Barclay Todd: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeBarclay Todd: Oral Questions — Questions to Ministers[Sitting date: 30 July 2015. Volume:707;Page:5508. Text is incorporated into the Bound Volume.]3.TODD BARCLAY (National—Clutha-Southland) to the Minister of Finance: What reports has he received on the outlook for the New Zealand economy?Hon BILL ENGLISH (Minister of Finance): In a speech delivered yesterday the Governor of the Reserve Bank said that the economy is growing at around 2.5 percent a year consistent with the solid moderate growth that this Government is looking for. He highlighted the factors supporting that growth including our record high labour force participation rate; our strong population growth as New Zealanders return from overseas and skilled migrants are attracted to New Zealand; ongoing investment activity including in construction; and continued strength in the services sector which makes up around 60 percent to 70 percent of GDP. He pointed out that the economy is also being supported by an exchange rate that is 25 percent down against the US dollar compared with this time last year and of course lower interest rates.Todd Barclay: How is the fall in the exchange rate and interest rates supporting sustained growth in the New Zealand economy?Hon BILL ENGLISH: These are adjustments that one would expect particularly given the way that the commodity cycle has worked for the dairy industry. Industries that were forced to become more efficient when the exchange rate was US88c are now likely to become more profitable with the exchange rate at 67c against the US dollar. Of course these businesses may get the benefits in time of lower interest rates. These changes will for instance benefit the technology sector. A report released today stated that technology exports have doubled over the past 6 years and are now worth more than $6 billion making them New Zealand’s third-largest export earner behind dairy and tourism. Of course we welcome these positive comments from the Labour Party members about the diversification of the economy which seems to have been going on under their very noses and we are pleased—Mr SPEAKER: Order!Hon BILL ENGLISH: —that they understand the importance of the technology industry.Todd Barclay: How is the Government supporting export sectors such as information and communications technology?Hon BILL ENGLISH: Information and communications technology is among the 350 pieces of concrete microeconomic policies laid out in the Government’s Business Growth Agenda. A key part of supporting exporters including information and communications technology is the significant efforts to secure free-trade agreements. The Government is also rolling out ultra-fast broadband building the Rural Broadband Initiative and establishing three information and communications technology graduate schools—in Auckland Wellington and Christchurch. So the Government’s unfolding vision of a growing and robust information and communications technology sector seems to be going pretty well.David Seymour: Does the Government have any plans to lower barriers to foreign direct investment?Hon BILL ENGLISH: New Zealand is in general open to foreign direct investment but of course in some areas there are quite significant barriers. The Overseas Investment Act applies a set of very complex tests to people who want to buy certain categories of land in New Zealand. The Government has no plans to change that piece of legislation.Todd Barclay: How does economic growth translate into more jobs and higher incomes for New Zealand families?Hon BILL ENGLISH: Economic growth of course is about companies investing another dollar and employing another person. The effect of that is that since late 2010 New Zealanders have created 194000 extra jobs and the latest forecasts anticipate about 150000 more jobs by 2019. Average annual wages have increased by $5700 in the past 4 years and are forecast to rise to about $63000 a year in 4 years’ time. That is an increase of a further $7000. So despite some concerns about dairy pricesat the moment the outlook for the economy for jobs and for incomes is for moderate sustainable growth.Grant Robertson: Has he seen any reports of anyone other than him saying that the economic slowdown is coming at “the right time in the electoral cycle”; and when will he apologise for that cynical and out-of-touch comment?Mr SPEAKER: Well there are actually two questions.Hon BILL ENGLISH: I have seen reports of that member saying it but of course the relationship between the economic cycle and the political cycle is important. Labour decided to think about thinking about work and then it went and thought about work and the result of its thought about work was that it has now decided to think about it further. The next election is coming far too quickly for Labour to work out what work is.Grant Robertson: Which of the following reports has given him such a rosy outlook on the economy: GDP growth being negative in the March quarter the worst quarter since December 2010; dairy prices having fallen by over 50 percent since March; commodity prices being down 20 percent in the year to June; economic pessimism outweighing optimism for the first time in 6 years; economic pessimism at its highest since the Canterbury earthquakes—Mr SPEAKER: Order! I will need the question. [Interruption] Order! We now need the question.Grant Robertson: I asked the question but I hadn’t finished.Hon BILL ENGLISH: On any given day there are things about an economy or a world economy that are not going well and there are things that are going well. We are fortunate that because we have a resilient economy enough of the New Zealand economy is going pretty well particularly the manufacturing sector—since Labour said it was in crisis. But as the Reserve Bank Governor said yesterday we are currently growing at about 2.5 percent and that is consistent with an outlook of sustainable moderate growth.