Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 22 July 2014. Volume:700;Page:19264. Text is incorporated into the Bound Volume.]6.Hon DAVID PARKER (Deputy Leader—Labour)to the Minister of Finance: Has he seen reports that $4 billion to $5 billion will be sucked out of the economy due to the 35 percent fall in dairy prices since February and what policy responses if any does he intend to make to counteract this?Hon BILL ENGLISH (Minister of Finance):I have seen some reports that show that like opinion polls dairy prices go up and down. I can tell the member that we do not intend to counteract the drop in dairy prices by trying to shut down the industry as Labour and the Greens are promising.Hon David Parker: Does he agree with Goldman Sachs and Rabobank that there will be an oversupply of dairy products worldwide for the next 5 years putting more downward pressure on prices and what plan does he have to improve the New Zealand economy in light of that?Hon BILL ENGLISH: In the first place the dairy industry itself has a proud record of global competitiveness and resilience and I am quite confident that it will manage any fluctuation in prices that occur over the next few years. I might say that prices right now are still at relatively high levels. The decrease we have seen has been from record highs. The decrease was not unexpected. As I said the dairy industry will deal with it. The Government of course is proceeding with its Business Growth Agenda which is producing some quite impressive results—for instance a significant number of IT companies now listing for the first time on the stock exchange enabling diversification of investment for New Zealand savers.Hon David Parker: Well then does he not regret doing virtually nothing about the wood-processing industry decline which has seen large job losses that are concentrated in the regions and now after having less added value and fewer jobs face the consequences of a massive drop in log prices?Hon BILL ENGLISH: There have been some job losses in that sector including I might say in my own electorate. But the member is painting a partial picture. There have of course been very high returns in the industry to forest owners and there have been significant other new investments in further processing. In any case after 30 years of the Labour Party talking about trying to add more added value in timber in New Zealand it has never come up with a scheme that succeeds and of course it never will. Bureaucrats and politicians do not understand the complexity of managing the risks of producing a natural product and selling it halfway across the world. Our timber industry does understand those risks. It does a remarkably good job of it in sometimes difficult circumstances.Hon David Parker: Well then has he missed the public comments from the chief executive of Red Stag Timber who said that if Labour’s forestry package was implemented Red Stag Timber would invest immediately an additional $120 million in forest processing?Mr SPEAKER: I call the Hon Bill English in as far as he has ministerial responsibility.Hon BILL ENGLISH: I have seen the comments and it is not surprising that the person leading that company would invest more if he thought the Government was going to underwrite his risks. A lot of people would. Whether of course that is sustainable is a completely different issue.Hon David Parker: Given that the trade-weighted index and the New Zealand dollar are still at elevated levels despite the prices of two of our major exports logs and dairy collapsing in recent months does he now accept that there is something wrong with monetary policy as well as tax and savings settings or does he blame it on his failed housing policy?Hon BILL ENGLISH: Now that the member has labelled it a crisis I am sure it will start coming right because that is the same thing that has happened with the regional crisis the infrastructure crisis the employment crisis and the manufacturing crisis. Yes the dollar is at elevated levels. One of the reasons for that which the member should keep in mind is the relatively strong performance of the New Zealand economy compared with other economies. The Kiwi dollar can buy more for households today than at any time in the last 50 years. We see that as a success but of course it is an ongoing challenge for our export sector and we back them by taking every measure we can to improve their competitiveness. The Opposition’s policies are designed to hamstring if not shut down big parts of our export sector.