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Credit Rating Downgrade—Prime Minister’s Statements

Tuesday 4 October 2011 (advance copy) Hansard source (external site)

Parker7. Hon DAVID PARKER (Labour) Link to this
to the Prime Minister

Does he stand by his statement that “if we get downgraded, I personally would be very disappointed and very surprised”?

ParkerHon David Parker Link to this

Which of the following does the Prime Minister think was the more significant reason behind the rating agencies’ decisions to downgrade the rating of New Zealand: his Government’s consistent failure to meet its own growth forecasts, or the projections of ever-increasing international debt?

EnglishHon BILL ENGLISH Link to this

The most significant factor has been the fact that the global economy is facing increased volatility and lower growth prospects. That has made ratings agencies, banks, governments, and everybody much more sensitive to debt. So despite the fact that New Zealand’s position is better than it was in 2008, we have been put under the microscope and rating agencies have decided that even with a lower level of external liabilities, we are not as creditworthy as we were.

ParkerHon David Parker Link to this

Which of these indicators of his Government’s performance over the past 3 years does he think drove, or most drove, the double downgrade: 56,000 more unemployed, real GDP per capita down 3.6 percent, real wages down 3.2 percent, the wage and GDP gap with Australia up, Government spending up from 31 percent to 36 percent of GDP, net Government debt up 1,700 percent, or 100,000 immigrants to Australia and an $18 billion deficit?

SmithMr SPEAKER Link to this

Before I call the Minister to answer that, whoever is holding those signs in the gallery will take them down immediately or they will be removed. They will be taken down immediately. Thank you.

ParkerHon David Parker Link to this

Given the Minister’s acknowledgment in the first supplementary answer that the greatest problem was New Zealand’s increasing international debt, when will he be introducing substantial policies to grow our exports, and is he willing to consider a capital gains tax to properly direct investment into the export sector?

EnglishHon BILL ENGLISH Link to this

I think that the member might have missed the large tax package that the Government put in place in the Budget last year, which is, I think, taking about $800 million this year out of the speculative property sector. The Government is committed to rebalancing the economy to grow exports, and we do not believe that new taxes, more spending, and $7 billion worth of more borrowing are the ways to do it.

ParkerHon David Parker Link to this

Is the Minister telling New Zealand that National rules out ever introducing a broad capital gains tax?

EnglishHon BILL ENGLISH Link to this

That is the case, and I think that both of the people who turned up to that member’s meetings recently would agree with us.