6. Question No. 6—Economic DevelopmentHon TODD McCLAY (National—Rotorua) to the Minister for Economic DevelopmentQuestion No. 6—Economic Development 6. Hon TODD McCLAY (National—Rotorua) to the Minister for Economic Development: Does he consider a strong manufacturing sector to be an important indicator of a strong economy: if so is he concerned that manufacturing has contracted two months in a row for the first time since 2012?Hon PHIL TWYFORD (Minister for Economic Development): Yes manufacturing is crucial to New Zealand moving from volume to value. On the second part of the question yes manufacturing is our most trade-exposed sector of the economy accounting for more than half of our exports. We are monitoring the effect that global uncertainty is having on manufacturing but it's important to note that New Zealand has strong economic fundamentals: unemployment near record low 3.9 percent; stable GDP growth at 2.7 percent; low inflation 1.7 percent; rising wages; and books in surplus. We also have a number of programmes in place to support manufacturers to innovate and to grow: the R & D tax credit commercialisation funds and our skills and training programmes. We're also opening up new trade opportunities so that our manufacturers can diversify their export products and destinations.Hon Todd McClay: Is he aware that employment in manufacturing has gone backwards for four consecutive months under his Government?Hon PHIL TWYFORD: Well what the member is seeing—and it's recorded in the performance of manufacturing index—is the effect that international uncertainty is having and the change in the index for new orders underlines that. By international standards our manufacturing sector is highly exposed to international markets and BNZ economists said recently that there's no doubt the manufacturing sector is under stress much like it is elsewhere in the world at present.Hon Todd McClay: Well is he aware that New Zealand exporters are receiving some of the highest prices they have in a decade and if so how does he explain new orders in manufacturing now being at their lowest point in a decade?Hon PHIL TWYFORD: Well export prices are high but that may well be because of other factors and as the Prime Minister said yesterday we've seen very high export prices for beef and lamb boosted by issues like swine fever in China. The point is that global uncertainty is feeding through into investment decisions that businesses are making. They are seeing global uncertainty and therefore not investing as much now to generate future activity. Given how trade exposed our manufacturing is the change in the index for new orders shows without a doubt the effect that that uncertainty is having on our manufacturers.Hon Todd McClay: Well is he honestly saying that the reason that manufacturing is going backwards and the economy is slowing is because of African swine flu in China and doesn't it have more to do with the anti-growth policies and considerable uncertainty that his Government has created over the last two years?SPEAKER: Order! The member will rephrase the question to make it in order.Hon Todd McClay: Is he honestly saying that it is African swine flu in China that is the reason for the slowdown and isn't it actually the case that it's his Government's policies and uncertainty that are delivering concern to the manufacturing sector in New Zealand?Hon PHIL TWYFORD: No. Swine flu is one reason why export prices are currently so high in relation to lamb and beef. But look I need to point out to the member that manufacturing sectors have been contracting in most other advanced economies including Germany the UK Japan and the eurozone while in the US and China we're seeing very very slight expansion. This Government inherited a failure to invest in the workforce for manufacturing and that is the thing that's holding our manufacturers back right now. That's what the—SPEAKER: Order! [Interruption] Order! I know it's not a Government question but the member was going on too long.Hon Todd McClay: What impact does uncertainty caused by his Government having no economic plan and their hundreds of working groups have on the confidence and growth of the manufacturing sector?SPEAKER: I'm going to ask the member to rephrase the question so it's within order.Hon Todd McClay: What impact does uncertainty caused by a lack of a plan by this Government and their hundreds of working groups have on confidence and growth of the manufacturing sector?Hon PHIL TWYFORD: I completely reject the premise of that question. We've inherited a failure to invest in the workforce. We're faced with global uncertainty. Actually compared to all of the other comparators internationally our manufacturing sector and our economy are performing extremely well at the moment. We are working with manufacturers actually to raise productivity and reorient the economy away from the reliance on population growth and property speculation that was the hallmark of economic policy under the former Government.Hon Todd McClay: Well is he aware that his Government is having the same impact on manufacturing confidence as the global financial crisis with confidence levels falling 73 points since they came to Government?Hon PHIL TWYFORD: Well the reason business sentiment is in that position is because of the global headwinds. It's because of the—Hon David Bennett: You're an idiot.Hon PHIL TWYFORD: —global uncertainty that's being experienced by all of our major trading—SPEAKER: Order! The member will resume his seat. David Bennett will withdraw and apologise.Hon David Bennett: I withdraw and apologise.SPEAKER: He's on his last warning.