1. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
Does he stand by his statements relating to the downturn in the New Zealand economy?
Hon JOHN KEYIs Mr English’s view that New Zealand is “unlikely to aggressively grow out of” the recession closer to the mark than his own view of the deepening recession shown by the latest economic survey, where the Prime Minister previously claimed that, in fact, we would aggressively grow out of this recession by the end of this year?
Actually, the Minister of Finance’s assessment of the economy and mine are remarkably similar. For the purpose of the Leader of the Opposition’s education, I just inform him that the advice the Government has received from Treasury is as follows. If the economy grows slightly faster than is predicted in the Budget round, then Treasury predicts that we will be growing in the June quarter of this year. If it is broadly in terms with where Treasury thinks the Budget might be, remembering that that is quite considerably worse than the Budget Policy Statement, then Treasury expects it to be no later than in the December quarter of this year. Even under Treasury’s doomsay scenario, it thinks it will be March 2010.
The Leader of the Opposition has asked the question, and for the purpose of good order, I will just repeat my quote. When asked by Guyon Espiner whether we would still be in recession in a year’s time, I stated—and this is the quote, verbatim—“I think by the end of 2009 early 2010 this time next year—we’ll be starting to come out of that and I think actually starting to come out of it reasonably aggressively. I’m more optimistic about 2011 than 2010 but nevertheless I think 2010 will be positive.” Once again, we on this side of the House are right.
Hon Phil Goff: I seek leave to table the transcript of an interview with Mr Bill English on Q+A on 5 April 2009, where, contrary to saying that we will come out of the recession reasonably aggressively, he stated that we are unlikely to aggressively grow out of it.
Mr SPEAKERDid the Prime Minister talk to Mr English about contradicting, and therefore undermining, his view about aggressively coming out of the recession, given the confusing signals to the business community and the public when the two National Party leaders say things contradicting one another; and is the Prime Minister confident that this will not happen again?
Not in the slightest—I have huge respect for the views held by the Minister of Finance, and I talk to him regularly. I might add that, on top of the different scenarios Treasury has provided, it is worth noting how much variation there is out there. Only this week Business and Economic Research Ltd came out thinking unemployment would be 5.2 percent at its peak. Members can contrast that with the New Zealand Institute saying a few weeks earlier that unemployment would be 11 percent; the New Zealand Institute of Economic Research had it at 6.1 percent. The reality is that we are in a very unusual recession—arguably the worst since the 1930s Depression—and there is a range of views on exactly when New Zealand will start growing again.
Nathan GuyIs the Government more concerned about economic forecasts than it is about actually doing something to help New Zealand through the recession?
Unlike the Opposition, this Government is not obsessed about updating, and talking about, forecasts. We are much more concerned about taking action to help blunt the sharpest edges of the recession. I might add as well—
Hon Chris CarterIf I were Mr Chris Carter, I would go out and get some bike shorts, because he will be using them soon. The basic point is that the Government has done a lot. Whether it is tax cuts, small to medium sized enterprise packages, the Resource Management Act reform, the reform of Auckland’s governance, or the 9-day working fortnight—this has been a very busy and active Government.
Does the Prime Minister stand by his commitment to a Cape Reinga to the Bluff cycleway, which would create 4,000 jobs at a cost of $50 million; if so, how does he explain his deputy’s comments on Q+A“Well, we won’t be spending $50 million on it this year, or next year, or the year after.”, which again seems to undermine his leader, and has the Prime Minister talked regularly to Mr English about that?
I am confident about the cycleway. However, after looking at the Television One poll results on Sunday night, I am fearful that Mr Goff will be on his bike before I am.
Will the Government be changing its economic and fiscal policies every time an economic forecast changes?
No. The forecasts of the length and depth of the recession will continue to change over the coming months, but the pathway out of the recession is crystal clear—that is, all of the actions that this Government has been taking; it is a busy Government.
What new plans does the Prime Minister have to tackle unemployment, given Treasury’s prediction yesterday that 60,000 more New Zealanders will be out of a job by this time next year, and to what extent does he believe that those plans will reduce that estimated number?
As I said in answer to one of the earlier questions from the member, there is quite a wide range of predictions from Treasury, both in terms of growth, where it pointed out that we may well be growing in this quarter, right through to the doomsay scenario, which was the March quarter of 2010. That is equally the case when we look at unemployment; there are a range of predictions. What I can say is that the Government is focused on keeping people in work or ensuring that people get into jobs as much as they can. This Government has taken action; the Opposition is taking no action other than whingeing.
Hon Sir Roger Douglas Link to this
What action does the Prime Minister intend to take to restore confidence in the New Zealand economy, given the results of the Quarterly Survey of Business Opinion, which shows the lowest level of confidence since 1974?
I think the business community is responding to what it is seeing internationally, which is a very weak international position. But I think the New Zealand business community is taking confidence from the fact that this Government is acting. Thirteen days after the royal commission’s report, we announced a plan for the reform of Auckland. Tax cuts were delivered on 1 April. The reform of the Resource Management Act is flowing through the House. The member’s own leader is working very aggressively and very effectively on reducing regulation across the New Zealand business community. When I go around businesses in New Zealand, the only thing I hear from them is: “Thank goodness there is a National-ACT Government. We are very pleased to see the back of Labour.”
Does Bill English’s comment yesterday that it was anybody’s guess how high unemployment would go next year indicate a lack of confidence in current plans to deal with unemployment; if so, what plans does he have to stop unemployment spiralling out of control, like Treasury has estimated?
No, it reflects the reality, which is that it is anybody’s guess how high unemployment might go. The Minister of Finance is working very hard on making sure the New Zealand economy starts growing as quickly as it can. Can I say how lucky we are to have a Minister of Finance so focused on that issue.
Does he accept that the downturn in the economy will disproportionately affect in a negative way Māori unemployment; and how does this fact, together with no tax cuts for low-income Māori families, fire-at-will in the first 90 days of employment, and the failure to even consult Māori in Auckland about representation in Auckland governance, enhance mana, as the agreement with the Māori Party would have suggested?
I do agree with the Leader of the Opposition that the recession is more likely to affect Māori New Zealanders, as they are disproportionately represented as lower-income New Zealanders. We are doing a lot of things. It is not true that Māori did not get tax cuts; they got them like everybody else. It is true that the 90-day provision legislation will absolutely help Māori, because it will help them, just as it will help other New Zealanders, to get a job.
Hon Trevor Mallard Link to this
Further to his reference to the importance of tax cuts to the recovery of the economy, has he accepted the proposal of the Minister of Finance for a Budget Day announcement that out-year tax cuts will be scrapped?
The Government has not made any decision in relation to tax cuts for the out-years except to say that we recognise that there is a difficult economic position in front of us. The Government needs to make sure that it is balanced in what it does and it will take the actions that are necessary to ensure that we do the best for New Zealanders. I can say that tax cuts, whenever they occur, in my opinion are good for the economy because they stimulate demand and they put the right incentives back in the economy.
Hon Trevor Mallard Link to this
Is he prepared to rule out the reversal of the legislation passed in December for tax cuts?