4. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Prime Minister
Is it his policy to “muddle through” the current economic uncertainty?
Rt Hon JOHN KEY (Prime Minister) Link to this
No, the Government has actively taken a number of steps to ensure New Zealand can minimise any fall-out from global economic events. For example, we have set a faster track back to surplus and we have limited debt to under 30 percent of GDP. We have front-loaded our borrowing programme during favourable market conditions, which will cover the Government’s obligations over coming months should markets show signs of tightening, and the Reserve Bank has ensured it can provide temporary liquidity to sound institutions. It does not mean we are immune to any global events, but we are certainly in a lot better shape than the one we inherited from that hapless Labour Government 3 years ago.
Hon David Cunliffe Link to this
Given the answer to the primary question was no, it was not his plan, does he then agree with the sentiments he ascribed to his Minister of Finance this morning that it was sufficient for New Zealand to muddle through the current economic turbulence; or does he aspire to a better plan?
I have never said the words in the quote that the member has just said. In fact, I have the quote in front of me. The question from Rachel Smalley was “Do you believe a double-dip recession is on the horizon?”, to which I said “while the atmosphere and the mood is very dark in the United States”—by the way, that is the place where the President has Camp David as a retreat—“and in Europe, … we may just muddle through”, “we” being the world, not New Zealand.
Hon David Cunliffe Link to this
I seek leave to table a transcript of the Prime Minister’s response to that question from TV3’s Firstline—
Mr SPEAKERHon David Cunliffe Link to this
Does he recall the Minister of Finance giving a speech in 2009, wherein he said “we want to do better than just muddle through”; and, 2 years later on, with growth of just 0.1 percent, and 47,000 more people out of work than when he came into office, is it not time he delivered on this aspiration?
Yes, I recall that speech. Notwithstanding the earthquakes that have taken place in Christchurch, which have clearly had an impact on the economy, we have grown at 1 percent for the first half of this year. The OECD average has been 0.3 percent for the first quarter, and 0.2 percent for the second quarter. It might be worth thinking about what those quarters looked like in 2008: March was minus 0.2 percent, June was minus 0.6, September was minus 0.6, and December was minus 1.2. That is a remarkable set-up from that hapless Labour Government.
Hon David Cunliffe Link to this
I seek leave to table a document. It may assist the Prime Minister’s memory if I were to table this graph of GDP statistics, which shows the change in trend since—
Leave is sought to table that document. Is there any objection? There is objection. [ Interruption] A point of order is being dealt with, and it will not be dealt with that way.
Chris TremainThat is an excellent question. When the Government came into office in late 2008 we inherited the following economic conditions: inflation was 5.1 percent, mortgage interest rates were 10.5 percent, food prices had gone up 11 percent, the economy had gone backwards for four quarters in a row, Treasury was forecasting deficits for ever, and debt was meant to go to 60 percent of GDP and never come back down again. That was the going-away present that Labour delivered an incoming National Government. I am proud to have led a Government that has turned that situation round.
Hon David Cunliffe Link to this
When the Prime Minister promised New Zealanders an “aggressive” recovery and that the country would come “roaring” out of recession, did he mean that 3 years later he would be muddling through, and growth would be crawling along at 0.1 percent, well below the rate of population growth?
Again, I did not say “roaring”, so the member, if he wants to quote me, should get the facts and read them out properly, as well as the full quote, as he knows well. Relatively speaking, we are doing pretty well—not as well as we would like; of course we would like to do better. I am reasonably confident about quarter three and four growth.
Hon John Boscawen Link to this
Has he seen the IMF World Economic Outlook report, projecting New Zealand’s real GDP growth between 2006 and 2016 at just 0.8 percent per annum; if so, rather than muddling through, is he prepared to reconsider his decision to shelve the last two 2025 reports, which outlined a plan for New Zealand to boost its growth?
No, I have not seen that report, but what I would say is let us have a little bit of context about the last 3 years, at least. We have had a global financial crisis, which has affected—
Well, if David Cunliffe really thinks New Zealand can be the only country in the entire world that would be immune from the global financial crisis, then I think “Camp David 1” should swap over to “Camp David 2”, because he is clearly not demonstrating any form of leadership. Secondly, if one looks at the earthquakes, and the economic impact of those, which has been enormous on the New Zealand economy, and then within that context one looks at what is happening in New Zealand, I think one can take a view that says we are starting to do better and are improving within that environment. We have grown for eight of the last nine quarters, we will be back in surplus by 2014-15, our debt is one quarter of the OECD average, we have interest rates at a 45-year low, unemployment is starting to fall, we have created 45,000 jobs, and I think in the context of that environment, it is not too bad.
Hon David Cunliffe Link to this
Why is the Prime Minister content to roar about the success of the Rugby World Cup and the record dairy payout, outside the Chamber, but barely able to squeak about the performance of his Government—because it is all someone else’s fault, such as the global recession or previous Governments—when he gets into the Chamber?
I was actually slightly conscious that I was roaring inside the Chamber, but, for the purposes, let us go through it one more time. We have grown in eight out of the last nine quarters—not bad. We have interest rates at a 45-year low—not bad. Unemployment is starting to fall—not too bad. We are likely to create 170,000 jobs in the next 4 years, we have reformed the Resource Management Act, and, by the way, we are on track to win the Rugby World Cup.
Now, look. The House will come to order. It has had its fun, and will come to order. The member will resume his seat—
I thank the honourable member; I just want the House to settle down for a moment. Now, it is a point of order the honourable member wishes to raise.
Hon David Cunliffe Link to this
It was a little difficult to hear with that background noise, but I was wondering whether I heard the Prime Minister say when he will return to surplus—
Hon John Boscawen Link to this
Does he consider it satisfactory that the International Monetary Fund is projecting a lower 10-year growth rate for New Zealand than for 148 other countries, all of which have been affected by the global financial crisis, including Australia at 1.6 percent per annum and Singapore at 2.6 percent per annum; if not, when can New Zealanders look forward to his Government implementing the recommendations of the 2025 Taskforce?
About as soon as we look forward to decriminalising cannabis. I have not seen that particular report, so I cannot tell the member that detail, because the context of it would need to be seen. What I can tell the member is that in the last 6 months—if we just look at the last 6 months as an example—we have grown at double the rate of the OECD average.
Hon John Boscawen Link to this
I seek leave of the House to table a graph prepared by the International Monetary Fund showing projected growth rates over a 10-year period from 2006 to 2016, putting New Zealand at the 148th slot.