer—although her colleagues might laugh in the face of New Zealanders, they are not laughing out there in “mortgage belt New Zealand” right now?

Prudent economic management has delivered for New Zealand the longest run of economic growth since the Second World War. Prudent economic management has delivered the lowest unemployment rate in around 25 years. I hate to think what Kiwis would be paying for their mortgage rates now if that member—that gambler—had ever got his hands on the economic tiller.

Well, what confidence can the New Zealand public have in her Government when her Government cannot even get the numbers right—like today, when it had to admit there was $600 million more revenue than it announced last week?

The only person disappointed that there is $600 million more in the coffers is the Leader of the Opposition, because it does not suit his doom and gloom scenario.

Well, are the facts of life not that her Government will miraculously find another $600 million—or maybe it will be $1 billion—a few weeks before the election just like it did last time, because that is the way the books are run under a Labour Government?

I raise a point of order, Madam Speaker. I just want to make a point here to do with the format of questions, because you have given an indication that questions should begin with a questioning word for a start. Mr Key gets about $100,000 more than most backbenchers, and a car and everything else that goes with it, and at this point in time he cannot, surely, get away with saying “well” at the front of every question. I am asking you to uphold some rules here, because at a certain point those backbenchers will think that if he can get away with it, then why cannot they have his job and do the same thing, because they can do it just as well.

Cullen Hon Dr Michael Cullen Link to this

It is a timely reminder. I hate to remind the member that he started a question today with “given”. I did not intervene at that point, because this sometimes happens. However, it is a timely reminder that questions should be questions.

Does the Prime Minister draw the conclusion from slash-and-burn calls arising out of the international credit crunch that Roger Douglas is not merely out of the box but now running National Party policy?

Cullen Hon Dr Michael Cullen Link to this

Yes, the—[ Interruption] If that member interrupts me one more time when I am reflecting on a ruling, then I will be asking him to leave the Chamber. The member will please be seated. Often it is very difficult for me to hear exactly what is happening because members are interjecting. Therefore, I must reflect upon what I think has been said. I say to Dr Nick Smith that that is what I was doing. Would the member please repeat the question so that we can hear it, and then I can make a ruling.

Does the Prime Minister draw the conclusion from calls for slash-and-burn policies based on an international credit crunch that Roger Douglas is not merely out of his box but now running National Party policy?